COURT OF TAX APPEALS DECISIONS
A PETITION FILED WITH THE CTA DUE TO THE COMMISSIONER’S INACTION WITHIN 180-DAYS IS DISMISSIBLE FOR LACK OF JURISDICTION. In Nueva Ecija II Electric Cooperative, Inc. Area II v. Commissioner of Internal Revenue, G.R. No. 258101 (Notice), Apri119, 2022, the Supreme Court categorically held that no new or separate 180-day period is granted to the Commissioner of Internal Revenue (CIR) to act on the Administrative Appeal. The 180-day period is counted from the filing of protest to the Regional Director, not in the CIR’s administrative appeal. (CTA Case No. 10818, February 4, 2025)
AN ASSESSMENT IS VOID IF THE GROUP SUPERVISOR WHO RECOMMENDED THE NOTICE OF DISCREPANCY AND PRELIMINARY ASSESSMENT NOTICE IS NOT NAMED IN THE LETTER OF AUTHORITY; MEMORANDUM OF ASSIGNMENT CANNOT REPLACE A LOA. The issuance of a Letter of Authority (LOA) is a necessary prerequisite for the lawful examination of a taxpayer’s books and other accounting records by any Revenue Officer (RO). Without it, any resulting assessment is invalid. Furthermore, any reassignment or transfer of a case to another RO, as well as any revalidation of an expired LOA, must be accompanied by the issuance of a new LOA. In this case, although Group Supervisor Dominic Morales recommended the issuance of the Notice of Discrepancy and the Preliminary Assessment Notice, his name does not appear in any of the applicable LOAs—which list only Group Supervisors Ronaldo Camba and Constate Jr. Reinante. Consequently, the assessment is rendered void. (Helix Aggregates, Inc. (formerly Lafargeholcim Aggregates, Inc., v. CIR, CTA Case No. 10852, March 3, 2025); A Memorandum of Assignment cannot substitute a LOA is not valid and sufficient authority, even if the LOA was belatedly issued (Productivity Technologies Services, Inc. v. CIR, CTA Case No. 10873, March 7, 2025; Barrio Fiesta Manufacturing Corporation v. CIR, CTA Case no. 10213, MARCH 17, 2025)
ASSOCIATION DUES, MEMBERSHIP FEES, AND OTHER CHARGES COLLECTED BY HOMEOWNERS’ ASSOCIATIONS ARE NOT SUBJECT TO VALUE-ADDED TAX (VAT). This is because such collections do not constitute a sale of services as defined under Section 105 of the National Internal Revenue Code (NIRC), which outlines the transactions subject to VAT. There is no commercial activity involved that can be considered taxable under VAT laws. These fees are merely collected to cover expenses related to the maintenance, repair, improvement, reconstruction, and administrative operations necessary for the association to provide services to its members. Moreover, Revenue Memorandum Circular (RMC) No. 9-2013 is null and void to the extent that it seeks to impose VAT on these collections, as it contradicts the clear provisions of Section 105 of the NIRC. (Pasig Green Park Village Homeowners Association, Inc. v. CIR, CTA Case No. 10149, February 6, 2025)
FAILURE TO SPECIFY THE NEWLY DISCOVERED EVIDENCE OR ADDITIONAL EVIDENCE; FAILURE TO SUBMIT DOCUMENTS WITHIN 60 DAYS FROM FILING OF REQUEST FOR REINVESTIGATION; OR SUBMISSION BEYOND THE 60-DAY PERIOD – RENDERS THE ASSESSMENT FINAL AND UNAPPEALABLE. Under Section 3 of Revenue Regulations No. 12-99, as amended by RR No. 18-2013, a taxpayer may administratively protest a tax assessment by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment, in the manner prescribed by the implementing rules. For a request for reinvestigation, all relevant supporting documents must be submitted within sixty (60) days from the date of filing the protest; otherwise, the assessment shall become final. Additionally, the request must specify any newly discovered or additional evidence the taxpayer intends to present. In the present case, although the petitioner timely filed a protest on November 15, 2018, requesting a reinvestigation of the assessment for taxable year 2015, it failed to submit the required supporting documents by January 14, 2019, and did not identify any new or additional evidence as mandated. Instead, the petitioner merely made a general reservation to submit further documents without actual compliance. As a result, the tax assessment became final and unappealable, and the petitioner’s subsequent appeal was deemed premature, depriving the Court of jurisdiction to hear the case. (Suburbia Automotive Ventures, Inc. v. CIR, CTA Case No. 10128, March 3, 2025) In another case, the petitioner filed its Request for Reinvestigation on May 16, 2019, giving it until July 15, 2019 to complete the submission of all relevant documents. However, it only submitted the necessary supporting documents on August 28, 2019—104 days after the request and 44 days beyond the deadline. This delay signified that the protest was not properly or timely substantiated, resulting in the tax assessment becoming final, executory, and unappealable. The petitioner’s reliance on previous court decisions was misplaced, as those cases involved taxpayers who had submitted what they considered to be complete documentation within the prescribed period. In contrast, the petitioner’s subsequent submission of documents after the deadline indicated that the initial filing was incomplete. Furthermore, the Court rejected the petitioner’s interpretation that the 60-day rule is without consequence, as this would effectively nullify the clear directive of Section 228 of the NIRC. Since vital supporting documents—such as VAT invoices and official receipts—were only submitted after the lapse of the period, the protest lacked factual and legal basis within the required timeframe, rendering the request for reinvestigation invalid and the assessment final.(My Solid Technologies & Devices Corporation v. CIR, CTA Case no. 10293, February 6, 2025)
REVENUE REGULATIONS
Revenue Regulations No. 9-2025
Implementing the provisions of Republic Act No. 12066 (CREATE MORE Act) concerning the tax treatment of local sales of goods and/or services by Registered Business Enterprises (RBEs). It clarifies the application of Value-Added Tax (VAT) to such transactions.
| VAT Rate on Local Sales | All local sales of goods and/or services by RBEs are subject to 12% VAT, unless exempt or zero-rated.
Local sales shall include sales of goods and services to domestic market enterprises and non-RBEs, regardless of location. |
| Income Tax Regime Impact | The applicable income tax regime (e.g., Income Tax Holiday, 5% Gross Income Earned, Special Corporate Income Tax, Enhanced Deduction Regime, or Regular Corporate Income Tax) does not affect the VAT treatment of local sales. |
| Location of Sales | The location of the RBE or the transaction (inside or outside ecozones, freeports, or customs territory) is not a determining factor for VAT applicability on local sales. |
| Liability to Pay and Remit VAT.
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Rests with the buyer of the goods or services.
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| Buyer’s VAT Status | Business-to-Business (B2B): VAT-registered buyers can claim input VAT on purchases from RBEs.
· RBE-seller to bill the transaction inclusive of the VAT, which is shown as a separate item in the invoice that will be tagged as “VAT on Local Sales.” (not to be included in the total amount due from the buyer); buyer to pay the purchase price to the RBE- seller, exclusive of VAT on local sales. · Buyer of the goods or services to and remit the corresponding VAT from the transaction. Filing and payment of VAT · Re. Goods from ECOZONES and Freeport – on a per transaction basis; BIR Form No. 0605 (in the meantime) to be transmitted to RBE-Seller for the release of the goods. · Re. Services from ECOZONES and Freeport – on a monthly basis; BIR Form No. 1600-VT; to be filed on or before 10th day; buyer to issue withholding VAT Certificate (2307) to the RBE-Seller · Re. Goods and Services from BOI-Registered Enterprise – on a monthly basis; BIR Form No. 1600-VT; to be filed on or before 10th day; buyer to issue withholding VAT Certificate (2307) to the RBE-Seller |
| Business-to-Consumer (B2C): Non-VAT registered buyers cannot claim input VAT.
· Imposing payment and remittance is not administratively feasible; buyer/consumer will still pay the VAT due on the transaction, but the RBE-Seller will be responsible for remitting it to the government. · The seller shall be responsible in remitting the VAT on local sales it charged to its buyers that are not engaged in business. |
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| Government agencies purchasing goods and/or services from RBEs must withhold 12% VAT on payments. | | |
| Requirements to Claim of Input Tax by VAT-Registered Buyers
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Sales Invoice issued by the RBE showing the amount of VAT on local sales; and
Copy of the corresponding duly-filed BIR Form No. 1600VT or BIR Form No. 0605, whichever is applicable. |
| Optional VAT registration on local sales | If the RBE is under the 5% GIE or SCIT and all registered activities fall under the same income tax regime
This will not affect the RBE’s existing fiscal and non-fiscal incentives, including VAT zero-rating on local purchases and VAT exemption on importation that are directly attributable to the RBE’s registered activity. |
Revenue Regulations No. 10-2025
Amends the Consolidated VAT Regulations (RR No. 16-2005) to implement provisions of the National Internal Revenue Code (Tax Code) as amended by Republic Act No. 12066. These amendments focus on Value-Added Tax (VAT) zero-rating and refund procedures, particularly concerning export-oriented enterprises.
| Export Sales Threshold | At least 70% of the enterprise’s total annual production in the preceding taxable year must be exported. |
| Certification Requirement | Must obtain a certification from the Export Management Bureau (EMB) of the Department of Trade and Industry (DTI) confirming compliance with the export sales threshold. |
| Post-Audit Compliance | EMB may conduct post-audits to verify continued compliance with the export sales threshold. |
| Streamlining VAT Refund Claims | Taxpayers may submit certified true copies of supporting documents (e.g., invoices, receipts) for VAT refund claims instead of original documents. |
| Request for Reconsideration and appeal to the CTA | In case of partial or full denial of a VAT refund claim, taxpayers must file a request for reconsideration within 15 days of receiving the decision.
In case of full or partial denial of the request for reconsideration, or failure on the part of the CIR to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may appeal with the CTA within thirty (30) days: i. after the expiration of the ninety (90)-day period to decide on the application for refund, in cases where no action is made by the CIR on the application for refund; or ii. from the receipt of the decision denying the request for reconsideration; or iii. after the lapse of the fifteen (15)-day period to decide on the request for reconsideration in cases where no action is made by the CIR on the request for reconsideration. When no decision is rendered within the 90-day period or the 15- day period, as the case may be, and the taxpayer-claimant opted to seek for a judicial remedy within thirty (30) days from such period, the administrative claim for refund or the request for reconsideration shall be considered moot and shall no longer be processed. |
| Refund in case of cancellation of VAT registration (retirement or change in status) | 2 year from the date of cancellation (issuance of BIR Tax Clearance) |
Revenue Regulations No. 11
Implements provisions of the National Internal Revenue Code (Tax Code) as amended by Republic Act No. 12066, also known as the CREATE MORE Act.These regulations focus on enhancing tax compliance through the mandatory use of electronic invoicing and electronic sales reporting systems.
| Mandatory Electronic Invoicing Requirement | Taxpayers engaged in E-commerce, under the jurisdiction of LTS, large taxpayers, using CAS/CBA, exporters, RBEs availing tax incentives, and using POS systems |
| Exemption | Micro taxpayers under the Ease of Paying Taxes (EoPT) Act (can voluntarily issue electronic invoices) |
| Electronic Sales Reporting Requirement | Applicable once BIR establishes system to store and process data, including e-commerce, LTS taxpayers, large taxpayers, exporters, RBEs, POS system users, etc. |
| Deductions for Compliance | Micro and Small Taxpayers: 100% of setup cost; Medium and Large Taxpayers: 50% of setup cost |
| Claiming Deductions | Deductions can be claimed only once within the taxable year when system setup is completed or final payment is made |
| Effective Date | March 14, 2025 |
| Deadline for Compliance | March 14, 2026 |
Revenue Regulations No. 12
Amends Section 5 of Revenue Regulations No. 3-69 to enhance due process in the service and execution of summary remedies, particularly concerning the Warrant of Distraint and/or Levy (WDL).
| Individual Taxpayers | – Serve personally to delinquent taxpayer, authorized representative, or a household member (legal age, sufficient discretion).- If refusal or absence, constructive service allowed with two credible witnesses (preferably barangay officials) who are not BIR employees. – Duplicate copy left at taxpayer’s premises, and a copy sent via registered mail/e-mail. |
| Corporate Taxpayers | – Serve to the president, vice president, manager, treasurer, comptroller, or any responsible person who customarily receives correspondence for the corporation. |
| Taxpayers Reported as “Cannot Be Located” (CBL) | – If the taxpayer resurfaces or their whereabouts are known, WDL and related notices (e.g., Warrants of Garnishment, Notice of Levy, Notice of Tax Lien, Notice of Encumbrance) are served simultaneously. |
| Effectivity | – Amendments took effect immediately upon publication on the BIR Official Website on March 6, 2025. |
Revenue Memorandum Circular No. 14-2025
Provides clarifications and updates to the mandatory requirements for claiming tax credit certificates or cash refunds of excess/unutilized Creditable Withholding Tax (CWT) on income.These updates amend certain provisions of RMC No. 75-2024 to align with Sections 76(C), 204(C), and 229 of the National Internal Revenue Code (NIRC) of 1997, as amended.
| Document Submission | Taxpayers can submit scanned, facsimile, photocopy, notarized, or certified true copies of BIR Form No. 2307 (Certificate of Creditable Tax Withheld) and BIR Form No. 1606 (Withholding Tax Remittance Return). |
| Authenticity verified by cross-referencing with SAWT and Alphalist of payees.
Included in the verification procedures of the processing office is the validation of the authenticity and veracity of the claimed BIR Form No. 2307 by comparing the CWT claimed per Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source (SAWT) submitted by the taxpayer claimant with the annual or quarterly Alphalist of payees as attached in the BIR Form No. 1604E or 1601E submitted by the withholding agents of the taxpayer-claimant. If the data matches, the BIR can already be assured that the BIR Form 2307 claimed by the taxpayer-claimant is valid and authentic which makes the question as to whether or not the submitted document is an original copy already moot and academic |
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| Taxpayer Types Clarification | Section 76(C) of the Tax Code applies to corporate taxpayers. |
| Individual taxpayers should base claims on Section 58(E) in relation to Section 204 of the Tax Code. | |
| Filing Tax Returns After Claim | Taxpayers cannot amend tax returns after filing a claim for income tax credit or refund. |
| Only tax returns filed before the application will be considered in the claim evaluation. | |
| Changes in Documentary Requirements | Annex “A.1” of RMC No. 75-2024 renumbered as Annex “A.1.1.” |
| New Annex “A.1.2” added for mandatory individual taxpayer-claimant requirements. | |
| Amendments made to Annexes “A.1,” “A.2,” and “A.4” of RMC No. 75-2024. | |
| Effectivity | Amendments took effect immediately on February 19, 2025, upon publication on the BIR website. |
Memorandum Circular No. 20-2025
Provides clarifications on the policies, guidelines, and procedures for processing and issuing the Tax Clearance Certificate for Final Settlement of Government Contracts (TCFG)
| Coverage of TCFG Requirement | Required for government contracts involving any procurement via public bidding process (RA No. 12009); and procurement of goods, consulting services, and infrastructure projects (RA No. 9184, amended by RA No. 12009).
Exempt for small value purchase contracts. |
| Definition of TCFG | TCFG is a certificate contractors must obtain before the final settlement of government contracts, confirming tax compliance. – TCFG needed only before the final (e.g., 10th) settlement in contracts with multiple installments. |
| Exemption from TCGP | Contractors are not required to secure a Tax Clearance Certificate for General Purposes (TCGP) for collection purposes when applying for the TCFG (in line with RA No. 11032). |
| Effectivity | The circular took effect immediately upon publication on the BIR Official Website on March 20, 2025. |
BIR RULINGS
CASH DISTRIBUTIONS FROM PHILIPPINE DEPOSITARY RECEIPTS (PDRS) TO A NONRESIDENT FOREIGN CORPORATION ARE TAXED AS INTEREST AND NOT AS DIVIDENDS SINCE PDRS DO NOT CONFER STOCK OWNERSHIP. Under Section 28(B)(5)(b) of the Tax Code, dividends paid by a domestic corporation to a nonresident foreign corporation (NRFC) are subject to a 15% income tax, provided the NRFC’s country of residence grants a tax credit for taxes deemed paid in the Philippines equivalent to that 15%. In the case of Mercury Media Holdings Finance I, Ltd. (Mercury Media), an NRFC, the cash distribution it received from Philippine Depositary Receipts (PDRs) issued by ABS-CBN Holdings Corporation over ABS-CBN Corporation shares is not considered a dividend. As a media entity, ABS-CBN cannot be owned by foreigners, and Mercury Media, being a foreign corporation, cannot be a stockholder. Moreover, PDRs do not represent ownership of shares. Accordingly, the cash distribution is not a dividend subject to the reduced 15% rate but is treated as interest income subject to the regular 30% tax rate. (BIR Ruling No. OT-006-2024, January 24, 2024; see also BIR Ruling No. OT-007 and 009)
THE TRANSFER OF MEMBERSHIP SHARES TO A NEW NOMINEE-TRUSTEE IS NOT SUBJECT TO CAPITAL GAINS TAX, DONOR’S TAX, OR DOCUMENTARY STAMP TAX AS IT INVOLVES NO MONETARY CONSIDERATION, NO CHANGE IN BENEFICIAL OWNERSHIP, AND NO INTENT TO DONATE. Landbank of the Philippines (LBP) transferred its Manila Polo Club, Inc. (MPC) membership shares from its former nominee-trustee to a new nominee-trustee pursuant to a Declaration of Trust. This transaction is exempt from capital gains tax because it involves no monetary consideration and no change in beneficial ownership. It is also not subject to donor’s tax, as a valid donation requires intent to freely give, which LBP lacks given the business nature of the transfer. Additionally, documentary stamp tax does not apply since there is no actual transfer or conveyance of beneficial ownership of the shares. (BIR Ruling No. OT-008-2024, February 21, 2024; see also BIR Ruling No. OT-010-2024, February 22, 2024)
A TAXPAYER MUST CONSISTENTLY USE THE SAME INVENTORY VALUATION METHOD UNLESS A CHANGE IS APPROVED BY THE COMMISSIONER, PROVIDED THE NEW METHOD FOLLOWS BEST ACCOUNTING PRACTICES AND CLEARLY REFLECTS INCOME. Under Section 41 of the 1997 NIRC, once a taxpayer adopts a specific inventory valuation method for a taxable year, that method must be used in all subsequent years unless the Commissioner authorizes a change. The chosen method must align with the best accounting practices in the industry and accurately reflect income. In this case, Netfarms, Inc. was permitted to switch from the FIFO method to the Moving Average Method due to its new computerized accounting system, as this change complies with sound accounting standards and clearly presents the company’s income. Inventory items include agricultural and construction supplies, spare parts, fuel, lubricants, office supplies, and others (BIR Ruling No. OT-011-2024, February 22, 2024).
REAL PROPERTIES ACQUIRED BY A REAL ESTATE DEALER ARE CLASSIFIED AS ORDINARY ASSETS AND SUBJECT TO APPLICABLE TAXES, EVEN IF THEY DO NOT MEET THE TYPICAL DEFINITIONS OF ORDINARY ASSETS. Ordinary assets include: (1) stock in trade or similar inventory at year-end; (2) real property held primarily for sale in the ordinary course of business; (3) real property used in business subject to depreciation under Section 34(F) of the Tax Code; and (4) other real property used in the taxpayer’s trade or business. According to Section 3(a)(1) of RR No. 07-03, all real properties acquired by a real estate dealer are considered ordinary assets. Although the properties are not inventory, not primarily held for sale, not depreciable, nor used in business, the taxpayer’s engagement in the real estate business—including activities such as purchasing, owning, leasing, and selling properties—classifies all its real properties as ordinary assets. Consequently, sales of these properties are subject to Creditable Withholding Tax (CWT), Documentary Stamp Tax (DST), and Value-Added Tax (VAT) (BIR Ruling No. OT-012-2024, February 22, 2024).
UNIVERSAL CHARGE FOR MISSIONARY ELECTRIFICATION (UCME) COLLECTED BY DISTRIBUTION UTILITIES IS NOT AN INCOME AND NOT SUBJECT TO VAT, WHILE PAYMENTS FROM THE UCME FUND TO NEW POWER PROVIDERS ARE ZERO-RATED FOR VAT UNLESS THE PROVIDERS ARE VAT-EXEMPT ELECTRIC COOPERATIVES. The BIR, in BIR Ruling No. 020-02, March 13, 2022, held that Universal Charge for Missionary Electrification (UCME) to be collected by the distribution utilities do not belong to PSALM and since they would not redound to its benefit, the same would not be considered an income. The UCME subsidy fund collected by the distribution utilities and/or electric cooperatives from its consumers, are eventually remitted in trust to PSAM for transfer to NPC and cannot be considered as part of their gross receipts. Thus, the same is not subject to VAT. On the part of the New Power Providers (NPPs)/ Qualified Third Parties (QTPs) who take over the generation function of NPC in the remote and unviable areas in the off-grid under Alternative Electric Service for Isolated Villages scheme, such payment to NPPS/QTPs from UCME fund for merchant electrification is subject to zero-rated VAT pursuant to Section 6 of RA No. 9136, unless such NPPs/QTPs are registered with the Cooperative Development Authority and considered as electric cooperatives enjoying VAT-exempt privilege pursuant to RA No. 9520. (BIR Ruling No. OT-013-2024, February 22, 2024)
VAT ZERO-RATING ON LOCAL PURCHASES UNDER THE CREATE LAW APPLIES ONLY TO GOODS AND SERVICES EXCLUSIVELY USED IN REGISTERED EXPORT PROJECTS; NON-EXPORT ENTERPRISES ARE SUBJECT TO REGULAR VAT. Section 5, Rule 18 of the amended Implementing Rules and Regulations of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Law) states that VAT zero-rating on local purchases applies solely to goods and services directly attributable to and exclusively used in the registered project or activity of registered export enterprises during the transitory period. Although registered export enterprises (REEs) may still avail of VAT zero-rating, it is limited to qualifying goods and services. Since Baliwag State University, despite being registered with PEZA as developer/operator for an Information Technology Park, is a non-export enterprise, payments for its construction project are subject to the regular 12% VAT. (BIR Ruling No. OT-014-2024, February 22, 2024).
BIR DEADLINES FROM MAY 26 TO JUNE 1, 2025. A gentle reminder on the following deadlines, as may be applicable:
| DATE | FILING/SUBMISSION |
| May 30, 2025 | SUBMISSION – Proof of eFiled BIR Form 1702 – RT/EX/MX with Audited Financial Statements (AFS), 1709 (if applicable), and Other Attachments through Electronic Audited Financial Statements (eAFS) or Manually – Fiscal Year ending January 31, 2025 |
| SUBMISSION – Soft copies of Inventory Lists and Schedules stored and saved in DVD-R/USB properly labeled together with Notarized Sworn Declaration – Fiscal Year ending April 30, 2025 | |
| e-SUBMISSION – Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayers – eFPS Filers – Fiscal Quarter ending April 30, 2025 | |
| e-FILING/FILING & e-PAYMENT/PAYMENT – BIR Form 1702Q (Quarterly Income Tax Return For Corporations, Partnerships and Other Non-Individual Taxpayers) and Summary Alphalist of Withholding Taxes (SAWT) – For the Quarter ending March 31, 2025 | |
| ONLINE REGISTRATION (thru ORUS) – Computerized Books of Accounts and Other Accounting Records – Fiscal Year ending April 30, 2025 | |
| June 1, 2025 | SUBMISSION – Consolidated Returns of All Transactions based on the Reconciled Data of the Stockbrokers. May 16–31, 2025 |
| SUBMISSION – Engagement Letters and Renewals or Subsequent Agreements for Financial Audit by Independent CPAs. Fiscal Year beginning August 1, 2025 |