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)
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
- Identify all government‐mandated charges billed, determine which are Lifeline or GEA-All.
- Adjust your billing system/software to segregate these charges and flag them as VAT-exempt, non-creditable withholding amounts.
- Train accounting teams and auditors, and ensure future contracts are consistent.
- 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.