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Philippines threatens seizure of $923 million worth of Shell imports for alleged non payment of taxes | 01/17/2010 4:00 PM

DOE chief fears shortage if Shell oil imports are seized

MANILA, Philippines – Energy Secretary Angelo Reyes fears there could be shortage in supply of fuel if the Bureau of Customs (BOC) seizes P43 billion worth of Pilipinas Shell Petroleum Corp.’s importations.

“Shell can’t operate as usual, BOC may have to go the process of bidding for the sale of the cargoes. But the buyer may not have the capacity to store the cargo,” noted Reyes in a message to reporters.

He explained that “Shell has a share of over 30% of the market—second only to Petron Corp.”

The BOC earlier vowed to seize $923 million worth of Shell’s imports arriving in February to May 2010 as payment for alleged back taxes. The agency said Shell failed to pay excise taxes covering its importations of Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG) from 2004 to 2009.

Shell is disputing BOC’s tax assessments before the Court of Tax Appeals. The company contends that excise taxes are not applicable to its CCG and LCCG imports because these are merely raw materials and not finished products.

Reyes said the Department of Energy shares the same position.

“Final tax is levied as gasoline leaves the refinery for sale to the market,” he said, pointing out that “BOC insists to collect tax on the intermediate product.”

Shell said the planned seizure of its imports would force it to shut down its Batangas refinery, resulting in fuel shortage, job losses and massive disruption of critical industries such as power, and sea and air transportation.

Apart from having a 27.7% average share in the retail market, Shell said it also supplies 33% of the demand of power companies including the National Power Corp.; around 17.2% of the fuel requirement of the aviation industry; 24.6% of the marine transport market; and 70.2% of the local demand for bitumen which is used in road works.

as of 01/17/2010 4:02 PM

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