Illegal TCCs pile up to P1.2 billion—DOF

Published April 2, 2021, 1:00 PM

by Chino S. Leyco

The notices of disallowance (NDs) on the tax credit certificates (TCCs) issued to several textile companies over a decade ago continue to pile up, with the Commission on Audit (COA) having invalidated so far close to P1.2 billion-worth of these illegal tax perks.

The TCCs issued by One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS)  between 2008 and 2014 to six textile firms were found illegal by COA, the Department of Finance (DOF) said on Wednesday, March 31.

Last year, the COA-Special Audits Office (COA-SAO) also issued NDs to these six textile companies amounting to a combined P818.6 million. 

A new set of NDs involving P376.63 million was issued by the COA last month to these same textile firms, bringing the total of their disallowed TCCs to P1.195 billion, based on a Feb. 23 letter sent by the audit body to Finance Secretary Carlos Dominguez III. 

This latest set of NDs covered TCCs that were issued between 2009 and 2013, according to the letter sent by COA-SAO Officer-in-Charge (OIC) Gloria Silverio. 

Several past officials and employees of the DOF, Board of Investments (BOI), Bureau of Customs and OSS were held liable by COA in various instances for issuing illegal TCCs to several companies.

Created under Administrative Order (AO) No. 266 issued in 1992 to process TCCs and duty drawback applications, the OSS is a composite body managed by the DOF, Bureau of Internal Revenue, Customs and the BOI.

Tax credits were offered as incentives under the Omnibus Investments Code (Executive Order or EO 226) to exporters and manufacturers of BOI-registered products for export that have actually paid duties and taxes on the raw materials and supplies they had used in manufacturing their products.

Approved applications meant refunds on the duties and taxes that were supposedly used later to pay other tax liabilities due the government.  

However, the OSS was subsequently found to have issued TCCs to either ghost exporters or real companies that were not in the export trade or did not deserve the tax credits issued to them.