Fuel marking system eyed by July

The Bureau of Customs (BOC) is targeting to implement by July the fuel marking scheme under the tax reform law to plug leakages caused by oil smuggling, an official said yesterday.

Yogi Filemon Ruiz, director III of the BOC’s Enforcement Group, said the fuel marking system is part of the priorities of Customs commissioner Isidro Lapena who has ordered the fast implementation of the program.

“That is based on the pronouncements of the commissioner. He wants to implement it before July,” Ruiz told reporters on the sidelines of an Anti-Illicit Trade Summit organized by the Fight Illicit Trade movement in Makati City.

According to Ruiz, the BOC is drafting the implementing rules and regulations pertain- ing to the fuel marking system.

He said the government was also able to conduct the trial stage for the system a month ago. “We have already done the trial in Subic. It was done a month ago,” Ruiz said.

Implementing the system by July would give the BOC at least six months to crackdown on oil smuggling, according to Ruiz.

He said this would hopefully allow the BOC to capture at least half of the P40 billion annual foregone revenue caused by the illicit trade of fuel.

“Based on the presentation of the BOC, P40 billion is our loss. Hopefully, we can fill that gap. With the remaining six months, if we implement that we can recover more than half,” the BOC official said.

However, the Department of Finance (DOF) earlier said the agency is still gearing up for the procurement of the technology and service provider for the fuel marking system.

Finance Assistant Secretary Maria Teresa Habitan told reporters the bidding would take place by the third quarter of this year.

A mandatory fuel marking scheme, as contained in the Tax Reform for Acceleration and Inclusion, aims to curve illicit trade of petroleum products.

According to DOF estimates, the measure is expected to plug as much as P44 billion in foregone revenues annually due to oil smuggling.

On the other hand, the implementation of the system would cost the government P2 billion annually.

The DOF also opened the possibility of charging the cost of the marker dyes to fuel manufacturers and importers. The fuel marker is estimated to cost around P0.9 per liter.

In 2016, revenue collections from petroleum products reached P52.56 billion, according to the DOF.

Of this amount, the BIR collected P13.22 billion in the form of excise taxes and P2.11 billion in VAT, while the BOC collected P10.92 billion in excise taxes and P26.30 billion in VAT.