INSIGHTS is a monthly publication of BDB LAW to inform, update and provide perspectives to our clients and readers on significant tax-related court decisions and regulatory issuances (includes BIR, SEC, BSP, and various government agencies).

DISCLAIMER: The contents of this Insights are summaries of selected issuances from various government agencies, Court decisions, and articles written by our experts. They are intended for guidance only and as such should not be regarded as a substitute for professional advice.

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The operative characteristic
which entitles sales to
ECOZONE-registered entities
with VAT zero percent is that
the merchandise or goods sold
thereto is "to be used in
connection with the registered
activity".

The BIR finds that the taxpayer's sales to ecozone-registered enterprises do not qualify for VAT zero-rating pursuant to RMC No. 25-99, which states that "sales of ordinary automobiles to PEZA, SBMA and other ECOZONE registered enterprises are not entitled to VAT zero-rating.”

The taxpayer refutes said finding and points out that the BIR’s application of RMC No. 25-99 in its case is misplaced and unfounded, since while the items sold to Ford Subic and Ford Clark are automobiles, they are nevertheless pursuant to the registered ECOZONE activities of said entities, and hence must be entitled to VAT zero-rating in accordance with the NIRC and its regulations.

Here, the CTA ruled in favor of the taxpayer.

The BIR, in applying RMC No. 25-99 to assess taxpayers’ sales, merely relied on the fact that what was sold by the taxpayer to Ford Subic and Ford Clark are automobiles and spare parts, without taking into consideration the two entities' registered activities within their respective ECOZONEs.

It must be emphasized that the operative characteristic which entitles sales to ECOZONE-registered entities with VAT zero percent is that the merchandise or goods sold thereto is "to be used in connection with the registered activity".

Since Ford Subic and Ford Clark are both engaged in automotive dealership, its purchases of automobiles and spare parts from the taxpayer indeed qualifies for VAT zero-rating as these are to be used in connection with their respective registered activities. (Ford Group Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10805, April 4, 2025)

RR No. 14-2025, April 25, 2025 - This Amends Section 14 of the Revenue Regulations No. 3-2025 on the prescribed policies and guidelines for the implementation of VAT on Digital Services

RMC No. 031-2025, April 7, 2025 - This is a clarification on the provisions on the applicable taxes due on sale of real property considered as ordinary assets of the seller and other relevant matters

All taxpayers habitually engaged in the real estate business shall comply with   the following:

• Filing of BIR Form No. 1606 (Withholding Tax Remittance Return – For Onerous Transfer of Real Property other than Capital Asset) and BIR Form No. 2000 – OT (Documentary Stamp Tax Declaration /Return for One-Time Transactions)

• Proof of payment shall be attached to BIR Form No. 1606 as proof of claiming the income tax credit.

Note: The total of tax credits claimed per submitted Summary Alphalist of Withholding Taxes by taxpayers shall be the total of BIR Form No. 2307 under Creditable Tax Withheld for the year for its business other than real estate and the CWT remitted through BIR Form No. 1606.

• The seller habitually engaged in the real estate business on their sale of real property financed by financing institutions shall issue a sales invoice to the buyer as evidence of sale and payment, and an acknowledgment receipt or official receipt to the financing institution as evidence of each receipt.

Transfer fees, processing fees, miscellaneous fees, registration fees, and the like, billed by the taxpayer habitually engaged in the real estate business shall be subject to income tax and VAT.

RMC No. 38-2025, April 23, 2025 -This provides clarification on the requirement of submission of taxpayer identification number of cooperative members for the issuance of certificate of tax exemption in relation to Revenue Memorandum Circular No. 158-2022

SEC Memorandum Circular No. 3, Series of 2025, dated April 4, 2025 - This prescribes the mandatory use of the SEC Zuper Easy Registration Online (ZERO) in the registration of corporations using the Electronic Simplified Processing of Application for Registration of Company (eSPARC) and One Day Submission and E-Registration of Companies (OneSEC) as portals

Mandatory Use of SEC ZERO in eSPARC and OneSEC

• A user can register a new corporation through eSPARC and OneSEC using SEC ZERO as the only mode of processing.

• To access and facilitate the registration using SEC ZERO, the user must create a credentialed eSECURE account for all incorporators/signatories of the proposed corporation.

• The signatories will be able to authenticate their respective signatures through the eSAP, which is integrated into the eSPARC and OneSEC ZERO processing.

Coverage of the Mandatory Use of SEC ZERO with eSPARC and OneSEC

Domestic Stock Corporations shall be processed through the SEC ZERO, as follows:

For other types of corporations, the Regular Only mode of processing shall continue to apply for three (3) months from the effectivity of this Memorandum Circular.

IC Circular Letter No. 2025-09 dated April 8, 2025 - This provides the new Omnibus Guidelines on Investments.This provides the new Omnibus Guidelines on Investments.

The following are admissible investments of insurance companies, professional reinsurers, and mutual benefit associations (“MBAs”):

• Cash, time deposits, special savings accounts, deposit certificates, money market instruments, and fixed income securities with maturity of one (1) year or less, arising from an investment transaction, in currencies acceptable to the BSP as part of its international reserves;
• Marketable securities that are compliant with any of the conditions laid down in this Circular Letter;
• Investment vehicles;
• Loans;
• Purchase of accounts or loans receivables subject to the conditions and requirements of CL No. 2018-73;
• Real estate properties;
• Investments in infrastructure projects under the Philippine Development Plan, subject to the conditions and requirements of CL No. 2024-23;
• Investment in equities of other financial institutions;
• Securities issued by registered enterprise as defined in Executive Order No. 226 (s. 1987), entitled the Omnibus Investment Code;”
• Certificates, notes, and other obligations issued by the trustees or receivers of any institution created or existing under the laws of the Philippines which, or the assets of which, are being administered under the direction of any court having jurisdiction;
• Electronic Data Processing (EDP) machines or Information and Communications Technology (“ICT”) Systems and Infrastructure, subject to the conditions and requirements of CL No. 2014-18; Proprietary club shares; and
• Investment Management Agreement (IMA) or other forms of contract primarily for financial return.

These admissible investments shall not require prior approval from the Commission. However, investments under Article ll, Sections 1(d)(1)(ii), (d)(2), (d)(3), (d)(5), (e), (f), (g), (h), and (l)shall require prior approval from the Commission subject to the conditions of this CL and the documentary requirements under Annex A thereof.

On the other hand, the following assets shall in no case be allowed as admitted assets of insurance companies, professional reinsurers, and MBAs doing business in the Philippines in the determination of its financial condition:

• Goodwill, tradenames, and other like intangible assets;
• Prepaid or deferred charges for expenses and commissions paid by such insurance company;
• Advances to officers (other than policy loans), which are not adequately secured and which are not previously authorized by the Commissioner, as well as advances to employees, agents, and other persons on mere personal security;
• Shares of stocks of such insurance company, owned by it, or any equity therein as well as loans secured thereby, or any proportionate interest in such shares of stock through the ownership by such insurance company of an interest in another corporation or business unit;
• Furniture, furnishing, fixtures, safes, equipment, library, stationery, literature, and supplies;
• Items of bank credits representing checks, drafts, or notes returned unpaid after the date of statement; and The amount, if any, by which the aggregate value of investments as carried in the ledger assets of such insurance company exceeds the aggregate value thereof.

FIRB Advisory No. 003-2025 - 
The FIRB highly encourages all IPAs to use the prescribed COR template for each transitory project of RBEs qualified to avail of said non-fiscal incentives.

Pursuant to Section 29 of CREATE MORE Act, the non-fiscal incentives previously enjoyed by transitory RBEs prior to the effectivity of CREATE Act.

Transitory RBEs may continue availing of the duty and VAT exemption on importations and VAT zero-rating on local purchases beginning the effectivity of CREATE MORE Act until December 31, 2024.

The FIRB highly encourages all IPAs to use the prescribed COR template for each transitory project of RBEs qualified to avail of said non-fiscal incentives.

The CORs for transitory RBEs should include the following: IPA Name, Business Enterprise Name, Project/Activity Name, COR Number, Original Registration Date, TIN, Market Orientation, PSIC Subclass Classification, Project/Activity Address, ITH, ITH Start and End Date, Gross Income Earned and Start Date, Duty Exemption, VAT Exemption including start and end date, VAT Zero-Rating including start and end date, other types of incentives, other activity classification including their end and start date, place of issuance, board resolution date and number.

Once CORs have been signed, IPAs shall upload these to the Fiscal Incentives Registration and Monitoring System (FIRMS)

In case IPAs do not use FIRMS, they shall submit to the FIRB Secretariat the list of transitory projects, along with the above-mentioned details with new CORs within sixty (60) calendar days from the issuance of the said Advisory.