VAT removal from system loss charge may take effect next month – ERC

MANILA, Philippines – The removal of the value-added tax (VAT) on the widely unpopular system loss charged by electricity distributors may take effect as early as next month, Energy Regulatory Commission (ERC) Chairperson Francis Saturnino Juan said on Wednesday.

At a congressional budget hearing, Juan said the ERC already laid down Resolution No. 26 of 2026, which reclassified system loss as a pass-through cost that paved the way for the Bureau of Internal Revenue (BIR) to cut the VAT charge.

The power sector regulator will order distributors to revise their bills after its resolution and the BIR circular takes effect, he added.

“After that, we will issue a directive to our distribution utilities so they can revise their bill format in line with what the BIR will release,” Juan told lawmakers in Filipino.

“This could happen in October or November,” he said.

READ: BIR prepares VAT removal on system loss charge in power bills

Efforts to ease charges in power bills came after President Ferdinand R. Marcos, Jr. urged authorities to explore ways to make electricity cheaper, including scrapping the system loss fee – a charge on the difference between electricity produced and consumed paid for by end-users – and its accompanying tax.

Electricity bills in the Philippines carry multiple charges, from generation and transmission to levies subsidizing green energy projects. /gsg