SHELL seeks tax refunds... I mean tax credits.. does BIR still gives tax rebates nowadays? I bet due to scarcity of funds they merely resort to giving tax credits.
Well reason is because they sold petroleum products to an international carrier and they claimed that inasmuch as the law provides exemption from paying excise tax, then therefore they are entitled to a tax rebate.
Well we all know Shell right? their one of the top local oil companies in the country. Their into the manufacture, distribution and sale including export of petroleum products.
What Shell tried to do here is not Tax Evasion as all other big companies are understandably tempted to do so. What it tried doing here in this case is what you call 'Tax Avoidance'.
Well of course you're a top big oil company, it's a given that you retain some of the best mercantile lawyers in the country. So what do you do come the day of filing your business taxes? you call on your pool of lawyers to try think of a way to augment company expenses right? And well of course since these men are all well versed in tax laws, then there's no harm in trying in circumventing some tax provisions right? And if caught in the act of doing? then you just have put up an innocent look, scratch your head and say "oh I didn't know that..tsk". E malay mo nga makalusot.
So here they are Shell maintaining that since petroleum products sold to qualified international carriers are exempt from excise tax, as expressly stated in the tax code, then no taxes should imposed on the article, to which goods the tax attaches, whether in the hand of the said international carriers or the petroleum manufacturer or producer. (Hmhm- pushing the envelope huh?)
But then the Commissioner of Internal Revenue on the other hand thought otherwise. Contending that Shell must shoulder the excise taxes it previously paid on petroleum products which it later sold to international carriers.
Meaning it cannot pass on the tax burden to the said international carriers which have been granted exemption under Sec. 135 of the NIRC.
Okay what does Sec. 135 of the 1997 NIRC has to say?
SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; (b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and (c) Entities which are by law exempt from direct and indirect taxes.
So what happened? Had Shell really understood it differently?
ISSUE:
1. WON Shell can pass on to international carriers and exempt agencies the excise taxes it paid as manufacturer or producer.
2. WON Shell has a right to file a claim for refund or tax credit for the excise taxes it paid or the petroleum products it sold to international carriers.
HELD:
1. SHELL CANNOT PASS ON THE EXCISE TAXES
Court says: An excise tax is a tax on the manufacturer not on the purchaser. Hence Shell as engaged in the business of processing petroleum products is the one liable for the excise taxes.
There being no express grant under NIRC of exemption of payment of excise tax to local manufacturers of petroleum products sold international carriers and absent any provision in the Code authorizing the refund of excise tax paid, the Court holds that Sec. 135 should be construed as prohibiting the shifting of the burden of the excise tax to the international carriers who buys petroleum products from the local manufacturers.
2. SHELL HAS NO RIGHT TO CLAIM FOR TAX REFUND
Founded on the principles of international comity and reciprocity. PD 1359 granted exemption from payment of excise tax but only to foreign international carriers who are allowed to purchase petroleum products free of specific tax provided the country of said carrier also grants tax exemption to Philippine carriers.
So what is PD 1359? This was a Marcos Decree that amended a previous tax code, the Sec. 134 of the 1977 NIRC. The exact provision states:
"HOWEVER, PETROLEUM PRODUCTS SOLD TO AN INTERNATIONAL CARRIER FOR ITS USE OR CONSUMPTION OUTSIDE OF THE PHILIPPINES SHALL NOT BE SUBJECT TO SPECIFIC TAX, PROVIDED, THAT THE COUNTRY OF SAID CARRIER EXEMPTS FROM TAX PETROLEUM PRODUCTS SOLD TO PHILIPPINE CARRIERS."
I think the old law Sec. 134 of the 1977 NIRC did not extend tax exemption to international carriers before. So Marcos did spearheaded the tax exemption, that is now contemplated in the current law governing sale of petroleum products outside the country.
Geez... I bet Shell must have been dissing that Marcos amendment up to now.
In continuation, the Supreme Court further stated that both the earlier amendment in the 1977 Tax Code and the present Sec. 135 of the 1997 NIRC did not exempt the oil companies from the payment of excise tax on petroleum products manufactured and sold by them to international carriers.
Therefore claims for tax refund or credit filed by Shell is denied for lack of basis.
So Shell top retainer lawyers loses this case. I bet they knew it all along. E malay mo nga naman talaga baka makalusot. The case is dated 2012... makakalusot ka pa ba kay Commissioner Kim Henares? Try mo lang ;p
Well reason is because they sold petroleum products to an international carrier and they claimed that inasmuch as the law provides exemption from paying excise tax, then therefore they are entitled to a tax rebate.
Well we all know Shell right? their one of the top local oil companies in the country. Their into the manufacture, distribution and sale including export of petroleum products.
What Shell tried to do here is not Tax Evasion as all other big companies are understandably tempted to do so. What it tried doing here in this case is what you call 'Tax Avoidance'.
Well of course you're a top big oil company, it's a given that you retain some of the best mercantile lawyers in the country. So what do you do come the day of filing your business taxes? you call on your pool of lawyers to try think of a way to augment company expenses right? And well of course since these men are all well versed in tax laws, then there's no harm in trying in circumventing some tax provisions right? And if caught in the act of doing? then you just have put up an innocent look, scratch your head and say "oh I didn't know that..tsk". E malay mo nga makalusot.
So here they are Shell maintaining that since petroleum products sold to qualified international carriers are exempt from excise tax, as expressly stated in the tax code, then no taxes should imposed on the article, to which goods the tax attaches, whether in the hand of the said international carriers or the petroleum manufacturer or producer. (Hmhm- pushing the envelope huh?)
But then the Commissioner of Internal Revenue on the other hand thought otherwise. Contending that Shell must shoulder the excise taxes it previously paid on petroleum products which it later sold to international carriers.
Meaning it cannot pass on the tax burden to the said international carriers which have been granted exemption under Sec. 135 of the NIRC.
Okay what does Sec. 135 of the 1997 NIRC has to say?
SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; (b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and (c) Entities which are by law exempt from direct and indirect taxes.
So what happened? Had Shell really understood it differently?
ISSUE:
1. WON Shell can pass on to international carriers and exempt agencies the excise taxes it paid as manufacturer or producer.
2. WON Shell has a right to file a claim for refund or tax credit for the excise taxes it paid or the petroleum products it sold to international carriers.
HELD:
1. SHELL CANNOT PASS ON THE EXCISE TAXES
Court says: An excise tax is a tax on the manufacturer not on the purchaser. Hence Shell as engaged in the business of processing petroleum products is the one liable for the excise taxes.
There being no express grant under NIRC of exemption of payment of excise tax to local manufacturers of petroleum products sold international carriers and absent any provision in the Code authorizing the refund of excise tax paid, the Court holds that Sec. 135 should be construed as prohibiting the shifting of the burden of the excise tax to the international carriers who buys petroleum products from the local manufacturers.
2. SHELL HAS NO RIGHT TO CLAIM FOR TAX REFUND
Founded on the principles of international comity and reciprocity. PD 1359 granted exemption from payment of excise tax but only to foreign international carriers who are allowed to purchase petroleum products free of specific tax provided the country of said carrier also grants tax exemption to Philippine carriers.
So what is PD 1359? This was a Marcos Decree that amended a previous tax code, the Sec. 134 of the 1977 NIRC. The exact provision states:
"HOWEVER, PETROLEUM PRODUCTS SOLD TO AN INTERNATIONAL CARRIER FOR ITS USE OR CONSUMPTION OUTSIDE OF THE PHILIPPINES SHALL NOT BE SUBJECT TO SPECIFIC TAX, PROVIDED, THAT THE COUNTRY OF SAID CARRIER EXEMPTS FROM TAX PETROLEUM PRODUCTS SOLD TO PHILIPPINE CARRIERS."
I think the old law Sec. 134 of the 1977 NIRC did not extend tax exemption to international carriers before. So Marcos did spearheaded the tax exemption, that is now contemplated in the current law governing sale of petroleum products outside the country.
Geez... I bet Shell must have been dissing that Marcos amendment up to now.
In continuation, the Supreme Court further stated that both the earlier amendment in the 1977 Tax Code and the present Sec. 135 of the 1997 NIRC did not exempt the oil companies from the payment of excise tax on petroleum products manufactured and sold by them to international carriers.
Therefore claims for tax refund or credit filed by Shell is denied for lack of basis.
So Shell top retainer lawyers loses this case. I bet they knew it all along. E malay mo nga naman talaga baka makalusot. The case is dated 2012... makakalusot ka pa ba kay Commissioner Kim Henares? Try mo lang ;p
