Tax Planning
Philippines Clarifies VAT on Government-Mandated Charges and Exempts PERA UI-TFs
The Philippines BIR has amended guidance clarifying VAT treatment of government-mandated charges under the EOPT Act and accredited new PERA Unit Investment Trust Funds exempted from income tax.
By NomadicTax Research Team • 5-8 min read • August 11, 2026
## Background: EOPT and VAT on Government-Mandated Charges
Under Republic Act 11976 (Ease of Paying Taxes Act), the Bureau of Internal Revenue (BIR) amended **Revenue Memorandum Circular No. 116-2024** to clarify which government-mandated charges are **not subject to output tax nor considered creditable withholding tax** under VAT and income tax rules. These changes were issued in **RMC No. 60-2026** in **June 2026**.([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2060-2026.pdf?utm_source=openai))
### Charges now excluded include:
* Lifeline Subsidy under ERC Res. No.02, Series of 2026
* Green Energy Auction Allowance under ERC Res. No.6, Series of 2025
* Universal Charges, Feed-in Tariff Allowance (FIT-All), Real Property Tax and other specified amounts.([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2060-2026.pdf?utm_source=openai))
**Implication for VAT-registered businesses**: Accurate classification of these charges ensures correct VAT treatment—over-charging or understating VAT can lead to compliance risk.
## Exempt PERA UITFs: RMC No. 74-2026
In July 2026, the BIR published **Revenue Memorandum Circular 74-2026**, circularising additional **PERA Unit Investment Trust Funds (UITFs)** approved by the Bangko Sentral ng Pilipinas (BSP). Income from investments held in these accredited UITFs is **exempt from income tax** under the PERA Act.([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2074_redacted.pdf?utm_source=openai))
### Newly accredited funds include:
* ATRAM PERA Global Dividend Accumulation Feeder Fund (PERA GDAF)
* ATRAM PERA Global Allocation Feeder Fund (PERAGAFF) II
These additions expand tax-favoured retirement savings options for Filipino individuals participating in PERA.([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2074_redacted.pdf?utm_source=openai))
## What Businesses and Individuals Should Do
* **For VAT-registered companies**: Review whether any part of your billing involves government-mandated charges. If so, verify if those charges are among those now excluded—update pricing and VAT declarations accordingly.
* **For retirement savers using PERA**: Check if choosing among the newly accredited UITFs aligns with your investment risk profile and tax planning strategy.
* **Maintain proper documentation**: for transactions claimed as excluded, have supporting regulatory references (ERC resolutions etc.) on record.
* **Review contracts/agreements**: where government-mandated charges were included in original contracts out of habit/neglect, these may need to be re-negotiated or re-classified.
## Example Scenarios
| Person / Entity | Before Change | After Change |
|------------------|---------------|---------------|
| Residential electricity consumer paying ‘lifeline subsidy’ as part of bill | May include VAT depending on interpretation | Lifeline Subsidy excluded from VAT/output tax under RMC 60-2026 |
| Business purchasing a PERA UITF not yet accredited | Income subject to regular income tax | Now income from accredited UITFs like PERAGAFF II is **exempt** under PERA |
## A Quick Checklist
1. Identify your exposure to government-mandated charges.
2. Map against list in RMC 60-2026.
3. For PERA investments, confirm accreditation via BSP and BIR publications.
4. Adapt accounting/VAT/declaration systems to reflect these distinctions.
5. Seek tax-professional advice if you have mixed charge components or are uncertain.
**Takeaway**: Both changes bring clarity and tax relief in different ways—for companies managing VAT and for individuals saving through PERA—if you align early, you can avoid audit issues and make the most of the exemptions.