Textile manufacturers’ group hits delays in payment of tax credits

A group of textile manufacturers has warned that they may close up shop and lay off workers if the government cannot pay their tax credits.

In an open letter published on Wednesday and addressed to Finance Secretary Cesar V. Purisima, Trade Secretary Gregory L. Domingo and five other officials of the Department of Finance (DOF), Bureau of Internal Revenue, Bureau of Customs and Board of Investments (BOI), a group which said they “represent an informal association of BOI-registered textile mills” claimed that their tax credit incentives have been withheld from them “since July 2014 by the DOF One-Stop [OSS] Shop Center.”

Tax credits are refund payments that companies can claim as incentives for the taxes and duties they earlier paid on their imported raw materials. Instead of granting cash refunds, the government issues tax credit certificates, which firms can use as a form of payment to settle tax obligations.

According to the group’s legal counsel, Gerard P. S. Algarra, “the pitiful and unacceptable” reason being cited by the OSS Center was that “the processing of all applications for tax credits, tax debit memos and transfers have been held in abeyance ‘pending final resolution by the executive committee on the issues related to the granting of tax credits and utilization.’”

“It has been nine months since you have unilaterally and without basis suspended our rights and we see no solution in sight,” they said.

In this regard, the group said they were “so disappointed and exasperated that despite repeated appeals, the executive committee chairman of OSS Center has not yet set any date for the [committee] to convene.”

The officer in charge of OSS Center is Sheila N. Castaloni, who was also recently appointed by President Aquino as acting director of the DOF’s revenue office.