Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 4452

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

EXPLANATORY NOTE

This bill seeks to grant tax and other non-fiscal incentives to
importers, manufacturers, operators and owners of hybrid cars in the
Philippines.

With the usually rising fuel prices in the country, automobile owners
are considering other ways and means to save fuel on their vehicles.

One possible solution is the use of hybrid cars. Hybrid cars are
vehicles that use both rechargeable energy and normal gasoline-fueled
power source for propulsion. These c: e long-lasting, low polluting, and
use less gasoline than standard cars with pure internal combustion engines:
Though most hybrid cars still use gasoline as their primary fuel source, new
technologies include the use of ethanol and hydrogen fuel

Hybrid cars are really the answer to the fuel-saving problem in the
country. Nevertheless, it is very expensive to produce. A hybrid car costs
about USD 6,000 more than its non-hybrid counterpart. While carmaker
companies in the country are considering the importation and manufacture
of hybrid models, they still cannot do so due to higher costs compared with
regular gas-fed vehicles. They are willing to invest if only the government
will grant importers and manufacturers special incentives like duty-free and
tax-free importation of parts and components of hybrid vehicles.

Parts and components are currently charged with 15% to 30% most
favored nation tariffs if they are sourced outside of member-countries of the
ASEAN, Imports from ASEAN members, on the other hand, are charged
with a 5% common effective preferential tariff rates.

The duty-free and tax-free importation of parts will make hybrid car
assembly competitive with the production of normal gas-fed cars. If only the


government will grant tax incentives to manufacturers and importers of
hybrid cars, these cars will become more affordable and available to
Filipinos. Grant of tax exemptions shall be subject to a periodic review of
the Secretary of Finance. The time frame may be enough to give time for the
local automotive industry to develop its own capability to locally produce
the said parts and components.

In view of the foregoing, the immediate passage of thi is earnestly

sought

ARTHUR C, YAP
Representative


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No4 452

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP.

AN ACT
PROVIDING INCENTIVES FOR THE MANUFACTURE,
ASSEMBLY, CONVERSION AND IMPORTATION OF
ELECTRIC, HYBRID AND OTHER ALTERNATIVE
FUEL VEHICLES, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled,

SECTION 1, Title. - This Act shall be known as the "E

ric, Hybrid
and Other Alternative Fuel Vehicles Incentives Act of 2016"

SEC. 2. Declaration of Policy. - \t is the policy of the State to
safeguard life and environment by encouraging the use of alternative sources
of energy for vehicles intended for public and private use. To protect the
well-being and promote the economic condition of the people as well as to
promote energy independence and security in the midst of development and
innovation in technology, the following are hereby declared

A) It is the policy of the State to protect and advance the right of the
people to a balanced and healthful ecology in accord with the rhythm
and harmony in nature. The State shall recognize and address the

detrimental effects on the environment, safeguard the welfare, and


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protect the health of the people by improving air quality and by
reducing the impact of greenhouse has effects emitted from man-
made sources such as vehicles operating on fossil fuels.

B) The State supports the need to promote the development of new
technology to accelerate social progress and promote human
development. The use of alternative sources of energy on vehicles
intended for public and private use is encouraged to promote
innovation, energy efficiency, security and conservation, and to
speed-up the deployment of cleaner technology.

C) The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments. To accelerate economic growth and generate
employment, the state shall provide incentives to private enterprises

and individuals engaged in the manufacture, assembly, conversion,

and importation of electric, hybrid and other alternative fuel vehicles.
SEC. 3. Definition of Terms. As used herein, the following shall
mean:
(a) Electric Vehicle shall refer to any vehicle that uses electric motors
solely for propulsion.

(b)Hybrid Vehicle (HV) shall refer to any vehicle that combines the

technologies of using internal combustion engine (ICE) with a
battery-powered electric motor to gain advantages of both propulsion
systems.

(c) Other Alternative Fuel Vehicle (AFV) shall refer to any vehicle using

alternative sources of energy such as but not limited to: solar, wind,


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hydrogen fuel cell, compressed natural gas (CNG) or liquefied natural

gas (LNG) and liquefied petroleum gas (LPG), other than
conventional sources of energy like petroleum and gasoline for
propulsion.

(d)Manufacturer or Assembler shall mean any individual, partnership,
corporation or other entity engaged in the manufacture, assembly and
conversion of electric, hybrid and other alternative fuel vehicles
incorporated, organized and existing under Philippine laws.

(e) Importer shall mean any individual, partnership, corporation or other
entity engaged in the importation of completely built units (CBUs) of
electric, hybrid and other alternative fuel vehicles incorporated,
organized and existing under Philippine laws.

SI

4. Coverage. - This Act shall cover electric, hybrid and other
alternative fuel vehicles but shall not include vehicles powered by gasoline,

petroleum, bio-diesel and bio-ethanol.

5, Incentives to Manufacturers or Assemblers. - The provision
of any special or general law to the contrary notwithstanding, the
manufacture or assembly of completely knocked-down (CKD) parts of
electric, hybrid and other alternative fuel vehicles, including the conversion
of vehicles into electric, hybrid and other alternative fuel vehicles, shall be

exempt from the payment of excise taxes and duties for nine (9) years from

the effectivity of this Act.
The imposition of the Value Added Tax (VAT) for the purchase and
importation of raw materials, spare parts, components and capital equipment

used in the manufacture or assembly of electric, hybrid and other alternative


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fuel vehicles shall be suspended for the next nine (9) years from the
effectivity of this Act.

SEC. 6. Incentives to Importers. - The provision of any special or
general law to the contrary notwithstanding, the importation of completely

built units (CBUs) of electric, hybrid and other alternative fuel vehicles shall

be exempt from the payment of excise taxes and duties for nine (9) years
from the effectivity of this Act.

SEC. 7. Exemption from the Payment of Motor Vehicle User's
Charge (MVUC). - Electric, hybrid and other alternative fuel vehicles shall
be exempt from the payment of the Motor Vehicle User's Charge (MVUC)
imposed by the Land Transportation Office (LTO) under Republic Act No.
8794, otherwise known as "Motor Vehicle User's Charge (MVUC) Act"

SEC. 8. Non-Fiscal Incentives. —

|. Priority in Registration and Issuance of Plate Number. - Registration
and renewal of registration of electric, hybrid and other alternative

fuel vehicles shall be prioritized by the Land Transportation Office. A

special type of vehicle plate to be prescribed by L TO shall be

exclusively issued to all electric, hybrid and other alternative fuel
vehicles upon registration

2. Priority in Franchise Application. - Public Utility Vehicle (PUV)
operators exclusively utilizing electric, hybrid and other alternative
fuel vehicles shall be granted priority by the Land Transportation

Franchising and Regulatory Board (LTFRB) in the approval of

applications for franchise to operate, including its renewal, for nine

(9) years from the effectivity of this Act.


3. Exemption from Unified Vehicular Volume Reduction Program

(UVVRP) or Number-Coding Scheme. - All electric, hybrid and other

alternative fuel vehicles shall be exempted from the mandatory
Unified Vehicular Volume Reduction Program (UVVRP) or Number-
Coding Scheme being implemented by the Metro Manila

Development Authority (MMDA) and other local government units

(LGUs) concerned.

4. Provision for Free Parking Spaces in New Establishments. - Business

and commercial establishments to be constructed after the effectivity
of this Act are mandated to provide exclusive parking spaces free of
charge for all electric, hybrid and other alternative fuel vehicles. No

building permit shall be issued for the construction of business and

commercial establishments that include parking spaces unless. the
owner submits an affidavit that there shall be free parking Spaces to be
exclusively designated for electric, hybrid and other alternative fuel

vehicles,

SEC. 9. Registration, Implementation and Monitoring. - The

Department of Finance (DOF) and Department of ‘Trade and Industry (DTI)
shall be responsible for the administration and implementation of the

incentives granted under this Act

Manufacturers, assemblers, converters and importers of electric,

hybrid and other alternative fuel vehicles shall register with DOF in order to

avail of the incentives provided under this Act. For proper monitoring, DOF


and DTI shall meet regularly to monitor and review the implementation of
the incentives provided herein.

SEC. 10. Implementing Rules and Regulations, - The DOF in
coordination with the DTI shall promulgate the necessary rules and
regulations for the effective implementation of this Act.

SEC. 11. Separability Clause. - If any provision of this Act is
declared unconstitutional or invalid, other parts or provisions hereof not
affected thereby shall continue to be in full force and effect.

SEC. 12. Repealing Clause. - All other laws, orders, issuances,

circulars, rules and regulations or parts thereof, which are inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.

SECTION 13. Effectivity. - This Act shall take effect fifteen (15)
days from its complete publication in the Official Gazette of in a newspaper
of general circulation in the Philippines, whichever comes earlier

APPROVED.