Expanded e-vehicle incentive program to boost business, climate goals – DOF

By Francis Allan L. Angelo

Finance Secretary Ralph G. Recto emphasized that the recent National Economic and Development Authority (NEDA) Board decision to expand the electric vehicle incentive program under Executive Order (EO) No. 12 will enhance the ease of doing business in the Philippines, advance the country’s climate ambitions, and generate more green jobs for Filipinos.

“This strategic move puts the Philippines at the forefront of green technology, attracting more sustainable investments. It will spur the creation of high-quality jobs, foster innovation, and offer Filipinos more eco-friendly vehicle choices. Ultimately, it will bring us closer to reaching our goal of reducing greenhouse gas emissions by 75% in 2030,” Recto said.

On May 15, 2024, the NEDA Board, chaired by President Ferdinand R. Marcos, Jr., approved the expansion of tariff exemptions on electric vehicles (EVs) to include e-motorcycles, e-bicycles, nickel metal hydride accumulator batteries, e-tricycles, hybrid electric vehicles (HEVs), and plug-in hybrid electric vehicles (PHEVs) jeepneys or buses. The tariffs on these articles will be reduced to 0% until 2028.

The tariff exemptions also include EV parts and components and completely knocked down (CKD) EVs, which could incentivize interested parties to assemble or manufacture in the Philippines, deepening the manufacturing sector and generating quality employment.

The Committee on Tariff and Related Matters (CTRM) will conduct an annual review of the rates to ensure they are timely, applicable, and considerate of the sectors affected by the changes in duties on EVs.

President Marcos initially signed EO 12 on January 13, 2023, removing tariffs on EVs and their parts for five years. However, EO 12 did not cover e-jeepneys, e-buses, e-tricycles, and e-quadricycles.

With the expanded measure, EVs will become more accessible and affordable to consumers, accelerating the country’s transition to eco-friendly transportation solutions.

Additionally, these incentives are expected to attract more investors to establish operations in the Philippines, covering manufacturing, research and development, and infrastructure development in the EV industry. This influx of investment is anticipated to boost government revenues and create green jobs, further solidifying the Philippines’ position as a leading manufacturing hub in Asia.

In addition to the expanded EO 12, the government has implemented reforms to attract more investments in the EV sector. Under the Electric Vehicle Industry Development Act (EVIDA), effective April 2022, EV owners enjoy exemptions from “number coding” road congestion measures and receive priority registration and renewal with the Land Transportation Office (LTO). EVs also benefit from a 30% excise tax discount on motor vehicle user charges, while hybrid vehicles receive a 15% discount. EVs are issued a special license plate under the law.

Earlier, the Tax Reform for Acceleration and Inclusion (TRAIN) Act, implemented in January 2018, provided tax incentives for EVs. Hybrid vehicles are subject to 50% of applicable excise tax rates on automobiles, while purely electric vehicles are exempt from excise tax. This was complemented by the 2022 Strategic Investment Priority Plan (SIPP), which identified green ecosystems, including EV-related activities, for investment incentives.

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act identifies incentives for registered business enterprise activities covered in the SIPP, including an income tax holiday spanning four to seven years and a special corporate income tax rate of 5%. Amendments to the CREATE Act are underway to improve the country’s tax incentives policy and administration, and further align with investor interests in strategic investments.

“All of these reforms are a testament to the President’s commitment to roll out a red carpet for investors and the Philippines’ strong resolve to create a vibrant and sustainable EV ecosystem. The policy environment for investments in the country has never been more open and liberalized than it is now. The Department of Finance will continue to act fast on measures that will further promote ease of doing business to attract more productivity-enhancing investments in the country,” Recto said.