Sources of Tax Credit
- Tax credits may arise from:
- Excess quarterly income taxes paid (optional to claim).
- Overwithholding of income taxes not deducted.
- Input taxes from zero-rated or effectively zero-rated sales by VAT-registered persons.
- Input taxes on capital goods imported or purchased locally by VAT-registered taxpayers.
- Unused input taxes due to VAT registration cancellation.
- Excise taxes paid on petroleum products sold to tax-exempt entities and exports.
- Erroneous or illegal tax or penalty payments.
- Taxpayers erroneously registered as VAT persons are excluded from certain input tax credits.
- No tax refund or TCCs shall be issued for tax incentives without actual tax payment.
Uses of Tax Credit Certificate
- TCCs can be used to pay direct internal revenue tax liabilities such as income tax, documentary stamp tax, excise tax, VAT, percentage tax, and other internal revenue taxes.
- TCCs cannot be used for:
- Withholding taxes.
- Tax amnesty payments.
- Excise deposit payments.
- Taxes administered by other agencies.
- Compromise penalty payments.
Assignment or Transfer of TCC
- TCCs are held by taxpayers as owners and may be transferred once with prior approval from the Commissioner or authorized representative.
- Conditions for transfer:
- Verification of TCC validity.
- Transfer limited to one instance.
- Transferee must use the TCC only for direct internal revenue tax liabilities.
- Assignment Procedures include:
- Presentation and verification of TCC.
- Deed of Assignment submitted with original TCC.
- Cancellation of original TCC if partially transferred; issuance of new TCCs representing portions.
- New TCC valid for five years, annotated with "Not valid for further transfer" and "Not valid for cash conversion".
Period of Validity, Conversion and Revalidation
- Validity Period:
- TCC expires if unutilized after 5 years unless revalidated.
- Unused amount after expiry reverts to the National Government's General Fund.
- Conversion:
- Requests for cash refund allowed during validity.
- Original TCC must be surrendered for verification and cancellation.
- Unclaimed refund checks after 5 years are forfeited to government.
- Revalidation:
- Can be done before expiry for TCCs issued before January 1, 1998 within six months prior to the 5th anniversary.
- Application filed with BIR Collection Service or authorized office.
- New TCC issued showing unutilized balance.
- Revalidation subject to no outstanding tax liabilities; any outstanding liabilities are deducted first through TDM issuance.
Repealing Clause
- Revenue Regulations No. 7-98 and other inconsistent issuances are repealed, amended, or modified accordingly.
Effectivity
- The regulations take effect 15 days after publication in a newspaper of general circulation.
- Promulgated on July 19, 2000, signed by Secretary of Finance and Commissioner of Internal Revenue.