Electricity bills could get a little lighter as BIR removes VAT on system loss charges

Floyd Brenz., Philippine Canadian Inquirer
September 14, 2026

Photo Courtesy: BIR

Filipino electricity consumers could see some relief on their power bills after the Bureau of Internal Revenue removed the value-added tax on allowable system loss charges.

The measure means consumers will no longer pay VAT on the portion of electricity charges attributed to system losses, a move expected to help reduce overall power costs.

System loss refers to electricity lost as power is transmitted and distributed from generating facilities to consumers. Utilities are allowed to recover certain system loss costs through electricity charges, which can form part of a consumer’s monthly bill.

The BIR’s move comes as households continue to feel pressure from electricity and other living expenses, making even relatively small reductions in monthly power bills significant for consumers.

The tax change also highlights the government’s effort to examine charges that make up electricity bills as it seeks ways to ease the cost of power.

For consumers, the immediate question is how much the exemption will actually reduce their monthly bills. While the removal of VAT does not eliminate system loss charges themselves, it removes an additional tax applied to that component.

At a time when electricity remains a major household expense, the change could offer another small but meaningful break for Filipino families trying to keep their power bills under control.