The Bureau of Internal Revenue has issued tax regulations under Revenue Regulations 02-2025 to implement provisions of Republic Act 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 as part of a securitization plan will be exempt from value-added tax (VAT) and documentary stamp tax. 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 percent 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 and the Department of Finance as housing-related.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants