SEVENTEENTH CONGRESS OF THE -,
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REPUBLIC OF THE PHILIPPINES ome atti
Second Regular Session “_
SENATE 1B MAY 28 P54
SB.No.— 1824 pour
RECENY! ¥ U5 |
Introduced by Senator Poe _ -
AN ACT

EXEMPTING THE SALE OF ELECTRICITY 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 a costly necessity. According to the 2012 Family Income and
Expenditure of the Philippine Statistics Authority, electricity accounted for 4.5% of
total family expenditure in 2012.1 For a family of five in the lowest income decile,
this is equivalent to spending Php 7,023 or Php 585 a month.”

Taxes and subsidies account for 11 to 20% of a family’s electricity bill, of which at
around 9% 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 can reduce
electricity rates among residential consumers by 0.7918 Php/KwH- 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.

(pitts

+ Philippine Statistics Authority. 2012 Family Income and Expenditure Survey.
Ibid.

3 United States Agency for International Development. “Challenges in Pricing Electric Power Services
in Selected ASEAN Countries” (April 2013). Retrieved from http://www.catif.ora/wp-
nt/upl ‘Challenges-in-Pricing-Electric-Power-Services.



SEVENTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES
Second Regular Session

SENATE
S.B.No.__1824

Introduced by Senator Poe

EXEMPTING THE SALE OF ELECTRICITY 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 of Representatives of the Philippines in
Congress assembled:
SECTION 1.- Section 108 (a) 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.- 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 of services including the use of
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 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; fsates—ofelectrieityby—generation—eompanies,
transmission,-and-distributien-companies;} services of franchise grantees of
felectric-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"
SEC. 2.- Section 109 (1) of the National Internal Revenue Code, as amended

by Republic Act No. 9337, is 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"

(AA) Sale of drugs and alcohol and medicines prescribed for diabetes, high
cholesterol, and hypertension beginning January 1, 2019; and}
(BB) Sale of lease of goods or properties;
(CC) SALES OF ELECTRICITY BY GENERATION, TRANSMISSION,
AND DISTRIBUTION COMPANIES AND ELECTRIC COOPERATIVES;
AND



(DD) SERVICES OF FRANCHISE GRANTEES OF ELECTRIC
UTILITIES.

SEC. 3. Repealing Clause.- All laws, decrees, orders, rules and regulations or
other issuances or parts thereof inconsistent with the provisions of this Act are
hereby repealed and modified accordingly.

SEC. 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.

SEC. 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,