The government already marked 1.1 billion liters of petroleum products under the fuel marking program ahead of the tax scheme’s full implementation by February 2020, Finance Secretary Carlos Dominguez III said over the weekend.
“[There is] 1.1 billion liters [of] fuel marked,” Dominguez told reporters Friday night at the sidelines of an event at the Department of Finance headquarters in Manila.
The program aims to address the proliferation of smuggled fuel in the country. Fuel marking involves the injection of chemical which shows that correct excise taxes and import duties are paid.
Dominguez said last year that the implementation of the fuel marking program would help address the expected rise in fuel smuggling with higher fuel taxes under the Tax Reform for Acceleration and Inclusion Law that took effect in January 2018.
He was reacting to comments made by Petron Corp. president and chief executive Ramon Ang who said that petroleum smuggling increase after the TRAIN law took effect.
Dominguez said the government anticipated the potential increase in smuggling and therefore initiated the fuel marking program under the TRAIN law. He said fuel marking was designed to help address the issue.
He said the program would be a strong indicator of increased compliance, and “those who skirted required declarations and payment of taxes in the past are now following the law.”
Dominguez noted as a good examplethe Port of Limay’s collection for June 2019 which reached P3.6 billion above target. This was higher than the excess collection in May 2019 by P1.1 billion. The ports of Subic and Cagayan de Oro also exceeded their targets.
Ang said Petron was putting on hold its expansion plan amid the challenging environment hurting the business. He said among the challenges facing Petron were the volatility in global crude prices and rampant smuggling.
Dominguez said the implementation of the fuel marking program was expected to boost government revenues by at least P5 billion.
A study commissioned by local oil industry players estimated that revenue losses due to oil smuggling reached as high as P43.8 billion annually.