Rules give teeth to BIR, BOC to go after oil smugglers

Two of the country’s biggest revenue agencies have been given powers to run after oil smugglers, per new rules that also allowed easy detection of adulterated fuel.

Joint Circular No. 1-2019 dated July 5 signed by Finance Secretary Carlos Dominguez III, Internal Revenue Commissioner Caesar Dulay and Customs Commissioner Rey Leonardo Guerrero provided the specific guidelines of the fuel marking scheme rolled out by the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) as provided under the Tax Reform for Acceleration and Inclusion Act.

Under the rules, which were published on Friday, “random field testing and confirmatory on the fuel required to be marked shall be conducted to check compliance with the mandatory marking requirement.”

The guidelines empowered the BOC and the BIR with deputization and “police authority” during field testing.

“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 circular read.

The BOC and BIR officers can not only seize the smuggled products but also arrest the unscrupulous traders.

Fuel marking is mandatory on all imported, manufactured and refined diesel, gasoline and kerosene, including those withdrawn from free zones, the joint circular read.

“Only authorized trained specialists by the fuel marking provider can mark the petroleum products. In no instance shall the marker be in the possession of any unauthorized person including depot and refinery personnel,” the guidelines also read.

The Department of Finance had estimated foregone tax revenues due to oil smuggling and misdeclaration reached P26.9 billion in 2016, almost half of the actual collections that year.