ECOZONE

A: A place specifically designated for the location of certain industries or

business that enjoys tax exemption privilege. It is also known as a Special
Economic Zone.

An ecozone or a Special Economic Zone has been described as selected

areas with highly developed or which have the potential to be developed into
agro-industrial, industrial, tourist, recreational, commercial, banking, investment
and financial centers whose metes and bounds are fixed or delimited by
Presidential Proclamations. An ecozone may contain any or all of the following:
industrial estates (IEs), export processing zones (EPZs), free trade zones and
tourist/recreational centers. The national territory of the Philippines outside of the
proclaimed borders of the ecozone shall be referred to as the Customs Territory.
(CIR v. Toshiba Information Equipment (Phils.), Inc., G.R.. No. 150154, August 9,
2005)

Note: An ecozone while geographically within the Philippines is deemed a

separate customs territory and is regarded in law as foreign soil.

How are transactions within the ecozone treated?

1. Sales by suppliers from outside the borders of the ecozone are deemed
exports and are treated as export sales.

2. Conversely, if the sales are made to persons or entities outside the ecozone
but within the Philippines, such sales are considered as importations by
the buyers and subject to import duties.

DOCTRINE OF TWIN PREXCRIPTION PERIOD

Tax Refund: 2 years Prescriptive Period

Section 112(A) of the Tax Code - claim for refund of excessively paid input VAT
claim for excess input VAT should be filed within two years from the close of the
taxable quarter when the sales were made
when to reckon the two-year prescriptive period, in a 2013 Decision, SC already
drew a distinction between claims for refund under Section 112(A) and Section
229 of the Tax Code
Section 112(A) applies in the case of a taxpayer who is engaged in zero-rated or
effectively zero-rated sales.
By contrast, Section 229 may still apply to a refund of input VAT, but only in
cases where the amount is excessively or wrongfully collected.
The prescriptive period for filing a judicial claim for refund for erroneously paid
tax (including erroneously paid input VAT, if applicable) under Section 229 is two
years from the date of the erroneous payment.
Sec 112 (A): Administrative Claim = 2-year period reckoned from the close of the
taxable quarter when the zero-rated sales were made. Consequently, an appeal
or judicial claim before CTA may still be filed outside of the two-year period.
Sec 112 (A): Judicial Claims = taxpayer may file an appeal to the CTA under 2
scenarios, i.e., in case of a denial of the claim for refund or due to inaction by the
BIR Commissioner. The Supreme Court also explained the remedies of a
taxpayer as consisting of: 1) filing a judicial claim with the CTA within 30 days
from receipt of the denial by the BIR Commissioner, or (2) filing the judicial claim
within 30 days from the expiration of the 120-day period in case of inaction by the
BIR Commissioner.
The 30-day period mentioned under the 2 scenarios is mandatory and
jurisdictional
An appeal before the expiration of the 120-day period in the 2nd scenario is
likewise prejudicial to the claim

Section 112(A) of the Tax Code

"any VAT-registered person, whose sales are zero-rated or effectively zero-rated

may, within two (2) years after the close of the taxable quarter when the sales
were made, apply for the issuance of a tax credit certificate or refund of
creditable input tax due or paid attributable to such sales."

Supplemented by Section 112(C)

"the Commissioner shall grant a refund or issue the tax credit certificate within
one hundred twenty (120) days from the date of submission of complete
documents. In case of full or partial denial of the claim for tax refund or tax credit,
or the failure on the part of the Commissioner to act on the application, the
taxpayer affected may, within thirty (30) days, appeal the decision or the unacted
claim with the Court of Tax Appeals."