Posted by: robertgsarmiento | October 20, 2010

Bonifacio Global City – Commercial Lot for Sale

here’s a property located along the primest area of bonifacio global city, taguig.  total lot area is 2400 square meters and price is Php 240,000 per square meter exclusive of  Value Added Tax which is for the account of the buyer.  Floor area ratio is 16 so a high rise condominium development is viable.  for further details, please call our office.  thanks and regards.

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 2 5708882 ( line 2 )
+63 2 5707973 ( line 3 )
+63 920 9064829 ( mobile )
email : roberts@surfshop.net.ph
website : http://www.robertgsarmiento.org
blogsite : https://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com

Posted by: robertgsarmiento | October 17, 2010

Dasmarinas Village House and Lot

here’s a newly renovated house and lot in makati’s posh subdivision, dasmarinas village that’s recently in the market for sale.   total lot area is 1132 square meters and floor area is 650 square meters.  two storey with four bedrooms with individual toilet and bath, den, pool, landscaped garden and garage good for four cars.   currently tenanted at Php 285T/mo.  owner’s price is Php 140M.  for further details, please call our office.  thanks and regards.

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 920 9064829 ( mobile )
email : roberts@surfshop.net.ph
blogsite : https://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com

Posted by: robertgsarmiento | October 14, 2010

Residential Properties for Lease

hello everyone,

here’s our list of condos and houses for lease for your reference.  for further details, please call our office.  thanks and regards.

CONDOMINIUM FOR LEASE

( prices are exclusive of association dues and vat )

BONIFACIO GLOBAL CITY

One Serendra                          135m2                  2br @ 110T/mo ++

Pacific Plaza Tower               298m2                  3br @ 190T/mo ++

Essensa Forbes                      290m2                  3br @ 165T/mo ++

Bonifacio Ridge                      115m2                  3br @ 90T/mo ++

One McKinley Place              186m2                  3br @ 140T/mo ++

Regent Parkway                      307m2                  3br @ 170T/mo ++

AYALA AVENUE

Pacific Plaza                           285m2                  3br @ 130T/mo ++

Twin Tower                            271m2                  3br @ 100T/mo ++

Urdaneta Apartment              271m2                  3br @ 95T/mo ++

Ritz Tower                              268m2                  3br @ 110T/mo ++

ROCKWELL

Amorsolo West                      60m2                    studio @ 60T/mo all in

Rizal                                        268m2                  3br @ 165T/mo ++

Manansala                               55m2                    1br @ 55T/mo ++

LEGASPI VILLAGE

One Legazpi Park                  60m2                    1br @ 55T ++

TRAG, Laguna Tower           186m2                  3br @ 160T ++

TRAG, San Lorenzo              151m2                  3br @ 155T ++

TRAG, Laguna Tower           147m2                  2br @ 150T ++

HOUSE & LOT FOR LEASE

Forbes Park @ 350T, 5br, pool                         Valle Verde @ 100T, 4br

Dasmarinas @ 150T, 3br, pool                          Valle Verde @ 100T, 3br, den, pool

Dasmarinas @ 160T, 6br, pool                          Corinthian @ 190T, 4br, den, pool

Magallanes @ 110T, 5br                                       Greenmeadows @ 200T, 6br

Magallanes @ 70T, 4br                                         San Lorenzo @ 90T, 4br, den

robert

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 2 5708882 ( line 2 )
+63 2 5707973 ( line 3 )
+63 920 9064829 ( mobile )
email : roberts@surfshop.net.ph
blogsite : https://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com
website : http://groverockwell.wordpress.com
website:  http://ofwproperties.wordpress.com
website : http://bechayv.wordpress.com
website : http://ningngo.wordpress.com
Posted by: robertgsarmiento | October 12, 2010

San Miguel Village, Makati Investment

here’s a rare duplex for sale in san miguel village, makati that’s recently in the market for sale.  excellent investment as both units are currently leased out.  total lot area is 355 square meters.  each unit has three bedrooms, two toilet and bath, living / dining room and a car garage.  owner’s price for both duplexes is Php 24M.  for further details, please call our office.  thanks and regards.

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 2 5708882 ( line 2 )
+63 2 5707973 ( line 3 )
+63 920 9064829 ( mobile )
email : roberts@surfshop.net.ph
blogsite : https://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com
website : http://groverockwell.wordpress.com

Posted by: robertgsarmiento | October 11, 2010

One Salcedo Place – Rare 3br unit for Sale

here’s a rare unit available at one of ayala land’s inc. primest development, one salcedo place, salcedo village, makati.  this well maintained 186 square meter unit which faces the park has three bedrooms with individual toilet and bath, spacious living room, dining room, kitchen, service area, maid’s room with bathroom, and two parking slots.  for those that are not familiar with the location, velasquez park otherwise known as salcedo park has a weekly saturday market wherein all goods from flowers, baskets, wine and fine gourmet food are available to the market.   owner’s price is Php 18.5M.  for further details on this opportunity, please call our office.  thanks and warmest regards.

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 2 5708882 ( line 2 )
+63 2 5707973 ( line 3 )
+63 920 9064829 ( mobile )
email : roberts@surfshop.net.ph
blogsite : https://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com
website : http://groverockwell.wordpress.com
website:  http://ofwproperties.wordpress.com
website : http://bechayv.wordpress.com
website : http://ningngo.wordpress.com
Posted by: robertgsarmiento | October 10, 2010

Addition Hills House & Lot for Sale

here’s a custom built house located in addition hills, mandaluyong.  total lot area is 691 square meters and floor area is 900 square meters.   this meticulously built 3 storey house owned by a foreigner has 2 electric gates on the ground floor since it’s a corner property good for 4 car garage each thus a total of 8 cars can be parked.  also at the ground floor is an office with a full bathroom, driver’s quarters with bathroom, and small room used for his secretary.

on the second floor, you will see the chinese inspired four corner architectural design wherein the middle area is just open.  at this level is also the living room, home theater, powder room, kitchen with high end appliances, dining room with custom built furnitures overlooking the koi pond with waterfalls, electrical room, aquarium, maid’s quarters with bathroom, spacious service area, and a sizeable area where the generator used to be.

on the 3rd level are the 4 bedrooms with individual toilet and bath, guest room, and a spacious area good for an entertainment or small office.  the master’s bedroom has a balcony and the bathroom even has a steam room.

orientation of the property is southeast.  the house took a year and a half to build and is now three years old.  very well maintained with excellent ventilation.  as mentioned earlier, some furnitures were custom built by a national artist and only high end materials were used from pipes all the way up to the roof.  should this house been built inside one of the villages in greenhills, it could easily sell for Php 75M.  serious inquiries only please.  owner’s price is Php 52M.  for further details, please call my office.  thanks and regards.

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 2 5708882 ( line 2 )
+63 2 5707973 ( line 3 )
+63 920 9064829 ( mobile )
email : roberts@surfshop.net.ph
blogsite : https://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com
website : http://groverockwell.wordpress.com
website:  http://ofwproperties.wordpress.com
website : http://bechayv.wordpress.com
website : http://ningngo.wordpress.com
Posted by: robertgsarmiento | September 16, 2010

Property Requirements – September 2010

We are currently reprenting the following personal clients in need of the properties listed below :

Property Requirements : September 2010

My clients are looking to BUY the following properties :

1)       Alexandra unit @ 14M – 15M, with or w/out income

2)       Townhouse unit at Valle Verde 5,6 @ 9M-12M

3)       Luntala Unit @ 14M-15M

4)       Pacific Plaza Tower, North – A or D unit, with or w/out income

5)       Forbes Park – 2500-3000m2 @ 85T/m2

6)       Warehouse @ 30M-50M, w/lot of 1300m2 and floor area of 1000m2, QC, Mand, Taguig, Pasig

7)       Warehouse @ Manila, w/lot of 3000m2 and floor area of 2000m2 @ 15T/m2

8)       Lot for 4 storey office building, 500m2 @ 10M, Mandaluyong, Taguig, APHOVAI

9)       Bel-Air 1,2,3,4 and San Lorenzo – old house @ 35M-45M

10)   Lot or H&L @ Loyola Hts, Xavierville, St. Ignatius, Monte Vista, Scout, New Manila @ 15M-40M

11)   Lot at Kapitolyo, San Juan, Southbay, Hillsborough

12)   Boni Ridge, Serendra, One Mckinley, 2-3br @ 10M – 13M

13)   Lots at White Plains, St. Ignatius,Valle Verde, Acropolis, Blue Ridge @ 300-500m2, market value

14)   Lots, townhouse dev’t – Loyola Hts, Scout, Sta. Mesa Hts, Mand, San Juan, 400000m2

My clients are looking to LEASE the following properties :

1)       Warehouse – 1500m2 between Balintawak to Taguig

2)       Warehouse – 1000m2 for taxi garage

3)       Vacant lot ( 1000-1500m2 ) for gas station, main thoroughfare, 35 meter frontage

4)       Ground floor unit at Ortigas Center, 150-200m2 for retail space

5)       Restaurant sites – Ortigas Center, Makati, Quezon City, Manila, 100-200m2

6)       Commissary at Mandaluyong, Makati, QC, San Juan, Pasig

7)       Office space at Makati * Ortigas * Bonficio Global City, 500m2, must have bathroom in unit

Should you have a propertywe could offer, please email me at roberts@surfshop.net.ph or call our office at

+632 5708882 *  +632 5707973 * +632 7235405 * +632  725183

Finally, should you also need help or have a friend in need of selling or leasing their property, please let me know.

Thank you always for your support.

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 2 5708882 ( line 2 )
+63 2 5707973 ( line 3 )
+63 920 9064829 ( mobile )
email : roberts@surfshop.net.ph
blogsite : https://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com

Posted by: robertgsarmiento | September 11, 2010

Dept of Energy Evaluating 18 Offers for Ocean Power

MANILA, Philippines – At least 18 new proposals have been filed with the Department of Energy (DoE) by firms seeking to harness ocean currents for power generation as part of the the country’s bid to increase its renewable energy sources.

Energy Secretary Jose Rene Almendras said this is a welcome development and the department is now evaluating at these proposals to put up ocean or marine-powered technologies in the country’s waters.

“We’re happy to now see 18 ocean technology applicants. Ideally, we want to see a lot more because we have so much sea and islands here,” he said.

DoE assistant secretary Mario Marasigan said they are carefully studying these proposals as these are relatively new technology.

“We still have to evaluate. We have to make sure that their technologies will work here. We need to look at economics and the financials. We need to look at the costs of energy to see if it will be beneficial to the government and the consumers,” Marasigan said.

But Marasigan agreed that ocean technology is very promising since “we are an archipelago. We have more water than land. So why not tap these resources if you have more waters than land.”

The DoE has already approved the plan of Deep Ocean Power Philippines Inc., joint venture between Filipino and American investors, to build the first ocean power facility in the country in 2012.

DOPPI is going to put two ocean-run power facilities in Panay and Mindoro with initial capacity of 10 to 20 megawatts (MW) each. It is so far the only ocean-based power technology approved by the DoE as part of the 87 service RE contracts signed by the department recently.

Last year, the DoE said it plans to develop 100 megawatts (MW) ocean thermal energy resource potential In San Jose, Antique. DoE data showed that this 100 MW project would need an investment of some $250 million.

Posted by: robertgsarmiento | September 10, 2010

Value Added Tax – Frequently Asked Questions

I. General VAT Queries

Who are liable to register as VAT taxpayers?
Any person who, in the course of trade or business, sells, barters or exchanges goods or properties or engages in the sale or exchange of services shall be liable to register if:
  1. His gross sales or receipts for the past twelve (12) months, other than those that are exempt under Section 109 (A) to (U), have exceeded One Million Five Hundred Thousand Pesos (P1,500,000.00): or
  2. There are reasonable grounds to believe that his gross sales or receipts for the next twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will exceed One Million Five Hundred Thousand Pesos (P1,500,000.00).
When is a new VAT taxpayer required to apply for registration and pay the registration fee?
New VAT taxpayers shall apply for registration as VAT Taxpayers and pay the corresponding registration fee of five hundred pesos (P500.00) using BIR Form No. 0605 for every separate or distinct establishment or place of business before the start of their business following existing issuances on registration.

Thereafter, taxpayers are required to pay the annual registration fee of five hundred pesos (P500.00) not later than January 31, every year.

What compliance activities should a VAT taxpayer, after registration as such, do promptly or periodically?
The following compliance activities must be performed by a VAT-registered taxpayer:
  1. Pay the annual registration fee of P500.00 for every place of business or establishment that generates sales;
  2. Register the books of accounts of the business/occupation/calling, including practice of profession, before using the same;
  3. Register the sales invoices and official receipts as VAT-invoices or VAT official receipts for use on transactions subject to VAT. (If there are other transaction not subject to VAT, a separate set of non-VAT invoices or non-VAT official receipts need to be registered for use on transactions not subject to VAT);
  4. Filing of the Monthly Value-added Tax Declaration on or before the 20th day following the end of the taxable month (for manual filers)/on or before the prescribed due dates enunciated in RR No. 16-2005 (for e-filers) using BIR Form No. 2550M and of the Quarterly VAT Return on or before the 25th day following the end of the taxable quarter using BIR Form No. 2550Q, reflecting therein gross receipts (for seller of service)/ gross sales (for seller of goods) and output tax (VAT on sales); purchases of goods and services made in the course of trade or business/exercise of profession and input tax (VAT on purchases), other allowable tax credits as in the case of advance VAT payment and VAT withheld by government payors, and VAT payable or excess input VAT, whichever is applicable, with the accredited agent banks (AABs) of the BIR or Revenue Collection Officers (RCOs) of the BIR (in areas without AAB), for returns with payment, or with the RDO/LTDO having jurisdiction over the taxpayer (home RDO/LTDO), for returns without payment. (The monthly VAT Declaration and the Quarterly VAT Return shall reflect the consolidated total for all the taxable lines of activity and all the establishments – head office and branches);
  5. Submit with the RDO/LTDO having jurisdiction over the taxpayer, on or before the deadline set in the filing of the Quarterly VAT Return, the soft copy of the Quarterly Schedule of Monthly Sales and Output Tax (if the quarterly sales exceed P2,500,000.00), and the soft copy of the Quarterly Schedule of Monthly Domestic Purchases and Input Tax/ the soft copy of the Schedule of Transactional/Individual Importation ( if the quarterly total purchases exceed P1,000,000.00), reflecting therein the required data prescribed under existing revenue issuances.
How do we determine the main or principal business of a taxpayer who is engaged in mixed business activities?

In determining the main or principal business of a taxpayer, we apply the predominance test. Under this test, if more than fifty (50%) of its gross sales and/or gross receipts comes from its business/es subject to VAT, its main/principal business falls within the VAT system making its status as a VAT person. Otherwise, he can not be considered as a VAT person eligible for the election provided for under Section 109(2) of the Tax Code.

What is the liability of a taxpayer becoming liable to VAT and did not register as such?

Any person who becomes liable to VAT and fails to register as such shall be liable to pay the output tax as if he is a VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly registered.

Who may opt to register as VAT and what will be his liability?
  1. Any person who is VAT-exempt under Sec. 4.109-1 (B) (1) (V) not required to register for VAT may, in relation to Sec. 4.109-2, elect to be VAT-registered by registering with the RDO that has jurisdiction over the head office of that person, and pay the annual registration fee of P500.00 for every separate and distinct establishment.
  2. Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed transactions) may opt that the VAT apply to his transactions which would have been exempt under Section 109(1) of the Tax Code, as amended [Sec. 109(2)].
  3. Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do not exceed ten million pesos (P10,000,000.00) derived from the business covered by the law granting the franchise may opt for VAT registration. This option, once exercised, shall be irrevocable. (Sec. 119, Tax Code).
  4. Any person who elects to register under optional registration shall not be allowed to cancel his registration for the next three (3) years.

The above-stated taxpayers may apply for VAT registration not later than ten (10) days before the beginning of the calendar quarter and shall pay the registration fee unless they have already paid at the beginning of the year. In any case, the Commissioner of Internal Revenue may, for administrative reason deny any application for registration. Once registered as a VAT person, the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day of the month following registration.

What are the instances when a VAT-registered person may cancel his VAT registration?
  1. If he makes a written application and can demonstrate to the commissioner’s satisfaction that his gross sales or receipts for the following twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will not exceed one million five hundred thousand pesos (P1,500,000.00); or
  2. If he has ceased to carry on his trade or business, and does not expect to recommence any trade or business within the next twelve (12) months.
When will the cancellation for registration be effective?

The cancellation for registration will be effective from the first day of the following month the cancellation was approved.

What is the invoicing/ receipt requirement of a VAT-registered person?
A VAT registered person shall issue :
  1. A VAT invoice for every sale, barter or exchange of goods or properties; and
  2. A VAT official receipt for every lease of goods or properties and for every sale, barter or exchange of services.
May a VAT-registered person issue a single invoice/ receipt involving VAT and Non-VAT transactions?

Yes. He may issue a single invoice/ receipt involving VAT and non-VAT transactions provided that the invoice or receipt shall clearly indicate the break-down of the sales price between its taxable, exempt and zero-rated components and the calculation of the Value-Added Tax on each portion of the sale shall be shown on the invoice or receipt.

May a VAT- registered person issue separate invoices/ receipts involving VAT and Non-VAT transactions?

Yes. A VAT registered person may issue separate invoices/ receipts for the taxable, exempt, and zero-rated component of its sales provided that if the sales is exempt from value-added tax, the term “VAT-EXEMPT SALE” shall be written or printed prominently on the invoice or receipt and if the sale is subject to zero percent (0%) VAT, the term “ZERO-RATED SALE” shall be written or printed prominently on the invoice or receipt.

How is the Value-Added Tax presented in the receipt/ invoice?
The amount of the tax shall be shown as a separate item in the invoice or receipt.

Sample:


Sales Price
P100,000.00


VAT
12,000.00


Invoice Amount
P112,000.00

What is the information that must be contained in the VAT invoice or VAT official receipt?
  1. Name of Seller
  2. Business Style of the Seller
  3. Business Address of the Seller
  4. Statement that the seller is a VAT-registered person, followed by his TIN
  5. Name of Buyer
  6. Business Style of Buyer
  7. Address of Buyer
  8. TIN of buyer, if VAT- registered and amount exceed P1,000.00
  9. Date of transaction
  10. Quantity
  11. Unit cost
  12. Description of the goods or properties or nature of the service
  13. Purchase price plus the VAT, provided that:

    • The amount of tax shall be shown as a separate item in the invoice or receipt;
    • If the sale is exempt from VAT, the term “VAT-EXEMPT SALE” shall be written or printed prominently on the invoice or receipt;
    • If the sale is subject to zero percent (0%) VAT, the term “ZERO-RATED SALE” shall be written or printed prominently on the invoice receipt; and
    • If the sale involves goods, properties or services some of which are subject to and some of which are zero-rated or exempt from VAT, the invoice or receipt shall clearly indicate the breakdown of the sales price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt.
  14. Authority to Print Receipt Number at the lower left corner of the invoice or receipt.
What is the liability of a taxpayer not registered as VAT and issues a VAT invoice/ receipt?

The non-VAT registered person shall, in addition to paying the percentage tax applicable to his transactions, be liable to VAT imposed in Section 106 or 108 of the Tax Code without the benefit of any input tax credit plus 50% surcharge on the VAT payable (output tax). If the invoice/ receipts contain the required information, purchaser shall be allowed to recognize an input tax credit.

What is the liability of a VAT-registered person in the issuance of a VAT invoice/ receipt for VAT-exempt transactions?

If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-exempt transaction but fails to display prominently on the invoice or receipt the words “VAT-EXEMPT SALE”, the transaction shall become taxable and the issuer shall be liable to pay the VAT thereon. The purchaser shall be entitled to claim an input tax credit on his purchase.

What is “output tax”?

Output tax means the VAT due on the sale, lease or exchange of taxable goods or properties or services by any person registered or required to register under Section 236 of the Tax Code.

What is “input tax”?

Input tax means the VAT due on or paid by a VAT-registered on importation of goods or local purchase of goods, properties or services, including lease or use of property in the course of his trade or business. It shall also include the transitional input tax determined in accordance with Section 111 of the Tax Code, presumptive input tax and deferred input tax from previous period.

What comprises “goods or properties”?
The term “goods or properties” shall mean all tangible and intangible objects, which are capable of pecuniary estimation and shall include, among others:
  1. Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business;
  2. The right or the privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;
  3. The right or privilege to use in the Philippines of any industrial, commercial or scientific equipment;
  4. The right or the privilege to use motion picture films, films, tapes and discs; and
  5. Radio, television, satellite transmission and cable television time.
What comprises “sale or exchange of services”?
The term “sale or exchange of services” means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, whether in kind or in cash, including those performed or rendered by the following:
  1. Construction and service contractors;
  2. Stock, real estate, commercial, customs and immigration brokers;
  3. Lessors of property, whether personal or real;
  4. Persons engaged in warehousing services;
  5. Lessors or distributors of cinematographic films;
  6. Persons engaged in milling, processing, manufacturing or repacking goods for others;
  7. Proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts, theatres, and movie houses;
  8. Proprietors or operators of restaurants, refreshment parlors, cafes, and other eating places, including clubs and caterers;
  9. Dealers in securities;
  10. Lending investors;
  11. Transportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire and other domestic common carriers by land relative to their transport of goods or cargoes;
  12. Common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines;
  13. Sales of electricity by generation, transmission, and/or distribution companies;
  14. Franchise grantees of electric utilities, telephone and telegraph, radio and/or television broadcasting and all other franchise grantees, except franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do not exceed Ten Million Pesos (P10,000,000.00), and franchise grantees of gas and water utilities;
  15. Non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies; and
  16. Similar services regardless of whether or not the performance thereof calls for the exercise of use of the physical or mental faculties.

The phrase “sale or exchange of services” shall likewise include:

  1. The lease of use of or the right or privilege to use any copyright, patent, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;
  2. The lease or the use of, or the right to use of any industrial, commercial or scientific equipment;
  3. The supply of scientific, technical, industrial or commercial knowledge or information;
  4. The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or enjoyment of any such property, or right or any such knowledge or information;
  5. The supply of services by a nonresident person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from such non-resident person;
  6. The supply of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme;
  7. The lease of motion picture films, films, tapes and discs; and
  8. The lease or the use of or the right to use radio, television, satellite transmission and cable television time.
What is a zero-rated sale?

It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT pursuant to Sections 106 (A) (2) and 108 (B) of the Tax Code. It is a taxable transaction for VAT purposes, but shall not result in any output tax. However, the input tax on purchases of goods, properties or services, related to such zero-rated sales, shall be available as tax credit or refund in accordance with RR No. 16-2005.

What transactions are considered as zero-rated sales?
The following services performed in the Philippines by VAT-registered person shall be subject to zero percent (0%) rate:
  1. Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
  2. Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
  3. Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;
  4. Services rendered to persons engaged in international shipping or air transport operations, including leases of property for use thereof; Provided, however, that the services referred to herein shall not pertain to those made to common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines, the same being subject to twelve percent (12%) VAT under Sec. 108 of the Tax Code starting Feb. 1, 2006;
  5. Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceeds seventy percent (70%) of total annual production;
  6. Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country. Gross receipts of international air carriers doing business in the Philippines and international sea carriers doing business in the Philippines are still liable to a percentage tax of three percent (3%) based on their gross receipts as provided for in Sec. 118 of the Tax Code but shall not be liable to VAT; and
  7. Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other shipping sources using technologies such as fuel cells and hydrogen fuels; Provided, however that zero-rating shall apply strictly to the sale of power or fuel generated through renewable sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power .
The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:
  1. Export sales
    • The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported, paid in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
    • The sale of raw materials or packaging materials to a non-resident buyer for delivery to as resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer’s goods, paid for in acceptable foreign currency, and accounted for in accordance with the rules and regulations of the BSP;
    • The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production;
    • Sale of gold to the BSP;
    • Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws; and
    • The sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations; Provided, that the same is limited to goods, supplies, equipment and fuel pertaining to or attributable to the transport of goods and passengers from a port in the Philippines directly to a foreign port, or vice-versa without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad, or to load passengers and/or cargoes bound for abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than the mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to twelve percent (12%) output VAT.
  1. Foreign Currency Denominated Sales

The sale to a non-resident of goods, except those mentioned in Sections 149 and 150 of the Tax Code, assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP.

  1. Sales to Persons or Entities Deemed Tax-exempt under Special Law or International Agreement

Sale of goods or property to persons or entities who are tax-exempt under special laws or international agreements to which the Philippines is a signatory, such as, Asian Development Bank (ADB), International Rice Research Institute (IRRI), etc.

Where will taxpayers file their applications for VAT zero-rating?

Taxpayers shall file their application directly with the Audit Information, Tax Exemption and Incentives Division (AITEID) under the Assessment Service, or with the LTAID I and II, BIR National Office, as the case may be.

What is a Contractor’s Final Payment Release Certificate and where should taxpayers file their application for this?

The Contractor’s Final Payment Release Certificate is issued by the BIR before a government contractor is fully paid for his contract with the government. Taxpayers may file their application at the BIR National Office at the Audit Information, Tax Exemption and Incentives Division (AITEID)

What transactions are considered deemed sales?
The following transactions are considered as deemed sales:
  1. Transfer, use or consumption, not in the course of business, of goods or properties originally intended for sale or for use in the course of business. Transfer of goods or properties not in the course of business can take place when VAT-registered person withdraws goods from his business for his personal use;
  2. Distribution or transfer to:

    • Shareholders or investors as share in the profits of the VAT-registered person; or
    • Creditors in payment of debt or obligation
  1. Consignment of goods if actual sale is not made within sixty (60) days following the date such goods were consigned. Consigned goods returned by the consignee within the 60-day period are not deemed sold;
  2. Retirement from or cessation of business, with respect to all goods on hand, whether capital goods, stock-in-trade, supplies or materials as of the date of such retirement or cessation, whether or not the business is continued by the new owner or successor. The following circumstances shall, among others, give rise to transactions “deemed sale”;
    • Change of ownership of the business. There is a change in the ownership of the business when a single proprietorship incorporated; or the proprietor of a single proprietorship sells his entire business.
    • Dissolution of a partnership and creation of a new partnership which takes over the business.
What is VAT-exempt sale?
It is a sale of goods, properties or service and the use or lease of properties which is not subject to output tax and whereby the buyer is not allowed any tax credit or input tax related to such exempt sale.
What are the VAT-exempt transactions?
  1. Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefore;
  2. Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals considered as pets);
  3. Importation of personal and household effects belonging to residents of the Philippines returning from abroad and non-resident citizens coming to resettle in the Philippines; Provided, that such goods are exempt from custom duties under the Tariff and Customs Code of the Philippines;
  4. Importation of professional instruments and implements, wearing apparel, domestic animals, and personal household effects (except any vehicle, vessel, aircraft, machinery and other goods for use in the manufacture and merchandise of any kind in commercial quantity) belonging to persons coming to settle in the Philippines, for their own use and not for sale, barter or exchange, accompanying such persons, or arriving within ninety (90) days before or after their arrival, upon the production of evidence satisfactory to the Commissioner of Internal Revenue, that such persons are actually coming to settle in the Philippines and that the change of residence is bonafide;
  5. Services subject to percentage tax under Title V of the Code, as amended;
  6. Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar cane into raw sugar;
  7. Medical, dental, hospital and veterinary services except those rendered by professionals;
  8. Educational services rendered by private educational institutions duly accredited by the Department of Education (DepED), the Commission on Higher Education (CHED) and the Technical Education and Skills Development Authority (TESDA) and those rendered by the government educational institutions;
  9. Services rendered by individuals pursuant to an employer-employee relationship;
  10. Services rendered by regional or area headquarters established in the Philippines by multinational corporations which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive income from the Philippines;
  11. Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws except those granted under P.D. No. 529 – Petroleum Exploration Concessionaires under the Petroleum Act of 1949;
  12. Sales by agricultural cooperatives duly registered and in good standing with the Cooperative Development Authority (CDA) to their members, as well as of their produce, whether in its original state or processed form, to non-members, their importation of direct farm inputs, machineries and equipment, including spare parts thereof, to be used directly and exclusively in the production and/or processing of their produce;
  13. Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered and in good standing with the Cooperative Development Authority;
  14. Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with and in good standing with CDA; Provided, that the share capital contribution of each member does not exceed Fifteen Thousand Pesos (P15,000.00) and regardless of the aggregate capital and net surplus ratably distributed among the members;
  15. Export sales by persons who are not VAT-registered;
  16. The following sales of real properties are exempt from VAT, namely:
    1. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business;
    2. Sale of real properties utilized for low-cost housing as defined by RA No. 7279, otherwise known as the “Urban Development and Housing Act of 1992” and other related laws, such as RA No. 7835 and RA No. 8763;
    3. Sale of real properties utilized for specialized housing as defined under RA No. 7279, and other related laws, such as RA No. 7835 and RA No. 8763, wherein price ceiling per unit is P225,000.00 or as may from time to time be determined by the HUDCC and the NEDA and other related laws;
    4. Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and below, or house and lot and other residential dwellings valued at Two Million Five Hundred Thousand Pesos (P2,500,000.00) and below where the instrument of sale/ transfer/ disposition was executed on or after July 1, 2005; Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amounts stated herein shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office (NSO); Provided, further, that such adjustment shall be published through revenue regulations to be issued not later than March 31 of each year.
  17. Lease of residential units with a monthly rental per unit not exceeding Ten Thousand Pesos (P10,000.00), regardless of the amount of aggregate rentals received by the lessor during the year; Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amount of P10,000.00 shall be adjusted to its present value using the Consumer Price Index, as published by the NSO;
  18. Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements;
  19. Sale, importation or lease of passenger or cargo vessels and aircraft, including engine equipment and spare parts thereof for domestic or international transport operations; Provided, that the exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall be limited to those of one hundred fifty (150) tons and above, including engine and spare parts of said vessels; Provided, further, that the vessels to be imported shall comply with the age limit requirement, at the time of acquisition counted from the date of the vessel’s original commissioning, as follows: (a) for passenger and/or cargo vessel, the age limit is fifteen (15) years old, (b) for tankers, the age limit is ten (10) year old, and (c) for high-speed passengers crafts, the age limit is five (5) years old; Provided, finally, that exemption shall be subject to the provisions of Section 4 of Republic Act No. 9295, otherwise known as “The Domestic Shipping Development Act of 2004”;
  20. Importation of life-saving equipment, safety and rescue equipment and communication and navigational safety equipment, steel plates and other metal plates including marine-grade aluminum plates, used for shipping transport operations; Provided, that the exemption shall be subject to the provisions of Section 4 of Republic Act No. 9295, otherwise known as “The Domestic Shipping Development Act of 2004”.
  21. Importation of capital equipment, machinery, spare parts, life-saving and navigational equipment, steel plates and other metal plates including marine-grade aluminum plates to be used in the construction, repair, renovation or alteration of any merchant marine vessel operated or to be operated in the domestic trade. Provided, that the exemption shall be subject to the provisions of Section 19 of Republic Act No. 9295, otherwise known as the “The Domestic Shipping Development Act of 2004”.
  22. Importation of fuel, goods and supplies engaged in international shipping or air transport operations; Provided, that the said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port, or vice-versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated form abroad, or to load passengers and/or cargoes bound for abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other that the mentioned in the paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT;
  23. Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries, such as money changers and pawnshops, subject to percentage tax under Sections 121 and 122, respectively of the Tax Code; and
  24. Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One Million Five Hundred Thousand Pesos (P1,500,000.00). Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amount of P1,500,000.00 shall be adjusted to its present value after using the Consumer Price Index, as published by the NSO.
What are the previously exempt transactions that are now subject to VAT?
  • Medical services such as dental & veterinary services rendered by professionals;
  • Legal services;
  • Non-food agricultural products;
  • Marine and forest products;
  • Cotton and cotton seeds;
  • Coal and natural gas;
  • Petroleum products;
  • Passenger cargo vessels of more than 5,000 tons;
  • Work of art, literary works, musical composition;
  • Generation, transmission and distribution of electricity including that of electric cooperatives;
  • Sale of residential lot valued at more than P1,500,000.00;
  • Sale of residential house & lot/dwellings valued at more than P2,500,000.00;
  • Lease of residential unit with a monthly rental of more than P10,000;

II. RELIEF-Related Queries

What is “RELIEF”?
RELIEF means Reconciliation of Listing for Enforcement. It supports the third party information program of the Bureau through the cross referencing of third party information from the taxpayers’ Summary Lists of Sales and Purchases prescribed to be submitted on a quarterly basis.
Who are required to submit Summary List of Sales?
VAT taxpayers with quarterly total sales/receipts (net of VAT), exceeding Two Million Five Hundred Thousand Pesos (P2,500,000.00) are required to submit a Summary List of Sales.
Who are required to submit Summary List of Purchases?
VAT taxpayers with quarterly total purchases (net of VAT) of goods and services, including importation exceeding One Million Pesos (P1,000,000.00) are required to submit Summary List of Purchases.
What are the Summary Lists required to be submitted?
  • Quarterly Summary List of Sales to Regular Buyers/ Customers Casual Buyers/ Customers and Output Tax
  • Quarterly Summary of List of Local Purchases and Input tax; and
  • Quarterly Summary List of Importation.
When is the deadline for submission of the above Summary Lists?
The Summary List of Sales/Purchases, whichever is applicable, shall be submitted on or before the twney-fifth (25th) day of the month following the close of the taxable quarter — calendar quarter or fiscal quarter.

What are the penalties for failure to submit the Summary Lists?

  • For failure to file, keep or supply a statement, list or information required on the date prescribed shall pay and administrative penalty of One Thousand Pesos (P1,000.00) for each such failure, unless it is shown that such failure is due to reasonable cause and not to willful neglect; and
  • An aggregate amount to be imposed for all such failures during a taxable year shall not exceed Twenty-Five Thousand Pesos (P25,000.00).

III. What is the treatment for Withholding of VAT on Government Money Payments?

  • The goverment or any of its political subdivisions, instrumentalities or agencies, including government-owned or controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and/or services taxed at twelve percent (12%) VAT pursuant to Sections 106 and 108 of the Tax Code, deduct and withhold a Final VAT due at the rate of five percent (5%) of the gross payment.

The five percent (5%) final VAT withholding rate shall represent the net VAT payable of the seller.  The remaining seven percent (7%) effectively accounts for the standard input VAT for sales of goods or services to government or any of its political subdivisions, instrumentalities or agencies including GOCCs in lieu of the actual input VAT directly attributable or ratably apportioned to such sales.  Should actual input VAT attributable to sales to government exceeds seven percent (7%) of gross payments, the excess may form part of the sellers’ expense or cost.  On the other hand, if actual input VAT attributable to sale to government is less than seven percent (7%) of gross payment, the difference must be closed to expense or cost.

  • The government or any of its political subdivisions, instrumentalities or agencies including GOCCs, as well as private corporation, individuals, estates and trusts, whether large or non-large taxpayers, shall withhold twelve percent (12%) VAT with respect to the following payments:
    1. Lease or use of properties or property rights owned by non-residents; and
    2. Other services rendered in the Philippines by non-residents.

IV. In what grounds can the Commissioner of Internal Revenue suspend the business operations of a taxpayer?

The Commissioner or his authorized representative is empowered to suspend the business operations and temporarily close the business establishment of any person for any of the following violations:

(a) In the case of a VAT-registered Person:

  • Failure to issue receipts or invoices;
  • Failure to file a value-added-tax return as required under Section 114; or
  • Understatement of taxable sales or receipts by thirty percent (30%)  or more of his correct taxable sales or receipts for the taxable quarter.

(b) Failure to any Person to Register as Required under Section 236

  • The temporary closure of the establishment shall be for the duration of not less than five (5) days and shall be lifted only upon compliance with whatever requirements prescribed by the Commissioner in the closure order.


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Posted by: robertgsarmiento | September 9, 2010

Portugal’s Green Energy Revolution !

Regular readers of this site know that a great deal of our Features and In the News items involve the interrelated issues of energy / environment / infrastructure / and economic growth.

Most of those pieces are a bit sad to read, because they show how ugly this crucial nexus is, besotted by corruption and indifference on the part of the powerful, resulting in painful & often unnecessary suffering for the powerless.

It is therefore a tremendous pleasure to present the story below, because it shows not only that successful outcomes CAN be achieved when people work together, but also that the application of intellectual resources to real-world problems is an absolute necessity, both in principle and in general, and especially during times of protracted crisis, such as the one we are currently experiencing.

So while this story is definitely long – and, in certain ways, complicated – it’s definitely worth spending time with, because it reveals so much about what COULD be, and not simply about what CAN’T BE.

Five years ago, the leaders of sun-scorched, wind-swept Portugal made a bet:

To reduce their dependence on imported fossil fuels, they embarked on an array of ambitious renewable energy projects — primarily harnessing the country’s wind and hydropower, but also its sunlight and ocean waves.

The result ???

Today, Lisbon’s trendy bars, Porto’s factories and the Algarve’s glamorous resorts are powered substantially by clean energy.

Nearly 45 percent of the electricity in Portugal’s grid will come from renewable sources this year, up from 17 percent just five years ago.

Land-based wind power — this year deemed “potentially competitive” with fossil fuels by the International Energy Agency in Paris — has expanded sevenfold in that time.

And Portugal expects in 2011 to become the first country to inaugurate a national network of charging stations for electric cars.

“I’ve seen all the smiles — you know: It’s a good dream. It can’t compete. It’s too expensive,” said Prime Minister José Sócrates, recalling the way Silvio Berlusconi, the Italian prime minister, mockingly offered to build him an electric Ferrari.

Mr. Sócrates added, “The experience of Portugal shows that it is possible to make these changes in a very short time.”

The oil spill in the Gulf of Mexico has renewed questions about the risks and unpredictable costs of America’s unremitting dependence on fossil fuels.

While Portugal’s experience shows that rapid progress is achievable, it also highlights some of the costs of such a transition.

Portuguese households have long paid about twice what Americans pay for electricity, and prices have risen 15 percent in the last five years, probably partly because of the renewable energy program, the International Energy Agency says.

Although a 2009 report by the agency called Portugal’s renewable energy transition a “remarkable success,” it added, “It is not fully clear that their costs, both financial and economic, as well as their impact on final consumer energy prices, are well understood and appreciated.”

Indeed, complaints about rising electricity rates are a mainstay of pensioners’ gossip here.

Mr. Sócrates, who after a landslide victory in 2005 pushed through the major elements of the energy makeover over the objections of the country’s fossil fuel industry, survived last year’s election only as the leader of a weak coalition.

“You cannot imagine the pressure we suffered that first year,” said Manuel Pinho, Portugal’s minister of economy and innovation from 2005 until last year, who largely masterminded the transition, adding,

“Politicians must take tough decisions.”

Still, aggressive national policies to accelerate renewable energy use are succeeding in Portugal and some other countries, according to a recent report by IHS Emerging Energy Research of Cambridge, Mass., a leading energy consulting firm.

By 2025, the report projected, Ireland, Denmark and Britainwill also get 40 percent or more of their electricity from renewable sources; if power from large-scale hydroelectric dams, an older type of renewable energy, is included, countries like Canada and Brazil join the list.

The United States, which last year generated less than 5 percent of its power from newer forms of renewable energy, will lag behind at 16 percent (or just over 20 percent, including hydroelectric power), according to IHS.

To force Portugal’s energy transition, Mr. Sócrates’s government restructured and privatized former state energy utilities to create a grid better suited to renewable power sources.

To lure private companies into Portugal’s new market, the government gave them contracts locking in a stable price for 15 years — a subsidy that varied by technology and was initially high but decreased with each new contract round.

Compared with the United States, European countries have powerful incentives to pursue renewable energy.

Many, like Portugal, have little fossil fuel of their own, and the European Union’s emissions trading system discourages fossil fuel use by requiring industry to essentially pay for excessive carbon dioxide emissions.

Portugal was well poised to be a guinea pig because it has large untapped resources of wind and river power, the two most cost-effective renewable sources.

Government officials say the energy transformation required no increase in taxes or public debt, precisely because the new sources of electricity, which require no fuel and produce no emissions, replaced electricity previously produced by buying and burning imported natural gas, coal and oil.

By 2014 the renewable energy program will allow Portugal to fully close at least two conventional power plants and reduce the operation of others.

“So far the program has placed no stress on the national budget” and has not created government debt, said Shinji Fujino, head of the International Energy Agency’s country study division.

If the United States is to catch up to countries like Portugal, energy experts say, it must overcome obstacles like:

·        a fragmented, outdated energy grid poorly suited to renewable energy;

·        a historic reliance on plentiful and cheap supplies of fossil fuels, especially coal;

·        powerful oil and coal industries that often oppose incentives for renewable development; and

·        energy policy that is heavily influenced by individual states.

The relative costs of an energy transition would inevitably be higher in the United States than in Portugal.

But as the expense of renewable power drops, an increasing number of countries see such a shift as worthwhile, said Alex Klein, research director, clean and renewable power generation, at IHS.

“The cost gap will close in the next decade, but what you get right away is an energy supply that is domestically controlled and safer,” Mr. Klein said.

Necessity Drives Change

Portugal’s venture was driven by necessity.

With a rising standard of living and no fossil fuel of its own, the cost of energy imports — principally oil and gas — doubled in the last decade, accounting for 50 percent of the country’s trade deficit, and was highly volatile.

The oil went to fuel cars, the gas mainly to electricity.

Unlike the United States, Portugal never depended heavily on coal for electricity generation because close and reliable sources of natural gas were available in North Africa, and Europe’s carbon trading system could make coal costly.

Portugal is now on track to reach its goal of using domestically produced renewable energy, including large-scale hydropower, for 60 percent of its electricity and 31 percent of its total energy needs by 2020, with total energy needs defined as including purposes other than generating electricity, like heating homes and powering cars.

In making the shift, Portugal has overcome longstanding concerns about reliability and high cost.

The lights go on in Lisbon even when the wind dies down at the vast two-year-old Alto Minho wind farm.

The country’s electricity production costs and consumer electricity rates — including the premium prices paid for power from renewable sources — are about average for Europe, but still higher than those in China or the United States, countries that rely on cheap coal.

Portugal says it has kept costs down by focusing heavily on the cheapest forms of renewable energy — wind and hydropower — and ratcheting down the premium prices it pays to lure companies to build new plants.

While the government estimates that the total investment in revamping Portugal’s energy structure will be about 16.3 billion euros, or $22 billion, that cost is borne by the private companies that operate the grid and the renewable plants and is reflected in consumers’ electricity rates.

The companies’ payback comes from the 15 years of guaranteed wholesale electricity rates promised by the government.

Once the new infrastructure is completed, Mr. Pinho said, the system will cost about 1.7 billion euros ($2.3 billion) a year less to run than it formerly did, primarily by avoiding natural gas imports.

A smaller savings will come from carbon credits Portugal can sell under the European Union’s carbon trading system: countries and industries that produce fewer emissions than allotted can sell permits to those that exceed their limits.

Mr. Fujino of the International Energy Agency said Portugal’s calculations might be optimistic.

But he noted that the country’s transition had also created a valuable new industry:

Last year, for the first time, it became a net power exporter, sending a small amount of electricity to Spain.

Tens of thousands of Portuguese work in the field.

Energias de Portugal, the country’s largest energy company, owns wind farms in Iowa and Texas, through its American subsidiary, Horizon Wind Energy.

Redesigning the System

A nationwide supply of renewable power requires a grid that can move electricity from windy, sunny places to the cities.

But a decade ago in Portugal, as in many places in the United States today, power companies owned not only power generating plants, but also transmission lines.

Those companies have little incentive to welcome new sources of renewable energy, which compete with their investment in fossil fuels.

So in 2000, Portugal’s first step was to separate making electricity from transporting it, through a mandatory purchase by the government of all transmission lines for electricity and gas at what were deemed fair market prices.

Those lines were then used to create the skeleton of what since 2007 has been a regulated and publicly traded company that operates the national electricity and natural gas networks.

Next, the government auctioned off contracts to private companies to build and operate wind and hydropower plants.

Bidders were granted rights based on the government-guaranteed price they would accept for the energy they produced, as well as on their willingness to invest in Portugal’s renewable economy, including jobs and other venture capital funds.

Some of the winners were foreign companies.

In the latest round of bidding, the price guaranteed for wind energy was in the range of the price paid for electricity generated by natural gas.

Such a drastic reorganization might be extremely difficult in the United States, where power companies have strong political sway and states decide whether to promote renewable energy.

Colorado recently legislated that 30 percent of its energy must come from renewable sources by 2020,but neighboring Utah has only weak voluntary goals.

Coal states, like Kentucky and West Virginia, have relatively few policies to encourage alternative energies.

In Portugal, said Mr. Pinho, the former economy minister, who will join Columbia University’s faculty, “the prime minister had an absolute majority.”

“He was very strong, and everyone knew we would not step back,” Mr. Pinho said.

A Flexible Network

Running a country using electricity derived from nature’s highly unpredictable forces requires new technology and the juggling skills of a plate spinner.

A wind farm that produces 200 megawatts one hour may produce only 5 megawatts a few hours later; the sun shines intermittently in many places; hydropower is plentiful in the rainy winter, but may be limited in summer.

Portugal’s national energy transmission company, Redes Energéticas Nacionais or R.E.N., uses sophisticated modeling to predict weather, especially wind patterns, and computer programs to calculate energy from the various renewable-energy plants.

Since the country’s energy transition, the network has doubled the number of dispatchers who route energy to where it is needed.

“You need a lot of new skills.

It’s a real-time operation, and there are far more decisions to be made — every hour, every second,” said Victor Baptista, director general of R.E.N.

“The objective is to keep the system alive and avoid blackouts.”

Like some American states, Portugal has for decades generated electricity from hydropower plants on its raging rivers.

But new programs combine wind and water:

Wind-driven turbines pump water uphill at night, the most blustery period; then the water flows downhill by day, generating electricity, when consumer demand is highest.

Denmark, another country that relies heavily on wind power, frequently imports electricity from its energy-rich neighbor Norway when the wind dies down; by comparison, Portugal’s grid is relatively isolated, although R.E.N. has greatly increased its connection with Spain to allow for energy sharing.

Portugal’s distribution system is also now a two-way street.

Instead of just delivering electricity, it draws electricity from even the smallest generators, like rooftop solar panels.

The government aggressively encourages such contributions by setting a premium price for those who buy rooftop-generated solar electricity.

“To make this kind of system work, you have to make a lot of different kinds of deals at the same time,” said Carlos Zorrinho, the secretary of state for energy and innovation.

To ensure a stable power base when the forces of nature shut down, the system needs to maintain a base of fossil fuel that can be fired up at will.

Although Portugal’s traditional power plants now operate many fewer hours than before, the country is also building some highly efficient natural gas plants.

To accommodate all this, Portugal needed new transmission lines from remote windy regions to urban centers.

Portugal began modernizing its grid a decade ago.

Accommodating a greater share of renewable power cost an additional 480 million euros, or about $637 million, an expense folded into electricity rates, according to R.E.N.

Last year, President Obama offered billions of dollars in grants to modernize the grid in the United States, but it is not clear that such a piecemeal effort will be adequate for renewable power.

Widely diverse permitting procedures in different states and the fact that many private companies control local fragments of the grid make it hard to move power over long distances, for example, from windy Iowa to users in Atlanta.

The American Society of Civil Engineers gave the United States’ grid a “D+,” commenting that it is “in urgent need of modernization.”

“A real smart national grid would radically change our technology profile,” said John Juech, vice president for policy analysis at Garten Rothkopf, a Washington consulting firm that focuses on energy.

“But it will be very costly, and the political will may not be there.”

A 2009 report commissioned by the Pew Center on Global Climate Change estimated that the United States would have to spend $3 billion to $4 billion a year for the next two decades to create a grid that could accommodate deriving 20 percent of electricity from wind power by 2030 — a 40 percent to 50 percent increase over current spending.

The Drawbacks

Energy experts consider Portugal’s experiment a success.

But there have been losers.

Many environmentalists object to the government plans to double the amount of wind energy, saying lights and noise from turbines will interfere with birds’ behavior.

Conservation groups worry that new dams will destroy Portugal’s cork-oak habitats.

Local companies complain that the government allowed large multinationals to displace them.

Until it became the site of the largest wind farm south of Lisbon,

Barão de São João was a sleepy village on the blustery Alentejo Coast, home to farmers who tilled its roller coaster hills and holiday homeowners drawn to cheap land and idyllic views.

Renewable energy has brought conflict.

“I know it’s good for the country because it’s clean energy and it’s good for the landowners who got money,but it hasn’t brought me any good,” said José Cristino, 48, a burly farmer harvesting grain with a wind turbine’s thrap-thrap-thrap in the background.

“I look at these things day and night.”

He said 90 percent of the town’s population had been opposed.

In Portugal, as in the United States, politicians have sold green energy programs to communities with promises of job creation.

Locally, the effect has often proved limited.

For example, more than five years ago, the isolated city of Moura became the site of Portugal’s largest solar plant because it “gets the most sun of anywhere in Europe and has lots of useless space,” said José Maria Prazeres Pós-de-Mina, the mayor.

But while 400 people built the Moura plant, only 20 to 25 work there now, since gathering sunlight requires little human labor.

Unemployment remains at 15 percent, the mayor said — though researchers, engineers and foreign delegations frequently visit the town’s new solar research center.

Indeed, Portugal’s engineers and companies are now global players.

Portugal’s EDP Renováveis, first listed on stock exchanges in 2008, is the third largest company in the world in wind-generated electricity output.

This year, its Portuguese chief executive, Ana Maria Fernandes, signed contracts to sell electricity from its wind farm in Iowa to the Tennessee Valley Authority, according to this truly illuminating article from the New York Times.

So quite apart from the irony of the US now seeking the help of Portugal in the area of clean energy, there are even greater stakes in this area.

We have already made clear that China is shooting ahead of the US in the whole arena of clean, green high technology, both in general and in selling their new technologies to the US.

Next week, we will have another long piece about still different ways the Chinese are proceeding along this path, this time with the help – happily or not – of the Germans, who, as we have just shown, are already deeply dependent on China for their current surge of economic growth.

And the week after that, we will run yet another Feature about how China is forging ahead on the key path of creating an economically viable electric car.

So whether Americans – of MANY professions – like it or not, they have little choice EXCEPT to follow Portugal along the structurally transformational path of becoming committed to clean, green energy technology – because China has already made this strategic decision, and if they end up, literally, leaving the US in the dust as a result, the so-called American way of life is going to become a bitterly ironic reminder of what was once considered a great country.

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