EY-Global-oil-and-gas-tax-guide-2014

448 Philippines
Philippines
Country code 63
Makati City GMT +8
EY
6760 Ayala Ave
Makati City
1226
Philippines
Oil and gas contacts
Emmanuel C. Alcantara
Tel 2 891 0307
emmanuel.c.alcantara@ph.ey.com
Allenierey Allan V. Exclamador
Tel 2 891 0307
allenierey.v.exclamador@ph.ey.com
Antonette C. Tionko
Tel 2 891 0307
antonette.c.tionko@ph.ey.com
Tax regime applied to this country
□ Concession
□ Production sharing contracts
□ Royalties
■ Service contract
□ Profit-based special taxes
□ Corporate income tax
A. At a glance
Fiscal regime: corporate tax and production sharing
• Production-sharing — The service contractor receives its share of petroleum
as a service fee of up to 40% of the net proceeds from petroleum operations,
and the Government share under a service contract is not to be less than
60% of the net proceeds.
• Bonuses — Bonuses are payable by the contractor to the Government upon
signing, discovery or production, but only if stipulated in the service
contract.
• Corporate income tax rate — The service contractor is subject to the
corporate income tax (CIT) of 30% based on net income, as provided under
the 1997 Tax Code for the country, as amended by Section 28(A)(1) of the
Republic Act No. 9337.
• Capital allowances — Accelerated depreciation; E: immediate write-off for
exploration costs.
• Investment incentives — The service contractor is entitled to exemption from
all taxes, except income tax.
B. Fiscal regime
The Philippines Government, through its Department of Energy, as owner
of natural resources (including oil and gas reserves) in the Philippines, may
directly explore for and produce indigenous petroleum. It may also enter
into a service agreement with a service contractor for the exploration and
development of oilfields under Presidential Decree (PD) No. 87, as amended
(otherwise known as the Oil Exploration and Development Act of 1972). The
agreement is embodied in a service contract with the Philippine Government.
The service contractor receives its share of petroleum as a service fee
equivalent to no more than 40% of the net proceeds from the petroleum
operations (under the Department of Energy Model Service Contract pursuant
to PD No. 87, as amended). The service contractor’s income is subject to CIT at
a rate of 30% based on net income (proceeds), as provided under the 1997 Tax
Code, as amended by Section 28(A)(1) of the Republic Act No. 9337.