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Court of Tax Appeals: Reduction in accounts receivable does not lead to VAT deficiency

  • The Court of Tax Appeals (CTA) ruled that a reduction in accounts receivable (AR) did not result in a value added tax (VAT) deficiency.
  • The taxpayer argued that the reduction in AR was due to the write-off of uncollectible accounts, which should not be subject to VAT.
  • The tax authority claimed that the write-off did not comply with the mandatory requirements for bad debts to be deducted from gross income.
  • The CTA stated that tax assessments must be based on facts and not presumption, and the taxpayer provided supporting documents to explain the decrease in AR.
  • The court clarified that the requirements for deductibility under Revenue Regulations (RR) No. 05-99 apply to income tax, not VAT.


Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.


VAT news
VAT news