By Justine Irish D. Tabile, Reporter and Chloe Mari A. Hufana
PRESIDENT Ferdinand R. Marcos, Jr. should push a bill that seeks to do away with the value-added tax (VAT) on electricity charges to help lower the cost of power, which is a major concern of investors, according to the Philippine Chamber of Commerce and Industry (PCCI).
The 12% tax on electricity charges from distribution to the end-user should be removed, PCCI President Enunina V. Mangio told reporters last week.
“We wish for our President to consider making VAT exempt or at least reduce the VAT imposed on electricity charges from distribution to the users because it has a big impact,” she said in mixed English and Filipino.
“Our investors, because of the cost of power here, are having problems, making them go to other countries instead of the Philippines,” she added.
Ms. Mangio said sales of generated power are VAT-zero-rated under the Electric Power Industry Reform Act. But this was repealed after the amended VAT provisions of the National Internal Revenue Code of 1997.
“During the time of then President Gloria Macapagal Arroyo, as a temporary measure, she declared that the electricity charges from distribution to the end-user would be subjected to VAT,” she said.
“It was just a temporary measure. However, it became permanent… so what we are pushing right now is to expand the zero-rating on electricity charges up to the end-user or at least reduce the VAT imposed on them,” she added.
Ms. Mangio said the cost of power is a major complaint of investors, pushes them away even if the Philippines has an English-speaking and technically equipped workforce.
She noted that while the industry is waiting for additional base load and renewable energy sources, the state should temporarily remove or cut the VAT on electricity sales to lower power rates.
“If this happens, we will be able to invite more investors, and more investors means more employment and taxes,” she added.
Last year, Senator Francis G. Escudero filed Senate Bill No. 2301, which seeks to exempt electricity sales from VAT. The bill is pending before a Senate committee.
A similar bill in the House of Representatives has been pending with the ways and means committee since August 2022.
Meanwhile, Ms. Mangio urged Mr. Marcos to push economic measures that support the business sector in his third State of the Nation Address.
PCCI sought the passage of the capital income and financial tax reform to streamline taxes on passive income and financial transactions, align tax rates on interest, dividends and capital gains, and simplify the documentary stamp tax to lower expenses.
At a virtual news briefing on Sunday, PCCI also sought the liberalization of foreign equity restrictions through constitutional amendments.
“We are strictly supporting economic amendments in our Constitution… We should be careful not to touch other provisions,” she said.
PCCI also sought the passage of a bill that seeks to improve the country’s digital infrastructure by lowering internet costs.
Lower internet charges would help micro, small and medium enterprises, which make up 99% of businesses in the Philippines, she said.
“They dream of being digitized and we can only do that if we have strong and stable internet connectivity,” Ms. Mangio said in mixed English and Filipino.
PCCI also said the government should promote digital payments among agencies, government-owned and -controlled corporations and local governments.
She said online payments, especially for processing various forms of permits, could hasten business registration processes.
Ms. Mangio also said they are hoping for changes to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) and Philippine Economic Zone Authority laws, specifically the promotion of a flexible work schedule among government agencies.
PCCI is also advocating for a national unemployment insurance to protect jobless Filipinos.
The group also sought priority treatment for the Freedom of Information Act, changes to the Secrecy of Bank Deposits law and creation of a Disaster Resilience Department.
