Philippines

Revenue Regulations No. 2 2026: Implementation of Tax Incentives under the Natural Gas Law

On 17 March 2026, the Bureau of Internal Revenue issued Revenue Regulations No. 2 2026, providing implementing guidelines for the tax incentives under Republic Act No. 12120, or the Philippine Natural Gas Industry Development Act. The regulations clarify the availability of value-added tax (VAT) exemptions on the sale and purchase of indigenous natural gas, aggregated gas, and electricity generated from such gas, subject to specific conditions. They also prescribe the eligibility requirements and compliance procedures for taxpayers availing the incentives, including proper documentation and reporting in VAT returns. In addition, the regulations address the interaction of incentives under RA No. 12120 with those available under the National Internal Revenue Code, ensuring that taxpayers do not avail of overlapping benefits. The measure aims to promote investment in the natural gas industry while ensuring proper tax administration and compliance.

Republic Act No. 12316: Authority to Suspend or Reduce Excise Tax on Petroleum Products

On 25 March 2026, Republic Act (RA) No. 12316 was enacted, amending Section 148 of the National Internal Revenue Code (NIRC) to authorize the President, upon recommendation of the Development Budget Coordination Committee (DBCC) and in coordination with the Department of Energy (DOE), to temporarily suspend or reduce excise taxes on petroleum products when specified oil price thresholds are met. Key features of the law include:

• Authority to suspend or reduce excise taxes on fuel products when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) reaches or exceeds USD 80 per barrel for one month immediately preceding the issuance of an order.
• Flexibility to apply the relief to specific petroleum products, whether through a full suspension or partial reduction of excise tax rates, depending on prevailing economic conditions.
• A maximum implementation period of three months per suspension or reduction, subject to an aggregate limit of one year.
• Automatic reinstatement of excise tax rates once crude oil prices fall below the prescribed threshold or upon expiration of the allowable period, whichever occurs first.
• Reporting and monitoring requirements to assess the fiscal and economic impact of any suspension or reduction, including oversight by relevant government agencies.

Pursuant to this authority, Executive Order No. 114, issued on 16 April 2026, implemented the temporary suspension of excise taxes on LPG (except when used as raw material for petrochemical production or for motive power) and kerosene (except when used as aviation fuel) for an initial period of three months, subject to monthly review by the DBCC.

Executive Order No. 113: Thirteenth Foreign Investment Negative List

On 13 April 2026, the Philippines issued Executive Order No. 113, promulgating the Thirteenth Regular Foreign Investment Negative List (FINL). Compared to the 12th FINL, the updated list incorporates several liberalization measures aimed at expanding or clarifying foreign investment opportunities, including:

• Explicit confirmation of up to 100% foreign ownership in renewable energy projects involving solar, wind, hydro, and tidal energy.
• Expanded foreign participation in telecommunications, consistent with amendments introduced under the Public Service Act.
• Updated foreign equity rules for retail trade enterprises, aligning the FINL with the Retail Trade Liberalization Act.
• Revised foreign participation limits in certain government procurement activities, reflecting recent legislative changes.
• Refined restrictions applicable to the security sector, with clearer delineation of activities reserved to Philippine nationals.

Despite these changes, the 13th FINL retains foreign ownership restrictions in sectors reserved under the Constitution and existing laws, including mass media, land ownership, educational institutions, cooperatives, and small-scale mining. Overall, the updated FINL seeks to enhance the country's investment climate while preserving safeguards for strategic and sensitive industries.