BIR: Lifeline subsidy, GEA-All fees not taxable

MANILA, Philippines — The Bureau of Internal Revenue (BIR) has clarified that lifeline subsidy and the green energy auction allowance (GEA-All) are not subject to output value-added tax (VAT) or creditable withholding taxes, citing that these are pass-through fees collected by distribution utilities for state programs rather than revenues.

In Revenue Memorandum Circular 60-2026, the agency amended an earlier directive to include the lifeline subsidy and GEA-All among government-mandated charges that are exempt from taxes.

Asked for more information, BIR Commissioner Charlie Mendoza said the clarification ensures that their tax treatment is consistent with other similar pass-through charges in the power sector.

“This, in turn, is expected to contribute to lower electricity costs for consumers by preventing the imposition of additional tax burdens on amounts that do not constitute utility income or gross sales,” he told The STAR.

Other exempted government charges include the Energy Tax under Batas Pambansa Blg. 36, Universal Charges under the Electric Power Industry Reform Act, Benefits to Host Communities, Feed-in Tariff Allowance, National and Local Franchise Taxes and Real Property Tax.

However, Mendoza emphasized that the circular does not grant a new exemption but clarifies that these charges are not part of the distribution utilities’ taxable income or gross sales in the first place, since they are collected on behalf of government programs.

Last month, these state-mandated charges drew public criticism as consumers complained that the fees added to their monthly bills burdened them.

Some lawmakers have suggested that the costs should instead be covered by the national budget or absorbed by power companies.GEA-All funds the development of renewable energy projects in the country, such as hydropower, biomass, solar, and wind facilities. The collection is currently suspended until this month.