Philippines: Guidance on excise tax exemption for electric vehicles, tax treatment of securitization transactions

Guidance under Revenue Regulations No. 1- 2025 and No. 2-2025

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February 10, 2025

The Department of Finance (DoF) issued Revenue Regulations (RR) No. 1-2025 (effective January 6, 2025) amending section 9 (E) of RR No. 25-2003 relating to the documentary requirements to be submitted by a motor vehicle manufacturer/assembler/importer in order for the Bureau of Internal Revenue (BIR) to determine whether the automobiles subject to excise tax exemption are hybrid or purely electric vehicles.

The DoF also issued RR No. 2-2025 (effective January 8, 2025) implementing the tax provisions of sections 27 and 34 of Title IV of Republic Act No. 9267, otherwise known as “The Securitization Act of 2004.” RR 2-2025 provides:

  • Tax exemption of transfer of assets: Section 3 of RR 2-2025 provides that sale or transfer of assets to a special purpose entity (SPE) made in accordance with the securitization plan shall be exempt from value added tax (VAT) and documentary stamp tax (DST), or any other taxes imposed in lieu thereof. Moreover, the transfer of assets in settlement of outstanding debts shall not be subject to capital gains tax.
  • Tax exemption on 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.
  • Tax treatment of income from securities: Section 5 provides that the income from ABS shall be subject to 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.

Read a February 2025 report prepared by the KPMG member firm in the Philippines

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