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  • Commissioner of Internal Revenue V Burroughs Limited and The Court of Tax Appeals

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    John Yeung
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    (1) Burroughs Branch Office (BBO) paid 15% branch profit remittance tax in March 1979 and remitted the remaining profits to its head office. BBO claimed a refund, arguing the tax should be based on profits remitted after tax, not total profits. (2) The CTA ruled in BBO's favor in 1983. However, the CIR argued a 1982 memorandum circular revoked the 1980 BIR ruling on which BBO relied. (3) The Supreme Court affirmed the CTA's decision, finding the 1982 circular could not be applied retroactively per the Tax Code. The tax base was profits remitted after tax, as the 1980 ruling at the time of B

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    (1) Commissioner of Internal Revenue v Burroughs Limited and the Court of Tax Appeals

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    (1) Burroughs Branch Office (BBO) paid 15% branch profit remittance tax in March 1979 and remitted the remaining profits to its head office. BBO claimed a refund, arguing the tax should be based on profits remitted after tax, not total profits. (2) The CTA ruled in BBO's favor in 1983. However, the CIR argued a 1982 memorandum circular revoked the 1980 BIR ruling on which BBO relied. (3) The Supreme Court affirmed the CTA's decision, finding the 1982 circular could not be applied retroactively per the Tax Code. The tax base was profits remitted after tax, as the 1980 ruling at the time of B

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    66 views1 page

    Commissioner of Internal Revenue V Burroughs Limited and The Court of Tax Appeals

    Uploaded by

    John Yeung
    (1) Burroughs Branch Office (BBO) paid 15% branch profit remittance tax in March 1979 and remitted the remaining profits to its head office. BBO claimed a refund, arguing the tax should be based on profits remitted after tax, not total profits. (2) The CTA ruled in BBO's favor in 1983. However, the CIR argued a 1982 memorandum circular revoked the 1980 BIR ruling on which BBO relied. (3) The Supreme Court affirmed the CTA's decision, finding the 1982 circular could not be applied retroactively per the Tax Code. The tax base was profits remitted after tax, as the 1980 ruling at the time of B

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    of 1

    (1) CIR v BURROUGHS LIMITED AND THE CTA June 19, 1986

    Loan In a BIR ruling dated January 21, 1980 by then Acting CIR Hon. Efren I. Plana the
    Petition for certiorari to review the Decision of CTA aforequoted provision had been interpreted to mean that "the tax base upon
    PARAS, J which the 15% branch profit remittance tax ... shall be imposed...(is) the profit
    FACTS actually remitted abroad and not on the total branch profits out of which the
    BBO = Burroughs Branch Office located at Makati, Metro Manila. remittance is to be made. "

    March 1979, BBO applied with the CB for authority to remit to its parent (2) CIR contends that R is no longer entitled to a refund because Memorandum
    company abroad, branch profit amounting to P7,647,058. Thus, on Mar 14, 1979, Circular No. 8-82 dated March 17, 1982 had revoked and/or repealed the BIR
    it paid the 15% branch profit remittance tax, pursuant to Sec. 24 (b) (2) (ii) and ruling of January 21, 1980. The said memorandum circular states
    remitted to its head office the amount of P6,499,999.30.
    - remittance tax (P1,147,058.70) = 15% of P7,647,058.00 Considering that the 15% branch profit remittance tax is imposed and collected at source,
    necessarily the tax base should be the amount actually applied for by the branch with the
    Claiming that the 15% profit remittance tax should have been computed on the Central Bank of the Philippines as profit to be remitted abroad.
    basis of the amount actually remitted (P6,499,999.30) and not on the amount
    before profit remittance tax (P7,647,058.00), BBO filed a written claim for the Petitioner's aforesaid contention is without merit. What is applicable in the case
    refund or tax credit of the amount of P172,058.90 representing alleged overpaid at bar is still the Revenue Ruling of January 21, 1980 because Burroughs Limited
    branch profit remittance tax. paid the branch profit remittance tax in question on March 14, 1979.
    - tax credit = 1,147,058.70 974,999.89 (w/c is 15% of 6,499,999.30) Memorandum Circular No. 8-82 dated March 17, 1982 cannot be given
    retroactive effect in the light of S327 of the NIRC which provides-
    Feb 24, 1981, BBO filed w/ the CTA a petition for review for the recovery of the
    above-mentioned amount of P172,058.81. S327. Non-retroactivity of rulings. Any revocation, modification, or reversal of any of the
    rules and regulations promulgated in accordance with the preceding section or any of the
    June 27, 1983, CTA ruled in favor of BBO and ordered CIR to grant the tax credit. rulings or circulars promulgated by the Commissioner shall not be given retroactive
    application if the revocation, modification, or reversal will be prejudicial to the taxpayer
    Unable to obtain a reconsideration from the aforesaid decision, CIR filed the xxx
    instant petition before the SC.
    WHEREFORE, the assailed decision of respondent CTA is hereby AFFIRMED. No
    Whether the tax base upon which the 15% branch profit remittance tax pronouncement as to costs.
    shall be imposed is the amount applied for remittance on the profit
    actually remitted after deducting the 15% profit remittance tax. SO ORDERED.
    Held: Yes
    (1) The pertinent provision of the NIRC is Sec. 24 (b) (2) (ii) which states:
    Sec. 24. Rates of tax on corporations....
    (b) Tax on foreign corporations. ...
    (2) (ii) Tax on branch profits remittances. Any profit remitted abroad by a
    branch to its head office shall be subject to a tax of fifteen per cent (15 %) ...

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