COA cancels P212 million more tax credits to textile firms

MANILA, Philippines — The Commission on Audit (COA) has disallowed the release of P212.63 million worth of tax credits to six textile firms allegedly involved in a tax credit certificate (TCC) scam, the Department of Finance (DOF) said.

According to the DOF, the COA has issued another set of Notices of Disallowance (NDs) to Capital-Roll Knit Corp. (CRC), Uni-Glory’s Knitting Corp. (UKC), Primeknit Manufacturing Corp. (PMC) and Tai-Cheng Integrated Resource Inc. (TICIRI) for P153.13 million worth of TCCs.

The DOF said these companies were found to have illegally acquired the TCCs from the One-Stop Shop Inter-agency Tax Credit and Duty Drawback Center (OSS) from 2008 to 2012.

In addition, the DOF said two other firms also received NDs from COA for P59.5 million worth of TCCs.

The DOF said P31.17 million of this amount was originally issued to Miskhu Industrial Corp. in 2009, while P28.33 million in disallowed TCCs were issued to Universal Pacific Knitting Mills Inc. (UPKM) in 2008.

These, together with the NDs received by the other firms in relation to the textile TCC scam, brought the total amount of disallowed TCCs by COA at P818.6 million as of Oct. 21, the DOF said.

Created under Administrative Order (AO) No. 266, the OSS is a composite body managed by the DOF, Bureau of Internal Revenue (BIR), BOC and the BOI to process TCCs and duty drawback applications.

TCCs were issued to exporters and manufacturers of BOI-registered products to refund the duties and taxes they paid on imported raw materials.  These refunds were used to pay other tax liabilities due to the government.

However, the DOF said some tax credits were granted illegally to either ghost exporters or real companies that did not deserve the tax credits.

In 2018, COA revealed that the OSS granted TCCs worth P11.18 billion to 33 ineligible or non-existent textile companies from 2008 to 2014.

The DOF said P8.85 billion of this amount was granted to 29 claimants despite the absence of proof of payment of duties and taxes, proof of exportation of finished products, and importation records.

Four other claimants got TCCs worth P2.34 billion, even as their entitlement to the fiscal incentive had already expired, the DOF said.

The DOF said several officials and employees of the agency, Board of Investments (BOI), Bureau of Customs (BOC) and OSS who were responsible for processing and approving the illegal TCCs in the past, as well as their recipients and claimants from the four companies, have been held liable by COA.