Republic of the Philippines
House of Representatives

Quezon City

EIGHTEENTH CONGRESS
First Regular Session

931

HOUSE BILL NO.

INTRODUCED BY REPRESENTATIVE ALFRED VARGAS

EXPLANATORY NOTE

The Philippines is blessed with rich natural resources throughout its exclusive economic
zone (EEZ) and extended continental shelf, including natural gas and oil. Unfortunately, we
have been unable to tap the full potential of these energy resources. As a consequence of,
we have no choice but to import crude oil from oil-exporting countries, regardless of the

price which has become unconscionably high.

In the last four to five years, petroleum exploration in the Philippines has practically stopped
with no major foreign oil and gas company coming in. This is all because of the perceived
unstable policies due to the Commission on Audit (COA) ruling and now with the proposed

‘Tax Reform for Acceleration and Inclusion (TRAIN 2) Act.

The implementation of the TRAIN 2 Law coinciding with other factors such as the rise of
global oil prices and inflation have resulted to the upsurge of fuel prices thereby diminishing
the purchasing power of the public, especially those who belong to the lowest strata of our

society.

‘The second tranche of TRAIN imposes an additional P2.24 per liter of gasoline and diesel,
consisting of P2 in excise tax and PO.24 in value-added tax (VAT). Removing VAT on


petroleum products would lighten the burden on the Filipino people who are presently

saddled by high prices of fuel and other basic goods and services.

This bill seeks to exempt petroleum products from value-added tax (VAT) as a measure to

alleviate the burden of fuel price hikes on the Filipino people.

In view of the foregoing, the approval of this bill is earnestly sought.

ALFRED VARGAS


Republic of the Philippines
House of Representatives
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 3931

INTRODUCED BY REPRESENTATIVE ALFRED VARGAS

AN ACT
EXEMPTING PETROLEUM PRODUCTS FROM VALUE-ADDED TAX (VAT),
AMENDING FOR THE PURPOSE SECTION 109 OF THE NATIONAL INTERNAL
REVENUE CODE OF 997, AS AMENDED

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

Section 1. Section 109 of the National Internal Revenue Code of 1997, as amended, is
further amended to read as follows:

"SEC. 109. Exempt Transactions. - (1) Subject to the provisions of

Subsection (2) hereof, the following transactions shall be exempt from the
value-added tax:

XXXX

(Z) Sale of gold to the Bangko Sentral ng Pilipinas (BSP);

(AA) Sale of drugs and medicines prescribed for diabetes, high cholesterol, and
hypertension beginning January 1, 2019; and]

(BB) Sale or lease of goods or properties or the performance of services other
the transactions mentioned in the preceding paragraphs, the gross annual sales and/or
receipts do not exceed the amount of Three million pesos (P3,000,000); AND

(CC) IMPORTATION OR SALE OF PETROLEUM PRODUCTS.
XXXX

Section 2. Implementing Rules and Regulations. - Within thirty (30) days from the
effectivity of this Act, the Secretary of Finance shall, upon the recommendation of the



Commissioner of Internal Revenue, promulgate the rules and regulations necessary for its
effective implementation

Section. 3. Repealing Clause. - All laws, decrees, rules and regulations inconsistent with
the provisions of this Act are hereby repealed or amended accordingly.

Section. 4. Effectivity Clause. - This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in two (2) newspapers of general circulation.

Approved,