A new measure filed in the Senate aims to remove the value-added tax (VAT) imposed on systems loss charges, which are currently passed on to electricity consumers through their monthly bills.
Senate Bill No. 2076, filed by Senator Risa Hontiveros, proposes an amendment to the National Internal Revenue Code (NIRC) to exclude systems loss charges from transactions subject to VAT.
Systems loss refers to “the difference between the electrical energy delivered to the distribution system (energy input) and the energy delivered to residential household consumers (energy output).”
The bill argues that VAT is a consumption tax on goods and services, while systems loss charges represent distribution losses—not goods or services.
As such, households should not be burdened with VAT on these charges.
“This VAT on systems loss is a double pain and insult: We are already paying for systems loss that we did not benefit from, and then we will have to pay tax on it. We must immediately end this unfair arrangement, especially now that electricity costs are going up,” Hontiveros said
The measure emphasizes that removing VAT on systems loss would make tax policies fairer and provide immediate relief to consumers facing rising electricity costs.
SB 2076 is part of a broader legislative package intended to ease the burden on power consumers, particularly low-income households, amid global energy challenges. (Hannah Torregoza)
