Biofuel production, processing and distribution projects may avail of the following incentives:

  • Income tax holiday;
  • Minimum tax and duty of 3% and value-added tax on imported capital equipment;
  • Tax credit on domestic capital equipment;
  • Exemption from contractor’s tax;
  • Unrestricted use of consigned equipment;
  • Exemption from taxes and duties on imported spare parts; and
  • Such other applicable incentives under Article 39 of E.O. No. 226.

E.O. 449 “Modifying the Rate of Import Duty on Bioethanol Fuel under Section 104 of the Tariff and Customs Code of 1978 (P.D. No. 1464), as Amended” provides that the importation of ethanol strength by volume exceeding 99% shall be subject to 1% Most Favored-Nation (MFN) rate of import duty when imported with certification from the DOE that the articles will be used for the Fuel Ethanol Program.

Under the Department Circular No. DC 2006-05-0006 Promulgating the Implementing Rules and Regulations of the Republic Act No. 9367 otherwise known as the Biofuels Act of 2006, the following additional incentives can be availed in the production and distribution of biofuels:

  • 0% Specific Tax on local or imported biofuels component of the blend per liter of volume
  • Exemption form Value Added Tax (VAT) of the sale of raw materials used in the production of biofuels
  • Exemption from wastewater charges of all water effluents used as liquid fertilizers in the production of biofuels.