Finance Secretary Carlos Dominguez III expects the early implementation of the fuel marking program, aimed at checking oil smuggling that is costing the government an estimated P27 billion to P44 billion in annual revenue losses.
Dominguez in the latest executive committee meeting directed Finance officials involved in the implementation of the project to bring newly-appointed Bureau of Customs chief Rey Leonardo Guerrero up to speed on the fuel marking program.
A master plan was submitted by the government’s newly-chosen provider―the joint venture of Switzerland-based SICPA SA and SGS Philippines―to set the fuel marking program in motion, Finance Undersecretary Mark Dennis Joven said in a report to Dominguez.
Joven said that SICPA SA and SGS Philippines must submit the master plan in 30 days from the signing of the fuel marking contract on Oct. 30.
To ensure that fuel marking program would not be delayed, the BoC and the Bureau of Internal Revenue have drafted the implementing rules and regulations and would match this with the master plan drawn up by the chosen fuel marking provider, Joven said.
The BoC is the lead agency that will implement the fuel marking program, which is mandated under the Tax Reform for Acceleration and Inclusion Act.
“I expect that the commissioner is fully briefed on that,” Dominguez said during the Execom meeting, the first attended by Guerrero in his new job as Customs commissioner.
Finance Undersecretary Karl Kendrick Chua said at the Execom meeting the master plan would lay out the implementation schedule for the fuel marking program, which is targeted for “early next year.”
“We’re not yet precise on the date. But early next year is the target. They have a marker already that they have prepared,” Chua said.
As the fuel marking provider, SICPA SA and SGS Philippines are expected to provide a unique chemical marker capable of being embedded at a molecular level to petroleum products, such as gasoline, diesel and kerosene.
Their contract also covers services and equipment necessary to administer and inject the marker to the fuel and the administration of confirmatory tests, both in the field and in laboratories.
The DoF has estimated revenue losses (value-added tax and excise taxes) from smuggled or misdeclared fuel at P26.87 billion (approximately $565.68 million) in 2016 alone.
However, the Asian Development Bank has pegged it at a higher figure of P37.5 billion in losses annually, while a study commissioned by the local oil industry estimated the foregone revenues at a much higher of P43.8 billion a year.
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.”
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