Status of 'territorial' oil mulled

Status of 'territorial' oil mulled

Deputy permanent secretary for finance Prapas Kong-Ied says oil transported by Chevron Thailand Exploration and Production for use on its rigs should be counted as a domestic purchase, adding that the ministry must retrieve 3 billion baht in excise duty refunds from the petroleum explorer.

Mr Prapas said he was expressing his own opinion and would wait for further input from the Council of State.

In 2010, the tax collection agency's committee tasked with considering tax issues mulled a request by PTT Exploration and Production (PTTEP), which had sought clarification on whether oil transported to rigs located farther than 12 nautical miles offshore be viewed as exports. The committee determined that it should be considered an export.

Chevron Thailand's petroleum rigs are located on a continental shelf that is farther than 12 nautical miles from the coast.

That decision came a year after customs officials had said that such transactions should be counted as domestic purchases subject to excise duties and value-added tax (VAT).

Even though PTTEP made the request for clarification, PTT's petroleum-exploring flagship firm has never claimed excise duty refunds. But Chevron Thailand claimed excise duty refunds worth 3 billion baht from the Customs Department during 2010-15.

The issue became contentious after the incumbent director-general of the Customs Department, Kulit Sombatsiri, recently asked for the Council of State's interpretation on the definition of "territorial". He further asked the Customs Department to slow down related tax refunds.

Currently, the laws governing both customs and excise duties provide no clear-cut definition of territorial.

The Office of the Ombudsman, however, disagreed with the Customs Department's 2010 conclusion.

Mr Prapas said the case needs to be considered from the standpoint of other special laws that provide definitions of territorial such as the Petroleum Act 1971, which defines territorial as including petroleum rigs located on the continental shelf, and the Revenue Code, which also defines territorial as extending to the continental shelf.

To further complicate matters, the Council of State earlier reviewed a similar case in which it determined that oil transported from petroleum rigs onshore must be counted as an export.

To make the matter clear-cut, a definition of territorial should be added to the laws regulating customs and excise duties, of which draft bills are pending in the National Legislative Assembly, said Mr Prapas.

Do you like the content of this article?
COMMENT (2)