THE BUREAU of Internal Revenue (BIR) has imposed a 2-percent withholding tax on payments to generation companies and other market participants selling electricity through the country’s wholesale power market.
Under Revenue Regulations No. 005-2026, the BIR required the Independent Electricity Market Operator of the Philippines (IEMOP), which facilitates electricity trading and settlements in the Wholesale Electricity Spot Market (WESM), to withhold 2 percent from the gross amount it remits to generation companies and other market participants.
The rule covers electricity sold through the WESM, where transactions involving the sale and purchase of electricity among generation companies, distribution utilities, and other market participants are conducted.
The IEMOP is responsible for facilitating electricity trade in the Philippine electric power industry as the independent market operator of the WESM.
The operator, however, is designated solely as a withholding agent and will not be considered to have income arising from the remittances that the regulation covers.
As a withholding agent, the IEMOP will be responsible for deducting and withholding the 2-percent tax from all gross remittances to generation companies and other spot market participants.
Gross remittances refer to the total amount payable to electricity sellers for the sale of electricity before any deductions, according to the regulation.
The IEMOP will also be required to remit the taxes withheld by filing the required withholding tax returns through the BIR’s Electronic Filing and Payment System, as well as issue a Certificate of Tax Withheld at Source to each electricity seller.
The certificates must be issued on or before the 20th day after the close of the taxable quarter or upon request of the payee.
Also, the IEMOP is expected to furnish the LT Document Processing & Quality Assurance Division of the BIR’s Large Taxpayers Service with a duly certified list of electricity buyers. (Nyah Genelle C. De Leon © Philippine Daily Inquirer)
