THE fuel marking program is expected to generate an additional P5-billion worth of revenue for the government with revenue agencies gearing up for implementation this quarter with the issuance of the program’s rules earlier this month.
The Department of Finance (DoF), Bureau of Customs (BoC) and the Bureau of Internal Revenue (BIR) released the implementing guidelines in Joint Circular No. 001.2019 published on July 5.
The circular identifies the BIR as responsible for collecting taxes on domestically refined or manufactured petroleum products while the BoC is responsible for taxing imported products.
The fuel marking system stains petroleum products with special marker dyes, to indicate that tax has been properly paid before the products are removed from storage and released onto the market. The absence of marking is considered prima facie evidence of tax avoidance and is considered an anti-smuggling measure.
Importers, consignees, and refiners are required to accommodate fuel marking teams deployed by the revenue agencies, while a contracted marking provider is tasked with supplying marker and the associated equipment, field testing services and confirmatory testing to ensure all fuel products are compliant.
Fuel marking is authorized by the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
“The implementation of the fuel marking program is expected to boost government revenue by at least P5 billion in 2019. The issuance of the circular is a product of extensive preparations that started in November 2018,” Finance Secretary Carlos G. Dominguez III said in a mobile message on Sunday.
“With the issuance of the circular under the terms of reference with the French consortium that won the bid at least 95% of all marking sites will be operational by the end of the year. The consortium will deliver equipment to our marking sites over the next few weeks and marking operations are scheduled to begin this quarter.”
Mr. Dominguez said that due consultation was carried out before the completion of the guidelines, with stakeholders including the Department of Energy and the Department of Environment and Natural Resources.
“The circular incorporates results of various tests carried out since late last year as well as the unique operational processes of various import terminals and local production facilities. We have been able to confirm that the physical and chemical properties of marked fuel remained unchanged over time. The fuel analyzers have also undergone repeated tests in their ability to detect whether unmarked fuel has been mixed into fuel supply. We also determined how best to streamline the marking process into day-to-day operations,” Mr. Dominguez added.
According to the circular, only petroleum products for domestic consumption with proof of payment of taxes will be subject to marking.
The fuel marking provider meanwhile will implement a comprehensive field testing program for full coverage of fuel storage and facilities nationwide.
“Six months after the roll-out of the program, all petroleum products found in the domestic market including those in storage tanks, depots, and terminal facilities shall be tested for compliance with the fuel marking program,” the circular said. — Reicelene Joy M. Ignacio