Congressmen urge probe on BIR order vs oil smuggling SEZ News
MANILA, Philippines - Congressmen on Tuesday asked the House of Representatives to order an inquiry into the Bureau of Internal Revenue's order, mandating oil companies to apply for tax refunds and requiring them to register all storage facilities within freeports and economic zones.
Tarlac 3rd District Rep. Jeci Lapus and Pampanga 1st District Rep. Carmelo Lazatin said that the BIR order tramples upon provisions of Republic Act 7227 or the law which created the Subic Special Economic and Freeport Zone and the Clark Freeport Zone.
The BIR issued on February 17, 2012 Revenue Regulations 2-2012 to combat alleged rampant oil smuggling and ensure that proper taxes are correctly collected from petroleum and petroleum products imported into the Philippines, including those coming through the Freeport Zones and Economic Zones.
Lapus, a vice chairman of the House Committee on Accounts, said the question of whether a department regulation can override a law passed by Congress and pertinent decisions by the Supreme Court may arise from RR 2-2012.
He said that RR 2-2012 contradicts Section 12 of RA 7227, which states that the "Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment."
He added that RA 7227 provides that in lieu of all taxes, a five percent tax on gross income shall be paid by all registered business enterprises within the Freeport Zone.
The law also provides that if an importer is located inside the Freeport Zone, such importation shall not be subject to value-added tax and excise tax. In addition, if the same importer sells such petroleum products within the Freeport Zone, no tax shall be due according to Lapus.
Through House Resolution 2292, Lapus and Lazatin sought an inquiry into RR 2-2012 and determine whether if the issuance runs contrary to provisions of RA 7227 and other pertinent decisions of the Supreme Court.
Revenue Regulations 2-2012 mandates the collection of oil taxes and duties and allows oil companies to apply for tax refunds once they show proof that the imported oil was consumed within the ecozone or freeport. It also requires oil firms to register all their oil storage facilities within free ports and economic zones.
Lazatin warned that if RR 2-2012 is upheld, it will set a dangerous precedent as the BIR can impose taxes on other and all importations by Freeport and Economic Locators.
"Revenue Regulations 2-2012 would authorize the BIR to introduce amendments to RA 7227 which is a clear violation of the 1987 Constitution," said Lazatin, a member of the House Committee on Bases Conversion.