The Bureau of Internal Revenue (BIR) has tightened tax collection oversight in the Wholesale Electricity Spot Market (WESM), assigning the market operator direct responsibility for withholding and remitting taxes on electricity transactions in a move aimed at improving compliance and accountability.
Under Revenue Regulations No. 5-2026, the Independent Electricity Market Operator of the Philippines (IEMOP) will serve as the withholding agent for the 2 percent creditable withholding tax on gross remittances to generation companies and other market participants selling electricity through WESM.
The new arrangement places tax deductions at the market settlement stage, requiring IEMOP to withhold the applicable amount before releasing payments to electricity sellers. Collections must then be remitted to the government through the BIR’s Electronic Filing and Payment System.
The rules also require IEMOP to issue BIR Form No. 2307 to payees and submit quarterly reports identifying electricity buyers and recipients of payments, providing the tax agency with a clearer record of transactions and withholding activity.
BIR Commissioner Charlito Martin Mendoza said the measure is intended to ensure that taxes arising from electricity trading are collected and properly accounted for.
“We want to make sure that taxes from electricity transactions actually reach the government and are properly recorded,” Mendoza said.
He added that transferring withholding responsibility to IEMOP would establish a clearer system for tracking taxes deducted and remitted from spot-market transactions.
The regulation was signed by Finance Secretary Frederick Go upon Mendoza’s recommendation and published on October 1. It will take effect 15 days after publication in the Official Gazette or on the BIR website, whichever comes first.
The measure introduces a more centralized mechanism for collecting taxes from electricity sales in the spot market. Its implementation will place greater responsibility on IEMOP to ensure accurate deductions, timely remittances and complete reporting, while giving the BIR a more structured basis for monitoring compliance.
The regulation does not change the stated 2 percent withholding rate but establishes who must collect and remit the tax on covered transactions.
