The tax policy direction leading to the reduction of oil import duty from 3.0-percent to zero-percent starting January 2010 is gaining support, but industry refiners are batting for parity of application especially for crude oil sourced from non-ASEAN countries.

Petron Corporation and Pilipinas Shell Petroleum Corporation have adopted common stance on such tax policy proposition as their crude oil imports are not from ASEAN countries.

Such policy prescription toward reduction to zero tariff is in line with the most-favored nation (MFN) rates, which may run counter to the course set forth under the common effective preferential tariff scheme (CEPT) for ASEAN Free Trade Area and other trade bloc agreements.

Shell, in particular, noted that “unequal tariff rates applied to crude sourced by Philippine refiners from non-ASEAN countries and imports from ASEAN countries will eventually result to the decimation of the local refinery business.”

It was further argued that tax application parity is also fully underpinned by Section 6 of Republic Act 8479 or the Downstream Oil Industry Deregulation Act, which requires a uniform tariff rate for both imported raw and finished petroleum products, generally referred to as MFN rates.

The local refiners raised concern that the policy track of the ASEAN Trade in Goods Agreement (ATIGA) prescribing oil import tariff reduction to zero-percent for ASEAN-sourced products may unduly discriminate refiners which are procuring crude oil from producing countries outside the region.

“As in the case of ATIGA, petroleum products from non-ASEAN countries will be discriminated compared to those products coming from ASEAN countries,” Shell stressed.

The company noted that while the promotion of free trade arrangements among-ASEAN member countries is very much an acceptable precept and there is nothing illegal about it, the oil refiners noted that policies must be weighed in such a way that it must not take prejudice against vital businesses, such as oil refining business.