Marcos orders abolition of tax credit center

PRESIDENT Ferdinand R. Marcos, Jr. has ordered the abolition of a one-stop shop center that simplified the processing of tax credits, upon the recommendation of Finance Secretary Benjamin E. Diokno who claimed it was “plagued by corruption allegations.”

The functions of the One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS Center), such as processing and issuing tax clearance certificates and duty drawbacks, will be transferred to the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC), according to Administrative Order No. 4, which was signed by Executive Secretary Lucas P. Bersamin on Feb. 20 and released on Wednesday.

Other assets and liabilities of the OSS Center will be transferred to the Department of Finance (DoF).

The center was created through an administrative order signed by the late president Corazon C. Aquino in 1992. It was formed to expedite the processing of tax credits and duty drawbacks under various laws.

“The operations of the OSS Center, which had been plagued by corruption allegations over the years and had been defunct since 2016, is now rightfully under the BIR and the BoC. This will streamline revenue operations and reduce administrative expenses,” Mr. Diokno said in a DoF statement.

A separate Palace statement quoted Mr. Diokno as saying some officials and employees of the OSS Center “have been found to have committed a series of several tax credit scams involving billions of pesos over the years.”

“Its abolition and transfer of functions under the BIR and the BoC are in line with the Marcos Jr. administration’s push to rightsize government. This will streamline revenue operations and reduce administrative expenses,” the DoF chief was quoted as saying.

Mr. Diokno also said the OSS Center had not processed and issued any tax credit certificates since 2016. “It is not practical for the government to provide for its budget every year since it does not perform its functions anymore,” he added.

According to the order, the center’s personnel that would be affected by the move will “receive separation benefits… unless they are appointed to other positions in the government.” 

“[It] is the policy of the National Government to rationalize the functional structures of agencies with complementary mandates and promote coordination efficiency and organization coherence in the bureaucracy,” the order read.

Within 90 working days upon the order’s effectivity, the Finance Secretary “shall fully implement the abolition, including the disposition and transfer of the OSS Center’s functions, personnel and assets as may be necessary.”

Mr. Diokno last year recommended to the President the abolition of the OSS Center “for institutional strengthening, to promote economy, efficiency, and effectiveness in the delivery of public services.”

In 2021, the DoF said the Commission on Audit (CoA) had rejected total of P3 billion in tax credits granted to textile companies from 2008 to 2014. The CoA had found that the OSS Center issued illegal certificates to either ghost exporters or real companies that were not in the export trade.

Tax credit certificates are usually given to exporters registered with the Board of Investments. With these certificates, exporters can get refunds on raw materials taxes they paid by offsetting the tax credits against other taxes due.

However, some companies that illegally obtained tax credit certificates sold them to other companies at a discount, allowing the latter firms to reduce their own tax liabilities. — Kyle Aristophere T. Atienza