Pilipinas Shell fully pays P3.49B of tax arrears under protest



MANILA, Philippines — Oil giant Pilipinas Shell Petroleum Corp. on Monday paid 3.49 billion pesos in import duties on raw materials, under protest, to retain its customs clearance for the time being.

In a text message, Deputy Customs Commissioner Vincent Philip Maronilla confirmed Pilipinas Shell’s settlement by Monday (January 10) deadline of the second tranche – valued at 1.72 billion pesos – of arrears of ‘taxes incurred at the port of Batangas.

On December 27, the oil company paid the first installment in the amount of 1.77 billion pesos.

The Customs Office (BOC) had warned that it could suspend Pilipinas Shell’s import accreditation if it did not pay the amount in full. With Monday’s payment, Maronilla said there would be no suspension, “at this point.”

Taxes had been imposed on imports of alkylates from Pilipinas Shell, which it used in its oil refinery from 2014 to 2020.

In March 2021, the Supreme Court lifted Pilipinas Shell’s Temporary Ban Order (TRO) against import duties, paving the way for collection by the BOC.

However, the payments to the oil company were made under protest, as the case was referred to the Tax Appeal Court (CTA).

Maronilla said “the protest affair that accompanies [Pilipinas Shell’s] the payment falls under the exclusive competence of the BOC.

“The decision of the Supreme Court, if any, will of course be one of the bases for the resolution of the protest case,” said Maronilla, who is also the spokesperson for the BOC.

In 2020, Pilipinas Shell closed its refinery in Batangas, not thanks to declining margins aggravated by falling domestic demand for oil at the height of the most stringent lockdowns at the start of the COVID-19 pandemic.

Finance Secretary Carlos Dominguez III congratulated the BOC for collecting taxes from Pilipinas Shell. “. Even though it is the subject of protests, I think it is a real step forward, ”Dominguez told Customs Commissioner Rey Leonardo Guerrero in December.

For Dominguez, “the BOC’s decision to demand payment of the tax on imports of Shell alkylates level the playing field, as other oil companies pay the same on their shipments of the product.”

Last year, the BOC collected 645.8 billion pesos in import duties and other taxes, exceeding both its 2021 target and the 2019 tax intake before the pandemic.

In a statement on Monday, BOC said last year’s collections were increased by 1.5 billion pesos in revenue collected through post-clearance audits.

In 2021, the BOC post-clearance audit group issued 349 audit advice letters, increasing the additional revenue from audit activities by a quarter compared to collections in 2020.

The post-clearance audit group, led by Maronilla, could “legally collect more revenue from pending audits from 2019 to 2021,” the BOC said.

The country’s second-largest tax collection agency reported 55 letters of formal notice worth 12.5 billion pesos that had “become final and enforceable for failure of the audited importers to challenge them.”

“These are now referred to BOC’s legal department for filing the necessary collection suit,” he said.

In addition, the BOC raised 555.4 million pesos last year through the public auction of 1,257 containers containing mainly galvanized steel and rice, which had exceeded the length of stay in the ports of the country.

Of the total of 2,407 unused containers last year, the remaining 1,150 containing clothing, furniture, oil and other worthless items, as well as rotten foodstuffs were condemned or destroyed, a indicated the BOC.

In addition to generating additional revenue, the BOC said that “these disposition activities have also effectively facilitated trade by eliminating congestion at ports and stations and ensuring the flow of business within the agency.”

The BOC is expected to generate more than 671.1 billion pesos in taxes this year, a target Guerrero told the investigator was achievable as long as the economy grew by a forecast 7-9% and increased imports by a tenth.


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