Palace assures no new tax with removal of VAT on systems loss charges

September 15, 2026

By ABOGADO.COM.PH Staff

The government is not mulling a new tax to make up for P 10 billion in estimated annual revenue losses from the removal of the value-added tax on allowable electricity system-loss charges, Malacañang said on Tuesday.

The government would instead rely on efficient tax administration and existing revenue reforms to offset the potential reduction in revenue.

“Sa ngayon ay wala pong napag-uusapan kung mayroong pang dagdag na buwis na ipapataw, dahil hindi po iyan ang concern sa ngayon ng pamahalaan,” said Presidential Communications Office Undersecretary and Palace press officer Claire Castro in a press briefing.

This was after the Bureau of Internal Revenue recognized the allowable system-loss charge within the Energy Regulatory Commission-approved cap as a government-mandated charge that is excluded from gross sales for VAT purposes.

This means the charge is not subject to output vat or creditable withholding tax on VAT.

Castro said this might slash VAT collections by P 10 billion a year, but assured that the government can generate revenue through efficient tax administration and collection, VAT reforms on digital services, and the CREATE MORE law.

She added that President Ferdinand Marcos Jr. still supports the removal of the systems-loss charges through amendments to the Electric Power Industry Reform Act.