Competence. Integrity. Commitment.

COURT OF TAX APPEALS DECISIONS

ONLY THE DEPARTMENT OF JUSTICE’S (DOJ) RECEIPT OF THE DECISION, NOT THAT OF DEPUTIZED BIR COUNSEL, STARTS THE APPEAL PERIOD. Criminal cases must be prosecuted under the direction and control of the public prosecutor. Deputized legal officers, such as BIR lawyers, merely assist and remain under the supervision of the DOJ, which retains principal prosecutorial authority. Service of a decision on deputized counsel does not bind the principal counsel; instead, only receipt by the DOJ triggers the reglementary period for appeal. In this case, the DOJ received the Division’s Resolution on December 29, 2023, giving plaintiff-appellant until January 15, 2024 to file a Petition for Review. However, the Motion for Extension of Time was filed only on January 24, 2024 via registered mail, beyond the allowable 15-day period. Since the motion was granted only on condition that it was timely filed, the Court deemed it denied. Consequently, no valid Petition for Review or motion to extend was filed within the reglementary period, rendering the assailed Resolution final and executory. The Court En Banc thus dismissed the Petition for lack of jurisdiction. (People of the Philippines v. SKI Construction Group, Inc. et. al., CTA EB Crim No. 139, CTA Crim Case No. A-17, February 17, 2025)

A CLAIM FOR EXEMPTION FROM REAL PROPERTY TAX (RPT) INVOLVES A QUESTION OF FACT CONCERNING THE CORRECTNESS OF THE ASSESSMENT, WHICH IS WITHIN THE JURISDICTION OF THE LOCAL BOARD OF ASSESSMENT APPEALS (LBAA)  AND CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA); THUS, EXEMPTION CLAIM SHOULD HAVE BEEN RESOLVED AT THE ADMINISTRATIVE LEVEL, NOT DISMISSED AS A PURE QUESTION OF LAW. A taxpayer claiming exemption from RPT must submit sufficient documentary evidence to the assessor, thereby placing the burden on the taxpayer to prove factual grounds for exemption. Such claims pertain to the reasonableness or correctness of the assessment and are questions of fact, distinct from questions of law involving authority to assess or collect, which fall under the jurisdiction of the LBAA and CBBA. In this case, Qualfon Philippines, Inc. (QPI) challenged the assessment of its desktop computers, claiming they are exempt from RPT. The CBAA erroneously ruled the issue as a pure question of law, despite its own exercise of jurisdiction when it rendered a decision upholding RPT liability and ordering reassessment. In line with the legal framework and jurisprudence, QPI’s claim involved factual determination of its entitlement to exemption and should have been properly evaluated by the LBAA and CBAA. (Qualfon Philippines, Inc. v. The City of Dumaguete, et al., CTA EB No. 2741, July 2025)

A PROTEST MUST BE IN WRITING AND FILED WITHIN 30 DAYS FROM PAYMENT OF THE ASSESSED REAL PROPERTY TAX (RPT); THE TAXPAYER’S AUGUST 8, 2017 LETTER OF MANIFESTATION WAS NOT A VALID WRITTEN PROTEST, AND ITS FAILURE TO TIMELY APPEAL RENDERED THE ASSESSMENT FINAL AND UNAPPEALABLE. Section 252(a) of the 1991 Local Government Code requires that a protest to an RPT assessment be made in writing within 30 days from payment, and any denial must be appealed to the LBAA within 60 days from receipt. Qualfon Philippines, Inc. (QPI) contended that its August 8, 2017 Letter of Manifestation constituted its formal protest following the City Treasurer’s denial dated July 25, 2017. However, the Court ruled that the letter was merely a manifestation, with no accompanying formal protest submitted to the records. The claim that the Treasurer's early denial deprived QPI of the 30-day protest period was also rejected, as the law imposes the 30-day period on the taxpayer to act, not on the Treasurer to wait. The Court emphasized that statutory periods must be strictly followed, and failure to do so is fatal. As QPI failed to file a timely appeal by the September 25, 2017 deadline, the assessment became final and executory. (Qualfon Philippines, Inc. v. The City of Dumaguete, et al., CTA EB No. 2741, July 2025)

WHERE THERE IS NO NOTICE OF ASSESSMENT (NOA) ISSUED, THE PROPER REMEDY FOR THE TAXPAYER IS UNDER SECTION 196 OF THE LOCAL GOVERNMENT CODE (LGC) ON REFUND OF ERRONEOUSLY PAID OR ILLEGALLY COLLECTED TAXES, NOT UNDER SECTION 195, WHICH PRESUPPOSE A FORMAL DEFICIENCY TAX ASSESSMENT. Under Section 196 of the LGC, a taxpayer may file a claim for refund of taxes that were erroneously or illegally collected, without the need for a prior assessment or protest. This provision applies when there is no finding of deficiency and, consequently, no Notice of Assessment (NOA) issued by the local treasurer. In this case, the Court held that the billing statements issued to respondent after the renewal of its business permit were not formal NOAs as contemplated under Section 195 of the LGC. Since there was no NOA finding a deficiency, the respondent was not required to file a protest within 60 days under Section 195. As such, the respondent properly availed of the remedy under Section 196 by filing a claim for refund within the two-year prescriptive period. Therefore, Section 7B.14(b) and (c) of the Revised Makati Revenue Code, which mirror Section 195, do not apply. (City of Makati and the Office of the City Treasurer of Makati through Jesusa E. Cuneta v. Casas+Architects, CTA EB No. 2771 [CTA AC No. 259], April 29, 2025).

LOCAL GOVERNMENTS ARE PROHIBITED FROM IMPOSING BUSINESS TAXES ON PROFESSIONALS SOLELY ENGAGED IN THE PRACTICE OF THEIR PROFESSION; SINCE CASAS+ARCHITECTS OPERATES EXCLUSIVELY AS A PROFESSIONAL PARTNERSHIP OF ARCHITECTS, IT IS EXEMPT FROM LOCAL BUSINESS TAX (LBT) AND ENTITLED TO A REFUND OF THE AMOUNTS PAID. Section 133(j) of the LGC prohibits local government units from levying taxes on professionals who are exclusively engaged in the practice of their profession. In this case, the Court affirmed that Casas+Architects is a professional partnership engaged solely in the practice of architecture, including interior design and landscaping, which fall within the lawful scope of the architectural profession. The Court in Division found no evidence that the Casas+Architects was involved in interior decorating or any other commercial activity that would remove it from the ambit of tax exemption. Given this, the imposition of LBT by the City of Makati was unlawful. (City of Makati and the Office of the City Treasurer of Makati through Jesusa E. Cuneta v. Casas+Architects, CTA EB No. 2771 [CTA AC No. 259], July 2025).

FOREIGN CURRENCY EXCEEDING USD10,000 BROUGHT INTO THE PHILIPPINES WITHOUT FULL DECLARATION IS SUBJECT TO LAWFUL SEIZURE BY CUSTOMS AUTHORITIES, AS CORRECTLY APPLIED WHEN MOHAMMAD FAILED TO DECLARE USD501,600 OUT OF THE USD649,600 HE CARRIED UPON ARRIVAL FROM HONG KONG. Custom Modernization and Tariff Act (CMTA) authorizes customs officers to seize goods subject to forfeiture, including undeclared items under Section 1113(l)(2), while Section 1404 specifically mandates seizure for failure to declare dutiable goods—including foreign currency—upon arrival. Section 4.1 of Customs Administrative Order (CAO) No. 1-2017 requires arriving passengers carrying foreign currency in excess of USD 10,000 to declare the entire amount using a Foreign Currency Declaration Form (FCDF), consistent with Bangko Sentral ng Pilipinas (BSP) rules. In this case, Mohammad arrived at NAIA from Hong Kong carrying USD 649,600 in his baggage, but declared only USD 148,000 in the FCDF. As this left USD 501,600 undeclared, the District Collector of NAIA rightfully exercised the authority to seize the amount through a Warrant of Seizure and Detention (WSD). (Chang L. Mohammad, et al. v. Commissioner of Customs, CTA EB No. 2784, July 2025).

SETTLEMENT OF SEIZURE CASES WHEN FRAUD IS PRESENT IS PROHIBITED; THE DELIBERATE NON-DECLARATION OF USD 491,600 CONSTITUTED FRAUD THAT DISQUALIFIED THE CASE FROM COMPROMISE. Section 1124 of the CMTA authorizes the District Collector, with the approval of the Commissioner, to settle seizure cases through payment of a fine or redemption of forfeited goods. However, such settlement is expressly disallowed when fraud is involved, the importation is prohibited, or the release of goods would be contrary to law. In this case, the Commissioner of Customs acted within the legal bounds of his discretion when he upheld the denial of petitioners’ Motion to Enter Into Compromise Settlement. Although petitioners contended that none of the statutory exceptions applied, the record shows that petitioner Mohammad declared only USD 148,000 out of the USD 649,600 he carried upon arrival in the Philippines. This substantial discrepancy, involving over USD 491,000 in undeclared funds, was found to be a deliberate act of concealment—an indicium of fraud. Accordingly, in view of the fraud attending the undeclared importation, settlement of the seizure case was legally barred under Section 1124.
(Chang L. Mohammad, et al. v. Commissioner of Customs, CTA EB No. 2784, July 2025).

FORFEITURE OF THE UNDECLARED USD 491,600 WAS PROPER AND NOT EXCESSIVE, AS IT IS A PENALTY EXPRESSLY ALLOWED UNDER SECTION 1124 OF THE CMTA, AND NEITHER PROVISIONAL DECLARATION UNDER SECTION 403 NOR AMENDMENT UNDER SECTION 408 APPLIED, GIVEN THE COURT’S FINDING OF FRAUD AND THE ABSENCE OF VALID JUSTIFICATION. The penalty of forfeiture is authorized under CMTA  when fraud attends the importation of goods, and may not be settled by payment of a fine. Petitioners’ reliance on CAO 10-2020, Section 14-4, and CMTA Sections 403 and 408—on provisional and amended declarations—is misplaced, as these provisions do not apply when the declarant is aware of material facts but deliberately fails to disclose them. In this case, the Court found that petitioner Mohammad knew he was carrying USD 491,600, despite his claim that some of the money belonged to another person and was verbally declared. His failure to lodge a proper written declaration or request an amendment before examination, without any valid justification, disqualified him from the remedial provisions of the CMTA. The presence of prima facie evidence of fraud warranted the denial of the motion for settlement and justified the forfeiture. (Chang L. Mohammad, et al. v. Commissioner of Customs, CTA EB No. 2784, July 2025).

CAPITAL GAINS TAX (CGT) MUST BE BASED ON THE CORRECT ZONAL VALUE, AND SINCE THE BIR USED AN INCORRECT AND UNSUBSTANTIATED VALUATION, RESULTING IN OVERPAID TAX, THE TAXPAYER IS ENTITLED TO A REFUND. A CGT on the sale of land by a domestic corporation is imposed at 6% based on the higher of the gross selling price or the fair market value (FMV), which may either be the zonal value prescribed by the BIR or the value stated in the city assessor’s schedule. In this case, the BIR computed CGT based on a zonal value of ₱10,650/sqm, amounting to ₱5.75 million in CGT liability, which the petitioner contested as erroneous. The Court found merit in the petitioner’s claim that the property should be assessed using a zonal value of ₱4,725/sqm, citing a certified BIR document (Exhibit “P-4”) that accurately reflected the applicable rates for the property’s classification. Although the petitioner also proposed a lower ₱7,500/sqm valuation based on “Interior Lot” classification, this claim lacked evidentiary support. Nonetheless, the Court determined that the BIR misapplied the higher rate applicable only to “Along-the-road” properties, and thus used the ₱4,725/sqm rate as the correct basis. With this adjustment, the correct CGT was computed at ₱2.55 million, and taking into account initial and subsequent payments, the Court found an overpayment of ₱3.2 million in CGT alone. Furthermore, the Court ruled that the surcharge of ₱1.44 million and excessive interest of over ₱1 million were unjustified under Sections 248 and 249 of the NIRC, because no grounds for civil penalties were established. In total, the petitioner was held to have overpaid by ₱5,677,373.22 and was awarded a refund of this amount.
(Bangko Sentral ng Pilipinas v. CIR, CTA Case No. 10083, Amended Decision dated February 19, 2025).

BOTH ADMINISTRATIVE AND JUDICIAL CLAIMS FOR REFUND MUST BE FILED WITHIN TWO YEARS FROM TAX PAYMENT, AND THE COURT DISMISSED THE PETITION FOR LACK OF JURISDICTION BECAUSE THE PETITIONER FAILED TO PROVE ACTUAL FILING AND RECEIPT OF ITS ADMINISTRATIVE REFUND CLAIM WITH THE BIR. Sections 204(C) and 229 of the 1997 National Internal Revenue Code (NIRC), as amended, provide that a taxpayer seeking refund of taxes erroneously or illegally collected must file a written administrative claim with the BIR within two years from the date of payment, and only thereafter may it file a judicial claim before the Court. In this case, the Bangko Sentral ng Pilipinas (BSP) sought the refund of documentary stamp tax (DST) paid on a property acquired through extrajudicial foreclosure, asserting exemption under the NIRC. However, while BSP claimed it filed an administrative claim dated June 18, 2018 and a follow-up letter dated April 10, 2019, the Court found these insufficiently substantiated. The LBC receipt submitted as proof for the June 18 letter merely showed delivery to a certain "Mary Ann G. Salazar" but bore no stamp or acknowledgment from BIR RDO No. 23-B confirming actual receipt. During cross-examination, BSP’s witness admitted there was no BIR stamp on the document. Similarly, the April 10 follow-up letter, filed via registered mail, was returned undelivered with a “Moved Out” notation, and BSP’s representative testified that no one signed the return card. As no other evidence or testimony established proper filing or receipt of the administrative claim, the Court ruled that BSP failed to meet the jurisdictional requirement of prior administrative filing, which rendered the judicial claim premature and void of jurisdiction. (Bangko Sentral ng Pilipnas v. CIR, CTA Case No. 10106, Amended Decision dated March 13, 2024).

BIR ISSUANCES

Revenue Memorandum Circular No. 75-2025, July 23, 2025

Category	Details
Covered Period (Original Deadlines)	Tax returns, payments, and required document submissions originally due from July 21 to July 25, 2025
New Deadline	Extended to July 31, 2025; if this date falls on a holiday or non-working day, the deadline moves to the next working day
Covered Transactions	·         Filing of BIR forms ·         Payment of internal revenue taxes ·         Submission of reports, attachments, and other required documents
Affected Taxpayers	Those residing or operating in the areas affected by the weather disturbances and covered by the corresponding work suspension declarations
Covered Areas (Provinces & Metro Manila)	Metro Manila, and provinces in Ilocos Region, Cordillera, Cagayan Valley, Central Luzon, CALABARZON, MIMAROPA, Bicol Region, and Western Visayas, including: - Ilocos Norte, Ilocos Sur, La Union, Pangasinan - Abra, Apayao, Benguet, Ifugao, Kalinga, Mountain Province - Cagayan, Nueva Vizcaya - Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Zambales - Cavite, Laguna, Batangas, Rizal, Quezon - Marinduque, Oriental Mindoro, Occidental Mindoro, Palawan, Romblon - Albay, Camarines Sur, Catanduanes, Masbate, Sorsogon - Aklan, Antique, Capiz, Guimaras, Iloilo, Negros Occidental

BIR RULINGS

FRANCHISE FEES ARE SUBJECT TO REGULAR CORPORATE INCOME TAX AS ORDINARY BUSINESS INCOME AND A 2% EXPANDED WITHHOLDING TAX IF THE PAYOR IS A TOP WITHHOLDING AGENT. Pursuant to Sections 27 (A) and (D) and 42 (A) (4) of the Tax Code, as amended, and Revenue Regulations No. 2-1998, as amended, along with the Supreme Court's interpretation of passive income, franchise fees are generally subject to regular corporate income tax rather than the final withholding tax (FWT) on royalties. This is because such fees are considered ordinary business income derived from the active pursuit of a corporation's primary purpose, which includes activities such as developing and licensing intellectual property rights, as well as providing training and systems for franchisees. Consequently, these fees are subject to the regular corporate income tax rate of 25% for income earned after July 1, 2020 (or 30% for income earned before that date). Furthermore, suppose the payor of these franchise fees is designated as one of the top withholding agents by the Bureau of Internal Revenue (BIR). In that case, the fees will also be subject to an expanded withholding tax (EWT) of 2%. Otherwise, if the payor is not a top withholding agent, the EWT will not apply. (BIR Ruling No. OT-015-2025, January 7, 2025)

 

RECONVEYANCE OF LAND WITHOUT CONSIDERATION BY A REAL ESTATE BUSINESS IS A TAXABLE TRANSFER OF AN ORDINARY ASSET, INCURRING CORPORATE INCOME TAX, VAT FOR THE TRANSFEROR, AND CWT (BASED ON HIGHER OF SELLING PRICE OR FAIR MARKET VALUE) AND DST FOR THE TRANSACTION. Under Section 27(A) and 196 of the Tax Code, as amended, and Revenue Regulations No. 2-98 and No. 7-2003, the reconveyance of a parcel of land, even without consideration, is considered a taxable transfer if the transferor is engaged in the real estate business. As such, the reconveyed land by Cityland Development Corporation to original owners due to overlapping of structures, which treated as an ordinary asset, is considered subject to corporate income tax and value-added tax for the transferor. Consequently, the transaction is also subject to creditable withholding tax (CWT) by the transferee, based on the gross selling price or fair market value (whichever is higher) and depending on the property's value, and a documentary stamp tax (DST). (BIR Ruling No. OT-016-2025, January 7, 2025)

THE BIR DOES NOT ISSUE RULINGS SUCH AS REQUESTS TO CANCEL A LETTER OF AUTHORITY IF THE MATTER IS ALREADY UNDER AUDIT OR INVESTIGATION. Pursuant to Section 2 (r) of Revenue Bulletin No. 01-03, the Bureau of Internal Revenue (BIR) considers requests for rulings on matters that are already the subject of an ongoing audit or investigation as "No-Ruling Areas." Therefore, a request to cancel a Letter of Authority due to an existing audit/investigation falls under this "No-Ruling Area" policy. (BIR Ruling No. OT-017-2025, January 7, 2025)

ONLY IMPORTED SWEETENED BEVERAGES EXCLUSIVELY USING COCONUT SAP SUGAR OR STEVIOL GLYCOSIDES ARE EXCISE TAX-EXEMPT; NO ADDED CALORIC/NON-CALORIC SWEETENERS REMAIN TAXABLE. Under Section 47 of Republic Act No. 10963 (TRAIN Law) and Section 3 of Revenue Regulations No. 20-2018, only sweetened beverages using purely coconut sap sugar and purely steviol glycosides are exempt from excise tax; therefore, imported sweetened beverages, even if certified by the FDA as having no added caloric and non-caloric sweeteners, remain subject to excise tax if they do not exclusively use the exempted sweeteners, especially if the presence of high fructose corn syrup is not explicitly ruled out. (BIR Ruling No. OT-018-2025, January 7, 2025).

A RETIREMENT FUND, WHILE TAX-EXEMPT, IS STRICTLY PROHIBITED FROM INVESTING IN THE EMPLOYER'S BUSINESS VENTURES TO PREVENT DIVERSION OF FUNDS, SAFEGUARD EMPLOYEE BENEFITS, AND MAINTAIN FINANCIAL SEPARATION. Under Section 60(B) of the Tax Code, as amended, and Section 5 of Revenue Regulations No. 1-68, as amended, a retirement fund, while a separate taxable entity with income generally exempt from tax, must operate exclusively for the benefit of its employees. Consequently, investing the retirement fund in the employer's business ventures is prohibited as it could lead to a substantial diversion of income or corpus, jeopardize the fund's sufficiency to pay benefits due to the variability of business operations, and compromise the crucial separation of funds, potentially facilitating tax evasion. (BIR Ruling No. OT-019-2025, January 7, 2025)

INCOME FROM PHILIPPINE INVESTMENTS BY FOREIGN GOVERNMENT-OWNED ENTITIES IS ONLY TAX-EXEMPT IF THEY ARE RECOGNIZED "FINANCING INSTITUTIONS," NOT "INVESTMENT COMPANIES", THUS MAKING THE SUBJECT COMPANIES' INCOME FROM PHILIPPINE STOCKS, BONDS, OR OTHER DOMESTIC SECURITIES FULLY TAXABLE. Pursuant to Section 32 (B) (7) (a) of the Tax Code, as amended, and considering the distinctions between "financing companies" (as defined by R.A. No. 5980, as amended by R.A. No. 8556) and "investment companies" (as per Section 4 of R.A. No. 2629), income derived from Philippine investments by entities owned by foreign governments is exempt from income tax only if they are recognized as financing institutions or international/regional financial institutions established by foreign governments. In this case, the Companies, despite being wholly owned subsidiaries of a foreign sovereign wealth fund, are primarily engaged in investing and trading securities, which classifies them as investment companies rather than financing institutions. Therefore, their income from investments in Philippine stocks, bonds, or other domestic securities is subject to Philippine income tax and withholding taxes. (BIR Ruling No. OT-020-2025, January 7, 2025).

BIR DEADLINES FROM JULY 28 - AUGUST 03, 2025. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
July 30, 2025	ONLINE REGISTRATION (thru ORUS) - Computerized Books of Accounts and Other Accounting Records - Fiscal Year ending June 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 March 31, 2025
	SUBMISSION - Soft Copies of Inventory List and Schedules stored and saved in DVD-R/USB properly labeled together with Notarized Sworn Declaration - Fiscal Year ending June 30, 2025
	e-SUBMISSION - Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayers.  eFPS Filers - For the Quarter ending June 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) - Fiscal Quarter ending May 31, 2025
July 31, 2025	e-FILING/FILING & e-PAYMENT/PAYMENT - 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 June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 1601-FQ (Quarterly Remittance Return of Final Income Taxes Withheld) and Quarterly Alphalist of Payees (QAP) – eFPS & Non-eFPS Filers - For the Quarter ending June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 1602Q (Quarterly Remittance Return of Final Taxes Withheld on Interest Paid on Deposits and Yield on Deposit Substitutes/Trusts/Etc.) – eFPS & Non-eFPS Filers - For the Quarter ending June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 1603Q (Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other Than Rank and File) – eFPS & Non-eFPS Filers - For the Quarter ending June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 1621 (Quarterly Remittance Return of Tax Withheld on the Amount Withdrawn from Decedent’s Deposit Account) – eFPS & Non-eFPS Filers -For the Quarter ending June 30, 2025
	SUBMISSION - Contract of Lease and Lessee Information Statement and Other Attachments by Lessors/Sub-Lessors of Commercial Establishments, Buildings or Spaces for Tenants – 1st Semester of 2025
	SUBMISSION - Sworn Statement by every Lessee/Concessionaire/Owner or Operator of Mines & Quarry/Processor of Minerals/Producer or Manufacturer of Mineral Products – 1st Semester of 2025
	SUBMISSION - Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayers.  Non-eFPS Filers – For the Quarter ending June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 2550Q (Quarterly Value-Added Tax Return).  eFPS & Non-eFPS Filers - For the Quarter ending June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 2551Q (Quarterly Percentage Tax Return).  For the Quarter ending June 30, 2025
August 01, 2025	SUBMISSION - Consolidated Return of All Transactions based on Reconciled Data of Stockbrokers.  July 16-31, 2025
	SUBMISSION - Engagement Letters and Renewals or Subsequent Agreements for Financial Audit by Independent CPAs - Fiscal Year beginning October 1, 2025

COURT OF TAX APPEALS DECISIONS

A criminal case for willful failure to pay tax prescribes after 5-years from finality of the tax assessment; thus, should be dismissed if assessment becomes final on February 10, 2013, but the Information was filed only on January 28, 2020. Violations of tax laws prescribe in five (5) years from the date of commission or, if unknown, from discovery and institution of judicial proceedings. Jurisprudence such as Lim v. Court of Appeals (G.R. No. L-48134-37, October 18, 1990) and Tupaz v. Ulep (G.R. No. 127777, October 1, 1999) clarifies that for failure to pay taxes despite demand, prescription begins upon finality of the assessment coupled with willful refusal to pay. In this case, the assessment became final on February 10, 2013 or thirty days after the Final Letter of Demand was mailed on January 10, 2013, and thus, the prescriptive period ended on February 10, 2018. Since the Information was filed only on January 28, 2020, it was filed nearly two years beyond the allowable period. Consequently, the government's right to prosecute had already prescribed, warranting the dismissal of the case. (People of the Philippines v. Cosco Petroleum Cmpan, Inc. Michael T. Co Say, CTA Crim. No. O-805, January 20, 2025; see also People of the Philippines v. Buensol Construction Co.,et. al., CTA Crim. No. O-969, January 21, 2025)

Prosecution must prove beyond reasonable doubt the willful failure to pay tax; thus, accused should be acquitted due to invalid assessment for lack of valid Letter of Authority (LOA) and absence of proof of receipt of the Preliminary Assessment Notice (PAN) and Formal Letter of Demand (FLD). Under Section 255 of the NIRC of 1997, as amended, conviction for willful failure to pay taxes requires proof that (1) the accused is required to pay tax, (2) failed to do so, and (3) such failure was willful. However, the BIR’s assessment was rendered void due to a lack of a valid LOA authorizing Revenue Officer Galagac to conduct the examination. As a result, there was no valid deficiency tax liability to trigger the legal duty to pay. Even assuming that an obligation existed, the prosecution failed to establish willfulness, as it could not prove that the accused received the PAN and FLD due to the absence of return cards and failure to authenticate registry receipts. Thus, the Court held that all three elements of the crime were not established, warranting acquittal. (People of the Philippines v. Cosco Petroleum Cmpan, Inc. Michael T. Co Say, CTA Crim. No. O-805, January 20, 2025 )

Accused incurs no civil liability if the government fails to present competent evidence, apart from the void assessment. In Mendez and reaffirmed in People v. Tiotangco, the Supreme Court ruled that in criminal tax cases, civil liability for unpaid taxes must be established by competent evidence independent of the tax assessment. A void assessment, without more, is insufficient to support a civil judgment. In the present case, the prosecution relied solely on documents and testimony derived from an invalid assessment conducted without lawful authority. No independent or competent evidence was presented to substantiate the tax deficiency. Consequently, the Court found no factual or legal basis to impose civil liability on the accused. (People of the Philippines v. Cosco Petroleum Cmpan, Inc. Michael T. Co Say, CTA Crim. No. O-805, January 20, 2025 )

Accused should be acquitted for prosecution’s failure to establish a valid assessment or prove the willful non-payment of taxes beyond reasonable doubt, due to the prescription of the assessment, lack of due process, and insufficient evidence of intent. Under Section 255 of the National Internal Revenue Code (NIRC), as interpreted in People v. Mendez, criminal liability for willful failure to pay taxes requires proof beyond reasonable doubt of three elements: (1) the legal obligation to pay tax, (2) failure to pay at the time required by law, and (3) that such failure was willful (i.e., done knowingly, voluntarily, and intentionally in disregard of a known legal duty). In the present case, although the prosecution established that Buensol was a registered taxpayer in 2012 and that accused Solis was a responsible officer, it failed to prove that a valid and enforceable assessment existed. The FLD/FAN issued by the BIR was declared void for being time-barred under Section 203 of the NIRC, as it was issued more than three years after the due date for filing the 2012 tax return. Additionally, the assessment was based on unverified third-party information without the required confirmations under RMO No. 28-2007, and failed to indicate a clear and definite due date for payment, violating due process (the FLD stated the accused is only “requested” to pay tax;  “Due date: February 22” may refer to due date when the FLD/FAN should be delivered; deadline of February 22, 2017 is confusing as interest is computed until February 24, 2017). These defects rendered the assessment invalid and incapable of supporting a criminal charge. Further, the prosecution failed to establish that Solis was aware of a final tax liability and deliberately refused to pay it. Mere receipt of notices by family members through substituted service was insufficient to prove the accused’s willful intent to evade taxes. Given these substantial procedural and evidentiary lapses, the Court held that the essential elements of the offense were not proven, and thus acquitted the accused. (People of the Philippines v. Buensol Construction Co.,et. al., CTA Crim. No. O-969, January 21, 2025 )

The petition was dismissed for lack of jurisdiction as petitioner failed to timely appeal within the 30-day period from the deemed affirmed decision of the Commissioner of Customs (COC), pursuant to Section 1126 of the Custom Modernization and Tariff Act (CMTA) and Section 11 of RA No. 1125. a person aggrieved by the decision of the District Collector may elevate an appeal to the COC within 15 days from the receipt of the decision. The COC shall have 30 days from the receipt of the records to decide on the case. If no such decision is rendered within the said 30-day period, the decision of the District Collector shall be deemed affirmed, and an aggrieved party must then file a petition for review with the CTA within 30 days from such deemed affirmed decision. In this case, the records of petitioner Sigrid Carandang’s appeal were received by the Commissioner on January 14, 2021, and no action was taken within the 30-day period, resulting in a deemed affirmed decision on February 13, 2021. Instead of appealing to the CTA within the required period, petitioner filed a motion for reconsideration before the Commissioner, an unauthorized remedy not provided under the CMTA, which further delayed her filing of the petition for review until May 20, 2021, well beyond the March 15, 2021 deadline. The CTA emphasized that jurisdiction over the subject matter is conferred strictly by law, and that failure to comply with the statutory appeal period is fatal, thereby leaving the Court without authority to take cognizance of the case or rule on its merits. (Sigrid Carandang v. Hon. Rey Lenardo B. Guerrero, Commissioner of Customs et. al., CTA Case No. 10523)

 

An environmental fee is not a tax and  thus not within the jurisdiction of the CTA. The CTA’s appellate jurisdiction over regional trial court’s decisions become operative only when the case involves a tax. Tax and fees are different from each other. An imposition is considered a tax if the generation of revenue is the primary purpose; otherwise, it is a regulatory fee. An environmental tax is not a tax but a regulatory fee, as it is imposed for purposes of watershed protection, conservation and management program under  the Watershed Code. Thus, the CTA has no jurisdiction in assailing the environmental fee. (DOLE Philippines Inc. – Stanfilco Division v. The Sangguniang Panlungsod of the City of Davao et. al., CTA AC no. 306, February 17, 2025);

The BIR must collect assessed taxes within three years from the date of assessment, and since the valid FLD was issued on December 1, 2014 and no valid suspension occurred, the BIR’s collection efforts initiated only in 2017 and 2021 were made beyond the prescriptive period and thus barred. Under Section 203 of the NIRC, the BIR is given three years from the date of assessment to collect internal revenue taxes, either by distraint, levy, or court action, unless the period is suspended under Section 224 (e.g., when a reinvestigation is granted) or extended under Section 223 (e.g., via a written agreement). In this case, the Court found that a valid FLD was received by the accused on December 1, 2014, which served as the valid assessment notice. From this date, the BIR had until December 1, 2017 to collect. The taxpayer filed a protest with a request for reinvestigation, but failed to submit supporting documents within 60 days as required under RR No. 18-13 and Section 228 of the NIRC, rendering the protest void. Moreover, the BIR did not prove that it granted the reinvestigation or that the Final Decision on Disputed Assessment (FDDA) issued in 2017 was validly received. Consequently, there was no valid suspension of the prescriptive period. Since the BIR only issued the Warrant of Distraint and/or Levy on December 13, 2017, and filed criminal Informations in March 2021, both actions occurred after the three-year period had lapsed, making the BIR’s collection efforts prescribed. Thus, the Court ruled that the taxpayer can no longer be compelled to pay the assessed deficiency taxes, and revoked the BIR’s authority to enforce collection.

The five-year prescriptive period for criminal tax violations, if unknown, begins from discovery and referral for preliminary investigation, and since more than five years lapsed before the Information was filed in court, the criminal case is barred by prescription. Section 281 of the National Internal Revenue Code (NIRC) states that violations of tax laws prescribe after five (5) years, which is reckoned either from the date of the violation or, if unknown, from the date of discovery and the institution of judicial proceedings for its investigation and punishment. Further, Section 2, Rule 9 of the RRCTA provides that only the filing of the Information in the CTA interrupts the prescriptive period and not the filing of a complaint with the DOJ. The Court rejected petitioner’s argument that the complaint’s filing with the DOJ already interrupted prescription. The CT ruled that for unknown violations, the prescriptive period starts only upon discovery and referral for preliminary investigation, and that the period from that point up to the filing of the Information in court must not exceed five years. In this case, while the violation was discovered and referred for preliminary investigation, the Information was filed beyond the five-year limit, and the Court ruled that the case had already prescribed, leading to the dismissal of the criminal action. (People of the Philippines v. Ma. Luisa Reyes Angulo, CTA Crim Case Nos. O-867 and O-868, February 13, 2025)

Rappler Holdings Corporation (RHC) is not a dealer in securities as it was not regularly engaged in buying and selling securities for profit, and its issuance of Philippine Depositary Receipts (PDRs) was a legitimate capital-raising activity of a financial holding company, which is not a taxable event. Under Securities Regulation Code (SRC), and Revenue Regulations No. 06-08, a "dealer in securities" must be regularly engaged in the purchase and resale of securities to customers for profit, or in the ordinary course of business. The CTA En Banc upheld the Division’s ruling that RHC did not fall under this definition. The evidence showed that RHC issued PDRs to NBM and Omidyar Network for the sole purpose of raising capital for its subsidiary, Rappler Inc., in line with its purpose as a financial holding company, not as a merchant of securities. The Court noted that RHC neither bought securities from its subsidiary nor resold them to third parties, and that its Articles of Incorporation expressly prohibited it from acting as a dealer or stockbroker. Furthermore, the PDRs did not convey ownership or economic rights over the underlying shares unless exercised and subject to legal limitations on foreign ownership. Therefore, the PDR issuance was an investment arrangement, not a taxable sale or trading transaction, and there was no grave abuse of discretion in the Division’s factual findings to that effect. (People of the Philippines and Bureau of Internal Revenue v. Rappler Holdings Corporation and Maria Ressa, CTA EB Crim No. 126, CTA Crim Case Nos. O-679, O-680, O-681 and O-682, February 21, 2025)

 

BIR ISSUANCES

Revenue Memorandum Circular No. 061-2025, June 19, 2025

Repealed/Modified Tax Exemptions under Capital Markets Efficiency Promotions Act (CMEPA)

• All the above exemptions are revoked starting July 1, 2025.
• Affected transactions are now subject to income tax, capital gains tax, dividends tax, and/or documentary stamp tax, depending on the transaction type.

Affected Law / Provision	Entity / Description	Repealed Tax Exemptions
PD No. 1648 (Sec. 9)	National Development Company (NDC)	Exemption on issuance of bonds and securities (now subject to DST)
EO No. 603 (Secs. 6–8)	Light Rail Transit Authority (LRTA)	Exemptions on interest income, capital gains, DST, and bond issuance
RA No. 7354 (Sec. 14)	Philippine Postal Corporation	Exemptions on interest income, capital gains, DST
RA No. 4850 (Sec. 12)	Laguna Lake Development Authority (LLDA)	Exemptions on interest income, capital gains, DST, and bond issuance
PD No. 37 (No. 8)	Nayong Pilipino Foundation	Exemptions on interest income, capital gains, DST
PD No. 205 (Sec. 12)	Development Academy of the Philippines (DAP)	Exemptions on interest income, capital gains, DST
PD No. 442 (Art. 204)	State Insurance Fund (SSS/GSIS)	Exemption on capital gains tax
PD No. 696 (Secs. 10–11)	Philippine Aerospace Development Corp.	Exemptions on interest income, capital gains, DST, and bond issuance
RA No. 85 / RA No. 2081 (Sec. 2(g))	Development Bank / RFC	Exemptions on interest income and bond issuance
RA No. 3844 / RA No. 6389 (Secs. 76–77, 98)	Agricultural Land Reform Code	Exemptions on interest income, dividends, capital gains, DST on bonds
RA No. 3591 (Sec. 24)	Philippine Deposit Insurance Corporation (PDIC)	Exemptions on interest income and bond issuance
EO No. 1037 (Sec. 12)	Philippine Retirement Park System	Exemptions on interest income, capital gains, DST, and bond issuance
RA No. 6395 (Sec. 8(a))	National Power Corporation (NPC)	Exemptions on interest income, capital gains, DST on bonds
PD No. 334 (Secs. 9, 15)	Philippine National Oil Company (PNOC)	Exemptions on interest income, capital gains, DST, bond issuance
PD No. 1467 (Sec. 16)	Philippine Crop Insurance Corporation	Exemption on capital gains
RA No. 10801 (Sec. 56)	OWWA	Exemption on capital gains
RA No. 9267 (Sec. 28)	Securitization Act of 2004	Exemption on DST
RA No. 6426 (Sec. 6)	Foreign Currency Deposit Act	Exemption on interest income of residents (now taxable)
RA No. 9497 (Sec. 16(b))	Civil Aviation Authority of the Philippines (CAAP)	Exemptions on interest income, dividends, capital gains
RA No. 7356 (Sec. 21)	National Commission for Culture and the Arts (NCCA)	Exemptions on interest income, dividends, capital gains
RA No. 10086 (Sec. 23(a))	National Historical Commission of the Philippines (NHCP)	Exemptions on interest income, dividends, capital gains
PD No. 1201 (Sec. 11)	Philippine Institute for Development Studies (PIDS)	Exemptions on interest income, dividends, capital gains
RA No. 2640 / BP 35 (Sec. 11)	Veterans Federation of the Philippines	Exemptions on interest income, dividends, capital gains
RA No. 4156 / RA No. 6366 (Sec. 12)	Philippine National Railways (PNR)	Exemptions on interest income, dividends, capital gains
RA No. 9182 / RA No. 9343 (Sec. 15)	SPV Law (Special Purpose Vehicles)	Exemptions on capital gains and DST

 

Revenue Memorandum Circular  No. 066-2025, July 2, 2025

Context / Background	Previously, under RMC No. 80-2023, RBEs availing of VAT zero-rating on local purchases had to submit a sworn declaration to their suppliers affirming that the goods/services purchased were directly and exclusively used in their export activities.
Clarified Rule	With the issuance of RR No. 10-2025, the sworn declaration is no longer required. The VAT Zero-Rating Certificate issued by the concerned Investment Promotion Agency (IPA) (e.g., PEZA, BOI) is now sufficient documentary basis for claiming the 0% VAT rate.
BIR’s Post-Audit	The BIR retains authority to perform post-audit verification to confirm that the purchased goods/services are indeed directly attributable to the RBE’s registered project or activity.
Key Compliance Implication	RBEs and suppliers no longer need to collect sworn declarations. They must secure and retain the IPA-issued VAT Zero-Rating Certificate and ensure that transactions are indeed tied to registered export activity to withstand post-audit scrutiny.

Revenue Memorandum Circular No. 065-2025, July 2, 2025

Who is Covered	New business taxpayers ➤ With no existing TIN ➤ Or with an existing TIN but registering a new line of business
Types of Books Allowed	1. Manual Books of Accounts 2.Loose-Leaf Books of Accounts (LLBA) 3. Computerized Books of Accounts (CBA) or Computerized Accounting System (CAS)
Manual Books	·         No approval needed ·         Can be registered at the same time as TIN application ·         No additional permit required
Loose-Leaf Books (LLBA)	·         Requires a Permit to Use (PTU) ·         PTU can be issued only after TIN issuance ·         Cannot be registered during initial TIN application ⚠️ ·         Use without PTU is a violation
Computerized Books / CAS	·         Requires an Acknowledgement Certificate (AC) ·         AC can be issued only after TIN issuance ·         Cannot be registered during initial TIN application ·         Use without AC is a violation
Timing of Book Registration	Not mandatory during business registration
Compliance Warning	If LLBA or CBA are used without PTU or AC, the taxpayer is liable for failure to make valid entries under BIR rules
System Update	Once PTU or AC is issued, BIR Registration Officer must update the taxpayer's records to reflect the registration of LLBA or CBA

BIR RULINGS

Income earned by CDPQ, a government-owned entity of Quebec, from investments in the Philippines is exempt from income tax and withholding tax as it qualifies as a foreign government agency. Under Section 32(B)(7)(a)(i) of the Philippine Tax Code, income derived by foreign governments or their controlled financing institutions from investments in Philippine securities is exempt from income tax and withholding tax. CDPQ, created by a legislative act of the National Assembly of Quebec and mandated to manage public pension and insurance funds, is a government instrumentality of the State of Quebec. Its structure, control, and ownership—along with its public mandate and accountability to Quebec's Ministry of Finance—qualify it as a "foreign government" for tax purposes. As such, income from its Philippine investments, including dividends and interest, falls within the scope of this tax exemption. Accordingly, the BIR confirmed that CDPQ’s current and future Philippine-sourced investment income is not subject to Philippine income or withholding taxes (BIR Ruling No. OT-001-2025, January. 3, 2025).

If a homeowners association remains a validly registered homeowners' association with an existing BIR registration and Authority to Print (ATP), no subsequent ATP may be issued to another group without first properly canceling the original. Under Section 4 of the Tax Code, the CIR has exclusive authority to interpret tax laws and rule on matters under the BIR’s jurisdiction, including the issuance of Authorities to Print (ATP). Section 238 of the Tax Code further requires taxpayers to secure an ATP prior to printing official receipts, which must contain required tax details. Consistent with RMO No. 83-99, a validly issued ATP remains in force unless revoked due to the taxpayer’s dissolution or loss of registration with a competent agency. In BIR Ruling No. OT-002-2025, the BIR confirmed that Sun Valley Residential Estates Homeowners Association, Inc. (SVREHAI), Phases 1-2, remains duly registered with the BIR and the Department of Human Settlements and Urban Development (DHSUD), and was validly issued an ATP. Given that its ATP has not been canceled or invalidated following the required procedures, the issuance of a separate ATP to a different faction is improper. The intra-association dispute is not within the BIR’s jurisdiction and does not independently affect the validity of the existing ATP. (BIR Ruling No. OT-002-2025, January 6, 2025)

SKK, a Top 10,000 Corporation, failed to withhold 2% EWT from payments to PSALM as required under RR No. 2-1998; while PSALM is not liable to refund since it reported and paid taxes on the income, SKK remains liable for penalties. Under Sections 2.57.2 to 2.57.5 of Revenue Regulations No. 2-1998, as amended, Top 10,000 Corporations like SKK Steel Corporation are mandated to withhold 1% or 2% expanded withholding tax (EWT) from payments to regular suppliers—including government-owned and controlled corporations (GOCCs) such as PSALM—at the time of payment or when the expense is recorded, whichever is earlier. Section 2.57.3 clearly places the withholding obligation on the buyer-payor, while failure to comply is subject to penalties under Sections 251 and 255 of the Tax Code. In this case, SKK failed to withhold the required EWT on its earlier payments to PSALM. After a BIR audit in 2014 revealed this lapse, SKK unilaterally deducted the back taxes from PSALM’s billing and claimed to have remitted the amount to the BIR. However, PSALM objected and billed SKK for the deducted amount plus interest, citing lack of BIR Form 2307 as proof of remittance. The BIR ruled that although SKK failed in its withholding obligation, PSALM had already reported the income in its tax returns without claiming deductions, and paid the corresponding taxes—thereby satisfying the substance of the withholding system. As a result, PSALM has no obligation to refund the deducted amount or the interest. Nonetheless, SKK may still be penalized for its failure to withhold and may claim a tax refund from the BIR upon submission of proper documentation (e.g., Form 2307) proving actual remittance (BIR Ruling No. OT-003-2025, January 6, 2025).

Technical fees paid by AAPPI to AMPL for remote services performed abroad are deemed Philippine-sourced royalties, and are thus subject to income tax, withholding tax, and VAT. Under Sections 23(F), 28(B)(1), and 42(C)(3) of the Tax Code, a non-resident foreign corporation (NRFC) is generally taxed only on income derived from sources within the Philippines, and compensation for services performed abroad is considered foreign-sourced and not subject to Philippine tax. However, Section 42(A)(4)(c) creates an exception: income derived from the supply of scientific, technical, industrial, or commercial knowledge or information is treated as royalties from Philippine sources if such knowledge is used in the Philippines. In this case, although the services rendered by Allegiance Marketing Pty. Ltd. (AMPL), an Australian NRFC, under a Technical Services Agreement were performed remotely from Australia and supported by a certification of non-rendition in Philippine territory, the BIR determined that the services involved the supply of technical knowledge used by Accor Advantage Plus Philippines, Inc. (AAPPI) in its operations in the Philippines. Therefore, the technical fees constitute Philippine-sourced royalties subject to income tax and final withholding tax under Section 28(B)(1), and to 12% VAT pursuant to Section 108(A)(3) of the Tax Code. (BIR Ruling No. OT-004-2025, January 6, 2025).

Tanay Water District is exempt from income tax, but remains liable for the 2% franchise tax under Section 119 and for 2% creditable withholding by government entities. Section 27(C) of the Tax Code, as amended by Republic Act No. 10026, exempts local water districts (LWDs) from the corporate income tax otherwise imposed on government-owned and controlled corporations (GOCCs). This means that Tanay Water District is not liable to pay the regular 25% income tax imposed on domestic corporations, nor is it subject to creditable withholding tax (CWT) on its income. However, the same law does not provide an exemption from the 2% franchise tax under Section 119 of the Tax Code, which applies to all franchise holders, including water utilities, regardless of whether they are GOCCs or not. Section 119 specifically imposes a 2% tax on gross receipts derived from the business covered by the franchise, which in this case includes water distribution services. In addition, Section 5.116(A)(4)(b) of Revenue Regulations No. 2-98, as amended, requires all government agencies, instrumentalities, GOCCs, LGUs, and their subsidiaries to withhold 2% franchise tax from gross payments made to franchise holders operating water utilities. Applying these provisions, while Tanay Water District enjoys income tax exemption, it is still liable for the 2% franchise tax on its gross receipts and must account for the corresponding withholding made by government payors, which can be credited against its franchise tax liability. The BIR thus affirmed that Tanay Water District remains subject to the franchise tax and related withholding requirements despite its income tax exemption (BIR Ruling No. OT-005-2025).

BIR DEADLINES FROM JULY 21 - 27 2025. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
July 25, 2025	SUBMISSION – Quarterly Summary List Sales/Purchases / Importations by a VAT Registered Taxpayers.  Non-eFPS Filers – For the Quarter ending June 30, 2025
	SUBMISSION - Sworn Statement of Manufacturer’s or Importer’s Volume of Sales of each particular Brand of Alcohol Products, Tobacco Products and Sweetened Beverage Products - For the Quarter ending June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 2550Q (Quarterly Value-Added Tax Return).  eFPS & Non-eFPS Filers -For the Quarter ending June 30, 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 2551Q (Quarterly Percentage Tax Return).  For the Quarter ending June 30, 2025

COURT OF TAX APPEALS DECISIONS

A non-stock, non-profit mutual benefit association is not subject to Local Business Tax (LBT) as it is neither engaged in business nor classified as a financial institution or insurance company. Under Sections 131(d) and 143(f) of the Local Government Code (LGC), LBT may only be imposed on entities engaged in business or profit-driven financial activities, while Sections 190 and 403 of the Insurance Code expressly exclude mutual benefit associations (MBAs) from the definitions of “insurance companies” and “financial institutions”; applying these provisions, the Supreme Court held that a non-stock, non-profit MBA operating solely for the benefit of its members by providing financial assistance such as sickness, death, and unemployment benefits is not engaged in business or profit-seeking activity and therefore cannot be subjected to LBT, rendering the assessment and issuance of a tax order of payment void for lack of legal basis. (Public Safety Mutual Benefits Fund., Inc. v. Laquian, CTA Case No. 289, February 12, 2025)

A Tax Order Payment (TOP) is considered an assessment if it states the nature and amount of the tax and penalties even without citing the exact ordinance provision as long as it sufficiently informs the taxpayer (tax type, base, implied rate, and surcharges). Section 195 of the Local Government Code requires that a local tax assessment must include the nature of the tax, the amount of deficiency, and the applicable surcharges, interest, and penalties for it to be valid; applying this, the TOP issued was deemed sufficient as it clearly indicated the tax type (“FINANCIAL INSTITUTION – INSURANCE COMPANIES”), the tax base, rate (implied at 60% of 1%), and total amount due including penalties, which aligns with the rate prescribed under Section 21.02(1) of the City of San Juan Revenue Code of 2013, thereby upholding its validity and showing no due process violation despite the taxpayer’s failure to recognize the ordinance provision cited. (Public Safety Mutual Benefits Fund., Inc. v. Laquian, CTA Case No. 289, February 12, 2025)

Accused is acquitted for alleged willful failure to pay tax, ruling that the assessment was void due to improper service of the LOA and FAN/FLD, which violated her right to due process. Under Section 255 of the National Internal Revenue Code (NIRC) of 1997, as amended, a taxpayer who willfully fails to pay any tax, file a return, or supply accurate information may be held criminally liable. Here, the CTA acquitted the accused, Lanila Madayag Diaz-Salayog, for failure of the prosecution to prove her guilt beyond reasonable doubt. The Court held that the Bureau of Internal Revenue (BIR) failed to properly serve the Letter of Authority (LOA) and Final Assessment Notice/Formal Letter of Demand (FAN/FLD), both of which are essential to establish a valid tax assessment and a willful failure to pay taxes. The LOA was improperly delivered to an unauthorized person at an address different from the taxpayer's registered address, and there was no competent justification or proof for the substituted service. Similarly, the FAN/FLD lacked proper evidence of mailing and receipt, such as registry receipts or an affidavit of service. Due to these procedural lapses, the assessment was rendered void, and without a valid assessment, neither criminal liability nor civil liability for the alleged ₱10.67 million deficiency income tax for 2014 could arise (People of the Philippines v. Lanila Madayag Diaz, CTA Crim Case No. O-999, January 15, 2025)

Accused was acquitted as the cigarettes found in his van were inadmissible evidence, seized through an invalid warrantless search lacking probable cause despite his admitted possession.  A mere unexplained possession of imported articles subject to excise tax, for which no tax has been paid, is punishable regardless of ownership. In this case, Victor Gaw Sy was apprehended driving a van containing 5,000 reams of imported “Two Moon” and “Blue Moon” cigarettes with unpaid excise taxes amounting to ₱1.75 million. Although Sy claimed he was unaware of the contents and was merely hired to transport the van, the Court found he had animus possidendi (intent to possess) due to his conscious physical control of the goods. However, the Court ruled that the warrantless search and seizure of the vehicle and cigarettes was unconstitutional due to the absence of probable cause and irregularities in the checkpoint procedure, rendering the seized evidence inadmissible and ultimately acquitting the accused. (People of the Philippines v. Victor Gaw Sy, CTA Case No. O-1050, January 15, 2025)

The tax assessment against Smart Communications was cancelled because it was partly prescribed, issued without jurisdiction over receipts recorded in Tuguegarao City, and based on arbitrary estimates unsupported by an audit of its records. Provinces may impose a franchise tax on businesses operating within their territorial jurisdiction based on gross receipts. Moreover, the law limits the assessment of local taxes to within five years from the date they become due. In this case, Smart Communications Inc. was assessed by the Province of Cagayan for local franchise taxes amounting to ₱48.59 million covering the years 2011 to 2015. Smart argued that it was exempt under its legislative franchise (R.A. No. 7294) which included a “tax in lieu of all taxes” clause, and also invoked the Public Telecommunications Policy Act’s equality clause. The Court rejected these defenses, affirming prior Supreme Court rulings that the “in lieu of all taxes” clause covers only national taxes, not local ones, and that Section 23 of the PTPA does not grant a tax exemption. However, the Court held that the 2011 assessment had prescribed, the Province had no authority to tax gross receipts recorded in Tuguegarao City, and that the assessments were invalid for being based on arbitrary, uniform estimates without examining Smart’s books. Thus, the Court cancelled the entire tax assessment and enjoined its collection (Smart Communications Inc. v. Province of Cagayan, CTA AC No. 291, Civil Case No. 8456, February 17, 2025)

The Regional Trial Court (RTC) correctly dismissed the petition, ruling that appeals from a local treasurer’s denial of tax protest under Section 195 of the LGC are original actions, as it involves judicial review of a non-judicial entity’s ruling. Under Section 195 of the Local Government Code (LGC) of 1991, a taxpayer may file an appeal with a court of competent jurisdiction within 30 days from receipt of the denial of a protest issued by the local treasurer against a local tax assessment. The Supreme Court clarified that such appeal is an exercise of original jurisdiction by the RTC because the local treasurer, as a non-judicial entity, does not render judicial decisions subject to appellate review. Applying this to the case, the RTC of Taguig City correctly dismissed the petition on the ground that appeals under Section 195 of the LGC are original actions, not appellate in nature, thus affirming its authority to exercise original jurisdiction over the taxpayer’s challenge to the local treasurer’s denial of protest (Lucio Tan Group, Inc. v J. Voltaire R. Enriquez, in his capacity as City Treasurer of Taguig City, CTA AC No. 300, February 12, 2025)

Under Section 196 of the Local Government Code (LGC), a refund claim applies in the absence of a valid assessment, which must state the nature, amount, and legal basis of the tax; otherwise, any court action without prior refund claim is premature. Under Section 196 of the LGC of 1991, a taxpayer may claim a refund of erroneously or illegally collected taxes by first filing a written claim with the local treasurer, and only after doing so may initiate a judicial action, provided both actions are filed within two years from the date of payment. In this case, petitioner paid local taxes on March 27, 2023 to the City Treasurer of Taguig as alleged deficiency business tax on dividend income, and subsequently filed a Petition for Review before the RTC without first submitting a written claim for refund. The document titled “Tax Deficiency Assessment for the Year 2022” lacked the necessary elements of a valid assessment under Section 195, such as the nature of the tax, factual and legal bases, and clear reference to applicable laws or ordinances. As such, Section 195 was inapplicable, and the proper remedy was under Section 196. However, petitioner’s letters to the City Treasurer only protested the assessment but did not specifically request a refund, thus failing to comply with the administrative prerequisite. Because no valid administrative claim for refund was filed prior to seeking judicial relief, the Petition for Review was dismissed for prematurity and failure to exhaust administrative remedies, despite the payment having been made within the allowable two-year period (Lucio Tan Group, Inc. v J. Voltaire R. Enriquez, in his capacity as City Treasurer of Taguig City, CTA AC No. 300, February 12, 2025)

BIR RULINGS

Prior service in a merged entity may be counted toward the ten-year requirement for tax-exempt retirement benefits, provided the merger was beyond the employee’s control and no separation pay was received. Pursuant to Section 32(B)(6)(a) of the National Internal Revenue Code (Tax Code), retirement benefits received by employees are exempt from income tax if the employee has rendered at least ten (10) years of service in the same employer and is at least fifty (50) years old at retirement. Under the Certificate of Qualification granted by the Bureau of Internal Revenue (BIR) to the BPI Group of Companies, and guided by relevant rules and jurisprudence, the ten-year service requirement may include aggregate years of service rendered by BFSBI employees prior to their absorption into BPI, provided the transfer was due to a valid merger beyond the employees' control and no separation benefits were received. Accordingly, in the context of the approved merger between BPI and BFSBI effective January 1, 2022, the BIR confirms that: (1) the BFSBI employees' prior service may be credited toward the tenure requirement under the Retirement Plan; and (2) the tax-exempt status of retirement benefits, the tax exemption of Retirement Fund investment income, and the deductibility of employer contributions to the Retirement Fund remain unaffected, so long as the conditions under the law and Certificate of Qualification continue to be met. (BIR Ruling No. OT-068-2024, December 26, 2024)

Sale and printing of educational books not principally for advertisements and compliant with NBDB rules are VAT-exempt, and thus not subject to 5% creditable withholding VAT by government purchasers. Pursuant to Section 109(1)(R) of the National Internal Revenue Code of 1997, as amended, in relation to Republic Act No. 8047 and Revenue Regulations No. 16-2005, the sale, importation, printing, or publication of books and educational materials—including digital formats—is exempt from Value-Added Tax (VAT), provided such materials are not principally for paid advertisements and comply with National Book Development Board (NBDB) requirements. Applying this provision, the Bureau of Internal Revenue confirmed that Mexico Printing Company, Inc. (MPCI), as an NBDB-registered book publisher and printer engaged in contracts with the government, is exempt from the 12% VAT on qualified transactions. Consequently, government entities purchasing such VAT-exempt materials from MPCI are not required to withhold the 5% creditable VAT under RMO No. 23-2014. However, MPCI’s non-exempt printing activities remain subject to VAT, and its purchases from suppliers are still subject to 12% VAT, as VAT exemptions apply only to its sales of qualified educational materials and not to its inputs. (BIR Ruling No. VAT-067-2024, December 18, 2024)

Coconut sap sugar processed through simple boiling with polarization below 99.5° and color above 800 ICU is considered in its original state and thus exempt from VAT. Pursuant to Section 109(1)(A) of the National Internal Revenue Code of 1997, as amended, and in relation to Revenue Regulations No. 8-2015, agricultural food products in their original state, including those that undergo simple processes such as boiling, may be exempt from VAT. Applying this provision, coconut sap sugar, produced through basic farm-level processes like boiling and drying, and meeting the specified thresholds of polarization (below 99.5°) and color (above 800 ICU), is deemed to be in its original state and thus qualifies as a VAT-exempt agricultural product. (BIR Ruling No. VAT-066-2024, November 15, 2024)

Leases and local purchases directly used in the development and installation of a certified renewable energy project are subject to 0% VAT. Pursuant to Section 15(g) of Republic Act No. 9513 (Renewable Energy Act) and Section 108(B)(3) of the Tax Code, as amended, purchases and leases of goods, properties, and services by a Department of Energy-certified renewable energy developer are subject to zero percent (0%) VAT, provided they are directly used in the development, construction, and installation of renewable energy facilities. Applying this, transactions such as the lease of land and procurement of local supplies and services for a certified solar power project are VAT zero-rated, subject to post-audit by the BIR to ensure the inputs were indeed utilized for the qualified activities. (BIR Ruling No. OT-065-2024, November 13, 2024)

Property transfers pursuant to a court-approved Declaration of Nullity of Marriage and adjudication to common children as presumptive legitimes are not subject to CGT, donor’s tax, or DST. Under Sections 24(D)(1), 98(A), and 188 of the Tax Code, as amended, and relevant BIR rulings, transfers of real properties arising from a court-approved Declaration of Nullity of Marriage are not subject to capital gains tax, donor's tax, or documentary stamp tax (DST), as these are not considered sales, donations, or dispositions with monetary consideration but rather judicial partitions or distributions in compliance with property settlement. Additionally, the adjudication of property to common children as presumptive legitimes is also exempt from CGT and DST but must be annotated on the titles and will form part of the gross estate for estate tax purposes upon the death of either parent. (BIR Ruling No. OT-062-2024, October 18, 2024)

Tax exemption was denied due to private inurement arising from excessive fringe benefits comprising 40% of operating expenses, violating the non-profit requirement. Under Par. 3, Sec. 4, Art. XIV of the 1987 Constitution and Section 30(H) of the NIRC of 1997, non-stock, non-profit educational institutions are exempt from income tax only if their revenues are actually, directly, and exclusively used for educational purposes; however, due to substantial fringe benefits and incentives comprising 40% of operating expenses, which constitute private inurement, the institution failed to meet the non-profit requirement and was thus denied income tax exemption and reclassified as a proprietary educational institution subject to the 10% preferential tax under Section 27(B). (BIR Ruling No. SH30-063-2024, October 18, 2024)

The transfer of real properties via deeds of assignment by a liquidating government entity to the National Government, though akin to dacion en pago, is exempt from CGT, donor’s tax, and DST as it is a non-profit governmental function pursuant to its statutory mandate. Pursuant to Sections 24(D)(1), 98, 99, 101, 173, 188, 196, and 199 of the NIRC of 1997, as amended, Section 132(e) of R.A. No. 7653 (New Central Bank Act), and Section 66 of R.A. No. 6657 (CARL), the deeds of assignment executed by the CB-Board of Liquidators (CB-BOL) in favor of the Republic of the Philippines (ROP), although containing provisions similar to a dacion en pago and ordinarily taxable as a sale or disposition, are not subject to capital gains tax (CGT), donor’s tax, or documentary stamp tax (DST), as the transfers were made in performance of CB-BOL’s statutory duty to liquidate residual assets not transferred to the BSP, and such disposition by a government entity to the National Government is considered a governmental act not undertaken for profit, and therefore entitled to tax exemptions. (BIR Ruling No. OT-061-2024, October 8, 2024)

BIR DEADLINES FROM JULY 8, TO MAY 13 2025. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
July 08, 2025	SUBMISSION- All Transcript Sheets of Official Register Books (ORBs) used by Dealers/Manufacturers/Toll Manufacturers/Assemblers/Importers of Alcohol Products, Tobacco Products, Petroleum Products, Non-Essential Goods, Sweetened Beverage Products, Mineral Products & Automobiles.  Month of June 2025
	e-SUBMISSION - Monthly e-Sales Report for All Taxpayers using CRM/POS and/or Other Similar Business Machines whose last digit of 9-digit TIN is Even Number.  Month of June 2025
July 10, 2025	SUBMISSION - List of Buyers of Sugar Together with a Copy of Certificate of Advance Payment of VAT made by each buyer appearing in the List by a Sugar Cooperative.  Month of June 2025
	SUBMISSION - Information Return on Releases of Refined Sugar by the Proprietor or Operator of a Sugar Refinery or Mill.  Month of June 2025
	SUBMISSION - Monthly Report on DST Collected and Remitted by the Government Agency.  Month of June 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 2200-C (Excise Tax Return for Cosmetic Procedures) with Monthly Summary of Cosmetic Procedures Performed.  Month of June 2025
	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 1600-VT (Monthly Remittance Return of Value-Added Tax) and/or 1600-PT (Other Percentage Taxes Withheld) and Monthly Alphalist of Payees (MAP) – eFPS & Non-eFPS Filers – Month of June 2025.
	BIR Form 1606 (Withholding Tax Remittance Return for Onerous Transfer of Real Property Other Than Capital Asset Including Taxable and Exempt).  Month of June 2025.
	e-FILING & e-PAYMENT/REMITTANCE - BIR Form 1600-VT (Monthly Remittance Return of Value-Added Tax) and/or 1600-PT (Other Percentage Taxes Withheld) and BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation).  National Government Agencies (NGAs).  Month of June 2025
	e-SUBMISSION - Monthly e-Sales Report for All Taxpayers using CRM/POS and/or Other Similar Business Machines whose last digit of 9-digit TIN is Odd Number.  Month of June 2025
	FILING & PAYMENT - BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation).  Non-eFPS Filers.  Month of June 2025
	FILING & PAYMENT/REMITTANCE FILING & PAYMENT/REMITTANCE - BIR Form 2200-M Excise Tax Return for the Amount of Excise Taxes Collected from Payment Made to Sellers of Metallic Minerals.  Month of June 2025
July 11, 2025	e-FILING - BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group E.  Month of June 2025
July 12, 2025	e-FILING - BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group D.  Month of June 2025
July 13, 2025	e-FILING - BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group C.  Month of June 2025

COURT OF TAX APPEALS DECISIONS

An assessment is void for violating due process when the BIR issues a Formal Letter of Demand/Final Assessment Notice (FLD/FAN) before the lapse of the 15-day period to respond to a Preliminary Assessment Notice (PAN). The BIR must observe due process by granting the taxpayer 15 days from receipt of the PAN to file a response before issuing a FLD/FAN. The Court emphasized that the taxpayer must be afforded the full 15-day period to respond to the PAN, and failure to do so renders the subsequent assessment void. (CIR v. D.M. Wenceslao & Associates, Inc., CTA EB No. 2802, CTA Case No. 9764, February 6, 2025)

A petition filed by the BIR without written authorization from the Office of the Solicitor General is invalid and only the Solicitor General, as a general rule, may represent the government in appellate proceedings.  Under established jurisprudence and the general rule that only the Office of the Solicitor General (OSG) is authorized to represent the government in appellate proceedings—including those involving the Bureau of Internal Revenue (BIR)—a petition filed without the OSG’s authorization is not validly instituted. While Section 220 of the Tax Code allows BIR legal officers to initiate civil and criminal actions, the Supreme Court in CIR v. La Suerte, G.R. No. 144942, July 4, 2002, clarified that this does not extend to appellate proceedings. In this case, the Commissioner of Internal Revenue (CIR) filed a Petition for Review without any written authorization or deputization from the OSG. As none of the recognized exceptions apply, and no proof of OSG authority was presented, the Petition was deemed invalidly filed, resulting in the finality of the assailed Decision and Resolution. (CIR v. One Cypress Agri-Solution, Inc. CTA EB No. 2813, CTA Case No. 9937, March 5, 2025)

Failure to submit proof of actual receipt or required documents —such as return cards, postmaster certifications, or a sworn service report—rendered the FLD/FANs void for violating due process requirements. The issuance of a valid assessment requires that the taxpayer be duly notified through proper service of the FLD/FAN, thereby ensuring the taxpayer’s right to due process is upheld. In this case, while the BIR claimed service of the FLD/FANs by registered mail after a failed personal delivery, it merely submitted registry receipts without accompanying return cards, postmaster certifications, or a sworn report detailing the manner, date, and recipient of service as required by regulations. These deficiencies, combined with the express denial of receipt by the taxpayer, failed to overcome the disputable presumption of receipt by mail. Without competent proof of actual receipt or compliance with procedural requirements, the Court found that the BIR did not validly serve the assessment notices, and thus, any resulting assessment is void and unenforceable for lack of due process. (CIR v. One Cypress Agri-Solution, Inc. CTA EB No. 2813, CTA Case No. 9937, March 5, 2025)

Failure to appeal the warrants of distraint and garnishment within the 30-day reglementary period bars the CTA from acquiring jurisdiction over the case. The Court of Tax Appeals has jurisdiction over “other matters arising under the NIRC,” including the issuance of collection remedies such as warrants of distraint and levy (WDL) and garnishment (WOG); however, jurisdiction is also subject to compliance with procedural rules which require the filing of an appeal within 30 days from receipt of the questioned measure — and since petitioner received the WDL and WOG as early as March or April 2022 but only filed the Petition for Review on October 26, 2022, after making belated letter-requests to the Regional Director that did not toll the period, the Court in Division correctly dismissed the case for being filed out of time and for lack of jurisdiction. (Danile N. Matias v. CIR, CTA EB No. 2824, CTA Case No. 11025, March 4, 2025)

An assessment is void for violating due process when conducted by revenue officers not named in a valid LOA and issued by an unauthorized BIR official. Pursuant to Sections 6(A) and 13 of the NIRC of 1997, as amended, and RMO No. 43-90, only revenue officers specifically named in a duly issued Letter of Authority (LOA) by the CIR, Deputy Commissioner, or Regional Director may validly examine a taxpayer’s books; in this case, although the instant LOA authorized Revenue Officers (RO) San Pedro-Anaban, Budano, and Maniego, the audit and issuance of the PAN and FLD/FAN were instead performed by ROs Ancheta and Monforte, who were not named in any valid LOA but merely referenced in a letter signed by Chief of the LT Regular Audit, who lacked authority to issue LOAs, thus rendering the assessment void for violating the taxpayer's right to due process. (CIR v. Concepcion Industries, Inc., CTA EB No. 2863, CTA Case No. 10305, January 22, 2025)

Lack of due date in the FLD/FAN renders the assessment void. A valid FLD/FAN must include a definite due date to constitute a proper demand for payment and to trigger the accrual of delinquency interest. In this case, the FLD/FAN lacked any indication of a due date, thereby depriving the taxpayer of essential information needed to determine remedies and properly respond to the assessment. This omission constitutes a violation of due process, rendering the assessment null and void and justifying the Court in Division’s ruling enjoining the collection of the assessed amounts. (CIR v. Concepcion Industries, Inc., CTA EB No. 2863, CTA Case No. 10305, January 22, 2025)

The right to collect prescribes when no WDL was served within the 3-year period from the issuance of the assessment. Under Section 203 of the NIRC, as interpreted in CIR v. QL Development, Inc., the BIR must initiate collection of assessed taxes within three years from the date of assessment, unless interrupted by actions specifically enumerated in Section 223(d), such as the valid service of a WDL. In this case, the FLD/FAN was issued on October 15, 2002, but the first valid act of collection—a Warrant of Garnishment dated March 18, 2008—was served 1,981 days later. The November 6, 2003 letter merely reiterated the demand for payment and did not constitute valid collection under the law. As the WDL was served well beyond the 3-year prescriptive period, and no other interrupting act occurred, petitioner’s right to collect had clearly prescribed. (CIR v. Canlubang Waterworks Corporation, CTA EB No. 2917, CTA Case No. 10682, February 27, 2025)

REVENUE ISSUANCES

Revenue Memorandum Circular No. 45, 2025, April 30, 2025

The Bureau of Internal Revenue informs all concerned of the issuance of CDA-DOF-BIR Joint Administrative Order No. 001-2025, which sets the rules for implementing the penalty provision under Section 308 of the Tax Code, as amended by the CREATE Act and implemented by DOF-DTI JAO No. 001-2023; the Order takes effect on March 28, 2025, as confirmed by FIRB Advisory 002-2025, following its publication on March 13, 2025.

Summary of CDA-DOF-BIR Joint Administrative Order No. 001-2025:

Section	Subject	Details
Scope	Covered Parties	·         CDA-registered cooperatives with valid CTEs availing tax incentives ·         CDA officials/employees responsible for reporting
Reportorial Requirements	Reports to be Submitted	By Cooperatives: ·         ATIR (Annex A) — within 30 days from tax return filing deadline ·         ABR (Annex B) — on or before May 15 annually By CDA: ·         Consolidated ATIR (Annex C) ·         Consolidated ABR (Annex D) ·         Master list (Annex E) — by Jan 30 yearly
Penalties (for Cooperatives)	Based on Offense	·         1st Offense: ₱100,000 fine ·         2nd Offense: ₱500,000 fine ·         3rd Offense: Revocation of CTE by BIR
Penalties (for CDA Officials)	Sanctions	·         Fine: 1 to 6 months' salary ·         Suspension: Up to 1 year ·         Other administrative/criminal penalties as applicable
Effect of CTE Revocation	Tax Liability	·         Liable for all taxes, surcharges, interest, and penalties ·         May re-apply for CTE after prohibition period and upon compliance
Installment Payments	For Monetary Penalties	·         Allowed for up to 2 years ·         Up to 3 years for micro-cooperatives with proven financial incapacity
Waiver of Penalties	Exemptions	Granted if due to force majeure/Acts of God, upon submission of: ·         Application letter ·         LGU/Barangay Certificate ·         Supporting documents
Request for Reconsideration	One-time Option	Allowed once during cooperative’s existence for valid grounds ·         Final approval by CDA Board
Grace Period	Request by CDA	·         Up to 30 days for submission of Annexes C, D, and E ·         Must request at least 5 days before deadline
Transitory Provisions	Implementation Phases	For Taxable Year 2023: ·         ATIR/ABR due 60 days from effectivity ·         CDA reports due 90 days from effectivity Penalty Application: ·         2024 – Large & Medium cooperatives ·         2025 – Small cooperatives ·         2026 – Micro-cooperatives
Effectivity	Effective Date	March 28, 2025 (15 days after publication in The Philippine Star on March 13, 2025)

Revenue Memorandum Circular No. 47, 2025, May 7, 2025

The BIR clarifies the VAT obligations of Nonresident Digital Service Providers (NRDSPs). It confirms registration, filing, payment, invoicing, and enforcement rules related to VAT on cross-border digital services consumed in the Philippines.

Topic	Clarification / Requirement
Registration Requirement	All NRDSPs must register with the BIR, whether B2B, B2C, or both
Filing Obligation	All NRDSPs must file VAT returns to report digital transactions
Registration Method	Initially via ORUS; later through the VAT on Digital Services (VDS) Portal
Registration Deadline	On or before June 1, 2025 (120 days from RR 3-2025 effectivity)
Required Documents	Government-issued registration documents from country of origin
Local Representative	Not mandatory; may appoint a resident third-party service provider
Manual Registration	Allowed via BIR RDO No. 39–South Quezon City
Tax Type and Liability	Registered for 12% VAT on gross sales
Noncompliance Penalty	Subject to fines and possible suspension of operations
Proof of Registration	BIR Form No. 2303 (Certificate of Registration) with TIN
B2B Treatment	VAT is withheld and remitted by the PH buyer under reverse charge
B2C Treatment	NRDSP must directly file and pay VAT via simplified regime
Marketplace Transactions	If platform controls key aspects, it is deemed the DSP and liable
Invoicing Requirement	No format required; invoice must contain transaction details and VAT info
VAT Applicability Date	Effective June 2, 2025 (120 days from RR effectivity)
VAT Return Form	Use BIR Form No. 2550-DS for filing/payment; B2B buyers use 1600-VT
Input Tax Credit	Not allowed for NRDSPs
Refund for Erroneous VAT	Not allowed; may carry over excess to next return
Marketplace Liability	Not liable if payment goes directly to NRDSP
Service Fees via Marketplace	Still subject to VAT even if tied to physical goods
Scope of Taxable Digital Services	Includes online platforms, marketplaces, search engines, cloud services, media, etc.
Example – Teleconsultation	Online medical platforms are subject to VAT as digital service
Educational Institutions	No tax exemption certificate needed—DepEd/CHED/TESDA recognition suffices
RBEs and EOEs	Exempt if digital services are directly attributable to registered activities
Business Verification	Buyer may be verified via TIN, questionnaires, or registration documents
Substantiating Input VAT	Buyer may use filed BIR Form 1600-VT
Advance Payments for 2025	VAT still applies to services rendered from June 2, 2025, onward
Cost Sharing Arrangements	Shared costs for digital services consumed in PH are subject to VAT

Revenue Memorandum Circular No. 48, 2025, May 8, 2025

This BIR provides clear guidance on the correct foreign exchange (forex) rates to use in computing excise tax on mineral products, covering both export and domestic sales.

Particulars	Provision	Forex Reference	Basis Date	Other Notes
Export Sales – Provisional Excise Tax	For export permit application	BAP Spot Rate	Date of export permit application	Used for temporary computation
Export Sales – Final Excise Tax	After final assay and invoice	BAP Weighted Average Rate	Date of shipment	Shipment is deemed on bill of lading date
Export Sales – Final Invoice Deadline	Invoice issuance	N/A	Within 90 days from shipment date	Based on actual market value
Domestic Sales – Provisional Excise Tax	For transport permit (when denominated in foreign currency)	BAP Spot Rate	Date of transport permit application	Applies to local sales to processors
Domestic Sales – Final Excise Tax	After final assay and invoice	BAP Weighted Average Rate	Date of final sales invoice	Adjusts based on actual values
When is Product Considered Shipped	Determination of shipment date	N/A	Date of bill of lading	Used for final tax basis
Refund Due to Overpayment	Allowed if final tax is lower than provisional	N/A	Refund claim allowed under Section 229, NIRC	Must be supported by documents
Refund Filing Deadline	For excess excise tax payments	N/A	Within 2 years from date of payment	Subject to BIR refund rules

Revenue Memorandum Circular No. 49, 2025, May 7, 2025

• This BIR announces the release of the Offline eBIRForms Package Version 7.9.5, which may now be downloaded from the BIR website.
• The new version includes updated tax forms and multiple enhancements such as additional Alphanumeric Tax Codes (ATCs), a new treaty code for Brunei, and bug fixes. Certain forms are available for filing only through the Electronic Filing and Payment System (eFPS).

Revenue Memorandum Circular No. 52, 2025, May 30, 2025

This BIR announces the release of BIR Form No. 2550-DS (January 2025 version), designed specifically for nonresident digital service providers (NDSPs) to file their Value-Added Tax (VAT) returns, in line with Republic Act No. 12023 and Revenue Regulations No. 3-2025. The BIR will issue a separate revenue issuance containing detailed guidelines on the filing and payment procedures.

Provision	Details
Form Introduced	BIR Form No. 2550-DS (Jan 2025)
Purpose	For use by Nonresident Digital Service Providers in filing VAT returns
Legal Basis	Republic Act No. 12023 and Revenue Regulations No. 3-2025
Coverage	VAT due from digital services provided by nonresident entities to persons in the Philippines
Implementation Notes	Filing and payment procedures to be covered in a separate revenue issuance

BIR RULINGS

The transfer of the club share from one trustee to another is not subject to CGT, DST, or donor's tax as there is no consideration or change in beneficial ownership, which remains with the appointing entity. Under the Tax Code of 1997 and relevant jurisprudence, the transfer of the Manila Polo Club, Inc. (MPCI) proprietary share from one trustee to another is not subject to capital gains tax (CGT), documentary stamp tax (DST), or donor's tax, as there is no change in beneficial ownership. Applying the Supreme Court’s ruling in Sime Darby Pilipinas, Inc. v. Mendoza, HSBC remains the beneficial owner of the MPCI share while the legal title is merely held by the trustee to comply with MPCI’s requirement that only natural persons may be registered members. The assignment is solely to allow the trustee to enjoy club privileges during his employment with HSBC, with no consideration given and no intent to donate. As clarified under Revenue Regulations No. 13-2004, DST is not due since there is no transfer of beneficial ownership, and similarly, donor’s tax does not apply as there is no intent of liberality or patrimonial increase on the part of the trustee. (BIR Ruling No. OT-35-2024, September 4, 2024; BIR Ruling No. OT-38-2024, September 4, 2024; BIR Ruling No. OT-39-2024, September 11 2024; BIR Ruling No. OT-40-2024, September 11, 2024; BIR Ruling No. OT-41-2024, September 11, 2024)

Payments to a non-resident consultant for services performed entirely abroad—including reports, online workshops, and virtual meetings—are not subject to Philippine income tax, withholding tax, or VAT, as the income is considered foreign-sourced under the Tax Code. Under Sections 23(D), 25(B), and 42(C)(3) of the Tax Code, non-resident alien individuals not engaged in trade or business in the Philippines are taxable only on income derived from sources within the Philippines, with compensation for services being considered foreign-sourced if the services are performed outside the country. Section 108(A) similarly limits VAT to services performed within the Philippines. Applying these provisions, the compensation paid to the non-resident Canadian consultant under the Renewal Contract and Consultancy Services Agreement—covering advisory services, reports, virtual workshops, and communications conducted entirely outside the Philippines—is not subject to Philippine income tax, withholding tax, or VAT, as the income is foreign-sourced and the services were performed abroad. However, any portion of the services rendered physically within the Philippines, such as in-country missions or trainings, would be subject to Philippine income tax, withholding tax, and VAT. (BIR Ruling No. OT-049-2024, October 7, 2024)

 

 

BIR DEADLINES FROM JUNE 23 TO JUNE 30, 2025. A gentle reminder on the following deadlines, as may be applicable:

 

DATE	FILING/SUBMISSION
June 25, 2025	SUBMISSION - Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayer - Non-eFPS Filers – Fiscal Quarter ending May 31, 2025   Sworn Statement of Manufacturer’s or Importer’s Volume of Sales of each particular Brand of Alcohol Products, Tobacco Products and Sweetened Beverage Products – Fiscal Quarter ending May 31, 2025   e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 2550Q (Quarterly Value-Added Tax Return) - eFPS & Non-eFPS Filers – Fiscal Quarter ending May 31, 2025   BIR Form 2551Q (Quarterly Percentage Tax Return) - Fiscal Quarter ending May 31, 2025
June 29, 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) – Fiscal Quarter ending April 30, 2025
June 30, 2025	ONLINE REGISTRATION (thru ORUS) - Computerized Books of Accounts and Other Accounting Records – Fiscal Year ending May 31, 2025
	SUBMISSION - Soft copies of Inventory List and Schedules stored and saved in DVD-R/USB properly labeled together with Notarized Sworn Declaration – Fiscal Year ending May 31, 2025
	Manufacturers’/Assemblers’/Importers’ Sworn Statement of each Particular Brand/Model of Automobile, Alcohol Products, Tobacco Products and Sweetened Beverage Products -1st Semester of 2025
	Soft copies of Inventory List and Schedules stored and saved in DVD-R/USB properly labeled together with Notarized Sworn Declaration – Fiscal Year ending May 31, 2025
	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 February 28, 2025
	e-SUBMISSION - Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayers - eFPS Filers – Fiscal Quarter ending May 31, 2025

 

COURT OF TAX APPEALS DECISIONS

The tax assessment is void if the BIR failed to prove proper service of the Notice of Informal Conference and Preliminary Assessment Notice (PAN); procedural requirements in substituted serve must be complied with; unverified sources like newspaper clippings and third party sources cannot be a valid basis for assessment.

Due process in tax assessments requires that taxpayers be informed in writing of the law and facts on which the assessment is based, beginning from Notice of Informal Conference (NIC), followed by a Preliminary Assessment Notice (PAN), and ultimately a Formal Letter of Demand (FLD). Where  there was no evidence that the NIC was received, and the PAN was served without complying with the requirements for valid substituted service, including the absence of corroborating documents such as a barangay official's acknowledgment or a postmaster's certification;  where the revenue officer who allegedly served the PAN did not testify, and the BIR's witness lacked personal knowledge, the FLD and all related assessment notices for deficiency taxes are void for violating the petitioner’s right to due process. (Rex Jayson Miraflor Tuozo v. CIR, CTA Case No. 10638, March 24, 2025; see also Apex 5678 Rockwell, Inc. v. CIR, CTA Case No. 10673, February 19, 2025 and Diamond Drilling Corporation of the Philippines v. CIR, CTA Case No. 10661, January 20, 2025); where the Acknowledgment Receipt for the PAN was incomplete, with the section indicating the reason for substituted service left blank, and the witnesses’ identities and roles not properly specified; where the Written Report also failed to prove that no person was found at the address or that the barangay official who allegedly received the notice was properly identified or authenticated, the assessment notices, and the consequent Warrant of Distraint and Levy (WDL) and Warrant of Garnishment (WOG), were declared void and without legal effect. (Regus Plt Centre, Inc. v. CIR, CTA Case No. 10778, March 11, 2025); where the Formal Letter of Demand (FLD) did not adequately explain how the alleged income was computed and failed to identify or attach the documents that formed the basis of the assessment—such as news clippings and third-party sources; where documents were also not presented during administrative proceedings, denying the respondents the opportunity to examine and refute them, the unverified sources like newspaper articles, without proper corroboration, constitute hearsay and lack probative value. Given the absence of verified factual support and the failure to inform the taxpayers of the detailed basis of the assessment, the Court ruled that the assessment violated the respondents' right to due process and was therefore void. (CIR v. Sps. Emmanuel D. Pacquiao and Jinkee J. Pacquiao, CTA EB No. 2737, CTA Case No. 8639, January 23, 2025)

CMC No. 131-2019, being an interpretative rule that merely implements EO No. 23, s. 2017, is valid without prior publication; District Collectors are not indispensable parties since a final and complete resolution can be made without affecting their individual interests, given they acted under the authority of the BOC Commissioner. 

Under established jurisprudence, interpretative administrative rules do not require publication to be effective, as they merely clarify or implement existing law without adding new obligations; applying this to the case, CMC No. 131-2019, addressed solely to Bureau of Customs personnel, merely reiterated the duty rates under EO No. 23, s. 2017 and did not create new rights or impose additional burdens on the public, making its implementation valid even without prior publication. Moreover, an indispensable party is one whose interest in the controversy is such that a final adjudication cannot be made without affecting that interest or rendering the decision ineffective. Applying this principle, the Court held that the District Collectors who issued the demand letters are not indispensable parties because the petition primarily seeks to nullify CMC No. 131-2019 for lack of prior publication, with the demand letters being merely consequential to that issuance. Even if the demand letters were the main subject, the District Collectors, being under the authority of the BOC Commissioner and lacking a distinct legal interest in the controversy, are not necessary for a complete and binding resolution of the case. (Fabrossi Food Group Inc. et. al, v. Bureau of Customs, CTA EB No. 2742, CTA Case No. 10111, February 28, 2025)

Taxpayer must file a protest within 30 days from receipt of the Final Assessment Notice (FAN); FAN received on December 17, 2018, but protested to only on April 12, 2019—well beyond the prescribed period -  renders the assessment final, executory, and placing it beyond the Court’s jurisdiction.

Section 228 of the NIRC of 1997, as amended, and RR No. 12-99, as amended, require that a taxpayer must file an administrative protest—either a request for reconsideration or reinvestigation—within 30 days from receipt of the FLD/FAN lest the tax assessment becomes final, executory, and demandable. Where the petitioner received the FLD/FAN on December 17, 2018, through an employee authorized to receive official communications, as confirmed by petitioner’s own witness, but petitioner filed its protest only on April 12, 2019—well beyond the 30-day deadline which expired on January 16, 2019, the assessment becomes final and executory. Although petitioner claimed it became aware of the assessment only upon receipt of the Final Notice Before Seizure on April 1, 2019, this was contradicted by its own admission that it received the FLD/FAN on December 27, 2018. Due to the failure to timely protest the FLD/FAN, the assessment became final, and the Court in Division correctly ruled it had no jurisdiction to hear the case. (E-Power Security and Investigation Services Inc., v. CIR, CTA EB No. 2747, CTA Case No. 10143, February 21, 2025)

Assessment is void if the BIR failed to specify the factual and legal bases in the PAN, FAN, and FDDA, and did not address the taxpayer’s arguments on trade discounts versus senior citizen discounts. Under Section 228 of the NIRC of 1997, as amended, and implementing rules under RR No. 12-99, a tax assessment is void if the taxpayer is not properly informed in writing of the legal and factual bases for the assessment, as this violates due process. In this case, the BIR failed to address and consider the respondent’s detailed arguments in both its Reply to the PAN and Protest to the FLD/FAN, particularly concerning the nature of the disallowed sales discount and the inapplicability of RR No. 7-2010. Despite repeated contentions that the discounts were trade-related and not senior citizen discounts, the BIR’s findings in the FAN/FLD and FDDA lacked any reasoned explanation or citation of specific facts and law for rejecting the respondent’s position. This omission constitutes a clear denial of due process, thereby rendering the deficiency VAT assessment void and unenforceable. (CIR v. Ajanta Pharma Philippines, Inc., CTA EB o. 2761, CTA Case No. 10057, January 31, 2025)

Under Section 228 of the NIRC and relevant jurisprudence, the 30-day appeal period is reckoned from the receipt of the PCLs—not the earlier denial letter—as only the PCLs clearly constituted a final, appealable decision.

Under Section 228 of the NIRC and established jurisprudence, a final decision on a disputed assessment must be clearly and unequivocally communicated to the taxpayer to trigger the 30-day period to appeal to the Court of Tax Appeals (CTA). Applying this, the July 30, 2018 letter from the Regional Director merely cited the taxpayer’s failure to submit supporting documents and referenced procedural rules, but did not convey a clear final determination or demand for payment; hence, it could not be deemed a final decision appealable to the CTA. In contrast, the Preliminary Collection Letters (PCLs) received on April 4, 2019, contained a definitive demand for payment and warned of summary remedies in case of non-compliance, satisfying the legal requirement of finality. As such, the 30-day appeal period began from the receipt of the PCLs, and since the petition was filed on April 11, 2019, it was timely. Accordingly, the Court in Division properly exercised jurisdiction over the case. (CIR v. Joselito B. Yap, CTA EB No. 2792, CTA Case No. 10063, February 11, 2025)

The CTA may consider issues like improper service of LOAs even if raised for the first time on appeal, as it decides cases de novo and addresses matters affecting assessment validity.

The CTA is a court of record that decides cases de novo, allowing it to consider all evidence and issues necessary for a just resolution, even if not previously raised at the administrative level. Applying this, the Court in Division correctly ruled on the issue of improper service of Letters of Authority and assessment notices despite it being raised for the first time on appeal, since such issue pertains to the intrinsic validity of the assessments. Moreover, the CTA is not confined to the issues initially stipulated by the parties and may address related matters to ensure an orderly and complete disposition of the case. (CIR v. Joselito B. Yap, CTA EB No. 2792, CTA Case No. 10063, February 11, 2025)

Taxpayer is estopped from challenging the service of LOAs and assessment notices, having acknowledged receipt and failed to timely object at the administrative level.

Under the doctrine of estoppel, a party is precluded from taking a position inconsistent with one previously assumed, especially when the other party has relied on such representation in good faith. Applying this principle, the taxpayer is estopped from questioning the validity of the service of the LOAs and assessment notices for taxable years 2011 to 2013, as he repeatedly admitted in his Legal Protest Notices that he received the Preliminary Assessment Notices (PANs), Final Assessment Notices (FANs), and Formal Letters of Demand (FLDs). These notices were received by individuals who acted as his authorized representatives, and respondent never objected to their authority or the propriety of service during the administrative proceedings. Moreover, by submitting documents in compliance with the LOAs without objecting, respondent confirmed their receipt and validity. Failure to timely object to alleged defects in service at the administrative level bars a taxpayer from raising such issues for the first time on appeal, as doing so would undermine orderly tax administration and judicial review. (CIR v. Joselito B. Yap, CTA EB No. 2792, CTA Case No. 10063, February 11, 2025)

Electric cooperatives registered with the National Electrification Administration (NEA) remain exempt from income tax despite lack of Cooperative Development Authority (CDA) registration.

The legal basis for income tax exemption of electric cooperatives is Section 39(a) of P.D. No. 269, which grants permanent exemption to those registered with the NEA. While E.O. No. 93 later withdrew these exemptions, FIRB Resolution No. 24-87 partially restored them but maintained the taxability of income from electric operations. However, R.A. No. 6938, as amended, repealed laws inconsistent with its provisions but preserved P.D. No. 269. In Samar-I Electric Cooperative v. CIR, the Supreme Court ruled that CDA registration is optional for NEA-registered cooperatives and that E.O. No. 93 was effectively repealed by R.A. No. 6938. Applying this precedent, the taxpayer, though not registered with the CDA, retains its income tax exemption under P.D. No. 269, and thus cannot be held liable for income tax. (CIR v. MORESCO-II, CTA EB No. 2796, CTA Case No. 10145, February 28, 2025)       

 

BIR RULINGS

Income from PAGCOR’s purchase of slot machines from a non-resident supplier used in gaming operations is subject only to 5% final withholding tax in lieu of all other taxes, including the 25% income tax and VAT.

Under Section 13 of Presidential Decree No. 1869, as amended, PAGCOR and its contractees—whether domestic or foreign, resident or non-resident—are subject only to a 5% franchise tax on gross revenue from gaming operations, in lieu of all other national and local taxes, including corporate income tax and VAT. This exemption is affirmed by jurisprudence, including the Supreme Court rulings which emphasized that tax incentives extend to PAGCOR’s suppliers and licensees without distinction. In application, the BIR ruled that PAGCOR’s purchase of slot machines from a non-resident supplier falls under this exemption, as the machines are used in PAGCOR’s gaming operations. Accordingly, the non-resident supplier is subject only to a 5% final withholding tax (as franchise tax), and not to the 25% income tax under RA No. 11534 or VAT. However, income from non-gaming operations remains taxable under regular rules. (BIR Ruling No. VAT-027-2024, May 13, 2024)

CWT and DST on the installment sale of real property must be computed based on the higher of the zonal value or market value at the time the Agreement to Purchase and Sale was executed.

Pursuant to Section 3(J) of Revenue Regulations No. 17-2003, for sales of real property classified as ordinary assets on an installment basis—wherein payments in the year of sale do not exceed 25% of the agreed consideration—the creditable withholding tax (CWT) is computed on each installment, based on the ratio of actual collection to the total consideration, applied to the gross selling price or fair market value at the time of the execution of the contract to sell, whichever is higher; while the documentary stamp tax (DST) accrues upon execution of the deed of absolute sale, it is also based on the gross selling price or fair market value at the time of the contract to sell. Applying this to the transaction between Fine Properties, Inc. (FPI) and Prime Asset Ventures, Inc. (PAVI), the BIR confirmed that since the agreement to purchase and sell was executed on June 24, 2021 and clearly structured as an installment sale (with less than 25% paid initially and the balance due in 2023), the CWT and DST should be computed based on the higher of the zonal or market value of the subject property at that date. The subsequent execution of the deed of absolute sale upon full payment merely consummates the sale, and the legal and tax consequences are deemed to have retroacted to the date of perfection of the contract. (BIR Ruling No. OT-028-2024, May 29, 2024)

The assignment of rights under a Contract to Sell, with no gain realized and no transfer of ownership, is not subject to CGT, EWT, VAT, or DST—except DST on notarial acknowledgment, with DST due upon execution of the Deed of Absolute Sale.

Pursuant to Section 24(D)(1) of the Tax Code and Revenue Regulations No. 02-98, as amended, capital gains tax (CGT) or expanded withholding tax (EWT) applies only when there is a realized gain from the sale, exchange, or assignment of real property interests. In this case, since the original buyer assigned its rights under a Contract to Sell before completing full payment and the amount paid by the assignee equaled the assignor's payment to the original sellers, no gain was realized; hence, the assignment is not subject to CGT or EWT. Further, the assignment of rights is not considered a sale of real property and thus not subject to value-added tax (VAT). Likewise, under Section 196 of the Tax Code, documentary stamp tax (DST) does not apply to the assignment of rights as it is not a sale or conveyance of real property itself. However, the notarial acknowledgment of the Deed of Assignment is subject to a fixed DST of ₱30.00, and the eventual Deed of Absolute Sale executed by the assignee will trigger DST based on the original Contract to Sell’s terms. (BIR Ruling No. OT-029-2024, May 29, 2024)

Under RA No. 8047 and Section 109(1)(R) of the Tax Code, VAT exemption applies to sales and publication of qualified educational materials, but not to non-exempt services or purchases which remain subject to 12% VAT.

Under Section 12 of RA No. 8047 and Section 109(1)(R) of the Tax Code, sales, printing, or publication of books, newspapers, and other educational reading materials that are not principally devoted to paid advertisements and are compliant with National Book Development Board (NBDB) requirements are exempt from VAT. Applying these provisions, Inteligente Publishing, Inc., as a registered book publisher and seller under the NBDB, may claim VAT exemption for its core activities involving the sale and publication of qualified educational materials. However, activities not covered by the exemption—such as bookbinding, engraving, printing of brochures or trade books—are subject to 12% VAT, requiring the Company to register as a VAT-registered entity and issue separate VAT invoices for those transactions. Moreover, while its core sales may be VAT-exempt, its purchases of goods or services from VAT-registered suppliers remain subject to VAT since tax exemption does not prohibit the passing on of VAT to buyers under Section 107 of the Tax Code. (BIR Ruling No. VAT-030-2024, June 5, 2024)

Exemption from donor’s tax under RA 6657 is denied as the law covers only capital gains tax and the land remains agriculturally classified, lacking proof of reclassification.

Under Section 66 of Republic Act No. 6657, also known as the Comprehensive Agrarian Reform Law of 1988, land transfers made under the Act—such as those involving disturbance compensation arising from the lawful termination of tenancy due to land reclassification or conversion to non-agricultural use—are exempt from capital gains tax, registration fees, and related taxes and fees. However, the law does not expressly provide exemption from donor’s tax, and tax exemptions, being in derogation of sovereign power, must be strictly construed against the taxpayer. In the present case, while the transfer of a portion of land from BBB to the tenant was executed as disturbance compensation, there is no showing that the land has been officially reclassified or converted by competent authorities for residential, commercial, or industrial use as required under Section 36(1) of RA No. 3844, which remains applicable. All supporting documents submitted show that the land remains classified as agricultural in actual use. Therefore, in the absence of proof of reclassification or conversion and without a clear legal basis for donor’s tax exemption, the request cannot be granted, and the transaction remains subject to donor’s tax.(BIR Ruling No. OT-031-2024, June 5, 2024)

Insurance policies issued by GSIS to IPAs and their registered business enterprises are subject to DST (borne by the non-exempt party) and 12% VAT, unless the enterprise is under the 5% SCIT regime and the insurance—such as for assets or employees directly involved in the registered activity—is proven to be directly and exclusively used therein and certified by the concerned IPA for VAT zero-rating.

Insurance policies issued by the GSIS to Investment Promotion Agencies (IPAs) and their registered business enterprises (RBEs) are generally subject to both documentary stamp tax (DST) and value-added tax (VAT), unless otherwise expressly exempted by law. While the GSIS is exempt from DST under Section 39 of RA No. 8291, liability shifts to the other contracting party pursuant to Section 173 of the NIRC. IPAs are not exempt from DST or VAT, as the 5% special corporate income tax (SCIT) in lieu of all national and local taxes applies only to registered business enterprises, not to the IPAs themselves. For RBEs, those under the ITH regime are liable for DST, while those under the 5% SCIT regime are not, since the SCIT covers DST. As to VAT, registered export enterprises (REEs) may avail of the VAT zero-rating on local purchases (including insurance premiums) only if such purchases are directly and exclusively used in their registered project or activity, supported by a VAT zero-rating certificate issued by the concerned IPA, in accordance with RR No. 3-2023. Insurance related to assets or employees integral to the project may qualify for zero-rating, provided proper attribution is possible. Otherwise, or in the case of Domestic Market Enterprise, (DME) the purchase is subject to 12% VAT, which becomes part of the cost if the DME is under SCIT. Supporting documents such as the insurance policy, tax incentive registration status (ITH or SCIT), and the VAT zero-rating certificate must be submitted to avail of these tax benefits, subject to possible post-audit by the BIR. (BIR Ruling No. OT-032-2024, June 5, 2024)

The transfer of legal title to a new nominee-trustee of shares is not subject to CGT, donor’s tax, or DST, as there is no consideration or change in beneficial ownership.

Capital gains tax (CGT) and documentary stamp tax (DST) apply only where there is a sale, exchange, or transfer involving consideration or a change in beneficial ownership. DST applies only when there is an actual or constructive transfer of beneficial ownership. In this case, Nestlé Philippines, Inc. (NPI), the true and beneficial owner of a Manila Polo Club (MPC) membership share, merely transferred legal title from its former nominee BBB to new nominee CCC due to the end of BBB’s employment. The transfer was made under a Declaration of Trust confirming that CCC holds the share solely for NPI’s benefit, with no consideration and no transfer of beneficial ownership. As such, the transaction is not subject to CGT, donor’s tax (as there is no intent to donate), or DST. Only the notarization of the trust document is subject to DST under Section 185 of the Tax Code. (BIR Ruling No. OT-034-2024, September 4, 2024)

BIR DEADLINES FROM JUNE 9 TO MAY 18 2025. 

A gentle reminder on the following deadlines, as may be applicable:

 

BIR DEADLINES FROM JUNE 16 TO JUNE 20, 2025. 

A gentle reminder on the following deadlines, as may be applicable:

 

DATE	FILING/SUBMISSION
June 16, 2025	Estate Tax Amnesty
	Consolidated Return of All Transactions based on the Reconciled Data of Stockbrokers - June 1-15, 2025
June 20, 2025	e-FILING/FILING & e-PAYMENT/PAYMENT - BIR Form 1600 WP (Remittance Return of Percentage Tax on Winnings and Prizes Withheld by Race Track Operators) – eFPS & Non-eFPS Filers – Month of May 2025

 

 

COURT OF TAX APPEALS (CTA) DECISIONS

Different due dates renders the assessment void for lack of a clear, unequivocal payment deadline. A valid Final Assessment Notice/Formal Letter of Demand (FAN/FLD) must contain two essential elements: a definite demand for a specific amount of tax liability and a clear, unequivocal due date for payment. In the present case, the FAN/FLD is flawed because it contains two inconsistent due dates—one indicating payment is due within 15 days from receipt of the Preliminary Assessment Notice (PAN) or February 12, 2020, and another stating a later due date (the due date for the payment on the assessment notices was February 29, 2020) thereby creating confusion and failing to provide a single, clear deadline for payment. Thus, the assessment is void (Kingston Aluminum and Stainless Sales Corp., v. CIR, CTA Case No. 10326, February 24, 2025)

Failure of the Bureau of Internal Revenue (BIR) to prove willful falsity prevents application of the 10-year prescriptive period, rendering the assessment barred by prescription. Internal revenue taxes must be assessed within three years from the filing or due date of the tax return or the ten-years in case of false or fraudulent returns filed with intent to evade tax or failure to file a return. The Supreme Court, in McDonald’s Philippines Realty Corp. v. CIR, clarified that to apply the extended ten-year period, the BIR must prove with clear and convincing evidence that the taxpayer deliberately or willfully filed a false return containing material misstatements or omissions. Additionally, the taxpayer must be properly notified that the extended period is invoked, with the factual and legal basis clearly stated. In this case, although the BIR alleged false returns based on discrepancies in foreign exchange valuation and imposed a surcharge, the BIR failed to present clear and convincing evidence that the taxpayer acted with deliberate or willful intent to evade tax. Consequently, the period to assess has prescribed, rendering the deficiency Capital Gains Tax assessment invalid. (Holcim Philippines Manufacturing Corporation v. CIR, CTA Case No. 10414, February 14, 2025)

Value-Added Tax (VAT) cannot be imposed on presumed unaccounted expenses; it must be based on actual sales or service income. VAT is imposed on gross selling price or gross receipts from sales or services—not from disbursements or expenses. In this case, the BIR treated the discrepancy between the taxpayer’s AFS/ITR and 1604CF/1601-E as undeclared income and subjected it to VAT based solely on presumed unaccounted expenses. However, the Court found this assessment legally baseless, as VAT liability must be based on actual sales or service income, not inferred from expenditures. (Ebar Abstracting Company, Inc. v. CIR, CTA Case No. 10681, January 15, 2025)

In VAT zero-rating, Certificate or Articles of Foreign Incorporation and a SEC Certificate of Non-Registration of the NRFC must be provided; separate personality of the taxpayer and NRFC parties must be respected even if they are related parties; proof that services were performed in the Philippines is required. VAT zero-rating on the sale or supply of services applies only if certain requirements are met: (1) the recipient is a non-resident foreign corporation (NRFC) not engaged in business in the Philippines; (2) the services are not related to processing, manufacturing, or repacking; (3) the services are performed in the Philippines by a VAT-registered person; and (4) payment is made in acceptable foreign currency. To establish NRFC status, the taxpayer must present a Certificate or Articles of Foreign Incorporation and a SEC Certificate of Non-Registration. In this case, petitioner adequately proved that Innodata, Inc. is a foreign entity not doing business in the Philippines by submitting the required documents, and the Court emphasized that the separate corporate personality of Innodata, Inc. must be respected despite its relationship with petitioner. However, petitioner failed to meet the third requirement, as there was no clear indication in the service agreement or supporting evidence that the services were actually performed in the Philippines. Without proof of the place of service, one of the essential elements for VAT zero-rating remains unproven, rendering the claim for zero-rated VAT treatment incomplete. (Ebar Abstracting Company, Inc. v. CIR, CTA Case No. 10681, January 15, 2025)

Disallowing excess input ax carried forward to succeeding period without written legal and factual basis violates Section 228's due process, rendering the assessment void. A tax assessment must inform the taxpayer in writing of the legal and factual bases on which it is made; failure to do so renders the assessment void. In this case, respondent disallowed input tax carried forward to succeeding period without providing any explanation or legal justification for the disallowance. This lack of disclosure violates the due process requirement under Section 228, and as such, the disallowed input tax must be cancelled for being invalid. (Ebar Abstracting Company, Inc. v. CIR, CTA Case No. 10681, January 15, 2025)

A BIR letter not clearly stating it as a final decision on disputed assessment is not an appealable Final Decision on Disputed Assessment appealable to the CTA. The CTA has exclusive appellate jurisdiction over decisions of the Commissioner of Internal Revenue (CIR) involving disputed assessments, which must be based on an FDDA. An FDDA must clearly state the facts, applicable laws or jurisprudence, and must explicitly indicate that it constitutes the final decision of the Commissioner or his duly authorized representative. In this case, the taxpayer erroneously treated the letter issued by the Regional Director as an FDDA, due to the letter's failure to clearly and categorically state that it was the final decision on the disputed assessment. As such, the letter cannot be considered an appealable FDDA, and the CTA correctly dismissed the petition for lack of jurisdiction. (Bukidon II Electric Cooperative, Inc. v. CIR, CTA Case No. 10822, March 25, 2025)

Issuance of the FLD/FAN before the expiration of the 15-day period to respond to the PAN violates due process, rendering the tax assessment void. Taxpayers who received a PAN are given fifteen (15) days from receipt thereof to respond before FLD/FAN may be issued. This procedural safeguard ensures compliance with the taxpayer's right to due process. In this case, the taxpayer received the PAN on January 4, 2016 and had until January 19, 2016 to respond. However, the BIR issued the FLD/FAN prematurely on January 12, 2016—before the expiration of the 15-day period—thereby depriving the petitioner of the opportunity to be heard. The BIR’s failure to observe this mandatory period constitutes a violation of due process, rendering the subject tax assessments null and void and without legal effect. (Vibal Group, Inc. v. CIR, CTA Case No. 10291, January 20, 2025)

Delayed service of the assessment after its payment deadline violates due process, rendering the assessment invalid. Tax authorities must inform the taxpayer of the legal and factual bases of the assessment, including a clear amount due and a date to comply. In this case, although the FLD/FAN was dated October 29, 2018 and required payment by October 31, 2018, it was only served on DMCI Masbate Power on November 5, 2018—after the deadline had lapsed. This deprived the taxpayer of a fair opportunity to pay within the prescribed period, thereby violating its right to due process. (DMCI Masbate Power Corporation v. CIR, CTA Case No. 10424, March 13, 2025)

 

REVENUE REGULATIONS

 

Revenue Regulations No. 012-2025, November 29, 2024

 

Provision	Details
Warrant of Distraint/Levy (WDL)	Must be served personally to the taxpayer or their authorized representative
If Taxpayer is Absent/Refuses	WDL may be constructively served in presence of 2 credible witnesses (preferably barangay officials); Leave copy at premises
Additional Communication	Send a copy of the WDL via registered mail and/or email
Resurfaced Taxpayers	Applies to those previously tagged as "Cannot Be Located" (CBL) but have appeared at any BIR office had whereabouts legally determined
	Must be simultaneously served with other related documents directly to the taxpayer or authorized representative

 

Revenue Regulations No. 014- 2025, April 2, 2025

 

Category	Details
Issued	April 2, 2025
Who’s Affected	Non-Resident Digital Service Providers
Registration Deadline	June 1, 2025 via ORUS or VDS Portal
VAT Liability Starts	June 2, 2025, regardless of registration status
BIR Authority	Commissioner may extend the registration deadline as needed

 

 

Revenue Regulations No. 015-2025, April 29, 2025

 

Category	Details
Issuance Date	April 29, 2025
Purpose	Updates rules for tax-qualified private retirement plans (RA 4917, Tax Code)
Covered Plans	Pension, Gratuity, Provident, Profit-sharing, Stock Bonus
Tax Benefits	Retirement benefits & trust income: Tax-exempt Employer contributions: Tax-deductible
Employee Eligibility	Minimum 50 years old At least 10 years of service Must not have availed similar tax benefits before
Application	Submit documents (trust agreements, actuarial report, etc.) within 30 days of effectivity

 

BIR RULINGS

Unutilized input VAT from zero-rated sales cannot be deducted as an expense. Under Revenue Memorandum Circular No. 57-2013, unutilized input VAT attributable to zero-rated sales may only be recovered through a refund or tax credit claim. The Tax Code provides no legal basis for treating such amounts as deductible expenses. Furthermore, per the Supreme Court ruling in United Coconut Planters Bank v. Spouses Uy, only decisions of the Supreme Court establish binding precedent, rendering rulings of lower courts like the Court of Tax Appeals merely persuasive. Applying these principles, the BIR denied Norteam Shipping Service, Inc.’s request to record its denied VAT refund claim as a miscellaneous expense for income tax purposes. Despite NSSI citing the CTA decision in Maersk Global Service Center, the absence of a supporting Supreme Court ruling and the clear guidance of RMC No. 57-2013 preclude the deductibility of unutilized input VAT as an income tax expense. (BIR Ruling No. OT-016-2024, February 28, 2024)

Sales of herb-roasted chicken for take-out are VAT-exempt as simple-processed agricultural products. The sale of agricultural and poultry products that have undergone simple processes such as roasting remains VAT-exempt, including those prepared for market using methods like roasting or broiling. Applying this to Agros Trofi Corporation, which sells herb-roasted chicken solely on a take-out basis without dine-in facilities, the BIR confirmed that such sales fall within the scope of VAT-exempt transactions, consistent with the legislative intent to exclude common food items like roasted chicken from VAT, as reflected in the Bicameral Conference Committee records. (BIR Ruling No. VAT-017-2024, February 28, 2024)

Proceeds from electronic gift certificates are not taxable income or VATable sales, but related service fees and unspent balances are subject to VAT and taxes under the NIRC and RA 10962. Amounts received as proceeds from electronic gift certificates (eGCs) represent value held in trust by the issuer on behalf of the beneficiary and thus do not constitute taxable income or VATable sales. Thus, the face value proceeds from eGCs issued to clients are not subject to income tax, expanded withholding tax, or VAT, making the issuance of acknowledgment receipts proper. However, service fees for facilitation, administration, or marketing are subject to 12% VAT and EWT, requiring issuance of official receipts, while revenue from unspent eGCs and commissions paid to merchants are taxable accordingly. (BIR Ruling No. OT-018-2024, March 8, 2024)

Importation of a MARINA-approved passenger vessel for domestic transport qualifies for VAT exemption, subject to regulatory compliance. The Tax Code exempts from VAT the sale, importation, or lease of passenger vessels for domestic transport operations, subject to compliance with MARINA’s importation restrictions and vessel retirement program. Applying this, Montenegro Shipping Lines, Inc.’s importation of the 2023-built RORO passenger vessel MV "Binibining Coron," duly authorized by MARINA and necessary for its operations, qualifies for VAT exemption, provided it adheres to MARINA’s conditions. (BIR Ruling No. VAT-019-2024, March 14, 2024)

Income payments to persons enjoying income tax exemptions under the Omnibus Investment Code of 1987 is exempted from withholding tax. Thus, a domestic corporation registered with the Board of Investment as a Domestic Market Enterprise is exempt from CWT on revenues generated exclusively from its registered production of bean sprouts and alfalfa sprouts This exemption is granted under the terms of Executive Order No. 226 and subject to compliance with the specific terms and conditions set forth in the taxpayer BOI Registration Agreement. (BIR Ruling No. 020-2024, March 14, 2024)

Property dividends are subject to VAT despite non-VAT registration status; exemption claim is denied due to lack of proof and documentary compliance. Property dividends constituting stocks in trade or properties primarily held for sale or lease, when distributed by a corporation, are subject to VAT based on their fair market value or zonal valuation, whichever is higher. In the case of M.C. Holdings Corporation, despite its claim of being a non-VAT registered entity, the denial of its request for exemption is based on the principle that VAT liability is determined by the Tax Code regardless of registration status. The corporation’s failure to meet the burden of proof to establish exemption, along with noncompliance with documentary requirements under Revenue Memorandum Order No. 9-2014, justified the denial. Thus, M.C. Holdings Corporation remains subject to VAT on the distribution of property dividends as ruled, and the claim for exemption was properly denied. (BIR Ruling No. 023-2024, April 11, 2024)

Termination fee as compensation for breach of contract and services rendered related to its business operations is subject to both VAT and income tax. A VAT is imposed on any person engaged in the course of trade or business on the sale, barter, exchange, lease of goods or properties, and the rendering of services in the Philippines. In this case, the termination fee received by Air Liquide Philippines, Inc. from Pilipinas Shell Petroleum Corporation under the Termination Agreement is subject to VAT because it constitutes compensation not only for breach of contract but also for services rendered and related costs incurred in the construction and installation of specialized plants, which are directly connected to Air Liquide’s business operations. Additionally, the termination fee is subject to income tax under Section 27(A) of the Tax Code as it represents income “from whatever source derived,” including compensation for loss of anticipated profits. Thus, both VAT and income tax apply to the termination fee received by Air Liquide. (BIR Ruling No. OT-022-2024, April 11, 2024)

Amounts received by Easytrip for loads/reloads are not income and exempt from EWT, but its service fees and income from holding these funds are taxable and subject to EWT and VAT. Withholding tax is imposed on income payments where there is a flow of wealth to the recipient, and taxes withheld serve as advance payments of the recipient’s income tax. In the case of Easytrip Services Corporation, amounts received from banks, credit card companies, authorized merchants, and corporate clients for loads and reloads are considered cash advances or liabilities held in trust for remittance to toll operators and therefore do not constitute income, making them exempt from EWT. However, the service fees charged by Easytrip for its electronic toll collection services, as well as any income earned from holding the cash advances or refunds on unused loads, do constitute income and are subject to income tax, creditable withholding tax, and VAT. (BIR Ruling No. OT-024-2024, April 25, 2024)

Maxicare’s sale of prepaid HMO services is subject to 12% VAT, as no law exempts such transactions from VAT. The Tax Code imposes VAT on gross receipts from the sale of services rendered “in the course of trade or business,” including health maintenance organization (HMO) services, unless specifically exempted by law. Revenue Memorandum Circular No. 56-2002 clarifies that HMO providers like Maxicare are subject to VAT because they provide prepaid membership services rather than direct medical services. (BIR Ruling No. VAT-025-2024, April 29, 2024)