COURT OF TAX APPEALS (CTA) DECISIONS
AN ASSESSMENT IS VOID IF DUE DATES IN THE ASSESSMENT NOTICES WERE LEFT BLANK. Under the Tax Code and prevailing jurisprudence, an assessment must contain a demand of definite and fixed tax liability, within a specific period. Thus, where the Formal Letter of Demand (FLD) states that “please take note that the interest will have to be adjusted if paid beyond the date specified therein” but the accompanying Formal Assessment Notice (FAN) shows that the due dates were left blank, no proper demand within a specific period was validly made, thus, the assessment is void. (ePerformax Contact Centers (Cebu) Corp. v. Commissioner of Internal Revenue (CIR), CTA Case No. 10572, September 9, 2025)
AN ASSESSMENT IS VOID IF THE BIR DID NOT PROVIDE EXPLANATIONS FOR REJECTING THE TAXPAYAYER’S ARGUMENTS IN ITS REPLY TO THE PRELIMINARY ASSESSMENT NOTICE (PAN). Under the Tax Code and prevailing jurisprudence, the taxpayer must be informed of the law and the facts on which the assessment is made, otherwise, the assessment is void. The BIR must give reason for rejecting the taxpayer’s explanations and must give the particular facts upon which his conclusions are based, especially as regards the adjustments made, and those facts must appear on record. Thus, where the assessments are similar to the findings in the PAN, except for the interest adjusted and compromise penalty imposed; the FLD did not address any explanations in the protest letter to the PAN; the details of discrepancy in the FAN was merely copied verbatim from the PAN; and the BIR did not provide sufficient explanation for the adjustment in the basic tax, the assessment is void (ePerformax Contact Centers (Cebu) Corp. v. CIR, CTA Case No. 10572, September 9, 2025; see also BSFIL Technologies, Inc. v. CIR, CTA Case No. 10603, August 2025)
A WARRANT OF DISCTRAINT AND/OR LEVY ISSUED PENDING APPEAL WITH THE CIR IS VOID FOR BEING ISSUED PREMATURELY. The BIR may collect via distraint or levy in case of delinquency tax. Delinquency means that the taxpayer failed to pay within the period stated in the notice and demand and for which the taxpayer filed to file an appeal to the CTA or CIR within 30 days from receipt of the decision denying the request for reconsideration or reinvestigation. When the taxpayer timely appealed the Final Decision on Disputed Assessment (FDDA) to the CIR, the FDDA cannot be deemed final, executory or demandable as taxes are not yet delinquent, hence, the BIR cannot proceed with collection via WDL. Thus, where the taxpayer received the FDDA on August 25, 2020, and it appealed the same before the CIR on September 24, 2020, the WDL received on August 2, 2021, pending action of the CIR, is void for having been issued prematurely; moreover, considering that the CIR has no decision yet, the CTA cannot rule on the validity of the assessment. (BSFIL Technologies, Inc. v. CIR, CTA Case No. 10603, August 2025)
A PROTEST IS A REQUEST FOR RECONSIDERATION IF THE TAXPAYER STATES SO AND IT FAILED TO SUBMIT ADDITIONAL DOCUMENTS WITHIN 60 DAYS. An assessment may be protested administratively by filing a request for reconsideration or reinvestigation, in such form and manner prescribed. “Form and manner” means that taxpayer must state the nature of the protest whether reconsideration or reinvestigation, and in case of reinvestigation, the taxpayer has 60 days to submit relevant supporting documents from filing of protest. Thus, where the taxpayer’s protest dated January 9, 2020 categorically refer to “request for reconsideration”, but it later on sent a letter dated March 9, 2020 clarifying that it is a request for reinvestigation, and there is no indication that the taxpayer submitted supporting documents to the BIR, the taxpayer belied its claim that its protest is a request for reinvestigation. (BSFIL Technologies, Inc. v. CIR, CTA Case No. 10603, August 2025)
PETITION IS DISMISSED IF FILED ONE-DAY LATE. The CTA has jurisdiction over other matters or cases that arise out of the NIRC or related laws administered by the BIR. This includes issues on validity of the WDL and prescription. Appeal may be filed with the CTA 30 days from receipt of decision or ruling of the BIR. Thus, where the taxpayer received the WDL on June 14, 2021, but it filed the petition for review on July 15, 2021, or one day late, the CTA has no jurisdiction and the appeal should be dismissed. (Keys Realty and Development Corporation v. CIR, CTA Case no. 10589, July 7, 2025)
INACTION OF THE COMMISSIONER IS APPEALABLE TO THE CTA AFTER LAPSE OF 180 DAYS FROM FILING OF THE PROTEST, NOT FROM FILING OF REQUEST FOR RECONSIDATION BEFORE THE CIR. Under the Tax Code and jurisprudence, if CIR does not timely act on the protest, the options to either (a) file a Petition with the CTA under 180+30 rule from the filing of the protest; or (b) await the CIR’s decision and file a Petition 30 days from receipt thereof, are mutually exclusive. If the CIR does not act upon the protest and the taxpayer does not file a Petition within 30 days from the lapse of the 180-day period, the taxpayer’s only recourse is to await the CIR’s decision and file a Petition 30 days after that. Thus, where the taxpayer protested the FAN on March 12, 2019, received the FDDA on November 23, 2021, but instead of filing a petition with the CTA, filed a Request for Reconsideration to the said FDDA on December 20, 2021, the counting of 180+30 days is from the filing of the protest, not on the filing of Request for Reconsideration. Therefore, the taxpayer had October 8, 2019 (180+30 days) to file the petition; and the petition based on inaction of the CIR, filed on July 18, 2022 or 210 days after its request for reconsideration, was filed out of time.(Empire Automation Phils. Inc., v. CIR, CTA Case No. 10924, September 15, 2025)
PETITION FILED OUTSIDE THE 30-DAY PERIOD FROM RECEIPT OF THE FDDA IS DISMISSIBLE; TAXPAYER CANNOT ARGUE THAT ITS ADMINISTRATIVE OFFICER HAS NO AUTHORITY TO RECEIVE THE FDDA WHEN THE PAN AND FLD WAS ALSO RECEIVED BY THE DESK RECEPTIONIST AND ADMINISTARTIVE SUERVISOR. The taxpayer has 30 days from receipt of the adverse decision of the CIR’s duly authorized representative on the disputed assessment to file its appeal by way of Petition for Review before the CTA. Where the FDDA was received on March 6, 2020, the taxpayer has 30 days to file the petition until April 5, 2020. Thus, a petition filed on November 29, 2021 is belatedly filed. Moreover, where the PAN and FAN were received by the desk receptionist and administrative supervisor, respectively, the taxpayer cannot question the service of the FDDA to an unauthorized person, if it was also signed received by its own administrative officer. (G2K Corporation v. CIR, CTA Case No. 10690, September 9, 2025)
ASSESSMENT IS VOID IF BIR FAILED TO PROVE THAT PAN WAS SERVED. A PAN is a mandatory requirement of due process. It must be actually received by the taxpayer. If receipt is denied by the taxpayer, the BIR has the burden to prove that it was duly served. Thus, where the taxpayer denied receipt of the PAN and additional PAN; and BIR failed to provide evidence such as written report of service to actually show that the said documents were received by the taxpayer; and where during the trial, it was confirmed by the BIR witness that the BIR records failed to indicate that PAN was served, the taxpayer’s due process was violated. Moreover, the BIR cannot argue that the taxpayer should not be allowed to raise the issue for the first time on appeal which were not raised at the administrative level as the cases before the CTA are litigated de novo and the CTA can entertain arguments or even evidence not raised at the administrative level (Lakeside Food & Beverages Corp. v. CIR, CTA Case No. 10627, September 2025)
RECEIPT OF PAN AND FAN BY “PURCHASING OFFICER” AND “ASSISTANT LOGISTIC” IS VALID EVEN THOUGH NOT ALLEGEDLY AUTHORIZED BY THE TAXPAYER IF DURING TRIAL, THE WITNESS ADMITTED THAT THE SAID DOCUMENTS WERE RECEIVED BY THE TAXPAYER. Substituted service may be availed of only when it is shown that personal service is not practicable and when the party is not present at the registered or known address by leaving the assessment notices at the party’s registered address, with “party’s clerk” or with a “person having charge” thereof. Where the taxpayer insists that the LOA, NIC, PAN and FAN were received by individuals not authorized representatives (purchasing officer and assistant logistic) of the taxpayer to receive the same, but on trial, the witness, who has custody of the financial records, admitted that the same were received by the taxpayer, the service is proper and the taxpayer’s right to due process was not violated. (IBMS Technology Phils., Corporation v. CIR, CTA Case No. 10606, July 30, 2025)
SERVICE OF NOTICE OF INFORAL CONFERENCE (NIC), PAN AND FAN AFTER 180 DAYS FROM RECEIPT OF THE LOA WILL NOT RENDER THE ASSESSMENT VOID. Under the 2015 rules, a 180-day period for regional cases is prescribed to submit a report of investigation/verification but it does not state that the LOA shall be void if the period is not observed. Moreover, it also confirmed that that as early as 2010, a requirement to revalidate the LOA was withdrawn. Therefore, failure to revalidate the LOA does not affect the validity of the assessment; thus, where the BIR, served the LOA in 2018, but the NIC, PAN and FAN were served in 2020 or after 2 years from the receipt of the LOA, the taxpayer’s right is not violated. (IBMS Technology Phils., Corporation v. CIR, CTA Case No. 10606, July 30, 2025)
TAXES SHOULD BE ASSESSED WITHIN THE 3-YEAR PRESCRIPTIVE PERIOD BUT TAXPAYER SHOULD POINT OUT WHICH THE ASSESSED AMOUNT HAS PRESCRIBED. Internal revenue taxes should be assessed within 3 years from the date prescribed by law of the filing of the return or actual date of filing, whichever is later. Assessment refers to the service of the FAN. Thus, where the FAN was received on December 30, 2020, the assessment for 2017 for 1st and 3rd quarter VAT (should be assessed no later than October 25, 2020) and EWT for January to November, for 2017 (no later than December 13, 2020), have prescribed. However, the taxpayer should point out which portion of the assessment pertains to the prescribed tax. Thus, the entire assessment (for EWT) shall be considered as pertaining to the month of December 2017. (IBMS Technology Phils., Corporation v. CIR, CTA Case No. 10606, July 30, 2025)
TAXPAYER MAY BE ASSESSED FOR OVERCLAIMED DEPRECIATION FOR VEHICLES FOR FAILURE TO PROVE COST. Under the rules, only 1 vehicle for land transportation is allowable for depreciation per official or employee provided that the acquisition cost does not exceed Php2.4 Million. Thus, where the taxpayer failed to present proof that the acquisition cost of each vehicle did not exceed Php2.4. million threshold (i.e sales invoice, or deed of sale to prove the purchase price),, and that only 1 vehicle was assigned per employee, overclaimed depreciation is sustained. (IBMS Technology Phils., Corporation v. CIR, CTA Case No. 10606, July 30, 2025)
VAT-ZERO RATED SALES REQUIRES PEZA CERTIFICATION AND INVOICE/RECEIPTS COMPLIANT WITH INVOICING REQUIREMENTS. To determine whether sales are subject to zero-rated VAT, the following are the requirements: 1. Sale was made by VAT registered person and sale was made to an entity entitled to incentives under EO No. 226. For the first element, where the taxpayer failed to submit BIR Form 2303 to establish that is a VAT-registered person, the ORs and billing statements and FAN revealing the VAT registration of the taxpayer are sufficient. For the second requisite, the taxpayer must submit the invoice or official receipts and proof of zero rating. Where the taxpayer submitted sales invoice as proof of sale and PEZA certifications as proof of entitlement to zero-rating, but invoice does not comply with invoicing requirements (OR failed to indicate nature of service; OR failed to indicate the transactions as zero-rated), due to lack of proper substantiation, portion of zero-rated sales should be disallowed. (IBMS Technology Phils., Corporation v. CIR, CTA Case No. 10606, July 30, 2025)
EXCESS INPUT VAT MAY NOT BE APPLIED IF USED IN THE SUBSUQUENT QUARTER/S Under the NIRC, excess input VAT can be carried over to the succeeding quarters. Since, it will be offset to the output tax in subsequent period, it may redound to the benefit of the taxpayer in such future period. Thus, the taxpayer must prove that the input tax was not utilized in the succeeding quarter/s Thus, where the taxpayer failed to provide evidence to establish that the excess input tax was not carried over or applied in the succeeding period, ensuring that the taxpayer will not benefit twice from the same input tax credits (1) as deduction from the current assessment and (2) as credits against output tax liability in succeeding taxable quarter/period, the BIR correctly points out that the excess was not applied against the allowable input tax. (IBMS Technology Phils., Corporation v. CIR, CTA Case No. 10606, July 30, 2025)
REVENUE ISSUANCES
Revenue Memorandum Circular No. 04-2026
| Date Issued | January 15, 2026 |
| Subject | Clarification on the Mandatory Registration of Permanently Bound Loose-Leaf Books of Accounts and Computerized Books of Accounts Through the Online Registration and Update System (ORUS), and Extension of Registration Deadlines |
| Mandatory Online Registration | The registration of Permanently Bound Loose-Leaf Books of Accounts and Computerized Books of Accounts must be completed strictly through the Online Registration and Update System (ORUS). |
| Manual Registration | Manual registration at a Revenue District Office (RDO) is only permitted if there is a documented system downtime or if an official advisory regarding ORUS unavailability has been issued. |
| Validation and Compliance |
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Extension of Registration Deadlines
| REGISTRATION | DEADLINE | EXTENSION |
| Registration of Permanently Bound Loose-Leaf Books of Accounts/Invoices and Other Accounting Records | January 15, 2026 | January 31, 2026 |
| Registration of Computerized Books of Accounts and Other Accounting Records | January 30, 2026 | February 17, 2026 |
Revenue Regulations No. 25-2025
The Bureau of Internal Revenue has suspended the mandatory excise tax bond for petroleum importers and manufacturers under Section 5 of RA 11032 and Section 160 of the Tax Code, recognizing the bond as a redundant cost since taxes are already settled prior to the release of goods.
| Subject | Temporary Suspension of the Excise Tax Bond Requirement |
| Legal Justification | The bond is deemed an “undue regulatory burden” because excise taxes are already paid prior to the release of oil from customs or refineries. |
| Scope | Petroleum Industry Importers & Manufacturers |
| Compliance and Reporting |
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| Implementation | The suspension remains in effect until the Anti-Red Tape Authority (ARTA) completes its review for a potential permanent repeal of the law. |
Revenue Regulations No. 26-2025
Pursuant to Sections 244 and 245 of the National Internal Revenue Code, in relation to Sections 12 and 13 of Republic Act No. 12066 (CREATE MORE Act), the Bureau of Internal Revenue has extended the compliance deadline for the issuance of electronic invoices to December 31, 2026, for specific groups including e-commerce entities, Large Taxpayers, and users of Computerized Accounting Systems to allow for necessary system reconfigurations.
| Subject | Extension Of Issuance Of Electronic Invoices By E-Commerce Sector (Small To Large), Those Under The Large Taxpayers Service, And Users Of Computerized Accounting Systems (CAS) |
| Purpose | The extension aligns with national policy to allow “operational adjustments” during the shift to digital tax administration. |
| E-Commerce Sector |
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| Exporters & POS Users | Compliance for exporters, RBEs, and POS users is deferred until the BIR establishes a system capable of processing the required data. |
| Electronic Sales Reporting System | Covered taxpayers will eventually be mandated to report sales electronically once separate specific regulations are issued. |
Revenue Regulations No. 27-2025
The Bureau of Internal Revenue has updated the tax rules for the sale of tax-exempt vehicles to non-exempt buyers, imposing a 16% annual depreciation rate (capped at 80%) for tax base computation, while disqualifying any depreciation if the transaction is found to be a scheme to circumvent excise taxes.
| Subject | Valuation and tax treatment of tax-exempt automobiles when they are sold or transferred to non-exempt persons |
| Purpose | To ensure it reflects fair market conditions and prevents revenue loss. |
| Tax Base | The tax is calculated on either the selling price or the book value, whichever is greater. |
| Depreciation Rate | A standardized 16% yearly reduction is allowed, but it cannot exceed 80% of the original cost. |
| Zero-Depreciation Penalty | If “intent to circumvent” is found, the tax is based on the original price without any deductions. |
| Short-term Ownership | Selling a vehicle within one year without valid operational justification suggests a tax-evasion intent. |
| Affiliated Transfers | Selling to employees or relatives without documented fair market value triggers an investigation into the transaction’s validity. |
| Operational Use | The BIR may now inspect mileage logs and maintenance records to verify the vehicle was actually used for official purposes. |
BIR RULINGS
DEFENSE CONTRACTOR IS ENTITLED TO INCOME TAX AND VAT INCENTIVES FOR ITS REGISTERED PROJECTS AND TAX-EXEMPT IMPORTATIONS OF NON-LOCALLY AVAILABLE DEFENSE MATERIAL, SUBJECT TO THE FULFILLMENT OF EXPORT REQUIREMENTS AND SPECIFIC REGISTRATION CONDITIONS. Pursuant to the provisions of Republic Act No. 11534, as amended by Republic Act No. 12066, and the Self-Reliant Defense Posture Revitalization Act (RA No. 12024), Registered Business Enterprises (RBEs) engaged in the manufacture of defense material are granted incentives such as Income Tax Holidays, a 5% Special Corporate Income Tax, and VAT exemptions on local purchases and importations of capital equipment and raw materials not locally available. In this case, the subject domestic enterprise, which manufactures firearms and ammunition for government agencies, possesses multiple BOI-registered projects that qualify for these fiscal benefits; however, the application of these facts confirms that the entitlement to incentives for specific projects is contingent upon meeting the 70% export threshold, and the exemption from national internal revenue taxes and VAT on imported materiel is restricted exclusively to items that cannot be sourced within the local market. (BIR RULING NO. OT-207-2025, October 28, 2025)
PAYMENTS FOR AIRPORT-RELATED FEES AND RENTALS MADE TO A GOVERNMENT AIRPORT AUTHORITY ARE EXEMPT FROM CREDITABLE WITHHOLDING TAX BECAUSE SUCH REVENUES CONSTITUTE INCOME DERIVED FROM THE EXERCISE OF ESSENTIAL GOVERNMENTAL FUNCTIONS EXCLUDED FROM GROSS INCOME. Pursuant to Section 32 (B) (7) (b) of the National Internal Revenue Code of 1997, as amended, and as supported by Executive Order No. 292, income derived by the Government or its political subdivisions from any public utility or from the exercise of essential governmental functions is excluded from gross income and exempt from taxation. Applying these laws to the facts, the subject international air carrier is not required to withhold taxes on payments made to the national airport authority for landing fees, rentals, and utility charges; while the passage of RA No. 11659 reclassified the airport authority from a “public utility” to a “public service,” it remains a government instrumentality whose primary mandate providing safe and efficient airport facilities—is an essential governmental function rather than a proprietary one, thereby rendering its operational income exempt from income tax and the corresponding creditable withholding tax. (BIR Ruling No. OT-217-2025, November 12, 2025)
BIR DEADLINES FROM JANUARY 26 TO JANUARY 31, 2026. A gentle reminder on the following deadlines, as may be applicable:
| DATE | FILING/SUBMISSION |
| January 29, 2026 | e-FILING & PAYMENT (Online/Manual) – BIR Form 1702Q (Quarterly Income Tax Return For Corporations, Partnerships and Other Non-Individual Taxpayers) and Summary Alphalist of Withholding Taxes (SAWT). Fiscal Quarter ending November 30, 2025 |
| January 30, 2026 | SUBMISSION – Proof of e-Filed BIR Form 1702-RT/1702-EX/1702-MX with Audited Financial Statements (AFS), 1709 (if applicable), and Other Attachments through Electronic Audited Financial Statements (eAFS). Fiscal Year ending September 30, 2025 |
| SUBMISSION – Soft Copies of Inventory List and Schedules stored and saved in DVD-R/USB properly labeled together with a Notarized Sworn Declaration. Calendar Year ending December 31, 2025 | |
| e-SUBMISSION – Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayers – eFPS Filers. For the Quarter ending December 31, 2025 | |
| ONLINE REGISTRATION (thru ORUS) – Computerized Books of Accounts and Other Accounting Records. Calendar Year ending December 31, 2025 | |
| January 31, 2026 | DISTRIBUTION – BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld – For Compensation Payment With or Without Tax Withheld) to the Employees. Calendar Year 2025 |
| SUBMISSION – Sworn Declaration of Motels & Other Similar Establishments. Taxable Year 2025 | |
| SUBMISSION – Sworn Statement by Senior Citizens whose Annual Income does not exceed the poverty level as determined by NEDA thru the NSCB. Taxable Year 2025 | |
| SUBMISSION – Annual Information by all Accredited Tax Agents/Practitioners to be submitted to RNAB/RRAB. Taxable Year 2025 | |
| SUBMISSION – Annual Alphabetical List of Professionals/Persons who were issued Professional/Occupational Tax Receipt (PTR/OTR) by LGUs. Calendar Year ending December 31, 2025 | |
| SUBMISSION – Sworn Certification from the International Carrier stating that there is no change in the Domestic Laws of its Home Country Granting Income Tax Exemption to Philippine Carriers. Calendar Year 2026 for Exemptions issued in 2025 | |
| SUBMISSION – Notarized Income Payor/Withholding Agent’s Sworn Declaration with List of Payees Not Subjected To Withholding Tax. Calendar Year 2026 | |
| SUBMISSION – Contract of Lease and Lessee Information Statement and Other Attachments by Lessors/Sub-Lessors of Commercial Establishments, Buildings or Spaces for Tenants. 2nd Semester of 2025 | |
| SUBMISSION – Sworn Statement by every Lessee/Concessionaire/Owner/Operator of Mines or Quarry/Processor of Minerals/Producers or Manufacturers of Mineral Products. 2nd Semester of 2025 | |
| e-FILING – BIR Form 1604-C (Annual Information Return of Income Taxes Withheld on Compensation) and/or BIR Form 1604-F (Annual Information Return of Income Payments Subjected to Final Withholding Taxes) and Related Alphalist. Calendar Year 2025 | |
| e-FILING & PAYMENT (Online/Manual) – BIR Form 1601-EQ (Quarterly Remittance Return of Creditable Income Taxes Withheld-Expanded) and Quarterly Alphalist of Payees (QAP) – eFPS & Non-eFPS Filers. For the Quarter ending December 31, 2025 | |
| e-FILING & PAYMENT (Online/Manual) – BIR Form 1601-FQ (Quarterly Remittance Return of Final Income Taxes Withheld) and Quarterly Alphalist of Payees (QAP) – eFPS & |