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Philippine refiner Petron wins court battle with government over tax

https://www.chemnet.com   Aug 05,2010
The Philippines government has lost its decade-long battle over tax dues with Petron Corp., the country's largest refiner, local media reported Wednesday.


At stake was some Pesos 580 million ($12.75 million) in excise tax that the government claimed Petron owed. But the Supreme Court ruled that Petron had complied with proper procedures for the transfer and use of its tax credit certificates or TCCs from 1995 to 1997.


The Supreme Court reversed a 2007 ruling by the Court of Tax Appeals ordering Petron to pay the Bureau of Internal Revenue the amount after declaring its TCCs null and void.


The tax default was incurred after the TCCs Petron had used to pay its taxes were canceled by the Department of Finance saying they were fraudulently issued and obtained.


The Court of Tax Appeals ordered Petron to pay Pesos 580.2 million comprising Pesos 284.3 million in basic taxes, a 25% late payment surcharge and interest of Pesos 295.39 million.


Overturning this ruling, the Supreme Court said: "Petron has more than amply proved its good faith by complying with the procedures laid down for the transfer and use of the nullified TCCs."


It also said that the Bureau of Internal Revenue could no longer take back the tax credits it had already approved even if the TCCs were subsequently found to have been fraudulently obtained after witnesses alleging the fraud were not available for cross examination.


"Without the former general managers/officers being presented on the witness stand to affirm the truth and veracity of their statements, the affidavits they executed are hearsay for lack of opportunity to cross-examine said affiants," the Supreme Court said.


The country's other refiner, Shell Pilipinas Petroleum Corp. is also involved in a tax battle with the government. In June, Shell announced it would postpone a plan to expand its refinery as it awaited the results of the Philippine Bureau of Customs, which claims that the refiner owes Pesos 7.3 billion in taxes. Shell has also put on hold a planned initial public offering that is tied to the refinery plans.
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