Government issuance of tax credit certificates up 41% in first quarter

MANILA, Philippines - The government has issued P1.29 billion worth of tax credit certificates (TCCs) in the first quarter of the year, higher than the amount issued in the same period last year, data from the Department of Finance’s One Stop Shop Center (OSSC) showed.

The latest figure is 41 percent or P530.3 million higher than the total issuances in the same period last year amounting to P756.7 million.

The increase reflects the improved performance of the economy, particularly the recovery in exports, said Villamor Plan, executive director of the OSSC.

“The increase is due mainly to the improved performance of Philippine exports during the latter part of 2009. A substantial part of the issuances is attributable to oil companies,” Plan said.

Exports have been steadily recovering, hitting $3.572 billion in April or a growth of 27.4 percent from the year-ago level of $2.804 billion.

The latest figure brought the total amount of TCCs issued by the OSSC to P3.07 billion as of end-March.

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 in paying taxes. Fraud is committed when companies acquire the certificates illegally.

Last year, the government issued less TCCs mainly because of the global financial crisis which hit the country in late 2007.

For the last 10 years, the OSSC issued an average of roughly P3.5 billion to P4 billion worth of TCCs. 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 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 in 1995 to the middle of 1998, defrauded the government of P2.5 billion in revenues from tax credit certificates.

It involves businessmen Faustino Chingkoe and his wife Gloria, who are now facing criminal charges for their alleged involvement in the tax scam allegedly in collusion with top officials of the DOF.

The Chingkoe group of companies, chaired by Faustino, was one of the companies found to have used the tax certificates to cheat the government. Faustino was also found to have conspired with the government to secure the certificates.