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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No.

Introduced by Representatives Sergio C. Dagooc, Presley C. De Jesus,

‘Adriano A. Ebcas, and Godofredo N. Guya

EXPLANATORY NOTE

This bill proposes to exempt the sale of electricity from the
payment of value-added tax (VAT). Prior to the enactment of
Republic act No. 9337, also known as the Expanded Value Added Tax
Law, the cost of electricity in the Philippines was already one of the
highest in Asia and the imposition of VAT on not only the power
generation, but also on the transmission and distribution services
further increased the cost.

‘The Philippine Statistics Authority, based on the results of
2011 Household Energy Consumption Survey (HECS), has said that
electricity remains as the most common source of energy used by
household in the Philippines. About 87 percent of 21.0 million
households used electricity from March to August 2011. This
accounts for 4.800195% or more than 1/25 of all household
expenditures in the Philippines goes towards electricity.

The challenge is for the state to ensure affordable, reliable, and
accessible electricity at the heart of balancing price fluctuations, in
view of the increasing inflation rates especially as electricity, gas, and
fuels contributed greatly to inflation.

In view of the foregoing and in order to help alleviate the
crippling burden of high power costs, this proposed measure seeks
to exempt the sale of electric power from Value Added Tax. By
lowering the cost of electricity, this bill hopes to spur additional
investments, boost the competitiveness of small and medium
enterprises through lower operating costs, and increase the
purchasing power of a household. The amount of VAT foregone



through this exemption will eventually be recovered by the State
through the consumption of goods and services from this increased
purchasing power.

The passage of this bill is earnestly and sincerely sought.

REP. aby C. DAGOOC

APEC Partylist
. PRESLEY C. DE 2 :
PHILRECA Partylist

REP. ADRIANO A. EBCAS
Ako Padayon Pilipino Partylist



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
EIGHTEENTH CONGRESS
First Regular Session

3248
House Bill No.

Introduced by Representatives Sergio C. Dagooc,
Presley C. De Jesus, Adriano A. Ebcas, and Godofredo N. Guya

“AN ACT
EXEMPTING THE SALE OF ELECTRICITY BY POWER GENERATION,
TRANSMISSION AND DISTRIBUTION COMPANIES, PARTICULARLY
NON-STOCK NON-PROFIT ELECTRIC 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
10863, AND FOR OTHER PURPOSES”

Beit enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 108 of Republic Act No. 8424, as amended by Republic Act No
9337 and 10963, otherwise known as the National Internal Revenue Code of 1997, 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. - There shall be levied, assessed and
collected, a value-added tax equivalent to twelve percent (12%) of
gross receipts derived from the sale or exchange or services,
including 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


1s property, whether personal or real; warehousing services; lessors

16 or distributors of cinematographic films; persons engaged in

7 milling, processing, manufacturing or repacking goods for others;

18 proprietors, operators or keepers of hotels, motels, resthouses,

19 pension houses, inns, resorts; proprietors or operators of

20 restaurants, refreshment parlors, cafes and other eating places,

21 including clubs and caterers; dealers in securities; lending

22 investors; transportation contractors on their transport of goods

23 or cargoes, including persons who transport goods or cargoes for

24 hire and other domestic common carriers by land relative to their

25 transport of goods or cargoes; common carriers by air and sea

26 relative to their transport of passengers, goods or cargoes from

27 one place in the Philippines to another place in the Philippines;

30 aaiading alates anececmaiteaty services af pac

31 grantees of [eleetrie-utilities,] telephone and telegraph, radio

32 and television broadcasting and all other franchise grantees

33 except those under Section 119 of this Code and non-life

34 insurance companies (except their crop insurances), including

35 surety, fidelity, indemnity and bonding companies; and similar

36 services regardless of whether or not the performance thereof

37 calls for the exercise or use of the physical or mental faculties. The

38 phrase ‘sale or exchange of services’ shall likewise include:”

39 SECTION 2. Section 109 (1) of Republic Act No. 8424, as amended by
40 Republic Act No 9337, otherwise known as the National Internal Revenue Code
41 of 1997, is hereby further amended to read as follows:

42 “Sec. 109. Exempt Transactions — (1) Subject to the provisions of

4B Subsection (2) hereof, the following transactions shall be exempt

44 from the value-added tax:

45 XXX

46 (BB) Sale or lease of goods or properties or the performance of

47 services other than the transactions mentioned in the preceding

48 paragraphs, the gross annual sales and/or receipts do not exceed

49 the amount of Three million pesos (P3,000,000)

50 (CC) Sale of electricity by generations, transmission,

51 and distribution companies and electric cooperatives;

52 and

53 (DD) Services of Franchise Grantees of Electric

54 Utilities.”

55 SECTION 3. Repealing Clause - All laws, presidential decrees, executive
56 orders, letters of instruction, administrative rules and regulations or parts
57 thereof which are contrary to or inconsistent with the provisions of this Act are

58 hereby repealed or modified accordingly.


59
61
62
63

65

SECTION 4. Separability Clause — Should any part or provision of this Act be
held unconstitutional or invalid, all other provisions hereof which are not
affected thereby shall continue to be in full force and effect.

SECTION 5. Effectivity. - This Act shall take effect after fifteen (15) days
following its complete publication in the Official Gazette or in two (2)
newspapers of general circulation whichever is earlier.

Approved.