Implementing Executive Order No. 114, Series of 2026 “Temporarily Suspending the Excise Taxes on Specific Petroleum Products Pursuant to Section 148 of the Republic Act No. 8424 or the National Internal Revenue Code of 1997, As amended”
SECTION 1. BACKGROUND. – Section 148 of the National Internal Revenue Code of 1997, as amended (NIRC), provides that the President may, upon recommendation of the Development Budget Coordination Committee (DBCC), in coordination with the Secretary of Energy, susm=pended the imposition of, or reduce the excise taxes on fuel when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) reaches or exceeds Eighty US Dollars (USD 80.00) per barrel for one (1) month immediately preceding the issuance of the suspension or reduction order.
On April 16, 2026, President Ferdinand R. Marcos, Jr. issued Executive Order (EO) No. 114, Series of 2026 entitled “Temporarily Suspending the Excise Taxes on Specific Petroleum Products Pursuant To Section 148 of the Republic Act No. 8424 or the National Internal Revenue Code of 1997, As Ameded”.
Pursuant to the provisions of Section 244 in relation to Section 245 of the NIRC, and Section 6 of EO No. 14, series of 2026, this Revenue Regulations is hereby promulgated to implement the provisions of the EO temporarily suspending the imposition of excise taxes on Liquefied Petroleum Products (LPG), except when used as raw material for the production of petrochemical products or used for motive power, and Kerosene, except when used as aviation fuel, in accordance with Section 148 of the NIRC.
SEC. 2. SUSPENSION OF EXCISE TAXES. – Beginning April 17, 2026, the imposition of excise taxes on the following covered petroleum products is hereby suspended:
The suspension of excise taxes shall apply only to these petroleum products removed form the place of production or customs custody after the effectivity of the EO.
SEC. 3 DURATION OF THE TEMPORARY SUSPENSION AND AUTOMATIC REVERSION OF RATES. – The temporary suspension of excise taxes on the covered petroleum products shall be for a period of three (3) months from the effectivity of the EO. The suspension shall be subject to monthly review by the DBCC, which shall recommend to the President the continuation, modification, extension, or termination thereof.
The excise tax rates on the covered petroleum products shall automatically revert to the rates prescribed under Section 148 of the NIRC, without the need for further issuances, upon the occurrence of any of the following:
SEC. 4. MONITORING AND INVENTORY REQUIREMENT – During the duration of the suspension, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) shall submit to Congress a monthly report on the declared value and volume of the covered petroleum products based on:
Such monthly report shall be submitted every fifteenth day of the following month.
The Department of Finance (DOF), through the BIR and the BOC, shall conduct an inventory of existing stocks of LPG and kerosene as of the effectivity of the EO.
Revenue Officer On Premises (ROOPs) shall continue performing their duties of monitoring the activities of taxpayers in their establishments pursuant to Sections 5 and 6 of the NIRC, without prejudice to further legal action as the circumstances may warrant.
SEC 5. REPORTORIAL REQUIREMENTS. – For the effective implementation of the EO, the following guidelines shall be followed:
SEC. 6. PENALTIES. – Violations of the provisions of these Regulations, including non-compliance with the reportorial requirements, shall be subject to the corresponding penalties provided for under Title X of the NIRC, and applicable regulations.
SEC. 7. REPEALING CLAUSE. – All rules and regulations inconsistent with the provisions of these Regulations are hereby repealed or amended accordingly.
SEC. 8. EFFECTIVITY. – These Regulations shall take effect immediately following its complete publication in the Official Gazette or in the BIR Official Website, whichever comes first.
Guidelines in the Availment of the Fiscal Incentives Under Section 38 of Republic Act No. 12120, Otherwise Known as the “Philippine Natural Gas Industry Development Act”
SECTION 1. SCOPE. – Pursuant to Section 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), and in accordance with the State’s policy to promote natural gas as a safe, efficient, and cost-effective energy source, those Regulations are hereby issued to provide guideline in the availment of the tax incentives provided under Section 38 of Republic Act (RA) No. 12120, otherwise known as the “Philippine Natural Gas Industry Development Act”.
SECTION 2. DEFINITION OF TERMS – For purposes of these Regulation, the following terms shall be defined as follows:
(a) Aggregation refers to the procurement of indigenous natural gas, combining it with imported Liquefied Natural Gas, and selling the aggregated gas to gas buyers in the Philippines or abroad, by Participant/s known aggregators;
(b) Ancillary services are those services provided by a generation facility using indigenous natural gas and/or aggregated gas, which are necessary to support the transmission and distribution of electricity;
(c) Distribution Utility refers to any electric cooperative, private corporation, government-owned utility or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with RA No. 9136 or the Electric Power Industry Reform Act of 2001;
(d) Generation Facility refers to a facility for the production of electricity and/or thermal energy such as, but not limited to, steam, hot or cold water;
(e) Indigenous Natural Gas refers to natural gas produced from field within the territorial jurisdiction of Republic of the Philippines;
(f) Liquefied Natural Gas refers to natural gas that has been liquefied by cooling at a cryogenic temperature;
(g) Participant refers to a natural or juridical person who engages in the trade of natural gas either as a supplier, aggregator, bunker trader, or reseller;
(h) Permit refer to an authorization issued by the Department of Energy (DOE) for the siting, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, anfd abandonment of Philippine Downstream Natural Gas Industry (PDNGI) Facilities for Own-Use or Third-Party Access (TPA). It shall likewise apply to the accreditation of Participants in the trade of natural gas, including but not limited to the purchase, supply, aggregation, bunkering, reselling, and export of natural gas, and any other activity related to the PDNGI;
(i) Permit Holder refers to a natural or juridical person who owns the PDNGI Facility and is granted a permit by DOE to engage in the siting, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment of PDNGI Facilities for Own-use or TPA;
(j.) Philippine Downstream Natural Gas Industry Facility or PDNGI Facility refers to the Liquefied Natural Gas Storage and Regasification Terminal, PDNG Transmission System, anf PDNG Distribution System and other related facilities;
(k.) Reselling refers to the procuring of natural gas from a supplier or aggregator and reselling it to gas buyers by a Participant known as reseller; and
(l) Supply refers to the procuring or producing and selling of indigeneous or imported natural gas to gas buyers in the Philippines or abroad by a Participant known as a supplier.
SECTION 3. FISCAL INCENTIVES. – The fiscal incentives provided under Section 38 of RA No. 12120 are as follows:
a. VALUE-ADDED TAX (VAT) EXEMPTION. – The purchase and sale of indigenous natural gas, aggregated gas and power generated by generation facilities using indigenous natural gas and aggregated gas shall be exempt from VAT. Provided, that the exemption from VAT for aggregated gas is only to the extent of the amount of indigenous natural gas attributed to be in the aggregated gas. This includes:
SECTION 4. REQUIREMENTS FOR THE AVAILMENT OF THE VAT EXEMPTION. – To qualify for VAT exemption, the following documents shall be attached to the Quarterly VAT Declaration (BIR Form No. 2550Q):
In bost cases, a Certified True Copy of the DOE Permit shall be attached to the DOE Endorsement.
In preparing the Quarterly VAT Declaration, taxpayers shall indicate the legal basis of the VAT exemption availed of (i.e., Section 38 of R.A. No. 12120) of Field Item Number 14A of this Quarterly VAT Declaration.
SECTION 5. REQUIREMENTS FOR AVAILMENT OF INCENTIVES UNDER TITLE XIII OF THE TAX CODE. – The availment of incentives under Title XIII of the Tax Code shall be governed by the provisions of the Title XIII of the Tax Code and its Implementing Rules and Regulations.
SECTION 6. PROHIBITION AGAINST DOUBLE AVAILMENT OF INCENTIVES. – Unless otherwise provided by law, the availment of fiscal incentives under Title XIII of the Tax Code shall be disqualification on the availment of similar tax incentives provided under the RA No. 12120 and other special laws.
SECTION 7. REPEALING CLAUSE. – All revenue rules and regulations and other revenue issuances or parts thereof, which are inconsistent with these Regulations, are hereby amended or modified accordingly.
SECTION 8. SEPARABILITY CLAUSE. – If any clause, sentence, provision or section of these Regulations shall be held invalid or unconstitutional, the remaining parts thereof shall not be affected thereby.
SECTION 9. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or in the BIR Official website, whichever comes first.
Amending Sections 3,4, and 7 of Revenue Regulations (RR) No. 9-2025 to Clarify Filing and Payment Rules for VAT on Local Sales, Provide Optional Value-Added Tax (VAT) Registration for Certain Registered Business Enterprises (RBEs), Extend the Deadline for System Reconfiguration, and Exclude Certain Enterprises and Activities from the Coverage of VAT on Local Sales of RBEs Under Section 295(D) of the National Internal Revenue Code of 1997 (Tax Code), as Amended by Section 18 of Republic Act (RA) No. 12066
Pursuant to the provisions of Sections 244 and 245 of the Tax Code as amended, in relation to Section 32 of RA No. 12066, these Regulations hereby promulgated to amend Sections 3, 4 and 7 of RR No. 9-2025 to clarify the manner of filing and payment of VAT on local sales, provide optional VAT registration for certain RBEs, exclude certain enterprises and business activities from the coverage of VAT on local sales of RBEs under Section 295(D) of the Tax Code, as amended by Section 18 of RA No. 12066, and extend the deadline for compliance with invoicing system reconfiguration.
SECTION 1. Section 3(A)(3)(a) of RR No. 9-2025 is hereby amended to read as follows:
“a. For Purchase of goods from economic zones or freeport. – The filing and payment of the “VAT on B2B local sales by RBEs” shall be on a per transaction basis using the BIR Form to be prescribed by the BIR for this purpose through a separate revenue issuance. In the meantime, BIR Form No. 0605 shall be utilized and shall immediately transmitted to the RBE, as part of the attachments prior to the release of goods from the economic zone or freeport.
However, in cases where the shipment of goods and purchased in the ecozone or freeport is in bulk(e.g., delivered through a single container truck) and is covered by several invoices, the buyer may opt to pay the VAT due thereon in a single payment. The BIR Form No. 0605 covering the payment of all the invoices together with the list of all the invoices covered shall be presented to the BOC prior to its release.”
SECTION 2. Section 4 of RR No. 9-2025 is hereby amended to read as follows:
“SECTION 4. OPTIONAL VAT REGISTRATION AND EXCLUSIONS FROM THE COVERAGE OF VAT ON LOCAL SALES UNDER SECTION 295(D) OF THE TAX CODE, AS AMENDED.-
A. OPTIONAL VAT REGISTRATION. – An RBE availing of the 5% Special Corporate Income Tax (SCIT) or Gross Income Earned (GIE) regime, and whose registered activities are all under the same income tax incetive, may opt to register as a VAT taxpayer solely for purposes of its local sales. Such VAT registration shall not affect the RBE’s entitlement to its existing fiscal and non-fiscal incentives, uncluding VAT zero-rating on local purchases and VAT exemption on importation, provided these are directly attributable to it registered activities.
In accordance with Section 236(G) of the Tax Code, as amended, an RBE that elects VAT registration under this provision shall not be allowed to cancel such registration under Section 236(E)(2) of the same Code for a period of three (3) years from the date of registration.
B. EXCLUSIONS FROM THE COVERAGE OF VAT ON LOCAL SALES UNDER SECTION 295(D) OF THE TAX CODE, AS AMENDED. – VAT- registered Domestic Market Enterprises (DMEs) that do not qualify for VAT zero-rating on local purchases or VAT exemption on importation despite being registered with any of the Investment Promotion Agencies are subject to VAT on both their local purchases and importation.
The application of Section 295(D) of the Tax Code to their local sales mandating the buyer to pay and remit the corresponding VAT to the BIR would result in accumulated unutilized input VAT from local purchases and importations, which are not eligible for refund under Section 112(A) of the Tax Code.
To address such scenario, their local sales shall not be subject to the buyer’s payment and remittance of VAT (B2B transactions) under Section 295(D) of the Tax Code, as amended. The RBE-seller shall file and pay the corresponding VAT to the BIR as a regular VAT taxpayer.
In addition, the following sale transaction/entities are excluded from the coverage of Section 295(D) of the Tax Code, as amended:
SECTION 3. The effectivity of the provision under Section 7 of RR No. 9-2025, which requires RBEs using registered Cash Registered Machines/Point-of-Sales (CRM/POS). Computerized Accounting System (CAS), Computerized Books of Accounts with Accounting Records, or other registered invoicing systems/software to reconfigure or rename their systems by replacing the term ‘VAT/VAT Amount’ in the breakdown of sales with ‘VAT on Local Sales’, or adding the same where ‘VAT/VAT Amount’ is not applicable, is hereby extended until December 31, 2026. The Commissioner may further extend the deadline as may be necessary.
SECTION 4. SEPARABILITY CLAUSE. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.
SECTION 5. REPEALING CLAUSE – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.
SECTION 6. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first.
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 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, and 25 of Republic Act (RA) No. 12214, or the “Capital Markets Efficiency Promotion Act” (CMEPA), these Regulations are hereby promulgated to implement the amendments to Sections 22, 24, 25, 27, 28, 32, 34, 38, 39, and 42 of the Tax Code.
SECTION 2. DEFINITION OF TERMS – For purposes of these Regulations, the following terms shall be taken to mean as follows:
a. Shares of stock – refer to shares of stock of a corporation, warrants, options, as well as units of participation in partnerships (except general professional partnership), joint stock companies, joint accounts, joint ventures taxable as corporations, associations, and recreation or amusement clubs (such as golf, polo or similar clubs), and mutual fund certificates.
b. Shareholder – refer to a holder of shares of stock, warrants, options, as well as holder of a unit of participation in a partnership (except general professional partnerships), joint stock company, joint account, taxable joint venture, and holder of a mutual fund certificate, joint-stock company, or insurance company, or member in an association, recreation, or amusement club, such as golf, polo, or similar clubs.
c. Securities – refer to shares, participation, or interest in a corporation, commercial enterprise, or profit-making venture evidenced by a certificate, contract, or instrument, whether written or electronic in character, which shall include:
d. Deposit substitute – refers to an alternative form of obtaining funds from the public other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrower’s own account, for the purpose of relending or purchasing of receivables and other obligations.
Provided, that the term ‘public’ shall mean twenty (20) or more individual or corporate lenders at any given time. These instruments may include, but need not be limited to bankers’ acceptances, promissory notes, repurchase agreements, excluding reverse repurchase agreements entered into by and between the Bangko Sentral ng Pilipinas (BSP) and any authorized agent bank, certificates of assignment or participation and similar instruments with recourse.
Provided, however, That debt instruments issued for interbank call loans with maturity of not more than five (5) days to cover deficiency in reserves against deposit liabilities, including those between or among banks and quasi-banks, shall not be considered as deposit substitute debt instruments.
e. Passive income – refers to any income that is earned from resources that do not require a taxpayer’s active pursuit and performance of trade or business and is not subject to value-added tax imposed in the Tax Code.
f. Equity-based compensation – covers all types of employee equity schemes that come in different forms such as stock options, restricted share awards, which may or may not pertain to the shares of stock of the grantor itself, but which all have the common feature of being granted to existing employees of the grantor as a performance incentive for services rendered by the employees and are typically dependent on performance, outstanding business achievements and exemplary organizational, technical or business accomplishments.
g. Stock options – merely entitles the employee to purchase shares at a future date. Thus, unless the options are exercised, the employee do not become shareholders. The period between the grant of stock options and the date when they become exercisable represents the vesting period.
h. Restricted stock units – stock units may or may not be subject to a vesting period, as will be specified in the grant. Settlement of vested stock may be made in the form of (i) shares, (ii) cash or (iii) a combination of shares and cash.
i. Stock appreciation rights – the terms and conditions are similar to stock options. However, under the stock appreciation rights, the optionee may receive (i) shares, (ii) cash or (iii) a combination of shares and cash, as determined by the grantor.
j. Mutual Fund Company – an open-end and close-end company as defined under the Investment Company Act.
k. Unit Investment Trust Fund – an open-end pooled trust fund denominated in peso or any acceptable currency, which is established, operated, and administered by a trust entity and made available by participation.
SECTION 3. CERTAIN PASSIVE INCOME – The coverage of the uniform rates of tax on certain passive income pursuant to Sections 24, 25, 27 and 28 of the Tax Code, as further amended by the CMEPA, is as follows:
INDIVIDUAL(Effective July 1, 2025)
A. Citizens, Resident Alien, and Non-Resident Alien Engaged in Trade or Business
B. Non-Resident Alien Not Engaged in Trade or Business
CORPORATIONS(Effective July 1, 2025)
A. Domestic and Resident Foreign Corporations
B. Non-Resident Foreign Corporations
If the income is generated in the active pursuit and performance of the corporation’s primary purposes, the same is not passive income. For VAT purposes, in the course of trade or business includes transactions incidental thereto. Also, the rule of regularity to the contrary notwithstanding, the following shall be considered as being rendered in the course of trade or business in the Philippines and, thus, subject to VAT.
SECTION 4. INCLUSION IN THE GROSS INCOME – As provided in Section 8 of the CMEPA, amending Section 32 of the Tax Code, the following items are included as part of the gross income. These are:
(1) 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.
(2) Gains realized from the sale or exchange or retirement of bonds, debentures or other certificate of indebtedness including those with a maturity period of more than five (5) years. Thus, if traded thru a local or foreign stock exchange, subject to stock transaction tax (STT) under Section 127 of the Tax Code; otherwise, subject to ordinary income tax (graduated rates) for individual and regular corporate income tax for corporaion.
SECTION 5. EXCLUSION FROM GROSS INCOME – Pursuant to Section 8 of the CMEPA, amending Section 32(B)(7) of the Tax Code, there are additional items excluded from gross income, which means that these items are also exempt from income tax. These are:
(1) Interest Income and Gains from the Sale, Transfer, or Disposition of Project-Specific Bonds. – Specific bonds that are issued by the Republic of the Philippines or any of its instrumentalities 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, as determined by the Secretary of Finance.
(2) Gains from Redemption of Shares or Units of Participation in Mutual Fund and Unit Investment Trust Fund. – Gains realized by the investor upon redemption of shares of stock in a mutual fund company as defined in Section 22 (BB) of the Tax Code, 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.
SECTION 6. ADDITIONAL ALLOWABLE DEDUCTIONS. – Section 9 of the CMEPA, amending Section 34 of the Tax Code, provides that, in the case of securities held by a dealer in securities or an entity licensed by the appropriate government regulatory agencies to buy and sell securities either for the entity’s own account or for the account of others, including banks and other financial intermediaries, said securities will be considered as ordinary assets and if ascertained to be worthless, such instruments will be considered as ordinary losses that are allowed as deduction from the taxable income.
Section 9 of the CMEPA likewise provides that fifty percent (50%) of the employer’s actual contribution made to Personal Equity and Retirement Accounts (PERA) under RA No. 9505 shall be an additional deduction from gross income, subject to compliance with the requirements set forth therein.
SECTION 7. ENTITIES ALLOWED TO CLAIM LOSSES FROM WASH SALES OF STOCK OR SECURITIES AS AN ALLOWABLE DEDUCTION. – As provided in Section 10 of the CMEPA, amending Section 38 of the Tax Code, aside from dealer in stock or securities, any entity or financial intermediary duly licensed by the appropriate government regulatory agencies to buy and sell securities either for the entity’s own account or for the account of others can likewise claim deduction under Section 34 of the Tax Code for the loss from wash sales of stocks or securities provided that such loss arises out of transactions made in the ordinary course of the business of such dealer, entity, or financial intermediary.
SECTION 8. NON- APPLICABILITY OF THE LIMITATION ON CAPITAL LOSSES TO DEALER IN SECURITIES OR OTHER FINANCIAL INTERMEDIARY. – Pursuant to Section 11 of the CMEPA, amending Section 39 of the Tax Code, the limitation of capital losses under Section 39 (C) of the Tax Code does not apply to dealer in securities or other entity or financial intermediary duly licensed by the appropriate government regulatory agencies to trade in securities that sells any bond, debenture, note, or certificate or other evidence indebtedness issued by any corporation (including one issued by a government or political subdivision thereof), with interest coupons or in registered form.
SECTION 9. SOURCES OF INTEREST INCOME IN THE PHILIPPINES . – Pursuant to Section 12 of the CMEPA, amending Section 42 of the Tax Code, interest income from debt instruments, bank deposits, deposit substitutes, trust funds, and other similar arrangements, such as bonds, notes , or other interest-bearing obligations of residents, corporate or otherwise, regardless of the government or any of its agencies or instrumentalities, are also considered sourced within the Philippines.
SECTION 10. TRANSITORY PROVISION – Any tax exemption and preferential rate on financial instruments issued or transacted prior to July 1, 2025, shall be subject to the prevailing tax rate at the time of its issuance for the remaining maturity of the relevant agreement.
the prevailing rate or tax exemption prior to July 1, 2025 shall apply only for the remaining maturity of the relevant agreement if the following conditions are present:
SECTION 11. SEPARABILITY CLAUSE – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.
SECTION 12. REPEALING CLAUSE – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.
SECTION 13. EFFECTIVITY CLAUSE. – These Regulations shall take effect on July 1, 2025, following its publication in the Official Gazette or the Bureau of Internal Revenue’s official website, whichever comes first.
Implementing the Documentary Stamp Tax (DST) Rate Adjustments and Amendments to the Documents and Papers Not Subject to DST Under Republic Act No. 12214, Otherwise Known as the “Capital Markets Efficiency Promotion Act”
SECTION 1 . SCOPE – Pursuant to Sections 244 and 255 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Sections 19,20,21,23, and 25 of Republic Act (RA) No. 12214, otherwise known as “Capital Markets Efficiency Promotion Act” (CMEPA), these Regulations are hereby promulgated to implement the rate adjustments for DST under Sections 174, 176, and 179 of the tax Code and the amendments to the documents and papers not subject to DST under Section 199 of the same Code.
SECTION 2. COVERAGE – These Regulations shall cover documents, loan agreements, instruments, papers, acceptances, assignments, sales and transfers of the obligation, right or property incident thereto in respect of the transactions made or accomplished on July 1, 2025 onwards.
SECTION 3. DEFINITION OF TERMS – For purposes of these Regulations, the following terms shall be taken to mean as follows:
(a) Mutual Fund Company – an open-end and close-end company as defined under the Investment Company Act.
(b) Unit Investment Trust Fund – an open-ended pooled trust fund denominated in peso or any acceptable currency, which is established, operated, and administered by a trust entity and made available by participation.
(c) Debt Instrument – shall mean instruments representing borrowing and lending transactions, including but not limited to debentures, certificates and indebtedness, due bills, bonds, loan agreements, including those signed abroad wherein the object of contract is located or used in the Philippines, instruments and securities issued by the government or any of its instrumentalities, deposit substitutes, debt instruments, certificates or other than the regular savings deposit taking into consideration the size of the deposit and the risks involved or drawing interest and having a specific maturity date, promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation.
SECTION 4. NEW RATE OF DST ON ORIGINAL ISSUE OF SHARES OF STOCK – Section 174 of the Tax Code, as amended by Section 19 of the CMEPA, now reads as follows:
“SEC 174. Stamp Tax on Original Issue of Shares of Stock. – On every original issuem whether on organization, reorganization or for any lawful purpose, of shares of stock by any association, company or corporation, there shall be collected a documentary stamp tax of SEVENTY-FIVE PERCENT OF ONE PERCENT (75% OF 1%) of the par value of such shares of stock: Provided, That in the case of the original issue of shares of stock without par value, the amount of the documentary stamp tax herein prescribed shall be based upon the actual consideration for the issuance of such shares of stock: Provided, further, That in the case of stock dividends, on the actual value represented by each share.”
SECTION 5. NEW RATE OF DST ON BONDS, DEBENTURES, AND CERTIFICATES OF STOCK INDEBTEDNESS ISSUED IN FOREIGN COUNTRIES – Section 176 of the Tax Code, as amended by Section 20 of the CMEPA, now reads as follows:
“SEC 176. Stamp Tax on Bonds, Debentures, and Certificates of Stock or Indebtedness Issued in Foreign Countries – A documentary stamp tax of SEVENTY-FIVE PERCENT OF ONE PERCENT (75% OF 1%) of the value of the transaction shall be collected from the person selling or transferring bonds, debentures, certificates of stock, or certificates of indebtedness issued in any foreign country.”
SECTION 6. NEW RATE OF DST ON ALL DEBT INSTRUMENTS – Section 179 of the Tax Code, as amended, by Section 21 of the CMEPA, now reads as follows:
“Sec. 179. Stamp Tax on All Debt Instruments – On every original issue of debt instruments, there shall be collected a documentary stamp tax of SEVENTY-FIVE PERCENT OF ONE PERCENT (75% OF 1%) of the issue price of any such debt instrument: Provided, That for such debt instruments with terms of less than one (1) year, the documentary stamp tax to be collected shall be of a proportional amount in accordance with the ratio of its term in number of days to three hundred sixty-five (365): Provided, further, That only one documentary stamp tax shall be imposed on the loan agreement and promissory notes, mortgage, security interest over personal property, and other contracts issued to secure such loan,“
In cases where a loan agreement and a promissory note, mortgage, security interest over personal property and other contracts issued to secure such loan are simultaneously issued and executed, only one DST shall be imposed on either loan agreement or promissory note, mortgage, security interest over personal property and other contracts issued to secure such loan, whichever will yield a higher tax. Moreover, where only one instrument was prepared, made, signed or executed to cover a loan agreement/promissory note /pledge/mortgage, the DST prescribed in Section 195 of the Tax Code, on Stamp Tax on Mortgages, Pledges and Deeds of Trust, shall be paid and computed on the full amount of the loan or credit granted. In this regard, the instrument shall be treated as covering only one taxable transaction.
SECTION 7. DOCUMENTS AND PAPERS NOT SUBJECT TO STAMP TAX. – Section 199 of the Tax Code, as amended by Section 23 of the CMEPA, now reads as follows:
“SEC. 199. Documents and Papers Not Subject to Stamp Tax – The Provisions of Section 173 to the contrary not withstanding, the following instruments, documents, and papers shall be exempt form the documentary stamp tax:
(e) Sale, exchange, redemption, or other disposition of shares of stock listed and traded through a local or foreign stock exchange.
(o) Original issuance, redemption, or other disposition of shares in a mutual fund company.
(p) Issuance of certificate or other evidence of participation in a mutual fund or unit investment trust fund.”
SECTION 8. SEPARABILITY CLAUSE – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.
SECTION 9. REPEALING CLAUSE – All other issuances and rules and regulations or parts thereof which are contrary to the inconsistent with the provisions of these Regulations are hereby, amended or modified accordingly.
Amending pertinent provisions of Revenue Regulations No. 25-2003, as Amended, to Implement Section 149 of the National Internal Revenue Code of 1997, as Further Amended Under Section 18 of Republic Act No. 12214, Otherwise Known as the ” Capital Markets Efficiency Promotion Act”
Section 1. SCOPE – Pursuant to Section 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Sections 18 and 25 of Republic Act (RA) No. 12214, otherwise known as the “Capital Markets Efficiency Promotion Act” (CMEPA), these Regulations are hereby promulgated to amend Revenue Regulations (RR) No. 25-2003, as amended, in relation to RR No. 5-2018, mainly for the purpose of removing pick-ups from the list of tax-exempt automobiles.
Section 149 of the Tax Code, as further amended by Section 18 of the CMEPA, which now reads, as follows:
“SEC.149. Automobiles – There shall be levied, assessed and collected ad valorem tax on automobiles based on the manufacturer’s or importer’s selling price, net of excise and value-added tax , in accordance with the following schedule:
Provided, That hybrid vehicles shall be subject to fifty percent (50%) of the applicable excise tax rates on automobiles under this Section: Provided, further, That purely electric vehichles shall be exempt from excise tax on automobiles.”
Section 2. COVERAGE – These Regulations cover the exclusion of pick-ups from the list of automobiles exempt from excise tax starting July 1, 2025.
Section 3. DEFINITION OF TERMS – Section 2 of RR No. 25-2003, as amended, is hereby further amended to read as follows:
“SEC. 2. DEFINITION OF TERMS – For purposes of these Regulations, the following words and phrases shall have the meaning indicated below:
(o) PICK-UPS – shall refer to motor vehicles having enclosed cab and open bodies with low sides and tailgates.
Section 4. RATES – Section 4 of RR No. 25-2003, as amended, is hereby amended and shall now read, as follows:
“SEC. 4. RATES AND BASES OF THE AD VALOREM TAX ON AUTOMOBILES. There shall be levied, assessed and collected an ad valorem tax on automobiles based on the manufacturer’/ assembler’s or importer’s selling price, net of excise and value-added tax, in accordance with the following schedule:
Section 5. TAX-EXEMPT REMOVALS OF AUTOMOBILES – Section 9 of RR No. 25-2003 is hereby further amended to exclude pick-ups from the list of tax-exempt removals of automobiles and shall now read as follows:
“SEC.9. TAX-EXEMPT REMOVALS OF AUTOMOBILES. The following removals of locally manufactured/assembled or release of imported automobiles from the place of production or from customs’ custody, respectively, are exempt from the payment of the appropriate excise taxes subject to certain conditions.
a. Removal for Export –
No ad valorem tax shall be collected on locally manufactured/assembled automobiles which shall be removed for exportation and are actually exported without returning to the Philippines subject to the following conditions:
(1) Permit to Export – Immediately before removal, exporters of automobile shall apply in writing for a written permit from the Commissioner of Internal Revenue, stating the brand/model, number of units and value per unit of the automobiles to be exported, country of destination, name of the vessel, consignee, and the place of loading. The discovery of any of such unit in-transit or which have actually have been exported without the issuance of the appropriate permit shall be deemed prima facie evidence of illegal removal of the same and the ad valorem tax shall be due immediately upon demand.
(2) Direct delivery to vessel – Automobiles for export shall be loaded direct from the place of production/assembly to the vessel or means of transportation carrying them outside the Philippines and the same shall be under the supervision of authorized internal revenue officer. A certification to this effect shall be duly issued by the Bureau of Customs immediately after loading and departure of the vessel or other means of transportation from the Philippine territory.
(3) Proof of exportation – Exporters of automobiles are required to submit proof of exportation satisfactory to the Commissioner of Internal Revenue within thirty (30) days from the date of removal from the place of assembly/production. The proofs of exportation shall consist of the following documents.
i. Statement from the Bangko Sentral ng Pilipinas (BSP) or any of its accredited banks that the proceeds of the sale in acceptable foreign currency have been inwardly remitted and accounted for in accordance with the existing banking rules and regulations;
ii. Certified true copy of the bill landing or airway bill;
iii. Commercial invoice issued by the manufacturer/assembler-exporter to the foreign consignee; and
iv. An Export Entry and a Certificate of Inspection and Loading issued by the Bureau of Customs officer who had supervised the actual loading of the automobile units into the vessel.
In cases where the proofs of exportation are not submitted within the thirty-day period, or where such proofs are submitted within the period but the same are not satisfactory to the Commissioner of Internal Revenue, the manufacturer/assembler-exporter shall be required to pay the ad valorem tax including the applicable penalties. Such payment shall be entered in the Official Register Book stating the date of payment and validation number of the official receipt covering the payment.
(4) Exporter’s bond – when deemed necessary, an exporter shall be required to give a bond for an amount equivalent to the removal of the same for export shipment, conditioned upon the exportation of the same in good faith.
b. Delivery to tax-exempt persons or entities –
Manufacturers/assemblers or importers of automobiles are hereby allowed to sell to tax-exempt persons or entities without the pre-payment of ad valorem tax subject to certain conditions.
The above persons or entities may also remove imported automobilities from customs custody without the pre-payment of the ad valorem tax subject to existing rules and regulations.
2. Requirements in the sale of automobiles to tax-exempt entities
No automobilies shall be removed from the assembly plant or place of production or release from customs custody for sale to tax-exempt agencies without prior written approval from the Commissioner of Internal Revenue. The tax-exempt customer of the manufacturers/assembler or importer shall apply in writing for the approval of such exemption submitting among others, favorable indorsement from concerned government agency (e.g. Department of Foreign Affairs for tax exempt purchase of automobile by foreign embassies for their official use); an authenticated true copy of the purchases order indicating the description of the automobiles to be purchased; the chassis and engine number; and the place or location of the point of delivery of the automobiles.
The written approval of the Commissioner of Internal Revenue or his duly authorized representative shall be forwarded by the tax-exempt customer to the manufacturer/assembler, through the dealer and thereafter, the automobile may be removed and delivered, free form excise tax, to the dealer. Such written approval is valid only for the particular transaction applied for by the tax-exempt customer.
3. Tax credits/refunds by tax-exempt persons or entities.
In cases where the tax-exempt persons or entities purchased automobiles in which the ad valorem tax due thereon was paid or where the ad valorem tax had been erroneously or illegally collected, such tax-exempt persons or entities may file a claim for tax refund or tax credit with the Commissioner of Internal Revenue under existing rules and regulations, submitting the following:
a) Authenticated copy of the Certificate of Tax Exemptions;b) Original and duplicate copies of sales invoices; and c) Certified photocopies of proof of payment of the ad valorem tax.
The claim for tax credit/refund for erroneous payment of ad valorem tax should be filed within two (2) years form date of payment of the ad valorem tax. Processing of claims for tax refund/credit shall be done by the BIR but the actual issuance of Tax Credit Certificate/refund shall come from the agency where the actual payment was made.
c. Removals for deliver and use exclusively within the freeport zone –
For purposes of these Regulation, automobiles imported directly into the legislated freeport zones from abroad or purchased from establishments located within the customs territory for use exclusively within the freeport zone shall be exempt from the imposing of the excise tax. Therefore, in the event that the automobile is, by whatever mode, introduced into the customs territory, in case where the automobile was directly imported, or re-introduced into the customs territory in case the automobile was purchased from establishments located within the customs territory, the same shall be deemed an importation into the Philippines subject to customs duties, taxes, and charges, including excise and value-added taxes.
d. Removal of automobiles for test run –
Should an automobile be removed for test run, prior notice of the test should be given to the appropriate BIR Office that may allow the test run; provided, that the unit under the test run shall be returned to the plant on the same day. In the event that the manufacturer/assembler failed to return the said unit to the manufacturing/assembly plant within the prescribed period, the ad valorem tax otherwise due thereon shall be immediately due and demandable.
e. Purely Electric Vehicle –
Purely Electric Vehicle shall be exempt from the Excise Tax on Automobiles. Hybrid Vehicles shall be subject to Fifty Percent (50%) of the applicable excise tax rates on automobiles, prior to the removal of the automobiles from the manufacturing plant or customs custody, the Commissioner of Internal Revenue (CIR), shall refer to the electric vehicle recognition list published by the Department of Energy (DOE), which contains the information and classification for battery electric vehicles (purely electric vehicles/BEV), plug-in hybrid electric vehicles (PHEV) and hybrid electric vehicles (HEV).
The BIR shall make a determination whether the automobile is exempt from excise tax or subject to 50% excise tax, respectively, on the basis of the DOE’s list of recognized electric vehicles, published on its website, without prejudice to the BIR’s authority to conduct any post-verification assessment of the automobiles.
For purposes of keeping up to date with the latest publications of the list of recognized electric vehicles, the DOE shall furnish the BIR with a certfied true copy of an updated list of recognized electric vehicles.”
SECTION 6. RESPONSIBILITY OF MANUFACTURERS, ASSEMBLERS AND IMPORTERS – All manufacturers, assemblers or importers are hereby required to file an updated manufacturers’/assemblers’ or importers’ sworn statement on all brands/models of pick-ups as of June 30, 2025. The updated manufacturers’/assemblers’ or importers’ sworn statement shall be submitted to the CIR, Attention: Chief, Excise Large Taxpayers Regulatory Division (ELTRD) within fifteen (15) working days from the date of effectivity of these Regulations. This sworn statement shall likewise be subjected to verification as provided under existing regulations and issuances.
All manufacturers, assemblers or importers are further required to submit a duly notarized list of inventory of on-hand Completely Built-Up (CBU) pick-ups, including Completely Knocked-Down (CKD) and Semi-Knocked Down (SKD) units that are located within the manufacturing/assembly plant, storage facility or warehouse or the customs premises, and those in transit for which import entries have been filed with the Bureau of Customs (BOC) on or before June 30, 2025, indicating therein the brand, model, year, engine number, body and chassis number thereof. The list shall be submitted to the CIR, Attention: Chief, Excise LT Field Operations Division (ELTFOD) within fifteen (15) working days from the date of effectivity of these Regulations. Failure to submit the inventory list shall be constructed that the concerned manufacturers, assemblers or importers do not have any inventory on hand or in transit of CBUs, CKDs and SKDs as of June 30, 2025.
SECTION 7. TRANSITORY PROVISION – In order to ensure the orderly implementation of these Regulations, the imposition of excise tax on pick-ups shall not apply on the following:
SECTION 8. SEPARABILITY CLAUSE – if any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.
SECTION 9. REPEALING CLAUSE – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.
Circularizing Joint Administrative Order No. 002-2025, series of 2025, Entitled “Guidelines to Implement Sections 6,6, and 8 of Republic Act No. 12066, on the Certification of Export-Oriented Enterprise with Export Sales of at least Seventy Percent (70%) of the Total Annual Production of the Preceding Taxable Year”Joint Administrative Order No. 002-2025
Guidelines to Implement Sections 6,6, and 8 of Republic Act No. 12066, on the Certification of Export-Oriented Enterprise with Export Sales of at least Seventy Percent (70%) of the Total Annual Production of the Preceding Taxable Year
WHEARAS, Republic Act (RA) No. 12066, otherwise known as “An Act Amending Sections 24, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237, 237-A, 269, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, and 311, and Adding New Sections 135-A, 295-A, 296-A, and 297-A of the National Internal Revenue Code of 1997, as amended (Tax Code), and for Other Purposes”, was enacted on 08 November 2024;
WHEREAS, Sections 6, 7, and 8 of RA No. 12066 amended Section 106(A)(2)(a)(3), 108(B)(5), and 109(dd) of the Tax Code and provides for the Value-added tax (VAT) zero-rating of sales of goods to and sale of services performed for export-oriented enterprises, and VAT exemption of importation of goods to and sale of services performed for export-oriented enterprises, and VAT exemption of importation of goods by export-oriented enterprises: Provided, that the export sales of such export-oriented enterprises are at least seventy percent (70%) of its total annual production for the preceding taxable year: Provided, further, That such goods and services are directly attributable to the export activity of the export-oriented enterprise;
WHEREAS, the same provisions designated the Department of Trade and Industry (DTI)-Export Marketing Bureau (EMB) to determine compliance with the aforementioned thresholds;
WHEREAS, the Department of Finance (DOF) is responsible for the formulation, institutionalization, and administration of fiscal policies, acting in coordination with other concerned political subdivisions, agencies, and instrumentalities of government;
WHEREAS, the DTI served as the primary coordinative, promotive, facilitative, and regulatory arm of government for the country’s trade, industry, and investment activies;
WHEREAS, the Bureau of Internal Revenue (BIR) assesses and collects all national internal revenue taxes, fees, and charges, enforces all forfeitures, penalties, and fines connected therewith, and interprets the provisions of the Tax Code and other tax laws;
WHEREAS, the Bureau of Customs (BOC) supervises and controls the entrance and clearance of vessels and aircraft engaged in foreign commerce, enforces the Customs Modernization and Tariff Act and all other laws, rules, and regulations related to tariff and customs administration, including the enforcement of forfeitures, penalties, and fines connected therewith.
WHEREAS, the DTI, through the DTI-EMB, is mandated to oversee the development, promotion, and monitoring of Philippine exports and provide exporters with the enabling environment to make them globally competitive;
NOW, THEREFORE, pursuant to the above-mentioned, and subject to the limitations of their mandates conferred by law, the DOF, BIR, BOC, and DTI, do hereby promulgate the following guidelines through this Joint Administrative Order (JAO).
Section 1. General Provisions
Section 2. Definition of Terms
As used in the JAO:
Section 3. Certification Procedure
Section 4. Validity of the Certification
The DTI-EMB Certification shall be valid until the end of the applicable taxable year (calendar/fiscal) adopted by the export-oriented enterprise unless earlier revoked.
Section 5. Revocation of Certification
If it is determined that export sales of the export sales of the export-oriented enterprise is less than seventy percent (70%) of the total annual production of the preceding taxable year the Certification shall be revoked by the DTI-EMB.
After revocation of the DTI-EMB Certification, the export-oriented enterprise shall be subject to VAT on their importations for such taxable year covered by the revoked STI-EMB Certification and shall be allowed to refund the excess input tax after verification.
Section 6. Roles and Responsibilities
To fully implement the provisions of these Guidelines, the following agencies shall have the following roles and responsibilities:
Section 7. Violations and Penalties
Any violation of any of the provisions of RA No. 12066, as implemented by these Guidelines, shall be grounds for the initiation of appropriate action against the export-oriented enterprise without prejudice to the filing of appropriate administrative, civil, or criminal charges.
Section 8. Additional Requirements
The DTI-EMB, BIR, and BOC may issue pertinent administrative orders, memorandum circulars, or other similar documents further providing details for enforcement of these Guidelines.
Section 9. Information Dissemination
This JAO shall be disseminated nationwide by the DTI-EMB, BIR and BOC. Information campaigns, and dissemination programs and activities shall be undertaken by the agencies to educate export-oriented enterprises, local suppliers, and other stakeholders.
Section 10. Separability
If any provision of part of this JAO is found invalid, illegal, and unenforceable, the remainder of the rules shall remain valid, legal and subsisting.
Section 11. Repealing Clause
All other others, issuances, rules and regulations which are inconsistent with RA No. 12066 and these rules are hereby repealed and modified.
Section 12. Effectivity
This JAO shall take effect immediately following its publication in a newspaper in general circulation and filing of three (3) copies hereof with the Office of National Administrative Register (ONAR), University of the Philippines (UP) Law Center, Diliman, Quezon City, pursuant to Presidential Memorandum Circular No. 11 dated 09 October 1992.
An act creating a VAT Refund mechanism for non-resident tourists, adding a new section 112-A to the National Internal Revenue Code of 1997, as amended, for the purpose
Section 1 – A new section designated as Section 112-A under Chapter I, Title IV of the National Internal Revenue Code, as amended, is hereby inserted to read as follows:
“Sec 112-A VAT Refund for Tourists – (a) A Tourist shall be eligible for a VAT refund on locally purchased goods if the following requisites are present (1) The goods are purchased in person by the tourist in duly accredited stores; (2) Such goods are taken out of the Philippines by the tourist within sixty (60) days from the date of purchase; and (3) The value of goods purchased per transaction is equivalent to at least Three thousand pesos (P3,000.00): Provided, That such threshold shall be subject to review and adjustment every three (3) years by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, taking into consideration the Consumer Price Index (CPI) as published by the Philippine Statistics Authority (PSA). (b) The Department of Finance shall engage the services of one (1) or more reputable, globally recognized and experienced VAT refund operators to provide end-to-end solutions to the government for the establishment and operation of a VAT refund system for tourists. (c) The refund under this section may be made either electronically or in cash. (d) The amount necessary for the VAT refund system for tourist under this Code shall be charged against the special account in the General Fund as provided under Section 106 of this Code.For the purpose of this section the term ‘Tourist’ means a non-resident foreign passport holder.” Section 2 – Implementing Rules and Regulations – Within ninety (90) calendar days from the effectivity of this Act, the Secretary of Finance shall, after due consultation with the Department of Trade and Industry, Department of Transportation, Department of Tourism, National Economic and Development Authority, Bureau of Internal Revenue, and Bureau of Customs, promulgate the necessary rules and regulations to faithfully implement the intent and provisions of this Act. Section 3 – Separability Clause – If any provision of this Act is declared unconstitutional, the remaining parts or provisions not affected thereby shall remain in full force and effect. Section 4 – Repealing Clause – All laws, decrees, executive orders, implementing rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Act are deemed repealed, amended, or modified accordingly. Section 5 – Effectivity – This Act shall take effect fifteen (15) days following its publication in the Official Gazette or in a newspaper of general circulation.
“Sec 112-A VAT Refund for Tourists –
Section 2 – Implementing Rules and Regulations – Within ninety (90) calendar days from the effectivity of this Act, the Secretary of Finance shall, after due consultation with the Department of Trade and Industry, Department of Transportation, Department of Tourism, National Economic and Development Authority, Bureau of Internal Revenue, and Bureau of Customs, promulgate the necessary rules and regulations to faithfully implement the intent and provisions of this Act.
Section 3 – Separability Clause – If any provision of this Act is declared unconstitutional, the remaining parts or provisions not affected thereby shall remain in full force and effect.
Section 4 – Repealing Clause – All laws, decrees, executive orders, implementing rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Act are deemed repealed, amended, or modified accordingly.
Section 5 – Effectivity – This Act shall take effect fifteen (15) days following its publication in the Official Gazette or in a newspaper of general circulation.
Amending the Pertinent Provisions of Revenue Regulations NO. 16-2005 to Implement the Value-Added Tax Provisions under Section 106, 108, 109, and 112 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 Section 32 of Republic Act (RA) No. 12066, these Regulations are hereby promulgated to implement the Value Added Tax (VAT) provisions under Section 6,7,8, and 9 of the said Act.
Section 2 Coverage. – These regulations shall amend pertinent provisions of Revenue Regulations (RR) No. 16-2005, as amended, to cover the following provisions of the Tax Code:
SECTION 3. ZERO-RATED SALES OF GOODS OR PROPERTIES. – The entire Section 4.106-5 of RR No. 16-2005, as amended, is hereby further amended to read as follows:
“Sec. 4.106-5. Zero-Rated Sales of Goods and Properties. – A zero-rated sale of goods or properties (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not results in any output tax. However, the input tax on purchases of goods or properties, related to such zero-rated sale, shall be available as tax credit or refund in accordance with these Regulations.
The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:
SECTION 4. ZERO-RATED SALE OF SERVICES. – The entire Section 4.108-5 of RR No. 16-2005, as amended, is hereby further amended and shall now be read as follows:
“SEC. 4.108-5. Zero-Rated Sale of Services. –
SECTION 5. VAT-EXEMPT TRANSACTIONS. – Section 4.109(u) is hereby amended, and Section 4.109(dd) shall be added to RR No. 16-2005, to read as follows.
“SEC. 4.109. VAT-Exempt Transactions. –
xxx xxx xxx
(B) Exempt transactions. – The following transactions shall be exempt from VAT:
(u) Importation of fuel, goods, and supplies used for international shipping or air transport operations. Said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port, or vice versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad, or to load passengers and/or cargoes bound for abroad: Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than that mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to twelve percent (12%) VAT;
xxx xxx xxx (dd) Importation of goods by an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production or sales of the preceding taxable year: Provided, That such goods are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the EMB of the DTI shall determine the compliance with the aforementioned threshold. For this purpose, ‘directly attributable’ shall follow the same definition under Section 4.106(a)(3)(ii) of these Regulations.”
SECTION 6. VAT REFUND/CREDIT. – Section 4.112-1 of RR No. 16-2005 shall now be renumbered as Section 4.112 and shall be further amended to read as follows:
“INPUT VAT REFUND OR TAX CREDIT CERTIFICATE”
SEC. 4.112. Claims for Cash Refund/Tax Credit Certificate of Input Tax. –
A VAT-registered person whose sales of goods, properties or services are zero-rated or effectively zero-rated may apply for the issuance of a cash refund of input tax attributable to such sales. The input tax that may be subject of the claim shall exclude the portion of input tax that has been applied against the output tax. The application should be filed within two (2) years after the close of the taxable quarter when such sales were made. In case of zero-rated sales under Secs. 106(A)(2)(a)(1) and (3), Secs. 108(B)(1) and (2) of the Tax Code, the payments for the sales must have been made in acceptable foreign currency duly accounted for in accordance with the BSP rules and regulations.
Where the taxpayer is engaged in both zero-rated or effectively zero- rated sales and in taxable or exempt sales of goods, properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, only the proportionate share of input taxes allocated to zero-rated or effectively zero-rated sales can be claimed for refund or issuance of a tax credit certificate.
In the case of a person engaged in the transport of passenger and cargo by air or sea vessels from the Philippines to a foreign country, the input taxes shall be allocated ratably between his zero-rated sales and non- zero-rated sales (sales subject to regular rate and VAT-exempt sales).
A VAT-registered person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Sec. 106(C) of the Tax Code may, within two (2) years from the date of cancellation, apply for the issuance of tax credit certificate or cash refund for any unused input tax which he may use in payment of his other internal revenue taxes or apply for refund for any unused input tax: Provided, however, that the taxpayer- claimant shall be entitled to a refund if it has no internal revenue tax liabilities against which the tax credit certificate may be utilized: Provided further, that for purposes of dissolution or cessation of business, the date of cancellation being referred hereto is the date of the issuance of BIR Tax Clearance.
Claims for tax credits/refunds shall be filed with the appropriate BIR Office in accordance with the existing rules and regulations.
(1) In proper cases, the CIR shall grant refund for creditable input taxes within ninety (90) days from the date of submission of certified true copies of invoices and other documents specifically limited to those prescribed in the revenue issuances and in support of the application filed in accordance with Subsections (a) and (b) hereof: Provided that, should the CIR find that the grant of refund is not proper, the CIR must state in writing the legal and factual basis for the denial. The 90-day period to process and decide shall start from the filing of the claim up to the release of the payment of the approved VAT refund: Provided that, the claim/application is considered to have been filed only upon submission of the duly certified copies of invoices and other documents in support of the application as prescribed under pertinent revenue issuances.
(2) The taxpayer shall have fifteen (15) days from receipt of the full or partial denial to file a request for reconsideration. The request for reconsideration shall be limited only to questions of law on the full or partial denial of the claim for refund. Additional documentary requirements particularly those unsubmitted/unsupported mandatory requirements during the filing of the claim shall not be accepted. The CIR or his duly authorized representative shall decide on the request for reconsideration within fifteen (15) days from receipt thereof. Failure to file a request for reconsideration within the fifteen (15)-day period shall render the decision final.
(3) In case of full or partial denial of the request for reconsideration, or failure on the part of the CIR to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may appeal with the CTA within thirty (30) days:
i. after the expiration of the ninety (90)- day period to decide on the application for refund, in case where no action is made by the CIR on the application for refund; or
ii. from the receipt of the decision denying the request for reconsideration; or
iii. after the lapse of the fifteen (15)-day period decide on the request for reconsideration in cases where no actions is made by the CIR on the request for reconsideration
When no decision is rendered within the 90-day period or the 15-day period, as the case may be, and the taxpayer-claimant opted to seek for a juridical remedy within thirty (30) days from such period, the administrative claim for refund or the request for reconsideration shall be considered moot and shall no longer be processed.
VAT refund claims shall be classified into low-, medium-, and high-risk, with the risk classification based on the amount of VAT refund claim, tax compliance history, frequency of filing vat refund claims, among others: Provided, that medium- and high-risk claims shall be subject to audit or other verification process in accordance with the BIR’ national audit program for the relevant year.
Refund shall be moved upon warrants drawn by the CIR or by his duly authorized representative without the necessary pf being countersigned by the Chairman, Commission on Audit (COA), the provisions of the Revised Corporation Code of 1987 to the contrary notwithstanding: Provided further, That the BIR shall publish statistics on the aggregated volume, processing time, approval rate of refund claims, and other relevant statistics in their website: Provided further, that in case of disallowed by the COA, only the taxpayer shall be liable for the disallowed amount without prejudice to any administrative liability on the part of any employee of the BIR who may be found to be grossly negligent in the grant of refund.
The Department of Finance shall establish a VAT refund center in the BIR and in the Bureau of Customs (BOC) that will handle the electronic processing and granting of cash refunds of creditable input tax. In the absence of automated processing, the existing procedures shall apply.
An amount equivalent to five percent (5%) of the total VAT collection of the BIR and the BOC from the immediately preceding year shall be automatically appropriated annually and shall be treated as a special account in the General Fund or as trust receipts for the purpose of funding claims for VAT refund: Provided that, any unused fund, at the end of the year shall revert to the General Fund.
(i) Quarterly Report
The BIR and the BOC shall be required to submit to the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) a quarterly report of all pending claims for refund and any unused fund.”
SECTION 7. TRANSITORY PROVISIONS. – For VAT credit/refund claims pursuant to Section 112(A) and 112(B) of the Tax Code, these Regulations shall apply to VAT credit/refund claims that are filed starting April 1, 2025, onwards to provide ample time for taxpayers and the BIR to adjust with the new requirements and procedures that will be imposed for this purpose.
SECTION 8. SEPARABILITY CLAUSE. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.
SECTION 9. REPEALING CLAUSE. – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.
SECTION 10. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first.
Republic of the Philippines
Congress of the Philippines
Metro Manila
Nineteenth Congress
Third Regular Session
Begun and held in Metro Manila, on Monday, the twenty-second day of July, two thousand twenty-four.
[REPUBLIC ACT NO. 12066]
AN ACT AMENDING SECTIONS 27, 28, 32, 34, 57,106, 108, 109, 112, 135, 237, 237-A, 269, 292, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, AND 311, AND ADDING NEW SECTIONS 135-A, 295-A, 296-A, AND 297-A OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 27 (A) of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 27. Rates of Income Tax on Domestic Corporations. –
(A) In General. – Except as otherwise provided in this Code, an income tax rate of twenty-five percent (25%) effective July 1, 2020 is hereby imposed upon the taxable income derived during each taxable year from all sources within and without the Philippines by every corporation, as defined in Section 22(B) of this Code and taxable under this Title as a corporation, organized in, or existing under the laws of the Philippines: Provided, That corporations with net taxable income not exceeding Five million pesos (P5,000,000) and with total assets not exceeding One hundred million pesos (P100,000,000), excluding land on which the particular business entity’s office, plant, and equipment are situated during the taxable year for which the tax is imposed, shall be taxed at twenty percent (20%): Provided, further, That registered business enterprises under the enhanced deductions regime as provided in Section 294(C) of this Code shall be taxed at a rate equivalent to twenty percent (20%) on their taxable income derived from registered projects or activities during each taxable year.
xxx.”
SEC. 2. Section 28 (A)(1) of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 28. Rates of Income Tax on Foreign Corporations. –
(A) Tax on Resident Foreign Corporations. –
(1) In General. – Except as otherwise provide in this Code, a corporation organized, authorized, or existing under the laws of any foreign country, engaged in trade or business within the Philippines, shall be subject to an income tax equivalent to twenty-five (25%) of the taxable income derived in the preceding taxable year from all sources within the Philippines effective July 1, 2020: Provided, That the registered business enterprises under the enhanced deductions regime as provided in Section 294(C) of this Code, shall be subject to a tax rate equivalent to twenty percent (20%) of their taxable income derived from registered projects or activities during each taxable year.
x x x.
(B) Tax on Non-resident Foreign Corporation. –
(1) In General. – x x x.”
SEC. 3. Section 32 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 32. Gross Income. –
(A) General Definition. – x x x
(B) Exclusion from Gross Income. – The following items shall not be included in the gross income and shall be exempt from taxation under this Title:
(1) x x x;
(2) x x x;
(3) x x x;
(4) x x x;
(5) Income Exempt under Treaty. – Income of any kind, to the extent required by any treaty obligation, including agreements entered into by the President with economies and administrative regions, subject to the concurrence of the Senate, binding upon the Government of the Philippines.
(6) x x x; and
(7) x x x.”
SEC. 4. Section 34 of the National Internal Revenue Code of 1997, as amended, is hereby further emended to read as follows:
“SEC. 34. Deductions from Gross Income. –
x x x
(B) Interest. – x x x
(C) Taxes. – x x x
(1) In General. – x x x
(2) Limitations on Deductions. – x x x
(3) Credit Against Tax for Taxes of Foreign Countries – x x x
(4) Limitations on Credit. – x x x
(5) Adjustments on Payment Incurred Taxes. – x x x
(6) Year in Which Credit Taken – x x x
(7) Proof of Credits – x x x
(8) Input Tax Attributable to VAT-Exempt Sales. – Input tax paid on local purchases attributable to VAT-exempt sales shall be deductible from the gross income of the taxpayer.
x x x.”
SEC. 5. Section 57 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 57. Withholding of Tax at Source.-
(A) Withholding of Final Tax on Certain Incomes. – x x x
(B) Withholding of Creditable Tax at Source. – The Secretary of Finance may, upon the recommendation of the Commissioner, require the withholding of a tax on the items of income payable to natural or juridical persons, residing in the Philippines, by payor-corporation/persons as provided for by law, at the rate of not more than fifteen percent (15%) thereof, which shall be credited against the income tax liability of the taxpayer for the taxable year.
(C) Tax-free Covenant Bonds. – x x x
SEC. 6. Section 106 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 106. Value-Added Tax on Sale of Goods or Properties.-
(A) Rate and Base of Tax. – x x x.
(1) ‘Goods or Properties.’ The term ‘goods’ or ‘properties’ x x x;
(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:
(a) Export Sales. – The term ‘export sales’ means:
(2) Sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer’s goods and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
(3) Sale of goods to an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production of the preceding taxable year: Provided, That such goods are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the Export Marketing Bureau of the Department of Trade and Industry (DTI) shall determine compliance with the aforementioned threshold. Any export-oriented enterprise that fails to meet the threshold shall be disqualified from availing of VAT zero-rating on local purchases in the immediately succeeding year: Provided, finally, That input tax otherwise due on VAT zero-rated local purchases attributable to VAT-exempt sales shall be paid and deductible from the gross income of the taxpayer. For this purpose, ‘directly attributable’ shall refer to goods and services that are incidental to and reasonably necessary for the export activity of the export-oriented enterprise, including janitorial, security, financial, consultancy, marketing and promotion services, and services rendered for administrative operations such as human resources, legal, and accounting;
(4) The sale of goods, supplies, equipment, and fuel to persons engaged in international shipping or international air transport operations; Provided, That the goods, supplies, equipment, and fuel shall be used for international shipping or air transport operations; and
(5) Sales to bonded manufacturing warehouses of export-oriented enterprises.
The Department of Finance (DOF) shall establish a VAT refund center in the Bureau of Internal Revenue (BIR) and in the Bureau of Customs (BOC) that will handle the electronic processing and granting of cash refunds of creditable input tax.
An amount equivalent to five percent (5%) of the total VAT collection of the BIR and the BOC from the immediately preceding year shall be treated as a special account in the General Fund or as trust receipts for the purpose of funding claims for VAT refund: Provided, That any unused fund, at the end of the year shall revert to the General Fund: Provided, further, That the BIR and the BOC shall be required to submit to the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) a quarterly report of all pending claims for refund and any unused fund.
(b) x x x;
(c) x x x; and
(d) Those sales subject to zero percent (0%) VAT under special laws.
SEC. 7. Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. –
(A) Rate and Base of Tax.- x x x
(B) Transactions Subject to Zero Percent (0%) Rate.- The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate:
(5) Services performed for an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production of the preceding taxable year: Provided, That such services are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the Export Marketing Bureau of the DTI shall determine compliance with the aforementioned threshold. Any export-oriented enterprise that fails to meet the threshold shall be disqualified from availing of VAT zero-rating in the immediately succeeding year: Provided, finally, That input tax otherwise due on VAT zero-rated local purchases attributable to VAT-exempt sales shall be paid and deductible from the gross income of the taxpayer. For this purpose, ‘directly attributable’ shall follow the same definition under Section 106 of this Code.
(6) x x x;
(7) x x x; and
(8) Sales subject to zero percent (0%) VAT under special laws.
The DOF shall establish a VAT refund center in the BIR and in the BOC that will handle the electronic processing and granting of cash refunds of creditable input tax.
SEC. 8 Section 109 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 109. Exempt Transactions. –
(u) Importation of fuel, goods, and supplies used for international shipping or air transport operations;
(dd) Importation of goods by an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production of the preceding taxable year. Provided, That such goods are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the Export Marketing Bureau of the DTI shall determine the compliance with the aforementioned threshold. For this purpose, ‘directly attributable’ shall follow the same definition under Section 106 of this Code.”
SEC. 9. Section 112 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 112. Refunds or Tax Credits of Input Tax.-
The taxpayer shall have fifteen (15) days from receipt of the full or partial denial to file a request for reconsideration. The Commissioner shall decide on the request for reconsideration within fifteen (15) days from receipt thereof. Failure to file a request for reconsideration within the fifteen (15)-day period shall render the decision final.
In case of full or partial denial of the request for reconsideration, or failure on the part of the Commissioner to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the request for reconsideration, or after the expiration of the ninety (90)-day period to decide on the application for refund, or after the lapse of the fifteen (15)-day period to decide on the request for reconsideration in cases where no action is made by the Commissioner on the request for reconsideration, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application for VAT refund within the ninety (90)-day period and on the request for reconsideration within the fifteen (15)-day period shall be punishable under Section 269 of this Code.
SEC. 10. Section 135 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 135. – Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. – Petroleum products sold to the following are exempt from excise tax:
(a) International carriers of the Philippine or foreign registry directly importing petroleum products, on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner:
Suppliers of petroleum products to international carriers shall be allowed to file a claim for refund of excise tax paid on such products, upon presenting proof that the petroleum products were sold to international carriers of Philippine or foreign registry, for their use or consumption outside the Philippines, following the procedure under Section 135-A of this Code.
(b) x x x
(c) x x x.”
SEC. 11. A new Section 135-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 135-A shall read as follows:
”SEC. 135-A. Refund of Excise Tax on Petroleum Products. – No refund or credit of excise tax paid by suppliers on otherwise exempt sales under Section 135 shall be allowed, unless the taxpayer files a written claim for refund with the Commissioner, within two (2) years after the payment of excise tax: Provided, however, That a return filed showing an overpayment shall be considered a written claim for refund.
The Commissioner shall process and decide the refund under this provision within ninety (90) days from the submission of complete documents supporting the application filed. Should the Commissioner deny the claim for refund in full or in part, the Commissioner shall communicate in writing to the taxpayer, the legal and/or factual basis for the denial.
The taxpayer shall have fifteen (15) days from the receipt of the denial to file a request for reconsideration, which shall be resolved by the Commissioner within fifteen (15) days from the receipt thereof. Failure to file a request for reconsideration within the fifteen (15)-day period shall render the decision final.
In case of full or partial denial of the request for reconsideration, or failure on the part of the Commissioner to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the request for reconsideration, or after the lapse of the period to decide on the application for refund or request for reconsideration, in cases where no action is made by the Commissioner, appeal the decision with the Court of Tax Appeals.
Failure on the part of any official agent or employee of the BIR to process and decide on the application within the ninety (90)-day period and on the request for reconsideration within the fifteen (15)-day period shall be punishable under Section 269 of this Code.”
SEC. 12. Section 237 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 237. Issuance of Invoices. –
Upon the establishment of a system capable of storing and processing the required data, the Bureau shall require taxpayers engaged in the export of goods and services, taxpayers engaged in e-commerce, and taxpayers under the jurisdiction of the Large Taxpayers Service to issue electronic invoices, subject to rules and regulations to be issued by the Secretary of Finance upon recommendation of the Commissioner following a public hearing held for this purpose: Provided, That taxpayers not covered by the mandate of this provision may voluntarily issue electronic invoices: Provided, further, That the Secretary of Finance, upon the recommendation of the Commissioner , may require taxpayers to issue electronic invoices.
SEC. 13. Section 237-A of the National Internal Revenue Code of 1997, as amended, is hereby further amended, to read as follows:
“SEC. 237-A. Electronic Sales Reporting System. – Upon the establishment of a system capable of storing and processing the required data, the Bureau shall require taxpayers engaged in the export of goods and services, and taxpayers under the jurisdiction of the Large Taxpayer Service to electronically report their sales data to the Bureau through the use of electronic point of sale systems, subject to rules and regulations to be issued by the Secretary of Finance as recommended by the Commissioner of Internal Revenue: Provided, That the machines, fiscal devices, and fiscal memory devices shall be at the expense of the taxpayer: Provided, further, That the Secretary of Finance, upon the recommendation of the Commissioner, may require taxpayers to electronically report their sales data to the Bureau.
All taxpayers required to issue and those who voluntarily choose to issue electronic invoices and electronically report their sales data to the Bureau shall be granted, in addition to the allowable deduction provided under Section 34(A)(1), the following allowable deductions:
(1) For micro and small taxpayers as defined under Section 21(B) of this Code, an additional deduction from taxable income of one hundred percent (100%) of the total cost for setting up an electronic sales reporting system.
(2) For medium and large taxpayers as defined under Section 21(B) of this Code, an additional deduction from taxable income of fifty percent (50%) of the total cost for setting up an electronic sales reporting system.
The foregoing allowable deduction shall be availed of only once. The importation of such electronic sales reporting system shall also be exempt from taxes.
SEC. 14. Section 269(j) of the National Internal Revenue Code of 1997, as amended, is further amended to read as follows:
”SEC. 269. Violations Committed by Government Enforcement Officers. – Every official, agent, or employee of the BIR or any other agency of the Government charged with the enforcement of the provisions of this Code, who is guilty of any of the offense herein below specified shall, upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000) and suffer imprisonment of not less than ten (10) years but not more than fifteen (15) years and shall likewise suffer an additional penalty of perpetual disqualification to hold public office, to vote, and to practice in any public election:
(j) Deliberate failure to act on the application for refunds within the prescribed period provided under Sections 112, 135-A, and 204 of this Act.
SEC. 15. Section 292 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 292. Extent of Authority to Grant Tax Incentives. – The Fiscal Incentives Review Board or the Investment Promotion Agency, shall grant the appropriate tax incentives provided in this Title to RBEs only to the extent of their approved registered project or activity under the Strategic Investment Priority Plan (SIPP), taking into consideration the infusion of investment capital, generation of direct local employment which takes into account Republic Act No. 11962, otherwise known as the ‘Trabaho Para sa Bayan Act’, and other standard and project-specific performance metrics of the registered project or activity that may be imposed by the Fiscal Incentives Review Board of the concerned Investment Promotion Agency.”
SEC. 16. Section 293 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC.293. Definitions. – When used in this Title:
SEC. 17. Section 294 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 294. Incentives.-Subject to the conditions and period of availment in Sections 295, 296, and 296-A, respectively, the following types of tax incentives may be granted to registered projects or activities:
SEC. 18. Section 295 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 295. Conditions of Availment. – The availment of tax incentive in the preceding section shall be governed by the following rules:
The elected incentive package shall be irrevocable for the entire duration for entitlement to such incentives under Sections 296 and 296-A of this Code: Provided, That in no case shall the EDR be granted simultaneously with the SCIT.
The elected incentive package shall be irrevocable for the entire duration for entitlement to such incentives under Sections 296 and 296-A of this Code.
The folowing conditions for the availment of each enhanced deduction shall be complied with:
The Department of Finance, in coordination with the BIR, Fiscal Incentives Review Board, and Investment Promotion Agencies, shall prescribe the terms and conditions on the grant of EDR under Section 294(C) and this Title.
An Investment Promotion Agency may authorize the importation of capital equipment, raw materials, spare parts, or accessories pending issuance of the certificate of registration, subject to the posting of a performance bond or bank guarantee equivalent to duties and taxes waived on such importations and other conditions as may be determined by the concerned Investment Promotion Agency and the BOC.
No taxes and duties shall be imposed on subsequent sale, transfer, or disposition of the capital equipment, raw materials, spare parts, or accessories, which were granted tax and customs duty exemption hereunder within the first five (5) years from date of importation. The approval of the Investment Promotion Agency must be secured before the sale, transfer, or disposition of the capital equipment, raw materials, spare parts, or accessories, which were granted tax and customs duty exemption hereunder, and shall be allowed only under any of the following circumstances:
In case of subsequent sale, transfer, or disposition of tax and duty-free capital equipment, raw materials, spare parts, or accessories, within the first five (5) years from the date of importation and upon approval by the Investment Promotion Agency, there shall be taxes and duties assessed based on the net book value of the capital equipment, raw materials, spare parts, or accessories if:
Provided, That if the RBE sells, transfers, or disposes the aforementioned imported items without prior approval, the RBE and the vendee, transferee, or assignee shall be solidarily liable to pay twice the amount of the duty exemption that should have been paid during its importation: Provided, further, That the sale, transfer, or disposition, of the capital equipment, raw materials, spare parts, or accessories made after five (5) years from the date of importation shall require that prior notice be given by the RBE to the Investment Promotion Agency: Provided, furthermore, That even if the sale, transfer, or disposition of the capital equipment, raw materials, spare parts, or accessories was made after five (5) years from the date of importation with notice to the Investment Promotion Agency, the RBE is still liable to pay the duties based on the net book value of the capital equipment, raw materials, spare parts, or accessories if it violated any of its registration terms and conditions.
Provided, That the local sales of goods and/or services by an RBE, regardless of the income tax incentives regime and location, shall be subject to twelve percent (12%) VAT, unless otherwise exempt or zero-rated under Titles IV and XIII of this Code. For this purpose, ‘local sales’ shall cover sales of goods and services to domestic market enterprises or non-RBEs, regardless of whether the sale occurs within the freeport or economic zones: Provided, further, That the liability to pay and remit the VAT to the government rests with the buyer of the said goods or services.
Any registered export enterprise that fails to meet the seventy percent (70%) export sales threshold in the immediately preceding year or high-value domestic market enterprise that fails to meet the export sale or investment capital requirement shall be disqualified from availing of duty exemption on importation under Section 294(D), and VAT exemption on importation and VAT zero-rating on local purchases under Section 294(E) in the immediately succeeding year.
Notwithstanding the provisions in the preceding paragraphs, sales receipts and other income derived from non-registered project or activity shall be subject to appropriate taxes imposed under this Code.
Any law to the contrary notwithstanding, the importation of petroleum products by any person, including RBEs, shall be subject to the payment of applicable duties and taxes as provided under Republic Act No. 10863, otherwise known as the ‘Customs Modernization and Tariff Act’, and this Code, respectively, upon importation into the Philippine customs territory and/or into free zones as defined under Republic Act No. 10863: Provided, That the importation of petroleum products used in international shipping or air transport operations shall be covered by the provisions of Sections 109 (U) and 135(A) of this Code.
Provided, That applicable duties x x x
The tax shall be directly remitted by the RBE to the Treasurer’s office of the municipality or city where the enterprise is located.
Where two (2) or more local government units cover the same enterprise, the sharing between such local government units shall be as follows:
Fifty percent (50%) of the share of the municipality based on the foregoing allocation shall be remitted to the province where the said municipality is located: Provided, That cities shall retain one hundred percent (100%) of their share.
Local government units may reduce or waive the rate of tax, or their share thereof, in the case of two (2) or more local government units covering the same enterprise.
RBEs, whose performance commitments include job generation, shall maintain their employment levels to the extent practicable. In case of reduced employment or when the performance commitment for job generation is not met, the RBEs must submit to their respective Investment Promotion Agencies and the Fiscal Incentives Review Board their justifications for and plans to address the same in the succeeding year.”
SEC. 19. A new Section 295-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 295-A shall read as follows:
“SEC. 295-A. Registered Business Enterprises Taxpayer Service – A separate service within the BIR is hereby created to support the end-to-end tax compliance of RBEs. The Commissioner shall prescribe the manner and place of filing returns and payment of taxes by RBEs through the said service. For ease of compliance with tax rules and regulations, simplified filing and payment processes shall be implemented for RBEs.”
SEC. 20, Section 296 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 296. Period of Availment of Incentives for Projects or Activities Approved by the Investment Promotion Agencies – The period of availment of incentives granted by the Investment Promotion Agencies to RBEs shall be as follows:
(A) For export enterprise under the SIPP, ITH of four (4) to seven (7) years, depending on location and industry priorities as specified in this section, followed by SCIT or EDR for ten (10) years, or SCIT or EDR for a maximum period of fourteen (14) to seventeen (17) years, depending on location and industry priorities: Provided, That the application for extension of availment of incentives shall only be allowed for the same registered project or activity if such project or activity employs at least ten thousand (10,000) direct local employees and maintains the said number during its registration, even if the registered project or activity no longer complies with the conditions and qualifications set forth in the SIPP: Provided, further, That the extension of availment of incentives shall not exceed five (5) years, subject to the performance review by the Investment Promotion Agency, Notwithstanding any provision to the contrary, no ITH shall be granted to registered export enterprises that applied for extension of availment of incentives for the same project or activity.
A qualified expansion project or activity registered under this Act may qualify to avail of SCIT or EDR for eight (8) years, subject to the provisions of Sections 294(B) and (C), qualifications set forth in the SIPP, and performance review by the Investment Promotion Agency: Provided, That existing registered projects or activities prior to the effectivity of Republic Act No. 11534 otherwise known as the ‘Corporate Recovery and Tax Incentives for Enterprises Act’, may qualify to register on or before December 31, 2024 and avail of the incentives granted under Republic Act No. 11534 for the prescribed period, subject to the criteria and conditions set forth in the SIPP. The qualified expansion project or activity may also be entitled to duty exemption on importation, VAT exemption on importation, and VAT zero-rating on local purchases subject to the provisions of Sections 294(D) and (E), respectively.
A qualified expansion project or activity registered under this Act may qualify to avail of EDR for eight (8) years, subject to the provisions of Section 294(C), qualifications set forth in the SIPP and performance review by the Investment Promotion Agency or the Fiscal Incentives Review Board, as the case may be: Provided, That existing registered projects or activities prior to the effectivity of Republic Act No. 11534 may qualify to register on or before December 31, 2024 and avail of the incentives granted under Republic Act No. 11534 for the prescribed period, subject to the criteria and conditions set forth in the SIPP.
The period of availment of the foregoing income tax-based incentives shall commence from the actual start of commercial operations with the RBE availing of the tax incentives within three (3) years from the date of registration, unless otherwise provided in the SIPP and its corresponding guidelines.
The period of availment of incentives based on the combination of both location and industry priorities, as determined in the SIPP, shall be as follows:
For exporters:
For domestic market activities:
In addition to the incentives provided in the tiers above, projects or activities of registered business enterprises located in areas recovering from armed conflict or a major disaster, as determined by the Office of the President, shall be entitled to two (2) additional years of income tax-based incentives.
Projects or activities registered prior to the effectivity of this Act, or under the incentive system provided herein that shall, in the duration of their incentives, completely relocate from the National Capital Region, shall be entitled to three (3) additional years of income tax-based incentives: Provided, That the additional incentive shall commence at the completion of the relocation of operations.
RBEs may continue to avail of the VAT zero-rating on local purchases and VAT exemption on importation under Section 294(E), and duty exemption on importation under Section 294(D), for the entire registration period as an RBE, reckoned from the date of registration, if the RBEs continue to meet the terms and conditions of registration by their respective Investment Promotion Agencies and if the RBEs maintain at least seventy percent (70%) of total annual production or output as export sales for the immediately preceding year.
Registered domestic market enterprises may avail of duty exemption on importation from the date of registration until the expiration of the income tax-based incentives granted in this section.
After the expiration of the entitlement to VAT zero-rating on local purchases and VAT exemption on importation under this Title, registered export enterprises may avail of the VAT zero-rating on local purchases and VAT exemption on importation under Sections 106, 108, and 109 of this Code: Provided, That they comply with the requirements set forth therein.”
SEC. 21. A new Section 296-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 296-A shall read as follows:
”SEC. 296-A. Period of Availment of Incentives for Projects or Activities Approved by the Fiscal Incentives Review Board. – The period of availment of incentives granted by the Fiscal Incentives Review Board to RBEs shall be as follows:
(A) For an export enterprise under the SIPP, ITH of four (4) to seven (7) years, depending on location and industry priorities as specified in this section, followed by SCIT or EDR for twenty (20) years, or SCIT or EDR for a maximum period of twenty-four (24) to twenty-seven (27) yeras, depending on location and industry priorities: Provided, That the application for extension of availment of incentives shall only be allowed for the same registered project or activity if such project or activity employs at least ten thousand (10,000) direct local employees and maintains the said number during its registration, even if the registered project or activity no longer complies with the conditions and qualifications set forth in the SIPP: Provided, further, That the extension of availment of incentives shall not exceed ten (10) years, subject to the performance review by the Fiscal Incentives Review Borad. Notwithstanding any provision to the contrary, no ITH shall be granted to registered export enterprises that have applied for extension of availment of incentives for the same project or activity.
A qualified expansion project or activity registered under this Act may qualify to avail of SCIT or EDR for thirteen (13) years, subject to the provisions of Sections 294(B) and (C), qualifications set forth in the SIPP and performance review by the Fiscal Incentives Review Board: Provided, That existing registered projects or activities prior to the effectivity of this Act may qualify to register and avail of the incentives granted under this Act for the prescribed period, subject to the criteria and conditions set forth in the SIPP. The qualified expansion project or activity may also be entitled to VAT exemption on importation and VAT zero-rating on local purchases under Section 294(E) and duty exemption on importation under Section 294 (D).
(B) For domestic market enterprise under the SIPP, ITH of four (4) to seven (7) years, followed by EDR for twenty (20) years, or EDR for a maximum period of twenty-four (24) to twenty-seven (27) years, depending on location and industry priorities: Provided, That the application for extension of availment of incentives shall be allowed for the same registered project or activity only if employment level for such project or activity employs at least ten thousand(10,000) direct local employees and maintains the said number during its registration, even if the registered project or activity no longer complies with the conditions and qualifications set forth in the SIPP: Provided, further, That the extension of availment of incentives shall not exceed ten (10) years, subject to the performance review by the Fiscal Incentives Review Board. Notwithstanding any provision to the contrary, no ITH shall be granted to domestic market enterprises that have applied for extension of availment of incentives for the same project or activity.
A qualified expansion project or activity registered under this Act may qualify to avail of EDR for thirteen (13) years, subject to the provisions of Section 294(C), qualifications set forth in the SIPP, and performance review by the Investment Promotion Agency or Fiscal Incentives Review Board, as the case may be: Provided, That existing registered projects or activities prior to the effectivity of this Act may qualify to register and avail of the incentives granted under this Act for the prescribed period, subject to the criteria and conditions set forth in the SIPP. The qualified expansion project or activity may also be entitled to VAT exemption on importation and VAT zero-rating on local purchases under Section 294(E) and duty exemption on importation under Section 294(D).
The period availment of the foregoing income tax-based incentives shall commence from the actual start of commercial operations with the RBE availing of the tax incentives within three (3) years from the date of registration, unless otherwise provided in the SIPP and its corresponding guidelines.
RBEs may continue to avail of the VAT zer-rating on local purchases and VAT exemption on importation under Section 294(E), and duty exemption on importation under Section 294(D), for the entire registration period as an RBE, reckoned from the date of registration, if the RBEs continue to meet the terms and conditions of their registration with their respective Investment Promotion Agencies and if the following requirements are met for the immediately preceding year:
Registered domestic market enterprise may avail of duty exemption from the date of registration until the expiration of the income tax-based incentives granted in this section.
After the expiration of the entitlement to VAT zero-rating on local purchases and VAT exemption on importation under this Title, registered export enterprises may avail of the VAT zero-rating on local purchases and VAT exemption on importation under Sections 106, 108, and 109 of this Code: Provided, That they comply with the requirements set forth therein.
Projects or activities registered prior to the effectivity of this Act or under the incentive system provided herein that completely relocate from the National Capital Region, within the duration of their incentives, shall be entitled to three (3) additional years of income tax-based incentives: Provided, That the additional incentive shall commence upon the completion of the relocation of operations.”
SEC. 22. Section 297 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 297. Expanded Functions of the Fiscal Incentives Review Board. – The functions and powers of the Fiscal Incentives Review Board created under the Presidential Decree No. 776, as amended, shall be further expanded as follows:
(A) To exercise policy-making, oversight, regulatory, and quasi-judicial functions on the administration and grant of tax incentives by the Investment Promotion Agencies and other government agencies administering tax incentives. In particular, the Fiscal Incentives Review Board shall:
(1) Determine the target performance metrics as conditions to avail of tax incentives;
(2) Review and audit the compliance of Investment Promotion Agencies and other government agencies administering tax incentives, with respect to the administration and grant of tax incentives and impose sanctions such as, but not limited to, withdrawal, suspension, cancellation of their authority to grant tax incentives under this Title without prejudice to the conduct of inquiry, investigation, and filing of appropriate criminal and administrative cases against erring officials and employees in accordance with the procedures prescribed under existing laws;
(3) Conduct regular monitoring and evaluation of investment and non-investment tax incentives, such as using cost-benefit analysis to determine their impact on the economy and whether agreed performance targets are met; and prescribe data requirements, reporting standards, processes, and procedures for the application of incentives for the calculation of costs and benefits upon application;
(4) Check and verify, as necessary, the compliance of RBEs through the Investment Promotion Agencies, with the terms and conditions of their availment, in particular the agreed target performance metrics, rules and regulations of this Act, and other relevant laws or issuances;
(5) Provide Investment Promotion Agencies with capacity-building activities to ensure that they are equipped to comply with reportorial requirements; and
(6) Assess its organizational structure, focusing on the adequacy of its human resources for regulatory and quasi-judicial functions. If necessary, the Fiscal Incentives Review Board shall submit to the Department of Budget and Management the proposed organizational changes to strengthen its human resources in accordance with existing laws and regulations.
For this purpose, all Investment Promotion Agencies and other government agencies administering tax incentives shall annually furnish the Fiscal Incentives Review Board with all the issuances related to the grant and administration of incentives
(B) To approve or disapprove the grant of tax incentives to the extent of the registered project or activity listed in the SIPP upon the recommendation of the Investment Promotion Agency: Provided, That the application for tax incentives shall be duly accompanied by a cost-benefit analysis: Provided, further, That the Investment Promotion Agencies shall use the Fiscal Incentives Review Board-prescribed data requirements and methodologies for the application of incentives in calculating the costs and benefits upon application: Provided, further, That the Investment Promotion Agencies shall grant the tax incentives to registered projects or activities listed in the SIPP with investment capital of Fifteen Billion pesos (P15,000,000,000) and below: Provided, furthermore, That the Fiscal Incentives Review Board, in consultation with the Investment Promotion Agencies, may increase the threshold amount of Fifteen billion pesos (P15,000,000,000);
(C) To approve applications for tax subsidies to government-owned or –controlled corporations, government instrumentalities, government commissaries and state universities and colleges.
For this purpose, the other government agencies shall ensure complete submission of applications, documents, records, books, or other relevant data or material;
(D) To formulate additional time-bound or place-specified projects or activities for inclusion in the SIPP during periods of recovery from calamities and post-conflict situations and where the Fiscal Incentives Review Board determines that there is a need to attract many classes, firms, and other investors that would accelerate the growth of a region’s flagship industries in accordance with the Medium-Term Development Plan and Republic Act No. 11962, otherwise known as the ‘Trabaho Para sa Bayan Act’ and recommend incentives to the President;
(E) To cancel, suspend, or withdraw, after due process, the enjoyment of fiscal incentives of concerned RBEs on its own initiative or upon the recommendation of the Investment Promotion Agency for flagrant and material violations of any of the conditions imposed in the grant of fiscal incentives, including but not limited to, the non-compliance with the agreed performance commitments and endorse RBEs whose incentives are cancelled, suspended, or withdrawn to the concerned revenue agencies for the assessment and collection of taxes and duties due commencing from the first year of availment;
(F) x x x
(G) To require Investment Promotion Agencies and other government agencies administering tax incentives to submit, regularly or when requested, summaries of approved investment and incentives granted, and firm- or entity –level tax incentives and benefits data as input to the Fiscal Incentives Review Board’s review and audit function, and evaluation of performance of recipients of tax incentives. For this purpose, the Fiscal Incentives Review Board shall maintain a master list of registered products and services for export or domestic consumption that are entitled to incentives: Provided, That to facilitate compliance with the foregoing, the DTI, in coordination with relevant regulatory bodies, shall cause the registration and reporting by RBEs of the types of services rendered whether domestically or to foreign clients; types of products manufactured domestically, products imported and sold locally, and products exported;
(H) To publish regularly, per firm, the data pertaining to the amount of tax incentives, tax payments, and other related information, including benefits data, subject to the provisions of Chapter V of this Title;
(I) x x x
(J) x x x
(K) To decide on issues, on its own initiative or upon the recommendation of the Investment Promotion Agency after due hearing, concerning the approval, disapproval, cancellation, suspension, withdrawal, or forfeiture of tax incentives or tax subsidy in accordance with this Act. The Fiscal Incentives Review Board shall decide on the matter within ninety (90) days from the date when the Fiscal Incentives Review Board may, within thirty (30) days from receipt of the adverse decision, appeal the same to the Court of Tax Appeals;
(L) To promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Title. The Fiscal Incentives Review Board may use any electronic means of publication in the Official Gazette or its official website;
(M) x x x
(N) x x x
(O) To recommend policies to prevent abuse of fiscal incentives availment and tax evasion under this Code and smuggling activities; and
(P) To exercise all other powers necessary or incidental to attain the purposes of this Act and other laws vesting additional functions on the Fiscal Incentives Review Board.
SEC. 23. A new Section 297-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 297-A shall read as follows:
”SEC. 297-A. Processing of Tax Incentive Applications. – The Fiscal Incentives Review Board and Investment Promotion Agencies shall issue a decision on applications for tax incentives within twenty (20) working days from the receipt of all required documents, in accordance with Section 9 of Republic Act No. 11032, otherwise known as the ‘Ease of Doing Business and Efficient Government Service Delivery Act of 2018’. An extension of the processing period may be permitted only once, and shall in no case exceed an additional twenty (20) working days.”
SEC. 24. Section 300 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 300. Strategic Investment Priority Plan. – The BOI, in consultation with the Fiscal Incentives Review Board, and the Investment Promotion Agencies, other government agencies administering tax incentives, and the private sector, shall formulate the SIPP to be submitted to the President for approval, which may contain recommendations for types of non-fiscal support needed to create high-skilled jobs to grow a local pool of enterprises, particularly micro, small and medium enterprises (MSMEs), that can supply to domestic and global value chains, to increase the sophistication of products and services that are produced and/or sourced domestically, to expand domestic supply and reduce dependence on imports, and to attract significant foreign capital or investment. The SIPP may include areas of investment that are specific to an area or region, taking into consideration the project or activity that the Investment Promotion Agencies in those areas or regions deem fit to promote, in order to foster regional growth and attract investments: Provided, That the project or activity identified by the Investment Promotion Agencies shall be consistent with the Philippine Development Plan and Republic Act No. 11962, otherwise known as the ‘Trabaho Para sa Bayan Act’. The SIPP shall be valid for a period of three (3) years, subject to review and amendment every three (3) years thereafter unless there would be a supervening event that would necessitate its review: Provided, That the BOI shall cause the publication of the rules and regulations implementing the SIPP, including any amendments thereof, in the Official Gazette or newspaper of general circulation, and on its official website, to be effective.
The SIPP shall contain the following:
(B) Scope and coverage of location and industry tiers in Section 296.
All sectors or industries that may be included in the SIPP shall undergo an evaluation to determine the suitability and potential of the industry or the sector in promoting long-term growth and sustainable development, and the national interest. In no case shall a sector or industry be included in the SIPP unless it is supported by a formal evaluation process or report.
In no case shall the Investment Promotion Agencies accept application unless the project or activity is listed in the SIPP. Projects or activities not listed in the SIPP shall be automatically disapproved.”
SEC. 25. Section 301 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 301. Power of the President to Grant Incentives. – Notwithstanding the provisions of Sections 295, 296, and 296-A, the President may, in the interest of national economic development, or upon the recommendation of the Fiscal Incentives Review Board, modify the mix, period or manner of availment of incentives provided under this Code or craft the appropriate fiscal and non-fiscal support package for a highly desirable project or a specific industrial activity based on defined development strategies for creating high-value jobs, building new industries to diversify economic activities, and attracting significant foreign and domestic capital or investment, and the fiscal requirements of the activity or project, subject to maximum incentive levels recommended by the Fiscal Incentives Review Board: Provided, That the grant of ITH shall not exceed ten (10) years followed by SCIT of five percent (5%) or EDR; or SCIT or EDR, which may be immediately granted at the start of commercial operations: Provided, further, That the total period of income tax-based inventive availment shall not exceed forty (40) years.
The Fiscal Incentives Review Board shall determine whether the benefits that the government may derive from such investment are clear and convincing and far outweigh the cost of incentives that will be granted in determining whether a project or activity is highly desirable.
The determination by the Fiscal Incentives Review Board shall guide the President in calibrating either or both the magnitude of the incentives to be granted and the agreed performance target corresponding to the grant.
The President may exercise the powers under this section: Provided, That the following conditions are satisfied:
Provided, That the threshold shall be subject to a periodic review by the Fiscal Incentives Review Board every three (3) years, taking into consideration international standards or other economic indicators: Provided, further, That if the project fails to substantially meet the projected impact on the economy and agreed performance targets, the Fiscal Incentives Review Board shall recommend to the President the cancellation of the tax incentive or fiscal and non-fiscal support package or the modified period or manner of availment of incentives, after due hearing and an adequate opportunity to substantially comply with the agreed performance targets and outputs.
For this purpose, the President may grant non-fiscal support package limited to the utilization of government resources such as use of land and budgetary support provision under the annual General Appropriations Act.
This power of the President, in as far as it commands additional public sector expenditures in support of investors, is suspended during fiscal years when, an unmanageable fiscal deficit is declared by the President on the advice of the Development Budget Coordination Committee with a consequence that even core budgetary obligations, such as but not limited to, mandatory revenue allotments for local government units and budget for the National Economic and Development Authority’s core public investments program, cannot be fully financed.
Notwithstanding the provisions in the preceding paragraphs, tax and duty incentives granted through legislative franchises shall be exempted from the foregoing powers of the President to review, withdraw, suspend, or cancel tax incentives and subsidies.”
SEC. 26. Section 308 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 308. Penalties for Noncompliance with Filing and Reportorial Requirements. – Any RBE or other registered enterprises, which fails to comply with filing and reportorial requirements with the appropriate Investment Promotion Agencies or other government agencies administering tax incentives and/or, which fails to show proof of filing of tax returns using the electronic system for filing and payment of taxes of the BIR under Section 305 hereof, shall be imposed the following penalties by the appropriate Investment Promotion Agency or other government agency administering tax incentives:
Provided, That if the failure to show such proof is not due to the fault of the RBEs or other registered enterprises, the same shall not be a ground for the suspension of the ITH and/or other tax incentives availment: Provided, further, That collections from the penalties shall accrue to the general fund.
After due process, the concerned Investment Promotion Agency may cancel the registration, suspend the enjoyment of inventive benefits of any registered enterprise, and/or require refund of incentives enjoyed by such enterprise, including interests and monetary penalties, for any willful and material misrepresentation of information or submission of falsified or misleading information or documents for the purpose of availing of more incentives that what is entitled to under this Code: Provided, further, That in case of cancellation of the certificate of registration, the project or activity of the RBE shall cease to be registered and the RBE shall be required to pay all appropriate taxes and duties from the date of cancellation order becomes final and executory.
Provided, That the Investment Promotion Agency, with the recommendation of the Commissioner, may revoke or suspend incentives granted by the Investment Promotion Agency, and/or order a business closure of the RBE that violated Title VI (Excise Taxes on Certain Goods) and Title X (Statutory Offenses and Penalties) of this Code and other related revenue regulations, order, or issuances of the government: Provided, further, That such authority shall cover the acts of the RBE committed even in the first year of availment of incentives. Notwithstanding the provisions of this section, the DOF, the BIR, and the BOC shall retain their respective mandates, powers and functions as provided for under this Act and related laws.
Any government official or employee who fails without justifiable reason to provide or furnish the required tax incentives report or other data or information as required under Sections 306 and 307 of the Act shall be penalized, after due process, by a fine equivalent to the official’s or employee’s basic salary for a period of one (1) month to six (6) months or by suspension from government service for not more than one (1) year, or both, in addition to any criminal and administrative penalties imposable under existing laws.”
SEC. 27. Section 309 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 309. Prohibition on Registered Activities. – Except as allowed under this provision, a qualified registered project or activity under an Investment Promotion Agency administering an economic zone or freeport shall be exclusively conducted or operated within the geographical boundaries of the zone or freeport being administered by the Investment Promotion Agency in which the project or activity is registered: Provided, That an RBE may conduct or operate more than one qualified registered project or activity within the same zone or freeport under the same Investment Promotion Agency: Provided, further, That any project or activity conducted or performed outside the geographical boundaries of the zone or freeport shall not be entitled to the incentives provided in this Act: Provided, furthermore, That RBEs may institute a ‘telecommuting’ program as defined under Republic Act No. 11165, otherwise known as the “Telecommuting Act”, including work-from-home arrangements, which shall not cover more than fifty percent (50%) of the total workforce, and shall be subject to the rule and regulations formulated by the Investment Promotion Agency. The RBEs shall continue to avail of all the incentives provided under this Act and under their registration with any applicable Investment Promotion Agency: Provided, finally, That double registration for purposes of availing of other incentives under special laws shall not be allowed.”
SEC. 28. Section 310 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 310. Establishment of One-Stop Action Center and Initial Point of Contact for Foreign Investment Leads. – All Investment Promotion Agencies shall establish a one-stop shop or one-stop action center that will facilitate and expedite, to the extent possible, the setting up and conduct of registered projects or activities, including assistance in coordinating with the local government units and other government agencies to comply with the Republic Act No. 11032, otherwise known as the ‘Ease of Doing Business and Efficient Government Service Delivery Act of 2018’: Provided, however, That the enterprises shall continue to avail of the one-stop shop facility notwithstanding the expiration of their incentives under this Code.
Unless otherwise provided under special laws, local government units may delegate to the concerned Investment Promotion Agency, through appropriate memoranda of agreement, the functions of accepting, processing, and granting business permits and licenses.
The Investment Promotion Agency may also assist RBEs in obtaining licenses and permits from national government agencies by accepting and submitting documentary requirements for such licenses and permits, on behalf of the RBEs to the appropriate national government agencies.
The Investment Promotion Agency may undertake activities necessary to perform the function as the initial point of contact for foreign investment leads. Such activities shall include assisting potential foreign investors in establishing their business enterprises in the concerned Investment Promotion Agency or in the economic zone best suited to their specific needs.”
SEC. 29. Section 311 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 311. Investments Prior to the Effectivity of Republic Act No. 11534. – RBEs with incentives granted prior to the effectivity of Republic Act No. 11534 shall be subject to incentives granted in their certificate of registration or certificate of registration and tax exemption, ad to the following rules:
SEC. 30. Appropriations. – The Secretary of Finance shall immediately include in the Department’s program the operationalization of the electronic processing of the VAT refund system, the funding of which shall be included in the annual General Appropriations Act.
SEC. 31. Transitory Provisions. – The following provisions shall apply prospectively to projects or activities granted with tax incentives under Republic Act No. 11534 upon the effectivity of this Act:
No tax refund or credit shall be granted to RBEs covered by Section 19 of this Act.
SEC. 32. Implementing Rules and Regulations. – Within ninety (90) days from the effectivity of this Act, the Secretary of Finance, upon the recommendation of the Commissioner of Internal Revenue, shall promulgate the necessary rules and regulations for its effective implementation: Provided, That for the provisions under Title XIII of the National Internal Revenue Code of 1997, as amended, the Secretary of Finance and the Secretary of Trade and Industry shall jointly promulgate the necessary rules and regulations thereof within the same period, after due consultation with the BIR, the BOC, the BOI, and other Investment Promotion Agencies, for its effective implementation. Failure to promulgate the rules and regulations shall not prevent the implementation of this Act upon its effectivity.
SEC. 33. Separability Clause. – If any provisions of this Act is declared unconcstitutional, the remaining parts or provisions hereof not affected thereby shall remain in full force and effect.
SEC. 34. Repealing Clause. – All laws, decrees, executive orders, implementing rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Act are deemed repealed, amended, or modified accordingly.
SEC. 35. Effectivity. – This Act shall take effect after fifteen (15) days following its publication in the Official Gazette or in a newspaper of general circulation.
Approved,
(signed) (signed)
FERDINAND MARTIN G. ROMUALDEZ FRANCIS “CHIZ” G. ESCUDERO
Speaker of the House of Representatives President of the Senate
This Act, which is consolidation of Senate Bill No. 2762 and House Bill No. 9794, was passed by the Senate of the Philippines and the House of Representatives on September 10, 2024.
REGINALD S. VELASCO RENATO N. BANTUG JR.
Secretary General Secretary of the Senate
House of Representatives
Approved: Nov 08, 2024
(signed)
FERDINAND ROMUALDEZ MARCOS JR
President of the Philippines
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