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Wednesday, November 22, 2017

Gov’t readies tax perks for EV, hybrids

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by Bernie Cahiles-Magkilat

The government is coming up with a comprehensive electric vehicle (EV or e-vehicle)  industrial roadmap that will address all elements, including fiscal and non-fiscal incentives, as the Philippines vies to become a production hub for some models of global car manufacturers.

Trade and Industry Assistant Secretary Rafaelita Aldaba said they will be stocktaking all industry issues, studies, pending bills, and policies with all stakeholders and other government agencies during a roundtable discussion next month to be able to come up with a comprehensive e-vehicle program before end this year.

“We should be able to come up with the suggested program within the year and we need an Executive Order for this or if not a legislation, which will take a bit longer,” Aldaba said.

The government is more emboldened now to come up with an EV program with the signing of the establishment of ASEAN Federation of Electric and Hybrid Vehicle Industries (AFEHVI) among e-vehicle industry associations in each of the ASEAN countries at the 1st ASEAN EV & Hybrid Summit at the World Trade Center. With the theme “Strengthening Partnerships for Greener Transport in ASEAN and Beyond,” the regional federation agreed to collaborate to help in the promotion of the industry.

Aldaba said that the Philippine program will seek to create an ecosystem for the EV and hybrid vehicle industry where the necessary elements are present.

The program may also include the modernization of the old, dilapidated and highly air polluting jeepneys in the country. The new and modern jeepneys may come in the form electric or hybrid public utility vehicles.  There are over 220,000 jeepneys of over 15 years old that need to be replaced. The Department of Finance said modernization of the public utility vehicle modernization program could reach over P400 billion.

In terms of taxes, the current proposed Package One of the Tax Reform Program by the Lower House has already exempted EVs and hybrid s of the 12 percent value-added tax. It may also be granted exemption from the excise tax payments.

Importation of electric and hybrid vehicles may also be allowed duty-free because if these units are imported from the US ad EU they are slapped with 30 percent duty and 5 percent if from Korea and China.

But Aldaba is looking forward to the Package 2 of the tax reform bill wherein other fiscal and non-fiscal incentives may be granted. If registered under the Investment Priorities Plan, an EV manufacturer is entitled to six years of income tax holiday and 1 percent duty on the importation of capital equipment. Pending bills have called for special benefits to this mode of transportation such as free parking, no number coding and free charging.

Rommel Gutierez, president of the Chamber of Automotive Manufacturers of the Philippines, Inc., stressed that the reason Prius, the hybrid model introduced by Toyota Motor Philippines in 2009 in the local market, has poor market penetration is largely because it has no government incentives. Since 2009, there were only 100 units of Prius sold in the Philippines.

“We are not actually selling cars, but technologies,” said Gutierez. But Gutierez said “change is coming” with the tax reform bill now in Congress granting excise tax exemption.  CAMPI is now looking at the Package 2 of the tax reform bill as it will tackle the incentive scheme for this industry.

Aldaba, however, said the government cannot commit if the new incentive package for this industry would be better or superior than what other ASEAN countries are currently extending for e-vehicle players.

“We need to study because we have a different environment,” she said citing the country’s need to raise revenues to fund for the country’s infrastructure to sustain growth.

But Aldaba said the aim is to make it attractive enough for global e-vehicle manufacturers to make the Philippines their production hub.

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