Palace: VAT suspension on fuel needs law, beyond President’s power

By Darryl John Esguerra, Philippine News Agency

(PNA photo by Yancy Lim)

MANILA – Malacañang on Monday said suspending the value-added tax (VAT) on petroleum products is beyond the authority of President Ferdinand R. Marcos Jr. and would require an act of Congress.

Palace Press Officer Claire Castro made the clarification following calls from business groups, including the Philippine Chamber of Commerce and Industry (PCCI), to remove VAT on fuel amid rising global oil prices.

“Sa ngayon, wala kasing batas na nagbibigay ng anumang emergency powers para sa Pangulo na siya ay mag-suspend ng VAT sa fuel products. Ito po ay nakasalalay po sa Kongreso (At present, there is no law granting the President emergency powers to suspend VAT on fuel products. This rests with Congress),” Castro said.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, petroleum products are subject to a 12-percent VAT, on top of excise taxes, which together account for a significant portion of pump prices.

Marcos previously signed a law granting him authority to suspend or reduce excise taxes on petroleum products. This law, effective until Dec. 31, 2028, aims to mitigate rising fuel costs, allowing suspension when Dubai crude exceeds USD80 per barrel for one month.

The call to suspend VAT comes as global oil prices remain volatile due to geopolitical tensions in the Middle East, which have disrupted supply chains and driven up fuel costs worldwide.

Castro said the administration is carefully balancing the need to provide relief with maintaining government revenues.

“Ang Pangulo po kasi binabalanse po ang lahat… ang buwis din ay kailangan para sa pondo ng gobyerno para mayroon pa pong mga iba pang mga prayoridad (The President is balancing everything… taxes are needed to fund government priorities),” she said.

The Palace official noted that government revenues fund key programs, including infrastructure, social services and targeted subsidies aimed at cushioning vulnerable sectors from rising costs.

Despite limitations on executive authority, Castro said the government is studying possible tax-related interventions.

The administration has already rolled out measures such as fuel subsidies for public utility vehicle drivers and service contracting programs to stabilize transport costs, while exploring additional ways to mitigate the impact of high fuel prices on consumers and businesses.