EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
S E N  A T  E 
S. No. wr 7 4
tlF r-
■■Vvcjj.r 
tf  of i!ic 
I 
''
'19 
JUL 17 
P5--44
Introduced by Senator Grace Po%LC^ , ^
AN ACT
TO LOWER THE PRICE OF ELECTRICITY BY EXEMPTING ITS SALE BY 
GENERATION, TRANSMISSION AND DISTRIBUTION COMPANIES AND 
ELECTRICITY COOPERATIVES FROM THE IMPOSITION OF VALUE ADDED 
TAX, AMENDING FOR THE PURPOSE, SECTIONS 108 (A) AND 109 (1) OF 
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY REPUBLIC 
ACT NO. 9337, AND FOR OTHER PURPOSES
Explanatory Note
Electricity is an expensive necessity. According to the 2012 Family Income 
and Expenditure of the Philippine Statistics Authority, electricity and other utilities 
accounted for 7.9% of average family expenditure in 2015.1
Taxes and subsidies account for 11 to 20% of a family's electricity bill, of 
which at least 8% is from the Value Added Tax on the sale of electricity. Thus, the 
removal of the Value Added Tax (VAT) on electricity generation, transmission and 
distribution is an immediate way to reduce electricity prices. The removal of the VAT 
reduce electricity rates among residential consumers by 0.7918 Php/KwH-
can
equivalent to savings of Php 19 a day or Php 6,936 a year.'
In view of the foregoing, approval of this measure is eagerly sought.
GR.A.CE POE
1 Philippine Statistics Authority. 2015 Family Income and Expenditure Survey.
2 United States Agency for International Development. "Challenges in Pricing Electric Power Services in 
Selected ASEAN Countries" (April 2013). Retrieved from  http://w w w .catif.org/w p- 
content/uploads/2013/10/Challenges-in-Pricing-Electric-Power-Services.pdf


EIGHTEENTH CONGRESS OF THE
)
REPUBLIC OF THE PHILIPPINES
)
First Regular Session
)
/ s r ."
S E N  
S. No. ^
*19 
JUL 17 
P5 ^ 4
Introduced by Senator Poe * 1 1
AN ACT
TO LOWER THE PRICE OF ELECTRICITY BY EXEMPTING ITS SALE BY 
GENERATION, TRANSMISSION AND DISTRIBUTION COMPANIES AND 
ELECTRICITY COOPERATIVES FROM THE IMPOSITION OF VALUE ADDED 
TAX, AMENDING FOR THE PURPOSE, SECTIONS 108 (A) AND 109 (1) OF 
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY REPUBLIC 
ACT NO. 9337, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
1 
Section 1. Section 108 (a) of the National Internal Revenue Code, as
2 
amended by Republic Act No. 9337, is hereby further amended to read as follows:
3 
"Sec. 108.- Value-Added Tax on Sale of Services and Use or
4 
Lease of Properties.-
5 
"(A) Rate and Base of Tax.- There shall be levied, assessed and
6 
collected, a value-added tax equivalent to twelve percent (12%)
7 
of gross receipts derived from the sale or exchange of services
8 
including the use of lease of properties.
9 
"The 
phrase 'sale or exchange 
of services' means the
10 
performance of all kinds of services in the Philippines for others
11 
for a fee, remuneration or consideration, including those
12 
performed or rendered by construction and service contractors;
13 
stock, 
real 
estate, commercial, 
customs 
and 
immigration
14 
brokers; 
lessors 
of property, 
whether 
personal 
or 
real;
15 
warehousing services; lessors or distributors of cinematographic
16 
films; persons engaged in milling processing, manufacturing or
1


1 
repacking goods for others; proprietors, operators or keepers of
2 
hotels, motels, rest houses, pension houses, inns, resorts;
3 
proprietors or operators of restaurants, refreshment parlors,
4 
cafes and other eating places, including clubs and caterers;
5 
dealers 
in 
securities; 
lending 
investors; 
transportation
6 
contractors on their transport of goods or cargoes, including
7 
persons who transport goods or cargoes for hire and other
8 
domestic common carriers by land relative to their transport of
9 
goods or cargoes; common carriers by air and sea relative to
10 
their transport of passengers, goods or cargoes from one place
11 
in the Philippines to another place in the Philippines; [ sales of
12 
electricity— by— generation— companies>— transmission,— and
13 
distribution companies;] services of franchise grantees of
14 
[ electric utilities7]  telephone and telegraph, radio and television
15 
broadcasting and all other franchise grantees except those
16 
under section 
119 of this Code, 
and 
non-life insurance
17 
companies (except their crop insurances), including surety,
18 
fidelity, indemnity, and bonding companies; and similar services
19 
regardless of whether or not the performance thereof calls for
20 
the exercise or use of the physical or mental faculties. The
21 
phrase 'sale or exchange of services' shall likewise include:
22 
"x  X X.
23 
Sec. 2. Section 109 (1) of the National Internal Revenue Code, as amended,
24 
is further amended to read as follows:
25 
"SEC. 109. Exempt Transactions-
26 
(1) Subject to the provisions of Subsection (2) hereof, the
27 
following transactions shall be exempt from the value-added
28 
tax.
29 
( A ) x x x
30 
"x X X


1 
"(AA) Sale of drugs and alcohol and medicines prescribed for
2 
diabetes, 
high cholesterol, 
and 
hypertension 
beginning
3 
January 1, 2019; [and]
4 
(BB) Sale of lease of goods or properties;
5 
(CC) 
SALES 
OF 
ELECTRICITY 
BY 
GENERATION,
6 
TRANSMISSION, AND DISTRIBUTION COMPANIES
7 
AND ELECTRIC COOPERATIVES; AND
8 
(DD) 
SERVICES 
OF 
FRANCHISE 
GRANTEES 
OR
9 
ELECTRIC UTILITIES.
10 
Sec. 3. Repealing Clause. -  All laws, decrees, orders, rules and regulations or
11 
other issuances or parts thereof inconsistent with the provisions of this Act are
12 
hereby repealed and modified accordingly.
13 
Sec. 4. Separability Clause. -  If any provision of this Act is subsequently
14 
declared unconstitutional, the validity of the remaining provisions hereof shall remain
15 
in full force and effect.
16 
Sec. 5. Effectivity Clause. -  This Act shall take effect immediately after its
17 
complete publication either in the Official Gazette or in a newspaper of general
18 
circulation in the Philippines.
Approved,