Firms Can Encash Tax Credit Certificate


Companies holding value-added tax (VAT) tax credit certificates (TCCs) can now collect their full cash value upon maturity date or encash them in advance but at a discount.

This, as the government is implementing a five-year VAT TCC monetization program starting this year in its bid to promote a conducive business environment in the country.

Executive Order 68 issued by President Aquino states that the program covers tax credits issued pursuant to Section 112 (A) of Republic Act 8424, otherwise known as the Tax Reform Act of 1997, as amended; and outstanding VAT component of drawback TCCs issued pursuant to Section 106 (e) of the Tariff Customs Code of the Philippines.

TCC-issuing government agencies –Bureau of Customs, Bureau of Internal Revenue or the Department of Finance’s (DOF) One-Stop-Shop (OSS) Inter-Agency Tax Credit and Duty Drawback Center- shall verify and validate the outstanding TCCs.

Qualified VAT-registered taxpayers can collect the full cash value of the TCC upon the maturity date.

However, they also have the option to encash their certificates immediately from the government financial institutions (GFIs), the trustee banks, at a discount.

According to Joint Circular 2-2012 and 3-2012, TCCs issued by the BIR in 2003 and earlier and those released by the BOC from 2004 to 2007 will mature this year.

While TCCs issued by the BIR in 2008 and prior years and those released by the BOC in 2008 will mature in 2013. Those dated 2009, 2010 and 2011-2012 will mature in 2014, 2015 and 2016, respectively.

The refund for tax credits scheduled for monetization this year shall be made upon checks drawn by the commissioner of BIR or BOC or by his duly authorized representative.

But for TCCs scheduled for refund in 2013 to 2016, the BOC or BIR shall issue a Notice of Payment Schedule (NPS) containing the refundable amount and the maturity date.

“Where a taxpayer opts to monetize his TCC before its maturity date, he shall surrender the NPS to the GFIs. The GFIs shall give the equivalent of the refundable amount less the applicable discount,” said the circulars.

— Danielle Venz, Reposted from PHILEXPORT News and Features

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