COA disallows P377.3-M in tax credits given to 4 textile firms

The Commission on Audit (COA) issued notices of disallowances (NDs) on P377.29-million worth of tax credits given to four textile firms covering the years 2008 to 2012.

Citing a report from the COA, the Department of Finance (DOF) said the NDs were issued on the tax credits granted by the One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS) to the four textile firms.

The tax credits were granted to Capital-Roll Knit Corp. (CRC) with P40.88 million; Uni-Glory’s Knitting Corp. (UKC) with P15.03 million; Primeknit Manufacturing Corp. (PMC) with P15.76 million; and Tai-Cheng International Resource Inc. (TICIRI) with P20.01 million.

The DOF said this was in addition to the 75 TCCs disallowed by the COA that were  given to CRC on February 21, 2020, covering a combined value of P285.578 million.

According to the DOF, the Special Audits Office of the COA found that the firms' supposed importers reportedly purchased textile materials not registered and accredited with either the Board of Investments (BOI) or the Bureau of Customs (BOC).

The DOF added that there were also no records of importation and payment of the appropriate duties and taxes, and only minimal duties and taxes were paid to the BOC.

Furthermore, the TCCs issued the firms were issued even without the required import documents, proof of payment of duties and taxes, and other forms of certification for the grant of tax credits.

"There was no proof of payment of import taxes and duties by the suppliers; validation of actual exportation by the (OSS); in addition to questionable physical existence (of the companies); and the tax credit granted even exceeded the reported payments by the claimants to the suppliers," the COA report concluded, according to the DOF. — DVM, GMA News