Business groups fault policy inconsistency in Shell tax row

Two more business groups on Wednesday questioned the government’s bid to collect back taxes from Pilipinas Shell Petroleum Corp., citing the case as another example of inconsistent policy that would turn off investors. In a joint statement, the Management Association of the Philippines (MAP) and Financial Executives Institute of the Philippines (FINEX) urged President Gloria Macapagal-Arroyo to resolve the tax dispute lest the country’s attractiveness be sullied further. The Court of Tax Appeals early this month ordered Pilipinas Shell to pay P7.35 billion in back taxes after the Bureau of Internal Revenue reversed its stance and sided with the Bureau of Customs on the issue. Pilipinas Shell, the agencies said, should be paying duties on its imports of cracked gasoline and light catalytic cracked gasoline on top of the excise tax it already pays. Customs went on to threaten Shell that it would seize its imports unless it settled its tax deficiency. The oil firm since then has offered to post a surety bond with the Court of Tax Appeals to cover the back taxes while a final court decision is pending. Despite the ceasefire between the two camps, two business groups expressed concern over the alleged instability in government policies. "We cannot understand the retroactive application of the ruling as it sets a dangerous precedent that will discourage investments and investors," the MAP and FINEX said. "There’s no way an investor can calculate risks associated with abrupt changes in government policies. He is not going to invest in a country with an inconsistent and uncertain regulatory climate. He will just go elsewhere," they added. "We ask the President to immediately step in and resolve this issue, which seriously questions the government’s sincerity in promoting a favorable business environment in our country. The damage to the image of the country cannot be underestimated if this anomalous situation continues," the groups said. Other business groups — the Joint Foreign Chambers, Philippine Chamber of Commerce and Industry and Employers Confederation of the Philippines — have likewise hit government’s handling of the tax dispute. — Jessica Anne D. Hermosa, BusinessWorld