BIR ordered to refund P900-million in taxes to San Miguel Corp and subsidiary

Shutterstock photo

MANILA – The Bureau of Internal Revenue (BIR) has been mandated by the Court of Tax Appeals to refund in excess of P900 million to San Miguel Corp. (SMC) and its ancillary, San Miguel Brewery Inc. (SMBI.)

The tax court made its decision in a 32-page ruling that deemed the BIR in violation of Republic Act No. 9334; the law that increases the excise tax rates imposed on alcohol and tobacco products and stipulates that “brands of fermented liquors introduced in the domestic market between Jan. 1, 1997, and Dec. 31, 2003 shall remain in the classification which the BIR determined that they belong as of December 2003.”

According to the ruling, SMC and SMBI had paid above and beyond the correct amount of excise taxes from Aug.1, 2007, to Dec. 31, 2008, relative to the reclassification of “San Mig Light.”

The BIR initially classified San Mig Light as a “new and medium-priced” brand on Oct. 27, 1999; whereas, in 2002, the tax agency reclassified the same brand as a “variant” thereby subjecting it to higher excise taxes

“It will be recalled that these brands were already classified by the BIR based on their current net retail prices in 1999 through a market survey. Consequently, their upward reclassification in 2003 by the BIR through another market survey is a prohibited reclassification,” the tax court said.

SMC and SMBI’s claim of P934,119,938.35 as the amount overpayed was validated by the independent Certified Public Accountant commissioned by the tax court.
“After a thorough scrutiny of the evidence submitted, the court agrees with the findings and observation of the independent CPA,” the court said.