Tax credit issuance down 25% to P3.3 billion in January-November

MANILA, Philippines - The government’s One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center has issued P3.304 billion worth of tax credit certificates (TCCs) from January to November, 25 percent lower than the P4.420 billion it issued in the same period last year, according to the latest data from the center, which is a unit under the Department of Finance.

Villamor Plan, executive director of the center, said the decrease is due mainly to a reduction in the number of certificates issued to oil companies dropped by 59.55 percent during the period, data from the Center showed.

A TCC serves as proof of a company’s claim for tax credits, which are granted either to exporting firms that are entitled to duty-free privileges or to those that have tax refunds. Holders may use these certificates to pay taxes. Fraud is committed when companies acquire the certificates illegally.

The reduction in the issuance of TCCs to oil companies reflects the slower economic growth in the country, due mainly to the global financial crisis which hit the country in late 2007.

The One-Stop Shop Center said the reduction also attributable to measures put in place by the center to prevent a repeat of the controversial tax credit scam that occured in the early 1990s.

The center issued certificates worth an average of roughly P3.5 billion to P4 billion for the last 10 years. In 2008, the amount of TCCs issued stood at P4.654 billion.

This is a significant reduction from a high of P11.94 billion issued by the office at the height of the so-called tax credit scam in the early 1990s.

Plan, who took over the center in 2008, said the DOF has been continuously reengineering the center to prevent the repeat of the tax scam and to better assist the export industry.

The tax credit scam, which occurred from 1995 to the middle of 1998, defrauded the government of P2.5 billion in revenues.