The Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 22026 to implement the value-added tax (VAT) exemption granted under Republic Act (RA) 12120, otherwise known as the Philippine Natural Gas Industry Development Act. RR 2-2026, to promote the development and utilization of indigenous natural gas in the Philippines.
Coverage of VAT exemption
The following are exempt from VAT:
Purchase and sale of indigenous natural gas and aggregated gas; and,
Purchase and sale of electricity and ancillary services produced by generation facilities using indigenous or aggregated gas.
For aggregated gas, the exemption applies only to the portion attributable to indigenous natural gas. The exemption covers all recognized modes of sale, including electricity market transactions and financial or contractual arrangements.
Documentary requirements
Taxpayers must submit the following, together with the quarterly VAT return (BIR Form 2550-Q):
For suppliers, aggregators, bunker traders or resellers:
Endorsement from the Department of Energy’s (DOE’s) Oil Industry Management Bureau (OIMB), confirming the engagement in the sale of indigenous natural gas; and,
DOEOIMB certification on the volume and percentage of indigenous natural gas sold in a taxable quarter.
For generation facilities:
Endorsement from the DOE Electric Power Industry Management Bureau (EPIMB) confirming the use of indigenous natural gas; and,
DOEEPIMB certification on the electricity generated from indigenous natural gas in a taxable quarter.
A certified true copy of the DOE permit must accompany all documentation. The legal basis for the exemption of Section 18 of RA 11220 must also be indicated in Field Item 14A of the BIR Form 2550-Q.
Effectivity
RR 22026 takes effect on April 1, 2026, 15 days from its publication on the BIR website on March 17, 2026.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants