BOC tells Shell to pay unpaid taxes by Dec. 10

MANILA, Philippines - Bureau of Customs (BOC) Commissioner Napoleon Morales has given Pilipinas Shell Petroleum Corp. until Dec. 10 to pay P7.3 billion in uncollected excise taxes or have the release of its future shipments of catalyctic cracked gasoline (CCG) put on hold.

Morales said he informed Shell country tax manager Nigel Avila of the BOC’s rejection of the oil firm’s second appeal for more time to pay the P7.3 billion in back taxes, in a letter he signed last Friday.

In its motion for reconsideration, Shell had also requested that the release of its CCG shipments not be put on hold.

The P7.3-billion unpaid excise taxes covered the shipments of unleaded gas declared as CCG from 2004 to 2009. The shipments landed at the Port of Batangas.

“In the light of the foregoing, please be informed that your Motion for Reconsideration is denied for lack of merit and you are hereby ordered to pay, within 10 days from receipt hereof, the P7,348,767,933 (subject to recomputation due to availment of lower specific tax rate before the effectivity of RA 9337 on 15 July 2009) principal liability for your shipments covered by the import entries cited in the demand letters of the District Collector of the Port of Batangas dated 30 January 2009 and 14 September 2009,” Morales said. BOC expects the Shell official concerned to read the letter on Dec. 1.

Morales said he hopes his ultimatum “would force them to pay.”

The BOC badly needs to boost its collection, considering that it is suffering from a P36-billion shortfall in its January to September collection. It has blamed the global economic recession for the collection shortfall.

He told Shell that Section 1508 of the Tariffs and Customs Code of the Philippines authorizes BOC to put on hold the release of future shipments of unleaded gasoline that has been declared as CCG, if the company continues to ignore the payment demand.

Failure of Shell to settle the back taxes would also mean additional expenses for interests, surcharges/penalties and a possible court action.

Morales stressed he is still open to a staggered payment as long as the amount is paid in full on or before Dec. 29, since Dec. 30 and 31 are holidays.

Morales said the BOC has also elevated its conflicting opinion with the Bureau of Internal Revenue (BIR) to the Department of Finance.

The BIR does not consider CCG excisable.

The one-page memorandum Morales gave to DOF Secretary Margarito Teves dated Nov. 26 read: “This is to humbly request that Office for a definitive ruling on the propriety of the continued issuance of the BIR of the Authority to Release Imported Goods (Atrig) for the importation of catalyctic cracked gasoline.” 

“Considering the conflicting positions of the two sister agencies, BIR and the BOC, under that Office’s jurisdiction, the requested intervention and definitive ruling on the matter would certainly assist in the speedy settlement of the issue,” BOC told the DOF.