Taxmen driven by reward in running after Shell — MBC

A whistleblower reward worth P1.46 billion has likely been the main reason why taxmen are going after Pilipinas Shell Petroleum Corp. for an alleged tax deficiency, the Makati Business Club (MBC) claimed on Tuesday. The business group, which counts Pilipinas Shell as a member, said "certain government officials" were seeking to collect the reward provided for by the Tariff and Customs Code for recovering lost tax revenue. This personal motive explains the recent reversal of a government decision that had already absolved Pilipinas Shell from paying P7.35 billion worth of duties on its 2004 to 2009 imports of cracked gasoline and light catalytic cracked gasoline, the business group said in a statement. Back in February, the Court of Tax Appeals ordered the oil refiner 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 has issued a bond to cover for the alleged tax deficiency to keep the government from seizing incoming fuel imports pending the dispute. "[We] note with some satisfaction the apparent truce between the Philippine government and Pilipinas Shell in their public disagreement over back taxes," the MBC said. "However, we believe the main issue remains to be the instability of government policies and regulations... The policy inconsistency appears to be driven not by the sole objective to increase government revenues but also by individual consideration," the MBC said. "We have reliable information that a major motivation for this sordid flip-flopping is the desire of certain government officials to collect a 20-percent whistleblower reward of P1.46 billion for collecting back taxes," the group said. Alberto A. Lim, the group’s executive director, said they had found out about this from Pilipinas Shell. "They see the motivation is more personal," Lim said in a telephone interview. He declined to name the officials and agencies involved. Officials of Pilipinas Shell, the Bureau of Customs and Bureau of Internal Revenue could not be immediately reached for comment. The Tariff and Customs Code rewards a person who provides information about tax fraud when the revenue is recovered. It also rewards the Customs official or employee who has discovered and reported such anomalies with the assistance of an informer. "The Tariff and Customs Code provisions have only encouraged harassment and extortion by government officials who are tasked to collect revenue for the government," the MBC said. The group echoed business groups’ earlier statements warning of the incident’s impact on the investment climate. "The Pilipinas Shell case sends a chilling message to potential investors... It speaks of the unreliability of government to implement its own regulations with consistency and of institutional weakness by allowing the privatization of gains that should accrue to [the] government," it added. — Jessica Anne D. Hermosa, BusinessWorld