AS the Middle East crisis continued to cause global supply chain disruptions, President Ferdinand Marcos Jr. on Friday issued Executive Order 125 temporarily suspending the excise taxes on liquified petroleum products (LPG) and kerosene, which are used in cooking and other daily needs.
The suspension will apply on LPG except when used as raw materials for production of petrochemical products or used for motive power and kerosene, except when used for aviation.
The excise taxes for the covered petroleum products will revert to the rates prescribed under the National Internal Revenue Code one week after the one-month average Dubai crude oil price based Means of Platts of Singapore (MOPS) falls below US$80 per barrel as certified by the Department of Energy (DOE), or after three months from the effectivity of the order.
Under Republic Act 12316, the President may suspend or reduce excise tax on petroleum products when the average price of Dubai crude oil based on MOPS reaches or exceeds US$80 dollar per barrel for one month preceding the issuance of the suspension or reduction.
Marcos issued EO 125 based on the recommendation of the Development Budget Coordination Committee (DBCC) in coordination with DOE.
It will take effect immediately upon the publication of EO 125 in the Official Gazette or in newspapers of general circulation.
The Department of Finance (DOF) and DOE were allowed to issue rules, regulations and guidelines for the implementation of the suspension.
Both agencies were directed to conduct an inventory of existing stocks of LPG and kerosene once EO 125 takes effect.
DOF’s Bureau of Customs and Bureau of Internal Revenue were mandated to submit to the House of Representatives monthly information on the declared value and volume of petroleum products covered by EO 125.
Within 15 days from the issuance of EO 125, the DBCC in coordination with DOE will review the implementation of the new issuance to the House of Representatives and the Senate. It may also recommend to the President the continuation, modification, extension, or termination of the said suspension.
The government implemented a similar measure from April to June, which resulted in P2.5 billion in forgone government revenues.
Marcos issued EO 125 after DOE announced there can be a rollback in the price of diesel and kerosene next week amid renewed diplomatic engagement between the United States and Iran, which can allow more ships carrying oil and gas to pass through the Strait of Hormuz.