SC defines VAT refund rules, favors Doehle Shipmanagement

February 5, 2025 | 6:09pm

MANILA, Philippines — The Supreme Court has handed a victory to Doehle Shipmanagement Philippines Corp. in a dispute over unutilized input value-added tax, clarifying the rules for filing VAT refund claims with the tax commissioner.

In a decision promulgated on August 19, 2024, the high court's Third Division upheld that for VAT refund claims filed before June 11, 2014, the 120-day period within which the Commissioner of Internal Revenue (CIR) must act begins when the taxpayer determines that its submission of documents is complete.

The case

The case arose from Doehle’s claim for a VAT refund for 2012. The company filed its administrative claim with the CIR on March 31, 2014, and submitted additional supporting documents on July 28, 2014.

When the BIR failed to act, Doehle elevated the case to the Court of Tax Appeals (CTA) on Dec. 23, 2014.

The BIR contended that Doehle’s filing with the Court of Tax Appeals was untimely, arguing that the 120-day processing period began in March 2014 when the administrative claim was first filed. Under this interpretation, Doehle would have had only until September 2014 to appeal to the CTA.

Both the CTA and Supreme Court, however, disagreed with this position.

What the rules say. The 1997 Tax Code grants the CIR 120 days from the taxpayer’s submission of complete documents to decide on the administrative claim.

If the CIR denies or fails to act, the taxpayer has 30 days to file a judicial claim with the Court of Tax Appeals. This is commonly referred to as the "120 + 30-day rule."

The ruling

The Supreme Court affirmed the CTA’s decision and clarified that the 120-day period started on July 28, 2014—the date when Doehle submitted additional documents.

The high court emphasized that this interpretation aligns with the intent of the law to benefit taxpayers by ensuring their claims are processed promptly.

The high court further explained  that the 30-day rule applies only when the CIR determines that the submission is incomplete, not when the taxpayer proactively submits additional information.

“In [Doehle’s] case, it filed its administrative claim on March 31, 2014, but submitted additional documents on its own on July 28, 2014. As a result, the 120-day period for the CIR to resolve the claim began on July 28, 2014.

VAT refund claims based on filing dates

The high court in its ruling also summarized the rules for administrative VAT refund claims based on filing dates:

For administrative claims filed before June 11, 2014:

• The 120-day period begins from the date of filing the administrative claim with complete documents or when the taxpayer indicates that it will no longer submit additional documents.
• If the BIR requests additional documents, the taxpayer has 30 days to comply, and the 120-day period begins upon submission or expiration of the given period.
• If the BIR does not notify the taxpayer that the submission is incomplete, the 120-day period begins from the date the taxpayer voluntarily submitted additional documents.
• The taxpayer must file the administrative claim within two years from the end of the taxable quarter.

For administrative claims filed from June 11, 2014 until December 31, 2017:

• The 120-day period begins from the date of filing the administrative claim with complete supporting documents.
• The taxpayer cannot submit additional documents.
• The taxpayer must file the administrative claim within two years from the end of the taxable quarter.

For administrative claims filed beginning January 1, 2018:

• The BIR has 90 days to resolve the administrative claim from the date of its filing with complete supporting documents.
• Once an administrative claim is filed, the BIR shall no longer require additional documents from the taxpayer. If the taxpayer submits an incomplete claim, it shall be disallowed outright.
• The taxpayer must file the administrative claim within two years from the end of the taxable quarter or the issuance of tax clearance in instances of cancellation of registration or cessation of business