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Lily’s Fashion, Inc. is a garment manufacturer located and registered as a Subic Bay Freeport Enterprise under Republic Act No. 7227 and a non-VAT taxpayer. As such, it is exempt from payment of all local and national internal revenue taxes. During its operations, it purchased various supplies and materials necessary in the conduct of its manufacturing business. The suppliers of these goods shifted to Lily’s Fashion, Inc. the 10% VAT on the purchased items amounting to P500,000.00. Lily’s Fashion, Inc. filed with the BIR a claim for refund for the input tax shifted to it by the suppliers.

If you were the Commissioner of Internal Revenue, will you allow the refund? 5%

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