03/09/2026
๐๐๐ฅ ๐ฃ๐ฅ๐๐ฃ๐๐ฅ๐๐ฆ ๐ฉ๐๐ง ๐ฅ๐๐ ๐ข๐ฉ๐๐ ๐ข๐ก ๐๐๐๐ข๐ช๐๐๐๐ ๐ฆ๐ฌ๐ฆ๐ง๐๐ ๐๐ข๐ฆ๐ฆ ๐๐๐๐ฅ๐๐ ๐ง๐ข ๐๐๐๐ฃ ๐๐ข๐ช๐๐ฅ ๐๐๐๐๐ง๐ฅ๐๐๐๐ง๐ฌ ๐๐๐๐๐ฆ
BIR Commissioner Charlito Martin R. Mendoza announced that the Bureau of Internal Revenue is preparing the issuance that will remove the Value-Added Tax (VAT) on the allowable system loss charge in electricity bills, in line with President Ferdinand R. Marcos Jr.โs directive to review and clarify tax rules that can provide immediate relief to consumers.
The BIR will issue the corresponding Revenue Memorandum Circular after the lapse of fifteen (15) days from the publication of Energy Regulatory Commission (ERC) Resolution No. 26, Series of 2026, which classifies the system loss charge as a government-mandated pass-through cost.
โAs Finance Secretary Frederick Go has consistently guided us, our reforms should deliver results that people can immediately feel. When there is a clear basis under the law to provide tax relief, we should act on it. We are preparing the BIR issuance now so that after the required period has lapsed, we can immediately implement the VAT removal and pass the benefit on to electricity consumers,โ Commissioner Mendoza said.
Under ERC Resolution No. 26, Series of 2026, the allowable system loss charge is treated as a cost recovered through electricity bills rather than income earned by generation companies, the National Grid Corporation of the Philippines (NGCP), and distribution utilities.
โIn simple terms, consumers should not be paying VAT on electricity that never actually reaches their homes or businesses. A pass-through charge is a cost collected from consumers and passed on to the proper recipient. Removing VAT from that charge means a lower amount will be passed on to electricity consumers,โ Commissioner Mendoza said.
The forthcoming issuance builds on earlier BIR action clarifying the tax treatment of government-mandated electricity charges. Under RMC No. 60-2026 released in June, the BIR clarified that the Lifeline Subsidy, Green Energy Auction Allowance, and other specified government-mandated charges are not subject to output VAT and related creditable withholding taxes.
โWe will continue reviewing our tax rules for areas where their proper application can provide practical relief to taxpayers. Where the law allows it, we want that relief to be clear, immediate, and felt by our people,โ Commissioner Mendoza said.
