The Court of Tax Appeals has upheld the government’s position to levy the Philippine branch of Cayman Islands-based oil firm, Halliburton Worldwide Limited.
In a 22-page decision dated Oct. 29 and made public Friday, the CTA en banc reversed and set aside an earlier ruling by its Special Second Division for the firm’s failure to prove its entitlement to the value-added tax refund or tax credit certificate being claimed.
In a decision penned by Associate Justice Maria Rowena Modesto-San Pedro, the court noted that “the burden is on the taxpayer to show that it has strictly complied with the conditions for the grant of the tax refund or credit. Since taxes are the lifeblood of the government, tax laws must be faithfully and strictly implemented as they are not intended to be liberally construed”.
HWL provides oilfield services and products, such as well completion, drilling, cementing, logging, well testing, and consulting services, and providing oil field equipment and technology to the oil and gas industries.
It had claimed tax credit /refunds for taxes on zero-rated sales transactions in 2014 amounting to P142 million representing services it sold to renewable energy developers namely Energy Development Corp. and Maibarara Geothermal Inc as well as goods sold by HWL to its non-resident affiliates doing business outside the Philippines, Halliburton Energy Services and Halliburton GMB.
In 2016, it filed with the Bureau of Internal Revenue an application for a tax refund worth P5.2 million for its zero-rated receipts from the RE developers and its non-resident affiliates.
In October 2018, the CTA partially granted its claim for refund up to P844,194.
In upholding the BIR’s appeal and reversing the CTA division’s ruling, the court en banc, among other things, noted that the firm failed to meet the invoicing and substantiation requirements under the country’s tax code.