CTA voids P212.48-million BIR tax assessment vs San Roque Power

The Court of Tax Appeals (CTA) has voided the Bureau of Internal Revenue’s (BIR) P212.48-million deficiency tax assessment against San Roque Power Corp., according to a report by BusinessWorld. The ruling stemmed from a dispute over the proper tax treatment of the power generation company’s ancillary service revenues and payments to a foreign contractor.

The CTA ruled that San Roque Power’s ancillary service revenues were subject to the zero-percent value-added tax (VAT) rate, rejecting the BIR’s position that they should be taxed at the standard 12% rate. The court also held that payments made to a Japanese contractor for services performed entirely outside the Philippines were not subject to Philippine withholding tax.

The decision provides clarity on the tax treatment of cross-border service payments and ancillary revenues in the power sector. San Roque Power operates a 345-megawatt hydroelectric plant in Pangasinan and supplies electricity to the Luzon grid.