Chevron Philippines loses excise tax refund case

Chevron Philippines, Inc. has lost its claim for refund of excise taxes it paid in 2007 for the importation of 1.5 million liters of petroleum products, which it eventually sold to Clark Development Corp. (CDC). Its claim for refund of PHP 6.5 million (US$154,785) was turned down in July by the Court of Tax Appeals (CTA) due to lack of merit.
Chevron argued that the excise tax it paid for the importation of the 1.5 million liters of petroleum products valued at PHP41.7 million (US$993,006) should be refunded because the imported products were sold to the CDC, a government-owned and -controlled corporation (GOCC). The CDC, which manages the Clark special economic and freeport zone, is registered with the Philippine Economic Zone Authority (PEZA), and enjoys tax exemption under the National Internal Revenue Code (NIRC) of 1997.
Chevron claimed refund of the excise tax it paid for the imported petroleum that was sold to the tax-exempt GOCC. The Bureau of Internal Revenue (BIR) countered that the NIRC does not exempt imported petroleum products from excise tax coverage. It asserts that excise tax refund is allowed only for goods produced locally and subsequently exported. The court held that while Section 135 of the NIRC exempts from excise tax petroleum products sold to “entities which are by law exempt from direct and indirect taxes,” the law does not explicitly grant exemption to oil companies selling their imported petroleum products to such tax exempt entities. (August 10, 2012)