tax relief on electricity

Senate Bill No. 670: Sale of Electricity by Generation and Distribution of Companies and Electric Cooperatives

The cost of electricity rose once again in February this year, owing to higher power supply agreements as Filipinos braced themselves for the summer months when electric bills normally skyrocket. The Philippines has one of the most expensive electricity costs in Southeast Asia, having the third highest tariffs for residential electricity whereas our neighbors’ electrical distribution is heavily subsidized by their governments.

High power rates are debilitating to the average household or business that already struggle to cover the costs of many other necessities such as water, gas, and of increasing necessity nowadays, internet.

This bill seeks to amend the National Internal Revenue Code of 1997, as amended, by removing Value Added Tax from the sale of electricity, at all stages: generation, transmission, and distribution, by all electric companies and cooperatives.

A tax relief on electricity will result in a significant gain in disposable income for Filipino families, as well as for businesses who benefit from lower operating costs and more profit left for expansion and investment. VAT-exempt electricity will surely light up many more Filipino’s lives.

In view of the foregoing, the passing of this bill is earnestly sought.  


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Bam: Lower the price of electricity

A senator has submitted a measure seeking to lower power rates by removing Value Added Tax (TAX) from the sale of electricity by all electric companies and cooperatives.

In his Senate Bill No. 670, Sen. Bam Aquino wants to make VAT-exempt the sale of electricity at all stages — from generation, transmission, and distribution — to lessen the expenses of Filipino families.

 “A tax relief on electricity will result in significant savings for Filipino families as well as lower operating costs for businesses, from small restaurants and retail stores to large factories,” Sen. Bam said.

 The measure seeks to amend Section 108 (A) (II) and 109 (1) of the National Internal Revenue Code, as amended by Republic Act No. 9337, to cover sale, transmission and distribution of electricity from VAT-exempted transactions.

 Among them are sales of electricity by generation, transmission and distribution companies and electric cooperatives and services of franchise grantees or electric utilities.

 The senator is also eyeing to exempt from VAT the sale or importation of machineries and equipment, including spare parts, to be directly used by the buyer or importer in the generation, transmission and distribution of electricity

 “We’ve been complaining about our expensive electricity for too long. Something must be done to bring down prices,” Sen. Bam said.

 The Philippines has one of the most expensive electricity costs in Southeast Asia, having the third highest tariffs for residential electricity whereas our neighbors’ electrical distribution is heavily subsidized by their governments.

 The lawmaker added that more than hindering foreign investment, high power rates add burden to average Filipino families that are already struggling to pay for other necessities such as water, food and gas.

 

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