Gov't allocates P9-B for VAT-TCC tax refunds
MANILA, Philippines - Budget Secretary Florencio Abad said P9 billion has been allocated this 2012 for the new 5-year value-added tax (VAT) refund scheme recently approved by President Aquino.
Abad said on Monday, April 2, that the Aquino administration has allocated P10 billion for tax refunds this 2012, of which P9 billion is earmarked particularly for the VAT refunds in a scheme announced by the Malacanang.
On Sunday, April 1, Executive Secretary Paquito Ochoa Jr. announced the new scheme approved by President Aquino through Executive Order No. 68.
The scheme introduces the VAT credit monetization scheme in place of the “tedious, prolonged and often-corrupted process” of tax credit certificates (TCCs) issued by the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) that are held by VAT-registered taxpayers.
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.
Under the existing system, TCCs are issued to tax payers to indicate their tax credits in lieu of a cash refund. These TCCs can be used to offset other tax obligations in the form of tax deductions.
However, the system has been susceptible to irregularities.
Abad said the VAT credit monetization scheme would help address the problem of corruption that hounded the old system.
The new scheme would also encourage businesses to diligently and accurately pay their taxes.
Only in the Philippines
Ochoa noted Budget Department studies that indicate that the Philippines is the only country in the ASEAN region using TCCs to refund VAT claims.
“Businesses, especially exporters, have been crying out for government to refund their VAT credits in an expedient manner. The outmoded TCC scheme traps their liquidity for as much as three years and exposes them to certain unscrupulous practices,” he said.
“President Aquino is committed to introducing fairness and regularity in managing revenues. By showing businesses that the tax credit system works in a predictable way, we are ultimately encouraging them to pay the correct taxes diligently,” he said.
Abad, on the other hand, said the Aquino administration will allocate funds for the VAT refund scheme in the annual National Budgets from 2012 up to 2016.
With the monetization program gives taxpayers have 2 options in encashing their outstanding TCCs: first, collecting, in advance, a discounted value of their TCC; or, collecting the full cash value upon a particular maturity date. BIR and BoC will verify outstanding VAT TCCs and will issue Notices of Payment Schedule to TCC holders.
Beginning this year, BIR and BoC will no longer issue TCCs for VAT refunds unless applied for by VAT taxpayers unless the latter applies for the same. Under the existing system, TCCs are issued to tax payers to indicate their tax credits in lieu of a cash refund. These TCCs can be used to offset other tax obligations in the form of tax deductions.
However, the system has been susceptible to irregularities. - Rappler.com