Taguig City Denied Refund Appeal for Local Business Tax
The Court of Tax Appeals (CTA) has rejected Taguig City government’s petition requesting to overturn a trial court decision. The case involved a P624,481.37 refund for local business tax (LBT) that Forbeswood Heights Condominium Association, Inc. was granted. This ruling confirms that the local business tax for 2022 was mistakenly collected from the condominium association.
The CTA, sitting as a full court, upheld the regional trial court’s affirmation of the metropolitan trial court’s earlier order to refund the LBT. According to the decision, “The Court En Banc finds no compelling basis to overturn or modify the decision rendered by RTC-Taguig on Feb. 5, 2024.”
Background of the Local Business Tax Dispute
On January 5, 2022, Taguig City issued a billing statement to Forbeswood Heights, demanding payment for local business tax, environmental impact fee, and business plate fee totaling P1,441,858.82. This was related to the renewal of the condominium’s business permit for the year 2022.
Forbeswood Heights settled the bill on January 10, 2022. However, on March 7, 2022, the association filed a formal protest with the Taguig City government. They requested the cancellation of the billing statement and demanded a refund of the LBT paid, citing that the tax was improperly imposed.
The city government denied the request on May 18, 2022. Subsequently, Forbeswood Heights filed a case at the Metropolitan Trial Court of Taguig City on June 24, 2022. The court partially ruled in favor of the condominium, ordering a refund of P624,481.37.
Court of Tax Appeals Upholds Refund Decision
Following an appeal, the Regional Trial Court of Taguig City upheld the trial court’s decision. The city government then elevated the case to the Court of Tax Appeals. Taguig argued that no law specifically exempts condominium corporations from paying local business tax.
However, the CTA dismissed this argument as without merit. The tax court explained, “To be liable for LBT, a person must be engaged in trade or business.” The city had categorized Forbeswood Heights as a contractor to impose the tax on its gross receipts.
The CTA referred to a Supreme Court ruling which clarified that a condominium corporation is “not engaged in trade or business and, ergo, is not liable for LBT.” This precedent supported the refund order.
Legal Implications and Final Ruling
The 10-page decision was authored by Associate Justice Marian Ivy F. Reyes-Fajardo with concurrence from the full court bench. The ruling reinforces the principle that condominium corporations do not fall under the category of entities subject to local business tax.
This case serves as a key reference for similar disputes involving tax assessments on condominium corporations. It also illustrates the proper interpretation of tax laws concerning local business tax liabilities.
For more news and updates on local business tax, visit Filipinokami.com.