Claims for tax credit refunds have reached about P1.5 billion, the Philippine Exporters Confederation Inc. (Philexport) said Monday.
To date, about 1,300 applications for tax credit certificate (TCC) encashment, involving P1.5 billion, have been filed with the government, Philexport said, citing a report from Nelson M. Aspe of the Bureau of Internal Revenue.
Businessmen have until the end of October to avail themselves of their tax credits, Philexport said.
Philexport said Aspe, BIR operations group deputy commissioner, had assured exporters that there would be enough funds to cover tax credit claims filed this year after a bigger budget had already been approved by the House of Representatives for similar claims next year.
The exporters’ group said this was made clear by Aspe in a recent seminar on improving the bottom line of SME exporters held in Makati City.
The BIR has a P3-billion budget to cover the refund of the value-added taxes paid by the exporters. The taxes are covered by TCCs and are due for redemption this year, Philexport said.
TCCs previously issued by the BIR and those granted by the one-stop shop of the finance department that have matured are now eligible for “monetization,” Philexport said, citing Aspe’s report.
Tax credit certificates are incentives under the law given to those who bring in dollars to the country led by exporters.
“It is an instrument that is primarily used as substitute to tax payment in cash,” Philexport said.
In previous administrations, exporters were allowed to sell their tax credit certificates at a discount to big taxpayers. The practice was disallowed in 2010 by President Aquino because it was found to have spawned corruption. Refund by the government was included in the national budget starting this year.
The monetization program for TCCs was ordered by President Aquino under Executive Order No. 68.
Previously, businesses could not monetize TCCs and could only use them to offset other tax obligations in the form of tax deductions. However, the Department of Budget and Management noted that the previous system has been vulnerable to irregularities in utilization and was difficult to monitor.
Thus, starting this year, the government will no longer issue TCCs unless registered exporters opt for tax credits rather than encashing the equivalent amount.
TCCs have to be verified and validated by concerned government agencies, such as the BIR and Bureau of Customs before the holder can be given a notice of payment.