PE2 anticipates boost in EE projects with improved incentives under CREATE law

The Philippine Energy Efficiency Alliance (PE2) anticipates a significant increase in energy efficiency projects seeking registration with the Department of Energy (DOE) and the Board of Investments (BOI) due to the improved incentive package under CREATE MORE law.

“PE2 is hopeful that the improved incentive package under CREATE MORE would be more effective in attracting more ESCO- and TPPD-led energy efficiency projects to secure DOE endorsement and BOI registration,” said PE2 president Alexander Ablaza.

At the PE2 general membership meeting, the BOI highlighted recent provisions under the CREATE MORE Act (Republic Act 12066). Among these is the reduction in the corporate income tax rate for registered business enterprises (RBEs) under the Enhanced Deduction Regime (EDR), which now stands at 20%, down from 25%.

The act also expanded allowable deductions, such as doubling the deduction on power expenses from 50% to 100% and adding a 50% deduction for costs incurred in exhibitions, trade fairs, and trade missions.

Another notable enhancement is the improved Net Operating Loss Carry-Over (NOLCO), allowing businesses to carry forward losses for up to five years following the end of their Income Tax Holiday (ITH) period. These changes aim to promote greater investment in energy-efficient projects and boost competitiveness.

BOI Legal and Compliance Service Director Elyjean Portoza highlighted that enterprises engaged in energy efficiency initiatives, whether directly registered with the BOI or through third-party project developers, can now opt for either a 4-7-year Income Tax Holiday (ITH) paired with a 10-year Enhanced Deduction Regime (EDR) or a 14-17 year EDR, offering greater flexibility to boost investment feasibility.

She clarified that Energy Service Companies (ESCOs) and Third-Party Project Developers (TPPDs) can qualify for Income Tax Holiday (ITH) incentives by implementing simple or complex energy efficiency projects that achieve at least 15% energy savings within the specified project boundary.