Shell Goes To Court Over Philippine Excise Tax Dispute

by Mary Swire, Tax-News.com, Hong Kong

08 December 2009

Pilipinas Shell Petroleum Corporation (PSPC) is petitioning the Philippines’ Court of Tax Appeals to prevent the Bureau of Customs (BOC) from enforcing an assessment for excise tax on its imports of some gasoline products.

PSPC refines, transports and sells a wide range of oil-based products in the Philippines, including fuels, lubricants and liquefied petroleum gas. The PHP7.3bn (USD158m) excise tax assessment by the BOC relates to its imports from 2004 to the present of catalytic cracked gasoline (CCG).

In its submission to the court, PSPC is reported to be questioning the jurisdiction of the BOC over the imposition of the tax, given that, it is said, the Bureau of Internal Revenue (BIR) has responsibility for interpreting the provisions of the Philippine revenue regulations.

It is also reported that the BIR has made a prior ruling that the CCG imports are not subject to excise tax, as they are duty-free raw materials subsequently used in the production of unleaded premium petrol in PSPC’s refinery.

PSPC has further explained that, while it continues to dispute the BOC jurisdiction in this case, all taxes due on the raw materials are, in fact, effectively paid when the unleaded petrol is transferred from the refinery for sale on its forecourts. The enforcement of the BOC’s excise tax would therefore, it says, also represent double taxation of the product.

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