The Department of Energy (DOE) and Department of Finance (DOF) issued a joint memorandum circular on December 4 that exempts all electric cooperatives (ECs) from local taxes, fees and charges imposed by local government units (LGUs).
The agencies said in a statement yesterday ECs qualified for exemptions are those registered with the National Electrification Administration (NEA) or the Cooperative Development Authority and compliant with NEA’s financial and operational standards.
The circular was signed by Energy Secretary Raphael Lotilla and Finance Secretary Ralph Recto, represented by undersecretary Bayani Agabin.
The circular provides guidelines for ECs on the availment of preferential rights under Republic Act (RA) No. 7160, in relation to RA No. 10531, wherein ECs are required to secure an annual certificate of compliance from the NEA, demonstrating their adherence to the prescribed financial and operational standards.
To qualify for the certification, ECs must achieve at least a 75 percent rating based on NEA’s compliance parameters, which include maintaining high collection efficiency, achieving a positive net worth, meeting system reliability and system loss standards, conducting annual general membership assemblies and district elections as scheduled, implementing electrification projects to attain 100 percent customer connection, and submission of complete and timely reportorial requirements.
DOE and DOF said local taxes are defined as enforced contributions imposed by an LGU in provinces, cities, municipalities and barangays through an ordinance, such as real property taxes, business tax, franchise tax and tax on transfer of real property ownership.
However, all ECs remain subject to regulated and reasonable administrative costs imposed by LGUs, including fees for business permits, mayor’s permits, barangay clearances, community tax certificates and other charges, such as those for water consumption, electricity and toll fees.
NEA is also expected to issue the guidelines governing its issuance of certificate of compliance within 15 days from the effectivity of the joint memorandum circular.
“This local tax exemption is a significant milestone for our qualified ECs, as it directly translates to reduced financial burdens that can be reinvested into improving services and achieving 100 percent total electrification… By reducing these costs, we empower them to focus on expanding access to electricity, especially in unserved and underserved areas, ensuring no Filipino household is left behind,” Lotilla said.
NEA administrator Antonio Mariano Almeda witnessed the signing of the circular that addresses crucial gaps in the finances of ECs to enable them to access certain tax privileges and incentives, which would redound eventually to the benefit of their respective organizations and member-consumer-owners.
Almeda said the development also proves the government’s commitment to fostering equitable financial support to all ECs, without distinction, while ensuring their compliance with operational standards. NEA serves as a supervisory body to all 121 ECs nationwide to regularly monitor distribution system parameters, such as systems loss and reliability, circuit kilometers and substation capacity to ensure that they remain operationally reliant and technically efficient in delivering services.
