BIR commissioner insists Shell liable for back taxes

The Bureau of Internal Revenue (BIR) insists Pilipinas Shell Petroleum Corp. is liable for P7.34 billion in back taxes, amid criticisms of the bureau's flip-flopping stand on the issue. BIR Commissioner Joel Tan-Torres on Wednesday said the oil firm's imports of catalytic cracked gasoline and light catalytic cracked gasoline from 2004 to 2009 are subject to excise taxes. He added that the retroactive imposition of the tax was done by the Customs bureau, which had been deputized by the BIR to collect internal revenue taxes due on imports. "There are legitimate instances when a retroactive imposition of tax can be done and I believe that the Bureau of Customs took this into account when it acted on this matter," Tan-Torres said in a statement. Customs is forcing Pilipinas Shell to pay P7.34 billion in excise taxes on shipments of what the oil firm claims are raw materials. The company, which uses the imports to make unleaded gasoline, has noted that being raw materials, these are not subject to excise tax. It also said it already pays excise taxes on the finished product and Customs' attempt to collect taxes on the same goods constitutes double taxation. But Tan-Torres noted that while the tax agency is conscious of taxpayers' rights, it is also mandated to implement the Tax Code. "When the Tax Code mandates a particular tax treatment, then that should be implemented even if this may be harsh for the affected taxpayers," he added. Shell refused to pay, citing a legal opinion issued in 2004 by then BIR Commissioner Jose Mario Buñag exempting the imports from the tax. Tan-Torres reversed this order last month. Customs has threatened to seize P43 billion worth of assets of Shell in connection with the company's alleged failure to pay the taxes. The Philippine Chamber of Commerce and Industry (PCCI), European Chamber of Commerce in the Philippines (ECCP) and Employers Confederation of the Philippines (ECOP) have questioned the BIR's new ruling and the retroactive tax application. The business groups said the decision sends a negative signal to foreign and local investors who want stable policies. Shell, which controls almost a third of the local oil market, has warned of a supply shortage and the possible shutdown of its Batangas refinery if Customs seizes its raw materials and imported products. — GMANews.TV