Monday, February 01, 2016

Asia International Auctioneers, Inc. vs. Commissioner of Internal Revenue (CIR)


ISSUE: Whether or not a deficiency VAT assessment is tantamount to an assessment for withholding tax liabilities such that the taxpayer cannot avail of a tax amnesty program

RULING: No. The CIR did not assess AIA as a withholding agent that failed to withhold or remit the deficiency VAT and excise tax to the BIR under relevant provisions of the Tax Code. Hence, the argument that AIA is deemed a withholding agent for these deficiency taxes is fallacious. Indirect taxes, like VAT and excise tax, are different from withholding taxes. To distinguish, in indirect taxes, the incidence of taxation falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. On the other hand, in case of withholding taxes, the incidence and burden of taxation fall on the same entity, the statutory taxpayer. The burden of taxation is not shifted to the withholding agent who merely collects, by withholding, the tax due from income payments to entities arising from certain transaction and remits the same to the government.

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