PH still losing billions from oil smuggling
Around a third of all diesel products currently in the market are contraband

OIL SMUGGLING ON THE RISE. Local officials seize a cargo of smuggled oil products in San Fernando, La Union. Photo courtesy of

MANILA, Philippines – The Philippines continues to lose billions of pesos in revenue each year from the proliferation of smuggled petroleum products in the country, an industry player said on Sunday, November 25.

The foregone revenues are increasing as prices of oil continue to rise, according to Pilipinas Shell Petroleum Vice President for Communications Roberto S. Kanapi.

Citing a report of the Petroleum Institute of the Philippines (PIP), Kanapi said this year, the amount could even go beyond the P20 billion to P30 billion previously estimated.

“If you take away the 12% value added tax (VAT) on gasoline that averages around P50 per liter, that amounts to around P6 per liter in foregone revenues for the government,” he explained.

1/3 of all diesel products smuggled

The PIP — composed of other industry players like Petron, Chevron, Total, PTT or Liquigaz — estimates that around a third of the diesel products currently in the market are smuggled.

Many citizens don’t even know they are gassing up their cars with illegal fuel. (Read: Is your car running on smuggled gas?)

The industry has requested the government through the Bureau of Internal Revenues (BIR) to do advanced collection of VAT on imports from economic zones, particularly Subic and Cagayan de Oro.

However, Kanapi said BIR actions have been suspended pending a final decision on a court case lodged against the advanced collection of VAT on fuel imports in free trade and economic zones.

BIR trying to stop smuggling

On February 17, the BIR issued Revenue Regulation 2-2012 to combat the proliferation of oil smuggling and prevent further revenue losses for government.

The order made it mandatory to immediately implement corrective measures to curb this type of contraband and ensure the collection of taxes from petroleum products.

It also clarified that VAT and excise taxes to be collected from each imported oil product will be paid by the importer to the Bureau of Customs.

Regarding special economic zones like Subic or Cagayan de Oro, the order stated that selling petroleum products to registered companies enjoying tax privileges within these areas — as well as to individuals engaged in international shipping or air cargo transport operations — is exempt from VAT.

As for refund claims, all are processed by Customs but subject to the endorsement of the BIR. –

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.