Jollibee subsidiary wins P18.5-M tax refund case

FILE: A Jollibee restaurant at SLEX Sell Service Area, Muntinlupa City (Photo by Patrickroque01 at English Wikipedia, CC BY-SA 4.0)

MANILA – A Singapore-based subsidiary of Jollibee Foods Corporation (JFC) has been granted a PHP18 million refund by the Court of Tax Appeals (CTA) for taxes erroneously collected in 2009.

The CTA’s Third Division, in a 17-page decision dated Aug. 26, ordered the Bureau of Internal Revenue (BIR) to refund or issue a tax credit certificate to Jollibee Worldwide Pte. Ltd. (JWPL) the amount of PHP18.48 million, which it said was “illegally assessed and erroneously collected” income tax, withholding tax on compensation and expanded withholding tax for 2009.

JWPL is a wholly-owned subsidiary of JFC and is licensed to operate as a regional operating headquarters in the Philippines.

The tax court also “canceled and set aside” the final assessment notices (FAN) and a formal letter of demand (FLD) dated January 15, 2013, issued by revenue officials to JWPL for deficiency income tax, withholding tax, and expanded withholding tax for the taxable year 2009.

It noted that the firm had been deprived of due process when it was not allowed an opportunity to respond to the preliminary assessment notice (PAN) within 15 days as mandated by revenue regulations.

A taxpayer has 15 days from receipt of the PAN to file a protest with the BIR.

“If during the said period, the taxpayer fails to file a protest to the PAN, it is only then that respondent (revenue commissioner), or his duly authorized representative, can consider the taxpayer in default, and correspondingly cause the issuance of an FLD and assessment notice, which shall be subsequently served to the said taxpayer,” the tribunal said.

The procedure is part of the due process requirement in the issuance of a deficiency tax assessment, the court said.

The court noted that final assessment notices and a formal letter of demand were issued on January 15, 2013, five days from January 10 of that year when the company received the PAN.

A warrant of distraint and/or levy issued on March 18, 2015, was also declared null and void.