Office of the President
On 25 March 2026, Republic Act (RA) No. 12316, entitled “An Act Authorizing the President to Suspend or Reduce Excise Tax on Petroleum Products, Amending for the Purpose Section 148 of the National Internal Revenue Code of 1997, as Amended”, was signed into law by the President.
The salient features of the law include:
- The suspension or reduction of excise tax may be implemented when the average Dubai crude oil price, based on Mean of Platts Singapore (MOPS), reaches or exceeds USD 80 per barrel for one (1) month immediately preceding the issuance of the order.
- The measure may be applied to specific petroleum products and take the form of either a full suspension or a partial reduction of excise taxes, depending on prevailing conditions.
- Any suspension or reduction is limited to a maximum of three (3) months at a time, with an aggregate cap of one (1) year per calendar year.
- Excise tax rates will automatically revert to their original levels either (i) when oil prices fall below the threshold, or (ii) after the lapse of the applicable period.
- The authority granted to the President to suspend or reduce excise taxes is valid until 31 December 2028.
(R.G. Manabat & Co. Note: The RA was published in the Official Gazette on 25 March 2026 and will take effect 15 days thereafter, or on 9 April 2026)
Bureau of Internal Revenue
The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 24-2026, dated 30 March 2026, clarifies the application of RMC Nos. 5-2024 and 38-2024 on the Tax Treatment of Cross-Border Services.
The RMC explains how these prior RMCs should be applied when assessing the taxability of cross-border services, taking into account the Supreme Court’s decision in Aces Philippines Cellular Satellite Corporation vs. Commissioner of Internal Revenue (promulgated on 30 August 2022).
The RMC emphasizes that the services listed in RMC No. 5-2024 are not automatically subject to Philippine income tax (final withholding tax) merely because they are considered “cross-border” services.
- The general rule remains that services are taxed where they are performed.
- However, the Aces Philippines case expanded the situs by allowing taxability if the benefit or completion of the service occurs in the Philippines.
Thus, a Revenue Officer (RO) must establish that the source of income is within the Philippines before imposing tax.
When assessing cross‑border transactions, ROs must evaluate the entire service arrangement, rather than isolating specific activities. They must establish the essential elements identified in the Circular to determine taxability.
The RMC also reiterates that the burden of proof lies with the taxpayer to show that the income was derived from sources outside the Philippines and is therefore not subject to Philippine income tax. It outlines the types of documents that a taxpayer may submit. When documents are physically submitted, the BIR may accept photocopies certified by the taxpayer or its authorized representative, although the Bureau may still require the presentation of the originals.
Additionally, the RMC clarifies that obtaining a BIR ruling is not a prerequisite for applying the correct tax treatment. However, taxpayers may still request a confirmatory ruling regarding the non-taxability of the income.
The RMC takes effect immediately.
(R.G. Manabat & Co. Note: The RMC was posted on the BIR website on 30 March 2026.)
Here are the links to the full texts of the issuances: RA No. 12316 and RMC No. 24-2026.