President Ferdinand Marcos Jr. issued an executive order reducing and condoning real property taxes (RPTs) imposed on independent power producers (IPPs), citing risks to the stability of the country’s energy sector and economy.
Executive Order (EO) No. 83, signed on Feb. 13, reduces the RPT liabilities of IPPs operating under Build-Operate-Transfer (BOT) contracts with government-owned or -controlled corporations (GOCCs).
The order also waives accumulated interests and penalties on unpaid taxes assessed by local government units (LGUs).
Mr. Marcos said the measure was necessary to prevent financial strain on the National Power Corporation (NAPOCOR) and the Power Sector Assets and Liabilities Management Corporation (PSALM), which have assumed a substantial portion of the tax obligations under contractual agreements.
The EO lowers the assessment level for taxable assets, such as power plants and equipment, from 80% to 15% of their fair market value.
“The collection of these taxes at the maximum assessment level would trigger massive direct liabilities on the part of NAPOCOR and PSALM, threatening their financial stability,” the order stated.
It added that enforcing the full tax burden could disrupt the government’s fiscal consolidation efforts and lead to higher electricity prices or power outages.
The order also mandates that RPT payments exceeding the newly reduced amount will be credited toward future tax obligations.
Government agencies, including the Department of the Interior and Local Government (DILG) and the Department of Finance (DOF), are tasked with ensuring compliance.
The President’s move follows similar tax relief measures issued under previous administrations, including EO Nos. 27, 173, 19, 60, 88, 117, 126, 157, 176, and 36. These orders also sought to prevent legal and financial conflicts between LGUs and power producers while maintaining energy security.
The order takes effect immediately upon publication in the Official Gazette or a newspaper of general circulation.