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NEWS UPDATES Asean Affairs                       27  August 2011

Philippines customs seeks help in tax evasion case

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The Philippines Bureau of Customs (BOC) has sought the expertise of the Department of Energy to determine whether Pilipinas Shell Petroleum Corp. is liable for the disputed excise tax on its alkylate imports.

In a statement, Customs Commissioner Angelito Alvarez said the agency is not sitting on the case, which involves tax deficiencies worth P1.6 billion.

“The recent controversy surrounding the alkylate importation of Pilipinas Shell boils down to the question as to whether alkylate is an intermediate product and thus not subject to excise tax as claimed by Pilipinas Shell or a finished product, specifically motor gasoline as claimed by the officials of the Port of Batangas,” Alvarez said.

In October last year, the BOC filed smuggling charges against Shell for its alleged tax deficiency of P24 billion, the biggest tax-evasion case filed so far by the bureau.

The Customs chief said the agency sought the expertise of a third-party that can provide a credible and irrefutable certification on the true nature of alkylate.

Both BOC and Shell had contracted SGS Philippines to test a sample of alkylate taken from a shipment of the oil company.

“Unfortunately, the testing certificate issued by Brian Bailey, division manager of SGS Oil, Gas and Chemicals, indicated that the sample did not pass the PNS [Philippine National Standard] for premium plus, premium and regular gasoline on the 10 percent volume recovered distillation test, and on the Octane Number test for premium plus gasoline,” Alvarez said.

This means alkylate is not a finished product.

“We cannot claim taxes when the facts whether alkylate is a finished product or a mere blending component has yet to be determined. Thus, we are seeking the opinion of the Department of Energy to aid us in this matter,” Alvarez said.

“And it does not help that the BIR had effectively recognized alkylate as raw material not subject to excise tax when it issued an individual authority to Release Imported Goods for all the alkylate importations involved in the subject claim,” he said.

Under the Tariff and Customs Code, imports of blending component necessary to manufacture finished oil products that would later on be exported are free from excise tax.

“While these two developments do not seem to support the P1.6 billion claim being recommended by our Batangas Collection District against Pilipinas Shell, we have decided to refer this matter to the Department of Energy for guidance pending the outcome of our own investigation being undertaken by the Run After the Smugglers group,” Alvarez said.

“Rest assured that the course of action we will take on this matter will depend on the preponderance of evidence for or against the P1.6 billion claim,” he said.


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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