Ecozone firms must pay taxes for oil imports

MANILA, Philippines — The Bureau of Internal Revenue (BIR) has required importers in economic zones to pay the VAT and excise tax on their petroleum shipments in compliance with the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

Under Revenue Regulations 4-2022, the BIR said taxes due on all petroleum products that enter the economic zones should be paid to the Bureau of Customs.

Further, the BIR said that both the VAT and excise tax should be settled with Customs prior to any and all transfer, transport or withdrawal of the petroleum imports.

An importer can file for a VAT refund if the petroleum shipment was transferred to an exporter who will use it for its registered activity.

Likewise, VAT credits can be claimed as long as the petroleum products were delivered to buyers involved in international shipping or air transport, as well as firms that are VAT zero-rated under special laws or trade agreements.

The BIR said an importer could obtain excise tax refund if the oil product was sold to an international carrier that used it outside the Philippines.

The agency said excise credits can be received for transfers made to specific entities protected by special conventions and tax treaties.

Similarly, excise tax can be retrieved for the sale of petroleum imports to firms that are, by law, exempt from paying direct and indirect taxes.

“Once approved, the claim shall be forwarded to the Customs for cash payments or issuance of a tax credit certificate, as applicable,” the BIR said.

“No claim for refund shall be granted – unless it is properly shown to the satisfaction of the BIR – that said petroleum or petroleum products have actually been transferred, delivered, sold and used by the foregoing entities for the above-stated purposes,” it said.

The BIR reminded exporters that petroleum shipments used for their registered activity are only exempt from paying VAT, not excise tax. Local refiners enjoying fiscal incentives from an investment promotion agency may import crude petroleum and refine it within the facility without having to pay any duties and taxes.

The BIR is tightening its tax collection after falling short of its first quarter target. The BIR raised just P485.4 billion in the three months to March, lacking P47.2 billion to meet the goal of P532.6 billion for the period.

For the year, the BIR, as the lead agency in tax efforts, eyes to collect P2.43 trillion in revenues, the bulk of which at P1.25 trillion will come from taxes on net income and profits.