BIR Ruling No. 006-2023

REPUBLICOF THE PHILIPPINES

BUREAHI OOTERNALIREVENUE DEPARTMENT OF FINANCE

Quezon City

BIR Ruling No. 1299-2018 Sec.15(g),R.A.No.9513 RR No. 2-98, as amended BIR Ruling No.751-2018 BIR Ruling No.404-2019 OT- 006-2023

JAN 2 3 2023

8F Unit 8A Inoza Tower 40th St., Bonifacio Global City Taguig City 1634 PHILIPPINE HYBRID ENERGY SYSTEMS, INC.

Attention: DAN DYONNE EMINIANO Q.GONZALES Corporate Secretary

Gentlemen:

through the operation of its Wind Energy Project during the effectivity of its Income Tax services pursuant to Section 15g) of Republic Act (R.A.) No.9513,otherwise known as the "Renewable Energy Act of 2008, and that the income payment received by the Company SYSTEMS, INC. (the Company for a confirmatory ruling that the Company, a Department of Energy (DOE)-registered Renewable E.ergy (RE) Developer, is entitled to value-added tax (VAT) zero-rating on its purchases of iocal supply of goods, properties and Holiday (ITH are exempt from the creditable withholding tax imposed under Revenue Regulations (RR) No. 2-98, as amended. This refers to your request on behalf of PHILIPPINE HYBRID ENERGY

Commission (SEC) with Company Registration No. A200017683. The primary purpose of the under the laws of the Republic of the Philippines,registered with the Securities and Exchange Company, as stated in its Articles of Incorporation, is as follows: As represented, the Company is a domestic corporation duly organized and existing

distribution of energy; provided, that, in no event shall the Corporation itself public utility, or provide a public service, or engage in industries or activities diesel, turbine, and other power-generating plants and related facilities for the subdivision, instrumentality or agency thereof, or any government-owned or controlled corporation, other entity engaged in the development, supply or engage in the distribution of electricity, in retail trade or in the business of a conversion into electricity of distillate and other fuels provided by and under contract with the Government of the Republic of the Philippines, or any to design, construct, erect, assemble, commission and operate wind

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reserved by the Constitution or laws to corporation wholly owned by Filipino citizens."

Pursuant to its primary purpose, the Company, as an RE Developer, is engaged in wind exploration, development, production, and utilization, including the construction, installation operation and maintenance of Wind Energy Systems to convert Wind Energy to electrical power and the transmission of suck electrical power and/or other non-electrical uses.

DOE and Board of Investments (BOI". The details of its registration with the aforementioned government agencies are as follows: The Company is a Registered RE Developer with the BIR, Department of Energy

TIN Mindoro;Puerto GaleraOriental Abra de Ilog. Occidental Mindoro Site Centificate o Registration WESC on 14 March (COR)No FDOE 2011) (issued COR No. Certificate of Registration 22 November BOI 2013 (issued on Activity under WEPSProject 8x2 MW Wind Energy Power Developer of Registered Renewable Type of Systems Energy BOI

In reply,please be informed as follows:

VAT Zero-Rating

Section 15(g) of RA No. 9513 provides that

Activities. -- RE developers of renewable energy facilities. including hybrid systems, in proportion to and to the extent of the "Section 15. Incentives for Renewable Energy Projects and

RE component, for both power and non-power applications, as duly certified by the DOE, in consultation with the BOI, shall be entitled to the following incentives:

XXX XX X

(g) Zero Percent Value-Added Tax Rate. -- xxx

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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This provision shall also apply to 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 contractors.

as well as the whole process of exploring and developing renewable energy sources up to its VAT on their local purchases of goods and services needed for the development, 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 limited to the services performed by subcontractors and/or contractors. Under said law, the local purchases these are needed for the development, construction and installation of their power plant facilities conversion into power, including but not limited to the 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. of goods and services by RE Developers are subject to zero percent (0%) VAT provided that Clearly, RA No. 9513 intended to exclude RE Developers from the coverage of the 12%

to the Company's purchases of goods and services that will be used in the development. to the services performed by subcontractors and contractors, pursuant to Section 15 of RA No. certified RE Developer, its suppliers/sellers of goods and services should not pass on 12% VAT developing renewable energy sources up to its conversion into power, including but not limited construction and installation of its power plant facilities and the whole process of exploring and 9513. Accordingly, since PHILIPPINE HYBRID ENERGY SYSTEMS,INC.is a DOE-

but not limited to the services performed by subcontractors and/or contractors. installation of the above-enumerated projects/activities. This includes the whole process of local purchases of goods and services that will be used in the development, construction and exploring and developing renewable energy sources up to its conversion into power, including It must be emphasized that the zero-percent VAT shall be limited only to the Company's

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

Income Tax/CWT

National Internal Revenue Code (Tax Code) of 1997,as amended, states that the withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying Investments Code of 1987. exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Section 2.57.5 (B) (2) of RR No. 2-98, as amended, implementing Section 57 (B) of the

a project duly registered with the BOI under Certificate of Registration COR No dated November 22,2013, for a period of seven (7) years beginning from April 2015 or actual tax and CWT on revenues generated from the sales of electricity of the 8x2 MW WEPS Project Thus.PHILIPPINE HYBRID ENERGY SYSTEMS,INC.is exempt from income

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98, as amended. Also, only revenues derived from power generated and sold to the grid, other known as the Omnibus Investments Code of 1987and Section 2.57.5 (B)(2) of RR No.2- start commercial operations', whichever is earlier, but in no case earlier than the date of registration of the project with the BOI, pursuant to Executive Order (EO) No.226, otherwise entities and/or communities shall be entitled to ITH.

compliance with the provisions of the Specific Terms and Conditions of its BOI-COR Lastly, the Company's entitlement to ITH for its BOI-registered project is subject to the

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

Very truly yours.

K-1 LARRY/M.BARCELO Assistant Commissioner 0010435 Legal Service Q

from the start of such commissioning or testing whichever comes earlier, as certified by the DOE. 1 Per BOI Legal Service letter dated September 24, 2014, date of actual commercial operation shall be reckoned from the state at which the RE Plant generated the first kilowatt-hour of energy after commissioning or testing, or two (2) months