Prescribing the rules for the implementation of the Energy Tax on Electric Power Consumption

September 10, 1979 REVENUE REGULATIONS NO. 09-79 SUBJECT : Prescribing the rules for the implementation of the Energy Tax on Electric Power Consumption TO : All Internal Revenue Officers, Electric Power Utility Companies, and Others Concerned Pursuant to Section 4 of Batas Pambansa Blg. 36 and in accordance with the provisions of Section 326 and in relation to Section 4, both of the National Internal Revenue Code of 1977 as amended, the following regulations are hereby promulgated. SECTION 1. Scope . These regulations shall prescribe the rules governing the implementation of the energy tax on electric power consumption and shall be known as Revenue Regulations No. 9-79. SECTION 2. Who are considered as residential consumers . The energy tax herein imposed shall apply to every single family dwelling unit whose energy requirements are serviced and measured through only one electric meter issued and installed by an electric power utility company. For the purposes of this energy tax, a single family dwelling unit is considered as having at least one kitchen and any of the accessory facilities such as garage, servant's quarters, swimming pool, etc. which are serviced by only one meter. It shall include (a) residential house; (b) individually metered residential apartments; (c) individually metered residential condominium units; (d) temporary service for the construction of a single family dwelling unit. SECTION 3. Special rule on residential house used also for other non-residential activities . Where a residential customer conducts a business or other non-residential activities such as store, cottage industry, etc., in the same premises as his residence and that the combined energy requirements are serviced and measured by one single electric meter and its monthly electric power consumption is billed using the applicable residential meter schedule, the energy tax herein imposed shall apply. However, if in the instant case, the applicable rates used by the electric power utility company are other than the residential meter schedule, such as the general service rates or general power rates, then the energy tax shall not apply. SECTION 4. Rates of tax . The graduated rates of energy tax herein imposed on the monthly electric power consumption of every residential customer of electric power utilities, are as follows: Consumption Rates Not over 650 kilowatt-hours Exempt Over 650 kilowatt-hours but P0.10 per kilowatt-hour not over 1,000 kilowatt-hours in excess of 650 kilowatt-hours Over 1,000 kilowatt-hours but P35.00 plus P0.20 not over 1,500 kilowatt-hours per kilowatt-hour in excess of 1,000 kilowatt-hours Over 1,500 kilowatt-hours P135.00 plus P0.35 per kilowatt-hour in excess of 1,500 kilowatt-hours Thus, if a residential customer should consume 1,500 kilowatt/hour for a month, the energy tax shall be computed as follows: Consumption Rate @ KWH Tax Due First 650 KWH Exempt P Next 350 KWH P.10 35.00 Next 500 KWH .20 100.00 Total 1,500 KWH P135.00 ========== ======= SECTION 5. Rates of energy tax applicable in areas other than Metro Manila . In general, the rates of energy tax enumerated in Section 4 hereof, shall apply to all electric power consumption of all residential customers of electric power utilities in the Philippines. However, if 1) the electric power rates (excluding the energy tax) in areas outside Metro Manila are equal to or higher than the electric power rates (including the energy tax) prevailing in Metro Manila, the energy tax shall not apply. Illustration Assume that the prevailing electric power rates per KWH (excluding the energy tax) in Tacloban area are equal to or higher than the electric power rates including the energy tax in Metro Manila Area. I. Metro Manila Area average rate per KWH for the first 1,000 KWH (including energy tax) P.437 ===== II. Tacloban Area per KMH (excluding energy tax) P1.05 ===== Considering that in Tacloban, the existing electric power rates already exceed the prevailing electric power rates (including the energy tax) in the Metro Manila area, then the energy tax shall not apply in Tacloban. 2) If the electric power rates (excluding the energy tax) in another area are less than the prevailing electric power rates (including the energy tax) in Metro Manila Area, then the energy tax shall apply. In all cases, however, the energy tax to be imposed and added to the electric power rates, shall be limited to an amount that would equal to but not to exceed the prevailing electric power rates (including the energy tax) in Metro Manila Area. Illustration Assume that in Lanao area the prevailing power rates per KWH (excluding the energy tax) plus the energy tax are less than the prevailing power rate per KWH in Metro Manila Area. I. Metro Manila Area average rate per KWH for the first 1,000 KWH (including energy tax) P.44 ==== II. Energy power rate (excluding the energy tax) P.17 Energy tax .10 P.27 ==== Considering that in the Lanao area the electric power rates, including the energy tax is still lower than the prevailing rates in the Metro Manila Area, the full energy tax shall apply. Thus, the energy tax to be imposed by the electric power utility company shall be P35.00 computed as follows: Consumption Rate Tax Due First 650 KWH Exempt - Next 350 " P.10 35.00 Total 1,000 KWH P35.00 ========== ======= Illustration Assume that the power rates per KWH plus the energy tax in Pampanga area would exceed the prevailing power rates including the energy tax in Metro Manila Area. I. Metro Manila Area average rate, per KWH for the first 1,000 KWH (including energy tax) P.46 === II. Pampanga Area Power rate P.40 Energy tax .10 P.50 ==== Considering that in Pampanga area, the energy tax when added to the existing electric power rates would exceed the prevailing electric power rates (including the energy tax) in Metro Manila Area by P.04 (P.50 P.46), then only the difference of P0.06) @ KWH shall be considered as the energy tax, thereby placing at equal amounts the cost of electric power in that area (Pampanga) equal to that of the Metro Manila Area. Thus, the energy tax to be imposed by the electric power utility shall be P21.00 computed as follows: Consumption Rate Tax Due First 650 KWH Exempt P Next 350 " P.06 21.00 Total 1,000 KWH P21.00 ==== ====== For the purposes of this energy tax, the prevailing "electric power rates" shall be the total of the cost of energy, purchase power adjustments, currency exchange rate adjustments and such other charges that are added into the bill by electric power utility companies in determining the total monthly electric bill of every residential consumers. SECTION 6. Procedures to be followed by electric power utility companies outside Metro Manila in determining whether their prevailing electric power rates are higher or lower than that of Metro Manila area . For purposes of determining whether their prevailing electric power rates are higher or lower than the prevailing electric power rates (including the energy tax) imposed in Metro Manila area, all electric power utility companies outside Metro Manila must be guided by the formula adopted by Manila Electric Company, in computing their monthly billings of its residential consumers. FORMULA : 1) To determine the monthly billing Amount of bill = Cost of energy charges + Currency exchange rate adjustment + Purchase power adjustment 2) To determine the average cost per kilowatt/hour Amount of bill + Number of kilowatt/hour consumed = Average cost per kilowatt/hour However, inasmuch as two of the cost factors, i.e. , currency exchange rate adjustment and purchase power adjustments, used by Manila Electric Company vary from month to month, the Bureau of Internal Revenue shall circularize every month to all concerned the aforesaid cost factors secured from Manila Electric Company. As an illustration for the application of the above formula, the prevailing electric power rates per kilowatt/hour by Manila Electric Company for the month of October, 1979 is shown in Annex "A" hereof. SECTION 7. Manner of billing the energy tax on electric power consumption . The energy tax herein imposed on every residential consumer shall be shown separately in the monthly billings to be collected from every residential consumer by the owner or proprietor, operator or any person in charge of the electric utility. Copy of said monthly billings shall be made readily available at its principal place of business. SECTION 8. Manner of filing return and payment of taxes . Within twenty (20) calendar days after the end of each calendar month, a return (BIR Form No. _____) of the preceding monthly billings collected by the owner, proprietors, operators or any persons in-charge of the public utilities, shall be filed with the Bureau of Internal Revenue and the energy taxes so collected shall be remitted to the Commissioner of Internal Revenue, Revenue Regional Director, Revenue District Officer or the Collection Agent of the City or Municipality where the electric utilities principal's office is located and where its books of accounts are kept. SECTION 9. Treatment of taxes paid . The energy tax herein imposed shall not be allowed as a deduction for income tax purposes. Likewise, the tax herein imposed when collected shall not be considered as part of the gross receipts of the electric power utility company for purposes of computing the franchise tax thereon. SECTION 10. Records to be maintained by electric utility companies . Every electric power utility company shall maintain records as well as all the supporting data used in preparing the monthly billings, and the required return as provided for and required under Sections 6 and 7 hereof respectively, which must be readily available at its principal place of business. SECTION 11. Declaration must be under oath . The monthly return required to be filed by the electric power utility companies under these regulations shall be made under oath by the owner or proprietor, operator or any person in charge of such electric companies. SECTION 12. Penalties . If the tax is not remitted within the prescribed period, the owner, proprietor, operator or any person in charge of the electric utility shall be liable to the surcharges herein below imposed. These penalties shall be collected at the same time, in the same manner and as part of the tax. a) In case the tax is not remitted within the prescribed period, not due to willful neglect, there shall be added to the tax an amount equal to twenty-five per centum (25%) of the tax due. b) In case the required return is not filed within the prescribed period due to willful neglect or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made on the basis of the return before the discovery of the falsity or fraud, a surcharge of fifty per centum (50%) of the tax due shall be imposed. SECTION 13. Repealing clause . All regulations, rules, orders or part thereof which are inconsistent with this act are hereby repealed or modified accordingly. SECTION 14. Effectivity . These regulations shall take effect immediately and shall apply only on electric power consumption of residential consumers whose monthly billing periods start on September 7, 1979 and thereafter. PEDRO M. ALMANZOR Acting Minister of Finance Recommending Approval: EFREN I. PLANA Acting Commissioner ANNEX "A" COMPUTATION OF PREVAILING ELECTRIC POWER RATES OF MANILA ELECTRIC COMPANY Based on October, 1979 Factors Currency Exch. Rate Adjustment 1.2% Purchased Power Adjustment P0.119/kwh CONSUMPTION Based on Based on Based on Based on Based on 650 KWH 1000 KWH 1500 KWH 2000 KWH 5000 KWH First 14 kwh P2.00 P2.00 P2.00 P2.00 P2.00 Next 46 kwh x .125 5.75 5.75 5.75 5.75 5.75 Next 60 kwh x .07 4.20 4.20 4.20 4.20 4.20 Next 80 kwh x .14 11.20 11.20 11.20 11.20 11.20 Total: 200 kwh ====== Excess 450 kwh x .35 157.20 Excess 800 kwh x .35 280.00 Excess 1,300 kwh x .35 455.00 Excess 1,800 kwh x .35 630.00 Excess 4,800 kwh x .35 1,680.00 Energy Charge P180.65 P303.15 P478.15 P653.15 P1,703.15 Currency Exch. Rate Adjustment 2.17 3.64 5.74 7.84 20.44 Purchase Power Adjustment 53.55 95.20 154.70 214.20 571.20 Energy Tax (Exempted) 35.00 135.00 310.00 1,360.00 TOTAL BILL P236.37 P436.99 P773.59 P1,185.19 P3,654.79 ======== ======== ======== ====== ======= Average Rate Per KWH P236.37 P436.99 P773.59 P1,185.19 P3,654.79 650 1000 1500 2000 5000 P0.364 =P0.437 =P0.516 =P0.593 P0.731 = ======== ======== ======== ======== =======