Compliance
Philippines: Clarifying Output VAT & Creditable Withholding for Green Energy & Lifeline Subsidies
BIR’s RMC 60-2026 excludes lifeline subsidy & green energy auction allowance from Output VAT and Creditable Withholding Tax under the Ease of Paying Taxes Act.
By NomadicTax Research Team • 5-8 min read • August 20, 2026
## What Did RMC No. 60-2026 Change?
Issued **4 June 2026**, Revenue Memorandum Circular 60-2026 amends RMC 116-2024 to clarify that certain government-mandated charges, including **Lifeline Subsidy** and **Green Energy Auction Allowance (GEA-All)**, are **not subject** to Output Value-Added Tax (VAT) and Creditable Withholding Tax on both VAT and Income. This change is part of implementing Republic Act 11976 (Ease of Paying Taxes Act). ([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2060-2026.pdf?utm_source=openai))
## Implications for Businesses & Utilities
- Providers charging the Lifeline Subsidy or GEA-All must *remove* these items when computing Output VAT.
- Cannot claim Creditable Withholding Tax on these amounts if paid by customers or clients.
- Existing invoices or contracts may need to be reviewed and updated retrospectively, especially if the charges were previously included in VATable sales.
## Practical Example
Utility company sells electricity; their bill includes charges for:
- Lifeline Subsidy
- Energy Tax
- Universal Charges etc.
Under RMC 60-2026:
- **Exclude** Lifeline Subsidy & GEA-All when computing Output VAT base.
- Do **not** include them in Creditable Withholding Tax calculations.
- All other mandated charges per RMC 116-2024 remain as before.
## Actionable Steps for Affected Entities
1. Identify all government‐mandated charges billed, determine which are Lifeline or GEA-All.
2. Adjust your billing system/software to segregate these charges and flag them as **VAT-exempt, non-creditable withholding** amounts.
3. Train accounting teams and auditors, and ensure future contracts are consistent.
4. If in doubt, consult BIR or tax counsel to confirm correct treatment.
## Why It’s Significant
- Ensures consistency with the Ease of Paying Taxes Act, reducing ambiguity for taxpayers.
- Helps prevent over-collection of VAT or withholding tax on charges not meant to be taxed.
- Promotes fairer tax burdens particularly on electricity or utility bills for low-income consumers reliant on lifeline subsidies.
## Bottom Line
If your business bills or pays Lifeline Subsidies or Green Energy Auction Allowance, update your VAT and withholding tax treatment immediately to align with RMC 60-2026. Doing so will avoid penalties, over-paying or misfiling tax obligations.