Manila, Philippines — Starting in October, consumers may see a reduction in their monthly electricity bills following the removal of the 12% Value-Added Tax (VAT) on the System Loss Charge.
Households consuming around 200 kilowatt-hours (kWh) per month could save as much as ₱20 under the measure.
This comes after the Bureau of Internal Revenue (BIR), with the approval of the Energy Regulatory Commission (ERC), removed the VAT imposed on the System Loss Charge, which forms part of consumers’ electricity bills.
The System Loss Charge refers to the cost of electricity lost due to technical losses in transmission and distribution lines, as well as electricity losses caused by theft, pilferage or illegal connections.
It may be recalled that during President Ferdinand Marcos Jr.’s fifth State of the Nation Address (SONA), he called for the eventual removal of the System Loss Charge, including the 12% VAT, through amendments to the Electric Power Industry Reform Act (EPIRA) wherein the Department of Energy (DOE) is now working toward this goal.
Malacañang and other government agencies have assured consumers that no new taxes will be imposed on monthly electricity bills despite the government losing an estimated ₱10 billion in annual tax collections following the removal of the VAT.