To provide Filipino families with greater relief from high electricity rates, Senator Bam Aquino called for the removal of the 12-percent value-added tax (VAT) on electricity bills, rather than limiting the exemption to system loss charges. The latter will leave residents with meager savings on their bill, which will not bring them the needed relief, he said.
Aquino said the Bureau of Internal Revenue’s upcoming revenue memorandum circular (RMC) removing the VAT on system loss charges in electricity bills would only lead to a 0.5- to 0.8-percent reduction in electricity bills.
Meanwhile, removing VAT from the entire electricity bill could result in an estimated 8 percent to 10 percent reduction for a household with a monthly average consumption of 200kwh, equivalent to savings of around P237 to P296 per month, or P2,844 to P3,552 annually, the senator said.
‘From our studies, the share of VAT on systems loss is quite small, like 0.8 percent only. Our proposal is to remove the VAT on the electricity bill itself. That would bring a 10-percent discount or a 10-percent decline in our electricity bill,’ said Aquino, chairperson of the Committee on Trade, Commerce, and Entrepreneurship.
Aquino, likewise, renewed his call for the passage of his Senate Bill 266, which he filed on July 8, 2025, just days after the start of the 20th Congress.
The proposed measure seeks to exempt from VAT the sale of electricity by generation, transmission, and distribution companies, as well as electric cooperatives, to help lower electricity rates and ease the burden on consumers.
Aquino also emphasized that removing VAT on electricity would help strengthen micro, small, and medium enterprises, create more jobs, and stimulate economic growth.
Under Aquino’s proposed measure, the sale of electricity by generation, transmission, and distribution companies, including electric cooperatives, would be classified as VAT-exempt transactions. The bill also exempts the services of franchise grantees of electric utilities from VAT.
As part of his broader efforts to ease the cost of living amid high prices of goods and petroleum products, Aquino also filed Senate Bill No. 2047 to reduce the value-added tax (VAT) from 12 percent to 10 percent on goods and services, including petroleum products.