Republic Act No. 7156 or the Mini-Hydro Law provides the following rights and privileges to mini-hydro developers, as follows:
1. Special privilege tax rates: Tax payable by developers/grantees to develop potential sites for hydroelectric power and to generate, transmit and sell electric power shall be 2 percent of their gross receipts.
2. Income tax holiday for seven (7) years from start of commercial operations.
3. Tax and duty free importation of machinery, equipment and materials-Exemption from payment of tariff duties and value-added tax (VAT) on importation of machinery and equipment (within seven (7) years from date of awarding of contract).
4. Tax credit on domestic capital equipment - For developers who buy machinery, equipment, materials and parts from a local manufacturers, tax credit is given equivalent to 100 percent of value of VAT and custom duties that would have been paid to import said machinery, equipment, etc.
5. Special realty tax rates on equipment and machinery: Realty and other taxes on civil works, equipment, machinery and other improvements of a registered mini-hydroelectric power developer shall not exceed 2.5 percent of their original cost.
6. VAT Exemption - Exemption from payment of 10 percent VAT on gross receipts derived from sale of electric power whether wheeled via the NPC grid or electric utility lines.