CTA orders BIR to refund P32.58 million to San Roque Power

THE Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) to refund or issue a tax credit certificate worth P32.58 million to San Roque Power Corp., ruling that its sale of ancillary services derived from hydropower qualifies for zero-rated value-added tax (VAT) treatment, according to BusinessWorld.

In a 36-page decision promulgated on June 9, the CTA’s Third Division granted the power firm’s petition for review, reversing the BIR’s previous denial of the refund claim. The court held that the ancillary services—such as frequency regulation and reserve power—are directly related to the generation of electricity from renewable sources, thus falling under the zero-rated VAT provisions of the National Internal Revenue Code.

The ruling provides a significant tax relief for San Roque Power, which operates a 345-megawatt hydroelectric plant in Pangasinan. The case underscores the tax treatment nuances for energy companies offering grid support services, and may set a precedent for similar claims in the renewable energy sector.