What 2024 Energy Credits Await Companies?
For Philippine businesses, the conversation around energy has shifted aggressively in the last 12 months. It is no longer just about "saving on the electric bill." With the signing of the CREATE MORE Act (RA 12066) in late 2024 and the maturing of the Energy Efficiency and Conservation (EEC) Act, energy has become a primary lever for tax avoidance and fiscal strategy.
If you are a CFO or facility manager in Metro Manila, Calabarzon, or Cebu, you are likely looking at two realities: Meralco rates averaging ₱11–₱13 per kWh, and a government increasingly desperate to incentivize green investments. The result is a suite of "energy credits"—both in the form of tax breaks and actual bill rebates—that are waiting to be claimed in 2025.
Here is the practitioner’s guide to the specific fiscal incentives and energy credits available to Philippine companies right now.
1. The CREATE MORE Act: A Game Changer for Power Costs
The headline news for 2024–2025 is the CREATE MORE Act (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy). While the acronym is a mouthful, the implications for energy-intensive industries are massive.
The most critical update is the Enhanced Deduction (ED) on Power Expenses.
Under the original CREATE Act, registered business enterprises (RBEs) could claim a 50% additional deduction on power costs. CREATE MORE increases this to 100%.
What This Means for Your P&L
If your manufacturing plant has an annual electricity bill of ₱50 million, and you are an RBE (registered with BOI or PEZA):
Previously: You could deduct ₱75 million (standard expense + 50% bonus) from your taxable income regarding power.
Now: You can deduct ₱100 million (standard expense + 100% bonus).
This effectively shields a massive portion of your revenue from the 20–25% Corporate Income Tax (CIT). This incentive alone can make the difference between a red and black bottom line for semiconductor firms, cold storage facilities, and heavy industry.
For a deeper dive on how these mechanisms work for different business types, read our analysis of renewable energy incentives for Philippine businesses.
2. Board of Investments (BOI) Income Tax Holidays
If you are installing a solar system not just for savings but as a registered project, you are entering the territory of the Board of Investments (BOI).
Under the 2022 Strategic Investment Priority Plan (SIPP) and continuing into 2025, "Green Ecosystem" projects—including renewable energy and energy efficiency—are Tier 2 or Tier 3 priorities.
The Income Tax Holiday (ITH)
For qualified projects, the government offers an Income Tax Holiday (ITH) lasting 4 to 7 years.
Self-Financed Projects: If you buy a solar system for your factory’s own use, the ITH usually applies to the incremental income generated by that efficiency.
Third-Party Projects: If you are an Energy Service Company (ESCO) installing the system, the ITH applies to your revenue from that contract.
Duty-Free Importation
Importing solar panels, inverters, and mounting structures is currently duty-free under RA 9513, provided you have the requisite DOE endorsement. This saves you the standard 3–10% tariff on imported equipment. However, be warned: the paperwork for RE tax holidays is rigorous, and you must secure the Certificate of Endorsement (COE) before the equipment arrives at the Port of Manila.
3. RA 11285: Incentives for "Energy Efficiency Projects"
Many companies overlook the Energy Efficiency and Conservation (EEC) Act (RA 11285) because they view it as a compliance burden (requiring Energy Officers and annual reports). However, it also unlocks fiscal incentives.
The BOI now recognizes "Energy Efficiency Projects" as a distinct investment class. This isn't just about solar panels; it covers:
Replacing old chillers with high-efficiency magnetic bearing chillers.
Upgrading to smart LED lighting systems.
Installing Variable Frequency Drives (VFDs) on motors.
The 15% Threshold
To qualify for BOI fiscal incentives under this category, your project must demonstrate at least 15% energy savings measured at the project boundary.
15–20% Savings: You may qualify for 50% of the standard ITH period.
>25% Savings: You qualify for 100% of the ITH period.
This turns a capital expense (retrofitting your building) into a tax-shielding asset. If you are planning a major renovation, consult our guide on business solar incentives to see how to bundle these upgrades for maximum tax credit eligibility.
4. Net Metering Credits (For Systems <100kW)
For smaller commercial entities—like bank branches, gasoline stations, or quick-service restaurants—the "credit" you are looking for is literal: Net Metering Credits.
If your solar system is under 100kW, you can export excess power to the grid. The distribution utility (DU), whether it's Meralco, VECO, or SFELAPCO, will "buy" this power from you.
The "Blended Rate" Reality
The credit is not 1:1. You buy power at the retail rate (e.g., ₱12/kWh), but the DU credits you at the "generation charge" average (usually ₱5–₱7/kWh).
The Trap: Do not size your system assuming you will get rich selling power to Meralco. You won't.
The Strategy: The credit is purely a buffer for months when you have low consumption (e.g., Holy Week or December breaks). It rolls over to your next bill, reducing your payable amount.
While less lucrative than the CREATE MORE tax breaks, net metering is vital for reducing the cash burn of small operations. Check the current rates in our net metering credits explainer.
5. VAT Zero-Rating and Exemptions
The VAT situation for renewable energy has historically been messy, with conflicting rulings between the BIR and the DOE. However, recent clarifications under the CREATE and CREATE MORE Acts have solidified the rules.
Local Purchases: If you are a Registered Business Enterprise (RBE) and the solar installation is "directly attributable" to your registered activity, your purchase of the system from a local installer should be VAT Zero-Rated. This instantly saves you 12% on the project cost.
Importation: As mentioned, direct importation by RE developers is VAT-exempt.
Crucial Note: The "Directly Attributable" clause is strictly enforced. If you are a BPO company (registered activity) but you install solar on a rest house owned by the corporation (unrelated activity), the BIR will disallow the VAT exemption. Navigating these tax implications requires precision; see our article on navigating solar taxes to avoid a deficiency assessment during your next audit.
How to Move Forward
The landscape of 2024–2025 offers a rare convergence of high electricity prices and generous government subsidies. However, these credits are not automatic. They require:
Registration: You must be registered with the BOI, PEZA, or hold a DOE Certificate of Compliance.
Compliance: You must meet the reportorial requirements of RA 11285 (submitting your Annual Energy Utilization Report).
Endorsement: You need a DOE endorsement to clear goods duty-free.
If you are merely installing solar to lower your bill, you are already winning—the ROI is typically 3–5 years given current commercial solar costs. But if you ignore the tax credits and enhanced deductions available under CREATE MORE, you are leaving millions of pesos on the table.
Review your status. If you are a VAT-registered corporation with significant power expenses, 2025 is the year to turn that expense line into a tax shield.