BIR exempts power co-ops from franchise tax

The Bureau of Internal Revenue (BIR) has exempted the country’s 119 electric cooperatives from paying franchise taxes, according to sectoral legislators.

Representatives from the Association of Philippine Electric Cooperatives (APEC-Party List) Ernest Pablo, Edgar Valdez and Sunny Madamba in an interview with The STAR, said this BIR resolution will provide relief for the electric cooperatives and its member-consumers which are being asked to pay some P1-billion worth of taxes for the period 1997-1998.

"It is a good thing that the issue has been settled. We want to extend our gratitude to the BIR for clearing things up," they said.

BIR deputy commissioner for legal and inspection group Jose Mario Bunag, in his letter to the APEC representatives, said "it is clear from the foregoing ruling that the electric utilities, not being a cooperative subject to franchise tax under Section 119 of the National Internal Revenue Code (NIRC) of 1997 are those which are guarantee of a legislative franchise. It does not apply to electric cooperatives."

The electric cooperatives have been questioning the BIR’s franchise tax collection since 1997.

Meanwhile, NEA administrator Francisco Silva said the energization effort of the administration has reached its six-millionth mark as of end-June 2003. This has benefited some 31,456 barangays and 1,455 municipalities/cities.

Silva reported that NEA’s revenues reached P17.5 billion from sales of 3,952 gigawatthours.

The collection efficiency of NEA for the first six months of the year reached 95 percent. Moreover, system loss averaged at 14-15 percent as of Aug. 6 from a high of 26 percent at the start of the year.