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Tax court accepts Shell’s surety bond in P7-B excise tax dispute


The Court of Tax Appeals has allowed Pilipinas Shell Petroleum Corp. to post a surety bond to cover P7.35 billion in supposed tax liabilities while the tax dispute is pending. This effectively ends government moves to seize Pilipinas Shell’s fuel imports. In a four-page decision penned by Presiding Justice Ernesto D. Acosta, the tax court said “[the government is] enjoined until the case is finally decided, resolved or terminated, from undertaking any actions under Section 1508 of the Tariff and Customs Code of the Philippines and/or from all remedies to collect from petitioner the excise taxes and [value-added tax], with increments, subject of the case." Last Feb. 9, the tax court did not extend the stay order sought by Pilipinas Shell to prevent the Bureau of Customs from seizing its fuel imports. This would have allowed Customs to seize the oil firm’s shipments, but the government eventually agreed to let Pilipinas Shell to post a bond instead of shelling out cash for an escrow account. The tax court later received an acknowledgment from the Office of the Solicitor-General that it was no longer objecting to the bond. A surety bond is a security of sorts for the alleged tax deficiency while Pilipinas Shell and the government wait for a final decision from the tax court. The dispute involves importations of catalytic cracked gasoline and light catalytic cracked gasoline from 2004 to 2009 which Pilipinas Shell claims are raw materials not subject to excise taxes. But the government maintains the shipments were misdeclared and were actually finished goods subject to excise taxes on top of duties. The surety bond, issued by Malayan Insurance, Inc., is equivalent to 100% of the principal amount of excise taxes and value-added taxes being collected. -- I. P. Pedrasa, BusinessWorld

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