House bill granting tax breaks to eco-friendly car makers OK’d on 3rd reading

MANILA, Philippines–A measure recently approved by the House of Representatives seeks to provide tax breaks for manufacturers and importers of environment-friendly vehicles.

House Bill 5460, which seeks to alleviate the country’s dependency on imported fossil oil by paving the way for introduction of electric, hybrid or alternative-fuel cars through exemptions from taxes, was approved on third and final reading.

The measure seeks to exempt those manufacturing, converting or importing such vehicles from excise taxes and duties for nine years from the effectivity of the law for the manufacture or assembly of completely knocked-down parts of electric, hybrid and other alternative fuel vehicles.

For those nine years, they will also be exempted from the paying value-added tax for importing raw materials, spare parts, components and capital equipment used in the manufacture or assembly of electric, hybrid and other alternative fuel vehicles as well as conversion into such vehicles.

It also proposes having zero percent value-added tax rate during the said period on the sale of raw materials, spare parts, components and capital equipment used in the manufacture or assembly of electric, hybrid and other alternative fuel vehicles including the conversion of vehicles into electric, hybrid and other alternative-fuel vehicles.

It defines a hybrid vehicle as one that combines technologies using internal combustion engine (ICE) with a battery-powered electric motor to gain advantages of both propulsion systems.

An alternative-fuel vehicle uses other sources of energy in place of fossil fuel products, which include solar, wind, hydrogen fuel cell, compressed natural gas,  liquefied natural gas and liquefied petroleum gas.

The electric car is described as one that makes use of electric motors solely for propulsion.

One of its authors, Batangas Representative Hermilando Mandanas, said that it was important to make such vehicles accessible and more popular to Filipinos and that this could be done by bringing down their prices through exemptions from excise, import and value-added taxes.

“If you bring down the cost of importation and manufacturing, you lower the prices and more people can afford to buy them,” he explained, pointing out that the measure could be part of the groundwork for the widespread use of electric or hybrid vehicles.