Senate
Ohee uf the Serrctary

FIFTEENTH CONGRESS OF THE __)
REPUBLIC OF THE PHILIPPINES )
First Regular Session ) WY FEB-2. 339

SENATE

ne

$.No. 2672

Introduced by Senator JUAN MIGUEL F. ZUBIRI

EXPLANATORY NOTE

This last few months, we have experienced the steepest climb of oil prices in the
world market. Oil prices have been peaking progressively higher and stabilizing or
settling down at higher and higher levels. The giant appetites of China, India and the
United States, and instability in the Middle East all exert upward pressure on prices.

The problem is that increasing oil prices and the additional impact of VAT
translates to higher consumer prices. Monitoring of consumer prices shows that
consumer prices are following on the heels of oil prices. Prices of food, beverages &
tobacco, clothing, housing and repairs services, and fuel, light and water all track the
price of oil. An increase in electricity rates also results to rising cost of production, rising

prices and rising consumer expenditures.

The RVAT has made crude and petroleum products and electricity highly-taxed
commodities. Increased collection from RVAT is a gain for government coffers but it has
caused much pain to consumers since its imposition. Every peso raked in by
government is an additional burden shouldered by the consumer especially in times of

rising oil prices.

This bill seeks to offer relief to the consumers by restoring the Value-Added Tax

exemption on sales of petroleum and petroleum products and of electricity.

IGUEL F. ZUBIRI


Cea aneon

Serate

(Oita af the Srevelaey

FIFTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES }
First Regular Session “1 Fe -2 P3339

SENATE
RECEIVED B pe

S.No. 2672

Introduced by Senator JUAN MIGUEL F. ZUBIRI

AN ACT AMENDING
THE NATIONAL INTERNAL REVENUE CODE OF 1997 AS AMENDED

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 109, Chapter 1 of Title IV - Value-Added Tax of the NIRC
As Amended is hereby amended to read as follows:”

Sec. 109. Exempt Transactions. - The following shall be exempt from the

value- added tax:
(a) xxx
(b) xxx
(c) xxx
(d) xxx

After paragraph (d), insert the following paragraph (e).

(e) SALE OR IMPORTATION OF COAL AND NATURAL GAS, IN
WHATEVER FORM OR STATE, “AND PETROLEUM PRODUCTS
(EXCEPT LUBRICATING OIL, PROCESSED GAS, GREASE, WAX AND
PETROLATUM) SUBJECT TO EXCISE TAX IMPOSED UNDER TITLE
Vi;

And re-letter the succeeding paragraphs, from (f) to (r) and

insert the following paragraph (s) after the re-lettered (r).

(s) SALES BY DISTRIBUTION UTILITIES RELATIVE TO THE
GENERATION AND DISTRIBUTION OF ELECTRICITY AS WELL AS
THEIR IMPORTATION OF MACHINERIES AND EQUIPMENT,
INCLUDING SPARE PARTS, WHICH SHALL BE DIRECTLY USED IN
THE GENERATION AND DISTRIBUTION OF ELECTRICITY;

And re-letter the succeeding paragraphs.


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SEC. 2. Section 119, Title V - Other Percentage Taxes is hereby amended to

read as follows:

Section 119. Tax on Franchises. - Arly provision of general or special law
to the contrary notwithstanding, there shall be levied, assessed and collected in
respect to all franchises on radio and/or television broadcasting companies
whose annual gross receipts of the preceding year do not exceed Ten million
pesos (P10,000,000.00), subject to Section 236 of this Code, a tax of three
percent (3%) and on ELECTRIC, gas and water utilities, a tax of two percent
(2%) on the gross receipts derived from the business covered by the law granting
the franchise: Provided, however, That .radio and television broadcasting
companies referred to in this Section shall have an option to be registered as a
value-added taxpayer and pay the tax due thereon: Provided, further, That once
the option is exercised, said option shall be irrevocable.

The grantee shall file the return with, and pay the tax due thereon to the
Commissioner or his duly authorized representative, in accordance with the
provisions of Section 128 of this Code, and the return shall be subject to audit by
the Bureau of Internal Revenue, any provision of any existing law to the contrary

notwithstanding

SEC. 3. Section 148, Chapter V of Title VI - Excise Taxes on Certain Goods is

hereby amended to read as follows:

Chapter V - Excise Tax on Petroleum Products
Sec.148, Manufactured Oils and Other Fuels. - There shall be collected on
refined and manufactured mineral oils and motor fuels, the following
excise taxes which shall attach to the goods hereunder enumerated as
soon as they are in existence as such:

(a) xx;

(b) xxx 5

(c) xxx ;

(A) xxx ; '

(e) Naphtha, regular gasoline and other similar products of
distillation, per liter of volume capacity, [Four pesos and thirty-five
centavos (P4.35)] FOUR PESOS AND EIGHTY CENTAVOS
(P4.80): Provided, however, That naphtha, when used as a raw
material in the production of petrochemical products or as
replacement fuel for natural-gas-fired-combined cycle power plant,
in lieu of locally-extracted natural gas during the non-availability
thereof, subject to the rules and regulations to be promulgated by


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the Secretary of Energy, in consultation with the Secretary of
Finance, per liter of volume capacity, Zero (P0.00): Provided,
further, That the by-product including fuel oil, diesel fuel, kerosene,
pyrolysis gasoline, liquefied petroleum gases and similar oils having
more or less the same generating power, which are produced in the
processing of naphtha into petrochemical products shall be subject
to the applicable excise tax specified in this Section, except when
such by-products are transferred to any of the local oil refineries
through sale, barter or exchange, for the purpose of further
processing or blending into finished products which are subject to
excise tax under this Section;

(f) xx;

(9) xxx;

(h) Kerosene, per liter of volume capacity, [zero centavos
(0.00)] SIXTY CENTAVOS (0.60): Provided, That kerosene, when
used as aviation fuel, shall be subject to the same tax on aviation
‘turbo jet fuel under the preceding paragraph (g), such tax to be
assessed on the user thereof,"

(i) Diesel fuel oil, and on similar fuel oils having more or less
the same generating power, per liter of volume capacity, [zero
centavos (P0.00)] ONE PESO AND SIXTY-THREE CENTAVOS.
(P1.63);

(@) xxx;

(k) 00%; :

(1) Bunker fuel oil, and’on similar fuel oils having more or
less the same generating power, per liter, of volume capacity, [zero
centavos (P0.00)] THIRTY CENTAVOS (P0.30).

SEC. 4. Implementing Rules and Regulations. - The Secretary of Finance,
shall, upon the recommendation of the Commissioner of Internal Revenue, promulgate
not later than 90 days upon the effectivity of this Act, the rules and regulations for the
effective implementation of this Act.

SEC. 5. Repealing Clause. - All laws, executive orders, rules or regulations, or
any part thereof, inconsistent with any provisions of this Act are hereby repealed or
modified accordingly.

SEC. 6. Effectivity. - This Act shall take effect immediately upon its approval.

Approved,