NGCP pays franchise tax, not income tax

Manila Bulletin
by James Loyola
April 4, 2014

National Grid Corporation of the Philippines clarified that, while it is exempt from income tax payments as provided by the law, it dutifully pays its franchise taxes to the government.

The firm is a privately-owned transmission company with a 25-year concession and 50-year franchise to operate the country’s power grid.

The grid operator made the clarification after the Department of Finance (DOF) published a Tax Watch print ad stating that only 39 of the top 100 corporations ranked by the Securities and Exchange Commission (SEC) landed on the Bureau of Internal Revenue’s (BIR) list of 500 top corporate/non-individual taxpayers.

NGCP ranked 25th in SEC’s list which was based on revenues. BIR’s list, which was based on income tax returns, did not include NGCP.

“NGCP’s franchise granted through Republic Act 9511 mandates that it pay a franchise tax equivalent to 3% of all gross receipts, ‘in lieu of income tax and any and all taxes, duties, fees and charges of any kind, nature of description levied, established or collected by any local or national authority on its franchise, rights, privileges, receipts, revenues and profits, and on properties used in connection with its franchise,’” explained NGCP spokesperson Atty. Cynthia D. Perez-Alabanza.

She added that “NGCP dutifully pays any and all taxes due from it to the government. This is another way we contribute to nation-building.”

NGCP transmits high-voltage electricity through “power superhighways” that include the interconnected system of transmission lines, towers, substations, and related assets. source