Pilipinas Shell Petroleum Corp. (PSPC) said it will remit a total of P3.49 billion under protest to the Bureau of Customs (BOC), representing alleged excise taxes and value added taxes (VAT) on fuel blending components used in its refinery operations from 2014 to 2020.
PSPC said the issue of whether or not alkylate, the fuel component in question, is to be subjected to excise taxes is still being decided by the courts.
PSPC said the BOC recognized the oil company’s intent to pay under protest the excise tax and VAT relative to the alkylate importations, pursuant to the demand letter of the Port of Batangas in view of the dissolution by the Supreme Court of the temporary restraining order (TRO) previously issued, as a result of the matter being remanded to the Court of Tax Appeals.
“This will allow us to continue to provide to our customers and to the general public who rely on our products and mindful of the thousands of Filipinos whose livelihood depends on our ability to maintain our operations,” PSPC said.
The Department of Energy had said alkylate is not a finished product but an intermediate product which should not be subject to excise tax.
Both the Bureau of Internal Revenue and the BOC also interpreted alkylate is not subject to excise tax as the material is not among those articles enumerated under Title VI of the National Internal Revenue Code of 1997 which states that “the production of petroleum products, whether or not they are classified as products of distillation and for use solely for the production of gasoline, shall be exempt from excise tax.”
However, its interpretation remain unclear especially when the Supreme Court last July lifted a TRO stopping the government from imposing taxes on PSPC’s importation of alkylate.
Alkylate’s primary function is to produce gasoline products that are low in sulfur content.
