Waiving the Exporter's Bond Required on a Per-shipment Basis for Petroleum Products

September 24, 1987 BIR RULING NO. 303-87 143 000-00 303-87 Gentlemen : This refers to your letters dated August 11, 1987 and September 11, 1987 in effect requesting that the exporter's bond on a per-shipment basis for your petroleum product exports required under Section 143 of the Tax Code, as amended by Executive Order No. 22, be waived. It is represented that you are manufacturing petroleum products under the provisions of LOI 1352 issued on September 8, 1985, as amended by Executive Order No. 280, which grants duty and tax exemptions to oil companies in respect to two types of export arrangements, viz: a) Offshore processing where the foreign-owned oil is brought into the country by the foreign entity who retains ownership of the crude oil and the refined products that are subsequently expected; and b) Processing of additional volume of own-imported crude by the local oil companies and exportation of the refined products processed therefrom; (BIR Ruling dated August 13, 1986) that you have an existing manufacturer's bond, general exporter's bond, and importer's bond in the respective maximum amount of P500,000.00 or a total of 1.5 Million in bond exposure with the Bureau of Internal Revenue; that if the exporter's bond required on a per-shipment basis provided under Executive Order No. 22 is enforced, it will result in loss of incentive for your petroleum product exports because the additional cost of premium payments on the bond will make your export price uncompetitive in foreign market. iatdc In reply, please be informed that the exporter's bond required under Section 143 of the Tax Code, as amended by Executive Order No. 22, in the nature of performance bond to guarantee the exportation of articles subject to excise/specific tax but removed from factory premises without pre-payment thereof and to answer for such taxes in case of possible sale in the local market. Considering that your petroleum product exports already enjoy exemption from taxes under and by virtue of LOI 1352 as amended by Executive Order No. 280, and the fact that these are removed directly from the factory or customs premises to shipside for export to the foreign market, the exporter's bond on a per shipment basis is considered unnecessary. Such being the case, the exporter's bond required on a per-shipment basis is waived, pursuant to said Section 143 of the Tax Code, as amended. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner