Part2 Revenue Regulations 2018

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
Quezon City
REVENUE REGULATIONS NO. l - 2018
SUBJECT: Providing for the Revised Tax Rates on Mineral Products pursuant to
the Provisions of Republic Act No. 10963, otherwise known as the
"Tax Reform for Acceleration and Inclusion (TRAIN) Law"
Amending for the Purpose Revenue Regulations No. 13-94
TO: All Internal Revenue Officers and Others Concerned.
SECTION 1: SCOPE. - Pursuant to the provisions of Section 244 in relation to Section

245 of the National Internal Revenue Code of 1997 (N IRC), as amended, and Section 84 of
Republic Act No. 10963, otherwise known as the "Tax Reform for Acceleration and
Inclusion (TRAIN) Law", these Regulations are hereby promulgated to amend the relevant
provisions of Revenue Regulations (R R) No. 13-94 by providing for the revised tax rates on
m mineral products.
SEC. 2: Amending Section 3 of RR No. 13-94
"SEC. 3: DEFINITION OF TERMS. - For purposes of these Regulations, the

following words and phrases shall have the meaning indicated below•
a. xxx xxxxxx xxx
2. Gross Oil pull shall be interpreted as the actual market value of m minerals or
mineral products or of bullion from each mine or m mineral land operated as a
separate entity, without any deduction from mining, milling, refining (including
all expenses incurred to prepare the said minerals or mineral products in a
marketable state), as well as transporting¼ handling, marketing or any other
expenses: Provided, That if the minerals or mineral products are sold or
consigned abroad by the lessee or owner of the mine under C.I.F. terms, the actual
cost of ocean freight and insurance shall be deducted: Provided, however. That in
the case of mineral" concentrates not traded in commodity exchanges in the
Philippines or abroad such as copper concentrate. The actual market value shall
be the world price quotations of the refined mineral products content thereof
prevailing in the said commodity exchanges, after deducting the smelting,
refining and other charges incurred in the process of cannellini the mineral
concentrates into refined metal traded in those commodity exchanges:
xxx xxx xxx
1
SEC. 3: Amending Section 5 of RR No. 13-94
"SEC. 5: Payment of excise tax on minerals and mineral products.
A. Rate and Base of Tax. There shall be levied, assessed and collected on
mineral products and quarry resources, excise tax as follows:
3.1 . On domestic and imported coal and coke:

Date of Effectivity Excise Tax er Metric Ton
January l , 201 8 Fifty pesos (1150.00)
January l , 201 9 One hundred pesos (PI 00.00)
January l, 2020 and onwards One hundred and fifty pesos (P 1 50.00)
Coal produced under Coal Operating Contracts entered into by the government
pursuant to Presidential Decree No. 972 as well as those exempted from excise tax on
mineral products under other laws shall now be subject to the applicable rates above
beginning January l, 201 8.
3.2 All non-metallic minerals and quarry resources:

Excise Tax
Locally extracted or produced Four per cent (4%) based on the actual
market value of the gross output thereof at
the time of removal.
Imported Four per cent (4%) based on the value used

by the Bureau of Customs (BOC) in
determining tariff and customs duties. net
of excise tax and value-added tax.
Locally' extracted natural gas Exempt.

and liquefied natural gas
2
3.3 All metallic minerals.
Excise Tax
Locally extracted or produced Four percent (4%) based on the actual

copper. gold, chromite and market value of the gross output thereof at
other metallic minerals the time of removal.
Impaled copper. gold chromite Four percent (4%) based on the value used
and other metallic minerals by the BOC in determining tariff and
customs duties, net of excise tax and value-
added tax.
3.4 Indigenous petroleum. a tax of six per cent (6%) of the fair international market price
thereof on the first taxable sale. barter. exchange or such similar transaction. such tax to
be paid by the buyer or purchaser before removal from the place of production. The
phrase first average sale, hurler, exchange or similar transaction ' means the transfer of
indigenous petroleum in its final state to a first taxable transferee. The fair international
market price shall be determined in constitution with an appropriate government agency;
For the purpose of this Subsection, •indigenous petroleum shall include locally-
extracted mineral oil, hydrocarbon gas. bitumen, crude asphalt, mineral gas and all other
similar or naturally associated substances with the exception of coal, peat, bituminous
shale and/or stratified mineral deposits.
B. xxx"
SEC. 4: REPEALING/AMENDATORY CLAUSE. All regulations, rulings or orders

or portions thereof not consistent herewith are hereby revoked- repealed, modified or
amended accordingly.
SEC. 5: EFFECTIVITY CLAUSE. These Regulations shall take effect immediately

after its complete publication in a newspaper of general circulation.
Recommending Approval:
CAESAR R. DULAY
Commissioner of Internal Revenue
012459
BIR TRAIN IRR/RR Drafting Committee
3
REPUBLIC CF THE PHILIPPINES
Quezon City
REVENUE REGULATIONS NO. 2-2018
SUBJECT Providing for the Revised Tax Rates and other Implementing Guidelines
on Petroleum Products Pursuant to Republic Act No. 10963, otherwise
known as the "Tax Reform for Acceleration and Inclusion (TRAIN)
Law"
TO All Internal Revenue Officials and Others Concerned
SECTION 1. SCOPE. Pursuant to the provisions of Section 244 in

relation to Section 245 of the National Internal Revenue Code (NIRC) of 1997 as
amended, these Regulations are hereby promulgated to implement the provisions on
Petroleum Products under Section 84 of Republic Act No. 10963, amending
provisions of Section 148, Chapter V of Title VI Excise Tax on Petroleum Products,
of the NIRC, as amended.
SEC. 2. REVISED EXCISE RATES AND BASES OF SPECIFIC

TAX. — There shall be collected on refined and manufactured mineral oils and
motor fuels, the following excise taxes which shall attach to the goods hereunder
enumerated as soon as they are in existence as such:
EFFECTIVITY
PRODUCTS
January l , 201 8 January l , 2019 January l. 2020
(a) Lubricating oils and greases,
including but not limited to base stock
for lube oils and greases, high vacuum
distillates, aromatic extracts and other
similar preparations, and additives for
lubricating oils and greases, whether
such additives are petroleum based or
not, per litre and kilogram respectively,
of volume capacity or weight. P10.00
(a. l) Locally produced or imported
oils previously taxed but
subsequently reprocessed, re-refined,
recycled, per litre and kilogram of
volume capacity or weight.
(b) Processed gas, per litre of volume
capacity.
4
(c) Waxes and petrolatum per kilogram.
(d) Denatured alcohol to be used for
motive power, per litre of volume
capacity.
(e) Asphalts, per kilogram.
(f) Naphtha, regular gasoline, pyrolisis
gasoline and other similar products of
distillation. per liter of volume capacity
P7.OO P9.OO P1O.OO
(g) Unleaded premium gasoline. per liter
of volume capacity
(h) Kerosene. per liter of volume P3.OO P4.OO P5.OO
capacity
(i) Aviation turbo jet fuel, aviation gas,
per liter of volume capacity
P4.OO P4.OO P4.OO
(j) Kerosene, when used as aviation
fuel, per liter of volume capacity
(k) Diesel fuel oil, and on similar fuel
oils having more or less the same
generating power, per liter of volume
capacity
(l) Liquefied petroleum gas used for
motive power, per kilo ram P2.50 P4.50 P6.OO
(m) Bunker fuel oil, and on similar oils
having more or less the same
generating power, per liter of volume
capacity
(n) Petroleum coke, per metric ton
(o) Liquefied petroleum gas, per kilo P1.OO P2.OO P3.OO
gram
(p) Naphtha and pyrolysis gasoline,
when used as a raw material in the
production of petrochemical products or
in the refining of petroleum products, or
as replacement fuel for natural-gas-
fired-combined cycle power plant, in
lieu of locally-extracted natural gas
during the non-availability thereof, per
liter of volume capacity PO.OO PO.OO PO.OO
(q) Liquefied petroleum gas, when
used as raw material in the
production of petrochemical
products, per kilo ram
(r) Petroleum coke, when used as
feedstock to any power generating
facility, per metric ton
5
SEC. 3. EXCEPTION TO REVISED EXCISE TAX RATES. The
revised rates under Section 2 shall not apply under the following instances:
a) Lubricating oils and greases produced from base stocks and

additives on which the excise tax has already been paid shall no longer
be subject to excise tax.
b) Unless otherwise provided by special laws, if the denatured

alcohol is mixed with gasoline, the excise tax on which has already been
paid, only the alcohol content shall be subject to the tax herein
prescribed. The removal of denatured alcohol of not less than one
hundred eighty degrees (1800) proof (ninety per cent (900) absolute
alcohol) shall be deemed to have been removed for motive power,
unless shown otherwise.
SEC. 4. CREDITABLE EXCISE TAX. — The excise tax paid on the

purchased base stock (bunker) used in the manufacture of excisable articles and
forming part thereof shall be credited against the excise tax due thereon. For
purposes of these regulations, any excess of excise taxes paid on raw materials
resulting from manufacturing, blending, processing, and storage and handling losses
shall not give rise to a tax refund or credit.
SEC. 5. SUSPENSION OF SCHEDULED INCREASE. For the

period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as
imposed in this section shall be suspended when the average Dubai crude oil based
on Mean Of Platt’s Singapore (MOPS) or three (3) months prior to the scheduled
increase of the month reaches or exceeds eighty dollars (USD 80) per barrel. A
separate Revenue Regulation (RR) shall be issued for this purpose.
SEC. 6. MANDATORY MARKING OF ALL PETROLEUM

PRODUCTS. – The use of an official fuel marking or similar technology on
petroleum products that are refined, manufactured, or imported into the Philippines,
and that are subject to the payment of taxes and duties, such as but not limited to
unleaded premium gasoline, kerosene and diesel fuel oil shall be required. It shall be
implemented in accordance with rules and regulations to be issued by the Secretary
of Finance in consultation with the Commissioner of Internal Revenue and
Commissioner of Customs and in coordination with the Secretary of Energy.
SEC. 7. MANUFACTURERS AND/ OR IMPORTERS TO

PROVIDE THEMSELVES WITH COUNTING OR METERING
DEVICES TO DETERMINE VOLUME OF PRODUCTION AND
IMPORTATION. Manufacturers of oil products subject to excise tax shall
provide themselves with such necessary number of suitable counting or metering
devices to determine as accurately as possible the volume, quantity or articles
produced by them under the rules and regulations promulgated by the Secretary of
Finance upon recommendation of the Commissioner of Internal Revenue:
6
Provided, That the Department of Finance shall maintain a registry of all
petroleum manufacturers and/ or importers and the articles being manufactured
and/ or imported by them: Provided further, That the Department of Finance
shall mandate the creation of a real-time inventory of petroleum articles being
manufactured, imported or found in storage depots of such petroleum
manufacturers and/ or importers: Provided, finally, That importers of finished
petroleum products shall also provide themselves with Bureau-accredited
metering devices to determine as accurately as possible the volume of petroleum
products imported by them.
SEC.8. TRANSITORY PROVISION. — For the effective

implementation of the Act, the following guidelines shall be followed during the
transitory period:
a) Submission of Stock Inventories. Concerned oil companies,

owners, operators or lessees of storage depots shall submit duly
notarized inventories of all petroleum products as of midnight of
December 3 1, 201 7 to Excise LT Field Operations Division
(ELTFOD) in the case of taxpayers registered within Revenue
Region (R R) Nos. 4 (San Fernando, Pampanga), 5 (Caloocan), 6
(Manila), 7 (Quezon City). 8 (Makati City) and 9 (San Pablo City)
or to the concerned Excise Tax Area (EXT A) in the case of
taxpayers registered outside of RR 4 to 9, on or before January 1
5, 201 8 in the prescribed format in Annex Likewise, similar
inventories shall be submitted as of midnight of December 3 1 201
8, December 31, 20 1 9 and December 3 1, 2020. These sworn
statements shall likewise be subjected to verification as required
under existing regulations and issuances. In the case of failure to
submit the required inventories by any of the aforesaid taxpayer,
petroleum products found in their possession as of January l, 20 1
8, January I - 2019 and January l, 2020 shall be subjected to the
new excise tax rates.
b) Accounting for slacks or inventory of goods after each date of

effectivity of the new excise tax rates. These inventories of
petroleum products taken prior to each date of effectivitv shall be
liquidated and accounted for on a "First-in First-Out- (FIFO)
method of inventory.
c) Issuance of Withdrawal Certificates. All Withdrawal

Certificates issued covering the removals of petroleum products
subject to the old or previous tax rates products shall be prominently
stamped with the “STOCKS ON HAND PRIOR TO APPLICABLE
DATE OF EFFECTIVIT”'. The removals of finished goods where
the accompanying Withdrawal Certificates do not bear such
information shall be subject to the new excise tax rates imposed
under these Regulations at the time of its actual removal, even if the
same were taken from the old or previous inventory.
7
SECTION 9. PENALTIES. — Violations of the provisions of
these Regulations shall be subject to the corresponding penalties provided
for under Title X of the N IRC of 1 997, as amended, and applicable
regulations.
SECTION 10. REPEALING CLAUSE. — All rules and

regulations inconsistent with the provisions of these Regulations are hereby
repealed or amended accordingly.
SECTION 11. EFFECTIVITY. — These Regulations shall take

effect immediately following its complete publication in at least one (l)
newspaper of general circulation.
8
9
Quezon City
SUBJECT: Providing for the Revised Tax Rates on Tobacco Products Pursuant to
the Provisions of Republic Act No. 10963, otherwise known as "Tax
Reform for Acceleration and Inclusion (TRAIN) Law", Amending for
the Purpose Revenue Regulations No. 17-2012
TO: All Internal Revenue Officers and Others Concerned.
SECTION 1. SCOPE. - Pursuant to the provisions of Section 244 in relation to Section

245 of the National Internal Revenue Code of 1 997 (NIRC), as amended and Section 84 of
Republic Act No. 1 0963, otherwise known as "Tax Reform for Acceleration and Inclusion
(TRAIN) Law", these Regulations are hereby promulgated to provide for the revised tax rates
on cigarettes, amending certain provisions of Revenue Regulations (RR) No. 17- 2012
SEC. 2. AMENDATORY PROVISIONS. - The provisions of Section 3 Items B (4) and

B (5) of RR No. 17-2012 is hereby amended as follows:
"SEC. 3. REVISED RATES AND BASES OF THE SPECIFIC TAX. -

There shall be levied, assessed and collected an excise tax on tobacco
products, in accordance with the following schedule:
DATE OF EFFECTIVITY OF TAX RATES
January January l, January
l , 2018 July 1, 2020 until l, 2022 January l,
PRODUCT until 2018 until December until 2024
June December 31, 2021 December onwards
30, 2018 31, 2019 31, 2023
xxx
B. TOBACCO
PRODUCTS
Per Pack Per Pack Per Pack Per Pack Effective

(4)Cigarettes packed by Php35.00 Php 37.50 Php 40.00 1/1/2024
PhP 32.50 the specific
hand
(5) Cigarettes packed by Php 32.50 Php 35.00 Php 37.50 Php 40.00 tax rate
machine shall be
increased
by 4%
every year
10
SEC. 4. REPEALING CLAUSE. — All regulations, rulings or orders or portions thereof
not consistent with the provisions of these Regulations are hereby revoked, repealed or
amended accordingly'.
SEC. 5. EFFECTIVITY CLAUSE. - These Regulations shall take effect immediately

following its publication in a newspaper of general circulation.
11
Quezon City
SUBJECT: Rules and Regulations Implementing the Documentary

Stamp Tax Rate Adjustment Under Republic Act No.
10963, Otherwise Known as the "Tax Reform For
Acceleration and Inclusion (TRAIN) Law"
TO: All Revenue Officials, Employees and Others Concerned
SECTION 1. SCOPE — Pursuant to the provisions in Section 4 and

Section 244 of Republic Act No. 8424 and Section 84 of Republic Act No. 10963,
these regulations are hereby promulgated to implement the rate adjustment of
documentary stamp taxes provided in Sections 5 1, 52. 53. 54, 55, 56, 57, 58, 59, 60,
61, 62, 63, 64, 65, 66. 67, 68. 69, and 70 in Republic Act No. 10963 otherwise known
as the "Tax Reform for Accelerations and
Inclusion (TRAIN) Law'
SEC. 2. NEW RATE OF DST ON ORIGINAL ISSUE OF SHARES

OF STOCKS
"SEC. 174. Stamp Tax on Original Issue of Shares of Stock. - On every

original issue, 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 two
pesos (P2.00) on each Two hundred pesos (P200) or fractional part
thereof, 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.”
The rate of DST on the original issue of shares has been increased from One
peso (PI .00) to Two pesos (P2.00) on each Two hundred pesos (P200), or fractional
part thereof of the par value of such shares of stock.
12
SEC. 3. NEW RATE OF DST ON STAMP TAX ON SALES,
AGREEMENTS TO SELL, MEMORANDA OF SALES, DELIVERIES
OR TRANSFER OF SHARES OR CERTIFICATES OF STOCK
“SEC. 175. Stamp Tax on Sales, Agreements to Sell, Memoranda

of Sales, Deliveries or Transfer of Shares or Certificates of
Stock. — On all sales or agreements to sell or memoranda of sales or
deliveries or transfer of such securities by assignment in bank or by
delivery or by any paper or agreement memorandum or other
evidences of transfer or sale whether entitling the holder in any manner
to the benefit of such stock or to secure the future payment of money
or for the future transfer of any stock, there shall be collected a
documentary stamp tax of One peso and Fifty centavos (P1 .50) on
each Two hundred pesos (P 200), or fractional part thereof, of the par
value of such stock: Provided, That only one tax shall be collected on
each sale or transfer of stock from one person to another, regardless of
whether or not a certificate of stock or obligation is issued, indorsed, or
delivered in pursuance of such sale or transfer: and Provided, further,
That in the case of stock without par value the amount of the
documentary stamp tax herein prescribed shall be equivalent to Fifty
per cent of the documentary stamp tax paid upon the original issue of
said stock."
The rate of DST on sales, agreements to sell, memoranda of sales, deliveries or

transfer of shares or certificates of stock has been increased from Seventy-five
centavos (PO. 75) to One peso and fifty centavos (PI .50) on each Two hundred pesos
(P200), or fractional part thereof, of the par value of such stock. In case of stocks
without par value, the DST shall be equivalent to Fifty per cent (50 0/0) of the DST
paid upon the original issue of said stock.
SEC. 4. NEW RATE OF DST ON CERTIFICATES OF PROFITS OR

INTEREST IN PROPERTY OR ACCUMULATIONS
"SEC. 177, Stamp Tax on Certificates of Profits or Interest in Property

or Accumulations. — On all certificates of profits, or any certificate or
memorandum showing interest in the property or accumulations of any
association, company or corporation, and on all transfers of such certificates
or memoranda, there shall be collected a documentary stamp tax of One
peso (PI .00) on each Two hundred pesos, or fractional part thereof, of the
face value of such certificates or memorandum.'
The rate of DST on the Certificates of Profits or Interest in Property or
Accumulations has been increased from Fifty centavos (P0.50) to one peso (P1 .00) on
each Two hundred pesos, or fractional part thereof, of the face value of such
certificates or memorandum.
13
SEC. 5. NEW RATE OF DST ON BANK CHECKS, DRAFTS,
CERTIFICATES OF DEPOSIT NOT BEARING INTEREST, AND OTHER
INSTRUMENTS
"SEC. 178. Stamp Tax on Bank Checks, Drafts, Certificates of Deposit

not Bearing Interest, and Other Instruments. — On each bank check,
draft or certificate of deposit not drawing interest. or order for the
payment of any sum of money drawn upon or issued by any bank, trust
company, or any person/persons, companies or corporations, at sight
or on demand, there shall be collected a documentary stamp tax of
three pesos (P3.00)
The rate of DST on bank checks, drafts, certificates of deposit not bearing
interest, and other instruments has been increased from One peso and Fifty centavos
(P1 .50) to Three pesos
SEC. 6. NEW RATE OF DST ON ALL DEBT INSTRUMENTS
"SEC. 179. Stamp Tax on All Debt Instruments. — On every original

issue of debt instruments, there shall be collected a documentary
stamp tax of One peso and Fifty centavos (P1 .50) on each Two
hundred pesos (P200.00) or fractional part thereof. of the issue price of
any such debt instruments: Provided, that 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)
days: Provided, further, That only one documentary stamp tax shall be
imposed on either loan agreement, or promissory notes issued to
secure such loan.
The rate of DSI on all debt instruments is increased from One peso (P1 .00) to
One peso and Fifty centavos (P1.50) on each Two hundred pesos (P200.00), or
fractional part thereof, of the issue price of any such debt instruments.
SEC. 7. NEW RATE ON ALL BILLS OF EXCHANGE OR DRAFTS
"SEC. 180. Stamp Tax on Al/ Bills of Exchange or Drafts. On all bills
of exchange (between points within the Philippines) or drafts, there
shall be collected a documentary stamp tax of Sixty centavos (P0.60)
on each Two hundred pesos or fractional part thereof, of the
face value of any such bill of exchange or draft.”
The rate of DST on all bills of exchange or drafts has been increased from
Thirty centavos (P0. 30) to Sixty centavos (P0.60) on each Two hundred pesos (P
200.00) or fractional part thereof, of the face value of any such bill of exchange or
draft.
14
SEC. 8. NEW RATE OF DST UPON ACCEPTANCE OF BILLS OF
EXCHANGE AND OTHERS
"SEC. 181. Stamp Tax Upon Acceptance of Bills of Exchange and

Others Upon any acceptance or payment of any bill of exchange or
order for the payment of money purporting to be drawn in a foreign
country but payable in the Philippines, there shall be collected a
documentary stamp tax of Sixty centavos (P0.60) on each Two
hundred pesos (P200) or fractional part thereof, of the face value of
any such bill of exchange or order, or the Philippine equivalent of such
value, if expressed in foreign currency.”
The rate of DST on acceptance of bills of exchange and others all bills of
exchange or drafts has been increased from Thirty centavos (PO0.30) to Sixty
centavos (P0.60) on each Two hundred pesos (P200.00) or fractional part thereof of
the face value of any such bill of exchange or draft, or the Philippine equivalent of
such value, if expressed in foreign currency.
SEC. 9. NEW RATE OF DST ON FOREIGN BILLS OF EXCHANGE

AND LETTERS OF CREDIT
"SEC. 182. Slump Tax on Foreign Bills of Exchange and of Credit — On

all foreign bills of exchange and letter of credit (including orders. by
telegraph or otherwise, the payment of money issued by express or
steamship companies or by any person or persons) drawn in but payable
out of the Philippines in a set of three (3) or more according to the
custom of merchants and bankers, there shall be collected a documentary
stamp tax of Sixty centavos (P0.60) on each Two hundred pesos or
fractional part thereof, of the face value of any such bill of exchange or
letter of credit, or the Philippine equivalent of such face value, if
expressed in foreign currency.”
The rate of DST on all bills of exchange or drafts has been increased from Thirty
centavos (P0.30) to Sixty centavos (P0.60) on each Two hundred pesos (P200), or
fractional part thereof. of the face value of any such bill of exchange or letter of credit, or
the Philippine equivalent of such face value, if expressed in foreign currency.
SEC. 10. NEW RATE OF DST ON LIFE INSURANCE POLICIES
"SEC. 183. Stamp Tax on Life Insurance Policies — On all policies of insurance or
other instruments by whatever name the same may be called, whereby any insurance
shall be made or renewed upon any life or lives, there shall be collected a one-time
documentary stamp tax at the following rates:
15
If the amount of insurance does not exceed P100,000 Exempt
If the amount of insurance exceeds
P100,000 but does not exceed P300,000 P20.00
P750,000 but does not exceed P1,000,000 P150.00
If the amount of insurance exceeds P1,000,000 P200.00
The rates of DST on life insurance policies have been doubled.
SEC. 11. NEW RATE OF DST ON POLICIES OF ANNUITIES AND

PRENEED PLANS
"SEC. 186. Stamp Tax on Policies of Annuities and Pre-Need Plans. —

On all policies of annuities, or other instruments by whatever name the
same may be called, whereby an annuity may be made, transferred or
redeemed, there shall be collected a documentary stamp tax of One peso
(P1 .00) on each Two hundred pesos (P200), or fractional part thereof of
the premium or instalment payment on contract price collected. On pre-
need plans, the documentary stamp tax shall be Forty centavos (P0.40)
on each Two hundred pesos (P200), or fractional part thereof, of the
premium or contribution collected."
The rate of DST on annuities has been increased from Fifty centavos (P0.50) to
One peso (P1 .00) on each Two hundred pesos (P200), or fractional part thereof, of the
premium or instalment payment on contract price collected. Pre-need plans are now
taxed at Forty centavos (P0.40) from the previous rate of Twenty centavos (0.20)
SEC. 12. NEW RATE OF DST ON CERTIFICATES
"SEC. 188. Stamp Tax on Certificates — on each certificate of damage or

otherwise, and on every other certificate or document issued by any
customs officer, marine surveyor, or other person acting as such. and on
each certificate issued by a notary public, and on each certificate of any
description required by law or by rules or regulations of a public office,
or which is issued for the purpose of giving information, or establishing
proof of a fact, and not otherwise specified herein, there shall be
collected a documentary stamp tax of Thirty pesos (P 30.00)."
The rate of DST on certificates has been increased from Fifteen pesos (PI5.00) to
Thirty pesos (P30.00).
16
SEC. 13. NEW RATE OF DST ON WAREHOUSE RECEIPTS
"SEC. 189. Stamp Tax on Warehouse Receipts, On each warehouse

receipt for property held in storage in a public or private warehouse or
yard for any person other than the proprietor of such warehouse or yard,
there shall be collected a documentary stamp tax of Thirty pesos (P
30.00): Provided That no tax shall be collected on each warehouse receipt
issued to any one person in any one calendar month covering property the
value of which does not exceed Two hundred pesos (P200)."
The rate of DST on warehouse receipts has been increased from Fifteen pesos (PI 5.00) to
SEC. 14. NEW RATE OF DST ON JAI-ALAI, HORSE RACE,

TICKETS, LOTTO, OR OTHER AUTHORIZED NUMBERS GAMES
"SEC. 190. Stamp Tax on Jai-alai, Horse Race, Tickets, Lotto, or Other
Authorized Numbers Games. — On each jai-alai, horse race ticket, lotto,
or other authorized numbers games, there shall be collected a
documentary stamp tax of Twenty centavos (P0.20): Provided, That if the
cost of the ticket exceed One peso (P1.00), an additional tax of Twenty
centavos (P0.20) on every One peso (P1.00), or fractional part thereof,
shall be collected.”
The rate of DST on jai-alai horse race, tickets lotto or other authorized number
game has been increased from Ten centavos (P0. 10) to Twenty centavos (P0.20); and if
the cost of ticket exceeds One peso (P1.00), the additional tax has been increased from
Ten centavos (0.10) to Twenty centavos (P0.20) on every One peso (P1.00) or fractional
part thereof.
SEC. 15. NEW RATE OF DST ON BILLS OF LADING OR RECEIPTS
"SEC. 191 Stamp Tax on Bills o/ Lading or Receipts. — On each set of bills of lading
or receipts (except charter party) (Or any goods. merchandise, or effects shipped from
one port or place in the Philippines (except on ferries across rivers) or to any foreign
port, there shall be collected a documentary stamp tax of Two pesos if the value of
such goods exceeds One hundred pesos (P100) and does not exceed One thousand
pesos. Twenty pesos if the value exceeds One thousand pesos (P1000): Provided,
however. That freight tickets covering goods, merchandise or effects carried as
accompanied baggage of passengers on land and water carriers primarily engaged in
the transportation of passengers are hereby exempt.”
The rate of DST on each bill of lading or receipt has been increased from One peso
(P1.00) to Two pesos (P 2.00) if the value of goods exceeds One hundred pesos (PI 00) and
does not exceed One thousand pesos (P 1,000); and the rate of DST has been increased
Ten pesos (PI 0.00) to Twenty pesos (P20.00), if the value of goods exceeds One thousand
pesos (P 1,000).
17
SEC. 16. NEW RATE OF DST ON PROXIES
"SEC. 192. Stamp Tax on Proxies. On each proxy for voting at any
election of officers of any company or association or for any other
purpose, except proxies issued affecting the affairs of associations or
corporations organized for religious, charitable or literary purposes, there
shall be collected a documentary stamp tax of Thirty pesos (P 30.00)."
The rate of DST on each proxy has been increased from Fifteen pesos (P15.00) to
SEC. 17. NEW RATE OF DST ON POWERS OF ATTORNEY
"SEC. 193. Stamp Tax on Powers of Attorney. — On each power of

attorney to perform any act whatsoever, except acts connected with the
collection of claims due from or accruing to the Government of the
Republic of the Philippines, or the government of any province, city or
municipality, there shall be collected a documentary stamp tax of Ten
pesos (P 10.00)."
The rate of DST on each power of attorney has been increased from Five pesos
(P5.00) to Ten pesos (P10.00).
SEC. 18. NEW RATE OF DST ON LEASES AND OTHER HIRING

AGREEMENTS
"SEC. 194. Stamp Tax on Leases and Other Hiring Agreements. — On

each lease, agreement, memorandum, or contract for hire, use or rent of
any lands or tenements. or portions thereof, there shall be collected a
documentary stamp tax of Six pesos (P6.00) for the first Two thousand
pesos (P2.000), or fractional part thereof, and an additional Two pesos for
every One thousand pesos (PI or fractional part thereof. in excess of the
first Two thousand pesos (P 2,000) each year of the term of said contract
or agreement.”
The rate of DST on leases and other hiring agreements has been increased from
Three pesos (P 3.00) to Six pesos for the first Two thousand pesos or fractional
part thereof: and the additional tax was increased from One peso (PI .00) to Two pesos
[Or every One thousand pesos (P 1 or fractional part thereof', in excess of the first
Two thousand pesos (P 2,000).
SEC. 19. NEW RATE OF DST ON MORTGAGES, PLEDGES, AND

DEEDS OF TRUST
"SECTION 195. Stamp Tax on Mortgages, Pledges, and Deeds Trust. - On

every mortgage or pledge of lands, estate, or property, real or personal,
heritable or movable, whatsoever, where the same shall be made as a security
18
for the payment of any definite and certain sum of money lent at the time or
previously due and owing or forborne to be paid, being payable, and on any
conveyance of land, estate, or property whatsoever. in trust or to be sold or
otherwise converted into money which shall be and intended only as security,
either by express stipulation or otherwise, there shall collected a documentary
stamp tax at the following rates:
(a) When the amount secured does not exceed Five thousand
pesos (P 5,000), Forty pesos (P40.00)
(b) On each Five thousand pesos (P 5,000), or fractional part

thereof in excess of Five thousand pesos an additional tax of Twenty
pesos P 20.00.
The rate of DST on every mortgage, pledge, or deed of trust has been increased from
Twenty pesos (P20.00) to Forty pesos (P40.00), when amount secured does not exceed Five
thousand pesos (P 5,000); and the additional tax has been increased from Ten pesos (P10.00)
to Twenty pesos (P20.00), on each Five thousand pesos (P 5,000), or fractional part thereof in
excess of Five thousand pesos (P 5,000).
SEC. 20. NEW RATE OF DST ON DEEDS OF SALE, AND

CONVEYANCES AND DONATION OF REAL PROPERTY
"SEC. 196. Stamp tax on Deeds o/ Sale, Conveyances and Donations of Real
Property. - On all conveyances, donations, deeds, instruments, or writings,
other than grants, patents or original certificates of adjudication issued by the
government, whereby any land, tenement, or other realty sold shall be
granted. assigned, transferred, donated or otherwise conveyed to the
purchaser, or purchasers, or to any other person or persons designated by
such purchaser or purchasers, or donee, there shall be collected a
documentary stamp tax, at the rates herein below prescribed based on the
consideration contracted to be paid for such realty or on its fair market value
determined in accordance with Section 6(E) of this Code, whichever is
higher: Provided, That when one of the contracting parties is the Government
the tax herein imposed shall be based on the actual consideration.
(a) When the consideration, or value received or contracted to be paid

for such realty, after making proper allowance of any encumbrance, does
not exceed One thousand pesos (P1,000), Fifteen pesos (P15.00).
(b) For each additional One thousand pesos (P 1,000) or fractional part
thereof in excess of One thousand pesos of such consideration or value,
Fifteen pesos (P15.00).
Transfers exempt from donor's tax under Section 101 (a) and (b) of this Code
shall be exempt from the tax imposed under this section.
19
When it appears that the amount of the documentary stamp tax payable
hereunder has been reduced by an incorrect statement of the consideration in
any conveyance, deed, instrument or writing subject to such tax the
Commissioner, provincial or City Treasurer or other revenue lie officer shall
from the assessment rolls or other reliable source of information, assess the
property of its true market value and collect the proper tax thereon.
Donations of real property shall be subject (o DST under the amended Section 196.
However, the following donations or gifts exempt from donors tax under Section 101 (A)
and (B) shall be exempt from DST:
(A) In the Case of Gifts Made by a Resident
( l ) Gifts made to or for the use of the National Government or any entity created by
any of its agencies which is not conducted for profit, or to any political subdivision of
the said Government; and
(2) Gifts in favour of an educational and/or charitable, religious, cultural or social

welfare corporation, institution, accredited nongovernment organization, trust or
philanthropic organization or research institution or organization: Provided, however, That
not more than thirty per cent (30%) of said gifts shall be used by such donee for
administration purposes. For the purpose of this exemption, a non-profit educational and/or
charitable corporation, institution, accredited nongovernment organization, trust or
philanthropic organization and/or research institution or organization' is a school, college or
university and/or charitable corporation, accredited nongovernment organization trust or
philanthropic organization and/or research institution or organization, incorporated as a
non-stock entity, paying no dividends, governed by trustees who receive no compensation,
and devoting all its income, whether students fees or gifts, donation, subsidies or other
forms of philanthropy, to the accomplishment and promotion of the purposes enumerated in
its Articles of Incorporation.
(B) In the Case of Gifts made by a Non-resident not a Citizen of the Philippines
(l) Gifts made to or for the use of the National Government or any entity created by
any of its agencies which is not conducted for profit, or to any political subdivision of
the said Government.
(2) Gifts in favour of an educational and/or charitable, religious, cultural or social

welfare corporation, institution, foundation, trust or philanthropic or organization or
research institution or organization: Provided, however That not more than thirty per
cent (30%) of said gifts shall be used by such donee for administration purposes.
SEC. 21. NEW RATE OF DST ON CHARTER PARTIES AND

SIMILAR INSTRUMENTS
20
"SEC. 197. Stump tax on Charter Parties and Similar Instruments. — On
every charter party- contract or agreement the charter of any ship, vessel or
streamer or any letter or memorandum or other writing between the captain,
master or owner or other person acting as agent of any ship, vessel or
steamer, and any other person or persons for or relating to the charter of any
such ship, vessel or streamer, and on any renewal or transfer of such charter,
contract, agreement, letter or memorandum, there shall be collected a
stamp tax at the 101 lowing rates:
(a) If the registered gross tonnage of the ship, vessel or steamer does
not exceed one thousand (l, 000) tons, and the duration of the charter or
contract does not exceed six (6) months, One thousand pesos (P 1,000):
and for each month or fraction of a month in excess of six (6) months
and additional tax of One hundred pesos (P100.00) shall be paid.
(b) If the registered gross tonnage exceeds one thousand (l, 000) tons
and does not exceed ten thousand (l tons, and the duration of the charter
or contract does not exceed six (6) months, Two thousand pesos (P
2,000); and for each month or' fraction of a month in excess of six (6)
months. an additional tax of Two hundred pesos (P200.00) shall be paid.
(c) If the registered gross tonnage exceeds ten thousand (10,000) tons
and the duration of the charter or contract does not exceed six (6)
months, Three thousand pesos (P3,000); and for each month or fraction
of a month in excess of six (6) months, an additional tax of Three
hundred pesos (P 300.00) shall be paid.”
The rates of DST on charter parties and similar instruments have been doubled.
SEC. 22. REPEALING CLAUSE. All existing rules and regulations or thereof,
which are inconsistent with the provisions of these regulations, are hereby repealed,
amended or modified accordingly.
SEC. 23. SEPARABILITY CLAUSE. - If any clause, sentence, provision or

section of these Rules shall be held invalid or unconstitutional, the remaining parts thereof
shall not be affected thereby.
SEC. 24. EFFECTIVITY. - These regulations shall take effect after fifteen (15)
days following publication in the Official Gazette or a newspaper of general circulation,
whichever comes first.
BIR IRR/RR Drafting and Implementation Committee
21
Quezon City
REVENUE REGULATIONS NO. 5 - 2018
SUBJECT : Revenue Regulations Implementing the Adjustment

of Rates on the Excise Tax on Automobiles pursuant
to the Provisions of Republic Act No. 10963,
otherwise known as the "Tax Reform for
Acceleration and Inclusion (TRAIN) Law"
Amending for the Purpose Revenue Regulations No.
25-2003
TO : All Internal Revenue Officers and Others Concerned.
SECTION 1. SCOPE - Pursuant to the provisions of Section 244 in relation

to Section 245 of the National Internal Revenue Code of 1997 (NIRC), as
amended, and Section 84 of Republic Act No. 10963, otherwise known as the
"Tax Reform for Acceleration and Inclusion (TRAIN) Law" these Regulations
are hereby promulgated to these Regulations are hereby promulgated to amend
Revenue Regulations (RR) No. 25-2003 providing for the revised tax rates of
excise tax on automobiles.
SEC. 2. Section 2 of RR No. 25-2003 is hereby amended as follows:
"SEC. 2. DEFINITION OF TERMS. For purposes of these

Regulations, the following words and phrases shall have the meaning
indicated below.
(N) HYBRID ELECTRIC VEHICLE - SHALL REFER

TO A MOTOR VEHICLE POWERED BY ELECTRIC
ENERGY WITH OR WITHOUT PROVISION FOR
OFF-VEHICLE CHARGING. IN COMBINATION
WITH GASOLINE, DIESEL OR ANY OTHER
MOTIVE POWER: PROVIDED, THAT, FOR
PURPOSES OF THIS ACT, A HYBRID ELECTRIC
VEHICLE MUST BE ABLE TO PROPEL ITSELF
FROM A STATIONARY CONDITION USING
SOLELY ELECTRIC MOTOR.
22
SEC. 3. Section 4 of RR No. 25-2003 is hereby amended 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’s/assembler-s or importers selling price, net of excise
and value-added tax, in accordance with the following schedule, EFFECTIVE JANUARY
1, 2018:
NET MANUFACTURER'S
TAX RATE
PRICE/ IMPORTER'S SELLING PRICE
Up to six hundred thousand pesos (p600,000.00)
Four percent (4%)
To one million pesos (p1,000,000)
Up to six hundred thousand pesos (p600,000.00)
Ten percent (10%)
To one million pesos (p1,000,000)
Over one million pesos (p1,000,000)
To four million pesos (p4,000,000) Twenty percent (20%)
Over four million pesos (p4,000,000) Fifty percent (50%)
PROVIDED, THAT HYBRID VEHICLES SHALL BE TAXED AT

FIFTY PERCENT (50%) OF THE APPLICABLE EXCISE TAX
RATES ON AUTOMOBILES SUBJECT TO THE CONDITIONS
IN SECTION 9 (E) OF THIS REGULATIONS: PROVIDED,
FURTHER, THAT IN THE CASE OF IMPORTED
AUTOMOBILES NOT FOR SALE, THE TAX IMPOSED
HEREIN SHALL BE BASED ON THE TOTAL LANDED VALUE,
INCLUDING TRANSACTION VALUE, CUSTOMS DUTY AND
ALL OTHER CHARGES."
SEC. 4. Section 9 is hereby amended 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.
E. PURELY ELECTRIC VEHICLES 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 DEPARTMENT OF ENERGY
(DOE) SHALL DETERMINE WHETHER THE AUTOMOBILES
ARE HYBRID VEHICLES OR PURELY ELECTRIC VEHICLES,
23
AND FURNISH THE COMMISSIONER OF INTERNAL
REVENUE, ATTENTION: CHIEF EXCISE LARGE TAXPAYERS
REGULATORY DIVISION (ELTRD), CERTIFIED COPIES OF
THE RESULTS OF SUCH EXAMINATION OR INDORSEMENT
TO THAT EFFECT.
F. PICK-UPS."
SEC. 5. A new provision designated as Section 5-A in RR No. 25-2003 is hereby inserted to
read as follows:
"SEC.5-A. VALIDATION OF MANUFACTURERS' AND IMPORTERS

SELLING PRICE - By the end of three months from the imposition of the new
rates, the Bureau of Internal Revenue shall validate the Manufacturer's or Importer's
Selling Price of the newly introduced models against the Manufacturers or Importer's
Selling Price as defined herein and initially determine the correct bracket under which
a newly introduced model shall be classified. After the end of one year from such
validation and every year thereafter, the Bureau of Internal Revenue shall revalidate
the initially validated Net Manufacturer's or Importer's Selling Price against the Net
Manufacturer's or Importer's Selling Price as of the time of revalidation in order to
finally determine the correct tax bracket under which a newly introduced model shall
be classified."
SEC. 6. TRANSITORY PROVISIONS
1. All manufacturer's/assembler's or importers are hereby required to file an updated

manufacturer's/assemblers or importer's sworn statement for each brands/models of
automobiles as of the day immediately before the date of effectivity of these
Regulations. The updated manufacturer's/assembler’s or importer's sworn statement
shall be submitted to the Commissioner of Internal Revenue, Attention: Chief, Excise
Large Taxpayers Regulatory Division (ELTRD) within seven working (7) days from
the date of effectivity of these Regulations. This sworn statement shall likewise be
subjected to verification as required under existing regulations and issuances; and
2. All manufacturers/assemblers or importers shall submit a duly notarized list of

inventory on-hand of completely built-up (CBU) automobiles 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 for which import entries have been filed as of the day immediately before
the date of effectivity of these Regulations- indicating therein the brand, year model,
engine, body and chassis numbers thereof. The list shall be submitted to the
Commissioner of Internal Revenue. Attention: Chief. Excise LT Field Operations
Division (ELTFOD) within seven working (7) days from the date of effectivity of
these Regulations. Failure to submit the inventory list on the part of the
manufacturers/assemblers/ importers shall be construed that the said
manufacturers/assemblers/ importers do not have any inventory on hand of CBUs.
CKDs and SKDs as of the day immediately before the date of effectivity of these
Regulations.
24
SEC. 7. REPEALING CLAUSE — All regulations, rulings or orders or portions thereof
which are inconsistent with the provisions of these Regulations are also hereby' revoked,
repealed or amended accordingly.
SEC. 8. EFFECTIVITY CLAUSE - These Regulations shall take effect on January 201
8 following its complete publication in the Official Gazettes or in at least one (l ) newspaper
of general circulation.
25
Quezon City
REVENUE REGULATIONS NO. 6 – 2018
SUBJECT: Revoking Revenue Regulations (RR) No. 12-2013 Thereby Reinstating the
Provisions of Section 2.58.5 of RR No. 14-2002, as Amended by RR No.
17-2003.
TO : All Withholding Agents, Internal Revenue Officers, Employees and

Others Concerned.
SECTION 1. SCOPE — Pursuant to the provisions of Section 244, in relation to

Section 34 (K) of the National Internal Revenue Code of 1 997, as amended, these
regulations are hereby promulgated to revoke RR No. 12-2013, relative to the requirements
for deductibility of certain expenses, thereby reinstating the provisions of Section 2.58.5 of
RR No. 14-2002 as amended by RR No. 17.2003.
SECTION 2. REQUIREMENTS FOR DEDUCTIBILITY OF CERTAIN

EXPENSES - RR No. 12-2013 is hereby revoked, in effect, reinstating the provisions stated
under RR No. 14-2002, as amended by RR No. 17-2003 to read as follows:
"Sec.2.58.5. Requirements for Deductibility — any income payment

which is otherwise deductible under the Code shall be allowed as a deduction
from the payor's gross income only if it is shown that the income tax required to
be withheld has been paid to the Bureau in accordance with Sec. 57 and 58 of the
Code.
A deduction will also be allowed in the following cases where no

withholding of tax was made:
(A) The payee reported the income and pays the tax due thereon and the
withholding agent pays the tax including the interest incident to the failure to
withhold the tax and surcharges, applicable at the time of the audit/investigation
or reinvestigation/reconsideration.
(B) The recipient/payee failed to report the income on the due date thereof
but the withholding agent/taxpayer pays the tax„ including the interest incident to
26
the failure to withhold the tax and purchase if applicable at the time of
audit/investigation or reinvestigation/reconsideration.
(C) The withholding agent erroneously under-withheld the tax but pays the
difference between the correct amount and the amount of tax including the
interest, incident to such error and surcharges if applicable at the time of the
audit; investigation or reinvestigation; reconsideration.
Items of deduction representing return of capital such as those pertaining
to purchases of raw materials forming part of finished product or purchases of
goods for resale, shall be allowed as deductions upon withholding agent's
payment of the basic withholding tax and penalties incident to non-withholding
or under withholding. "
SECTION 3. REPEALING CLAUSE - All existing rules and regulations or any

revenue issuances or parts thereof which are inconsistent with the provisions of these
Regulations are hereby revoked or amended accordingly.
SECTION 4. EFFECTIVITY - These Regulations shall take effect after fifteen

(15) days following publication in any newspaper of general circulation.
27
Quezon City
REVENUE REGULATIONS NO. 7 – 2018
SUBJECT : Amending Certain Sections of Revenue Regulations No. 12-99,

as Amended by Revenue Regulations No. 18-13, Relative to
the Due Process Requirement in the Issuance of a Deficiency
Tax Assessment
TO : All Internal Revenue Officers and Others Concerned
SECTION 1. Scope — Pursuant to the provisions of Section 244, in relation to

Section 245 of the National Internal Revenue Code of 1997 (Tax Code), as
amended, these Regulations are hereby promulgated to amend provisions of
Revenue Regulations (RR) No. 12-99, as amended by RR No. 18-13.
SECTION 2. Amendment — Section 3 of RR 12-99, as amended by RR No.

13-18, is hereby amended by adding Section 3.1.1 providing for the preparation of
a Notice of Informal Conference, thereby renumbering other provisions thereof,
and prescribing other provisions for the assessment of tax liabilities. The pertinent
provisions of Section 3 of RR 12-99 shall now read as follows:
"SECTION. 3. Due Process Requirement in the Issuance of a

Deficiency Tax Assessment
3.1 Mode of procedure in the issuance of a deficiency tax

assessment:
3.1.1 Notice for Informal Conference. — The Revenue Officer

who audited the taxpayer's records shall, among others, state in his report
whether or not the taxpayer agrees with his findings that the taxpayer is
liable for deficiency tax or taxes. If the taxpayer is not amenable, based
on the said Officer's submitted report of investigation, the taxpayer shall
be informed, in writing, by the Revenue District Office or by the Special
Investigation Division, as the case may be (in the case of Revenue
Regional Offices) or by the Chief of Division concerned (in the case of
the BIR National Office) of the discrepancy or discrepancies in the
taxpayer's payment of his internal revenue taxes, for the purpose of
"Informal Conference," in order to afford the taxpayer with an
opportunity to present his side of the case.
28
The Informal Conference shall in no case extend beyond thirty
(30) days from receipt of the notice for informal conference. If it is found
that the taxpayer is still liable for deficiency tax or taxes after presenting
his side, and the taxpayer is not amenable, the Revenue District Officer or
the Chief of the Special Investigation Division of the Revenue Regional
Office or the Chief of Division in the National Office as the case may be,
shall endorse the case within seven (7) days from the conclusion of the
Informal Conference to the Assessment Division of the Revenue Regional
Office or to the Commissioner or his duly authorized representative for
issuance of a deficiency tax assessment.
Failure on the part of Revenue Officers to comply with the

periods indicated herein shall be meted with penalty as provided by
existing laws, rules and regulations."
SECTION 3. Repealing Clause — Any rules and regulations or parts thereof

inconsistent with the provisions of these Regulations are hereby repealed,
amended, or modified accordingly.
SECTION 5. Effectivity — The provisions of these Regulations shall take

effect after fifteen (15) days following publication in any newspaper of general
circulation
29
Quezon City
SUBJECT: Rules and Regulations Implementing the Increase in the

Stock Transfer Tax Under Republic Act No. 10963,
Otherwise Known as the "Tax Reform for Acceleration
and Inclusion (Train) Law"
TO : All Revenue Officials, Employees, and Others Concerned
SEC. 1. SCOPE Pursuant to the provisions in Section 4 and Section 244 of

Republic Act No. 8424 and Section 84 of Republic Act No. 10963, these regulations are
hereby promulgated to implement the rate increase in the stock transfer tax provided in
Section 39 of Republic Act No. 10963 otherwise known as the "Tax Reform for Acceleration
and Inclusion (TRAIN) Law".
SEC. 2. NEW RATE OF PERCENTAGE TAX ON STOCK

TRANSFER
"SEC. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and
Traded through the Local Stock Exchange or through Initial Public Offering
(A) Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded
through the Local Stock Exchange. - There shall be levied, assessed and
collected on every sale, barter, exchange. or other disposition of shares of
stock listed and traded through the local stock exchange other than the
sale by a dealer in securities, a tax at the rate of six-tenths of one percent
(6/10 of 1%) of the gross selling price or gross value in of the shares of
stock sold. bartered. exchanged or otherwise disposed which shall be
paid by the seller or transferor.
xxx
The percentage tax on the sale, barter or exchange of shares of stock listed and
traded through the local stock exchange has been increased from one-half of one
percent ( l "2 of 1% to six-tenths of one percent (6/10 of 1%
30
SEC. 3. REPEALING CLAUSE - All existing rules and regulations parts
thereof which are inconsistent with the provisions of these regulations are hereby
repealed amended or modified according
SEC. 4. SEPARABILITY CLAUSE - If any clause, sentence provision

or section of these Rules shall be held or unconstitutional- the remaining parts thereof
shall not be affected thereby.
SEC. 5. TRANSITORY PROVISIONS - The following work around

filing and payment procedures shall be followed while BIR Form No. 2552 is being
updated:
SEC.6. EFFECTIVITY- These regulations shall take effect

immediately.
31
Quezon City
SUBJECT Amending Section 10 of Revenue Regulations No. 10-

2010 (dated 06 October 2010) or the Exchange of
Information Regulations
TO All Internal Revenue Officers/Employees and Others

Concerned
Section 1. Scope - Pursuant to the provisions of Section 244 in relation to

Section 4 of the National Internal Revenue Code (NIRC) of 1997 (Tax Code of
1997), as emended, as well as to Republic Act (RA) No. 10021, or the Exchange of
Information on Tax Matters Act of 2009, these Regulations are hereby promulgated
to amend Section 10 of Revenue Regulations (RR) No. 10-2010, entitled
"Exchange of Information Regulations"
Section 2. Objective — This Regulation is issued in order for the Bureau

to effectively and fully comply with the provisions on exchange of information
contained in international conventions or agreements on tax matters to which the
Philippines is a signatory or a party to as well as with RA No. 10021.
Section 3. Section 10 of RR No. 10-2010 is hereby amended to read as

follows:
"SECTION10. Notice to Taxpayers. — A

taxpayer shall be duly notified in writing by the Commissioner
that a foreign tax authority is requesting for exchange of
information held by financial institutions pursuant to an
international convention or agreement on tax matters within
sixty (60) days his transmittal of all the information requested
from, and provided for by, the concerned financial institution to
the requesting treaty partner.
32
Section 4. Repealing Clause- All revenue issuances or portions thereof
inconsistent with the provisions of these Regulations are considered repealed,
Section 5. Effectivity Clause — These Regulations shall take effect

after fifteen (15) days following complete publication in a newspaper of general
circulation.
33
Quezon City
REVENUE REGULATIONS NO. l 1- 2018
January 31, 2018
SUBJECT : Amending Certain Provisions of Revenue Regulations No. 2-98,

as Amended, to Implement Further Amendments Introduced
by Republic Act No. 10963, Otherwise Known as the “Tax
Reform for Acceleration and Inclusion (TRAIN)” Law,
Relative to Withholding of Income Tax.
Pursuant to the provisions of Section 244 of the National Internal Revenue Code and the
provisions of Republic Act No. 10963 (TRAIN Law), certain provisions of Revenue
Regulations (RR) No. 298, as amended, is hereby further amended as prescribed under the
aforesaid law.
SECTION 1. Certain items of Section 2.57.1 of RR No. 2-98, as amended, is hereby

renumbered and further amended to read as follows:
“SECTION 2.57.1. Income Payments Subject to Final Withholding Tax. The

following forms of income shall be subject to final withholding tax at the rates herein
specified:
(A) Income Payments to a Citizen or to a Resident Alien Individual:
(1) Interest from any peso bank deposit, and yield or any monetary benefit from deposit
substitutes and from trust funds and similar arrangements; royalties (except on books,
as well as other literary and musical compositions), prizes (except prizes amounting to
Ten thousand pesos [₱10,000] or less which shall be subject to tax under Subsection
(A) of Section 24 of the Tax Code, as amended); and other winnings (except winnings
from Philippine Charity Sweepstakes and lotto amounting to ₱10,000 or less which
shall be exempt) derived from sources within the Philippines – Twenty percent (20%)
xxx xxx xxx
(4) Interest income received by an individual taxpayer from a depository

bank under the Expanded Foreign Currency Deposit system – Fifteen
percent (15%).
34
xxx xxx xxx
(5) Cash and/or property dividends actually or constructively received from a domestic
corporation, joint stock company, insurance or mutual fund companies and regional
operating headquarters of multinational companies, or on the share of an individual in
the distributable net income after tax of a partnership (except general professional
partnership) of which he is a partner, or on the share of an individual in the net income
after tax of an association, a joint account or a joint venture or consortium taxable as a
corporation of which he is a member or co-venturer – Ten percent (10%)
xxx xxx xxx
(8) Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange. – On
the net capital gains realized during the taxable year from the sale, barter, exchange or
other disposition of shares of stock in a domestic corporation – Fifteen percent (15%)
(B) Income Payments to Non-resident Aliens Engaged in Trade or Business

in the Philippines. – xxx
xxx xxx xxx
(6) Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange. –
On net capital gains realized during the taxable year from the sale, barter, exchange or
other disposition of shares of stock in a domestic corporation – Fifteen percent (15%)
(C) Income Derived from All Sources Within the Philippines by a Non-
resident Alien Individual Not Engaged in Trade or Business Within the
Philippines. - xxx
xxx xxx xxx
(3) Capital Gains from Sale of Shares of Stock Not Traded in the Stock
Exchange. – On net capital gains realized during the taxable year
from the sale, barter, exchange or other disposition of shares of stock
in a domestic corporation – Fifteen percent (15%)
(D) Income Payment to a Domestic Corporation. [formerly under letter (G)]

– xxx
xxx xxx xxx
(3) Interest income derived from a depository bank under the Expanded
Foreign Currency Deposit system – Fifteen percent (15%).
xxx xxx xxx
(7) Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange. – On
net capital gains realized during the taxable year from the sale, barter, exchange or
other disposition of shares of stock in a domestic corporation – Fifteen percent (15%).
xxx xxx xxx
35
(E) Income Payment to a Resident Foreign Corporation. [formerly under
letter (H)]– xxx
(F) Income Derived from All Sources Within the Philippines by Non-
Resident Foreign Corporation. [formerly under letter (I)]– xxx
(G) Fringe Benefits Granted to the Employee (Except Rank and File
Employee). – [formerly under letter (J)] – On the grossed-up monetary
value of the fringe benefits granted or furnished by the employer to his
employees (except rank-and file as defined in the Code). –
Employee is a citizen/resident alien/non-resident alien engaged in trade or business

within the Philippines – Thirty-five percent (35%)
Employee is a non-resident alien not engaged in trade or business within the Philippines
– Twenty-five percent (25%)
The grossed-up value of the fringe benefit shall be determined by dividing the actual
monetary value of the fringe benefit by the difference between one hundred percent
(100%) and the applicable rate of income tax. The actual monetary value of the fringe
benefit shall be divided by sixty-five percent (65%) to get the grossed-up value subject
to 35% fringe benefit tax (FBT); while the divisor shall be seventy five percent (75%)
to get the grossed-up value subject to 25% FBT.
Fringe benefits, however, which are required by the nature of or necessary to the trade,
business or profession of the employer, or where such fringe benefit is for the
convenience and advantage of the employer shall not be subject to the fringe benefit
tax.
The term fringe benefit means any good, service or other benefit furnished or granted in
cash or in kind by an employer to an individual employee (except rank and file
employees) such as but not limited to, the following:
(1) Housing;
(2) Expense account;
(3) Vehicle of any kind;
(4) Household personnel, such as maid, driver and others;
(5) Interest on loan at less than market rate to the extent of the
difference between the market rate and actual rate granted;
(6) Membership fees, dues and other expenses borne by the employer
for the employee in social and athletic clubs or other similar
organizations;
(7) Expenses for foreign travel;
(8) Holiday and vacation expenses;
(9) Educational assistance to the employee or his dependents; and
(10) Life or health insurance and other non-life insurance premiums or
similar amounts in excess of what the law allows.
36
(H) Informer’s Reward to Persons Instrumental in the Discovery of Violations of the
National Internal Revenue Code and the Discovery and Seizure of Smuggled Goods.
[Formerly under letter (K)] - xxx
xxx xxx xxx”
SECTION 2. Certain items of Section 2.57.2 of RR No. 2-98 is hereby renumbered and
further amended to read as follows:
“SECTION 2. 57.2. Income Payments Subject to Creditable Withholding Tax

and Rates Prescribed Thereon. – Except as herein otherwise provided, there shall be
withheld a creditable income tax at the rates herein specified for each class of payee
from the following items of income payments to persons residing in the Philippines:
(A) Professional fees, talent fees, etc. for services rendered – On the gross
professional, promotional, and talent fees or any other form of remuneration for the
services rendered by the following:
Individual payee:
If gross income for the current year did not exceed ₱3M- Five percent (5%);
If gross income is more than ₱3M- Ten percent (10%)
Non-individual payee:
If gross income for the current year did not exceed ₱720,000-Ten percent (10%);
If gross income exceeds ₱720,000- Fifteen percent (15%)
(1) Those individually engaged in the practice of profession or callings;

lawyers; certified public accountants; doctors of medicine;
architects; civil, electrical, chemical, mechanical, structural,
industrial, mining, sanitary, metallurgical and geodetic engineers;
marine surveyors; doctors of veterinary science; dentist;
professional appraisers; connoisseurs of tobacco; actuaries;
interior decorators, designers, real estate service practitioners
(RESP), (i.e. real estate consultants, real estate appraisers and real
estate brokers) requiring government licensure examination given by
the Real Estate Service pursuant to Republic Act No. 9646 and all
other profession requiring government licensure examination
regulated by the Professional Regulations Commission, Supreme
Court, etc.
For professional fees paid to medical practitioners (includes doctors of medicine,

doctors of veterinary science and dentists) by hospitals and clinics or paid directly by
health maintenance organizations (HMOs) and/or similar establishments [formerly
under letter (I)]:
(a) It shall be the duty and responsibility of the hospitals, clinics,

HMOs and similar establishments to withhold and remit taxes
due on the professional fees of their respective accredited
medical practitioners, paid by patients who were admitted and
confined to such hospitals and clinics. Hospitals, clinics, HMOs
37
and similar establishments must ensure that correct taxes due on
the professional fees of their medical practitioners have been
withheld and timely remitted to the Bureau of Internal Revenue
(BIR). For this purpose, hospitals and clinics shall not allow
their medical practitioners to receive payment of professional
fees directly from patients who were admitted and confined to
such hospital or clinic and, instead, must include the professional
fees in the total medical bill of the patient which shall be payable
directly to the hospital or clinic.
(b) Exception – The withholding tax herein prescribed shall not

apply whenever there is proof that no professional fee has in fact
been charged by the medical practitioner and paid by his patient.
Provided, however, that this fact is shown in a sworn declaration
jointly executed by the medical practitioner, and the patient or
his duly authorized representative, in case the patient is a minor
or otherwise incapacitated. This sworn declaration, to be
executed in the form presented in Annex “A” of these
Regulations, shall form part of the records of the hospital or
clinic and shall constitute as part of its records and shall be made
readily available to any duly authorized Revenue Officer for tax
audit purpose. Provided, further, that the said administrator of the
hospital or clinic shall inform the concerned LTS/RR/RDO
having jurisdiction over such hospital or clinic about any medical
practitioner who fails or refuses to execute the sworn statement
herein prescribed, within ten (10) days from the occurrence of
such event.
(c) Hospitals and clinics shall submit the list containing the names
and addresses of the medical practitioners in the following
classifications, every 15th day after the end of each calendar
quarter, to the concerned Collection Division of the Revenue
Region for non-large taxpayers and at the Large Taxpayers
Document Processing and Quality Assurance Division (LT-
DPQAD) in the National Office or Large Taxpayers District
Office (LTDO) in the Region for large taxpayers, where such
hospital of clinic is registered, using the prescribed format.
(i) Medical practitioners whose professional fee was paid by

patients directly to the hospital or clinic.
(ii) Medical practitioners who did not charge any professional

fee from their patients.
(d) For this purpose, the term ‘medical practitioners’ shall likewise
include medical technologists, allied health workers (e.g.,
occupational therapists, physical therapists, speech therapists,
nurses, etc.) and other medical practitioners who are not under an
employer-employee relationship with the hospital or clinic, or
HMO and other similar establishments.
38
(e) Hospitals and clinics shall be responsible for the accurate
computation of taxes to be withheld on professional fees paid by
patients thru the hospitals and clinics, in the same way that
HMOs shall be responsible for the computation of taxes to be
withheld from the professional fees paid by them to the medical
practitioners, and the timely remittance of the applicable
expanded withholding tax.
The list of all income recipients-payees in this Subsection shall be included in the
Alpha list of Payees Subject to Expanded Withholding Tax attached to BIR Form No.
1604-E (Annual Information Return of Creditable Income Taxes Withheld
(Expanded)/Income Payments Exempt from Withholding Tax).
Likewise, the hospitals, clinics or HMOs shall issue a Certificate of Creditable

Withholding Tax Withheld at Source (BIR Form No. 2307) to medical practitioners
who are subjected to withholding, every 20th day following the close of the taxable
quarter or upon request of the payee.
All hospitals and clinics shall submit to the BIR (Collection Division of the Regional
Office having jurisdiction over the place where the income earner is registered/LT-
DPQAD for large taxpayers in Metro Manila/LTDO for large taxpayers outside Metro
Manila), in three (3) copies [two (2) copies for the BIR and one (1) copy for the
taxpayer], a sworn statement executed by the president/managing partner of the
corporation/company as to the complete and updated list of medical practitioners
accredited with them.
(2) Professional entertainers, such as, but not limited to, actors and
actresses, singers, lyricists, composers and emcees.
(3) Professional athletes including basketball players, pelotaris and

jockeys;
(4) All directors and producers involved in movies, stage, radio,

television and musical productions;
(5) Insurance agents and insurance adjusters;
(6) Management and technical consultants;
(7) Bookkeeping agents and agencies;
(8) Other recipients of talent fees;
(9) Fees of directors who are not employees of the company paying
such fees, whose duties are confined to attendance at and
participation in the meetings of the board of directors;
(10) Income Payments to certain brokers and agents [formerly under

letter (G)] – on gross commissions of customs, insurance, stock,
immigration and commercial brokers, fees of agents of professional
entertainers and real estate service practitioners (RESPs), (i.e. real
39
estate consultants, real estate appraisers and real estate brokers) who
failed or did not take up the licensure examination given by and not
registered with the Real Estate Service under the Professional
Regulations Commission.
(11) Commissions of independent and/or exclusive sales representatives,

and marketing agents of companies [formerly under letter (O)] – on
gross commissions, rebates, discounts and other similar
considerations paid/granted to independent and/or exclusive sales
representatives and marketing agents and sub-agents of companies,
including multi-level marketing companies, on their sale of goods
and services by way of direct selling or similar arrangements where
there is no transfer of title over the goods from the seller to the
agent/sales representative.
“Multi-level marketing”, for purposes of these regulations, is a system of direct selling

in which consumer products are sold by individuals where consumer products and
services are supplied by an established multi-level marketing company who encourages
the distributor to build and manage his own sales force by recruiting, motivating, and
training others to sell the product or service. A percentage on the sales of the
distributor’s sales force would be his compensation in addition to his personal sales.
“Multi-level marketing companies”, for purposes of these regulations, means any entity
that is engaged in the sale of its products or services through individual that directly sell
such products or services to the consumers.
The amounts subject to withholding tax under this subsection (A) shall include not only
fees but also per diem fees, allowances and other form of income payments not subject
to withholding tax on compensation.
In the case of professional entertainers, professional athletes, directors involved in

movies, stage, radio, television and musical productions and other recipients of talent
fees, the amounts subject to withholding tax shall include amounts paid to them in
consideration for the use of their names or pictures in print, broadcast, or other media
or for public appearances, for purposes of advertisements or sales proportion.
If the recipient of the aforementioned income, however, is an employee of the lone

income payor, such fees or payments shall be considered supplemental compensation
subject to the withholding tax on compensation under Section 2.78 of these
Regulations.
Individual payees whose gross receipts/sales in a taxable year shall not exceed ₱3M,
are required to submit a sworn declaration of his/her gross receipts/sales (Annex “B1”),
together with a copy of Certificate of Registration (COR), to all the income
payor/withholding agents not later than January 15 of each year or at least prior to the
initial payment of the professional fees/commissions/talent fees, etc in order for them to
be subject to five percent (5%). The ten percent (10%) withholding tax rate shall be
applied in the following cases: (1) the payee failed to provide the income
payor/withholding agent of such declaration; or (2) the income payment exceeds ₱3M,
despite receiving the sworn declaration from the income payee. In the case of
individual payees with only one payor, the sworn declaration to be accomplished shall
40
be Annex “B-2” and submitted, together with a copy of their COR, to the said lone
income payor.
In the case of non-individual payees, if the company or corporation’s gross income is

estimated not to exceed ₱720,000 during the taxable year, the authorized officer is
required to provide all its income payors/withholding agents with a notarized sworn
statement to that effect (Annex “B-3”), together with a copy of the COR, not later than
January 15 of each year or prior to the initial income payment so that the income
payor/withholding agent shall only withhold ten percent (10%). The fifteen percent
(15%) withholding tax rate shall be applied in the following cases: (1) the payee failed
to provide the income payor/withholding agent of such declaration; or (2) the income
payment exceeds ₱720,000, despite receiving the sworn declaration from the income
payee. The sworn declaration shall be executed by the president/managing partner of
the corporation/company/general professional partnerships.
Moreover, income payors/withholding agents shall subsequently execute a sworn

declaration (Annex “C”) stating the number of payees who have submitted the income
payees’ sworn declarations (Annexes “B-1”, “B-2” and “B-3”) with the accompanying
copies of their COR. Such declaration of the income payors/withholding agents shall
be submitted, together with the list of payees, to the concerned BIR office where
registered on or before January 31 of each year or fifteen (15) days following the month
when a new income recipient has submitted the payee’s sworn declaration.
(B) Rentals [formerly under letter (C)]
(1) Real Properties - On gross rental for the continued use or possession
of real property used in business which the payor or obligor has not
taken or is not taking title, or in which he has no equity – Five
percent (5%)
(2) Personal Properties – On gross rental or lease in excess of Ten

Thousand Pesos (₱10,000) annually for the continued use or
possession of personal property used in business which the payor or
obligor has not taken or is not taking title, or in which he has no
equity, except those under financial lease arrangements with leasing
and finance companies authorized to operate under Republic Act No.
8556 (Financing Company Act of 1998). – Five percent (5%)
However, the Ten Thousand Pesos (₱10,000) threshold shall not apply when the
accumulated gross rental or lease paid by the lessee to the same lessor exceeds or is
reasonably expected to exceed ₱10,000 within the year. In which case, the lessee shall
withhold the five percent (5%) withholding tax on the entire amount.
(3) Poles, satellites and transmission facilities - On gross rentals or

lease for the use of poles, satellites and/or transponder and
transmission facilities which include but not limited to the following:
switchboards, land lines/aerial cables, underground cables and
submarine cables – Five percent (5%)
(4) Billboards - On gross rentals or lease of spaces used in posting

advertisements in the form of billboards and/or structures similar
thereto, posted in public places such as, but not limited to, buildings,
41
vehicles, amusement places, malls, street posts, etc. – Five percent
(5%);
(5) Cinematographic film rentals and other payments [formerly under

letter (D)]– On gross payments to resident individuals and corporate
Cinematographic film owners, lessors or distributors – Five percent (5%)
(C) Income payments to certain contractors [formerly under letter (E)] –

On gross payments to the following contractors, whether individual or
corporate — Two percent (2%)
(1) General engineering contractors — Those whose principal contracting business in

connection with fixed works requiring specialized engineering knowledge and skill
including the following divisions or subjects:
(a) Reclamation works;

(b) Railroads;
(c) Highways, streets and roads;
(d) Tunnels;
(e) Airports and airways;
(f) Waste reduction plants;
(g) Bridges, overpasses, underpasses and other similar works;
(h) Pipelines and other systems for the transmission of petroleum
and other liquid or gaseous substances;
(i) Land levelling;
(j) Excavating;
(k) Trenching;
(l) Paving; and
(m) Surfacing work.
(2) General Building contractors — Those whose principal contracting

business is in connection with any structure built, for the support,
shelter and enclosure of persons, animals, chattels, or movable
property of any kind, requiring in its construction the use of more than
two unrelated building trades or crafts, or to do or superintend the
whole or any part thereto. Such structure includes sewers and
sewerage disposal plants and systems, parks, playgrounds, and other
recreational works, refineries, chemical plants and similar industrial
plants requiring specialized engineering knowledge and skills,
powerhouse, power plants and other utility plants and installation,
mines and metallurgical plants, cement and concrete works in
connection with the above-mentioned fixed works.
(3) Specialty Contractors — Those whose operations pertain to the

performance of construction work requiring special skill and whose
principal contracting business involves the use of specialized building
trades or crafts.
(4) Other contractors —
42
(a) Filling, demolition and salvage work contractors and operators of
mine drilling apparatus;
(b) Operators of dockyards;
(c) Persons engaged in the installation of water system, and gas or

electric light, heat or power;
(d) Operators of stevedoring, warehousing or forwarding

establishments;
(e) Transportation contractors which include common carriers for the

carriage of goods and merchandise of whatever kind by land, air
or water, where the gross payments by the payor to the same
payee amounts to at least two thousand pesos (₱2,000) per month,
regardless of the number of shipments during the month;
(f) Printers, bookbinders, lithographers and publishers except those

principally engaged in the publication or printing of any
newspaper, magazine, review or bulletin which appears at regular
intervals, with fixed prices for subscription and sale;
(g) Messengerial, janitorial, private detective and/or security

agencies, credit and/or collection agencies and other business
agencies;
(h) Advertising agencies, exclusive of gross payments to media;
(i) Independent producers of television, radio and stage performances

or shows;
(j) Independent producers of "jingles";
(k) Labor-recruiting agencies and/or “labor-only” contractors. For this

purpose, any person who undertakes to supply workers to an
employer shall be deemed to be engaged in “labor-only”
contracting where such person does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises and other materials and the workers recruited and placed
by such person are performing activities which are directly related
to the principal business or operations of the employer which the
workers are habitually employed;
(l) Persons engaged in the installation of elevators, central air

conditioning units, computer machines and other equipment and
machineries and the maintenance services thereon;
(m) Persons engaged in the sale of computer services, computer

programmers, software/program developer/designer, internet
service providers, web page designing, computer data processing,
conversion or base services and other computer related activities;
43
(n) Persons engaged in landscaping services;
(o) Persons engaged in the collection and disposal of garbage;
(p) TV and radio station operators on sale of TV and radio airtime;

and
(q) TV and radio block timers on sale of TV and radio commercial

spots.
(D) Income distribution to the beneficiaries [formerly under letter (F)] – On

income distributed to the beneficiaries of estates and trust as determined
under Sec. 60 of the Code, except such income subject to final
withholding tax and tax exempt income — Fifteen percent (15%)
(E) Income payments to partners of general professional partnerships

[formerly under letter (H)] – Income payments made periodically or at
the end of the taxable year by a general professional partnership to the
partners, such as drawings, advances, sharing, allowances, stipends, etc.
— Fifteen percent (15%), if the gross income for the current year
exceeds P720,000; and Ten percent (10%), if otherwise.
(F) Gross selling price or total amount of consideration or its equivalent

paid to the seller/owner for the sale, exchange, or transfer of real
property classified as ordinary asset [formerly under letter (J)] – A
creditable withholding tax based on the gross selling price/total amount
of consideration or the fair market value determined in accordance with
Section 6(E) of the Code, whichever is higher, paid to the seller/owner
for the sale, transfer or exchange of real property, other than capital
asset, shall be imposed upon the withholding agent/buyer, in accordance
with the following schedule:
44
Registration with the HLURB or HUDCC shall be sufficient for a seller/transferor to be
considered as habitually engaged in the real estate business. If the seller/transferor is
not registered with HLURB or HUDCC, he/it may prove that he/it is engaged in the
real estate business by offering other satisfactory evidence (for example, he/it
consummated during the preceding year at least six taxable real estate transactions,
regardless of amount). Notwithstanding the foregoing, for purposes of these
Regulations, banks shall not be considered as habitually engaged in the real estate
business.
xxx xxx xxx
(G) Additional income payments to government personnel from importers,

shipping and airline companies, or their agents [formerly under letter
(K)] – On gross additional payments by importers, shipping and airline
companies, or their agents to government personnel for overtime
services as authorized by law — Fifteen percent (15%);
For this purpose, the importers, shipping and airline companies or their agents, shall be
the withholding agents of the Government.
(H) Certain income payments made by credit card companies [formerly

under letter (L)] – On one-half (1/2) of the gross amounts paid by any
credit card company in the Philippines to any business entity, whether a
natural or juridical person, representing the sales of goods/services made
by the aforesaid business entity to cardholders — One percent (1%)
(I) Income payment made by top withholding agents, either private

corporations or individuals, to their local/resident supplier of goods
and local/resident supplier of services other than those covered by
other rates of withholding tax. [formerly under letters (M) and (W)] –
Income payments made by any of the top withholding agents, as
determined by the Commissioner, to their local/resident supplier of
goods/services, including non-resident aliens engaged in trade or
business in the Philippines, shall be subjected to the following
withholding tax rates:
Supplier of goods – One percent (1%)

Supplier of services – Two percent (2%)
Top withholding agents shall include the following:
a. Classified and duly notified by the Commissioner as either any of the following
unless previously de-classified as such or had already ceased business operations:
(1) A large taxpayer under Revenue Regulations No. 1-98, as

amended;
(2) Top twenty thousand (20,000) private corporations under RR
No. 62009; or
(3) Top five thousand (5,000) individuals under RR No. 6-2009;
45
b. Taxpayers identified and included as Medium Taxpayers, and those under the
Taxpayer Account Management Program (TAMP).
The top withholding agents by concerned LTS/RRs/RDOs shall be published in a

newspaper of general circulation. It may also be posted in the BIR website. These shall
serve as the “notice” to the top withholding agents. The obligation to withhold under
this sub-section shall commence on the first (1st) day of the month following the month
of publication. Existing withholding agents classified as large taxpayers, top 20,000
private corporations or top 5,000 individuals which have not been delisted prior to these
regulations shall remain as top withholding agents. The initial and succeeding
publications shall include the additional top withholding agents and those that are
delisted.
The term “goods” pertains to tangible personal property. It does not include intangible
personal property, as well as agricultural products which are defined under item (N) of
this Section.
The term “local resident suppliers of goods/suppliers of services” pertains to a supplier

from whom any of the top withholding agents, regularly makes its purchases of
goods/services. As a general rule, this term does not include a casual purchase of
goods/services that is purchase made from a non-regular supplier and oftentimes
involving a single purchase. However, a single purchase which involves Ten thousand
pesos (₱10,000) or more shall be subject to withholding tax under this subsection. The
term “regular suppliers”, for purposes of these regulations, refer to suppliers who are
engaged in business or exercise of profession/calling with whom the taxpayer-buyer has
transacted at least six (6) transactions, regardless or amount per transaction, either in
the previous year or current year.
(J) Income Payments made by a government office, national or local,

including barangays, or their attached agencies or bodies, and
government-owned or controlled corporations to its local/resident
supplier of goods/services, other than those covered by other rates of
withholding tax. [formerly under letter (N)] – Income payments, except
any single purchase which is P10,000 and below, which are made by a
government office, national or local, including barangays, or their
attached agencies or bodies, and government-owned or controlled
corporations, on their purchases of goods and purchases of services from
local/resident suppliers:
Supplier of goods – One percent (1%)

Supplier of services – Two percent (2%)
A government-owned or controlled corporation shall withhold the tax in its capacity as

a government-owned or controlled corporation rather than as a corporation stated in
Subsection (I) hereof.
(K) Tolling fees paid to refineries [formerly under letter (P)] – On the gross
processing/tolling fees paid for the conversion of molasses to its by-
products and raw sugar to refined sugar. – Five percent (5%)
46
(L) Payments made by pre-need companies to funeral parlors [formerly
under letter (Q)] – On the gross payments made by pre-need companies
to funeral parlors for funeral services rendered. – One percent (1%).
(M) Payments made to embalmers [formerly under letter (R)] – On the gross
payments made to embalmers for embalming services rendered to
funeral companies. – One percent (1%)
(N) Income payments made to suppliers of agricultural products [formerly

under letter (S)] – Income payments made to agricultural suppliers such
as those, but not limited to, payments made by hotels, restaurants, hotels,
restaurants, resorts, caterers, food processors, canneries, supermarkets,
livestock, poultry, fish and marine product dealers, hardware, factories,
furniture shops, and all other establishments, in excess of the cumulative
amount of Three hundred thousand pesos (₱300,000.00) within the same
taxable year. - One percent (1%)
The term “agricultural suppliers” refers to suppliers/sellers of agricultural, forest and

marine food and non-food products, livestock and poultry of a kind generally used as, or
yielding or producing of foods for human consumption; and breeding stock and genetic
materials therefor. “Livestock” shall include cow, bull and calf, pig, sheep, goat and
other animals similar thereto. “Poultry” shall include fowl, duck, goose, turkey and
other animals similar thereto. “Marine products” shall include fish and crustacean such
as but not limited to, eel, trout, lobster, shrimp, prawn, oyster, mussel and clam, shell
and other aquatic products.
Meat, fruit, fish, vegetable and other agricultural and marine food products, even if they
have undergone the simple processes of preparation or preservation for the market, such
as freezing, drying, salting, smoking or stripping, including those using advanced
technological means of packaging, such as shrink wrapping in plastics, vacuum packing,
tetra-pack and other similar packaging method, shall still be covered by this subsection.
An agricultural food product shall include, but shall not be limited to the following:
corn, coconut, copra, palay, cassava, coffee, etc. Polished and/or husked rice, corn grits,
locally produced raw cane sugar and ordinary salt shall be considered as agricultural
food products.
(O) Income payments on purchases of minerals, mineral products and

quarry resources as defined and discussed in Section 151 of the Tax
Code [formerly under letter (T)] – Income payments on purchases of
minerals, mineral products, and quarry resources such as but not limited
to silver, gold, marble, granite, gravel, sand, boulders and other
materials/products. – Five percent (5%). However, BSP is required to
withhold one percent (1%) of gross payments made, and remit the same
to the Government.
(P) MERALCO Payments on the following [formerly under letter (U)]:
xxx xxx xxx
47
(Q) Interest income on the refund paid either through direct payment or
application against customers’ billings by other electric Distribution
Utilities (DUs) in accordance with the rules embodied in ERC
Resolution No. 8, Series of 2008, dated June 4, 2008, governing the
refund of meter deposits … [formerly under letter (V)] - xxx
xxx xxx xxx
(R) Income payments made by political parties and candidates of local and
national elections on all their purchase of goods and services related to
campaign expenditures, and income payments made by individuals or
juridical persons for their purchases of goods and services intended to
be given as campaign contributions to political parties and candidates
[formerly under letter (X)] – Five percent (5%)
(S) Interest income derived from any other debt instruments not within the
coverage of ‘deposit substitutes’ and Revenue Regulations 14-2012,
unless otherwise provided by law or regulations [formerly under letter
(Y)] – Twenty Percent (20%)
(T) Income payments to Real Estate Investment Trust (REIT) [formerly

under letter (Z)] – Income payments made to corporate taxpayers duly
registered with the LTS Regular LT Audit Division as REIT for
purposes of availing the incentive provisions of Republic Act No. 9856,
otherwise known as “The Real Estate
Investment Trust Act of 2009”, as implemented by RR 13-2011 - One percent (1%)
(U) Income payments on sugar [formerly under letter (AA)] - xxx
xxx xxx xxx
Provided, finally, That, notwithstanding the presentation of proof of exemption from

the payment of income tax (e.g. BIR ruling, special law, etc.), the concerned proprietor,
or operator of the sugar mill/refinery, or any buyer of Quedan or Molasses Storage
Certificate is still required to withhold and remit the creditable withholding tax.
For purposes of these regulations, all income payments paid to sub-agents or their
equivalent, whether paid directly or indirectly by the agent or the owner of the goods,
shall be subject to withholding tax in the same manner as that of the agent.
Any income subject to income tax may be subject to withholding tax; however, income
exempt from income tax is consequently exempt from withholding tax. Further, income not
subject to withholding tax does not necessarily mean that it is not subject to income tax.”
SECTION 3. Section 2.57.3 of RR No. 2-98, as amended, is hereby further amended to read
as follows:
“SECTION 2.57.3. Persons Required to Deduct and Withhold. – xxx
xxx xxx xxx
48
The obligation to withhold is imposed upon the buyer-payor of income although the
burden of tax is really upon the seller-income earner/payee; hence, unjustifiable refusal
of the latter to be subjected to withholding shall be a ground for the mandatory audit of
all internal revenue tax liabilities, as well as the imposition of penalties pursuant to
Section 275 of the Tax Code, as amended, upon verified complaint of the buyer-payor.
Provided, however, that an individual seller-income earner/payee, may not be subjected

to withholding under Section 2.57.2 hereof if the source of income comes from a lone
income payor and the total income payment is less than ₱250,000 in a taxable year. In
this case, the concerned individual shall execute an Income Payee’s Sworn Declaration
of gross receipts/sales (Annex “B-2”) that shall be submitted to the lone payor. The
payee’s sworn declaration shall be submitted to the lone income payor of income before
the initial payment of income or before January 15 of each year, whichever is
applicable.
The income payor/withholding agent shall in turn execute its own Income
Payor/Withholding Agent’s Sworn Declaration (Annex “C”) stating the number of
payees who shall not be subjected to withholding taxes and have duly submitted their
income payees’ sworn declarations and copies of COR. Together with the income
payor/withholding agent’s sworn declaration is the list of payees, who shall not be
subjected to withholding tax, which shall be submitted by the income
payor/withholding agent to the concerned BIR office on or before the last day of
January of each year or on the fifteenth (15th) day of the following month when a new
income recipient submitted the payee’s sworn declaration to the lone income
payor/withholding agent.
The income payor/withholding agent’s sworn declaration (Annex “C”) shall be filed in
two (2) copies with the concerned LTS/RR/RDO office where the income
payor/withholding agent is registered and shall be distributed as follows:
(1) Original copy for the BIR; and

(2) Duplicate copy for lone payor/withholding agent.
The duly received income payor/withholding agent’s sworn declaration including the
required list shall serve as proof that the income payments made are not subject to
withholding tax.
In the event that the individual payee’s cumulative gross receipts in a year exceed
₱250,000, the income payor/withholding agent shall withhold the prescribed
withholding tax based on the amount in excess of ₱250,000, despite the prior
submission of the individual income payee’s sworn declaration. On the other hand, if
the individual income payee failed to submit an income payee’s sworn declaration to
the lone income payor/withholding agent, the income payment shall be subject to the
applicable withholding tax even though in a taxable year the income payment is
₱250,000 and below.
For individual payees, the income payor/withholding agent shall withhold the
prescribed withholding tax rate. In case there are two rates prescribed, the higher rate
shall apply if:
(1) The payee failed to provide the income payor/withholding agent of the required
declaration; or (2) the income payment exceeds P3M, despite receiving the sworn
declaration from the income payee.
49
For non-individual payees, the income payor/withholding agent shall withhold the
prescribed withholding tax rate. In case there are two rates prescribed, the higher rate
shall apply if: (1) the payee failed to provide the income payor/withholding agent of the
required declaration; or (2) the income payment exceeds P 720,000, despite receiving
the sworn declaration from the income payee.
Illustration 1: Ms Tina supplies special cupcakes on a regular basis to RPSV

Supermarket, a top withholding agent pursuant to Section 2.57.2 (I) of these
regulations. Prior to 2018, her annual sales to RPSV Supermarket never exceeded
₱250,000. She only bakes cupcakes upon order. RPSV Supermarket is her lone
payor of income; thus, she executed the sworn declaration of gross receipts stating
that her gross expected receipts shall not exceed ₱250,000 for the year from RPSV
Supermarket. However, in the latter part of 2018, RPSV Supermarket noted that its
purchase of cupcakes shall exceed ₱250,000. As expected, in 2018 the total
purchase of cupcakes by RPSV Supermarket from Ms. Tina amounted to ₱300,000.
Computation:
In this case, RPSV Supermarket shall withhold the amount of ₱500, computed
as follows:
Gross Receipts ₱ 300,000.00

Less: Amount not subject to withholding tax 250,000.00
Income subject to withholding tax ₱ 50,000.00
Multiply by: EWT rate 1%
Amount of withholding tax ₱ 500.00
* RPSV Supermarket is included as “Top Withholding Agent”, thus, the rate of

income tax withholding is 1% for the payments made to Ms. Tina, the supplier of
goods.
Illustration 2: Mr. Marvin was hired as a courier by G.O.D. Collection Services,

Inc., under a Contract for Service for one (1) year, with payment on the basis of the
number of letters/notices delivered. In the past years, Mr.
Marvin’s gross receipts from the said company never exceeded ₱250,000. In 2018, his
gross receipts amounted to ₱230,000.
Computation:
In this case, G.O.D. Collection Services Inc. shall withhold the amount of ₱4,600,
computed as follows:
Gross Receipts ₱ 230,000.00

Less: Amount not subject to withholding tax 0.00
Income subject to withholding tax ₱ 230,000.00
Multiply by: EWT rate 2%
Amount of withholding tax ₱ 4,600.00
* The withholding tax rate applicable in this case is 2%, since Mr.
Marvin is a supplier of services considered as service contractor.
50
* However, no withholding shall be made if Mr. Marvin executed a
payee’s sworn declaration in accordance with the format (Annex
“B-2”) provided under these regulations, and the same has been
received by G.O.D. Collection Services Inc. (lone
payor/withholding agent) and processed in accordance with
prescribed policy.”
as follows:
“SECTION 2.57.5. Exemption from Withholding. The withholding of creditable

withholding tax prescribed in these Regulations shall not apply to income payments
made to the following:
xxx xxx xxx
(B) Persons enjoying exemption from payment of income taxes pursuant to the
provisions of any law, general or special, such as but not limited to the following:
(1) Sales of real property by a corporation which is registered with and certified by the
Housing and Land Use Regulatory Board (HLURB) or the Housing and Urban
Development Coordinating Council (HUDCC) as engaged in socialized housing project
where the selling price of the house and lot or only lot does not exceed the socialized
housing price applicable to the area as prescribed and certified by the said
board/council as provided under Republic Act No. 7279 and its implementing
regulations.
xxx xxx xxx
(3) Corporations which are exempt from the income tax under Sec. 30 of the Tax Code,
as amended, and government-owned or controlled corporations exempt from income
tax under Section 27(A), (C) of the same Code, to wit: the Government Service
Insurance System (GSIS), the Social Security System SSS), the Philippine Health
Insurance Corporation (PHIC); and the Local Water Districts (LWD). However, the
income payments arising from any activity which is conducted for profit or income
derived from real or personal property shall be subject to withholding tax as prescribed
in these regulations.
xxx xxx xxx
(5) Joint ventures or consortium formed for the purpose of undertaking

construction projects or engaging in petroleum, coal, geothermal and
other energy operations pursuant to an operating or consortium
agreement under a service contract with the government. Provided,
however, joint ventures or consortium formed for the purpose of
undertaking construction projects shall comply with the following
conditions to be considered as joint venture not taxable as a
corporation:
a) Should involve joining or pooling of resources by licensed local

contracts; that is, licensed as general contractor by the Philippine
Contractors Accreditation Board (PCAB) of the Department of
Trade and Industry
51
(DTI);
b) These local contractors are engaged in construction business; and
c) The Joint Venture itself must likewise be duly licensed as such
by the PCAB of the DTI.
Joint ventures involving foreign contractors may also be treated as a non-taxable

corporation only if the member foreign contractor is covered by a special license as
contractor by the PCAB of the DTI; and the construction project is certified by the
appropriate Tendering Agency (government office) that the project is a foreign
financed/internationally-funded project and that international bidding is allowed under
the Bilateral Agreement entered into by and between the Philippine Government and
the foreign/international financing institution pursuant to the implementing rules and
regulations of Republic Act No. 4566 otherwise known as Contractor’s License Law.
(6) Individuals who earn ₱250,000.00 and below from a lone income
payor upon compliance with the following requirements:
a) The individual has executed a payee’s sworn declaration of gross

receipts in accordance with the format per attached Annex “B-2”;
b) The sworn declaration has been submitted to the lone income payor/withholding
agent on or before January 15 of each year or before the initial income payment,
whichever is applicable.
Illustration 3: Mr. Wil, a messenger, was hired by Brgy. MRU Health Center,
under a Job Order arrangement. His monthly pay is fixed at ₱15,000. He provided
Brgy. MRU a notarized sworn declaration of gross receipts. Brgy. MRU is the lone
income payor of Mr. Wil which was likewise indicated in the aforesaid sworn
declaration.
Computation:
The income tax to be withheld shall be computed as follows -
Annual Income (P 15,000 X 12) ₱ 180,000.00

Tax to be withheld ₱ 0.00
* Mr. Wil submitted to Brgy. MRU the notarized payee’s sworn declaration stating
that his gross receipts shall not exceed ₱250,000, and since the actual receipts for
the year did not exceed the said amount, the income payment was not subjected to
withholding. Brgy. MRU, a Local Government Unit (LGU), may also withhold
business tax depending on the income tax regime selected by Mr. Wil as indicated
in his sworn declaration.”
SECTION. 5. Section 2.58 of RR No. 2-98, as amended, is hereby further amended to read
as follows:
“SECTION 2.58. Returns and Payment of Taxes Withheld at Source.
(A) Manner, Venue and Time of Filing of Withholding Tax Returns and
Payment of Taxes Withheld at Source - Taxpayers mandated to
52
electronically file and pay shall use the BIR’s electronic system, while
those not mandated has the option to either use the said electronic system,
or file with the Authorized Agent Banks (AABs) under the jurisdiction of
the Revenue District Office where they are registered. Withholding
agents located at municipalities where there is no AAB, the returns shall
be filed with the Revenue Collection Officer assigned in the said
municipality. The filing of the withholding tax returns (BIR Form No.
1601EQ for creditable withholding tax and Form Nos. 1602 for final tax
on interest on bank deposits, 1603 for final tax withheld on fringe
benefits, and 1601FQ for all other final withholding taxes) and payment
of the taxes withheld at source shall be made not later than the last day of
the month following the close of the quarter during which the
withholding was made.
For this purpose, the quarter shall follow the calendar quarter, e.g., for taxes withheld
during the quarter ending March 31, the same shall be remitted by the withholding
agent on or before April 30. The return filed shall be accompanied by the Quarterly
Alphabetical List of Payees (QAP), reflecting the name of income payees, Taxpayer
Identification Number (TIN), the amount of income paid segregated per month with
total for the quarter (all income payments prescribed as subject to withholding tax
under these regulations, whether actually subjected to withholding tax or not subjected
due to exemption), and the total amount of taxes withheld, if any.
Considering that taxes withheld by the withholding agents are held in trust for the
government and its availability is an imperious necessity to ensure sufficient cash
inflow to the National Treasury, withholding agents shall file BIR Monthly Remittance
Form (BIR Form No. 0619E and/or 0619F) every tenth (10th) day of the following
month when the withholding is made, regardless of the amount withheld. For
withholding agents using EFPS facility, the due date is on the fifteenth (15th) day of the
following month. Withholding agents with zero remittance are still required to use and
file the same form.
In the case of sale of shares of stocks not traded thru a local stock exchange and sale of
real property considered as capital asset, the filing and payment of the tax due thereon
shall be made within thirty (30) days after the sale or disposition using BIR Form No.
1707 and 1706, respectively. For sale of real property considered as ordinary asset, the
remittance of tax withheld shall be made on or before the tenth (10th) day following the
month of transaction using BIR Form No. 1606.
(B) Withholding Tax Statement for Taxes Withheld - Every payor required
to deduct and withhold taxes under this subsection shall furnish each
payee, a withholding tax statement, in triplicate, within twenty (20) days
from the close of the quarter. The prescribed form (BIR Form No, 2307
for creditable withholding tax and BIR Form 2306 for final withholding
tax) shall be used, showing the monthly income payments made, the
quarterly total, and the amount of taxes withheld. Provided, however, that
upon request of the payee, the payor must furnish such statement,
simultaneously with the income payment.
(C) Annual Information Return and Annual Alphabetical List of Payees

for income tax withheld at source – The withholding agent is required to
53
file with the concerned office of the LTS/RR/RDO where the
withholding agent is registered, the following:
1. Annual Information Return of Creditable Taxes

Withheld (Expanded)/Income Payments Exempt from
Withholding Tax (BIR Form No. 1604E) including the
corresponding Annual Alphabetical List of Payees - on or before
March 1 of the following year in which payments were made; and
2. Annual Information Return on Final Income Taxes Withheld (BIR

Form 1604F) including the corresponding Annual Alphabetical List
of Payees – On or before January 31 of the following year in which
payments were made.”
as follows:
“SECTION 2.78.1. Withholding of Income Tax on Compensation Income. -
(A) Compensation Income Defined. - xxx
(1) Xxx
(2) Xxx
(3) Facilities and privileges of relatively small value. – xxx The

following shall be considered as “de minimis” benefits not subject to
income tax as well as withholding tax on compensation income of
both managerial, and rank and file employees:
(a) Monetized unused vacation leave credits of private employees

not exceeding ten (10) days during the year;
(b) Monetized value of vacation and sick leave credits paid to

government officials and employees;
(c) Medical cash allowance to dependents of employees, not

exceeding ₱1,500 per employee per semester of ₱250 per month;
(d) Rice subsidy of ₱2,000 or one sack of 50kg. rice per month
amounting to not more than ₱2,000;
(e) Uniform and clothing allowance not exceeding ₱6,000 per

annum;
xxx xxx xxx
(B) Exemption from withholding tax on compensation. - The following

income payments are exempted from the requirement of withholding tax
54
on compensation but may be subject to income tax depending on the
nature/sources of income earned by the individual recipient.
xxx xxx xxx
(11) Thirteenth month pay and other benefits. –
(a) Thirteenth month pay equivalent to the mandatory one (1) month
basic salary of official and employees of the government
(whether national or local), including government-owned or
controlled corporations, and/or private offices received after the
twelfth month pay; and
(b) Other benefits such as Christmas bonus, productivity incentives,

loyalty award, gift in cash or in kind, and other benefits of
similar nature actually received by officials and employees of
both government and private offices, including the Additional
Compensation Allowance (ACA) granted and paid to all officials
and employees of the National Government Agencies (NGAs)
including State Universities and Colleges (SUCs), Government-
Owned and/or Controlled Corporations (GOCCs), Government
Financial Institutions (GFIs) and Local Government Units
(LGUs).
The above stated exclusions under (a) and (b) shall cover benefits paid or accrued
during the year, provided that the total amount shall not exceed ninety thousand pesos
(₱ 90,000), which may be increased through rules and regulations issued by the
Secretary of Finance, upon recommendation of the Commissioner, after considering
among others, the effect on the same of the inflation rate at the end of the taxable year.
(12) GSIS, SSS, Medicare and other contributions. – GSIS, SSS,

Medicare and Pag-Ibig contributions, and union dues of individual
employees.
(13) Compensation income of Minimum Wage Earners (MWEs) who

work in the private sector and being paid the Statutory Minimum
Wage (SMW), as fixed by Regional Tripartite Wage and
Productivity Board (RTWPB)/National Wages and Productivity
Commission (NWPC), applicable to the place where he/she is
assigned, as well as the compensation of employees in the public
sector who are paid not more than the SMW applicable to non-
agricultural sector, as fixed by RTWPB/NWPC, applicable to the
place where he/she is assigned.
‘Statutory Minimum Wage’ (SMW) shall refer to the rate fixed by the Regional
Tripartite Wage and Productivity Board (RTWPB), as defined by the Bureau of Labor
and Employment Statistics (BLES) of the Department of Labor and Employment
(DOLE). The RTWPB of each region shall determine the wage rates in the different
regions based on established criteria and shall be the basis of exemption from income
tax for this purpose.
55
The NWPC shall officially submit a Matrix of Wage Order by region, and any changes
thereto, within ten (10) days after its effectivity to the Assistant Commissioner,
Collection Service, for circularization in the BIR.
Aside from the SMW, the holiday pay, overtime pay, night shift differential pay, and
hazard pay, earned by the aforementioned MWE shall likewise be covered by the above
exemption. For purposes of these regulations, hazard pay shall mean the amount paid
by the employer to MWEs who were actually assigned to danger or strife-torn areas,
disease-infested places, or in distressed or isolated stations and camps, which expose
them to great danger or contagion or peril to life. Any hazard paid to MWEs which
does not satisfy the above criteria is deemed subject to income tax and consequently,
withholding tax on the said hazard pay.
In case of hazardous employment, the employer shall indicate in the Alphabetical List
of Employees, the MWEs who received the hazard pay, the period of employment, the
amount of hazard pay, and the justification for such payment as certified by the
concerned DOLE/allied agency, which certification is part of the attachment in the
filing of the Annual Information Return (BIR Form 1604-C). In the case of employees
under the public sector, the document to be attached is the Department of Budget
Management (DBM) Circular related to such payment of hazard pay.
Additional compensation such as commissions, honoraria, fringe benefits, benefits in

excess of the allowable statutory amount of ₱90,000.00, taxable allowances, and other
taxable income given to an MWE by the same employer other than those which are
expressly exempt from income tax shall be subject to withholding tax using the
withholding tax table.
Likewise, MWEs receiving other income from other sources in addition to

compensation income, such as income from other concurrent employers, from the
conduct of trade, business, or practice of profession, except income subject to final tax,
are subject to income tax only to the extent of income other than SMW, holiday pay,
overtime pay, night shift differential pay, and hazard pay earned during the taxable
year.
Any income subject to income tax may be subject to withholding tax; however, income
exempt from income tax is consequently exempt from withholding tax. Further, income
not subject to withholding tax does not necessarily mean that it is not subject to income
tax.
Any reduction or diminution of wages for purposes of exemption from income tax shall
constitute misrepresentation and therefore, shall result to the automatic disallowance of
expense, i.e. compensation and benefits account, on the part of the employer. The
offenders may be criminally prosecuted under existing laws.
(13) Compensation during the year not exceeding Two hundred fifty thousand pesos
(₱250,000).
Illustration 4: Ms. Alona is employed in CSO Corporation. She received the SMW
for 2018 in the total amount of ₱175,000, inclusive of the 13th month pay. In the
same year, she also received overtime pay of ₱40,000 and nightshift differential of
₱25,000. She also received commission income from the same employer of
₱20,000, thus, total income received amounted to ₱260,000.
56
Computation:
The employer of Ms. Alona shall determine the nature of income payments. The
amount to be subjected to income tax withholding shall be computed as follows -
Total Income received ₱ 260,000.00

Less: Income exempt from tax
Basic SMW ₱175,000.00
Overtime Pay 40,000.00
Night Shift Differential 25,000.00
Total Exempt Income as MWE 240,000.00
Taxable Income- Commission ₱ 20,000.00
Tax Due
On not over P 250,000.00 (₱20,000.00 x 0%) ₱ 0.00
* Taxpayer’s income of SMW, overtime pay, and night shift

differential pay are expressly exempt from income tax
under the law and consequently from withholding tax.
* Commission income from the same employer is taxable,

however, under the graduated income tax rates since it is
less than ₱250,000, there is no tax due.
Illustration 5: Ms. Cyril is employed in MAFD Corporation and is also a part-time

real estate agent for a real estate broker. In addition to the SMW of ₱180,000 she
received from her employer, she likewise received ₱75,000 as commissions from
her real estate dealings for the year 2018.
Computation:
The amount subject to income tax and withholding tax shall be computed depending on
the income tax regime selected by Ms. Cyril, since she is qualified to avail of such
option (income from business/practice of profession did not exceed ₱3,000,000) and
such option was reflected in the payee’s sworn declaration given by the taxpayer to the
payor/withholding tax agent real estate broker, as follows:
1. Under the graduate income tax (IT) regime:

Less: Income exempt from income tax - SMW 180,000.00
Tax Due
On not over ₱250,000.00 (₱75,000.00 x 0%) ₱ 0.00
2. Under the 8% IT regime:

Less: Income exempt from income tax- SMW 180,000.00
57
Tax Due
₱75,000.00 x 8% ₱ 6,000.00
* Taxpayer’s income as MWE does not exceed P 250,000; hence, not

subject to withholding tax.
* Since taxpayer is a mixed income earner and has received income

from other sources in addition to her compensation income, the
commission received during the taxable year is subject to income tax
and consequently, to withholding tax.
* If Ms. Cyril selected the graduated income tax regime, her

commission income is subject to income tax at 0% since it did not
exceed P 250,000 and she is also subject to business tax. However, if
she selected the 8% income tax regime, she is liable for income tax
amounting to P 6,000, but this is in lieu of the graduated income tax
and the percentage tax under Section 116 of the Tax Code, as
amended.”
SECTION 7. Section 2.79 of RR No. 2-98, as amended, is hereby further amended to read
as follows:
“SECTION2.79. Income Tax Collected at Source on Compensation Income.
(A) Requirement of Withholding. - Every employer must withhold from

compensation paid an amount computed in accordance with these
Regulations, whether the employee is a citizen or an alien, except non-
resident alien not engaged in trade or business. Provided, that no
withholding of tax shall be required on the SMW, including holiday pay,
overtime pay, night shift differential and hazard pay of MWEs in the
private/public sectors as defined in these Regulations. Provided,
further, that an employee who receives additional compensation such as
commissions, honoraria, fringe benefits, benefits in excess of the
allowable statutory amount of ₱90,000.00, taxable allowances and other
taxable income other than the SMW, holiday pay, overtime pay, hazard
pay, and night shift differential pay, shall be taxable only on such
additional compensation received.
(B) Computation of Withholding Tax on Compensation Income in General.

The procedures prescribed below shall govern the computation of
withholding tax on the taxable compensation income of the employees.
Provided, however, that taxable fringe benefits received by employees
other than rank and file, as defined in the Labor Code of the Philippines,
as amended, shall be subject to Fringe Benefits Tax pursuant to Section
33 of the Tax Code, as amended.
1. Use of Withholding Tax Tables. – In general, every employer

making payment of compensation shall deduct and withhold from
such compensation a tax determined in accordance with the
58
prescribed withholding tax table, Annex “D” for compensation paid
from January 1, 2018 until December 31, 2022 (as published under
RMC 1-2018 dated January 4, 2018) and Annex “E” for
compensation paid starting January 1, 2023.
xxx xxx xxx
If the compensation is paid other than daily, weekly, semi-monthly or monthly, the tax
to be withheld shall be computed as follows:
(a) Annually – use the annualized computation referred to in Sec. 2.79

(B)(5)(b) of these regulations;
(b) Quarterly and semi-annually – divide the compensation by three

(3) or six (6) respectively, to determine the average monthly
compensation. Use the monthly withholding tax table to compute
the tax, and the tax so computed shall be multiplied by three (3) or
six (6) accordingly.
(c) Components of Withholding Tax Table. -
a. Column 1 pertains to the following details:

i. Payroll period
ii. Compensation range
iii. Prescribed withholding tax
b. Columns 2 to 7 show the tax due for each of the

compensation range identified
(d) Steps to determine the amount of tax to be withheld.
Step 1. Determine the total monetary and non-monetary compensation paid to an

employee for the payroll period: monthly, semi-monthly, weekly or daily as the case
may be, excluding non-taxable benefits and mandatory contributions.
Classify taxable compensation into regular and supplementary compensation. Regular

compensation includes basic salary, fixed allowances for representation, transportation
and other allowances paid to an employee per payroll period. Supplementary
compensation includes payments to an employee in addition to the regular
compensation, such as commission, overtime pay, taxable retirement, taxable bonus,
and other taxable benefits, with or without regard to a payroll period.
Representation and Transportation Allowances (RATA) granted to public officers and

employees under the General Appropriations Act and the Personnel Economic Relief
and Allowance (PERA) which essentially constitute reimbursement for expenses
incurred in the performance of government personnel’s official duties shall not be
subject to income tax and consequently to withholding tax.
Step 2. Use the appropriate table in Annex “D” (for compensation paid from January
1, 2018 to December 31, 2022) or Annex “E” (for compensation paid from January 1,
2023 onwards) and select the applicable payroll period.
59
Step 3. Determine the compensation range of the employee by taking into account only
the total amount of taxable regular compensation income and apply the applicable tax
rates prescribed thereon.
Step 4. Compute the withholding tax due by adding the tax predetermined in the
compensation range as indicated on the column used and the rate of tax on the excess of
the total compensation over the minimum of the compensation range.
4. Sample Computations on the use of the Withholding Tax Tables.
The following are sample computations of withholding tax on compensation using the
prescribed withholding tax tables:
Illustration 6: Ms. Joc, an employee of MCUD Inc., is receiving daily compensation in

the amount of P 2,500, net of mandatory contributions.
Computation:
By using the daily withholding tax table, the withholding tax beginning January
2018 is computed by referring to compensation range under column 4 which shows
a predetermined tax of ₱356.16 on ₱2,192 plus 30% of the excess of Compensation
Range (Minimum) amounting to ₱308 (₱2,500.00 – ₱2,192.00), which is ₱92.40.
As such, the withholding tax to be withheld by the employer shall be ₱448.56.
Total taxable compensation ₱ 2,500.00

Less: Compensation Range (Minimum) 2,192.00
Excess ₱ 308.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱2,192.00 ₱ 356.16

Add: Tax on the excess (₱308.00 x 30%) 92.40
Total daily withholding tax ₱ 448.56
Illustration 7: Ms. Haidee, an employee of GEAL Corp., is receiving weekly

compensation in the amount of ₱9,500, net of mandatory contributions.
Computation:
By using the weekly withholding tax table, the withholding tax beginning January
2018 is computed by referring to compensation range under column 3 which shows
a predetermined tax of ₱576.92 on ₱7,692 plus 25% of the excess of Compensation
Range (Minimum) amounting to ₱1,808 (₱9,500.00 – ₱7,692.00), which is ₱452. As
such, the withholding tax to be withheld by the employer shall be ₱1,028.92.
Excess ₱ 1,808.00

Add: Tax on the excess (₱1,808.00 x 25%) 452.00
60
Total weekly withholding tax ₱ 1,028.92
Illustration 8: Ms. Rose, an employee of JMLH Company, is receiving semi-

monthly compensation in the amount of ₱15,500, net of mandatory contributions.
Computation:
By using the semi-monthly withholding tax table, the withholding tax beginning
January 2018 is computed by referring to compensation range under column 2
which shows a predetermined tax of ₱0 on ₱10,417 plus 20% of the excess of
Compensation Range (Minimum) amounting to ₱5,083 (₱15,500.00 – ₱10,417.00),
which is ₱1,016.60. As such, the withholding tax to be withheld by the employer
shall be ₱1,016.60.

Excess ₱ 5,083.00

Add: Tax on the excess (₱5,083.00 x 20%) 1,016.60
Total semi-monthly withholding tax ₱ 1,016.60
Illustration 9: Ms. Lyn, an employee of MAG Corp. is receiving regular monthly

compensation in the amount of ₱165,000, net of mandatory contributions, with
supplemental compensation in the amount of ₱5,000 for the month.
Computation:
By using the monthly withholding tax table, the withholding tax beginning January
2018 is computed by referring to compensation range under column 4 which shows a
predetermined tax of ₱10,833.33 on ₱66,667 plus 30% of the excess of Compensation
Range (Minimum) amounting to ₱103,833 (₱165,000.00 – ₱ 66,667.00 + ₱5,000),
which is ₱30,999.90. As such, the withholding tax to be withheld by the employer shall
be ₱43,659.89.
61
5. Use of Exceptional Computations
(a) Cumulative Average Method. – If in respect of a particular employee, the regular

compensation is exempt from withholding tax because the amount thereof is below the
compensation level, but supplementary compensation is paid during the calendar year;
or the supplementary compensation is equal to or more than the regular compensation
to be paid; or the employee was newly hired and had a previous employer/s within the
calendar year, other than the present employer doing this cumulative computation, the
present employer shall determine the tax to be deducted and withheld in accordance
with the cumulative average method provided hereunder:
Step 1. Add the amount of taxable regular and supplementary compensation to be paid
to an employee for the payroll period subject of computation to the sum of the taxable
regular and supplementary compensation since the beginning of the calendar year
including the compensation paid by the previous employers within the same calendar
year, if any;
Step 2. Divide the aggregate amount of compensation computed in step 1 by the

number of payroll period to which the amount relates;
Step 3. Compute the tax to be deducted and withheld on the cumulative average
compensation determined in Step No. (2) in accordance with the withholding tax table;
Step 4: Multiply the tax computed in Step No. (3) by the number of payroll period to
which it relates;
Step 5. Determine the excess, if any, of the amount of tax computed in Step No. (4)
over the total amount of tax already deducted and withheld from the beginning payroll
period to the last payroll period, including that withheld by the previous employer/s
within the calendar year, if any. The excess, as computed, shall be deducted and
withheld from the compensation to be paid for the last payroll period of the current
calendar year.
The cumulative average method, once applicable to a particular employee at any time
during the calendar year, shall be the same method to be consistently used for the
remaining payroll period/s of the same calendar year.
xxx xxx xxx
Illustration 10: The regular compensation is exempt from withholding tax but
supplementary compensation (commission) is paid during the calendar year.
Ms. Rose received the following compensation beginning January, 2018.
Month Regular Supplementary Total

Compensation Compensation Compensation
January P15,000 P20,000 P35,000
February 15,000 15,000 30,000
March 15,000 25,000 40,000
62
Computation:
Using the Revised Withholding Tax Table in Annex “D”, the taxes to be withheld for
each month following the step-by-step procedures enumerated above:
1. For January P35,000.00 + 0 = P 35,000.00

For February 35,000.00 + 30,000.00 = 65,000.00
For March 35,000.00 + 30,000.00 + 40,000.00 = 105,000.00
2. For January P 35,000.00 ÷ 1 = P 35,000.00

For February 65,000.00 ÷ 2 = 32,500.00
For March 105,000.00 ÷ 3 = 35,000.00
For March:
Tax on P 33,333 P 2,500.00
Tax on excess (P 35,000 – 33,333) x 25% 416.75
--------------
Tax on P 35,000 P 2,916.75
========
4. For January P2,916.75 x 1 = P 2,916.75

For February 2,333.40 x 2 = 4,666.80
For March 2,916.75 x 3 = 8,750.25
5. Tax to be withheld monthly:

For January P 2,916.75 – 0 = P 2,916.75
For February 4,666.80 – 2,916.75 = 1,750.05
For March 8,750.25 – 4,666.80 = 4,083.45
Illustration 11: Supplementary compensation is equal or more than the regular

compensation received.
Ms. Aimee received the following compensation beginning January, 2018.
Month Regular Supplementary Total

Compensation Compensation Compensation
January P15,000 P15,000 P30,000
February 15,000 15,000 30,000
March 15,000 20,000 35,000
63
Computation:
each month following the step-by-step procedures previously enumerated:
1. For January P30,000.00 + 0 = P 30,000.00

For February 30,000.00 + 30,000.00 = 60,000.00
For March 30,000.00 + 30,000.00 + 35,000.00 = 95,000.00
2. For January P 30,000.00 ÷ 1 = P 30,000.00

For February 60,000.00 ÷ 2 = 30,000.00
For March 95,000.00 ÷ 3 = 31,666.67
3. For January:
Tax on P 20,833 P 0.00
Tax on excess (P 30,000 – 20,833) x 20% 1,833.40
--------------
Tax on P 30,000 P 1,833.40
For February:
Tax on P 20,833 P 0.00
Tax on excess (P 30,000 – 20,833) x 20% 1,833.40
--------------
Tax on P 30,000 1,833.40
For March:
Tax on P 20,833 P 0.00
Tax on excess (P 31,666.67 – 20,833) x 20% 2,166.73
--------------
Tax on P 31,666.67 P 2,166.73
========
4. For January P1,833.40 x 1 = P 1,833.40
For February 1,833.40 x 2 = 3,666.80
For March 2,166.73 x 3 = 6,500.19
5. Tax to be withheld monthly:

For January P 1,833.40 – 0 = P 1,833.40
For February 3,666.80 – 1,833.40 = 1,833.40
For March 6,500.19 – 3,666.80 = 2,833.39
Illustration 12: A newly hired employee with previous employer within the calendar
year 2018.
Ms. Leni was hired by JPL Corporation on July 6, 2018. Her total taxable
income per month is P 35,000. She was previously employed by ENA Company from
January to June 30, 2018 with a monthly taxable income of P 30,000 or P180,000 for
six (6) months. Per BIR Form No. 2316 (Certificate of Compensation Payment/Tax
64
Withheld) issued by the previous employer, which was presented by Ms. Leni to her
present employer, the total tax withheld is P11,000.40. In computing for the tax
withheld on the compensation of Ms. Leni starting the month of July 6, 2018, JPL
Corporation shall use the cumulative average method.
each month following the step-by-step procedures previously enumerated:
1. For July 6 P 35,000 + 180,000 = P215,000.00

For August 215,000 + 35,000 = 250,000.00
For September 215,000 + 35,000 + 35,000 = 285,000.00
For October 215,000 + 35,000 + 35,000 + 35,000 = 320,000.00
For November 215,000 + 35,000 +35,000+35,000+ 35,000 = 355,000.00
65
(b) Annualized withholding tax method. – (1) When the employer-employee
relationship is terminated before end of the calendar year; and (2) when computing for
the year-end adjustment, the employer shall determine the amount to be withheld from
the compensation on the last month of employment or in December of the current
calendar year in accordance with the following procedures:
Step 1. Determine the taxable regular and supplementary compensation paid to the
employee for the entire calendar year.
Step 2. If the employee has previous employment/s within the year, add the amount of
taxable regular and supplementary compensation paid to the employee by the present
employer doing the annualized computation to the taxable compensation income
received from previous employer/s during the calendar year.
(a) When the employer-employee relationship is terminated

before December – The taxable regular and supplementary
compensation income shall be the amount paid since the
beginning of the current calendar year to the termination of
employment;
(b) Year-end adjustment- The taxable regular and

supplementary compensation income shall be the amount
paid since the beginning of the current calendar year to
December;
(c) Taxable fringe benefits received by employees holding

managerial or supervisory positions shall be subject to a
final fringe benefit tax as prescribed in Section 2.57.1(G)
hereof. Hence, the same shall not form part of the taxable
supplementary compensation of managers and supervisors
subject to tax using the withholding tax tables.
66
Step 3. Compute the amount of tax on the amount arrived in Step 2, in accordance with
the applicable schedules, as follows:
a. For compensation income earned for taxable years 2018 to

2022:
RANGE OF TAXABLE
TAX DUE = a + (b x c)
INCOME
BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000.00 - -
250,000.00 400,000.00 - 20% 250,000.00
400,000.00 800,000.00 30,000.00 25% 400,000.00
800,000.00 2,000,000.00 130,000.00 30% 800,000.00
2,000,000.00 8,000,000.00 490,000.00 32% 2,000,000.00
8,000,000.00 - 2,410,000.00 35% 8,000,000.00
b. For compensation income earned for taxable year 2023 and

onwards:
RANGE OF TAXABLE TAX DUE = a + (b x c)

INCOME
BASIC ADDITIONAL OF EXCESS

OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000.00 - -
250,000.00 400,000.00 - 15% 250,000.00
400,000.00 800,000.00 22,500.00 20% 400,000.00
800,000.00 2,000,000.00 102,500.00 25% 800,000.00
2,000,000.00 8,000,000.00 402,500.00 30% 2,000,000.00
8,000,000.00 - 2,202,500.00 35% 8,000,000.00
Step 4. (Formerly Step 6) Determine the deficiency or excess, if any, of the tax
computed in Step 3 over the cumulative withholding tax already deducted and withheld
since the beginning of the current calendar year. The deficiency withholding tax (when
the amount of tax computed in Step 3 is greater than the amount of cumulative tax
already deducted and withheld or when no tax has been withheld from the beginning of
the calendar year) shall be withheld from the last payment of compensation for the
calendar year. If the deficiency withholding tax is more than the amount of the last
compensation to be paid to an employee, the employer shall be liable to pay the amount
of tax which cannot be withheld from the employee’s last compensation for the year.
The obligation of the employee to the employer arising from the advances made by the
employer of the amount of the required tax is a matter of settlement between the
employee and employer.
67
The excess withholding tax (when the amount of cumulative tax already deducted and
withheld is greater than the tax computed in Step 3) shall be credited or refunded to the
employee not later than January 25 of the following year. However, in case of
termination of employment before December, the refund shall be given to the employee
at the payment of the last compensation during the year. In return, the employer is
entitled to deduct the amount refunded to the employee/s from the remittable amount of
taxes withheld from compensation income for the current month in which the refund
was made, and in the succeeding months thereafter until the amount refunded by the
employer is fully repaid.
The annualized computation done for each employee shall be reflected by the employer
at the alphabetical list attached to BIR Form No. 1604C.
Illustration 13: Mr. Bembem receives ₱120,000 as monthly regular compensation

(net of SSS/GSIS, PHIC, HDMF employee share only) starting January 1, 2018
from AMBS Company. On June 1, 2018, he filed his resignation effective June 30,
2018. He was unemployed for the rest of the year. The tax withheld from January 1
to May 31, 2018 was ₱134,164.50.
Computation:
For the period of employment -
Total Regular Compensation (Jan 1 to May 31, 2018) ₱ 600,000.00

Add: Regular Compensation to be received on June 120,000.00
Total Taxable Compensation Income (Jan-June, 2018) ₱ 720,000.00
Total Income Tax Due:

On ₱400,000.00 ₱ 30,000.00
Tax on Excess (₱720,000.00-₱400,000.00) x 25% 80,000.00
Total tax due ₱ 110,000.00
Less: Tax Withheld from January to May 134,164.50
Amount to be refunded by the employer to Mr. Bembem (₱ 24,164.50)
Illustration 14: Mr. Joey receives ₱120,000 as monthly regular compensation (net
of SSS/GSIS, PHIC, HDMF- all are employee share only) starting January 1, 2018
from CCF Corp. On June 1, 2018, he filed his resignation effective June 30, 2018
and was subsequently re-employed in EBQ Company on July 1, 2018 with a
monthly compensation of ₱130,000. He furnished his new employer with the BIR
Form 2316 from CCF Corp., his old employer, which showed that the amount he
received from the said previous employer was ₱720,000 with tax withheld of
₱134,164.50. On December 15, 2018, he received commissions of ₱15,000 from his
new employer. His new employer withheld ₱178,997.40 from his income.
Computation:
Total Compensation Received from previous
employer (Jan 1 to Jun 30, 2018) Add: ₱ 720,000.00
Regular Compensation from the new
employer (Jul 1 to Dec 31, 2018) 780,000.00
Total Taxable Compensation Income ₱ 1,500,000.00
Add: Supplementary Income (Commissions) 15,000.00
68
Total taxable Compensation Income ₱ 1,515,000.00
Tax Due:
On ₱800,000.00 ₱ 130,000.00
On Excess (₱1,515,000.00-₱800,000.00) x 30% 214,500.00
Total tax due ₱ 344,500.00
Less: Tax withheld (₱134,164.50 +₱178,997.40) Amount 313,161.90
to be deducted by EBQ Company from
Mr. Joey for December 2018 ₱ 31,338.10
Illustration 15: (YEAR-END ADJUSTMENTS COMPUTATION)

For taxable year 2018, EBQ Company’s records reflected the following:
1. Ms. Grace received the following compensation for the year:

a. Monthly Basic Salary ₱ 50,000.00
b. Overtime pay for November 10,000.00

c. Thirteenth Month Pay 50,000.00
d. Other Benefits 10,000.00
e. Withholding Tax (Jan-Nov) 73,334.25
Computation:
2. Mr. Gerry, hired on July 1, 2018, received the following compensation for
the year:
a. Monthly Basic Salary ₱ 25,000.00

b. Thirteenth Month Pay 25,000.00
c. Other Benefits 5,000.00
d. Salary from previous employer (Jan-May 2018) 125,000.00
e. Withholding tax from previous employer 4,167.00
f. Withholding tax (Jul-Nov) 4,167.00
69
Computation:
* The annualized computation done for each employee shall be reflected by the
employer at the alphabetical list of employees required to be attached to BIR Form No.
1604C. The list shall be submitted in electronic form.
(c) If the compensation is paid other than daily, weekly, semi-monthly or monthly,
compute the tax to be deducted and withheld as follows:
a) Annually – xxx
b) Quarterly and semi-annually – xxx
c) Bi-weekly – xxx
d) Miscellaneous - xxx
(C) Computation of Withholding Tax on Compensation and Benefits Received

by Employees other than Rank and File Employees – xxx
(1) Determine the total monetary and non-monetary compensation,

segregating gross receipts which include thirteenth (13th) month pay,
productivity incentives, Christmas bonus and fringe benefits received
by the employee per payroll period. When computing under the
annualized computation, the total monetary and non-monetary
compensation shall be that received for the calendar year. Gross
benefits received by officials and employees of public and private
entities shall be exempted from income tax and withholding tax;
provided that the amount of exemption shall not exceed ninety
thousand pesos (₱90,000.00).
(2) Segregate the taxable from the non-taxable compensation

(excluding the fringe benefits) paid to the employee. The taxable
income refers to all remuneration paid to an employee not otherwise
exempted by law from income tax and consequently from
withholding tax. The non-taxable income are those which are
70
specifically exempted from income tax by the Code or other special
laws as listed in Sec. 2.78.1(B) hereof (e.g. benefits not exceeding
(₱90,000.00), non-taxable retirement benefits and separation pay);
(3) Segregate the taxable fringe benefit and subject the same to
withholding pursuant to Subsection D of this section of the
Regulations;
(4) Compute withholding tax on the taxable regular and supplementary

compensation in accordance with the procedures prescribed in Sec.
2.79 (B)(1) of these regulations, for purposes of withholding per
payroll period and for purposes of computing under the cumulative
average method or for the yearend adjustment.
(D) Computation of Withholding Tax on Fringe Benefit-
(1) Final Withholding tax on Fringe Benefits paid to employees other

than rank and file. -There shall be imposed a final tax of thirty-five
percent (35%) on the grossed-up monetary value of fringe benefits
granted or furnished by the employer to his employees (except rank
and file employees) unless the fringe benefits is required by the
nature of or necessary to the trade, business or profession of the
employer, and when the fringe benefit is for the convenience and
advantage of the employer.
The fringe benefit tax shall be paid by the employer in the same manner as provided in
Sec. 2.58 of these Regulations. It shall not form part of the gross income of the
employee.
(2) Grossed-up monetary value of Fringe Benefits. – In general the

grossed-up monetary value of the fringe benefit shall be determined
by dividing the monetary value of the fringe benefit by sixty-five
(65%). The grossed-up monetary value of the fringe benefits
furnished to the employees who are taxable under subsection B of
Section 25 of the Tax Code, as amended, shall be determined by
dividing the monetary value of the fringe benefit by the difference
between one hundred percent (100%) and the applicable rates of
income tax prescribed on the aforesaid sub-section of Section 25, to
wit:
Subsection (B) – Twenty-five percent on income derived from sources within the
Philippines by a non-resident alien individual not engaged in trade or business in the
Philippines.
(3) Non-Taxable Fringe Benefits - xxx
xxx xxx xxx
Illustration 16: WBV Company (a domestic employer/company) granted Ms. Leni

(a Filipino branch manager employee), in addition to her basic salaries, ₱5,000 cash
71
per quarter for her personal membership fees at Country Golf Club. The Fringe
Benefits Tax (FBT) shall be computed as follows:
Monetary value of fringe benefit: ₱ 5,000.00

Percentage divisor applicable: 65%
FBT rate: 35%
FBT= (Monetary value of fringe benefit ÷ 65%) x 35%

FBT= (₱5,000.00 ÷ 65%) x 35%
FBT= ₱7,692.31 x 35%
FBT= ₱2,692.31
Illustration 17: Same facts but the employee is a non-resident alien individual not
engaged in trade or business within the Philippines:
Monetary value of fringe benefit: ₱ 5,000.00

Percentage divisor applicable: 75%
Fringe benefit tax rate: 25%
FBT= (Monetary value of fringe benefit ÷ 75%) x 25%

FBT= (₱5,000.00 ÷ 75%) x 25%
FBT= ₱6,666.67 x 25%
FBT= ₱1,666.67
(E) Computation of Withholding Tax on Employees of Area or Regional

Headquarters of multinational corporations, ROHQs, OBUs and
Petroleum Service contractors and sub-contractors - the manner and
regular rates of withholding tax on citizens and resident individuals under
Section 2.79(B) hereof shall apply.
(F) Requirement for Deductibility. – xxx
(G) Tax Paid by Recipient. – xxx
(H) Non-Deductibility of Tax and Credit for Tax Withheld. – xxx
xxx xxx xxx”
Note: Section 2.79 (I) of RR No. 2-98, as amended, is deleted.
as follows:
“SECTION 2.79.1. Application for Registration for Individuals Earning

Compensation Income (BIR Form No. 1902). – The application for registration of
employees shall be accomplished by both employer and employee relating to the
following information and other requirements:
72
(A) Employee. –
(1) Required Information
(a) Name/Taxpayer’s Identification Number (TIN)/Residential

Address of Employee /Other information required as stated in BIR
Form 1902;
(b) Civil Status of Employee whether single, married, legally

separated, widow or widower;
(c) Occupational Status of spouse of the employee. – If the employee

is legally married, the name and TIN, if any, of the spouse, and
whether said spouse is employed locally or abroad, unemployed or
engaged in trade or business;
(2) Required forms and attachments. –
The taxpayer shall file an application for registration (BIR Form 1902). To establish
identity and status, taxpayer is required to attach the following documents, if
applicable:
(a) Any identification issued by an authorized government body (e.g.

birth certificate, passport, driver’s license) that shows the name,
address, and birthdate of the applicant; In case of alien employee,
Passport and Working Permit or photocopy of duly received
Application For Alien Employment Permit (AEP) by the
Department of Labor and Employment (DOLE);
(b) Copy of Marriage contract, if married;
(c) Other documentary evidence to support employees' identification,

where the above documents are not available.
(3) Concurrent Multiple Employments. – An employee who is employed

concurrently by two or more employers within the same period of time
during the taxable year shall file the application for registration (BIR
Form no. 1902) with the main employer (employer to whom the said
employee’s service is render for most of the time during the taxable
year) and shall furnish a copy of the duly received application with the
secondary employers (2nd, 3rd, etc. employers). The employed
husband and wife shall each file a separate application with their
respective employers;
(4) Successive Multiple Employment – An employee who transferred to

another employer during the taxable year, shall furnish the concerned
new employer a copy of the Certificate of Compensation Payment/Tax
Withheld (BIR Form no. 2316) for compensation payment with or
without withholding tax during the taxable/calendar year issued by
previous employer/s.
73
(B) Employer. – The employer with whom the Application for Registration
(BIR Form No. 1902) is filed, must indicate the date of receipt thereon and
accomplish Part IV of the said Application pertaining to Employer’s
Information such as TIN, Employer’s Registered Name, and other relevant
information.
(C) Procedures for the filing of the Application for Registration (BIR Form
No. 1902) and/or Application for Registration Information Update
(BIR Form No. 1905).
(1) All employers shall require their concerned employees to accomplish in triplicate
the Application for Registration BIR Form 1902 (if the employee does not have
existing TIN) or Application for Update of Registration BIR Form 1905 (if the
employee has existing TIN and/or registered outside the RDO of the employer or if
update of the employer’s information), distributed as follows:
(1.1) Original copy- RDO;

(1.2) Duplicate- employer; and
(1.3) Triplicate- employee
The said forms shall be accomplished and submitted based on the following manner:
(a) New employee/s shall accomplish the Application for Registration

for Individuals Earning Compensation Income (BIR Form No,
1902) and submit the same to the employer. The employer shall
file the fully accomplished registration form of employees
registering for the first time to the BIR within ten (10) days from
the date of employment or secure the TIN of new employees using
the E-Registration System;
(b) In case of changes in the information data in the Application for

Registration (BIR Form No. 1902) previously submitted by the
employee, such as changes in employment, multiple employment
status and amount of compensation income, an Application for
Registration Information Update (BIR Form No. 1905) reflecting
the changes, together with the required documentary evidence of
changes, must be submitted to the employer within ten (10) days
after such change. The employer shall then make the necessary
adjustments on the withholding tax of the employee based on the
new information;
(2) The employer shall transmit all copies of the completely filled-out Application for
Registration Information Update (BIR Form No. 1905) to the concerned office of the
LTS/RR/RDO where the employer is registered, on or before the last day of the month
of receipt from the employee. The RDO or his duly authorized representative, where
the employer is registered, shall receive and stamp the three copies. The triplicate copy
duly stamped received by the BIR shall be given to the employee.
Registration and information updates of employees receiving purely compensation

income shall follow the existing policies and procedures thereon.”
74
as follows:
“SECTION 2.79.2. Failure to file Application for Registration (BIR Form No.
1902) – Where an employee, in violation of these regulations either fails or refuses to
file an Application for Registration (BIR Form No. 1902) together with the required
attachments, the employer shall withhold the taxes prescribed under the revised
withholding tax table (Annex “D” or “E”, whichever is applicable).”
SECTION 10. Section 2.79.4 of RR No. 2-98, as amended, is hereby further amended to
read as follows:
“SECTION 2.79.4. Husband and Wife – Where both husband and wife are each
recipients of compensation either from the same or different employers, taxes shall be
withheld separately in accordance with the applicable revised withholding tax table
(Annex “D” or “E”).”
SECTION 11. Section 2.80 of RR No. 2-98, as amended, is hereby further amended to read
as follows:
“SECTION 2.80. Liability for Tax. –
(A) Employer –
xxx xxx xxx
(C) Additions to Tax.-
(1) Xxx
xxx xxx xxx
(2) Interest – There shall be assessed and collected on any unpaid

amount of tax, interest at the rate of double the legal interest rate
for loans or forbearance of any money in the absence of an
express stipulation set by the Bangko Sentral ng Pilipinas from
the date prescribed for payment until the amount is fully paid.
Provided, that in no case shall the deficiency and the delinquency
interest prescribed under Subsections (B) and (C) hereof, be
imposed simultaneously.
(3) Deficiency Interest – Any deficiency in the tax due, as the term is
defined in this Code, shall be subject to the interest prescribed in
Subsection (A) hereof, which interest shall be assessed and
collected from the date prescribed for its payment until the full
payment thereof, or upon issuance of a notice and demand by the
Commissioner of Internal Revenue, whichever comes earlier.
If the withholding agent is the government or any of its agencies, political subdivisions
or instrumentalities or a government-owned or controlled corporation, the employee
thereof responsible for the withholding and remittance of tax shall be personally liable
for the surcharge and interest imposed herein.
75
xxx xxx xxx”
SECTION 12. Section 2.83.1 of RR No. 2-98, as amended, is hereby further amended to
read as follows:
“SECTION 2.83.1. Employees Withholding Statements (BIR Form 2316). – In

general, every employer or other person who is required to deduct and withhold the tax
on compensation, including fringe benefits given to rank and file employees, shall
furnish every employee from whom taxes were withheld a Certificate of Compensation
Payment and Tax Withheld (BIR Form No. 2316) on or before January 31 of the
succeeding calendar year, or if employment is terminated before the close of such
calendar year, on the day on which the last payment of compensation is made. The said
BIR Form No. 2316 is also required to be issued by every employer to employees
classified as MWEs and to other employees whose compensation were not subjected to
withholding tax.
The employer shall prepare BIR Form No. 2316 in triplicate, which shall be distributed
as follows:
(1) Original - Employee’s copy;

(2) Duplicate - BIR’s copy; and
(3) Triplicate - Employer’s copy which shall be retained for a period
of ten (10) years.
The Certificate shall indicate the following information:
a. Name and address of the employee;

b. Employee’s Taxpayer Identification Number (TIN);
c. Name and Address of the Employer;
d. Employer’s TIN;
e. The sum of compensation paid, including the non-taxable benefits;
f. The amount of statutory minimum wage received if employee is
MWE;
g. Overtime pay, holiday pay, night shift differential pay, and hazard
pay received if employee is MWE;
h. The amount of tax due, if any; and
i. The amount of tax withheld, if any.
The Certificate must be signed by both the employer/employer’s authorized officer and
the employee. It shall contain a written declaration that it is made under the penalties of
perjury. If the employer is the Government of the Philippines, its political subdivision,
agency or instrumentality or government-owned or controlled corporation, the
statement shall be signed by the duly designated officer or employee.
Employees qualified for the substituted filing of his/her Income Tax Return (ITR) as
indicated under Sec 2.83.4 of RR No. 2-98, as amended, shall immediately affix their
signatures in the Certificate of Compensation Payment and Tax Withheld to signify
their intention to avail of the substituted filing of ITR, and return to the employer the
duly signed Certificates for the latter’s signature. The employer shall give back to the
76
employee qualified for substituted filing of ITR the original copy while the duplicate
copy shall be submitted by the employer to the concerned BIR office not later than
February 28 of the succeeding year, with accompanying Certified List of Employees
Qualified for Substituted Filing of ITR (Annex “F”), reflecting the amount of income
payment, the tax due and tax withheld. This list shall be stamped “Received” by the
concerned BIR office, which shall be tantamount to the substituted filing of ITR by the
qualified employees. In the event that the employee will need his/her Certificate (BIR
Form No. 2316) stamped “Received”, he/she shall request the concerned BIR office to
have the Certificate stamped “Received” accompanied with the submission of the
employer’s certification that he/she was included in the list submitted by such employer
to the BIR.
For employees not qualified for substituted filing of Income Tax Return, two (original
and duplicate) copies of the subject certificate shall be given to the employee to serve
as proof of compensation received and tax credit, and the other copy shall be retained
by the employer. This shall form part of the employee’s Income Tax Return to be filed
on or before April 15 of the following year,
Failure of the employer to furnish the employee of the Certificate of Compensation and
Tax Withheld shall be a ground for the mandatory audit of payor’s all internal revenue
tax liabilities upon verified complaint.
In case of successive employments during the taxable year, an extra copy of BIR Form
No. 2316, duly certified by the previous employer, shall be furnished by the employee
to the new employer.
Any employer/withholding agent, including the government or any of its political
subdivisions and government owned and controlled corporations, who/which fails to
comply with the above filing/submission of BIR Form No. 2316 within the time
required by these Regulations, may be held liable under Section 250 of the Tax Code,
as amended, for each failure.
The imposition of any of the penalties under the Tax Code, as amended, and the
compromise of the criminal penalty on such violations shall not in any manner relieve
the violating taxpayer from the obligation to submit the required documents.
Any employer/withholding agent, including the government or any of its political
subdivisions and government owned and controlled corporations, who/which fails to
comply with the above filing/submission of BIR Form No. 2316 within the time
required by these Regulations for two consecutive years may be dealt with in
accordance with Section 255 of the Tax Code, as amended.”
SECTION 13. Section 2.83.4 of RR No. 2-98 is hereby amended to read as follows:
“SECTION 2.83.4. Substituted Filing of Income Tax Returns by Employees
Receiving Purely Compensation Income. – Individual taxpayers receiving purely
compensation income, regardless of amount, from only one employer in the Philippines
for the calendar year, the income tax of which has been withheld correctly by the said
employer (tax due equals tax withheld) shall not be required to file Annual Income Tax
Return for Individuals Earning Purely Compensation Income (BIR Form No. 1700). In
lieu of BIR Form No. 1700, the Certified List of Employees Qualified for Substituted
Filing of ITR with information regarding the name of compensation earner, TIN,
compensation paid, tax due and tax withheld, filed by the employer with the concerned
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BIR office and stamped “Received” by the latter shall be tantamount to the substituted
filing of ITRs by concerned employees.
The following individuals, however, are not qualified for substituted filing and
therefore, still required to file Income Tax Return in accordance with existing
regulations:
(A) Individuals deriving compensation from two or more employers

concurrently or successively at any time during the taxable year.
(B) Employees deriving compensation income, regardless of the amount,

whether from a single or several employers during the calendar year,
the income tax of which has not been withheld correctly (i.e. tax due
is not equal to the tax withheld) resulting to collectible or refundable
return.
(C) Individuals deriving other non-business, non-professional-related

income in addition to compensation income not otherwise subject to
a final tax.
(D) Individuals receiving purely compensation income from a single

employer, although the income tax of which has been correctly
withheld, but whose spouse falls under Section 2.83.4(A), 2.83.4(B)
and 2.83.4(C) of these regulations.
(E) Non-resident aliens engaged in trade or business in the Philippines

deriving purely compensation income, or compensation income and
other non-business, non-professional-related income.
xxx xxx xxx”
SECTION 14. TRANSITORY PROVISIONS. Income recipient/payee subject to

withholding tax under Section 2 (Section 2.57.2) hereof and availing to be exempt from the
prescribed withholding tax rates, shall submit on or before April 6, 2018 a duly
accomplished “Income
Payee’s Sworn Declaration of Gross Receipts/Sales”, together with a copy of the Certificate
of Registration (COR) to his/her income payor/withholding agent.
The income payor/withholding agent who/which received the “Income Payee’s Sworn
Declaration of Gross Receipts/Sales” and the copy of the payee’s COR shall submit on or
before April 20, 2018, a duly accomplished “Income Payor/Withholding Agent’s Sworn
Declaration”, together with the List of Payees who have submitted “Income Payee’s Sworn
Declaration of Gross Receipts/Sales” and copies of CORs.
Any income tax withheld by the income payor/withholding agent in excess of what is
prescribed in these regulations shall be refunded to the payee by the said income
payor/withholding agent. The income payor/withholding agent shall reflect the amount
refunded as adjustment to the remittable withholding tax due for the first quarter
withholding tax return. The adjusted amount of tax withheld shall also be reflected in the
Alphabetical List of Payees to be attached in the said first (1st) quarter return. The said list
of payees, who are subject to refund either due to the change of rates of withholding or due
to the qualification to avail of exemption from withholding tax (e.g. income recipient/payee
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submitted “Income Payee’s Sworn Declaration of Gross Receipts/Sales” and copy of COR),
shall likewise be attached in the said return which shall be filed on or before April 30, 2018.
In case the Certificate of Tax Withheld at Source (BIR Form No. 2307) has already been
given to the payee, the same shall be returned by the payee to the payor upon receipt of the
amount refunded by the income payor/withholding agent, together with the corrected BIR
Form No. 2307, if still applicable. Otherwise, the said certificate to be given to the payee on
or before the twentieth (20th) day after the close of the first (1st) quarter must reflect the
corrected amount of tax withheld.
In no case shall income payee use BIR Form No. 2307 twice for the same amount of income
payment from the same income payor/withholding agent and for the same period.
SECTION 15. REPEALING CLAUSE- All existing rules and regulations or parts
thereof which are inconsistent with the provisions of these regulations are hereby revoked.
SECTION 16. EFFECTIVITY- These regulations are effective beginning January 1,

2018, the effectivity date of the TRAIN law.
(Original Signed)
CARLOS G. DOMINGUEZ
Secretary of Finance
(Original Signed)
CAESAR R. DULAY
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Quezon City
January 25, 2018
SUBJECT: Consolidated Revenue Regulations on Estate Tax and Donor’s Tax

Incorporating the Amendments Introduced by Republic Act No. 10963,
Otherwise Known as the “Tax Reform for Acceleration and Inclusion
(TRAIN) Law”
TO : All Revenue Officials, Employees and Others Concerned
___________________________________________________________________________
SECTION 1. SCOPE – Pursuant to the provisions of Sec. 244 of the National

Internal Revenue Code of 1997, as amended (NIRC), and Sec. 84 of Republic Act No. 10963,
otherwise known as the “Tax Reform for Acceleration and Inclusion (TRAIN) Law”, these
Regulations are hereby issued to consolidate the rules governing the imposition and payment
of the estate and donor’s tax incorporating the provisions of the TRAIN Law, particularly the
provisions in Chapters I and II of Title III of the NIRC, thereby repealing Revenue
Regulations (RR) No. 2-2003, as amended.
SEC. 2. RATE OF ESTATE TAX – The net estate of every decedent, whether
resident or non-resident of the Philippines, as determined in accordance with the NIRC, shall
be subject to an estate tax at the rate of six percent (6%).
SEC. 3. THE LAW THAT GOVERNS THE IMPOSITION OF ESTATE

TAX – It is a well-settled rule that estate taxation is governed by the statute in force at the
time of death of the decedent. The estate tax accrues as of the death of the decedent and the
accrual of the tax is distinct from the obligation to pay the same. Upon the death of the
decedent, succession takes place and the right of the State to tax the privilege to transmit the
estate vests instantly upon death.
Accordingly, the tax rates and procedures prescribed under these Regulations shall
govern the estate of decedent who died on or after the effectivity date of the TRAIN Law.
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SEC. 4. COMPOSITION OF THE GROSS ESTATE – The gross estate of a
decedent shall be comprised of the following properties and interest therein at the time of
his/her death, including revocable transfers and transfers for insufficient consideration, etc.:
1. Residents and citizens – all properties, real or personal, tangible or intangible,

wherever situated.
2. Non-resident aliens – only properties situated in the Philippines provided, that,

with respect to intangible personal property, its inclusion in the gross estate is subject to the
rule of reciprocity provided for under Section 104 of the NIRC.
Provided, that amounts withdrawn from the deposit accounts of a decedent subjected
to the 6% final withholding tax imposed under Section 97 of the NIRC, shall be excluded
from the gross estate for purposes of computing the estate tax.
SEC. 5. VALUATION OF THE GROSS ESTATE – The properties

comprising the gross estate shall be valued according to their fair market value as of the time
of decedent’s death.
If the property is a real property, the appraised value thereof as of the time of death
shall be, whichever is the higher of –
(1) The fair market value as determined by the Commissioner, or
(2) The fair market value as shown in the schedule of values fixed by the provincial
and city assessors, whichever is higher.
For purposes of prescribing real property values, the Commissioner is authorized to

divide the Philippines into different zones or areas and shall, upon consultation with
competent appraisers, both from the private and public sectors, determine the fair market
value of real properties located in each zone or area.
In the case of shares of stocks, the fair market value shall depend on whether the
shares are listed or unlisted in the stock exchanges. Unlisted common shares are valued based
on their book value while unlisted preferred shares are valued at par value. In determining the
book value of common shares, appraisal surplus shall not be considered as well as the value
assigned to preferred shares, if there are any. On this note, the valuation of unlisted shares
shall be exempt from the provisions of RR No. 06-2013, as amended.
For shares which are listed in the stock exchanges, the fair market value shall be the
arithmetic mean between the highest and lowest quotation at a date nearest the date of death,
if none is available on the date of death itself.
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The fair market value of units of participation in any association, recreation or
amusement club (such as golf, polo, or similar clubs), shall be the bid price nearest the date of
death published in any newspaper or publication of general circulation.
To determine the value of the right to usufruct, use or habitation, as well as that of
annuity, there shall be taken into account the probable life of the beneficiary in accordance
with the latest basic standard mortality table, to be approved by the Secretary of Finance,
upon recommendation of the Insurance Commissioner.
SEC 6. COMPUTATION OF THE NET ESTATE OF a DECEDENT

WHO IS EITHER A CITIZEN OR RESIDENT OF THE PHILIPPINES - The
value of the net estate of a citizen or resident alien of the Philippines shall be determined by
deducting from the value of the gross estate the following items of deduction:
1. Standard deduction. – A deduction in the amount of Five Million Pesos (P

5,000,000) shall be allowed without need of substantiation. The full amount of P 5,000,000
shall be allowed as deduction for the benefit of the decedent. The presentation of such
deduction in the computation of the net taxable estate of the decedent is properly illustrated in
these Regulations.
2. Claims against the estate. – The word “claims” is generally construed to mean
debts or demands of a pecuniary nature which could have been enforced against the deceased
in his lifetime and could have been reduced to simple money judgements. Claims against the
estate or indebtedness in respect of property may arise out of: (1) Contract; (2) Tort; or (3)
Operation of Law.
2.1. Requisites for Deductibility of Claims against the Estate -
2.1.1. The liability represents a personal obligation of the deceased existing at

the time of his death;
2.1.2. The liability was contracted in good faith and for adequate and full
consideration in money or money’s worth;
2.1.3. The claim must be a debt or claim which is valid in law and
enforceable in court;
2.1.4. The indebtedness must not have been condoned by the creditor or the
action to collect from the decedent must not have prescribed.
2.2. Substantiation Requirements. - All unpaid obligations and liabilities of the

decedent at the time of his death are allowed as deductions from gross estate.
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Provided, however, that the following requirements/documents are complied
with/submitted:
2.2.1. In case of simple loan (including advances):
2.2.1.1 The debt instrument must be duly notarized at the time the
indebtedness was incurred, such as promissory note or contract of loan,
except for loans granted by financial institutions where notarization is not
part of the business practice/policy of the financial institution-lender;
2.2.1.2. Duly notarized Certification from the creditor as to the unpaid

balance of the debt, including interest as of the time of death. If the creditor is
a corporation, the sworn certification should be signed by the President, or
Vice-President, or other principal officer of the corporation. If the creditor is
a partnership, the sworn certification should be signed by any of the general
partners. In case the creditor is a bank or other financial institutions, the
Certification shall be executed by the branch manager of the bank/financial
institution which monitors and manages the loan of the decedent-debtor. If
the creditor is an individual, the sworn certification should be signed by him.
In any of these cases, the one who should certify must not be a relative of the
borrower within the fourth civil degree, either by consanguinity or affinity,
except when the requirement below is complied with.
When the lender, or the President/Vice-president/principal officer of

the creditor-corporation, or the general partner of the creditor-partnership is a
relative of the debtor in the degree mentioned above, a copy of the
promissory note or other evidence of the indebtedness must be filed with the
RDO having jurisdiction over the borrower within fifteen days from the
execution thereof.
2.2.1.3. In accordance with the requirements as prescribed in existing or

prevailing internal revenue issuances, proof of financial capacity of the
creditor to lend the amount at the time the loan was granted, as well as its
latest audited balance sheet with a detailed schedule of its receivable showing
the unpaid balance of the decedent-debtor. In case the creditor is an
individual who is no longer required to file income tax returns with the
Bureau, a duly notarized Declaration by the creditor of his capacity to lend at
the time when the loan was granted without prejudice to verification that may
be made by the BIR to substantiate such declaration of the creditor. If the
creditor is a non-resident, the executor/administrator or any of the legal heirs
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must submit a duly notarized declaration by the creditor of his capacity to
lend at the time when the loan was granted, authenticated or certified to as
such by the tax authority of the country where the non-resident creditor is a
resident;
2.2.1.4. A statement under oath executed by the administrator or executor of

the estate reflecting the disposition of the proceeds of the loan if said loan
was contracted within three (3) years prior to the death of the decedent;
2.2.2. If the unpaid obligation arose from purchase of goods or services:
2.2.2.1. Pertinent documents evidencing the purchase of goods or service,

such as sales invoice/delivery receipt (for sale of goods), or contract for the
services agreed to be rendered (for sale of service), as duly acknowledged,
executed and signed by decedent debtor and creditor, and statement of
account given by the creditor as duly received by the decedent debtor;
2.2.2.2. Duly notarized Certification from the creditor as to the unpaid

balance of the debt, including interest as of the time of death. If the creditor is
a corporation, the sworn Certification should be signed by the President, or
Vice-President, or other principal officer of the corporation. If the creditor is
a partnership, the sworn certification should be signed by any of the general
partners. If the creditor is a sole proprietorship, the sworn certification should
be signed by the owner of the business. In any of these cases, the one who
issues the certification must not be a relative of the decedent-debtor within
the fourth civil degree, either by consanguinity or affinity, except when the
requirement below is complied with.
When the lender, or the President/Vice-President/principal officer of

the creditor-corporation, or the general partner of the creditor-partnership is a
relative of the debtor in the degree mentioned above, a copy of the
promissory note or other evidence of the indebtedness must be filed with the
RDO having jurisdiction over the borrower within fifteen days from the
execution thereof.
2.2.2.3. Certified true copy of the latest audited balance sheet of the creditor
with a detailed schedule of its receivable showing the unpaid balance of the
decedent-debtor. Moreover, a certified true copy of the updated latest
subsidiary ledger/records of the debt of the debtor-decedent, (certified by the
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creditor, i.e., the officers mentioned in the preceding paragraphs) should
likewise be submitted.
2.2.3. Where the settlement is made through the Court in a testate or intestate
proceeding, pertinent documents filed with the Court evidencing the claims against
the estate, and the Court Order approving the said claims, if already issued, in
addition to the documents mentioned in the preceding paragraphs.
3. Claims of the deceased against insolvent persons as defined under R.A. 101422 and other
existing laws, where the value of the decedent’s interest therein is included in the value of the
gross estate.
4. Unpaid mortgages, taxes and casualty losses.
4.1. Unpaid mortgages upon, or any indebtedness in respect to, property where the
value of the decedent’s interest therein, undiminished by such mortgage or
indebtedness, is included in the value of the gross estate. The deduction herein
allowed in the case of claims against the estate, unpaid mortgages or any
indebtedness shall, when founded upon a promise or agreement, be limited to the
extent that they were contracted bona fide and for an adequate and full consideration
in money or money’s worth.
4.2. Taxes which have accrued as of the death of the decedent which were unpaid as
of the time of death. This deduction will not include income tax upon income
received after death, or property taxes not accrued before his death, or the estate tax
due from the transmission of his estate.
4.3. There shall also be deducted losses incurred during the settlement of the estate
arising from fires, storms, shipwreck, or other casualties, or from robbery, theft or
embezzlement, when such losses are not compensated for by insurance or otherwise,
and if at the time of the filing of the return such losses have not been claimed as a
deduction for income tax purposes in an income tax return, and provided that such
losses were incurred not later than the last day for the payment of the estate tax as
prescribed in Subsection (A) of Section 91.
In case unpaid mortgage payable is being claimed by the estate, verification

must be made as to who was the beneficiary of the loan proceeds. If the loan is found
to be merely an accommodation loan where the loan proceeds went to another person,
the value of the unpaid loan must be included as a receivable of the estate. If there is a
legal impediment to recognize the same as receivable of the estate, said unpaid
obligation/mortgage payable shall not be allowed as a deduction from the gross
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estate. In all instances, the mortgaged property, to the extent of the decedent’s interest
therein, should always form part of the gross taxable estate.
5. Property previously taxed. – An amount equal to the value specified below of any property
forming part of the gross estate situated in the Philippines of any person who died within five
(5) years prior to the death of the decedent, or transferred to the decedent by gift within five
(5) years prior to his death, where such property can be identified as having been received by
the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or
inheritance, or which can be identified as having been acquired in exchange for property so
received:
a. One hundred percent (100%) of the value if the prior decedent died within one (1)
year prior to the death of the decedent, or if the property was transferred to him by gift, within
the same period prior to his death;
b. Eighty percent (80%) of the value, if the prior decedent died more than one (1)
year but not more than two (2) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;
c. Sixty percent (60%) of the value, if the prior decedent died more than two (2) years
but not more than three (3) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;
d. Forty percent (40%) of the value, if the prior decedent died more than three (3)
years but not more than four (4) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death; and
e. Twenty percent (20%) of the value, if the prior decedent died more than four (4)
years but not more than five (5) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death.
These deductions shall be allowed only where a donor's tax, or estate tax imposed
under Title III of the NIRC was finally determined and paid by or on behalf of such donor, or
the estate of such prior decedent, as the case may be, and only in the amount finally
determined as the value of such property in determining the value of the gift, or the gross
estate of such prior decedent, and only to the extent that the value of such property is included
in the decedent's gross estate, and only if, in determining the value of the net estate of the
prior decedent, no deduction is allowable under this Item, in respect of the property or
properties given in exchange therefore. Where a deduction was allowed of any mortgage or
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other lien in determining the donor's tax, or the estate tax of the prior decedent, which was
paid in whole or in part prior to the decedent's death, then the deduction allowable under this
Item shall be reduced by the amount so paid. Such deduction allowable shall be reduced by an
amount which bears the same ratio to the amounts allowed as deductions under Items 2, 3, 4
and 6 of this Subsection as the amount otherwise deductible under this Item bears to the value
of the decedent's estate. Where the property referred to consists of two (2) or more items, the
aggregate value of such items shall be used for the purpose of computing the deduction.
6. Transfers for public use. – The amount of all bequests, legacies, devises or transfers to or
for the use of the Government of the Republic of the Philippines or any political subdivision
thereof, for exclusively public purposes.
7. The Family Home. – An amount equivalent to the current fair market value of the
decedent’s family home: Provided, however, that if the said current fair market value exceeds
Ten million pesos (P 10,000,000), the excess shall be subject to estate tax.
7.1. Definition of terms
Family home – The dwelling house, including the land on which it is situated,
where the husband and wife, or a head of the family, and members of their
family reside, as certified to by the Barangay Captain of the locality. The
family home is deemed constituted on the house and lot from the time it is
actually occupied as a family residence and is considered as such for as long
as any of its beneficiaries actually resides therein. (Arts. 152 and 153, Family
Code)
For purposes of these Regulations, however, actual occupancy of the house or

house and lot as the family residence shall not be considered interrupted or
abandoned in such cases as the temporary absence from the constituted
family home due to travel or studies or work abroad, etc. In other words, the
family home is generally characterized by permanency, that is, the place to
which, whenever absent for business or pleasure, one still intends to return.
The family home must be part of the properties of the absolute community or
of the conjugal partnership, or of the exclusive properties of both spouse
depending upon the classification of the property (family home) and the
property relations prevailing on the properties of the husband and wife. It
may also be constituted by an unmarried head of a family on his or her own
property. (Art. 156, Ibid.)
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For purposes of availing of a family home deduction to the extent allowable,
a person may constitute only one family home. (Art. 161, Ibid.)
Husband and Wife – Legally married man and woman.
Unmarried Head of a Family – An unmarried or legally separated man or

woman with one or both parents, or with one or more brothers or sisters, or
with one or more legitimate, recognized natural or legally adopted children
living with and dependent upon him or her for their chief support, where such
brothers or sisters or children are not more than twenty one (21) years of age,
unmarried and not gainfully employed or where such children, brothers or
sisters, regardless of age are incapable of self-support because of mental or
physical defect, or any of the beneficiaries mentioned in Article 154 of the
Family Code who is living in the family home and dependent upon the head
of the family for legal support.
The beneficiaries of a family home are:
(1) The husband and wife, or the head of a family; and
(2) Their parents, ascendants, descendants including legally adopted

children, brothers and sisters, whether the relationship be legitimate
or illegitimate, who are living in the family home and who depend
upon the head of the family for legal support. (Art. 154, Ibid)
7.2. Conditions for the allowance of family home as deduction from the gross estate:
7.2.1. The family home must be the actual residential home of the decedent
and his family at the time of his death, as certified by the Barangay Captain
of the locality where the family home is situated;
7.2.2. The total value of the family home must be included as part of the
gross estate of the decedent; and
7.2.3. Allowable deduction must be in an amount equivalent to the current

fair market value of the family home as declared or included in the gross
estate, or the extent of the decedent’s interest (whether conjugal/community
or exclusive property), whichever is lower, but not exceeding P 10,000,000.
8. Amount received by heirs under Republic Act No. 4917. - Any amount received by the heirs
from the decedent’s employer as a consequence of the death of the decedent-employee in
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accordance with Republic Act No. 4917 is allowed as a deduction provided that the amount of
the separation benefit is included as part of the gross estate of the decedent.
9. Net share of the surviving spouse in the conjugal partnership or community property. -
After deducting the allowable deductions appertaining to the conjugal or community
properties included in the gross estate, the share of the surviving spouse must be removed to
ensure that only the decedent’s interest in the estate is taxed.
SEC. 7. COMPUTATION OF THE NET ESTATE OF A DECEDENT

WHO IS A NON-RESIDENT ALIEN OF THE PHILIPPINES - The value of the
net estate of a decedent who is a non-resident alien in the Philippines shall be determined by
deducting from the value of that part of his gross estate which at the time of his death is
situated in the Philippines the following items of deductions:
1. Standard deduction. – A deduction in the amount of Five Hundred Thousand Pesos

(P 500,000) shall be allowed without need of substantiation. The full amount of P
500,000 shall be allowed as deduction for the benefit of the decedent.
2. The proportion of the total losses and indebtedness which the value of such part
bears to the value of his entire gross estate wherever situated. Losses and
indebtedness shall include the following:
2.1. Claims against the estate.
2.2. Claims of the deceased against insolvent persons where the value of the
interest therein is included in the value of the gross estate.
2.3. Unpaid mortgages, taxes and casualty losses.
The allowable deduction under this subsection shall be computed

using the following formula:
3. Property previously taxed.
4. Transfers for public use.
5. Net share of the surviving spouse in the conjugal property or community property
Unless otherwise provided in this section, the rules for the availment of deductions in
the preceding section shall apply.
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SEC. 8. PROPER PRESENTATION OF FAMILY HOME AND
STANDARD DEDUCTION AS DEDUCTIONS FROM THE GROSS ESTATE-
Illustrative examples to properly present the manner of deducting family home, standard
deduction, and other allowable deduction from the gross estate in accordance with the
provisions of the NIRC.
Illustrations:
(1) Decedent is unmarried, family home more than P10,000,000:
Although the family home is valued at P30 million, the maximum allowable
deduction for the family home is P10million only.
(2) Decedent is married, the family home is conjugal property, more than P 10,000,000:
(3) Decedent is married, the family home exclusive property, more than P10,000,000:
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(4) Decedent is an unmarried, the family home is below P 10,000,000:
(5) Decedent is married, the family home is conjugal property and is below P 10,000,000:
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(6) Decedent is married, the family home exclusive property and below P 10,000,000:
SEC. 9. TIME AND PLACE OF FILING ESTATE TAX RETURN AND

PAYMENT OF ESTATE TAX DUE. –
1. Estate Tax Returns. - In all cases of transfers subject to the tax imposed herein, or
regardless of the gross value of the estate, where the said estate consists of registered
or registrable property such as real property, motor vehicle, shares of stock or other
similar property for which a Certificate Authorizing Registration from the Bureau of
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Internal Revenue is required as a condition precedent for the transfer of ownership
thereof in the name of the transferee, the executor, or the administrator, or any of the
legal heirs, as the case may be, shall file a return under oath.
Estate tax returns showing a gross value exceeding Five million pesos (P
5,000,000) shall be supported with a statement duly certified to by a Certified Public
Accountant containing the following:
1.1 Itemized assets of the decedent with their corresponding gross value at the time of
his death, or in the case of a non-resident, not a citizen of the Philippines, of that part
of his gross estate situated in the Philippines;
1.2. Itemized deductions from gross estate allowed in Section 86; and
1.3. The amount of tax due whether paid or still due and outstanding.
2. Time for filing estate tax return. - For purposes of determining the estate tax, the
estate tax return shall be filed within one (1) year from the decedent’s death. The
Court approving the project of partition shall furnish the Commissioner with a
certified copy thereof and its order within thirty (30) days after promulgation of such
order.
3. Extension of time to file estate tax return. - The Commissioner or any Revenue
Officer authorized by him pursuant to the NIRC shall have authority to grant, in
meritorious cases, a reasonable extension, not exceeding thirty (30) days, for filing
the return. The application for the extension of time to file the estate tax return must
be filed with the Revenue District Office (RDO) where the estate is required to secure
its Taxpayer Identification Number (TIN) and file the tax returns of the estate, which
RDO, likewise, has jurisdiction over the estate tax return required to be filed by any
party as a result of the distribution of the assets and liabilities of the decedent.
4. Time for payment of the estate tax. – As a general rule, the estate tax imposed under
the NIRC shall be paid at the time the return is filed by the executor, administrator or
the heirs.
5. Extension of time to pay estate tax. – When the Commissioner finds that the payment
of the estate tax or of any part thereof would impose undue hardship upon the estate
or any of the heirs, he may extend the time for payment of such tax or any part
thereof not to exceed five (5) years in case the estate is settled through the courts, or
two (2) years in case the estate is settled extra judicially. In such case, the amount in
respect of which the extension is granted shall be paid on or before the date of the
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expiration of the period of the extension, and the running of the statute of limitations
for deficiency assessment shall be suspended for the period of any such extension.
Where the request for extension is by reason of negligence, intentional

disregard of rules and regulations, or fraud on the part of the taxpayer, no extension
will be granted by the Commissioner.
If an extension is granted, the Commissioner or his duly authorized

representative may require the executor, or administrator, or beneficiary, as the case
may be, to furnish a bond in such amount, not exceeding double the amount of the tax
and with such sureties as the Commissioner deems necessary, conditioned upon the
payment of the said tax in accordance with the terms of the extension.
Any amount paid after the statutory due date of the tax, but within the
extension period, shall be subject to interest but not to surcharge.
6. Payment of the estate tax by instalment and partial disposition of estate. – In case of
insufficiency of cash for the immediate payment of the total estate tax due, the estate
may be allowed to pay the estate tax due through the following options, including the
corresponding terms and conditions:
6.1. Cash installment
i. The cash installments shall be made within two (2) years from the date of
filing of the estate tax return;
ii. The estate tax return shall be filed within one year from the date of
decedent’s death;
iii. The frequency (i.e., monthly, quarterly, semi-annually or annually), deadline

and amount of each installment shall be indicated in the estate tax return,
subject to the prior approval by the BIR;
iv. In case of lapse of two years without the payment of the entire tax due, the
remaining balance thereof shall be due and demandable subject to the
applicable penalties and interest reckoned from the prescribed deadline for
filing the return and payment of the estate tax; and
v. No civil penalties or interest may be imposed on estates permitted to pay the

estate tax due by installment. Nothing in this subsection, however, prevents
the Commissioner from executing enforcement action against the estate after
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the due date of the estate tax provided that all the applicable laws and
required procedures are followed/observed.
6.2. Partial disposition of estate and application of its proceeds to the estate tax due
i. The disposition, for purposes of this option, shall refer to the conveyance of
property, whether real, personal or intangible property, with the equivalent
cash consideration;
ii. The estate tax return shall be filed within one year from the date of
decedent’s death;
iii. The written request for the partial disposition of estate shall be approved by
the BIR. The said request shall be filed, together with a notarized undertaking
that the proceeds thereof shall be exclusively used for the payment of the
total estate tax due;
iv. The computed estate tax due shall be allocated in proportion to the value of
each property;
v. The estate shall pay to the BIR the proportionate estate tax due of the
property intended to be disposed of;
vi. An electronic Certificate Authorizing Registration (eCAR) shall be issued

upon presentation of the proof of payment of the proportionate estate tax due
of the property intended to be disposed. Accordingly, eCARs shall be issued
as many as there are properties intended to be disposed to cover the total
estate tax due, net of the proportionate estate tax(es) previously paid under
this option; and
vii. In case of failure to pay the total estate tax due out from the proceeds of the
said disposition, the estate tax due shall be immediately due and demandable
subject to the applicable penalties and interest reckoned from the prescribed
deadline for filing the return and payment of the estate tax, without prejudice
of withholding the issuance of eCAR(s) on the remaining properties until the
payment of the remaining balance of the estate tax due, including the
penalties and interest.
7. Request for Extension of Time, Installment Payment and Partial Disposition of

Estate. – For purposes of these Regulations, the request for extension of time to file
the return, extension of time to pay estate tax and payment by installment shall be
filed with the Revenue District Officer (RDO) where the estate is required to secure
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its TIN and file the estate tax return. This request shall be approved by the
Commissioner or his duly authorized representative.
8. Place of filing the return and payment of the tax. – In case of a resident decedent, the
administrator or executor shall register the estate of the decedent and secure a new
TIN therefor from the Revenue District Office where the decedent was domiciled at
the time of his death and shall file the estate tax return and pay the corresponding
estate tax with the Accredited Agent Bank (AAB), Revenue District Officer or
Revenue Collection Officer having jurisdiction on the place where the decedent was
domiciled at the time of his death, whichever is applicable, following prevailing
collection rules and procedures.
In case of a non-resident decedent, whether non-resident citizen or non-

resident alien, with executor or administrator in the Philippines, the estate tax return
shall be filed with and the TIN for the estate shall be secured from the Revenue
District Office where such executor or administrator is registered: Provided, however,
that in case the executor or administrator is not registered, the estate tax return shall
be filed with and the TIN of the estate shall be secured from the Revenue District
Office having jurisdiction over the executor or administrator’s legal residence.
Nonetheless, in case the non-resident decedent does not have an executor or
administrator in the Philippines, the estate tax return shall be filed with and the TIN
for the estate shall be secured from the Office of the Commissioner through RDO No.
39-South Quezon City.
The foregoing provisions notwithstanding, the Commissioner of Internal

Revenue may continue to exercise his power to allow a different venue/place in the
filing of tax returns.
9. Liability for payment. – The estate tax imposed under the NIRC shall be paid by the
executor or administrator before the delivery of the distributive share in the inheritance to any
heir or beneficiary. Where there are two or more executors or administrators, all of them are
severally liable for the payment of the tax. The eCAR pertaining to such estate issued by the
Commissioner or the Revenue District Officer (RDO) having jurisdiction over the estate, will
serve as the authority to distribute the remaining/distributable properties/share in the
inheritance to the heir or beneficiary.
The executor or administrator of an estate has the primary obligation to pay the estate
tax but the heir or beneficiary has subsidiary liability for the payment of that portion of the
estate which his distributive share bears to the value of the total net estate. The extent of his
liability, however, shall in no case exceed the value of his share in the inheritance.
105
SEC. 10. PAYMENT OF TAX ANTECEDENT TO THE TRANSFER OF
SHARES, BONDS OR RIGHTS AND BANK DEPOSITS WITHDRAWAL –
There shall not be transferred to any new owner in the books of any corporation, sociedad
anonima, partnership, business, or industry organized or established in the Philippines any
share, obligation, bond or right by way of gift inter vivos or mortis causa, legacy or
inheritance, unless an eCAR is issued by the Commissioner or his duly authorized
representative.
If a bank has knowledge of the death of a person, who maintained a bank deposit
account alone, or jointly with another, it shall allow the withdrawal from the said deposit
account, subject to a final withholding tax of six percent (6%) of the amount to be withdrawn,
provided that the withdrawal shall only be made within one year from the date of the
decedent. The bank is required to file the prescribed quarterly return on the final tax withheld
on or before the last day of the month following the close of the quarter during which the
withholding was made. The bank shall issue the corresponding BIR Form No. 2306 certifying
such withholding. In all cases, the final tax withheld shall not be refunded, or credited on the
tax due on the net taxable estate of the decedent.
The executor, administrator, or any of the legal heirs, withdrawing from the deposit
account shall provide the bank where such withdrawal shall be made, with the TIN of the
estate of the decedent. For this purpose, the bank shall require prior to such withdrawal, the
presentation of BIR Form No. 1904 of the estate, duly stamped received by the BIR,. Further,
all withdrawal slips shall contain the following terms and conditions: (a) a sworn statement by
any one of the joint depositors to the effect that all of the joint depositors are still living at the
time of withdrawal; and, (b) a statement that the withdrawal is subject to the final withholding
tax of 6%.
In instances where the bank deposit accounts have been duly included in the gross
estate of the decedent and the estate tax due thereon paid, the executor, administrator, or any
of the legal heirs shall present the eCAR issued for the said estate prior to withdrawing from
the bank deposit account. Such withdrawal shall no longer be subject to the withholding tax
imposed under this section.
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SEC. 11. RATE OF DONOR’S TAX –
1.1. Rate. - The donor’s tax for each calendar year shall be six percent (6%)
computed on the basis of the total gifts in excess of Two Hundred Fifty
Thousand Pesos (P 250,000) exempt gift made during the calendar year.
1.2. The application of the rates as provided above is imposed on donations made
on or after the effectivity date of the TRAIN Law.
1.3. Contribution for election campaign. - Any contribution in cash or in kind to

any candidate, political party or coalition of parties for campaign purposes,
shall be governed by the Election Code, as amended.
SEC. 12. THE LAW THAT GOVERNS THE IMPOSITION OF

DONOR’S TAX - The donor’s tax is not a property tax, but is a tax imposed on the transfer
of property by way of gift inter vivos. (Lladoc vs. Commissioner of Internal Revenue, L-
19201, June 16, 1965; 14 SCRA, 292). The donor’s tax shall not apply unless and until there
is a completed gift. The transfer of property by gift is perfected from the moment the donor
knows of the acceptance by the donee; it is completed by the delivery, either actually or
constructively, of the donated property to the donee. Thus, the law in force at the time of the
perfection/completion of the donation shall govern the imposition of the donor’s tax.
In order that the donation of an immovable may be valid, it must be made in a public
document specifying therein the property donated. The acceptance may be made in the same
Deed of Donation or in a separate public document, but it shall not take effect unless it is
done during the lifetime of the donor. If the acceptance is made in a separate instrument, the
donor shall be notified thereof in an authentic form, and this step shall be noted in both
instruments.
A gift that is incomplete because of reserved powers, becomes complete when either:
(1) the donor renounces the power; or (2) his right to exercise the reserved power ceases
because of the happening of some event or contingency or the fulfilment of some condition,
other than because of the donor’s death.
Renunciation by the surviving spouse of his/her share in the conjugal partnership or

absolute community after the dissolution of the marriage in favor of the heirs of the deceased
spouse or any other person/s is subject to donor’s tax whereas general renunciation by an heir,
including the surviving spouse, of his/her share in the hereditary estate left by the decedent is
not subject to donor’s tax, unless specifically and categorically done in favor of identified
heir/s to the exclusion or disadvantage of the other co-heirs in the hereditary estate.
107
Where property, other than a real property that has been subjected to the final capital
gains tax, is transferred for less than an adequate and full consideration in money or money’s
worth, then the amount by which the fair market value of the property at the time of the
execution of the Contract to Sell or execution of the Deed of Sale which is not preceded by a
Contract to Sell exceeded the value of the agreed or actual consideration or selling price shall
be deemed a gift, and shall be included in computing the amount of gifts made during the
calendar year.
The law in force at the time of the completion of the donation shall govern the
imposition of donor’s tax.
For purposes of the donor’s tax, “NET GIFT” shall mean the net economic benefit
from the transfer that accrues to the donee. Accordingly, if a mortgaged property is
transferred as a gift, but imposing upon the donee the obligation to pay the mortgage liability,
then the net gift is measured by deducting from the fair market value of the property the
amount of mortgage assumed.
SEC. 13. VALUATION OF GIFTS MADE IN PROPERTY. – The

valuation of gifts in the form of property shall follow the rules set forth in Section 6 of this
regulations: Provided, that the reckoning point for valuation shall be the date when the
donation is made.
SEC. 14. COMPUTATION OF THE DONOR’S TAX. – Donations shall be

subject to donor’s tax applicable when the donations are made. Hence, for donor’s tax
purposes, donations made before January 1, 1998 shall be subject to the donor’s tax computed
on the basis of the old rates imposed under Section 92 of the National Internal Revenue Code
of 1977 (R.A. No. 7499), while donations made on or after January 1, 1998 until December
31, 2017 shall be subject to the donor’s tax computed in accordance with the amended
schedule of rates prescribed under Section 99 of the National Internal Revenue Code of 1997
(R.A. No. 8424), implemented by RR No. 2-2003, as amended. Only donations made on or
after January 1, 2018 shall be subject to the donor’s tax rate provided under the TRAIN Law
as implemented by these Regulations.
The computation of the donor’s tax is on a cumulative basis over a period of one
calendar year. Husband and wife are considered as separate and distinct taxpayer’s for
purposes of the donor’s tax. However, if what was donated is a conjugal or community
property and only the husband signed the deed of donation, there is only one donor for
donor’s tax purposes, without prejudice to the right of the wife to question the validity of the
108
donation without her consent pursuant to the pertinent provisions of the Civil Code of the
Philippines and the Family Code of the Philippines.
Illustration:
Donations were made on January 30, 2018 at P 2,000,000; on March 30, 2018 at P
1,000,000; and August 15, 2018 at P 500,000.
Solution/computation:
SEC. 15. FILING OF RETURNS AND PAYMENT OF DONOR’S TAX -
(A) Requirements. – Any person making a donation (whether direct or indirect),

unless the donation is specifically exempt under the NIRC or other special laws, is required,
for every donation, to accomplish under oath a donor’s tax return in duplicate. The return
shall set forth:
1. Each gift made during the calendar year which is to be included in gifts;
2. The deductions claimed and allowable;
3. Any previous net gifts made during the same calendar year;
4. The name of the donee; and
5. Such further information as the Commissioner may require.
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(B) Time and place of filing and payment. – The donor’s tax return shall be filed
within thirty (30) days after the date the gift is made or completed and the tax due thereon
shall be paid at the same time that the return is filed. Unless the Commissioner otherwise
permits, the return shall be filed and the tax paid to an AAB, the Revenue District Officer and
Revenue Collection Officer having jurisdiction over the place where the donor is domiciled at
the time of the transfer, or if there be no legal residence in the Philippines, with the Office of
the Commissioner. In the case of gifts made by a non-resident, the return may be filed with
the Philippine Embassy or Consulate in the country where he is domiciled at the time of the
transfer, or directly with the Office of the Commissioner. For this purpose, the term “OFFICE
OF THE COMMISSIONER” shall refer to the Revenue District Office (RDO) having
jurisdiction over the BIR-National Office Building which houses the Office of the
Commissioner, or presently, to the Revenue District Office No. 39-South Quezon City.
(C) Notice of donation by a donor engaged in business. – In order to be exempt from

donor’s tax and to claim full deduction of the donation given to qualified-donee institutions
duly accredited, the donor engaged in business shall give a notice of donation on every
donation worth at least Fifty Thousand Pesos (P50,000) to the Revenue District Office (RDO)
which has jurisdiction over his place of business within thirty (30) days after receipt of the
qualified donee institution’s duly issued Certificate of Donation, which shall be attached to
the said Notice of Donation, stating that not more than thirty percent (30%) of the said
donation/gifts for the taxable year shall be used by such accredited non-stock, non-profit
corporation/NGO institution (qualified-donee institution) for administration purposes
pursuant to the provisions of Section 101(A)(3) and (B)(2) of the NIRC.
SEC. 16. TRANSFER FOR LESS THAN ADEQUATE AND FULL

CONSIDERATION - Where property, other than real property referred to in Section
24(D), is transferred for less than an adequate and full consideration in money or money's
worth, then the amount by which the fair market value of the property exceeded the value of
the consideration shall, for the purpose of the tax imposed by this Chapter, be deemed a gift,
and shall be included in computing the amount of gifts made during the calendar year:
Provided, however, that a sale, exchange, or other transfer of property made in the ordinary
course of business (a transaction which is a bona fide, at arm’s length, and free from any
donative intent) will be considered as made for an adequate and full consideration in money
or money’s worth.
SEC. 17. EXEMPTION OF CERTAIN GIFTS - The following are exempt

from the donor’s tax:
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1. Gifts made to or for the use of the National Government or any entity created by
any of its agencies which is not conducted for profit, or to any political
subdivision of the said Government; and
2. Gifts in favor of an educational and/or charitable, religious, cultural or social
welfare corporation, institution, accredited nongovernment organization, trust or
philanthropic organization or research institution or organization: Provided, however,
that not more than thirty percent (30%) of said gifts shall be used by such donee for
administration purposes. For the purpose of this exemption, a 'non-profit educational
and/or charitable corporation, institution, accredited nongovernment organization,
trust or philanthropic organization and/or research institution or organization' is a
school, college or university and/or charitable corporation, accredited nongovernment
organization, trust or philanthropic organization and/or research institution or
organization, incorporated as a non-stock entity, paying no dividends, governed by
trustees who receive no compensation, and devoting all its income, whether students'
fees or gifts, donation, subsidies or other forms of philanthropy, to the
accomplishment and promotion of the purposes enumerated in its Articles of
Incorporation.
SEC. 18. REPEALING CLAUSE – All existing rules and regulations or parts thereof,
which are inconsistent with the provisions of these regulations, are hereby repealed, amended
or modified accordingly.
SEC. 19. SEPARABILITY CLAUSE – If any clause, sentence, provision or section of

these Rules shall be held invalid or unconstitutional, the remaining parts thereof shall not be
affected thereby.
SEC. 20. EFFECTIVITY– These regulations are effective beginning January 1, 2018, the
effectivity of the TRAIN Law.
(Original Signed)
CARLOS G. DOMINGUEZ
(Original Signed)
CAESAR R. DULAY
111
Quezon City
March 15, 2018
SUBJECT : Regulations Implementing the Value-Added Tax Provisions under

the Republic Act (RA) No. 10963, or the “Tax Reform for
Acceleration and Inclusion (TRAIN),” Further Amending Revenue
Regulations (RR) No. 16-2005 (Consolidated Value-Added Tax
Regulations of 2005), as Amended.
TO : All Internal Revenue Officials, Employees and Others Concerned
SECTION 1. SCOPE. Pursuant to the provisions of Sections 244 and 245 of the National
Internal Revenue Code of 1997 (Tax Code), as amended, and Section 84 of Republic Act
(R.A) No. 10963 otherwise known as the “Tax Reform for Acceleration and Inclusion
(TRAIN) Law, these Regulations are hereby promulgated to amend certain provisions of
Revenue Regulations (RR) No. 16-2005, as amended, and implement the value-added tax
(VAT) and percentage tax provisions of the TRAIN Law, hereby amending
SECTION 2. AMENDMENTS. Sections 4.106-5, 4.108-3, 4.108-5, 4.109-1, 4.109-

2, 4.110-3, 4.112-1, 4.114-1, 4.114-2, and 4.116 of RR No. 16-2005, as amended, are hereby
further amended to read as follows:
SEC. 4.106-5. Zero Rated Sales of Goods or Properties. - xxx
The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:
112
(a) Export sales. - "Export Sales" shall mean:
(1) The sale and actual shipment of goods from the Philippines to a
foreign country, irrespective of any shipping arrangement that may be agreed upon
which may influence or determine the transfer of ownership of the goods so exported,
paid for in acceptable foreign currency or its equivalent in goods or services, and
accounted for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas (BSP);
(2) The 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, paid for in acceptable foreign currency, and accounted for in accordance with
the rules and regulations of the BSP;
(3) The sale of raw materials or packaging materials to an exportoriented

enterprise whose export sales exceed seventy percent (70%) of total annual
production. Any enterprise whose export sales exceed 70% of the total annual
production of the preceding taxable year shall be considered an export-oriented
enterprise.
(4) Transactions considered export sales under Executive Order No. 226,
otherwise known as the Omnibus Investments Code of 1987, and other special laws.
"Considered export sales under Executive Order No. 226" shall mean the Philippine
port F.O.B. value determined from invoices, bills of lading, inward letters of credit,
landing certificates, and other commercial documents, of export products exported
directly by a registered export producer, or the net selling price of export products
sold by a registered export producer to another export producer, or to an export trader
that subsequently exports the same: Provided, That sales of export products to another
producer or to an export trader shall only be deemed export sales when actually
exported by the latter, as evidenced by landing certificates or similar commercial
documents: Provided, further, That without actual exportation the following shall be
considered constructively exported for purposes of these provisions: (1) sales to
bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to
export processing zones; (3) sales to registered export traders operating bonded
trading warehouses supplying raw materials in the manufacture of export products
113
under guidelines to be set by the Board in consultation with the Bureau of Internal
Revenue (BIR) and the Bureau of Customs (BOC); (4) sales to diplomatic missions
and other agencies and/or instrumentalities granted tax immunities, of locally
manufactured, assembled or repacked products whether paid for in foreign currency
or not.
For purposes of zero-rating, the export sales of registered export traders shall include
commission income. The exportation of goods on consignment shall not be deemed export
sales until the export products consigned are in fact sold by the consignee; and Provided,
finally, that sales of goods, properties or services made by a VAT-registered supplier to a
BOI-registered manufacturer/producer whose products are 100% exported are considered
export sales. A certification to this effect must be issued by the Board of Investment (BOI)
which shall be good for one year unless subsequently reissued by the BOI.
(5) 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 exclusively for international
shipping or air transport operations.
The sale of goods, supplies, equipment and fuel to persons engaged in international shipping
or international air transport operations is limited to goods, supplies, equipment and fuel that
shall be used in the transport of goods and passengers 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, supplies
or equipment is used for purposes other than that mentioned in this paragraph, such portion of
fuel, goods, supplies, and equipment shall be subject to 12% VAT.
Provided, that items (2), (3), and (4) abovementioned shall be subject to the twelve
percent (12%) VAT and no longer be subject to zero percent (0%) VAT rate upon
satisfaction of the following conditions:
1. The successful establishment and implementation of an enhanced VAT refund

system that grants and pays refunds of creditable input tax within ninety (90)
days from the filing of the VAT refund application with the Bureau: Provided
that, to determine the effectivity of Item no. 1, all applications filed from
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January 1, 2018 shall be processed and decided within ninety (90) days from the
filing of the VAT refund application.
The 90-day period to process and decide, pending the establishment of the enhanced
VAT Refund System shall only be up to the date of approval of the Recommendation
Report on such application for VAT refund by the Commissioner or his duly authorized
representative.
However, all claims for refund/tax credit certificate filed prior to January 1, 2018 shall
still be governed by the one hundred twenty (120)-day processing period.
The Secretary of Finance shall provide transitory rules for the grant of refund under the
enhanced VAT Refund System after the determination of the fulfilment of the condition
by the Commissioner of Internal Revenue as provided in item 1 paragraph 1 hereof; and
2. All pending VAT refund claims as of December 31, 2017 shall be fully paid in
cash by December 31, 2019.
Provided, That Department of Finance shall establish a VAT refund center in the BIR
and in the Bureau of Customs (BOC) that will handle the processing and granting of
cash refunds of creditable input tax.
(b) Sales to persons or entities whose exemption under special laws or international
agreements to which the Philippines is a signatory effectively subjects such sales to zero rate.
xxx xxx xxx
SEC. 4.108-3. Definitions and Specific Rules on Selected Services. -

xxx xxx xxx
(e) Sale of electricity by generation, transmission by any entity including

the National Grid Corporation of the Philippines (NGCP), and
distribution companies including electric cooperatives shall be subject
to twelve percent (12%) VAT on their gross receipts.
xxx xxx xxx
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SEC. 4.108-5. Zero Rated Sale of Services. –
(a) In general. – A zero-rated sale of service (by a VAT-registered

person) is a taxable transaction for VAT purposes, but shall not result in any output
tax. However, the input tax on purchases of goods, properties or services related to
such zero-rated sale shall be available as tax credit or refund in accordance with these
Regulations.
(b) Transactions Subject to Zero Percent (0%) VAT Rate. – The

following services performed in the Philippines by a VAT-registered person shall be
subject to zero percent (0%) VAT rate:
(1) Processing, manufacturing or repacking goods for other persons

doing business outside the Philippines, which goods are subsequently exported, where
the services are paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the BSP;
(2) Services other than processing, manufacturing or repacking rendered

to a person engaged in business conducted outside the Philippines or to a nonresident
person not engaged in business who is outside the Philippines when the services are
performed, the consideration for which is paid for in acceptable foreign currency and
accounted for in accordance with the rules and regulations of the BSP;
(3) Services rendered to persons or entities whose exemption under

special laws or international agreements to which the Philippines is a signatory
effectively subjects the supply of such services to zero percent (0%) rate;
(4) Services rendered to persons engaged in international shipping or air

transport operations, including leases of property for use thereof: Provided, that these
services shall be exclusively for international shipping or air transport
operations. Thus, the services referred to herein shall not pertain to those made to
common carriers by air and sea relative to their transport of passengers, goods or
cargoes from one place in the Philippines to another place in the Philippines, the same
being subject to twelve percent (12%) VAT under Sec. 108 of the Tax Code.
116
(5) Services performed by subcontractors and/or contractors in
processing, converting, or manufacturing goods for an enterprise whose export sales
exceed seventy percent (70%) of the total annual production;
3. Transport of passengers and cargo by domestic air or sea vessels from the Philippines
to a foreign country. Gross receipts of international air or shipping carriers doing
business in the Philippines derived from transport of passengers and cargo from the
Philippines to another country shall be exempt from VAT; however, they are still
liable to a percentage tax of three percent (3%) based on their gross receipts derived
from transport of cargo from the Philippines to another country as provided for in
Sec. 118 of the Tax Code; and
4. Sale of power or fuel generated through renewable sources of energy such as, but not
limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy,
and other emerging sources using technologies such as fuel cells and hydrogen fuels:
Provided, however, that zero-rating shall apply strictly to the sale of power or fuel
generated through renewable sources of energy, and shall not extend to the sale of
services related to the maintenance or operation of plants generating said power.
Provided, That Subparagraphs (b)(1) and (b)(5) abovementioned shall be subject to the
twelve percent (12%) VAT and no longer be subject to zero percent (0%) VAT rate
upon satisfaction of the following conditions:
1. The successful establishment and implementation of an enhanced VAT

refund system that grants and pays refunds of creditable input tax
within ninety (90) days from the filing of the VAT refund application
with the Bureau: Provided that, to determine the effectivity of Item no. 1,
all applications filed from January 1, 2018 shall be processed and
decided within ninety (90) days from the filing of the VAT refund
application.
The 90-day period to process and decide, pending the establishment of the enhanced
VAT Refund System shall only be up to the date of approval of the Recommendation
Report on such application for VAT refund by the Commissioner or his duly authorized
representative.
117
However, all claims for refund/tax credit certificate filed prior to January 1, 2018 shall
still be governed by the one hundred twenty (120)-day processing period.
enhanced VAT Refund System after the determination of the fulfilment of the condition
2. All pending VAT refund claims as of December 31, 2017 shall be fully
paid in cash by December 31, 2019.
Provided, That Department of Finance shall establish a VAT refund center in the BIR
xxx xxx xxx
SEC. 4.109-1. VAT-Exempt Transactions. –

xxx xxx xxx
(B) Exempt transactions. –
(1) Subject to the provisions of Section 4.109.2 hereof, the

following transactions shall be exempt from VAT:
(a) xxx
xxx xxx xxx
(d) Importation of professional instruments and implements, tools of

trade, occupation or employment, wearing apparel, domestic animals, and
personal and household effects belonging to persons coming to settle in the
Philippines or Filipinos or their families and descendants who are now residents
or citizens of other countries, such parties hereinafter referred to as overseas
Filipinos, in quantities and of the class suitable to the profession, rank or
position of the persons importing said items, for their own use and not for barter
or sale, accompanying such persons, or arriving within a reasonable time:
Provided, That the Bureau of Customs may, upon the production of satisfactory
evidence that such persons are actually coming to settle in the Philippines and
118
that the goods are brought from their former place of abode, exempt such goods
from payment of duties and taxes: Provided, further, that vehicles, vessels,
aircrafts, machineries and other similar goods for use in manufacture, shall not
fall within this classification and shall therefore be subject to duties, taxes and
other charges;
(e) Services subject to percentage tax under Title V of the Tax Code, as
enumerated below:
(1) Sale or lease of goods or properties or the performance of services of non-VAT-registered

persons, other than the transactions mentioned in paragraphs (A) to (AA) of Sec. 109(1) of the
Tax Code, the gross annual sales and/or receipts of which does not exceed the amount of
Three Million Pesos (P3,000,000.00).
xxx xxx xxx
(p) The following sales of real properties are exempt from VAT, namely:
(1) Sale of real properties not primarily held for sale to customers or held for
lease in the ordinary course of trade or business.
However, even if the real property is not primarily held for sale to customers or held for lease
in the ordinary course of trade or business but the same is used in the trade or business of the
seller, the sale thereof shall be subject to VAT being a transaction incidental to the taxpayer’s
main business.
(2) Sale of real properties utilized for low-cost housing as defined by RA No.
7279, otherwise known as the "Urban Development and Housing Act of 1992" and
other related laws.
"Low-cost housing" refers to housing projects intended for homeless low-income family
beneficiaries, undertaken by the Government or private developers, which may either be a
subdivision or a condominium registered and licensed by the Housing and Land Use
Regulatory Board/Housing (HLURB) under BP Blg. 220, PD No. 957 or any other similar
law, wherein the unit selling price is within the selling price per unit as set by the
Housing and Urban Development Coordinating Council (HUDCC) pursuant to RA No.
7279 otherwise known as the “Urban Development and Housing Act of 1992” and other laws.
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(3) Sale of real properties utilized for socialized housing as defined
under RA No. 7279, and other related laws, such as RA No. 7835 and RA No. 8763,
wherein the price ceiling per unit is P450,000.00 or as may from time to time be
determined by the HUDCC and the NEDA and other related laws.
"Socialized housing" refers to housing programs and projects covering houses and lots or
home lots only undertaken by the Government or the private sector for the underprivileged
and homeless citizens which shall include sites and services development, long-term
financing, liberated terms on interest payments, and such other benefits in accordance with
the provisions of RA No. 7279, otherwise known as the "Urban Development and Housing
Act of 1992" and RA No. 7835 and RA No. 8763. "Socialized housing" shall also refer to
projects intended for the underprivileged and homeless wherein the housing package selling
price is within the lowest interest rates under the Unified Home Lending Program (UHLP)
or any equivalent housing program of the Government, the private sector or nongovernment
organizations.
(4) Sale of residential lot valued at One Million Five Hundred Thousand
Pesos (P 1,500,000.00) and below, or house & lot and other residential dwellings
valued at Two Million Five Hundred Thousand Pesos (P 2,500,000.00) and below, as
adjusted in 2011 using the 2010 Consumer Price Index values.
If two or more adjacent residential lots are sold or disposed in favor of one buyer, for the
purpose of utilizing the lots as one residential lot, the sale shall be exempt from VAT only if
the aggregate value of the lots do not exceed P 1,500,000.00. Adjacent residential lots,
although covered by separate titles and/or separate tax declarations, when sold or disposed to
one and the same buyer, whether covered by one or separate Deed of Conveyance, shall be
presumed as a sale of one residential lot.
Provided, That beginning January 1, 2021, the VAT exemption shall only apply to sale of
real properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business, sale of real property utilized for socialized housing as
defined by Republic Act No. 7279, sale of house and lot, and other residential dwellings
with selling price of not more than Two Million Pesos (P2,000,000.00): Provided, further,
That every three (3) years thereafter, the amounts stated herein shall be adjusted to its present
value using the Consumer Price Index, as published by the Philippine Statistics Authority
(PSA).
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(q) Lease of residential units with a monthly rental per unit not exceeding Fifteen Thousand
Pesos (P 15,000.00).
The foregoing notwithstanding, lease of residential units where the monthly rental per unit
exceeds Fifteen Thousand Pesos (P 15,000.00), but the aggregate of such rentals of the
lessor during the year do not exceed Three Million Pesos (P 3,000,000.00) shall likewise be
exempt from VAT; however, the same shall be subject to three percent (3%) percentage tax
under Section 116 of the Tax Code.
In cases where a lessor has several residential units for lease, some are leased out for a
monthly rental per unit of not exceeding P 15,000.00 while others are leased out for more
than P 15,000.00 per unit, his tax liability will be as follows:
1. The gross receipts from rentals not exceeding P 15,000.00 per month per
unit shall be exempt from VAT regardless of the aggregate annual gross
receipts. It is also exempt from the 3% percentage tax.
2. The gross receipts from rentals exceeding P 15,000.00 per month per unit
shall be subject to VAT if the aggregate annual gross receipts from said
units only exceeds P 3,000,000.00. Otherwise, the gross receipts will be
subject to the 3% tax imposed under Section 116 of the Tax Code.
In case of mixed transactions, the abovementioned rule should be observed. The term
‘residential units’ shall refer to apartments and houses & lots used for residential purposes,
and buildings or parts or units thereof used solely as dwelling places (e.g., dormitories, rooms
and bed spaces) except motels, motel rooms, hotels and hotel rooms, lodging houses, inns
and pension houses.
The term ‘unit’ shall mean an apartment unit in the case of apartments, house in the case of
residential houses; per person in the case of dormitories, boarding houses and bed spaces; and
per room in case of rooms for rent.
Illustration 1: A lessor rents his 15 residential units for P 14,500 per month. During the
taxable year, his accumulated gross receipts amounted to P 2,610,000. He is not subject
to VAT since the monthly rent per unit does not exceed P 15,000. He is also not subject
to 3% Percentage Tax.
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Using the same example, assuming he has 20 residential units with the same monthly
rent per unit and his accumulated gross receipts during the taxable year amounted to
P3,480,000, he is still not subject to VAT even if the accumulated earnings exceeded
P3,000,000 since the monthly rent per unit does not exceed P15,000. He is also not
subject to 3% Percentage Tax.
Illustration 2: A lessor rents his 15 residential units for P 15,500 per month. During the
taxable year, his accumulated gross receipts amounted to P 2,790,000. He is not subject
to VAT since his accumulated gross receipts did not exceed P 3,000,000. He is, however,
subject to 3% Percentage Tax since the monthly rent per unit is more than P 15,000.00.
Using the same example, assuming he has 20 residential units with the same monthly
rent per unit and his accumulated gross receipts during the taxable year amounted to P
3,720,000, he is already subject to VAT since the accumulated earnings exceeded P
3,000,000 and the monthly rent per unit is more than P 15,000.00.
Illustration 3: A lessor rents his 2 commercial and 10 residential units for monthly rent
of P 60,000 and P 15,000 per unit, respectively. During the taxable year, his
accumulated gross receipts amounted to P 3,240,000 (P 1,440,000 from commercial units
and P 1,800,000 from residential units). The P 1,440,000 from commercial units is not
subject to VAT since it did not exceed P 3,000,000. It is, however, subject to 3%
Percentage Tax. On the other hand, the P 1,800,000 accumulated receipts from the
residential units are not subject to Percentage Tax and exempt from VAT since the
monthly rent is not more than P 15,000.
Using the same example, assuming the lessor has 5 commercial units and his
accumulated gross receipts during the taxable year amounted to P 5,400,000 (P
3,600,000 from commercial units and P 1,800,000 from residential units), he is subject to
VAT with respect to P 3,600,000 since it exceeded P 3,000,000. The P 1,800,000
accumulated receipts from residential units are not subject to Percentage Tax and
exempt from VAT since the monthly rent is not more than P 15,000.
Illustration 4: A lessor rents his 5 commercial and 10 residential units for monthly rent
of P 60,000 and P 15,500 per unit, respectively. During the taxable year, his accumulated
gross receipts amounting to P 5,460,0000 (P 3,600,000 from commercial units and
P1,860,000 from residential units) shall be subject to VAT since it exceeded the
P3,000,000 threshold and the monthly rent of residential units is more than P15,000.
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(s) Importation of fuel, goods and supplies by persons
engaged in international shipping or air transport operations:
Provided, that the fuel, goods and supplies shall be used for
international shipping or air transport operations. Thus, 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;
(t) Services of banks, non-bank financial intermediaries

performing quasi-banking functions, and other non-bank financial
intermediaries such as money changers and pawnshops, subject to
percentage tax under Sections 121 and 122, respectively, of the Tax Code;
(u) Sale or lease of goods and services to senior citizens and

persons with disabilities, as provided under Republic Act Nos. 9994
(Expanded Senior Citizens Act of 2010) and 10754 (An Act Expanding
the Benefits and Privileges of Persons with Disability), respectively;
(v) Transfer of Property pursuant to Section 40(C)(2) of the

Tax Code, as amended;
(w) Association dues, membership fees, and other

assessments and charges collected on a purely reimbursement basis by
homeowners’ associations and condominium corporations established
under Republic Act No. 9904 (Magna Carta for Homeowners and
Homeowners’ Association) and Republic Act No. 4726 (The
Condominium Act), respectively;
(x) Sale of gold to the Bangko Sentral ng Pilipinas;
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(y) Sale of drugs and medicines prescribed for diabetes, high
cholesterol, and hypertension to beginning January 1, 2019 as
determined by the Department of Health; and
(z) Sale or lease of goods or properties or the performance of

services other than the transactions mentioned in the preceding paragraphs,
the gross annual sales and/or receipts do not exceed the amount of Three
Million Pesos (P 3,000,000.00).
Self-employed individuals and professionals availing of the 8% tax on gross sales

and/or receipts and other non-operating income, under Sections 24(A)(2)(b) and
24(A)(2)(c)(2)(a) of this Code shall also be exempt from the payment of twelve
(12%) VAT.
Illustration 5: Mr. JMLH signified his intention to be taxed at “8% income tax
in lieu of the graduated income tax rates and percentage tax under Section 116”
in his 1st Quarter Income Tax. However, his gross sales/receipts during the
taxable year have exceeded the VAT threshold as follows:
Amount
January PHP 250,000.00
February 250,000.00
March 250,000.00
April 250,000.00
May 250,000.00
June 250,000.00
July 250,000.00
August 250,000.00
September 250,000.00
October Php 1,000,000.00
November 1,000,000.00
December 1,000,000.00 3,000,000.00
Total gross Sales/Receipts Php 5,250,000.00
Mr. JMLH lost the option to pay the 8%

commuted tax rate when his gross sales/receipts exceeded the three million
threshold during the 4th Quarter. For business tax purposes, he is subject to the
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12% VAT prospectively starting November 2018. He is also required to update
his registration from non-VAT to VAT on or before November 30, 2018.
SEC. 4.109-2. Exempt Transactions May be Registered for VAT Purposes. — A

VAT-registered person may, in relation to Sec. 236 (H) of the 1997 Tax Code, as
amended, elect that the exemption in Sec. 4.109-1(B) hereof shall not apply to his
sales of goods or properties or services. Once the election is made, it shall be
irrevocable for a period of three (3) years counted from the quarter when the election
was made except for franchise grantees of radio and TV broadcasting whose annual
gross receipts for the preceding year do not exceed ten million pesos
(P10,000,000.00) where the option becomes perpetually irrevocable.
Illustration 6: WPM is a rice dealer. His total annual gross sales and/or receipts
do not exceed Three Million (P 3,000,000.00), allowing him to avail the
following:
(a) WPM is a VAT-exempt taxpayer. He may elect to

avail of the optional registration for VAT of exempt person under
Section 236 (H) of the 1997 Tax Code, as amended. Upon election
of such option, he shall not be entitled to cancel his VAT
registration for the next three (3) years;
(b) WPM may elect to pay the 8% commuted tax

rate on gross sales or receipts and other non-operating income in
lieu of the graduated income tax rates and the percentage tax
under Section 24(A)(2)(b) of the 1997 Tax Code, as amended, since
his gross sales or receipts did not exceed Three Million Pesos
(P3,000,000) during the taxable year. If he elects to pay the 8%
commuted tax, he shall not be allowed to avail of the optional
registration for VAT of exempt person provided by Section 236(H)
of the 1997 Tax Code, as amended.
SEC. 4.110-3. Claims for Input Tax on Depreciable Goods. – Where a

VATregistered person purchases or imports capital goods, which are depreciable
assets for income tax purposes, the aggregate acquisition cost of which (exclusive of
VAT) in a calendar month exceeds One Million pesos (P1,000,000.00), regardless of
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the acquisition cost of each capital good, shall be claimed as credit against output tax
in the following manner:
(a) If the estimated useful life of a capital good is five (5) years
or more - The input tax shall be spread evenly over a period of sixty (60)
months and the claim for input tax credit will commence in the calendar
month when the capital good is acquired. The total input taxes on
purchases or importations of this type of capital goods shall be divided by
60 and the quotient will be the amount to be claimed monthly.
(b) If the estimated useful life of a capital good is less than five
(5) years — The input tax shall be spread evenly on a monthly basis by
dividing the input tax by the actual number of months comprising the
estimated useful life of the capital good. The claim for input tax credit shall
commence in the calendar month that the capital goods were acquired.
Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished
depreciable capital goods purchased or imported during any calendar month does not
exceed One million pesos (P 1,000,000.00), the total input taxes will be allowable as
credit against output tax in the month of acquisition.
Capital goods or properties refers to goods or properties with estimated useful life
greater than one (1) year and which are treated as depreciable assets under Sec. 34(F)
of the Tax Code, used directly or indirectly in the production or sale of taxable goods
or services.
The aggregate acquisition cost of depreciable assets in any calendar month refers to
the total price, excluding the VAT, agreed upon for one or more assets acquired and
not on the payments actually made during the calendar month. Thus, an asset
acquired on installment for an acquisition cost of more than P 1,000,000.00,
excluding the VAT, will be subject to the amortization of input tax despite the fact
that the monthly payments/installments may not exceed P 1,000,000.00.
Construction in progress (CIP) is the cost of construction work which is not yet
completed. CIP is not depreciated until the asset is placed in service. Normally, upon
completion, a CIP item is reclassified and the reclassified asset is capitalized and
depreciated.
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CIP is considered, for purposes of claiming input tax, as a purchase of service, the
value of which shall be determined based on the progress billings. Until such time the
construction has been completed, it will not qualify as capital goods as herein
defined, in which case, input tax credit on such transaction can be recognized in the
month the payment was made: Provided, that an official receipt of payment has been
issued based on the progress billings.
In case of contract for the sale of service where only the labor will be supplied by the
contractor and the materials will be purchased by the contractee from other suppliers,
input tax credit on the labor contracted shall still be recognized on the month the
payment was made based on a progress billings while input tax on the purchase of
materials shall be recognized at the time the materials were purchased.
Once the input tax has already been claimed while the construction is still in
progress, no additional input tax can be claimed upon completion of the asset when it
has been reclassified as a depreciable capital asset and depreciated. (c) The
amortization of the input VAT shall only be allowed until December 31, 2021
after which taxpayers with unutilized input VAT on capital goods purchased or
imported shall be allowed to apply the same as scheduled until fully utilized:
Provided, That in the case of purchase of services, lease or use of properties, the
input tax shall be creditable to the purchaser, lessee or licensee upon payment of the
compensation, rental, royalty or fee.
Illustration 7: ABC Corporation sold capital goods on installment on October 1,

2018. It is agreed that the selling price, including the VAT, shall be payable in
five (5) equal monthly installments with the first installment to be paid on
October 1, 2018. The data pertinent to the sold assets are as follows:
Selling price - P 5,000,000 (exclusive of VAT)

Passed-on VAT - P 600,000
Original Cost of Asset - P 3,000,000
Accumulate Depreciation at the time of sale - P 1,000,000
Unutilized Input Tax (Sold Asset) - P 100,000
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Accounting Entries:
SELLER BUYER
October 1, 2017 October 1, 2017
Cash P1,120,000 Asset P5,000,000
Installment Receivable 4,480,000 Input Tax 500,000
Accumulated Depreciation 1,000,000
Output Tax 600,000 Cash 1,120,000
Asset 3,000,000 Installment Payable 4,480,000
Gain on sale of set 3,000,000
To record VAT liability:
Output Tax 600,000
Input tax 100,000
VAT Payable 500,000
Periodic receipt of Periodic Subsequent Payment:

installment
Cash 1,120,000 Installment payable 1,120,000
Installment Payable 1,120,000 Cash 1,120,000
* The input tax of P 600,000.00 shall be spread evenly over a period of 60 months
starting on October 2018 of purchase.
If the depreciable capital good is sold/transferred within a period of five (5) years or
prior to the exhaustion of the amortizable input tax thereon, the entire unamortized
input tax on the capital goods sold/transferred can be claimed as input tax credit
during the month/quarter when the sale or transfer was made.
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Illustration 8: A manufacturer purchased capital goods on different occasions as
follows:
Month of Amount 12% Input Useful No. of Last Month of

Purchase (Php) Tax Life Monthly Amortization
Amortization
January 2018 Php Php 6 years 60 December 2022
8,500,000 1,020,000
February 2018 8,500,000 1,020,000 4 years 48 January 2022
December 10,000,000 1,020,000 5 years 60 November 2022
2018
January 2018 10,000,000 1,020,000 5 years - *Outright claim
on
January 2022
a) For purchase made on January 2018, the amortization shall be

for the shorter period of 5 years only or up to December 2022
although the useful life is 6 years.
b) For purchase made on February 2018, the amortization shall
be for period of 4 years only or up to January 2022 since the
useful life of the asset is shorter than 5 years.
c) For purchase made on December 2021, the amortization shall
be for the period of 5 years or up to November 2026.
d) For purchase made on January 2022, no amortization shall be
made and the input VAT shall be claimed on the month of
purchase or January 2022.
xxx xxx xxx
SEC. 4.112-1. Claims for Refund/Credit of Input Tax. –
(a) Zero-rated and Effectively Zero-rated Sales of Goods, Properties or Services
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 tax refund of input tax
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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 zerorated sales and in
taxable (including sales subject to final withholding VAT) 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, subject to final VAT withholding and VAT-exempt sales).
(b) Cancellation of VAT registration
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 for any unused input tax which he may
use in payment of his other internal revenue taxes: Provided, however, that he shall
be entitled to a refund if he has no internal revenue tax liabilities against which the
tax credit certificate may be utilized: Provided, further, that the date of
cancellation being referred hereto is the date of issuance of tax clearance by the
BIR, after full settlement of all tax liabilities relative to cessation of business or
change of status of the concerned taxpayer: Provided, finally, that the filing of
the claim shall be made only after completion of the mandatory audit of all
internal revenue tax liabilities covering the immediately preceding year and the
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short period return and the issuance of the applicable tax clearance/s by the
appropriate BIR Office which has jurisdiction over the taxpayer.
(c) Where to file the claim for refund/credit
Claims for refunds shall be filed with the appropriate Bureau of Internal Revenue
(BIR) Office (Large Taxpayers Service (LTS), Revenue District Office (RDO))
having jurisdiction over the principal place of business of the taxpayer. Claims for
input tax refund of direct exporters shall be exclusively filed with the VAT Credit
Audit Division (VCAD).
(d) Period within which refund/credit of input taxes shall be made
In proper cases, the Commissioner of Internal Revenue shall grant refund for
creditable input taxes within ninety (90) days from the date of submission of the
official receipts or invoices and other documents in support of the application filed
in accordance with subsections (A) and (B) hereof: Provided, That, should the
Commissioner find that the grant of refund is not proper, the Commissioner
must state in writing the legal and factual basis for the denial.
The 90-day period to process and decide, pending the establishment of the
enhanced VAT Refund System shall only be up to the date of approval of the
Recommendation Report on such application for VAT refund by the
Commissioner or his duly authorized representative: Provided, That all claims
for refund/tax credit certificate filed prior to January 1, 2018 will be governed
by the one hundred twenty (120)-day processing period.
In case of full or partial denial of the claim for tax refund, the taxpayer affected may,
within thirty (30) days from the receipt of the decision denying the claim, 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 within the
ninety (90) - day period shall be punishable under Section 269 of the Tax Code,
as amended.
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(e) Manner of giving refund
Refund shall be made upon warrants drawn by the Commissioner of Internal

Revenue or by his duly authorized representative without the necessity of being
countersigned by the Chairman, Commission on Audit (COA), the provision of the
Revised Administrative Code to the contrary notwithstanding:
Provided, that refunds under this paragraph shall be subject to post audit by the
COA.
(f) VAT Refund Center
The Department of Finance shall establish a VAT refund center in the BIR and
in the Bureau of Customs (BOC) that will handle the processing and granting of
(g) Automatic Appropriation
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.
(h) Quarterly Report
The BIR and 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.
xxx xxx xxx
SEC.4-114-1. Filing of Return and Payment of VAT.
(A) Filing or Return. – Every person liable to pay the valueadded tax imposed
under this Title shall file a quarterly return of the amount of his gross sales or receipts
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within twenty-five (25) days following the close of each taxable quarter prescribed
for each taxpayer. The term “taxable quarter” shall mean that quarter that is
synchronized with the income tax quarter of the taxpayer (i.e., the calendar quarter or
fiscal quarter): Provided, however, That VAT-registered persons shall pay the value-
added tax on a monthly basis: Provided, finally That beginning January 1, 2023,
the filing and payment required under the Tax Code shall be done within
twenty-five (25) days following the close of each taxable quarter.
xxx xxx xxx
SEC.4-114-2. Withholding of VAT on Government Money Payments and

Payments to Non-Residents.
(a) Withholding of Value-added Tax. – The Government or any of its political

subdivisions, instrumentalities or agencies, including government- owned or -
controlled corporations (GOCCs) shall, before making payment on account of each
purchase of goods and services which are subject to the value added tax imposed in
Sections 106 and 108 of this Code, deduct and withhold the value-added tax imposed
in Sections 106 and 108 of this Code, deduct and withhold a final value-added tax at
the rate of five percent (5%) of the gross payment thereof: provided, that beginning
January 1, 2021, the VAT withholding system under this subsection shall shift
from final to a creditable system: Provided, That the payment for lease or use of
properties or property rights to non-resident owners shall be subject to twelve percent
(12%) withholding tax at the time of payment: Provided, however, that payments
for purchase of goods and services arising from projects funded by Official
Development Assistance (ODA) as defined under Republic Act No. 8182,
Otherwise known as the “Official Development Assistance Act of 1996,” as
amended, shall not be subject to the Final/Creditable Withholding Taxes as
imposed in this subsection.
xxx xxx xxx
SEC.4-116. Tax on Persons Exempt from Value-added Tax (VAT).

—
Any person whose sales or receipts are exempt under Section 109 (1) (BB) of the Tax
Code from the payment of value-added tax and who is not a VAT-registered person
shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or
133
receipts: Provided, however, that the following shall be exempt from the payment
of three percent (3%) percentage tax:
1. Cooperatives: and
2. Self-employed individuals and professionals availing of

the 8% tax on gross sales and/or receipts and other non-operating
income, under Sections 24(A)(2)(b) and 24(A)(2)(c)(2)(a) of the Tax
Code, as amended..
xxx xxx xxx
SECTION 13. TRANSITORY PROVISIONS. –
1. In relation to Section 109(1)(BB), an existing VAT-registered taxpayer

whose gross sales/receipts in the preceding taxable year did not exceed the
VAT threshold of P3,000,000.00 may continue to be VAT-registered
taxpayer and avail of the “Optional Registration for Value-Added Tax of
Exempt Person” provided by Section 236(H). Once availed, the taxpayer
shall not be entitled to cancel the VAT registration for the next three (3)
years.
2. A VAT-registered taxpayer who opted to register as Non-VAT as a result

of the implementation of the TRAIN Law, shall immediately:
a. submit an inventory list of unused invoices and/or receipts as of

the date of filing of application for update of registration from
VAT to NonVAT, indicating the number of booklets and its
corresponding serial numbers; and
b. surrender the said invoices and/or receipts for cancellation.
A number of unused invoices/receipts, as determined by the taxpayer with the

approval of the appropriate BIR Office, may be allowed for use, provided the phrase
“Non-VAT registered as of (date of filing an application for update of
registration). Not valid for claim of input tax.” shall be stamped on the face of each
and every copy thereof, until new registered non-VAT invoices or receipts have been
received by the taxpayer. Upon such receipt, the taxpayer shall submit a new
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inventory list of, and surrender for cancellation, all unused previously-stamped
invoices/receipts.
SECTION 4. REPEALING CLAUSE. — Any rules and regulations,
issuances or parts thereof inconsistent with the provisions of these Regulations are
hereby repealed, amended or modified accordingly.
SECTION 5. SEPARABILITY CLAUSE. — If any of the provisions of these

regulations is subsequently declared unconstitutional, the validity of the remaining
provisions hereof shall remain in full force and effect.
SECTION 6. EFFECTIVITY. — These Regulations are effective beginning

January 1, 2018, the effectivity of the TRAIN Law.
(Original Signed)
CARLOS G. DOMINGUEZ
Secretary of Finance Recommending Approval:
(Original Signed)
CAESAR R. DULAY
135
Quezon City
SUBJECT : Amending the Provisions of Revenue

Regulations No. 11-18, Particularly Section 2 and 14
TO : All Internal Revenue Officers, and Others Concerned
SECTION 1. SCOPE – Pursuant to the provisions of Section 244 in relation to

Section 245 of the National Internal Revenue Code of 1997 (Tax Code of 1997) as
amended, these Regulations are hereby promulgated to amend certain provisions of
Revenue Regulations (RR) No. 1 1-2018.
SECTION 2. AMENDATORY PROVISIONS. – The provisions of Sections 2

and 14 of RR 11-2018, are hereby amended as follows:
"SECTION 2. Certain items of Section 2.57.2 of RR No. 2-98 is

hereby renumbered and further amended to read as follows:
SECTION 2.57.2. Income Payments Subject to Creditable Withholding

Tax and Rates Prescribed Thereon. — Except as herein otherwise provided,
there shall be withheld a creditable income tax at the rates herein specified for
each class of payee from the following items of income payments to persons
residing in the Philippines:
(A) Professional fees, talent fees, etc. for services rendered — On the gross
professional, promotional, and talent fees or any other form of remuneration
for the services rendered by the following:
Individual payee:
136
If gross income for the current year did not exceed P3M - Five percent (5 %): If gross
income is more than P3M or VAT Registered regardless of amount - Ten percent
(1%)
Non-individual payee: If gross income for the current year did not exceed P
72(L()()()-Ten percent (10%); If gross income exceeds - Fifteen percent (15%)
xxx xxx xxx
SECTION 14. TRANSITORY PROVISIONS. Income recipient/payee

subject to withholding tax under Section 2 (Section 2.57.2) hereof and availing
to be exempt from the prescribed withholding tax rates, shall submit on or
before April 20, 2018 a duly accomplished "Income Payee's Sworn Declaration
of Gross Receipts/ Sales” together with a copy of the Certificate of
Registration (COR) to his/her income avor/withholding.
The income payor/withholding agent who/which received the "Income Payee's

Sworn Declaration of Gross Receipts/Sales" and the copy of the payee's COR
shall submit on or before April 30, 2018, a duly accomplished "Income
Payor/Withholding Agent's Sworn Declaration", together with the List of Payees
who have submitted "Income Payee's Sworn Declaration of Gross
Receipts/Sales" and copies of CORs.
Any income tax withheld by the income payor/withholding agent in excess of
what is prescribed in these regulations shall be refunded to the payee by the said
income payor/withholding agent. The income payor/withholding agent shall
reflect the amount refunded as adjustment to the remittable withholding tax due
for the first quarter withholding tax return. The adjusted amount of tax withheld
shall also be reflected in the Alphabetical List of Payees to be attached in the
said first (l st) quarter return.
The said list of payees, who are subject to refund either due to the change of
rates of withholding or due to the qualification to avail of exemption from
withholding tax (e.g. income recipient/payee submitted "Income Payee's Sworn
Declaration of Gross Receipts/Sales" and copy of COR), shall likewise be
attached in the said return which shall be filed on or before April 30, 2018.
137
In case the Certificate of Tax Withheld at Source (BIR Form No. 2307) has
already been given to the payee, the same shall be returned by the payee to the
payor upon receipt of the amount refunded by the income payor/withholding
agent, together with the corrected BIR Form No. 2307, if still applicable.
Otherwise, the said certificate to be given to the payee on or before the twentieth
(20th) day after the close of the first (1 st) quarter must reflect the corrected
amount of tax withheld.
In no case shall income payee use BIR Form No. 2307 twice for the same
amount of income payment from the same income payor/withholding agent and
for the same period.
SECTION 3. REPEALING CLAUSE. All existing rules and regulations or
parts thereof which are inconsistent with the provisions of these regulations are
hereby revoked.
SECTION 4. EFFECTIVITY. These regulations shall take effect
immediately.
002185
APR 03 2018
CAESAR R. DULAY
015320
138
Quezon City
April 2, 2018
SUBJECT: Amends Revenue Regulations No. 8-2018 Particularly on

the Due Date for the Updating of Registration from VAT to
Non-VAT
TO : All Internal Revenue Officers, and Others Concerned
SECTION 1. SCOPE – Pursuant to the provisions of Section 244 in relation to

Section 245 of the National Internal Revenue Code of 1997 (Tax Code), as amended,
these Regulations are hereby promulgated to amend the transitory provisions of RR
No. 8-2018 on the updating of registration from VAT to non-VAT which was due last
March 3 1, 2018.
SECTION 2. AMENDMENT. – Section 13 of RR 8-2018 is hereby amended by

extending the deadline of registration updates to read as follows:
"SECTION 13. TRANSITORY PROVISIONS. - In connection with the

provision of Section 24(A)(2)(b) and Section 2(A)(2)(c) of the Tax Code, as
amended, all existing VAT registered taxpayers whose gross sales receipts
and other non-operating income in the preceding year did not exceed the
VAT threshold of P 3 000,000.00 shall have the option to update their
registration to non-VAT until April 30, 2018, following the existing
procedures on registration updates and the inventory and
surrender/cancellation of unused VAT invoices/receipts.
139
After the above-mentioned date, existing VAT-registered taxpayers who
have not exceeded the threshold for the immediately preceding three years,
may opt to update their registration to non-VAT, following rules and
regulations on registration updates, verification, and the inventory and
cancellation of VAT invoices/receipts.”
SECTION 3. REPEALING CLAUSE. All revenue issuances that are

inconsistent with the provisions of these Regulations are hereby amended, modified
or repealed accordingly.
SECTION 4. EFFECTIVITY. These regulations are effective immediately.
C
002187
APR 03 2018
CAESAR R. DULAY
015319
140
Quezon City
April 30, 2018
SUBJECT : Amending Revenue Regulations No. 10-2015 as

amended by RR No. 12-2015, 14-2015 ad 6-2016 on the Use of Non-
Thermal Paper for All Cash Register Machines (CRMs) / Point of Sales
(POS) Machines and Other Invoice/Receipt Generating
Machine/Software
TO : All Business Establishments, Internal Revenue

Officers, and Employees and Others Concerned
SECTION 1. SCOPE – Pursuant to the provisions of Section 244, in relation to

Section 203, 222, 235 of the National Internal Revenue Code of 1997 (Tax Code), as
amended, these Regulations are hereby promulgated to amend the following
provisions of RR No. 10-2015 as amended by RR 12-2015, 14-2015 and 6-2016.
SECTION 2. AMENDMENT. – Sections 2, 3, 4, 5 and 6 of RR 10-2015 are

hereby amended to read as follows:
All taxpayers using CRM/POS machines or other invoice/receipt generating

machine/software shall have the option to use the type of paper depending on their
business requirements, subject to the retention and preservation of accounting records
for a period within which the Commissioner is authorized to make an assessment and
collection of taxes, as prescribed in Section 203 and 222 of the 1997 National
Internal Revenue code, as amended.
141
All tape receipts issued and the data printed on the tape receipts shall show the
information required under Section 5 of RR 10-2015, as amended, namely:
1. Taxpayer’s (TP) Registered Name

2. TP’s Business Name/style, if ay;
3. A statement that the taxpayer is VAT or NON VAT registered
followed by the Taxpayers Identification Number (TIN) and 4-digit
branch code. Example: VAT Registered TIN 123-456-789-0000;
4. Machine Identification Number (MIN);
5. Serial number of the CRM/POS machine;
6. Detailed business address where such Official Receipts (ORS)/Sales
Invoices (Sis) /Commercial Invoices (CIS) shall be used/located
7. Date of transaction;
8. Serial Number of the OR/SI/CI printed prominently;
9. A space provided for the Name, Address and TIN of the buyer;
10. Description of the items/goods or nature of service;
11. Quantity;
12. Unit cost;
13. Total cost;
14. VAT amount (if transaction is subject to 12% VAT);
15. If the VAT taxpayer is engaged in mixed transactions, the amounts
involved shall be broken down to: VATable sales, VAT Amount,
Zero Rated Sales, and VAT Exempt Sales;
16. For NonVAT ORs/Sls and Cls (VAT or NON-VAT) such as delivery
receipts, order slips, purchase orders, provisional receipts,
acknowledgment receipts, collection receipts, credit/debit memo, job
orders and other similar documents that form part of the accounting
records of the taxpayer and/or issued to the customers, in addition to
the above-enumerated applicable information, the phrase "THIS
DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" in
bold letters, shall be conspicuously printed at the bottom of the NON
VAT ORs/Sls/Cls;
17. Taxpayers whose transactions are not subject to VAT or Percentage

Tax shall issue NON-VAT principal receipts/invoices indicating
142
prominently at the face of such receipts/invoices the word
“EXEMPT”;
18. If the taxpayer is subject to percentage tax under Title V of the 1997
NIRC, as amended, but also sells goods/services under Section 109
(A) to (W), excluding (E) of the same Code, as amended by Republic
Act (RA) No. 10378, the non-VAT principal receipts/invoices shall
indicate the breakdown of Sales Subject to Percentage Tax (SSPT)
and Exempt Sales;
19. The following shall be printed at the bottom portion of the OR/SI/CI:
 Name, address and TIN of the accredited supplier of
CRM/POS/Other similar machines/software;
 Accreditation number and the date of accreditation (date issued
“mm/dd/yyyy” and valid until “mm/dd/yyyy”) of the accredited
supplier;
 BIR Final Permit To Use (PTU) Number;
 The phrase “THIS INVOICE/RECEIPT SHALL BE VALID
FOR FIVE (5) YEARS FROM THE DATE OF THE
PERMIT TO USE.”
20. For taxpayers transacting with a Senior Citizen (SC) and/or Person/s
With Disability (PWD) pursuant to RA 9994 (Expanded Senior
citizens Act of 2010) and RA 10754 [(An Act Expanding the
Benefits and Privileges of Persons With Disability (PWD)],
respectively, a space for the following shall also be required:
• Senior Citizen/PWD TIN;
• OSCA ID No. /PWD ID No.
• Senior Citizen / PWD discount (show detailed

breakdown of the 20% discount and/or 12% VAT
exemption, whichever is applicable; and
• Signature of the SC/PWD.
However, for taxpayers whose transactions are not covered by RA 9994 / 10754, the
above information may not be indicated. Moreover, the buyer/customer who maybe
needing proof of such payment to be able to claim for expense (for income tax
purposes) or input tax (for VAT purposes), may return the issued tape receipt to the
seller and request for issuance of a manual invoice or receipt: Whenever so requested
143
by the buyer / customer, the seller shall issue the manual receipt/invoice, whichever
is applicable, to replace the previously issued tape receipt.
Sales generated from CRM / POS machines where tape receipts

issued were replaced by manual invoice / receipt shall be deducted from the sales to
be reported in the eSALES system of the BIR. This deduction shall be reflected as
an adjustment in the CRM Sales Book/Back end report.
The returned tape receipt shall be attached to the duplicate copy of the
manually issued invoice / receipt and shall be the basis in adjusting the sales.
However, the sales that were replaced with manual invoice / receipt shall still be
included but separately indicated in the Summary List of Sales (SLS) required to be
submitted by VAT registered taxpayers.
SECTION 3. PENALTY PROVISIONS. – Any persons who will comply with

these provisions shall be imposed a penalty based on existing revenue issuances.
SECTION 3. REPEALING CLAUSE. – The provisions of any existing

regulations, rulings or orders, or portions thereof inconsistent with the
provisions of these Regulations are hereby revoked, repealed or amended
accordingly.
SECTION 4. EFFECTIVITY. This regulations shall take effect fifteen (15) days
after its publication in a newspaper of general circulation.
C
002629
MAY 22 2018
CAESAR R. DULAY
Commissioner of Internal Revenu
016266
144
Quezon City
July 10, 2018
SUBJECT : Amending Revenue Regulations (RR) No. 12-2018

Particularly Section 13 Thereof
TO : All Internal Revenue Officers, and Others

Concerned
SECTION 1. SCOPE – Pursuant to the provisions of Sections 102 and 244 of the
National Internal Revenue Code of 1997 (Tax Code of 1997) as amended, these
Regulations are hereby promulgated for the purpose of amending Section 13 of RR
No. 12-2018, particularly on the valuation of gifts made in property.
SECTION 2. AMENDMENT. – Section 13 of RR No. 12-2018, is hereby

amended to read as follows:
“SECTION 13. VALUATION OF GIFTS MADE IN PROPERTY. – The

valuation of gifts in the form of property shall follow the rules set forth in
Section 5 of these regulations: Provided, that the reckoning point for valuation
shall be the date when the donation is made.”
SECTION 3. REPEALING CLAUSE. All existing rules and regulations or

thereof which are inconsistent with the provisions of these regulations are hereby
revoked.
SECTION 4. EFFECTIVITY. These regulations are effective immediately.
145
C
JUL 24 2018
CAESAR R. DULAY
018380
146
Quezon City
June 5, 2018
SUBJECT : Amending Specific Provisions of Revenue

Regulations No. 8-2016 Particularly Certain Guidelines on the Processing
of Applications for Tax Clearance for Bidding Purposes
TO : All Internal Revenue Officers, and Others

Concerned
SECTION 1. SCOPE AND OBJECTIVES. – Pursuant to Sections 7(a) and

244 of the National Internal Revenue Code of 1997, as amended, these regulations
are hereby promulgated for the purpose of amending certain provisions of Revenue
Regulations (RR) No. 8-2016, by changing certain guidelines and policies in the
processing and issuance of Tax Clearance for bidding purposes.
This is in line with the Bureau's objective of extending utmost and unequivocal
service to its stakeholders pursuant to its commitment to the mechanisms of "Ease of
Doing Business" in this country to enable the taxpayers cope with the ever changing
dynamics and demands of the business community for the benefit of the Bureau and
the taxpayers.
SECTION 2. AMENDMENT. – Items 44.1 and 4.4.2 (c) of RR No. 8-2016 shall
be amended to read, respectively, as follows:
“4.4 1 All applications for the issuance of Tax Clearance in accordance with
the requirements under RA No, 9184 and EO No. 398 shall be manuallv filed
with the Collection Division of the Revenue Reaional Office where the
147
taxpayer or partnership/corporation is currently and duly registered or with
the concerned office under the Large Taxpayers service if the taxpayer is
classified as large taxpayer, until such time that an on-line application for this
purpose has been made available for use of prospective bidders.”“4.4.2
xxx xxx xxx
c. For those with previously issued Tax Clearance for bidding purposes, the
requested Tax Clearance shall only be issued if they are found to be regular
eFPS users from the time of enrollment up to the time of filing of application.
The regular usage of eFPS shall not apply to new applicants. The submission
of the new applicant's latest income tax and business tax returns not filed and
paid through the Bureau's eFPS shall suffice.”
SECTION 3. REPEALING CLAUSE. All existing rules and regulations,

revenue issuances, memoranda, rulings or parts thereof, which are contrary to or
inconsistent with the provisions hereof are hereby amended, modified or repealed
accordingly.
SECTION 4. EFFECTIVITY. The provisions of these Regulations shall take

effect fifteen (15) days after publication in any newspaper of general circulation.
JUL 27 2018
CAESAR R. DULAY
018214
148
Quezon City
09 AUG 2018
SUBJECT : Amends Revenue Regulations (RR) No. 13-2018

Particularly on the Use of Invoices/Receipts of Previously Registered
VAT Taxpayers who are now Non-VAT Taxpayers Pursuant to Section
84 of Republic Act (RA) No. 10963, or the “Tax Reform for Acceleration
and Inclusion (TRAIN Law)”
TO : All Internal Revenue Officials, Employees and

Others Concerned
National Internal Revenue Code of 1 997 (Tax Code), as amended, these Regulations
are hereby promulgated to amend the transitory provisions of RR No. 13-2018 on the
use of invoices / receipts which were stamped “Non-VAT registered as of (date of
filing an application for update of registration). Not valid for claim of input tax.”
SECTION 2. AMENDMENT. – Section 13 of RR No. 13-2018 is hereby

amended by providing deadline on the use of stamped Non-VAT invoices/receipts to
read as follows:
“SECTION 13. TRANSITORY PROVISIONS. –
xxx xxx xxx

A number of unused invoices/receipts, as determined by the
taxpayer with the approval of the appropriate BIR Office, may be allowed
for use, provided the phrase "Non-VAT registered as of (date of filing an
149
application for update of registration). Not valid for claim of input tax."
shall be stamped on the face of each and every copy thereof, until new
registered non-VAT invoices or receipts have been printed and received by
the taxpayer or until August 31, 2018, whichever comes first. Upon
receipt of newly-printed registered non-VAT invoices or receipts, the
taxpayer shall submit, on the same day, a new inventory list of, and
surrender for cancellation, all unused previously-stamped invoices/receipts.”
SECTION 3. REPEALING CLAUSE. All revenue issuances inconsistent with

the provisions of these Regulations are hereby amended, modified or repealed
accordingly.
CAESAR R. DULAY
015319
150
Quezon City
July 25, 2018
REVENUE REGULATIONS NO. 20- 2018
SUBJECT: Prescribing the Implementing Rules and Guidelines

on the Imposition of Excise Tax on Sweetened and
Beverages Pursuant to Section 47 of Republic Act
No. 10963 otherwise known as “Tax Reform for
Acceleration and Inclusion TRAIN Law”.
TO: All Internal Revenue Officers and Others

Concerned
_________________________________________________________
SECTION 1. SCOPE. – Pursuant to Section 244 of the National

Internal Revenue Code (NIRC), as amended, and Section 84 of Republic Act
(R.A.) No. 10963, otherwise known as the “Tax Reform for Acceleration and
Inclusion (TRAIN)” Law, these regulations are hereby promulgated to
implement Section 150-B of the NIRC, as amended, on the excise tax on
sweetened beverages, as introduced by Section 47 of the TRAIN Law.
SEC.2. DEFINITION OF TERMS- For purposes of these

Regulations and for a more effective enforcement and collection of excise
taxes, the following words and phrases shall have the meaning indicated
below:
a. “ACT” – shall refer to Republic Act (R.A) No. 10963 otherwise known as
the “Tax
Reform for Acceleration and Inclusion (TRAIN) Law”;
151
b. SWEETENED BEVERAGES (SBs) - refer to non-alcoholic beverages of
any constitution (liquid, powder, or concentrates) that are pre-packaged
and sealed in accordance with the Food and Drug Administration (FDA)
standards, that contain caloric and/or non-caloric sweeteners added by the
manufacturers, and shall include, but not be limited to the following, as
described in the Food Category System from Codex Alimentarius Food
Category Descriptors (Codex Stan 192-1995, Rev 2017 or the latest) as

adopted by the FDA:
(1) Sweetened juice drinks;
(2) Sweetened tea;
(3) All carbonated beverages;
(4) Flavored water;
(5) Energy and sports drinks;
(6) Other powdered drinks not classified as milk, juice, tea, and
coffee;
(7) Cereal and grain beverages; and
(8) Other non-alcoholic beverages that contain added sugar.
c. CALORIC SWEETENER - refers to a substance that is sweet and

includes sucrose, fructose, and glucose that produces a certain
sweetness.
d. HIGH FRUCTOSE CORN SYRUP (HFCS) – refers to a sweet

saccharide mixture containing fructose and glucose which is derived
from corn and added to provide sweetness to beverages, and which
includes other similar fructose syrup preparations.
e. NON-CALORIC SWEETENER - refers to a substance that is

artificially or chemically processed that produces a certain sweetness.
152
These are substances which can be directly added to beverages, such
as aspartame, sucralose, saccharin, acesulfame potassium, neotame,
cyclamates and other non-nutritive sweeteners approved by the
Codex Alimentarius and adopted by the FDA.
SEC. 3. TAX RATES AND BASES – There shall be levied,

assessed and collected, effective January 1, 2018, a specific tax on
sweetened beverages, in accordance with the following:
PRODUCT DESCRIPTION Tax Rate

(per liter of volume
capacity)
Using purely caloric sweeteners, and purely non- P6.00
caloric sweeteners, or a mix of caloric and non-
caloric sweeteners
Using purely high fructose corn syrup or in P12.00
combination with any caloric or non-caloric
Sweetener
Using purely coconut sap sugar and purely Exempt
steviol glycosides
Coconut sap sugar shall comply with specifications as stated in

the Philippine National Standard (PNS)/Bureau of Agricultural and
Fisheries Products Standards (BAFPS) 76:2010 ICS 67.180 or latest
updated standards.
Steviol glycoside specified shall comply with the Joint

FAO/WHO Expert Committee on Food Additives (JECFA)
specifications.
Computation of Excise Tax (Illustrations):
1. Carbonated Beverages
Dulce Manufacturing Corp. will remove from the place of
production 100 cases of Super Cola using HFCS and non-caloric
sweetener. Each case contains 6 bottles of 1.5 liters each.
153
No. of Cases 100
Multiplied by no. of bottles per case x 6_
Total no. of bottles 600
Multiplied by content per bottle x 1.5L
Total Volume in Liters 900L
Multiplied by Specific Tax Rate x P12.00
Total Excise Tax to be paid before removal P 10,800.00
2. Powdered Juice
Sweety Import Corp. will remove from customs custody 50 cases of Four
Seasons Powdered Juice using caloric and non-caloric sweetener
containing 144 packs by 25 grams. Each 25 grams pack can make 1 Liter
(per serving suggestion appearing on the label).
No. of Cases 50
Multiplied by no. of packs per case x 144
Total no. of packs 7,200
Multiplied by serving suggestion per pack in liters of volume x 1L
Total Volume in Liters 7,200L
Multiplied by Specific Tax Rate x P6.00_
Total Excise Tax to be paid before removal P43,200.00
SEC. 4. PERSONS LIABLE: The following persons shall be

liable for the payment of excise tax on sweetened beverages:
a. For Locally Manufactured Sweetened Beverages
(1) All Manufacturers of Sweetened Beverages shall pay

the excise tax imposed under Section 150-B, Chapter VI, Title
VI of the Tax Code, as amended.
154
(2) Person having possession of domestically manufactured
sweetened beverages removed from the place of production
without the payment of the tax shall pay the excise tax thereon.
(3) For Imported Sweetened Beverages
(4) All Owners or Importers of Sweetened Beverages shall

pay the excise tax imposed under Section 150-B, Chapter VI,
Title VI of the Tax Code, as amended.
(5) Person having possession of imported sweetened

beverages removed from customs custody without the payment
of the tax shall pay the excise tax thereon.
The excise tax shall be paid by the owner or importer of the

sweetened beverages or by any person who is found in possession of
any untaxed sweetened beverages, including any person other than
the one legally entitled to exemption from the excise tax in the
proper case. In the case of sweetened beverages brought or imported
tax-free into the country by persons, entities, or agencies exempt
from tax and are subsequently sold, transferred, or exchanged in the
Philippines to non-exempt persons or entities, including the
introduction and re-introduction into customs territory of said
sweetened beverages intended for exclusive use within the freeport
zones, the purchaser or transferee, owner/possessor thereof shall be
considered as the importer, and shall be liable for the excise tax due
on such importation.
Provided, that toll manufacturers, bottlers and other sub-

contractors of manufacturers or importers of sweetened
beverages shall not be subject to excise tax. Provided further, in such
cases, the manufacturer or importer shall be liable to pay the excise
tax on sweetened beverages.
SEC. 5. TIME, PLACE AND MANNER OF FILING OF
RETURN AND PAYMENT OF EXCISE TAX ON
SWEETENED BEVERAGES.
155
a. For Locally Manufactured Sweetened Beverages
A separate return (BIR Form No. 2200-S) shall be filed for each place
of production with the concerned Revenue District Office (RDO)
where the Head Office is duly registered and the excise tax shall be
paid before removal of domestically manufactured sweetened
beverages from place of production and the return shall be filed and
the excise tax paid at any authorized agent bank (AAB), revenue
collection officer or duly authorized city or municipal treasurer in the
Philippines under Section 130 (A)(2)(3) of the NIRC, as amended.
b. For Imported Sweetened Beverages
All importers/traders of excisable sweetened beverages, whether

importing raw materials of any constitution (liquid, syrups, powder, or
concentrates) or finished goods, shall apply for an Authority to Release
Imported Goods (ATRIG) with Excise LT Regulatory Division
(ELTRD), BIR National Office and pay the corresponding excise tax
based on the equivalent yield in liters of volume capacity of the
imported articles.
The Excise Tax on imported finished goods shall be paid before

release from customs custody. However, for imported raw materials
which will be used in the production of excisable sweetened beverages,
the excise tax due thereon shall be paid before removal of the finished
goods from place of production.
SEC. 6. EXCLUSIONS - The following products, as described in

the food category system from Codex Alimentarius Food
Category Descriptors (Codex Stan 192-1995, Rev 2017 or the latest)
as adopted by the FDA, are not subject to the excise tax imposed
under Section 150-B of the NIRC, as amended, to wit:
a. All milk products, including plain milk, infant formula milk, follow-
on milk, growing up milk, powdered milk, ready-to-drink milk,
flavored milk, and fermented milk.
156
Milk product refers to products obtained by any processing of milk,
which may contain food additives, and other ingredients functionally
necessary for the processing (Codex General Standard for the Use of
Dairy Terms (Codex Stan 206-1999).
In accordance with the Codex Alimentarius, the following Codex

Standards for various milk products are adopted:
1. Milk powders and cream powder (Codex Stan 207-1999)
2. Fermented milks (Codex Stan 243-2003)
3. Blend of evaporated skimmed milk and vegetable fat

(Codex Stan 250-2006)
4. Blend of skimmed milk and vegetable fat in powdered

form Codex Stan 251-2006)
5. Blend of sweetened condensed skimmed milk and

vegetable fat (Codex Stan 252-2006)
6. Evaporated milks (Codex Stan 281-1971)
7. Sweetened condensed milks (Codex Stan 282-1971)
Dairy products are not synonymous with milk products. Only milk
products are covered by the exemption.
b. Soymilk and flavored soymilk shall refer to products, the main

ingredients of which are the soybean and/or soy derivative(s) (e.g.
soybean flour, soybean concentrates, soybean isolates or defatted
soya) and water which are produced without fermentation process.
(Codex Stan. CXS 322R-2015)
c. One Hundred Percent (100%) Natural Fruit Juices – Original liquid

resulting from the pressing of fruit, the liquid resulting from the
reconstitution of natural fruit juice concentrate, or the liquid resulting
157
from the restoration of water to dehydrated natural fruit juice that do
not have added sugar or caloric sweetener. If there is sugar or
sweetener added at any amount, the product shall be considered
excisable depending on the kind of sweetener added and its
corresponding rate specified under the Act;
d. One Hundred Percent (100%) Natural Vegetable Juices – Original

liquid resulting from the pressing of vegetables, the liquid resulting
from the reconstitution of natural vegetable juice concentrate, or the
liquid resulting from the restoration of water to dehydrated natural
vegetable juice that do not have added sugar or caloric sweetener. If
there is sugar or sweetener added at any amount, the product shall be
considered excisable depending on the kind of sweetener added and
its corresponding rate specified under the Act;
e. Meal Replacement and Medically Indicated Beverages – Any liquid

or powder drink/product for oral nutritional therapy for persons who
cannot absorb or metabolize dietary nutrients from food or
beverages, or as a source of necessary nutrition used due to a medical
condition and an oral electrolyte solution for infants and children
formulated to prevent dehydration due to illness; and
f. Ground coffee, instant soluble coffee, and pre-packaged powdered

coffee products.
The proper classification of beverages shall be subject to the

determination by the FDA.
SEC.7. TRANSFER OF RAW MATERIALS –

Manufacturers of sweetened beverages subject to tax herein shall not be
allowed to transfer or remove raw materials
from place of production, except when the transfer or removal thereof is

intended for further processing to its other registered production or toll-
manufacturing plants and shall be accompanied by an Excise Taxpayer’s
Removal Declaration (ETRD).
158
“Raw materials” shall refer to the chief substance or ingredient of
any constitution (liquid, syrups, powder, concentrates) for the production
of sweetened beverages. Raw materials that are intended for further
processing to produce sweetened beverages are not subject to excise tax.
Regardless however of declaration as raw materials, those that clearly do not
need further processing (i.e., only for repacking) shall be subjected to excise tax.
Packaging materials and supplies shall not be considered as raw materials

for purposes of these Regulations.
SEC. 8. TRANSFER OR SALE OF SEMI-PROCESSED

GOODS
Semi-processed goods, such as syrups/puree/concentrates sold to

fast food chains where the syrups/puree/concentrates are mixed with
carbonated water and dispensed through soda vending or juice dispensing
machines, shall be considered as finished goods subject to excise tax for
purposes of this Regulation, notwithstanding that the same are in their semi-
processed state. The excise tax shall be computed using a pre-determined
formula in arriving at the equivalent yield in liters of volume
capacity submitted by the manufacturer as approved by the FDA.
SEC.9. IMPOSITION OF EXCISE TAX ON

SWEETENED BEVERAGES PRODUCED AND
CONSUMED WITHIN THE PREMISES OF THE
MANUFACTURER
Sweetened beverages that are produced or manufactured and are

subsequently consumed within the place of production shall be subject to the
payment of excise tax by the manufacturer. The corresponding volume in liter
and the excise tax due thereon shall be declared in the excise tax returns and
shall be paid, in the same manner as that prescribed for ordinary removals of
excisable sweetened beverages.
The Excise Taxpayer’s Removal Declaration (ETRD), or any

other form that may be prescribed by the BIR, shall be issued by the duly
159
authorized representative of the manufacturer duly attested to by the Revenue
Officer assigned at the manufacturer’s premises. Accordingly, the brand name and
volume of sweetened beverages consumed within the production premises
shall be separately indicated in the prescribed Official Register Books (ORBs)
of the manufacturer.
SEC. 10. EXPORTATION OF SWEETENED BEVERAGES
Sweetened beverages products intended for exports may be removed from the
place of production without the prepayment of excise tax, subject to the
following terms and conditions:
a. A permit shall be per shipment secured from the BIR Office where the
manufacturer is registered or required to be registered as an excise
taxpayer before the product is removed from the place of production;
b. A surety bond has been posted to guarantee payment of excise tax

which is otherwise due on such removal. For this purpose, the
manufacturer-exporter may, at his option, post either a continuing surety
bond or a performance surety bond for each and every export transaction.
With respect to the performance surety bond, the amount of the exporter’s
bond shall be equal to the amount of excise tax otherwise due on the actual
volume or value of the sweetened beverages to be exported. On the other
hand, with respect to the continuing surety bond, the amount of the
exporter’s bond shall be equivalent to the amount of excise tax otherwise
due on the estimated annual volume or value of the said products to be
exported, or to the amount of excise tax due on the un-liquidated export
shipments of such product, whichever is lower.
A revised surety bond shall be submitted to the appropriate BIR Office in

case the exporter’s bond is no longer sufficient to cover the subsequent
tax-exempt exportations. In case of failure to submit the said revised surety
bond, no permit shall be issued by the concerned BIR Office;
160
c. The products removed from the place of production shall be directly
transported, loaded aboard the international shipping vessel or carrier, and
shipped directly to the foreign country of destination without returning to
the Philippines;
d. Proof of exportation such as, but not limited to, the documents
enumerated below, shall be submitted within thirty (30) days from the date
of actual date of exportation. However, the
e. Concerned BIR Office may, upon written request by the taxpayer-

exporter, grant a maximum of 30 days, one-time extension for the
submission of such documents for meritorious reasons.
(1) Export Entry Declaration duly filed with the Bureau

of Customs
(2) Commercial Invoice
(3) Packing list
(4) Bill of Lading
(5) Cargo Manifest, if applicable
(6) Inward bank remittance in foreign currency
acceptable to the Bangko Sentral ng Pilipinas
(7) Any document showing proof that the products
exported have actually arrived and unloaded in the foreign port
of destination (e.g., certificate of discharge, import entry
declaration duly received by the foreign port of entry, etc.)
(8) Other necessary documents as may be reasonably
required; and
f. The prescribed phrase “EXPORTED FROM THE PHILIPPINES” is

printed on each label that is attached/affixed on the primary container in a
recognizable and readable manner.
In case of failure to comply with the above terms and conditions, the
removal of the product shall be subject to excise tax, inclusive of penalties. Further,
no subsequent application for permit for tax-free exportation shall be processed and
granted unless all the aforementioned requirements have been fully complied with.
161
SEC.11. SECURING A PERMIT TO ENGAGE IN BUSINESS AS
MANUFACTURER, IMPORTER OF SWEETENED BEVERAGES.
An application for a Permit shall be filed with the ELTRD, BIR

National Office where the manufacturer or importer is required to be registered as
an excise taxpayer. The application shall be accompanied by the following:
(1) Request Letter;

Attention: Chief, Excise LT Regulatory Division (ELTRD)
(2) Importer/Manufacture
r’s Surety Bond;
(P100,000.00 – initial
coverage)
(3) Certificate of Registration from the Securities and Exchange

Commission, together with Articles of Incorporation/Partnership
and By-Laws (for corporation and partnership) and Certificate of
Registration from the Department of Trade and Industry (for
individual);
(4) Mayor’s Permit, as required by Local Government Code;
(5) BIR Certificate of Registration (with latest Registration Fee BIR-

FORM 0605);
(6) Latest copy of Income Tax Return duly filed and received by the
BIR, if applicable;
(7) Location Map and Plat & Plan of the

Warehouse; and If Manufacturer –
Blueprint
(8) Latest Approved Certificate of Product Registration of every

Product/Brand Name manufactured/imported issued by the FDA.
162
SEC.12. ASSESSMENT NUMBERS –
For administration purposes, permits shall be assigned assessment

numbers in the following order:
Schedule Paragraph Description

SB 1 Manufacturer of Sweetened Beverages
SB I Importer of Sweetened Beverages
SB T Toll-Manufacturer of Sweetened Beverages
The code above will be followed by a code representing the place of

production/plant/warehouse location as assigned by the BIR or as defined by the
manufacturer/importer/toll-manufacturer, as the case may be.
To illustrate, SB1Laguna where:
SB Sweetened Beverages
1 Manufacturer of SB
Laguna Assigned code for plant location/place

of production
In case the manufacturer/importer/toll-manufacturer of Sweetened Beverages

has an existing code for its place of production which form part of its batch code/lot
code, it may opt to adopt the same. The manufacturer/importer/toll-manufacturer
must provide the BIR with corresponding legends/guides for its respective batch code
prior to its use.
163
To illustrate, SB1012018 where:
CODE PARTICULARS
1 Manufacturer of SB
012018 Code for plant location/place of

production as defined by the
Manufacturer
SBI012018 where:
CODE PARTICULARS
I Importer of SB
012018 Code for place of removal from

warehouse as defined by the Importer
SEC.13. TOLLING, BOTTLING AND OTHER SUB-

CONTRACTING AGREEMENTS
In cases of tolling, bottling and other sub-contracting agreements by

manufacturer or importer/owner of sweetened beverages with other persons or
entities, the following rules and procedures shall be strictly observed:
a. Registration Requirements
Any person who is engaged as a sub-contractor to manufacture

sweetened beverages or to undertake any part of the manufacturing
process such as bottling, packaging, etc. shall secure Permit to Operate
as a sub-contractor at the Excise LT Regulatory Division (ELTRD).
164
In case the sub-contractor is a newly registered taxpayer for excise tax
purposes, he shall be issued an Assessment Number. In case the sub-
contractor/toller is already a registered excise taxpayer, a separate
assessment number for this purpose shall no longer be required.
The newly registered sub-contractor/toller shall be required to install

and maintain ORBs as well as the preparation and submission thereof
using a format as may be prescribed by the BIR. For sub-contractors
who are already registered as an excise taxpayer, the installation and
maintenance of a separate ORB for the sub-contracted/toller activity
shall be required. The deadline of submission of the transcript sheets
prescribed herein shall be on or before the eighth (8th) day of the
month immediately following the month of operation and every
eighth 8th day of every month thereafter, to be submitted to the LT
Performance Monitoring and Programs Division (LTPMPD).
b. Separate Application for Permits
For each brand of sweetened beverages, the manufacturer or

importer/owner and the sub-contractor shall file separate applications
for a permit with the BIR Office prior to the initial production of the
brand. The application shall be supported by the following
documents:
For the application of the manufacturer or importer/owner of the

product:
(1) Sub-contracting Agreement (tolling, bottling, packaging,

etc); and
(2) Permit to engage in business as manufacturer or importer

of sweetened beverages. In case the manufacturer is not yet a
duly registered taxpayer for excise tax purposes, he shall first
undergo the usual registration process.
165
For the application of the sub-contractor:
(1) Sub-contracting Agreement (tolling, bottling, packaging,

etc.);
(2) Permit to engage in business as sub-contractor of

sweetened beverages. In case the sub-contractor is not yet a duly
registered taxpayer for excise tax purposes, he shall first
undergo the usual registration process;
(3) Plant layout of the sub-contractor clearly indicating the

line of production where the brand shall be manufactured,
bottled, packaged, finished goods, storage tanks, warehouse,
etc.; and
(4) Production process flow charts
c. Terms and conditions during the sub-contracted activity
(1) In case the basic raw materials shall be supplied by the

manufacturer/importer/owner of the brand, the same shall be
directly transported to and unloaded in the premises of the sub-
contractor from the production premises/warehouse of the
manufacturer/importer/owner of the brand or from the customs’
custody, in case of importation;
The dedicated storage areas, storage tank and line of production

that are to be used for the purpose shall be clearly identified as
depicted in the supporting plant layout. Only the assigned
storage area, storage tank and line of production as granted in
the permit shall be used during the period of the sub- contracting
agreement. In case of any change thereof, a prior permit shall be
secured from the BIR. However, if such change is temporary or
emergency in nature such as due to the occurrence of fortuitous
events, force majeure, etc., a written notification therefor shall
be filed immediately with the BIR, in lieu of the said permit;
166
(3) In cases where the concerned BIR Office cannot provide
a revenue officer to monitor the operations of the sub-contractor,
an advance production schedule, together with documents that
may be prescribed under the permit, shall be submitted to the
Excise LT Field Operations Division (ELTFOD) prior to every
scheduled production run indicating the quantity of the basic
raw materials to be used for production, the scheduled date of
production/tolling/bottling and the quantity of the finished
products that will be produced;
(4) An ETRD or any form to be prescribed by the BIR shall

cover all removals from the sub-contractor’s production
premises/warehouse. For this purpose, a separate set of ETRDs
or any form to be prescribed by the BIR shall be issued
exclusively for activity covered by the sub-contracting
agreement; and
(5) Such other terms and conditions that are deemed

necessary in the performance of the sub-contracting activity.
SEC.14. ADMINISTRATIVE REQUIREMENTS –
All manufacturers and importers of sweetened beverages shall comply with the
following administrative requirements:
a. Registration of Existing and New Brands and its Variants subject to

Excise Tax.
Prior to the initial manufacture for public distribution or importation

of existing and new brands and its variants, an application for
registration thereof shall be filed with the ELTRD. The application
shall be accompanied by the following:
i. Manufacturer’s/Importer’s Sworn Statement- every

manufacturer/importer of sweetened beverages subject to excise
167
tax imposed herein shall file with the Commissioner a sworn
statement showing, among other information, the following data:
a. SB Products Manufactured or Produced and the

corresponding Monthly Volume of Production;
b. Percentage (%) of Sweeteners Used per Product/Variant

(% by volume);
c. Brand Names;
d. Bottle Content in liter per product;
e. No. of bottles per case per product;
f. Kind/Type of Sweeteners used;
g. Applicable Specific Tax Rate; and
h. Equivalent Servings (in liter) – for concentrated or

powdered form.
The manufacturer’s/importer’s sworn statement shall be submitted

as a supporting document to the prescribed application for the
initial registration of sweetened beverages and thereafter submit
an updated sworn statement on or before the end of the months of
June and December of the year.
ii. Exact replica of the proposed label, as well as the

‘artwork’ of the secondary containers (e.g. cartons, boxes, etc.), of
the brand in three (3) copies. On the face of the label and all sides
of secondary containers of sweetened beverage products, the
following shall be conspicuously printed in easily recognizable
and readable manner:
168
(1) Name and address of the manufacturer, in case of locally
manufactured sweetened beverage products.
For imported products, the name and address of the foreign

manufacturer, as well as the name and address of the
importer, if applicable, shall be indicated on the label;
The assessment number may be printed on the container of

the beverage (i.e. bottom of bottle, crown, neck.) other than
the label. It is mandatory for the assessment number to be
reflected on the container of the beverage.
(2) The phrase “EXPORTED FROM THE PHILIPPINES”,

in case the brand shall be exported: Provided, That no
exportation of sweetened beverage products by any person
shall be allowed unless the required export markings are
prominently printed on the said containers; and
(3) The phrase “FOR EXPORT TO THE PHILIPPINES;

TAX AND DUTY PAID”, in case the brand shall be
imported for domestic market.
(4) In accordance with the rules promulgated by FDA,

indicate on the label the type of sweetener used, and on
sweetened beverages in powder form to indicate on the
equivalent of each serving per liter of volume capacity.
b. Application for an Electronic Authority to Release Imported

Goods (eATRIG) for Excise Tax Purposes.
All applications for eATRIG for Excise Tax Purposes shall be done
online and processed in the ELTRD, BIR-National Office.
Accordingly, the Chief of ELTRD shall be the designated approving
officer.
No ATRIG shall be issued in case the imported sweetened beverages

are already released from the customs’ custody. Likewise, no
169
subsequent application for ATRIG shall be processed unless the
importer has submitted proofs of payment of the excise tax due on
the imported products covered by previously issued ATRIG.
c. Use of New BIRs Form on All Removals of Sweetened Beverages
Excise Tax Returns (BIR Form No. 2200-S) and Excise Taxpayer’s
Removal Declaration (ETRD) (BIR Form No. 2299) are hereby
prescribed to be used and issued by all registered manufacturers for
all removals of sweetened beverages. The ETRD shall be
requisitioned from the ELTFOD in the BIR National Office, or from
the Excise Tax Area Offices at the different BIR Revenue Regions
having respective jurisdiction over the manufacturers of sweetened
beverages. The manner of preparation, issuance and cancellation
thereof as well as the applicable reportorial requirements shall be
strictly observed in accordance with the existing rules, regulations
and procedures issued for this purpose.
d. Books and Records to be Kept and Maintained - Every person or

entity engaged in the manufacture or importation of sweetened
beverages shall keep ORBs and such other forms or records that may
be required by the Commissioner of Internal Revenue, which must be
kept within the place of production/importer’s warehouse and shall at
all times be made available for inspection by duly authorized internal
revenue officer(s).
e. Deadline for the Submission of Transcript Sheets of the

ORBs for Sweetened Beverages
The submission of all transcript sheets of ORBs by all manufacturers

and importers, including sub-contractors, for sweetened beverages to
the concerned BIR Office or to Excise Tax Area (EXTA) having
jurisdiction of the place of production shall be on or before the eighth
(8th) day of the month immediately following the month of operation.
f. Amount of Manufacturers’ and Importers’ Surety Bond
170
Pursuant to Section 160 of the National Internal Revenue Code of
1997, as amended, Manufacturers and importers of articles subject to
excise tax shall post a surety bond subject to the following
conditions:
(A) Initial Bond. - In case of initial bond, the amount shall be

equal to One Hundred Thousand pesos (P1 00,000): Provided,
That if after six (6) months of operation, the amount of initial
bond is less than the amount of the total excise tax paid during
the period, the amount of the bond shall be adjusted to twice
the tax actually paid for the period.
(B) Bond for the Succeeding Years of Operation – The bonds

for the succeeding years of operation shall be based on the
actual total excise tax paid on locally manufactured and/or
imported sweetened beverage during the year immediately
preceding the year of operation.
Such bond shall be conditioned upon faithful compliance, during

the time such business is followed, with laws and rules and
regulations relating to such business and for the satisfaction of all
fines and penalties imposed by this Code.
g. Storage of Tax-Paid Sweetened Beverages – When the excise tax

has been paid on the sweetened beverages, the same shall not
thereafter be stored or permitted to remain in the manufacturing plant
or place of production.
h. Supervision and Control of the Manufacturing Plant or Place of

Production
There shall be deployed, on a day-to-day basis, revenue officer(s) to
check or supervise the production and removal of finished products
from every unit of any establishment producing or manufacturing
articles subject to excise tax; at least three (3) revenue officers in
such establishment that operates twenty-four (24) hours a day; two
(2) revenue officers if it operates more than eight (8) hours and at
least one (1) in a small factory, who shall render eight (8) hours of
171
duty, except in small manufacturers located in contiguous places, and
perform the specific duties and functions.
SEC.15. PENALTIES - Violations of these Regulations shall be

subject to the corresponding penalties under Title X of the NIRC of 1997, as
amended.
Further, the following penalty provisions are hereby prescribed

pursuant to the provisions of the Act, as follows:
a. Any manufacturer who knowingly misdeclares or misrepresents

in his or its sworn statement as required under Section 12 of these
Regulations, in relation to Section 130 (C) of the NIRC, as amended,
any pertinent data or information shall, upon discovery, be penalized
by a summary cancellation or withdrawal of the permit to engage in
business as manufacturer of sweetened beverages as provided under
Section 268 of the NIRC, as amended;
b. Any corporation, association or partnership liable for any of the

acts or omissions in violation of the provisions of Section 150-B of
the NIRC, as amended and as implemented by these Regulations shall
be fined treble the aggregate amount of deficiency taxes, surcharges
and interest which may be assessed pursuant to the provisions of
Section 150-B of the NIRC, as amended;
c. Any person liable for any of the acts or omission prohibited under
Section 150-B of the NIRC, as amended and as implemented by these
Regulations shall be criminally liable and penalized under Section 254
of the NIRC, as amended;
d. Any person who willfully aids or abets in the commission of any

such act or omission shall be criminally liable in the same manner as
the principal; and
e. If the offender is not a citizen of the Philippines, he shall be

deported immediately after serving the sentence without further
proceedings for deportation.
172
SEC. 16. RESPONSIBILITY OF THE FOOD AND
DRUG ADMINISTRATION (FDA). – Starting June 1, 2018, the
FDA shall require all manufacturers and importers of sweetened
beverages covered by the Act to indicate on the label the type of
sweetener used, and on sweetened beverages in powder form to indicate
on the label the number of liters per pack size (net weight volume).
The FDA shall also conduct post-marketing surveillance of the

sweetened beverages on display in supermarkets, groceries or retail stores
and/or inspection of manufacturing sites to determine compliance with the
requirements of Section 150-B of the NIRC, as amended. Violations of the
provisions of the Act, including but not limited to, mislabeling or misbranding,
shall, to the extent applicable, be punishable under existing laws.
The FDA shall provide a summary list of registered sweetened

beverages together with the required details and information using the prescribed
format as shown in Annex “A”, hereto attached.
SEC.17. TRANSITORY PROVISIONS - Upon the effectivity of the

Act, the following transitory provisions shall strictly be observed by all
concerned:
a. Taxpayers engaged in manufacturing and importation of

sweetened beverages shall update on or before August 31, 2018, their
Certificate of Registration (BIR
Form No. 2303) using BIR Form No. 1905 to add the excise tax type
‘XB’ withLT Assistance Division or Excise LT Regulatory Division
for Large Taxpayers; or with the Revenue District Office (RDO) for
Non-Large Taxpayers where they are registered.
b. All manufacturers and importers of sweetened beverages are

required to:
173
(1) Secure a Permit to operate as Manufacturer/Toll-
Manufacturer/Importer of Sweetened Beverages whether
registered as large taxpayers or non-large taxpayers at ELTRD on
or before August 31, 2018.
(2) Secure an Authority to Release Imported Goods

(ATRIGs) at the ELTRD before release of shipment from customs
custody. In the meantime that Sweetened Beverage is not yet
included in the National Single Window (NSW) System of the
Bureau of Customs (BOC), hard copy of the duly notarized
application form shall still be submitted by the importer or
authorized broker-representative to ELTRD, BIR National Office.
No ATRIG shall be electronically transmitted to BOC until the
inclusion of the SB classification in the NSW.
(3) Requisition from ELTFOD in writing the required forms

to be used in supporting the removals of the excisable products:
Excise Taxpayer’s Removal Declaration (ETRD).
c. All the manufacturers and importers of sweetened beverages

subject to excise tax under Section 150-B of the NIRC shall submit to
the ELTRD, copy furnished the ELTFOD, the following documentary
requirements on or before August 31, 2018:
b.1. Notarized summary list of existing and new brands of locally

manufactured and imported brands of sweetened beverages
for purposes of registration of said brands. (Please refer to
Sec. 14A hereof for the details of the requirements);
b.2. Manufacturer’s Sworn Statement on all existing and new

locally manufactured brands; and
174
b.3. Notarized Sworn Declarations and Inventory List as of December
31, 2017;
d. All manufacturers of sweetened beverages shall use the downloadable

BIR Form No. 2200-S in filing and paying of excise tax due upon removals
of excisable products from the place of production.
It is also required to submit the Excise Taxpayer’s Removal Declaration

(ETRD-BIR Form No. 2299), summary list of removals, and liquidation
statement of advance deposits and application as supporting attachments to
the BIR Form 2200-S on a weekly basis to its designated email address at
sb.attachment@bir.gov.ph.
e. For purposes of the label requirement on printing the name and address
of the manufacturer/importer is mandated to comply on or before August 31,
2018.
SEC. 18. SEPARABILITY CLAUSE - If any of the provisions of

these Regulations is declared invalid by a court of competent jurisdiction, the
remainder of these Regulations or any provision not affected by such declaration of
invalidity shall remain in full force and effect.
SEC. 19. EFFECTIVITY. – These Regulations are effective

beginning January 1, 2018, the effectivity of the TRAIN Law.
(Original Signed)
CARLOS G. DOMINGUEZ
(Original Signed)
CAESAR R. DULAY
175
Quezon City
September 14, 2018
SUBJECT : Regulations Implementing Section 249 (Interest) of the

National Internal Revenue Code (NIRC) of 1997, as amended under Section
75 of the Republic Act (RA) No. 10963 or the “Tax Reform for Acceleration
and Inclusion (TRAIN Law)”
TO : All Internal Revenue Officials, Employees and Others

Concerned
SECTION 1. SCOPE – Pursuant to the provisions of Sections 244 and 245 of

the National Internal Revenue Code of 1 997 (Tax Code), as amended, and Section 84 of
Republic Act (R.A) No. 10963 otherwise known as the "Tax Reform for Acceleration
and Inclusion (TRAIN) Law, these Regulations are hereby promulgated to implement
Section 249 (Interest) of the Tax Code, as amended by the TRAIN Law.
SECTION 2. RATE OF INTEREST. – There shall be assessed and

collected on any unpaid amount of tax, interest at the rate of double the effective legal
interest rate for loans or forbearance of any money in the absence of an express
stipulation as set by the Bangko Sentral ng Pilipinas (BSP) from the date prescribed for
payment until the amount is fully paid.
The rate of interest per BSP Memorandum No. 799 series of 2013 for loans or
forbearance of any money in the absence of an express stipulation is six percent (6%).
176
Thus, the rate of legal interest imposable under Section 249 of the Tax Code, as
amended, shall be twelve percent (12%). A Circular shall be issued by the Commissioner
in case BSI) prescribes new rate of interest.
SECTION 3. DEFICIENCY INTEREST. - Interest imposed on any deficiency tax

due, which interest shall be assessed and collected from the date prescribed for its
payment until: (a) full payment thereof, or (2) upon issuance of a notice and demand by
the Commissioner or his authorized representative, whichever comes first.
SECTION 4. DELINQUENCY INTEREST. – Interest imposed on the failure to

pay:
(1) The amount of the tax due on any return to be filed; or

(2) The amount of the tax due for which no return is required; or
(3) A deficiency tax, or any surcharge or interest thereon on the due

date appearing in the notice and demand of the Commissioner or
his authorized representative until the amount is fully paid, which
interest shall form part of the tax.
SECTION 5. NO DOUBLE IMPOSITION OF INTEREST. – Upon

the effectivity of the TRAIN Law, in no case shall the deficiency and delinquency
interest prescribed herein be imposed simultaneously.
Illustration: Mr. A has been assessed deficiency income tax of P 1,000,000.00,

exclusive of interest and surcharge, for taxable year 2018. The tax liability has
remained unpaid despite the lapse of June 30, 2020, the deadline for payment
stated in the notice and demand issued by the Commissioner. Payment was made by
the taxpayer on February 10, 2021. The applicable interest shall be computed as
follows:
177
SECTION 6. TRANSITORY PROVISION. – In cases where the tax liability/ies
or deficiency tax/es became due before the effectivity of the TRAIN Law on January l ,
20 1 8, and where the full payment thereof will only be accomplished after the said
effectivity date, the interest rates shall be applied as follows:
Period Applicable Interest Type and Rate
For the period up to December 31, 2017 Deficiency and/or delinquency interest at
20%
For the period January 1, 2018 until full Deficiency and/or delinquency interest at
payment of the tax liability 12%
The double imposition of both deficiency and delinquency interest under Section 249
prior to its amendment will still apply in so far as the period between the date
prescribed for payment until December 31, 2017.
Illustration 2: A company has been deficiency income tax of P 1,000,000.00,

exclusive of interest and surcharge, for taxable year 2015. The tax liability has
remained unpaid despite the lapse of June 30, 201 7, the deadline for payment
stated in the notice and demand issued by the Commissioner. Payment was
made by the taxpayer only on February 10, 20 1 8. The civil penalties for late
payment shall be computed as follows:
178
SECTION 7. REPEALING CLAUSE. – Any rules and
regulations, issuances or parts thereof inconsistent with the provisions of these
Regulations are hereby repealed, amended or modified accordingly.
SECTION 8. SEPARABILITY CLAUSE. – If any of the

provisions of these regulations is subsequently declared unconstitutional, the
validity of the remaining provisions hereof shall remain in full force and effect.
SECTION 9. EFFECTIVITY. – These Regulations are effective beginning January 1,

2018, the effectivity of the TRAIN Law.
003938
CAESAR R. DULAY
Commissioner of Internal Revenue SEP 11 2018
019003
179
Quezon City
June 29, 2018
SUBJECT : Further Amendment to Section 10 of Revenue

Regulations No. 10-2010, as last amended by Revenue Regulations No. 10-
2018, relative to “Notice to Taxpayers”
SECTION 1. SCOPE – Pursuant to the provisions of Section 244 in relation

to Section 4 of the National Internal Revenue Code (NIRC) of 1997 (Tax Code of 1997),
as amended, and of Republic Act (RA) No. 10021, or the Exchange of Information on
Tax Matters Act of 2009, these Regulations are hereby promulgated to amend Section 10
of Revenue Regulations (RR) No. 10-2010, otherwise known as the “Exchange of
Information Regulations.”
SECTION 2. OBJECTIVES. – This regulation is issued to effectively and

fully comply with the provisions on exchange of information contained in international
conventions or agreements on tax matters to which the Philippines is a signatory or a
party with a view to adapt them to the evolving international environment and
developments in transparency for tax matters and to ensure compliance with the
international standard for exchange of information.
Section 3. Section 10 of RR No. 10-2010, as last amended by RR

No. 10-2018, is hereby further amended to read as follows:
180
“Section 10. Notice to Taxpayers. — A taxpayer shall be duly notified in
writing by the Commissioner that a foreign tax authority is requesting for exchange
of information held by financial institutions pursuant to an international convention
or agreement on tax matters:
1. Within sixty (60) days following the transmittal of all information

requested from, and provided for by, the concerned financial institution
to the requesting treaty partner; or
2. In cases where notification is likely to undermine the chance of success
of the investigation conducted by the requesting jurisdiction, and the
requesting jurisdiction has made a substantiated request for a deferment
of the notification based on these grounds, notice to the taxpayer must
only be given after receipt of communication from the requesting
jurisdiction that the investigation has already attained finality.”
SECTION 4. REPEALING CLAUSE. – All revenue issuances or portions thereof

inconsistent with the provisions of these Regulations are considered repealed, amended,
or modified accordingly.
SECTION 5. EFFECTIVITY CLAUSE. – These Regulations shall take effect
after fifteen (15) days following complete publication in a newspaper of general
circulation.
004237
CAESAR R. DULAY
019645
181
Quezon City
NOV 21 2018
SUBJECT : Amending Certain Provisions of Revenue (RR) No. 17-

2011, as Amended, Implementing Republic Act (RA) No. 9505, Otherwise
Known as the “Personal Equity and Retirement Account (PERA) Act of
2008”
National Internal Revenue Code of 1997, as amended, in relation to Section 13 of
Republic Act (RA) No. 9505, otherwise known as the "Personal Equity and Retirement
Account (PERA) Act of 2008", certain provisions of Revenue Regulations (RR) No. 17-
2011, as amended, is hereby further amended as prescribed under the aforesaid law.
SECTION 2. Sections 4 (5) of RR No. 17-2011, as amended, is hereby further

amended to read as follows:
“SECTION 4. Establishment of a PERA. — A Contributor must comply

with the following requirements in establishing a PERA:
xxx xxx xxx
(5) Submission of proof of source of funds for the year or to be earned for the year
when the PERA contribution was made.”
182
SECTION 3. Section 10 (B) of RR No. 17-2011, as amended, is hereby renumbered
and further amended to read as follows:
“SECTION 10. PERA Distributions and Early Withdrawals.
xxx xxx xxx
B. Early Withdrawal
The following shall be subject to the Early Withdrawal Penalty:
(1) Transfer of PERA assets to another Qualified/Eligible PERA

Investment Product and/or another Administrator within fifteen (15)
calendar days from the withdrawal thereof;
(2) For payment of accident
2) For payment of accident or illness-related hospitalization in excess of thirty
(30) clays, in which case a duly notarized cloclorß' certificate attesting (o the
said event shall be attached 10 the Notice Q/'
Termination/Withdrawal/Transfer to be submitted to the PERA Processing Office,
(3) For payment to a Contributor who has been subsequently

rendered permanently totally disabled as defined under the
Employees Compensation Law or Social Security System
Law, in which case a certification duly issued by a pertinent
government agency that the Contributor had been
permanently totally disabled shall be attached to the Notice of
Termination/ Withdrawal/Transfer to be submitted to the
PERA Processing Office;
(4) Deduction of fees of the administrator, custodian and product
provider (subsequent to account opening) from PERA assets,
provided that such deduction is made with the consent of_the
Contributor.”
SECTION 3. REPEALING CLAUSE. – Any rules and regulations, issuances or

parts thereof inconsistent with the provisions of these Regulations are hereby repealed,
183
SECTION 5. SEPARABILITY CLAUSE. – If any of the provisions of these
Regulations is subsequently declared unconstitutional, the validity of the remaining
SECTION 6. EFFECTIVITY. – These Revenue Regulations shall take effect

immediately.
Approved:
CAESAR R. DULAY
OCT 23 2018
020033
184
Quezon City
SUBJECT : Further Amending Section 9 of Revenue Regulations

No. 25-2003 Relative to the Determination by the Department of Energy
Whether the Automobiles Subject to Excise Tax Exemption are Hybrid or
Purely Electric Vehicles pursuant to the Provisions of Republic Act No.
10963, Otherwise known as the “Tax Reform for Acceleration and Inclusion
(TRAIN) Law”
TO : All Revenue Officers and Others Concerned

the National Internal Revenue Code of 1997 (NIRC), as amended, in relation to Section
84 of Republic Act No. 10963, otherwise known as the "TRAIN Law", these
Regulations are hereby promulgated to further amend Section 9 of Revenue Regulations
No. 25-2003, as amended by Section 4 of Revenue Regulations No. 05-2018, providing
for the Department of Energy (DOE) to determine whether the automobiles subject to
excise tax exemption are hybrid vehicles or purely electric vehicles pursuant to the
provisions of the TRAIN Law.
SECTION 2. PURPOSE OF REGULATIONS – The purpose of these

Regulations is to amend/revise the guidelines and procedures for the processing of the
request for tax exemption of Hybrid or Purely Electric Vehicles by the DOE, consistent
with the objective of promoting the ease of doing business and efficient delivery of
government service under Republic Act (RA) No. 11032. During the inter-agency
consultation called by the DOE with representatives from BIR, DOF and BOC, the DOE
proposed that the BIR could use as a basis the current Department of Environment and
Natural Resources (DENR) system of issuing a Certificate of Conformity (COC) for new
motor vehicles in determining with high level of confidence the vehicle classification as
185
Hybrid or Purely Electric Vehicles (HEV/EV) as defined under RA No. 10963. The
actual inspection or separate validation of vehicle by the DOE to verify whether the
automobile is an HEV/EV is a clear duplication of an existing DENR issuance of COC
for new Locally manufactured or imported vehicles.
SECTION 3. Further Amending Section 9(E) of RR No. 25-2003 -

Section 9(E) of RR No. 25-2003 is further amended to 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 condition.
a. x xx
xxx xxx xxx
E. PURELY ELECTRIC VEHICLES 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 CUSTOM CUSTODY, THE
COMMISSIONER OF INTERNAL REVENUE (CIR), ATTENTION: CHIEF EXCISE
LARGE TAXPAYER REGULATORY DIVISION (ELTRD) SHALL REQUIRE
FROM THE MOTOR VEHICLE MANUFACTURE /ASSEMBLER/IMPORTER THE
PRESENTATION/ SUBMISSION OF THE CERTIFICATE OF CONFORMITY
(COC) ISSUED BY THE DENR – ENVIRONMENT MANAGEMENT BUREAU
(EMB) WHICH CONTAINS INFORMATION ON THE VEHICLE’S MODEL/MAKE
AND OTHER TECHNICAL SPECIFICATION/INFORMATION, INCLUDING THE
CORRESPONDING CLASSIFICATION ON FUEL FEED FROM WHICH IT CAN
BE ASCERTAINED WHETHER THE VEHICLES IS A HYBRID ELECTRIC
VEHICLE (HEV).
IN CASE THE SUBJECT OF THE APPLICATION FOR COC IS A PURELY

ELECTRIC VEHICLE (EV), A CERTIFICATE OF NON-COVERAGE (CONC),
INSTEAD OF COC, SHALL BE PRESENTED TO THE ELTRD BY THE
MANUFACTURER/ASSMBLER/IMPORTER, STATING THEREIN THAT THE
VEHICLE APPLIED FOR COC IS A PURELY ELECTRIC VEHICLE (EV) AND
HAS NO TAILPIPE EMISSION AND THEREFORE NOT COVERED BY RA NO.
8749 (PHILIPPINE CLEAN AIR ACT).
THE BIR SHALL MAKE A DETERMINATION WHETHER THE EV OR HEV IS

EXEMPT FORM EXCISE TAX OR SUBJECT TO 50% EXCISE TAX,
RESPECTIVELY, ON THE BASIS OF THE CONC OR COC ISSUED BY THE DER-
EMB AS PRESENTED BY THE MANUFACTURER OR IMPORTED HEV OR EV.”
186
SECTION 4. REPEALING CLAUSE. – The provisions of any revenue
regulations, revenue memorandum circulars or any other issuances inconsistent with
these Regulations are hereby revoked, repealed or amended accordingly.
SECTION 5. EFFECTIVITY. – These Regulations shall take effect on January 1,

2018 following its complete publication in the Official Gazettes or in at least one (1)
newspaper of general circulation.
Approved:
CAESAR R. DULAY
Commissioner of Internal Revenue NOV 29 2018
020321
187
Quezon City
December 21, 2018
SUBJECT : Regulations Implementing Section 109 (AA) of the

National Internal Revenue Code (NIRC) OF 1997, as amended, Pursuant to
Section 34 of the Republic Act (RA) No. 10963 or the “Tax Reform for
Acceleration and Inclusion (TRAIN Law)” Providing for Value-Added Tax
(VAT) Exemption on the Sale of Drugs and Medicines Prescribed for
Diabetes, High Cholesterol ad Hypertension
TO : All Internal Revenue Officials, Employees and Others

Concerned

the National Internal Revenue Code of 1 997 (Tax Code), as amended, and Section 84 of
Republic Act (R.A) No. 10963 otherwise known as the "Tax Reform for Acceleration
and Inclusion (TRAIN Law), these Regulations are hereby promulgated to implement
Section 109 (AA) of the Tax Code, as amended by the TRAIN Law, and prescribe the
guidelines for:
1. The VAT exemption on sale of drugs and medicines prescribed for the
treatment and/or prevention of diabetes, high cholesterol and
hypertension; and
2. The identification of drugs and medicines entitled to exemption from
VAT.
SECTION 2. SCOPE. – The exemption from VAT provided herein shall

apply to the sale by manufacturers, distributors, wholesalers and retailers of drugs and
medicines prescribed for the treatment and/or prevention of diabetes, high-cholesterol
188
and hypertension starting January l , 201 9. The importation of the above-described
drugs and medicines shall be subject to VAT under Section 1 07 of the Tax Code. as
amended.
For this purpose, the "List of VAT -exempt Diabetes, High-Cholesterol and
Hypertension Drugs" as identified and published by the Food and Drug Authority
(FDA), shall be posted in the BIR Website thru a Revenue Memorandum Circular. Any
update, such as registration of new and/or additional drugs and medicines. as well as de-
registration of those previously published by the FDA, shall likewise be posted in the
BIR Website.
The sale of drugs not included in the List of VAT-exempt Diabetes, High-Cholesterol
and Hypertension Drugs published by the FDA shall be subject to VAT.
SECTION 3. ISSUANCE OF VAT-EXEMPT INVOICE. – In

accordance with the invoicing requirements, the word “VAT-EXEMPT” shall
prominently be indicated in the invoice issued for the sale of drugs and prescribed for the
treatment and prevention of diabetes, high-cholesterol and hypertension.
SECTION 4. HANDLING OF COMPLAINTS. – Complaints for non-

compliance and violation of these regulations shall be forwarded to
ecomplaints@bir.gov.ph for proper handling and/or dissemination to the concerned BIR
Office.
SECTION 5. PENALTIES AND OTHER SANCTIONS. –

Notwithstanding other penalties which may be imposed for violation/s of specific
regulations, any person who violates any provision of these Regulations shall, in
addition to the tax required to be paid, if there is any, upon conviction for each act or
omission, be punished by a fine of not more than One Thousand Pesos (PI ,000) or suffer
imprisonment of not more than six (6) months, or both, pursuant to Section 275 of the
Tax Code, as amended.
SECTION 6. REVENUE DATA REPORT. – For purposes of submission, the

duly validated revenue data report on the sale of drugs and medicines prescribed for the
treatment of diabetes, high cholesterol and hypertension shall be submitted to
Department of Finance (DOE).
189
SECTION 7. REPEALING CLAUSE. – Any rules and regulations, issuances or
parts thereof inconsistent with the provisions of these Regulations are hereby repealed,
amended or modified accordingly.
SECTION 8. SEPARABILITY CLAUSE. – If any of the provisions of these

regulations is subsequently declared unconstitutional, the validity of the remaining
SECTION 9. EFFECTIVITY. – These Regulations shall take effect beginning

January 1, 2019.
Approved:
005116
CAESAR R. DULAY
Commissioner of Internal Revenue DEC 21 2018
190
Quezon City
SUBJECT : Amends Certain Provisions of Revenue Regulations

No. 13-2018 to Implement the 90-Day Processing of Claim for VAT Refund
Under Section 112(C) of the Tax Code of 1997, as amended by Republic Act
(R.A.) No. 10963, Otherwise known as the Tax Reform for Acceleration and
Inclusion or TRAIN
TO : All Revenue Officers and Others Concerned
SECTION 1. SCOPE – Pursuant to the provisions of Sections 244 and 245

of the National Internal Revenue Code of 1997 (Tax Code), as amended, these
Regulations are hereby promulgated to amend certain provisions of Revenue
Regulations (RR) No. 13-2018 to effect the amendments made in Section 112(C) in
relation with Sections 106(A)(2)(a)(3), (4), and (5) and 108(B)(1) and (5) of the Tax
Code, as amended by R.A. No. 10963 or the TRAIN.
SECTION 2. AMENDMENTS. – Sections 4.106-5, 4.108-5, 4.112-1

and 13 of RR No. 13-2018, are hereby further amended to read as follows:
“SEC. 4.106-5. Zero Rated Sales of Goods or Properties. - xxx.

XXX XXX XXX.
Provided, That items (2), (3), and (4) abovementioned shall be subject to the twelve
percent (12%) Value-Added Tax and no longer be subject to zero percent (0%) VAT
rate upon satisfaction of the following conditions:
1. The successful establishment and implementation of an enhanced

VAT refund system that grants refunds and pays refunds of
creditable input tax within ninety (90) days from the filing of the
VAT refund application with the Bureau; Provided, That, to
191
determine the effectivity of Item no. l, all applications filed from
January 1, 2018 shall be processed and decided within ninety (90)
days from the filing of the VAT refund application.
The 90-day period to process and decide shall start from the filing of the
application/claim for refund up to the release of the payment of the VAT refund.
Provided, That, the claim/application is considered to have been filed only upon
submission of the official receipts or invoices and other documents in support of the
application as prescribed under pertinent issuances.
enhanced VAT Refund Syste, after the determination of the fulfilment of the condition
2. All pending VAT refund claims as of December 31, 2017 shall be

fully paid in cash by December 31, 2019.
Provided, that the Department of Finance shall establish a VAT refund center in the BIR
xxx xxx xxx
SEC. 4.108-5. Zero Rated Sale of Services. –

xxx xxx xxx
Provided, That subparagraphs (b)(l) and (b)(5) abovementioned shall be subject to the
twelve percent (12%) Value-added tax and no longer be subiect to zero percent (0%)
VAT rate upon satisfaction of the following conditions:
1. The successful establishment and implementation of an enhanced

VAT refund system that grants refunds and pays refunds of
creditable input tax within ninety (90) days from the filing of the
VAT refund application with the Bureau: Provided, That, to
determine the effectivity of Item no. 1, all applications filed from
January 1, 2018 shall be processed and decided within ninety (90)
days from the filing of the VAT refund application.
192
The 90-dav period to process and decide shall start from the filing of the
application/claim for refund IID to the release of the payment of the VAT refund.
Provided, That, the claim/application is considered to have been filed only upon
submission of the official receipts or invoices and other documents in support of the
application as prescribed under pertinent revenue issuances.
enhanced VAT Refund System after the determination of the fulfillment of the condition
2. All pending VAT refund claims as of December 31, 2017 shall be
fully paid in cash by December 31, 2019.
Provided, that the Department of Finance shall establish a VAT refund center in the BIR
xxx xxx xxx
SEC.4.112-1. Claims for Refund/Credit of Input Tax. –
xxx xxx xxx
(d) Period within which refund/credit of input taxes shall be made
In proper cases, the Commissioner of Internal Revenue shall grant refund for creditable
input taxes within ninety (90) days from the date of submission of official receipts or
invoices and other documents in support of the application filed in accordance with
subsections (a) and (b) hereof: Provided, That, should the Commissioner find that the
grant of refund is not proper, the Commissioner 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 VAT refund. Provided, That, the
claim/application is considered to have been filed only upon submission of the official
receipts or invoices and other documents in support of the application as prescribed
under pertinent revenue issuances.
193
In case of full or partial denial of the claim for tax refund, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim, appeal
the decision with the Court of Tax Appeals (CTA): Provided, that failure on the part of
any official, agent, or employee of the BIR to act on the application within the ninety
(90)-day period shall be punishable under Section 269 of the Tax Code, as amended.
Provided further, That, in the event that the 90-day period has lapsed without having the
refund released to the taxpayer-claimant, the VAT refund claim may still continue to be
processed administratively. Provided however, That the BIR official, agent, or
employee who was found to have deliberately caused the delay in the processing of the
VAT refund claim may be subjected to penalties imposed under said section.
xxx xxx xxx
“SECTION 13. TRANSITORY PROVISIONS. – This section is re-numbered to

Section 3.
xxx xxx xxx
3. The foregoing amendment, relative to the 90-day processing period of claims to

include the payment thereon shall apply to claims to be filed upon the effectivity of these
Regulations.
SECTION 4. REPEALING CLAUSE. – Any rules and regulations,
issuances or parts thereof inconsistent with the provisions of these Regulations are
hereby repealed, amended or modified accordingly.
SECTION 5. SEPARABILITY CLAUSE. – If any of the provisions of

these Regulations is subsequently declared unconstitutional, the validity of the remaining
SECTION 5. EFFECTIVITY. – These Regulations shall take effect

immediately following publication in leading newspaper of general circulation.
Approved:
CAESAR R. DULAY
021993
194

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REPUBLIC OF THE PHILIPPINES

REVENUE REGULATIONS NO. l - 2018

TO: All Internal Revenue Officers and Others Concerned.

SECTION 1: SCOPE. - Pursuant to the provisions of Section 244 in relation to Section

SEC. 2: Amending Section 3 of RR No. 13-94

"SEC. 3: DEFINITION OF TERMS. - For purposes of these Regulations, the

a. xxx xxxxxx xxx

xxx xxx xxx

"SEC. 5: Payment of excise tax on minerals and mineral products.

3.1 . On domestic and imported coal and coke:

January l , 201 8 Fifty pesos (1150.00)

January l , 201 9 One hundred pesos (PI 00.00)

3.2 All non-metallic minerals and quarry resources:

Imported Four per cent (4%) based on the value used

Locally' extracted natural gas Exempt.

Locally extracted or produced Four percent (4%) based on the actual

SEC. 4: REPEALING/AMENDATORY CLAUSE. All regulations, rulings or orders

SEC. 5: EFFECTIVITY CLAUSE. These Regulations shall take effect immediately

BIR TRAIN IRR/RR Drafting Committee

REVENUE REGULATIONS NO. 2-2018

TO All Internal Revenue Officials and Others Concerned

SECTION 1. SCOPE. Pursuant to the provisions of Section 244 in

SEC. 2. REVISED EXCISE RATES AND BASES OF SPECIFIC

a) Lubricating oils and greases produced from base stocks and

b) Unless otherwise provided by special laws, if the denatured

SEC. 4. CREDITABLE EXCISE TAX. — The excise tax paid on the

SEC. 5. SUSPENSION OF SCHEDULED INCREASE. For the

SEC. 6. MANDATORY MARKING OF ALL PETROLEUM

SEC. 7. MANUFACTURERS AND/ OR IMPORTERS TO

SEC.8. TRANSITORY PROVISION. — For the effective

a) Submission of Stock Inventories. Concerned oil companies,

b) Accounting for slacks or inventory of goods after each date of

c) Issuance of Withdrawal Certificates. All Withdrawal

SECTION 10. REPEALING CLAUSE. — All rules and

SECTION 11. EFFECTIVITY. — These Regulations shall take

REVENUE REGULATIONS NO. 3-2018

TO: All Internal Revenue Officers and Others Concerned.

SECTION 1. SCOPE. - Pursuant to the provisions of Section 244 in relation to Section

SEC. 2. AMENDATORY PROVISIONS. - The provisions of Section 3 Items B (4) and

"SEC. 3. REVISED RATES AND BASES OF THE SPECIFIC TAX. -

Per Pack Per Pack Per Pack Per Pack Effective

SEC. 5. EFFECTIVITY CLAUSE. - These Regulations shall take effect immediately

BIR TRAIN IRR/RR Drafting Committee

REVENUE REGULATIONS NO. 4-2018

SUBJECT: Rules and Regulations Implementing the Documentary

TO: All Revenue Officials, Employees and Others Concerned

SECTION 1. SCOPE — Pursuant to the provisions in Section 4 and

SEC. 2. NEW RATE OF DST ON ORIGINAL ISSUE OF SHARES

"SEC. 174. Stamp Tax on Original Issue of Shares of Stock. - On every

“SEC. 175. Stamp Tax on Sales, Agreements to Sell, Memoranda

The rate of DST on sales, agreements to sell, memoranda of sales, deliveries or

SEC. 4. NEW RATE OF DST ON CERTIFICATES OF PROFITS OR

"SEC. 177, Stamp Tax on Certificates of Profits or Interest in Property

"SEC. 178. Stamp Tax on Bank Checks, Drafts, Certificates of Deposit

SEC. 6. NEW RATE OF DST ON ALL DEBT INSTRUMENTS

"SEC. 179. Stamp Tax on All Debt Instruments. — On every original

SEC. 7. NEW RATE ON ALL BILLS OF EXCHANGE OR DRAFTS