Zero VAT to Boost Renewable Energy

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The mandated zero-rated value-added tax (VAT) privilege extended to renewable energy resources is seen shoring up investment inflows in this area; thus, giving the countrys bid for higher energy independence a big boost.

At least, this was the assessment give by former Energy secretary Vincent S. Perez, in a talk with reporters, referring to the VAT exemption provided under Section 6 of Republic Act 9337 or the new VAT Law, which gives a zero percent VAT rating for the sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels. "We hope that more players will invest in developing our untapped renewable energy resources to increase our energy self-sufficiency and advance our march towards energy independence."

Expressing that the VAT law could be considered as one of the most difficult legislative measures ever tackled by Congress, the former energy chief considers its passage as "a watershed in the political maturity of Congress in passing an urgent, critical, albeit unpopular tax measure."

Having just returned from recent speaking engagements in the United States, Perez relayed that several institutional investors and fund managers from there closely followed the congressional deliberations on the VAT bill, and "have silently applauded the passage of the VAT Law as a crucial step in the restoration of the fiscal health of the country."

In the sphere of exploiting and developing the countrys renewable and indigenous energy sources, it would be noted that the Department of Energy launched in May 2003 a comprehensive Renewable Energy Policy Framework to aggressively pursue such policy.

In that same year, the energy department sent a mission to the United Kingdom to lure investors for the development of new and renewable energy (NRE) sources in the country. …