Manila Electric Company (Meralco) yesterday
said it intends to contest before the Court of Tax Appeals its
preliminary income tax assessment of P2.21 billion by the Bureau
of Internal Revenue (BIR).
The BIR Large Taxpayers Division preliminary
assessment in January this year disallows Meralco to carry-over
the overpaid income tax of about P 977 from 1999 to 2002.
BIR, however, said it disallowed to
carry-over the overpaid income tax on the ground that the
crediting for the 1999 overpayment of income tax was done beyond
the two-year prescriptive period to ask for a tax refund.
"Any carry-over of tax credit can only be
applied in the immediately succeeding year," BIR said.
Meralco said this is tantamount to double
taxation and disputes the BIR decision.
"When the Supreme Court’s Decision ordering
Meralco to refund to affected customers the 16.7 centavos per
kWh during the billing period February 1994 to April 30, 2003,
became final in 2003, it necessarily resulted to overpayment of
income taxes estimated at that time at P8.9 billion," said Gil
San Diego, Meralco vice president and head of legal office.
San Diego added that in the ordinary course
of crediting overpayment of tax for the taxable year 1999,
Meralco should have credited the P977 million to its tax
liabilities in the succeeding year of 2000. Meralco’s books,
however, had already been audited for the years 2000 and 2001
and therefore it can no longer amend its 1999 tax return to
reflect the overpayment of income tax.
Since the 1999 income tax return was still
pending audit when the Supreme Court decision became final in
2003, Meralco can still amend its 1999 tax return to reflect the
overpayment of income tax and to carry it over in the 2002 tax
return as credit for its tax liability, San Diego said.
He said that the two-year prescriptive period
cited by the BIR applies only in tax refund claim and not in the
amendment of income tax returns. Regarding the contention that
the carry-over of tax credit can only be applied in the
immediately succeeding year,
"It is our position that although this may
have been true under the 1977 National Internal Revenue Code (NIRC),
this has already been superseded by section 76 of the 1997 NIRC
on January 1, 1998. Said section states that if the corporation
is entitled to a tax credit or refund of the estimated quarterly
income taxes paid, the excess amount shown in its final
adjustment return may be carried over and credited against the
estimated quarterly income tax liabilities for the taxable
quarters of the succeeding taxable years," San Diego said.
