THE Commission on Audit (COA) has so far invalidated almost P1.6 billion in tax credits that were found to have been illegally secured by six textile firms from 2008 to 2014.
The Department of Finance (DOF) said on Wednesday that the tax credit certificates issued to these textile firms came from the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS). Created via Administrative Order 266 by then-President Corazon Aquino, the center is headed by the DOF.
These companies include Capital-Roll Knit Corp. (CRC), Uni-Glory’s Knitting Corp. (UKC), Primeknit Manufacturing Corp. (PMC), Tai-Cheng Integrated Resource Inc. (TICIRI), Miskhu Industrial Corp. (MIC) and Universal Pacific Knitting Mills Inc. (UPKM).
Based on a June 22, 2021, letter sent by the COA-Special Audits Office (COA-SAO) to the DOF, the disallowed TCCs to the textile firms have already amounted to P1.58 billion. The amount includes the new set of Notices of Disallowances (NDs) that were issued by the COA in the second quarter for P389.27 million in TCCs.
As of the first quarter of the year, the COA-SAO reported that NDs were issued to these textile firms for having secured P1.195 billion in illegal TCCs.
The latest set of NDs covered TCCs that were issued mostly between 2010 and 2014, according to the letter sent by COA-Director Gloria Silverio.
The textile firm which received the largest amount of illegal TCCs so far is the CRC with P664.92 million.
This was followed by UKC (P241.68 million), PMC (P214.31 million), TICIRI (P198.81 million), MIC (P136.98 million), and UPKM, Inc. (P127.81 million).
Of the newly disallowed TCCs by these textile firms, the bulk was in the CRC at P97.72 million, followed by the UKC (P70.88 million), the PMC (P60.04 million), the Ticiri (P57.54 million), the MIC (P56.87 million) and the UPKM Inc. (P46.2 million).
COA holds lieable several past officials and employees of the DOF, the Board of Investments, the Bureau of Customs and the OSS who were responsible for processing and approving the illegal TCCs between 2008 and 2014, as well as the recipients and claimants from the six companies.
Approved applications meant tax credits on the duties and taxes that exporters supposedly paid. They could then use the amount to pay other tax liabilities due the government. The practice of these alleged exporters who illegally obtained TCCs was to sell the certificates to other companies at a discount. The latter would then use the TCCs to pay their own tax liabilities.
The COA found that the OSS issued TCCs to either ghost exporters or real companies that were not in the export trade or did not deserve the tax credits issued to them, such as these six textile companies.