Marcos Grants Tax Relief to Power Producers

President Ferdinand Marcos Jr. has signed Executive Order (EO) No. 83, reducing and condoning real property taxes (RPTs) imposed on independent power producers (IPPs) to safeguard energy sector stability and prevent economic strain.

The order, signed on Feb. 13, applies to IPPs operating under Build-Operate-Transfer (BOT) contracts with government-owned or -controlled corporations (GOCCs). It also waives accumulated interest and penalties on unpaid taxes assessed by local government units (LGUs).

Marcos said the measure was necessary to prevent financial difficulties for the National Power Corporation (NAPOCOR) and the Power Sector Assets and Liabilities Management Corporation (PSALM), which have inherited significant tax obligations under existing agreements.

“The collection of these taxes at the maximum assessment level would trigger massive direct liabilities on the part of NAPOCOR and PSALM, threatening their financial stability,” the order stated.

The EO lowers the assessment level for taxable assets, such as power plants and equipment, from 80% to 15% of their fair market value. It warns that enforcing the full tax burden could weaken NAPOCOR and PSALM’s financial standing, disrupt the government’s fiscal consolidation efforts, and potentially cause higher electricity costs or power interruptions.

The order also provides that any RPT payments exceeding the newly reduced amount will be credited toward future tax obligations, ensuring financial flexibility for affected power producers.

Government agencies, including the Department of the Interior and Local Government (DILG) and the Department of Finance (DOF), are tasked with ensuring compliance among LGUs and GOCCs.

Marcos’ move follows similar tax relief measures issued by previous administrations, including EO Nos. 27, 173, 19, 60, 88, 117, 126, 157, 176, and 36, which aimed to prevent legal and financial disputes while maintaining energy security.

The order takes effect immediately upon publication in the Official Gazette or a newspaper of general circulation.