The Department of Energy (DOE) announced that all electric cooperatives (ECs) nationwide are exempted from taxes imposed by their local government units (LGUs).
The memorandum was signed by Energy Secretary Raphael P.M. Lotilla and Finance Secretary Ralph G. Recto, represented by Undersecretary Bayani Agabin, on Wednesday, Dec. 4.
According to the memo, ECs that comply with the National Electrification Administration (NEA) standards and are registered with the Cooperative Development Authority (CDA) will no longer pay local taxes, fees, and charges levied by their respective LGUs.
"This local tax exemption is a significant milestone for our qualified ECs, as it directly translates to reduced financial burdens that can be reinvested into improving services and achieving 100 percent total electrification," Lotilla said.
Lotilla added that minimizing costs for ECs would empower them to expand their electricity services, especially in hard-to-reach areas.
These local taxes are imposed in provinces, cities, municipalities, and barangays, and include real property taxes, business taxes, franchise taxes, and taxes on the transfer of real property ownership.
"Under this Circular, electric cooperatives are required to secure an annual Certificate of Compliance from the NEA, demonstrating their adherence to the prescribed financial and operational standards," the DOE said.
The DOE clarified that certification will be given to ECs with a 75 percent rating on NEA's compliance parameters.
The NEA will issue guidelines for the Certificate of Compliance within fifteen days after the tax exemption memo.
"These parameters include maintaining high collection efficiency, achieving a positive net worth, meeting system reliability and system loss standards, conducting annual general membership assemblies and district elections as scheduled, implementing electrification projects to attain 100 percent customer connection, and submitting complete and timely reportorial requirements to the NEA," it added.
While tax exemption will take place, ECs will still be subject to regulated and reasonable costs from the LGUs, as long as they are within the scope of Joint Memorandum Circular No. 2019-01, signed by the Department of the Interior and Local Government (DILG) and the Department of Finance (DOF).
This includes business permit fees, mayor's permits, barangay clearances, community tax certificates, and other charges such as water, electricity, and toll fees.