Power coops now exempt from local taxes

MANILA, Philippines —  All electric cooperatives (ECs) in the country may now be exempted from local taxes, fees and charges imposed by local government units (LGUs) upon compliance with financial and operational standards.

This followed the signing of a joint memorandum circular between the Department of Energy and the Department of Finance yesterday, which provides guidelines for ECs on the availment of preferential rights.

Under this circular, ECs are mandated to secure an annual certificate of compliance from the National Electrification Administration (NEA), demonstrating their adherence to the prescribed parameters.

“This local tax exemption is a significant milestone for our qualified ECs, as it directly translates to reduced financial burdens that can be reinvested into improving services and achieving 100 percent total electrification,” Energy Secretary Raphael Lotilla said.

Local taxes refer to enforced contributions imposed by LGUs in provinces, cities, municipalities and towns through an ordinance, such as real property taxes, business tax, franchise tax and tax on the transfer of real property ownership.

This initiative, Lotilla said, would help ECs focus on “expanding access to electricity, especially in unserved and underserved areas, ensuring no Filipino household is left behind.”

To qualify for the certification, ECs must achieve a rating of at least 75 percent based on NEA’s compliance parameters.

These parameters include high collection efficiency, a positive net worth, meeting system reliability and system loss standards, and complete and timely submission of reportorial requirements.

However, all ECs are still subject to regulated and reasonable local administrative costs, including fees for business permits, mayor’s permits, barangay clearances, community tax certificates and other charges.

Within 15 days from the effectivity of the joint circular, the NEA is expected to release the guidelines governing its issuance of certificates of compliance.

Asked for comment, NEA Administrator Antonio Almeda said this development “proves the government’s commitment to fostering equitable financial support to all ECs.”