Marcos Jr. signs executive order granting tax relief to power producers

President Ferdinand Marcos Jr. has signed an executive order (EO) reducing and condoning real property taxes (RPTs) for independent power producers (IPPs) to safeguard energy sector stability and prevent economic strain.

The move follows a precedent set by previous administrations, which issued similar tax relief measures, including EO Nos. 27, 173, 19, 60, 88, 117, 126, 157, 176, and 36, to prevent legal and financial disputes while safeguarding energy security.

In a Manila Standard report, Marcos said the measure aims to prevent financial strain on the National Power Corporation (NAPOCOR) and the Power Sector Assets and Liabilities Management Corporation (PSALM), which have inherited a significant share of tax obligations under existing agreements.

Executive Order (EO) No. 83, signed on February 13, grants tax relief to independent power producers (IPPs) under Build-Operate-Transfer (BOT) contracts with government-owned or -controlled corporations (GOCCs), aiming to ease their financial burden and ensure stable power generation.

The order also waives accumulated interest and penalties on unpaid taxes assessed by local government units (LGUs), easing the financial burden on power producers and government agencies.

By lowering the assessment level for taxable assets from 80% to 15% of their fair market value, the EO aims to ease the financial burden on IPPs and encourage sustained energy investments.

The order warned that enforcing the full tax burden could weaken NAPOCOR and PSALM’s financial standing, disrupt the government’s fiscal consolidation efforts, and potentially cause higher electricity costs or power interruptions.

Any RPT payments made beyond the reduced amount will be credited toward future tax obligations, ensuring continued financial flexibility for affected power producers.

Additionally, the EO tasked the Department of the Interior and Local Government (DILG) and the Department of Finance (DOF) with ensuring compliance among LGUs and GOCCs.

By easing tax obligations on power producers, the government aims to ensure affordable electricity, maintain financial stability in the energy sector, and prevent disruptions in power supply. Stay informed on this development by following Power Philippines.