Granting the President the Power to Lower the Rate of Value-added Tax on Petroleum Products

Senate Office of the Secretarp TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES 26 APR 15 P3:38 First Regular Session SENATE 2045 RECEIVED BY: S.B. No. _ Introduced by SENATOR IMEE R. MARCOS AN ACT GRANTING THE PRESIDENT OF THE PHILIPPINES THE POWER TO LOWER THE RATE OR SUSPEND THE IMPOSITION OF VALUE-ADDED TAX ON PETROLEUM PRODUCTS FOR A LIMITED PERIOD OF ONE (1) YEAR IN TIMES OF NATIONAL EMERGENCY OR STATE OF CALAMITY, AMENDING FOR THE PURPOSE SECTIONS 106 AND 107 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED EXPLANATORY NOTE

Section 9, Article II of the 1987 Constitution provides that, "the State shall

promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life of all." Since the implementation of Republic Act No. 10963, otherwise known as the Reform for Acceleration and Inclusion (TRAIN) Law, fuel prices have been subject to external shocks. The first quarter of 2026 has seen unprecedented volatility. Following military escalations in the Middle East in February 2026, global supply chains have been thoroughly upended. The situation reached a critical point in March 2026, when the Philippines officially declared a National Energy Emergency (Executive Order No. 110, s. 2026). Restraints in the Strait of Hormuz, where 20% of the petroleum market flows through, caused domestic pump prices to reach historic highs. By April 2026, prices for diesel surged to as high as Php 172.90 per liter, gasoline to PhP 119.90 per liter, and kerosene peaked at an alarming PhP 178.29 per liter.

The domino effect of these hikes in petroleum products has pushed the national inflation rate to 4.1% as of April 2026, nearly double the increase from the inflation rate in February 2026, which was at 2.4%. In view of the current situation of the country, which has just recovered from a bout of high inflation brought upon by increasing food prices, there is a need to give some relief to the Filipinos and ensure their survival and recovery. The government should not earn windfall profits on price increases in basic commodities and inputs. As a means of easing the financial burden of the public, this bill proposes to grant the President of the Philippines the power to temporarily lower the rate or suspend the imposition of Value-Added Tax (VAT) on petroleum products in times of national emergency or a state of calamity, such as this crisis. In view of the foregoing reasons, the passage of this bill is earnestly sought. Imee h. Транса IMEER. MARCOS

SenatE Office of the Sccretarp TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES 26 APR 15 P3:38 First Regular Session SENATE RECEIVED BY: 2045 S.B. No. _ Introduced by SENATOR IMEE R. MARCOS AN ACT GRANTING THE PRESIDENT OF THE PHILIPPINES THE POWER TO LOWER THE RATE OR SUSPEND THE IMPOSITION OF VALUE-ADDED TAX ON PETROLEUM PRODUCTS FOR A LIMITED PERIOD OF ONE (1) YEAR IN TIMES OF NATIONAL EMERGENCY OR STATE OF CALAMITY, AMENDING FOR THE PURPOSE SECTIONS 106 AND 107 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Section 106 of the National Internal Revenue Code of 1997, as

amended, is further amended to read: "Section 106. Value-added Tax on Sale of Goods or Properties. - (A) Rate and Base of Tax - There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, a value added tax equivalent to twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, suck tax to be paid by the seller or transferor. PROVIDED, THAT THE PRESIDENT OF THE PHILIPPINES, BY VIRTUE OF AN EXECUTIVE ORDER, AFTER CONSULTATION WITH THE SECRETARY OF FINANCE, MAY LOWER THE RATE OR SUSPEND THE IMPOSITION OF THE VALUE-ADDED TAX ON THE SALES OF PETROLEUM PRODUCTS IN TIMES OF A DULY DECLARED STATE

OF NATIONAL EMERGENCY OR STATE OF CALAMITY FOR A PERIOD NOT EXCEEDING ONE (1) YEAR UPON DETERMINATION BY THE PRESIDENT THAT SUCH LOWERING OF RATE OR SUSPENSION IS NECESSARY TO PROTECT PUBLIC INTEREST AND WELFARE. xxX."

SEC. 2. Section 107 of the National Internal Revenue Code of 1997, as amended,

is further amended to read: "Section 107. Value-added Tax on the Importation of goods. - (A) In General. - There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to twelve percent (12%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any. PROVIDED FURTHER, THAT THE PRESIDENT OF THE PHILIPPINES, BY VIRTUE OF AN EXECUTIVE ORDER, AFTER CONSULTATION WITH THE SECRETARY OF FINANCE, MAY LOWER THE RATE OR SUSPEND THE IMPOSITION OF THE VALUE-ADDED TAX ON THE IMPORTATION OF PETROLEUM PRODUCTS IN TIMES OF A DULY DECLARED STATE OF NATIONAL EMERGENCY OR STATE OF CALAMITY FOR A PERIOD NOT EXCEEDING ONE (1) YEAR UPON DETERMINATION BY THE PRESIDENT THAT SUCH LOWERING OF RATE OR SUSPENSION IS NECESSARY TO PROTECT PUBLIC INTEREST AND WELFARE. xxx."

SEC. 3. Implementing Rules and Regulations. - Within thirty (30) days from the

2 effectivity of this Act, the Secretary of Finance, in coordination with the Bureau of Internal Revenue, shall promulgate the necessary rules and regulations for its effective 4 implementation.

SEC. 4. Repealing Clause. - All other laws, decrees, executive orders and

6 issuances, proclamations, rules and regulations, and other issuances or parts thereof that are inconsistent with the provisions of this Act are hereby repealed or amended, accordingly.

SEC. 5. Separability Clause. - If any provision of this Act shall be declared

unconstitutional or invalid, the other provisions not otherwise affected shall remain in full force and effect.

SEC. 6. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in a newspaper of general circulation. Approved,