SyCip Salazar Hernandez & Gatmaitan
  June 17, 2022 - Philippines

Philippines: Electric Vehicle Industry Development Act offers tax incentives
  by Ronald Mark C. Lleno

Introduction

Republic Act No. 11697, or An Act Providing for the Development of the Electric Vehicle Industry (EVIDA Law), became effective on 15 April 2022. The EVIDA Law outlines the regulatory framework and creates a comprehensive roadmap for the operation of electric vehicles (EVs) in the Philippines. It governs "the manufacture, assembly, importation, construction, installation, maintenance, trade and utilization, research and development, and regulation of electric vehicles".

The EVIDA Law is a timely response to counter increasing fuel prices and reduce the country's dependence on fossil fuels. In this regard, there are currently 28 companies in the Philippines engaged in the manufacturing of EVs. Complementing these companies are 11 parts and component manufacturers, and seven importers. The EVIDA Law is expected to encourage growth for this industry, further attract high-tech investments and stay current with the ongoing global shift to EVs.

This article provides an overview of the tax incentives that this new law provides for manufacturers and importers of EVs, and their parts and components.Manufacturing

The manufacture and assembly of EVs and the following related elements must undergo evaluation:

The evaluation process exists to determine these elements:

All sectors or industries that may be included in the SSIP will undergo a further evaluation process to determine the suitability and potential of the industry in "promoting long-term growth and sustainable development, and the national interest". If the activities of EV manufacturers will be included in the SIPP, such activities will be entitled to the following incentives under the Omnibus Investments Code and the Tax Code, as amended by the CREATE Act:

Comment

The EVIDA Law has boosted the transition from conventional vehicles toward EV, offering several key tax incentives to businesses in this industry. The development is a welcome one as ordinary motor vehicles are largely affected by the oil price hikes experienced in the Philippines. EVs may help mitigate these concerns as these types of vehicles will not be dependent on fossil fuels.

The EVIDA Law is also expected to create more opportunities for the local manufacturing of EVs and facilitate the establishment of the necessary infrastructures for EVs in the Philippines.

For further information on this topic please contact Ronald Mark C Lleno at SyCip Salazar Hernandez & Gatmaitan (SyCipLaw) by telephone (+632 8982 3500, +632 8982 3600, +632 8982 3700) or email ([email protected]). The SyCipLaw website can be accessed at www.syciplaw.com.

Carina C Laforteza, partner and head of the tax department, assisted in the preparation of this article.

 

Originally published by Lexology