Excise tax on LPG, kerosene suspended

MANILA – President Ferdinand R. Marcos Jr. on Friday issued Executive Order (EO) 125, ordering the suspension of excise taxes on liquefied petroleum gas (LPG) and kerosene following the rise in fuel prices.

EO 125 orders the full suspension of the excise taxes on LPG, except when used as raw material for production of petrochemical products or used for motive power, as well as kerosene, except when used as aviation fuel.

The directive was issued following the recommendation of the Development Budget Coordination Committee (DBCC) to temporarily suspend or reduce the excise tax on petroleum products.

The DBCC’s recommendation came after the Department of Energy (DOE) issued a formal certification that the one-month average price of Dubai crude reached USD99.41 barrel from Aug. 13 to Sept. 11, well above the USD80-per-barrel threshold under Republic Act (RA) No. 12316 for possible suspension or reduction of fuel taxes.

EO 125 mandates the DBCC, in coordination with the DOE, to review the implementation of the suspension of excise taxes and submit a report to the House of Representatives (HOR) and the Senate, in accordance with RA No. 12316.

It also provides for the automatic reversion of excise tax rates, a week after the one-month average Dubai crude oil price falls below USD80 per barrel, as certified by the DOE, or upon the expiration of the three-month suspension.

“Based on these reports, the DBCC may recommend to the President the continuation, modification, extension, or termination of said suspension,” the order read.

“The excise tax rates on petroleum products shall automatically revert to the rates prescribed under Section 148 of the NIRC, as amended, without need of further issuance."

The DOE and the Department of Finance (DOF), through the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), are directed to conduct an inventory of existing stocks of LPG and kerosene and ensure compliance with the latest directive.

The BIR and the BOC are also mandated to submit to the HOR monthly information on the declared value and volume of petroleum products covered by EO 125.

According to the EO, the DOE must require oil companies to submit, on a monthly basis, information on the cost components of petroleum products covered by the order during the period of tax suspension.

EO 125 takes effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.

Under RA No. 12316, the President may, upon the recommendation of the DBCC and in coordination with the DOE, suspend or reduce excise taxes on specified petroleum products when the one-month average Dubai crude price reaches or exceeds USD80 per barrel.

The relief may be granted for up to three months.

In April, Marcos invoked his power to suspend excise taxes on LPG and kerosene for three months following the DBCC recommendation. (PNA)