Pilipinas Shell fully pays P3.49B in back taxes under protest

Shell

MANILA, Philippines—Oil giant Pilipinas Shell Petroleum Corp. on Monday fully paid P3.49-billion in dues from raw material imports, under protest, to retain its Customs accreditation for now.

In a text message, Customs Assistant Commissioner Vincent Philip Maronilla confirmed Pilipinas Shell’s settlement at Monday’s (Jan. 10) deadline of the second tranche—worth P1.72 billion—of back taxes incurred at the Port of Batangas.

Last Dec. 27, the oil firm paid the first tranche amounting to P1.77 billion.

The Bureau of Customs (BOC) had warned it may suspend Pilipinas Shell’s import accreditation if it failed to pay the amount in full. With Monday’s payment, Maronilla said there will be no suspension, “at this point.”

The taxes had been slapped on Pilipinas Shell’s alkylate imports, which it used in its petroleum refinery from 2014 to 2020.

In March 2021, the Supreme Court lifted Pilipinas Shell’s temporary restraining order (TRO) against the import duties, paving the way for the BOC’s collection.

However, the oil firm’s payments had been made under protest, as the case was remanded to the Court of Tax Appeals (CTA).

Maronilla said “the protest case that accompanies [Pilipinas Shell’s] payment is within the exclusive jurisdiction of the BOC.”

“The decision of the Supreme Court, if applicable, of course, will be one of the basis in resolving the protest case,” said Maronilla, who’s also the BOC’s spokesperson.

In 2020, Pilipinas Shell closed its refinery facility in Batangas, no thanks to dropping margins aggravated by lower domestic oil demand at the height of the most stringent lockdowns at the onset of the COVID-19 pandemic.

Finance Secretary Carlos Dominguez III had commended the BOC for collecting Pilipinas Shell’s tax dues. “Congratulations on collecting the tax on the alkylate imports. Even though it’s under protest, I think it’s a real move forward,” Dominguez told Customs Commissioner Rey Leonardo Guerrero in December.

For Dominguez, “the BOC’s move to demand tax payments on Shell’s alkylate imports levels the playing field as other oil companies have been paying the same on their shipments of the product.”

The BOC last year collected P645.8 billion in import duties and other taxes, surpassing both its 2021 goal and 2019 tax take before the pandemic.

In a statement on Monday, the BOC said last year’s collections were boosted by P1.5 billion in revenues collected through post-clearance audits.

The BOC’s post-clearance audit group in 2021 issued 349 audit notice letters, which helped jack up additional revenues from audit activities by a fourth compared with 2020 collections.

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

The country’s second-largest tax-collection agency pointed to 55 demand letters worth P12.5 billion which had “become final and executory for failure of the audited importers to contest the same.”

“These are now being referred to the BOC legal service for filing of the necessary collection suit,” it said.

Also, the BOC raised P555.4 million last year from the public auction of 1,257 containers containing mostly galvanized steel and rice, which had been overstaying at the country’s ports.

Out of the total of 2,407 overstaying containers disposed of last year, the remaining 1,150 containing used clothing, furniture, oil and other value-less articles, as well as rotten foodstuff were condemned or destroyed, the BOC said.

On top of raising additional revenues, the BOC said “these disposition activities also resulted in the efficient trade facilitation by eliminating port and yard congestion, and ensuring the smooth flow of business within the agency.”

The BOC must generate a larger P671.1 billion in taxes this year, a target which Guerrero told the Inquirer was attainable as long as the economy grew by the projected 7 to 9 percent and increased imports by a tenth.

TSB