Police powers given to BIR, BOC staff

To effectively implement the fuel marking system rolled out last March, personnel of the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) will be granted police powers to inspect any suspected smuggled oil.

“When there is reasonable cause or verified information received that a vessel, tank trucks or similar fuel-transporting vehicle is carrying any unmarked, adulterated or diluted petroleum products, the BOC or BIR officer nearest the vicinity may stop and search the same in line with their authority to search for taxable products under Section 171 of the NIRC [National Internal Revenue Code] and Section 222 of the CMTA [Customs Modernization and Tariff Act],” the draft implementing guidelines of the fuel marking program released by the Department of Finance (DOF) read.

The draft rules will be issued in the form of a joint BOC, BIR and DOF circular this month after it was presented during a public consultation last week.

Under the proposed guidelines, the BIR or BOC officer nearest the vicinity of a fuel manufacturing or refining facility, gasoline stations and other retail outlets, depots, warehouses, buildings or place “may enter and search the same where there is probable cause or verified information that adulterated or diluted fuel are produced or stored therein, pursuant to under Section 171 of the NIRC and Section 219 of the CMTA.”

In all instance, the fuel marking provider must immediately conduct the testing of the petroleum product suspected to be unmarked, adulterated or diluted and proper documentation of the process must at all times be observed, according to the proposed rules.

“Pursuant to Sections 15 and 171 of the NIRC and Section 214 of the CMTA, BIR and BOC officials and personnel may effect the search and seizure of the petroleum products found to be unmarked, adulterated or diluted. All members of the field inspection units are deemed automatically deputized to perform necessary function to effect the search, seizure and arrest related thereto,” it added.

The joint venture of SGS Philippines Inc. and Switzerland-based SICPA SA will implement fuel marking in the country, having earlier bagged a five-year contract.

The two firms will establish and operate a fuel marking system that will supply and inject fuel markers in all taxable oil products, except Jet A-1, Avgas, crude oil and LPG. The venture will also implement and manage a fuel testing program, including fuel analysis and data management nationwide. The contract also requires that the group will transfer the technological know-how to employees of the BOC and the BIR.

SICPA and SGS executives have assured the government that the marker imported from Switzerland could not be faked as it has a unique formulation for the Philippines.

According to the DOF’s previous estimates, revenue losses from excise taxes and value-added tax due to oil smuggling and misdeclaration reached P26.9 billion in 2016, almost half of the actual P52.6 billion collected by the BOC and the BIR that year.

The Manila-based Asian Development Bank had a higher estimate of P37.5 billion in forgone tax revenues yearly from oil smuggling, while another study commissioned by the domestic oil industry pegged revenue losses at P43.8 billion annually.