DOF uncovers another tax credit scam

The Department of Finance (DOF) flagged yesterday another tax credit scam involving several textile manufacturing companies.

In a briefing, Finance Secretary Carlos G. Dominguez III said that the Commission on Audit (COA) uncovered 7,591 questionable tax credit certificates (TCCs) that were issued from 2008 to 2014 with a total value of 111.18 billion.

“In a report dated July 6, 2018, the COA found that from 2008 to 2014, the One-Stop Shop Inter-Agency and Duty Drawback Center (OSS) erroneously issued around 3,231 TCCs contrary to the Omnibus Investments Code of 1987, to the detriment of the Government,” Dominguez said.

In particular, Dominguez said that

18.85-billion tax credits were “overstated and supported by spurious documents,” while 12.34-billion certificates were granted to claimants whose fiscal incentives have already expired.

“I have ordered the creation of a Task Force composed of the respective Undersecretaries of the Revenue Operations Group, Legal Affairs Group, and the Policy Development and Management Services Group to recover the value of

111.18 billion worth of undue tax credits granted to ineligible or non-existent textile companies by the OSS from 2008 to 2014,” the finance chief said.

The questioned TCCs were issued to 33 textile companies.

Dominguez now said the DOF will pursue appropriate charges against public officials and private individuals who have unduly benefited from the issuance TCCs to ineligible and non-existent textile companies.

Members of the newly created task force are Finance Undersecretaries Antonette Tionko, Bayani Agabin, and Gil Beltran.

“Expect this Department to pursue the appropriate charges against the public officers and private persons who manipulated and unjustly benefited from the tax credit process with the OSS,” Dominguez said.

A copy of the COA report, Dominguez said, has been turned over to the Board of Investments (BOI) “for appropriate action against the accredited enterprises.”

A tax credit is a rebate of refund of import taxes and duties which a BOI registered enterprise, firm or manufacturer has paid beforehand to the government on the raw materials, supplies and semi manufactured products it has earlier imported to the country.

Under the tax credit incentive program, the government gives back to the exporter or manufacturer the import duties and taxes it has earlier paid, not in cash, but in the form of a TCC, which the Government guarantees to honor and accept also as payment for taxes and duties and other obligations due to the National Government.

In July 2014, the DOF suspended its TCC program for textiles amid the proliferation of fake certificates. (CSL)