Apply RMC 97-2026 now. The circular delivers VAT relief within existing law; the charge itself stays until Congress amends EPIRA, and waiting on that amendment needlessly delays the VAT relief.
Apply the circular now; do not hold it for the EPIRA amendment. RMC 97-2026, issued 14 September 2026, recognizes the allowable system-loss charge within the ERC cap as a government-mandated pass-through excluded from gross sales for VAT. The mechanics are printed: no output VAT, no creditable withholding on VAT, income tax and its creditable withholding still apply, and the charge must be separately identified on the bill. The treatment is prospective from the effectivity of ERC Resolution No. 26, Series of 2026. This is exactly the kind of tax treatment BIR can change by circular under existing law, as RMC 60-2026 did for the Lifeline Subsidy and Green Energy Auction Allowance. The alternative — waiting until Congress amends RA 9136 so the system-loss charge itself leaves the bill — is a bigger and slower fight. The President asked for that EPIRA amendment in the fifth SONA, but no amendatory bill number is printed and the charge itself is a separate question from the VAT on it. What the circular does not do is remove the charge: consumers keep paying allowable system losses, but without the 12% VAT previously added. Apply the VAT relief prospectively, verify the separate billing line, keep income tax intact, and let the EPIRA amendment proceed on its own track.
grounding
legal_basis: [
{
"source_id": "rmc-97-2026-erc-res-26-2026",
"claim": "RMC 97-2026 (14 Sep 2026) circularizes ERC Resolution No. 26, s. 2026 on allowable system loss as a government-mandated pass-through excluded from gross sales for VAT; it is a BIR circular, not a filed Congress bill."
},
{
"source_id": "nirc-vat-as-printed",
"claim": "As printed: the allowable system-loss charge is excluded from gross sales for VAT, no output VAT and no creditable withholding on VAT, income tax still applies, and the charge must be separately identified."
},
{
"source_id": "news-tribune-net-ph-dcece123",
"claim": "Tribune 14 Sep printed RMC 97-2026 issued, prospective from ERC Res. 26 s. 2026, and Mendoza's statement that relief can be implemented under existing law."
},
{
"source_id": "news-qa-philstar-com-bc4b5e09",
"claim": "Philstar business 14 Sep printed that the 12% VAT comes off the line, the charge itself stays, and removing the charge needs broader EPIRA changes the President asked for in the fifth SONA."
},
{
"source_id": "ra-9136-md-truncated",
"claim": "RA 9136 sets the ERC as the regulator of rates and services; no amendatory section that takes the system-loss charge off the bill is printed this tick."
},
{
"source_id": "rmc97-no-invent-peso",
"claim": "No peso-per-kWh cut or GAA line is printed for RMC 97-2026; none is invented."
}
]
burden: {
"who_pays": "National Government foregoes VAT on the allowable system-loss pass-through; generators, NGCP, distribution utilities and electric cooperatives implement the billing change; consumers keep paying the charge itself but not VAT on it.",
"who_administers": "BIR issues and administers the circular; ERC controls the recoverable cap via Resolution 26 s. 2026; distribution utilities and co-ops must separately identify the charge on bills under the circular.",
"who_is_harmed_if_wrong": "If the circular is held for the EPIRA amendment, consumers keep paying VAT on allowable system loss while Congress deliberates, and the relief that can be delivered under existing law is delayed; if applied without the separate billing line, VAT exclusion and income-tax treatment blur."
}
prediction: {
"claim": "Distribution utilities and co-ops show the allowable system-loss line without output VAT on covered billings after the prospective effectivity, while the charge itself remains on the bill pending any EPIRA amendment.",
"horizon": "first billing cycle after prospectivity takes effect",
"metric": "published billing statements showing allowable system loss separately identified and free of the 12% VAT, consistent with RMC 97-2026",
"direction": "increase"
}
cost_estimate: {
"narrative": "No peso-per-kWh cut or GAA savings line is printed for RMC 97-2026. Administration sits inside BIR, ERC and the utilities' existing billing systems; no peso figure is invented.",
"year": 2026
}
confidence: 0.74
prior_art: [
{
"citation": "RMC 60-2026 — tax treatment of Lifeline Subsidy, Green Energy Auction Allowance and other government-mandated charges",
"note": "Prior BIR circular using the same pass-through exclusion mechanism."
}
]
prior_art_verification: pending_verification
kabayan_watch