Meralco billing for December to include VAT

The Manila Electric Co. (Meralco) will start charging the 10-percent value-added tax (VAT) in its December billings to its customers. 

Meralco VAT implementation task force chairman Anthony Rosete said customers whose 30-day billing cycles start on Nov. 1 and end on Dec. 1 will be billed for electric consumption during such period, plus the VAT thereon in their December bills.

The new tax measure took effect last Nov. 1. 

Earlier, Meralco estimated that the impact of the expanded VAT law on the electricity rate of its customers will amount to an average increase of 58 centavos per kilowatthour.

But customers whose billing cycles start after Nov. 1 and end 30 days after in December will be billed in their December bills for: electric consumption plus the VAT thereon during the billing cycle; and the VAT on consumption for the period from Nov. 1 to the start of the billing cycle less the two percent national franchise tax paid during the same period.

To illustrate, customers with billing cycles from Nov. 15 to Dec. 15 will be billed in their December bills for electric consumption during such period plus the VAT, as well as the VAT for consumption from Nov. 1 less the two percent national franchise tax paid for the period.  

The backbilling of VAT in the December bills is unavoidable for some customers due to their billing cycles and the fact that customers are billed only once a month and not on a daily basis.

Rosete said Meralco would comply with the implementing guidelines issued by the Bureau of Internal Revenue and the Energy Regulatory Commission (ERC), after a few clarifications on certain provisions.  

The Meralco official reiterated that the VAT is revenue neutral to Meralco and that all VAT collections will accrue to the government.

"The VAT component on the charges to be reflected in the Meralco bill is only a pass-through charge. Hence, Meralco only serves as a collecting agent of the government for the collection of the VAT," he said.

"We would like to assure our customers that their electric bills will clearly indicate the VAT for each component of the bill subject to the value added tax," he added. "The ERC bill format shows how the VAT will be reflected in the bill to be given to each customer." 

Meralco’s statement came after the ERC released last Wednesday the guidelines for the VAT implementation in the power sector. 

Based on its estimates, the ERC said the impact of 10-percent VAT on power will only be at 6.6 percent to seven percent due to several mitigating measures implemented by the government such as the removal of the two percent franchise tax.