FINANCE SECRETARY Carlos G. Dominguez III said incentives offered in pending tax reform legislation could facilitate the attraction of investment in clean energy projects, which will go hand-in-hand with the government’s recent ban on new coal-fired power plants.
Mr. Dominguez expressed his support last week for the Energy department’s plan to reduce the Philippines’ reliance on coal as a source of energy and adopt more renewable sources.
“This, in conjunction with CREATE’s performance-based fiscal incentives, will steer private capital towards new investments in renewable energy,” Mr. Dominguez told reporters on Monday via Viber.
He was referring to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, which aims to lower the corporate income tax rate to 25% this year from 30% currently, while reforming the incentives regime by making them more performance-based and time-bound.
The bill forms part of the government’s economic recovery program but is currently pending at the Senate.
Mr. Dominguez said the measure has several provisions that give “generous and performance-based” tax incentives to investments under the Strategic Investment Priorities Plan, which will soon include the renewable energy sector. The sector’s existing incentives will be retained even after the measure is approved.
He said companies involved in renewable energy would also benefit from the measure as it offers income tax deductions for research and development.
“The enhanced deduction is designed to boost innovation, such as efficient power generation and improved battery technology,” he said.
Deductions for training could also be employed to create green, high-skilled jobs, he said.
Finance Assistant Secretary Maria Teresa S. Habitan said in a Viber message that the bill offers double deductions against gross income for investment in research and development as well as in training.
The Philippines is among the most disaster-prone countries in the world, according to the 2020 World Risk Index.
Last week, the Energy department imposed a moratorium on new coal-fired power projects and allowed foreign investors to take 100% ownership in geothermal projects.
Energy Secretary Alfonso G. Cusi said the shift will facilitate more investment in sustainable power production and make the power mix flexible.
The department is currently reviewing the Philippine Energy Plan for the next two decades. — Beatrice M. Laforga