CBC hits ‘double taxation’

THE Cebu Business Club (CBC) yesterday expressed concern over the government’s flip-flopping on the issue of Shell’s payment of import taxes.

In a statement sent to Sun.Star Cebu, the CBC said the government now requires Shell to pay taxes retroactively for the importation of catalytic cracked gasoline and light catalytic cracked gasoline that it uses as a raw material for the production of refined gasoline locally.

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In 2004, Bureau of Internal Revenue (BIR) Commissioner Jose Mario Buñag issued a legal opinion that the importation of the two products, being raw materials, were exempted from excise tax. But last year, the club said, BIR Commissioner Joel Tan-Torres reversed Buñag’s ruling. He agreed with the Bureau of Customs (BOC) that the two products were subject to tax.

Shell paid excise taxes for its finished gasoline products totaling more than P34 billion from 2004 to 2009, the club said.

“Requiring the company to pay an additional excise tax amounting to P7.35 billion for the same years on its imported inputs will constitute double taxation—and a flip-flop on an earlier, validated ruling.”

The CBC said double taxation discourages local production and instead encourages direct imports of finished products.

Inconsistencies in the application of laws and rules also discourage foreign direct investments, the group said.

It called on the Department of Finance “to intervene and compel the BIR/BOC to cease their attempts to collect these unfairly levied ‘back taxes’ in the spirit of the earlier rulings that confirmed the exemption of these products from taxes.”