Revenue Regulations No. 007-2025

Implementing the Amendments to Section 27, 28, and 34 of the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066

SECTION 1. SCOPE. – Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Sections 1, 2, 4, and 32 of the Republic Act (RA) No. 12066, these Regulations are hereby promulgated to implement Sections 27, 28, and 34 of the Tax Code, specifically on:

(1) reduced income tax rates for domestic and resident Foreign corporations classified as Registered Business Enterprises (RBEs) under the Enhanced Deductions Regime (EDR) as provided in Section 294(C) of the Tax Code; and
(2) additional allowable deductions from gross income under Section 34(C)(8) of the same Code.

Section 2 Corporate Income Tax Rates. – The income tax rates for domestic and resident foreign corporations pursuant to Section 27 and 28 of the Tax Code, as amended by RA No. 12066 are as follows:

1. DOMESTIC CORPORATIONS:

• RESIDENT FOREIGN CORPORATIONS:

SECTION 3. APPLICABILITY OF THE REDUCED INCOME TAX RATE, – For RBEs under the EDR, the corporate income tax rate of twenty percent (20%) shall apply starting November 28, 2024 and shall only cover the taxable income derived from registered projects or activities during each taxable year. Income from non-registered projects or activities shall be subject to the applicable income tax rates.

SECTION 4. DEDUCTIBILITY OF INPUT TAX ATTRIBUTABLE TO VAT EXCEMPT SALES. – Input tax paid on local purchases attributable to VAT-exempt sales shall be deductible from the gross income of the taxpayer in accordance with Section 34(C)(8) of the Tax Code.

SECTION 5. TRANSITORY PTOVISIONS. – For RBEs who availed of the EDR and have already filed their Annual Income Tax Return covering calendar year 2024 or fiscal year ending on or before the effectivity of these Regulations, the excess income tax payments as a result of the reduction of tax rate from twenty-five percent (25%) to twenty percent (20%) upon the effectivity of RA No. 12066 may be carried forward to the succeeding taxable quarter/year.

SECTION 6. SEPARABILITY CLAUSE. – If any of the provision of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 7. REPEALING CLAUSE. – All other issuance and rules and regulations or parts thereof which are contrary to the inconsistent with the provisions of there Regulations are hereby repealed, amended or modified accordingly.

SECTION 8. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever come first.