RR No. 2-2025: Implementing the tax provisions of Republic Act No. 9267, otherwise known as “The Securitization Act of 2004”

Key points

1. Transfers to the SPE. The sale or transfer of assets to the Special Purpose Entity (SPE), including security interests, made under the Securitization Plan, is exempt from VAT and Documentary Stamp Tax, or other taxes imposed in lieu of them.
2. Dacion en pago. Under Section 28 of RA No. 9267, transfer of assets by dation in payment by the obligor to the obligee is not subject to Capital Gains Tax under Section 27 (D)(5) of the Tax Code.
3. Issuance and trading of ABS. The original issuance of asset-backed securities (ABS) and related securities, such as seller’s equity, subordinated debt purchased by the originator, and credit enhancement, is exempt from VAT but subject to DST. Secondary trades and later transfers of ABS are exempt from DST and VAT.
4. Yield on ABS. Yield or income from ABS is subject to twenty percent (20%) Final Withholding Tax. Investor yield from low cost or socialized housing-related ABS is exempt from Income Tax if it comes from securitizing mortgage and housing receivables of government housing agencies, and the ABS is certified by the Department of Human Settlements and Urban Development and the Department of Finance.

Who is affected

• Special Purpose Entities
• Originators and obligors in securitization
• Investors in ABS