CTA affirms P1.6-B tax refund for Lucio Co, family

The Court of Tax Appeals (CTA) has affirmed a division ruling ordering the Bureau of Internal Revenue (BIR) to refund a total of P1.647 billion to retail tycoon Lucio Co and his family for the erroneous payment of capital gains taxes in 2012.

In an en banc decision dated Feb. 28, the court denied the BIR’s petition questioning the CTA Third Division’s June 2, 2016 decision in favor of the Co family.

The case involved publicly listed Puregold Price Club’s 2012 share-swap acquisition of the Co family’s Kareila Management Corp.

Under the deed of exchange, the Cos transferred all their Kareila shares to Puregold, so the family could increase its collective ownership of the retail giant to 75.83 percent, from 66.55 percent.

The CTA reiterated that the share-swap transaction was a tax-free exchange under the National Internal Revenue Code, because the law allowed the nonrecognition of gains when “further control” of a firm is increased “collectively.” —Vince P. Nonato