(10%)
XYZ Corporation, an export oriented company, was able to secure a Bureau of Internal Revenue (BIR) ruling in June 2005 that exempts from tax the importation of some of its raw materials. The ruling is of first impression, which means the interpretations made by the Commissioner of Internal Revenue is one without established precedents.
Subsequently, however, the BIR issued another ruling which in effect would subject to tax such kind of importation. XYZ Corporation is concerned that said ruling may have a retroactive effect, which means that all their importations done before the issuance of the second ruling could be subject to tax.
a) What are BIR rulings?
b) What is required to make a BIR ruling of first impression a valid one?
c) Does a BIR ruling have a retroactive effect, considering the principle that tax exemptions should be interpreted strictly against the taxpayer?
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1 comment:
IV.
a.
BIR rulings are rules promulgated by the BIR for the effective enforcement of internal revenue laws.
b.
To make a BIR ruling of first impression a valid one, the following requisites must be present:
1. It must be consistent and in harmony with law;
2. It must be reasonable;
3. It must be useful and necessary;
4. It must be published but publication is not necessary if the ruling merely interprets or clarifies the law.
c.
A BIR ruling does not have a retroactive effect if the same would be prejudicial to the taxpayer, except in the case of rulings where: (a) the taxpayer deliberately misstates or omits material facts; (b) the facts subsequently gathered by the BIR are materially different from the facts on which the ruling is based; or (c) the taxpayer acted in bad faith.
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