Maibarara Geothermal, Inc. v. Commissioner of Internal Revenue
GR No. 250479
July 18, 2022
Under the Philippine tax system, VAT is considered as an indirect tax. Indirect tax is a tax demanded, in the first instance, from, or is paid by, one person or entity in the expectation and intention of shifting the burden to someone else.
Whether petitioner is entitled to the refund of its unutilized input VAT for the first, second, third, and fourth quarters of taxable year 2011.
Since VAT is an indirect tax, the seller of goods and services which also serves as an intermediary in a chain of manufacturers, suppliers, distributors, and consumers (i) shoulders the economic burden of VAT imposed on its purchases, and (ii) pays the VAT imposed on its sales. The first is called input tax and the second, output tax. Moreover, the Court has already ruled that any claim for refund or tax credit of unutilized input VAT must be attributable to zero-rated or effectively zero-rated sales. In this case, there is no output VAT incurred from the first to fourth quarters of taxable year 2011 attributable thereto cannot be refunded. It is clear under Section 112(A) that the refund or tax credit of unutilized input VAT is premised on the existence of zero-rated or effectively zero-rated sales.
