Summary
RMC No. 116-2024 clarifies the provisions of RA No. 11976 (Ease of Paying Taxes Act) that apply to the Power Industry.
Key points
- Gross sales and invoicing. Gross sales of Distribution Utilities (DUs) and Electric Cooperatives (ECs) for sale of services, including power, exclude VAT and amounts earmarked for third parties or received as reimbursement that do not benefit the seller. DUs and ECs invoice customers for electricity sale, transmission and ancillary services including the VAT of GenCos and Transmission Companies, but claim no Input Tax from these. Customers engaged in business claim that Input Tax.
- Pass-through and RES. The pass-through charges of the Retail Electricity Supplier (RES) are the transmission and distribution charges, and the RES claims no input tax on them.
- Charges not subject to Output Tax or CWT. Energy Tax under Batas Pambansa Blg. 36, Universal Charges and Benefits to Host Communities under RA No. 9136, FIT-ALL under ERC Res. 24, Series of 2013, franchise taxes, and Real Property Tax are not subject to Output Tax and Creditable Withholding Tax on VAT and Income.
- Creditable withholding. The 5% creditable VAT withheld by government customers is claimed in the VAT Returns of DUs and ECs per BIR Form No. 2307. The 2% tax withheld by customers is claimed in the Income Tax Return of DUs, ECs and RES per BIR Form No. 2307.
- Adjustments for zero-rated and exempt sales. GenCos and Transmission Companies invoice the full amount including VAT. DUs, ECs and RES give a certification of zero-rated or exempt transactions on or before the 5th day of the month after the invoice period. GenCos and Transmission Companies then issue adjustment documents showing the original invoice number.
- Deferred VAT. GenCos and Transmission Companies are not liable to remit outstanding deferred VAT from the effectivity of RR No. 3-2024 on April 27, 2024. As a transitory step, they submit an inventory by September 30, 2024, and DUs and ECs remit the deferred VAT using BIR Form No. 0605. DUs and ECs also file a remittance summary within 10 days and give copies of the form and proof of payment to the GenCos and Transmission Companies within three (3) days.
Who is affected
- Distribution Utilities (DUs)
- Electric Cooperatives (ECs)
- Generation Companies (GenCos) and Transmission Companies
- Retail Electricity Suppliers (RES)
Deadlines and effectivity
- Certification of zero-rated or exempt transactions by the 5th day of the month after the invoice period
- Deferred VAT inventory due on or before September 30, 2024
- Remittance summary within 10 days from remittance
- Copies of BIR Form No. 0605 and proof of payment within three (3) days
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.