MANILA, Philippines — The Department of Finance (DOF) has withheld the release of P319 million worth of tax credits to a Bulacan-based textile firm flagged by the Commission on Audit (COA) due to its alleged involvement in a tax credit certificate (TCC) scam.
In a statement, the DOF said the One-Stop Inter-agency Tax Credit and Duty Drawback Center (OSS) has informed the Department of Labor and Employment (DOLE) of its decision to put on hold the request of Indo Phil Group of Companies (IPGC), pending the final result of the COA investigation on TCCs issued from 2008 to 2014.
“We highlight that Indo Phil Acrylic Manufacturing Corp. (IPAMC), Indo Phil Cotton Mills Inc. (IPCMI), and Indo Phil Textile Mills Inc. (IPTMI) are covered by the COA SAO (Special Audits Office) Report 2018-06, with findings of irregularities on the TCCs issued to each company for years 2008 to 2014,” OSS executive director Emee Macabales said in a letter to Labor Secretary Silvestre Bello III.
Macabales wrote Bello after the labor chief referred IPGC president Shanti Sipani’s request to have the firm’s P57 million tax refund and P262 million TCCs processed by the OSS.
According to the DOF, Sipani claimed that IPGC’s tax refunds, amounting to P30.6 million in 2016 and P26.4 million in 2017, were already approved by the Bureau of Internal Revenue, but were withheld by the Bureau of Customs due to the COA audit findings.
The DOF had also put on hold TCCs totaling P262 million--P69 million for IPTMI, P91 million for IPCMI, and P102 million for IPAMC--due to the COA report.
The DOF said Indo Phil claimed to have just followed the government’s direction in applying for the TCCs.
However, Macabales pointed out that the COA had begun issuing Notices of Disallowance to the companies whose TCCs were found to be “tainted with irregularities.”
“Due to these developments and the enormity of the amount involved, the Department of Finance and OSS Center are taking precautions before any request for TCCs, Tax Debit Memos (TDMs) or duty drawbacks are acted upon,” Macabales said.
Macabales assured Bello that the OSS would update his office on any developments on this matter.
TCCs were issued to exporters and manufacturers of Board of Investments-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.
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.
Upon the receipt of the report on the P11.18-billion tax credit scam, Dominguez had signed Department Order 39-2018 forming a task force to investigate and run after those involved in the illegal transactions.
The COA had also issued Notices of Disallowance on tax credits amounting to P377.29 million granted by the OSS to four textile firms from 2008 to 2012.