Gatchalian: VAT on system loss can be removed without new law

Abi Sarabia M., Philippine Canadian Inquirer
August 21, 2026

Photo courtesy: Senator Win Gatchalian Fb Page

MANILA, Philippines — Senate President Sherwin “Win” Gatchalian said the 12-percent value-added tax on electricity system loss charges can be removed without passing a new law.

Gatchalian said the Energy Regulatory Commission (ERC) only needs to issue a regulation to remove the VAT.

“I and Chairman Nino have the same interpretation that the VAT on system loss can already be removed; a law is no longer needed,” he said during a Senate energy panel hearing Thursday.

Gatchalian said the interpretation is based on the Ease of Paying Taxes Act, which provides that not all costs passed on to consumers are automatically subject to VAT.

He said the same provision was previously applied to lifeline rates.

“So, this means VAT on system losses can now be removed; all that is needed is regulation from the ERC,” Gatchalian said.

He added that the Bureau of Internal Revenue, the Senate energy committee and his office agree on the interpretation.

Gatchalian said removing the VAT through ERC regulation is the quickest way to lower electricity costs while the Senate continues discussing bills that seek to remove system loss charges from consumers’ power bills altogether.

The ERC has not announced when it may issue the regulation.