Friday, October 15, 2010

Pilipinas Shell charged with 24 billion tax case (Thank you Customs!)

Yes, I admit. 


IN several entries here, I lambasted Customs Commissioner Angelito Alvarez for not lifting a finger against smugglers and tax evaders. Now, I am saying "thank you" to him for this singular effort to recover 24 billion pesos from Pilipinas Shell. 


I am extremely overjoyed that the administration is finally starting to regain its moral compass and starting to really go after these big-time smugglers, tax evaders, and criminal lords in barongs. I hope this is not the usual ningas cogon.


I am very happy that I will just quote the entire Philippine Daily Inquirer article about Pilipinas Shell tax evasion case. Thank you, Mr. Alvarez for a job well done.


Biggest ever: P24-B tax case filed vs Shell 
By Nikko Dizon
Philippine Daily Inquirer
First Posted 02:45:00 10/15/2010

Filed Under: State Budget & Taxes, Smuggling, Crime and Law and Justice, Oil & Gas - Downstream activities, Graft & Corruption
MANILA, Philippines—The Bureau of Customs Thursday filed with the justice department a P24.5-billion complaint against the local unit of oil giant Royal Dutch Shell, accusing the company of evading import duties and taxes in what could be the country’s biggest smuggling case.
“This criminal complaint should prove to everyone that President Aquino’s campaign against smuggling, corruption and other economic crimes respects no sacred cows,” Customs Commissioner Angelito Alvarez said at a press conference in the justice department.
Edgardo Chua, the chair of Pilipinas Shell Petroleum Corp., said his company had “never, ever engaged in smuggling. That’s against our business principles.”
In its 18-page complaint backed by 17 brown folders of invoices and other documents, the customs bureau accused Pilipinas Shell of “intentional misclassification and misdeclaration” of its various petroleum imports from 2004 to 2009 to avoid the payment of excise duties and value-added taxes (VAT).
In what Alvarez described as the biggest claim ever against a suspected smuggler, the government is seeking the payment of P24.5 billion in unpaid taxes and additional penalties.
‘Totally ridiculous’
Still, Chua belittled the government case. “We are one of the biggest taxpayers in the country. This charge is totally, totally, shall we say, ridiculous,” he said, adding the company has yet to see the complaint.
Named respondents in the complaint were Nigel Avila, Pilipinas Shell country tax manager; Brian Khriz Acosta, Carolyn Francisco, Ma. Cristina Rago, and Janice de los Reyes, Pilipinas Shell employees who signed the import entries; customs brokers Diosdado Bagon, Jorge Pascual Jr., and Mary Grace Maleon; and other John and Jane Does.
Alvarez said 52 import entries filed from 2007 to 2009 showed that Pilipinas Shell’s shipments of unleaded gasoline were “intentionally misclassified” as tetrapropylene under the Harmonized System (HS) Code.
The customs commissioner said this was “a ploy to cheat the government of billions of pesos,” as tetrapropylene was not among the articles under the National Internal Revenue Code subject to excise tax.
He said the misclassification in the 52 import entries defrauded the government of P2.5 billion in excise duties and VAT.
Between August 2005 and December 2008, Pilipinas Shell also allegedly misdeclared its imports as catalytic cracked gasoline (CCG) or light catalytic cracked gasoline (LCCG). Documents issued by Shell International Eastern Trading Co. and other shipping companies, however, described the shipments as unleaded premium gasoline—which has a higher tax rate.
Alvarez said the misdeclaration deprived the government of P385.8 million in revenues.
“With the twin acts of misdeclaration and misclassification, the government lost at least P2.7 billion worth of excise and value-added taxes,” he said.
800-percent surcharge
Alvarez said the Tariff Customs Code of the Philippines provided that fraudulent acts and practices committed by the accused could be penalized by as much as 800 percent of the taxes owed the government.
In this case, the surcharge amounted to P21.8 billion. Thus, the bureau is demanding P24.5 billion from Pilipinas Shell.
Alvarez said that the smuggling case against Pilipinas Shell was different from the P7.3-billion tax collection case against Pilipinas Shell pending before the Court of Tax Appeals.
Chua, however, said Pilipinas Shell believed the complaint was covered in the pending case.
The Aquino administration, which took office on June 30, has launched a high-profile campaign against tax evasion and smuggling under its Run After Tax Evaders (RATE) and Run After The Smugglers (RATS) programs.
Prior to the Pilipinas Shell case, the cases unveiled each week since July involved relatively small amounts and none has yet made it to court, prompting analysts to say the Aquino administration needed to show more to convince investors it was serious in stamping out corruption. With a report from Reuters


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