HOLDERS of value-added tax (VAT) tax credit certificates (TCCs) will be given an option to wait for the end of their validity and monetize them in full or convert them to cash earlier at a discount under government rules on TCC monetization.
Two circulars, one each for the Bureaus of Internal Revenue (BIR) and Bureau of Customs (BOC), were signed by their respective heads and together with the Secretaries of the Department of Finance and Department of Budget and Management, implementing the special provisions on VAT TCC monetization under the General Appropriations Act of 2012.
Under the Joint Circular Nos. 2-2012 and 3-2012, VAT TCCs will need to be first verified and validated by the concerned issuing government agency before a notice of payment schedule (NPS) is provided to the holder. Concerned agencies may be the BIR, BOC, or the One-Stop-Shop Center of the DOF (DOF-OSS).
Upon securing an NPS, â€” a document detailing the taxpayerâ€™s information, refundable amount and TCC maturity dateâ€” holders may then â€œopt to sell the outstanding amounts at a discount to government financial institutions (GFIs)â€ or â€œhold the NPS until its maturity and be paid the full cash value of the TCC in accordance with the specified schedule.â€
â€œWhere a taxpayer opts to monetize his TCC before its maturity date, he shall surrender the NPS to the government financial institutions (GFIs). The GFIs shall give the equivalent refundable amount less the applicable discount,â€ the circulars stated.
Finance Assistant Secretary Ma. Teresa S. Habitan said the department is tapping the Land Bank of the Philippines and Development Bank of the Philippines for the program. â€œIt is now up to them to draft the formula on determining the discount,â€ she said.
Private banks, however, are also welcome to join the effort, she said, since the process of monetizing outstanding TCCs willÂ take until 2016.
DOF data showed there is some P9.9 billion worth of outstanding TCCs dating back to 2001. TCCs issued by the BIR amounted to P3.7 billion, Customs, P875.6 million and OSS, P5.4 billion.
The Circulars provided for a schedule of monetization for TCC holders who would want to get the full cash equivalent of their certificates.
TCCs issued from 2003 and prior years will be monetized in full by the BIR this year, while BOC will monetize in 2012 those issued from 2004 to 2007, the two circulars stated.
Next year, both bureaus will monetize the TCCs issued in 2008, followed by certificates issued in 2009 (by 2014), 2010 (by 2015) and 2011 and 2012 (by 2016).
Choice is however left to the TCC holder on whether or not to monetize the TCC, the circulars stated.
â€œAny holder of a covered TCC who opts not to enrol in the program shall retain the right to credit the TCCs against tax liabilities in accordance with existing rules on TCC utilization,â€ the circulars said.
Habitan said the government will continue to issue TCCs even as it embarks on the monetization program.
â€œTCCs are provided for in the law.Â Now it is up to the taxpayer whether he wants to have a TCC or a cash refund,â€ she explained.
The two circulars will be in effect 15 days after publication.