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Tax Boost for Sustainable Mobility in the Philippines

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EV Tax Exemption

The Philippines is proposing new excise tax law that would exempt electric vehicles (EVs) from excise duty. The proposed exemptions are part of the House Bill 5636, which the House of Representatives passed on May 31, and the Senate Bill 1408 currently under consideration.

The proposed law also exempts hybrid vehicles so long as its drive system “consists of an efficient combustion engine and a powerful electric motor which can run at least 30 kms under one full charge” — a low bar of qualification for the average hybrid vehicle.

 

What it means 

The proposed law fills a gap in the Philippines’ auto sector, which had not seen such incentives for EVs and hybrid vehicles unlike neighbours Thailand and Malaysia, for example. It signals the government’s commitment to greener urban mobility following its move last month to lead by example vis-a-vis promoting EVs to the public.

“This is very timely so that we will be able to see more hybrid vehicles on the road, thus helping in our advocacy of promoting the use of alternative-fueled vehicles nationwide,” says Rommel Juan, president of the Electric Vehicle Association of the Philippines (EVAP). “

“Finally, we join the rest of the world in promoting low or zero carbon emission vehicles not only to help protect our environment but also to save on oil importations”, says Juan. “This development is increasingly relevant as the Philippines is set to host the very first ASEAN Electric and Hybrid Vehicles Summit on June 29 to 30, 2017 at the World Trade Center. This will be co-organized by EVAP, the Board of Investments, the Chamber of Automotive Manufacturers of the Philippines and Meralco”.

Check out Philippines Hosts Inaugural ASEAN Electric Vehicle Summit

 

Aggressive Incentives

The Philippines’ proposed incentives — essentially exempting EVs and hybrids from excise duty — are more aggressive compared to some neighbours.

As a comparison to some of ASEAN member countries:

Thailand

Recently announced a two-year promotion that will see excise duty reduced by about half for CBU hybrids and plug-in hybrids, ranging between 5% and 15% depending on CO2 emission levels. EVs will be charged 2% excise duty.

Singapore 

Offers tax rebates beginning from SGD$5,000 up to SGD$30,000 for cars with CO2 emissions lower than 135g/km. Notably however it imposes tiered surcharges for cars that emit more than that threshold.

Malaysia

On the other hand,  no longer offers tax incentives for fully imported EVs and hybrids. The applicable excise duty for EVs are 10% while the tax for hybrids range from 65% up to 105% depending on fuel type and capacity, among others, according to the Malaysian Excise Duties Order 2017.

 

Why It Matters

The tax exemptions are set to catalyse a shift from fossil fuel-based vehicles to greener alternatives. This may be the final piece of the puzzle amid a push from the government for more sustainable urban mobility via rail projects as well as efforts to gradually replace the nation’s iconic jeepneys with electrified versions.

Pushing for a green shift on the private vehicles front is in-line with the overarching goal of promoting “electric and hybrid vehicles as an alternative to petroleum-fueled vehicles coupled with the needed infrastructure like battery charging and swapping stations” said Patrick Aquino, director of the Philippines Department of Energy who is also the supervising member of the ad hoc technical working group on EV charging stations.

It is also in-line with an emerging push for local manufacturing of EVs and hybrids. Earlier this month, Tesla Motors’ Elon Musk said the carmaker is in talks with the Indian government for temporary relief from local import restrictions as it sets up a factory to cater to the Indian auto market, which aims to be fully electric by year 2030.

 

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