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President Ferdinand Marcos Jr. signed into law a measure enabling fuel excise tax suspension or reduction
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Trigger for the suspension is set at Dubai crude price of $80 per barrel for one month
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Tax suspension is valid up to three months per instance, one year total
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Measure is effective until December 31, 2028
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Taxes automatically revert once oil prices fall below the threshold or after three months
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Oil firms are mandated to submit monthly pricing data to the Department of Energy
President Ferdinand Marcos, Jr. has signed into law a measure authorizing the temporary suspension or reduction of excise taxes on petroleum products, providing the government with a key mechanism to mitigate the impact of rising global oil prices.
Republic Act 12316 authorizes the President, upon recommendation of the Development Budget Coordination Committee (DBCC) and in coordination with the Energy Secretary, to suspend or reduce fuel excise taxes when the Dubai crude oil benchmark reaches or exceeds US$80 per barrel for one consecutive month.
Any such suspension or reduction is capped at three months per instance and cannot exceed one year in total. Tax rates revert automatically to their original levels one week after the monthly average Dubai crude price falls below the US$80 threshold — as certified by the Department of Energy (DOE) — or after three months, whichever occurs first.
“The power of the President to temporarily suspend or reduce the excise tax on petroleum products granted under this Section shall be exercised only until December 31, 2028,” the law stated.
The executive branch is required to report to the legislature the basis and objectives of any tax suspension, covering expected revenue losses, effects on households, impact on inflation and fuel prices, a cost-benefit analysis, and any possible market distortions or unintended consequences.
“The report shall include a recommendation on whether the suspension or reduction of excise taxes should be maintained, modified, or lifted, and shall form part of the basis for any continued suspension or reduction,” the law read.
The measure also mandates oil companies to provide the DOE with monthly data on the cost components of petroleum products sold in the domestic market, strengthening regulatory oversight.
Philexport: Measure provides much relief
The Philippine Exporters Confederation, Inc. (PHILEXPORT) welcomed the enactment of the law, describing it as a critical policy tool amid surging fuel costs.
PHILEXPORT president Sergio R. Ortiz-Luis Jr. said the measure provides much-needed relief for exporters, manufacturers, logistics providers, and consumers facing double-digit fuel price increases.
“For exporters, especially MSMEs, transport and logistics costs are a major component of overall expenses. Any relief on fuel costs will help preserve competitiveness in already volatile global markets,” Ortiz-Luis said.
He noted that escalating geopolitical tensions and supply uncertainties have triggered a ripple effect across supply chains, increasing costs in freight, trucking, power, and production.
“There are members who have expressed the possibility of reducing workhours due to higher input costs”, he added. “The ability of the President to suspend or reduce excise taxes on fuel can help cut operating costs, prevent further price pass-through, and ultimately protect jobs and livelihoods.”
The law will take effect 15 days after publication in the Official Gazette or in a newspaper of general circulation.
