The Supreme Court has ruled that Value Added Tax (VAT) can be imposed on toll fees.
In a 19-page unanimous decision promulgated July 19, 2011, the high court en banc lifted the temporary restraining order it issued on Aug. 13, 2010 on the imposition of a 12-percent VAT on tollways by the Bureau of Internal Revenue (BIR) and the Department of Finance.
“The VAT on franchise grantees has been in the statute books since 1994 when Republic Act 7716 or the Expanded Value Added Tax law was passed. It is only now, however, that the executive has earnestly pursued the VAT imposition against tollway operators,” the high court said.
“The executive exercises exclusive discretion in matters pertaining to the implementation and execution of tax laws. Consequently, the executive is more properly suited to deal with the immediate and practical consequences of the VAT imposition,” it added.
The high court decision stemmed from the petition filed by former Nueva Ecija Representative Renato Diaz and former Assistant Secretary Aurora Maria Timbol of the Department of Trade and Industry.
Diaz, principal author at the House of Representatives of Republic Act 8424 or the Comprehensive Tax Reform Act of 1997 and RA 7716 or the Expanded Value Added Tax Law said that the toll fees were not included in the coverage of sale of services subject to VAT.
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