THE Bureau of Internal Revenue (BIR) has imposed a two-percent withholding tax on electricity sold through the Wholesale Electricity Spot Market (WESM), to be deducted by the Independent Electricity Market Operator of the Philippines (IEMOP) from remittances to power firms.
IEMOP will serve solely as a withholding agent and will not be considered as earning from power sales. It will be responsible for submitting the amounts withheld to the BIR, together with the list of payees, in accordance with the tax bureau’s regulations.
The WESM operator will also have to issue certificates of tax withheld at source, or BIR Form 2307, to each electricity seller.
The BIR said the new rule was pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, which authorize the agency to promulgate rules and regulations for the effective implementation and enforcement of tax laws.
The WESM is the centralized trading platform for electricity in the Philippines. It was created under the Electric Power Industry Reform Act of 2001 and began operating, beginning in Luzon, in 2006. It expanded to the Visayas in 2010 and added Mindanao in 2023.
