How to take advantage of new tax incentives for renewable energy in the Philippines
September 30, 2022
After more than 10 years, the Department of Finance has finally issued Revenue Regulations (RR) 7-2022, which provides "the policies and guidelines for the availment of tax incentives under the Renewable Energy Act of 2008".
Taxpayers entitled to tax incentives
The following taxpayers are entitled to tax incentives under the Renewable Energy Act 2008, as further detailed under RR 7-2022:
- renewable energy (RE) developers or individuals or judicial entities created, registered and/or authorised to operate in the Philippines in accordance with existing Philippine laws and engaged in the exploration, development and utilisation of RE resources and actual operation of RE systems or facilities;
- manufacturers, fabricators and suppliers of locally produced RE equipment (RE manufacturers); and
- purchasers of RE equipment.
How to take advantage of tax incentives
Existing and new RE developers and RE manufacturers must:
register with the Department of Energy (DOE) through the Renewable Energy Management Bureau (REMB). They must secure one of the following certificates and submit them to the Bureau of Internal Revenue (BIR):
- a DOE certificate of registration - this is issued to RE developers that hold valid RE service or operating contracts; or
- a DOE certificate of accreditation - this is issued to RE manufacturers upon submission of necessary requirements;
- secure a certificate of endorsement from the DOE. RE developers must secure the certificate prior to the first year of availment of the 10% corporate income tax rate incentive. RE manufacturers that import components, parts and materials necessary for the manufacture and/or fabrication of RE equipment must secure the certificate through the REMB, on a per import basis; and
- register with the Board of Investments (BOI). The certificate of income tax holiday (ITH) entitlement (CE) issued by the BOI must be attached to the current annual income tax return (ITR) to be filed with the BIR. The ITH shall apply only to the registered activity indicated in the CE. Failure to attach the CE to the ITR may result to the forfeiture of the ITH incentive for the covered taxable year.
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