Zero tariff policy now extended to two-wheeled EVs, hybrid vehicles

By Beatriz Marie D. Cruz, Reporter

THE NATIONAL Economic and Development Authority (NEDA) Board on Wednesday granted tax breaks for electric motorcycles (e-motorcycles), electric bicycles (e-bicycles) and hybrid electric vehicles (EVs), as the government seeks to further promote green transport and cut carbon emissions.

The NEDA Board, chaired by President Ferdinand R. Marcos, Jr., on Wednesday approved to expand the coverage of Executive Order (EO) No. 12 which temporarily reduced tariffs on electric vehicles to zero until 2028.

The zero tariff policy will now cover e-motorcycles, e-bicycles, nickel metal hydride accumulator batteries, e-tricycles and quadricycles, hybrid EVs and plug-in hybrid EV (PHEV) jeepneys or buses.

The NEDA Board also agreed to keep the zero tariff policy on 34 lines of battery EVs currently covered by EO 12.

In February 2023, Mr. Marcos signed EO 12, which temporarily removed the tariffs for EVs and their parts and components for five years. However, the EO did not include two-wheeled EVs and hybrid vehicles.

Prior to the order, tariff rates for some EVs ranged from 5-30%.

“EO 12 is designed to stimulate the EV market in the country, support the transition to emerging technologies, reduce our transport system’s reliance on fossil fuels, and reduce greenhouse gas emissions attributed to road transport,” NEDA Secretary Arsenio M. Balisacan said in a statement on Thursday.

The Philippine government is now promoting more environment-friendly means of transport as it committed to reduce greenhouse gas emissions by 75% by 2030 under the Paris Agreement.

“By encouraging consumers to adopt EVs, we are promoting a cleaner, more resilient, and more environmentally friendly transportation alternative,” Mr. Balisacan, who also serves as the vice chairperson of the NEDA Board, said.

The recommendation to expand EO 12’s coverage was made by the Committee on Tariff and Related Matters (CTRM) after a series of industry consultations.

The Department of Trade and Industry said the expansion of the EO aligns with the country’s commitment to green transition and promotes the adoption of eco-friendly transportation.

“By making EVs and hybrid EVs more accessible and affordable, the government not only fosters sustainable mobility but also contributes to cleaner air and a healthier environment,” Trade Secretary Alfredo E. Pascual said in a statement.

European Chamber of Commerce of the Philippines (ECCP) President Paulo Duarte welcomed the expansion of EO 12, saying that this would aid the industry in achieving the targets set under the Comprehensive Roadmap for the Electric Vehicle Industry.

“The extended elimination of EV tariffs will also prompt a positive push for the development of EV infrastructure. We also laud the incorporation of hybrid EVs and PHEVs in the zero tariffs program as this will greatly enhance their affordability and serve as a driving force for the eventual market penetration of (battery EVs), thereby encouraging their widespread adoption and accelerating the transition towards cleaner mobility solutions,” Mr. Duarte said in a Viber message.

Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said EO 12 would help the Philippines develop its own EV manufacturing hub.

“The upside is that this might spur the manufacturing or assembling of such EV vehicles. Other countries have already embarked on the manufacturing side, and we can also catch up,” he said via telephone.

Rene S. Santiago, founding member of the Transportation Science Society of the Philippines, said improving the road traffic flow would be a better way to cut greenhouse gas emissions.

“Lower taxes can induce more buyers, but the percentage of Filipino households who can afford those EVs is small,” Mr. Santiago said via Viber.

Eleanor L. Roque, tax principal of P&A Grant Thornton, noted that while the order would lessen revenue collection, the government’s top priority should be sustainability and environmental protection.

“We are already at the 11th hour and government cannot just rely on market forces or societal changes. Otherwise, we are setting up for failure. Government must step up and drive the change,” she said in a Viber message.

PROJECT APPROVALS
Meanwhile, the NEDA Board approved a P2.75-billion Facility for Accelerating Studies for Infrastructure (FAST-Infra) project.

“FAST-Infra will initially focus on the transportation sector by providing fund support in formulating high-quality transportation master plans and develop a robust pipeline of big-ticket transportation projects that would strengthen both national and regional connectivity,” it said.

The board also greenlit the Infrastructure for Safer and Resilient Schools (ISRS) project, which involves the repair, rehabilitation and reconstruction of school facilities damaged by natural disasters.

The project will be implemented starting this year until 2029. It will cover 13,101 classrooms across 1,282 schools nationwide.

The NEDA Board also extended the implementation period of the P8.41-billion Light Rail Transit (LRT) Line 2 East Extension project to give way for the “full disbursement to project contractors and consultants and ensure the quality of the project until the end of its defects liability period in December 2024.”

The project, which added railway stations in Marikina City and Antipolo, east of Metro Manila, was completed in 2021.

The NEDA Board also approved the extension of the Department of Agrarian Reform’s land titling project to Dec. 31, 2027 from Jan. 1, 2024. The loan validity was also extended to Dec. 31, 2027 from Jan. 1, 2025.

The P24.62-billion Support to Parcelization of Lands for Individual Titling project aims to improve land tenure security and stabilize the property rights of agrarian reform beneficiaries.