Bureau of Internal Revenue Issuances
REVENUE MEMORANDUM CIRCULARS (RMC)
RMC No. 9-2025
January 28, 2025
Publishing the EO No. 61 Technical Working Group Resolution No. 2024-2 “Guidelines on the Grant of the FY 2023 Performance-Based Bonus and the FY 2024 Productivity Enhancement Incentive”
Full Text | EO No. 61 Technical Working Group Resolution No. 2024-2
REVENUE MEMORANDUM ORDERS (RMO)
RMO No. 6-2025
January 30, 2025
Providing the work-around guidelines and procedures in the utilization of the Mobile Revenue Collection Officers System using tablets/desktop computers/laptops and printers and amending certain provisions of RMO No. 8-2013 particularly on the use of Collection Officer Receipting
REVENUE REGULATION
RR No. 4-2025
January 30, 2024
Further amending the “De Minimis” benefits provisions of RR No. 2-98, as amended, increasing the Clothing Allowance pursuant to RA No. 11975, the Fiscal Year 2024 Genereal Appropriations Act, and Employees Achievement Awards
TAX LAW
REPUBLIC ACT No. 12023 – VAT on Digital Services
Official Gazette / October 2, 2024
AN ACT AMENDING SECTIONS 105, 108, 109, 110, 113, 114, 115, 128, 236, AND 288 AND ADDING NEW SECTIONS 108-A AND 108-B OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED
REPUBLIC ACT No. 12066 – CREATE MORE
Official Gazette / November 13, 2024
AN ACT AMENDING SECTIONS 27, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237, 237-A, 269, 292, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, AND 311, AND ADDING NEW SECTIONS 135-A, 295-A, 296-A, AND 297-A OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
REPUBLIC ACT No. 12079 – A VAT Refund for Non- Resident Tourists
Official Gazette / December 9, 2024
AN ACT CREATING A VAT REFUND MECHANISM FOR NON-RESIDENT TOURISTS, ADDING A NEW SECTION 112-A TO THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, FOR THE PURPOSE
FISCAL INCENTIVES REVIEW BOARD – Department of Finance
Official Website / December 17, 2024
FIRB Advisory No. 007-2024
Interim Implementing Rules and Regulations (IRR) on the Availment of Incentives and Transfer of Registration as Provided Under Republic Act No. 12066
https://firb.gov.ph/download/firb-advisory-no-007-2024/?wpdmdl=4135&refresh=6776528c473f11735807628
WHAT IS THE FIRB?
The Fiscal Incentives Review Board, or FIRB, is the interagency government body given the authority by the Philippine law to grant tax incentives to registered business enterprises. The FIRB has delegated to the country’s investment promotion agencies the grant of tax incentives for registered projects or activities with investment capital of one billion pesos (P1,000,000,000) and below. The FIRB also grants tax subsidies to government-owned and -controlled corporations (GOCCs).
WHAT ARE THE TAX INCENTIVES AVAILABLE?
Business enterprises registered with the investment promotion agencies (IPAs) may apply for incentives under the single menu provided under CREATE, which include the following:
- 4 to 7 years of income tax holiday (ITH)
- 10 years of special corporate income tax (SCIT) for export enterprises
- Enhanced deductions
- Customs duty exemption on importation
- Value-added tax (VAT) exemption on importation and VAT zero-rating on local purchases
A Step-by-Step Guide for IPAs: Approve and Consolidate the Annual Tax Incentives Report (ATIR) and Annual Benefits Report (ABR) submissions of RBEs through FIRMS – After the RBE’s submission of the ATIR-ABR package through FIRMS, the IPAs can navigate and download the packages under Manual Submission, or Approve/Return the RBE’s ATIR-ABR under Electronic Submission.
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https://firb.gov.ph/download/a-step-by-step-guide-for-ipas-approve-and-consolidate-the-atir-and-abr-submissions-of-rbes-through-firms/?wpdmdl=3954&refresh=67809445871d91736479813
TAX AND BUSINESS RELATED NEWS
BIR WEEKENDER BRIEFS
Volume No. 16 Issue No 4 Week ending January 24, 2024
A total of two (2) tax cases were filed by BIR district offices under the BIR’s Run After Tax Evaders (RATE) Program on January 17.
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https://bir-cdn.bir.gov.ph/BIR/pdf/v16n4%20highres.pdf
Lumagui: Government Contractors have to present an Updated Tax Clearance before Final Settlement of Government Contracts
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. has issued Revenue Regulation No. 17-2024 (RR No. 17-2024) which requires government contractors to secure from the BIR an updated tax clearance certifying that the contractor does not have any outstanding tax liabilities, and that the contractor has duly filed its latest income and business tax returns and paid the corresponding taxes due, prior to the final settlement of a government contract.
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https://bir-cdn.bir.gov.ph/BIR/pdf/PR01JAN0825.pdf
Lumagui: BIR hits 2024 collection target; ends 20-year drought
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui, Jr. announced that the BIR has reached its 2024 collection target of Php 2.848 trillion. This is the collection goal approved by the Development Budget Coordination Committee (DBCC) last March 22, 2024. This is the first time in twenty (20) years since the BIR achieved its full collection goal.
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https://bir-cdn.bir.gov.ph/BIR/pdf/PR02JAN1525.pdf
Lumagui: BIR will exceed 2024 DBCC Collection Goal by the Billions; Final Numbers out by Early-February
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. confirmed that the agency has not only reached its (Development Budget Coordination Committee) DBCC collection goal for 2024, a first after twenty (20) long years, it will also exceed its collection goal by the billions. A surplus of billions is expected to be added to its collection for 2024, after final reconciliation is made by early February 2025. The BIR has a 2024 collection goal of Php 2.848 Trillion, as approved by the DBCC last March 2024.
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https://bir-cdn.bir.gov.ph/BIR/pdf/PR03JAN2025.pdf
SC: Acquittal in Tax Case Does Not Erase Obligation to Pay Taxes
Supreme Court of the Philippines / January 24, 2025
The Supreme Court (SC) reiterated that being acquitted of a criminal tax violation does not automatically exempt a taxpayer from paying unpaid taxes. The Office of the Solicitor General (OSG) had filed criminal cases before the Court of Tax Appeals (CTA) against the company and Uy for failing to file the company’s income tax return and pay income and value-added tax. The CTA dismissed the criminal cases due to insufficient evidence proving that Uy was a responsible officer of the company and, therefore, could not be held criminally liable for the company’s actions. Uy’s acquittal also removed the element of willfulness in the company’s non-payment of taxes. Additionally, the CTA dismissed the related civil case that aimed to determine the amount of taxes the company owed.
Click the link below to read the full news from the source:https://sc.judiciary.gov.ph/sc-acquittal-in-tax-case-does-not-erase-obligation-to-pay-taxes/
Tax laws passed and pending bills
MT&F Attorney at Law / Atty. Euney Marie Mata-Perez / January 9,2025
The beginning of every year is always a good opportunity to look back at the events of the past year, to give thanks and learn from them, as well as to look forward and plan ahead. In 2024, we saw the passage of the following laws amending our National Internal Revenue Code (“Tax Code”): (a) Republic Act (RA) No. 11976, or the Ease of Paying Taxes (EOPT) Act, which was passed in January 2024, (b) CREATE More Act or RA No. 12066 which was passed in November 2024, and (c) Republic Act RA No. 12023 imposing value-added tax (VAT) on digital services which was passed in December 2024. On 13 June 2024, RA No. 12001, or the Real Property Valuation and Assessment Reform Act (RP-VAR Act), was passed. These laws are game changers relative to Philippine taxation. The EOPT Act made tax filing and payment easier by allowing the filing of returns and payment of all internal revenue taxes manually or electronically with any authorized agent bank or Revenue District Office (RDO). It also made uniform the basis for VAT, both for sale of goods and services, to be “gross sales”, changing the landscape of VAT taxation on service providers which were previously taxed based on gross receipts. It also introduced classifications of taxpayers into micro, small, medium and large taxpayers for income tax purposes, as well as low, medium, and high-risk claims for value-added tax (VAT) refund purposes. Further, it amended Sections 204 and 229 of our Tax Code to modify the rules and procedure on the claims for refund of erroneously paid or illegally collected taxes. The CREATE More Act (RA No. 12066) introduced amendments to provisions in our Tax Code on income tax, VAT, especially on VAT zero rating on purchases, incentives enjoyed by registered business enterprises, on powers of the Fiscal Incentives Board, and the Investment Promotion Agencies, on refunds of excise taxes on petroleum products sold to international carriers, and on electronic invoicing, among others. RA No. 12023, which imposed value-added tax (VAT) on digital services and amended several provisions of our Tax Code, expanded the “nexus” of VAT taxation on digital services to provide that “digital services delivered by nonresident digital service providers shall be considered performed or rendered in the Philippines if the digital services are consumed in the Philippines”. It introduced a definition of “digital services” in Section 108-A of the Tax Code to refer to any service that is supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated. Digital services shall include online search engines, online marketplaces or e-marketplaces; cloud services; online media and advertising; online platforms; or digital goods.
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Tax laws passed and pending bills – MTF Counsel | Mata-Perez, Tamayo & Francisco Law Firm | best law firms in the philippines | law firms in makati
DOF successfully issues JAO to implement pre-border technical verification and cross-border e-invoicing system that will protect consumers from unsafe goods
Department of Finance / January 24, 2025
The Committee on Pre-border Technical Verification and Cross-border Electronic Invoicing (CPTVCEI), led by the Department of Finance (DOF), has successfully issued the Joint Administrative Order (JAO) implementing AO No. 23, series of 2024 or the Digital and Integrated System for Pre-border Technical Verification and Cross-border Electronic Invoicing that will safeguard consumers from unsafe goods. The initiative is in line with President Ferdinand R. Marcos, Jr.’s 8-Point Socioeconomic Agenda of enhancing bureaucratic efficiency by streamlining government processes and ensuring transparency in public service delivery. “With the freshly issued JAO, we can now begin our collective efforts towards strengthening our border protection through digitalization. This will certainly go a long way in putting an end to smuggling, misdeclaration, and undervaluation. This will not only ensure that our consumers are protected from counterfeit and substandard goods, but also help us collect much-needed revenues for our people. Sisiguraduhin po namin sa DOF ang maayos at mabilis na pagpapatupad ng AO 23,” Finance Secretary Ralph G. Recto said. JAO No. 001-2025 lays out the specific roles and rules to carry out the implementation of AO 23. It simplifies customs procedures, expedites the inspection of all imported goods in the Philippines, strengthens border security, and protects consumers from substandard products. he JAO is a direct result of the collaborative efforts among the members of the CPTVCEI with the DOF as the Chair. This showcases the administration’s commitment to fostering a well-coordinated and effective governance framework. Members of the CPTVCEI include the Bureau of Customs (BOC), Department of Agriculture (DA), Department of Trade and Industry (DTI), Department of Energy (DOE), Department of Health (DOH), Department of Environment and Natural Resources (DENR), Department of Information and Communications Technology (DICT), Philippine Drug Enforcement Agency (PDEA). Representatives from duly recognized industry associations, namely the Philippine Chamber of Commerce and Industry (PCCI) and the Chemical and Pharmaceutical Industry Organization of the Philippines (CPIOPI) are also members of the CPTVCEI.
Click the link below to read the full news from the source:
https://www.dof.gov.ph/dof-successfully-issues-jao-to-implement-pre-border-technical-verification-and-cross-border-e-invoicing-system-that-will-protect-consumers-from-unsafe-goods/
AI and taxes: A new era of efficiency and innovation ‘Suits The C-Suite’
Business World / Danielle Irma D. Arellano and Jan Kriezl M. Catipay / January 26, 2025
IN BRIEF:
• From streamlining communications with taxpayers to leveraging AI for high-impact decision-making, AI can revolutionize the Philippines tax landscape.
• Automation in tax processes, aided by bots, has been introduced to streamline routine tasks such as collating voluminous data from systems for tax return preparation.
• Although AI is set to usher in more efficient tax administration and effective tax policy and planning, it also comes with its own set of challenges and risks.
Artificial intelligence (AI) comes up as a common topic in formal conversations at work and informal talks with friends, family members, and even conversations with strangers. It is also rapidly being integrated into various aspects of business operations, including tax.
From streamlining communications with taxpayers to aiding high-impact decision-making, AI can revolutionize the Philippines tax landscape. This article will dive into what AI has already transformed — and has yet to transform — with respect to how tax is practiced and how tax will be administered.
AI IN TAX ADMINISTRATION – n the Philippines, the Bureau of Internal Revenue (BIR) has introduced AI advancements such as the AI-driven chatbot Revie. Revie serves as an Interactive Taxpayer Assistant, addressing general inquiries, finding RDOs, and handling Taxpayer Identification Number (TIN) inquiries, eComplaints, and eAppointments. This innovation allows taxpayers to quickly access information that previously required visiting the BIR tax office or enduring long queues for appointments. This technology application leads to an enhanced taxpayer experience and makes tax information accessible to all 24/7 without imposing an additional burden to current BIR personnel.
AI IN TAX POLICY AND PLANNING – With the ongoing Digital Transformation (DX) Program of the BIR, it is expected that the data obtained from taxpayer filings and remittances will be utilized to optimize reporting and analytics. With the continuous accumulation of data, the BIR will also create a data warehouse aimed at viewing taxpayers holistically which may change how tax policy is crafted in the future.
DATA PRIVACY AND SECURITY – AI is only as good as the data used, highlighting the need to address concerns about potential data breaches. Sensitive taxpayer information must be secured against being leaked to the public or, worse yet, used to commit cybercrimes.
TRANSPARENCY AND ACCOUNTABILITY – Transparency and accountability in an AI-driven tax system will be necessary to foster taxpayer confidence in the adoption of these technologies.
Click the link below to read the full news from the source:
https://www.bworldonline.com/economy/2025/01/26/649070/ai-and-taxes-a-new-era-of-efficiency-and-innovation/
Gatchalian wants Senate inquiry on tax benefit threats vs coops
Manila Bulletin / Hannah L. Torregoza / January 26, 2025
Senator Sherwin Gatchalian has called for a congressional inquiry into a Bureau of Internal Revenue (BIR) requirement that allegedly threatens the tax exemption privileges of cooperatives. Gatchalian is referring to the requirement for cooperative members to present a Tax identification number (TIN) when obtaining a Certificate of Tax Exemption (CTE). Through its Revenue Memorandum Circular (RMC) No.124-2020, the BIR stated that the TIN requirement is based on a provision of the National Internal Revenue Code which states that any person required under the Code to make, render, or file a return, statement, or other document must be assigned or supplied with a TIN.The Senate Committee on Ways and Means chairperson, however, said that the submission of TINs by all members of cooperatives is not a prerequisite for tax exemption under Articles 60 and 61 of the Philippine Cooperative Code of 2008.
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https://mb.com.ph/2025/1/26/gatchalian-wants-senate-inquiry-on-tax-benefit-threats-vs-coops
DOF maximizes national gov’t revenue streams by privatizing non-performing assets to generate more funds for national development and minimize debt
Department of Finance / January 26, 2025
The Department of Finance (DOF) is maximizing the National Government’s (NG) revenue streams by privatizing non-performing and idle public assets in order to generate more funds to aid national development and minimize debt. “The assets we are privatizing are no longer productive and continue to drain the National Government’s resources through management, security, and maintenance costs. By disposing of these non-performing assets, we eliminate unnecessary expenditures and unlock resources that can address the pressing needs of our people. This approach ensures the efficient use of public funds,” Finance Secretary Ralph G. Recto emphasized. To support the national government’s gargantuan national budget, the DOF is pursuing the generation of non-tax revenues through its privatization efforts as stated in Executive Order 323, which established the Inter-agency Privatization Council (PrC) and the Privatization Management Office (PMO). It is composed of the Secretary of Finance as Chairman, with the Secretary of the Department of Budget and Management (DBM), the Department of Trade and Industry (DTI), the National Economic and Development Authority (NEDA), and the Department of Justice (DOJ) as members. The National Treasurer (BTr) and the Chairman of the Presidential Commission on Good Government (PCGG) serve as non-voting members of the Council. The DOF has been in close coordination with the Social Security System (SSS) and Government Service Insurance System (GSIS) on some assets that would serve as good long-term investments for the pension funds. The privatization of idle and underperforming government assets is a win-win solution for both the national government and investors, as compensation from the sale will support priority programs and projects that will benefit the Filipino people.
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https://www.dof.gov.ph/dof-maximizes-national-govt-revenue-streams-by-privatizing-non-performing-assets-to-generate-more-funds-for-national-development-and-minimize-debt/
EDITORIAL — Tax awareness campaign
The Philippine Star / January 26, 2025
Wanting to tout economic gains under his watch, President Marcos has ordered agencies to make economic terms “easily digestible and in a language that makes sense to Juan de la Cruz.” He issued the order last Friday during the board meeting at Malacañang of the National Economic and Development Authority, during which the NEDA reported that the economy remained in good shape despite missing its targets for 2024. Alongside trying to make gross domestic product and headline inflation comprehensible to ordinary citizens, the administration can tack on a taxpayer information campaign, which may promote efficiency and honesty in government. Too many Filipinos think they are not taxpayers if they don’t pay income or corporate taxes, and therefore have no financial stake in good governance. Filipinos even at the lowest income levels must be made fully aware of their automatic contributions to the national coffers. They must understand that each time they switch on the light at their home or consume water from the taps, they pay value-added tax to the government. A hefty 12 percent of the price of gasoline for tricycles and jeepneys is collected as excise tax by the government. There’s VAT on road toll.
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https://www.philstar.com/opinion/2025/01/26/2416847/editorial-tax-awareness-campaign
Tobacco industry backs pause in raising excise tax rates
Business World / Aubrey Rose A. Inosante / January 27, 2025
THE tobacco industry said it supports a pause in excise tax rate hikes and called for more efficient utilization of local governments’ national tax allotments (NTA). “If they think this moratorium will help the industry, I think it’s worth trying if it works in other countries. Anyway, we’re losing income. Why don’t we try it here?,” National Tobacco Administration (NTA) Administrator and Chief Executive Officer Belinda S. Sanchez told BusinessWorld on Monday on the sidelines of the 2nd International Tobacco Agricultural Summit She was referring to House Bill 11279, which proposes to suspend the annual 5% increase in tobacco until 2026, replacing it with 6% adjustments every two years starting in 2027. The bill also aims to deter smuggling.
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https://www.bworldonline.com/economy/2025/01/27/649364/tobacco-industry-backs-pause-in-raising-excise-tax-rates/
Vape taxes hit P1.35 billion in first 11 months
Business World / Justine Irish D. Tabile / January 27, 2025
TAX COLLECTIONS from vapor products totaled P1.35 billion in the 11 months to November, according to the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA). He noted the shift towards HTPs and vapes over the years has not been accompanied by appropriate regulation and tax measures. “The government is taking various steps to address these concerns. This matter has been brought to the Cabinet’s attention to ensure prompt and responsive action,” he said.
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https://www.bworldonline.com/economy/2025/01/27/649365/vape-taxes-hit-p1-35-billion-in-first-11-months/
PH garners strong biz interest in AI investments at WEF Annual Meeting
Department of Finance / January 27, 2025
The Philippines, through Special Envoy of the President to the World Economic Forum (WEF) and Finance Secretary Ralph G. Recto, has garnered strong business interest in Artificial Intelligence (AI) investments during the WEF Annual Meeting held in Davos-Klosters, Switzerland from January 20 to 24, 2025. At the Philippine Breakfast Interaction attended by close to 50 international public and private sector leaders, the Finance Chief spotlighted the Philippines’ strategic advantages that position it as an ideal partner in building the economy of the future. Central to this pitch were the attractive fiscal and non-fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act that will ensure the long-term success of businesses and potentially position the country as a hub for AI innovation. Aside from the CREATE MORE Act, Secretary Recto said the Philippine government has been expanding its digital infrastructure through the Philippine Digital Infrastructure Project, the National Broadband Program, and the Common Tower Program to enhance digital connectivity nationwide—particularly in underserved areas. Moreover, the government has implemented regulations in the digital space to strengthen oversight of digital businesses, such as the Internet Transactions Act and the value-added tax on non-resident digital services.
Click the link below to read the full news from the source:
https://www.dof.gov.ph/ph-garners-strong-biz-interest-in-ai-investments-at-wef-annual-meeting/
Challenges in taxing the digital economy
MSN.com / Joseph Valenzuela / January 28, 2025
In recent years, the digital economy has experienced remarkable growth, with the rapid expansion of sectors like e-commerce and online service platforms. Online shopping and digital services have become essential elements of modern life, driven largely by the convenience and time-savings they offer. In the Philippines, many prefer online shopping over visiting malls to avoid the heavy traffic, which is a waste of time for many. This trend has also allowed many Filipinos, especially small business owners, to earn additional income as affiliates of online shopping platforms. However, the rapid expansion of the digital economy has posed significant challenges for governments and tax authorities, particularly in ensuring that revenues from digital transactions are properly reported and taxed. As businesses increasingly operate online and digital services become an integral part of daily life, traditional tax frameworks are struggling to keep pace with this transformation. This article explores the challenges of taxing the digital economy and the initiatives of the Philippine government to address these challenges. Here are some challenges encountered by tax authorities: Jurisdictional issues: Determining where businesses should pay taxes is one of the most significant challenges. Traditional tax rules are based on concepts like “permanent establishment” (i.e., a physical presence) and “source of income.” However, digital businesses often lack a physical presence in many of the countries where they earn revenue. This creates confusion about which country has the right to tax the business and whether a country can tax a company that does not have offices or stores there. Cross-border transactions: The digital economy relies on transactions occurring across different countries, with goods and services easily moving from one place to another. Because these transactions are global, it becomes difficult for countries to collect taxes, especially when tax rates and enforcement rules vary from one country to another. This highlights the need for countries to work together and create common rules for taxing digital transactions. Intangible assets: Many digital businesses rely on things like software, user data and intellectual property, known as intangible assets. Unlike physical items, which are easier to value and tax, these intangible assets are harder to measure and tax correctly. This has led to discussions about how to fairly assign profits from these assets to the countries where they are created. In response to these challenges, the Philippine government has taken steps to integrate digital taxation into tax reform initiatives.
The Bureau of Internal Revenue (BIR) released Revenue Memorandum Circular (RMC) 60-2020 to remind individuals earning income through digital platforms to ensure their businesses are properly registered. In addition, the BIR clarified the proper tax treatment of cross-border services by issuing Revenue Memorandum Circular (RMC) 5-2024, as further clarified by 38-2024. Recently, President Marcos signed into law Republic Act (RA) 12023 or the Value-Added Tax (VAT) on Digital Services Law, which imposes a 12 percent VAT on digital service providers.
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Challenges in taxing the digital economy
Challenges in taxing the digital economy
Top of Mind / The Philippine Star / Joseph Valenzuela / January 28, 2025
In recent years, the digital economy has experienced remarkable growth, with the rapid expansion of sectors like e-commerce and online service platforms. Online shopping and digital services have become essential elements of modern life, driven largely by the convenience and time-savings they offer. In the Philippines, many prefer online shopping over visiting malls to avoid the heavy traffic, which is a waste of time for many. This trend has also allowed many Filipinos, especially small business owners, to earn additional income as affiliates of online shopping platforms. In response to these challenges, the Philippine government has taken steps to integrate digital taxation into tax reform initiatives. The Bureau of Internal Revenue (BIR) released Revenue Memorandum Circular (RMC) 60-2020 to remind individuals earning income through digital platforms to ensure their businesses are properly registered. In addition, the BIR clarified the proper tax treatment of cross-border services by issuing Revenue Memorandum Circular (RMC) 5-2024, as further clarified by 38-2024. Recently, President Marcos signed into law Republic Act (RA) 12023 or the Value-Added Tax (VAT) on Digital Services Law, which imposes a 12 percent VAT on digital service providers.
Click the link below to read the full news from the source:
https://www.philstar.com/business/2025/01/28/2417302/challenges-taxing-digital-economy
SC: Foreign Deposit Accounts Exempt From Estate Tax
Supreme court of the Philippines / January 28, 2025
The Supreme Court (SC) ruled that foreign currency deposit accounts are exempt from estate tax under Republic Act No. 6426 (RA 6426), also known as the Foreign Currency Deposit Act of the Philippines. The SC affirmed these rulings, emphasizing that the NIRC, a general tax law, did not expressly repeal the specific tax exemption granted by RA 6426, a special law. The Court clarified that a general law cannot override or revoke a special law without a clear and explicit repeal provision. RA 6426, enacted in 1974, was designed to attract foreign investments and deposits by exempting foreign currency accounts from all taxes. The NIRC, on the other hand, was passed in 1997 to govern the imposition of taxes, including estate tax. It contained only a general repealing clause. Thus, there is no express repeal of the tax exemption in favor of foreign currency deposit accounts. (Courtesy of the SC Office of the Spokesperson)
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https://sc.judiciary.gov.ph/sc-foreign-deposit-accounts-exempt-from-estate-tax/
Senate OKs bill lowering tax on stock transactions on final reading
Business World / John Victor D. Ordonez / January 28, 2025
THE SENATE on Monday approved on final reading a bill that seeks to cut the tax on stock transactions to 0.1% from 0.6%, aiming to encourage more Filipinos to invest in the stock market. Twenty-one senators unanimously voted in favor of Senate Bill No. 2865, or the Capital Markets Efficiency Promotion Act, which aims to make the country’s capital market more competitive with its regional peers. A final tax rate of 10% will be imposed on cash and property dividends received from a local corporation, joint stock company, mutual fund, or on the share of an individual in the net income of the entity. The House of Representatives passed a counterpart bill in March, which also seeks to lower the tax on dividends for non-resident investors to 10% from the current 25%. These measures will be reconciled in a bicameral conference committee before President Ferdinand R. Marcos, Jr. signs the final version into law.
Click the link below to read the full news from the source:
https://www.bworldonline.com/corporate/2025/01/28/649307/senate-oks-bill-lowering-tax-on-stock-transactions-on-final-reading/
BIR estimates 2024 tobacco revenue at $7.3B
Business World / Aubrey Rose A. Inosante / January 28, 2025
BUREAU of Internal Revenue (BIR) Commissioner Romeo D. Lumagui, Jr. on Tuesday gave a preliminary estimate for Philippine tobacco revenue at $7.3 billion in 2024. “The Philippines, as one of Asia’s developing economies, is home to an active tobacco industry, whose revenues are projected to reach $7.3 billion in 2024,” Mr. Lumagui said in a speech during the 2nd International Tobacco Agricultural Summit.
Click the link below to read the full news from the source:
https://www.bworldonline.com/economy/2025/01/28/649694/bir-estimates-2024-tobacco-revenue-at-7-3b/
Chip firms could get top-tier perks in CREATE MORE IRR
Business World / January 30, 2025
THE Philippine Economic Zone Authority (PEZA) said semiconductor industry investors are considered strong candidates for being classified into the top tier of fiscal-incentive recipients. President Ferdinand R. Marcos, Jr. said last week that his government is considering inserting a special provision favoring semiconductor companies in the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 12066 also known as the CREATE MORE Act. Tier 3 investors, according to the interim IRR, are export enterprises approved by the Foreign Investment Review Board (FIRB), eligible for a six-year income tax holiday (ITH) plus 20 years of an enhanced deduction rate (EDR) regime or special corporate income tax (SCIT), or 26 years of EDR/SCIT if they are in Metro Manila. The corresponding incentives are a seven-year ITH followed by 20 years of EDR/SCIT, or 27 years of EDR/SCIT if they are in metropolitan areas adjacent to the National Capital Region; and a seven-year ITH plus 20 years of EDR or SCIT, or 27 years of EDR/SCIT if they are in other areas. Domestic enterprises approved by FIRB may avail of a six-year income tax holiday (ITH) plus 20 years of EDR/SCIT, or 26 years of EDR if they are in Metro Manila; a seven-year ITH followed by 20 years of EDR, or 27 years of EDR if they are in metropolitan areas adjacent to the National Capital Region; and a seven-year ITH plus 20 years of EDR, or 27 years of EDR if they are in other areas.
Click the link below to read the full news from the source:
https://www.bworldonline.com/economy/2025/01/30/650186/chip-firms-could-get-top-tier-perks-in-create-more-irr/
PAGCOR tax treatment “Taxwise Or Otherwise”
Business World / Maria Isabel Silpedes / January 29, 2025
Imagine a world where the rules of the game are crystal clear. In December, the Bureau of Internal Revenue (BIR) took a huge step to clarify the tax treatment of the Philippine Amusement and Gaming Corp. (PAGCOR), including its Contractees and Licensees, when it issued Revenue Memorandum Circular (RMC) No. 132-2024. Building on past issuances (under RMC Nos. 33-2013 and 32-2022) and Supreme Court rulings, the BIR’s latest guidelines aim to untangle the complexities of PAGCOR’s diverse income streams and their tax treatment. Whether gaming operations or non-gaming operations, for both contractees or licensees, the RMC aims to streamline compliance and eliminate the long-standing ambiguities that may have produced multiple interpretations. In general, PAGCOR’s income can be classified into the following: (1) income from operations under PAGCOR’s franchise/gaming operations; and (2) income from other related operations/services or from non-gaming operations. Income from gaming operations is derived from issuing and/or granting licenses to operate casinos, gaming clubs, and other similar recreation or amusement places, gaming pools, to PAGCOR Contractees and Licensees, as well as earnings derived by PAGCOR from its own operations under its franchise. Such income includes income from casino operations, dollar pit operations, regular bingo operations, and mobile bingo operations operated by it, with agents on commission basis. PAGCOR’s income from its franchise/gaming operations is subject to 5% franchise tax, in lieu of all taxes, including value-added tax (VAT). Conversely, income from related operations/services or from non-gaming operations is subject to the regular corporate income tax, VAT and other applicable taxes.
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https://www.bworldonline.com/economy/2025/01/29/649899/pagcor-tax-treatment/
PH convenes high-level biz dialogue with Dutch investors in the Netherlands
Department of Finance / January 29, 2025
The Philippines convened a high-level business dialogue with Dutch investors in the Netherlands on January 27, 2025 to showcase the nation’s promising growth potential and pro-investment reforms to attract more foreign investors into the country. The dialogue brought together over 30 leaders from the Dutch business and financial sectors. It was organized by the Department of Finance (DOF) in collaboration with the Department of Trade and Industry (DTI), the Philippine Trade and Investment Center (PTIC), the Bangko Sentral ng Pilipinas (BSP), and hosted by the leading European bank ING. According to Undersecretary Velasquez, the Philippines is also making strides to become more open, liberalized, and globally competitive than ever before especially with the recent enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act that will ensure the long-term success of businesses.
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https://www.dof.gov.ph/ph-convenes-high-level-biz-dialogue-with-dutch-investors-in-the-netherlands/
Foreign currency deposit accounts exempt from estate tax, SC says
Business World / Chloe Mari A. Hufana / January 30, 2025
THE SUPREME COURT has ruled that foreign currency deposit accounts are exempt from estate tax under Republic Act (RA) No. 6426, or the Foreign Currency Deposit Act of the Philippines. The High Court affirmed the lower court’s decision, saying that the NIRC, as a general tax law, did not explicitly repeal the specific tax exemption provided by RA 6426. The Court clarified that a general law cannot override a special law without a clear and express repeal provision. RA 6426, enacted in 1974, was specifically designed to encourage foreign investments and deposits by exempting foreign currency accounts from all taxes.
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https://www.bworldonline.com/banking-finance/2025/01/30/649733/foreign-currency-deposit-accounts-exempt-from-estate-tax-sc-says/
BIR: Excise tax moratorium to affect revenue target
The Philippine Star / Keisha Ta-Asan / January 30, 2025
MANILA, Philippines —The Bureau of Internal Revenue will have to revise its revenue collection targets if Congress approves the proposed two-year moratorium on the annual hikes in tobacco excise tax, BIR Commissioner Romeo Lumagui Jr. said. On the sidelines of the International Tobacco Agricultural Summit, Lumagui said that if a moratorium is imposed, the government must recalibrate its revenue projections for tobacco excise tax collections, which were set based on assumptions of annual rate hikes. Under the revised tax structure, excise tax rates will increase by two percent in 2026 and four percent in 2027. It will alternate between two and four percent hikes until 2035.
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https://www.philstar.com/business/2025/01/30/2417773/bir-excise-tax-moratorium-affect-revenue-target
SC exempts foreign currency accounts from estate tax
MSN.com / Franco C. Borona / January 30, 2025
MANILA, Philippines — The Supreme Court (SC) has ruled that foreign currency deposit accounts are exempt from estate tax under Republic Act 6426, also known as the Foreign Currency Deposit Act of the Philippines. The decision, penned by Associate Justice Ramon Paul Hernando, came from the High Court’s First Division, which upheld an estate tax refund claim filed by the estate of Charles Marvin Romig, an American who resided in Puerto Galera, Oriental Mindoro, until his death in 2011. Romig passed away without leaving a will, and his sole heir, Maricel Narciso Romig, transferred ownership of his properties to herself, including a dollar deposit account with the Hongkong and Shanghai Banking Corporation (HSBC) Limited Makati Branch, through an Affidavit of Self-Adjudication. Initially, Maricel excluded the dollar deposit account from the estate tax computation. However, she later paid an additional P4.56 million to cover the account’s value. Subsequently, she sought a refund, arguing that foreign currency deposit accounts are exempt from estate tax under Section 6 of RA 6426.
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SC exempts foreign currency accounts from estate tax
Stock tax cut seen to boost market appeal
Business World / John Victor D. Ordonez / January 31, 2025
The Senate on Monday approved on final reading Senate Bill No. 2865, or the Capital Markets Efficiency Promotion Act, which aims to make the country’s capital market more competitive with its regional peers. In the 2024 Capital Market Review of the Philippines published by the Organization for Economic Cooperation and Development (OECD), the number of newly listed firms and capital raised through initial public offerings (IPO) in the Philippines have been the lowest in the Association of Southeast Asian Nations (ASEAN) since 2000. The cost of listing on local stock exchanges varies significantly across different countries, and the Philippines is no exception. When comparing the initial listing fees on the main equity markets, the Philippines stands out with a fee of 0.10% of the market capitalization for companies with a market cap of $150 million, according to the OECD report. This is relatively high compared to its regional peers: Indonesia and Malaysia both charge 0.01%, Thailand charges 0.05%, and Singapore is slightly higher at 0.06%. Under the bill, a final tax rate of 10% will be imposed on cash and property dividends received from a local corporation, joint stock company, mutual fund, or on the share of an individual in the net income of the entity. The House of Representatives passed a counterpart bill in March, which also seeks to lower the tax on dividends for non-resident investors to 10% from the current 25%. Resident foreign corporations and their regional operating headquarters will be required to pay a minimum corporate income tax of 10% on their taxable income. But foreign corporations not engaged in trade or business in the Philippines shall pay a tax of 25% of their gross income during each taxable year. The bill also imposes a final tax of 20% on interest or monetary benefits earned from any currency bank deposit, trust fund, or similar arrangement.
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https://www.bworldonline.com/corporate/2025/01/31/650126/stock-tax-cut-seen-to-boost-market-appeal/
CTA junks PAL’s petition for P20-M tax refund
Manila Bulletin / Xzarina Nicole Ong Ki / January 31, 2025
The Court of Tax Appeals (CTA) has denied the petition of Philippine Airlines, Inc. (PAL) which sought a refund of more than P20 milion it paid under protest in 2019 for excise taxes on imported liquor and tobacco products. In a decision promulgated last Jan. 24, the CTA as a full court rules that PAL failed to present enough evidence that the imported liquor and tobacco products were not available locally at reasonable quantity, quality and price. In May and October 2023, the CTA’s first division denied PAL’s petition for refund. The case was elevated to the CTA as a full court. Case records showed that from August 2014 to February 2018, PAL imported various kinds of liquor and tobacco products as part of its in-flight and commissary supplies. The Bureau of Customs (BOC) demanded payment of excise taxes amounting to P20,059,948.44. PAL paid the taxes under protest on Aug. 3, 2019. Later, PAL filed a letter request for the refund or the issuance of a tax credit certificate before the Bureau of Internal Revenue (BIR). It was denied.
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https://mb.com.ph/2025/1/31/cta-junks-pal-s-petition-for-p20-m-tax-refund
Senate bill seeks VAT exemption for electricity, internet
Manila Bulletin / Dhel Nazario / January 31, 2025
Senator Francis Tolentino has filed a bill seeking to exempt electricity and internet services from the 12 percent value-added tax (VAT). In filing Senate Bill 2970 on Thursday, Jan. 30, Tolentino noted that electricity costs in the Philippines are among the highest in the region – a situation that may stifle economic growth and even cause deindustrialization. On the other hand, he said exempting internet services from VAT will help promote digital inclusion, ensuring that all Filipinos can participate in the digital economy. “The important role of electricity and internet in our daily lives, particularly in education and remote work cannot be overstated. As more educational institutions transition to online platforms and businesses adopt flexible work arrangements, affordable internet access becomes even more vital,” Tolentino said in his bill. “By eliminating VAT on electricity and internet sales and services, the government would alleviate financial pressures on consumers and businesses alike, fostering a more inclusive and robust digital landscape,” he added.
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https://mb.com.ph/2025/1/31/senate-bill-seeks-vat-exemption-for-electricity-internet#google_vignette
BIR pins hopes on new tax measures to reach ₱3.2-trillion target
Manila Bulletin / Derco Rosal / January 31, 2025
Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui Jr. expressed optimism that the agency can achieve its ₱3.2 trillion revenue target for this year, provided major tax measures are passed. If achieved, this would mark a second consecutive year of the BIR, the government’s main tax agency, meeting the target—a historic first, Lumagui told reporters on the sidelines of the recent Tobacco International Summit. “Assuming that everything will pass, I think that’s why I’m very optimistic and feel that we’ll be able to have a very historic year this year because it’s the first time ever that there will be a back-to-back attainment of the DBCC [Development Budget Coordination Committee] target,” Lumagui said.
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https://mb.com.ph/2025/1/31/bir-optimistic-on-3-2-trillion-target
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