BOI links CREATE MORE to EE investments
Record 98% of members attend GMM
MAKATI CITY, 26 November 2024 – The Board of Investments (BOI) delivered a detailed presentation on the recently enacted Republic Act 12066, or the CREATE MORE Act, and how its expanded fiscal incentives could benefit energy efficiency (EE) investments under Republic Act 11285, or the Energy Efficiency and Conservation Act. Director Elyjean Portoza of the BOI Legal and Compliance Service was the luncheon guest speaker during the Philippine Energy Efficiency Alliance (PE2) general membership meeting (GMM), held earlier today at the Makati Diamond Residences.
Dir. Portoza explained how the CREATE MORE law amends the various provisions of the National Internal Revenue Code (NIRC), the most significant of which is the reduction of the corporate income tax rate for registered business enterprises (RBEs) under the enhanced deduction regime (EDR) from the previous 25% to 20%. She also explained the improvements of enhanced deductions under the new law: (a) deduction on power expense increased from 50% to 100%; (b) inclusion of tourism industries on deduction for reinvestment allowance until 31 December 2034; (c) inclusion of 50% additional deduction on expenses relating to exhibitions, trade missions or trade fairs; (d) enhanced net operating loss carry-over (NOLCO) may be carried over as deduction within the next 5 consecutive years immediately following the last year of the income tax holiday (ITH) entitlement period.
The BOI official explained that CREATE MORE now enables a domestic market enterprise engaged in energy efficiency projects registered by an investment promotion agency such as BOI (e.g., energy service company (ESCO) or third-party project developer (TPPD)) to choose between the 4–7-year ITH plus 10 year EDR or 14–17 EDR to improve the commercial viability of the energy efficiency investment.
Atty. Portoza also explained that ESCOs and TPPDs can avail of ITH incentives for simple and complex energy efficiency projects capable of delivering a minimum 15% energy savings measured at the defined project boundary. Such ITH incentive no longer applies to self-financed simple and complex energy efficiency projects. She clarified however that both self-financed projects under the Energy Efficiency Strategic Investments (EESI) category, such as waste heat recovery systems, own-use solar PV systems, or electric vehicle refleeting with charging stations, shall only be entitled to the ITH incentive and duty exemption on importation of capital equipment, raw materials, spare parts or accessories. The ITH incentive shall be limited to the prescribed ITH entitlement period under the CREATE Act (4-7 years) or until the recovery of 50% of its capital investment, which excludes the cost of land and working capital of the registered energy efficiency project. On the other hand, ESCOs and TPPDs can benefit from the 100% ITH incentive for investments made under the EESI category.
During a fireside chat following the BOI presentation, PE2 president Alexander Ablaza said, “PE2 is hopeful that the improved incentive package under CREATE MORE would be more effective in attracting more ESCO- and TPPD-led energy efficiency projects to secure DOE endorsement and BOI registration. Beyond own-use solar PV projects, we hope that third-party investments in EE projects involving space cooling, refrigeration, compressors, motors, drives, lighting and energy management technologies could grow with the catalytic effect of the CREATE MORE law.”
The PE2 officers, led by Ablaza, thanked the membership for the record 98.3% attendance of regular members. It was likewise the first time that only one associate member was unable to participate in the semi-annual GMM.
During the GMM, the PE2 officers presented their plans for 2025, which includes the upcoming Energy Efficiency Day 2025 and the proposed PE2 training program.
