By MYRNA M. VELASCO
An efficient tax credit measure is being propounded for oil products that will be funneled for the use of locators in economic zones, just so the government’s campaign to extensively plug smuggling activities in the industry could be fully achieved.
Ramon F. Villavicencio, chairman of Insular Oil Corporation, opined that in the fuel marking program being instituted by the Department of Finance (DOF), it will be a more prudent move to enforce taxes and duties on oil product shipments once the delivering vessels already reached the country.
He explained that such could be more effective rather than getting the products dyed or marked only upon payment of taxes – which is now the prevailing policy as set forth in the implementing rules of the fuel marking program as enforced by the Bureau of Customs.
Villavicencio noted that since ecozones like those in Subic and Cagayan de Oro, are by rule tax-free, the duties and taxes paid at ports during the arrival of the product shipments could then be reimbursed or claimed as tax deductions of the taxpayer-oil firms via the issuance of tax credit certificates (TCCs).
But if TCCs shall be issued for oil products being channeled to ecozones, he noted that the payments or settlements on such shall be done within a reasonable timeframe – like 30 to 45 days; then at a rate that must not be incurring deep discounts.
He said the tax credit system for ecozones had turned problematic in the past because these are paid back only after so long, then the taxpayer-oil company can only get 60 percent as back payment on taxes paid.
“If it would be done through tax credits, the government should see to it – because these are big amounts – that there should be effective payment of tax credits,” Villavicencio stressed.
The typical lament of the industry, he sounded off, is anchored on the fact that when these TCCs are paid back, it could take very long and at values way lower than what had already been paid for by the companies.
Beyond tax credits, the alternative proposal of Villavicencio is to treat the taxes paid at the arrival of product shipments as deductions in the final taxes that the concerned oil companies will eventually pay for in their assessed income taxes.