tax report PPT

1. RR 7-2022
RR 9-2022
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2. Topics
R.R. 7-2022: Tax Incentives under the
Renewable Energy Act of 2008
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R.R. 9-2022: Policies and Guidelines for the
Admissibility of Sales in Electronic Format

3. RR 7-2022: Tax Incentives Under the
Renewable Energy Act of 2008 and
the Policies and Guidelines for the
Availment Thereof (issued on June
30, 2022)
• Objectives of the issuance
• Who are entitled?
• How to avail of tax incentives?
• What are these tax incentives?
Presentation Title 3

4. Objectives
• In accordance with the State’s
policy to increase the utilization
of Renewable Energy (RE)
resources by institutionalizing
the development of national
and local capabilities in the use
of RE systems and promoting
its efficient and cost-effective
commercial application by
providing fiscal incentives
 Promulgated relative to the tax-
incentive provisions of
Renewable Energy Act of 2008

5. Who are entitled:
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1. RE developers: individuals or judicial entities created, registered, and/or authorized
to operate in the Philippines in accordance with existing Philippine laws and engaged in
the exploration, development and utilization of RE resources and actual operation of
RE systems/facilities. (Section 2(n))
2. Manufacturers, fabricators, and suppliers of locally-produced RE equipment
3. Purchasers of RE equipment

6. Requirements to avail of tax incentives (Section 3)
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For RE developers and manufacturers, fabricators, and suppliers of locally-produced RE
equipment
A. Registration / accreditation with the DOE through the Renewable
Energy Management Bureau (REMB)
B. Certificate of Endorsement by the DOE
1. DOE Certificate of Registration- issued to an RE developer holding a valid RE
Service/Operating Contract.
2. DOE Certificate of Accreditation- issued to manufacturers of RE equipment
1. RE developers- prior to the first year of availment of the 10% corporate income tax rate
2. RE manufacturers- on a per importation basis

7. Requirements to avail of tax incentives (Section 3)
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For RE developers and manufacturers, fabricators, and suppliers of locally-produced RE
equipment
C. Registration with the Board of Investments (BOI)
B. Certificate of ITH Entitlement (CE) from the BOI
Failure to attach the CE to the ITR may result to the forfeiture of the ITH
incentive for the covered taxable year

8. Fiscal Incentives (Section 4)
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For RE developers, including hybrid systems, in proportion to the extent of the RE
component.
• Existing RE projects
• New investment in RE resources
• Additional investments in the RE project
A. Income Tax Holiday (ITH) for seven (7) years
- Exempt from income taxes levied by the National Government

9. Fiscal Incentives (Section 4)
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A. Income Tax Holiday (ITH) for seven (7) years
• Existing RE projects: from commercial operation, that is when the RE project is (1)
issued a Cert. of Compliance by the ERC and (2) ready to inject power to the grid. RE
developers with existing RE facilities that were in operations for more than seven years
shall not be entitled to ITH, except for additional investment in RE Resources.
• New investment in RE resources: Entitled to seven years ITH from the start of
commercial operations. RE developers undertaking discovery and development of new
RE resources distinct from their registered operations may quality as new projects.
• Additional investments in the RE project: Availment of ITH shall not be more than three
(3) times the period of the initial availment by the existing or new RE Project or covering
new or additional investments.

10. Fiscal Incentives (Section 4)
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• Subject to the ff conditions:
• NOLCO has not been previously offset as a deduction from gross income;
• Loss results from operations;
• RR No. 14-2001 shall be strictly followed.
B. Net Operating Loss Carry-Over (NOLCO)
The NOLCO during the first three years from the start of commercial operation shall be
carried over as a deduction from gross income for the next seven consecutive taxable
years immediately following the year of such loss

11. Fiscal Incentives (Section 4)
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• Provided, that the RE developers shall pass on the savings to the end-users in the
form of lower power rates.
C. Corporate Tax Rate of 10%
• After availment of the ITH, all registered RE developers shall pay a corporate tax of 10%
on their net taxable income.
• Requirements to be submitted to the BIR:
• 1. Certificate of Endorsement by the DOE;
• 2. Valid, subsisting and RE service/ operating contract;
• 3. Sworn Undertaking stating that the RE developer: (1) has not been found to have
breached its obligations under the RE Service/Operating Contract and (2) shall pass on the
savings derived from this incentive in the form of lower power rates.

12. Fiscal Incentives (Section 4)
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• If an RE developer applies for accelerated depreciation, the project or its expansions
shall no longer be eligible to avail of the ITH.
D. Accelerated Depreciation
• If an RE project fails to receive an ITH before full operation, the RE developer may
apply for accelerated depreciation in its tax books.
• How applied: plant, machinery and equipment that are reasonably needed and actually used for
the exploration, development and utilization of RE resources may be depreciated using a rate not
exceeding twice the rate which would have been used.
• Methods of accelerated depreciation that may be adopted: (1) Declining balance method; and (2)
Sum-of-the years digit method.

13. Fiscal Incentives (Section 4)
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• Ancillary services generated through renewable sources of energy (services that are
necessary to support the transmission of capacity and energy from resources to loads
while maintaining reliable operation of the transmission system in accordance with good
utility practice and the Grid Code).
E. Zero Percent Value-Added Tax Rate
• The sale of power or fuel generated through renewable sources of energy.
• The purchase by an RE developer of local goods, properties, and services needed for
the development, construction, and installation of the plant facilities; and the whole
process of exploration and development of RE sources up to its conversion into power,
including, the services performed by subcontractors and/or contractors.

14. Fiscal Incentives (Section 4)
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F. Tax Exemption of Carbon Credits
All proceeds from the sale of carbon emission credits shall be exempt from any and all
taxes.

15. Fiscal Incentives Applicable to Hybrid and Co-Generation
Systems (Section 5)
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Limited applicability.
• only in proportion to and to the extent of the RE component
• only to the extent of equipment, machinery, and/or devices utilizing RE resources
• The RE developer shall secure a DOE certification to distinguish the equipment,
machinery, and/or devices utilizing RE Resources.
Hybrid System: any power or energy generation facility which makes use of two or more
types of technologies utilizing both conventional and/or renewable fuel resources
Co-generation System: facilities which produce electrical and/or mechanical energy and
forms of useful thermal energy such as heat or steam which are used for industrial,
commercial heating or cooling purposes through the sequential use of energy

16. Fiscal Incentives Applicable to Manufacturers, Fabricators, and
Suppliers of Locally-Produced RE equipment (Section 6)
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A. Value Added Tax (VAT)-free Importation of Components, Parts, and Materials.
All shipments necessary for the manufacture and/or fabrication of RE equipment and
components shall be exempt from VAT on importation, provided that such components
are:
(1) Not manufactured domestically in reasonable quantity and quality at competitive prices;
(2) Directly and actually needed and shall be used exclusively in the manufacture/fabrication of RE
equipment;
(3) Covered by shipping documents in the name of the duly registered manufacturer/fabricator to
whom the shipment will be directly delivered by customs authorities; and
(4) Prior approval of the DOE is obtained before importation.

17. Fiscal Incentives Applicable to Manufacturers, Fabricators,
and Suppliers of Locally-Produced RE equipment (Section 6)
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B. Income Tax Holiday and Exemption.
For seven years starting from the date of registration and accreditation with the
appropriate government agencies, an RE manufacturer, fabricator, and supplier of RE
equipment shall be fully exempt from income taxes levied by the National Government
on net income derived from the sale of RE equipment, machinery, parts, and services.

18. Fiscal Incentives Applicable to Manufacturers, Fabricators,
and Suppliers of Locally-Produced RE equipment (Section 6)
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C. Zero-Rated Value-Added Tax Transaction
• On transactions with local suppliers of goods, properties, and services needed in the
manufacture/fabrication of RE equipment.

19. Incentives for Purchasers of RE Equipment for Residential,
Industrial or Community Use (Section 8)
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Tax Rebate for Purchase of RE Components
Purchasers of RE equipment shall be entitled to a rebate equivalent to the VAT passed on to the
said
purchasers.
• available to purchasers who are not VAT-registered
• in the form of a tax credit from the income tax liability of the purchasers during the year of
purchase
• any unutilized rebate or tax credit shall be forfeited.

20. Prohibition Against Double Availment of Incentives
(Section 9)
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Unless otherwise provided by law, the registration/accreditation to avail of
incentives under this Act shall disqualify the availment of other tax and
nontax incentives under the NIRC, as amended by CREATE.

21. 22
RR 9-2022
Prescribing Policies and
Guidelines for the Admissibility
of Sales Documents in
Electronic Format in Relation
to
the Implementation of Section
237, Issuance of Receipts
or Sales or Commercial
Invoices, and 237-A, Electronic
Sales Reporting System, of the
NIRC as Amended by the
TRAIN Law.

22. Section 237. Issuance of Receipts or Sales or
Commercial Invoices. (NIRC, as amended)
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“[…] Within five(5) years from the effectivity of this Act and upon the establishment of a
system capable of storing and processing the required data, the Bureau shall require
taxpayers engaged in the export of goods and services, taxpayers engaged in e-
commerce, and taxpayers under the jurisdiction of the Large Taxpayers Service to
issue electronic receipts or sales or commercial invoices in lieu of manual receipts or
sales or commercial invoices, subject to the rules and regulations to be issued by the
Secretary of Finance upon recommendation of the Commissioner and after a public
hearing shall have been held for this purpose: Provided, That taxpayers not covered by
the mandate of this provision may issue electronic receipts or sales or commercial
invoices, in lieu of manual receipts, and sales and commercial invoices. […]”

23. Section 237-A. Electronic Sales Reporting System
(NIRC, as amended)
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“Within five (5) years from the effectivity of this Act and upon establishment of a system
capable of storing and processing the required data, the Bureau shall require taxpayers
engaged in the export of goods and services, and taxpayers under the jurisdiction of the
Large Taxpayers Service to electronically report their sales data to the Bureau through
the use of electronic point of sale systems, subject to rules and regulations to be issued
by the Secretary of Finance as recommended by the Commissioner of Internal Revenue:
Provided, That the machines, fiscal devices, and fiscal memory devices shall be at the
expense of the taxpayer. xxx”

24. RR 9-2022, Whereas clauses
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In compliance with the TRAIN law, the Bureau has developed the Electronic
Invoicing/Receipting and Sales Reporting System (EIS) that is:
• capable of storing and processing sales data required to be transmitted by covered
taxpayers using their Sales Data Transmission System; and
• capable of issuing sales documents through its web-based issuance facility to be
used by qualified taxpayers that will be determined by the BIR.
EIS ensures integrity and reliability of the sales and purchases data that will be
generated and verified therefrom.

25. Scope (Section 1)
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1. Taxpayers engaged in the export of goods and services;
2. taxpayers engaged in electronic commerce (e-commerce);
3. taxpayers under the Large Taxpayers Service (LTS); and
4. taxpayers authorized by the Bureau to issue electronic SIs/ORs
through the web-based facility of the EIS.

26. Policies and Guidelines (Section 2)
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1. Admissibility.
At the time of tax audit or investigation or verification of the taxpayer, the
sales and purchases data that will be generated and verified through the
EIS, in lieu of hard copies, are admissible, provided, these comply with the
information/data requirements under existing revenue issuances and the
minimum information required under Section 113 of the same Tax Code.
The requirement for prominently stamping of the term "zero-rated sales" on
the face of the receipt or invoices is no longer necessary inasmuch as a
separate reporting to EIS is required for each sales classification,
particularly VATable, zero-rated and exempt.

27. Policies and Guidelines (Section 2)
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2&3. Printed receipts no longer required.
2. Taxpayers duly-authorized to use the EIS, shall not be required to submit printed
copies of invoices or receipts issued for their sales.
3. Printed Invoices/Receipts for purchases from suppliers using the web-based
issuance in the EIS, or through Sales Data Transmission System, will no longer be
required to be submitted. However, only purchase data that are validated in the EIS
shall be allowed for purposes of claiming input VAT or for claiming deductible
expenses.
Receipts and invoices presented or claimed by the buyer as purchases that are not
reported in the EIS by the supplier shall be construed as unreported sales and shall
be subject to further investigation.

28. Policies and Guidelines (Section 2)
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4. Retention.
The original form or digital copies, whichever is applicable, must be retained in
accordance with Sections 235 and 237 of the Tax Code, as amended, in order for
the taxpayer to provide the same upon demand for verification and validation of
the sales and purchases data generated through the EIS or submitted electronic
forms of invoices or receipts.

29. Policies and Guidelines (Section 2)
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5. When taxpayers may be required hard copies or allowed access to the computerized
system: (Subject to CIR approval)
a. Missing or vague details in the invoices or receipts that were transmitted to the EIS, which
the investigating Revenue Officer needs further clarification;
b. Information in the invoices and receipts that are not included in the data required to be
transmitted to the EIS;
c. Validation of export sales data during verification of VAT refund claims for unutilized input
VAT attributable to zero-rated sales by taxpayer-claimants;
d. Taxpayer is under tax fraud investigation;
e. Skipped or missing series in the invoices or receipts issued; and/or
f. Other instances as may be determined by the CIR.
In this regard, the volume of the sales documents required to be submitted or presented may
be a representative sample of the total sales or purchases as may be determined by the
revenue officer of the Bureau.

30. Policies and Guidelines (Section 2)
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6. Authority of revenue officers
Revenue officers are not precluded from accessing the respective CAS or POS/CRM machines
of the taxpayer under the EIS to validate whether the sales data transmitted to the EIS matches
the sales recorded in their electronic systems.
7. Consequences of taxpayer’s refusal to give access to revenue officers
• Gives revenue officers authority to employ alternative means in the verification of the records
of the taxpayer.
• May result in possible disallowances or assessments.
• Any violation of the provisions of RR No. 9-2009 may result in prosecution of the taxpayer by
the BIR. Upon conviction, the taxpayer shall be held liable for the penalties.
• May also result in the revocation of the acknowledgement certificate or permit to use CAS of
the taxpayer, upon recommendation of the revenue officer.

31. Policies and Guidelines (Section 2)
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8. Procedures of manual verification still applicable
Sales and purchases not covered by these Regulations shall be in compliance with the existing
policies and procedures for the manual verification of sales and purchases.

32. Repealing clause and effectivity
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Section 3. Repealing Clause
All existing rules and regulations or parts thereof, which are inconsistent with the provisions of
these Regulations are hereby repealed, amended, or modified accordingly.
Section 4. Effectivity
These Regulations shall take effect immediately after publication in a newspaper of general
circulation.
Published in Manila Times on July 1, 2022

33. THANK YOU
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