The Bureau of Internal Revenue (BIR) has issued tax regulations under Revenue Regulations (RR) No. 02-2025 to implement provisions of Republic Act No. 9267, “The Securitization Act of 2004.” The regulations provide tax exemptions for asset transfers and the issuance of asset-backed securities, with a focus on the housing sector.
Under the law, the sale or transfer of assets to a Special Purpose Entity (SPE) as part of a securitization plan will be exempt from value-added tax (VAT) and documentary stamp tax (DST). This exemption also applies to the transfer of any related security interests. Additionally, transfers made through dation in payment will not be subject to capital gains tax.
The regulations also cover the issuance and transfer of asset-backed securities, which are financial instruments backed by assets like loans or mortgages. The original issuance of these securities, as well as related instruments such as subordinated debt, will be exempt from VAT but will remain subject to documentary stamp tax. Subsequent trades of these securities will be exempt from both value-added tax and documentary stamp tax.
Income from asset-backed securities will be subject to a 20% final withholding tax. However, income from securities tied to low-cost or socialized housing will be tax-exempt, provided the securities are certified by the Department of Human Settlements and Urban Development (DHSUD) and the Department of Finance as housing related.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants
P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd.
As published in SunStar Cebu, dated 23 January 2025
