Philippine banana exporter loses bid for $2.3m tax refund

Banana exporter Tagum Agricultural Development Corp. (Tadeco), which is entangled in a graft case, has lost its bid for a tax refund of around US $2,330,000.

In a decision dated Oct. 13, the Third Division of the Court of Tax Appeals denied Tadeco’s petition for the $2.3 million refund on creditable input value added tax for 2012 on the grounds that the company filed it more than three months late on Oct. 30, 2014.

Under the National Internal Revenue Code, Tadeco could only bring the case to the tax court within 30 days from the lapse of the 120-day period given to the Bureau of Internal Revenue (BIR) to act on its refund claim.

The CTA ruled that like a claim for tax exemption, a refund claim “is construed strictly against the taxpayer.”

“In other words, strict compliance with the 120+30 day periods is necessary for such a claim to prosper,” it said.

It said the 120-day period started on Feb. 18, 2014, when Tadeco filed its claim, and expired on June 18, 2014. Tadeco only had until July 18, 2014 to question the BIR’s inaction.

The decision did not tackle Tadeco’s assertion that it was entitled to a refund or tax credit on excess input VAT on goods purchased to produce its Cavendish bananas for export.

Tadeco was embroiled in controversy after House Speaker Pantaleon Alvarez filed a graft complaint on March 13 against the company controlled by the family of Davao del Norte 2nd Dist. Rep. Antonio Floirendo Jr., President Duterte’s top election campaign financier.

Tadeco’s joint venture agreement with the Bureau of Corrections covered 5,308.36 hectares of Davao Penal Colony land. It was first entered into in 1969 and extended for another 25 years in May 2003.

The Commission on Audit (COA) said the agreement was unconstitutional for exceeding the size of public land that could be leased to private corporations under the present and past constitutions. COA also said the agreement violated the 50-year limit on the private use of public lands.

The Office of the Ombudsman last month found probable cause to indict Floirendo for violating the antigraft law for having direct or indirect financial interest in any transactions with the government.

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