Clarification on reporting of VAT on power generation

The Circular was issued to clarify the various issues in the implementation of Revenue Memorandum Circular No. 62-2012 on the revised rule on the reporting of gross receipts and remittance of VAT on power generation and other related charges.

Following are some of the issues clarified in the Circular:

1. On the liability of generation companies and electricity suppliers to interest and penalties for non-remittance of outstanding deferred VAT from distribution utilities (DUs) and electric cooperatives (ECs) prior to August 25, 2012

Generation companies (GenCos), aggregators, market operators, retail electricity suppliers and other suppliers of electricity shall be required to remit only the amount of outstanding deferred VAT prior to August 25, 2012 that they collected from the DUs/ ECs, which the latter had collected from the end-users/customers.

DUs /ECs shall reconcile with GenCos, aggregators, market operators, retail electricity suppliers and other suppliers of electricity the unremitted portion of the deferred VAT prior to August 25, 2012, which shall be subject to audit by the BIR.

However, the outstanding deferred VAT prior to August 25, 2012 that has already been remitted by the DUs/ECs to the GenCos, aggregators, market operators, retail electricity suppliers and other suppliers of electricity, but not paid by the latter to the BIR within the deadline prescribed herein, shall be subject to surcharge, interest and penalties.

2. On the determination of amount of generation fee and VAT to be paid per GenCo

The VAT collected from the end-users by the DUs/ECs must immediately be remitted to the GenCos, aggregators, market operators, retail electricity suppliers and other suppliers of electricity not later than the 10th day of the following month, to enable the GenCos to remit the VAT on or before the 20th or 25th of the same month, whichever is applicable, net of GenCos’ own input tax, if any.

Moreover, DUs/ECs are required to furnish the GenCOs with a summary list of VAT collections from end-users/customers to enable the GenCos to file the VAT returns, and attach the list as a supplemental schedule to the GenCos’ Summary List of Sales submitted to the BIR.

In case the DU/EC has special arrangements with the GenCo for discounts for prompt payments, and such is availed of by the DU/EC, the payment shall be deemed collected from the end-user/client.  Accordingly, the same shall be reported as part of the GenCo’s vatable gross receipts, and shall be subjected to VAT.

3. On manner of allocating zero-rated sales and other reconciling items to the GenCos

The zero-rated sales and other reconciling items shall be proportionately allocated by the DUs/ECs based on kilowatt purchased.

(Revenue Memorandum Circular No. 71-2012, November 15, 2012)

Tax Brief – December 2012

Punongbayan and Araullo