MALACAÑAN PALACE
MANILABY THE PRESIDENT OF THE PHILIPPINES
EXECUTIVE ORDER NO. 27
REDUCTION AND CONDONATION OF REAL PROPERTY TAXES AND INTEREST/PENALTIES ASSESSED ON THE POWER GENERATION FACILITIES OF INDEPENDENT POWER PRODUCERS UNDER BUILD-OPERATE-TRANSFER CONTRACTS WITH GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS IN THE PROVINCE OF QUEZON
WHEREAS, under Republic Act No. 7160 (“Local Government Code of 1991”), government-owned or controlled corporations (“GOCCs”) engaged in the generation and transmission of electricity enjoy a number of exemptions/privileges with respect to real property taxes, including an assessment level of 10% on all its lands, buildings, machineries and other improvements (Sections 216 and 218), as well as an exemption for all machinery and equipment that are actually, directly and exclusively used in the generation and transmission of electric power and machinery and equipment used for pollution control and environmental protection (Section 234);
WHEREAS, the Province of Quezon has taken the position that Independent Power Producers (“IPPs”) in its territory which are not GOCCs are not entitled to the exemptions/privileges of GOCCs with respect to real property taxes on their...
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Executive Orders
Reduction And Condonation Of Real Property Taxes And Interest/penalties Assessed On The Power Generation Facilities Of Independent Power Producers Under Build-Operate-Transfer Contracts With Government-Owned Or Controlled Corporations In The Province Of Quezon
Executive Order No. 27
Summary of Executive Order No. 27
Reduction and Condonation of Real Property Taxes and Interest/Penalties on Power Generation Facilities of Independent Power Producers (IPPs) under Build-Operate-Transfer Contracts with Government-Owned or Controlled Corporations (GOCCs) in the Province of Quezon
• Background and Rationale (Whereas clauses):
- GOCCs engaged in power generation and transmission enjoy exemptions/privileges on real property taxes under the Local Government Code of 1991, including 10% assessment level and exemption for machinery and equipment used for power generation and pollution control. (Section 216, 218, 234)
- The Province of Quezon takes the position that IPPs, which are not GOCCs, are not entitled to these exemptions/privileges and plans to enforce collection of real property taxes from IPPs in the province.
- Payment of these taxes by IPPs, some of which are contractually assumed by GOCCs/National Government, threatens the financial stability of GOCCs, fiscal consolidation efforts, and energy price stability.
- Forcible collection by LGUs will trigger massive liabilities for NPC/PSALM, increase electricity costs, and may cause cross-defaults and economic losses.
- The President can condone or reduce real property taxes when public interest requires it. (Section 277)
• Reduction and Condonation of Real Property Tax Liabilities (Section 1):
- Real property tax liabilities of IPPs on property, machinery, and equipment used for power production under Build-Operate-Transfer Contracts with GOCCs (NPC and PSALM) in Quezon Province for all years up to 2011 are reduced to an amount equivalent to 15% of the fair market value of said assets, depreciated at 2% per annum, less any amounts already paid.
- All fines, penalties, and interest on such deficiency real property tax liabilities are condoned, and IPPs are relieved from payment.
• Implementation and Compliance (Section 2):
- All government departments, agencies, instrumentalities, GOCCs, and LGUs are ordered to strictly comply with this Executive Order.
• Repealing Clause (Section 3):
- All other rules, regulations, and issuances inconsistent with this Executive Order are repealed or modified accordingly.
• Effectivity (Section 4):
- This Executive Order takes effect immediately.
Reduction and Condonation of Real Property Taxes and Interest/Penalties on Power Generation Facilities of Independent Power Producers (IPPs) under Build-Operate-Transfer Contracts with Government-Owned or Controlled Corporations (GOCCs) in the Province of Quezon
• Background and Rationale (Whereas clauses):
- GOCCs engaged in power generation and transmission enjoy exemptions/privileges on real property taxes under the Local Government Code of 1991, including 10% assessment level and exemption for machinery and equipment used for power generation and pollution control. (Section 216, 218, 234)
- The Province of Quezon takes the position that IPPs, which are not GOCCs, are not entitled to these exemptions/privileges and plans to enforce collection of real property taxes from IPPs in the province.
- Payment of these taxes by IPPs, some of which are contractually assumed by GOCCs/National Government, threatens the financial stability of GOCCs, fiscal consolidation efforts, and energy price stability.
- Forcible collection by LGUs will trigger massive liabilities for NPC/PSALM, increase electricity costs, and may cause cross-defaults and economic losses.
- The President can condone or reduce real property taxes when public interest requires it. (Section 277)
• Reduction and Condonation of Real Property Tax Liabilities (Section 1):
- Real property tax liabilities of IPPs on property, machinery, and equipment used for power production under Build-Operate-Transfer Contracts with GOCCs (NPC and PSALM) in Quezon Province for all years up to 2011 are reduced to an amount equivalent to 15% of the fair market value of said assets, depreciated at 2% per annum, less any amounts already paid.
- All fines, penalties, and interest on such deficiency real property tax liabilities are condoned, and IPPs are relieved from payment.
• Implementation and Compliance (Section 2):
- All government departments, agencies, instrumentalities, GOCCs, and LGUs are ordered to strictly comply with this Executive Order.
• Repealing Clause (Section 3):
- All other rules, regulations, and issuances inconsistent with this Executive Order are repealed or modified accordingly.
• Effectivity (Section 4):
- This Executive Order takes effect immediately.