August 5, 2018 | 9:03 pm
A NONPROFIT has asked legislators to
modify certain provisions of a pending bill promoting energy efficiency to
align it with the second phase of Republic Act 10963 or Tax Reform for
Acceleration and Inclusion (TRAIN 2), which will repeal incentive provisions of
an existing law.
“Given the parallel legislative
process for TRAIN Package 2, which considers the repeal of incentive provisions
of Executive Order No. 226, we now see the need to modify Section 20 on Fiscal
Incentives of the EE&C (Energy Efficiency and Conservation) Bill,” said the
Philippine Energy Efficiency Alliance, Inc. (PE2) in its letter to the House of
Representatives’ committee on ways and means.
In the letter, PE2 President
Alexander Ablaza said the pending bill should specify the recommended incentives
for projects that will be needed to ensure the financial viability of
energy-efficienct investments.
The energy efficiency bill should
also remove its express reference to Executive Order No. 226, or the 1987
Omnibus Investments Code, he said.
It should also identify the Board of
Investments (BoI) as the lead investment promotion agency to administer the
fiscal incentives for energy efficiency projects, while removing restrictions
on ownership by nationality.
PE2 also wants the bill to specify a
minimum 15-year period to avail of the recommended fiscal incentives.
“To effectively address these needs,
PE2 respectfully forwards our proposed rewording of Section 20 of the EE&C
Bill,” it said.
Its proposed rewording of Section 20
states that during the first 15 years from the passage of the law, energy
efficiency projects should be included in the Strategic Investments Priorities
Plan (SIPP) of the government.
It also says that the application by
a project proponent for registration of such project should be duly acted upon
by the BoI on the basis of the endorsement issued by the Department of Energy
(DoE).
A certified project should also be
entitled to receive a certificate of entitlement from the Fiscal Incentives
Review Board.
It said that a Filipino natural
person or partnership or any other association, cooperative, or corporation
organized under Philippine law, whether Filipino or up to 100% foreign-owned,
which is a proponent of an energy efficiency project, as duly endorsed by the
DoE, should be entitled to the following incentives: income tax holiday; zero
percent value-added tax (VAT) rate; tax and duty exemption on imported capital
equipment.
Specifically, for the first six
years of its commercial operations, the project proponent is sought to be
exempt from income taxes levied by the National Government.
The selling price, remuneration or
consideration received by a project proponent is proposed to be subject to zero
percent VAT, pursuant to the National Internal Revenue Code of 1997, as amended.
All project proponents should also
be entitled to zero-rated VAT on its purchases of local supply of goods,
properties and services needed for the development, construction and
installation of its plant facilities.
Within the first 10 years upon the
issuance of an endorsement by the DoE, the importation of technologically
energy-efficient machinery, equipment, vehicles, spare parts and materials is
to be exempt 100% from customs duties and national internal revenue tax
payable.
At the end of the 15-year period,
the Fiscal Incentives Review Board may suspend or cancel the grant of such
incentives upon a joint recommendation of the DoE and the BoI that they are no
longer required in order to ensure the financial viability of energy efficiency
investments.
PE2 earlier said that energy
efficiency and conservation should be treated as the “first fuel” of the
economy to slow down the rise in energy prices by deferring around 45,900
megawatts (MW) of energy infrastructure upgrades through 2040.
It said consistent with the DoE’s
road map, the economy will have to proactively shave off at least 182 metric
tons of oil equivalent in energy demand in the next 22 years to meet the 2040
targets and save the economy around P36 trillion in energy purchases.
PE2, which describes itself as a
nonprofit, nonmarket, non-state civil society organization, said the
Philippines is the only country in the region without a mandatory energy
efficiency and conservation policy framework or mainstreamed fiscal incentives
for related investments. — Victor V. Saulon
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