loss VAT charge reaches ERC level
The Philippine Energy Regulatory Commission is proposing to remove the 12% VAT on electricity system loss charges to lower costs for consumers. The move is supported by President Marcos Jr. and aims to align tax policy with the actual delivery of services.
Why it matters
This policy change could provide significant financial relief to consumers by eliminating taxes on energy that is lost during transmission and distribution.
THE Energy Regulatory Commission (ERC) is proposing to scrap the 12% value-added tax (VAT) from electricity losses charged to consumers to reduce their costs, which is expected to result in P6 billion savings.
In a draft resolution, the ERC is hoping to exclude the system loss charge from the gross receipts of generation companies (gencos), distribution utilities, and the grid operator.
The regulator wants a system loss charge within the allowable cap to be identi fi ed as a government-mandated charge not subject to VAT.
“The exclusion of the allowable system loss charge from the VAT base of gencos and NGCP (National Grid Corp. of the Philippines) will directly reduce the cost of electricity charged to consumers,” the regulator said.
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