Gov't flip-flopping stand on Shell will turn off investors — JFC

The Joint Foreign Chambers (JFC) has joined other business leaders who have criticized the government for its flip-flopping stance on Pilipinas Shell Petroleum Corp.'s alleged P7.3-billion tax deficiency. In a letter to Finance Secretary Margarito B. Teves dated February 1, the umbrella group that represents foreign investor interest here, said the policy reversal could turn off investors. The chamber also said the Bureau of Customs threat to confiscate future oil shipments of the company, which endangers local oil supply should be reviewed. "The JFC organizations and their members trust that this severe issue — affecting the environment in which business is done in this country — can be resolved fairly," the JFC told Teves. "We are watching the dispute between the government and Pilipinas Shell with deep concern," the group said, adding that the state's alleged double taxation undermines its efforts to encourage manufacturing investments in the Philippines. Bureau of Internal Revenue (BIR) Commissioner Joel Tan-Torres insists Pilipinas Shell is liable for P7.34 billion in back taxes, a reversal of the stand of a former BIR chief. Tan-Torres 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. Customs is forcing Pilipinas Shell to pay P7.34 billion in excise taxes on shipments of what the oil firm claims are raw materials for which duties had been paid. The firm, which uses the imports to make unleaded gasoline, had noted that being raw materials, these are not subject to excise tax. But Tan-Torres said that while the tax agency is conscious of taxpayers' rights, it is also mandated to implement the Tax Code. Legal opinion Shell refuses 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