Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

i DATE:

Seventeenth Con; TW

First Regular Ses:

HOUSE BILL NO. 38834

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Introduced by Representative Manuel F.

EXPLANATORY NOTE

es holds the dubious distinction of having one of the highest eleetr
South Fast Asia in recent years. Notwithstanding the high cost of electric power in the country
parts of the country ~ mostly in the Southern Philippines - are plagued with regular daily power out
lasting for hours due to a crippling shortage in power supply. ‘These power outages has resulted in
billions of pesos in lost opportunity costs for the country

The Philippi city rates in

some

The prohibitive cost of electric: power and its unreliable supply have become major stumbling
blocks in the country’s pursuit for sustainable economic progress and recovery. Apart from the
uncertainty in clean and stable power supply. economic disincentives such as the high cost of power has
adversely affected the country’s regional and global competitiveness in attracting direct foreign
investments. ‘The high cost of electric power has likewise greatly affected the disposable income of the
average Filipino family who now have less money for savings because of the resultant increase in the cost
of basic commodities. transportation, fuel, education, medical and other services. and other core
necessities.

In contrast to the high tax regime for electric power in the Philipy
countries such as Indonesia, Malaysia, and Thailand are heavily subsidized by their respective
governments, Across the entire power supply chain, Philippine taxes ranging from royalty taxes on
indigenous fuel for power generation (e.g., Malampaya natural gas, geothermal steam), the value-added
tax, the local franchise tax, the Universal Charges, and other government fees and charges, ete, have all
contributed to the high cost of electrical power to end-users.

trie power rates in

And in order to help alleviate the crippling burden of high power costs,
ie power by electric cooperatives from value-

In view of the foregoing,
“this proposed measure seeks
added tay (VAT) through the

‘exempt the sale of elect
fmendment of the National Internal Revenue Code of 1997, as amended by
Republic Act No. 9377. Av, this measure seeks t grant some relief from high electricity rates to
households served by clegffie cooperatives, By lowering the cost of elvetrical power, this bill hopes to
spur addtional inyestmeyfs gnd boost the eompettiveness of small and medium enterprises through lower
operating costs

Ngee

aN
'y RECEIVED @
29 SEP 2016

\ 9 Br ap
3 phy
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Republic of the Philippines

NTATIVES

Seventeenth Congr
t Regular Session

no, 8834

Introduced by Representative Manuel F. Zubi

AN ACT.

LECTRICITY BY ELECTRIC COOPERATIVES AS.
VALUE-ADDED TAX EXEMPT TRANSACTIONS, AMENDING FOR THE PURPOSE,
109 (1) OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY
REPUBLIC ACT NO. 9337, AND FOR OTHER PURPOSES,

CLASSIFYING THE SALE (

Be it enacted by the Senate und House of Representatives of the Philippines in Congress
aysembled:
SECTION 1, Section 109 (1) of the National Internal Revenue Code. as amended by Republic

Act No. 9337. is hereby further amended to read as follows:

*. 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
UB) NNN.
ANY
"(UY XX,

“(V) SALE OF ELECTRIC POWER BY F

CTRIC COOPERATIYV

“(Y) Lixport sales by persons who are not VAT-tegistered

SECTION 3. Repealing Clause. ~ The following laws or provisions of Jaws are hereby

repealed
A) Section 24 (A) and (B) of Republic Act No. 9337: and

(B) All other laws, acts, decree:

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 foree and

effect.

TION 5. Effectivity Clause, ~ This Act shall take effect immediately afier its complete
publication either in the Official Gazette or in a newspaper of general circulation in the

Philippines.

Approved.