Bureau of Internal Revenue Issuances
REVENUE MEMORANDUM CIRCULAR
RMC No. 11-2025
February 7, 2025
Circularizing Republic Act No. 12120, otherwise known as the Philippine Natural Gas Industry Development Act
REVENUE MEMORANDUM ORDER
RMO No. 7-2025
February 7, 2025
Further Amending Revenue Memorandum Order No. 1-2021, as Amended, Prescribing the Gross Sales Threshold for Cases to be Audited/Investigated by the Office Audit Section of the Assessment Divisions in Regional Offices
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
https://firb.gov.ph/download/firb-advisory-no-007-2024/?wpdmdl=4135&refresh=6776528c473f11735807628
WHAT ARE THE TAX INCENTIVES AVAILABLE?
- 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 6 Week ending February 7, 2025
2025 BIR National Tax Campaign Kickoff – Commissioner Romeo D. Lumagui, Jr. along with the DCIRs, spearheaded the conduct of the 2025 BIR National Tax Campaign Kickoff held on February 4, 2025 at the Philippine International Convention Center in Pasay City – Commissioner Romeo D. Lumagui Jr., along with the Deputy Commissioners, spearheaded the conduct of the 2025 BIR National Tax Campaign Kickoff held on February 4, 2025 at the Reception Hall of the Philippine International Convention Center (PICC) in Pasay City. Gracing the event were President Ferdinand R. Marcos, Jr. and Undersecretary Charlito Martin Mendoza,representing Finance Secretary Ralph Recto. Top government officials from the Department of Finance and Department of Justice, heads and representatives of the country’s top, small and micro taxpayers and various BIR partners were also present. BIR officials and selected personnel also participated in ushering this year’s tax campaign kickoff with the theme, “Buwis na Tapat, Tagumpay Nating Lahat.” The program was conducted in two parts. The Pre-Program started with an audio-visual presentation of BIR’s 2024 achievements and this year’s tax campaign jingle and music video
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https://bir-cdn.bir.gov.ph/BIR/pdf/v16n6%20FINAL.pdf
Lumagui: PBBM throws his support to the BIR’s War against Ghost Receipts, Illicit Vape, & Illicit Cigarette; Expect more BIR enforcement operations this 2025
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. announced that the agency’s war against ghost receipts, illicit vape, and illicit cigarettes will soldier on this 2025. This announcement was made in relation to the speech made by President Ferdinand R. Marcos Jr. during the BIR Kick-Off event last Tuesday, where he declared that individuals and companies who engage in tax fraud will be held accountable.
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https://bir-cdn.bir.gov.ph/BIR/pdf/PR05FEB0625.pdf
Lumagui: BIR Educates Business Establishments in Nationwide Tax Compliance Verification Drive (TCVD); No Penalties to Be Imposed during Nationwide TCVD
In celebration of Tax Awareness Month, the Bureau of Internal Revenue (BIR) launched the Friendly Tax Compliance Verification Drive (TCVD) to promote taxpayer education and encourage voluntary compliance. This initiative focuses on helping taxpayers understand their tax obligations, identify common issues, and guide them in correcting these to ensure proper compliance with tax laws. “The BIR will conduct a tax education campaign, through a nationwide TCVD. The purpose of this TCVD is solely to educate businesses on their tax obligations. No penalties will be imposed,” Commissioner Lumagui stated. The Friendly TCVD, which runs from February 10 to 14, 2025, takes an educational and supportive approach. Instead of imposing penalties, the BIR aims to assist taxpayers by explaining their obligations and how they can comply with tax regulations. On its first day alone, more than 24,000 establishments across the entire Philippines were visited as part of the drive. Some of the most common issues found included businesses not being officially registered, not keeping their books of accounts at their place of business, and not displaying their certificate of registration. Additionally, some taxpayers had not yet converted their official receipts into the required sales or service invoices under the Ease of Paying Taxes (EOPT) Act.
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https://bir-cdn.bir.gov.ph/BIR/pdf/PR06FEB1125.pdf
Tax incentives for rehab of heritage bldgs. in Iloilo City eyed
Philippine News Agency / Perla Lena / February 11, 2025
ILOILO CITY – The local government here is considering giving additional tax incentives to owners of heritage buildings along Calle Real and other similar structures and houses identified by the Iloilo City Cultural Heritage Council. “We are already talking to the finance committee for additional real property tax incentives,” Mayor Jerry Treñas said in an interview on Tuesday. These include granting real property tax incentives for developers constructing buildings exclusively for business process outsourcing (BPO) operations, amending the Iloilo City Economic Recovery Incentives Ordinance of 2021, and updating investment incentives for key development areas.
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https://www.pna.gov.ph/articles/1243830
Ghosting is a taxpayer’s regret ‘Let’s Talk Tax’
Business World / Ma. Jessica A. Guevarra / February 10, 2025
February is often associated with love because of Valentine’s Day. However, to those who are dating, it is now common to hear the term “ghosting,” which means the act of suddenly cutting off ties without explanation due to fear of confrontation. But for taxpayers, ghosting the BIR is something to regret, especially when it comes to tax audits. The BIR is no stranger to being ghosted by taxpayers, which it classifies as Cannot Be Located (CBL). On Jan. 14, the BIR issued Revenue Memorandum Order (RMO) No. 004-2025, outlining the policies and guidelines in reporting CBL taxpayers and the procedures for handling their cases. Taxpayers may be considered CBL when they are not found at their registered address, their whereabouts cannot be established, or their indicated address is non-existent. The RMO also provides that those taxpayers with virtual offices (a shared office utilized by various taxpayers), but with no authorized representative available to receive any correspondence addressed to them, may likewise be considered CBL. In case there are irregularities in the registration process resulting in the taxpayer being tagged as CBL, the concerned Revenue Officers (ROs)/officials involved will be subject to appropriate sanctions. Equally important to note is that, before the concerned RO handling the case may tag such taxpayers as CBL, they are required to exhaust all possible means available to locate the taxpayer.
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https://www.bworldonline.com/economy/2025/02/10/652439/ghosting-is-a-taxpayers-regret/
A look back: A company’s claim for input VAT
The Philippine Star / Christine Faye Collado / February 11, 2025
Section 110(A) of the Tax Code, as amended, identifies the transactions creditable against output tax. Among the transactions are the purchase or importation of goods for sale, for conversion into or intended to form part of a finished product for sale, including packaging materials for use as supplies in the course of business ,or use as materials supplied in the sale of service, or for use in trade or business. Furthermore, the purchase of services on which a value-added tax (VAT) has accrued shall also be creditable against output tax. These instances were especially highlighted in a recently decided 2008 -case, wherein the Supreme Court (SC) have also clarified that creditable input tax should be attributable to the zero-rated or effectively zero-rated sales. The Commissioner of Internal Revenue petitioner in the case contends that there should be direct attributability between input tax and zero-rated sales in terms of claims for refund or issuance of a tax credit certificate. They further asserted the notion that the input tax should come from the purchase of goods or services that forms part of the finished product and should be directly used in the production chain. The respondent in the case countered on the grounds that they have fully complied with all the invoicing requirements and requisites to validly claim for the tax refund or the unutilized input VAT that was attributable to the zero-rated sale. In the case at hand, it is also important to note that “attributable” means to explain something by identifying its cause. In line with this, the input VAT that is attributable to the zero-rated sale meant that such input VAT is considered to be caused by that particular sale. Section 112 of the Tax Code, as amended, makes no mention of the need for input tax to be directly attributable to zero-rated sales in order for it to be refundable or creditable.
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https://www.philstar.com/business/2025/02/11/2420605/look-back-companys-claim-input-vat
BIR launches tax compliance verification drive
Philippine News Agency / Anna Leah Gonzales / February 11, 2025
MANILA – The Bureau of Internal Revenue (BIR) launched a campaign that aims to help taxpayers understand their tax obligations to encourage voluntary compliance. In a statement Tuesday, the BIR said the Friendly Tax Compliance Verification Drive (TCVD) which runs from Feb. 10 to 14, focuses on helping taxpayers understand their tax obligations, identify common issues, and guide them in correcting these to ensure proper compliance with tax laws. The BIR said the initiative aims to build lasting awareness and improve cooperation between the BIR and the business community. “The BIR will conduct a tax education campaign, through a nationwide TCVD. The purpose of this TCVD is solely to educate businesses on their tax obligations. No penalties will be imposed,” BIR Commissioner Romeo Lumagui Jr. said.
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https://www.pna.gov.ph/articles/1243817
CREATE MORE: A better version of the CREATE law ‘Taxwise Or Otherwise’
Business World / Aimee Rose Dela Cruz / February 12, 2025
In November, Republic Act 12066 (otherwise known as CREATE MORE), which amended CREATE, was finally signed into law. The new law seeks to enhance the competitiveness of the Philippines’ incentive regime. CREATE MORE now expands the coverage by using the term “directly attributable,” which refers to goods and services that are incidental to and reasonably necessary for the registered project or activity of the RBE. This includes janitorial security, financial, consultancy services, marketing and promotion, and administrative functions such as human resources, legal and accounting. Interestingly, these were the expenses that were previously specifically disallowed for VAT zero-rating in the implementing rules of CREATE. Thus, the amendment brings much relief to both RBEs and their suppliers. The IPA is vested with the authority to determine what is “directly attributable” depending on the registered project or activity of the RBE. Another significant amendment under CREATE MORE is the reduction of the corporate income tax (CIT) rate applied to RBEs availing of the Enhanced Deductions (ED) incentive. Under CREATE, those under ED were generally subject to the 25% regular CIT. Under CREATE MORE, those availing of ED are now entitled to the lower CIT rate of 20% on income arising from the registered activity/project. CREATE MORE now includes an item specifically dedicated to RBE Local Tax (RBELT) among the list of incentives under Section 194 (F). Under this newly added provision, LGUs may pass an ordinance imposing an RBELT for those under ITH and ED, at a rate of not more than 2% of the RBE’s gross income. The 2% RBELT shall be in lieu of local fees and charges that the LGU imposes. No RBELT may be collected from RBEs under the SCIT. As to the order of availment, under CREATE, the ITH should be availed of first, followed by SCIT or ED, with the choice between SCIT and ED required to be made at the start, when the RBE is applying for IPA registration. Under CREATE MORE, SCIT or ED may be availed of outright, without having to go through ITH first. This means that in the first year of commercial operations, the RBE may already enjoy either the SCIT or ED regime. This is expected to give RBEs flexibility especially if directly availing of SCIT or ED will be more beneficial to the company. With respect to imports, the duty exemption incentive now covers capital equipment, raw materials, spare parts, or accessories “directly attributable” to the registered activity (instead of “directly and exclusively” under CREATE), and goods used for administrative purposes. Also, CREATE MORE now allows imports prior to issuance of the Certificate of Registration (CoR). In the past, registration with the IPA must be completed first, as evidenced by the CoR, before tax and duty-free imports are allowed.
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https://www.bworldonline.com/economy/2025/02/12/653005/create-more-a-better-version-of-the-create-law/
Court affirms Pacquiaos’ win in P2.2-B tax case
Philippine Daily Inquirer / Kathleen de Villa / February 12, 2025
MANILA, Philippines — Former senator and boxing icon Manny Pacquiao and his wife Jinkee had their victory affirmed by the court in connection with a P2.26-billion tax case. The Court of Tax Appeals (CTA) has affirmed its decision dismissing the case arising from the couple’s alleged deficiencies in 2008 and 2009. But according to the CTA en banc, citing the BIR’s Revenue Regulations, the income tax assessment was void due to a violation of the respondents’ right to due process and the bureau’s failure to inform the Pacquiaos about the basis for a tax assessment. Lack of legal basis The tax court also disagreed with the BIR’s argument that the tax assessment it initiated was grounded in fact and in law. It took note of court records showing that the agency relied on newspaper clippings “without independent verification of the reported figures.” “There being no reversible error, the court en banc finds no cogent reason or justification to disturb the conclusions reached by the Special Third Division.” It was referring to the September 2022 ruling of the CTA Special Third Division that nullified the income tax assessment for “lack of sufficient basis.”
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https://newsinfo.inquirer.net/2033757/court-affirms-pacquiaos-win-in-p2-2-b-tax-case
‘Use new technology to battle corruption in tax system’ SC Justice Leonen
Manila Bulletin / Rey G. Panaligan / February 13, 2025
Supreme Court (SC) Senior Associate Justice Marvic M.V.F. Leonen underscored the potential of technological innovation “to battle the many challenges in the country’s tax system, including corruption.” “Technology has already started to transform various sectors, and it can play a crucial role in improving tax administration, boosting efficiency and enhancing transparency,” Leonen said. He was guest speaker during the recent induction ceremonies for the 2025 board of directors of the Tax Management Association of the Philippines, Inc. (TMAP). Without citing specifics on corruption, Leonen pointed out the need to combat corruption in the tax system as he warned that “it has evolved into more complex and often unrecognizable forms.” “Today we need to engage the broader networks, embrace new technologies and continually enhance our skills to stay ahead,” he stressed.
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https://mb.com.ph/2025/2/13/use-new-technology-to-battle-corruption-in-tax-system-sc-justice-leonen
BIR launches week-long TCVD
Agence France-Presse / Jonnavie Villa / February 12, 2025
CEBU, Philippines — With the intention to build good will and educate taxpayers of their tax obligations, the Bureau of Internal Revenue in Central Visayas (BIR-7) launched the week-long Friendly Tax Compliance Verification Drive (TCVD). The drive, which started last Monday, February 10, 2025, encouraged taxpayers in resolving tax issues in order to help them correct any non-compliance before penalties are imposed. BIR-7 regional director Douglas Rufino noted that the drive is intended to provide business owners with a comprehensive understanding of their duties as taxpayers without the fear of citations or penalties. “The usual approach kasi namin noon is magkaroon ng citation, confiscation, we issue it immediately. Ngayon po, dahil in observance ng Tax Awareness Month, we just apply the friendly reminders to the taxpayers,” said Rufino.
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https://www.philstar.com/the-freeman/cebu-news/2025/02/12/2420971/bir-launches-week-long-tcvd
Business leaders oppose ‘unjust’ tax hikes amid excessive gov’t spending
Manila Bulletin / Dexter Barro II / February 12, 2025
The donor’s taxes, according to MAP, were similarly reduced to simplify real property taxation. The group noted that tax bases of real property taxation is expected to increase with the new valuation system, as embodied with the recent passage of RA No. 12001, or the Real Property Valuation and Assessment Reform (RP-VAR) Act.
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https://mb.com.ph/2025/2/12/business-execs-oppose-government-s-proposed-tax-increases#google_vignette
British Chamber, Asian Consulting Group push business ease, tax education
Philstar.com / February 11, 2025
The British Chamber of Commerce Philippines (BCCP) has officially marked its partnership with one of its Corporate Members, Asian Consulting Group (ACG) through the signing of a Memorandum of Understanding (MOU) on Jan. 10, 2025. This partnership will further assist on the on-going initiatives of the British Chamber in promoting the Philippines as an investment destination in the region. Present during the signing are representatives including BCCP Executive Chairman Chris Nelson, ACG Founder and Chief Executive Officer Raymond Abrea and President and Chief Operating Officer Hazel Joy Mendoza. As the Chamber’s consultant tax partner, this partnership aims to provide more information to businesses that are interested in doing business in the Philippines and educate companies on new regulations, tax incentives, and other policy developments. In 2024, the Chamber supported the passage of the Ease of Paying Taxes Act and the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act and consistently emphasized that, tax reforms along with other legislation, can help attract foreign businesses in the country.
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https://www.philstar.com/business/biz-memos/2025/02/11/2420853/british-chamber-asian-consulting-group-push-business-ease-tax-education
PH, Cambodia ink double taxation agreement to boost biz confidence, increase trade, and spur economic growth
Department of Finance / February 13, 2025
The Philippines and Cambodia have signed a double taxation agreement (DTA) to boost business confidence, increase trade, and spur economic growth between the two nations. The DTA was signed for the Philippines by Finance Secretary Ralph G. Recto, and for Cambodia by Deputy Prime Minister and Minister of Foreign Affairs and International Cooperation Prak Sokhonn on February 11, 2025. The signing was witnessed by President Ferdinand R. Marcos, Jr. and Prime Minister Samdech Moha Borvor Thipadei Hun Manet. Specifically, the agreement covers various aspects of taxation, including income from business profits, dividends, interests, royalties, capital gains, and other sources of revenue, ensuring a fair and efficient tax framework for businesses and individuals operating in both jurisdictions. It also includes the exchange of tax information and dispute resolution mechanisms in line with the Anti-Base Erosion and Profit Shifting (BEPS) and tax transparency initiatives and standards.
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https://www.dof.gov.ph/ph-cambodia-ink-double-taxation-agreement-to-boost-biz-confidence-increase-trade-and-spur-economic-growth/
Lumagui flags thousands of unregistered businesses, missing invoices and bookkeeping issues in BIR’s tax drive
Bilyonaryo.com / February 12, 2025
Many businesses in the country operate without official registration with the Bureau of Internal Revenue (BIR), fail to maintain books of accounts at their place of business, and do not display their certificates of registration. According to the BIR, these are among the most common violations identified during its “friendly” Tax Compliance Verification Drive (TCVD), which began on February 10 and will run until February 14, 2025, as part of Tax Awareness Month.
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Lumagui flags thousands of unregistered businesses, missing invoices and bookkeeping issues in BIR’s tax drive
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