Marcos reduces, condones real property taxes of IPPs under BOT contracts

President Ferdinand ''Bongbong'' Marcos Jr. has signed an executive order reducing and condoning real property taxes (RPTs), including interests and/or penalties assessed on power generation facilities of independent power producers under build-operate-transfer contracts with government-owned or controlled corporations (GOCCs).

Executive Order No. 83 states that all liabilities for RPTs for calendar year (CY) 2024, including any special levies accruing to the Special Education Fund, on property, machinery and equipment actually and directly used by IPPs for the production of electricity under BOT scheme and similar contracts, whether dominated as Power Purchase Agreements, Energy Conversion Agreements or other contractual agreements, with GOCCs, assessed by LGUs and other entities authorized to impose RPTs for CY 2024, are reduced to an amount equivalent to the tax due if computed based on an assessment level of 15% of the fair market value of said property, machinery and equipment depreciated at the rate of two percent per annum, less any amount already paid by the IPPs.

According to the EO, all interests and/or penalties on such deficiency RPT liabilities are also condoned and the concerned IPPs are relieved from payment thereof.

The collection of the subjected RPTs for CY 2024, which were assessed by concerned local government units at the maximum assessment level of 80%, will trigger massive direct liabilities on the part of NAPOCOR/PSALM, which may threaten their financial stability.

The Department of the Interior and Local Government, together with the Department of Finance, is hereby tasked to monitor the compliance of localities. —KG, GMA Integrated News