European biz group wary of Pilipinas Shell tax row

The European Chamber of Commerce of the Philippines (ECCP) warned on Thursday that unless Pilipinas Shell Petroleum Corp. resolves its tax row with the Bureau of Customs, a "red flag" would be raised to investors. “ECCP would like to have the issue settled and resolved at the soonest possible time. We do not want this to become another red flag for investors who are looking into the country as a possible destination," ECCP president Hubert d'Aboville said. This pertained to a P1.6 billion case filed in 2009 by Batangas Customs collector Juan Tan against Shell for allegedly defrauding the government by not paying excise taxes for import shipments of alkylate. D'Aboville said the Bureau of Internal Revenue (BIR) has already assessed the questioned petroleum product called alkylate and held it to be “a raw material and that an SGS (Philippines) analysis that was asked by Customs showed that it does not meet Philippine National Standards for gasoline." ECCP is a bilateral foreign chamber that promotes European interests in the Philippines as well as Philippine interests in Europe. With more than 700 members, ECCP offers a strong business network that potentially translates to multiple business opportunities. “The government of President Aquino from the start has sent a very strong message that it will never tolerate corruption and we believe it will make the correct actions in this issue," the ECCP president said. Shell denies tax evasion accusations Shell had explained in an earlier statement that alkylate is a blending component used to meet Philippine National Standards (PNS) criteria for unleaded gasoline. Starting in 2000, the Philippine Clean Air Act required more stringent specifications established through the PNS. “Alkylate is not a finished product but an intermediate product, thus not subject to excise tax. However, when the alkylate is further processed into finished unleaded gasoline product that is fit and ready for consumption, the finished product is subject to the payment of excise taxes before the same is released from Shell's refinery. In other words, no excise tax is lost on the alkylate imports in question," Shell said. Shell added that last April’s sampling and testing conducted by SGS Philippines after the joint request of both Shell and the Customs Bureau found the sampled alkylate shipment had not met the PNS specification for Premium Plus, Premium and Regular Gasolines. Shell said the BIR issued an individual Authority to Release Imported Goods (ATRIG) for all the alkylate importations involved in the subject claim. “No excise taxes were paid on the shipments because they were all covered by the corresponding ATRIGs issued by the BIR, which recognized the same to be raw materials and/or blending components," Shell said. The petroleum company said it had paid all the right taxes and strongly denied having engaged in any fraudulent activity, especially smuggling, as this is very much against its business principles. Customs Commissioner Angelito Alvarez asked the Department of Energy for guidance on the alkylate importations pending the outcome of its own investigation being undertaken by the Run-After-The-Smugglers group. “Rest assured that the course of action we will take on this matter will depend on the preponderance of evidence for or against the P1.6 billion claim," Alvarez said. — MRT/VS, GMA News