Tax Matters That Matter — Your Source for Timely BIR Updates

 Key features of Revenue Regulations (RR) No. 15-2025, which revises the policies and guidelines for private retirement benefit plans in the Philippines

Scope and Coverage

• Applies to private retirement benefit plans that meet the BIR’s qualifications.
• Only plans with BIR approval and a valid Certificate of Tax Qualification are considered Tax-Qualified Plans (TQPs) and eligible for tax incentives.

Tax Incentives and Privileges

• Retirement benefits received under a TQP are exempt from income and withholding tax.
• Trust fund investment income is also tax-exempt, provided: 
  • It’s earned by a trust forming part of a pension, stock bonus, or profit-sharing plan.
  • The trust is exclusively for employees.
  • It complies with BIR investment limitations.
• Employer contributions to TQPs are deductible from gross income, including: 
  • Contributions for the Normal Cost (liability accrued during the year).
  • Excess contributions, amortized over 10 years if not previously deducted.

Qualification Requirements

To qualify for tax incentives:

• The plan must be reasonable and permanent.
• The employee must: 
  • Be at least 50 years old.
  • Have served the same employer for at least 10 years.
  • Not have previously availed of similar retirement benefits.

Compliance and Documentation

• Employers must apply for the Certificate of Qualification within 30 days of the plan’s effectivity.
• Required documents vary depending on whether the plan is: 
  • Trusteed
  • Non-trusteed/insured
  • Multi-employer.

Coverage Rules

• Must cover at least 70% of all employees.
• If eligibility criteria are set, at least 80% of eligible employees must be covered.
• Excludes: 
  • Part-time workers (≤20 hours/week)
  • Seasonal employees (≤5 months/year).

Anti-Abuse Safeguards

• Strict rules against discriminatory practices favoring officers or highly compensated employees.
• Retirement funds must not be diverted to employer ventures.
• Non-forfeiture provisions ensure employees retain accrued benefits even if the plan is terminated.

Administrative Fees

• Fees for certificate issuance range from ₱2,000 to ₱5,000, depending on employer size.
• Employers with ≤5 employees are exempt from fees.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Bureau of Internal Revenue.

Purpose of the Amendment

• RR No. 14-2025 updates the transitory provisions of RR No. 3-2025 to clarify the registration timeline and VAT applicability for Non-Resident Digital Service Providers (NRDSPs).

Registration Deadline

• NRDSPs must register or update their information with the Bureau of Internal Revenue (BIR) within 120 days from the effectivity of RR No. 14-2025.
• Registration must be done via the VAT on Digital Services (VDS) Portal or the Online Registration and Update System (ORUS).
• The final deadline for registration is June 1, 2025.

VAT Applicability

• NRDSPs will be subject to 12% VAT starting June 2, 2025, immediately after the 120-day registration period.
• VAT applies to digital services consumed in the Philippines, regardless of the provider’s physical presence.

Compliance Requirements

• NRDSPs must: 
  • Register with the BIR.
  • Collect and remit VAT on taxable digital services.
  • Issue invoices showing VAT details.
  • File VAT returns regularly.

Reverse Charge Mechanism

• For Business-to-Business (B2B) transactions:      
  • The Philippine-based buyer is responsible for withholding and remitting VAT using BIR Form No. 1600-VT.
• For Business-to-Consumer (B2C) transactions:      
  • The NRDSP is directly liable for VAT and must remit it through the VDS Portal.

Enforcement & Flexibility

• The Commissioner of Internal Revenue may extend deadlines if necessary.
• Non-compliance may result in temporary blocking of digital services by the Department of Information and Communications Technology (DICT) and National Telecommunications Commission (NTC).

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Bureau of Internal Revenue.

 Electronic Invoicing Requirements (Section 237)

• Mandates the issuance of electronic invoices in a structured format that can be extracted and transmitted to the BIR.
• Applies to: 
  • E-commerce and internet-based businesses
  • Large Taxpayers under the Large Taxpayers Service (LTS)
  • Taxpayers using Computerized Accounting Systems (CAS), Computerized Books of Accounts (CBA), and invoicing software
  • Exporters and Registered Business Enterprises (RBEs) availing of tax incentives
  • POS system users and other taxpayers as required by the BIR
• Printed invoices without electronic reporting capability are not considered electronic invoices.

Electronic Sales Reporting System (Section 237-A)

• Requires covered taxpayers to electronically report sales data to the BIR via system-to-system transfer (e.g. JSON or XML format).
• Reporting must be done without manual entry and in real time or within 3 days of the transaction.
• Applies to the same taxpayer groups as above, including their head and branch offices.

Coverage of E-Commerce Activities

• Includes online sales of physical/digital goods, services, rentals, digital content creation, freelance services, ride-sharing, delivery platforms, and more.
• Covers both formal and informal online businesses.

Additional Allowable Deductions

• Taxpayers who comply with both electronic invoicing and sales reporting may claim: 
  • 100% of setup cost as additional deduction for micro and small taxpayers
  • 50% of setup cost for medium and large taxpayers
• Deduction is one-time and applies in the taxable year the system is completed or paid.

Effectivity and Compliance Timeline

• RR No. 11-2025 took effect on March 14, 2025.
• Covered taxpayers must comply with electronic invoicing requirements by March 14, 2026.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Bureau of Internal Revenue.

Key Features of RR No. 10-2025

VAT Zero-Rating for Sale of Goods (Section 106)

• Applies to export sales, including: 

1. Direct shipment of goods abroad
2. Sales to export-oriented enterprises meeting the 70% export threshold
3. Sales to bonded manufacturing warehouses
4. Sales to international shipping and air transport operators for foreign routes

• Local suppliers no longer need BIR approval for zero-rating if buyers present valid certifications from DTI or IPAs.

VAT Zero-Rating for Sale of Services (Section 108)

• Covers services rendered to: 

1. Non-resident clients outside the Philippines
2. Export-oriented enterprises
3. Entities exempt under international agreements
4. International shipping and air transport operators (for foreign operations only)

• Must be paid in acceptable foreign currency and properly accounted for under BSP rules.

VAT-Exempt Transactions (Section 109)

• Includes specific exemptions under subsections (u) and (dd), such as: 

1. Sales of renewable energy (power or fuel)
2. Certain transactions related to international transport operations

• Clarifies that partial use for domestic purposes may trigger 12% VAT.

VAT Refund and Credit (Section 112)

• Streamlines procedures for claiming VAT refunds: 

1. Applies to claims filed starting April 1, 2025
2. Input VAT related to zero-rated sales may be claimed as tax credit or refund
3. Refund claims must comply with updated documentation and timelines.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Bureau of Internal Revenue.

Key Features

Reduced Corporate Income Tax Rates

Domestic Corporations

• General rate: 25%
• Small corporations (net income ≤ ₱5M and assets ≤ ₱100M): 20%
• Registered Business Enterprises (RBEs) under Enhanced Deductions Regime (EDR): 20% effective November 28, 2024

Resident Foreign Corporations

• General rate: 25%
• RBEs under EDR: 20% effective November 28, 2024

Enhanced Deductibility of Input VAT

• Input VAT on local purchases attributable to VAT-exempt sales is now deductible from gross income under Section 34(C)(8) of the Tax Code.

Transitory Provisions

• Excess income tax payments due to the rate reduction may be carried forward to the next taxable period for RBEs that filed returns before the regulation’s effectivity.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Bureau of Internal Revenue.

Key Features

• Clothing Allowance Increase

1. The annual tax-exempt ceiling for uniform and clothing allowance has been raised from ₱6,000 to ₱7,000.
2. This adjustment aligns with Republic Act No. 11975 and the FY 2024 General Appropriations Act.

• Employee Achievement Awards

1. Awards for length of service or safety achievements are now recognized in cash, gift certificates, or tangible personal property.
2. The non-taxable threshold remains at ₱10,000 annually, provided the awards are granted under a written, non-discriminatory plan.

• Tax Implications:  These benefits remain exempt from income tax, withholding tax on compensation, and fringe benefit tax, as long as they fall within the prescribed limits.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Bureau of Internal Revenue.

Coverage & Scope

• Applies to resident and nonresident Digital Service Providers (DSPs) supplying digital services consumed in the Philippines.
• Covers Business-to-Business (B2B) and Business-to-Consumer (B2C) transactions.
• Defines digital services as automated services delivered via the internet or electronic networks (e.g., online platforms, cloud services, digital goods, advertising).

Registration Requirements

• All DSPs, including nonresident entities, must register with the Bureau of Internal Revenue (BIR).
• Nonresident DSPs may appoint a resident third-party service provider for compliance but are not required to have a physical presence.
• Registration is done via the VAT on Digital Services (VDS) Portal or temporarily through ORUS.

VAT Filing & Remittance

• Resident DSPs: File VAT returns and remit 12% VAT on gross sales.
• Nonresident DSPs: (1) B2B: Philippine business buyer withholds and remits VAT. (2) B2C: Nonresident DSP directly files and pays VAT.
• E-marketplaces: Liable for VAT on sales by nonresident merchants if they control key aspects of the transaction.

Invoicing & Compliance

• Invoices must include transaction details and VAT disclosure.
• Nonresident DSPs are not allowed to claim input VAT.
• Failure to register or comply may result in penalties or suspension of operations.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Bureau of Internal Revenue.