THE COURT of Tax Appeals (CTA) partially granted Royal Caribbean Cruises Ltd.’s petition for review, ordering the Bureau of Internal Revenue (BIR) to issue a tax credit certificate worth over P7 million, representing its unutilized input value-added tax (VAT) attributable to its zero-rated sales for the fourth quarter of 2018.

The cruise company originally sought over P14 million in refund, but the tax court’s Second Division said it did not provide substantial evidence with the required documentation to be allowed the full amount.

“In sum, [Royal Caribbean] has sufficiently proven its entitlement to the refund or issuance of tax credit certificate of its unutilized input VAT attributable to its zero-rated sales but only in the amount of P7,038,142.81,” Associate Justice Corazon G. Ferrer-Lopez penned in a 47-page ruling released on Oct. 15.

The petitioner filed an administrative claim for a refund of P17.1 million with the BIR but was only granted P2.3 million.

The cruise line appealed this denial to the CTA, arguing that the denied amount, which includes input VAT carried over from previous quarters, is attributable to its zero-rated sales in the fourth quarter of 2018.

Upon examining the supporting invoices and receipts for the P14.1-million claim, the tribunal determined that only around P7.04 million met the substantiation and invoicing requirements of the VAT law and regulations.

The remaining P7.1 million was disallowed for failure to meet the substantiation and invoicing requirements under the VAT law and regulation.

Specifically, the court did not grant the P7.1 million due to the missing taxpayer identification number on supporting documents, lack of separate indication of VAT on supporting documents, insertions or alterations on invoices and official receipts, discrepancies in countersignatures, and missing signatures of the issuer or authorized representatives on invoices. — Chloe Mari A. Hufana