Metro Manila (CNN Philippines, May 31) — Oil products imported by firms located in economic zones are now subjected to tax, the Bureau of Internal Revenue (BIR) has indicated following the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Under the agency’s Revenue Regulations No 4-2022, importers of all petroleum products entering the economic zones should settle the value-added tax (VAT) and excise tax to the Bureau of Customs (BOC).
The said taxes should be paid prior to any transfer, transport, or withdrawal of the petroleum imports.
A refund of taxes paid is possible if the petroleum products were transferred to a registered export enterprise that will use it “directly and exclusively” for its registered project.
An importer can also seek a VAT refund if the oil products have been delivered to entities engaged in international shipping or air transport operations; likewise those firms that are statutorily zero-rated for VAT under special laws or international agreements.
In addition, the BIR noted that an importer can tap excise tax refund if the oil products were sold to international carriers for consumption outside the Philippines, to entities or agencies covered by tax treaties and conventions, and those which, by law, are exempted from direct and indirect taxes.
“Once approved, the claim shall be forwarded to the BOC for cash payment or issuance of a tax credit certificate, as applicable,” the BIR explained.
“No claim for refund shall be granted unless it is properly shown to the satisfaction of the BIR that said petroleum or petroleum products have actually been transferred, delivered, sold and used by the foregoing entities for the above-stated purposes,” it said.
The BIR added that local refiners enjoying fiscal incentives with an investment promotion agency may import and refine crude petroleum at their facilities without paying duties and taxes.
As for Tax Management Association of the Philippines president Fulvio Dawilan, this policy is nothing new since it’s actually just the implementation of the CREATE law that took effect in 2021.
He also told CNN Philippines it is the consumers who will “bear all the burden of all the taxes paid by importers” since these are ultimately pass on to them.
The BIR failed to hit its collection target by 8.9% in the first three months of 2022. In a previous statement released by the Department of Finance, the agency collected ₱485.4 billion, short of the Development Budget Coordination Committee’s ₱532.6-billion target.
