BIR Ruling No. 392-2022

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Sec. 15(g),R.A. No. 9513

BIR Ruling No. 1299-2018 BIR Ruling No.751-2018 CT- 392-2022 SEP2 2.222

PHILIPPINE GEOTHERMAL PRODUCTION COMPANY, INC. 14th Floor 6750 Ayala Avenue Makati City 1226

Attention: Mr. Ian Jason R. Aguirre Vice President & Chief Financial Officer

Gentlemen:

This refers to your request for a confirmatory ruling that Philippine Geothermal Production Company, Inc. ("PGPC" or the "Company"), a Department of Energy (DOE)- registered Renewable Energy (RE) Developer, is entitled to zero percent (0%) value-added tax (VAT) on its purchases of local supply of goods, properties and services needed for the development, construction and installation of its plant facilities, and the whole process of exploration and development of renewable energy (RE) sources up to its conversion into power, i.e., the entire development/commercial stage, which include commercial operations, pursuant to Section 15(g) of Republic Act (R.A.) No. 9513, otherwise known as, the "Renewable Energy Act of 2008.

Background

The PGPC is a Filipino corporation operating the Geothermal Stem Fields located in

Company is a wholly-owned company of SM Investments Corporation. Tiwi, Albay, and Mak-Ban which encompasses the provinces of Laguna and Batangas. The

Geothermal Energy Resources the following projects: PGPC has registered with the Department of Energy (DOE) as a RE Developer of

Site Registration (COR) No DoE Certificate of : Applicable Service Contract

Makiling Banahaw (Mak. Tiwi, Albay Ban), Batangas (issued on April 25, 2013) (issued on April 25, 2013) Geothermal Service Contract No. Geothermal Service Contract No. 2013 2014 ; April 25. April 25,

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Philippine Geothermal Production Company, Inc. Page 2 of 4

Likewise, the Company has registered the above-mentioned projects with the Board of Investments (BOI). The pertinent details of the various registrations with the BOI are as follows:

Tiwi, Albay Makiling-Banahaw (Mak-ban) Site April 15, 2014) ussued on (issued on April 15, 2014) BOr Certificate of Registration (COR) Resources (Tiwi Renewable Energy MW Geothermal Production Field) Renewable Energy MW Geothermal Production Field Developer of 136 Developer of 236 Resources [Makiling Geothermal Banahaw (Mak-ban) Geothermal Registered Activity. (as indicated in) BOI COR Registration provides: generated by the enterprise as well as its purchases of local supply of goods, properties and services needed for whole process of exploration and development of RE conversion into power The respective BOI the development. construction and installation of its plant facilities and the shall be subject to sources up to its "The sale of power Value Added Tax E TZeroPercent Rate :

zero percent value- the NIRC added tax pursuant to

The details of the BIR registration with respect to these projects are as follows: The Company has been registered with the BIR in respect to these various projects.

w.whwwwisitewTeww.nera Makiling-Banahaw (Mak-ban) Tiwi, Albay RDO No. 56 RDO No. 121 (LT-Excise) ORIN

Discussion/Ruling

Section 15 of RA No. 9513 provides:

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

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Phitippine Geothermal Production Company, Inc. Page 3 of 4

including but not limited to the services performed by subcontractors and/or developing renewable energy sources up to its conversion into power, This provision shall also apply to the whole process of exploring and

contractors.

construction and installation of their power plant facilities and the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not 12% VAT on their local purchases of goods and services needed for the development. Clearly, RA No. 9513 intended to exclude RE Developers from the coverage of the

limited to the services performed by subcontractors and/or contractors. Under said law, the local purchases of goods and services by RE Developers are subject to zero percent (0%)

their power plant facilities as well as the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the VAT provided that these are needed for the development, construction and installation of

services performed by subcontractors and/or contractors. This is one of the fiscal incentives given by the government to encourage RE Developers to develop and utilize the renewable energy resources in the country.

Accordingly, since PGPC is a DOE-certified RE Developer, its suppliers/sellers of goods and services should not pass on 12% VAT to the Company's purchases of goods and services that will be used in the development, construction and installation of its power plant facilities and the whole process of exploration and development of renewable energy sources up to its conversion into power, i.e., the entire development/commercial stage which may include commercial operations, pursuant to Section 15 of RA No. 9513 relative to the following registered activities:

TIN Makiling- Tiwi, Albay Banahaw (Mak. ban) ::Stte (issued on April 25, 2013 GSC GSC 2013 Ceruficate of (issued on April 25, Registration DOE Geothermal Geothermal 2013 2013 Contract No. April 25, Service Contract No. April 25, Service Contract Service (issued on 2014) (issued on COR No. April 15, COR No. April 15, 2014) Registration BO1 Renewable Energy Renewable Energy Developer of 136 MW (Tiwi Geothermal Developer of 236 MW Production Field Registered Activities Geothermal Resources Production Field) Geothermal Resources {Makiling Banahaw (Mak-ban) Geothermal

G

C+- 3 92 -.20 2 2 SEP 2 2 2022

Page 4 of 4 Philippine Geothermal Production Company, Inc.

It must be emphasized that the zero-percent VAT shall be limited only to the

construction and installation of the above-enumerated projects/activities. This includes the whole process 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 Company's local purchases of goods and services that will be used in the development.

contractors.

construction and installation of power plant facilities. the BIR whether the purchased goods/services were indeed utilized in the development Likewise, the grant of VAT zero-rating shall be subject to post audit verification by

This ruling is being issued on the basis of the foregoing facts as represented.

ruling shall be considered null and void. However, if upon investigation, it will be ascertained that the facts are different, then this

Very truly yours,

K- LARRY/M. BARCELO Assistant Commissioner 10009454 Legal Service