BIR, BOC seek P15.5-billion budget for tax refunds

MANILA, Philippines - The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) are seeking a combined budget of P15.5 billion for the two agencies’ various tax refund requirements for 2013, latest data from the Department of Finance (DOF) showed. 

Of the P15.5 billion, the BIR is seeking a budget of P9 billion for tax refunds for 2013 while the BOC proposed a tax refund budget of P6.5 billion.

The BIR’s budget for refunds would be used for excess collection of value added tax (VAT) and other revenue taxes of P1.5 billion, refund of input taxes attributable to zero-rated transactions in the amount of P7 billion and the second tranche monetization of the VAT component of Tax Credit Certificates issue in 2008 and prior years amounting to P500 million.

The Aquino administration has decided to shift from the previous TCC system for VAT claims to a cash refund to avoid a repeat of the TCC scam in the mid-1990s.

The shift in the VAT refund system is the country’s affirmative response to the business sector’s appeal for an enhanced business environment as well as the country’s recognition of an internationally accepted practice.

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.

With the new system, the Aquino administration hopes to prevent a repeat of the controversial TCC scam which occurred in the mid-1990s and defrauded the government some P2.5 billion in revenues.

President Aquino issued earlier Executive Order 68, which mandates the implementation of a five-year monetization program for VAT TCCs issued by the BIR and the BOC.

The program gives taxpayers the option to exchange their outstanding TCCs with cash at a discounted rate when collected in advance or the full cash value upon a particular maturity date.

The BOC would use P6.3 billion for the refund of input VAT on zero-rated import transactions.

For the second tranche of the TCC monetization, the BOC is seeking a budget of P200 million.