The Bureau of Internal Revenue (BIR) expanded its list of tax-exempt power sector fees, a move aimed at preventing double taxation and lowering electricity bills for consumers amid volatile global energy markets.

Under Revenue Memorandum Circular 60-2026 issued on June 4, the government’s main tax agency officially excluded the Lifeline Subsidy and the Green Energy Auction Allowance (GEA-All) from output value-added tax (VAT) and creditable withholding tax.

The nw BIR directive updated previous guidelines from 2024 to align with the country's Ease of Paying Taxes Act.

BIR Commissioner Charlito Martin R. Mendoza told Manila Bulletin on Friday, June 5, that the RMC was issued to clarify the proper tax treatment of these government-mandated charges and “to promote uniform and equitable compliance with existing tax rules under the Ease of Paying Taxes (EOPT) Act.”

Mendoza said that the Lifeline Subsidy and the GEA-All are not revenues raised by DUs, including electric cooperatives (ECs). “These are government-mandated charges, regulatory in nature, that are collected and remitted to the proper entities,” he said.

“Because these amounts are pass-through charges, which do not belong to the DUs, such as ECs, and do not form part of their taxable income or gross sales, they should not be subjected to output VAT or creditable withholding taxes,” Mendoza told Manila Bulletin.

As such, the country’s main tax collection agency’s clarification is “intended to ensure that [these charges’] tax treatment is consistent with other similar pass-through charges in the power sector.”

“This, in turn, is expected to contribute to lower electricity costs for consumers by preventing the imposition of additional tax burdens on amounts that do not constitute utility income or gross sales,” the Commissioner added.

The Lifeline Rate is a government subsidy that grants discounted electricity rates to low-income and marginalized households, including beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps). The GEA-All, meanwhile, is a charge that supports the government’s push to expand the use of renewable energy sources such as wind and solar power.

“In both cases, the DUs merely serve as collecting agents,” Mendoza said, further clarifying that the newly issued RMC is “not a grant” of a new tax break. “Rather, it clarifies that these charges are not part of the DUs’ taxable income or gross sales in the first place, since they are collected on behalf of government programs,” he said.

Prior to the recent updates, the government had already excluded six specific power-related fees from VAT and income tax withholding. These exemptions cover the Energy Tax, Universal Charges, and financial benefits provided to communities that host energy facilities.

Additionally, the list includes the Feed-in Tariff Allowance (FIT-All), national and local franchise taxes, and real property taxes.

This 2026 amendment updates the guidelines established by RMC No. 116-2024, which was originally issued to provide a definitive list of government-mandated charges that do not constitute gross receipts for tax purposes, thereby preventing “tax on tax” scenarios.

Last month, the Energy Regulatory Commission (ERC) ordered the temporary suspension of the GEA-All collection, a move expected to lower electricity bills for consumers through June.