For the government to have a coordinated effort on its fight against fuel smuggling, the Department of Energy (DOE) has batted for ‘reconciliation of data’ among all relevant government agencies so they can also harmonize strategies on how to fend off that lingering menace in the industry.
To achieve that goal, the DOE has inked a memorandum of agreement (MOA) with the Bureau of Customs (BoC) and the Bureau of Internal Revenue (BIR) so they can step up partnership in going after illegal fuel smugglers in the country.
Foremost in the goal of that newly signed pact is the creation of a “reconciliation committee” that will then work and sort out reconciled reports to serve as basis not just in pinning down smugglers but also to guide in the imposition of correct and appropriate taxes to the oil industry players.
In Cusi’s view, one of the key starting points for all these government agencies is to have a solid data to bank on to fortify the government’s muscle versus smugglers.
“Through the MOA, there will be an opportunity to work together in arriving at reconciled reports as reliable bases for the computation of correct taxes and duties,” the energy chief stressed.
He added “I am aware that to implement an effective anti-fuel smuggling programs, it would require the relevant frontline agencies to work together and arrive at an aligned and comprehensible solution – and basic of which is the need to align and reconcile the data and reports of the DOE, BOC and BIR.”
In particular, the DOE has reiterated that when they are looking at the level of oil consumption, there has always been discrepancy in the oil importation data that is on the records of the BoC.
The department emphasized that by merely looking at importation being validated by the BOC, the outcome is always equal to the declared importation. But when fully validated on the ground, there’s discrepancy on the volume of consumption – as reflected on the figures collated by the DOE.
“Taking into account the volume of importation with duties and tax payments at Customs, they are equal. But when the final consumption is tallied, there’s difference in the figures because consumption is always higher than the level of declared product importations, so the math isn’t adding up,” the DOE noted.
Through the years, the disclosure of information as to the tax leakage resulting from oil smuggling would often vary from P30 billion to P50 billion annually, depending on which of the agencies will be reporting that data.
It is that ‘data incompatibility’ premise then that has prompted the DOE to push for an initiative that will fuse together the key agencies involved in the fight against oil smuggling to finally have data and facts that are in sync, consistent and harmonized with one another, because that could in the process plug the loopholes also in taxation for the oil industry.
The newly signed pact between the agencies, according to Cusi, is “a culmination of our aspiration of materializing an inter-agency coordinated platform which I believe is the first in the history of our agencies, of approaching anti-smuggling policies and programs.”
He expounded the DOE has been “finding concrete ways by which it can contribute to preventing fuel smuggling…to ensure that this unscrupulous scheme and its perpetrators do not succeed in taking away the much needed revenue for the government for the detriment of our fiscal position and ultimately to the benefits of our countrymen.”
With the implementation of both the Tax Reform for Acceleration and Inclusion (TRAIN) Act and fuel marking spearheaded by the Department of Finance, the government is targeting to shore up revenue collections – but in the process, it will also need to toughen up measures against oil smuggling.