RR No. 7-2025: Implementing the Amendments to Sections 27, 28, and 34 of the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066

Key points

1. Domestic corporations. The general rate is 25%, effective July 1, 2020. The rate is 20% for those with net taxable income not exceeding Five Million Pesos (P 5,000,000.00) and total assets not exceeding One Hundred Million Pesos (P100,000,000.00), excluding land on which the office, plant and equipment sit.
2. Resident foreign corporations. The general rate is 25%, effective July 1, 2020.
3. RBEs under the EDR. Registered Business Enterprises under the Enhanced Deductions Regime in Sec. 294(C) pay 20%, effective November 28, 2024. This covers only taxable income from registered projects or activities, and income from non-registered ones is taxed at the applicable rates.
4. Input tax deduction. Input tax on local purchases attributable to VAT-exempt sales is deductible from gross income under Section 34(C)(8).
5. Excess payments. RBEs under the EDR that already filed their Annual Income Tax Return for calendar year 2024, or fiscal year ending on or before effectivity of the Regulations, may carry forward excess payments from the reduction from 25% to 20% to the succeeding taxable quarter or year.

Who is affected

• Domestic corporations
• Resident foreign corporations
• Registered Business Enterprises under the EDR

Deadlines and effectivity

• General rates effective July 1, 2020
• RBE 20% rate effective November 28, 2024