Professional Documents
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Taxpayers
Taxpayers remedies under the
National Internal Revenue
Ruling:
NO. MCIT does not tax capital but only taxes income as
shown by the fact that the MCIT is arrived at by deducting
the capital spent by a corporation in the sale of its goods,
i.e., the cost of goods and other direct expenses from gross
sales. Besides, there are sufficient safeguards that exist for
the MCIT: (1) it is only imposed on the 4th year of
operations; (2) the law allows the carry forward of any
excess MCIT paid over the normal income tax; and (3) the
Secretary of Finance can suspend the imposition of MCIT in
2. Non-retroactivity of rulings.
FACTS:
Benguet Corporation is a domestic corporation
engaged in the exploration, development and operation
of mineral resources, and the sale or marketing thereof to
various entities. It is a VAT registered enterprise.
The transactions in question occurred during the
period between 1988 and 1991. Under Sec. 99 of NIRC as
amended by E.O. 273 s. 1987 then in effect, any person
who, in the course of trade or business, sells, barters or
exchanges goods, renders services, or engages in similar
transactions and any person who imports goods is liable
for output VAT at rates of either 10% or 0% (zero-rated)
depending on the classification of the transaction under
In January of 1988, Benguet applied for and was granted
by the BIR zero-rated status on its sale of gold to Central
Bank. On 28 August 1988 VAT Ruling No. 3788-88 was
issued which declared that the sale of gold to Central
Bank is considered as export sale subject to zero-rate
pursuant to Section 100 of the Tax Code, as amended by
EO 273.