The Court of Tax Appeals (CTA) has canceled the P7-million income tax assessment against the United Church of Christ in the Philippines (UCCP) arising from the government’s refusal to apply the tax-exempt status on its now-defunct Bethany Hospital for the year 2010.
In a Jan. 15 decision, the court’s Special Third Division granted UCCP’s petition to set aside the Bureau of Internal Revenue’s Oct. 15, 2014, final assessment notice and Nov. 7, 2014, formal letter of demand.
The court said the notice and demand letter were null and void for being issued beyond the three-year prescriptive period under the National Internal Revenue Code.
It said the BIR did not justify its failure to meet the deadline.
The BIR invoked fraud as an exemption, claiming that UCCP falsely indicated the Tacloban City-based hospital to be a “tentative exempt organization,” when it was supposedly a nonstock and nonprofit corporation that only enjoyed a 10-percent preferential tax rate.
However, the CTA said the BIR failed to prove UCCP’s intention to evade tax.
The charity hospital was destroyed by Supertyphoon “Yolanda” in 2013. —Vince F. Nonato