BOC seeks private sector partners for fuel marking project | PortCalls Asia | Asian Shipping and Maritime News

The Philippine Bureau of Customs (BOC) is asking providers of fuel marking products and services to help the agency implement its fuel marking program.

In a recent announcement, BOC Port Operations Service director James Layug said BOC is now drafting policies and guidelines for the effective implementation of a fuel marking program, one of the tax reform endeavors of the government to minimize smuggling of petroleum products and boost the collection of revenue.

As lead agency for the program, BOC is inviting companies offering fuel marking products or services to conduct a technical presentation before BOC’s technical working group with the view to aiding in the execution of the fuel marking program.

The Department of Finance (DOF), BOC’s mother agency, earlier said a mandatory fuel marking system would be implemented by early next year to curb smuggling and misdeclaration of petroleum products, which cost the government almost P27 billion in annual revenue losses.

The mandatory fuel marking system is part of Package One of the proposed tax reform bill endorsed by the DOF for congressional approval.

Finance Undersecretary Karl Kendrick Chua earlier said the fuel marking plan would be launched by BOC, assisted by sister agency Bureau of Internal Revenue (BIR), beginning next year.

Under the fuel marking system, a particular mark will be placed on oil, both locally produced and imported, to indicate that taxes for the product have been paid.

DOF expects to award the contract by the third quarter of this year to give the successful bidder enough time to roll out the system by ‪January 1, 2018, Chua said.

“The project cost for a five-year implementation is expected to be fully recoverable as early as the first year of implementation, as the unit cost of fuel marking is low, as low as 9 centavos per liter based on past pilots,” Chua said.

The DOF said that for 2016 alone, revenue losses (VAT and excise taxes) from smuggled or misdeclared fuel were at P26.87 billion (about US$565.68 million).

However, the Asian Development Bank pegs the losses at a higher P37.5 billion annually, while a study commissioned by the local oil industry estimates foregone revenues at P43.8 billion per year, Chua said.

Meanwhile, the Institute for Development and Econometric Analysis assesses that “smuggled gasoline accounts for an average of 23% of gasoline consumption from 2000 to 2006,” while “smuggled diesel accounts for an average of 6%.”

DOF earlier said the fuel marking and monitoring system was backed by various groups as a way to prevent oil smuggling and complement efforts to improve the collection of fuel excise taxes.

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