The Department of Finance (DOF) said the exchange of information between the Department of Energy (DOE) and the government’s two main tax agencies will boost the implementation of the first-ever nationwide fuel marking program.
Finance Secretary Carlos G. Dominguez III said the signing of the memorandum of agreement on information exchange and reconciliation by the DOE with the Bureaus of Internal Revenue (BIR) and of Customs will further strengthen their fight against oil smuggling.
Dominguez added that he also expects the accord will curb the misdeclaration of imported petroleum products, which will lead to increased revenue collections and ensure fair competition among oil companies.
“Having gone through the ravages of a pandemic and funding our nation’s economic recovery, the government needs all the revenue it can muster,” said Dominguez in his pre-recorded message during the virtual signing ceremony.
“Properly collecting all taxes due from the oil industry is indispensable to this effort. This will help us surmount the global health emergency and bring the country back to the path of inclusive growth. A better future for our people depends on this,” he added.
The agreement formalizes the continued partnership among the DOE, Customs and BIR in running after oil smugglers.
The three government agencies committed to exchange information and reconcile the volumes of imported and exported crude oil, finished petroleum products and bioethanol, denatured imported bioethanol, and inventory reports.
Dominguez said the importance of the agreement “cannot be understated” as its deliverables are designed to support the work of a joint task force set up by Customs and BIR to perform the field testing activities under the fuel marking program.
“I trust that the agencies involved in this initiative will be up to the task of making our fuel marking program an effective instrument to put an end to oil smuggling and be a model for other countries to follow,” Dominguez added.
The implementation of the fuel marking program is among the key provisions of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which is the first package of the Duterte administration's Comprehensive Tax Reform Program.
With the adjustments in the taxes imposed on petroleum products under TRAIN, the fuel marking program was mandated under this law to help reduce oil smuggling.
As of May 13 of this year, the government has collected a total of P229.5 billion in taxes from 23.59 billion liters of fuel marked under the program that was launched last September 4, 2019.
Of the total amount, the Customs accounted for P201.58 billion of the tax haul, while the BIR collected another P27.92 billion.