MANILA – The Court of Tax Appeals (CTA) has upheld the government’s decision to impose income taxes on Filipino employees of the Asian Development Bank (ADB).
In a 30-page decision dated July 30 by Associate Justice Juanito C. Castañeda Jr., the CTA en banc denied the suit filed by ADB Filipino employees and upheld the government’s position in the controversy.
The petitioner-taxpayers had argued that since the ADB started in 1966 up to 2013, Filipino ADB employees were exempted from payment of income tax on their salaries from the ADB.
Ruling against the employees, the tax court sided with revenue officials who said income derived from ADB by Filipino employees were clearly subject to tax.
“A review of the relevant treaty and legislative provisions will demonstrate that Congress certainly intended to tax the salaries and emoluments received by Filipinos from ADB,” the court added.
The CTA cited a Senate resolution ratified in 1966 the agreement establishing the ADB with an express reservation by the government to tax salaries and emoluments paid by the bank to Filipino citizens or nationals.
The court noted that “even assuming there was a failure in the past to take a categorical position on the taxation of Filipino ADB employees, such does not operate to estop the government from correcting the same”.
“Prolonged practice of non-collection of certain taxes, if proven to be erroneous, does not ripen to validity,” the CTA said. (PNA)