Understanding Tax Refund Limitations: Legal and Erroneous Payment Criteria Under the Tax Code

• Not all tax overpayments qualify as erroneous or illegal for refunds under the Tax Code.
• If a compromise application is denied, advance payments are not refunded.
• VAT zero-rated entities should ensure suppliers respect legal incentives.
• Advance tax payments cannot be recovered as they are not considered erroneous or illegal.
• Tax refunds under the Tax Code are limited to VAT on zero-rated sales and other taxes deemed illegal or erroneous.
• Illegal taxes are those without legal basis, such as those imposed without authority or on exempt property.
• Erroneous tax payments are mistakes of fact, like paying taxes unaware of exemptions.
• Overpayments not meeting the definitions of illegal or erroneous are often non-refundable.
• Payments under compromise agreements are non-refundable if the compromise is disapproved, even if later court rulings favor the taxpayer.

Source: bdblaw.com.ph

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.

---

---