By LEE C. CHIPONGIAN
Availment of tax credit certificates — which reached P200 million in April to the surprise of the Bureau of Internal Revenue, could be winding down since most of the credits were collected in advance in 2005, the agency’s highest official said.
"It’s a problem of timing," BIR Commissioner Jose Mario Buñag said. "Most of the TCCs (released by the Department of Finance) were collected in advance via the creditable withholding tax and quarterly payment of income tax."
Buñag explained that the BIR collected most of the TCCs last year and what was advanced in April is already the tail end. "What’s left is the balance if April (P200 million)," he added.
The problem was that the DoF and the BIR failed to anticipate the amount of TCCs availed of in April and this resulted to a shortfall in tax collection.
"We did a good job of collecting P7 billion more than last year (in April) but not enough to cover the target expectations. We will make sure that May collections will be much better," Bunag said.
The BIR fell short of its tax collection last April by P7 billion, collecting only P71 billion. The government still managed to post a surplus in April despite the BIR shortfall but gains were wiped out due to the TCCs – which amounted to P200 million for the month, and the failure to collect income tax. Income tax collection by the BIR amounted to P48.5 billion in April, about 15 percent off the target of P57.3 billion.
DoF Secretary Margarito B. Teves said his office is currently reviewing the volume of TCCs that are still out there, to prepare for when the credits are used by the taxpayers.
"We need to have an inventory (but) it will not be possible, at this point, to cancel the tax credits because these are contractual obligations and we have to honor the TCCs," he said earlier.
These tax credit certificates serve as proof of a company’s claim for tax credits, which are granted either to exporting firms that are entitled to dutyfree privileges or as tax refunds.
The DoF issues these TCCs. Teves said the tax credits should be resubmitted to the finance department for validation in view of reports that many of them are "not genuine." TCCs are valid for five years but some taxpayers still use them beyond this period.
Both the DoF and the BIR are revalidating the TCCs so they can cancel the fake credits.
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