BIR removes VAT on system loss charge
Other Relevant Tax Updates:
- TAX & BUSINESS-RELATED NEWS [SEPTEMBER 14-21]
- BIR CIRCULARIZES ERC RESOLUTION ON THE REMOVAL OF VAT ON SYSTEMS LOSS
- CTA CASE ON LOCAL BUSINESS TAX ASSESSMENT OF A CONDOMINIUM CORPORATION
I. TAX & BUSINESS-RELATED NEWS [SEPTEMBER 14-21]
1. BCDA eyes Q1 2027 for bidding on remaining Market! Market! land
2. ADB to raise $6B for Asean Blue Economy tack
3. Aznar allocates P503.8m for new ships
4. Potential US import ban could hit iPhones, Galaxy, Pixel over patent dispute
5. Mastercard launches Wallet Pay to expand digital wallet reach
BCDA eyes Q1 2027 for bidding on remaining Market! Market! Land [GMA News Online, September 21, 2026]
According to BCDA president and chief executive officer Joshua Bingcang, the property will be bidded out as a transit-oriented development (TOD), as it will serve as a substation for the planned Metro Manila Subway.
ADB to raise $6B for Asean Blue Economy tack [BusinessMirror, September 21, 2026]
THE Asian Development Bank (ADB) said it will mobilize up to $6 billion in financing through 2030 for projects aimed at protecting Southeast Asia’s seas and supporting industries that depend on them.
https://businessmirror.com.ph/2026/09/21/adb-to-raise-6b-for-asean-blue-economy-tack/
Aznar allocates P503.8m for new ships [Manila Standard, September 20, 2026]
Aznar Shipping Corp. is allotting P503.8 million from its planned initial public offering to acquire two brand-new RoRoPax vessels as it expands its fleet and service routes in the Visayas.
https://manilastandard.net/business/corporate/314795052/aznar-allocates-p503-8m-for-new-ships.html
Potential US import ban could hit iPhones, Galaxy, Pixel over patent dispute [Technobaboy, September 19, 2026]
Potential US import ban could hit iPhones, Galaxy, and Pixel devices after the US International Trade Commission opened an investigation into Apple, Samsung, and Google. The case comes from BoomCloud 360, a small California audio company, claiming infringement of spatial audio patents.
Mastercard launches Wallet Pay to expand digital wallet reach [The Philippine Star, September 19, 2026]
Mastercard has launched a new suite of payment services to help digital wallets expand across borders and connect to more merchants, with GCash among the participating providers through its partnership with Alipay+.
II. BIR CIRCULARIZES ERC RESOLUTION ON THE REMOVAL OF VAT ON SYSTEMS LOSS
Revenue Memorandum Circular (RMC) No. 097-2026, issued on September 14, 2026, circularizes Energy Regulatory Commission (ERC) Resolution No. 26, Series of 2026, which declares the allowable System Loss Charge, within the cap approved by the ERC, as a government-mandated pass-through cost that does not form part of the gross sales of Generation Companies (GenCos), the National Grid Corporation of the Philippines (NGCP), and Distribution Utilities (DUs) for Value-Added Tax (VAT) purposes. As clarified, the allowable System Loss Charge is not subject to Output VAT and Creditable Withholding on VAT, provided that it is separately identified in the billing statement, invoice, or similar document. The exclusion does not extend to income tax and the corresponding creditable withholding tax. The Circular further amends Q&A No. 3 of RMC No. 116-2024, as previously amended by RMC No. 60-2026, and applies prospectively from its effectivity and that of ERC Resolution No. 26, Series of 2026.
If you wish to get a copy of complete text of CTA cases, please e-mail us at taxseminars@dmdcpa.com.ph.
III. CTA CASE
[A BILLING STATEMENT ISSUED FOR BUSINESS PERMIT RENEWAL IS NOT A NOTICE OF ASSESSMENT UNDER SECTION 195 OF THE LGC UNLESS IT STATES THE DEFICIENCY TAX, SURCHARGES, INTERESTS & PENALTIES] [WHERE NO ASSESSMENT EXISTS & THE TAXPAYER ALLEGES ERRONEOUS OR ILLEGAL PAYMENT OF LOCAL TAXES, THE REFUND CLAIM IS GOVERNED BY SECTION 196 OF THE LGC] [A CONDOMINIUM CORPORATION’S COLLECTION OF ASSOCIATION DUES, MEMBERSHIP FEES & SPECIAL ASSESSMENTS FOR MAINTENANCE & ADMINISTRATION DOES NOT CONSTITUTE BUSINESS SUBJECT TO LOCAL BUSINESS TAX]
Petitioners The City Treasurer and the City Government of Taguig City filed a Petition for Review seeking the reversal of the Regional Trial Court (RTC) Decision affirming the Metropolitan Trial Court’s (MeTC) ruling ordering the refund or issuance of a tax credit in favor of Respondent Royal Palm Residences Condominium Corporation representing Local Business Tax (LBT) allegedly collected erroneously for Taxable Year 2021. Petitioners argued that the Respondent’s claim had already prescribed because it was governed by Section 195 of the Local Government Code (LGC) on protest of assessment, contending that the Billing Statement issued in connection with the renewal of Respondent’s business permit constituted a Notice of Assessment. Likewise, the Respondent was engaged in business through the collection of association dues, membership fees, and special assessments, thereby making it liable for LBT as a contractor under the Taguig Revenue Code. Further, the Respondent was effectively claiming a tax exemption which should be strictly construed against the taxpayer. On the other hand, the Respondent argued that the Billing Statement was not a Notice of Assessment under Section 195 because it merely reflected taxes and fees payable for permit renewal and did not indicate any deficiency tax, surcharge, interest, or penalty. Further, as a condominium corporation organized solely to administer and maintain common areas, it is not engaged in business and therefore not subject to LBT. In ruling, the Billing Statement did not constitute a Notice of Assessment contemplated under Section 195 of the LGC and the Respondent’s refund claim was properly governed by Section 196 of the LGC. The Respondent timely filed both its administrative and judicial claims within the two-year prescriptive period. Also, the collection of association dues, membership fees, and special assessments by a condominium corporation to defray maintenance and administrative expenses does not constitute trade, business, or the sale of services for a fee, and therefore does not give rise to liability for LBT. Lastly, the Respondent’s claim was based on non–taxability, not tax exemption, because the LBT did not attach in the first place. Thus, the Petition is DENIED, and the RTC’s ruling is AFFIRMED. [CITY TREASURER OF TAGUIG & CITY GOVERNMENT OF TAGUIG CITY VS. ROYAL PALM RESIDENCES CONDOMINIUM CORPORATION, CTA EN BANC CASE NO. 3147, SEPTEMBER 2, 2026]
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