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Republic of the Philippines a
HOUSE OF REPRESENTATIVES? iypey
Quezon City =

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 344

Introduced by Reps. NERI JAVIER COLMENARES and CARLOS ISAGANI T. ZARATE

AN ACT

GENERATION, TRANSMISSION, AND DISTRIBUTION OF ELECTRICITY AS
VALUE-ADDED TAX EXEMPT TRANSACTIONS, AMENDING FOR THE PURPOSE
SECTIONS 108 (A) (ii) and 109 (1) OF THE NATIONAL INTERNAL REVENUE CODE,

AS AMENDED BY REPUBLIC ACT NO. 9337, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

his Dill seeks to amend the National Internal Revenue Code of 1997, as amended by Republic Act
No. 9377, by exempting electricity as a commodity from value-added tos (VAT). VAT is imposed
on the sales of electricity by generation companies, transmission and distatnainy companies and the

Rareases of fuel, food, and other commodities, it is the duty of Congress to provide economic relief
the Filipino people. The removal of VAT on electricity is one of the most viable options for
Congress to immediately act on.

Fo Philippines has already one of the highest cost of electricity in Southeast Asia For instance, the
2011 addition of 5.8 centavos per kilowatt-hour (kWh) on generation charges plus the 12% VAT
imposed raised the price of electricity at P9.55 per kWh, For « household consuming 200kWh of
electricity a month, the VAT is estimated at P191, an amount quite substantial to the average
Rorking Filipino, What is worse, VAT is not only imposed on the generation of consumed power
but also on system loss charges, this is clearly making the Filipino people suffer twice over.


Despite the obvious benefit to the country’s fiscal management, i is imperative that Congress act on
the removal of VAT on electricity a it isthe fastest and most drect fora ct economic relief for all
Filipino households and businesses. Whatever revenue losses to be suffered by government will
definitely be offset by the increased purchasing power of all households ac av as cheaper
Production costs, redounding to a more robust and equitable economy.

{n view of the foregoing, approval ofthis bill i eamestly sought.
hoe ZARATE

CARLOS ISAG,
Bayan Muna Party-List



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

i B44
HOUSE BILL No. 34

Introduced by Reps. NERI JAVIER COLMENARES and CARLOS ISAGANI T. ZARATE

AND DISTRIBUTION COMPANIES AND ELECTRIC COOPERATIVES, AND THE.

Be it enacted bythe Senate and House of Representatives ofthe Phikpines in Congress ascemble:

SECTION 1. Section 108 (A)(i) 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

“@ xxx

“Gi) xxx

sine phrase sale ot exchange of services' means the performance ofall 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,
Gominercial, customs and immigration brokers; lessors of property, whether personal of real;
warehousing services; lessors or distributors of cinematographic films; persone engaged in
mniling, processing, manufacturing ot repacking goods for others; propretors, operators or
keepers of hotels, motels, rest-houses, pension houses, inns, resorts; Proprietors or operators


of restaurants, sefreshment parlors, cafes and other eating places, including clubs and
caterers; dealers in securities; lending investors; transportation contractors on then transport

domestic common carriers by land relative to their transport of | ‘goods or cargoes; common
<utviess by ait and sea relative to their 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
[clectric utilties,] telephone and telegraph, radio and television broadcasting and all other
franchise grantees except those under Section 119 of this Code and non Lift insurance
combanies (except their crop insurances), including surety, fidelity, indemnity and bonding
FarsPanies: and similar services regardless of whether or not the performance thereof eal
for the exercise or use of the physical or mental faculties. The phrace sale or exchange of
services’ shall likewise include:

XXX.

SECTION. 2. Section 109 (1) of the National Internal Revenue Code, as amended by
Republic Act No. 9337, is hereby further amended to read as follows:

1SEC. 109. Exempt Transactions, - (1) Subject to the provisions of subsection @
hereof, the following transactions shall be exempt from the value-added tax

(A) xxx
“B) xxx

Xxx

<(U) xxx

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

“(W) SERVICES OF FRANCHISE GRANTEES OF ELECTRIC UTILITIES;
TR SALE OR IMPORTATION OF MACHINERIES AND EQUIPMENT,
INCLUDING SPARE PARTS, TO BE DIRECTLY USED BY THE BUYER OR
DMwORTER HIMSELF IN THE GENERATION, TRANSMISSION, AND
DISTRIBUTION OF ELECTRICITY,

“(Y) Export sales by persons who are not VAT-registered.

SECTION. 5. Repealing Clause. — The following laws ot provisions of laws are hereby
repealed:

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


@) All other laws, acts, decrees, executive orders, issuances, and rules and regulations or
parts thereof which are contrary to and inconsistent with any provisions of tes Ace ee
hereby repealed, amended, or modified accordingly

SECTION. 4. Separability Clause. — If any provision of this Actis subsequently declared
‘constitutional, the validity of the remaining provisions hereof shall remain in full fosce and effect.