RR No. 5-2026: IEMOP Withholds 2% on Electricity Sales and Issues BIR Form 2307 to Generators

Revenue Regulations (RR) No. 5-2026 makes the Independent Electricity Market Operator of the Philippines (IEMOP) a withholding agent: it must withhold 2% on gross remittances to generation companies and other market participants for electricity sold through the Wholesale Electricity Spot Market (WESM), and issue them BIR Form 2307. The regulation further amends Section 2.57.2 of RR No. 2-98.

This post covers who is affected, what the regulation’s text says, and how a generator records the credit. For the certificate deadline in general, see The Deadline to Issue BIR Form 2307 to Your Payee; for the series overview, see the BIR Form 2307 hub.

What does RR No. 5-2026 change about withholding on electricity sales? #

RR No. 5-2026 adds a new creditable withholding tax (CWT) category to Section 2.57.2 of RR No. 2-98: two percent (2%) on gross remittances by IEMOP to generation companies and other market participants for electricity sold through the WESM. The BIR copy carries a BIR date stamp of July 20, 2026, a Department of Finance approval date of September 17, 2026, and a Records Management Division received stamp of October 1, 2026.

The operative text of Section 2 reads:

“Remittances of the Independent Electricity Market Operator of the Philippines (IEMOP) to generation companies and other market participants. – On the gross remittances by IEMOP to generation companies and other market participants for electricity sold through the Wholesale Electricity Spot Market (WESM). – Two percent (2%)”

Source: Section 2, Revenue Regulations No. 005-2026, amending Section 2.57.2 of RR No. 2-98. The regulation is issued under Sections 244 and 245 of the National Internal Revenue Code of 1997 (Tax Code).

Who counts as IEMOP, the WESM, and a market participant? #

The regulation defines three terms, and each one sets the boundary of the new withholding rule.

Because the third definition turns on selling through the WESM and receiving remittances from IEMOP, a generator that sells only under bilateral contracts outside the WESM does not appear to be described by this rule for those sales; confirm with a tax professional.

What must IEMOP do as the withholding agent? #

IEMOP has four duties under RR No. 5-2026: withhold on gross remittances, remit through eFPS with the Alphalist, issue BIR Form 2307, and furnish a certified list of electricity buyers. The regulation lists them as items (a) to (d):

1. Withhold: “deducting and withholding the applicable withholding tax on all gross remittances, which refer to the total amount payable to the generation companies and other market participants for the sale of electricity before any deductions.”
2. Remit and report: “remitting the taxes withheld by filing the required withholding tax returns through the Bureau’s Electronic Filing and Payment System (eFPS), together with the Alphabetical List of Payees submitted via esubmission, in compliance with existing BIR regulations and prescribed deadlines.”
3. Issue the certificate: “issuing a Certificate of Tax Withheld at Source (BIR Form No. 2307) to each electricity seller subject to withholding, on or before the twentieth (20th) day after the close of the taxable quarter or upon request of the payee.”
4. Report buyers: “furnishing the LT Document Processing & Quality Assurance Division of Large Taxpayers Service, on or before the last day of the month following the close of each taxable quarter, with a duly certified list of electricity buyers under Annex ‘A’ hereof.”

Source: Section 2, items (a) to (d), Revenue Regulations No. 005-2026. The Annex “A” format was not part of the PDF reviewed for this post.

Worked example: a generator’s quarterly WESM settlement #

A worked example shows what changes in the generator’s books. The figures are fictional and are used only to illustrate the 2% rate in the regulation.

Assume a generation company’s total WESM settlement payable for the quarter, before any deductions, is ₱50,000,000.

The ₱1,000,000 is creditable, not final. The generator records it as a creditable withholding tax asset, then claims it against its income tax due using the BIR Form 2307 that IEMOP issues. The generator’s own return is where the credit is applied, and unused credits follow the usual carry-over and refund rules; see SAWT, Excess CWT, Carry-Over, and Refund.

What should generators and IEMOP do before the rule takes effect? #

Generators should reconcile settlements to certificates; IEMOP should prepare its withholding, reporting, and buyer-list processes. Section 4 of the regulation states: “These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first.” This site has not confirmed the publication date, so check the BIR’s 2026 Revenue Regulations page and add 15 days.

1. Identify WESM sales. Separate settlements through the WESM from bilateral-contract sales.
2. Set up credit tracking. Record the 2% as creditable withholding tax, with the quarter and the IEMOP certificate reference.
3. Calendar the certificate date. The twentieth day after quarter-end is the outer limit, unless the payee asks sooner.
4. Match certificates to settlements. A quarterly match by amount catches errors early; for the reporting side, see QAP DAT File for First-Time Withholding Agents.

Frequently asked questions #

What does RR No. 5-2026 require of IEMOP? #

Revenue Regulations No. 5-2026 designates the Independent Electricity Market Operator of the Philippines (IEMOP) as a withholding agent. IEMOP must deduct and withhold two percent (2%) on gross remittances to generation companies and other market participants for electricity sold through the Wholesale Electricity Spot Market, remit the tax through eFPS with the Alphabetical List of Payees, issue BIR Form 2307, and furnish a certified list of electricity buyers to the Large Taxpayers Service.

What are “gross remittances” under RR No. 5-2026? #

The regulation defines gross remittances as the total amount payable to the generation companies and other market participants for the sale of electricity before any deductions. The 2% is therefore computed on that gross amount.

When must IEMOP issue BIR Form 2307 to electricity sellers? #

RR No. 5-2026 requires IEMOP to issue a Certificate of Tax Withheld at Source (BIR Form No. 2307) to each electricity seller subject to withholding on or before the twentieth (20th) day after the close of the taxable quarter, or upon request of the payee.

Does IEMOP report income from these remittances? #

No. The regulation states that IEMOP is designated solely as a withholding agent and is not considered to have income arising from the remittances it makes.

When does RR No. 5-2026 take effect? #

Section 4 of RR No. 5-2026 provides that the regulations take effect fifteen (15) days following publication in the Official Gazette or on the BIR official website, whichever comes first. The effectivity date therefore depends on the actual publication date.

Summary #

RR No. 5-2026 adds a 2% creditable withholding rate on IEMOP’s gross remittances for electricity sold through the WESM, designates IEMOP solely as the withholding agent, and sets four duties: withhold, remit through eFPS with the Alphalist, issue BIR Form 2307 within 20 days after quarter-end, and furnish a certified buyer list. Generators record the withheld amount as a credit against income tax. No law-firm or audit-firm commentary on the regulation was found at the time of writing, so this post relies on the primary BIR text.

Source: Revenue Regulations No. 005-2026, Bureau of Internal Revenue.