Philippines grants VAT exemption on indigenous natural gas to boost energy security
- VAT exemption now applies to indigenous natural gas, related electricity, and ancillary services
- Incentive is tightly controlled through Department of Energy certification requirements
The Philippines has brought forward new VAT exemptions on indigenous natural gas and related power generation, as part of a broader policy push to strengthen domestic energy security and in reaction to the Iranian conflict which has pushed a spike in gas and fuel prices. They will come into effect in early April.
The measure, issued by the Bureau of Internal Revenue (BIR) and Department of Finance, implements fiscal incentives under Republic Act No. 12120, the Philippine Natural Gas Industry Development Act.
See how other countries VAT energy cuts are working.
Scope of the VAT exemption
The exemption applies to:
- Sale and purchase of indigenous natural gas
- Aggregated gas, but only the portion attributable to indigenous sources
- Electricity generated from indigenous natural gas
- Ancillary services directly linked to power generation
Eligibility and compliance requirements
Access to the VAT exemption is conditional on certification from the Department of Energy:
- Gas transactions must be validated by the Oil Industry Management Bureau, including volumes and indigenous gas proportions per taxable period
- Power producers must obtain confirmation from the Electric Power Industry Management Bureau on gas usage and electricity output
- Supporting permits must be attached to all endorsement applications
These controls are designed to ensure that incentives are targeted strictly at indigenous gas activity.
The regulations will take effect 15 days after publication in the Official Gazette or on the BIR website.
