Prescribing the rules for the implementation of the surtax on extraordinary gains realized by oil companies in accordance with Presidential Decree No. 1889 in relation to Executive Order No. 957

June 7, 1984 REVENUE REGULATIONS NO. 12-84 SUBJECT : Prescribing the Rules for the Implementation of the Surtax on Extraordinary Gains Realized by Oil Companies in Accordance with Presidential Decree No. 1889 in Relation to Executive Order No. 957 TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Scope . These Regulations shall govern the implementation of the surtax on extraordinary gains realized by oil companies on petroleum products and is promulgated pursuant to Section 5 of Presidential Decree No. 1889. SECTION 2 . Surtax Liability . Any oil company engaged in the importation, processing, refining and marketing of petroleum products, except retail petroleum dealers, who, at the time the new price increases for petroleum products were authorized, has in its inventory: (a) petroleum products valued or acquired at prices lower than the newly authorized increase in prices for each product, or (b) intermediate petroleum products which have appreciated in value due to the increase in the authorized selling prices of the ultimate finished product which are normally manufactured or processed out of said intermediate stocks, shall be liable to the surtax imposed by Section 5 of these Regulations. casia SECTION 3 . Definition of Terms . For purposes of these Regulations, the following definitions of terms are hereby adopted: (a) " Petroleum Products " shall include hydrocarbon, crude oil, intermediate refinery stocks, base stocks (including other intermediate petroleum products such as lubricating oil base stocks which are blended into greases and lubricating oils) and all other petroleum products enumerated in Sections 153, 155 and 156 of the National Internal Revenue Code. (b) " Inventory of Petroleum Products " shall mean the actual quantity of petroleum products in the possession of an oil company at the time the new price increases referred to in Section 2 were authorized, excluding (i) imports still in transit; and (ii) borrowings from other oil companies, but including quantities on loan to others. SECTION 4 . Computation of Extraordinary Gains . (a) Gains arising from the increase in oil industry netback . The amount of extraordinary gains due to these increases shall be determined on the average by multiplying the inventory of petroleum products, except crude oil, owned as of June 6, 1984, on which the customs duty and special ad valorem duty paid or assessed was computed under the old rate, by 1.10 centavos per liter and by 1.07 which is the average increase in oil industry netback per BOE Order dated June 6, 1984. (b) Gains arising from the increases in specific taxes . The amount of extraordinary gains due to these increases shall be determined by multiplying the inventory of unbonded (specific tax paid) of each petroleum product by the corresponding increase in specific taxes as set by Executive Order No. 957 . (c) To ensure consistency and accuracy in the computation of the extraordinary gains which will be the base for the computation of the surtax, reference shall be made to Annex A (Basis and Method of Inventory Gain Computation) of these Regulations. SECTION 5 . Surtax on Extraordinary Gains . A surtax of sixty-five (65%) per cent is imposed on the total extraordinary gains deemed realized as a result of price and internal revenue tax increases authorized for petroleum products, in addition to the regular income tax as provided for under Title II of the National Internal Revenue Code. The additional levy of 65% shall be allowed as part of the cost of petroleum products sold on or after June 7, 1984. SECTION 6 . Manner and Time of Payment of Surtax . (a) Every person liable to pay the surtax imposed by PD 1889, shall file a tax return (under BIR Form No. ______) and pay the corresponding surtax due thereon within thirty (30) days after June 6, 1984. (b) Such return shall, inter alia , indicate the following information: (1) Name, address and TAN of the taxpayer; (2) Nature of Business; (3) Itemized inventory list of petroleum products as of the effective date of the price increases. A separate inventory list for specific tax-paid petroleum products should also be submitted; (4) A computation of the extraordinary gains realized on existing inventory; and (5) The surtax due thereon. (c) If the amount of surtax due is One Million Pesos (P1,000,000) or more, the same may be paid by installment as may be authorized by the Commissioner of Internal Revenue. SECTION 7 . Place of Filing of Return and Payment of Surtax . The surtax on extraordinary gains shall be paid upon filing of the tax return, together with the schedule of inventory of petroleum products, at the Office of the Commissioner of Internal Revenue. acd SECTION 8 . Penalties . The provisions of the National Internal Revenue Code, particularly Title II thereof, shall apply in case of failure to file the tax return and to pay the surtax within the period and in the manner hereinabove prescribed. SECTION 9 . Repealing Clause . All administrative orders and other issuances which are inconsistent herewith, are hereby repealed or modified accordingly. SECTION 10 . Effectivity and Applicability . The surtax imposed by this Decree shall apply to extraordinary gains deemed realized by oil companies as a result of the authorized increase of June 7, 1984. CESAR E. A. VIRATA Minister of Finance Recommended by: RUBEN B. ANCHETA Acting Commissioner