THE COMMISSION on Audit (CoA) has found that the One-Stop Shop Inter-Agency and Duty Drawback Center (OSS) granted tax credit certificates (TCCs) worth P11.18 billion to 33 ineligible or even non-existent textile companies from 2008 to 2014, Department of Finance (DoF) officials announced in a press conference on Friday, saying they received the July 6 audit report on July 10.
“The audit disclosed that the center failed to safeguard the current tax credit system from undue claims for it granted tax credits in the total amount of P11.18 billion to 33 textile companies contrary to the provisions of EO No. 226,” read the summary of the CoA report distributed by the DoF to journalists.
Of this amount, P8.85 billion worth of tax credits were granted to 29 claimants despite the absence of proof of payment of duties and taxes and the export of finished products, and of importation records with the Bureau of Customs (BoC).
The other four claimants got TCCs worth P2.34 billion, even as their entitlement to the fiscal incentive had already expired.
The audit was conducted from April 2015 to Dec. 2016 and was requested by former Finance Undersecretary Carlo A. Carag in October 2011.
“It appears that, some time in 2014 or 2015, an office order was issued within the OSS that allowed the claiming of TCCs even without showing actual proof of importation… what they showed was local purchases of raw materials… they didn’t import,” Finance Undersecretary Antonette C. Tionko said.
The OSS was formed to expedite the processing of tax credits and duty drawbacks that were offered as an incentive under Executive Order No. 226, or the the Omnibus Investments Code.
TCCs are granted to exporters to claim taxes and duties paid on imported raw materials, and were used to pay other tax liabilities due the national government.
According to the CoA report, a total of over 7,000 TCCs worth P26.71 billion were issued from 2008 to 2014, and P11.24 billion of the amount were issued to garment and textile manufacturing companies, P10.54 billion of which were reported utilized as of end-2015.
“Of the P11 billion, over 80% have already been used to pay the BIR (Bureau of Internal Revenue) and the BoC,” said Ms. Tionko, adding that some of the perks were even illegally sold to other firms.
”We are taking the CoA audit report and conducting a deeper investigation. We will trace if there are others involved outside the OSS,” Finance Secretary Carlos G. Dominguez III said during the briefing.
”We are determined to get at the bottom of this and really identify who are responsible, and collect what we can… and of course charge those who we find that there’s evidence that they’re guilty and hopefully clear it up once and for all.”
The Finance chief signed Department Order No. 039-2018 on Friday, forming a task force to investigate and run after those involved.
The panel consists of Ms. Tionko of the Revenue Operations Group, Finance Undersecretary Bayani H. Agabin of the Legal Affairs Group and Finance Undersecretary Gil S. Beltran of the Policy Development and Management Services Group.
According to Mr. Dominguez, the group’s priority will be the “cancellation of Tax Credit Certificates that are still in circulation; and coordination with the Bureau of Internal Revenue and the Bureau of Customs in the assessment of taxpayers who applied these erroneous Tax Credit Certificates against their tax liabilities” as well as the “investigation and administrative sanctions against erring OSS personnel.”
He said that the DoF also forwarded the CoA report to the Board of Investments for “appropriate action against accredited enterprises.”
“Charges will have to be filed… and we hope that the claim will be paid immediately. If they’re not paid we will pursue them in court.”
Asked whether the DoF will be open to compromise with suspects, Mr. Dominguez replied: “at this point, no.” — Elijah Joseph C. Tubayan

RELATED ARTICLESMORE FROM AUTHOR