BIR says lifeline subsidy, green energy allowance not taxable

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MANILA, Philippines — The Bureau of Internal Revenue (BIR) has clarified that the Lifeline Subsidy and the Green Energy Auction Allowance (GEA-All) are not subject to value-added tax (VAT) and withholding tax under Revenue Memorandum Circular (RMC) No. 60-2026 issued on June 4.

The circular amends RMC No. 116-2024 by adding the Lifeline Subsidy and GEA-All to the list of government-mandated charges treated as pass-through collections and therefore not subject to output VAT and creditable withholding tax on VAT and income.

BIR Commissioner Charlito Martin R. Mendoza said distribution utilities and electric cooperatives merely act as collecting agents for the charges under the regulatory framework of the Energy Regulatory Commission (ERC).

“These amounts do not belong to the distribution utilities or electric cooperatives, do not form part of their revenues, taxable income, or gross sales,” Mendoza said. “These are government-mandated charges, regulatory in nature, that are collected and remitted to the proper entities.”