Invalidated TCCs of 8 textile firms now worth P3.8-B

The Notices of Disallowance (NDs) of the Commission on Audit (COA) on the tax credit certificates (TCCs) issued to several textile companies from 2008 to 2014 are now worth a total of P3.83 billion.

Silvertex Weaving Corp. (SWC), Knitech Manufacturing Inc. (KMI), 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) were among the textile firms found to have illegaly secured TCCs from the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS) in the past.

As of last year, the COA-Special Audits Office (COA-SAO) issued NDs to these textile companies amounting to a combined P3.41 billion.

A new set of NDs involving P424.26 million was issued by the COA to two of these textile firms, bringing the total of their disallowed TCCs to P3.83 billion, based on a March 28, 2022 letter sent by the audit body to Finance Secretary Carlos Dominguez III.

This latest set of NDs covered TCCs that were issued between 2012 and 2014, according to the letter sent by COA-SAO Officer-in-Charge (OIC) Gloria Silverio.

The COA-SAO discovered that a new set of TCCs worth P366.63 million that were granted to TICIRI should also be disallowed, on top of the earlier NDs that the audit body issued against the firm worth P374.47 million combined.

The total value of TICIRI’s disallowed TCCs is P741.1 million.

UKC, with TCCs totaling P241.68 million that were earlier disallowed by COA, also received NDs for a separate set of TCCs amounting to P53.34 million, according to the latest audit done by the COA-SAO.

Its disallowed TCCs now amount to P299.31 million.

The invalidated TCCs of the other textile firms were worth P906.8 million for SWC, P114.2 million for KMI, P452 million for MIC; P127.81 million for UPKM; P664.9 million for CRC; and P526.5 million for PMC.

Several past officials and employees of the Department of Finance (DOF), the Board of Investments (BOI), the Bureau of Customs (BOC), 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, were held liable by COA in various instances when the TCCs were issued.

Created under Administrative Order (AO) No. 266 issued in 1992 to process TCCs and duty drawback applications, the OSS is a composite body managed by the DOF, the Bureau of Internal Revenue (BIR), the BOC, and the BOI.

Tax credits were offered as incentives under the Omnibus Investments Code (Executive Order or EO 226) to exporters and manufacturers of BOI-registered products for export that have actually paid duties and taxes on the raw materials and supplies they had used in manufacturing their goods.

Approved applications resulted tax credit certificates that could be used to pay other tax liabilities due the government.

However, the OSS was subsequently found to have issued TCCs to either ghost exporters or real companies that were not entitled to the tax credits issued to them. (DOF)