Shell seeks intervention of DOF on tax deficiencies

MANILA, Philippines - Pilipinas Shell Petroleum Corp. is trying to seek the intervention of the Department of Finance (DOF) and Malacañang on the issue of alleged tax deficiencies.

“We have ongoing communications with the DOF and Malacañang on this,” Mylene Santos, communications manager for downstream, told reporters at the sideline of a community stakeholders’ consultation here.

According to Santos, the DOF, at this time, is still not issuing its official position on this issue.

Santos admitted that the company has been drawing up worst case scenarios including a possible refinery shutdown.

She said they would also exhaust all legal means in case the Court of Tax Appeals (CTA) ruled in favor of the government.

“We will definitely bring this to higher court,” she said, noting that as a natural consequence of the government’s threat to seize some P43 billion worth of imports of Shell would be a close down of the refinery.

But Shell vice president for manufacturing Arnel Santos said at present, the operations of the refinery is at “business as usual” mode.

“We are now explaining the possible consequence. But as of now, it’s business as usual for the refinery. We are producing normally and we have not experienced any disruption in the production. We have yet to be impacted. What is happening now is that we are explaining what could happen in the refinery and supply should the seizure. As far as further engagements in the future, I have yet to be updated,” he said.

Santos said the inventory of the company is on normal level. “As of now, we have enough inventory and we’re not even slowing down in our production,” he added.

On the average, Shell said its inventory can cover 10 to 20 days.

Santos said if the seizure will be pursued, Shell, whose been in the Philippines since 1960s, would incur P11 billion.

Shell, following the case filed by the Bureau of Customs (BOC) against the oil firm on alleged tax deficiency assessment, maintained that it complies with the 2004 ruling of the Bureau of Internal Revenue (BIR) that importation of CCG is not subject to excise tax.

“It was clear in the past, as early as 2004, there was already a clear ruling that it’s a raw material, not a finished product, and recently there was a BOC investigation report which came out, 2009 lang yun which validated that we are actually not selling the CCG, so based on those,” he said.

In a teleconference, BOC Commissioner Napoleon Morales said they are bound by law to collect these duties due to the government.

Morales disputed all the claims of Shell on the possibility of supply shortage in the country.

“We will start talking with Petron, Total, Chervon and other players if they could cover for the supply that Shell would not be able to serve,” he said.