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Tax Debit Memos

What are Tax Debit Memos?

A Tax Debit Memo is the legal authority issued by the One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center ( CENTER ) authorizing the utilization of the Tax Credit and Duty Drawback Certificates issued by the Center as payment to customs duties and tax obligations of the holder with the Bureau of Customs or as payment to national internal revenue obligations of the holder with the Bureau of Internal Revenue.

Under the revised guidelines for the processing of Tax Debit Memo as approved by the Executive Committee of the Center on September 28, 1998, a Tax Credit Certificate cannot be utilized as payment to the BOC and the BIR without a duly approved Tax Debit Memo from the Center.

What are the features of a Tax Debit Memo?

Under the revised guidelines, the TDM is now being issued equivalent to the exact amount needed by the claimant as shown by the supporting payment application documents. The Tax Debit Memo has a validity period of thirty (30) calendar days from date of official transmittal to the BOC or release to the claimant's authorized representative for payment to the BIR and is subject to liquidation within forty-five days from date of its release. The validity period of the Tax Debit Memo cannot be extended.

Who are required to apply for the Tax Debit Memo?

All eligible claimants who will be using the Tax Credit and Duty Drawback Certificates issued by the Center under their name and transferred or assigned to their account should apply for Tax Debit Memos for the following purpose:

A.)	Advance and final payment of the customs duties and taxes on importation of raw materials and supplies that would form part of the BOI registered or exported product as well as spare parts or machinery that would be used in the production of the aforementioned product.
B.)	Internal revenue taxes except withholding tax.
C.)	Other charges and fees due to the National Government.

What are the requirements for filing applications for the issuance of a Tax Debit Memo?

Claimants should submit the following requisites:

A.)	Application letter signed by the officer authorized under the claimant's Secretary's Certificate as to authorized company officials to transact with the Center. The same must be written in the company's official letterhead.
B.)	Certified copies of the import and/or other supporting documents showing the details of importation or tax obligations and the computation of the total amount requested. Certification of these documents must be made by the officer authorized under the claimant's Secretary's Certificate to certify documents required by the Center. The following supporting documents are required to be submitted:

For payment of duties and taxes and other fees to the Bureau of Customs:

b.1

Advance Duties and Taxes

Import Entry Declaration (IED)
Pro-forma Invoices

b.2

Final Duties and Taxes

BOC Import Entry and Internal Revenue Declaration (IEIRD)
Broker's estimate of the duties and taxes to be paid
Other appropriate documents

For payments of national taxes, except withholding taxes due to the Bureau of Internal Revenue:

Original or certified copy of the BIR form to be filed including supporting documents, i.e. audited F/S for payment of corporate income tax return for given period, etc.

What are the procedures for filing applications for the Tax Debit Memo?

Claimants should present their application first to the TCC Issuance and Application Division for pre-screening. The pre-screening would determine completeness, acceptability and conformity of the Tax Debit Memo application to existing policies and requirements. The pre-screening, which will be on a "while-you-wait basis", shall be performed upon filing of the application and the result can be obtained immediately after the evaluation. The Center personnel performing the pre-screening shall issue to the claimant's authorized representative a Denial Slip if application is incomplete or with deficiencies. The said deficiency or reason for denial will be indicated in the said slip. A Routing Slip will be issued if the application filed is in order.

TDM applications with attached Routing Slip will be given to the claimant's authorized representative and to be forwarded to the DOF Central Receiving Section located at the Podium for official recording and receipt. The Records Officer receiving the Tax Debit Memo application(s) will affix its signature and indicate the time and date of acceptance on the space provided in the routing slip. The said application will then be forwarded to the TCC Issuance and Application Division for processing and evaluation. Processed Tax Debit Memo applications will be forwarded to the Office of the Deputy Executive Director for recommendation and the Executive Director for final approval. Approved/signed Tax Debit Memos are sent back to the TCC Issuance and Application Division for proper transmittal or release.

TDM applications with attached Denial Slip shall be returned immediately the same day to the claimant's authorized representative who shall sign on the duplicate copy as proof that they have been properly advised on the reason(s) for the denial of their application.

How long is the processing period for the Tax Debit Memo?

The TDM application will be processed within three to four days from date of official receipt.

Are claimants allowed to follow-up status of their Tax Debit Memo application?

Yes, claimants may follow-up the status of their claims with the TCC Issuance and Application Division after three days from official receipt of the application. However, it is mandatory for the TCC Issuance and Application Division to immediately advise claimants as to status of their application on whether it is for denial or for temporary suspension.

What are the usual reasons encountered for the denial or temporary suspension of the Tax Debit Memo application?

Reason(s) for Denial: Non-adherence/ compliance to any of the following:

1.	Tax Credit or Duty Drawback Certificates are to be used in payment of obligations not permitted under existing policies. For BOI firms, these are utilization of TCCs to pay taxes and duties for the importation of raw materials, supplies or equipment not related to their BOI registered activity. For BIR TCs, these will include payment of withholding tax obligations which are not permitted.
2.	Failure to comply with the mandatory annual pre-qualification requirements of the Center as the claimant, after evaluation of the submitted pre-qualification requirement, was found as not qualified to transact business with the Center.
3.	The company officer applying for the issuance of the Tax Debit Memo is not authorized to sign application letter to the Center per Secretary's Certificate as to authorized officers to transact with this Office.
4.	BIR Revenue Memorandum Order No. 86-98. which prohibits the use of BOI Tax Credit Certificates in payment of internal revenue taxes.

Reasons for Temporary Suspension:

1.	Non-submission of the requisites under the annual mandatory pre-qualification of claimants despite repeated notice or follow-up by the Center.
2.	Overdue Tax Debit Memos which remain unliquidated beyond the 45-day period earlier mentioned..

Upon approval of the Tax Debit Memo application, how can the same be used to the BOC or the BIR?

Upon approval of the Tax Debit Memo, a transmittal letter to the BOC or the BIR will be prepared for signature of the Executive Director or the Deputy Executive Director. For Tax Debit Memo to be used in the BOC, the authorized liaison officer of the Center will deliver the signed transmittal letter and the original copies of the approved Tax Debit Memos and Tax Credit Certificates to the Bureau of Customs. The claimant's authorized representative will then be furnished a photocopy of the said transmittal letter as duly received by the BOC. The authorized representative will then present the said receiving copy to the BOC Collection Division to facilitate the payment transaction using the Tax Debit Memo issued.

For Tax Debit Memo issued for BIR purposes, the original copy of the signed transmittal letter together with the photocopy of the approved Tax Debit Memo will be delivered to the BIR by the Center. The original copies of the Tax Debit Memo and the Tax Credit Certificate to be used will be released directly to the claimant's authorized representative. The authorized representative must present the same to the BIR Collection Division for the issuance of another Tax Debit Memo and posting of the approved amount at the back of the TCC before it can be used as payment to its bank or Regional District Office (i.e. mandatory procedure).