Author MRTC

Introduction

REVENUE REGULATIONS (RR) NO. 002-2026

These Regulations provide guidelines on the availment of fiscal incentives under Republic Act No. 12120 (Philippine Natural Gas Industry Development Act), particularly on VAT exemption and other tax incentives for participants in the natural gas industry.

They aim to promote natural gas as a safe, efficient, and cost-effective energy source by granting tax benefits to qualified entities.

WHO are affected?  Participants in the natural gas industry (suppliers, aggregators, resellers, bunker traders).Generation facilities using indigenous or aggregated natural gas.Distribution utilities, electric cooperatives, and energy companies.End-users and entities authorized by the Energy Regulatory Commission (ERC).
WHAT are the changes?  Grants VAT exemption on sale and purchase of indigenous natural gas;aggregated gas (only to the extent of indigenous gas content);electricity and ancillary services generated from such sources.Introduces fiscal incentives under Title XIII of the Tax Code for qualified facilities.Provides clear documentation requirements for VAT exemption claims.Prohibits double availment of incentives under different laws unless expressly allowed.
WHY did it change?  To promote the development of the natural gas industry in the Philippines.To encourage investment in cleaner and more efficient energy sources.To support energy security and reduce energy costs.To provide clear tax rules and compliance guidelines.
WHERE does it apply?  Nationwide application covering all qualified participants in the Philippine downstream natural gas industry.Applies to transactions involving indigenous natural gas, aggregated gas, and electricity generation.Covers facilities certified by the Department of Energy (DOE).
WHEN is the effectivity and deadline?  Takes effect 15 days after publication in the Official Gazette or BIR website, whichever comes first.Applies to transactions and filings beginning from effectivity onward (no retroactive deadline stated).
 Compliance with documentation and reporting requirements is mandatory, including: 
1. Submission of DOE endorsements, specifically:
DOE–OIMB endorsement confirming that the participant is engaged in the sale of indigenous natural gas; and/or
DOE–EPIMB endorsement confirming that the generation facility uses indigenous natural gas;

2. Submission of DOE-EPIMB Certification on the power produced from indigenous natural gas for the corresponding taxable quarter (for generation facilities);

3. Attachment of the Certified True Copy (CTC) of the DOE Permit to the DOE endorsements; and

4. Indication of the legal basis of the VAT exemption (Section 38 of RA No. 12120) in the Quarterly VAT Return (BIR Form 2550Q).