Shell posts bond over P7.3-billion tax

MANILA, Philippines - Pilipinas Shell Petroleum Corp. (PSPC) posted yesterday a surety bond with the Court of Tax Appeals (CTA) in connection with its alleged P7.3-billion tax deficiency, which is being claimed by the Bureau of Customs (BOC).

The government, through Solicitor General Alberto Agra, accepted Shell’s offer to post a bond in lieu of cash to secure the claim of the BOC in case the latter gets a favorable court order in its demand for Shell to pay the back taxes.

“With the posting of the surety bond, the BOC shall not seize or hold PSPC’s importations during the pendency of the CTA Case No. 8004 and until the issue on PSPC’s excise tax liability is resolved with finality,” the Office of the Solicitor General said in a letter.

“We would like to express our gratitude to (Finance) Secretary Teves, but most especially to President Arroyo, (Energy) Secretary Angelo Reyes, (Trade) Secretary Peter Favila and Solicitor General Agra, who were instrumental in forging an agreement between the government and Shell that will be implemented during the pendency of the tax case,” Roberto Kanapi, Shell’s vice-president for communications, said.

“The interim arrangement between the government and Shell provided a positive resolution, thus averting a shortage in oil supply that would have adversely affected the public and the economy,” Kanapi added.

Shell earlier said it might be forced to stop its operations if BOC made good its threat to seize the oil firm’s imports to cover the back taxes. Such a scenario, Shell said, would result in a fuel shortage.

Shell was set to announce the schedule of the depletion of its current inventory when the settlement was reached.

Agra said the BOC and the Finance department accepted Shell’s surety bond offer “owing to the undeniable paramount public interest involved.”

Kanapi said that with the posting of the surety bond, Shell would resume importing products and raw materials for its fuel production.

Shell said the CTA would continue to hear the legal merits of the case, particularly the issue of double taxation.

The tax court will also determine if the Catalytic Cracked Gasoline and Light Catalytic Cracked Gasoline are raw materials that should not be subject to excise taxes.