DOF files criminal charges against three in tax credit scam

The Department of Finance has filed criminal charges against three individuals who were apprehended recently for faking tax credit certificates (TCC) amounting to P27.8 million Finance Secretary Jose Isidro Camacho said.

He said the move is part of the government’s overall thrust to improve revenue collection and to do away with "bad eggs" in the government’s ranks.

"This effort is aimed at achieving two objectives which are to help us on the collections and to be able to have good governance in both private and public sector," he said.

He noted that the apprehension of the suspects was made possible by the collaboration of private individuals who reported them the government authorities.

Camacho said an entrapment effort conducted by the DOF, the Bureau of Internal Revenue (BIR), and the National Bureau of Investigation (NBI) early this week resulted to the apprehension of BIR revenue officer II of Makati Arlyn Duque; Danilo Reyes, who represented himself as an officer of a large multinational company allegedly the holder of the TCC being sold; and Vicente Asuncion who posed as a DOF officer and acted as the party who vouched for the authenticity of the TCC being sold.

The suspects, Camacho said, have already been charged before the Pasig City Prosecutors Office with estafa through the falsification of public documents and violation of the anti-graft and corrupt practices act. Being a government employee, Duque was likewise charged with violation of the Code of Conduct for Ethical Standards of government employees.

According to Camacho, the new modus operandi of these syndicates involve the use of fake TCC, completely bypassing the application and processing operations of the DOF’s One Stop-Shop Tax Credit and Duty Drawback Center (OSS).

A TCC is given mostly to exporters in exchange for payment of their value-added tax (VAT). It is also an incentive given under the Omnibus Incentive Act which also allows the TCC holders to either sell or transfer the said certificates to other individuals or corporations.

DOF undersecretary Inocencio Ferrer Jr., who heads a task force pricing the TCC scam, said they are looking at the possibility of reviewing the provisions which allow the TCC to be transferred to other persons or entities. This allegedly caused the problem in tracking down and identifying valid TCCs from fake ones.

"One of the suggestions is to restrict the transfer of TCC to affiliates and subsidiaries only of the TCC holders," he said.

Internal Revenue commissioner Guillermo Parayno said the bureau is also working out at least three major recommendations to reduce, if not eradicate, the TCC-related crimes. These are: the issuance of a directive prohibiting BIR officials from acting as go-between in selling the TCCs; order the immediate revalidation of existing TCCs; and direct all parties either intending to buy or sell TCCs to notify and ask for a go-signal from the office of the BIR commissioner.

Parayno said they are evaluating some 250 TCCs being transferred from January to May 2003 amounting to P857 million to prevent these illegal activities to proliferate in the future.