President Ferdinand R. Marcos Jr. has signed Executive Order 83, granting significant tax relief to Independent Power Producers (IPPs) involved in Build-Operate-Transfer (BOT) agreements with government entities. The order, signed on February 13, aims to alleviate the financial burden on IPPs by reducing and forgiving real property taxes (RPT) and associated penalties on their power generation facilities. This move is intended to stabilize energy prices and prevent economic downturns due to potential defaults by these producers. The relief applies to the calendar year 2024 and includes a reduction in RPT based on a 15% assessment level of the fair market value of the property, machinery, and equipment, depreciated at 2% annually, minus any payments already made. Additionally, all accrued interests and penalties on these RPT liabilities are waived, and any overpayments will be credited towards future tax obligations. The decision comes in response to local government units (LGUs) asserting that IPPs are not eligible for the same tax exemptions as government-owned corporations, which had led to threats of enforcement actions against IPPs. The cessation of operations by these IPPs, which contribute significantly to the national grid with an estimated capacity of 3,100 megawatts, could lead to substantial government losses and force reliance on more expensive power alternatives or blackouts. All government departments, agencies, and LGUs are mandated to comply with EO 83, with the Department of the Interior and Local Government and the Department of Finance tasked with monitoring and reporting on its implementation.
President Marcos Jr. Approves Tax Relief for Power Producers Under BOT Agreements
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