RR No. 4-2022 — Implements Section 295(F), in relation to Section 294, both of the NIRC of 1997, as amended by RA No. 11534 (CREATE Act), on the tax treatment of the importation of petroleum and petroleum products into, and subsequent transfer, transport and/or withdrawal through and from Freeport Zones and Economic Zones (Published in Manila Times on May 30, 2022)

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE 3:00 0m MAY 25 272

May 26, 2022

REVENUE REGULATIONS NO. 4-2022

SUBJECT: Implementing Section 295(F). in relation to Section 294. both of the National and/or Withdrawal through and from Freeport Zones and Economic Zones. Enterprises Act" (CREATE Act). on the Tax Treatment of the Importation of Petroleum and Petroleum Products into. and Subsequent Transfer. Transport Internal Revenue Code of 1997, as Amended by Republic Act (RA) No. 11534. Otherwise Known as the "Corporate Recovery and Tax Incentives for

TO All Internal Revenue Officers and Others Concerned

BACKGROUND

amended by RA No. 11534 or the CREATE Act. provides. to wit: Section 295(F) of the National Internal Revenue Code of 1997 (Tax Code). as

the foregoing tax and duty incentives. and shall be subjeei to appropriute tuxes imposed under this Code. undor in free zones as defined under Republic Act No. 10863. otherwise known as the Customs Modernization and Tarift Act. shallt not be entited to Republic Act No. 8479, otherwise known as the Downsiream Oil Industry Deregulation Act of 1998'. for resate in the Philippine customs territory "(F) Persons who directy import petroleum products detined under

products by any person, including registered"business enterprises, shall be subject to the pevment of applicable duties and tuxes us provided under 10863. otherwise known as the Customs Modernization and Tariff Act.. Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act, und this Code, respectively, upon importation into the Philippine customs territory and/or into free zones as defined under Republie Act No. Any tuy to the contrary notwithstanding. the importation of petroleumt

and tuxes applicable under Republic Act No. 10863. otherwise known us the Customs Modernization and Tariff Act. and this Code, respectively, for direct or indirect export of petroleum products. and/or other tax-exempt sales under the Customs Modernization and Tariff Act and other special laws within the period provided therein. Provided. That the importer can file for claims for the refund of duties

refund of duties and taxes. as applicable under Republic Act No. 10863. otherwise known as the Customs Modernization and Taritf Act. and this subiect to the appropriate rules of the fuel marking program, may appty for a (ode. Provided. further. That the importers who subsequently export fuet.

petroleum products into the Freeport Zones and Economic Zones is already subject to applicable taxes. These Regulations are hereby issued in order to ensure the collection of the proper duties and taxes on petroleum products and to institute strict measures to control and monitor the movement and storage thereof which are entered and imported into Freeport Zones and Economic Zones and its subsequent transfer. transport, and/or withdrawal therefrom. Thus. upon the effectivity of the CREATE Act. the importation of petroleum and

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these Regulations are hereby promutgated in order to prescribe the following: SECTION 1. SCOPE -- Pursuant to Section 244. in relation to Section 245. of the Tax Code!

(ii) the strict monitoring of the movement of all petroleum and petroleum products within (i)the refund of Value- Added Tax (VAT) and Excise taxes paid for transactions (i) the tax administration treatment of all petroleum and petroleum products entered and/or statutorily zero-rated or exempt therefrom. imported into Philippine Freeport Zones or Economic Zones the aforementioned Zones and the subsequent transfer. transport and/or withdrawal of the same therefrom: and

maintenance of storage tanks. facilities. depots or terminals where commodities for commercial Moreover. these Regulations will provide administrative guidelines on the operation and use can be stored.

SECTION 2. DEFINITION OF TERMS -

(CREATE) Act. are considered as separate customs territories. Freeport Zones and Economic Zones (Zones). as defined in Section 4 (N) and (CC) respectively, of the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 11524. otherwise known as the Corporate Recovery and Tax Incentives for Enterprises

Entry into Freeport Zones and Economic Zones is the act of bringing goods into the Zones coming from a place within the territory of the Philippines.

a foreign tcrritory into Philippine Zones. whether for consumption, warehousing. or admission. Importation into Freeport Zones and Economic Zones is the act of bringing in goods from

hydrogen gas,"bitumen. asphalt. mineral wax. and all other similar or naturally-associated Petroleum shall refer to the naturally occurring mixture of compounds of hydrogen and carbon fuel deposits. with a small proportion of impurities and shall include any mineral oil. petroleum gast substances. with the exception of coal. peat, bituminous shale and/or other stratified mineral

percent (50%) by weight of such petroleum products. and retinery studges. or other such refinery petroleum fractions which have not undergone any process or treatment as to produce separate chemically-defined compounds in a pure or commercially pure state and to which various substances may have been added to render them suitable for particular uses: Provided, That the resultant product contains not less than fifty Petroleum Produets shall refer to products formed in the course of retining crude petrofeum through distillation. cracking. solvent refining and chemical treatment coming out as primary stocks from the refinery such as. but not limited to: LPG. naphtha. gasolines. solvents kerosenes. aviation fuels. diesel oils. fuel oils. waxes and petrolatums, asphalt. bitumens. coke

for storage of commodities, whether in bulk or in packages. which may or may.not have handling equipment. such as pipelines or conveyors. as well as berth for mooring cargo carriers. Terminal and Depot shall be used synonymously and, for purposes of these Regulations, shalt refer to a facility with at least one () structure. such as a silo. tank. yard or warehouse. intended

free privileges as provided by law. the act of moving the petroleum products from its original carrying vesset/orry or initial storage facitity used to receive the same upon entry and/or importation and brought to other Philippine Freeport Zones. Economic Zones. or other duly registered entities possessing tax- Transfer of Petroleum and Petroleum Products to Other Zones and Tax Free Entities is

Transport of Petroleum and Petroleum Products from Freeport Zones and Economic Zones is the act of bringing out and removal ot all petroleum and petroleum products from the Freeport Zones or Economic Zones and moved through Philippine Territory.

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EA HALFETENU

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Withdrawal of Petroleum and Petroleum Products from Freeport Zones and Economic Zones is the act of bringing out and removal of all petroleum and petroleum produets from the Freeport Zones or Economic Zones.

produet removed, and such document covers importers of finished petroleum product. accomplished by manufacturers and importers of petrofeum products for every removal of the name and address of the consignee. date of removal. quantity amd description of every Withdrawal Certificate pertains to an accountable BIR Form No. 2231 required to be products from the refinery or Customs custody. irrespective of destination. indicating therein

operate or permit to operate exempt facility, as the casc may be. Permit to Operate is the document issued by the Bureau of Internal Revenue (BIR) to excise permitee wish to change-the contents of said storage facility, it should secure another permit to taxpayers or operators. lessors/lessees of storage facilities of articles subiect to excise taxes which shall include the appropriate terms and conditions for the strict observance of the permitee. including the exact description of the commodity to be contained therein. Should the

or permit to operate exempt facility. as the case may be. including the exact description of the commodity to be contained therein. Should the permitee wish to change the contents of said storage facifity. it should secure another permit to operate Permit to Operate Exempt Facility is the document to be issued by the BIR to operators. lessors/lessees of storage facilities of articles which are not subiect to excise tax. Said permit shoutd contain the appropriate terms and conditions for the strict observance of the permitee.

eithcr owns, operates and/or leases to others the storage facilities as covered by a lease or Permitee is the taxpaver granted by the BIR a permit to operate. The permitee is one who operating agreement.

owned by the lessor. Lease or Operating Agreement is the docunent that stipulates the agreement between the Tessce and lessor with regard to the use and/or operation of the former of the stofage facilities

of a storage facility with whom a lease agreement was executed. Lessor or Operator shall be used synonymousiy with an owner or the one that grants the use

Lessee shall refer to the one who is granted the use of a storage facility by virtue of a leaset asreement with is owner or operator.

SECTION 3. TAX TREATMENT OF ALL PETROLEUM AND PETROLEUM ECONOMIC ZONES,OR LOCATORS OR OTHER PERSONS/ENTITIES: REFUND OTHER ADMINISTRATIVE REQUIREMENTS. PRODUCTS ENTERED AND IMPORTED INTO FREEPORT ZONES AND OF TAXES PAID: AUTHORITY TO RELEASE IMPORTED GOODS (ATRIG) AND

subsequent Transter. Transport and/or Withdrawal of the same after its entry or importation. cntered and/or imported into the Zones shall be paid by the party which entered the same or the importer thereof. as the case may be. to the Bureau of Customs (BOC) prior to any and alt The VAT and Excise tax which are due on all petroleum and petroleum products that are

exported outside the Philippines or transterred. delivered and sold to the following: The excise tax or VAT paid. as the case maybe. for petroleum and petroleum products that are

For VAT: (!) to a registered export enterprise and have been directly and exclusively used in its registered export project/activity: or (2) to entities engaged in international shipping or air transport operations and have been aectually used therefor: or (3) to entities that"are statutorily zero-rated for VAT under special laws or international agreements to which the Philippines is a signatory:

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treaties. conventions and other international agreements for their use of consumption; or (3) entities which are by law exempt from direct and indirect taxes. For Excise Tax: (1) international carriers of Philippine or foreign registry on their use or consumption outside the Philippines: or (2) exempt entities or agencies covered by tax

actually been transferred. delivered. sold, and used by. the foregoing entities for the above- may be refunded by filing a claim for credit or refund with the BIR for verification and is properly shown to the satisfaction of the BIR that said petroleum or petroleum products have issuance of a tax credit certificate, as applicable. No claim for refund shall be granted unless it stated purposes. evaluation. Once approved. the claim shall be forwarded to the BOC for cash payment or

In case the Zone registered enterprise shall subsequently (1) sell/introduce the petroleum or enterprise and/or party not enjoying tax privileges. no refund for taxes shall be granted for the product sold. In any event. the possessor of petroleum or petroleum producis must be able to taxes due on said goods shall be collected fron said possessor/user. petroleum products."or part of the volume thereof. into the customs territory (except sales of fuel for use in international operations), or (2) sell to another Zone registered business present sufficient evidence that the proper taxes due thereon have been paid. otherwise all the

directly and exciusively for its project or activity shall be VAT exempt but subject to excise The importation. however. of petroleum products by a registered export enterprise to be used teX

Zone. shall be exempt from payment of applicable duties and taxes under Section 295(G) of Moreover. the importation by a Philippine refinery enjoying fiscal incentives with an Investment Promotion Agency (IPA) of crude petroleum to be refined at its refinery inside the the Tax code.

duties and taxes shall be paid thereon. thus: Upon lifting of the petroleum products produced from the imported crude oil. the applicable

be. on petroleum products sold to entities entitled to 0 VAT or excise tax exemption may be claimed for refund under this rules, and (a) during Income Tax Holiday (ITH). the excise tax or VAT paid. as the case may

(b) during 5%% SCrTiGHE. the export sales and safes inside the Zones shall be exempt from VAT and excise taxes.

outside the Zones and used direetly and exelusively in their registered project or activity shall be exempt from VA'T but subject to excise taxes. exemption may be claimed for reltund under this rules: Provided finally. that impottations of petroleum produets produced from imported crude oil by registered export enterprises located The introduction into the customs territory of petroleum products produced from the imported erude oil by the said refinery to the extent of its local'sates allowanee. shall be subject to applieable duties and taxes payable by the inporter thereof: Provided that the excise tax or VAT paid. as the case may be. paid on sale to entities entitled to 0% VAT or excise tax

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before the retease thereof from Customs custody and the respective Zone Authority: For each and every Transfer. Transport and/or Withdrawal of petroleum and petroleum products. the party which entered the same or the importer thereof. as the case may be. shall

Y pay the Value-Added and Excise Taxes. as the case may be and computed at the time secure the prescribed ATRIG from the BIR's Excise Tax Regulatory Division (ETRD} obtain a Withdrawat Certificate from the BIR ELTFOD for petroleum and petroleum for petroleum and petroleum products imported into the Zones: of Transfer. Transport and withdrawat:

aceompany each and every Transfer. Transport and/ or Withdrawal of petroleum products regardless of the mode of conveyance. products entered into the Zones. The Withdrawal Certificate shall, at all times.

conditions which shall include. among others. the issuance of a Withdrawaf Certificate and the Submission of liquidation reports. for the Permitee's strict compliance. For excise tax purposes. all importers of petroleum and petroleum products shall secure a Permit to Operate with the BIR's ETRD. Such permit shall preseribe the appropriate terms and

or terminals throughout the Philippines. including those located within the Freeport Zones as thereof with the appropriate BIR Office having jurisdiction over the said facilities as follows: SEC. 4. REGISTRATION OF ALL STORAGE FACILITIES.-- All tank facilities, depots well as within the Economic Zones shall be registered by the owners. lessors or operators

Revenue Regions Where the Storage Facilities are Loeated Appropriate BIR Office Where to Kegister

Revenue Region Nos. 4. 5. 6. 7. 8.9 and 10 Excise Tax Regulatory Division. National Office Revenue Region Nos. 1. 2 and 3 Excise Tax Area 1-Baguio City Revenuc Region Nos. 11 and 12 Excise Tax Area HH-Bacolod Revenue Region Nos. 13. 14 Excise Tax Area IV-Cebu Revenue Region Nos. 15 and 19 Excise Tax Area V-Davao Revenue Region Nos. 16. 17 and 18 Excise Tax Area Vi-Cagayan de Or

Certificate for every removal from the retinery or customs custody to the point of destination or other goods subiect to excise taxes. a Permit to Operate from the BIR shall be issued. Said and succeeding transfer of petroleum products. joint supervision over the facilities with the petroleum and petroleum products stored therein. The monitoring requirements prescribed in this Section and in the permit granted shall likewise be strietly observed. In cases where said facilities will be used for the storage of petroleum or petroleum products permit shall preseribe the appropriate terms and conditions which shall inctude. among others. the maintenance ot Ofticial Register Books or their euuivalent. issuance of Withdrawal BiR. through the assignnment of revenue officers. and stocktaking/physical inventory taking of

articles subject to excise taxes. if satisfactorily established to the BiR. will be issued a Permit to Operate Exempt Facility. This notwithstanding, both Permit to Operate and Permit to changes be planned. an application for new permit should be made. A facility which will not be used for storage of petroleum or petroleun products or other Operate Exempt Facility should categorically state the goods stored therein. and should any

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Offices according to the preceding Section within fifteen (15) days from the date of effectivity of these Regulations: SEC. 5. TRANSITORY PROVISIONS, -- All owners. lessors or operators of tank facilities. depots or terminals shall submit the following copies of documents to the appropriate BIR

(e) Notarized undertaking(s) exccuted jointly with the respective tessee-owner(s) of the (c) Lease or Operating Agreement, in case the whote facility, depot or terminal is actually. (d) Terminalling. Lease, or Storage Agreement(s) with the lessee-owner(s) of the contents (a) BIR Certificate of Registration (b) Latest Blueprint of the Perspective Design of the whole storage facility, depot or tank number, description of the product and the volume of inventory thereof as of the date of effectivity of these Regulations. being leased or operated by another person or entity other than the owner thereof: content(s) of the storage tank(s) within the facility, depot or terminal containing the terminal specifically containing, among others, the tanks located therein. duly approved by a licensed professional authorized by law to issue such document: of the respective tanks: and

inspection of the facilities, depots and terminats, within thirty (30) days fron receipt of such The concerned BIR Offices shall issue the duly approved Permits to Operate, after evaluation/validation of the foregoing documents and the conduct of verification and ocular documents.

corresponding penatties under the pertinent provisions of the NIRC of 1997, as amended, and applicable regulations. SEC. 6. PENALTIES. - Any violation of these Regulations shall be subject to the

invalid by a competent court, the remainder of these Regulations or any provision not affected SEC. 7. SEPARABILITY CLAUSE. - If any provision of these Regulations is declared by such declaration of invalidity shall remain in force and effect. SEC. 8. REPEALING CLAUSE. -- All regulations, rulings or orders, or portions thereof which are inconsistent with the provisions of these Regulations are hereby revoked, repealed or amended accordingly. SEC. 9. EFFECTIVITY. - These Regulations shall take effect after fifteen (15) days following publication in the Officiat Gazette or in a newspaper of general"circulation. whichever comes first.

CARLOS GDOMINGU Secretary of Financs

Commissioner of Internal Revenue 1Ma Recommending Approval: CAESAR R. DULA 051181 MAY 2 4 28Z2

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