Fuel marking scheme implementation seen in 2019

PLANS to implement a fuel marking scheme have been pushed back to next year, with the Department of Finance (DoF) yet to bid out supply contracts for the anti-smuggling measure.

Assistant Secretary Mark Dennis Y.C. Joven said that implementation of the agency’s fuel marking system will likely be rolled out “early next year,” which represents a setback to the previous mid-2018 target for rollout.

Fuel marking involves the use of low concentrations of markers or dyes to be blended with the fuel, to mark the stages undergone by a particular batch of product, determining whether shipments have gone through legal import channels.

Marked fuel will indicate that batches have paid the required tariffs and went through all the necessary steps before it is sold in the market.

Fuel marking is authorized by the Tax Reform for Acceleration and Inclusion (TRAIN) Act which took effect on Jan. 1. It comes on top of additional excise taxes at P2.50 per liter of diesel and P3 per liter for kerosene.

The DoF has allotted P2 billion to engage fuel marking service providers.

Foregone revenue from smuggled or misdeclared fuel is estimated at between P25-40 billion annually.

The department has said that revenue leakage from fuel taxes was P26.87 billion in 2016, about half the P52.56 billion in taxes collected from petroleum products that year.

Finance Undersecretary Antonette C. Tionko said a technical working group is currently refining the terms of reference for the procurement exercise, in coordination with oil companies and refiners. Once the terms are finalized, materials will then be procured through the government’s standard bidding process under the Budget department.

Asked about the impact on revenue of a marking system, Mr. Joven said the target is to collect to collect around 10 times the total project cost.

“We need to get more than what we invested in the program, otherwise it’s a waste of money,” Mr. Joven said.

Reference:

Lopez, M. L. T. (March 6, 2018). Fuel marking scheme implementation seen in 2019. Business World. Retrieved from http://bworldonline.com/fuel-marking-scheme-implementation-seen-2019/