BIR Ruling No. 290-2020

Quezon Ciy

RA No. 9513; RR 16-05

BIR Ruling No.078-10 BIR Ruling No.358-17 BIR Ruling No.751-18 BIR Ruling No. 1299-18 OT-0290-2020

MAY 2 9 2020

REYES TACANDONG & CO. Citibank Tower, 8741 Paseo de Roxas Makati City 1226

Attention: Atty. William Benson S. Gan Tax Services

Gentlemen:

Core Geothermal Inc. (the "Company") for confirmation that the Company, a"Department of Energy (DOE)-registered Renewable Energy (RE) Developer, is entitled to value-added tax (VAT) zero-rating on its purchases of local supply of goods, properties and services needed for the This refers to your letter dated August 3, 2018 requesting on behalf of your client, Green

exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and contractors, pursuant to Section 15(g) of Republic Act (RA) No. 9513, otherwise known as, the "Renewable Energy Act of 2008. development, construction and installation of its various plant facilities, and the whole process of

Background:

Republic of the Philippines with registered address at One Corporate Centre, Julia Vargas Avenue corner Meralco Avenue, Ortigas Center, Pasig City. The Company is registered with the Securities and Exchange Commission (SEC) with Company Registration No. of Internal Revenue (BIR) TIN The Company is a domestic corporation duly organized and existing under the laws of the and with Bureau

are as follows: The primary purposes of the Company, as stated in its Amended Articles of Incorporation.

distributing energy including electricity and ancillary power derived from any and all forms, types, and kinds of renewable and other energy sources for lighting. "To carry on the general business of generating, storing, transmitting, and/or

BTREAU OF INTERNAL REVENUE

Y292020 O

OT-0290-202

VAT zero rating -Sec. 15(g) RA 95+ Green Core Geothermal, Inc. 2 MAY 2 9 2020

power and other purposes; t. sell such energy in wholesale to power corporations, or aggregate electricity to ary person or entity requiring the supply and delivery of its own use; to trade in an market for electricity, ancillary power or intangible engaging in the business ..f an investment company or a broker or seller of securities; to enter into cor..racts either alone or jointly with other companies or electricity to any person or chtity requiring the supply and delivery of electricity for assets, such as tradeable ertificates and other financial instruments without persons for the purpose of c arrying out all businesses under which this corporation is organized; to acquire, build, construct, own, maintain, and/or operate all necessary and convenient "buildings, structures, dows, machinery, substations, transmission lines, poles, wires, and other facilities; to engage in the provision of systems and technologies ii. the energy sector, and to acquire, hold, lease, occupy distribution utilities, electrici cooperatives and other entities; to sell, broker, market or use rights relating to lanc and natural resources."

exploration, development, generation and sale of energy from renewable sources,-such as geothermal energy. The Compai y uses the steam emanating from geothermal wells in order to generate electricity. The Compa ty sells electric energy generated by the power plants owned, operated, and maintained by the Company using the said geothermal steam. Pursuant to its primary pirposes, the Company, as an RE Developer, is engaged in the

its Implementing Rules and Reguations, summarized as follows: (BOI) in respect of the RE activit: s in accordance with the provisions of RA No. 9513, as well as The Company is a registered RE Developer with the BIR, DOE and Board of Investments

TIN Site Cert cate of Regitration May 8, 2012 (C(R) No. (:ssued on OE Contract No. Geothermal Applicable Operating Contract Service dated Dec. I1. Registration BOI Cert. of COR No. 2015 Energy Developer Energy Resources Activity under of Geothermal Registered (192.5 MW Geothermal Palinpinon Renewable Type of BOL

Power Plant

May3,2012 (. ssued on Contract No. Geothermal Operating dated Nov. 13 COR No. 2015 Energy Developer Energy Resources of Geothermal 112.5 MW Power Plant Geothermal Renewable Tongonan Complex Complex

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0T-0290-2020

Green Core Geothermal, Inc. VAT zero rating - Sec. 15(g) RA 95 1 3 MAY 2 9 2020

In reply thereto, please be;nformed that Section 15 (g) of RA No. 9513, provides, to wit:

power and non-power .applications, as duly certified by the DOE, in consultation with the BC?, shall be entitled to the following incentives: Activities. -- RE Develo,sers of renewable energy facilities, including hybrid systems, in proportion t. and to the extent of the RE component, for both "SEC. 15. Incntives for Renewable Energy Projects and

XXX : XXX XXX

purchases of local suppliy of goods, properties and services needed for the. development, constructicn and installation of its plant facilities. All RE Developers. shall be entitled to zero-rated value added tax on its

developing renewable energy sources up to its conversion into power. including but not limiteci to the services performed by subcontractors and/or contractors."(Underscoring ours) This provision shall also apply to the whole process of exploring and

construction and installation of th.::ir power plant facilities and the whole process of exploring and the services performed by subcor:.ractors and/or contractors. Under said law, the local purchases of goods, properties and services b.y RE Developers are subject to zero percent (0%) VAT provided that those are needed for the de:velopment, construction and installation of their power plant facilities, as well as the whole prc: sess of exploration and development of the renewable energy to contractors and subcontractors th develop and utilize the renewable energy resources in the country. VAT on their local purchases of goods, properties and services needed for the development. developing renewable energy sou ces up to its conversion into power, including but not limited to its conversion into power, inclu :.n'g the services performed by contractors and subcontractors. This is one of the fiscal incentives:i given by the government to encourage RE Developers including Clearly, RA No. 9513 intended to exclude RE Developers from the coverage of the 12%

Developer, should not pass on 12% VAT to its purchases of goods, properties and services that exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services perforrned by subcontractors and/or contractors. (BIR Ruling Nos. 78- will be used by the Company in is development, construction and installation of the geothermal power plant covered by its Geoshermal Operating Contract No. Operating Contract No. 2010 dated September 23, 2010 cnd 358-17 dated August 9, 2017) Accordingly, the supplier$/sellers of goods and services of the Company, it being a RE duly issued by the DOE. This includes the whole process of and Geothermal

goods, properties and services shall be limited only to the Company's local purchases that will be used in its development, construction and installation of the geothermal power plant covered by It must be emphasized, however, that the zero-percent (0%) VAT on local purchases of

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Green Core Geothermal, Inc. VAT zero rating-Sec.15(g RA 9513 0T-0290-2020 MAY 2 9 2020

Geothermal Operating Contract No. 2012-04-025 and Geothermal Operating Contract No. 2012- 04-026 issued by the DOE.This includes the whole prcess of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and/or contractors. Likewise, the grant of VAT zero-rating on local 2012-04-025 and Geothermal Operating Contract No. 2012-04-026 duly issued by the DOE. (BIR purchases is always subject to post audit verification by the Bureau of Internal Revenue (BIR) whether the purchased goods/services were indeed utilized in the development, construction and installation of the geothermal power plant covered by its Geothermal Operating Contract No. Ruling Nos. 751-18 dated April 30, 2018 and 1299-18 dated Qctober 23, 2018)

upon investigation, it will be disclosed that the facts are tifferent, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoirig facts as represented. However, if

asoytan Very truly yours,

CAESAR R.DULAY Cor. missioner of Internal Revenue

9 035258

K-1

gps(green core geothermal-RA 9513)