Tax-free benefits limit for workers increased
Other Relevant Tax Updates:
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TAX & BUSINESS-RELATED NEWS [DECEMBER 20-26]
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BIR INCREASES “DE-MINIMIS” BENEFITS CEILING
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BIR IMPLEMENTS THE ENHANCED VERSION OF THE ELECTRONIC DST
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BIR STREAMLINES THE REQUIREMENTS FOR THE APPLICATION OF A CERTIFICATE OF TAX EXEMPTION FOR SOCIALIZED HOUSING PROJECTS
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BIR RULINGS ON EXCISE TAX, SITUS OF TAXATION, CGT ON TRANSFER OF SHARES
I. TAX & BUSINESS-RELATED NEWS [DECEMBER 20-26]
1. Marcos declares special non-working holidays in several towns, cities in January 2026
2. Tax-free benefit limits for workers increased
3. PH extends land lease terms for foreign investors to 99 years
4. PCP: Don’t blame doctors’ fees for high cost of health care
5. PH to host 2 int’l tourism forums in 2026 – DOT
Marcos declares special non-working holidays in several towns, cities in January 2026 [ABS-CBN News, December 26, 2025]
President Ferdinand Marcos Jr. has signed 8 proclamations to declare special non-working holidays in different parts of the Philippines.
Tax-free benefit limits for workers increased [The Manila Times, December 25, 2025]
THE Bureau of Internal Revenue (BIR) has issued new regulations increasing and clarifying caps on “de minimis” benefits that employers may grant to workers without being subject to income tax.
PH extends land lease terms for foreign investors to 99 years [GMA News Online, December 25, 2025]
According to the DTI, the implementing rules and regulations for Republic Act 12252 or the Investors’ Lease Act — which operationalizes the extension of lease periods for foreign investors to an aggregate of 99 years from 75 years previously — was signed by officials last Friday, December 19.
PCP: Don’t blame doctors’ fees for high cost of health care [Philippine Daily Inquirer, December 25, 2025]
A group of doctors has stressed that the high cost of healthcare in the country is mostly due to the limited coverage and delayed reimbursements of the Philippine Health Insurance Corp. (PhilHealth), and not because of professional fees.
PH to host 2 int’l tourism forums in 2026 – DOT [GMA News Online, December 25, 2025]
These are the 2026 United Nations (UN) Tourism Global Forum on Gastronomy as well as the ASEAN Tourism Forum in Cebu.
II. BIR INCREASES “DE-MINIMIS” BENEFITS CEILING
Revenue Regulations (RR) No. 29-2025, issued on December 22, 2025, further amends the “De Minimis” Benefits provisions of RR No. 2-98, as amended, increasing the ceiling of non-taxable benefits effective January 6, 2026, as follows:
1. Monetized unused vacation leave credits of private employees-not exceeding 10 days to 12 days during the year
2. Medical cash allowance to dependents of employees from ₱1,500 to ₱2,000 per semester
3. Rice subsidy from ₱2,000 to ₱2,500 per month
4. Uniform and clothing allowance from ₱7,000 to ₱8,000 per year
5. Actual medical assistance from ₱10,000 to ₱12,000 per year
6. Laundry allowance from ₱300 to ₱400 per month
7. Employee’s achievement awards from ₱10,000 to ₱12,000 per year
8. Gifts given during Christmas and major anniversary celebrations from ₱5,000 to ₱6,000 per year
9. Daily meal allowance for overtime work and night/graveyard shift-not exceeding 25% to 30% of the basic minimum wage
10. Benefits received by an employee by virtue of a Collective Bargaining Agreement and productivity incentive scheme from ₱10,000 to ₱12,000.00 per year
If you wish to get a copy of complete text of CTA cases, please e-mail us at taxseminars@dmdcpa.com.ph.
III. BIR IMPLEMENTS THE ENHANCED VERSION OF THE ELECTRONIC DST
Revenue Regulations (RR) No. 28-2025, issued on December 22, 2025, implements the enhanced version of the Electronic Documentary Stamp Tax (eDST) System. Highlights include covered taxpayers and taxable documents, limitations on the use of loose documentary stamps and constructive affixture by way of exception to the mandatory coverage of adaption of eDST system, and administrative requirements for the enrolment and use of eDST.
IV. BIR STREAMLINES THE REQUIREMENTS FOR THE APPLICATION OF A CERTIFICATE OF TAX EXEMPTION FOR SOCIALIZED HOUSING PROJECTS
Revenue Memorandum Order (RMO) No. 048-2025, issued on December 19, 2025, streamlines the requirements for the application of a Certificate of Tax Exemption for Socialized and Economic Housing Projects pursuant to Republic Act (R.A.) No. 7279, or the “Urban Development and Housing Act of 1992” and Executive Order (E.O.) No. 226, or the “Omnibus Investments Code of 1987.” As streamlined, a Socialized Housing Certification issued by the Department of Human Settlements and Urban Development (DHSUD) is already sufficient for a developer to qualify for tax exemption, thereby removing additional layers of approval and simplifying compliance for housing developers. Applicants need only to submit the required Socialized Housing Certification, which shall be attached to the letter request in compliance with the earlier RMO No. 9-2014.
V. BIR RULINGS
SITUS OF TAXATION FOR TECHNICAL SERVICES IS NOT THE PLACE WHERE THE SERVICES ARE PERFORMED, BUT RATHER THE PLACE OF THE USER OR CONSUMER OF SUCH SERVICES
T PH, a PEZA-registered IT enterprise, is seeking confirmation on whether the service fees paid to T JP, a Japanese non-resident foreign corporation, are subject to Philippine Income Tax, withholding tax, and Value-Added Tax (VAT). As represented, T PH entered into a Service Agreement with T JP to subcontract a portion of work to be performed for the benefit of D Co., a domestic corporation. Subcontracted services for the benefit of D Co. will be performed in Japan. The obligation includes data preparation, systems evaluation, project management, and final systems checking. In reply, although T JP performed all services in Japan, the BIR ruled that the fees are taxable in the Philippines because technical services fall under Sections 42(A)(4)(f) and 108(A)(6) of the Tax Code, which consider the place of use or consumption of the service, not the place of performance, as the determining factor for tax situs. Since D Co., a domestic corporation, is the ultimate user and beneficiary of the services, the income is deemed sourced within the Philippines and is therefore subject to Philippine income tax, withholding tax, and 12% VAT. [BIR RULING NO. OT-061-2025, APRIL 15, 2025]
LAW-MANDATED TRANSFER OF SHARES TO THE REPUBLIC OF THE PHILIPPINES IS NOT SUBJECT TO CAPITAL GAINS TAX, DONOR’S TAX & DOCUMENTARY STAMP TAX
Presidential Commission on Good Government (PCGG) is seeking confirmation on the tax exemption of transfer of Coco Levy Assets, specifically the shares in Top Frontier Investment Holdings, Inc. (TFIHI) registered under PCGG in Trust for the Comprehensive Agrarian Reform Program (CARP), to the Republic of the Philippines (ROP). In reply, pursuant to Section 6 of Republic Act (RA) No. 11524, or the “Coconut Farmers and Industry Trust Fund Act,” the law mandates the reconveyance and turnover of all Coconut Levy Assets to the ROP. Although the transfer of shares would ordinarily fall under Section 27(D)(2) of the Tax Code on Capital Gains Tax (CGT), the BIR ruled that no CGT applies because the transfer is made in compliance with RA No. 11524. Furthermore, the donor’s tax does not apply since the transfer was not made out of liberality but solely to comply with a statutory directive and lacked donative intent. Lastly, the transfer is not subject to Documentary Stamp Tax under Section 175 of the Tax Code, as there is no sale, delivery, or voluntary conveyance but a mandated reconveyance under the law. [BIR RULING NO. OT-041-2025, MARCH 13, 2025]
ONLY THOSE SWEETENED BEVERAGES USING PURELY COCONUT SAP SUGAR & PURELY STEVIOL GLYCOSIDES SHALL BE EXEMPT FROM EXCISE TAX
F. Co. is requesting a ruling on the excise tax exemption of the importation of various products consisting of beverages. As represented, excise taxes were initially paid on the imported sweetened beverages to allow their immediate release from the Bureau of Customs (BOC), pending a final ruling on whether the products are exempt. The BOC advised securing a Food and Drug Administration (FDA) Certification to confirm exemption under the 2018 Tax Reform Acceleration and Inclusion (TRAIN) Law. However, the FDA later issued a certification stating that the products are not covered by the TRAIN Law. In reply, citing Section 47 of the TRAIN Law and Section 3 of Revenue Regulation (RR) No. 20-2018, only sweetened beverages using purely coconut sap sugar and purely steviol glycosides are exempt from excise tax, while beverages containing caloric and non-caloric sweeteners, or high fructose corn syrup remain taxable. The FDA certification did not confirm that the beverages have no added caloric or non-caloric sweetener and were free from high fructose corn syrup. Thus, the imported beverages listed in the FDA certification are subject to excise tax. [BIR RULING NO. OT-018-2025, JANUARY 7, 2025]
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