SC rules PSALM not liable to pay P9.5B VAT for 2008

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The Supreme Court (SC) has ruled that the Bureau of Internal Revenue (BIR) cannot collect P9.57 billion in value-added tax (VAT) for 2008 from the Power Sector Asset and Liabilities Management Corporation (PSALM) for the sale of the National Power Corporation’s (NPC) power generating assets.

In a decision written by Senior Associate Justice Antonio T. Carpio, the SC granted PSALM’s petition which challenged the Dec. 2, 2014 ruling of the Court of Tax Appeals in favor of the BIR.

Thus, the BIR said that since PSALM is the successor-in-interest of the NPC, the VAT exemption accorded to PSALM under BIR ruling No. 020-02 is deemed revoked. The SC said that under that law that created the NPC, the agency was mandated to “undertake the development of hydroelectric generation of power and the production of electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide basis.”

“Clearly, NPC and PSALM have different functions. Since PSALM is not a successor-in-interest of NPC, the repeal by RA 9337 of NPC’s VAT exemption does not affect PSALM,” it stressed.

 

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