MANILA, Philippines - Three years after the original presidential order was issued, the Bureau of Customs finally gave the go-ahead for the monetization of tax credit certificates (TCCs) it issued until 2012.
In a statement last Friday, Customs said it is now ready to accept import and value-added tax (VAT) TCCs for exchange to cash, pursuant to Executive Order (EO) No. 68-A.
“The rule covers claims for monetization of import VAT and VAT drawback TCCs outstanding as of Dec. 31, 2012...and cash conversion of all other VAT drawback TCCs which are not covered in the former,” Customs said.
TCCs are given to exporters and manufacturers who have paid duties for raw materials and supplies, which they will later on use for their products to be shipped abroad.
Under the law, such materials are qualified for tax incentives, hence, the government refunds it to them either through import TCCs issued by Customs, or VAT drawback TCCs from Customs and One-Stop Shop Drawback Center under the Department of Finance (DOF).
The practice changed after the issuance of EO 68, which facilitated the giving of cash refund to TCC holders. The order was “simplified” through EO 68-A signed in January 2014.
In pushing for the reform, the DOF has said that giving refund to companies with TCCs give them flexibility in using their incentives since TCCs can only be used to offset existing tax liabilities.
Customs Commissioner Alberto Lina told reporters it took time for the bureau to issue the monetization guidelines “because of a COA (Commission on Audit) ruling.”
According to the statement, VAT TCC holders must apply before the Tax Credit Secretariat by filing a letter of application, the original TCC, and an affidavit proving the authenticity of the TCC and the amount indicated on it.
In case a representative will claim the money, an authorization from the TCC owner will also be needed.
Customs said it will send out “due notice” to TCC holders as with regard to the specific details and schedule of monetization.
“The release of the cash equivalent of import VAT TCCs and drawback TCCs shall be subject to availability of funds appropriated for the purpose,” the statement read.