BIR issues revised policies and guidelines for conversion of TCC

MANILA, Philippines — The Bureau of Internal Revenue (BIR) has issued revised policies and guidelines for the conversion of tax credit certificates (TCC) into cash refund.

Internal Revenue commissioner Caesar Dulay issued Revenue Memorandum 20-2018, prescribing the new procedures on the processing of requests for cash conversion of TCCs, and updating the functions and responsibilities of offices involved in this process.

A TCC is a proof of a company’s claim for tax credits, which are granted to exporting firms to return duties or taxes earlier paid on imported raw materials, or those that have tax refund.

Under the new memorandum, all requests for cash conversion should be filed with the office that originally processed the issuance of the TCC.

This is with the exception of TCC claims subjected to further review and approval, which should be filed with the Tax Audit and Review Division, and revalidated TCCs, which should be filed with the Miscellaneous Operations Monitoring Division of the BIR’s Collection Service.

The BIR said the original copy of the TCC must be surrendered to the concerned processing office as part of the supporting documents for cash conversion.

Parties with approved applications for cash conversion will be entered into the BIR’s Integrated Tax System- Tax Credits and Refund System (ITS-TCRS) and have their original TCCs cancelled.

However, if the claimant was found to have outstanding tax liabilities, the claimant may use the TCC for payment of deficiencies, the BIR said.

In addition, the agency said no cash conversion would be allowed for TCCs issued as a result of the availment of fiscal incentives for which no actual payment was made, and previously transferred or assigned TCCs.

Certificates which remain unutilized after five years from the date of issue, unless revalidated, are also not eligible for cash conversion.

All requests for cash conversion will be referred to the BIR’s Collection Service for verification of the claimant’s tax liabilities, and subsequently, to the Finance Service for funding purposes.

The BIR’s Operations Group is responsible for the assessment of the recommendations for approval or disapproval for cash conversion of TCC, prior to submission to the Finance Service.

According to the BIR, all pending applications for conversion into cash refund of TCCs filed prior to the issuance of the new memorandum will be processed in accordance to the new policy and procedures.