Tax credit issuance down 27% to P3.1 billion in January-October

MANILA, Philippines - The government’s One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center has issued P3.066 billion worth of tax credit certificates (TCCs) in the first 10 months of the year, 27 percent lower than the P4.172 billion it issued in the same period last year, latest data from the Finance department showed.

The One Stop Shop is an agency under the Department of Finance. A TCC serves as proof of a company’s claim for tax credits, which are granted either to exporting firms that are entitled to duty-free privileges or to those that have tax refunds. Holders may use these certificates in paying taxes. Fraud is committed when companies acquire the certificates illegally.

Villamor Plan, executive director of the center, said the decrease in the total TCC issuances is due to a reduction in the number of certificates issued to oil companies and export firms particularly those in the electronics and manufacturing sectors.

Ultimately, Plan said the reduction in the issuance of TCCs to oil companies and export firms reflect the slower economic growth in the country, due mainly to the global financial crisis.

The Philippine economy, as measured by the country’s gross domestic product (GDP), grew by a only 0.8 percent in the third quarter of the year from 4.6 percent recorded a year ago and slower than the official forecast range for the period of 1.6 percent to 2.6 percent.

For the whole year, the government expects the economy to hit the lower end of the full-year forecast range of 0.8 percent to 1.8 percent.

Aside from a slower economic growth, the One-Stop Shop Center said the reduction in the number of TCCs issued is also due to the measures put in place by the center to prevent a repeat of the controversial tax credit scam that occured in the early 1990s.

Plan, who took over the center in 2008, said the DOF has been continuously reengineering the center to prevent the repeat of the tax scam and to better assist the export industry.

The tax credit scam, which occurred in 1995 to the middle of 1998, defrauded the government of P2.5 billion in revenues from tax credit certificates.