PBBM OKs tax cut for power producers to avert defaults

President Ferdinand Marcos Jr. approved the reduction and condonation of real property taxes and penalties for independent power producers (IPPs) for 2025 through Executive Order No. 106.

This measure aims to prevent IPP defaults, safeguard the country's electricity supply, and ensure fiscal stability.

The reduction in real property taxes for 2025 will be based on a specific depreciation and assessment level calculation, set at 15% of fair market value, depreciated 2% annually.

The order covers special levies for the Special Education Fund on power generation facilities under build-operate-transfer schemes and similar contracts.

It also waives all interest and penalties on unpaid obligations, with any excess payments credited to future liabilities.

The directive addresses longstanding disputes between local governments and IPPs regarding tax treatment under the Local Government Code of 1991.

While IPPs are technically liable for the taxes, Napocor and PSALM have contractually assumed a significant share, backed by the National Government.