DOF to implement fuel markings in 3rd quarter

The Department of Finance (DOF) is planning to implement the long-delayed anti-oil smuggling scheme in the third quarter this year following its “intensive research” to properly address the country’s problem on illicit fuel trade.

Finance Undersecretary Antonette C. Tionko said that the DOF’s technical working group (TWG) has already approved the terms of reference (TOR) for the fuel marking system, which will be implemented on both oil imports and locally refined petroleum products.

“The TWG has already approved the terms of reference… it should be out,” Tionko told reporters. “We are just ironing certain issues to the procurement in DBM [Department of Budget and Management] because we are the ones who will fund it.”

Ian Ralby, a recognized global expert on energy security, had said that nearly a third of the country’s petroleum products comes from illicit operations, highlighting the need for the Philippines’ fuel marking scheme. The DOF estimated that the government could raise around R20 billion in additional revenues annually once the fuel marking system is implemented.

Finance Secretary Carlos G. Dominguez III, meanwhile, said that the scheme is necessary to properly monitor the compliance of oil companies and importers with the Bureau of Internal Revenue’s (BIR) regulations.

But Dominguez clarified that the fuel marking system does not aim to scrutinize the local oil industry.

“We are assuming that all fuel importers are paying their tax. We just want assurance that they are continuing to pay their tax. It’s good to trust but it’s better to verify — its a verification program,” Dominguez told reporters.

The finance chief had said that illicit fuel trade is costing the government around R25 billion to R40 billion in foregone revenues annually. Finance Undersecretary Karl Kendrick T. Chua had explained the system was designed to curb smuggling and misdeclaration of petroleum products that cost the government billions of pesos in foregone revenues each year.

Under package one of comprehensive tax reform package (CTRP), the fuel marking plan would be implemented this year by the Bureau of Customs, with the assistance of the Bureau of Internal Revenue. (CSL)