Manila: Senators on Monday welcomed the Bureau of Internal Revenue's (BIR) removal of value-added tax (VAT) on electricity system loss charges, describing the government move as a relief for consumers while pressing for further cuts in power bills.

According to Philippines News Agency, Senate Committee on Energy chair Erwin Tulfo announced in plenary that the BIR, under Commissioner Charlito Martin Mendoza, issued Revenue Memorandum Circular No. 97-2026 removing VAT from the system loss charge. Tulfo noted that consumers have long sought the removal of this tax because it adds to the burden on their electricity bills. He emphasized that the system loss is merely a pass-through charge and does not represent electricity consumed by customers, questioning why consumers were being taxed for it.

Senate President Sherwin Gatchalian called the BIR action a "big win" for consumers, highlighting that the tax was removed without waiting for Congress to pass another law. He underscored the significance of this move, indicating that even without new legislation, the VAT on system loss has been lifted.

Senator Risa Hontiveros expressed hope that the BIR's decision would encourage the Energy Regulatory Commission (ERC) to take further action and address the system loss charge itself. She urged the ERC to be emboldened by the BIR's move to completely remove the system loss charge.

Tulfo mentioned that the Senate energy panel would continue reviewing proposals to remove non-technical system losses from consumer bills. Senator Bam Aquino also welcomed the VAT exemption but noted its limited impact compared to removing VAT from the entire electricity bill of residential consumers. He pointed out that the removal of VAT on system loss would account for only about 0.6 to 0.8 percent of the electricity bill. Aquino suggested that exempting residential electricity bills from VAT altogether could provide significantly bigger relief to households.

The BIR action follows government efforts to reduce electricity costs and review charges passed on to consumers, including system losses and other components of power bills.