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IP News
P50-M Tax Refund: Incentive for Filipino Inventors In a decision penned by Court of Tax Appeals (“CTA”) Associate Justice Lovell R. Bautista, the Bureau of Internal Revenue (“BIR”) was ordered to refund to Splash Corporation P47.47 million representing income taxes paid in 2002 for the its patented products. CTA rejected BIR’s claim that the amount paid by Splash represented taxes before the products were entitled to an exemption pursuant to BIR Revenue Regulation 9-93 which provides that tax exemption will only start on the date of the approval of the application for exemption. On 28 September 2004, the government approved Splash’s tax exemption application over its cosmetic products Extraderm Plus, Extraderm Extract and Maxipeel. These patented products, however, were sold as early as 2001, 1997 and 1999, respectively. Thus, Splash sought a refund amounting to P47.47 million in income taxes it had paid in 2002. The CTA said that under the law, the 10-year period is reckoned from the date a patented product is sold commercially and not from the date of the approval of the application for exemption. Further, the Court said that, “…all administrative issuances must not override, but must remain consistent and in harmony with the law they seek to apply and implement.” Stressing a well-entrenched doctrine in taxation law, the CTA said, “We reiterate the ancient principle that no one, not even the state, shall enrich oneself at the expense of another. In the field of taxation where the state exacts strict compliance upon its citizens, the state must likewise deal with taxpayers with fairness and honesty,” Source: Business World, May 27, 2008
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