Senato Offire of the forcretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 26 MAY -4 A11 :58 First Regular Session SENATE RECEIVED BY: 2076 S.B. No. - INTRODUCED BY SENATOR RISA HONTIVEROS AN ACT EXCLUDING SYSTEMS LOSSES FROM VALUE-ADDED TAXES (VAT) IN THE SALE OF ELECTRICITY TO RESIDENTIAL HOUSEHOLD CONSUMERS EXPLANATORY NOTE Electricity is a daily necessity that is involved in the daily lives and economic well-being of Filipino households. However, the conflict in the Middle East, which led to the global restriction of oil supply, has driven electricity prices higher. Historically, the demand for electricity spikes during the summer months, which may further exacerbate the problem. Thus, there is an urgency to mitigate electricity costs in the short-run to give our consumers relief. This measure seeks to provide immediate and tangible relief by exempting the system loss charge from VAT for residential electricity consumers. By removing the tax on this component, the proposed policy aims to reduce overall electricity bills. The measure is narrowly targeted to maximize consumer benefit while maintaining fiscal prudence. The imposition of value-added tax (VAT) on system loss effectively compounds costs borne by consumers. Residential households, in particular, have limited capacity to absorb these additional expenses. Consumers should not be unduly taxed on inefficiencies within the power system that are beyond their control. In view of the foregoing, the immediate passage of this bill is earnestly sought. saileror Barquel RISA HONTIVEROS Senator
Senate Wiirr of the derereiarp 26 MAY -4 A11 :58 TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES RECEIVED BY: First Regular Session S.B. No. . INTRODUCED BY SENATOR RISA HONTIVEROS AN ACT EXCLUDING SYSTEMS LOSSES FROM VALUE-ADDED TAXES (VAT) IN THE SALE OF ELECTRICITY TO RESIDENTIAL HOUSEHOLD CONSUMERS Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled.
Section 1. Short Title. - "VAT Exemption on Systems Loss Act for Residential
Household Consumers"
Section 2. Section 109 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to insert an additional subsection that shall read: "SEC. 109. Exempt Transactions. - (1) Subject to the provisions of subsection (2) hereof, the following transactions shall be exempt from the value-added tax: XXX (EE) SYSTEM LOSS COMPONENT IN THE SALE OF ELECTRICITY BY DISTRIBUTION COMPANIES AND ELECTRIC COOPERATIVES TO RESIDENTIAL HOUSEHOLD CONSUMERS. THE ENERGY REGULATORY COMMISSION (ERC) SHALL ENSURE THAT THE REDUCTION ARISING OUT OF THIS EXEMPTION SHALL NOT BE PASSED ON TO THE RESIDENTIAL HOUSEHOLD CONSUMERS THROUGH DISTRIBUTION WHEELING CHARGES OR OTHER PASS-THROUGH COMPONENTS. FOR THE PURPOSES OF THIS PROVISION, SYSTEM LOSSES SHALL REFER TO THE DIFFERENCE BETWEEN THE ELECTRIC ENERGY DELIVERED TO THE DISTRIBUTION SYSTEM (ENERGY INPUT) AND THE ENERGY DELIVERED TO THE RESIDENTIAL HOUSEHOLD CONSUMERS (ENERGY OUTPUT); XXX
Section 4. Implementing Rules and Regulations. - Within ninety (90) calendar
days from the effectivity of this Act, the Secretary of Finance shall, after due consultation with the relevant agencies, promulgate the necessary rules and regulations to faithfully implement the intent and provisions of this Act.
Section 5. Separability Clause. - If any provision of this Act is declared
unconstitutional, the remaining parts or provisions not affected thereby shall remain in full force and effect.
Section 6. Repealing Clause. - All laws, decrees, executive orders, implementing
rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Act are deemed repealed, amended, or modified accordingly.
Section 7. Effectivity. - This Act shall take effect after fifteen (15) days following
its publication in the Official Gazette or in a national newspaper of general circulation. Approved,