BIR to remove VAT from power system loss charges in bills

MANILA — The Bureau of Internal Revenue (BIR) is drafting a revenue memorandum circular that would remove the value-added tax imposed on allowable system loss charges appearing in power bills, according to BIR Commissioner Charlito Martin R. Mendoza.

The move follows President Ferdinand R. Marcos Jr.'s directive to review and clarify existing tax regulations that could deliver prompt relief to consumers facing rising electricity costs. The administration has identified VAT on system loss charges as an area where immediate action could ease the burden on households and businesses.

System loss charges are fees utilities add to bills to account for electricity lost during transmission and distribution. The removal of VAT on these charges would reduce the total amount consumers pay monthly, though the BIR has not yet specified the effective date for the regulatory change.

The revenue memorandum circular, once finalized and published, will provide formal guidance to electricity distributors and service providers on implementing the VAT exemption. The BIR's move aligns with broader government efforts to address affordability concerns in the power sector, which has faced criticism over consistently high consumer rates.