Electric cooperatives should be exempted from paying taxes, the National Electrification Administration (NEA) said.
NEA Administrator Edgardo Masongsong said that this has been certified as urgent under the Duterte administration’s proposed tax reform.
In line with this, House Bill (HB) 5636 or the proposed Tax Reform for Acceleration and Inclusion Act seeks to limit Value Added Tax (VAT) exemptions for cooperatives, except those who sell agricultural products.
Masongsong said they are coordinating with rural electrification advocates from the executive and legislative branches of the government to make this a reality.
This is to balance things out with electric cooperatives registered under the state-owned Cooperative Development Authority (CDA), which benefits from the Republic Act 7160 or the Local Government Code of 1991.
In a media forum in Quezon City last Thursday, Masongsong said the NEA is working to get the Justice Department’s support so that the 121 power cooperatives under their jurisdiction would be made tax-exempt as well.
He said Senator Sherwin Gatchalian, who chairs the Senate committee on energy and Marinduque Rep. Lord Allan Jay Velasco, who heads the same committee in the House of Representatives, have been involved in these talks along with the Departments of Energy and Finance.
According to Chapter 3, Section 13 of RA 10531, legislation governing the NEA, all non-stock and non-profit rural energy distribution utilities are entitled to preferential rights granted to cooperatives as per the Local Government Code of 1991 and other related laws.
The law states, “As a further incentive, the NEA may prioritize the grant of incentives in favor of electric cooperatives that are managed effectively and efficiently and comply consistently with its mandates and directives.”