MANILA, November 17, 2005
 (STAR) By Rocel C. Felix - The country incurred a balance of payments (BOP) deficit of $406 million in October, reversing the surplus of $439 million registered in the previous month due to debt servicing of the National Government (NG) and the Bangko Sentral ng Pilipinas (BSP).

Despite the deficit in October, the 10-month BOP still yielded a surplus of $2.32 billion, a turnaround from the deficit of $182 million recorded during the same period in 2004 and the $6- million deficit in October of last year.

"The surplus was due mainly to double-digit growth in remittances from overseas Filipino workers (OFWs) and strong portfolio investment inflows," Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.

The BSP chief added that the 10-month BOP position was also bolstered by the sustained growth in merchandise imports, government borrowing and higher investment income.

Tetangco noted that even with the deficit in October, the BOP will continue to maintain its projected surplus position for the rest of the year. In September, the BSP reported its highest BOP surplus of $2.730 billion.

For the year, the BSP expects a higher BOP surplus of $900 million against forecast of $853 million.

The BOP is a summary of the countryís transactions with the rest of the world and includes exports less imports, net portfolio and equity investments, income and other transfers.

In September, OFW remittances rose by a strong 28 percent to hit of $7.9 billion while gross international reserves stood at $18 billion.

Last August, the BSP incorporated some changes in the BOP statistics, which reflects the upward adjustments in the imports of goods.

The revision was based on the preliminary estimates using the methodology agreed upon by the Inter-Agency Committee on Trade Statistics. The same methodology was applied in adjusting the 2005 first quarter imports data.

The BSP said the final report by the NSO showed a lower adjustment to imports for 2003-2004 than the preliminary estimates.

"Consequently trade balance and current account balance would turn out to be more favorable than the initial estimates by $278 million and $766 million for 2003 and 2004, respectively," the BSP said.

This means that the current account surplus will be higher from $1.396 billion and $2 billion to $1.674 billion and P2.84 billion for 2003 and 2004, respectively.

EVAT on power takes effect as ERC okays guidelines By Donnabelle L. Gatdula The Philippine Star 11/17/2005

The impact of the expanded value-added tax (EVAT) on power rates will now be felt by consumers as the Energy Regulatory Commission (ERC) issued the implementing guidelines on the new tax measure.

In a press conference yesterday, ERC chairman Rodolfo Albano Jr. said due to the mitigating measures, however, the impact of EVAT on electricity rates would average between seven to eight percent instead of 10 percent.

For consumers with monthly consumption of between 50 to 100 kilowatthours (kwh), there will be an increase ranging from 23.15 centavos per kwh (P11.48 a month) to 41.53 centavos per kwh (P41.13 per month).

Based on the commissionís estimates, the impact of the EVAT hike to 12 percent by next year would be at around eight to nine percent.

The ERC issued Resolution 20 last Nov. 7 implementing Republic Act 9337 or the new Expanded Value Added Tax Law in the electricity sector. The resolution allows generation companies (GCs), the National Transmission Corp. (TransCo) and the distribution utilities (DUs) to impose the EVAT on electricity sales consistent with Revenue Memorandum Circular (RMC) 61-2005 issued by the Bureau of Internal Revenue (BIR).

"The electricity consumers can rest assure that the ERC has done an extensive review on the implementation measures of the EVAT affecting the electricity sector. Consumer protection is a paramount concern of the ERC," Albano said.

"It will also be comforting for consumers to know that the impact of this new tax measure will be less than eight percent as a result of the removal of the two-percent national franchise tax and that certain items are VAT zero-rated," the ERC chief added.

Albano said the new tax measure, which was made effective last Nov. 1, will be based on the gross receipts (GRs) on sales and services of electricity by generation, transmission, and distribution companies.

The GR, he said, shall be net of all discounts and gross of penalties but shall exclude the Energy Tax under Batas Pambansa 36, benefits to host communities, security deposit on metering machines (including interests provided that when applied to consumerís liability, it shall be subject to VAT), and the universal charges imposed under the Electric Power Industry Reform Act (EPIRA).

There are several items considered as VAT zero-rated namely: sale of power or fuel generated through renewable sources of energy; and sale of electricity to enterprises registered with the Philippine Economic Zone Authority (PEZA) or the Subic Bay Metropolitan Authority (SBMA).

Transactions made on or before Oct. 31, 2005 but due for collection on or after Nov. 1, 2005 and billed by Nov. 30, 2005 are also considered to be VAT zero-rated.

Such transactions include: electricity sold, transmitted, and distributed; deferred charges such as generation rate adjustment mechanism (GRAM) and incremental currency exchange rate adjustment (ICERA). An inventory of the deferred charges must be submitted to the BIR by Nov. 30, 2005; and generation rate and foreign exchange adjustments to electricity sold on or before Oct. 31, 2005 although billed and collected thereafter.

The VAT collected by the DUs on generation, transmission, and system loss shall be remitted to the concerned GC and TransCo, who, in turn, will be responsible for the tax due to the BIR.

"The ERC would like to emphasize that the electricity providers will not earn out of the VAT transactions. This is a pass through charge that is revenue-neutral. The ERC will perform confirmatory process on VAT imposed by the generation, transmission, and distribution utilities" he said.

The ERC official also guarantees that penalties, including the corresponding VAT imposed on DUs by reason of their fault or negligence, shall not be passed on to consumers.

As this developed, Albano said the commission will decide on the GRAM application of the National Power Corp. (Napocor) before the year ends. Napocor seeks to cover under GRAM its P19 billion worth of deferred charges.

If the application of Napocor for GRAM is approved, consumers in Luzon will be charged with an additional rate of 45 centavos per kwh; 64 centavos per kwh for Visayas customers and 51 centavos per kwh in Mindanao.

Chief News Editor: Sol Jose Vanzi

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