Deadline looms for P3.5-B Customs-Shell tax dispute

Bureau of Customs. (File photo from Philippine Daily Inquirer)

The Bureau of Customs (BOC) has warned it can suspend Pilipinas Shell Petroleum Corp.’s import accreditation if the company won’t pay the back taxes due before this year ends, following a recent High Court decision lifting a previous stop order.

Customs Commissioner Rey Leonardo Guerrero recently wrote Pilipinas Shell president and chief executive Lorelei Osial that “the possible suspension of the oil firm’s accreditation in case it fails to pay the taxes was not whimsically raised nor is the same a threat, but rather a proper recourse of the [BOC] pursuant to existing rules and regulations,” the Department of Finance (DOF) said in a statement on Saturday.

Supreme Court decision

Supreme Court of the Philippines. FILE PHOTO

Guerrero also pointed to the Supreme Court’s dissolution on March of the temporary restraining order, which had delayed the settlement of P3.49 billion in excise taxes and 12-percent value-added tax (VAT) slapped on Pilipinas Shell’s alkylate imports, which it used in its petroleum refinery from 2014 to 2020. Last year, Pilipinas Shell closed its refining facility in Batangas as the COVID-19 pandemic further aggravated declining margins.

Last week, Pilipinas Shell said it would pay the BOC, but under protest.

In response, Guerrero said in his letter that the BOC “was recognizing the oil firm’s intent to pay the back taxes.” He ordered Pilipinas Shell to shell out its initial payment on or before Dec. 27 of this year.

BOC warning

“In the event of default for the payment as agreed upon, the suspension of the accreditation of [Pilipinas Shell] shall be forthwith imposed subject to existing rules and regulations, and without prejudice to any other available administrative and judicial remedies, which the BOC may exercise,” the Customs chief warned.

Finance Secretary Carlos Dominguez III had commended the BOC for pursuing 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 Guerrero during a recent meeting.

“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,” Dominguez said.