Govt Considers Legislative Approach on Taxation Issues of Oil Exploration in the PH

The government is considering using a “legislative approach” to tackle taxation problems that have been blocking possible investment opportunities in the Philippine oil and gas exploration and production (E&P) industry.

President of the Philippine Petroleum Association (PAP), Mr. Edgar Benedict Cutiongco has said that industry players are on standby for a resolution of a pending case at the Supreme Court which could potentially solve the legal issues on taxation on petroleum service contractors.

The tax block of possible petroleum investors comes from the Commission on Audit’s (COA) interpretation which states that the income tax payment of the Malampaya consortium should not have been charged as part of the 60% royalty share of the country’s government.

This consortium led by Shell Philippines Exploration B.V. (SPEX) had previously won the ₱146.8 billion arbitration case back in 2019 at the International Chamber of Commerce (ICC) in Singapore. However, this would entail an affirmation ruling from the Supreme Court before the final award can be implemented.

“We’re leaving it to the Supreme Court right now. The strategy and the workflow is: we need to get Supreme Court to decide,” said Cutiongco, also sitting on the Philippine National Oil Company-Exploration Corporation (PNOC-EC)’s Board of Directors. The PNOC-EC is a state-run company that owns a minority stake in the Malampaya project.

“We will let Supreme Court decide with finality. But if not, there’s another option which is legislation to resolve the COA issue – so that (taxation policy) will become a law,” says Cutiongco.

Source: Manila Bulletin