Field testing for marked fuel starts February 2020

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Field tests for the government's fuel marking program start in February. Petroleum firms caught with unmarked products will be penalized for failing to pay taxes

Metro Manila (CNN Philippines, October 18) — The government said it will start field tests for all petroleum products in the market next year. Those caught without the prescribed fuel markers will be penalized for failing to pay taxes.

The Department of Finance, Bureau of Customs (BOC), and Bureau of Internal Revenue (BIR) announced Friday that they are giving a six-month lead time from the start of the rollout of the government's fuel marking program, which is their way of tracking smuggled fuel.

The Tax Reform for Acceleration and Inclusion Act that took effect on Jan. 1, 2018 required fuel marking just as the law raised the excise taxes on oil products by 4.50 per liter.

Under the scheme, imported and locally-refined fuel will be infused with a low concentration of dyes after taxes. Fuel products in storage tanks, petroleum depots, and terminals must all have the right amount of marker or dye in its mix. This means that the products went through the right import or refinery processes and paid the right duties.

READ: Gov't counting on fuel marking to curb rising smuggling

The DOF estimates about ₱20-40 billion annual revenues are not collected from smuggled fuel.

"By February 3, 2020, all gasoline, diesel and kerosene are expected to be marked completely," the agencies said in a statement. "Simultaneously, BOC and BIR personnel shall commence field testing activities and impose penalties, as necessary, for oil companies proven to have unmarked, adulterated and/or diluted fuel."

The countdown started from the first live marking conducted by Customs officials at the Seaoil Bulk Terminal in Mabini, Batangas on August 2, 2019.

Customs initially identified eight ports of entry for bulk imports: Batangas, Limay in Bataan, Subic, Davao, Cagayan de Oro, Cebu, Tacloban, and Iloilo. A fuel importer must submit a notice of arrival to the Fuel Marking One Stop Shop in respective Customs districts within 48 hours before the arrival of the shipment, and submit a number of documents to secure a special permit to discharge the products.

The BOC said only petroleum products for domestic consumption and with proof of payment of taxes will be marked by the joint venture of Switzerland-based SICPA SA and SGS Philippines, which has been tapped as the provider of the service.

These will then go through random field testing, which involves getting samples of the fuel from gas stations, storage facilities, and warehouses.

A joint special task force of the BIR and BOC would handle field tests. Samples that fail the procedure will be subject to two confirmatory tests. Fuel discovered without any marking or containing diluted or fake markers will be penalized, with the samples admissible in court for violation of tax laws.

The agencies said they have so far marked over 71 million liters of fuel from Seaoil, and is set to start marking products from the terminals of Pure Petroleum Corp., Phoenix Petroleum Corp., Unioil Petroleum Philippines, and Chevron Philippines, Inc. this month.