House Approves Exemption Of GCT On Lithium-Ion Batteries

  • The House of Representatives on Tuesday (June 21) approved the General Consumption Tax (Amendment of Schedule) Order, 2022, Resolution, which will facilitate the exemption of lithium-ion batteries from General Consumption Tax (GCT). 
  • Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke mentioned that as the Government seeks to achieve accelerated and aggressive increases in renewable energy penetration, lithium-ion batteries will play a pivotal role in that energy transition, adding that they are also aligned with the policy to promote electric vehicles. 
  • Clarke explained that the Ministry of Science, Energy and Technology over the years has been in constant dialogue with his Ministry about the category of items that constitute and represent appropriate technology, for which the Government’s long-standing policy of promoting renewables would mean that they would be subject to a differential tax regime. He said lithium-ion batteries were not among that list of about 14 items, “but technology has changed, and lithium-ion batteries are no longer only used in portable electronics, but now are increasingly being used in renewable technologies”. 
  • This action by the Ministry of Finance is influenced by the positive impact that the use of energy-efficient technologies has on reducing costs associated with electricity generation, especially in a time when energy prices are rising due to geopolitical tensions. 
  • If assessed against 2019 data, the government will likely lose $193Mn in revenues from this GCT exemption on lithium-ion batteries. However, the move will help the government to achieve its renewable energy target of 33% by 2030 and 50% by 2037 and yield costs savings from reduced non-renewable energy bills over the long-term. 
  • Companies such as Tropical Battery which are diversifying operations to take advantage of the shift in the energy policy to cleaner, renewable energy will also benefit. Tropical Battery has added a new subsidiary Tropical Mobility, an electric mobility solutions company, to serve the needs of the emerging electric vehicle (EV) market. It has also expanded its recycling partnership to include lithium-ion batteries which will support revenue generation as the GCT exemption incites greater demand for technologies such as cars which use lithium-ion batteries.

(Sources: JIS News & NCBCM Research)