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Markers to be injected in 15.2 billion liters of fuel to curb smuggling.

THE government is targeting to mark around 15.2 billion liters of fuel for the first year of implementation of the fuel marking system, in a bid to help curb oil smuggling in the country.

On Wednesday the Department of Finance (DOF) said that with the fuel marking system on track for full implementation by March, it is eyeing to inject fuel markers to an estimated 15.2 billion liters of fuel, both imported and those stored in the refineries.

The 15.2-billion-liter fuel volume is based on consumption projections for the full year 2019, according to DOF Director Nina R. Asuncion.

'We will meet the deadline,' Asuncion said.

Of the total estimate, the volume of fuel to be marked by the Bureau of Customs (BOC) through imports is pegged at 6.8 billion liters for the year, while that of the Bureau of Internal Revenue (BIR) which will inject markers at the local refineries is seen to account for 8.4 billion liters.

The fuel marking program aims to mark imported and refined petroleum products, such as gasoline, diesel and kerosene using a covert and sophisticated marking and testing technology to ensure that all taxes and duties on downstream fuels are paid.

It is envisioned to plug tax leakages from oil smuggling and other forms of fuel fraud, as well as increase the government's revenues.

'Although the program aims to curb oil smuggling and increase revenue collection, the policy-makers have always considered a seamless and efficient implementation of the program to be advantageous to both government and stakeholders,' BOC Deputy Commissioner Teddy S. Raval said.

Furthermore, a fuel marking fee amounting to P0.06884 per liter of fuel shall be paid by the government to the fuel marking service provider for the first year of implementation.

For the second to fifth year of implementation, the fuel marking fee shall be paid by petroleum companies on top of duties and taxes to be collected by BOC and BIR, respectively.

DOF Revenue Operations Group Director Emee Macabales said the government has provided P1.960 billion as funding for the first year of implementation of the fuel marking system, as well as establishing a fuel marking trust fund, wherein the collections from fuel marking fee will go to sustaining the program.

The rules for the trust fund was set up by the Permanent Committee, Macabales said. The Permanent Committee is composed of the DOF, the Commission on Audit (COA) and the Department of Budget and Management (DBM). 'So you see it is in place, the monitoring for this. There are required reports that [must] be submitted to these agencies to make sure that the funds are used only for the purpose it was set up,' Macabales said.

The government estimates, she said, that around P20 billion to P40 billion in revenues can be collected with the implementation of the fuel marking system, as it was earlier reported that the government loses around P27 billion to P44 billion due to oil smuggling.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, the fuel marking system is to be implemented over five years.

'We will be providing the services which includes the security from the moment the marker arrives...I am extremely confident of the security,' said SGS Global Operations Manager Steve Harrison.

The winning bidder for the fuel marking system program is the Sicpa-SGS consortium, which will provide a unique chemical marker capable of being embedded at a molecular level to petroleum products, such as gasoline, diesel and kerosene, thereby enabling authorities to test, identify and distinguish fuels being sold in the market.

'The markers will be coming from Switzerland and we ship them to the the access to the markers are highly controlled,' Sicpa SA Senior Technical Manager Edmund Halasz said.

Unmarked fuel holders face raps

After a three-month 'flush-out period,' within which all downstream fuels are expected to have been marked, random field testing shall be conducted by BOC, BIR and the fuel marking provider on depots, tank trucks and retail stations to determine the presence or dilution level of the fuel marker on petroleum products subject to marking.

'Being a possessor of an unmarked fuel, a person or an owner of retail station with the untaxed fuel shall be liable to the excise tax and VAT due on such fuel, including penalties. This is without prejudice to the filing of appropriate criminal case against the owner of the retail station,' said BIR Large Taxpayers Document Processing and Quality Assurance Division Chief Danilo Pasiliao.

The detailed guidelines on the aforementioned processes are currently being finalized by the BOC, BIR and DOF, subject to further consultation with the oil industry and other stakeholders.

'Well, again just to reiterate the benefits of this program. First of all, this is to strengthen our efforts against smuggling-whether it's fuel or other products, cigarettes and the like-we want to make sure that our tax administration reforms are just as strong as our tax policy reforms,' DOF Assistant Secretary Antonio Joselito G. Lambino II said at a briefing at the Palace on Wednesday.
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Publication:Business Mirror (Makati City, Philippines)
Date:Feb 28, 2019
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