Title
Guidelines for Downstream Oil Industry Appl
Law
Doe
Decision Date
Dec 10, 1998
The Department of Energy and the Board of Investments establish guidelines for the registration and incentives for new investments in the downstream oil industry, covering refining, storage, distribution, and marketing of petroleum products, while offering various tax incentives and support for eligible participants.
A

Definitions of Activities

  • Refinery: manufacturing petroleum products locally through distillation and oil treatment; related storage and movement within refinery
  • Storage: handling petroleum products of others for compensation
  • Distribution: selling and transporting fuels by tank trucks, barges, pipelines, including bunkering for vessels
  • Marketing: selling petroleum products at retail or wholesale, establishment and operation of gasoline stations and LPG outlets

Qualifications for Registration

  • Open to persons with new investments made after March 13, 1998
  • Refinery applicants must submit DOE endorsement certifying them as natural or juridical persons with new investments
  • Storage, marketing, and distribution applicants require DOE endorsement as new industry participants
  • Gasoline retail stations outside Less Developed Areas must invest minimum 10 million Pesos, excluding land

Incentives and Duration

  • Qualified persons receive incentives upon issuance of Certificate of Registration
  • Incentives available for five years from registration except Income Tax Holiday which starts from commercial operation

Specific Incentives

  • Income Tax Holiday (ITH) for 5 years from commercial operation; higher capital minimum for ITH in gasoline retail stations outside LDAs
  • Additional labor expense deduction: 50% of wage increase, doubled in LDAs
  • Reduced duty of 3% and VAT exemption on imported capital equipment subject to conditions and prior BOI approval
  • Tax credit on locally made capital equipment based on tariff differences
  • Unrestricted use of consigned equipment with proper re-export bonds
  • Exemption from taxes and duties on imported spare parts for consigned equipment under export production conditions
  • Exemption from real property tax and contractor's tax with BOI certification
  • Exemption from wharfage dues and export taxes on registered export products
  • Allowance to employ foreign nationals in supervisory or advisory positions for 5 years

Registration Options

  • Registered participants under E.O. 226 may opt to transfer to R.A. 8479 registration with DOE endorsement
  • Incentives limited to remaining period to prevent double enjoyment

Registration Procedure

  • Applicants file for DOE endorsement including disclosure of project details and compliance with DOE requirements
  • DOE evaluates within 20 working days and issues endorsement upon fees payment
  • Subsequent application for BOI registration follows procedures under E.O. 226
  • BOI decision within 20 working days; failure to act means approval with conditions
  • Applicants have 30 days to accept BOI decision and comply with requirements
  • Certificate issued after payment and fulfillment of pre-registration conditions

Transitory Provisions

  • Enterprises operating before effectivity may be registered upon evaluation
  • Storage, marketing, distribution enterprises operational after Jan 1, 1994 can apply for DOE endorsement and BOI registration
  • Certificates effective upon DOE endorsement with incentives for unavailed period only

Effectivity

  • Guidelines effective immediately upon publication in a newspaper of general circulation

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