Revenue Regulations · RRIncome tax

RR No. 18-2024

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Document type: RR
Number: 18
Year: 2024
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REVENUE REGULATIONS NO. 18-2024 issued on December 17, 2024, implements Section 32(B)(5) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 12066 (CREATE MORE Act). Pursuant to Section 32(B)(5) of the NIRC, as amended by RA No. 12066 or the CREATE MORE Act, income of any kind shall be excluded from the computation of gross income, as defined under Section 32(A) of the NIRC, and shall be exempt from Income Tax to the extent required by any treaty obligation binding upon the Government of the Philippines, or his/her authorized representative(s), including agreements entered into by the President, or his/her authorized representative(s), with economies and administrative regions, and duly concurred in by at least two-thirds of all the members of the Senate. Nothing in these Regulations shall be construed as recognizing the statehood of such economies and administrative regions, and derogating, from whatever policy that the Philippines has agreed to adopt and implement. The President or his/her authorized representative(s) shall only negotiate with economies and administrative regions as contained in the list provided by the Department of Foreign Affairs (DFA). The indicative list of such economies and administrative regions is attached in the regulations as Annex "A" and forms an integral part of these Regulations. Such list shall be regularly updated and/or communicated by the DFA to the Department of Finance and the Bureau of Internal Revenue as the former deems necessary.

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Issuance analysis

Structured from the available issuance text · Income tax

Revenue Regulations No. 18-2024 (issued December 17, 2024) implements Section 32(B)(5) of the NIRC as amended by the CREATE MORE Act (RA 12066). It excludes from gross income, and exempts from income tax, income of any kind to the extent required by treaty obligations binding on the Government of the Philippines, including agreements entered into by the President or authorized representatives with economies and administrative regions, provided these are concurred in by at least two-thirds of the Senate. The regulations clarify that nothing in them recognizes the statehood of such economies or regions or derogates from Philippine policy. Negotiations may only be conducted with economies and regions on a list provided by the DFA (attached as Annex A), which the DFA will regularly update and communicate to the DOF and BIR.

Purpose

To implement the gross income exclusion and income tax exemption under Section 32(B)(5) of the NIRC, as amended by RA No. 12066 (CREATE MORE Act), for income exempt to the extent required by treaty obligations binding on the Government of the Philippines, and to set procedural parameters (DFA list, Senate concurrence) for agreements with economies and administrative regions.

In brief

Implements the Section 32(B)(5) NIRC income tax exemption (as amended by the CREATE MORE Act) for income excluded from gross income to the extent required by treaty obligations, including Presidential agreements with economies and administrative regions on the DFA list.

Keywords

treaty obligationgross income exclusionCREATE MORE ActSection 32(B)(5) NIRCeconomies and administrative regionsSenate concurrence (two-thirds)Department of Foreign Affairs (DFA) listAnnex Aincome tax exemption

Key points

RR No. 18-2024 (issued December 17, 2024) implements Section 32(B)(5) of the NIRC of 1997, as amended by Republic Act No. 12066 (CREATE MORE Act).
Income of any kind is excluded from gross income under Section 32(A) and is exempt from income tax to the extent required by treaty obligations binding on the Government of the Philippines or its authorized representatives, including agreements entered into by the President with economies and administrative regions that are concurred in by at least two-thirds of all Senate members.
Nothing in the regulations may be construed as recognizing the statehood of the covered economies and administrative regions, or as derogating from any policy the Philippines has agreed to adopt and implement.
The President or authorized representatives may negotiate only with economies and administrative regions on a list provided by the DFA; the indicative list is attached as Annex A and forms an integral part of the regulations.
The DFA shall regularly update and/or communicate the list of economies and administrative regions to the Department of Finance and the Bureau of Internal Revenue as it deems necessary.

Tax types

Income Tax — income to the extent required by a binding treaty obligation is excluded from gross income and exempt from income tax.

Affected taxpayers

Taxpayers whose income of any kind is covered by treaty obligations binding on the Government of the Philippines, or by agreements entered into by the President (or authorized representatives) with economies and administrative regions concurred in by two-thirds of the Senate, benefit from the gross income exclusion and income tax exemption.