Approved tax breaks to encourage use of environmental-friendly vehicles

THE approval of a House bill proposing perks for the manufacture, assembly, conversion and importation of electric, hybrid and other alternative-fuel vehicles will make environment-friendly vehicles more accessible to Filipinos, a lawmaker said.

Before Congress adjourned for the Lenten break, it approved on third and final reading House Bill 5460, which will allow perks such as exemptions from excise, import and value-added taxes.

“We have to encourage the use of environment-friendly vehicles. If you bring down the cost of importation and manufacturing, you lower the prices and more people can afford to buy them,” said Batangas Representative Hermilando Mandanas, former chairman of the House Committee on Ways and Means and one of the authors of the bill.

The proposed law, according to Mandanas, aims to lay down the groundwork for the widespread use of electric, hybrid and other alternative-fuel vehicles to help protect the environment by mitigating the deleterious effects of harmful emission into the atmosphere.

Under the bill, incentives are given in the form of exemption from payment of excise taxes and duties for nine years from the effectivity of the law for the manufacture or assembly of completely knocked-down parts of electric, hybrid and other alternative fuel vehicles, including the conversion of vehicles into electric, hybrid and other alternative fuel vehicles.

The bill also exempts from the payment of value-added tax for nine years from the effectivity of the law the importation of raw materials, spare parts, components and capital equipment used in the manufacture or assembly of electric, hybrid and other alternative fuel vehicles.

A zero percent VAT rate shall be implemented during the nine-year period from the effectivity of the proposed act on the sale of raw materials, spare parts, components and capital equipment used in the manufacture or assembly of electric, hybrid and other alternative fuel vehicles including conversion into such vehicles.

A hybrid vehicle, as defined under the bill, is one that combines the technologies of using internal combustion engine with a battery-powered electric motor to gain advantages of both propulsion systems.

The electric car, on the other hand, is a vehicle that uses electric motors solely for propulsion, while an alternative fuel vehicle pertains to any vehicle using alternative sources or energy as described in the measure.

These alternative sources of energy include but are not limited to solar, wind, hydrogen fuel cell, compressed natural gas or liquefied natural gas and liquefied petroleum gas other than conventional sources of energy like petroleum and gasoline for propulsion. (Kathrina Alvarez/Sunnex)