The provision exempting local oil refineries from paying taxes and duties on crude oil imports was retained by Pres. Rodrigo Duterte in his approval of Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law on Friday.
The said provision, seen to benefit Petron Corporation, has been deemed controversial since it was not part of the House of Representatives’ and Senate’s approved versions.
Advocacy group Action for Economic Reforms (AER) was among the parties that called for the veto of the said provision, which was reportedly inserted in the deliberations of the bicameral conference committee.
Petron, the Philippines’ largest oil firm, owns the country’s remaining petroleum refinery in Limay, Bataan. The facility has been closed since February due to low margins spurred by the COVID-19 pandemic and what Petron President and CEO Ramon Ang has deemed as “unfair” taxation.
The oil giant lost Php11.4 billion in 2020 largely due to mobility restrictions amid the pandemic.
“However, it is glaring that one provision—that of protecting the local crude oil refinery, escaped the presidential veto when the very reasons for striking out other weak provisions apply to this specific firm. That is, the protection given to one local crude oil refinery is distortionary, uncompetitive, unfair, rigid, and redundant,” AER said in its statement.
“It is clear that the government is protecting a firm that is objectively uncompetitive. This shows that while the administration can have the political will to be uncompromising by striking out many questionable or weak provisions, it succumbed to the powerful lobby of one particular oligarch,” the statement continued.
Duterte vetoed nine items in the economic stimulus law.
Petron earlier mentioned that is committed to reopen the Bataan refinery by July.
Photo from Petron website.