THE COMMISSION on Audit (CoA) rejected a total of P3 billion in tax credits granted to textile companies in the six years to 2014, the Department of Finance (DoF) said.
Another P417.22 million in tax credit certificates was considered invalid, on top of the previous P2.6 billion, according to a report sent by CoA to the Finance department on Sept. 21.
Employees and officials from various government agencies had approved illegal tax credit certificates from 2008 to 2014, DoF said in a press release on Monday.
These tax credit certificates are usually given to exporters registered with the Board of Investments (BoI). Through these certificates, exporters can get 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 to other companies at a discount, allowing the latter firms to reduce their own tax liabilities.
CoA 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, DoF said.
The textile firms include Silvertex Weaving Corp., Knitech Manufacturing, Inc. (KMI), Capital-Roll Knit Corp., Uni-Glory’s Knitting Corp., and Primeknit Manufacturing Corp.
Tai-Cheng Integrated Resource, Inc., Miskhu Industrial Corp., and Universal Pacific Knitting Mills, Inc. also used invalidated tax credit certificates.
Silvertex Weaving topped the list with the largest amount in illegal tax credit certificates at P906.8 million, followed by Capital-Roll at P664.92 million, Miskhu at P451.98 million, and Primeknit at P312.08 million.
CoA had also issued notices of disallowance to Capital-Roll for P664.92-million worth of illegally issued tax credit certificates, Knitech for P114.2 million, Universal Pacific for P127.81 million, Uni-Glory for P241.68 million, and Tai-Cheng for P198.81 million.
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, were held liable by CoA. — Jenina P. Ibañez