BOC, BIR set to start fuel-marking compliance field testing

To ensure that all oil companies are complying with fuel marking, officers of the Bureaus of Customs (BOC) and of Internal Revenue (BIR) will start field testing on April 26.

In a statement on Thursday, the BOC said random field and confirmatory testing would cover diesel, gasoline and kerosene—oil products which since September 2019 were being injected with a chemical marker signifying payment of correct import duties and excise taxes.The BOC and the BIR will check if these products contain the required fuel-marker level.

“The field-testing process will be done using mobile laboratory units equipped with analyzers capable of detecting the official fuel marker’s presence in any fuel sample. The test result will be generated on-site and will indicate a pass or fail result,” the BOC said.

“Products with failed results will be subjected to confirmatory testing in the fuel-testing facility. For purposes of transparency, the owner of the fuel or his representative will be allowed to witness the field and confirmatory testing,” the BOC added.

The BOC said “petroleum products found without the official fuel marker or not containing the required level are subject to payment of duties and taxes, as well as appropriate fines and penalties,” payment of which will be without prejudice to confiscation and forfeiture of diluted or unmarked products on top of possible filing of criminal charges against erring importers and traders.

Rules issued in 2019 mandated the BOC to oversee fuel-marking implementation in depots, tank trucks, vessels, warehouses and fuel-transporting vehicles, while the BIR was in charge of refineries and their attached depots, gasoline stations and retail outlets.

To combat oil smugglingThe BOC, the BIR and the Department of Finance last February piloted field testing and issued its supplemental guidelines.

BOC Assistant Commissioner Vincent Philip Maronilla told the Inquirer back in February that they had yet to encounter any instance of counterfeit fuel markers.

Random field and confirmatory testing was mandated under the Tax Reform for Acceleration and Inclusion Law, which included the fuel-marking program as a tax administration measure to combat oil smuggling and misdeclaration.

Finance Secretary Carlos Dominguez III last year said the increasing tax revenue collection through fuel marking was proof that smuggling was on the decline.

Last Monday, Dominguez said that as of end-March, the BOC and the BIR collected a total of P210.6 billion in import duties and excise taxes from 21.6 billion liters of oil products with the help of fuel marking.

Prior to fuel marking, government estimates had shown foregone revenues from smuggled and misdeclared oil reached over half of actual duties and taxes collected in recent years.