DOF grants VAT exemption on indigenous natural gas

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

According to the DOF, the new revenue regulations provide a VAT exemption to the sale and purchase of indigenous natural gas, aggregated gas, and electricity generated using such gas, including ancillary services tied to power generation.

Exemptions for aggregated gas, however, only applies to the portion that is attributable to indigenous natural gas.

The transactions cover 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. 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,” BIR commissioner Charlito Mendoza was quoted as saying in a statement.

“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.

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

Generation facilities, meanwhile, will have to secure certification from the DOE’s Electric Power Industry Management Bureau that indicates their use of indigenous natural gas, and the amount of electricity produced. —RF, GMA Integrated News