By Marcos Orders Temporary Excise Tax Suspension on LPG, Kerosene Under EO 125
Excerpt: President Ferdinand R. Marcos Jr. has ordered the temporary suspension of excise taxes on liquefied petroleum gas (LPG) and kerosene under Executive Order No. 125, subject to specific exemptions, periodic review, and an automatic return of the tax rates under certain conditions.
President Ferdinand R. Marcos Jr. signed Executive Order (EO) No. 125 on September 25, 2026, ordering the temporary suspension of excise taxes on certain uses of liquefied petroleum gas (LPG) and kerosene.
The order was issued pursuant to Republic Act No. 12316, which authorizes the President, upon the recommendation of the Development Budget Coordination Committee (DBCC) and in coordination with the Department of Energy (DOE), to suspend or reduce excise taxes on petroleum products when the one-month average Dubai crude oil price based on the Mean of Platts Singapore (MOPS) reaches or exceeds US$80 per barrel.
What LPG and Kerosene Uses Are Covered?
Under Section 1 of EO No. 125, excise taxes are fully suspended on:
- LPG, except when used as a raw material for the production of petrochemical products or when used for motive power
- Kerosene, except when used as aviation fuel
This means the suspension does not apply to every use of LPG and kerosene. The specific exemptions identified in the executive order remain subject to the applicable excise tax rates.
Gasoline and diesel are also not included among the petroleum products covered by EO No. 125.
Oil Price Reached US$94.41 Per Barrel
According to EO No. 125, the Department of Energy certified on September 11, 2026 that the average Dubai crude oil price based on MOPS for the preceding 30 calendar days had reached US$94.41 per barrel.
This was above the US$80-per-barrel threshold provided under RA No. 12316 for the President to exercise the authority to temporarily suspend or reduce excise taxes on petroleum products.
The law allows a suspension or reduction to be applied only to specific petroleum products depending on prevailing conditions.
The DBCC, through Resolution No. 2026-11, subsequently recommended the full suspension of excise taxes on the covered LPG and kerosene products.
Suspension Will Be Reviewed Regularly
The suspension under EO No. 125 is subject to continuing government review.
Within 15 days from the issuance of the order, and every month thereafter, the DBCC, in coordination with the DOE, is directed to review the implementation of the suspension and submit a report to the House of Representatives and the Senate.
Based on these reports, the DBCC may recommend to the President the continuation, modification, extension, or termination of the suspension.
RA No. 12316 also requires the reports to contain information on matters such as estimated foregone government revenues, expected effects on fuel prices and inflation, possible market distortions, and other economic consequences of the tax suspension.
When Will the Excise Taxes Return?
EO No. 125 provides for the automatic reversion of the excise tax rates to those prescribed under Section 148 of the National Internal Revenue Code without the need for another executive issuance.
The regular excise tax rates will return upon whichever of the following occurs first:
- One week after the one-month average Dubai crude oil price based on MOPS falls below US$80 per barrel, as certified by the DOE; or
- Three months after the effectivity of EO No. 125.
Under RA No. 12316, each suspension or reduction may remain effective for a period not exceeding three months, subject to the conditions provided by law.
Government to Monitor LPG and Kerosene Stocks
EO No. 125 also directs the DOE and the Department of Finance, through the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), to conduct an inventory of existing LPG and kerosene stocks as of the effectivity of the order.
The BIR and BOC are also required to submit monthly information on the declared value and volume of petroleum products covered by the suspension.
Oil companies, meanwhile, are required to submit to the DOE monthly information on the cost components of petroleum products covered by EO No. 125. The DOE will then provide the information to the DBCC and Congress.
The Department of Finance, BIR, BOC, and DOE may issue additional rules, regulations, and guidelines necessary to implement the executive order.
When Does EO No. 125 Take Effect?
Section 9 of EO No. 125 provides that the order shall take effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.
This means the date the President signed the executive order and its legal effectivity are distinct. Its effectivity is tied to the publication requirement stated in the order.
Similar Suspension Was Implemented Earlier in 2026
The government previously temporarily suspended excise taxes on LPG and kerosene under Executive Order No. 114, signed in April 2026.
That earlier measure similarly covered LPG, except when used as a raw material for petrochemical production or for motive power, and kerosene, except when used as aviation fuel.
EO No. 125 again invokes the authority provided under RA No. 12316 following the rise in the average Dubai crude oil price above the statutory US$80-per-barrel threshold.
Sources
- Executive Order No. 125, s. 2026, certified copy dated September 25, 2026
