A DEPUTY speaker of the House of Representatives has asked Congress to investigate the alleged P113.7-billion tax-evasion case of Pilipinas Shell Petroleum Corp.
“I am here to bring to your attention the gross practices of Pilipinas Shell Petroleum Corp., the Philippines has lost over P100 billion in revenue due to the tactics employed by Shell to circumvent paying taxes,” Deputy Speaker Raneo Abu said in a recent privilege speech.
In 2001 Abu said Shell was importing gasoline, declaring them as catalytic cracked gasoline (CCG), and light catalytic cracked gasoline (LCCG), “unleaded gasoline” and “exclusively for sale”; and paid their import taxes.
“However, in March of 2004, they changed their declaration to ‘tetrapropylene’ and for blending component. In 2010 this was again misdeclared as alkalyte for blending component and other fuel oil. This then resulted in Shell not paying their due taxes for their gasoline shipments,” he said.
In 2009 Abu said the Bureau of Customs (BOC) demanded a P7.348-billion payment in taxes from Shell’s shipments of CCG and LCCG from 2004 to 2009; and the Bureau of Internal Revenue (BIR) declared that the exemption of CCG and LCCG has no factual and legal basis. Abu added that as the BIR demanded the payment of taxes on CCG and LCCG, Shell changed their shipment declaration to “alkalyte for blending component” in 2010.
“Yet, Shell insisted that their shipments were still not for public use, therefore not subject to excise tax. They even went as far as declaring it under a different tariff classification so that the BOC computer system would not detect the shipment as subject to tax,” Abu said.
In June 2012 Abu added the BIR also declared that the alkalyte shipments are indeed subject to excise tax.
“This then prompted the BOC to issue a demand letter, ordering Shell to pay P1.99 billion for their alkalyte shipments from May 2010 to June 2011,” Abu said.
In September 2015, Abu said the Court of Tax Appeals ruled that CCG and LCCG are subject to taxes, and ordered Shell to pay only P5.7 billion, as they are no longer liable for the 2004 and 2005 shipments due to the BIR’s tax-amnesty program they availed of in 2008.
“Shell also availed this amnesty program by paying only P3 million, 5 percent of their misdeclared P60 million net worth, a far cry from the P3 billion they owe the government. Do we believe that Shell’s national net worth is only P60 million? This could be true if we’re talking of only one gasoline station in the city,” Abu said.
Instead of paying, Shell once again filed a petition, this time to the Supreme Court, who then issued a temporary restraining order (TRO) against both the BIR and BOC, thus, again preventing both from taxing Shell’s incoming alkalyte importations, Abu added.
This TRO, the lawmaker said,also effectively prevented the BOC from collecting P55 million monthly taxes on its unleaded gasoline importations and from collecting the P7.348 billion on CCG and LCCG shipments due in 2009, and the P1.99 billion on alkylate shipments due in 2011.
“We are losing P55 million every month on alkalyte shipments, on top of the P7 billion they owe us in taxes for their CCG and LCCG shipments from 2004 to 2009 exclusive of penalties,” Abu added.
“As of January 2018, Shell owes us around P113.7 billion in taxes, and we cannot allow this to continue. We cannot simply stand by as Shell continues to evade paying the proper taxes, as they maneuver around the legal justice system,” Abu said. The deputy speaker said a decision in July 2015 saw Petron Corp. lose to the Commissioner of Internal Revenue for a similar case involving the taxation of alkalyte shipments. Petron paid its tax due, and has been paying ever since.
“We can see other players complying with the rule of law, and yet, Shell still refuses to back down, and still plays by its own rules,” Abu said.