The Court of Tax Appeals (CTA) has ruled in favor of the food firm Dole Fresh Fruit Company (DFFC) in a suit involving taxes paid by the company in 2013.
In a 22-page decision dated Feb. 5 released on Thursday, the tax court’s Second Division through Associate Justice Cielito Mindaro-Grulla ordered the Bureau of Internal Revenue (BIR) to grant a tax refund worth PHP9.03 million to the company.
The amount represents DFFC’s erroneously paid capital gains tax from the sale of its shares of stock in Dole Philippines, Inc. (DPI) to Dole Asia Holdings Pte. Ltd. (DAHL), a Singaporean firm.
The transaction involved 1,527,600 common shares sold for a purchase price of PHP105.69 million or 0.64% of DPI owned at the time by DFFC.
Associate Justices Juanito Castaneda Jr. and Jean Marie Bacorro-Villena concurred.
DFFC, which was formed under the laws of Nevada, United States on March 4, 2013, filed an application with the BIR’s Internal Tax Affairs Division to request confirmation that the transaction is exempt from capital gains tax under the RP-US Tax Treaty.
While the request was pending on March 21, 2013, DFFC filed its capital gains tax return and paid capital gains taxes in the amount of PHP9.03 million.
On April 5, 2013, the company finally secured the Certificate Authorizing Registration (CAR) and tax clearance on the sale of shares prompting it to file an application for tax credit/refund to recover the erroneously paid capital gains taxes.
“Generally, any gain by petitioner from the sale of shares in DPI should be subject to CGT. However, considering that the Philippines has a treaty with the US, the said income from the sale of shares may be exempted from income tax if the conditions set forth under the RP-US Tax Treaty are satisfied,” the court held. (PNA)