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End to Shell Tax Row Sought

September 02, 2011 News

European chamber head wants early resolution of the dispute with Customs says issue sending wrong signal to foreign investors.

The European Chamber of Commerce of the Philippines wants the tax row between Pilipinas Shell Petroleum Corp and the Bureau of Customs resolved soon saying the issue may send a wrong signal to foreign investors. 

"ECCP would like to have the issue settled and resolved at the soonest possible time.  We do not want this to become another red Sag for investors who are looking into the country as a possible destination," ECCP president Hubert d' Aboville said in an e-mail Thursday in response to a Manila Standard question.

D'Aboville cited findings by the Bureau of Internal Revenue that the questioned petroleum product, called alkylate, was a raw material. He said an SGS [Philippines] analysis sought by Customs also showed the product did not meet the Philippine National Standards for gasoline.

"The government of President Aquino from the start has sent a very strong message that it will never tolerate corruption and we believe it will make the correct actions in this issue," the ECCP official said.

Batangas Customs collector Juan Tan earlier filed a P1.6-billion case against Shell for allegedly defrauding the government by not paying excise taxes for import shipments of alkylate. 

Shell said in an earlier statement that alkylate was a blending component used to meet PNS criteria for unleaded gasoline.  The Philippine Clean Air Act since 2000 has required more stringent specifications through the PNS.

"Alkylate is not a finished product but an intermediate product thus not subject to excise tax.  However, when the alkylate is further processed into finished unleaded gasoline product that is fit and ready for consumption, the finished product is subject to the payment of excise taxes before the same is released from Shell's refinery.  In other words, no excise tax is lost on the alkylate imports in question," Shell said.

Shell said sampling and testing conducted by SGS Philippines in April through a joint request by both Customs and Shell showed that the alkylate shipment did not meet the PNS specification for gasoline products.

Shell said the BIR which interprets the pertinent provisions of the National Intemaf Revenue Code, authorized the release of the alkylate importations. 

"No excise taxes were paid on the shipments because they were all covered by the [release authority] issued by the BIR which recognized the same to be raw materials and or blending components," it said.


Source: Manila Standard Today; Business; 02 September 2011