Incentives for renewable energy projects reviewed

MANILA, Philippines - The Senate ways and means committee will examine the tax incentives in a bill providing framework for the development, exploration and commercialization of the country’s renewable energy sources, committee chairman Sen. Francis Joseph G. Escudero said the other day. Mr. Escudero said in an interview that the bill is expected to be approved at the plenary within the month. "The renewable energy bill will not be passed until such time we have made our recommendation on the exemption process found in the bill, because of the concern raised by Sen. Joker Arroyo on revenue loss or erosion of tax base in line with the exemptions proposed," he said. This review notwithstanding, he added that "we expect signing of the bill by September." Sen. Edgardo J. Angara who authored one of the bills, said the Senate is rushing the approval of the Palace-certified Renewable Energy bill. New and renewable energy sources include wind, solar, hydro, geothermal and biomass resources. "Certainly [Congress will pass the bill] within the month. I can see that we can expect a law before we adjourn for recess in October," Mr. Angara said in a separate interview. Senate Bill No. 2046 or Renewable Energy Act Of 2008 was also filed on Feb. 4 by senators Jinggoy P. Ejercito Estrada, Ramon A. Revilla Jr., Miriam Defensor Santiago, Juan Miguel F. Zubiri, Loren B. Legarda, Richard J. Gordon, Pia S. Cayetano, and Manuel M. Lapid. The Finance department was given until Wednesday next week to submit a study on the tax exemption provision of the proposed law. Mr. Escudero said his committee wants to know if the incentives are redundant in relation to other incentives already being offered, aside from the pending bill on the rationalization of fiscal incentives. The committee also has to assess if there will be difficulty in tax administration functions, particularly on the part of the Bureau of Internal Revenue. Lastly, the ways and committee wants to know the "necessity" of these exemptions. The House of Representatives approved its version of the measure on final reading last June 11. House Bill 4193 provides fiscal incentives such as tax and duty-free importation of machinery, a tax credit on capital components and parts bought locally, a tax holiday of six years, net operating loss carryover for the first three years of operations, accelerated depreciation, and a zero value-added tax rating — all presently offered to other investors. A few non-fiscal incentives are also included. - BusinessWorld