CBC: Hasty tax changes to discourage investors

CEBU, Philippines - The Cebu Business Club (CBC) expressed its concern on the government’s abrupt change of policy that now requires Shell to pay “back taxes.”

CBC is calling the attention of the concerned government agencies, especially Department of Finance to intervene and compel the Bureau of Internal Revenues and the Bureau of Customs to cease their attempts to collect these unfairly levied “back taxes.”

“We, at Cebu Business Club, an independent organization of businessmen and women, and professionals in Cebu, have joined together to help make Cebu a better place to live in and do business,” said CBC president Dondi Joseph in the group’s formal statement.

CBC also condemns the government’s move to retroactively require Shell to pay for the importation of catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) that it uses as a raw material for the production of refined gasoline locally.

In 2004, BIR Commissioner Jose Mario Buñag issued a legal opinion that the importation of the two products, being raw materials, is exempted from excise tax.

In 2009, BIR Commissioner Joel Tan-Torres reversed the Buñag ruling and agreed with the 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.

Requiring the company to pay an additional excise tax amounting to P 7.35 billion for the same years on its imported inputs will constitute double taxation – and a flip-flop on an earlier, validated ruling.

“Double taxation will only discourage local production and encourage direct imports of finished products in the present manner of Chevron, Total, and other independent players in the oil sector,” CBC said in the statement.

“Before committing to invest, businessmen expect fair, consistent and predictable rules to follow to enable them to determine the viability of their investments. If these rules are changed in the middle of the game, what signal will this give prospective investors in the country?” it added.

CBC said that the Philippines is already one of the laggards in attracting direct foreign investments in Asia. Inconsistencies on the application of the laws and rules discourage FDI and inhibit the creation of new badly needed jobs that will help lift many Filipinos out of poverty. T

“This is not the first time the Government has flip-flopped to the disadvantage of investors. This is a serious issue for potential investors,” CBC statement emphasized.

CBC hopes to get that this concern can move the DOF, to successfully intervene and compel the Bureau of Internal Revenue and Bureau of Customs to cease their attemps to collect these taxes in the spirit of the earlier rulings that confirmed the exemption of these products from taxes.

“The Philippines needs the fair and consistent application of the laws of this land if we are to attract investment. Our Country needs investment to fuel its growth and potential,” CBC statement concluded.