Mini-Hydro Law

Source: JOIN IEA/IRENA Policy and Measures Database
Last updated: 15 February 2017

Republic Act No. 7156 or the Mini-Hydro Law provides the following rights and privileges to mini-hydro developers, as follows:

  • 1. Special privilege tax rates: Tax payable by developers/grantees to develop potential sites for hydroelectric power and to generate, transmit and sell electric power shall be 2 percent of their gross receipts.
  • 2. Income tax holiday for seven (7) years from start of commercial operations.
  • 3. Tax and duty free importation of machinery, equipment and materials-Exemption from payment of tariff duties and value-added tax (VAT) on importation of machinery and equipment (within seven (7) years from date of awarding of contract).
  • 4. Tax credit on domestic capital equipment - For developers who buy machinery, equipment, materials and parts from a local manufacturers, tax credit is given equivalent to 100 percent of value of VAT and custom duties that would have been paid to import said machinery, equipment, etc.
  • 5. Special realty tax rates on equipment and machinery: Realty and other taxes on civil works, equipment, machinery and other improvements of a registered mini-hydroelectric power developer shall not exceed 2.5 percent of their original cost.
  • 6. VAT Exemption - Exemption from payment of 10 percent VAT on gross receipts derived from sale of electric power whether wheeled via the NPC grid or electric utility lines.

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