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Methods of Oil Smuggling

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1)      Outright smuggling

Outright smuggling is done by bringing petroleum into the country without duly reporting the shipments to customs officials.

The following are the major forms of outright smuggling:

·High Seas Smuggling. High seas smuggling occurs mostly in the high seas where officials have no jurisdiction. Fuel products usually come from nearby countries, where petroleum prices are much lower due to government subsidies. Smaller ships withdraw fuel from the mother ship for delivery to customers. These will then be resold in the country.

·Direct smuggling. Some oil players actually bring in vessels, dock in small ports, and discharge the fuel directly to waiting tank trucks who then deliver to service stations.  Not only is this illegal but is likewise a dangerous form of discharging fuel products.

·Exclusive Economic Zones (EEZs).  EEZs grant exporters tax-free importation of petroleum products as long as the products are used within the zone or are reexported. Some firms, however, use this privilege to import tax-free petroleum products and then smuggle these out of EEZs.

2) Technical smuggling

Technical smuggling is done through a number of ways, but all generally entails the use of tampered or counterfeit cargo documents.

·Lower declared value. Some importers declare value for their shipments thus paying lower VAT and excise taxes (for gasoline P4.35/li and Jet A-1 3.67/li).  This is done through fake or tampered invoices.

·Lower declared volume. Some importers declare lower shipment volumes for petroleum products which result in nonpayment of taxes for undeclared volumes.

·Misdeclaration of imports. Some importers misdeclare their shipments to avoid paying taxes. For instance, gasoline is misdeclared as diesel to avoid paying the specific tax of P4.35 per liter.


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Tags: Exclusive Economic Zones (EEZs) , oil smuggling , Smuggling

  • JasonBieber

    The main method of smuggling oil or the theory behind it is to do it all as much as you can under the unwatchful eye of the PNoy Administration. It’s been said over and over again without real refute that indeed smuggling under PNoy has been pretty terrible to say the least.

  • ARIKUTIK

    Basta ka KKK ay OK lang mag corrupt. Daang Tuwad ni Penoy.

  • xpider07

    Problema ito ng lahat ng mama-mayang Pilipino. Let’s put our best ideas to work to drastically lessen smuggling. If the best idea is to overhaul the system at BOC, so be it. And every year there should be a review of the system, take out the ones that don’t work.



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