Section 10September 12, 1991, Sec./Art. 10

Tax Incentives. – Any person, natural or judicial, authorized to engage in mini-hydroelectric power development shall be granted the following tax incentives or privileges:

(1) Special Privilege Tax Rates. – The tax payable by grantees to develop potential sites for hydroelectric power and to generate, transmit and sell electric power shall be two percent (2%) of their gross receipts from the sale of electric power and from transactions incident to the generation, transmission and sale of electric power. Such privilege tax shall be made payable to the Commissioner of Internal Revenue or his duly authorized representative on or before the 20th day of the month following the end of each calendar or fiscal quarter;

(2) Tax and Duty-free Importation of Machinery, Equipment and Materials. – Within seven (7) years from the date of award, importation of machinery and equipment, materials and parts shipped with such machinery and equipment including control and communication equipment shall not be subject to tariff duties and value-added tax: provided, that the said machinery, equipment, materials and parts: (a) are not manufactured domestically in reasonable quantity and quality at reasonable prices; (b) are directly and actually needed and will be used exclusively in the construction and impounding of water, transformation into energy, and transmission of electric energy to the point of use; and (c) are covered by shipping documents in the name of the duly registered developer to whom the shipment will be directly delivered by customs authorities: provided, further, that prior approval of the OEA was obtained before the importation of such machinery, equipment, materials and parts was made;

(3) Tax Credit on Domestic Capital Equipment. – A tax credit equivalent to one hundred percent (100%) of the value of the value-added tax and customs duties that would have been paid on the machinery, equipment, materials and parts had these items been imported shall be given to an awardee-developer who purchases machinery, equipment, materials and parts from a domestic manufacturer: provided, that such machinery, equipment, materials and parts are directly needed and will be used exclusively by the awardee-developer: provided, further, that prior approval by the OEA was obtained by the local manufacturer: provided, finally, that the sale of such machinery, equipment, materials and parts shall be made within seven (7) years from the date of award;

(4) Special Realty Tax Rates on Equipment and Machinery. – Any provision of the Real Property Tax Code or any other law to the contrary notwithstanding, realty and other taxes on civil works, equipment, machinery and other improvements of a registered mini-hydroelectric power developer shall not exceed two and a half percent (2.5%) of their original cost;

(5) Value-added Tax Exemption. – Exemption from the ten percent (10%) value-added tax on the gross receipts derived from the sale of electric power whether through the NPC grid or through existing electric utility lines; and

(6) Income Tax Holiday. – For seven (7) years from the start of commercial operation, a registered mini-hydroelectric power developer shall be fully exempt from income taxes levied by the National Government.