Gov’t to give tax rebates instead of tax credits—Abad

MANILA, Philippines—The government plans to do away with the distribution of tax credit certificates and instead distribute cash refunds, Budget Secretary Florencio Abad said on Wednesday.

Abad said P8.3 billion will be allocated for the purpose of cash refunds under the proposed 2012 national budget.

TCCs are instruments that indicate the amount of tax credit that can be used by the holder to offset against tax liabilities, other than withholding tax, or be converted to a cash refund.

“The study of Japan International Cooperation Agency affirms the findings of the Commission on Audit that TCCs are susceptible to irregularities in utilization and it is difficult to monitor,” Abad said in a statememt.

“Cash refunds, on the other hand, are less burdensome in terms of accounting and bookkeeping. Moreover, it promotes transparency that will have a positive impact on the country’s investment climate,” Abad said.

Abad said that outright cash refunds will be sourced from the revenues of BIR, “which is net of collections from input VAT and will have no impact on the budget deficit.”