No tax break for WESM operator

The Court of Tax Appeals (CTA) has formally decreed that the Independent Electricity Market Operator of the Philippines (IEMOP), as the duly authorized operating entity of the Wholesale Electricity Spot Market (WESM), is not exempt from paying income tax - and that effectively upheld an earlier ruling of the Bureau of the Internal Revenue (BIR) and the opinion rendered by the Department of Finance (DOF).

- By MYRNA M. VELASCO

In particular, the tax court noted that even if IEMOP had been registered as a non-stock, non-profit corporation, it still cannot be classified as a tax-exempt entity because it fails to establish its stature as a ‘business league’ that shall be freed from paying taxes under the prescription of Section 30 (F) of the National Internal Revenue Code (NIRC) of 1997.

As defined, ‘business league’ refers to “an association of persons having some common business interest, which limits its activities to work for such common interest and does not engage in a regular business of a kind ordinarily carried on for profit,” and the nature of its operations should have been similar to that of a chamber of commerce or board of trade.

“For failure to meet the statutory requirements and defining characteristics of a business league, petitioner (IEMOP) cannot be considered as such and is not entitled to income tax exemption under Section 30 (F) of the NIRC of 1997, as amended,” the CTA stressed.