Toshiba Information Equipment (Phils.) Inc. v.

CIR, G.R. No. 157594, 09 March 2010

 
FACTS
Toshiba is a domestic corporation registered with the Philippine Economic Zone Authority (PEZA) as an
Economic Zone (ECOZONE) export enterprise.It filed two separate applications for tax credit/refund of its
unutilized input VAT payments. The CIR denied the application. On appeal, the CTA ruled that Toshiba is
entitled to the credit/refund of the input VAT paid on its purchases of goods and services relative to such
zero-rated export sales. The Court of Appeals reversed the decision of the CTA in the petition for review
stating that Toshiba is a tax exempt entity under R.A. No. 7916 thus not entitled to refund the VAT
payments made in the domestic purchase of goods and services.

ISSUE
Is Toshiba entitled to VAT refund?

 
HELD
YES. Such export sales took place before October 15, 1999, when the old rule on the VAT treatment of
PEZA-registered enterprises still applied. Under this old rule, it was not only possible, but even
acceptable, for Toshiba, availing itself of the income tax holiday option under Section 23 of Republic Act
No. 7916, in relation to Section 39 of the Omnibus Investments Code of 1987, to be subject to VAT, both
indirectly (as purchaser to whom the seller shifts the VAT burden) and directly (as seller whose sales
were subject to VAT, either at ten percent [10%] or zero percent [0%])