RMC No. 60-2026: Why the Lifeline Subsidy and Green Energy Auction Allowance Are No Longer Subject to VAT
BIR Revenue Memorandum Circular (RMC) No. 60-2026, issued June 4, 2026, excludes two electricity billing components — the Lifeline Subsidy and the Green Energy Auction Allowance (GEA-All) — from output VAT and creditable withholding tax. Both are government-mandated, pass-through charges that distribution utilities and electric cooperatives merely collect on the ERC’s behalf, rather than amounts the utility earns as its own revenue.
Stay Current on VAT Rulings Like This One FREE →If your business reviews electricity bills for VAT input credit purposes, or you’re simply trying to understand why a bill’s line items changed, this circular affects two specific charges — not the electricity bill as a whole.
What the two excluded charges actually are #
RMC No. 60-2026 excludes the Lifeline Subsidy and the Green Energy Auction Allowance specifically — not every regulatory charge on an electricity bill — from output VAT and withholding tax. Knowing exactly what each charge funds is the starting point for understanding why the exclusion applies.
- Lifeline Subsidy — a cross-subsidy charge collected by distribution utilities and electric cooperatives, under Energy Regulatory Commission (ERC) rules, to fund reduced electricity rates for qualified low-income and marginalized “lifeline” households.
- Green Energy Auction Allowance (GEA-All) — a charge collected to fund the government’s Green Energy Auction Program, which supports renewable-energy incentives under Philippine energy policy.
Both charges are set and mandated by the ERC, and both flow through the distribution utility rather than originating from it.
Why these are treated as pass-through collections, not utility revenue #
RMC No. 60-2026 treats both charges as pass-through collections because the distribution utility or electric cooperative acts only as a collecting agent — the money is never the utility’s own revenue, taxable income, or gross sales, so taxing it as if it were created an inappropriate tax-on-tax effect passed on to consumers. This is the substantive reasoning behind the exclusion, not merely a procedural adjustment.
“These amounts do not belong to the distribution utilities or electric cooperatives, do not form part of their revenues, taxable income, or gross sales.”
This reflects GMA News Online’s and Mabuhay News’s reporting on RMC No. 60-2026 (June 2026). This session could not reach the BIR’s own PDF of RMC No. 60-2026 directly (bir-cdn.bir.gov.ph was blocked by network policy) to re-verify the exact typeset wording, so confirm the precise phrasing against the BIR’s own published circular before relying on it for a formal filing position.
RMC No. 60-2026 amends the earlier RMC No. 116-2024, adding the Lifeline Subsidy and GEA-All to the list of amounts already excluded from output VAT and withholding tax under that prior circular.
Practical impact on your electricity bill #
Going forward, the Lifeline Subsidy and GEA-All line items on an electricity bill should not carry a 12% VAT markup — a change a business reviewing its input VAT should expect to see on statements issued after the circular. Any bill still showing VAT charged on these two specific line items after the circular’s effectivity is worth flagging with the distribution utility or electric cooperative.
Watch this space: as of this post’s publish date, the BIR has publicly signaled, per press coverage, that it is preparing to extend similar VAT treatment to a separate, larger charge known as the “system loss” charge, through a forthcoming circular. That circular had not yet been issued or numbered as of this writing — treat any extension to system loss as an upcoming development, not yet a settled rule.
Worked example: the VAT removed from two line items #
A simplified residential or small-business electricity bill shows a ₱150 Lifeline Subsidy and an ₱80 GEA-All line item — before RMC No. 60-2026, both carried 12% VAT; after the circular, neither does.
| Line item | Amount | VAT before RMC No. 60-2026 (12%) | VAT after RMC No. 60-2026 |
|---|---|---|---|
| Lifeline Subsidy | ₱150.00 | ₱18.00 | ₱0.00 |
| Green Energy Auction Allowance (GEA-All) | ₱80.00 | ₱9.60 | ₱0.00 |
| Total VAT on these two items | ₱27.60 | ₱0.00 |
The ₱27.60 removed here is small on a single bill, but it illustrates the “tax on tax” problem the circular addresses: before RMC No. 60-2026, a customer paid VAT on money the utility never actually earned — it was only ever collecting the Lifeline Subsidy and GEA-All on the ERC’s behalf and passing them through. After the circular, that VAT layer on these two specific charges is gone.
Frequently Asked Questions #
What is RMC No. 60-2026? #
RMC No. 60-2026 is a Revenue Memorandum Circular issued by the BIR on June 4, 2026, excluding two electricity billing components — the Lifeline Subsidy and the Green Energy Auction Allowance — from output VAT and creditable withholding tax. It amends the earlier RMC No. 116-2024 to add these two charges to the list of excluded pass-through amounts.
Why aren’t the Lifeline Subsidy and Green Energy Auction Allowance subject to VAT? #
Both are pass-through collections mandated by the Energy Regulatory Commission (ERC). The distribution utility or electric cooperative only acts as a collecting agent — the money never belongs to it, never forms part of its revenue, taxable income, or gross sales, so taxing it as if it were the utility’s own sale created an inappropriate tax-on-tax effect passed on to consumers.
What is the Lifeline Subsidy on an electricity bill? #
The Lifeline Subsidy is a cross-subsidy charge collected by distribution utilities and electric cooperatives, under Energy Regulatory Commission rules, to fund reduced electricity rates for qualified low-income or marginalized “lifeline” households.
What is the Green Energy Auction Allowance (GEA-All)? #
The Green Energy Auction Allowance, or GEA-All, is a charge collected on electricity bills to fund the government’s Green Energy Auction Program, which supports renewable-energy incentives under Philippine energy policy.
Will the “system loss” charge on electricity bills get the same VAT treatment? #
As of this post’s publish date, the BIR has publicly signaled that it is preparing to extend similar VAT treatment to the separate “system loss” charge through a forthcoming circular, but that circular had not yet been issued or numbered at the time of writing. Treat this as an upcoming development to watch, not a settled rule.
Summary #
RMC No. 60-2026 removes output VAT and withholding tax from two specific, ERC-mandated pass-through charges — the Lifeline Subsidy and the Green Energy Auction Allowance — because the distribution utility never earns that money as its own revenue. The rule amends RMC No. 116-2024 and takes effect from the June 4, 2026 issuance date; a possible extension to the “system loss” charge is signaled but not yet final. For related VAT treatment of other government-adjacent charges, see CMEPA Act Guide (RA 12214) and VAT on Toll Fees for Expressway Operators.