Senate President Says VAT on Power Loss Can Be Removed Now

Senate President Sherwin "Win" Gatchalian declared Thursday that the 12-percent value-added tax imposed on electricity system loss charges can be removed through existing mechanisms, without requiring passage of new legislation.

Gatchalian made the statement during a Senate energy panel hearing focused on system loss issues. He based his position on recent consultations with Bureau of Internal Revenue Chair Charlito Mendoza regarding the tax treatment of system loss charges.

The development offers potential relief to consumers facing higher electricity costs, as system loss charges—which account for power lost during transmission and distribution—are currently subject to the standard VAT rate applied to electricity sales.

The Senate President's statement suggests the administration may be considering administrative action to address longstanding concerns about VAT charges on system losses, an issue that has drawn scrutiny from consumer advocacy groups and lawmakers concerned about the impact on household electricity bills.