MANILA — The Bureau of Internal Revenue (BIR) has expanded its list of tax-exempt power sector fees in a move aimed at preventing double taxation and helping ease electricity costs for consumers amid volatile global energy markets.

Under Revenue Memorandum Circular (RMC) 60-2026 issued on June 4, the BIR excluded the Lifeline Subsidy and the Green Energy Auction Allowance (GEA-All) from output value-added tax (VAT) and creditable withholding tax.

The updated directive revises earlier 2024 guidelines in line with the government’s Ease of Paying Taxes Act.

BIR Commissioner Charlito Martin R. Mendoza said the circular was issued to clarify the proper tax treatment of government-mandated charges and ensure uniform compliance.

“to promote uniform and equitable compliance with existing tax rules under the Ease of Paying Taxes (EOPT) Act.”

Mendoza said the excluded charges are not revenues of distribution utilities, including electric cooperatives, but are instead pass-through collections.

“These are government-mandated charges, regulatory in nature, that are collected and remitted to the proper entities,” he said.

He added that since the amounts do not form part of utilities’ income or gross sales, they should not be subjected to output VAT or creditable withholding taxes.

“Because these amounts are pass-through charges, which do not belong to the DUs, such as ECs, and do not form part of their taxable income or gross sales, they should not be subjected to output VAT or creditable withholding taxes,” Mendoza said.

The BIR said the clarification is intended to ensure consistent tax treatment of similar pass-through charges in the power sector and ultimately help reduce electricity costs for consumers.

“This, in turn, is expected to contribute to lower electricity costs for consumers by preventing the imposition of additional tax burdens on amounts that do not constitute utility income or gross sales,” he added.

The Lifeline Rate is a subsidy program that provides discounted electricity to low-income households, including beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps), while the GEA-All supports the government’s renewable energy expansion through wind and solar projects.

Mendoza said distribution utilities act only as collecting agents for these charges.

“In both cases, the DUs merely serve as collecting agents,” he said.

He clarified that the new circular is not a new tax incentive but a clarification of existing rules.

“Rather, it clarifies that these charges are not part of the DUs’ taxable income or gross sales in the first place, since they are collected on behalf of government programs,” he said.

The latest circular updates RMC No. 116-2024, which previously listed several government-mandated charges exempt from VAT and income tax withholding, including energy tax, universal charges, and financial benefits for host communities.

Other exemptions include feed-in tariff allowances, franchise taxes, and real property taxes.

The Energy Regulatory Commission earlier ordered the temporary suspension of GEA-All collection, which is expected to reduce electricity bills for consumers through June.