By CHINO S. LEYCO
The Department of Finance (DOF) will look into the books of oil companies that have reported substantial increases in production prior to the implementation of the fuel marking system.
Finance Undersecretary Antonette C. Tionko said there has been an increase in tax payments by the oil industry before the full implementation of the fuel markings, signalling that the “fear factor” has resulted in better tax compliance among the oil companies.
“Even before its was fully implemented, the fear factor that this is coming already resulted in more better reporting of volumes, especially in Subic where the increase was very significant,” Tionko told reporters.
While the government cannot confirm with “certainly” that oil players were not paying correct taxes prior to fuel marking’s implementation, Tionko said there will be audits on the industry to ensure taxes were properly paid in the past.
Finance Secretary Carlos G. Dominguez III said the new fuel marking scheme is necessary to properly monitor the compliance of oil companies and importers with the country’s tax laws.
Dominguez also said that it aims to scrutinize the oil industry and weed out illicit fuel traders who are costing the government around ₱25 billion to ₱40 billion in foregone revenues annually.
“We have a suspicion that not everybody was paying the right amount of tax on their fuel imports,” Dominguez said.
“Today, one of the most modern tools we have is the fuel marking system. Hopefully, this will help us reduce the amount of illicit fuel coming into the country and eliminate the entry of fuel that is not up to environmental standards,” he added.
Dominguez said at least ₱20-billion additional fuel tax revenues are expected to be added to the government’s coffers following the full implementation of fuel marking program.
To date, the Bureau of Internal Revenue (BIR) and the Bureau of Customs have marked about 24 billion liters of fuel.
Oil companies are also cooperating with the government, but some are not as fast as the others, Tionko admitted.
“Once we’re assured that we’ve totally saturated the supply, obviously the testing would be more serious,” Tionko said.
The government awarded the fuel-marking contract to Switzerland-based security ink technology provider Société Industrielle et Commerciale de Produits Alimentaires (SICPA).
Under the plan, the government will pay the ₱0.6884 per liter fuel marking fee for the first year of implementation while oil companies will pay for the fees for the second to fifth year of implementation.
The fuel marking fee is on top of the duties and taxes to be collected from oil companies by the BIR and Customs.