Metro Manila (CNN Philippines, July 28) – An executive order issued by President Ferdinand Marcos Jr. lowers real property taxes (RPTs) on generation facilities of Independent Power Producers (IPPs) operating under Build-Operate-Transfer (BOT) contracts.
Under EO 6 — signed by Executive Secretary Lucas Bersamin for the president last July 25 but made public on Friday — all RPT liabilities assessed by local government units (LGUs) for this year are reduced “to an amount equivalent to the tax due if computed based on an assessment level of 15% of the fair market value of the property, machinery and equipment depreciated at the rate of two percent per annum, less the amount already paid by the IPPs.”
This includes a special education fund on property, machinery, and equipment, power purchase agreements, energy conversion agreements, or other contractual agreements with the government corporations under BOT.
A BOT is a contract whereby the government grants a concession to a private company to finance, build, and operate a project for a certain number of years, and in the process earn a profit. At the end of the concession period, the private entity turns over the project to the government.
“All interests and penalties on such deficiency RPT liabilities are also hereby condoned and concerned IPPs are relieved from payment thereof,” the EO read.
IPPs are privately owned power plants that generate electricity for sale to distributors and end-users.
The EO stated that LGUs have taken the position that the IPPs operating in their territories are not entitled to exceptions and privileges enjoyed by contracts with government corporations.
It added that some LGUs “have threatened enforcement actions against IPPs, including levy and sale, at public auction affected properties.”
