MANILA, Philippines – The Bureau of Internal Revenue (BIR) has issued a new revenue regulation that will slap excise and value-added tax on petroleum products entering the Philippines through the different economic zones.
The new measure seeks to curb the problem of oil smuggling, which authorities have said are rampant in Freeport zones. These economic zones are areas that provide tax-free privileges and other incentives to locators to entice them to set-up shops in the Philippines.
However, some oil smugglers have used the economic zones as route for their illegal activities by using the tax-free privileges in these areas.
As such, the BIR issued Revenue Regulation 2-2012 which prescribes new rules on the tax treatment of petroleum and petroleum imported into the Philippines through Freeport and economic zones.
The BIR said oil importers have to pay taxes first and those that are indeed tax-exempt can file for a refund.
According to the measure, petroleum products that will be exported or sold to economic zone locators shall be tax-exempt.
“(T)he importer may file a claim for credit or refund with the Bureau of Customs (BOC),” the BIR regulation said.
The move is meant to ensure that entities that import oil do not abuse the tax-free privileges in economic zones by taking this route but selling their products in the domestic market.
For those that will not be exported or sold to economic zone locators, the importers must pay the proper duties.
“For each and every importation of petroleum and petroleum products, the importer thereof shall secure the prescribe ATRIG or Authority to Release Imported Goods from the BIR’s Excise Tax Regulatory Division and pay the VAT and excise taxes, as computed, before the release thereof from the BOC’s custody,” the BIR said in its regulation dated Feb. 20.
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.