Addressing the under-collection and under-utilization of CWT credits of Company X Group of Companies: An action research

• Main Author: Francisco, Paula Mae A.
• Format: text
• Language: English
• Published: Animo Repository 2020
• Subjects: Tax credits
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6227; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/13283/viewcontent/Francisco_PaulaMae_11671637_Addressing_the_Under_Collection_and_Under_Utilization_of__Redacted.pdf
• Institution: De La Salle University

This action research focused on addressing the under-collection and under-utilization of tax credits. Due to the passive approach of the company on collecting and utilizing CWT certificates, the company had lost the opportunity to claim tax credits from 2016 to 2018, amounting to P 25.4M. In the first cycle, the collaborators were able to construct the problem and identify the root causes of the problem using the Ishikawa Cause and Effect. The collaborators also defined the current state of the company and its desired future state, which is 100% collection and utilization of CWT certificates. In analyzing this, we used the principles of opportunity cost and gap analysis. In taking action, the significant step completed by the team was the creation of the work instruction (WI) that serves as a guide for the Tax Unit. After implementing the WI, at the end of the first cycle, the running collection rate is at 47.97%. In the second cycle, the collaborators identified provisions in the initial draft WI that are not feasible, such as imposing a “no CWT certificate, no-issuance of receipt” policy. The second cycle focused on identifying the issue on the policy and improving the WI for it to be sustainable not only for the Tax Unit but for the collectors as well. In this cycle, we also gained the support of higher management, as shown by the inclusion of the CWT certificates compliance as one of the criteria for qualifying for rebates. As a result, in the 2nd cycle, the collection rate of the company is at 96.56%. After the action research, the researcher was able to create a developed framework that discusses the factors to consider in creating an asset management policy specific to tax credits.