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Court denies FCF Minerals’ tax refund claim

THE Court of Tax Appeals (CTA) denied the claim of mining company FCF Minerals Corp. for a refund of its payment for value-added taxes (VAT) and customs fees worth P57.9 million for its importation of capital equipment in 2013.

In its March 15 ruling, the CTA denied the petition for “lack of merit” as FCF must comply with all the requisites for tax exemption on the importation of capital equipment in the Financial or Technical Assistance Agreement (FTAA).

FCF and the Philippine government entered the FTAA in September 2009 for FCF’s Runruno Gold Molybdenum Project in Quezon town, Nueva Vizcaya.

Under the said agreement, FCF would be exempted from VAT and customs fees on its importation of capital equipment, subject to five requisites.

FCF claimed the refund based on the first requisite that the importation should have taken place during or before the company’s recovery period.

The court ruling, referring to Revenue Memorandum Circular (RMC) No. 17-2013, said the recovery period is “five years or at a date when the aggregate of the net cash flows from the mining operations is equal to the aggregate of its pre-operating expenses, reckoned from the date of commencement of commercial production, whichever comes first.”

The court affirmed FCF’s claim that its importation took place before its recovery period, but ruled that FCF did not satisfy the second requisite that “the capital equipment [should not be] available domestically in comparable price and quality.”

FCF submitted to the court a certification that its imported capital equipment was not available domestically, but the court did not find it acceptable as the certificate was for only one brand of equipment, although there were other brands in the market that were comparable in price and quality. — Bianca Angelica D. Añago

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