RA 9337 — Revised Value Added Tax Law (RVAT, 2005)

Signed: May 24, 2005 Effective: July 1, 2005

Scope Note — Targeted Extraction. RA 9337 is a broad tax law amending multiple provisions of the National Internal Revenue Code of 1997. This wiki page covers only the energy-relevant provisions: (1) the RE zero-rating for VAT on service transactions (§6 amending NIRC §108(B)(7)); (2) the petroleum/fuel excise tax rate schedule (§17 amending NIRC §148); (3) the mineral products excise including coal and indigenous petroleum/natural gas (§18 amending NIRC §151); and (4) the repeal of energy-specific VAT exemptions (§24). Full tax law coverage is outside scope. confidence: medium because only energy-specific provisions were extracted.

TRAIN Act caveat: RA 10963 (TRAIN, 2017) substantially amended the petroleum and fuel excise rates set by RA 9337. The rates documented here are the 2005 baseline rates. For rates currently in effect, see the TRAIN Act amendments (not yet ingested in this wiki).

§6 amending NIRC §108(B)(7) — RE Zero-Rating on VAT Services

Sales of power or fuel generated through renewable sources of energy shall be subject to zero percent (0%) VAT under the zero-rated services provision of the NIRC. RE sources include:

“…biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels.”

[RA 9337, §6 amending NIRC §108(B)(7), 2005]

This zero-rating applies to the sale of power (a service for VAT purposes) by RE generation companies to buyers. Zero-rating means output VAT = 0%, and the RE generator can claim refund or credit of input VAT — making RE power effectively free of embedded VAT costs. This is a structural support for RE economics, later reinforced by RA 9513 (RE Act, 2008) incentives.

Note: The general goods zero-rating provision under §106 (NIRC §106(A)(2)) does not specifically enumerate RE equipment. Zero-rating of RE equipment imports and sales was addressed separately by RA 9513.

§17 amending NIRC §148 — Petroleum and Fuel Excise Tax Rates (2005 Schedule)

NIRC §148 covers excise taxes on refined and manufactured mineral oils and motor fuels. Excise taxes attach to goods upon their coming into existence.

2005 excise tax rates (pre-TRAIN baseline):

[RA 9337, §17 amending NIRC §148, 2005]

Key energy-sector notes:

1. Naphtha as natural gas replacement: Zero excise rate applies when naphtha is used as replacement fuel for natural gas-fired combined cycle power plants during non-availability of locally extracted natural gas. This provision links to gas supply security for the Malampaya-dependent power fleet.

2. LPG motive power: LPG at zero excise for household/commercial use, but if used in vehicles, it is taxed at the diesel excise rate.

3. Diesel/kerosene/bunker zero-rating (2005): These zero rates were later amended significantly by the TRAIN Act (RA 10963, 2017), which imposed tiered excise rates on previously zero-rated fuels including diesel, kerosene, and LPG.

§18 amending NIRC §151 — Mineral Products Excise

NIRC §151 covers excise taxes on minerals, mineral products, and quarry resources. Energy-relevant rates:

Coal:

• Tax: PhP 10.00 per metric ton [RA 9337, §18 amending NIRC §151(A)(1), 2005]
• Note: TRAIN Act (RA 10963, 2017) later increased coal excise substantially.

Natural gas — excise exemption:

“Notwithstanding the provision of paragraph (4) of subsection (A) of this Section, locally extracted natural gas and liquefied natural gas shall not be subject to the excise tax imposed herein.”

[RA 9337, §18 amending NIRC §151, 2005]

This means: while indigenous petroleum (crude oil and associated hydrocarbons) is subject to a 3% excise, locally extracted natural gas (including Malampaya gas) and LNG are expressly exempt from mineral products excise. This exemption remains operative.

Indigenous petroleum excise:

• Tax: 3% of fair international market price on the first taxable sale, barter, exchange, or similar transaction
• Paid by the buyer or purchaser before removal from place of production
• “Indigenous petroleum” = locally-extracted mineral oil, hydrocarbon gas (other than natural gas), bitumen, crude asphalt, mineral gas, and similar substances — excluding coal, peat, bituminous shale, and stratified mineral deposits
• Fair international market price: determined in consultation with an appropriate government agency

[RA 9337, §18 amending NIRC §151(A)(4), 2005]

§24 — Repealing Clause: Energy-Specific VAT Repeals

The following energy-related tax provisions were expressly repealed by RA 9337 [RA 9337, §24, 2005]:

Implication for energy sector:

• NPC: no longer VAT-exempt; its government mandates (missionary electrification, purchased power) now have VAT implications
• Generation companies: power sales previously had zero VAT under EPIRA §6. After RA 9337, conventional generation company power sales are VAT-taxable at 12%. RE generators retain zero-rating under §108(B)(7)
• Practical effect: creates an asymmetry between RE generation (0% VAT) and conventional generation (12% VAT), reinforcing RE’s fiscal competitiveness

Full text: Cleaned copy