MEMBERS of the Independent Power Producers (IPPs) are set to meet Friday to discuss possible action on the swelling real property taxes (RPT) that local government units (LGUs) wanted to collect.
Ernesto Pantangco, president of the Philippine Independent Power Producers Association (Pippa) said that currently the assessed RPT tax of IPPs already hit P64 billion higher than the P19 billion assessment made by state-run National Power Corp. (Napocor).
He said Napocor already entered into a deal with LGUs to pay these back taxes using a 10 percent assessed value of the property.
But he said on the case of the private sector, the real estate property taxes ranges from 10 to 80 percent.
“If you're a government-owned and -controlled corporation, you're assessed at zero percent. However, a GOCC, depending on certain legal considerations may be allowed to be charged 10 percent of the assessed value or the book value of the asset,” he said.
“But for the private sector, that can range from 10 to 80 percent of the assessed value. The tax rate is 2.5 percent of the 80 percent of the book value (of the asset),” he noted.
According to Pantangco, besides the property taxes, IPPs are also confronted with business permits problems and other permits to allow them to operate which is vital in securing loans.
“And if these permits are not issued then it will have a domino effect. If you don’t have a business permit then you are not allowed to operate your business. And business permits as with all other permits are creditor requirements,” he lamented
With this problem, Pantangco urged the Department of Finance to intervene saying“we're urgently requesting that the secretary of finance sit down with the various affected groups whether they be local governments.. (or) IPPs, to try to arrive at a mutually acceptable solution for this issue.”
Pantangco said real property taxes should only cover assessment of lands and buildings and not improvements being conducted by the companies.
“Under the local government code, LGUs can assess businesses with the real property tax on land, buildings and improvements. The issue we are contesting here is improvements, since land and buildings are not really that significant in terms of the total capex of a power plant. The biggest component is really the improvement, which are the machineries and equipment,” he said. (MSN/Sunnex)