Oil players favor VAT removal
MANILA, Philippines — As the prices of fuel products surge, oil players have expressed support for removing the value-added tax to lower costs—a sentiment that has been reiterated by various transport groups.
In a Senate hearing on Thursday, March 26, the Department of Finance (DOF) expressed hesitation about proposals to remove the VAT.
DOF Undersecretary Karlo Adriano said that exempting fuel products from VAT may have counterproductive results. He explained that VAT applies to both input and output, so removing VAT at the output level while retaining it at the input level may pass the costs down to consumers.
However, Independent Philippine Petroleum Companies Association (IPPCA) President Tanya Samillano said that this could easily be resolved.
“It’s easier for us to implement reduced prices when VAT is removed. Because what we were suggesting is, we don’t remove it on the bottom, we remove it upon arrival of the cargo. We will no longer pay VAT. It answers your request for immediate implementation on the pump prices,” Samillano said.
Samillano said that removing VAT upon importation eliminates costs on the company’s end. Ordinary Filipinos would feel the difference.
For example, if fuel products are at P100 per liter now, the next increase could be reduced by P12.
Executives from major petroleum companies agreed, favoring the removal of VAT on fuel products.
“Actually, from a technical point of view, the VAT will be faster to implement but indeed it should be end-to-end, so source to end,” Shell Pilipinas President Lorelie Quiambao-Osial said.
Quiambao-Osial added that VAT is percentage-based: the higher the price, the higher the VAT.
Petron General Manager Lubin Nepomuceno agreed, calling it an “industry position.”
Pump prices have surged to triple digits during the United States and Israel's war on Iran. President Ferdinand Marcos Jr. earlier signed a measure allowing him emergency powers to reduce or suspend the excise tax on petroleum products. However, he has not stated when he will use these powers.
Transport drivers and motorists have borne the brunt of soaring fuel prices, with different groups conducting strikes against the rising costs.
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