Taxpayer is entitled to a refund of the 2% tax erroneously remitted to the BIR.

Taxpayer is a PEZA-registered entity. As such, it is liable to pay 5% tax on gross income. For the year 2009, the computed 5% tax on gross income were all remitted to the BIR. Realizing that the 2% of the 5% tax should have been paid to the city government, taxpayer applied for a refund of the 2%. 

The Court ruled that under Republic Act No. 8478 (Special Economic Zone Act of 1995), the five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: (a) Three percent (3%) to the National Government; and (b) Two percent (2%) shall be directly remitted by the business establishments to the treasurer’s office of the municipality or city where the enterprise is located. Clearly, the law shows that there shall be at least two separate payments: one to the BIR for the 3% share of the National Government, and a separate payment covering 2% for the local government units. In this case, it is apparent from the returns and the payment forms that taxpayer remitted the full 5% tax to the BIR, including interest payments when petitioner amended the return. Thus, the court is convinced that with the circumstances in the present case, taxpayer is entitled to a refund or to be issued a Tax Credit Certificate. (Acquire Pacific Philippines Inc. vs. Commissioner of Internal Revenue, CTA Case No. 8465, December 31, 2013)