• Aquino reduces IPPs real property tax


    WITH the expected energy crisis next year, President Benigno Aquino 3rd has issued an executive order reducing the real property tax for independent power producers (IPPs) operating under the government’s build-operate-transfer (BOT) programs.

    Aquino signed Executive Order 173, or the “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 and/or Controlled-Corporations” on Friday, October 31, to forestall possible increases in the cost of electricity as result of the “forcible collection” of the said taxes from IPPs. “The payment of said real property taxes by the affected IPPs, some of which obligation have been contractually assumed by the GOCCs and carries the full faith of the National Government, threatens the financial stability of the GOCCs, the government’s fiscal consolidation efforts, and the stability of energy prices,” the EO said.

    It added that the collection of the subject real property taxes by the local government units (LGUs) concerned “will also trigger massive direct liabilities on the part of National Power Corporation/Power Sector Assets and Liabilities Management Corporation and other GOCCs and may increase the cost of electricity, and may trigger further cross-defaults and significant economic losses across all sectors.”

    Under the new EO, the President lowered the real property taxes paid by IPPs to an amount equivalent to the tax due if computed based on an assessment level of 15 percent of the property’s fair market value.

    He also condoned all fines and penalties incurred by IPPs due to deficiencies in real property taxes.

    Aquino based his order on Section 277 of Republic Act No. 7160 (Local Government Code of 1991), which says “the President may, when public interest so requires, condone or reduce the real property tax and interest for any year in any province or city or a municipality within the Metropolitan Manila area.”

    As such, “all fines, penalties and interests on such deficiency real property tax liabilities are also hereby condoned and the concerned IPPs are relieved from payment thereof,” the EO said.

    Aquino said all concerned departments, agencies and instrumentalities of the government, including GOCCs and LGUs, should strictly comply with the order, which takes effect immediately upon its publication in a newspaper of general circulation.


    Please follow our commenting guidelines.

    1 Comment

    1. The IPP’s billions of net profit will increase but we still had to pay more, more and more till our blood runs dry.