3. BIR IMPLEMENTS THE CREATE MORE PROVISIONS ON THE VAT IMPOSITION FOR LOCAL SALES BY RBE | Revenue Regulations (RR) No. 009-2025, issued on February 27, 2025, implements pertinent provisions of Section 295(D) of the National Internal Revenue Code of 1997 (Tax Code), as Amended by Section 18 of Republic Act No. 12066 (CREATE MORE), particularly on the treatment of local sales of goods and/or services by Registered Business Enterprises (RBEs). Highlights include the proper tax treatment, manner of implementation if the buyer is engaged in Business/Business-to-Business (B2B) or buyer/consumer is not engaged in Business/Business-to-Consumer (B2C), claim of input VAT by VAT-registered buyers, imposition of withholding VAT of 12% for government money payments on the purchase of goods and/or services from RBEs, invoicing requirements during the transitory provisions. It may be recalled that under CREATE MORE, local sales of goods and/or services by RBEs shall be subject to 12% VAT, unless otherwise exempt or zero-rated. Local sales cover sales of goods and services to domestic market enterprises or non-RBEs, regardless of whether the sale occurs within the freeport or economic zones. | 4. BIR IMPLEMENTS CREATE MORE PROVISIONS ON THE REDUCTION OF RCIT FROM 25% TO 20% FOR RBES & DEDUCTIBILITY OF INPUT TAX ATTRIBUTABLE TO VAT-EXEMPT SALES | Revenue Regulation (RR) No. 007-2025, issued on February 27, 2025, implements the reduced income tax rates for domestic and resident foreign corporations classified as Registered Business Enterprises (RBEs) and the deductibility of input tax attributable to Value-Added Tax (VAT)-exempt sales. The reduced corporate income tax rate of 20% shall apply starting November 28, 2024, and will only cover the taxable income derived from registered projects or activities during each taxable year. Income from non-registered projects or activities shall be subject to the applicable tax rates. For input tax paid on local purchases attributable to VAT-exempt sales, the same shall be deductible from the taxpayer’s gross income in accordance with Section 34(C)(8) of the Tax Code. | 5. BIR AMENDS WITHHOLDING TAX RATES & TAXABLE BASIS OF CREDIT CARD TRANSACTIONS AND E-MARKET & DIGITAL FINANCIAL SERVICES TO ALIGN WITH THE PROVISIONS OF CREATE MORE | Revenue Regulations (RR) No. 5-2025, issued on February 27, 2025, amends RR No. 2-98 relative to the withholding tax rates on certain income payments subject to creditable withholding tax to align with the mandate of the provisions of CREATE MORE on the revisions of withholding tax rates. Specifically, for credit card transactions, a 0.5% withholding tax will be imposed on gross payments to businesses for sales of goods and services. For e-Marketplace and Digital Financial Services, a 0.5% withholding tax will apply to gross remittances to merchants for goods or services sold via their platforms. | 6. BIR CIRCULARIZES THE AVAILABILITY OF THE ALPHALIST DATA ENTRY & VALIDATION MODULE VERSION 7.4 | Revenue Memorandum Circular (RMC) No. 015-2025, issued on February 25, 2025, circularizes the availability of the Alphalist Data Entry and Validation Module Version 7.4. It comprises the newly created alphanumeric tax codes and updated rates for transactions under the creditable and final withholding taxes. Consequently, the deadline for submission of the alphalists for the taxable year 2024 under BIR Forms 1604C, 1604F, 1601EQ, and 1601FQ is extended until March 25, 2025. The BIR has advised that alphalists previously submitted using the old version of the 7.3 data entry module but with error replies to messages from the eSubmission facility shall have to re-submit the said alphalists within the same deadline using the upgraded version module upon its availability. | 7. BIR CLARIFIES THE MANDATORY DOCUMENTARY REQUIREMENTS FOR CREDITABLE WITHHOLDING TAX REFUND PURSUANT TO EOPT LAW | Revenue Memorandum Circular (RMC) No. 14-2025, issued on February 19, 2025, clarifies certain provisions of RMC No. 75-2024 addressing the mandatory requirements for Tax Credits Certificates or cash refunds of excess/unutilized Creditable Withholding Tax (CWT) pursuant to the amendments introduced by the Ease of Paying Taxes (EOPT) Law. 1. Copies of BIR Form No. 2307, whether original or digital, are acceptable for verification, as authenticity is confirmed by comparing the CWT claimed per Summary Alphalist of Withholding Agents of income payments subject to Withholding Tax at Source (SAWT) with the Annual or Quarterly Alphalist of payees as attached in the BIR Form No. 1604E or 1601E. 2. For real estate business taxpayers, a copy of BIR Form No. 1606 is acceptable, as the processing office will verify the filing from the BIR database to ensure its authenticity and accuracy. 3. Individual taxpayers may claim a refund or tax credit for unutilized CWT under Section 58(E) in relation to Section 204 of the Tax Code. 4. A new set of mandatory requirements will be prescribed for individual taxpayers claiming a tax credit or refund for unutilized CWT. 5. Once a tax credit/refund claim is filed or an Electronic Letter of Authority (eLA) is issued, the taxpayer can no longer amend tax returns and only returns filed before the claim's receipt will be considered, with discrepancies potentially leading to disallowance or denial of the claim. | | DEEDS OF ASSIGNMENT FACILITATING THE TRANSFER OF REAL PROPERTIES FROM THE DEFUNCT CENTRAL BANK-BOARD OF LIQUIDATORS (CB-BOL) TO THE REPUBLIC OF THE PHILIPPINES, PURSUANT TO ITS LEGAL MANDATE, ARE NOT SUBJECT TO TAX Bureau of Treasury (BTr) is seeking confirmation that the transfer of the Comprehensive Agrarian Reform Program (CARP)-covered Central Bank-Board of Liquidators (CB-BOL) real properties to the National Government (NG) is exempt from Donor’s Tax, Documentary Stamp Tax (DST), and Capital Gains Tax (CGT), as the disposition is done through a deed of assignment and not a sale. As represented, CB-BOL ceased its operation in June 2018 and assigned its undisposed assets to the NG through the BTr. The subject properties were grouped into two as stated in the BTr's letter dated April 26, 2023: (1) Deed of Assignment (DOA) which pertains to forty-four (44) properties; and (2) a DOA for ten (10) properties possibly under CARP. In reply, pursuant to Section 132 of the Republic Act (RA) No. 7653 or the New Central Bank Act, not all assets or liabilities of the old CBP were transferred to and assumed by the BSP. The CB continued to exist as a juridical entity responsible for managing and settling its assets and liabilities. In addition, Section 66 of the CARP Law exempts from the payment of CGT all acts of transfer of ownership involving parcels of land identified to be under the CARP. Moreover, certain gifts are exempt from Donor's Tax if given to qualified institutions or donee under Section 101 of the Tax Code. Also, Section 199 of the Tax Code provides for certain documents exempted from the imposition of DST including related to the conduct of business of the BSP. Applying the foregoing, the various DOAs executed by the CB-BO, as assignor, in favor of the ROP, as represented by the BTr, as assignee, cannot be considered a gift or donation as these were executed ultimately as a form of partial settlement of the CB-BOL's debts owed to the NG. Hence, the DOAs cannot fall within the scope of donation subject to the Donor’s Tax. Further, since Section 132 (e) of RA No. 7653 does not limit the manner of the disposition of properties by CB-BOL to those which will generate revenue for the NG, it is not expected to make a profit or to engage in business. Hence, by transferring its assets through the DOAs, it is merely performing its mandated functions as a national government entity. In view of this, even if such acts contemplate a partial settlement of its obligation, the BIR confirmed that the DOAs transferring real properties are exempt from taxes. [BIR RULING NO. 061-2024, OCTOBER 8, 2024] | | TAX ASSESSMENTS ISSUED IN VIOLATION OF THE DUE PROCESS RIGHTS OF A TAXPAYER, SUCH AS FAILURE TO PROVIDE REASONS FOR REJECTING EXPLANATIONS, ARE NULL & VOID Petitioner Commissioner on Internal Revenue (CIR) filed a Petition for Review challenging the Court of Tax Appeals (CTA)’s earlier Decision canceling the Value-Added Tax (VAT) assessment of the Respondent Ajanta Pharma Philippines, Inc. The Petitioner argued that the assessment against the Respondent was valid and that there was no due process violation. He claimed the Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN) included detailed facts and legal grounds in line with due process requirements under Section 228 of the Tax Code of 1997, as amended. On the other hand, the Respondent asserted that the Petitioner violated the Respondent's due process rights by not considering their defenses and evidence. In ruling, Section 228 of the Tax Code requires that the taxpayer be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. Moreover, the PAN, FAN/FLD, and Final Decision on Disputed Assessment (FDDA) must, respectively, state, among others, the facts and the law on which the assessment is based. In Reply to PAN, the Respondent raised several points against the Petitioner's disallowance of sales discounts for senior citizens, arguing that the PAN lacked specific factual and legal bases, misinterpreted the discount as a senior citizen discount under R.A. No. 9994 or the Expanded Senior Citizens Act, and incorrectly applied Revenue Regulations (RR) No. 7-2010. It also clarified that the discounts were trade discounts for medicines intended for senior citizens, not subject to specific legal regulations. However, the Petitioner did not address these arguments in the FDDA or FAN/FLD, failing to provide reasons for rejecting them. This oversight violated the Respondent's due process rights, making the VAT assessment VOID and unenforceable. [COMMISSIONER OF INTERNAL REVENUE VS. AJANTA PHARMA PHILIPPINES, INC., CTA EN BANC CASE NO. 2761, JANUARY 31, 2025] | |
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