• 
SIXTEENTH CONGRESS OF THE REPUBL1C ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.B.No. 2101 
Introduced by Senator Jnan Ponce Enrilc 
AN ACT 
}iermtr 
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·14 
FEB -4 P 5 :59 
EXEMPTING THE SALE OF ELECTRICITY TO RESIDENTIAL CONSUMERS 
WITH CONSUMPTION NOT EXCEEDING 250 KILOWATT HOUR FROM THE 
VALUE-ADDED TAX, AMENDING FOR THE PURPOSE SECTION 109 (1) OF 
REPUBLIC ACT NO. 8424 OF THE NATIONAL INTERNAL REVENUE CODE OF 
1997, AS AMENDED, AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
This bill proposes to exempt the sale of electricity to residential consumers with 
consumption not exceeding two hundred fifty kilowatt hour (250 kwh) 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 V AT on power further increased the cost. According to the 
Department of Energy (DOE), residential consumers ~r households would have to shell out 
additional 0.592 centavos per kwh due to the imposition of VAT. If a household consumes 
an average of 250 kwh per month, household members would be able to save P148.00 in 
electricity payment if V AT is removed, a rather substantial amount especially to those who 
belong to the lower middle income bracket and below. 
The bill is limited to exempting residential users or households only because 
households cannot avail of output V AT to mitigate their V AT liability unlike industries, 
business and commercial establishments which could pass on the cost of electricity to the 
users of their service. Moreover, commercial users are in a better position to carry out the 
burden of VAT on electricity compared to households. Lastly, households are also the last 
, 
point in the V AT chain so the exemption will not adversely affect V AT collection efficiency 
in terms of establishing paper trail of VAT able transactions. 
Senate Bill Nos. 2547 and 2159, pushing for the same exemption, were filed by this 
Representation during the 14th and 15th Congresses, respectively. 
In view of these, the immediate passage of this bill is earnestly sought. 


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SIXTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
'14 
FEB -4 P5 :5B 
First Regular Session 
) 
S ENA TE 
S.B. No. 2101 
Introduced by Senator Juan Ponce Enrile 
AN ACT 
EXEMPTING THE SALE OF ELECTRICITY TO RESIDENTIAL CONSUMERS WITH 
CONSUMPTION NOT EXCEEDING 250 KILOWATT HOUR FROM THE VALUE-
ADDED TAX, AMENDING FOR THE PURPOSE SECTION 109 (1) OF REPUBLIC 
ACT NO. 8424 OR THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 109 (1) of Republic Act No. 8424, as amended, otherwise 
known as the National Internal Revenue Code of 1997, is hereby amended to read as 
follows: 
"SEC. 109. Exempt Transactions. -
(1) Subject to the provlSlons of 
Subsection (2) hereof, the following transactions shall be exempt from the 
value-added tax: 
xxx 
"(U) 
Deductions Allowed to the Estate of Citizen or a Resident. - In the 
case of a citizen or resident of the Philippines, by deducting from the value of 
the gross estate -
Services of banks, non -bank financial intermediaries 
performing 
quasi-banking 
functions, 
and 
other 
non-bank 
financial 
intermediaries; [and) 
"(v) 
SALE OF ELECTRICITY BY DISTRIBUTION UTILITIES TO 
RESIDENTIAL CONSUMERS WHOSE MONTHLY CONSUMPTION DOES 
NOT EXCEED TWO HUNDRED FIFTY KILOWATI HOUR (250 KWH); 
AND, 
"[ (V») 
(W) Sale or lease of goods or properties or the performance of 
services other than the transactions mentioned in the preceding paragraphs, 
the gross annual sales and/or receipts do not exceed the amount of One million 
five hundred thousand pesos (PI,SOO,OOO): Provided, That not later than 
January 3'1, 2009 and every three (3) years thereafter, the amount herein stated 
shall be adjusted to its present value using the Consumer Price Index, as 
published by the National Statistics Office (NSO);" 
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Sec. 2. Implementing Rules and Regulation~. - The Secretary of Finance shall, 
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upon the recommendation of the Commissioner of Internal Revenue, promulgate the 
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necessary rules and regulations for the effective implementation of this Act. 
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Sec. 3. Repealing Clause. - All laws, decrees, orders, rules and regulations or 
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other issuances or parts thereof inconsistent with the provisions of this Act are hereby 
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repealed and modified accordingly. 
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Sec. 4. Effectivity. - This Act shall take effect fifteen (15) days following the 
completion of its publication either in the Official Gazette or in a newspaper of 
general circulation in the Philippines. 
Approved,