VAT zero rating incentive for the renewable energy sector

VAT zero rating incentive

by Glory Grace J. Arugay

vat zero rating incentives

Due to the pressing concern of climate change, investments in renewable energy (RE) is now an ever-growing opportunity in the Philippines. Activities under the Renewable Energy Act are regularly included in the country's Investment Priorities Plan for entitlement to benefits and privileges.

Some fiscal incentives of RE projects include income tax holiday, exemption from duties and zero percent value-added tax (VAT) rate, among others. But while guaranteed under the law, procedures for claiming the incentives are not without any challenges.

The recent case of CBK Power Company Limited vs. Commissioner of Internal Revenue (CTA Case No. 8784, feb. 23), ("CBK Case") is instructuve in this light. In this case, the Court of Tax Appeals (CTA) First Division, through Associate Justice Cielito Mindaro-Grulla discussed a notable poin on claiming VAT refund by RE developers for their sales of electricity generated through hydropower.

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