MANILA – Electricity consumers could see about a P20 reduction in their monthly bills following the removal of value-added tax on system loss charges, Energy Secretary Sharon Garin said Tuesday.
The Bureau of Internal Revenue on Monday issued Memorandum Circular No. 97-2026, removing the allowable system loss charge, based on the cap approved by the Energy Regulatory Commission, from government-mandated collections included in gross sales for VAT purposes.
The circular, however, does not cover income tax and the corresponding creditable withholding tax.
Garin welcomed the BIR move, saying it forms part of the government’s broader effort to ease electricity costs.
System loss charges are collected by distribution utilities to recover electricity losses caused by technical factors and non-technical causes such as pilferage.
Garin said the BIR action addresses the tax imposed on system loss, while any reduction or removal of the system loss charge itself would require action under the Electric Power Industry Reform Act, the ERC, the National Electrification Administration, or the Department of Energy.
She added that the government is working toward gradually reducing system loss, potentially to zero, while avoiding sudden financial pressure on electric cooperatives.
The removal of VAT on system loss is part of the Marcos administration’s efforts to reduce electricity costs for consumers.
The BIR decision is expected to reduce government revenues by around Php 10 billion annually. Malacañang, however, said Tuesday that there are no plans to impose a new tax to offset the projected revenue loss. (PNA)
