Tax court rules for BSP on P2.4-B assessment

The Court of Tax Appeals (CTA) has cancelled the Bureau of Internal Revenue’s P2.37-billion tax assessment on the Bangko Sentral ng Pilipinas (BSP) for the year 2009.

In a decision dated Sept. 5, the CTA Second Division said the country’s central bank was not liable to pay the final withholding of gross receipt taxes (GRT) on interest income payments to various banks and financial institutions.

The BIR’s final decision on disputed assessment (FDDA), dated March 28, 2014, was invalidated for being based on the revoked Revenue Regulation No. 2-98.

The tax court explained the 1998 revenue regulation was “considered as revoked or repealed for being inconsistent” with Republic Act No. 9238 and Revenue Regulation No. 9-04, both of which took effect in 2004.

RA 9238, which introduced various changes in the applicable GRT rates and expanded its coverage, also specified the time and venue for the filing and payment of the tax.

The law did not include the withholding or deduction of the GRT at the source of the payment (the BSP) as one of the valid modes of payment.