Law Summary

Introduction

This Executive Order No. 68, issued on March 27, 2012, establishes a monetization program for outstanding Value-Added Tax (VAT) Tax Credit Certificates (TCCs) to provide qualified VAT-registered taxpayers with cash equivalents of their claims.

1. VAT TCC Monetization Program

• Legal Principle: The monetization program aims to convert outstanding VAT TCCs into cash for qualified taxpayers.
• Key Definitions:
  • VAT TCC: A certificate representing tax credits due to VAT-registered persons.
• Requirements/Procedures:
  • Taxpayers can choose to collect:
    • An advance discounted cash value from a trustee bank.
    • The full cash value upon maturity, as determined by the Bureau of Internal Revenue (BIR) or Bureau of Customs (BOC).
• Timeframes:
  • The program is set to run from 2012 to 2016.

2. Coverage

• Legal Principle: The program applies to all outstanding VAT TCCs.
• Requirements:
  • Covers TCCs issued under Section 112 (A) of Republic Act No. 8424 and Section 106 (e) of the Tariff and Customs Code (TCCP).

3. Period of Implementation

• Timeframes:
  • The monetization program will be implemented over five years (2012-2016).
  • Funding will be included in the National Expenditure Program (NEP) for these years.

4. Duties and Responsibilities

• Department of Budget and Management (DBM):
  • Ensure funding is included in the NEP.
  • Release appropriated amounts upon request from the Department of Finance (DOF).
• Department of Finance (DOF):
  • Direct BIR and BOC to verify outstanding VAT TCCs.
  • Provide confirmation letters acknowledging TCCs as obligations of the Republic.
  • Facilitate arrangements with trustee banks and utilize Bureau of Treasury facilities.
• BIR and BOC:
  • Issue Notice of Payment Schedule to TCC holders post-verification.
• Government Financial Institutions (GFIs):
  • Serve as trustee banks and establish special trust accounts for TCC monetization.
• Commission on Audit (COA):
  • Examine all transactions related to the monetization of TCCs.

5. Implementing Rules and Regulations (IRRs)

• Requirements:
  • DBM, DOF, BIR, and BOC are tasked to jointly issue IRRs to facilitate the implementation of the VAT TCC monetization program.

6. Non-issuance of VAT TCCs

• Legal Principle:
  • Beginning in 2012, BIR and BOC will no longer issue VAT TCCs for refunds unless specifically applied for by VAT taxpayers.
• Requirements:
  • Applies to claims under Section 112 (A) of RA 8424 and Section 106 (e) of TCCP.

7. Repealing Clause

• Legal Principle: Any inconsistent orders, rules, or regulations are repealed or modified as necessary.

8. Separability Clause

• Legal Principle: If any provision is declared invalid, the remaining provisions remain in effect.

9. Effectivity Clause

• Timeframes:
  • The Executive Order takes effect immediately upon publication in a newspaper of general circulation.

Key Takeaways

• The Executive Order establishes a monetization program for VAT TCCs to enhance cash flow for VAT-registered taxpayers.
• The program spans from 2012 to 2016, requiring cooperation between various government departments for funding and implementation.
• New restrictions on the issuance of VAT TCCs are introduced to streamline the process.
• Comprehensive duties are assigned to DBM, DOF, BIR, BOC, GFIs, and COA to ensure proper administration and oversight of the program.