CTA junks P8-M tax case vs. Jobstreet.com

The Court of Tax Appeals (CTA) has junked an P8-million tax case against Jobstreet.com for lack of evidence.

Jobstreet.com did not fail to pay P8 million in tax dues to the Philippine government, the CTA noted, arguing that as licensee of Jobstreet Singapore it was required to pay only a license fee for the use of intellectual property and services of Jobstreet Singapore.

The CTA cited the Intellectual Property License and Services Agreement between Jobstreet.com and Jobstreet Singapore dated September 15, 2014 which provides that the licensee should pay the company, or Jobstreet Singapore, without any deduction other than the amount required by law, if any, and that Philippine taxes on all payments relating to this agreement will be borne by the parent company.

“Clearly, petitioner is authorized to deduct, in the royalties and service fees due to Jobstreet Singapore, any Philippine taxes, such as VAT for the lease of its property rights,” the CTA said.

The tax court cited the testimony of Jobstreet.com’s finance manager Claribel Lincod that Jobstreet Singapore charged fees on Jobstreet Philippines amounting to Singapore $1,155,852 for the taxable year 2012, and that Jobstreet Singapore issued a debit note for the payment covering the fees for the financial year which ended on December 31, 2012.

The delay in the issuance of a debit note, which was issued in 2013, was due to the transition of activities at the time with respect to the change in ownership structure of Jobstreet Philippines, Lincod noted, saying that Jobstreet.com recognized in its books in 2012 that it had an obligation to pay Jobstreet Singapore for the use of intellectual property and services rendered in 2012.

By September 30, 2014, Lincod said Jobstreet Philippines remitted US$1,515,000 to the designated bank account of Jobstreet Singapore—covering the charges for the taxable years 2012 and 2013.

On top of Lincod’s testimony, the CTA weight to a number of documentary evidence proving Jobstreet.com’s payments to Jobstreet Singapore:

• Debit Note dated November 14, 2013 issued by Mr. Lionel Ng, finance manager of Jobstreet Singapore billing Jobstreet.com for the fees rendered for the year 2012

• BDO Telegraphic Transfer with Reference No. 0485140088939 dated September 30, 2014 as proof of payment in September 2014

• Email (Acknowledgment Receipt) dated June 19, 2017 by Stella Hui, senior finance manager of Jobstreet Singapore, acknowledging receipt of payment on September 30, 2014 for 2012 and 2013 amounting to  US$1,515,000

• Consular Certificate of Authentication of the certified true copy of Transfer Credit Advise of Jobstreet Singapore dated July 6, 2017, issued by The Hongkong and Shanghai Banking Corporation Limited in Singapore, confirming a remittance in the amount of US$1,515,000 on September 30, 2014

The CTA noted that in spite of BIR’s wide array of powers in seeking a taxpayer’s information, the documents upon which the allegation was based—specifically the Statement of Financial Position with corresponding Notes to Financial Statements and the BIR Form 1601-F—were not sought after and formally offered in evidence by the BIR.

“Simply put, there is no evidence to substantiate respondent’s claim that there was payment to non-resident foreign corporation in 2012. This Court cannot sustain an assessment for deficiency taxes based on empty allegations,” the CTA said.

“Wherefore, premises considered, the instant Petition for Review is hereby granted. Accordingly, the Final Decision on Disputed Assessment dated September 8, 2016, assessing petitioner of deficiency final withholding of VAT for the taxable period July 1, 2012 to December 31, 2012 in the aggregate amount of P8 million is canceled and set aside,” the CTA added. —VDS, GMA News