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Manila Bulletin devider Business devider The Economy devider Electric co-op group calls for VAT removal to ease consumer burden

Electric co-op group calls for VAT removal to ease consumer burden

Published May 22, 2025 01:37 pm

The Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA) has expressed its support for the proposal to eliminate the multiple value-added tax (VAT) on electricity, which is expected to result in lower power rates for consumers.

In a statement on Thursday, May 22, PHILRECA said the group, along with the so-called “power bloc” has identified the removal of VAT on power sales across generation, transmission, and distribution utilities as a priority.

According to the association, representatives from the power bloc have filed House Bill No. 32148, which proposes specific amendments to the National Internal Revenue Code (NIRC) to mitigate the financial burden on Member-Consumer-Owners (MCOs) through the elimination of VAT.

“We affirm that removing the VAT on electricity would cut the revenue of the government. However, this will reduce the total amount consumers need to pay for their consumption, especially for lower and middle-income households,” it stated.

Currently, the standard VAT rate is 12 percent and is applied to the sale of goods, services, and importations. Within the power sector, VAT is levied on generation, transmission, and distribution.

“The reliance of the Philippines on the importation of conventional energy sources such as fossil fuels, which are volatile due to supply and demand fluctuations, heavily exposes consumers to market price changes,” PHILRECA elaborated.

The electric cooperative group also noted that power bloc representatives have introduced House Bill No. 9733 and House Bill No. 2153, which mandate the government to “construct, operate, and maintain power-generating assets to ensure grid stability and supply reliability for ancillary and other purposes.”

“This proposal seeks to allow the government to intervene and fill the gap in generation capacity, ensuring energy security and price stability for MCOs,” it added.

Moreover, amendments to the Electric Power Industry Reform Act of 2001 are currently being deliberated by Congress.

“Through this proposed reform, the government will have a safeguard to regulate prices and ensure competition across generation companies, prohibiting the proliferation of market monopoly and abuses.”

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The Philippine Rural Electric Cooperatives Association Inc. (PHILRECA) value-added tax (VAT)
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