Transferability and Use of Tax Credit Certificate Issued by the Board of Investments

December 14, 1994 BIR RULING NO. 181-94 E.O. 226 000-00 181-93 Filsyn Corporation 8A-Lepanto Building Paseo de Roxas Makati, Metro Manila Attention: Mr . Antonio H . Roman Senior Vice-President Gentlemen : This refers to your letter dated May 11, 1994 requesting for a ruling on the transferability and use of tax credit certificate issued by the Board of Investments (BOI). cdpr It appears that on June 19, 1992 Tax Credit Certificate No. 005551 in the amount of P12,396,147.00 was issued to Paramount Gloves (Phil.) Incorporated (Paramount); that the certificate was derived from the one issued earlier under B.P. Blg. 391 to the same taxpayer and bears TCC No. 004814 in the amount of P32,876,438.00 dated June 22, 1992; that with the approval of the BOI Paramount transferred said certificate to you on February 3, 1994 as payment of your deliveries of Polyester yarn in the amount of P12,396,147.00; and that on February 23, 1994, BOI similarly approved your transfer of said certificate to Petron Corporation as payment of your purchases of bunker fuel. 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. "Tax credit certificates on net content and on net value earned shall be issued by the Chairman of the Board of 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. prcd Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue