RR No. 21-2025 — Implementing the Amendments Introduced by Republic Act No. 12214, Otherwise Known as the "Capital Markets Efficiency Promotion Act" on Sections 22, 24, 25, 27, 28, 32, 34, 38, 39 and 42 of the National Internal Revenue Code of 1997, as Amended (Date Posted: August 5, 2025)

REPUBLICOF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Bringing In Revenues for Nation-Building NATIONAL OFFICE BUILDING QUEZON CITY PILIPINAS BAGONG

AUG 0 5 2025

REVENUE REGULATONS NO 021-2025

SUBJECT Implementing the Amendments Introduced by Republic Act No.

12214, Otherwise Known as theCapital MarketsEfficiency Promotion Acton Sections 22,24,25,27,28,32,34,38,39,and 42 of the National Internal Revenue Code of 1997,as Amended

TO All Internal Revenue Officials,Employees and Others Concerned

Code of 1997.as amended (Tax Code.in relation to Sections 3.4.5,6,7,8,9,10,11.12,and SECTION 1.SCOPE.- Pursuant to Sections 244 and 245 of the National Internal Revenue

25 of Republic Act RA No.12214, or the Capital Markets Efficiency Promotion Act (CMEPA),these Regulations are hereby promulgated to implement the amendments to Sections 22.24.25.27,28.32.34,38,39,and 42 of the Tax Code.

SECTION2.DEFINITION OF TERMS.-For purposes of these Regulations,the following terms shall be taken to mean as follows:

a. Shares of stock -refer to shares of stock of a corporation, warrants,options.

as well as units of participation in partnerships (except general professional partnerships,joint stock companies, joint accounts, joint ventures taxable as corporations, associations, and recreation or amusement clubs (such as golf polo or similar clubs),and mutual fund certificates.

b. Shareholder - refers to a holder of shares of stock, warrants,options, as well as holder of a unit of participation in a partnership (except general professional

G: f ADMIN UNITME C AUG 05 2025 E ATERMENTREVESNUN c.Securities company,or member in an association,recreation,or amusement club,such as commercial enterprise, or profit-making venture evidenced by a certificate. holder of a mutual fund certificate, joint-stock company, or insurance golf, polo, or similar clubs. contract, or instrument, whether written or electronic in character, which shall include: partnerships,joint stock company,joint account, taxable joint venture, and refer to shares, participation, or interest in a corporation

BIR National Office Bldg.,Senator Miriam Defensor-Santiago Avenue,Diliman, Quezon City Trunkline: 8981-7000 ; 8929-7676 Website:www.bir.gov.ph

1 Shares of stock bonds debentures, notes evidence of

indebtedness, and asset-backed securities;

2 for a future subscription: in a profit-sharing agreement, such as certificates of deposit Investment contracts, certificates of interest, or participation

3 Fractional undivided interests in oil, gas, or other mineral

rights;

4. Certificates of assignment, certificates of participation, trust

certificates, voting trust certificates, or similar instruments;

5 Proprietary or non-proprietary membership certificates in

corporations; and

6. Other similar instruments as may be determined by the

Securities and Exchange Commission.

d.Deposit substitute -refers to an alternative form of obtaining funds from the debt instruments for the borrower's own account, for the purpose of relending or purchasing of receivables and other obligations. public other than deposits,through the issuance,endorsement,or acceptance of

individual or corporate lenders at any given time. These instruments may by and between the Bangko Sentral ng Pilipinas (BSP and any authorized include, but need not be limited to bankers acceptances, promissory notes. agent bank, certificates of assignment or participation and similar instruments repurchase agreements, excluding reverse repurchase agreements entered into Provided, that the term public shall mean twenty 20 or more

with recourse.

loans with maturity of not more than five (5 days to cover deficiency in and quasi-banks, shall not be considered as deposit substitute debt instruments. reserves against deposit liabilities, including those between or among banks Provided, however, That debt instruments issued for interbank call

e. Passive income -refers to any income that is earned from sources that do not not subject to value-added tax imposed in the Tax Code. require a taxpayer's active pursuit and performance of trade or business and is

f. Equity-based compensation - covers all types of employee equity schemes appreciation rights, and restricted share awards, which may or may not pertain that come in different forms such as stock options, restricted stock units, stock

@ BUREAU OFAINTERNAL REVENUE A SA EME ENT DIVISION Page 2 of 11

AUG 05 2025

BY ADMIN C:2fm

to the shares of stock of the grantor itself, but which all have the common

incentive for services rendered by the employees and are typically dependent feature of being granted to existing employees of the grantor as a performance onperformance,outstandingbusiness.achievementsand,exemplary organizational, technical or business accomplishments.

g. Stock options - merely entitles the employee to purchase shares at a future date. Thus, unless the options are exercised, the employees do not become they become exercisable represents the vesting period. shareholders. The period between the grant of stock options and the date when

h. Restricted stock units -stock units may or may not be subject to a vesting period, as will be specified in the grant. Settlement of vested stock may be cash. made in the form of i shares,ii cash or (iii a combination of shares and

i. Stock appreciation rights - the terms and conditions are similar to stock options. However, under the stock appreciation rights, the optionee may receive i shares,ii cash or iii a combination of shares and cash, as determined by the grantor.

j. Mutual Fund Company - an open-end and close-end company as defined under the Investment Company Act.

k. Unit Investment Trust Fund - an open-ended pooled trust fund denominated in peso or any acceptable currency, which is established, operated, and administered by a trust entity and made available by participation.

SECTION 3.CERTAIN PASSIVE INCOME.-The coverage of the uniform rates of tax on certain passive income pursuant to Sections 24,25,27 and 28 of the Tax Code, as further amended by the CMEPA,is as follows

(Effective July 1, 2025) INDIVIDUAL

A. Citizen, Resident Alien, and Non- Resident Alien Engaged in Trade or Business

Section 27D Sections 24B and 25A1,in relation to the last paragraph of Sections of the Tax Code benefit earned from any currency bank other similar arrangements, regardless of Interest,yield deposit or deposit substitute, trust funds and their nature or tenure, except income of Particulars or any other monetary Income Tax Rate 20%

BUREAU OFINTERNALREVENUE RECORD MANAGEME TDIVISION Page 3 of 11

AUG 05 2025

BY ADMINUNIT-1 q:21Am

non-residents, whether individualsor corporations. from transactions with

and 25A1 Sections 24B1 and 25(A)(1) Sections 24B2 Sections 24(B)(1) and 25A2 Cash and/or Property Dividends or less which shall be subject to graduated Code) Philippine Charity Sweepstakes and Lotto which shall be exempt) which shall be exempt from income tax Prizes (except prizes amounting to P10,000 tax rates under Section 24[A] of the Tax Other amounting to P10,000 or less from depositary banks under the expanded system Winnings (except winnings 10%-except Engaged in Business for Non- Resident which is Trade or Alien 20% 20%

subject to income tax

Sections 24B3 and 25(A1 or foreign stock exchange Capital Gains - Sale, exchange or other disposition of shares of stock in a domestic or foreign corporation not traded in a local rate of 20% 1%

Sections 24B4 and 25(A1 Capital Gains from Sale of Real Property (Note: Shares of a domestic corporation under Section 127A and (B of the Tax Code) sold or disposed of through a local or foreign stock exchange are subject to stock transaction tax, in lieu of capital gains tax. presumed to 6% on gains

realized from exchange, or disposition of have been the sale. other

Sections 24(B5Royalties earned as Passive Income realproperty (capital assets) 20%

BUREAUOFINTERNALREVENUE RECOROS MANAGEMENTDIVISION l Page 4 of 11

AUG 05 2025

5

BY: ADMINUNIT1 TIME: q:2Am

Sections 24B5 and 25A1 Section 27(D2 and 25A1 Section 28 Section 25(A3 in relation to Any income of non-residents from Royalties on books, as well as other literary works and musical compositions Owner, Lessor or Distributor Cinematographic films and similar works by a Non-ResidentCinematographic Film Exempt 25% 10%

expanded system transactions with depositary banks under the

B. Non- Resident Alien Not Engaged in Trade or Business

Sections of the Tax Code Particulars Income Tax Rate

Section 27D2 Section 25B,in relation to benefit earned from any currency bank Interest, yield or any other monetary deposit or deposit substitute, trust funds and treaty rate) (or the tax 25%

Section 25B Section 25B emoluments.or other fixed or determinable annual or periodic or casual gains, profits. and income. transactions with depositary banks under the expanded system which shall be exempt from income tax Cash and/or Property Dividends Rents, royalties, salaries, wages, premiums. annuities, their nature or tenure, except income from other similar arrangements, regardless of compensation, remuneration treaty rate on treaty rate) (or the tax (or the tax rovalties) 25% 25%

Section 25B, in relation to Section 24(B)(3) Capital Gains - Sale, exchange or other local or foreign stock exchange disposition of shares of stock-not traded in a treaty rate Cor the tax 15%

Section 25B, in relation to Section 24(B)(4) Sale of real property the Tax Code local or foreign stock exchange are subject to stock transaction tax, in lieu of capital Note: Shares sold or disposed of through a gains tax,under Section 127AandBof 6% on gains presumed have been to

UREAUOFTNTERNALREVENUE ORDS MANAGEMENT DIVISION exchange or other realized from the sale.

Page 5 of 11 AUG 05 2025

BY AOMINUNIT.1 MF q:23m

disposition of

assets) realproperty (capital

Section 27(D2 Any income of non-residents from Exempt

transactions with depositary banks under the expanded system

Effective July 1,2025 CORPORATIONS

A. Domestic and Resident Foreign Corporations

Sections27D1 and 28(A)(1) Sections of the Tax Code benefit earned from any currency bank and deposit or deposit substitute,trust funds Interest, yield, or any other monetary other similar arrangements. Particulars Income Tax Rate 20%

Sections 27D2 and 28(A)(6) of foreign banks that may be authorized regardless of their nature or tenure under the expanded foreign currency deposit system from foreign currency transactions with nonresidents,offshore banking units in the Philippines, local commercial banks including branches Income derived by a depositary bank Exempt from all taxes

BSP to transact business with foreign by the Bangko Sentral ng Pilipinas currency deposit system units and other depositary banks under the expanded

net income from such transactions as may specified by the Secretary of Monetary Board to be subiect to the foreign currency deposit system,except Finance, upon recommendation by the

and 28A6 Sections 27D2 residents other than offshore banking undersaid expandedsystems to system regular income tax payable by banks Interest income from foreign currency loans granted by such depositary banks units in the Philippines or other depositary banks under the expanded ORureay Finternan revendt N 10% Page 6 of11

AUG 05 2025

BY ADMINUNIT- TIME: q:27

Sections 27D(3 and28A1 a domestic corporation Intercorporate dividends received from Exempt

Section 27D4 traded in a local or foreign stock Capital Gains-Sale,exchange or other domestic or foreign corporation not dispositions of shares of stock of a 15%

of through a local or foreign stock exchange (Note: shares sold or disposed exchange are subject tostock

Section 27(D5 the Tax Code transaction tax, in lieu of capital gains tax,under Section 127(A and Bof Capital Gains Realized from the Sale Corporations) Exchange, or and/or Buildings Disposition (for Domestic of Land presumed realized the exchange buildings (capital 6% gain have disposition of lands and/or on been sale. the o on to

and 28A1 Sections 27D6 Royalties earned as Passive Income assets) 20%

B.Non-Resident Foreign Corporations

Section 28(B1 in relation to Section 28(A6 Sections of the Tax Code benefit earned from any currency bank deposit or deposit substitute, trust funds regardless of their nature or tenure. system which shall be exempt from Interest yield, or any other monetary and except income from transactions with depositary banks under the expanded othersimilar Particulars arrangements, or the tax treaty Income Tax Rate rate) 25%

Section 28(B)(5)(b) from a domestic corporation income tax Cash and/or Property Dividends received residence of the the country of condition that subject to the 15%

RECOROS MANAGEMENTDIVISION BUREAUOFINTERNALREVENUE corporate

L Page 7 of 11

AUG 05 2025

BY: ADMINUNIT-1 S ME 0ME

Section Section 28B1 28(B)(5)(c) compensation, emoluments,or other capital gains,except capital gains subject (except reinsurance premiums) annuities. fixed or determinable annual, periodic or casual gains, profits, and income, and to tax under Sec 28A1 dispositions of shares of stock of a domestic corporation not traded in a local or foreign stock exchange Rents,royalties salaries, Capital Gains-Sale,exchange or other premiums (or the tax treaty shareholder does (or the tax treaty deemed to have been paid in the that the country not impose any of residence of allows a credit Philippines or the corporate dividends (or the tax treaty shareholder of 10% tax tax on the royalties) rate on rate) rate) 2% 15%

Section 28(A)(6)(b) under the expanded system Code) Any income of non-resident corporations (Note: Shares sold or through a local or foreign stock exchange are subject to stock transaction tax, in lieu of capital gains tax, under Section 127 A and B of the Tax from transactions with depositary banks disposed of Exempt

business includes transactions incidental thereto. Also, the rule of regularity to the contrary primary purposes, the same is not passive income. For VAT purposes, in the course of trade or If the income is generated in the active pursuit and performance of the corporation's

Chamber of Real Estate and Builders Associations, Inc. v. Executive Secretary,G.R. No. 160756,March 9 2010,En Banc. BUREAUOFINTERNALREVENUE RECORDSMANAGEMENT DIVISION o Page 8 of 11

AUG 05 2025

BY ADMIN UNIT- TIME: q.21m

business in the Philippines and, thus, subject to VAT notwithstanding, the following shall be considered as being rendered in the course of trade or

I.Services rendered in the Philippines by non-resident foreign persons; and

2. Digital services delivered by non-resident digital service providers consumed in the

Philippines.

SECTION 4. INCLUSION IN THE GROSS INCOME.- As provided in Section 8 of the CMEPA,amending Section 32 of the Tax Code,the following items are included as part of the gross income. These are

1 Equity-based compensation, such as stock options, restricted stock units, stock compensation shall be included in the gross income at the time of exercise. appreciation rights, and similar items: Provided, that equity-based

2 Gains realized from the sale or exchange or retirement of bonds,debentures or Code; otherwise, subject to ordinary income tax (graduated rates for individual and regular corporate income tax for corporation. more than five 5 years. Thus, if traded thru a local or foreign stock other certificate of indebtedness including those with a maturity period of exchange, subject to stock transaction tax(STT under Section 127 of the Tax

gross income, which means that these items are also exempt from income tax. These are: SECTION 5.EXCLUSION FROM GROSS INCOME.- Pursuant to Section 8 of the CMEPA,amending Section 32(B7 of the Tax Code,there are additional items excluded from

1 Interest Income and Gains from the Sale, Transfer, or Disposition of Project-Specific Bonds. -- Specific bonds that are issued by the Republic of by the Secretary of Finance. the Philippines or any of its instrumentalities to finance capital expenditures or programs covered by the Philippine Development Plan or its equivalent and other high-level priority programs of the national government, as determined

2 Gains from Redemption of Shares or Units of Participation in Mutual Section 22 (BB) of the Tax Code, or units of participation in a Mutual Fund or Unit Investment Trust Fund: Provided, that prior to such redemption, final Fund and Unit Investment Trust Fund.- Gains realized by the investor upon redemption of shares of stock in a mutual fund company as defined in

3 The tax treatment of equity-based compensation is set forth in Revenue Regulations (RR) No. 13-2022, as further clarified in Revenue Memorandum Circular (RMC) No.143-2022,which are being adopted in these Regulations for purposes of this Section. Sections 105 and 114 (C of the Tax Code,as amended by RA 12023 entitled as An Act Amending Sections 105.108,109,110,113,114,115.128,236,And 288 And Adding New Sections 108-A and 108-B of The National Internal Revenue Code of 1997.as Amended

BUREAU OFINTERNALREVENUE U MANAGEM 6 ENI DIVISION Page 9 of 11

AUG 05 2025

E m ADMIN UNIT TIME: G27AN

taxes due on realized gains have been previously withheld at the level of the underlying assets.

SECTION 6.ADDITIONAL ALLOWABLE DEDUCTIONS.-Section 9 of the CMEPA amending Section 34 of the Tax Code,provides that, in the case of securities held by a dealer in

other financial intermediaries, said securities will be considered as ordinary assets and if securities or an entity licensed by the appropriate government regulatory agencies to buy and sell securities either for the entity's own account or for the account of others, including banks and

ascertained to be worthless, such instruments will be considered as ordinary losses that are allowed as deduction from the taxable income.

actual contribution made to Personal Equity and Retirement Accounts (PERA under RA No. 9505 shall be an additional deduction from gross income, subject to compliance with the requirements set forth therein. Section 9 of the CMEPA likewise provides that fifty percent (50% of the employer's

SECTION 7.ENTITIES ALLOWED TO CLAIM LOSSES FROM WASH SALES OF STOCK OR SECURITIES AS AN ALLOWABLE DEDUCTION.-As provided in Section

the ordinary course of the business of such dealer, entity, or financial intermediary. from wash sales of stocks or securities provided that such loss arises out of transactions made in securities, any entity or financial intermediary duly licensed by the appropriate government regulatory agencies to buy and sell securities either for the entity's own account or for the account of others can likewise claim deduction under Section 34 of the Tax Code for the loss 10 of the CMEPA,amending Section 38 of the Tax Code, aside from dealer in stock or

SECTION 8.NON-APPLICABILITY OF THE LIMITATION ON CAPITALLOSSES TO

under Section 39 (C) of the Tax Code does not apply to dealer in securities or other entity or issued by any corporation (including one issued by a government or political subdivision thereof), with interest coupons or in registered form. Section 1I of the CMEPA.amending Section 39 of the Tax Code,the limitation of capital losses DEALER IN SECURITIES OR OTHER FINANCIAL INTERMEDIARY. financial intermediary duly licensed by the appropriate government regulatory agencies to trade in securities that sells any bond, debenture, note, or certificate or other evidence of indebtedness - Pursuant to

as bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise securities issued by the government or any of its agencies or instrumentalities, are also considered sourced within the Philippines. SECTION 9.SOURCES OF INTEREST INCOME IN THE PHILIPPINES.-Pursuant to Section 12 of the CMEPA, amending Section 42 of the Tax Code,interest income from debt instruments, bank deposits, deposit substitutes, trust funds, and other similar arrangements, such regardless of the place of execution of said instruments, including debt instruments or debt

tax rate at the time of its issuance for the remaining maturity of the relevant agreement. SECTION 10.TRANSITORY PROVISION.- Any tax exemption and preferential rate on financial instruments issued or transacted prior to July l,2025,shall be subject to the prevailing

RECORQSMANAGFMENTDVISION BUREAUOFINTERNALREVENUE

31 Page 10 of t1 AUG 05 2025

ADMIN UNITC TIME: q:27m

The prevailing rate or tax exemption prior to July 1,2025 shall apply only for the remaining maturity of the relevant agreement if the following conditions are present:

1.The financial instrument was issued or transacted prior to July 1. 2025 as evidenced by

format: the instrument itself or any other relevant agreement either in written or electronic

2. The instrument itself or agreement provides for the maturity period of the financial instrument as agreed upon or stated in the instrument which is beyond July 1,2025;and

3. There is no change in the maturity date or remaining period of coverage from that of the the old ones, starting July 1, 2025. original document or agreement, and no renewal or issuance of new instrument to replace

SECTION 11.SEPARABILITY CLAUSE.-If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 12.REPEALING CLAUSE.-All other issuances and rules and regulations or

hereby repealed, amended or modified accordingly. parts thereof which are contrary to and inconsistent with the provisions of these Regulations are

official website, whichever comes first. 2025. following its publication in the Official Gazette or the Bureau of Internal Revenue's SECTION 13.EFFECTIVITY CLAUSE.-These Regulations shall take effect on July 1

Secretary of Finance LPHGRECTO jUV/29 2925

Recommending Approval

issioner of Internal Revenue NV GUI, JR. UREAUOEINTFRN NAGEMENT DIVISION REVENUI

AUG 0 5 2025

BY ADMINUNIT-1 q:Vm

Page11 of 11