Philippines: Recent Developments in the Philippines’ Taxation

Corporate and Investment Incentives

The CREATE MORE Act (RA 12066), effective in 2025, aims to boost the country’s investment climate.

Corporate Income Tax: Registered Business Enterprises (RBEs) under Enhanced Deductions now pay a reduced CIT rate of 20% (down from 25%).

Deductions: Power expense deductions increased to 100%, with an additional 50% for trade fairs and tourism reinvestments.

VAT: VAT zero-rating clarified for goods and services directly related to registered projects, covering janitorial, security, financial, and administrative services.

Local Taxes: RBEs can choose a simplified local tax (RBELT), capped at 2% of gross income, instead of other local taxes.

Digital Economy and Consumer Taxes

New rules now equalize the treatment of local and foreign service providers.

• VAT on Digital Services (RA 12023): Effective June 2, 2025, a 12% VAT is imposed on digital services consumed in the Philippines, such as streaming, cloud services, and online advertising. Non-resident digital service providers (DSPs) must register with the Bureau of Internal Revenue (BIR) via a new portal and use BIR Form 2550-DS for filings.

Capital Markets (CMEPA Reforms)

The Capital Markets Efficiency Promotion Act (RA 12214) took effect on July 1, 2025, streamlining the taxation of passive income.

• Uniform Interest Tax: A flat 20% final withholding tax now applies to all deposit accounts, including long-term peso deposits.
• Stock Transaction Tax (STT): Reduced significantly from 0.6% to 0.1% for shares traded through local or foreign stock exchanges.
• Capital Gains Tax (CGT): Standardized at 15% for the sale of unlisted domestic and foreign shares.
• Documentary Stamp Tax (DST): The rate on the original issuance of shares was reduced from 1% to 0.75%.

Individual and Administrative Updates

• De Minimis Benefits: Revenue Regulations No. 29-2025 increased the ceilings for non-taxable employee benefits (e.g., rice subsidy increased to ₱2,500/month; clothing allowance to ₱8,000/year; medical assistance to ₱12,000/year).
• In 2025, Social Security System (SSS) contribution rates rose to 15% (10% employer, 5% employee), and PhilHealth premiums reached 5%.
• In late 2025, the BIR issued RMC No. 107-2025, suspending most field audits and the issuance of Letters of Authority (LOA) to review audit procedures and protect taxpayer rights.
• The Enhanced Fiscal Regime for Large-Scale Metallic Mining Act (RA 12253) was enacted, though its new fiscal regime is set to take effect on February 17, 2026.

Tax Treaty

Key updates on the Philippines tax treaties include the implementation of streamlined procedures for claiming benefits, allowing outright application of lower rates based on a Tax Residency Certificate (TRC) without prior BIR approval. Active negotiations are underway to update agreements with Hong Kong and Singapore, while a new double taxation agreement with Cambodia was recently inked.

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Reference/ Citation

CREATE MORE | Bureau of Internal Revenue

https://www.bir.gov.ph/create-more

Lumagui: BIR tightens tax regulations for Digital Service Providers with Republic Act No. 12023 | Bureau of Internal Revenue

https://bir-cdn.bir.gov.ph/BIR/pdf/PR83NOV1224.pdf

Capital Markets Efficiency Promotion Act (CMEPA) | Bureau of Internal Revenue

https://www.bir.gov.ph/CMEPA

Further Amending the "De Minimis" Benefits Provisions of Revenue Regulations (RR) No. 2-98, as Amended, Increasing the Ceiling of Non-Taxable Benefits | Bureau of Internal Revenue

https://bir-cdn.bir.gov.ph/BIR/pdf/RR%20No.%2029-2025.pdf

IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT | Department of Finance

https://www.dof.gov.ph/wp-content/uploads/2025/12/MINING-IRR.pdf

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