Gov't to issue new regulations to curb oil smuggling

MANILA, Philippines - The Aquino administration would soon issue a regulation which would require oil importers to pay their taxes first before the Bureau of Customs can release their fuel products.

In a speech during the 63rd Management Association of the Philippines inaugural Meeting, Finance Secretary Cesar Purisima said the move is a major step toward curbing oil smuggling in the Philippines.

He said that fuel accounts for a major portion of the products smuggled into the country.

As such, he said the Bureau of Internal Revenue (BIR) is set to soon issue a revenue regulation implementing the rule.

“We will require fuel importers to pay tax first. Fuel accounts for a major portion of smuggling. The revenue regulation will be out in the next few weeks. It will not be popular but we’ve taught about it long and hard,” Purisima said.

He also said the Department of Finance, the BIR and the Bureau of the Treasury are now working out the mechanism for implementing the measure.

He expects oil industry players to criticize the measure but said the government is determined to issue the regulation as a means to help address rampant oil smuggling in the country.

“There is substantial smuggling of oil,” Purisima said.

The move may complement other existing anti-oil smuggling measure such as the fuel-marking scheme that has been put in place since 2009.

In October last year, the Department of Energy teamed up with the Departments of Justice and Finance as well as with the National Bureau of Investigation to pool resources and be able to monitor oil prices and rampant smuggling.

According to the Department of Energy, smuggling of oil is estimated at P60 billion.

Estimates of the Bureau of Customs, meanwhile, showed that the government is losing as much as P9.5 billion in potential revenues every year due to rampant smuggling of petroleum products.

Of the amount, P7 billion account for excise tax payments and P2.5 billion for import duties.

Under then Customs Commissioner Angelito Alvarez, the BOC as of 2011 has filed oil smuggling cases against Petronas Energy Philippines Inc., Jetti Petroleum Inc., Pilipinas Shell Petroleum Corp., Phoenix Petroleum Philippines Inc., Cross Country Oil and Petroleum Corp., Oilink International Corp. and Filpride Resources Inc.