DoF readies P9B tax refund for businesses
The finance and budget departments are still preparing the guidelines for a five-year value-added tax refund worth a total of P9 billion for this year alone, according to Internal Revenue Commissioner Kim S. Henares.
Henares said in an interview that a draft joint circular is being routed at the Department of Budget and Management toward finalization.
“We will be refunding in cash as much as possible, but the taxpayer has the option to take tax credit certificates, or TCCs, so we are also prepared for that,” she said.
The BIR chief added that pursuant to Executive Order No. 68 that President Aquino issued earlier this year, the BIR and the Bureau of Customs will monetize or settle VAT refunds in cash.
EO 68 also provides that the two revenue agencies will issue TCCs only if the concerned taxpayers ask for credits instead of cash.
TCCs can be used to offset other tax obligations in the form of tax deductions, but the EO is apparently meant to address past scams involving billions of pesos’ worth of fake credits.
Last April, Budget Secretary Florencio B. Abad said the EO puts in place a refund monetization scheme in lieu of the “tedious, prolonged and often-corrupted” TCC process.
EO 68 states that the implementation of the scheme “promotes [a] conducive business environment and raises the business credibility of the government both locally and globally.”
Abad said businesses, especially exporters, have been clamoring for the government to refund their VAT credits in an expedient manner.
But “the outmoded TCC scheme traps their liquidity for as much as three years and exposes them to certain unscrupulous practices,” he said.
With the EO, funds for the VAT cash refund will be allocated in the yearly national budgets starting this year until 2016. For 2012 alone, the budget was set at P9 billion.
As for outstanding TCCs, the monetization program gives taxpayers two options for turning them into cash—collecting in advance, but at a discount or collecting at face value upon maturity.
In both cases, according to DBM, the BIR and BoC will verify outstanding VAT TCCs and will issue notices of payment schedule to TCC holders.
