Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Batasan Hills, Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL No. _____ 
-------------------------------------------------------------------------------------------------------- 
Introduced by  
ACT Teachers Party-List Rep. FRANCE L. CASTRO,  
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,  
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL 
-------------------------------------------------------------------------------------------------------- 
AN ACT 
CLASSIFYING THE SALE OF ELECTRICITY BY GENERATION, 
TRANSMISSION, AND DISTRIBUTION COMPANIES AND ELECTRIC 
COOPERATIVES, AND THE SERVICES OF FRANCHISE GRANTEES OF 
ELECTRIC UTILITIES, AND SALE OR IMPORTATION OF MACHINERY 
AND EQUIPMENT DIRECTLY USED IN GENERATION, TRANSMISSION, 
AND DISTRIBUTION OF ELECTRICITY AS VALUE-ADDED TAX EXEMPT 
TRANSACTIONS, AMENDING FOR THE PURPOSE SECTIONS 108 (A)(ii) and 
109 (1) OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY 
REPUBLIC ACT NO. 9337, AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
This Bill seeks to amend the National Internal Revenue Code of 1997, as amended 
by Republic Act 9337, by exempting electricity as a commodity from value-added tax 
(VAT).  VAT is imposed on the sales of electricity by generation companies, transmission 
and distribution companies and the services of franchise grantees of electric utilities. 
VAT on electricity is another burden on the already over-taxed shoulders of our 
people, especially those whose incomes are barely enough to cover their basic needs. In 
times of unabated price increases of fuel, food, and other commodities, it is the duty of 
Congress to provide economic relief to the Filipino people. The removal of VAT on 
electricity is one of the most viable options for Congress to immediately act on. 
November 9,  2022
1:51 pm
5995


 
The Philippines has one of the highest costs of electricity in Southeast Asia.  For 
instance, the 2011 addition of 5.8 centavos per kilowatt-hour (kWh) on generation charges 
plus the 12 % VAT imposed raised the price of electricity at ₱9.55 per kWh. For a 
household consuming 200kWh of electricity a month, the VAT is estimated at ₱191.00, an 
amount quite substantial to the average working Filipino. What is worse, VAT is not only 
imposed on the generation of consumed power but also on system loss charges, thus clearly 
making the Filipino people suffer twice over. 
 
While it may have helped the government’s  fiscal position, it is imperative that 
Congress still act on the removal of VAT on electricity as it is the fastest and most direct 
form of economic relief for all Filipino households and businesses.  Whatever revenue 
losses to be suffered by the government will definitely be offset by the increased 
purchasing power of all households as well as cheaper production costs, redounding to a 
more robust and equitable economy. 
 
This measure was first filed by Bayan Muna party-list through its Representative 
Teddy Casino during the 14th Congress and was refiled in the succeeding Congresses. 
 
In view of the foregoing, approval of this bill is earnestly sought. 
 
 
Approved, 
 
  
 
 
 
 
________________________________ 
Rep. FRANCE L. CASTRO 
ACT Teachers Party-List 
 
 
 
 
________________________________ 
Rep. ARLENE D. BROSAS 
GABRIELA Women’s Party 
 
 
________________________________ 
Rep. RAOUL DANNIEL A. MANUEL 
KABATAAN Party-List 
 
 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Batasan Hills, Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL No. _____ 
-------------------------------------------------------------------------------------------------------- 
Introduced by  
ACT Teachers Party-List Rep. FRANCE L. CASTRO,  
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,  
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL 
-------------------------------------------------------------------------------------------------------- 
AN ACT 
CLASSIFYING THE SALE OF ELECTRICITY BY GENERATION, 
TRANSMISSION, AND DISTRIBUTION COMPANIES AND ELECTRIC 
COOPERATIVES, AND THE SERVICES OF FRANCHISE GRANTEES OF 
ELECTRIC UTILITIES, AND SALE OR IMPORTATION OF MACHINERY 
AND EQUIPMENT DIRECTLY USED IN GENERATION, TRANSMISSION, 
AND DISTRIBUTION OF ELECTRICITY AS VALUE-ADDED TAX EXEMPT 
TRANSACTIONS, AMENDING FOR THE PURPOSE SECTIONS 108 (A)(ii) 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 of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Section 108 (A)(ii) of the National Internal Revenue Code, as amended by 
Republic Act No. 9337, is hereby further amended to read as follows: 
“SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. – 
“(A) Rate and Base of Tax. – xxx 
“(i) xxx 
“(ii) xxx 
5995


 
“The phrase 'sale or exchange of services' means the performance of all kinds of 
services in the Philippines for others for a fee, remuneration or consideration, 
including those performed or rendered by construction and service contractors; 
stock, real estate, commercial, customs and immigration brokers; lessors of 
property, whether personal or real; warehousing services; lessors or distributors of 
cinematographic films; persons engaged in milling, processing, manufacturing or 
repacking goods for others; proprietors, operators or keepers of hotels, motels, rest-
houses, pension houses, inns, resorts; proprietors or operators of restaurants, 
refreshment parlors, cafes and other eating places, including clubs and caterers; 
dealers in securities; lending investors; transportation contractors on their transport 
of goods or cargoes, including persons who transport goods or cargoes for hire and 
other domestic common carriers by land relative to their transport of goods or 
cargoes; common carriers by air and sea relative to their transport of passengers, 
goods or cargoes from one place in the Philippines to another place in the 
Philippines; [sales of electricity by generation companies, transmission, and 
distribution companies;] services of franchise grantees of [electric utilities,] 
telephone and telegraph, radio and television broadcasting and all other franchise 
grantees except those under Section 119 of this Code and non-life insurance 
companies (except their crop insurances), including surety, fidelity, indemnity and 
bonding companies; and similar services regardless of whether or not the 
performance thereof calls for the exercise or use of the physical or mental faculties. 
The phrase 'sale or exchange of services' shall likewise include: 
 
“xxx. 
 
SECTION. 2. Section 109 (1) of the National Internal Revenue Code, as amended by 
Republic Act No. 9337, is hereby further amended to read as follows: 
 
“SEC. 109. Exempt Transactions. - (1) Subject to the provisions of subsection (2) 
hereof, the following transactions shall be exempt from the value-added tax: 
 
“(A) xxx 
 
“(B) xxx 
 
“xxx 
 
“(U) xxx 
 
“(V) SALES OF ELECTRICITY BY GENERATION, TRANSMISSION, AND 
 DISTRIBUTION COMPANIES AND ELECTRIC COOPERATIVES; 
 


“(W) SERVICES OF FRANCHISE GRANTEES OF ELECTRIC UTILITIES; 
 
“(X) SALE OR IMPORTATION OF MACHINERIES AND EQUIPMENT, 
INCLUDING SPARE PARTS, TO BE DIRECTLY USED BY THE BUYER OR 
 IMPORTER HIMSELF IN THE GENERATION, TRANSMISSION, AND  
DISTRIBUTION OF ELECTRICITY. 
 
“(Y) Export sales by persons who are not VAT-registered. 
 
SECTION. 3. Repealing Clause. – The following laws or provisions of laws are hereby 
repealed: 
 
(A) Section 24 (A) and (B) of Republic Act No. 9337; and 
 
(B) All other laws, acts, decrees, executive orders, issuances, and rules and 
regulations or parts thereof which are contrary to and inconsistent with any 
provisions of this Act are hereby repealed, amended, or modified accordingly. 
 
SECTION. 4. Separability Clause. – If any provision of this Act is subsequently declared 
unconstitutional, the validity of the remaining provisions hereof shall remain in full force 
and effect. 
 
SECTION 5. Effectivity Clause. – This Act shall take effect immediately after its complete 
publication either in the Official Gazette or in a newspaper of general circulation in the 
Philippines. 
 
Approved,