President Rodrigo Duterte has reduced and condoned the real property taxes and penalties assessed on the power generation facilities of certain independent power producers (IPPs).
Executive Order 19 reduces the 2015 and 2016 liabilities for real property tax on property, machinery, and equipment that the IPPs used for the production of electricity under the build-operate-transfer scheme with government-owned-and-controlled corporations (GOCCs).
The liabilities are reduced to an amount equivalent to the tax due if computed based on an assessment level of 15 percent of the fair market value of the property, machinery, and equipment depreciated at the rate of two percent per annum.
The interests on the real property tax liabilities are condoned and the IPPs will no longer need to pay these.
EO 19 states that, since a substantial part of the real property taxes being charged against the IPPs has been contractually assumed by the National Power Corp., the Power Sector Assets and Liabilities Management Corp. (Psalm) and other GOCCs, paying these would impose massive direct liabilities on the part of he GOCCs.
This could threaten their financial stability, drive up energy prices, and trigger further cross-defaults and significant economic losses across all sectors. /atm