DOE backs VAT cut on power bills

The Department of Energy supports proposals to suspend, reduce or remove value-added tax on electricity charges, saying such measures could help lower power costs for Filipino households and businesses, but the agency stressed that tax policy remains under the Department of Finance and Congress.

Energy Secretary Sharon S. Garin said during a virtual press conference on May 4, 2026, that the DOE backs any initiative that would bring down electricity prices.

“Anything that would lower the price of electricity the DOE supports… [but] the decision… is under the mandate of the Department of Finance,” Garin said.

The statement places the DOE behind consumer relief measures while clarifying that the agency’s role is limited to providing technical input on the energy-sector impact of proposed tax changes.

In a May 5, 2026, statement, the DOE said proposals to suspend, reduce or remove VAT on electricity “may help reduce power costs for consumers,” consistent with its mandate to help ensure secure, reliable and affordable electricity.

The agency said, however, that any tax measure must be carefully evaluated by the country’s economic managers, particularly the DOF, and Congress to balance lower electricity costs with the government’s continued delivery of essential public services.

The DOE reiterated the position in a May 6, 2026, statement, saying any VAT-related measure must be carefully studied to ensure that savings are fully and directly passed on to households, businesses and other end-users.

Under the current VAT system, electricity is subject to a pass-through tax structure in which companies along the power supply chain — from generation to distribution — claim offsets between the VAT they pay on inputs and the VAT they collect from consumers.

The DOE said removing or adjusting VAT on electricity requires a thorough evaluation of how the changes would flow through the supply chain and whether the resulting savings would be directly felt by consumers.

The issue has gained attention as lawmakers revisit charges embedded in electricity bills amid continuing public concern over rising power costs.

Sen. Risa Hontiveros filed Senate Bill No. 2076 on May 3, 2026, seeking to remove VAT on system loss charges in electricity bills, arguing that consumers should not be taxed for electricity that was not delivered to them.

The measure seeks to amend the National Internal Revenue Code to exempt system loss charges from VAT-covered transactions.

VAT is among the charges included in electricity bills, and its removal or reduction could directly lower monthly expenses for households and businesses.

The DOE said it stands ready to provide technical inputs to economic managers and Congress to help ensure that any policy intervention results in genuine consumer benefit while protecting the delivery of essential public services.

Beyond tax-related proposals, the department said it continues to pursue measures that directly address electricity prices amid the Middle East conflict.

Through ongoing interventions, the DOE said it helped avert a potential PHP 7.00 per kilowatt-hour increase in electricity prices, providing immediate relief to consumers.

The department said long-term affordability should also be pursued through efficient generation, improved grid reliability, stronger competition, responsible energy use, expanded power supply, accelerated renewable energy development and stronger grid infrastructure.

“Lasting affordability must be built on stable supply, cleaner energy, stronger infrastructure, and sound policy,” the DOE said.

The agency said it will continue working with Congress, economic managers, regulators, industry players and consumer groups to ensure that power sector reforms deliver real, sustainable and inclusive benefits to Filipinos.