Transferability of TCCs Issued by the One-Stop Shop Tax Credit and Duty Drawback Center to BOI-registered Firms

November 23, 1998 BIR RULING NO. 164-98 E.O. 226-000-00-164-98 Pilipinas Shell Petroleum Corporation Shell House, 156 Valero St. Salcedo Village, Makati City Attention: Mr . P . R . Cruz General Manager Treasury and Taxation Gentlemen : This refers to your letter dated July 31, 1997 to the Honorable Antonio P . Belicena , Undersecretary of Finance, Department of Finance Central Bank Bldg., Roxas Blvd., Manila, which was referred to this Office for comment and recommendation relative to the transferability of Tax Credit Certificates (TCC) issued by the One-Stop Shop Tax Credit and Duty Drawback Center to BOI registered firms pursuant to Executive Order No. 226 otherwise known as Omnibus Investments Code of 1987. It is represented that the TCCs transferred to you by some of your customers in payment of their fuel purchases and in turn being used by you in payment of your tax liabilities is being questioned by Atty. Estrella V. Martinez, Assistant Chief, Collections Programs Division of the BIR, since it is in violations of BIR Ruling No. 181-94 dated December 14, 1994. In reply thereto, please be informed that in BIR Ruling No. 181-94 dated December 14, 1994, this Office ruled as follows: "In reply, please be informed that under Rule IX of the Rules and Regulations issued by the Board of Investments to implement P.D. 1789 and B.P. Blg. 391 stating: "Rule IX Transferability of Tax Credit Certificate "Tax Credit Certificates issued for taxes and duties that would have been paid on domestic capital equipment purchased, withholding tax on interest, raw materials used in the manufactured export products shall be issued by the Minister of Finance or his representative upon recommendation of the Board. Said certificate may be transferred only to another registered enterprise in accordance with the Memorandum of Agreement between the Ministry of Finance and the Board of Investments dated October 5, 1982. cd "Tax credit certificates on net local content and on net value earned shall be issued by the Chairman of the Board or his representative and may be transferred only to domestic producers of the raw material and/or component suppliers and may require compliance with local content for such raw material/component." the tax credit certificate issued by the Board of Investments is limited to one transfer by the grantee to its domestic suppliers of raw materials and/or components who are likewise BOI-registered; thus, while you can be the transferee and user of such certificate, you are not allowed to transfer the same to your own supplier, much less to Petron for your purchases of bunker fuel which is neither a raw material nor component of your finished product. Accordingly, your request for a ruling on the unrestricted transferability and use of BOI-issued Tax Credit Certificate and in effect, to allow Petron to use the same as payment of its tax liability is hereby denied for lack of legal basis." aisadc Such being the case, the TCC being issued by the One-Stop Shop Interagency Tax Credit and Duty Drawback Center in accordance with Executive Order No. 226 otherwise known as the Omnibus Investment Act of 1987 to some of your customers can not be transferred to you in payment of the fuel purchases and in turn can not be used by you in payment of your tax liabilities. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue