Senate Majority Leader Francis Tolentino has filed a bill seeking to exempt electricity and internet from the 12 percent value-added tax (VAT).

 In his explanatory note on Senate Bill 2970, Tolentino stressed that the high cost of electricity consumption in the country “hampers private sector investment in crucial areas like manufacturing and leads to higher prices for basic goods and commodities.”

He noted that the situation “not only stifles economic growth but also contributes to serious challenges such as development stagnation and premature deindustrialization.”

“To address these issues, the bill aims to exempt electricity sales from VAT. By doing so, the government can help lower operating expenses for businesses, control inflation, and boost the disposable income of households. This relief is expected to stimulate economic activity and consumption, benefiting the overall economy,” he said.

Inclusion via digital means

On the other hand, Tolentino said exempting internet services from VAT will help promote digital inclusion, ensuring that all Filipinos can take part in the digital economy.

“The important role of electricity and internet in our daily lives, particularly in education and remote work cannot be overstated. As more educational institutions transition to online platforms and businesses adopt flexible work arrangements, affordable internet access becomes even more vital,” he said.

“By eliminating VAT on electricity and internet sales and services, the government would alleviate financial pressures on consumers and businesses alike, fostering a more inclusive and robust digital landscape,” he added.

Tolentino’s bill aims to amend Section 108 of the National Internal Revenue Code of 1997, removing sales of electricity by generation and services of electric utilities from VAT.

It expressly exempts from VAT the sale of electricity by generation, transmission and distribution companies and electric cooperatives; services of franchise grantees of electric utilities; and sales and services of internet service providers (ISPs).

“This bill aims to alleviate the rising costs of essential commodities and improve the overall quality of life for Filipinos,” Tolentino said.