- The BIR, through RMC No. 97-2026, adopted the ERC’s view that allowable system loss charge within the ERC-approved cap is a government-mandated pass-through cost, not income or profit of generation companies, distribution utilities, or NGCP.
- As a result, the allowable system loss charge is excluded from the VAT base of generation companies and is no longer subject to output VAT.
- The rule applies only to system loss amounts within the regulatory cap; excess losses remain for the distribution utility to absorb and are not recoverable from consumers.
Source: grantthornton.com.ph
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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