Implementing Presidential Decree No. 1615, Amending Section 199 of the National Internal Revenue Code of 1977, as amended

April 5, 1979 REVENUE REGULATIONS NO. 03-79 SUBJECT : Implementing Presidential Decree No. 1615, Amending Section 199 of the National Internal Revenue Code of 1977, as amended, by Imposing a Percentage Tax of 22% on Locally Produced Crude Oil TO : All Internal Revenue Officers and Others Concerned SECTION 1. Scope . Pursuant to the authority granted under Section 326, in relation to Section 4 of the National Internal Revenue Code of 1977, as amended, the following regulations are hereby promulgated to implement Presidential Decree No. 1615 amending Section 199 of the same Code by imposing a 22% ad valorem tax on locally produced crude oil. SECTION 2. Definition of terms . As used herein, the following terms and phrases shall have the meaning hereunder indicated: (a) "Indigenous petroleum" shall include locally extracted mineral oil, hydrocarbon gas, bitumen, crude asphalt, mineral gas and all other similar or naturally associated substances with the exception of coal, peat, bituminous shale and/or stratified mineral deposits. (b) "Crude oil" or "crude" means oil in its natural state before the same has been refined or otherwise treated. It does not include oil produced through destructive distillation of coal, bituminous shales or other stratified deposits, either in its natural state or after the extraction of water, and sand or other foreign substances therefrom. (c) "First taxable sale, barter, exchange or similar transaction" means the transfer of the indigenous petroleum in its original state to a first taxable transferee. (d) "Fair international market prices" shall be the price determined in accordance with Regulations promulgated by the Minister of Finance upon recommendation of the Commissioner of Internal Revenue in consultation with an appropriate government agency. For expediency and pending promulgation of guidelines to determine the fair international market price of indigenous petroleum, the contract price in an arm's length transaction between the petroleum producer and the buyer shall be used as the tax base in computing the percentage tax due thereon, which price shall at least be at par with the prevailing F.O.B. price of crude oil of comparable grade, gravity and quality being sold in the international free market as of the date of actual or constructive delivery of the indigenous petroleum. SECTION 3. Payment of the tax . The tax equivalent to twenty-two per centum (22%) of the fair international market price of indigenous petroleum sold, bartered or exchanged shall be paid by the first taxable transferee. Such tax shall be paid within fifteen (15) days from the date of actual or constructive delivery of indigenous petroleum to the said buyer or purchaser. If the tax herein imposed is not paid within the time specified above, the amount of the tax shall be increased by twenty-five per centum (25%), the increment to be a part of the tax, and the entire unpaid amount shall be subject to interest at the rate of fourteen per centum (14%) per annum. cd SECTION 4. Assignment of internal revenue officers where indigenous petroleum is produced or kept . The Commissioner of Internal Revenue is authorized to assign internal revenue officers in establishments or places where indigenous petroleum is produced or kept to supervise the enforcement and collection of the tax herein imposed and to render such other duties as the best interests of the service may require. SECTION 5. Administrative supervision over establishments producing, storing, selling, transporting, or buying indigenous petroleum . The relevant provisions of Chapter II, Title IV (Specific Taxes) of the Tax Code shall apply to establishments producing, storing, transporting, selling, or buying indigenous petroleum subject to the 22% tax under Section 199(b) of the Tax Code. SECTION 6. Repealing Clause . The provision of any regulations, orders, instructions or circulars or portions thereof which are in conflict or inconsistent with these regulations are hereby modified accordingly. SECTION 7. Effectivity . These Regulations shall take effect upon approval hereof. CESAR VIRATA Minister of Finance Recommended by: EFREN I. PLANA Acting Commissioner