DOF grants VAT exemption on indigenous natural gas

The Department of Finance (DOF) has granted a value-added tax (VAT) exemption on indigenous natural gas and related power generation, amid surging global crude prices linked to the ongoing crisis in the Middle East.

In a statement, the DOF said the new revenue regulations exempt from VAT the sale and purchase of indigenous natural gas, aggregated gas, and electricity generated using such gas, including ancillary services tied to power generation.

The exemption for aggregated gas, however, applies only to the portion attributable to indigenous natural gas.

Covered transactions include those undertaken by suppliers, aggregators, resellers, and generation facilities, including participants in the Philippine downstream natural gas industry, subject to certification by the Department of Energy (DOE).

“The BIR acknowledges the potential of natural gas to lower energy costs and help achieve national energy security," Bureau of Internal Revenue Commissioner Charlito Mendoza said in a statement.

"These regulations fully implement the mandates of RA No. 12120 by providing clear guidance on the availment of incentives that will support investment in the Philippine Natural Gas Industry,” he added.

Mendoza said the measure would boost cleaner energy competitiveness while strengthening tax system integrity:

“By establishing transparent and well-defined processes for VAT incentives on indigenous natural gas, we strengthen both the competitiveness of cleaner energy sources and the integrity of our tax system,” he added.

To qualify, participants must present an endorsement from the DOE’s Oil Industry Management Bureau (DOE-OIMB, along with a certification indicating the volume and percentage of indigenous natural gas sold during the taxable quarter.

Generation facilities, meanwhile, must secure certification from the DOE’s Electric Power Industry Management Bureau indicating their use of indigenous natural gas and the corresponding volume of electricity produced.—MCG, GMA Integrated News