ERC Chief Asked Marcos Admin to Remove the 12% VAT on Electricity
Energy Regulatory Commission (ERC) Chair Agnes Devanadera hopes the Marcos Jr administration will remove the 12% Value Added Tax (VAT) on the electricity.
Devanadera raised the problem of double taxation on electricity with the incoming administration on Thursday, intending to lower the exorbitant power costs now paid by end-users. Devanadera advocated that the government abolish the generation charge’s VAT.
She stated that just the distribution charge should be taxed. She went on to say that correcting the duplicate VAT calculation is not necessary by law. Instead, he claimed that the Bureau of Internal Revenue could only provide a legal interpretation of the tax policy.
An electrical bill, according to the article of Inquirer, includes charges for generation, transmission, distribution, universal, and feed-in-tariff allowance (FiT-All). On a monthly basis, power distributors such as Manila Electric Co. (Meralco) and power cooperatives collect these from their subscribers.
The rest is subject to VAT, with the exception of the universal and FiT-All costs. The VAT on the distribution charge, or the cost of supplying power to households and other end-users, is paid by these distribution companies and passed on to consumers.
Companies that generate energy, such as Aboitiz Power Corp. and First Gen Corp., must also pay VAT on the fuel they use. In fact, the average Filipino consumer pays taxes twice for using energy on a daily basis.
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