Customs to also ban sale of tax credit certificates

THE BUREAU of Customs (BoC) will follow the Bureau of Internal Revenue’s (BIR) lead and ban the sale of tax credit certificates (TCCs).

“We will also prohibit the transfer of TCCs. We will come out with a Customs Administrative Order within the month,” Customs Commissioner Angelito A. Alvarez said on Friday.

“Control is loose when TCCs can be traded. It makes it difficult to monitor,” he added.

The sale of TCCs has long been problematic for the government as the tax incentives sometimes end up with companies that aren’t qualified.

Mr. Alvarez pointed to reports of oil firms buying TCCs from garment manufacturers to avoid paying duties and taxes to the government.

“This causes leakages in revenue for us,” he said.

The trade of TCCs has become common practice since eligible firms are usually exempted from most other forms of taxes, tying up their money in tax credits they have little use for.

The BIR banned the sale of TCCs last week through Revenue Regulations 14-2011.

BIR Commissioner Kim S. Jacinto-Henares earlier advised the public to hold on to their TCCs even if they had no use for them, pointing out that the government will monetize them via a shift to the cash tax refund system next year.

A total of P709 million has been allocated to monetize existing TCCs in 2012. This budget expected to balloon to P9.3 billion by 2015.

The move to ban TCC sales, however, was criticized by a business leader who said that firms legitimately earned the tax breaks and should be allowed to profit from them.

“I really don’t agree with this,” Philippine Exporters Confederation, Inc. President Sergio Ortiz-Luis, Jr. said in a telephone interview yesterday.

“This is a liability of the government to companies. They should not be allowed to diminish the quality of that liability,” he added.

Some firms, he added, do not have the luxury of waiting for the liquidation of their idle TCCs next year.

“Next year is next year. That is just a promise. Some companies need that cash flow now,” Mr. Ortiz-Luis pointed out.

Finance department data show that the government had P12 billion worth of outstanding TCCs as of the end of last year, P456 million of which were with oil companies.

The government approved 289 TCCs amounting to P1.096 billion as of April this year, down from the same period last year when 473 TCCs worth P1.584 billion were issued.

TCCs are issued by the tax and customs bureaus and the Finance department’s One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center.
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By: Diane Claire J. Jiao
Source: Business World, Aug. 21, 2011
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