SEVENTEENTH CONGRESS OF THE REPU!
OF THE PHILIPPINES
First Regular Session

HOUSE OF REPRESENTATIVES
H.B.No. 4634

Introduced by Representative Rolando G. Andaya Jr.

AN ACT
EXEMPTING THE SALE OF ELECTRICITY BY GENERATION TRANSMISSION
AND DISTRIBUTION COMPANIES AND ELECTRICITY COOPERATIVES FROM
VALUE-ADDED TAX (VAT), 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 has become a crucial commodity in this day. In fact, electricity accounted
for 4.5% of total family expenditure in 2012.’ For a family of five in the lowest income
decile, this is equivalent to spending Php 7,023 or Php 585 a month.”

Although fully subsidizing electricity rates is not feasible due to budgetary
constraints, the State still has the mandate to keep electricity prices as affordable as
possible. The removal of the Value Added Tax (VAT) on electricity generation,
transmission and distribution offers some relief. The removal of the VAT is projected
to reduce electricity rates among residential consumers by 0.7918 Php/kKwH-
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

AA
ROLANDO|G ANDAYA Jr.

/

* Philippine Statistics Authority. 2012 Family Income and Expenditure Survey,

° ibid.

* United States Agency for International Development. “Challenges in Pricing Electric Power Services in
Selected ASEAN Countries’ (April 2013). Retrieved from http://www.catif.org/wp-
content/uploads/2013/10/Challenges-in-Pricing-Electric-Power-Services.paf


SEVENTEENTH CONGRESS OF THE REPUBLIC
OF THE PHILIPPINES.
First Regular Session

HOUSE OF REPRESENTATIVES
H.B. No.

Introduced by Representative Rolando G. Andaya Jr.

AN ACT
EXEMPTING THE SALE OF ELECTRICITY BY GENERATION TRANSMISSION
AND DISTRIBUTION COMPANIES AND ELECTRICITY COOPERATIVES FROM
VALUE-ADDED TAX (VAT), 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.- xxx
(i) xxx
(i) xxx

“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

another domestic common carriers by land relative to their transport of M

goods or cargoes; common carriers by air and sea relative to their |


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48

transport of passengers, goods or cargoes from one place in the
Philippines to another place in the Philippines; [sales of electricity by
generation companies, transmission, and distribution companies;]
services of franchise grantees of [electric 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:

KX x.

SECTION 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

(W) xxx

(X) SALES OF ELECTRICITY BY GENERATION, TRANSMISSION, AND
DISTRIBUTION COMPANIES AND ELECTRIC COOPERATIVES;

(Y) SERVICES OF FRANCHISE GRANTEES OR ELECTRIC UTILITIES.

SECTION 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.

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 force and effect.

SECTION 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,