InTAX: February 2025 Issue 1 | Volume 1

Department of Finance

The Department of Finance (DoF) issued the following:

Revenue Regulations (RR) No. 001-2025, dated 06 January 2025, to further amend Section 9 (E) of RR No. 25-2003 relative to the documentary requirements to be submitted by motor vehicle manufacturer/assembler/importer as basis for the Bureau of Internal Revenue to determine whether the automobiles subject to excise tax exemption are hybrid or purely electric vehicles:

The RR No. 01-2025 shall take effect immediately upon its publication in the Official Gazette or the BIR official website, whichever comes first.

(RGM & Co. Note:  The RR was published in the BIR Website on 06 January 2025)

RR No. 002-2025, dated 08 January 2025, to implement the tax provisions of Republic Act (RA) No. 9267, otherwise known as “The Securitization Act of 2004”.

RR No. 2-2025 was issued to implement the tax provisions of Sections 27 and 34 of Title IV of RA No. 9267. Said RR expounds on 3 salient points.

1. Tax Exemption of Transfer of Assets – Section 3 of RR 2-2025 provides that sale or transfer of assets to the Special Purpose Entity (SPE), including sale or transfer of any and all security thereto, made in accordance with the Securitization Plan shall be exempted from value-added tax (VAT) and documentary stamp tax (DST), or any other taxes imposed in lieu thereof.

Moreover, the transfer of assets in dation in payment by the obligor in favor of the oblige shall not be subject to capital gains tax as imposed.

2. Tax Exemption on the Issuance and Transfer of Securities – Section 4 provides that the original issuance of asset-backed securities (ABS) and other securities related solely to such securitization transaction shall be exempt from VAT, or any other taxes imposed in lieu thereof, but shall be subject to DST.

Secondary trades and subsequent transfers of ABS, including all forms of credit enhancement in such instruments shall be exempt from DST and VAT, or any other taxes imposed in lieu thereof.

3. Tax Treatment of Income from ABS – Section 5 provides that the income from ABS shall be subject to twenty percent (20%) final withholding tax. However, the income of investors from any low-cost or socialized housing-related ABS shall be exempt from income tax.

Such income must come from securitization of mortgage and housing-related receivables of the government housing agencies. The low-cost or socialized housing-related ABS must be certified by such by the Department of Human Settlements and Urban Development and the Department of Finance.

(RGM & Co. Note: The RR was published in the BIR Website on 8 January 2025)

Here are the links to the full texts of the issuances: RR No. 001-2025 and RR No. 002-2025.