Fuel marking to plug P27-b leakage – Manila Standard

Date
8 June 17
Category
Fuel Integrity Solutions
Tags
Philippines

The mandatory fuel marking system under the proposed Comprehensive Tax Reform Program is expected to plug P27 billion in annual losses incurred from oil smuggling, a Finance Department official said.

Finance Undersecretary Karl Kendrick Chua said the system was designed to curb smuggling and misdeclaration of petroleum products that was costing the government P26.9 billion to P43.8 billion in foregone revenues each year.

Fuel marking uses advanced technology molecular markers and sophisticated management system that analyzes each stage of the supply chain, beginning with refineries or fuel depots, and extending to the eventual sale of fuel products at the retail level.

Under package one of CTRP, which the DoF endorsed for congressional approval, the fuel marking plan would be implemented beginning next year by the Bureau of Customs, with the assistance of the Bureau of Internal Revenue.

The procurement process, which the BOC plans to start in the coming months, will be done through competitive bidding, Chua said at the 5th General Executive Council meeting of the Union of Local Authorities of the Philippines.

Chua said DoF was expecting the award of the contract by the third quarter so that the successful bidder would have enough time to roll out the system by ‪Jan. 1, 2018.

Implementing a fuel marking system is among the provisions under the substitute House Bill No. 5636 approved last May 3 by the House ways and means committee covering the first package of the CTRP.

The bill, sponsored by Quirino Rep. Dakila Carlo Qua on second reading, is now undergoing plenary deliberations at the House of Representatives.

“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 as low as 9 centavos per liter based on past pilots,” Chua said.

The DoF estimated revenue losses (VAT and excise taxes) of P26.87 billion from smuggled or misdeclared fuel ain 2016 alone.

However, the Asian Development Bank pegged it at a higher figure of P37.5 billion in losses annually while a study commissioned by the local oil industry placed it at P43.8 billion per year, Chua said.

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

Revenue collections from petroleum products amounted to P52.56 billion in 2016. Of the amount, the BIR collected P13.22 billion in the form of excise taxes and ‪P2.11 billion in VAT. The BOC collected P10.92 billion in fuel excise taxes and P26.30 billion in VAT from fuel in 2016.

Fuel marking to plug P27-b leakage – Manila Standard

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