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    Tax Report Cir Vs Marubeni

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    The Commissioner of Internal Revenue assessed Marubeni Corporation, a Japanese company, deficiency taxes for 1985. Marubeni filed petitions claiming it properly availed of the tax amnesty under Executive Orders 41 and 64. The Court of Tax Appeals and Court of Appeals found in favor of Marubeni, ruling that it was exempted from paying the taxes because it fell under the tax amnesty. The Supreme Court affirmed, finding that Marubeni did not fall under the exception to avail of the amnesty and that some of its work on the construction contracts was performed outside the Philippines' tax jurisdiction.

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    Tax Report Cir Vs Marubeni

    Uploaded by

    ken
    41 views5 pages
    The Commissioner of Internal Revenue assessed Marubeni Corporation, a Japanese company, deficiency taxes for 1985. Marubeni filed petitions claiming it properly availed of the tax amnesty under Executive Orders 41 and 64. The Court of Tax Appeals and Court of Appeals found in favor of Marubeni, ruling that it was exempted from paying the taxes because it fell under the tax amnesty. The Supreme Court affirmed, finding that Marubeni did not fall under the exception to avail of the amnesty and that some of its work on the construction contracts was performed outside the Philippines' tax jurisdiction.

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    The Commissioner of Internal Revenue assessed Marubeni Corporation, a Japanese company, deficiency taxes for 1985. Marubeni filed petitions claiming it properly availed of the tax amnesty under Executive Orders 41 and 64. The Court of Tax Appeals and Court of Appeals found in favor of Marubeni, ruling that it was exempted from paying the taxes because it fell under the tax amnesty. The Supreme Court affirmed, finding that Marubeni did not fall under the exception to avail of the amnesty and that some of its work on the construction contracts was performed outside the Philippines' tax jurisdiction.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    41 views5 pages

    Tax Report Cir Vs Marubeni

    Uploaded by

    ken
    The Commissioner of Internal Revenue assessed Marubeni Corporation, a Japanese company, deficiency taxes for 1985. Marubeni filed petitions claiming it properly availed of the tax amnesty under Executive Orders 41 and 64. The Court of Tax Appeals and Court of Appeals found in favor of Marubeni, ruling that it was exempted from paying the taxes because it fell under the tax amnesty. The Supreme Court affirmed, finding that Marubeni did not fall under the exception to avail of the amnesty and that some of its work on the construction contracts was performed outside the Philippines' tax jurisdiction.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 5

    G.R. NO.

    137377 DECEMBER 18, 2001

    COMMISSIONER OF INTERNAL REVENUE,

    PETITIONER,

    VS.

    MARUBENI CORPORATION, RESPONDENT.


    Facts:

    The Commissioner of Internal Revenue assails the decision dated January 15, 1999 of the Court of Appeals in CA-G.R. SP
    No. 42518 which affirmed the decision dated July 29, 1996 of the Court of Tax Appeals in CTA Case No. 4109. The tax
    court ordered the Commissioner of Internal Revenue to desist from collecting the 1985 deficiency income, branch profit
    remittance and contractor's taxes from Marubeni Corporation after finding the latter to have properly availed of the tax
    amnesty under Executive Orders Nos. 41 and 64, as amended.

    Marubeni Corporation is a foreign corporation organized and existing under the laws of Japan. It is engaged in
    general import and export trading, financing and the construction business. It is duly registered to engage in such
    business in the Philippines and maintains a branch office in Manila. The Commissioner of Internal Revenue issued a
    letter of authority to examine the books of accounts of the Manila branch office of respondent corporation for the fiscal
    year ending March 1985. In the course of the examination, petitioner found respondent to have undeclared income from
    two (2) contracts in the Philippines, both of which were completed in 1984. The contracts was with the National
    Development Company (NDC) for the construction and installation of a wharf/port complex and with the Philippine
    Phosphate Fertilizer Corporation (Philphos) for the construction of an ammonia storage complex at Leyte Industrial
    Development Estate.

    On August 27, 1986, respondent corporation received a letter dated August 15, 1986 from petitioner assessing
    respondent several deficiency taxes. The assessed deficiency internal revenue taxes, inclusive of surcharge and interest.

    On September 26, 1986, respondent filed two (2) petitions for review with the Court of Tax Appeals. The first petition,
    questioned the deficiency income, branch profit remittance and contractor's tax assessments in petitioner's assessment
    letter and the second, questioned the deficiency commercial broker's assessment.
    On August 2, 1986, Executive Order (E.O.) No. 412 declaring a one-time amnesty covering unpaid income
    taxes for the years 1981 to 1985 was issued. Under this E.O., a taxpayer who wished to avail of the income tax
    amnesty should, on or before October 31, 1986: (a) file a sworn statement declaring his net worth as of December
    31, 1985; (b) file a certified true copy of his statement declaring his net worth as of December 31, 1980 on record
    with the Bureau of Internal Revenue (BIR), or if no such record exists, file a statement of said net worth subject to
    verification by the BIR; and (c) file a return and pay a tax equivalent to ten per cent (10%) of the increase in net
    worth from December 31, 1980 to December 31, 1985.

    In accordance with the terms of E.O. No. 41, respondent filed its tax amnesty return dated October 30, 1986
    and attached thereto its sworn statement of assets and liabilities and net worth as of Fiscal Year (FY) 1981 and FY
    1986.

    On November 17, 1986, the scope and coverage of E.O. No. 41 was expanded by Executive Order (E.O.) No.
    64. In addition to the income tax amnesty granted by E.O. No. 41 for the years 1981 to 1985, E.O. No. 64 3 included
    estate and donor's taxes under Title III and the tax on business under Chapter II, Title V of the National Internal
    Revenue Code, also covering the years 1981 to 1985. E.O. No. 64 further provided that the immunities and
    privileges under E.O. No. 41 were extended to the foregoing tax liabilities, and the period within which the
    taxpayer could avail of the amnesty was extended to December 15, 1986. Those taxpayers who already filed their
    amnesty return under E.O. No. 41, as amended, could avail themselves of the benefits, immunities and privileges
    under the new E.O. by filing an amended return and paying an additional 5% on the increase in net worth to cover
    business, estate and donor's tax liabilities.

    On December 15, 1986, respondent filed a supplemental tax amnesty return under the benefit of E.O. No. 64

    CTA found that Marubeni properly availed of the tax amnesty and deemed cancelled the deficiency taxes. CA
    affirmed on appeal.
    Issue:

    Whether or not Marubeni Corporation is exempted from paying taxes


    Ruling:

    Yes, Marubeni Corporation is exempted from paying taxes.

    CIR claims Marubeni is disqualified from the tax amnesty because it falls under the exception in Sec 4b of EO 41:

    "Sec. 4. Exceptions. — The following taxpayers may not avail themselves of the amnesty herein granted:

    b) Those with income tax cases already filed in Court as of the effectivity hereof;”

    EO 41 took effect on Aug 22, 1986 and the 1985 deficiency was filed with CTA on Sept 26, 1986. When EO 41 became
    effective, the case had not yet been filed. Marubeni does not fall in the exception and is thus, not disqualified from availing
    of the amnesty under EO 41 for taxes on income and branch profit remittance.

    CIR argues that since the two agreements are turn-key, they call for the supply of both materials and services to the
    client, they are contracts for a piece of work and are indivisible. The situs of the two projects is in the Philippines, and the
    materials provided and services rendered were all done and completed within the territorial jurisdiction of the Philippines.
    However, Marubeni Corporation was able to sufficiently prove in trial that not all its work was performed in the Philippines
    because some of them were completed in Japan (and in fact subcontracted) in accordance with the provisions of the
    contracts. All services for the design, fabrication, engineering and manufacture of the materials and equipment under
    Japanese Yen Portion I were made and completed in Japan. These services were rendered outside Philippines’ taxing
    jurisdiction and are therefore not subject to contractor’s tax.

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