MANILA – The Court of Tax Appeals (CTA) has ordered the Makati City government to refund more than PHP500,000 to the Metro Pacific Tollways Corp. (MPTC) for local business taxes (LBT) the firm erroneously paid in 2015.
In its decision dated June 14 and recently published online, the CTA en banc partially granted the petition for review filed by Makati City and said the firm cannot be refunded PHP3.5 million representing LBT for 2014 and the first quarter of 2015.
The LBT was computed based on the firm’s dividend income which amounted to PHP558.5 million and PHP1.15 billion in 2013 and 2014, respectively.
The court said payment made for those periods was already final and executory as a result of MPTC’s failure to timely file a protest.
However, the CTA said PHP558,532 paid by MPTC for the second and third quarters of 2015, without any notice of assessment, have not yet attained finality and must be refunded by Makati for erroneous or illegal collection.
Citing provisions in the Local Government Code, the CTA said local government units are prohibited from imposing LBT on income realized by entities such as holding firms not classified as a bank or financial institution.
The prohibition, the court said “is without prejudice to potential liability for other taxes, whether national or local, should it (taxpayer) so engage in other profit-making activities aside from its management of the preferred shares, and the dividends resulting therefrom”.
The CTA added that its decisions ” do not constitute precedents and do not bind the public” since “only the decisions of the Supreme Court constitute binding precedents”. (PNA)