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Court tells tax bureau to refund BCDA

Posted on September 30, 2013 10:29:28 PM [ BusinessWorld Online ]

A COURT has ordered the Bureau of Internal Revenue (BIR) to refund the Bases and Conversion and Development Authority (BCDA) millions of pesos in tax withheld on the sale of military land, ruling that while the agency itself was not tax-exempt, proceeds from such sale was expressly excluded by law.

In a 26-page decision promulgated on Sept. 13, the first division of the Court of Tax Appeals granted BCDA’s request for a P101.637-million refund representing the 5% creditable withholding tax (CWT) on the sale of a 1.204-hectare property in the Fort Bonifacio area in Taguig City for some P2.033 billion.

The property, called “Expanded Big Delta Lots,” was awarded under four separate contracts to an unincorporated joint venture of Property Holdings, Inc.; The Net Group Project Management Corp.; and The Net Group Property Management Corp. in May 23, 2008.

The joint venture remitted to the tax bureau on July 31, 2008 some P101.637 million in CWTs.

BCDA later asked the bureau for a refund, arguing that the amount was “erroneously or illegally collected.”

On July 29, 2010, BCDA raised the issue to the CTA after the tax bureau failed to act on its refund request.

The CTA ruled that while BCDA was not one of the state firms or agencies exempt from income tax under Republic Act (RA) No. 9337 -- namely: the Government Service Insurance System, Social Security System, Philippine Health Insurance Corp. and Philippine Charity Sweepstakes Office -- an amendment to RA 7227, the law which formed BCDA, “specifically exempt the proceeds of the sale… of portions of Metro Manila military camps from all kinds of taxes and fees.”

“Considering that the proceeds from the sale of petitioner’s subject property are exempt from income tax, the CWTs which were withheld by buyer-companies amounting to P101,637,466.40 were erroneously remitted to and collected by the BIR,” read the decision penned by CTA Presiding Justice Roman G. Del Rosario.

Associate Justices Erlinda P. Uy and Cielito N. Mindaro-Grulla concurred with the decision.

BCDA was formed under RA 7227, or the Bases Conversion and Development Act of 1992, to oversee conversion of former military bases to “productive civilian use” and to raise funds for the government in the process. -- Mikhail Franz E. Flores           
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