Tax credit claimants told to present better proofs of entitlement

THE DEPARTMENT of Finance (DoF) has called out textile companies that refuse to submit import documents as proof of their tax credit claims with the agency.

In its latest Tax Watch ad, the agency called on 26 firms collectively claiming P1.96 billion in tax credits from the DoF’s One Stop Shop (OSS) Center, with tax credit applications not backed by actual import papers.

“Why complain about submitting basic documents if these can prevent another Tax Credit Scam?”, the agency said.

Cited as examples are the firms Indo Phil Textile Mills, Inc., which is claiming P170.3 million but was issued P80.8 million; Indo Phil Cotton Mills, Inc. applying for P148.6 million but getting only P69 million; and Indo Phil Acrylic Manufacturing Corp., which sought P84.9 million but only secured P9.8 million from the OSS Center.

Some 23 other firms applying for a total of P1.59 billion tax credits, however, have not been issued the certifications due to their failure to submit complete documents to support their tax claims.

“A basic principle in giving tax credit or refund is this: You cannot claim a refund for something you had not paid duties and taxes on,” the DoF said. “From three companies alone from the list above, government can lose P388 million if the OSS approves refunds not supported by proper documents.”

“To prevent another Tax Credit Scam, the OSS required basic import documents to show that duties and taxes were actually paid for which tax credits are being claimed,” the agency added, referring to the 1992-1998 scheme which led to multiple firms making a moneymaking scheme out of duty claims from the DoF.

Based on records, the DoF’s OSS Center issued at least 500 tax credit certificates to a group of fake garment and textile firms amounting to P2.5 billion. The tax credits, however, were either sold or transferred to other firms, which made it a “lucrative” scheme.

Hundreds of cases have since been filed in connection with the tax credit scam and are pending before all five divisions of the Sandiganbayan, each involving hundreds of millions of pesos.

Among the documents now being required from claimants include purchase invoices, delivery receipts, official receipts of suppliers, proof of payment of import duties and taxes, proof of importation by suppliers, import entry and internal revenue declarations, commercial invoices, bills of lading, and statements of settlement of duties and taxes. -- Melissa Luz T. Lopez

source:  Businessworld