RR No. 2-2026: Guidelines in the Availment of the Fiscal Incentives Under Section 38 of Republic Act No. 12120, Otherwise Known as the “Philippine Natural Gas Industry Development Act”

Key points

1. VAT exemption. The purchase and sale of indigenous natural gas, aggregated gas, and power generated by facilities using them are VAT-exempt. For aggregated gas, the exemption covers only the amount of indigenous natural gas attributed to it.
2. Covered transactions. This includes purchases and sales by aggregators, resellers, suppliers, ERC-authorized generators, and end-users. It also covers electricity or ancillary services from generation facilities using these gases, through any mode of purchase and sale, including supply agreements, the wholesale electricity spot market, and ancillary reserves market.
3. Title XIII incentives. Philippines Downstream Natural Gas Industry (PDNGI) Facilities certified by the DOE may avail of Title XIII incentives if they are in the Strategic Investment Priority Plan and registered with the Board of Investments.
4. Documents for VAT exemption. Attach to the Quarterly VAT Declaration (BIR Form No. 2550Q): for Participants, a DOE-OIMB endorsement and certification of volume and percentage of indigenous natural gas sold; for Generation Facilities, a DOE-EPIMB endorsement and certification of power produced from it. A Certified True Copy of the DOE Permit goes with the endorsement.
5. Legal basis and exclusivity. Taxpayers state Section 38 of R.A. No. 12120 as the legal basis on Field Item Number 14A of the Quarterly VAT Declaration. Unless a law provides otherwise, availing Title XIII incentives disqualifies similar incentives under RA No. 12120 and other special laws.

Who is affected

• Participants selling indigenous natural gas
• Generation facilities using indigenous natural gas or aggregated gas
• PDNGI Facilities certified by the DOE

Deadlines and effectivity

• Issued: March 17, 2026