The Bureau of Internal Revenue (BIR) has removed the value-added tax (VAT) on system loss charges. This move will lower electricity bills by about ₱20 per month for households. The change was made official through BIR Memorandum Circular No. 97-2026.
System loss charges cover technical and non-technical losses, including pilferage and inefficiencies. These are collected by distribution utilities.
With VAT now excluded, consumers will see smaller bills. However, the charges themselves will stay. Energy Secretary Sharon Garin said reducing or removing system loss charges will take gradual reforms under EPIRA, ERC, NEA, or DOE. This is to avoid hurting electric cooperatives financially.
The Marcos administration views the VAT removal as part of its effort to ease electricity costs. Malacañang confirmed government revenue will drop by around ₱10 billion each year. Still, officials said there is no need to introduce new taxes to make up for the loss.
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You can expect slightly lower bills starting this month. The government is also looking at long-term reforms to improve the power sector.
