Lg Electronics Philippines v. Commission Of Internal Revenue

LEONEN, J.:

This case involves the determination of whether petitioner LG Electronics Philippines, Inc. is entitled to the immunities and privileges granted under Tax Amnesty Act of 1997. This is a Petition for Review on Certiorari1 assailing the Court of Tax Appeals' Decision2 dated May 11, 2004 and Resolution3 dated September 22, 2004. LG Electronics Philippines, Inc. (LG) is a corporation duly organized and existing under the laws of the Philippines.4 On March 21, 1998, LG received a formal assessment notice and demand letter from the Bureau of Internal Revenue.

LG was assessed deficiency income tax of 267,365,067.41 for the taxable year of 1994.5 The deficiency was computed on the basis of (a) disallowed interest expenses for being unsupported; (b) disallowed salary expenses for not being subjected to withholding tax on compensation; (c) imputation of alleged undeclared sales; and (d) disallowed brokerage fees for not being subjected to expanded withholding tax.6 The Commissioner of Internal Revenue computed the deficiency as follows:7 Net Business Income ₱105,639,471.00 Add: Discrepancies Interest Expense-lack of proofs 24,515,117.00 Salaries Expense-unreconciled 9,586,097.35 Undeclared Sales Sales per investigation ₱844,238,605.12 Sales per return 836,509,217.00