THE Commission on Audit (CoA) said it discovered another P390 million worth of tax credits to textile companies that were improperly granted, bringing the total irregular credits in the six years to 2014 to P3.41 billion.
According to a CoA report to the Department of Finance (DoF), the Commission said it found P214.38 million in invalid tax credit certificates granted to Primeknit Manufacturing Corp., along with P175.66 million given to Tai-Cheng Integrated Resource, Inc.
The illegal tax credit certificates were granted between 2008 and 2014, the DoF said in a statement on Tuesday.
Tax credit certificates are typically given to exporters registered with the Board of Investments (BoI). Through these certificates, exporters can obtain refunds on raw materials taxes they paid by offsetting the tax credits against other taxes due.
However, some companies that illegally obtained tax credit certificates sold them on to other companies at a discount, allowing companies not entitled to them to reduce their own tax liabilities.
The Commission found that the One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center issued illegal certificates to either ghost exporters or real companies that were not in the export trade, such as the textile companies.
Other textile firms with invalidated tax credit certificates were Silvertex Weaving Corp., Knitech Manufacturing, Inc., Capital-Roll Knit Corp., Uni-Glory’s Knitting Corp., Miskhu Industrial Corp., and Universal Pacific Knitting Mills, Inc.
Silvertex had the largest tally of improperly-granted tax credit certificates at P906.8 million, followed by Capital-Roll at P664.92 million.
The One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center is attached to the DoF.
The CoA said representatives from the DoF, BoI, Bureau of Customs, and the One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center responsible for the approval of the illegal certificates, along with the recipients and claimants, are potentially liable for the illegal issuance of such certificates. — Jenina P. Ibañez