MANILA – The Department of Energy (DOE) is proposing new income tax holiday (ITH) rates for energy efficiency and conservation (EE&C) projects.
In an interview, Energy Utilization Management Bureau Director Patrick Aquino said DOE will be conducting public consultations on the endorsement guidelines to the Board of Investments (BOI) this month for the working draft of the proposed ITH rates.
Aquino presented the working draft of the proposal during the German Energy Week observance of the German-Philippine Chamber of Commerce and Industry early this week.
For equipment, process or boundary level projects with 15 percent to 20 percent energy savings and whole plant, facility, or establishment projects with 5 percent to 10 percent savings, the DOE is looking to offer 30-percent ITH of the cost of installed EE&C equipment, or system for self-financed projects and 50 percent ITH for third party EE&C project development.
“For example, a self-financed EE&C project that generates 20 percent savings at a cost of PHP1 million will have an ITH of 30 percent or 300,000 (pesos). When the EE&C project undertaken by a third party provider, which generated 20-percent savings, the rising income for the said provider will be covered by 50-percent ITH,” Aquino said.
Equipment, process or boundary level projects generating energy savings of more than 20 percent and up to 25 percent will be offered with 40 percent ITH of the cost installed for self-funded projects, and 75 percent ITH for those with third party partners.
Higher ITH will be given to the same projects with energy savings of more than 25 percent to 50 percent for self-financed projects and 100 percent for third party EE&C project development.
For the whole plant, facility, or establishment level, those with energy savings of 11 percent to 15 percent, may receive 40 percent ITH for self-financed projects and 75 percent for third party projects.
Those generating energy savings of more than 15 percent will be entitled for 50 percent ITH for self-financed projects and 100 percent for third party development.
Aquino said EE&C projects are included in the Investment Priorities Plan (IPP) of the BOI for the next 10 years with current incentives tied to the amount of the project.
He added the DOE will also be proposing to BOI to include EE&C projects in the preferred activities under the incentive rationalization plan of the government.
Registered EE&C projects are entitled to ITH for three to five years.
“We are hopeful to get at least four years as a minimum. But we will take whatever is given under CITIRA (Corporate Income Tax and Incentives Reform Act),” Aquino said.
The CITIRA bill has been renamed as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE). (PNA)
