THE Board of Investments (BoI) said power plants using conventional fuel are ineligible for the income tax holiday incentive offered under the 2022 Strategic Investment Priority Plan (SIPP).
In Memorandum Circular No. 2023-003 series of 2023 dated April 20 and published in a newspaper on May 6, the BoI said “revenue from sales of electricity sourced by power generation projects utilizing conventional fuels, waste heat, and other wastes from the Wholesale Electricity Spot Market (WESM) shall not be entitled to income tax holiday.”
The conventional fuels specified in the memorandum circular are coal, diesel, bunker, and natural gas.
According to the BoI, the clarification effectively amends the incentive structure for the 2020 Investment Priorities Plan (IPP), specifically the guidelines governing energy projects.
The 2022 SIPP, approved in May 2022, superseded the 2020 IPP.
The 2022 SIPP contains three tiers that determine the extent of the incentives that may be granted by the government. All activities listed in the 2020 IPP are deemed Tier 1 projects by the 2022 SIPP.
“Noting that sourcing of electricity from all sources is an essential component in the operation of battery energy storage systems projects for the provision of ancillary service to the national grid, there is a need to clarify the revenues from sales of electricity that should be entitled to the income tax holiday incentive,” the BoI said in the memorandum circular.
Under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the BoI is authorized to alter any of the terms governing an investment area and review the current Strategic Investment Priority Plan.
As of the first quarter, the BoI posted a 155% increase in approved investments to P463.3 billion across 68 approved projects.
The renewable energy industry accounted for the most investment approvals during the period, rising 156% to P440 billion, followed by manufacturing, which rose by 416% to P17 billion.
The BoI, an investment promotion agency under the Department of Trade and Industry, has set a target of P1.5 trillion worth of approved investments for 2023. — Revin Mikhael D. Ochave