REVENUE MEMORANDUM CIRCULAR NO. 116-2024
Issued to publish and clarify certain provisions of Revenue Regulations (RR) Nos. 3-2024 and 7-2024, implementing the National Internal Revenue Code of 1997 (Tax Code), as amended by RA No. 11976 or otherwise known as the “Ease of Paying Taxes (EOPT) Act”, affecting generation, transmission and distribution companies, as well as electric cooperatives and retail electricity suppliers.
Declaration of VAT by Generation Companies (GCs) and Transmission Companies (TCs)
- GCs and TCs will issue an invoice to the Distribution Utility (DUs), Electric Cooperatives (ECs), and Retail Electricity Supplier (RES) for the whole amount of the generation fees and transmission fees, respectively including the VAT for the billing period
- DUs, ECs and RES shall provide the certification of zero-rated/exempt transactions to the GCs and TCs on or before the 5th day of the month following the invoice period
- GCs and TCs will issue the applicable adjustment documents (i.e. Debit Memo/Note; Credit Memo/Note; Journal Voucher; or Negative Invoice to adjust the output tax liability based on the classification of customers as zero-rated or exempt.
Tax-treatment of Pass-Through Charges
| Entities Passing-On the Charge | Pass-Through Charges | Tax Treatment |
| Distribution Utility and Electric Cooperatives | Sale and transmission of electricity and ancillary services, including VAT of the GCs and TCs | All payments by DUs and ECs to the GCs and TCs pertaining to generation, transmission and other VATable charges shall be subject to VATDUs and ECs shall issue an invoice to the customers for the pass-through charges including VATThe proper claimant of input tax on pass-through charges shall be the customers engaged in business, instead of the DUs and ECs. |
| Retail Electricity Supplier | Transmission and Distribution charges | All payments by RES to the GCs and TCs pertaining to generation, transmission and other VATable charges shall be subject to VATRES shall not claim any input tax on the pass-through charges invoiced to the customers |
Tax Treatment of Specific Charges
| Charges | Tax Treatment |
| Government Mandated ChargesEnergy tax, Universal Charges, Benefits to Host Communities, Feed-in tariff allowance, National and Local Franchise Taxes and Real Property Tax | Not subject to Output tax or Creditable Withholding tax on VAT and Income. |
| 5% Creditable VAT withheld by government customers | Claimed as creditable VAT by DUs and ECs through BIR Form No. 2307 |
| 2% Income Tax withheld by customers engaged in business | Claimed as creditable withholding tax in the income tax returns of DUs, ECs and RES. |
TRANSITORY PROVISIONS
GCs and TCs shall not be liable for the remittance of all outstanding deferred VAT prior to the effectivity of RR Nos.3-2024 and 7-2024. However, as transitory procedure, BIR requires the following:
- GCs and TCs shall submit copies (hard and soft copy) of an inventory of the outstanding deferred VAT prior to April 27, 2024, to the concerned Revenue District Offices (RDOs)/Large Taxpayers (LT) Offices, on or before September 30, 2024
- DUs and ECs shall:
- Remit the deferred VAT, as collected using BIR Form No. 0605 clearly indicating the TIN of GCs and TCs
- Submit copies (hard and soft copy) of a Summary of the Remittance of Deferred VAT to concerned RDOs/LT Offices on or before the 10th day from the date of remittance of the BIR Form No. 0605, clearly indicating the name of Supplier, Address, TIN, RDO No., amount of VAT remitted, billing period, name of bank and date of remittance.
- Provide the GCs and TCs with copies (hard and soft copy) of duly filed BIR Form No. 0605 with proof of payment within three (3) days from the date of remittance to the BIR