RR No. 27-2025 — Amends Section 8 of Revenue Regulations No. 25-2003 on the Tax Treatment on Subsequent Sale, Transfer or Exchange of Tax-Exempt Automobile by a Tax-Exempt Person/Entity to a Non-Exempt Person/Entity (Date Posted: October 21, 2025)

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Bringing in Revenues for Nation-Building OCT 16" 2025 PILIPINAS BAGONG

REVENUE REGULATIONS NO.-0 2 7 - 2 025

SUBJECT: Amends. Section 8 of Revenue Regulations No. 25-2003 on the Tax Treatment Tax-Exempt Person/Entity to a Non-Exempt Person/Entity on Subsequent Sale, Transfer or Exchange of Tax-Exempt Automobile by a

TO: All Internal Revenue Officials, Employees and Others Concerned

transfers from tax-exempt persons/entities to non-tax-exempt buyers in order to Revenue Regulations (RR) No. 25-2003 modifying the allowable depreciation rate for vehicle ensure equitable tax computation and alignment with market-based valuation. SECTION 1. SCOPE. -- Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended, these Regulations are hereby promulgated to amend Section 8 of

follows: SECTION 2. AMENDMENT. -- Section 8 of RR No. 25-2003 is hereby amended to read as

by reason of his/their exemption, the purchase thereof by a non-exempt the time of sale, transfer, or exchange which depreciation rate shall be at sixteen automobile, whether locally purchased or imported, without payment of the tax person/entity shall be subjected to the ad valorem tax based on, whichever is more than eighty percent (80%) of the original cost or value. TRANSFER OR EXCHANGE OF TAX-EXEMPT AUTOMOBILE BY A PERSON/ENTITY. -- In cases where a tax-exempt person/entity acquired an higher of, (i) the actual consideration between the tax-exempt person/entity and the non-exempt person/entity; or (ii) the depreciated value of the automobile at percent (16%) per year, but in no case shall the total amount of depreciation be TAX-EXEMPT "SEC. 8. TAX TREATMENT ON SUBSEQUENT SALE, PERSON/ ENTITY TOANON-EXEMPT

person or entity prior to but sold after the effectivity of the Act, the computation of the ad valorem tax shall be governed by the Act. However, in case where the automobile was acquired by the tax-exempt

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exchanged by a tax-exempt person/entity, and it is determined that such acquisition was primarily intended to avoid the payment of excise tax, the Where a tax-exempt automobile is subsequently sold, transferred, or

or value of importation at the time of acquisition, without any allowance for applicable ad valorem tax shall be assessed based on the original purchase price depreciation

circumvent the payment of excise tax may be based on any of the following circumstances, unless evidence to the contrary is shown that the sale. transfer or exchange of the automobile is bona fide and at arm's length: A finding that the acquisition of an automobile was primarily to

1. The automobile is sold, transferred, or exchanged within a short

accident, or change in mission): justification or compelling reason (e.g.. operational need. period (e.g.. within one year) from acquisition without sufficient

2. A.pattern is observed where a tax-exempt person/entity business practice rather than bona fide institutional use: repeatedlyacquires...automobiles...under exemption.and subsequently disposes of them shortly after, suggesting a

3. The automobile is transferred to an officer..employee, relative. terms or documented fair market value: or closely affiliated entity without arm's length transaction

4. Records (e.g., mileage logs, maintenance records) show that the automobile was hardly used for the entity's official operations before its disposal: 5. Evidence exists of prior agreements. verbal or written.

indicating intent to sell or transfer the automobile even before or shortly after acquisition:

6 The tax-exempt person/entity's nature. operations. or size does

under the exemption: not justify the acquisition of a luxury or high-value automobile

7. The automobile was never registered in the name of the tax- exempt person/entity without valid justification, or use was

predominantly by persons not employed by or affiliated with the tax-exempt person/entity; or 8. Any other circumstance taken alone or in combination with the

above factors clearly indicates that the automobile was acquired not for bona fide institutional use but primarily to circumvent the payment of excise tax."

SECTION 3. REPEALING CLAUSE. -- All other issuances, rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly. BUREAU OF INTERNALREVENE RECOROS MANAGEMENT DVISION e

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SECTION 4. EFFECTIVITY. - These Regulations shall take effect fifteen (15) days following publication in the Official Gazette or the BIR's official website, whichever comes first.

Recommending Approval: RALEH G/RECTO Secletary/of F inance 283

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ROM MASU, JR.

Hmissioner of Internal Revenue #

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