More tax credit claims disallowed by COA
The Commission on Audit (COA) has disallowed a total of almost P1.2 billion in tax credits given to textile and garments manufacturers more than a decade ago after the Department of Finance (DOF) uncovered a scam.
“Capital-Roll Knit Corp., Uni-Glory’s Knitting Corp., Primeknit Manufacturing Corp., Tai-Cheng Integrated Resource Inc., Miskhu Industrial Corp. and Universal Pacific Knitting Mills Inc. were among the textile firms found to have secured illegal tax credit certificates (TCCs) from the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS) in the past,” the DOF said in a statement on Wednesday. The OSS Center was a unit of the DOF.
As such, the DOF said COA’s Special Audits Office issued notices of disallowance to these six textile companies for TCCs worth a total of P818.6 million last year.
And just last February, another P376.6 million in TCCs issued to the same six firms from 2009 to 2013 were also disallowed by COA, Special Audits Office officer-in-charge Gloria Silverio said in a letter to Finance Secretary Carlos Dominguez III.
In 2018, the COA uncovered P11.2 billion in questionable TCCs issued to 33 garments companies from 2008 to 2014 even as they were not registered with the Board of Investments (BOI), hence not entitled to fiscal and other perks, including tax credits, extended to investors. “Several past officials and employees of the DOF, the BOI, the Bureau of Customs and OSS who were responsible for processing and approving the illegal TCCs between 2008 and 2014, as well as their recipients and claimants, were held liable by COA in various instances,” the DOF said.
The TCCs were refunds that exporters could claim as an incentive for the import duties they paid for imported raw materials.
Instead of cash refunds, the government issued TCCs, which companies could use to settle their other tax obligations.
The DOF had blamed this scam on an OSS Center office order issued over 15 years ago, which allowed claiming of TCCs even without submitting actual proof of importation.
In 2014, OSS Center withheld the issuance of TCCs to garments firms.
