REPRES
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Republic of the Philippines > Receiven

HOUSE OF REPRESENTATIVES Dare 1 4

Quezon City, Metro Manila ELT AUG 2075
TIME SPM

TWENTIETH CONGRESS
First Regular Session

HOUSE BILLNO._3485

Introduced by Representative Jan Rurik D. Padiernos, GP (Galing sa Puso) Party-List

EXPLANATORY NOTE

Electricity is a basic need. Itis essential to every Filipino family. But in the Philippines,
electricity is very expensive. As of November 2024, the cost of electricity in the Philippines
averaged P12.49 per kilowatt hour, compared to P7.56 in Thailand and P7.06 in Vietnam, based
on Department of Energy data."

‘One reason for this high cost is the value added tax or VAT. At present, VAT is charged
on almost every part of the electric bill. This includes the generation charge, transmission
charge, distribution charge, system loss, metering, and other fees. As a result, the several
charges placed in the electricity bill, places a heavy burden on the consumers. A household bill
of 1,000 pesos can increase by more than 100 pesos just because of VAT.

This bill seeks to amend Sections 108 and 109 of the National Internal Revenue Code.
Itwill remove VAT on the sale and supply of electricity. This includes all charges in the electric
bill including but not limited to generation, transmission, distribution, system loss, metering,
and other pass-through charges

This proposal supports the duty of the State to promote social justice, reduce inequality,
and protect consumers from unfair pricing, It will also help rural areas by supporting electric
cooperatives and ensuring access to reliable and affordable electricity across the country.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

An
ATTY. JAN RURIK D, PADIERNOS.
GP (Galing sa Puso) Party-List

» Department of Energy - Energy Policy and Information Management Bureau. (2024, November). ASEAN electricity rates
as of November 2024, Department of Energy, Republic of the Philippines.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO.3469

Introduced by Representative Jan Rurik D. Padiernos, GP (Galing sa Puso) Party-List

AN ACT EXEMPTING ALL COMPONENTS OF THE ELECTRICITY BILL FROM
VALUE ADDED TAX (VAT), AMENDING SECTIONS 108 AND 109 OF THE
NATIONAL INTERNAL REVENUE CODE OF 1997, 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. "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 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, fsales-of electricity by generation companies, transmission by-any
entity, and-distribution companies, including -eleetrie-cooperatives}s services of franchise
grantees of feleeteie 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, INCLUDING
BUT NOT LIMITED TO CHARGES FOR GENERATION, TRANSMISSION,
DISTRIBUTION, SYSTEM LOSS, METERING, AND OTHER PASS-THROUGH
CHARGES AS DETERMINED BY THE ENERGY REGULATORY COMMISSION
(ERC), REGARDLESS OF CONSUMER CLASSIFICATION. THIS SHALL NOT
APPLY TO THE FOLLOWING: (1) EMBEDDED RESELLERS OR NON-UTILITY
ENTITIES ENGAGED IN THE RESALE OF ELECTRICITY UNLESS THEY ARE
REGULATED BY THE ENERGY REGULATORY COMMISSION (ERC);(2)
EXPORT-ORIENTED ENTERPRISES OR PEZA LOCATORS ALREADY
ENJOYING VAT ZERO-RATING UNDER SPECIAL ECONOMIC ZONE LAWS;
AND (3) UTILITY OPERATIONS OUTSIDE PHILIPPINE JURISDICTION OR
THOSE GOVERNED BY INTERNATIONAL TREATIES.

(FF) SERVICES OF FRANCHISE GRANTEES OF ELECTRIC UTILITIES."
SEC. 3. If any provision of this Act is held unconstitutional or invalid, the remaining

provisions shall remain in full force and effect.

SEC. 4, All other laws, decrees, issuances, rules and regulations, inconsistent with this
Act are hereby repealed, amended or modified accordingly.

SEC. 5. This Act shall take effect fifteen (15) days after its publication in the Official
Gazette or in a newspaper of general circulation

Approved,