Department of Finance
The Department of Finance (DoF) issued the following:
Revenue Regulations (RR) No. 18-2025 on 05 August 2025 for the purpose of excluding pick-up trucks from the list of tax-exempt automobiles starting 1 July 2025. However, the imposition of excise tax on pick-ups shall not apply on the following:
- Those units that are included in the inventory list as of 30 June 2025 and duly submitted to the BIR within the prescribed period.
- Those units in transit for which import entries have been filed with the BOC on or before 30 June 2025 and withdrawn on or after 01 July 2025.
The RR shall take effect on 1 July 2025 following its publication in the Official Gazette or the Bureau of Internal Revenue’s official website, whichever comes first.
RR No. 19-2025 on 05 August 2025 implementing the Documentary Stamp Tax (DST) rate adjustments and amendments to the documents and papers not subject to DST under the Republic Act (RA) No. 12214, otherwise known as the “Capital Markets Efficiency Promotion Act” (CMEPA).
The RR shall cover documents, loan agreements, instruments, papers, acceptances, assignments, sales and transfers of the obligation, right or property incident thereto in respect of the transaction made or accomplished on 1 July 2025.
RR No. 20-2025 on 05 August 2025, implementing the rate adjustment of Stock Transaction Tax (STT) and the imposition of the STT on the sale or exchange of domestic shares of stocks and other securities listed and traded through foreign stock exchange under Section 127 of the Tax Code.
Effective 1 July 2025, sale, exchange, or other disposition of shares of stock and other securities listed and traded through a local stock exchange and sale, exchange or other disposition of shares of stock of domestic corporation listed and traded through a foreign stock exchange are subject to a reduced STT rate of 1/10 of 1%.
RR No. 21-2025, 05 August 2025, implementing the amendments to Sections 22, 24, 25, 27, 28, 32, 34, 38, 39, and 42, of the Tax Code pursuant to RA No. 12214.
- Final Withholding Tax (FWT)
Any interest, yield, or other monetary benefit earned by a citizen, resident alien, non-resident alien engaged in trade or business in the Philippines, domestic corporation, and resident foreign corporation from any currency bank deposit or deposit substitute, trust funds, and other similar arrangements is subject to a uniform rate of 20% FWT.
Royalties earned as passive income is now subject to 20% FWT. Passive income refers to any income that is earned from sources that do not require a taxpayer’s active pursuit and performance of trade or business and is not subject to Value Added Tax (VAT).
- Inclusions from Gross Income
Gross income from compensation shall include equity-based compensation, such as stock options, restricted stock units, stock appreciation rights, and similar items, provided that equity-based compensation shall be included in the gross income at the time of exercise.
- Exclusions from Gross Income
The following are items excluded from gross income:
- Interest income and gains from sale, transfer or disposition of specific bonds that are issued by the Republic of the Philippines or any of its instrumentalities which are issued to finance capital expenditures or programs covered by the Philippine Development Plan or its equivalent and other high-level priority programs of the national government; and
- Gains realized by the investor upon redemption of shares of stock in a mutual fund company, or units of participation in a mutual fund or unit investment trust fund, provided that prior to such redemption, final taxes due on realized gains have been previously withheld at the level of the underlying assets.
Supreme Court
The Third Division of the Supreme Court (SC) ruled that the cross-border doctrine does not apply to sales of services to an enterprise registered with the Philippine Economic Zone Authority (PEZA) that is consumed outside of the ecozone. Citing the case of Commissioner of Internal Revenue vs. Sekesui Jushi Phils., Inc., the SC reiterated that PEZA-registered enterprises are not per se excluded from the coverage of the VAT system, rather it depends on what fiscal incentive is availed: (a) if an entity avails of the 5% gross income tax incentive the it is exempt from all taxes included the VAT; (b) if it avails of the income tax holiday under Executive Order No. 226 or the Omnibus Investments Code it is exempt from income taxes for a number of years, but not from other internal revenue taxes like the VAT. Further Revenue Memorandum Circular No. 74-99 recognized the cross-border doctrine and destination principle applies regardless of the type of registration of the PEZA-registered enterprise. Here, the taxpayer hired a third party to construct its laborers row house, bus terminal, JTA dormitory, RTN runaway and foreman’s duplex located outside the PEZA ecozone. As VAT is a tax on consumption the cross-border doctrine and destination principle apply. The situs of VAT is determined where the goods are consumed or where services are rendered. As the services were consumed within the Philippine customs territory, or outside the PEZA ecozone, the regular 12% rate of VATwill apply, and the fees paid in connection with the services cannot be subject to 0% VAT. [Coral Bay Nickel Corporation vs. Commissioner of Internal Revenue, G.R. Nos. 251333-34, 5 March 2025, uploaded on SC website on 4 August 2025].
Here are the links to the full texts of the issuances: RR NO. 18-2025, RR NO. 19-2025, RR NO. 20-2025, RR NO. 21-2025, Coral Bay Nickel Corporation vs Commissioner of Internal Revenue GR Nos 251333-34 dated 5 March 2025