REPUBLIC OF THE PHILIPPINES
Department of Finance
Department of Budget and Management
Department of Trade and Industry-Board of Investments
DOF – DBM – DTI-BOI JOINT ADMINISTRATIVE ORDER No. 01 – 2015
November 16, 2015
SUBJECT: GUIDELINES FOR THE TAX PAYMENT CERTIFICATE MECHANISM TO IMPLEMENT THE FISCAL SUPPORT FOR THE COMPREHENSIVE AUTOMOTIVE RESURGENCE STRATEGY (CARS) PROGRAM UNDER EXECUTIVE ORDER NO. 182, SERIES OF 2015
Pursuant to Section 13 of Executive Order No. 182, series of 2015, the Department of Trade and Industry-Board of Investments (DTI-BOI), Department of Budget and Management (DBM), and Department of Finance (DOF) are mandated to promulgate an efficient and effective Tax Payment Certificate (TPC) mechanism to implement the fiscal support incentive of the CARS Program. This Joint Administrative Order is hereby prescribed for the compliance, information, and guidance of all concerned agencies.
1.1 To prescribe the mechanism of providing fiscal support for the following activities in the manufacture of four-wheeled motor vehicles of three (3) enrolled models under the CARS Program:
A. Production of the enrolled Models;
B. Manufacture of Body Shell Assembly and Large Plastic Assemblies of the Model;
C. Manufacture of Common Parts and Strategic Parts not currently produced in the country at Original Equipment Manufacturer (OEM) standards of the Model/s; and
D. Shared Testing Facility for vehicles and/or parts.
1.2 To define the roles and responsibilities of the agencies concerned with the implementation of the TPC mechanism.
2.0. DEFINITION OF TERMS
For the purpose of this Order, the following terms shall mean:
2.1 Investment Project (IP) refers to eligible projects under 1.1. (B), (C) and (D) hereof that will avail of Fixed Investment Support (FIS).
2.2 Participating Car Maker Incentive Account (PCMIA) refers to an account created by the DTI-BOI to track the crediting and disbursements foreach Participating Car Maker (PCM) against the approved fiscal support. All availments of fiscal support, whether for FIS or Production Volume Incentive (PVI), will be in the name of the PCM.
2.3 Registered Participants refer to PCMs, parts makers and shared testing service providers registered under the CARS Program.
2.4.Tax Payment Certificate (TPC) refers to a non-transferrable certificate, which shall be used to defray the tax and duty obligations of the PCM to the National Government.The tax and duty obligations are excise tax, income tax, import duties, and Value Added Tax (VAT) only, and shall not include any type of withholding taxes.
3.0 GENERAL GUIDELINES
3.1 The total fiscal support for the CARS Program, as authorized under the GAA, shall not exceed Twenty Seven Billion Pesos (P27 Billion), with each qualified and enrolled Model allocated an amount not exceeding Nine Billion Pesos (P9 Billion). This shall be divided into two (2) categories, availment of which shall be evidenced by non-transferrable TPCs:
3.1.1 Fixed Investment Support (FIS) – shall not exceed Forty Percent (40%) of the total fiscal support, provided that in cases of Parts and Shared Testing Facility, the FIS shall not exceed 40% of the capital expenditure for tooling and equipment to manufacture the parts, including training costs for the start-up operation for the use thereof; and
3.1.2 Production Volume Incentive (PVI) – shall not exceed Sixty Percent (60%) of the total fiscal support.
3.2 All availments of fiscal support, whether for FIS or PVI, will be in the name of the PCM. The DTI-BOI shall set up a PCMIA for each model to track the crediting and disbursements against the approved fiscal support.
3.3 The TPCs to be issued by DTI-BOI shall be used by the PCM to defray its taxes and duties payable to the National Government.The taxes and duties refer to excise tax, income tax, import duties, and Value Added Tax (VAT) only, and shall not include any type of withholding taxes.
3.4 The total availment of fiscal support for the year should be limited to the amount appropriated for the year.
3.5 Registered Participants under the CARS Program shall not be allowed to register their activity under any other program granting incentives as a condition for TPC availment.
4.0 ROLES AND RESPONSIBILITIES
4.1 DEPARTMENT OF BUDGET AND MANAGEMENT (DBM)
4.1.1 The DBM shall evaluate and include in the National Expenditure Program, the annual requirements for the CARS Program as proposed by DTI-BOI, subject to budgeting laws, rules and regulations.
4.1.2 The DBM shall comprehensively release to the DTI-BOI the amount appropriated for the fiscal support of the CARS Program, including the operating requirements of the Project Management Office (PMO), through the General Appropriations Act (GAA) as Release Document (GAARD) subject to the complete submission of all accomplished applicable Budget Preparation (BP) Forms. Otherwise, the DBM shall release the funds through Special Allotment Release Order (SARO). There shall be no need for issuance of the corresponding cash disbursement authority for the fiscal support.
4.2 DEPARTMENT OF TRADE AND INDUSTRY- BOARD OF INVESTMENTS (DTI – BOI)
4.2.1 The DTI-BOI shall include in its budget proposal the estimated requirements for the CARS Program.
4.2.2 Upon receipt of the duly validated request for fiscal support availment from the PCM, the DTI-BOI shall obligate the corresponding amount approved for the issuance of the TPC against the available allotments released through GAARD/SARO.
4.2.3 The DTI-BOI shall devise the TPC Forms with appropriate security features, in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), and generate the serial or control numbers for the said Form.
4.2.4 The DTI-BOI shall issue TPCs in quadruplicate covering the specified tax and duty obligations of the PCMs to be distributed as follows:
- 1st copy to be given to the PCM;
- 2nd copy to the BIR or BOC;
- 3rd copy to the Bureau of the Treasury (BTr); and
- 4th copy to be retained by the DTI-BOI.
The DTI-BOI shall establish an online facility that will allow BIR, BOC and BTr to view and validate the TPCs issued by DTI-BOI.
4.2.5 The DTI-BOI shall reinstate the TPC credit amount in the PCMIA provided that it is in accordance with the provisions of 6.4 and 6.7 hereof.
4.2.6 The DTI-BOI shall submit to the DBM periodic reports on the totalamount of TPCs issued and utilized using prescribed Financial Accountability Reports (FARs). Actual fund utilization for the CARS Program shall be presented separately under FAR 1 (Statement of Appropriations, Allotments, Obligations, Disbursements and Balances) and FAR 4 (Monthly Report of Disbursement).
4.3 DEPARTMENT OF FINANCE (DOF)
The DOF shall oversee the acts of its Bureaus as enumerated below:
4.3.1 BIR and BOC
22.214.171.124 The BIR and BOC shall recognize and accept the TPCs issued by the DTI-BOI as tax/duty payment upon verification and validation against their records.
126.96.36.199 As may be necessary, the BIR and BOC shall issue the appropriate administrative issuances for the processing of the TPC transactions.
188.8.131.52 The BIR and BOC shall record the TPC transaction amount as part of their revenue collection.
184.108.40.206 The BIR and BOC shall submit monthly to the BTr a list of TPCs reported as part of the revenue collection.
4.3.2 Bureau of Treasury shall recognize and record the TPC transactions as revenue collections from BIR or BOC. Similarly, the TPC transactions shall also be recorded by BTr as expense.
5.0 AVAILMENT PROCESS
A. FIXED INVESTMENT SUPPORT (FIS)
5.1 FIS Availment: Crediting. Refer to Annex “A”.
5.1.1 The PCMs and their Suppliers shall implement their Program milestones in accordance with the provisions reflected in the FIS Registry of approved IPs.
5.1.2 The PCMs and their Suppliers shall submit regular IP status reports. The PCM shall be responsible for reviewing and endorsing the IP Status Reports to the DTI-BOI.
5.1.3 The Inter-agency Committee (IAC) shall regularly conduct status review meetings to validate submitted status reports.
5.1.4 For FIS availment crediting purposes, completion of IPs shall be evidenced by the actual use of the Parts and Assemblies on vehiclessold by the PCM on the Model. Upon issuance of wholesale invoice to dealer of the first unit, the PCM and their Suppliers may then request for FIS for completed IPs. The formal request for FIS of the PCM will be submitted to the IAC and the DTI-BOI.
5.1.5 An audit of the completed IPs of the PCMs and their Suppliers shall be conducted and a formal audit report shall be submitted to the DTI-BOI.
5.1.6 Upon review of the audit report, the DTI-BOI will confirm if PCMs and their Suppliers are eligible for FIS credit for completed IPs. In case of non-compliance with IP requirements, the PCMs and their Suppliers are required to address all audit findings first.
5.1.7 If the audit findings are found by the DTI-BOI to be in order as provided for in the preceding paragraph, FIS for the completed IPs are to be credited to the PCM’s Incentives Account.
B. PRODUCTION VOLUME INCENTIVE (PVI)
5.2 PVI Availment: Eligibility Certification. Refer to Annex “B”
5.2.1 The PCMs shall submit monthly production and parts importation and cubic data reports to the DTI-BOI.
5.2.2 To monitor the status of Program milestones, the IAC shall review the monthly PCM reports.
5.2.3 The PCM may request certification for PVI eligibility upon compliance with the criteria provided in Section 10 of EO182, Series of 2015.
5.2.4 An audit on the PVI eligibility of the PCMs shall be conducted and a formal audit reportshall be submitted to the DTI-BOI.
5.2.5 Once it determines that the PCM is eligible for PVI certification, the DTI-BOI shall issue a Certificate of PVI Eligibility (CPVIE) to the PCM. In case the DTI-BOI determines otherwise, the PCM shall be given an opportunity to address the audit findings and accordingly take appropriate measures within a reasonable period.
5.3 PVI Availment: Crediting. Refer to Annex “C”
5.3.1 In the course of the regular production of its Model, the PCM shall submit monthly production parts importation data and cubic data reports to the DTI-BOI.
5.3.2 The IAC shall regularly conduct status review meetings and plant visits to validate submitted status reports.
5.3.3 At the end of each fiscal year, the PCM may request the DTI-BOI for PVI credit for its production of the Model for the year.
5.3.4 The production volume and Logistics Efficiency Index (LEI) of the PCM shall be determined and a report submitted to the DTI-BOI.
5.3.5 On the basis of the production volume and LEI report, the DTI-BOI will determine the PCM’s eligibility for PVI and credit the same to the PCM’s Incentives Account, as the case may be. The PCM shall be given an opportunity to address any adverse audit findings and accordingly take appropriate measures within a reasonable period.
6.0 TAX PAYMENT CERTIFICATE ISSUANCE. Refer to Annex “D”
6.1 In the course of the PCM’s operations, it will incur liabilities for excise tax, income tax, import duties, and Value Added Tax (VAT). The PCM may request DTI-BOI for the issuance of a TPC to defray their liabilities with BIR or BOC, partially or wholly. The request shall include details of the PCM’s FIS and PVI entitlements, and the liabilities to which the TPC shall be applied.
6.2 Subject to sufficiency of the balance of the PCMIA and determination of the PCM’s eligibility for FIS and PVI entitlements, DTI-BOI shall issue the TPCs.
6.3 The PCM shall request DTI-BOI for the issuance of TPC based on the statutory deadlines for payment of tax and/or duty.
6.4 The TPCs shall have a validity period of only thirty (30) days counted from date of issue, and can only be used once; thus, it has to be presented immediately to either BIR or BOC for payment. The date indicated on the face of the TPC shall be presumed to be the date of issuance.
6.5 The BIR and BOC shall recognize and accept the TPC as payment of the tax and duty obligation indicated in the TPC, subject to verification of the copies of the TPC being presented for payment.
6.6 The BTr shall recognize and record the TPC transaction as revenue collection of BIR and/or BOC corresponding to the period reported by BIR and/or BOC as their revenue collection which is reckoned upon presentation of the TPC for payment.
6.7 In the event that a TPC is not presented or utilized for tax payment to BIR and/or BOC, the PCM should immediately surrender and return the original copy of the TPC to DTI-BOI for reinstatement in the PCMIA, provided that the surrender thereof was made within the validity period of the TPC; otherwise the same shall be forfeited in favor of the government.
6.8 The DTI-BOI shall regularly update the PCMIA. Further, the DTI-BOI shall regularly update the online facility of all TPC issuances, cancellations or reinstatements for purposes of online validation by BIR, BOC and BTr.
7.0 FINAL PROVISIONS
7.1 Review.This Order shall be reviewed, when necessary, by the inter-agency body composed of the DTI-BOI, DBM and DOF. Such review may include assessment, modification or updating of relevant provisions arising from the implementation of this Order.
7.2 Repealing Clause.All administrative orders or parts thereof, which are inconsistent with this Order, are hereby revoked, amended, or modified accordingly.
7.3 Separability Clause. If any provision of this Order is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.
7.4 Effectivity. This Order shall take effect fifteen (15) days following its publication in a newspaper of general circulation and filing of three (3) copies hereof with the Office of the National Administrative Register (ONAR) University of the Philippines (UP) Law Center, Diliman, Quezon City pursuant to Presidential Memorandum Circular No. 11 dated 09 October 1992.
APPROVED, November 16, 2015.
|CESAR V. PURISIMA||FLORENCIO B. ABAD||GREGORY L. DOMINGO|
|Department of Finance||Department of Budget and Management||Department of Trade and Industry|
|KIM S. JACINTO HENARES||ADRIAN S. CRISTOBAL JR.|
|Bureau of Internal Revenue||Board of Investments|
|ROBERTO B. TAN|
|Bureau of Treasury|
|AGATON TEODORO O. UVERO|
|Bureau of Customs|