President Duterte has reduced and condoned the real property taxes and penalties incurred by power companies dealing with government corporations.
The latest tax relief will cover the year 2020 based on Executive Order No. 126 signed by President Duterte last March 4. The order will take effect immediately after publication in the Official Gazette or a newspaper.
Under EO 216, all liabilities of real property taxes for 2020 on property, machinery and equipment used by the independent power producers (IPPs) for the production of electricity under a Build-Operate-Transfer scheme with the government owned and controlled corporations (GOCCs) are reduced to an amount equivalent to the fair market value of such property depreciated at 2 percent a year.
“All interests and penalties on such deficits RPT liabilities are hereby condoned and the concerned IPPs are relieved from payment thereof,” the order read.
The order noted the collection of such real estate taxes by local government units would trigger massive direct liabilities on the part of GOCCs and threaten their financial stability, government’s fiscal consolidation efforts, and the stability of energy prices. Such payment may also trigger “further cross-defaults and significant economic losses across sectors.”
A substantial portion of the tax obligations has been contractually assumed by the National Power Corporation/Power Sector Assets, Liabilities Management Corporation and carry the full faith and credit of the national government
The President directed concerned government agencies, GOCCs and local government units to comply with the latest directive. “Any violation of this Order shall be dealt with in accordance with civil service laws and regulations,” the order read.