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TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
25 JUL-3 P3 36
SENATE 
S. B. No. 61
RtCEi' I [t B';,
Introduced by Senator Rodante D. Marcoleta
AN ACT
EXEMPTING ELECTRICITY SALES FROM VALUE-ADDED TAX, FURTHER 
AMENDING FOR THE PURPOSE SECTIONS 108 AND 109 OF THE NATIONAL 
INTERNAL REVENUE CODE, AS AMENDED
EXPLANATORY NOTE
The Philippines remains to be one of the Southeast Asian countries with the highest 
cost of electricity. Several factors contribute to this continuing energy problem of the 
country that include: deregulation of power generation, transmission bottleneck, 
distribution losses, reliance on imported fuel for power plants, and unrealistic regulatory 
asset base, among others. All these result in elevated operating expenses that deter 
investments, leading to high electricity costs that burden consumers.
In 2024, the generation charge for electricity in the Philippines has seen multiple 
increases, primarily driven by several economic and market factors. The average 
household consuming 200 kWh monthly saw an increase of PhpO.1839 per kWh, primarily 
due to a rise in the generation charge, influenced by higher costs from the Wholesale 
Electricity Spot Market (WESM) and "sweetheart deals" in Power Supply Agreements 
(PSAs). Specifically, WESM charges rose by PhpO.2531 per kWh due to tight supply 
conditions, while PSAs saw a P0.1050 per kWh increase due to the weakening peso. 
Increases in the generation charge for electricity in 2024 highlight the complex interplay 
between currency fluctuations, supply chain issues, and market conditions. As the costs
A


associated with power generation continue to rise, consumers may need to adjust their 
budgeting for electricity expenses and consider energy-saving measures.
Accordingly, this proposed measure seeks to exempt sales of electricity from the 
twelve percent (12%) value-added tax (VAT) with the objective of reducing operational 
costs leading to lower price of electricity. This would further stimulate economic activity 
and enhance domestic consumption, thereby contributing to broader and more 
sustainable economic growth. The removal of VAT on electricity sales is likewise 
anticipated to relieve financial strain on both consumers and enterprises, thereby 
supporting the development of a more inclusive and resilient energy system and 
improving the overall quality of life for Filipinos.
In view of the foregoing, the immediate passage of this bill is earnestly sought.
RODANTE D. MARCOLETA


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TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
)
)
SENATE 
61
S. B. No.
4
Aex
Introduced by Senator Rodante D. Marcoleta
AN ACT
EXEMPTING ELECTRICITY SALES FROM VALUE-ADDED TAX, FURTHER 
AMENDING FOR THE PURPOSE SECTIONS 108 AND 109 OF THE NATIONAL 
INTERNAL REVENUE CODE, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
Section 1. Section 108 of the National Internal Revenue Code of 1997, as 
amended, is hereby further amended to read as follows:
"Sec. 108. Value-added Tax on the Sale of Services, Including Digital Services, 
and the Use or Lease of Properties. -
"(A) Rate and Base of Tax. - There shall be levied, assessed and 
collected, a value-added tax equivalent to twelve percent (12%) of the gross 
sales derived from the sale or exchange of services, including digital services, 
and the use or lease of properties.
"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


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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; 
fsolcs of electricity by -gencrotion companies/ transmission by any entity, and
distribution companies, including electric cooperatives;] 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; digital service 
providers; 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."
Sec. 2. Section 109 of the National Internal Revenue Code of 1997, as 
amended, 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 VAT:
XXX
(EE) SALE OF ELECTRICITY BY GENERATION, TRANSMISSION, AND 
DISTRIBUTION COMPANIES AND ELECTRIC COOPERATIVES.
(FF) SERVICES OF FRANCHISE GRANTEES OF ELECTRIC UTILITIES."
Sec. 3. Separability Clause. - If any provision or part of this Act is declared invalid 
or unconstitutional, the remainder thereof not otherwise affected shall remain in full 
force and effect.


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Sec. 4. Repealing Clause. - All laws, presidential decrees, executive orders, letters
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of instructions, proclamations or administrative regulations that are inconsistent with
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the provisions of this Act are hereby repealed, amended, or modified accordingly.
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Sec. 5. Effectivity. - This Act shall take effect fifteen (15) days after its publication
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in the Official Gazette or in a newspaper of general circulation.
Approved,