The Department of Energy said Thursday all electric cooperatives (ECs) in the country, whether registered with the National Electrification Administration (NEA) or the Cooperative Development Authority (CDA), complying with NEA’s financial and operational standards will be exempted from local taxes, fees, and charges imposed by local government units (LGUs).
Energy Secretary Raphael Lotilla and Finance Secretary Ralph Recto, represented by Undersecretary Bayani Agabin signed the joint memorandum circular on Dec. 4 on the local tax exemption.
Local taxes is defined as taxes or enforced contributions imposed by an LGU in provinces, cities, municipalities and barangays through an ordinance, such as real property taxes, business tax, franchise tax, and tax on transfer of real property ownership.
“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.
“By reducing these costs, we empower them to focus on expanding access to electricity, especially in unserved and underserved areas, ensuring no Filipino household is left behind,” he said.
The circular provides guidelines for electric cooperatives on the availment of preferential rights under Republic Act (RA) No. 7160, in relation to RA No. 10531.
The DOE said that 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.
It said that to qualify for this certification, ECs must achieve at least a 75 percent rating based on NEA’s compliance parameters.
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.
The DOE said all ECs, however, remain subject to regulated and reasonable administrative costs imposed by LGUs, in accordance with the Joint Memorandum Circular No. 2019-01 signed by the Department of the Interior and Local Government (DILG) and DOF.
The circular established the guidelines for reasonable rates of regulatory fees and service charges levied by LGUs.
These costs include fees for business permits, mayor’s permits, barangay clearances, community tax certificates, and other charges such as those for water consumption, electricity, and toll fees.
The DOE said the NEA is expected to issue the guidelines governing its issuance of certificate of compliance within 15 days from the effectivity of the joint circular.
