MANILA, Philippines — The Bureau of Internal Revenue (BIR) has removed the value-added tax (VAT) on the allowable system loss charge in electricity bills to provide relief to consumers by lowering the tax component of their power costs.
In Revenue Memorandum Circular (RMC) 97-2026 issued Monday, the BIR formally recognized the allowable system loss charge within the cap approved by the Energy Regulatory Commission (ERC) as a “government-mandated pass-through cost” that should be excluded from gross sales for VAT purposes.
This means the allowable system loss charge will no longer be subject to output VAT, reducing the amount that can be passed on to consumers in covered electricity billings.
“This may be one part of a broader effort to bring down electricity costs, but it is relief that can be implemented under existing law,” BIR Commissioner Charlito Martin Mendoza said in a statement on Monday.
“While Congress continues to consider wider reforms on electricity charges and taxes, the BIR is acting on the measures within its authority that can reduce the burden on consumers,” he added.
