LPG and Kerosene Excise Tax Suspension Lifted: What the July 8 Reversal Means for Your Business

The LPG and kerosene excise tax suspension has been lifted. On July 8, 2026, the Bureau of Internal Revenue confirmed that excise tax rates on both fuels automatically reverted to their original levels under Section 148 of the National Internal Revenue Code, pursuant to Section 3(i) of Executive Order No. 114. No new law was passed. No committee voted. The suspension was lifted because a number crossed a line the government set back in April.

For any business running LPG-fed kitchens, delivery fleets, or manufacturing lines, this is not background news. It is a cost that came back into your books this week, whether or not you noticed it happen.

What Changed Specifically

The excise tax suspension had applied since April 17, 2026, when EO No. 114 fully suspended excise on LPG (except when used as petrochemical feedstock or motive power) and kerosene (except aviation fuel), implementing Republic Act No. 12316 through BIR Revenue Regulations No. 3-2026. That suspension was scheduled for a formal review by the Development Budget Coordination Committee on July 17. The scheduled review ultimately became unnecessary because the automatic reversion clause took effect first.

Why the LPG Kerosene Excise Tax Suspension Was Lifted Early

RA 12316 gave the President authority to suspend fuel excise for up to three months at a time whenever the average Dubai crude oil price, based on the Mean of Platts Singapore, breaches USD80 per barrel. EO 114 built a mirror-image rule into the suspension itself: if that average price falls back below USD80 for a full month, and stays there for a week after certification, the excise reverts on its own. No DBCC recommendation. No new executive order.

That is exactly what happened. The Department of Energy certified that the average Dubai crude price for June 1 to 30 settled at USD79.45 per barrel, below the threshold. One week later, on July 8, the BIR confirmed the reversal was in effect, citing Section 3(i) of EO 114 directly.

The timing carries a second layer worth understanding. Oil prices eased in June amid improving market sentiment, including reduced geopolitical tensions in the Middle East, helping bring the monthly average Dubai crude price below the USD80 threshold. That coincided with modest local fuel price rollbacks around the same time the excise tax returned.

Since then, however, renewed tensions have added fresh uncertainty to global oil markets. If the average Dubai crude price climbs back above USD80 per barrel for a full month in a future certification cycle, the legal conditions for another suspension could again be met. Rather than treating this as a one-time policy change, businesses should view it as part of an ongoing price-trigger mechanism that can directly affect fuel costs and budgeting.

What It Means for Your Business

The practical exposure differs by how directly fuel costs sit in your cost structure.

F&B operators running LPG-fed kitchens. The excise adds roughly ₱37 per 11-kg tank back into your input costs. On its own, that is a modest line item. Where it becomes a real issue is inventory. LPG withdrawn from production or customs custody before July 8 carried zero excise, regardless of when it is actually used in the kitchen. LPG withdrawn from production or customs custody on or after July 8 is subject to the reinstated excise rate. If your kitchen is drawing from tanks purchased across that boundary, two units of the same input can have two different cost bases, and your food cost calculations and gross margin analysis may not reconcile cleanly unless that inventory split is tracked.

Logistics and delivery-heavy operations. Kerosene exposure is generally smaller for most SMEs than LPG, but any fleet or cold-chain operation using kerosene should apply the same withdrawal-date logic before assuming a flat cost increase across all remaining stock.

Retail and distribution businesses reselling LPG or kerosene products. Pricing to end customers should reflect the same withdrawal-date split. A blanket price increase applied to existing pre-July 8 stock overstates your margin recovery. At the same time, pricing pre-July 8 stock as though it already carries the reinstated excise can create compliance concerns, since the excise-free withdrawal documentation should still reflect EO No. 114 coverage for that batch.

This type of mismatch often surfaces during month-end variance analysis when businesses apply a single excise rate across all inventory instead of accounting for withdrawal dates. Tracking inventory based on the applicable withdrawal date helps ensure that cost of goods sold, margins, and supporting documentation remain aligned.

What to Do Now

• Pull your LPG and kerosene withdrawal records and mark the July 8, 2026 cutoff clearly. Anything withdrawn from production or customs custody before that date should still be costed at zero excise, even if it is used later.

• Update your cost of goods sold calculation to reflect two rates rather than one, at least until pre-July 8 stock is fully consumed.

• Check your supplier invoices for the EO No. 114 remark on pre-reversion deliveries. That remark is what supports the zero-excise treatment on audit, and it should stop appearing on anything dated July 8 or later.

• Watch the next DOE certification cycle, not just this one. Given the renewed volatility in global oil markets, another suspension remains possible if the average Dubai crude price rises above USD80 per barrel for a full month. Treat this as a recurring input to your quarterly cost forecasting rather than a one-time event.

For broader context on how excise and other indirect taxes fit into your overall compliance calendar, CloudCFO’s tax compliance resource hub is a useful starting point.

Navigate Regulatory Changes with Expert Help

Regulatory triggers like this one do not announce themselves in advance, and they do not wait for a business’s monthly close to catch up. CloudCFO works with SME clients precisely because these certification cycles, effectivity dates, and inventory-tax boundaries are easy to miss in the middle of running a business, and costly to get wrong after the fact.

For clients running LPG-dependent operations, CloudCFO is already reconciling withdrawal dates against the July 8 effectivity and adjusting cost of goods sold accordingly, so the correction shows up in this month’s numbers rather than as an unexplained variance three months from now. If your business is tracking this on its own and you want a second set of eyes on whether your inventory split is holding up, talk to CloudCFO about reviewing it before your next close.