House body probes Shell on alleged tax liabilities

Pilipinas Shell Petroleum Corp. is under investigation by the House ways and means committee for allegedly defrauding the government P11.271 billion in unpaid excise and valued added taxes (VAT) and penalties on imported unleaded gasoline for more than a year starting in October 2007.

Shell spokesperson Roberto Kanapi denied the allegations, saying that the company imported raw materials for making unleaded gasoline and not the product itself.

“We’re not supposed to pay because excise taxes are paid on finished products,” Kanapi said yesterday.

The ways and means committee started yesterday its investigation into the matter after receiving information from a certain Geronimo Pinar, a taxpayer and private citizen.

In a sworn statement dated Jan. 21 and submitted to the Bureau of Customs (BOC), Pinar said that from October 2007 to December 2008, Shell imported at least 1.6 million barrels of unleaded gasoline or equivalent to 257 million liters covered by 24 import entries.

“However, Pilipinas Shell has not paid any excise tax on the said imported unleaded gasoline,” Pinar said in his statement, a copy of which was furnished the House committee and the Department of Finance.

Pinar cited a provision in the Tax Code of the Philippines which mandates that imported unleaded gasoline is subject to an excise tax of P4.35 per liter.

“In the case of Pilipinas Shell, it is clearly guilty of fraud considering that, for a period of more than one year, it has systematically and deliberately failed to pay the excise tax, as well as the corresponding 12 percent VAT thereon, for each importation of unleaded gasoline which aggregated a total of at least 257 million liters,” Pinar said.

As such, Pinar said that Shell owes the government a total P1.18 billion excise taxes, P134 million in VAT and some P10 billion in penalties for a total of P11.271 billion.

Kanapi maintained that Shell did not have any tax liabilities because the company imported cat-cracked gasoline which it uses in making unleaded gasoline.

He said Shell mixes cat-cracked gasoline with gasoline from the refinery to produce Super Unleaded, the company’s unleaded gasoline brand.

He said the company has paid VAT on this product but not excise tax as this type of tax is only paid on finished product.

Kanapi said the company would explain to the BOC the matter.

“We will write to them,” he said.

Shell, he added, has a legal opinion from the Bureau of Internal Revenue (BIR) saying that the company does not have excise tax liabilities for the importation of cat-cracked gasoline.