Tax Credit Certificate
Tax Credit Certificate
the transfer of a valid TCC must be with prior approval of the Commissioner or his duly
authorized representative;
the transfer should be limited to one transfer only; and
the transferee shall use the TCC assigned to him strictly in payment of his direct internal revenue
tax liability and in no case shall the same be available for conversion to cash in his hands.
In practice, transfers or assignment of TCCs has been an industry for quite a time. The grantee
normally would transfer the same at a discount of say 10% to 15% because it is after the cash it
could generate and make use in its operations. For the buyer or transferee, it is after the gain on
the discount because it will utilize every peso of TCC with a lesser cost so it would benefit on the
discount. The broker then, would earn a professional fee out of the completed transactions. In
this instance, taxable gains and income are being realized, and a deductible loss is likewise
incurred.
For the government, the use of TCCs would reduce cash collections because transferring the
TCCs to taxpayers with much tax liabilities would maximize the use of the same thereby
negatively affecting collections. Without transferring, grantees without much direct liabilities
would tend to consume the TCC's in a long period of time. To my mind, this scenario prompted
the
BIR
to
issue
the
new
regulations,
disallowing
its
transfer.
Thus, in Section 2 Revenue Regulations No. 14-2011 dated July 29, 2011 amended Section 4 of
the
RR
No.
5-00
and
hereunder
provides
that:
"All Tax Credit Certificates (TCCs) issued by the BIR shall not be allowed to be transferred or
assigned to any person"
Accordingly, grantees of the TCC would themselves use the TCCs. Without much direct
liabilities, it would take them quite a long time to consume unless they could eye on some
alternative tax minimization schemes in accordance with law.