FINALLY, A TAX MOVE PEOPLE CAN FEEL!

While consumers continue to wrestle with painful electricity bills, Bureau of Internal Revenue Commissioner Atty. Charlito Martin R. Mendoza is pushing a move that could bring real relief where it matters most — inside every Filipino household and business paying for power.

The BIR is preparing an issuance that will remove Value-Added Tax (VAT) on the allowable system loss charge included in electricity bills.

And this is not just another bureaucratic announcement.

THIS IS A DIRECT HIT ON A CHARGE THAT CONSUMERS HAVE BEEN PAYING FOR YEARS!

Commissioner Mendoza announced that the BIR will issue the corresponding Revenue Memorandum Circular after the required 15-day period following publication of Energy Regulatory Commission Resolution No. 26, Series of 2026.

The ERC resolution classifies the allowable system loss charge as a government-mandated pass-through cost.

In plain English?

It is a cost recovered through electricity bills — not income earned by power generators, the National Grid Corporation of the Philippines, or distribution utilities.

So why should consumers continue paying VAT on a charge that is essentially being passed through?

MENDOZA’S ANSWER: THEY SHOULDN’T — IF THE LAW DOES NOT REQUIRE IT.

NO MORE TAX ON WHAT NEVER REACHED YOUR OUTLET?

Commissioner Mendoza put the issue in language ordinary consumers can understand.

Consumers, he said, should not be paying VAT on electricity that never actually reaches their homes or businesses.

That message cuts through the usual maze of tax jargon.

Electricity bills are already a monthly headache.

Generation charges.
Transmission charges.
Distribution charges.
System losses.
Government-mandated charges.

Then add taxes.

THE RESULT? A BILL THAT CAN MAKE EVEN A WORKING FAMILY’S BLOOD PRESSURE RISE.

That is precisely why the BIR’s planned action deserves attention.

If the allowable system loss charge is legally treated as a pass-through cost, removing VAT from that component could mean a lower amount being passed on to electricity consumers.

MENDOZA: TAX REFORM THAT PEOPLE CAN ACTUALLY FEEL

This is where Commissioner Atty. Charlito Martin R. Mendoza deserves the spotlight.

Tax reform is often discussed in the language of billions, regulations, circulars and compliance.

But the real test is brutally simple:

DO ORDINARY PEOPLE FEEL THE BENEFIT?

Mendoza’s approach appears aimed at precisely that question.

With guidance from Finance Secretary Frederick Go, the BIR is reviewing areas where the proper application of tax rules can provide immediate and practical relief.

And when there is a clear legal basis?

ACT. CLARIFY. IMPLEMENT. DELIVER.

That is the message.

The BIR’s forthcoming issuance also builds on Revenue Memorandum Circular No. 60-2026, which clarified the tax treatment of several government-mandated electricity charges, including the Lifeline Subsidy and Green Energy Auction Allowance.

THIS IS NOT A FREE PASS — IT IS A TAX CLARIFICATION

Let’s be clear.

The issue is not about simply wiping away taxes because electricity is expensive.

The issue is whether the law and regulatory framework support treating a particular charge as a pass-through cost rather than taxable income.

If the answer is yes, then the BIR has every reason to make the rule clear.

And Commissioner Mendoza appears determined to do exactly that.

NO CONFUSION. NO TAX OVERREACH. NO UNNECESSARY BURDEN.

Just proper implementation of the law.

FROM THE TAX OFFICE TO THE ELECTRIC METER

The significance of this move goes beyond one line item on an electricity bill.

It sends a message that revenue agencies can pursue collection while simultaneously ensuring that taxpayers are not charged beyond what the law requires.

That balance matters.

Government needs revenue.

But government must also protect taxpayers from unnecessary costs.

And if removing VAT from an allowable system-loss pass-through charge is legally warranted, then consumers should not have to wait indefinitely for relief.

THE PEOPLE PAY THE BILL. THEY DESERVE A FAIR BILL.

MENDOZA’S MESSAGE IS LOUD AND CLEAR

Commissioner Mendoza’s strongest point is perhaps his simplest:

When the law allows tax relief, make it clear, make it immediate, and make sure people feel it.

That is the kind of tax administration consumers understand.

Not merely collecting.

Not merely regulating.

But making sure that every peso charged to taxpayers has a proper legal basis.

For Filipino consumers staring at their electricity meters and wondering why the bill keeps climbing, the coming BIR issuance could be more than another government circular.

IT COULD BE A SMALL BUT VERY REAL BREAK IN THE WALL OF RISING POWER COSTS.
And behind that push stands a BIR chief willing to take the tax issue out of the conference room and bring it directly to where it matters most:

THE FILIPINO CONSUMER’S POCKET.

Commissioner Atty. Charlito Martin R. Mendoza has fired the opening shot.

Now the challenge is implementation.
Because when the government says consumers will get relief, the public should not merely hear it.

THEY SHOULD SEE IT — ON THE ELECTRIC BILL.
THAT’S WHAT REAL TAX REFORM LOOKS LIKE.

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