COURT OF TAX APPEALS (CTA) DECISIONS
A TAX ASSESSMENT IS VOID WHEN CONDUCTED WITHOUT A VALID LOA, AS SUBSTITUTION OF REVENUE OFFICERS REQUIRES A NEW OR AMENDED LOA, NOT A MERE REASSIGNMENT NOTICE. The Court ruled that a valid Letter of Authority (LOA) is indispensable for revenue officers to lawfully conduct an audit, and any substitution of officers must be supported by a new or amended LOA issued by the Commissioner of Internal Revenue or his duly authorized representative, as emphasized in Commissioner of Internal Revenue v. McDonald’s Philippines Realty Corp.. In this case, although the initially authorized specific revenue officers to audit Master Sports Corporation, they were replaced through a mere Re-Assignment Notice signed by a Revenue District Officer, without the issuance of a new LOA. Since the replacement officers proceeded with the audit absent proper authority, the resulting deficiency assessments were declared void. Consequently, the Court cancelled and set aside the assessment and enjoined the BIR from enforcing collection. (Master Sports Corporation v. Commissioner of Internal Revenue, CTA Case No. 10458, 2 May 2025).
LOA SERVED BEYOND 30 DAYS REMAINS VALID IF THE TAXPAYER ACCEPTS SERVICE AND PARTICIPATES IN THE AUDIT, AS BELATED OBJECTIONS ARE DEEMED MERE AFTERTHOUGHTS. While RAMO No. 1-10 required an LOA to be served within 30 days from issuance, RAMO NO. 1-2020 dated 17 September 2020 removed this provision, which was further clarified in RMC No. 82-2022, dated June 28, 2022. While the LOAs were served in 2019 or before the amendment, a taxpayer who accepts the LOA and submits to the audit without timely objection is deemed to have acquiesced to the BIR’s authority. In this case, the records showed that the taxpayer eventually accepted both LOAs, submitted documents, and participated in the audit. Following AFP General Insurance Corporation v. Commissioner of Internal Revenue, the Court held that petitioner’s belated challenge was merely an afterthought to evade liability, thereby upholding the validity of the LOAs’ service. (Pristine Energy Transfer Corporation v. Commissioner of Internal Revenue, CTA Case No. 10338, 6 May 2025.)
UNDER THE NIRC, DEFICIENCY ASSESSMENTS MUST BE ISSUED WITHIN THREE YEARS FROM THE DUE DATE OF FILING THE RETURN. The law provides that internal revenue taxes must generally be assessed within three (3) years from the deadline for filing the return. If no return is filed, or if a false return is filed, the BIR is given ten (10) years from discovery to assess. Since the BIR issued the assessment on 27 November 2019 (received 10 January 2020), its right to assess VAT for the first three quarters of 2016, as well as EWT and WTC for January to October 2016, had already been prescribed. Only VAT for the 4th quarter of 2016 and EWT and WTC for November and December 2016 were still within the 3-year period. As for DST, because no return was filed, the 10-year extraordinary period applied, and the assessment had not been prescribed. (Pristine Energy Transfer Corporation v. Commissioner of Internal Revenue, CTA Case No. 10338,6 May 2025.)
DUE PROCESS REQUIRES ACTUAL RECEIPT OF ASSESSMENT NOTICES BY THE TAXPAYER; SINCE THE BIR FAILED TO PROVE VALID SERVICE, THE ASSESSMENT IS VOID. Jurisprudence consistently holds that when a taxpayer denies receipt of a Preliminary Assessment Notice (PAN), Final Assessment Notice (FAN), and Formal Letter of Demand (FLD), the burden shifts to the BIR to prove that such notices were actually received. Proof of mailing alone is insufficient, especially when service is made to someone who is not authorized to receive documents on behalf of the taxpayer. An assessment that is not validly served violates due process and is void. In this case, the BIR claimed that the PAN and FAN/FLD were served through a courier service, but the evidence presented showed otherwise. The FAN/FLD was delivered to a security guard, who is not an authorized representative of the taxpayer. No competent proof was presented to establish actual receipt of the PAN. As a result, the BIR failed to discharge its burden to prove valid service of the assessment notices. Since the taxpayer was not properly informed of the legal and factual bases of the assessment, due process was violated, rendering the assessment void and without legal effect. Moreover, jurisprudence holds that a void tax assessment produces no legal effect and cannot serve as basis for collection. Without a valid assessment, subsequent collection measures such as a WDL are likewise void. Despite this, the BIR garnished PhP28,191,790.45 from the petitioner’s bank accounts. Since the assessment and collection were void, the government had no right to retain the amount, and the taxpayer is entitled to a refund of the illegally collected sum. (Fujitec, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10965, 7 May 2025.)
THE GOVERNMENT IS NOT LIABLE FOR DAMAGES OR LEGAL INTEREST SINCE THE COLLECTION, THOUGH LATER FOUND VOID, WAS NOT ATTENDED BY ARBITRARINESS AND NO LAW AUTHORIZES SUCH AWARD. Jurisprudence provides that interest on refunded taxes may only be awarded if expressly authorized by law or if the collection was arbitrary. Absent these conditions, the government cannot be compelled to pay damages or legal interest on amounts improperly collected. Arbitrariness exists only when there is inexcusable disregard of legal requirements, not when actions are based on a plausible interpretation of the law. In this case, while the BIR collected more than the amount stated in the WDL, the excess was attributed to its computation of interest and penalties, which it considered valid. Records also show that the BIR attempted to serve the Warrant of Garnishment and refrained from collecting the full available amounts once it deemed the liability satisfied. These actions negate arbitrariness. Since no statutory provision authorizes interest on tax refunds in this situation and the collection was not arbitrary, petitioner is not entitled to damages or legal interest. (Fujitec, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10965, 7 May 2025.)
A COMPROMISE SETTLEMENT REQUIRES EITHER REASONABLE DOUBT AS TO THE ASSESSMENT OR CLEAR INABILITY TO PAY; SINCE NEITHER WAS ESTABLISHED, THE DENIAL OF THE APPLICATION WAS PROPER. The Commissioner of Internal Revenue may compromise tax liabilities only in limited instances, specifically when there is reasonable doubt as to the validity of the assessment or when the taxpayer shows clear inability to pay. Such compromises must comply with regulatory approval procedures depending on the amount involved. Tax assessments, moreover, enjoy the presumption of correctness and regularity, and the burden lies with the taxpayer to prove otherwise. In this case, petitioner applied for a compromise settlement of its deficiency income tax on the ground of doubtful validity of the assessment. However, records showed that petitioner had in fact received the Final Assessment Notice, defeating its claim of non-receipt. Moreover, the assessment was supported by third-party data verified through the BIR’s no-contact audit system, which the petitioner failed to disprove with competent evidence. In the absence of proof that the assessment was arbitrary or baseless, no reasonable doubt existed as to its validity. Consequently, the National Evaluation Board acted within its authority in denying the application for compromise, and the Commissioner did not commit grave abuse of discretion in issuing the Notice of Denial. (Philippine Mining Development Corporation v. Commissioner of Internal Revenue, CTA Case No. 9292, 8 May 2025.)
A PETITION LACKING A VALID CERTIFICATION AGAINST FORUM SHOPPING MAY BE DISMISSED OUTRIGHT, ESPECIALLY WHEN THE PETITIONER FAILS TO CORRECT THE DEFECT DESPITE OPPORTUNITIES TO COMPLY. Courts strictly require a proper verification and certification against forum shopping as part of procedural due process. Failure to submit a compliant certification is a sufficient ground for dismissal, and repeated non-compliance despite extensions negates any claim of grave abuse of discretion by the court. Jurisprudence has consistently upheld dismissal where procedural defects remain uncorrected despite opportunities to cure. In this case, the petitioner was given equitable opportunities to submit a proper certification against forum shopping but failed to comply. No valid excuse or justification was presented for such failure. Applying the same principle, the First Division’s dismissal of the petitioner’s prior petition was proper, and no grave abuse of discretion was committed.(Johnny Sy Co v. Bureau of Internal Revenue, et al., CTA EB No. 2832 (CTA Case No. 11024), 9 May 2025.)
TAX ASSESSMENTS ARE VOID IF THE BIR FAILS TO CONSIDER AND ADDRESS THE TAXPAYER’S ARGUMENTS AND EVIDENCE, AS THIS VIOLATES THE TAXPAYER’S RIGHT TO DUE PROCESS. In Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc., the Supreme Court held that while the Commissioner need not accept a taxpayer’s explanations, she must provide specific reasons for rejecting them. The right to due process is violated when the BIR disregards evidence without explanation, since administrative adjudication requires considering the taxpayer’s defenses and giving reasons for conclusions. Here, petitioner filed a Reply to the PAN and a Request for Reinvestigation, setting forth arguments and submitting evidence. Despite this, the BIR simply reiterated the deficiency assessments in the FLD without addressing the taxpayer’s points. The FDDA’s generic statement that petitioner failed to provide relevant documents was insufficient, as it did not specify why the submitted arguments and evidence were disregarded. This failure to consider petitioner’s defenses constitutes a denial of due process, rendering the deficiency assessments void. (My Solid Technologies and Devices Corporation v. Commissioner of Internal Revenue, CTA Case No. 10598, 15 May 2025)
TAX ASSESSMENTS ARE VOID IF CONDUCTED BY REVENUE OFFICERS WITHOUT BEING SPECIFICALLY NAMED IN A VALID LOA. Jurisprudence, particularly Medicard Philippines, Inc. v. CIR and Lancaster Philippines, Inc. v. CIR, makes clear that only revenue officers specifically named in a Letter of Authority (LOA) may validly examine a taxpayer’s records, and that a Memorandum of Assignment (MOA) cannot cure the absence of such authority. In this case, while an LOA existed, it did not name RO Yu and GS Roldan, Jr., who actually conducted the audit. Their reliance on MOAs issued by the RDO, a subordinate official not empowered to issue LOAs, was insufficient. Since the audit was conducted without proper authority, the resulting deficiency VAT assessment was void (Commissioner of Internal Revenue v. Sellery Phils. Enterprises, Inc., CTA EB No. 2837, 20 May 2025).
LOA IS ALWAYS REQUIRED IN TAX AUDITS, WHETHER REGULAR OR MANDATORY, AND ITS ABSENCE RENDERS THE RESULTING ASSESSMENTS VOID. Under jurisprudence, particularly CIR v. Manila Medical Services, Inc., the issuance of a valid LOA is indispensable in all tax audits, as it is the authority that empowers revenue officers to examine a taxpayer’s records. The law makes no distinction between regular assessments and mandatory audits, such as those arising from applications for business retirement. In this case, the BIR argued that a mandatory audit dispensed with the need for an LOA and that errors in issuance should not prejudice government revenue. The Court rejected this, stressing that lack of a valid LOA is not a mere technicality but a due process violation that invalidates the entire assessment. The lifeblood doctrine cannot override the taxpayer’s right to due process. Accordingly, the CTA Division correctly cancelled and set aside the deficiency assessments for being null and void (Commissioner of Internal Revenue v. Sellery Phils. Enterprises, Inc., CTA EB No. 2837, 20 May 2025).
SECURITIES AND EXCHANGE COMMISSION
SEC OPINION NO. 24-01 INTERPRETED THE CONSTITUTIONAL AND STATUTORY RESTRICTIONS ON FOREIGN OWNERSHIP, CONTROL, AND ADMINISTRATION OF EDUCATIONAL INSTITUTIONS IN RELATION TO THE FOREIGN INVESTMENTS NEGATIVE LIST. Pursuant to the 1987 Constitution and the Foreign Investments Act (RA 7042), as implemented through the 12th Foreign Investments Negative List (E.O. 175, s. 2022), the Securities and Exchange Commission (SEC) issued an opinion on the proposed investment of a Japanese corporation in a Philippine subsidiary offering non-degree certification courses. The SEC affirmed that while educational institutions are generally subject to the 40% foreign equity cap and must be controlled and administered by Filipinos, the restriction does not extend to short-term, high-level skills development programs that are not part of the formal education system under B.P. 232. However, the Commission emphasized that jurisdiction over determining whether such programs qualify rests with CHED and TESDA, and that corporations engaged in technical-vocational education with certification fall under TESDA regulation. Thus, foreign ownership beyond 40% is permissible only if the proposed activities fall outside the scope of formal education. (SEC-OGC Opinion No. 24-01, Re: Foreign Ownership, Control, and Administration of Educational Institutions; Applicability of the Foreign Investments Negative List to Educational Institutions, January 2, 2024).
SEC OPINION NO. 24-02 CLARIFIED THAT UNDER THE CONDOMINIUM ACT, THE MASTER DEED AND DECLARATION OF RESTRICTIONS PREVAIL OVER THE ARTICLES OF INCORPORATION AND BY-LAWS IN DETERMINING THE COMPOSITION OF A CONDOMINIUM CORPORATION’S BOARD OF TRUSTEES. Pursuant to Republic Act No. 4726 (Condominium Act), as amended, and the Revised Corporation Code (RA 11232), the Securities and Exchange Commission (SEC) issued an opinion clarifying that in cases of inconsistency, the provisions of a condominium corporation’s Master Deed and Declaration of Restrictions (MDDR) prevail over its Articles of Incorporation (AOI) and By-Laws. The opinion addressed queries from The Cambridge Village Condominium Association, Inc., where the AOI and By-Laws provided for five trustees while the MDDR required seven. The SEC ruled that the MDDR must be followed, and the AOI and By-Laws must be amended accordingly. It further explained that, pending amendment, the number of trustees to be elected should still conform with the MDDR, and that delinquent members are not entitled to vote in determining quorum, by analogy to stock corporations under the RCC. (SEC-OGC Opinion No. 24-02, Re: Composition of Board of Trustees of a Condominium Corporation, January 19, 2024).
SEC OPINION NO. 24-03 CLARIFIED THE REQUIREMENTS FOR INVOKING RECIPROCITY IN EXEMPTING FOREIGN GOVERNMENT SECURITIES FROM REGISTRATION UNDER THE SECURITIES REGULATION CODE. Under Republic Act No. 8799 (Securities Regulation Code), the Securities and Exchange Commission (SEC) issued an opinion clarifying the scope of exempt securities under Subsection 9.1(b). In response to an inquiry from HSBC Philippines, the SEC explained that while securities issued or guaranteed by foreign governments with diplomatic relations with the Philippines may qualify as exempt from registration, invoking reciprocity requires more than proof of trading activity abroad. Instead, parties must submit competent and duly authenticated evidence—such as foreign laws or regulations—that Philippine government securities are likewise exempt from registration in the foreign jurisdiction. The SEC emphasized that Philippine courts do not take judicial notice of foreign law, which must be properly proven as a fact in accordance with evidentiary rules. (SEC-OGC Opinion No. 24-03, Re: Exempt Securities under Subsection 9.1(b) of the Securities Regulation Code, March 26, 2024)
REVENUE REGULATIONS
Revenue Regulations No. 021-2025
Based on Republic Act (RA) No. 12214, also known as the Capital Markets Efficiency Promotion Act (CMEPA), Revenue Regulations No. 021-2025 were issued to implement major amendments to the National Internal Revenue Code of 1997. The regulations introduce a simplified and uniform tax system for passive income, with a general effective date of July 1, 2025. This includes defining and clarifying terms like “securities” and “shares of stock” to encompass a wider range of financial instruments. The regulations also provide specific tax treatments for new income types, such as equity-based compensation, and establish that certain gains from financial instruments, like project-specific bonds and mutual fund redemptions, are now exempt from income tax. Furthermore, the regulations allow new allowable deductions for dealers in securities and clarify that interest income from various sources is considered sourced within the Philippines, irrespective of where the instrument was executed.
Tax Rates for Individuals (Effective July 1, 2025)
Citizen, Resident Alien, and Non-Resident Alien Engaged in Trade or Business
| Sections of the Tax Code | Particulars | Income Tax Rate |
| Sections 24 (B) (1) and 25 (A) (1), in relation to the last paragraph of Section 27 (D) (2) | Interest, yield, or any other monetary benefit earned from any currency bank deposit or deposit substitute, trust funds and other similar arrangements, regardless of their nature or tenure, except income of non-residents, whether individuals or corporations, from transactions with depositary banks under the expanded system which shall be exempt from income tax | 20% |
| Sections 24 (B) (1) and 25 (A) (1) | Prizes (except prizes amounting to P10,000 or less which shall be subject to graduated tax rates under Section 24 [A] of the Tax Code) | 20% |
| Sections 24 (B) (1) and 25 (A) (1) | Other Winnings (except winnings amounting to P10,000 or less from Philippine Charity Sweepstakes and Lotto which shall be exempt) | 20% |
| Sections 24 (B) (2) and 25 (A) (2) | Cash and/or Property Dividends | 10% — except for Non-Resident Alien Engaged in Trade or Business which is subject to income tax rate of 20% |
| Sections 24 (B) (3) and 25 (A) (1) | Capital Gains — Sale, exchange or other disposition of shares of stock in a domestic or foreign corporation not traded in a local or foreign stock exchange | 15% |
| Sections 24 (B) (4) and 25 (A) (1) | Capital Gains from Sale of Real Property | 6% on gains presumed to have been realized from the sale, exchange, or other disposition of real property (capital assets) |
| Sections 24 (B) (5) and 25 (A) (1) | Royalties earned as Passive Income | 20% |
| Sections 24 (B) (5) and 25 (A) (1) | Royalties on books, as well as other literary works and musical compositions | 10% |
| Section 25 (A) (3), in relation to Section 28 | Cinematographic films and similar works by a Non-Resident Cinematographic Film Owner, Lessor or Distributor | 25% |
| Section 27 (D) (2) | Any income of non-residents from transactions with depositary banks under the expanded system | Exempt |
Tax Rates for Corporations (Effective July 1, 2025)
Domestic and Resident Foreign Corporations
| Sections of the Tax Code | Particulars | Income Tax Rate |
| Sections 27 (D) (1) and 28 (A) (1) | Interest, yield, or any other monetary benefit earned from any currency bank deposit or deposit substitute, trust funds and other similar arrangements, regardless of their nature or tenure | 20% |
| Sections 27 (D) (2) and 28 (A) (6) | Income derived by a depositary bank under the expanded foreign currency deposit system from foreign currency transactions with nonresidents, offshore banking units in the Philippines, local commercial banks including branches of foreign banks that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with foreign currency deposit system units and other depositary banks under the expanded foreign currency deposit system, except net income from such transactions as may be specified by the Secretary of Finance, upon recommendation by the Monetary Board to be subject to the regular income tax payable by banks | Exempt from all taxes |
| Sections 27 (D) (2) and 28 (A) (6) | Interest income from foreign currency loans granted by such depositary banks under said expanded systems to residents other than offshore banking units in the Philippines or other depositary banks under the expanded system | 10% |
| Sections 27 (D) (3) and 28 (A) (1) | Intercorporate dividends received from a domestic corporation | Exempt |
| Section 27 (D) (4) | Capital Gains — Sale, exchange or other dispositions of shares of stock of a domestic or foreign corporation not traded in a local or foreign stock exchange | 15% |
| Section 27 (D) (5) | Capital Gains Realized from the Sale, Exchange, or Disposition of Land and/or Buildings (for Domestic Corporations) | 6% on the gain presumed to have been realized on the sale, exchange or disposition of lands and/or buildings (capital assets) |
| Sections 27 (D) (6) and 28 (A) (1) | Royalties earned as Passive Income | 20% |
Non-Resident Foreign Corporations
| Sections of the Tax Code | Particulars | Income Tax Rate |
| Section 28 (B) (1), in relation to Section 28 (A) (6) | Interest, yield, or any other monetary benefit earned from any currency bank deposit or deposit substitute, trust funds and other similar arrangements, regardless of their nature or tenure, except income from transactions with depositary banks under the expanded system which shall be exempt from income tax | 25% (or the tax treaty rate) |
| Section 28 (B) (5) (b) | Cash and/or Property Dividends received from a domestic corporation | 15% subject to the condition that the country of residence of the corporate shareholder allows a credit of 10% tax deemed to have been paid in the Philippines or that the country of residence of the corporate shareholder does not impose any tax on the dividends (or the tax treaty rate) |
| Section 28 (B) (1) | Rents, royalties, salaries, premiums (except reinsurance premiums) annuities, compensation, emoluments, fixed or determinable annual, periodic or casual gains, profits, and income, and capital gains, except capital gains subject to tax under Sec. 28 (A) (1) | 25% (or the tax treaty or other rate on royalties) |
| Section 28 (B) (5) (c) | Capital Gains — Sale, exchange or other dispositions of shares of stock of a domestic corporation not traded in a local or foreign stock exchange | 15% (or the tax treaty rate) |
| Section 28 (A) (6) (b) | Any income of non-resident corporations from transactions with depositary banks under the expanded system | Exempt |
BIR RULINGS
RETIREMENT BENEFITS ARE EXEMPT FROM WITHHOLDING TAX FOR EMPLOYEES WHO MEET THE AGE AND SERVICE DURATION REQUIREMENTS. Section 32 (B) (6) (a) of the National Internal Revenue Code of 1997 and Republic Act (RA) No. 7641, retirement benefits for two employees are exempt from withholding tax. The exemption applies because the employer does not have a BIR-approved retirement plan. The application of facts shows that both employees meet the conditions under RA No. 7641, which requires an employee to have at least five years of service and be between 60 and 65 years old at the time of retirement. One employee had 20.5 years of service, and the other had 16.19 years of service, both exceeding the minimum five-year requirement. The ruling also notes that the exemption does not cover salaries, 13th-month pay, or other benefits that exceed the P90,000 threshold. Additionally, unused monetized vacation leave credits of up to ten days are not subject to income or withholding tax, but sick leave credits are not included in this exemption. (BIR Ruling No. OT-121-2025, April 23, 2025)
A NON-STOCK SAVINGS AND LOAN ASSOCIATION IS EXEMPT FROM 20% FINAL WITHHOLDING TAX ON INTEREST INCOME FROM DEPOSITS. Under Republic Act (RA) No. 8367, a non-stock savings and loan association is exempt from certain taxes. The application of this law to a specific association shows that it is not subject to a 20% final withholding tax on its interest income from deposits and deposit substitutes. This exemption applies to the association’s income and interest earned on its deposits with banks. However, the tax exemption does not cover income derived from any of its properties, real or personal, or any activities conducted for profit. The association, which is a non-stock corporation and is registered with the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP), had requested a revalidation of its tax exemption certificate. The ruling is based on the provided facts and will be considered null and void if a later investigation reveals the facts were different. (BIR Ruling No. OT-124-2025, April 23, 2025)
A NON-STOCK SAVINGS AND LOAN ASSOCIATION CAN BE EXEMPT FROM GROSS RECEIPTS TAX (GRT) IF IT PROVES DURING AN AUDIT THAT IT OPERATES SOLELY FOR THE BENEFIT OF ITS MEMBERS AND DOES NOT ACQUIRE FUNDS FROM THE PUBLIC. Based on Republic Act No. 8367, Revenue Regulations No. 9-2004, and Revenue Memorandum Circular No. 9-2016, an organization, representing itself as a non-stock savings and loan association (NSSLA) and seeking exemption from the gross receipts tax (GRT), was advised that its claim for exemption cannot be granted based on mere representation. The Bureau of Internal Revenue (BIR) determined that while NSSLAs are generally exempt from certain taxes, they are subject to GRT if they function as a Non-Bank Financial Intermediary (NBFI) by obtaining funds from the public. Therefore, to qualify for the exemption, the association must prove through a factual determination by the Revenue District Office (RDO) that it exclusively serves its members, does not transact business with the public, and does not obtain funds from the public. The ruling emphasizes the principle that tax exemptions are construed strictly against the taxpayer and that the burden of proof rests on the entity claiming the exemption. (BIR Ruling No. OT-125-2025, April 23, 2025)
DONATIONS TO PRIVATE ENTERPRISES, EVEN IF FACILITATED BY A GOVERNMENT-OWNED AND CONTROLLED CORPORATION (GOCC), ARE SUBJECT TO THE 6% DONOR’S TAX. Pursuant to PD No. 1177, PD No. 1931, and EO No. 93, which withdrew tax exemptions for government-owned and controlled corporations (GOCCs), donations channeled through a GOCC to private enterprises are subject to donor’s tax. Specifically, a transfer of equipment from an intergovernmental organization to private enterprises, facilitated by a GOCC, is subject to the 6% donor’s tax on the total gift amount exceeding PHP 250,000, as provided by Sections 98 and 99 of the National Internal Revenue Code (NIRC). Although the GOCC itself, as the implementing arm of the project, may be exempt from certain taxes under its charter (PD No. 205), this exemption does not extend to the private enterprise-donees, which are not tax-exempt entities. (BIR Ruling No. OT-126-2025, April 23, 2025)
A COMPANY IS GRANTED APPROVAL TO CHANGE ITS INVENTORY VALUATION METHOD FROM WEIGHTED AVERAGE TO FIFO, AS THIS CHANGE ALIGNS WITH ITS PARENT COMPANY’S ACCOUNTING PRACTICES AND WILL NOT MISREPRESENT ITS INCOME. Pursuant to Section 41 of the Tax Code and Section 145 of Revenue Regulations No. 2, which require that a change in accounting method must be approved by the Commissioner of Internal Revenue, a request to change an inventory valuation method is granted. The company’s request to switch from the weighted average method to the First-In, First-Out (FIFO) method is approved, effective January 1, 2022. This approval is based on the company’s need to align its financial reporting with its parent company and affiliates, a change deemed to be in line with “best accounting practice” and one that will not significantly impact the company’s reported income. The BIR concluded that the change would clearly reflect the company’s income and is therefore permissible. (BIR Ruling No. OT-127-2025, April 23, 2025)
THE TAX CODE ALLOWS A 10-YEAR PRESCRIPTIVE PERIOD IN CASES INVOLVING PRIMA FACIE EVIDENCE OF FRAUD, MAKING A REQUEST FOR CANCELLATION OF TAX AUTHORITY BASED ON THE 3-YEAR RULE INAPPLICABLE. Under the National Internal Revenue Code, the standard three-year prescriptive period for tax assessments does not apply when fraud is present, in which case a ten-year period governs. In this case, the discovery of under-declared purchases amounting to over 70% of actual purchases was deemed prima facie evidence of fraud, thereby justifying the application of the extended prescriptive period and the denial of the request for cancellation of the electronic letter of authority. (BIR Ruling No. OT-128-2025, April 23, 2025)
BIR DEADLINES FROM SEPTEMBER 22 TO SEPTEMBER 28, 2025. A gentle reminder on the following deadlines, as may be applicable:
| DATE | FILING/SUBMISSION |
| September 25, 2025 | SUBMISSION – Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayer – Non-eFPS Filers – Fiscal Quarter ending August 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 August 31, 2025 | |
| e-FILING/FILING & e-PAYMENT/PAYMENT – BIR Form 2550Q (Quarterly Value-Added Tax Return) – eFPS & Non-eFPS Filers – Fiscal Quarter ending August 31, 2025 | |
| e-FILING/FILING & e-PAYMENT/PAYMENT – BIR Form 2551Q (Quarterly Percentage Tax Return) – eFPS & Non-eFPS Filers – Fiscal Quarter ending August 31, 2025 |