PRESIDENT Rodrigo R. Duterte has signed an executive order (EO) that cuts and condones real property taxes and interest and/or penalties assessed on the power generation facilities of independent power producers (IPPs).
The EO No. 60, which was signed by Mr. Duterte on July 25, covers the power generation facilities of independent power producers under build-operate-transfer contracts with government-owned or-controlled corporations (GOCCs).
Section 1 of the EO states that “(a)ll liabilities for real property tax, including any special levies accruing to the Special Education Fund, for calendar year (CY) 2017, on property, machinery, and equipment actually and directly used by IPPs for the production of electricity under a Build-Operate-Transfer scheme and similar contracts (whether denominated Power Purchase Agreements, Energy Conversion Agreements, or other contractual agreements) with GOCCs, assessed by local government units (LGUs) and other entities authorized to impose real property tax for all years up to CY 2017, are hereby reduced to an amount equivalent to the tax due if computed based on an assessment level of fifteen percent (15%) of the fair market value of the said property, machinery and equipment depreciated at the rate of two percent (2%) per annum, less any amounts already paid by the IPPs.”
It also says that “(a)ll interests on such deficiency, real property tax liabilities are also hereby condoned and the concerned IPPs are relieved from payment thereof.”
As for its application to future real proper tax liabilities, the EO says that all property tax payments made by the IPPs over and above the reduced amount under Section 1 shall be applied to their real property tax liabilities for the succeeding years. — Arjay L. Balinbin