Senate approves EE&C bill on 2nd reading, retaining BOI incentives

Senate approves EE&C bill on 2nd reading, retaining BOI incentives

SENATE OF THE PHILIPPINES, January 30, 2018 – The Senate of the Philippines has approved on second reading earlier today Senate Bill no. 1531, otherwise known as the Energy Efficiency and Conservation Act of 2017, after Senate Majority Floor Leader Vicente C. Sotto III moved to close the periods of interpellation, committee amendments and individual amendments for the said energy efficiency and conservation (EE&C) policy measure.

The interpellation was led by Senate Minority Floor Leader Franklin M. Drilon, who raised his concerns on the possible abuse of building owners of the income tax holiday incentive granted under the bill, as well as requests for clarification from Senator Leila de Lima. With inputs from the Philippine Energy Efficiency Alliance (PE2) and the Board of Investments (BOI), the bill sponsors, led by Senator Sherwin T. Gatchalian, was able to satisfy the queries of the Senate minority with manifestations on the floor that the 2017 Investments Priorities Plan (IPP), which now includes EE&C projects, was formulated in close consultation with agencies such as the Department of Finance, and that the 2017 IPP was approved by no less than President Duterte through the Executive Secretary.

“Fiscal incentives will depend on the nature of specific energy efficiency projects. For example, only income from energy service companies directly attributable to an energy efficiency project can qualify for income tax holiday,” Senator Gatchalian said. He clarified further that importation of energy efficiency equipment by the facility owner, such as a shopping mall owner, will not benefit from income tax holidays, but only from duty-free importation of capital equipment specifically intended for the energy efficiency project.

“We are satisfied that [the guidelines for fiscal incentives] has been clarified,” responded Senator Drilon.

Following the adjournment of Senate Session no. 50, PE2 president Alexander Ablaza said, “We are pleased that the bill sponsors found the support of PE2 useful and that no amendment was made on SB 1531, as proposed by the four endorsing Senate committees on July 31, 2017. The proposed language on fiscal incentives, although reduced in view of TRAIN, was therefore kept intact.”

The Alliance will continue to monitor the legislative process for the EE&C bill in the Senate, which could advance to bill approval on 3rd reading as early as first half of February.

Ablaza added, “PE2 will maintain its parallel support to the House of Representatives as it advances the hearing of the counterpart bill in the lower house, in view of the bicameral process.”
In both the House and Senate versions, the EE&C bill requires the inclusion of EE&C projects in the annual IPP of the BOI and that such EE&C projects shall be entitled to the incentives provided under Executive Order No. 226, otherwise known as the “Omnibus Investment Code of 1987,” as amended, or any other applicable laws.

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