COA rejects P3.4B in spurious tax credits

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The Audit Commission (COA) has so far denied a total of 3.4 billion pesos in tax credits given to unqualified textile companies at the height of a 2008-2014 scam, said Tuesday the Ministry of Finance (DOF).

Citing a November 17 report submitted by the COA’s special audit office to Finance Secretary Carlos Dominguez III, the DOF said in a statement that another TCC (tax credit certificates) worth 390 , 04 million pesos had been invalidated last month.

The COA rejected the 214.38 million pesos of TCC previously granted to Primeknit Manufacturing Corp., as well as the 175.66 million pesos granted to Tai-Cheng Integrated Resource Inc.

As a reminder, at least eight unscrupulous textile companies had obtained illegal TCCs from the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS), a unit of the DOF.

TCCs were refunds that exporters claimed as an incentive for import duties they paid for raw materials from abroad.

Instead of cash refunds, the government has issued CBTs, which businesses can use to pay their other tax obligations.

The DOF blamed the scam on an order from the OSS Center office issued over 15 years ago, which authorized TCC claims without presenting actual proof of importation.

“The practice of these alleged exporters who illegally obtained TCCs was to sell the certificates or tax credits issued by the OSS center to other companies at reduced prices, who would then use the TCCs to settle their own tax debts,” explained the DOF.

“COA discovered that the OSS had issued TCCs to shadow exporters or to real companies that were not in the export business or who were nonetheless not eligible for the tax credits granted to them. “, added the DOF.

When this scam was discovered, OSS Center has since 2014 suspended the issuance of TCCs to textile and clothing companies.

“Several former officials and employees of the DOF, Board of Investments (BOI), Bureau of Customs (BOC) and OSS Center who were responsible for processing and approving illegal TCCs issued during the period 2008-2014 , as well as the recipients and requesters of the six companies, were held accountable by COA, ”the DOF said.

In 2018, the COA discovered 11.2 billion pesos of questionable TCCs issued to 33 garment companies from 2008 to 2014, even though they were not registered with the BOI, and therefore were not entitled to the benefits. and other taxes granted to investors, such as tax credits.

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