EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
''tO ffirr of t!i»' i  
■: 'f j
T9 
JUL 16 All -44
S E N A T E
Introduced by Senator Juan Miguel F. Zubiri
AN ACT
CLASSIFYING THE SALE OR IMPORTATION OF PETROLEUM PRODUCTS 
AND RAW MATERIALS IN  THE MANUFACTURE THEREOF AS VALUE-ADDED 
TAX EXEMPT TRANSACTIONS, AMENDING FOR THE PURPOSE SECTION 109 
(1) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED,
AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Republic Act No. 9337 or the RVAT Law lifted the value-added tax (VAT) exemption 
of oil products in 2004 to help shore up government collections in the face of a looming 
fiscal crisis. In addition to the VAT, Republic Act No. 10963 or the Tax Reform for 
Acceleration and Inclusion (TRAIN) Law further increased the excise tax on petroleum 
products over a period of three years beginning January 2018. As of January 2019, P9 
per liter excise tax is imposed gasoline, P4.50 for diesel, P4 for kerosene, and P2 for every 
kilogram of cooking gas or liquified petroleum gas (LPG).
Petroleum products are characterized as socially sensitive products highly used in 
the power generation, commercial, transport, manufacturing and agricultural sectors. 
Diesel for instance is used by public transport. Kerosene is used for lighting. Fuel oil is 
used for power generation and liquified petroleum gas is used in most households. As 
key inputs to production and as household necessity, any increase in the prices of 
petroleum products and the additional burden of VAT and excise tax will have an impact 
on the lives of every Filipino as it also puts upward pressure on the prices of basic goods 
and services, transportation and energy cost. The Philippines, as an oil importer, is also 
vulnerable to price changes in the international market and unpredictable geopolitical 
tensions in oil producing countries.
Thus, this bill seeks to restore the VAT exempt status of petroleum and petroleum 
products to temper the impact of fuel taxes on pump prices and prices of basic goods 
and services. The additional income from lifting the VAT on oil products will hopefully 
provide extra purchasing power to help Filipinos cope with the inflationary effect brought 
about by the increase in other taxes levied by government.
In view of the foregoing, the immediate passage of this bill is earnestly sought.
GUEL F. ZUBIRI


EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
■tt' * 't£5ff ■! 0$tii*. i-
S E N A T E  
Senate Bill No.
t" o
0 0 /  Rl-CEr/^T)
*19 
JUL 16 
A11 '44
Introduced by Senator Juan Miguel F. Zubiri
AN ACT
CLASSIFYING THE SALE OR IMPORTATION OF PETROLEUM PRODUCTS 
AND RAW MATERIALS IN THE MANUFACTURE THEREOF AS VALUE-ADDED 
TAX EXEMPT TRANSACTIONS, AMENDING FOR THE PURPOSE SECTION 109 
(1) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED,
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House o f Representatives o f the Philippines in Congress 
assembled:
1 
SECTION 1. Section 109 (1), Chapter 1, Title IV, Value-Added Tax of Republic Act
2 
No. 8424, otherwise known as the Tax Reform Act of 1997, as amended by Republic Act
3 
No. 9337, is hereby further amended to read as follows:
4 
"SEC. 109. Exempt Transactions. -  (1) Subject to the provisions of subsection (2)
5 
hereof, the following transactions shall be exempt from the value-added tax:
6 
"(A) XXX
7 
"(B) XXX
8 
"(C) SALE OR IMPORTATION OF PETROLEUM PRODUCTS, EXCEPT
9 
LUBRICATING OIL, PROCESSED GAS, GREASE, WAX, PETROLATUM, AND
10 
COAL AND NATURAL GAS IN  WHATEVER FORM OR STATE SUBJECT TO
11 
EXCISE TAX IMPOSED UNDER TITLE V I;
12 
"(D ) SALE OR IMPORTATION OF RAW MATERIALS TO BE USED BY THE
13 
BUYER OR IMPORTER HIMSELF IN THE MANUFACTURE OF PETROLEUM
14 
PRODUCTS SUBJECT TO EXCISE TAX, EXCEPT LUBRICATING OIL,
15 
PROCESSED GAS, GREASE, WAX AND PETROLATUM;
16 
"XXX."
17
SEC. 2. Im plem enting Rules and Regulations. -  The Secretary of Finance


2
3
4
5
6
7
8 
9
10
11
12
1
shall, upon the recommendation of the Commissioner of the Bureau of Internal Revenue, 
promulgate not later than 15 days upon the effectivity of this Act, the necessary Rules 
and Regulations for the effective implementation of this Act.
SEC. 3. Repealing Clause. -  All laws, acts, decrees, executive orders, issuances, 
and rules and regulations or parts thereof which are contrary to and inconsistent with any 
provisions of this Act are hereby repealed, amended or modified accordingly.
SEC. 4. Separability Clause. -  If any provision of this Act is subsequently 
declared unconstitutional, the validity of the remaining provisions hereof shall remain in 
full force and effect.
SEC. 5. E ffectivity Clause. - This Act shall take effect immediately after its 
complete publication either in the Official Gazette or in a newspaper of general circulation 
in the Philippines.
Approved,