DoF releases additional list of rejected tax credits

DoF tax reform

THE Department of Finance (DoF) said the Commission on Audit (CoA) issued notices of disallowance to four textile firms seeking tax credits, bringing the total rejections to P606 million.

In a statement Monday, the DoF said CoA’s most recent rejections totaled P228.71 million worth of disallowed tax credit certificates (TCCs), which the state auditor found to have been granted illegally to the four companies between 2008 and 2012 by the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS).

Some P377.27 million worth of disallowed tax incentives were also attributed to the four firms earlier, bringing the total rejected tax credits applied for to P606 million, Finance Secretary Carlos G. Dominguez III said.

The DoF said the firms were: Capital-Roll Knit Corp. (CRC), Uni-Glory’s Knitting Corp. (UKC), Primeknit Manufacturing Corp. (PMC) and Tai-Cheng International Resource, Inc. (TICIRI).

It said the outstanding notices of disallowance to CRC totaled P410.02 million, while UKC tallied P78.02 million.

Tax credits granted to PMC worth P40.13 million were rejected by CoA, taking its total to P55.89 million. Meanwhile, notices of disallowance to TICIRI now amount to P62.03 million.

In July, the DoF first reported the initial round of rejected tax credits, after the four firms were found not to have complied with the requirements. The deficiencies included lack of proof of payment of import taxes and duties by the suppliers; validation of actual exportation by the OSS; and questions about the companies’ physical existence.

The OSS is an inter-agency body run by the DoF, Bureau of Customs, BoI and Bureau of Internal Revenue, to process applications for TCCs and duty drawbacks.

Tax credits are given to exporters and manufacturers of products for export, which are registered with the Board of Investments (BoI). Proof of duties and taxes on raw materials and supplies are a prerequisite for a TCC, since approved applications will trigger a refund of these taxes.

The DoF issued Department Order No. 039-2018 forming a task force to investigate and go after officials and firms involved in illegal transactions, after uncovering a tax credit scam in 2018.

In July 2018, the DoF also flagged P11.18 billion worth of TCCs that the OSS granted to 33 textile companies between 2008 and 2014 which were either not eligible for the benefit or allegedly non-existent, based on CoA findings. — Beatrice M. Laforga

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