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Press Release

THE PUBLIC DESERVES TO KNOW - Business Community expresses serious concern about the Shell Tax Issue

In various public statements in recent weeks, Pilipinas Shell Petroleum Corporation (Shell) clarified its position on the key issues regarding the alleged non-payment of excise taxes for its imports of Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG). Shell maintains that it has paid all applicable taxes on these raw materials, and that there are no factual or legal bases for saying otherwise.

Various business organisations, including the Joint Foreign Chambers (JFC), as well as the local federations Employers Confederation of the Philippines (ECOP), Philippine Chamber of Commerce and Industry (PCCI) and Philippine Exporters Confederation Inc. (PHILEXPORT) have earlier spoken on this issue,  due to its serious political, economic and social implications for the country: 

1.  This issue results in double taxation (the imposition of excise tax on the both the imported raw materials used and in the finished products), which not only puts Shell in an uneven playing field compared to other oil players, but more importantly: 

  • Reflects instability in government policies (with dangerous precedent set due to retroactive application); and         
  • Results in a policy implication of discouraging manufacturing investments in the country, thus, destroying the higher value added the industry contributes.  

2.  The issue similarly reflects abuse of seizure power by the Bureau of Customs, against importers with contested tax assessments.

In their February 15 public statement, the Joint Foreign Chambers, representing seven Chambers of Commerce  and Industry, numbering  around 1,700 multinational companies with substantial investment in the Philippines, echoed the above concerns as its members watch the tax dispute closely:   

"Double taxation, taxing both intermediates and final product, undermines the JFC's efforts to encourage manufacturing investments in the Philippines. Double taxation favours trading over manufacturing, which cannot be in the interest of Philippine economic policy makers. We suggest that this policy be  urgently addressed as it is detrimental to the vision of growth in manufacturing." 

  

On February 24, the Financial Executives Institute of the Philippines (FINEX) and the Management Association of the Philippines (MAP), similarly issued a joint statement  which expressed grave concern over the decision of the Bureau of Internal Revenue with regard to taxes applied to Shell:

"Consistency, predictability, and fairness of government policies, rules and regulations are essential to business.  If investments are to be attracted, businessmen should be confident that their investments would not be subject to arbitrary and unreasonable regulatory and policy changes.  

There's no way an investor can calculate risks associated with abrupt changes in government policies.  He is not going to invest in a country with an inconsistent and uncertain regulatory climate.  He will just go elsewhere."

Shell, together with the business community, remains vigilant and hopeful for the immediate resolution of this important issue. This issue is important and as part of Shell's business principles, it is Shell's duty to provide the public with accurate and truthful information, in the spirit of fairness and transparency.     

The public deserves to know.