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Acquiring
and Using
Tax Certificates |
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| Office
of Special Concerns |
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Legal
Authority
The
CENTER or the One-Stop Shop Inter-Agency
Tax Credit and Duty Drawback Center is
an office created by virtue of Administrative
Order (AO) 266, dated February 7, 1992,
for the purpose of achieving an orderly
and expeditious system of processing tax
credit and duty drawback claims of exporters.
Its creation aims to enhance the growth
and development of the exporters. Its
mandate is to process tax credit and duty
drawback applications within 30 working
days from the date of acceptance of complete
applications. AO 266 was amended on July
19, 1994 by AO 138, which made the CENTER
a permanent unit of the Department of
Finance. It likewise directed the CENTER
to institute a simplified and harmonized
system of tax credits in order to facilitate
trade and ensure the competitiveness of
the export sector.
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Powers,
Duties and Functions
The
CENTER has the following powers, duties
and functions under Administrative Order
No. 266:
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a)
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To
promulgate the necessary rules and regulations
or guidelines for the effective implementation
of AO 266; |
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b)
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To
accept applications for tax credits
and /or duty drawback and finish evaluation
thereof within (30) working days from
date of acceptance of complete applications;
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| c.) |
To
process claims for tax credits and duty
drawbacks and upon completion, issue
appropriate tax credit and duty drawbacks
certificates; |
| d.) |
To
authorize utilization of tax credit
certificates through the issuance to
tax debit memos in accordance with appropriate
guidelines; |
| e.) |
To
authorize the transfer of tax credit
certificates to other parties subject
to prescribed guidelines thereon; |
| f.) |
To
closely coordinate with the concerned
government agencies for effective and
efficient administration of tax credits
and related systems; |
| g.) |
To
regularly conduct dialogues with private
sector with end view of arriving at
realistic standard usage rates; |
| h.) |
To
adopt and/or revise standard usage rates
on all raw materials and imports used
in exporters motu propio or upon petition
by concerned exporters which shall be
used for computing special tax credits/duty
drawback; |
| i.) |
To
conduct regular post-audit examinations
on tax credit certificates issued using
standard rates; |
| j.) |
To
enforce compliance with tax credit/duty
drawback policy and procedural guidelines;
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| k.) |
To
manage the date processing for the storage
and retrieval of date on tax credit/duty
drawback scheme applications; |
| l.) |
To collect appropriate
fees in connection with the processing
of applications which maybe expended
to enhance its effectiveness and efficiency,
including but not limited to granting
allowances, overtime pays and other
material benefits to its members and
staff;
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| m.) |
To
perform such other functions/duties
as may be necessary or incidental in
the furtherance of the purpose for which
it has been established. |
| n.) |
To
recruit, hire and train the necessary
staff to process and evaluate applications
for tax credit/duty drawback; |
| o.) |
To
perform such other functions/duties
as may be necessary or incidental in
the furtherance of the purpose for which
it has been established. |
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Incentive
Laws Administered
The
following incentive laws are being administered
by the CENTER in the processing of tax credit
claims:
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1.
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Executive Order No.
226 (Omnibus Investments Code of 1987)
which provides a package of incentives
for firms registered with the Board
of Investments (BOI). These incentives
consist, among others, of the following:
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a)
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Tax
credit on raw materials; and |
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b)
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Tax credit
on domestic capital equipment.
*Tax credit
on domestic capital equipment
means the taxes and duties that
would have been waived on the
machinery , equipment, and spare
parts, had these items been
imported.
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2.
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P.D. 1789 (A Decree
to Revise, Amend and Codify the Investment,
Agricultural and Export Incentives
Acts to be known as the Omnibus Investments
Code) as amended by BP 391 (An Act
Declaring the 1983 Investments Incentives
Policy by Modifying the System on
the Grant of Investments Incentives).
BP 391 provides, among others, for
tax credit incentives on net value-earned
and net local content. Net Local
Content means value of export
sales less depreciation of capital
equipment and the value of imported
raw materials and supplies and indigenous
commodities which the Board may exclude
if they are not in anyway available
under clearly more favorable terms
in the international market. Net
Value-Earned means the value of
sales less cost of materials and components,
supplies and utilities and depreciation
of capital equipment.
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3.
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Letter
of Instruction No. 1355 (Providing Incentives
for Internal Exports, also known as
the Order Regalo Program). |
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4.
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Executive
Order No. 765 (Granting Certain Incentives
to Domestic Manufacturers Bidding in
Government Projects Financed out of
Foreign Loans). |
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5.
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Section
106, Tariff and Customs Code of the
Philippines, as amended. |
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6.
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Section 112, National
Internal Revenue Code. In the case
of direct exporter, the CENTER processes
and issues the tax credit certificate
equivalent to the creditable input
tax due or paid, attributable to zero-rated
or effectively zero-rated sales, to
the extent that such input tax has
not been applied against output tax.
The CENTER, however, does not issue
the tax credit certificate on the
import VAT. After initially processing
the import VAT portion, the CENTER
endorses the same to the Bureau of
Customs which issues the tax credit
certificate thereon. For the indirect
exporter, the claim should be filed
with the appropriate BIR Regional
Office.
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7.
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Republic Act 7844 (Export Development
Act of 1994). |
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8.
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Other
Applicable Laws: |
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a)
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RA
7369 (An Act Granting Tax and
Duty Exemption and Tax Credit
on Capital Equipment); |
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b)
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RA
7918 (An Act Amending Article
39, Title III Of Executive Order
No. 226, Otherwise Known As The
Omnibus Investments Code of 1987,
as Amended, and for Other Purposes); |
| c) |
RA
7103 (Iron and Steel Industry
Act); |
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Tax
credit on domestic capital equipment
under Section 9, RA 8479 (An Act
Deregulating the Downstream Oil
Industry, and for Other Purposes);
and |
| e) |
Section
35, RA 8550 (Philippine Fisheries
Code of 1998). |
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to top
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Types
of Tax Credits Issued
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BOI
GROUP
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BOC
GROUP
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BIR
GROUP
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RA 5186, RA 6135,
PD 1789, as amended by BP 391, EO
226
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Section 106 of the
Tariff and Customs Code of the Philippines
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Section 112 of the
National Internal Revenue Code
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Tax
credit on Raw Materials, Supplies
and Semi-manufactured Products - To
pay all kinds of national taxes to
the Government, except withholding
taxes.
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Tax credit on imported
materials - a) Blue TCCs issued to
non-oil users - To pay import duties
and taxes to the Bureau of Customs
only b) White TCCs issued to oil users
- To pay import duties and taxes to
the Bureau of Customs only.
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Tax credit on creditable
input VAT due or paid, attributable
to zero-rated or effectively zero-rated
sales - To pay internal revenue tax,
excluding withholding taxes, for which
the tax payer is directly liable.
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Tax credit on Domestic
Capital Equipment - To pay all kinds
of national taxes to the Government,
except withholding taxes.
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| PD
1789, as amended by BP 391 |
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Tax credit on Net
Local Content/Net Value-Earned - To
pay all kinds of national taxes to
the Government, except withholding
taxes.
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| RA
7844 |
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Tax credit for increase
in export revenues - To pay all kinds
of taxes and duties to the national
government except withholding taxes
and taxes payable to local government
units.
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| EO
765 |
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Tax credit on supplies,
raw materials and semi-manufactured
components used in government projects
- To pay import duties, taxes, charges
and fees due to the national government
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| LOI
1355 |
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Tax credit on supplies,
raw materials and semi-manufactured
components used in the manufacture
of goods considered as internal exports
- To pay all kinds of national taxes
to the Government.
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| RA
7103 |
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Tax credit incentives
similar to those under EO 226
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| RA
8479 |
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| Tax
Credit on Domestic Capital Equipment
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| RA
8550 |
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Tax credit on fuel
consumption of commercial fishing
vessel operators engaged in fishing
in the high seas
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