Pilipinas Shell, Customs fail to resolve tax row

Efforts to resolve the multibillion tax row between Pilipinas Shell Petroleum Corp. and the Bureau of Customs failed yesterday, with both parties refusing to compromise. The Energy department will again try to end the dispute today, when a temporary restraining order against Custom's plan to seize Pilipinas Shell shipments to cover for the supposed tax deficiencies lapses. "I was hoping that this matter will be resolved as a tax issue but it is now on the verge of becoming a supply issue," Energy Secretary Angelo T. Reyes, who called the meeting between Pilipinas Shell and Customs on Monday, told a briefing. Customs wants Pilipinas Shell to pay P7.3 billion in excise taxes for 2004 to 2009 on imports of catalytic cracked gasoline and light catalytic cracked gasoline. Including interest and other penalties, Pilipinas Shell said the amount could balloon to P43 billion. Pilipinas Shell is contending that Customs' demand meant double taxation since it had paid duties to the Bureau of Internal Revenue. It also said the products are exempted from excise tax since these are raw materials. Customs treats them as finished products. Reyes declined to say what the government would do once the situation leads to a fuel shortage. "We will address that problem when it occurs. It is speculative and I don't expect that to happen now," he said. Pilipinas Shell Country Chairman Edgardo O. Chua said three compromise options were being explored with Customs, but refused to elaborate. "We thought we could get something agreed today. Unfortunately that is not to be. There is still no meeting of the minds but it's a work in progress. We hope to have something sorted out by tomorrow," Chua said. Customs Deputy Commissioner Reynaldo S. Nicolas said the only mode of payment is through cash. "Bonds are not accepted modes of payment. The preferred mode of payment is through cash, although we can accept tax credit certificates," Nicolas said. — Jose Bimbo F. Santos, BusinessWorld