VAT charges to raise electricity rates

Delos Santos says that the imposition of 12 percent on Paleco’s gross receipts is also mentioned in the BIR’s Revenue Regulation 13-2018. (File photo)


The Palawan Electric Cooperative (Paleco) recently announced it will start to apply and collect a 12 percent value-added tax (VAT) on the consumers’ bills for May 2018 onwards.

This, after the Bureau of Internal Revenue (BIR), through acting Revenue District Officer Lorenzo C. Delos Santos, confirmed that electric cooperatives will have a VAT on its gross receipt starting January 2018, as per RA 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Section 108 of RA 8424 or the National Internal Revenue Code was amended by Sec. 33 of TRAIN law, which provides for a VAT of 12% on sales of electricity by generation companies, transmission by any entity, and distribution companies, including electric cooperatives.

The confirmation was in response to Paleco’s clarificatory letter to BIR on February 8.  Paleco invoked the Section 60 and 61 of RA 9520 or the Philippine Cooperative Code of 2008, which supposedly grants tax exemption to cooperatives registered with the Cooperative Development Authority (CDA).

Delos Santos added that the imposition of 12 percent on Paleco’s gross receipts is also mentioned in the BIR’s Revenue Regulation 13-2018.

This has prompted Paleco to collect back taxes from consumers starting from January 2018 and include it in the May 2018 bill.

The following is the retroactive VAT collection schedule: May (January), June (February), July (March and April), August (May and June), September (July and August), and October (September and October).

“All of the charges Paleco imposes are now subjected to a VAT, except the universal charges and those which are originally VATable, such as generation and system loss charges,” Paleco spokesperson Vicky Basilio told Palawan News on Thursday.

These charges are on distribution, supply, retail customer, metering, power act rate reduction, as well as on lifeline rate and senior citizen subsidies, Basilio specified.

“Your VAT depends on your power consumption per kilowatt hour,” she added.

Basilio said the application of VAT on the consumers’ bill will be significant in October when all of the charges will be subjected to VAT at one time.

“For May, your VAT will not be that high since the VAT on generation charge and on system loss that you paid last January will be deducted in your bill,” she said.

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