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Republic of the Philippines

Congress of the Philippines
Metro Manila
Tenth Congress
Republic Act No. 8424 December 11, 199
AN ACT A!"ND#N$ T%" NAT#&NA' #NT"RNA' R"("N)" C&D", A* A!"ND"D, AND +&R &T%"R
P)RP&*"*
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
*ection 1. Short Title. - This Act shall be cited as the "Tax Reform ct of !""#".
*ection 2. State Policy. - It is hereby declared the policy of the State to promote sustainable economic
groth through the rationali!ation of the "hilippine internal re#enue ta$ system% including ta$
administration& to pro#ide% as much as possible% an e'uitable relief to a greater number of ta$payers in
order to impro#e le#els of disposable income and increase economic acti#ity& and to create a robust
en#ironment for business to enable (rms to compete better in the regional as ell as the global mar)et% at
the same time that the State ensures that Go#ernment is able to pro#ide for the needs of those under its
*urisdiction and care.
*ection ,. "residential +ecree ,o. 11-.% as amended by% among others% "residential +ecree ,o. 1//0 and
1$ecuti#e 2rder ,o. 345% otherise )non as the ,ational Internal 6e#enue 7ode% is hereby further
amended.
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&rg-ni.-tion -n/ +unction of the 0ure-u of #ntern-l Re1enue
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T-2 on #ncome
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De3nitions
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$ener-l Principles
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T-2 on #n/i1i/u-ls
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T-2 on Corpor-tions
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Comput-tion of T-2-ble #ncome
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Comput-tion of $ross #ncome
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Allo4-ble De/uctions
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Accounting Perio/s -n/ !etho/s of Accounting
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Returns -n/ P-6ment of T-2
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"st-tes -n/ Trusts
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&ther #ncome T-2 Re7uirements
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8u-rterl6 Corpor-te #ncome T-2 Annu-l Decl-r-tion -n/ 8u-rterl6 P-6ments of #ncome
T-2es
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9ithhol/ing on 9-ges
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"st-te -n/ Donor:s T-2es
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"st-te T-2
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Donor:s T-2
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(-lue A//e/ T-2
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#mposition of T-2
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Compli-nce Re7uirements
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&ther Percent-ge T-2es
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"2cise T-2 on Cert-in $oo/s
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$ener-l Pro1isions
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"2emption or Con/ition-l T-2;+ree Remo1-l of Cert-in Articles
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"2cise T-2 on Alcohol Pro/ucts
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"2cise T-2 on Tob-cco Pro/ucts
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"2cise T-2 on Petroleum Pro/ucts
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"2cise T-2 on !iscell-neous Articles
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"2cise T-2 on !iner-l Pro/ucts
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A/ministr-ti1e Pro1isions Regul-ting 0usiness of Persons De-ling in Articles *ub<ect to
"2cise T-2
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Document-r6 *t-mp T-2
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Reme/ies
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Reme/ies in $ener-l
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Ci1il Reme/ies for Collection of T-2es
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Protesting -n Assessment, Refun/, etc.
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Compli-nce Re7uirements
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=eeping of 0oo>s of Accounts -n/ Recor/s
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A/ministr-ti1e Pro1isions
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Rules -n/ Regul-tions
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*t-tutor6 &?enses -n/ Pen-lties
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A//itions to the T-2
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Crimes, &ther &?enses -n/ +orfeitures
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Pen-lties #mpose/ on Public &@cers
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&ther Pen-l Pro1isions
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Allotment of #ntern-l Re1enue
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ADisposition -n/ Allotment of N-tion-l #ntern-l Re1enue in $ener-l
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*peci-l Disposition of Cert-in N-tion-l #ntern-l Re1enue T-2es
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&1ersight Committee
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Repe-ling Pro1isions
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+in-l Pro1isions
*ection 4. The Secretary of 8inance shall% upon recommendation of the 7ommissioner of Internal
6e#enue% promulgate and publish the necessary rules and regulations for the e9ecti#e implementation of
this Act.
*ection A. Transitory Provisions - +eferment of the 19ecti#ity of the Imposition of VAT on 7ertain Ser#ices.
- The e9ecti#ity of the imposition of the #alue-added ta$ on ser#ices as prescribed in Section 14:a; and :b;
of 6epublic Act ,o. 4<1<% as amended by 6epublic Act. .301% is hereby further deferred until +ecember 51%
1///% unless 7ongress deems otherise: "ro#ided% That the said ser#ices shall continue to pay the
applicable ta$ prescribed under the present pro#isions of the ,ational Internal 6e#enue 7ode% as amended.
*ection B. Separability Clause. - If any pro#ision of this Act is subse'uently declared unconstitutional% the
#alidity of the remaining pro#isions hereof shall remain in full force and e9ect.
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*ection . Repealing Clauses. -:A; The pro#ision of Section 14 of 6epublic Act ,o. 4/=<% otherise )non
as the >Thrift ?an)s Acts of 1//-> shall continue to be in force and e9ect only until +ecember 51% 1///.
19ecti#e @anuary 1% 3===% all thrift ban)s% hether in operation as of that date or thereafter% shall no longer
en*oy ta$ e$emption as pro#ided under Section 14 of 6.A. ,o. 4/=<% thereby sub*ecting all thrift ban)s to
ta$es% fees and charges in the same manner and at the same rate as ban)s and other (nancial
intermediaries.
:?; The pro#isions of the ,ational Internal 6e#enue 7ode% as amended% and all other las% including
charters of go#ernment-oned or controlled corporations% decrees% orders% or regulations or parts
thereof% that are inconsistent ith this Act are hereby repealed or amended accordingly.
*ection 8. $%ectivity - This Act shall ta)e e9ect on @anuary 1% 1//..
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&R$AN#CAT#&N AND +)NCT#&N &+ T%" 0)R"A) &+ #NT"RNA' R"("N)"
*ection 1. Title of the Code. - This 7ode shall be )non as the ,ational Internal 6e#enue 7ode of 1//4.
*ection 2. Po&ers and duties of the Bureau of 'nternal Revenue. - The ?ureau of Internal 6e#enue shall be
under the super#ision and control of the +epartment of 8inance and its poers and duties shall
comprehend the assessment and collection of all national internal re#enue ta$es% fees% and charges% and
the enforcement of all forfeitures% penalties% and (nes connected thereith% including the e$ecution of
*udgments in all cases decided in its fa#or by the 7ourt of Ta$ Appeals and the ordinary courts. The ?ureau
shall gi#e e9ect to and administer the super#isory and police poers conferred to it by this 7ode or other
las.
*ection ,. Chief ()cials of the Bureau of 'nternal Revenue. - The ?ureau of Internal 6e#enue shall ha#e a
chief to be )non as 7ommissioner of Internal 6e#enue% hereinafter referred to as the 7ommissioner and
four :0; assistant chiefs to be )non as +eputy 7ommissioners.
*ection 4. Po&er of the Commissioner to 'nterpret Tax *a&s and to +ecide Tax Cases. - The poer to
interpret the pro#isions of this 7ode and other ta$ las shall be under the e$clusi#e and original
*urisdiction of the 7ommissioner% sub*ect to re#ie by the Secretary of 8inance.
The poer to decide disputed assessments% refunds of internal re#enue ta$es% fees or other charges%
penalties imposed in relation thereto% or other matters arising under this 7ode or other las or portions
thereof administered by the ?ureau of Internal 6e#enue is #ested in the 7ommissioner% sub*ect to the
e$clusi#e appellate *urisdiction of the 7ourt of Ta$ Appeals.
*ection A. Po&er of the Commissioner to (btain 'nformation, and to Summon, $xamine, and Ta-e
Testimony of Persons. - In ascertaining the correctness of any return% or in ma)ing a return hen none has
been made% or in determining the liability of any person for any internal re#enue ta$% or in collecting any
such liability% or in e#aluating ta$ compliance% the 7ommissioner is authori!ed:
:A; To e$amine any boo)% paper% record% or other data hich may be rele#ant or material to such
in'uiry&
:?; To 2btain on a regular basis from any person other than the person hose internal re#enue ta$
liability is sub*ect to audit or in#estigation% or from any oAce or oAcer of the national and local
go#ernments% go#ernment agencies and instrumentalities% including the ?ang)o Sentral ng "ilipinas
and go#ernment-oned or -controlled corporations% any information such as% but not limited to%
costs and #olume of production% receipts or sales and gross incomes of ta$payers% and the names%
addresses% and (nancial statements of corporations% mutual fund companies% insurance companies%
regional operating head'uarters of multinational companies% *oint accounts% associations% *oint
#entures of consortia and registered partnerships% and their members&
:7; To summon the person liable for ta$ or re'uired to (le a return% or any oAcer or employee of
such person% or any person ha#ing possession% custody% or care of the boo)s of accounts and other
accounting records containing entries relating to the business of the person liable for ta$% or any
other person% to appear before the 7ommissioner or his duly authori!ed representati#e at a time
and place speci(ed in the summons and to produce such boo)s% papers% records% or other data% and
to gi#e testimony&
:+; To ta)e such testimony of the person concerned% under oath% as may be rele#ant or material to
such in'uiry& and
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:1; To cause re#enue oAcers and employees to ma)e a can#ass from time to time of any re#enue
district or region and in'uire after and concerning all persons therein ho may be liable to pay any
internal re#enue ta$% and all persons oning or ha#ing the care% management or possession of any
ob*ect ith respect to hich a ta$ is imposed.
The pro#isions of the foregoing paragraphs notithstanding% nothing in this Section shall be construed as
granting the 7ommissioner the authority to in'uire into ban) deposits other than as pro#ided for in Section
<:8; of this 7ode.
*ection B. Po&er of the Commissioner to .a-e assessments and Prescribe additional Re/uirements for
Tax dministration and $nforcement. -
:A; $xamination of Returns and +etermination of Tax +ue. - After a return has been (led as re'uired
under the pro#isions of this 7ode% the 7ommissioner or his duly authori!ed representati#e may
authori!e the e$amination of any ta$payer and the assessment of the correct amount of ta$:
"ro#ided% hoe#er& That failure to (le a return shall not pre#ent the 7ommissioner from authori!ing
the e$amination of any ta$payer.
The ta$ or any de(ciency ta$ so assessed shall be paid upon notice and demand from the
7ommissioner or from his duly authori!ed representati#e.
Any return% statement of declaration (led in any oAce authori!ed to recei#e the same shall not be
ithdran: "ro#ided% That ithin three :5; years from the date of such (ling % the same may be
modi(ed% changed% or amended: "ro#ided% further% That no notice for audit or in#estigation of such
return% statement or declaration has in the meantime been actually ser#ed upon the ta$payer.
:?; 0ailure to Submit Re/uired Returns, Statements, Reports and other +ocuments. - Bhen a report
re'uired by la as a basis for the assessment of any national internal re#enue ta$ shall not be
forthcoming ithin the time ($ed by las or rules and regulations or hen there is reason to
belie#e that any such report is false% incomplete or erroneous% the 7ommissioner shall assess the
proper ta$ on the best e#idence obtainable.
In case a person fails to (le a re'uired return or other document at the time prescribed by la% or
illfully or otherise (les a false or fraudulent return or other document% the 7ommissioner shall
ma)e or amend the return from his on )noledge and from such information as he can obtain
through testimony or otherise% hich shall be prima facie correct and suAcient for all legal
purposes.
:7; uthority to Conduct 'nventory1ta-ing, surveillance and to Prescribe Presumptive 2ross Sales
and Receipts. - The 7ommissioner may% at any time during the ta$able year% order in#entory-ta)ing
of goods of any ta$payer as a basis for determining his internal re#enue ta$ liabilities% or may place
the business operations of any person% natural or *uridical% under obser#ation or sur#eillance if there
is reason to belie#e that such person is not declaring his correct income% sales or receipts for
internal re#enue ta$ purposes. The (ndings may be used as the basis for assessing the ta$es for
the other months or 'uarters of the same or di9erent ta$able years and such assessment shall be
deemed prima facie correct.
Bhen it is found that a person has failed to issue receipts and in#oices in #iolation of the
re'uirements of Sections 115 and 354 of this 7ode% or hen there is reason to belie#e that the
boo)s of accounts or other records do not correctly reCect the declarations made or to be made in a
return re'uired to be (led under the pro#isions of this 7ode% the 7ommissioner% after ta)ing into
account the sales% receipts% income or other ta$able base of other persons engaged in similar
businesses under similar situations or circumstances or after considering other rele#ant information
may prescribe a minimum amount of such gross receipts% sales and ta$able base% and such amount
so prescribed shall be prima facie correct for purposes of determining the internal re#enue ta$
liabilities of such person.
:+; uthority to Terminate Taxable Period. D Bhen it shall come to the )noledge of the
7ommissioner that a ta$payer is retiring from business sub*ect to ta$% or is intending to lea#e the
"hilippines or to remo#e his property therefrom or to hide or conceal his property% or is performing
any act tending to obstruct the proceedings for the collection of the ta$ for the past or current
'uarter or year or to render the same totally or partly ine9ecti#e unless such proceedings are
begun immediately% the 7ommissioner shall declare the ta$ period of such ta$payer terminated at
any time and shall send the ta$payer a notice of such decision% together ith a re'uest for the
immediate payment of the ta$ for the period so declared terminated and the ta$ for the preceding
year or 'uarter% or such portion thereof as may be unpaid% and said ta$es shall be due and payable
immediately and shall be sub*ect to all the penalties hereafter prescribed% unless paid ithin the
time ($ed in the demand made by the 7ommissioner.
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:1; uthority of the Commissioner to Prescribe Real Property 3alues. - The 7ommissioner is hereby
authori!ed to di#ide the "hilippines into di9erent !ones or areas and shall% upon consultation ith
competent appraisers both from the pri#ate and public sectors% determine the fair mar)et #alue of
real properties located in each !one or area. 8or purposes of computing any internal re#enue ta$%
the #alue of the property shall be% hiche#er is the higher of&
:1; the fair mar)et #alue as determined by the 7ommissioner% or
:3; the fair mar)et #alue as shon in the schedule of #alues of the "ro#incial and 7ity
Assessors.
:8; Authority of the 7ommissioner to in'uire into ?an) +eposit Accounts. - ,otithstanding any
contrary pro#ision of 6epublic Act ,o. 10=- and other general or special las% the 7ommissioner is
hereby authori!ed to in'uire into the ban) deposits of:
:1; a decedent to determine his gross estate& and
:3; any ta$payer ho has (led an application for compromise of his ta$ liability under Sec.
3=0 :A; :3; of this 7ode by reason of (nancial incapacity to pay his ta$ liability.
In case a ta$payer (les an application to compromise the payment of his ta$ liabilities on his claim
that his (nancial position demonstrates a clear inability to pay the ta$ assessed% his application
shall not be considered unless and until he ai#es in riting his pri#ilege under 6epublic act ,2.
10=- or under other general or special las% and such ai#er shall constitute the authority of the
7ommissioner to in'uire into the ban) deposits of the ta$payer.
:G; Authority to Accredit and 6egister Ta$ Agents. - The 7ommissioner shall accredit and register%
based on their professional competence% integrity and moral (tness% indi#iduals and general
professional partnerships and their representati#es ho prepare and (le ta$ returns% statements%
reports% protests% and other papers ith or ho appear before% the ?ureau for ta$payers. Bithin one
hundred tenty :13=; days from @anuary 1% 1//.% the 7ommissioner shall create national and
regional accreditation boards% the members of hich shall ser#e for three :5; years% and shall
designate from among the senior oAcials of the ?ureau% one :1; chairman and to :3; members for
each board% sub*ect to such rules and regulations as the Secretary of 8inance shall promulgate upon
the recommendation of the 7ommissioner.
Indi#iduals and general professional partnerships and their representati#es ho are denied
accreditation by the 7ommissioner andEor the national and regional accreditation boards may
appeal such denial to the Secretary of 8inance% ho shall rule on the appeal ithin si$ty :<=; days
from receipt of such appeal. 8ailure of the Secretary of 8inance to rule on the Appeal ithin the
prescribed period shall be deemed as appro#al of the application for accreditation of the appellant.
:F; Authority of the 7ommissioner to "rescribe Additional "rocedural or +ocumentary
6e'uirements. - The 7ommissioner may prescribe the manner of compliance ith any documentary
or procedural re'uirement in connection ith the submission or preparation of (nancial statements
accompanying the ta$ returns.
*ection . uthority of the Commissioner to +elegate Po&er. - The 7ommissioner may delegate the
poers #ested in him under the pertinent pro#isions of this 7ode to any or such subordinate oAcials ith
the ran) e'ui#alent to a di#ision chief or higher% sub*ect to such limitations and restrictions as may be
imposed under rules and regulations to be promulgated by the Secretary of (nance% upon recommendation
of the 7ommissioner: "ro#ided% Foe#er% That the folloing poers of the 7ommissioner shall not be
delegated:
:a; The poer to recommend the promulgation of rules and regulations by the Secretary of 8inance&
:b; The poer to issue rulings of (rst impression or to re#erse% re#o)e or modify any e$isting ruling
of the ?ureau&
:c; The poer to compromise or abate% under Sec. 3=0 :A; and :?; of this 7ode% any ta$ liability:
"ro#ided% hoe#er% That assessments issued by the regional oAces in#ol#ing basic de(ciency ta$es
of 8i#e hundred thousand pesos :"-==%===; or less% and minor criminal #iolations% as may be
determined by rules and regulations to be promulgated by the Secretary of (nance% upon
recommendation of the 7ommissioner% disco#ered by regional and district oAcials% may be
compromised by a regional e#aluation board hich shall be composed of the 6egional +irector as
7hairman% the Assistant 6egional +irector% the heads of the Gegal% Assessment and 7ollection
+i#isions and the 6e#enue +istrict 2Acer ha#ing *urisdiction o#er the ta$payer% as members& and
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:d; The poer to assign or reassign internal re#enue oAcers to establishments here articles
sub*ect to e$cise ta$ are produced or )ept.
*ection 8. +uty of the 7ommissioner to 1nsure the "ro#ision and +istribution of forms% 6eceipts%
7erti(cates% and Appliances% and the Ac)noledgment of "ayment of Ta$es.-
:A; "ro#ision and +istribution to "roper 2Acials. - It shall be the duty of the 7ommissioner% among
other things% to prescribe% pro#ide% and distribute to the proper oAcials the re'uisite licenses
internal re#enue stamps% labels all other forms% certi(cates% bonds% records% in#oices% boo)s%
receipts% instruments% appliances and apparatus used in administering the las falling ithin the
*urisdiction of the ?ureau. 8or this purpose% internal re#enue stamps% strip stamps and labels shall
be caused by the 7ommissioner to be printed ith ade'uate security features.
Internal re#enue stamps% hether of a bar code or fuson design% shall be (rmly and conspicuously
aA$ed on each pac) of cigars and cigarettes sub*ect to e$cise ta$ in the manner and form as
prescribed by the 7ommissioner% upon appro#al of the Secretary of 8inance.
:?; 6eceipts for "ayment Made. - It shall be the duty of the 7ommissioner or his duly authori!ed
representati#e or an authori!ed agent ban) to hom any payment of any ta$ is made under the
pro#ision of this 7ode to ac)noledge the payment of such ta$% e$pressing the amount paid and
the particular account for hich such payment as made in a form and manner prescribed therefor
by the 7ommissioner.
*ection 9. 'nternal Revenue +istricts. - Bith the appro#al of the Secretary of 8inance% the 7ommissioner
shall di#ide the "hilippines into such number of re#enue districts as may form time to time be re'uired for
administrati#e purposes. 1ach of these districts shall be under the super#ision of a 6e#enue +istrict 2Acer.
*ection 1D. Revenue Regional +irector. - Hnder rules and regulations% policies and standards formulated
by the 7ommissioner% ith the appro#al of the Secretary of 8inance% the 6e#enue 6egional director shall%
ithin the region and district oAces under his *urisdiction% among others:
:a; Implement las% policies% plans% programs% rules and regulations of the department or agencies
in the regional area&
:b; Administer and enforce internal re#enue las% and rules and regulations% including the
assessment and collection of all internal re#enue ta$es% charges and fees.
:c; Issue Getters of authority for the e$amination of ta$payers ithin the region&
:d; "ro#ide economical% eAcient and e9ecti#e ser#ice to the people in the area&
:e; 7oordinate ith regional oAces or other departments% bureaus and agencies in the area&
:f; 7oordinate ith local go#ernment units in the area&
:g; 1$ercise control and super#ision o#er the oAcers and employees ithin the region& and
:h; "erform such other functions as may be pro#ided by la and as may be delegated by the
7ommissioner.
*ection 11. +uties of Revenue +istrict ()cers and (ther 'nternal Revenue ()cers. - It shall be the duty
of e#ery 6e#enue +istrict 2Acer or other internal re#enue oAcers and employees to ensure that all las%
and rules and regulations a9ecting national internal re#enue are faithfully e$ecuted and complied ith%
and to aid in the pre#ention% detection and punishment of frauds of delin'uencies in connection thereith.
It shall be the duty of e#ery 6e#enue +istrict 2Acer to e$amine the eAciency of all oAcers and employees
of the ?ureau of Internal 6e#enue under his super#ision% and to report in riting to the 7ommissioner%
through the 6egional +irector% any neglect of duty% incompetency% delin'uency% or malfeasance in oAce of
any internal re#enue oAcer of hich he may obtain )noledge% ith a statement of all the facts and any
e#idence sustaining each case.
*ection 12. gents and +eputies for Collection of 4ational 'nternal Revenue Taxes. - The folloing are
hereby constituted agents of the 7ommissioner:
:a; The 7ommissioner of 7ustoms and his subordinates ith respect to the collection of national
internal re#enue ta$es on imported goods&
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:b; The head of the appropriate go#ernment oAce and his subordinates ith respect to the
collection of energy ta$& and
:c; ?an)s duly accredited by the 7ommissioner ith respect to receipt of payments internal re#enue
ta$es authori!ed to be made thru ban).
Any oAcer or employee of an authori!ed agent ban) assigned to recei#e internal re#enue ta$ payments
and transmit ta$ returns or documents to the ?ureau of Internal 6e#enue shall be sub*ect to the same
sanctions and penalties prescribed in Sections 3</ and 34= of this 7ode.
*ection 1,. uthority of a Revenue ()ces. - sub*ect to the rules and regulations to be prescribed by the
Secretary of 8inance% upon recommendation of the 7ommissioner% a 6e#enue 2Acer assigned to perform
assessment functions in any district may% pursuant to a Getter of Authority issued by the 6e#enue 6egional
+irector% e$amine ta$payers ithin the *urisdiction of the district in order to collect the correct amount of
ta$% or to recommend the assessment of any de(ciency ta$ due in the same manner that the said acts
could ha#e been performed by the 6e#enue 6egional +irector himself.
*ection 14. uthority of ()cers to dminister (aths and Ta-e Testimony. - The 7ommissioner% +eputy
7ommissioners% Ser#ice 7hiefs% Assistant Ser#ice 7hiefs% 6e#enue 6egional +irectors% Assistant 6e#enue
6egional +irectors% 7hiefs and Assistant 7hiefs of +i#isions% 6e#enue +istrict 2Acers% special deputies of
the 7ommissioner% internal re#enue oAcers and any other employee of the ?ureau thereunto especially
deputi!ed by the 7ommissioner shall ha#e the poer to administer oaths and to ta)e testimony in any
oAcial matter or in#estigation conducted by them regarding matters ithin the *urisdiction of the ?ureau.
*ection 1A. uthority of 'nternal Revenue ()cers to .a-e rrests and Sei5ures. - The 7ommissioner% the
+eputy 7ommissioners% the 6e#enue 6egional +irectors% the 6e#enue +istrict 2Acers and other internal
re#enue oAcers shall ha#e authority to ma)e arrests and sei!ures for the #iolation of any penal la% rule or
regulation administered by the ?ureau of Internal 6e#enue. Any person so arrested shall be forthith
brought before a court% there to be dealt ith according to la.
*ection 1B. ssignment of 'nternal Revenue ()cers 'nvolved in $xcise Tax 0unctions to $stablishments
6here rticles sub7ect to $xcise Tax are Produced or 8ept. - The 7ommissioner shall employ% assign% or
reassign internal re#enue oAcers in#ol#ed in e$cise ta$ functions% as often as the e$igencies of the
re#enue ser#ice may re'uire% to establishments or places here articles sub*ect to e$cise ta$ are produced
or )ept: "ro#ided% That an internal re#enue oAcer assigned to any such establishment shall in no case stay
in his assignment for more than to :3; years% sub*ect to rules and regulations to be prescribed by the
Secretary of 8inance% upon recommendation of the 7ommissioner.
*ection 1. ssignment of 'nternal Revenue ()cers and (ther $mployees to (ther +uties. - The
7ommissioner may% sub*ect to the pro#isions of Section 1< and the las on ci#il ser#ice% as ell as the
rules and regulations to be prescribed by the Secretary of 8inance upon the recommendation of the
7ommissioner% assign or reassign internal re#enue oAcers and employees of the ?ureau of Internal
6e#enue% ithout change in their oAcial ran) and salary% to other or special duties connected ith the
enforcement or administration of the re#enue las as the e$igencies of the ser#ice may re'uire: "ro#ided%
That internal re#enue oAcers assigned to perform assessment or collection function shall not remain in the
same assignment for more than three :5; years& "ro#ided% further% That assignment of internal re#enue
oAcers and employees of the ?ureau to special duties shall not e$ceed one :1; year.
*ection 18. Reports of violation of *a&s. - Bhen an internal re#enue oAcer disco#ers e#idence of a
#iolation of this 7ode or of any la% rule or regulations administered by the ?ureau of Internal 6e#enue of
such character as to arrant the institution of criminal proceedings% he shall immediately report the facts
to the 7ommissioner through his immediate superior% gi#ing the name and address of the o9ender and the
names of the itnesses if possible: "ro#ided% That in urgent cases% the 6e#enue 6egional director or
6e#enue +istrict 2Acer% as the case may be% may send the report to the corresponding prosecuting oAcer
in the latter case% a copy of his report shall be sent to the 7ommissioner.
*ection 19. Contents of Commissioner9s nnual Report. - The annual 6eport of the 7ommissioner shall
contain detailed statements of the collections of the ?ureau ith speci(cations of the sources of re#enue
by type of ta$% by manner of payment% by re#enue region and by industry group and its disbursements by
classes of e$penditures.
In case the actual collection e$ceeds or falls short of target as set in the annual national budget by (fteen
percent :1-I; or more% the 7ommissioner shall e$plain the reason for such e$cess or shortfall.
*ection 2D. Submission of Report and Pertinent 'nformation by the Commissioner.
:A; Submission of "ertinent Information to 7ongress. - The pro#ision of Section 34= of this 7ode to
the contrary notithstanding% the 7ommissioner shall% upon re'uest of 7ongress and in aid of
GSV-/
legislation% furnish its appropriate 7ommittee pertinent information including but not limited to:
industry audits% collection performance data% status reports in criminal actions initiated against
persons and ta$payerJs returns: "ro#ided% hoe#er% That any return or return information hich can
be associated ith% or otherise identify% directly or indirectly% a particular ta$payer shall be
furnished the appropriate 7ommittee of 7ongress only hen sitting in 1$ecuti#e Session Hnless
such ta$payer otherise consents in riting to such disclosure.
:?; 6eport to 2#ersight 7ommittee. - The 7ommissioner shall% ith reference to Section 3=0 of this
7ode% submit to the 2#ersight 7ommittee referred to in Section 3/= hereof% through the 7hairmen
of the 7ommittee on Bays and Means of the Senate and Fouse of 6epresentati#es% a report on the
e$ercise of his poers pursuant to the said section% e#ery si$ :<; months of each calendar year.
*ection 21. Sources of Revenue. - The folloing ta$es% fees and charges are deemed to be national
internal re#enue ta$es:
:a; Income ta$&
:b; 1state and donorJs ta$es&
:c; Value-added ta$&
:d; 2ther percentage ta$es&
:e; 1$cise ta$es&
:f; +ocumentary stamp ta$es& and
:g; Such other ta$es as are or hereafter may be imposed and collected by the ?ureau of Internal
6e#enue.
T#T'" ##
TA5 &N #NC&!"
C%APT"R # ; D"+#N#T#&N*
*ection 22. +e:nitions - Bhen used in this Title:
:A; The term JpersonJ means an indi#idual% a trust% estate or corporation.
:?; The term JcorporationJ shall include partnerships% no matter ho created or organi!ed% *oint-
stoc) companies% *oint accounts :cuentas en participacion;% association% or insurance companies%
but does not include general professional partnerships and a *oint #enture or consortium formed for
the purpose of underta)ing construction pro*ects or engaging in petroleum% coal% geothermal and
other energy operations pursuant to an operating consortium agreement under a ser#ice contract
ith the Go#ernment. JGeneral professional partnershipsJ are partnerships formed by persons for
the sole purpose of e$ercising their common profession% no part of the income of hich is deri#ed
from engaging in any trade or business.
:7; The term Jdomestic%J hen applied to a corporation% means created or organi!ed in the
"hilippines or under its las.
:+; The term Jforeign%J hen applied to a corporation% means a corporation hich is not domestic.
:1; The term Jnonresident citi!enJ means:
:1; A citi!en of the "hilippines ho establishes to the satisfaction of the 7ommissioner the
fact of his physical presence abroad ith a de(nite intention to reside therein.
:3; A citi!en of the "hilippines ho lea#es the "hilippines during the ta$able year to reside
abroad% either as an immigrant or for employment on a permanent basis.
:5; A citi!en of the "hilippines ho or)s and deri#es income from abroad and hose
employment thereat re'uires him to be physically present abroad most of the time during
the ta$able year.
GSV-1=
:0; A citi!en ho has been pre#iously considered as nonresident citi!en and ho arri#es in
the "hilippines at any time during the ta$able year to reside permanently in the "hilippines
shall li)eise be treated as a nonresident citi!en for the ta$able year in hich he arri#es in
the "hilippines ith respect to his income deri#ed from sources abroad until the date of his
arri#al in the "hilippines.
:-; The ta$payer shall submit proof to the 7ommissioner to sho his intention of lea#ing the
"hilippines to reside permanently abroad or to return to and reside in the "hilippines as the
case may be for purpose of this Section.
:8; The term Jresident alienJ means an indi#idual hose residence is ithin the "hilippines and ho
is not a citi!en thereof.
:G; The term Jnonresident alienJ means an indi#idual hose residence is not ithin the "hilippines
and ho is not a citi!en thereof.
:F; The term Jresident foreign corporationJ applies to a foreign corporation engaged in trade or
business ithin the "hilippines.
:I; The term Jnonresident foreign corporationJ applies to a foreign corporation not engaged in trade
or business ithin the "hilippines.
:@; The term J(duciaryJ means a guardian% trustee% e$ecutor% administrator% recei#er% conser#ator or
any person acting in any (duciary capacity for any person.
:K; The term Jithholding agentJ means any person re'uired to deduct and ithhold any ta$ under
the pro#isions of Section -4.
:G; The term Jshares of stoc)J shall include shares of stoc) of a corporation% arrants andEor options
to purchase shares of stoc)% as ell as units of participation in a partnership :e$cept general
professional partnerships;% *oint stoc) companies% *oint accounts% *oint #entures ta$able as
corporations% associations and recreation or amusement clubs :such as golf% polo or similar clubs;%
and mutual fund certi(cates.
:M; The term JshareholderJ shall include holders of a shareEs of stoc)% arrantEs andEor optionEs to
purchase shares of stoc) of a corporation% as ell as a holder of a unit of participation in a
partnership :e$cept general professional partnerships; in a *oint stoc) company% a *oint account% a
ta$able *oint #enture% a member of an association% recreation or amusement club :such as golf% polo
or similar clubs; and a holder of a mutual fund certi(cate% a member in an association% *oint-stoc)
company% or insurance company.
:,; The term Jta$payerJ means any person sub*ect to ta$ imposed by this Title.
:2; The terms JincludingJ and JincludesJ% hen used in a de(nition contained in this Title% shall not
be deemed to e$clude other things otherise ithin the meaning of the term de(ned.
:"; The term Jta$able yearJ means the calendar year% or the (scal year ending during such calendar
year% upon the basis of hich the net income is computed under this Title. JTa$able yearJ includes%
in the case of a return made for a fractional part of a year under the pro#isions of this Title or under
rules and regulations prescribed by the Secretary of 8inance% upon recommendation of the
commissioner% the period for hich such return is made.
:L; The term J(scal yearJ means an accounting period of tel#e :13; months ending on the last day
of any month other than +ecember.
:6; The terms Jpaid or incurredJ and Jpaid or accruedJ shall be construed according to the method of
accounting upon the basis of hich the net income is computed under this Title.
:S; The term Jtrade or businessJ includes the performance of the functions of a public oAce.
:T; The term JsecuritiesJ means shares of stoc) in a corporation and rights to subscribe for or to
recei#e such shares. The term includes bonds% debentures% notes or certi(cates% or other e#idence
or indebtedness% issued by any corporation% including those issued by a go#ernment or political
subdi#ision thereof% ith interest coupons or in registered form.
:H; The term Jdealer in securitiesJ means a merchant of stoc)s or securities% hether an indi#idual%
partnership or corporation% ith an established place of business% regularly engaged in the
GSV-11
purchase of securities and the resale thereof to customers& that is% one ho% as a merchant% buys
securities and re-sells them to customers ith a #ie to the gains and pro(ts that may be deri#ed
therefrom.
:V; The term Jban)J means e#ery ban)ing institution% as de(ned in Section 3 of 6epublic Act ,o.
554% as amended% otherise )non as the General ban)ing Act. A ban) may either be a commercial
ban)% a thrift ban)% a de#elopment ban)% a rural ban) or speciali!ed go#ernment ban).
:B; The term Jnon-ban) (nancial intermediaryJ means a (nancial intermediary% as de(ned in
Section 3:+;:7; of 6epublic Act ,o. 554% as amended% otherise )non as the General ?an)ing Act%
authori!ed by the ?ang)o Sentral ng "ilipinas :?S"; to perform 'uasi-ban)ing acti#ities.
:M; The term J'uasi-ban)ing acti#itiesJ means borroing funds from tenty :3=; or more personal or
corporate lenders at any one time% through the issuance% endorsement% or acceptance of debt
instruments of any )ind other than deposits for the borroerJs on account% or through the
issuance of certi(cates of assignment or similar instruments% ith recourse% or of repurchase
agreements for purposes of relending or purchasing recei#ables and other similar obligations:
"ro#ided% hoe#er% That commercial% industrial and other non-(nancial companies% hich borro
funds through any of these means for the limited purpose of (nancing their on needs or the needs
of their agents or dealers% shall not be considered as performing 'uasi-ban)ing functions.
:N; The term Jdeposit substitutesJ shall mean an alternati#e from of obtaining funds from the public
:the term JpublicJ means borroing from tenty :3=; or more indi#idual or corporate lenders at any
one time; other than deposits% through the issuance% endorsement% or acceptance of debt
instruments for the borroers on account% for the purpose of relending or purchasing of
recei#ables and other obligations% or (nancing their on needs or the needs of their agent or
dealer. These instruments may include% but need not be limited to ban)ersJ acceptances%
promissory notes% repurchase agreements% including re#erse repurchase agreements entered into
by and beteen the ?ang)o Sentral ng "ilipinas :?S"; and any authori!ed agent ban)% certi(cates
of assignment or participation and similar instruments ith recourse: "ro#ided% hoe#er% That debt
instruments issued for interban) call loans ith maturity of not more than (#e :-; days to co#er
de(ciency in reser#es against deposit liabilities% including those beteen or among ban)s and
'uasi-ban)s% shall not be considered as deposit substitute debt instruments.
:O; The term Jordinary incomeJ includes any gain from the sale or e$change of property hich is not
a capital asset or property described in Section 5/:A;:1;. Any gain from the sale or e$change of
property hich is treated or considered% under other pro#isions of this Title% as Jordinary incomeJ
shall be treated as gain from the sale or e$change of property hich is not a capital asset as
de(ned in Section 5/:A;:1;. The term Jordinary lossJ includes any loss from the sale or e$change of
property hich is not a capital asset. Any loss from the sale or e$change of property hich is
treated or considered% under other pro#isions of this Title% as Jordinary lossJ shall be treated as loss
from the sale or e$change of property hich is not a capital asset.
:AA; The term Jran) and (le employeesJ shall mean all employees ho are holding neither
managerial nor super#isory position as de(ned under e$isting pro#isions of the Gabor 7ode of the
"hilippines% as amended.
:??; The term Jmutual fund companyJ shall mean an open-end and close-end in#estment company
as de(ned under the In#estment 7ompany Act.
:77; The term Jtrade% business or professionJ shall not include performance of ser#ices by the
ta$payer as an employee.
:++; The term Jregional or area head'uartersJ shall mean a branch established in the "hilippines by
multinational companies and hich head'uarters do not earn or deri#e income from the "hilippines
and hich act as super#isory% communications and coordinating center for their aAliates%
subsidiaries% or branches in the Asia-"aci(c 6egion and other foreign mar)ets.
:11; The term Jregional operating head'uartersJ shall mean a branch established in the "hilippines
by multinational companies hich are engaged in any of the folloing ser#ices: general
administration and planning& business planning and coordination& sourcing and procurement of ra
materials and components& corporate (nance ad#isory ser#ices& mar)eting control and sales
promotion& training and personnel management& logistic ser#ices& research and de#elopment
ser#ices and product de#elopment& technical support and maintenance& data processing and
communications& and business de#elopment.
:88; The term Jlong-term deposit or in#estment certi(catesJ shall refer to certi(cate of time deposit
or in#estment in the form of sa#ings% common or indi#idual trust funds% deposit substitutes%
GSV-13
in#estment management accounts and other in#estments ith a maturity period of not less than
(#e :-; years% the form of hich shall be prescribed by the ?ang)o Sentral ng "ilipinas :?S"; and
issued by ban)s only :not by nonban) (nancial intermediaries and (nance companies; to
indi#iduals in denominations of Ten thousand pesos :"1=%===; and other denominations as may be
prescribed by the ?S".
C%APT"R ## ; $"N"RA' PR#NC#P'"*
*ection 2,. 2eneral Principles of 'ncome Taxation in the Philippines. - 1$cept hen otherise pro#ided in
this 7ode:
:A; A citi!en of the "hilippines residing therein is ta$able on all income deri#ed from sources ithin
and ithout the "hilippines&
:?; A nonresident citi!en is ta$able only on income deri#ed from sources ithin the "hilippines&
:7; An indi#idual citi!en of the "hilippines ho is or)ing and deri#ing income from abroad as an
o#erseas contract or)er is ta$able only on income deri#ed from sources ithin the "hilippines:
"ro#ided% That a seaman ho is a citi!en of the "hilippines and ho recei#es compensation for
ser#ices rendered abroad as a member of the complement of a #essel engaged e$clusi#ely in
international trade shall be treated as an o#erseas contract or)er&
:+; An alien indi#idual% hether a resident or not of the "hilippines% is ta$able only on income
deri#ed from sources ithin the "hilippines&
:1; A domestic corporation is ta$able on all income deri#ed from sources ithin and ithout the
"hilippines& and
:8; A foreign corporation% hether engaged or not in trade or business in the "hilippines% is ta$able
only on income deri#ed from sources ithin the "hilippines.
C%APT"R ### ; TA5 &N #ND#(#D)A'*
*ection 24. 'ncome Tax Rates.
:A; 6ates of Income Ta$ on Indi#idual 7iti!en and Indi#idual 6esident Alien of the "hilippines.
:1; An income ta$ is hereby imposed:
:a; 2n the ta$able income de(ned in Section 51 of this 7ode% other than income
sub*ect to ta$ under Subsections :?;% :7; and :+; of this Section% deri#ed for each
ta$able year from all sources ithin and ithout the "hilippines be e#ery indi#idual
citi!en of the "hilippines residing therein&
:b; 2n the ta$able income de(ned in Section 51 of this 7ode% other than income
sub*ect to ta$ under Subsections :?;% :7; and :+; of this Section% deri#ed for each
ta$able year from all sources ithin the "hilippines by an indi#idual citi!en of the
"hilippines ho is residing outside of the "hilippines including o#erseas contract
or)ers referred to in Subsection:7; of Section 35 hereof& and
:c; 2n the ta$able income de(ned in Section 51 of this 7ode% other than income
sub*ect to ta$ under Subsections :b;% :7; and :+; of this Section% deri#ed for each
ta$able year from all sources ithin the "hilippines by an indi#idual alien ho is a
resident of the "hilippines.
The ta$ shall be computed in accordance ith and at the rates established in the folloing
schedule:
,ot o#er "1=%===PPPPPPPPP -I
2#er "1=%=== but not o#er "5=%===PP "-==Q1=I of the e$cess o#er "1=%===
2#er "5=%=== but not o#er "4=%===PP "3%-==Q1-I of the e$cess o#er "5=%===
2#er "4=%=== but not o#er "10=%===P ".%-==Q3=I of the e$cess o#er "4=%===
2#er "10=%=== but not o#er
"3-=%===P
"33%-==Q3-I of the e$cess o#er "10=%===
2#er "3-=%=== but not o#er "-=%===Q5=I of the e$cess o#er "3-=%===
GSV-15
"-==%===P
2#er "-==%=== PPPPPPPPPPP "13-%===Q50I of the e$cess o#er "-==%=== in
1//..
"ro#ided% That e9ecti#e @anuary 1% 1///% the top marginal rate shall be thirty-three percent
:55I; and e9ecti#e @anuary 1% 3===% the said rate shall be thirty-to percent :53I;.
8or married indi#iduals% the husband and ife% sub*ect to the pro#ision of Section -1 :+;
hereof% shall compute separately their indi#idual income ta$ based on their respecti#e total
ta$able income: "ro#ided% That if any income cannot be de(nitely attributed to or identi(ed
as income e$clusi#ely earned or reali!ed by either of the spouses% the same shall be di#ided
e'ually beteen the spouses for the purpose of determining their respecti#e ta$able
income.
:?; 6ate of Ta$ on 7ertain "assi#e Income.
:1; Interests% 6oyalties% "ri!es% and 2ther Binnings. - A (nal ta$ at the rate of tenty percent
:3=I; is hereby imposed upon the amount of interest from any currency ban) deposit and
yield or any other monetary bene(t from deposit substitutes and from trust funds and
similar arrangements& royalties% e$cept on boo)s% as ell as other literary or)s and musical
compositions% hich shall be imposed a (nal ta$ of ten percent :1=I;& pri!es :e$cept pri!es
amounting to Ten thousand pesos :"1=%===; or less hich shall be sub*ect to ta$ under
Subsection :A; of Section 30& and other innings :e$cept "hilippine 7harity Seepsta)es and
Gotto innings;% deri#ed from sources ithin the "hilippines: "ro#ided% hoe#er% That
interest income recei#ed by an indi#idual ta$payer :e$cept a nonresident indi#idual; from a
depository ban) under the e$panded foreign currency deposit system shall be sub*ect to a
(nal income ta$ at the rate of se#en and one-half percent :4 1E3I; of such interest income:
"ro#ided% further% That interest income from long-term deposit or in#estment in the form of
sa#ings% common or indi#idual trust funds% deposit substitutes% in#estment management
accounts and other in#estments e#idenced by certi(cates in such form prescribed by the
?ang)o Sentral ng "ilipinas :?S"; shall be e$empt from the ta$ imposed under this
Subsection: "ro#ided% (nally% That should the holder of the certi(cate pre-terminate the
deposit or in#estment before the (fth :-th; year% a (nal ta$ shall be imposed on the entire
income and shall be deducted and ithheld by the depository ban) from the proceeds of the
long-term deposit or in#estment certi(cate based on the remaining maturity thereof:
8our :0; years to less than (#e :-; years - -I&
Three :5; years to less than :0; years - 13I& and
Gess than three :5; years - 3=I
:3; 7ash andEor "roperty +i#idends - A (nal ta$ at the folloing rates shall be imposed upon
the cash andEor property di#idends actually or constructi#ely recei#ed by an indi#idual from
a domestic corporation or from a *oint stoc) company% insurance or mutual fund companies
and regional operating head'uarters of multinational companies% or on the share of an
indi#idual in the distributable net income after ta$ of a partnership :e$cept a general
professional partnership; of hich he is a partner% or on the share of an indi#idual in the net
income after ta$ of an association% a *oint account% or a *oint #enture or consortium ta$able
as a corporation of hich he is a member or co-#enturer:
Si$ percent :<I; beginning @anuary 1% 1//.&
1ight percent :.I; beginning @anuary 1% 1///&
Ten percent :1=I beginning @anuary 1% 3===.
"ro#ided% hoe#er% That the ta$ on di#idends shall apply only on income earned on or after
@anuary 1% 1//.. Income forming part of retained earnings as of +ecember 51% 1//4 shall
not% e#en if declared or distributed on or after @anuary 1% 1//.% be sub*ect to this ta$.
:7; 7apital Gains from Sale of Shares of Stoc) not Traded in the Stoc) 1$change. - The pro#isions of
Section 5/:?; notithstanding% a (nal ta$ at the rates prescribed belo is hereby imposed upon the
net capital gains reali!ed during the ta$able year from the sale% barter% e$change or other
disposition of shares of stoc) in a domestic corporation% e$cept shares sold% or disposed of through
the stoc) e$change.
GSV-10
,ot o#er "1==%===PPPPPPPPPPP -I
2n any amount in e$cess of "1==%===PP 1=I
:+; 7apital Gains from Sale of 6eal "roperty. -
:1; 'n 2eneral. - The pro#isions of Section 5/:?; notithstanding% a (nal ta$ of si$ percent
:<I; based on the gross selling price or current fair mar)et #alue as determined in
accordance ith Section <:1; of this 7ode% hiche#er is higher% is hereby imposed upon
capital gains presumed to ha#e been reali!ed from the sale% e$change% or other disposition
of real property located in the "hilippines% classi(ed as capital assets% including pacto de
retro sales and other forms of conditional sales% by indi#iduals% including estates and trusts:
"ro#ided% That the ta$ liability% if any% on gains from sales or other dispositions of real
property to the go#ernment or any of its political subdi#isions or agencies or to go#ernment-
oned or controlled corporations shall be determined either under Section 30 :A; or under
this Subsection% at the option of the ta$payer.
:3; $xception. - The pro#isions of paragraph :1; of this Subsection to the contrary
notithstanding% capital gains presumed to ha#e been reali!ed from the sale or disposition
of their principal residence by natural persons% the proceeds of hich is fully utili!ed in
ac'uiring or constructing a ne principal residence ithin eighteen :1.; calendar months
from the date of sale or disposition% shall be e$empt from the capital gains ta$ imposed
under this Subsection: "ro#ided% That the historical cost or ad*usted basis of the real
property sold or disposed shall be carried o#er to the ne principal residence built or
ac'uired: "ro#ided% further% That the 7ommissioner shall ha#e been duly noti(ed by the
ta$payer ithin thirty :5=; days from the date of sale or disposition through a prescribed
return of his intention to a#ail of the ta$ e$emption herein mentioned: "ro#ided% still further%
That the said ta$ e$emption can only be a#ailed of once e#ery ten :1=; years: "ro#ided%
(nally% that if there is no full utili!ation of the proceeds of sale or disposition% the portion of
the gain presumed to ha#e been reali!ed from the sale or disposition shall be sub*ect to
capital gains ta$. 8or this purpose% the gross selling price or fair mar)et #alue at the time of
sale% hiche#er is higher% shall be multiplied by a fraction hich the unutili!ed amount bears
to the gross selling price in order to determine the ta$able portion and the ta$ prescribed
under paragraph :1; of this Subsection shall be imposed thereon.
*ection 2A. Tax on 4onresident lien 'ndividual. -
:A; ,onresident Alien 1ngaged in trade or ?usiness Bithin the "hilippines. -
:1; 'n 2eneral. - A nonresident alien indi#idual engaged in trade or business in the
"hilippines shall be sub*ect to an income ta$ in the same manner as an indi#idual citi!en and
a resident alien indi#idual% on ta$able income recei#ed from all sources ithin the
"hilippines. A nonresident alien indi#idual ho shall come to the "hilippines and stay therein
for an aggregate period of more than one hundred eighty :1.=; days during any calendar
year shall be deemed a Jnonresident alien doing business in the "hilippinesJ. Section 33 :G;
of this 7ode notithstanding.
:3; Cash and;or Property +ividends from a +omestic Corporation or <oint Stoc- Company, or
'nsurance or .utual 0und Company or Regional (perating Head/uarter or .ultinational
Company, or Share in the +istributable 4et 'ncome of a Partnership =$xcept a 2eneral
Professional Partnership>, <oint ccount, <oint 3enture Taxable as a Corporation or
ssociation?, 'nterests, Royalties, Pri5es, and (ther 6innings. - 7ash andEor property
di#idends from a domestic corporation% or from a *oint stoc) company% or from an insurance
or mutual fund company or from a regional operating head'uarter of multinational company%
or the share of a nonresident alien indi#idual in the distributable net income after ta$ of a
partnership :e$cept a general professional partnership; of hich he is a partner% or the share
of a nonresident alien indi#idual in the net income after ta$ of an association% a *oint
account% or a *oint #enture ta$able as a corporation of hich he is a member or a co-
#enturer& interests& royalties :in any form;& and pri!es :e$cept pri!es amounting to Ten
thousand pesos :"1=%===; or less hich shall be sub*ect to ta$ under Subsection :?;:1; of
Section 30; and other innings :e$cept "hilippine 7harity Seepsta)es and Gotto innings;&
shall be sub*ect to an income ta$ of tenty percent :3=I; on the total amount thereof:
"ro#ided% hoe#er% that royalties on boo)s as ell as other literary or)s% and royalties on
musical compositions shall be sub*ect to a (nal ta$ of ten percent :1=I; on the total amount
thereof: "ro#ided% further% That cinematographic (lms and similar or)s shall be sub*ect to
the ta$ pro#ided under Section 3. of this 7ode: "ro#ided% furthermore% That interest income
from long-term deposit or in#estment in the form of sa#ings% common or indi#idual trust
funds% deposit substitutes% in#estment management accounts and other in#estments
e#idenced by certi(cates in such form prescribed by the ?ang)o Sentral ng "ilipinas :?S";
GSV-1-
shall be e$empt from the ta$ imposed under this Subsection: "ro#ided% (nally% that should
the holder of the certi(cate pre-terminate the deposit or in#estment before the (fth :-th;
year% a (nal ta$ shall be imposed on the entire income and shall be deducted and ithheld
by the depository ban) from the proceeds of the long-term deposit or in#estment certi(cate
based on the remaining maturity thereof:
8our :0; years to less than (#e :-; years - -I&
Three :5; years to less than four :0; years - 13I& and
Gess than three :5; years - 3=I.
:5; Capital 2ains. - 7apital gains reali!ed from sale% barter or e$change of shares of stoc) in
domestic corporations not traded through the local stoc) e$change% and real properties shall
be sub*ect to the ta$ prescribed under Subsections :7; and :+; of Section 30.
:?; ,onresident Alien Indi#idual ,ot 1ngaged in Trade or ?usiness Bithin the "hilippines. - There
shall be le#ied% collected and paid for each ta$able year upon the entire income recei#ed from all
sources ithin the "hilippines by e#ery nonresident alien indi#idual not engaged in trade or
business ithin the "hilippines as interest% cash andEor property di#idends% rents% salaries% ages%
premiums% annuities% compensation% remuneration% emoluments% or other ($ed or determinable
annual or periodic or casual gains% pro(ts% and income% and capital gains% a ta$ e'ual to tenty-(#e
percent :3-I; of such income. 7apital gains reali!ed by a nonresident alien indi#idual not engaged
in trade or business in the "hilippines from the sale of shares of stoc) in any domestic corporation
and real property shall be sub*ect to the income ta$ prescribed under Subsections :7; and :+; of
Section 30.
:7; Alien Indi#idual 1mployed by 6egional or Area Fead'uarters and 6egional 2perating
Fead'uarters of Multinational 7ompanies. - There shall be le#ied% collected and paid for each
ta$able year upon the gross income recei#ed by e#ery alien indi#idual employed by regional or area
head'uarters and regional operating head'uarters established in the "hilippines by multinational
companies as salaries% ages% annuities% compensation% remuneration and other emoluments% such
as honoraria and alloances% from such regional or area head'uarters and regional operating
head'uarters% a ta$ e'ual to (fteen percent :1-I; of such gross income: "ro#ided% hoe#er% That
the same ta$ treatment shall apply to 8ilipinos employed and occupying the same position as those
of aliens employed by these multinational companies. 8or purposes of this 7hapter% the term
Jmultinational companyJ means a foreign (rm or entity engaged in international trade ith aAliates
or subsidiaries or branch oAces in the Asia-"aci(c 6egion and other foreign mar)ets.
:+; Alien Indi#idual 1mployed by 29shore ?an)ing Hnits. - There shall be le#ied% collected and paid
for each ta$able year upon the gross income recei#ed by e#ery alien indi#idual employed by
o9shore ban)ing units established in the "hilippines as salaries% ages% annuities% compensation%
remuneration and other emoluments% such as honoraria and alloances% from such o9-shore
ban)ing units% a ta$ e'ual to (fteen percent :1-I; of such gross income: "ro#ided% hoe#er% That
the same ta$ treatment shall apply to 8ilipinos employed and occupying the same positions as
those of aliens employed by these o9shore ban)ing units.
:1; Alien Indi#idual 1mployed by "etroleum Ser#ice 7ontractor and Subcontractor. - An Alien
indi#idual ho is a permanent resident of a foreign country but ho is employed and assigned in
the "hilippines by a foreign ser#ice contractor or by a foreign ser#ice subcontractor engaged in
petroleum operations in the "hilippines shall be liable to a ta$ of (fteen percent :1-I; of the
salaries% ages% annuities% compensation% remuneration and other emoluments% such as honoraria
and alloances% recei#ed from such contractor or subcontractor: "ro#ided% hoe#er% That the same
ta$ treatment shall apply to a 8ilipino employed and occupying the same position as an alien
employed by petroleum ser#ice contractor and subcontractor.
Any income earned from all other sources ithin the "hilippines by the alien employees referred to under
Subsections :7;% :+; and :1; hereof shall be sub*ect to the pertinent income ta$% as the case may be%
imposed under this 7ode.
*ection 2B. Tax *iability of .embers of 2eneral Professional Partnerships. - A general professional
partnership as such shall not be sub*ect to the income ta$ imposed under this 7hapter. "ersons engaging
in business as partners in a general professional partnership shall be liable for income ta$ only in their
separate and indi#idual capacities.!avvphil?@et
8or purposes of computing the distributi#e share of the partners% the net income of the partnership shall be
computed in the same manner as a corporation.
GSV-1<
1ach partner shall report as gross income his distributi#e share% actually or constructi#ely recei#ed% in the
net income of the partnership.
C%APT"R #( ; TA5 &N C&RP&RAT#&N*
*ection 2. Rates of 'ncome tax on +omestic Corporations. -
:A; 'n 2eneral. - 1$cept as otherise pro#ided in this 7ode% an income ta$ of thirty-(#e percent
:5-I; is hereby imposed upon the ta$able income deri#ed during each ta$able year from all
sources ithin and ithout the "hilippines by e#ery corporation% as de(ned in Section 33:?; of this
7ode and ta$able under this Title as a corporation% organi!ed in% or e$isting under the las of the
"hilippines: "ro#ided% That e9ecti#e @anuary 1% 1//.% the rate of income ta$ shall be thirty-four
percent :50I;& e9ecti#e @anuary 1% 1///% the rate shall be thirty-three percent :55I;& and e9ecti#e
@anuary 1% 3=== and thereafter% the rate shall be thirty-to percent :53I;.
In the case of corporations adopting the (scal-year accounting period% the ta$able income shall be
computed ithout regard to the speci(c date hen speci(c sales% purchases and other transactions
occur. Their income and e$penses for the (scal year shall be deemed to ha#e been earned and
spent e'ually for each month of the period.
The reduced corporate income ta$ rates shall be applied on the amount computed by multiplying
the number of months co#ered by the ne rates ithin the (scal year by the ta$able income of the
corporation for the period% di#ided by tel#e.
"ro#ided% further% That the "resident% upon the recommendation of the Secretary of 8inance% may
e9ecti#e @anuary 1% 3===% allo corporations the option to be ta$ed at (fteen percent :1-I; of
gross income as de(ned herein% after the folloing conditions ha#e been satis(ed:
:1; A ta$ e9ort ratio of tenty percent :3=I; of Gross ,ational "roduct :G,";&
:3; A ratio of forty percent :0=I; of income ta$ collection to total ta$ re#enues&
:5; A VAT ta$ e9ort of four percent :0I; of G,"& and
:0; A =./ percent :=./I; ratio of the 7onsolidated "ublic Sector 8inancial "osition :7"S8"; to
G,".
The option to be ta$ed based on gross income shall be a#ailable only to (rms hose ratio of cost of
sales to gross sales or receipts from all sources does not e$ceed (fty-(#e percent :--I;.
The election of the gross income ta$ option by the corporation shall be irre#ocable for three :5;
consecuti#e ta$able years during hich the corporation is 'uali(ed under the scheme.
8or purposes of this Section% the term Jgross incomeJ deri#ed from business shall be e'ui#alent to
gross sales less sales returns% discounts and alloances and cost of goods sold. >7ost of goods soldJ
shall include all business e$penses directly incurred to produce the merchandise to bring them to
their present location and use.
8or a trading or merchandising concern% Jcost of goodsJ sold shall include the in#oice cost of the
goods sold% plus import duties% freight in transporting the goods to the place here the goods are
actually sold% including insurance hile the goods are in transit.
8or a manufacturing concern% Jcost of goods manufactured and soldJ shall include all costs of
production of (nished goods% such as ra materials used% direct labor and manufacturing o#erhead%
freight cost% insurance premiums and other costs incurred to bring the ra materials to the factory
or arehouse.
In the case of ta$payers engaged in the sale of ser#ice% Jgross incomeJ means gross receipts less
sales returns% alloances and discounts.
:?; "roprietary 1ducational Institutions and Fospitals. - "roprietary educational institutions and
hospitals hich are nonpro(t shall pay a ta$ of ten percent :1=I; on their ta$able income e$cept
those co#ered by Subsection :+; hereof: "ro#ided% that if the gross income from unrelated trade%
business or other acti#ity e$ceeds (fty percent :-=I; of the total gross income deri#ed by such
educational institutions or hospitals from all sources% the ta$ prescribed in Subsection :A; hereof
shall be imposed on the entire ta$able income. 8or purposes of this Subsection% the term Junrelated
trade% business or other acti#ityJ means any trade% business or other acti#ity% the conduct of hich
GSV-14
is not substantially related to the e$ercise or performance by such educational institution or
hospital of its primary purpose or function. A J"roprietary educational institutionJ is any pri#ate
school maintained and administered by pri#ate indi#iduals or groups ith an issued permit to
operate from the +epartment of 1ducation% 7ulture and Sports :+17S;% or the 7ommission on
Figher 1ducation :7F1+;% or the Technical 1ducation and S)ills +e#elopment Authority :T1S+A;% as
the case may be% in accordance ith e$isting las and regulations.
:7; Go#ernment-oned or 7ontrolled-7orporations% Agencies or Instrumentalities. - The pro#isions
of e$isting special or general las to the contrary notithstanding% all corporations% agencies% or
instrumentalities oned or controlled by the Go#ernment% e$cept the Go#ernment Ser#ice
Insurance System :GSIS;% the Social Security System :SSS;% the "hilippine Fealth Insurance
7orporation :"FI7;% the "hilippine 7harity Seepsta)es 2Ace :"7S2; and the "hilippine Amusement
and Gaming 7orporation :"AG726;% shall pay such rate of ta$ upon their ta$able income as are
imposed by this Section upon corporations or associations engaged in s similar business% industry%
or acti#ity.
:+; 6ates of Ta$ on 7ertain "assi#e Incomes. -
:1; Interest from +eposits and Nield or any other Monetary ?ene(t from +eposit Substitutes
and from Trust 8unds and Similar Arrangements% and 6oyalties. - A (nal ta$ at the rate of
tenty percent :3=I; is hereby imposed upon the amount of interest on currency ban)
deposit and yield or any other monetary bene(t from deposit substitutes and from trust
funds and similar arrangements recei#ed by domestic corporations% and royalties% deri#ed
from sources ithin the "hilippines: "ro#ided% hoe#er% That interest income deri#ed by a
domestic corporation from a depository ban) under the e$panded foreign currency deposit
system shall be sub*ect to a (nal income ta$ at the rate of se#en and one-half percent :4
1E3I; of such interest income.
:3; 7apital Gains from the Sale of Shares of Stoc) ,ot Traded in the Stoc) 1$change. - A (nal
ta$ at the rates prescribed belo shall be imposed on net capital gains reali!ed during the
ta$able year from the sale% e$change or other disposition of shares of stoc) in a domestic
corporation e$cept shares sold or disposed of through the stoc) e$change:
,ot o#er "1==%===PPPPPPP -I
Amount in e$cess of "1==%===PP 1=I
:5; Ta$ on Income +eri#ed under the 1$panded 8oreign 7urrency +eposit System. - Income
deri#ed by a depository ban) under the e$panded foreign currency deposit system from
foreign currency transactions ith local commercial ban)s% including branches of foreign
ban)s that may be authori!ed by the ?ang)o Sentral ng "ilipinas :?S"; to transact business
ith foreign currency depository system units and other depository ban)s under the
e$panded foreign currency deposit system% including interest income from foreign currency
loans granted by such depository ban)s under said e$panded foreign currency deposit
system to residents% shall be sub*ect to a (nal income ta$ at the rate of ten percent :1=I; of
such income.
Any income of nonresidents% hether indi#iduals or corporations% from transactions ith
depository ban)s under the e$panded system shall be e$empt from income ta$.
:0; Intercorporate +i#idends. - +i#idends recei#ed by a domestic corporation from another
domestic corporation shall not be sub*ect to ta$.
:-; 7apital Gains 6eali!ed from the Sale% 1$change or +isposition of Gands andEor ?uildings. -
A (nal ta$ of si$ percent :<I; is hereby imposed on the gain presumed to ha#e been
reali!ed on the sale% e$change or disposition of lands andEor buildings hich are not actually
used in the business of a corporation and are treated as capital assets% based on the gross
selling price of fair mar)et #alue as determined in accordance ith Section <:1; of this 7ode%
hiche#er is higher% of such lands andEor buildings.
:1; Minimum 7orporate Income Ta$ on +omestic 7orporations. -
:1; Imposition of Ta$. - A minimum corporate income ta$ of to percent :3I= of the gross
income as of the end of the ta$able year% as de(ned herein% is hereby imposed on a
corporation ta$able under this Title% beginning on the fourth ta$able year immediately
folloing the year in hich such corporation commenced its business operations% hen the
minimum income ta$ is greater than the ta$ computed under Subsection :A; of this Section
for the ta$able year.
GSV-1.
:3; 7arry 8roard of 1$cess Minimum Ta$. - Any e$cess of the minimum corporate income
ta$ o#er the normal income ta$ as computed under Subsection :A; of this Section shall be
carried forard and credited against the normal income ta$ for the three :5; immediately
succeeding ta$able years.
:5; 6elief from the Minimum 7orporate Income Ta$ Hnder 7ertain 7onditions. - The Secretary
of 8inance is hereby authori!ed to suspend the imposition of the minimum corporate income
ta$ on any corporation hich su9ers losses on account of prolonged labor dispute% or
because of force ma*eure% or because of legitimate business re#erses.
The Secretary of 8inance is hereby authori!ed to promulgate% upon recommendation of the
7ommissioner% the necessary rules and regulation that shall de(ne the terms and conditions
under hich he may suspend the imposition of the minimum corporate income ta$ in a
meritorious case.
:0; Gross Income +e(ned. - 8or purposes of applying the minimum corporate income ta$
pro#ided under Subsection :1; hereof% the term Jgross incomeJ shall mean gross sales less
sales returns% discounts and alloances and cost of goods sold. >7ost of goods soldJ shall
include all business e$penses directly incurred to produce the merchandise to bring them to
their present location and use.
8or a trading or merchandising concern% Jcost of goods soldJ shall include the in#oice cost of the
goods sold% plus import duties% freight in transporting the goods to the place here the goods are
actually sold including insurance hile the goods are in transit.
8or a manufacturing concern% cost of Jgoods manufactured and soldJ shall include all costs of
production of (nished goods% such as ra materials used% direct labor and manufacturing o#erhead%
freight cost% insurance premiums and other costs incurred to bring the ra materials to the factory
or arehouse.
In the case of ta$payers engaged in the sale of ser#ice% Jgross incomeJ means gross receipts less
sales returns% alloances% discounts and cost of ser#ices. J7ost of ser#icesJ shall mean all direct
costs and e$penses necessarily incurred to pro#ide the ser#ices re'uired by the customers and
clients including :A; salaries and employee bene(ts of personnel% consultants and specialists
directly rendering the ser#ice and :?; cost of facilities directly utili!ed in pro#iding the ser#ice such
as depreciation or rental of e'uipment used and cost of supplies: "ro#ided% hoe#er% That in the
case of ban)s% Jcost of ser#icesJ shall include interest e$pense.
*ection 28. Rates of 'ncome Tax on 0oreign Corporations. -
:A; Ta$ on 6esident 8oreign 7orporations. -
:1; 'n 2eneral. - 1$cept as otherise pro#ided in this 7ode% a corporation organi!ed%
authori!ed% or e$isting under the las of any foreign country% engaged in trade or business
ithin the "hilippines% shall be sub*ect to an income ta$ e'ui#alent to thirty-(#e percent
:5-I; of the ta$able income deri#ed in the preceding ta$able year from all sources ithin
the "hilippines: pro#ided% That e9ecti#e @anuary 1% 1//.% the rate of income ta$ shall be
thirty-four percent :50I;& e9ecti#e @anuary 1% 1///% the rate shall be thirty-three percent
:55I;% and e9ecti#e @anuary 1% 3=== and thereafter% the rate shall be thirty-to percent
:53I;.
In the case of corporations adopting the (scal-year accounting period% the ta$able income
shall be computed ithout regard to the speci(c date hen sales% purchases and other
transactions occur. Their income and e$penses for the (scal year shall be deemed to ha#e
been earned and spent e'ually for each month of the period.
The reduced corporate income ta$ rates shall be applied on the amount computed by
multiplying the number of months co#ered by the ne rates ithin the (scal year by the
ta$able income of the corporation for the period% di#ided by tel#e.
"ro#ided% hoe#er% That a resident foreign corporation shall be granted the option to be
ta$ed at (fteen percent :1-I; on gross income under the same conditions% as pro#ided in
Section 34 :A;.
:3; Minimum 7orporate Income Ta$ on 6esident 8oreign 7orporations. - A minimum
corporate income ta$ of to percent :3I; of gross income% as prescribed under Section 34
:1; of this 7ode% shall be imposed% under the same conditions% on a resident foreign
corporation ta$able under paragraph :1; of this Subsection.
GSV-1/
:5; International 7arrier. - An international carrier doing business in the "hilippines shall pay
a ta$ of to and one-half percent :3 1E3I; on its JGross "hilippine ?illingsJ as de(ned
hereunder:
:a; International Air 7arrier. - JGross "hilippine ?illingsJ refers to the amount of gross
re#enue deri#ed from carriage of persons% e$cess baggage% cargo and mail
originating from the "hilippines in a continuous and uninterrupted Cight% irrespecti#e
of the place of sale or issue and the place of payment of the tic)et or passage
document: "ro#ided% That tic)ets re#alidated% e$changed andEor indorsed to another
international airline form part of the Gross "hilippine ?illings if the passenger boards
a plane in a port or point in the "hilippines: "ro#ided% further% That for a Cight hich
originates from the "hilippines% but transshipment of passenger ta)es place at any
port outside the "hilippines on another airline% only the ali'uot portion of the cost of
the tic)et corresponding to the leg Con from the "hilippines to the point of
transshipment shall form part of Gross "hilippine ?illings.
:b; International Shipping. - JGross "hilippine ?illingsJ means gross re#enue hether
for passenger% cargo or mail originating from the "hilippines up to (nal destination%
regardless of the place of sale or payments of the passage or freight documents.
:0; 29shore ?an)ing Hnits. - The pro#isions of any la to the contrary notithstanding%
income deri#ed by o9shore ban)ing units authori!ed by the ?ang)o Sentral ng "ilipinas
:?S"; to transact business ith o9shore ban)ing units% including any interest income deri#ed
from foreign currency loans granted to residents% shall be sub*ect to a (nal income ta$ at the
rate of ten percent :1=I; of such income.
Any income of nonresidents% hether indi#iduals or corporations% from transactions ith said
o9shore ban)ing units shall be e$empt from income ta$.
:-; Ta$ on ?ranch "ro(ts 6emittances. - Any pro(t remitted by a branch to its head oAce
shall be sub*ect to a ta$ of (fteen :1-I; hich shall be based on the total pro(ts applied or
earmar)ed for remittance ithout any deduction for the ta$ component thereof :e$cept
those acti#ities hich are registered ith the "hilippine 1conomic Oone Authority;. The ta$
shall be collected and paid in the same manner as pro#ided in Sections -4 and -. of this
7ode: pro#ided% that interests% di#idends% rents% royalties% including remuneration for
technical ser#ices% salaries% ages premiums% annuities% emoluments or other ($ed or
determinable annual% periodic or casual gains% pro(ts% income and capital gains recei#ed by
a foreign corporation during each ta$able year from all sources ithin the "hilippines shall
not be treated as branch pro(ts unless the same are e9ecti#ely connected ith the conduct
of its trade or business in the "hilippines.
:<; 6egional or Area Fead'uarters and 6egional 2perating Fead'uarters of Multinational
7ompanies. -
:a; 6egional or area head'uarters as de(ned in Section 33:++; shall not be sub*ect to
income ta$.
:b; 6egional operating head'uarters as de(ned in Section 33:11; shall pay a ta$ of
ten percent :1=I; of their ta$able income.
:4; Ta$ on 7ertain Incomes 6ecei#ed by a 6esident 8oreign 7orporation. -
:a; Interest from +eposits and Nield or any other Monetary ?ene(t from +eposit
Substitutes% Trust 8unds and Similar Arrangements and 6oyalties. - Interest from any
currency ban) deposit and yield or any other monetary bene(t from deposit
substitutes and from trust funds and similar arrangements and royalties deri#ed from
sources ithin the "hilippines shall be sub*ect to a (nal income ta$ at the rate of
tenty percent :3=I; of such interest: "ro#ided% hoe#er% That interest income
deri#ed by a resident foreign corporation from a depository ban) under the e$panded
foreign currency deposit system shall be sub*ect to a (nal income ta$ at the rate of
se#en and one-half percent :4 1E3I; of such interest income.
:b; Income +eri#ed under the 1$panded 8oreign 7urrency +eposit System. - Income
deri#ed by a depository ban) under the e$panded foreign currency deposit system
from foreign currency transactions ith local commercial ban)s including branches of
foreign ban)s that may be authori!ed by the ?ang)o Sentral ng "ilipinas :?S"; to
transact business ith foreign currency deposit system units% including interest
income from foreign currency loans granted by such depository ban)s under said
GSV-3=
e$panded foreign currency deposit system to residents% shall be sub*ect to a (nal
income ta$ at the rate of ten percent :1=I; of such income.
Any income of nonresidents% hether indi#iduals or corporations% from transactions
ith depository ban)s under the e$panded system shall be e$empt from income ta$.
:c; 7apital Gains from Sale of Shares of Stoc) ,ot Traded in the Stoc) 1$change. - A
(nal ta$ at the rates prescribed belo is hereby imposed upon the net capital gains
reali!ed during the ta$able year from the sale% barter% e$change or other disposition
of shares of stoc) in a domestic corporation e$cept shares sold or disposed of
through the stoc) e$change:
,ot o#er "1==%===PPPPPPP -I
2n any amount in e$cess of "1==%===PP 1=I
:d; Intercorporate +i#idends. - +i#idends recei#ed by a resident foreign corporation
from a domestic corporation liable to ta$ under this 7ode shall not be sub*ect to ta$
under this Title.
:?; Ta$ on ,onresident 8oreign 7orporation. -
:1; 'n 2eneral. - 1$cept as otherise pro#ided in this 7ode% a foreign corporation not
engaged in trade or business in the "hilippines shall pay a ta$ e'ual to thirty-(#e percent
:5-I; of the gross income recei#ed during each ta$able year from all sources ithin the
"hilippines% such as interests% di#idends% rents% royalties% salaries% premiums :e$cept
reinsurance premiums;% annuities% emoluments or other ($ed or determinable annual%
periodic or casual gains% pro(ts and income% and capital gains% e$cept capital gains sub*ect
to ta$ under subparagraphs :7; and :d;: "ro#ided% That e9ecti#e 1% 1//.% the rate of income
ta$ shall be thirty-four percent :50I;& e9ecti#e @anuary 1% 1///% the rate shall be thirty-three
percent :55I;& and% e9ecti#e @anuary 1% 3=== and thereafter% the rate shall be thirty-to
percent :53I;.
:3; 4onresident Cinematographic 0ilm (&ner, *essor or +istributor. - A cinematographic (lm
oner% lessor% or distributor shall pay a ta$ of tenty-(#e percent :3-I; of its gross income
from all sources ithin the "hilippines.
:5; 4onresident (&ner or *essor of 3essels Chartered by Philippine 4ationals. - A
nonresident oner or lessor of #essels shall be sub*ect to a ta$ of four and one-half percent
:0 1E3I; of gross rentals% lease or charter fees from leases or charters to 8ilipino citi!ens or
corporations% as appro#ed by the Maritime Industry Authority.
:0; 4onresident (&ner or *essor of ircraft, .achineries and (ther $/uipment. - 6entals%
charters and other fees deri#ed by a nonresident lessor of aircraft% machineries and other
e'uipment shall be sub*ect to a ta$ of se#en and one-half percent :4 1E3I; of gross rentals
or fees.
:-; Tax on Certain 'ncomes Received by a 4onresident 0oreign Corporation. -
:a; 'nterest on 0oreign *oans. - A (nal ithholding ta$ at the rate of tenty percent
:3=I; is hereby imposed on the amount of interest on foreign loans contracted on or
after August 1% 1/.<&
:b; 'ntercorporate +ividends. - A (nal ithholding ta$ at the rate of (fteen percent
:1-I; is hereby imposed on the amount of cash andEor property di#idends recei#ed
from a domestic corporation% hich shall be collected and paid as pro#ided in Section
-4 :A; of this 7ode% sub*ect to the condition that the country in hich the nonresident
foreign corporation is domiciled% shall allo a credit against the ta$ due from the
nonresident foreign corporation ta$es deemed to ha#e been paid in the "hilippines
e'ui#alent to tenty percent :3=I; for 1//4% nineteen percent :1/I; for 1//.%
eighteen percent :1.I; for 1///% and se#enteen percent :14I; thereafter% hich
represents the di9erence beteen the regular income ta$ of thirty-(#e percent :5-I;
in 1//4% thirty-four percent :50I; in 1//.% and thirty-three percent :55I; in 1///%
and thirty-to percent :53I; thereafter on corporations and the (fteen percent :1-I;
ta$ on di#idends as pro#ided in this subparagraph&
:c; Capital 2ains from Sale of Shares of Stoc- not Traded in the Stoc- $xchange. - A
(nal ta$ at the rates prescribed belo is hereby imposed upon the net capital gains
GSV-31
reali!ed during the ta$able year from the sale% barter% e$change or other disposition
of shares of stoc) in a domestic corporation% e$cept shares sold% or disposed of
through the stoc) e$change:
,ot o#er "1==%===PPPPPPP -I
2n any amount in e$cess of "1==%===PP 1=I
*ection 29. 'mposition of 'mproperly ccumulated $arnings Tax. -
:A; 'n 2eneral. - In addition to other ta$es imposed by this Title% there is hereby imposed for each
ta$able year on the improperly accumulated ta$able income of each corporation described in
Subsection ? hereof% an improperly accumulated earnings ta$ e'ual to ten percent :1=I; of the
improperly accumulated ta$able income.
:?; Tax on Corporations Sub7ect to 'mproperly ccumulated $arnings Tax. -
:1; 'n 2eneral. - The improperly accumulated earnings ta$ imposed in the preceding Section
shall apply to e#ery corporation formed or a#ailed for the purpose of a#oiding the income
ta$ ith respect to its shareholders or the shareholders of any other corporation% by
permitting earnings and pro(ts to accumulate instead of being di#ided or distributed.
:3; $xceptions. - The improperly accumulated earnings ta$ as pro#ided for under this Section
shall not apply to:
:a; "ublicly-held corporations&
:b; ?an)s and other nonban) (nancial intermediaries& and
:c; Insurance companies.
:7; $vidence of Purpose to void 'ncome Tax. -
:1; Prima 0acie $vidence. - the fact that any corporation is a mere holding company or
in#estment company shall be prima facie e#idence of a purpose to a#oid the ta$ upon its
shareholders or members.
:3; $vidence +eterminative of Purpose. - The fact that the earnings or pro(ts of a
corporation are permitted to accumulate beyond the reasonable needs of the business shall
be determinati#e of the purpose to a#oid the ta$ upon its shareholders or members unless
the corporation% by the clear preponderance of e#idence% shall pro#e to the contrary.
:+; 'mproperly ccumulated Taxable 'ncome. - 8or purposes of this Section% the term Jimproperly
accumulated ta$able incomeJ means ta$able incomeJ ad*usted by:
:1; Income e$empt from ta$&
:3; Income e$cluded from gross income&
:5; Income sub*ect to (nal ta$& and
:0; The amount of net operating loss carry-o#er deducted&
And reduced by the sum of:
:1; +i#idends actually or constructi#ely paid& and
:3; Income ta$ paid for the ta$able year.
"ro#ided% hoe#er% That for corporations using the calendar year basis% the accumulated
earnings under ta$ shall not apply on improperly accumulated income as of +ecember 51%
1//4. In the case of corporations adopting the (scal year accounting period% the improperly
accumulated income not sub*ect to this ta$% shall be rec)oned% as of the end of the month
comprising the tel#e :13;-month period of (scal year 1//4-1//..
GSV-33
:1; 6easonable ,eeds of the ?usiness. - 8or purposes of this Section% the term Jreasonable needs of
the businessJ includes the reasonably anticipated needs of the business.
*ection ,D. $xemptions from Tax on Corporations. - The folloing organi!ations shall not be ta$ed under
this Title in respect to income recei#ed by them as such:
:A; Gabor% agricultural or horticultural organi!ation not organi!ed principally for pro(t&
:?; Mutual sa#ings ban) not ha#ing a capital stoc) represented by shares% and cooperati#e ban)
ithout capital stoc) organi!ed and operated for mutual purposes and ithout pro(t&
:7; A bene(ciary society% order or association% operating fort he e$clusi#e bene(t of the members
such as a fraternal organi!ation operating under the lodge system% or mutual aid association or a
nonstoc) corporation organi!ed by employees pro#iding for the payment of life% sic)ness% accident%
or other bene(ts e$clusi#ely to the members of such society% order% or association% or nonstoc)
corporation or their dependents&
:+; 7emetery company oned and operated e$clusi#ely for the bene(t of its members&
:1; ,onstoc) corporation or association organi!ed and operated e$clusi#ely for religious% charitable%
scienti(c% athletic% or cultural purposes% or for the rehabilitation of #eterans% no part of its net
income or asset shall belong to or inures to the bene(t of any member% organi!er% oAcer or any
speci(c person&
:8; ?usiness league chamber of commerce% or board of trade% not organi!ed for pro(t and no part of
the net income of hich inures to the bene(t of any pri#ate stoc)-holder% or indi#idual&
:G; 7i#ic league or organi!ation not organi!ed for pro(t but operated e$clusi#ely for the promotion
of social elfare&
:F; A nonstoc) and nonpro(t educational institution&
:I; Go#ernment educational institution&
:@; 8armersJ or other mutual typhoon or (re insurance company% mutual ditch or irrigation company%
mutual or cooperati#e telephone company% or li)e organi!ation of a purely local character% the
income of hich consists solely of assessments% dues% and fees collected from members for the sole
purpose of meeting its e$penses& and
:K; 8armersJ% fruit groersJ% or li)e association organi!ed and operated as a sales agent for the
purpose of mar)eting the products of its members and turning bac) to them the proceeds of sales%
less the necessary selling e$penses on the basis of the 'uantity of produce (nished by them&
,otithstanding the pro#isions in the preceding paragraphs% the income of hate#er )ind and character of
the foregoing organi!ations from any of their properties% real or personal% or from any of their acti#ities
conducted for pro(t regardless of the disposition made of such income% shall be sub*ect to ta$ imposed
under this 7ode.
C%APT"R ( ; C&!P)TAT#&N &+ TA5A0'" #NC&!"
*ection ,1. Taxable 'ncome +e:ned. - The term ta$able income means the pertinent items of gross
income speci(ed in this 7ode% less the deductions andEor personal and additional e$emptions% if any%
authori!ed for such types of income by this 7ode or other special las.
C%APT"R (# ; C&!P)TAT#&N &+ $R&** #NC&!"
*ection ,2. 2ross 'ncome. -
:A; 2eneral +e:nition. - 1$cept hen otherise pro#ided in this Title% gross income means all
income deri#ed from hate#er source% including :but not limited to; the folloing items:
:1; 7ompensation for ser#ices in hate#er form paid% including% but not limited to fees%
salaries% ages% commissions% and similar items&
:3; Gross income deri#ed from the conduct of trade or business or the e$ercise of a
profession&
GSV-35
:5; Gains deri#ed from dealings in property&
:0; Interests&
:-; 6ents&
:<; 6oyalties&
:4; +i#idends&
:.; Annuities&
:/; "ri!es and innings&
:1=; "ensions& and
:11; "artnerJs distributi#e share from the net income of the general professional partnership.
:?; $xclusions from 2ross 'ncome. - The folloing items shall not be included in gross income and
shall be e$empt from ta$ation under this title:
:1; Gife Insurance. - The proceeds of life insurance policies paid to the heirs or bene(ciaries
upon the death of the insured% hether in a single sum or otherise% but if such amounts are
held by the insurer under an agreement to pay interest thereon% the interest payments shall
be included in gross income.
:3; Amount 6ecei#ed by Insured as 6eturn of "remium. - The amount recei#ed by the
insured% as a return of premiums paid by him under life insurance% endoment% or annuity
contracts% either during the term or at the maturity of the term mentioned in the contract or
upon surrender of the contract.
:5; Gifts% ?e'uests% and +e#ises. D The #alue of property ac'uired by gift% be'uest% de#ise% or
descent: "ro#ided% hoe#er% That income from such property% as ell as gift% be'uest% de#ise
or descent of income from any property% in cases of transfers of di#ided interest% shall be
included in gross income.
:0; 7ompensation for In*uries or Sic)ness. - amounts recei#ed% through Accident or Fealth
Insurance or under Bor)menJs 7ompensation Acts% as compensation for personal in*uries or
sic)ness% plus the amounts of any damages recei#ed% hether by suit or agreement% on
account of such in*uries or sic)ness.
:-; Income 1$empt under Treaty. - Income of any )ind% to the e$tent re'uired by any treaty
obligation binding upon the Go#ernment of the "hilippines.
:<; 6etirement ?ene(ts% "ensions% Gratuities% etc.-
:a; 6etirement bene(ts recei#ed under 6epublic Act ,o. 4<01 and those recei#ed by
oAcials and employees of pri#ate (rms% hether indi#idual or corporate% in
accordance ith a reasonable pri#ate bene(t plan maintained by the employer:
"ro#ided% That the retiring oAcial or employee has been in the ser#ice of the same
employer for at least ten :1=; years and is not less than (fty :-=; years of age at the
time of his retirement: "ro#ided% further% That the bene(ts granted under this
subparagraph shall be a#ailed of by an oAcial or employee only once. 8or purposes
of this Subsection% the term Jreasonable pri#ate bene(t planJ means a pension%
gratuity% stoc) bonus or pro(t-sharing plan maintained by an employer for the bene(t
of some or all of his oAcials or employees% herein contributions are made by such
employer for the oAcials or employees% or both% for the purpose of distributing to
such oAcials and employees the earnings and principal of the fund thus
accumulated% and herein its is pro#ided in said plan that at no time shall any part of
the corpus or income of the fund be used for% or be di#erted to% any purpose other
than for the e$clusi#e bene(t of the said oAcials and employees.
:b; Any amount recei#ed by an oAcial or employee or by his heirs from the employer
as a conse'uence of separation of such oAcial or employee from the ser#ice of the
employer because of death sic)ness or other physical disability or for any cause
beyond the control of the said oAcial or employee.
GSV-30
:c; The pro#isions of any e$isting la to the contrary notithstanding% social security
bene(ts% retirement gratuities% pensions and other similar bene(ts recei#ed by
resident or nonresident citi!ens of the "hilippines or aliens ho come to reside
permanently in the "hilippines from foreign go#ernment agencies and other
institutions% pri#ate or public.
:d; "ayments of bene(ts due or to become due to any person residing in the
"hilippines under the las of the Hnited States administered by the Hnited States
Veterans Administration.
:e; ?ene(ts recei#ed from or en*oyed under the Social Security System in accordance
ith the pro#isions of 6epublic Act ,o. .3.3.
:f; ?ene(ts recei#ed from the GSIS under 6epublic Act ,o. .3/1% including retirement
gratuity recei#ed by go#ernment oAcials and employees.
:4; Miscellaneous Items. -
:a; Income +eri#ed by 8oreign Go#ernment. - Income deri#ed from in#estments in the
"hilippines in loans% stoc)s% bonds or other domestic securities% or from interest on
deposits in ban)s in the "hilippines by :i; foreign go#ernments% :ii; (nancing
institutions oned% controlled% or en*oying re(nancing from foreign go#ernments% and
:iii; international or regional (nancial institutions established by foreign go#ernments.
:b; Income +eri#ed by the Go#ernment or its "olitical Subdi#isions. - Income deri#ed
from any public utility or from the e$ercise of any essential go#ernmental function
accruing to the Go#ernment of the "hilippines or to any political subdi#ision thereof.
:c; "ri!es and Aards. - "ri!es and aards made primarily in recognition of religious%
charitable% scienti(c% educational% artistic% literary% or ci#ic achie#ement but only if:
:i; The recipient as selected ithout any action on his part to enter the
contest or proceeding& and
:ii; The recipient is not re'uired to render substantial future ser#ices as a
condition to recei#ing the pri!e or aard.
:d; "ri!es and Aards in sports 7ompetition. - All pri!es and aards granted to
athletes in local and international sports competitions and tournaments hether held
in the "hilippines or abroad and sanctioned by their national sports associations.
:e; 15th Month "ay and 2ther ?ene(ts. - Gross bene(ts recei#ed by oAcials and
employees of public and pri#ate entities: "ro#ided% hoe#er% That the total e$clusion
under this subparagraph shall not e$ceed Thirty thousand pesos :"5=%===; hich
shall co#er:
:i; ?ene(ts recei#ed by oAcials and employees of the national and local
go#ernment pursuant to 6epublic Act ,o. <<.<&
:ii; ?ene(ts recei#ed by employees pursuant to "residential +ecree ,o. .-1%
as amended by Memorandum 2rder ,o. 3.% dated August 15% 1/.<&
:iii; ?ene(ts recei#ed by oAcials and employees not co#ered by "residential
decree ,o. .-1% as amended by Memorandum 2rder ,o. 3.% dated August 15%
1/.<& and
:i#; 2ther bene(ts such as producti#ity incenti#es and 7hristmas bonus:
"ro#ided% further% That the ceiling of Thirty thousand pesos :"5=%===; may be
increased through rules and regulations issued by the Secretary of 8inance%
upon recommendation of the 7ommissioner% after considering among others%
the e9ect on the same of the inCation rate at the end of the ta$able year.
:f; GSIS% SSS% Medicare and 2ther 7ontributions. - GSIS% SSS% Medicare and "ag-ibig
contributions% and union dues of indi#iduals.
GSV-3-
:g; Gains from the Sale of ?onds% +ebentures or other 7erti(cate of Indebtedness. -
Gains reali!ed from the same or e$change or retirement of bonds% debentures or
other certi(cate of indebtedness ith a maturity of more than (#e :-; years.
:h; Gains from 6edemption of Shares in Mutual 8und. - Gains reali!ed by the in#estor
upon redemption of shares of stoc) in a mutual fund company as de(ned in Section
33 :??; of this 7ode.
*ection ,,. Special Treatment of 0ringe Bene:t.-
:A; 'mposition of Tax. - A (nal ta$ of thirty-four percent :50I; e9ecti#e @anuary 1% 1//.& thirty-three
percent :55I; e9ecti#e @anuary 1% 1///& and thirty-to percent :53I; e9ecti#e @anuary 1% 3=== and
thereafter% is hereby imposed on the grossed-up monetary #alue of fringe bene(t furnished or
granted to the employee :e$cept ran) and (le employees as de(ned herein; by the employer%
hether an indi#idual or a corporation :unless the fringe bene(t is re'uired by the nature of% or
necessary to the trade% business or profession of the employer% or hen the fringe bene(t is for the
con#enience or ad#antage of the employer;. The ta$ herein imposed is payable by the employer
hich ta$ shall be paid in the same manner as pro#ided for under Section -4 :A; of this 7ode. The
grossed-up monetary #alue of the fringe bene(t shall be determined by di#iding the actual
monetary #alue of the fringe bene(t by si$ty-si$ percent :<<I; e9ecti#e @anuary 1% 1//.& si$ty-
se#en percent :<4I; e9ecti#e @anuary 1% 1///& and si$ty-eight percent :<.I; e9ecti#e @anuary 1%
3=== and thereafter: "ro#ided% hoe#er% That fringe bene(t furnished to employees and ta$able
under Subsections :?;% :7;% :+; and :1; of Section 3- shall be ta$ed at the applicable rates imposed
thereat: "ro#ided% further% That the grossed -Hp #alue of the fringe bene(t shall be determined by
di#iding the actual monetary #alue of the fringe bene(t by the di9erence beteen one hundred
percent :1==I; and the applicable rates of income ta$ under Subsections :?;% :7;% :+;% and :1; of
Section 3-.
:?; 0ringe Bene:t de:ned. - 8or purposes of this Section% the term Jfringe bene(tJ means any good%
ser#ice or other bene(t furnished or granted in cash or in )ind by an employer to an indi#idual
employee :e$cept ran) and (le employees as de(ned herein; such as% but not limited to% the
folloing:
:1; Fousing&
:3; 1$pense account&
:5; Vehicle of any )ind&
:0; Fousehold personnel% such as maid% dri#er and others&
:-; Interest on loan at less than mar)et rate to the e$tent of the di9erence beteen the
mar)et rate and actual rate granted&
:<; Membership fees% dues and other e$penses borne by the employer for the employee in
social and athletic clubs or other similar organi!ations&
:4; 1$penses for foreign tra#el&
:.; Foliday and #acation e$penses&
:/; 1ducational assistance to the employee or his dependents& and
:1=; Gife or health insurance and other non-life insurance premiums or similar amounts in
e$cess of hat the la allos.
:7; 0ringe Bene:ts 4ot Taxable. - The folloing fringe bene(ts are not ta$able under this Section:
:1; fringe bene(ts hich are authori!ed and e$empted from ta$ under special las&
:3; 7ontributions of the employer for the bene(t of the employee to retirement% insurance
and hospitali!ation bene(t plans&
:5; ?ene(ts gi#en to the ran) and (le employees% hether granted under a collecti#e
bargaining agreement or not& and
GSV-3<
:0; +e minimis bene(ts as de(ned in the rules and regulations to be promulgated by the
Secretary of 8inance% upon recommendation of the 7ommissioner.
The Secretary of 8inance is hereby authori!ed to promulgate% upon recommendation of the
7ommissioner% such rules and regulations as are necessary to carry out eAciently and fairly the
pro#isions of this Section% ta)ing into account the peculiar nature and special need of the trade%
business or profession of the employer.
C%APT"R (## ; A''&9A0'" D"D)CT#&N*
*ection ,4. +eductions from 2ross 'ncome. - 1$cept for ta$payers earning compensation income arising
from personal ser#ices rendered under an employer-employee relationship here no deductions shall be
alloed under this Section other than under subsection :M; hereof% in computing ta$able income sub*ect to
income ta$ under Sections 30 :A;& 3- :A;& 3<& 34 :A;% :?; and :7;& and 3. :A; :1;% there shall be alloed the
folloing deductions from gross income&
:A; $xpenses. -
:1; 2rdinary and ,ecessary Trade% ?usiness or "rofessional 1$penses.-
:a; In General. - There shall be alloed as deduction from gross income all the
ordinary and necessary e$penses paid or incurred during the ta$able year in carrying
on or hich are directly attributable to% the de#elopment% management% operation
andEor conduct of the trade% business or e$ercise of a profession% including:
:i; A reasonable alloance for salaries% ages% and other forms of
compensation for personal ser#ices actually rendered% including the grossed-
up monetary #alue of fringe bene(t furnished or granted by the employer to
the employee: "ro#ided% That the (nal ta$ imposed under Section 55 hereof
has been paid&
:ii; A reasonable alloance for tra#el e$penses% here and abroad% hile aay
from home in the pursuit of trade% business or profession&
:iii; A reasonable alloance for rentals andEor other payments hich are
re'uired as a condition for the continued use or possession% for purposes of
the trade% business or profession% of property to hich the ta$payer has not
ta)en or is not ta)ing title or in hich he has no e'uity other than that of a
lessee% user or possessor&
:i#; A reasonable alloance for entertainment% amusement and recreation
e$penses during the ta$able year% that are directly connected to the
de#elopment% management and operation of the trade% business or profession
of the ta$payer% or that are directly related to or in furtherance of the conduct
of his or its trade% business or e$ercise of a profession not to e$ceed such
ceilings as the Secretary of 8inance may% by rules and regulations prescribe%
upon recommendation of the 7ommissioner% ta)ing into account the needs as
ell as the special circumstances% nature and character of the industry% trade%
business% or profession of the ta$payer: "ro#ided% That any e$pense incurred
for entertainment% amusement or recreation that is contrary to la% morals
public policy or public order shall in no case be alloed as a deduction.
:b; Substantiation 6e'uirements. - ,o deduction from gross income shall be alloed
under Subsection :A; hereof unless the ta$payer shall substantiate ith suAcient
e#idence% such as oAcial receipts or other ade'uate records: :i; the amount of the
e$pense being deducted% and :ii; the direct connection or relation of the e$pense
being deducted to the de#elopment% management% operation andEor conduct of the
trade% business or profession of the ta$payer.
:c; ?ribes% Kic)bac)s and 2ther Similar "ayments. - ,o deduction from gross income
shall be alloed under Subsection :A; hereof for any payment made% directly or
indirectly% to an oAcial or employee of the national go#ernment% or to an oAcial or
employee of any local go#ernment unit% or to an oAcial or employee of a
go#ernment-oned or -controlled corporation% or to an oAcial or employee or
representati#e of a foreign go#ernment% or to a pri#ate corporation% general
professional partnership% or a similar entity% if the payment constitutes a bribe or
)ic)bac).
GSV-34
:3; 1$penses Alloable to "ri#ate 1ducational Institutions. - In addition to the e$penses
alloable as deductions under this 7hapter% a pri#ate educational institution% referred to
under Section 34 :?; of this 7ode% may at its option elect either: :a; to deduct e$penditures
otherise considered as capital outlays of depreciable assets incurred during the ta$able
year for the e$pansion of school facilities or :b; to deduct alloance for depreciation thereof
under Subsection :8; hereof.
:?; 'nterest.-
:1; 'n 2eneral. - The amount of interest paid or incurred ithin a ta$able year on
indebtedness in connection ith the ta$payerJs profession% trade or business shall be
alloed as deduction from gross income: "ro#ided% hoe#er% That the ta$payerJs otherise
alloable deduction for interest e$pense shall be reduced by an amount e'ual to the
folloing percentages of the interest income sub*ected to (nal ta$:
8orty-one percent :01I; beginning @anuary 1% 1//.&
Thirty-nine percent :5/I; beginning @anuary 1% 1///& and
Thirty-eight percent :5.I; beginning @anuary 1% 3===&
:3; $xceptions. - ,o deduction shall be alloed in respect of interest under the succeeding
subparagraphs:
:a; If ithin the ta$able year an indi#idual ta$payer reporting income on the cash
basis incurs an indebtedness on hich an interest is paid in ad#ance through
discount or otherise: "ro#ided% That such interest shall be alloed a a deduction in
the year the indebtedness is paid: "ro#ided% further% That if the indebtedness is
payable in periodic amorti!ations% the amount of interest hich corresponds to the
amount of the principal amorti!ed or paid during the year shall be alloed as
deduction in such ta$able year&
:b;If both the ta$payer and the person to hom the payment has been made or is to
be made are persons speci(ed under Section 5< :?;& or
:c;If the indebtedness is incurred to (nance petroleum e$ploration.
:5; 2ptional Treatment of Interest 1$pense. - At the option of the ta$payer% interest incurred
to ac'uire property used in trade business or e$ercise of a profession may be alloed as a
deduction or treated as a capital e$penditure.
:7; Taxes.-
:1; 'n 2eneral. - Ta$es paid or incurred ithin the ta$able year in connection ith the
ta$payerJs profession% trade or business% shall be alloed as deduction% e$cept
:a; The income ta$ pro#ided for under this Title&
:b; Income ta$es imposed by authority of any foreign country& but this deduction
shall be alloed in the case of a ta$payer ho does not signify in his return his desire
to ha#e to any e$tent the bene(ts of paragraph :5; of this subsection :relating to
credits for ta$es of foreign countries;&
:c; 1state and donorJs ta$es& and
:d; Ta$es assessed against local bene(ts of a )ind tending to increase the #alue of
the property assessed.
"ro#ided% That ta$es alloed under this Subsection% hen refunded or credited% shall
be included as part of gross income in the year of receipt to the e$tent of the income
ta$ bene(t of said deduction.
:3; *imitations on +eductions. - In the case of a nonresident alien indi#idual engaged in
trade or business in the "hilippines and a resident foreign corporation% the deductions for
ta$es pro#ided in paragraph :1; of this Subsection :7; shall be alloed only if and to the
e$tent that they are connected ith income from sources ithin the "hilippines.
GSV-3.
:5; Credit gainst Tax for Taxes of 0oreign Countries. - If the ta$payer signi(es in his return
his desire to ha#e the bene(ts of this paragraph% the ta$ imposed by this Title shall be
credited ith:
:a; 7iti!en and +omestic 7orporation. - In the case of a citi!en of the "hilippines and
of a domestic corporation% the amount of income ta$es paid or incurred during the
ta$able year to any foreign country& and
:b; "artnerships and 1states. - In the case of any such indi#idual ho is a member of
a general professional partnership or a bene(ciary of an estate or trust% his
proportionate share of such ta$es of the general professional partnership or the
estate or trust paid or incurred during the ta$able year to a foreign country% if his
distributi#e share of the income of such partnership or trust is reported for ta$ation
under this Title.
An alien indi#idual and a foreign corporation shall not be alloed the credits against the ta$
for the ta$es of foreign countries alloed under this paragraph.
:0; *imitations on Credit. - The amount of the credit ta)en under this Section shall be sub*ect
to each of the folloing limitations:
:a; The amount of the credit in respect to the ta$ paid or incurred to any country shall
not e$ceed the same proportion of the ta$ against hich such credit is ta)en% hich
the ta$payerJs ta$able income from sources ithin such country under this Title bears
to his entire ta$able income for the same ta$able year& and
:b; The total amount of the credit shall not e$ceed the same proportion of the ta$
against hich such credit is ta)en% hich the ta$payerJs ta$able income from sources
ithout the "hilippines ta$able under this Title bears to his entire ta$able income for
the same ta$able year.
:-; d7ustments on Payment of 'ncurred Taxes. - If accrued ta$es hen paid di9er from the
amounts claimed as credits by the ta$payer% or if any ta$ paid is refunded in hole or in
part% the ta$payer shall notify the 7ommissioner& ho shall redetermine the amount of the
ta$ for the year or years a9ected% and the amount of ta$ due upon such redetermination% if
any% shall be paid by the ta$payer upon notice and demand by the 7ommissioner% or the
amount of ta$ o#erpaid% if any% shall be credited or refunded to the ta$payer. In the case of
such a ta$ incurred but not paid% the 7ommissioner as a condition precedent to the
alloance of this credit may re'uire the ta$payer to gi#e a bond ith sureties satisfactory to
and to be appro#ed by the 7ommissioner in such sum as he may re'uire% conditioned upon
the payment by the ta$payer of any amount of ta$ found due upon any such
redetermination. The bond herein prescribed shall contain such further conditions as the
7ommissioner may re'uire.
:<; Aear in 6hich Credit Ta-en. - The credits pro#ided for in Subsection :7;:5; of this Section
may% at the option of the ta$payer and irrespecti#e of the method of accounting employed in
)eeping his boo)s% be ta)en in the year hich the ta$es of the foreign country ere incurred%
sub*ect% hoe#er% to the conditions prescribed in Subsection :7;:-; of this Section. If the
ta$payer elects to ta)e such credits in the year in hich the ta$es of the foreign country
accrued% the credits for all subse'uent years shall be ta)en upon the same basis and no
portion of any such ta$es shall be alloed as a deduction in the same or any succeeding
year.
:4; Proof of Credits. - The credits pro#ided in Subsection :7;:5; hereof shall be alloed only if
the ta$payer establishes to the satisfaction of the 7ommissioner the folloing:
:a; The total amount of income deri#ed from sources ithout the "hilippines&
:b; The amount of income deri#ed from each country% the ta$ paid or incurred to
hich is claimed as a credit under said paragraph% such amount to be determined
under rules and regulations prescribed by the Secretary of 8inance& and
:c; All other information necessary for the #eri(cation and computation of such
credits.
:+; *osses. -
GSV-3/
:1; 'n 2eneral. - Gosses actually sustained during the ta$able year and not compensated for
by insurance or other forms of indemnity shall be alloed as deductions:
:a; If incurred in trade% profession or business&
:b; 2f property connected ith the trade% business or profession% if the loss arises
from (res% storms% shiprec)% or other casualties% or from robbery% theft or
embe!!lement.
The Secretary of 8inance% upon recommendation of the 7ommissioner% is hereby
authori!ed to promulgate rules and regulations prescribing% among other things% the
time and manner by hich the ta$payer shall submit a declaration of loss sustained
from casualty or from robbery% theft or embe!!lement during the ta$able year:
"ro#ided% hoe#er% That the time limit to be so prescribed in the rules and
regulations shall not be less than thirty :5=; days nor more than ninety :/=; days
from the date of disco#ery of the casualty or robbery% theft or embe!!lement gi#ing
rise to the loss.
:c; ,o loss shall be alloed as a deduction under this Subsection if at the time of the
(ling of the return% such loss has been claimed as a deduction for estate ta$ purposes
in the estate ta$ return.
:3; Proof of *oss. - In the case of a nonresident alien indi#idual or foreign corporation% the
losses deductible shall be those actually sustained during the year incurred in business%
trade or e$ercise of a profession conducted ithin the "hilippines% hen such losses are not
compensated for by insurance or other forms of indemnity. The secretary of 8inance% upon
recommendation of the 7ommissioner% is hereby authori!ed to promulgate rules and
regulations prescribing% among other things% the time and manner by hich the ta$payer
shall submit a declaration of loss sustained from casualty or from robbery% theft or
embe!!lement during the ta$able year: "ro#ided% That the time to be so prescribed in the
rules and regulations shall not be less than thirty :5=; days nor more than ninety :/=; days
from the date of disco#ery of the casualty or robbery% theft or embe!!lement gi#ing rise to
the loss& and
:5; 4et (perating *oss Carry1(ver. - The net operating loss of the business or enterprise for
any ta$able year immediately preceding the current ta$able year% hich had not been
pre#iously o9set as deduction from gross income shall be carried o#er as a deduction from
gross income for the ne$t three :5; consecuti#e ta$able years immediately folloing the
year of such loss: "ro#ided% hoe#er% That any net loss incurred in a ta$able year during
hich the ta$payer as e$empt from income ta$ shall not be alloed as a deduction under
this Subsection: "ro#ided% further% That a net operating loss carry-o#er shall be alloed only
if there has been no substantial change in the onership of the business or enterprise in
that -
:i; ,ot less than se#enty-(#e percent :4-I; in nominal #alue of outstanding issued
shares.% if the business is in the name of a corporation% is held by or on behalf of the
same persons& or
:ii; ,ot less than se#enty-(#e percent :4-I; of the paid up capital of the corporation%
if the business is in the name of a corporation% is held by or on behalf of the same
persons.
>8or purposes of this subsection% the term Jnot operating lossJ shall mean the e$cess of
alloable deduction o#er gross income of the business in a ta$able year.
"ro#ided% That for mines other than oil and gas ells% a net operating loss ithout the
bene(t of incenti#es pro#ided for under 1$ecuti#e 2rder ,o. 33<% as amended% otherise
)non as the 2mnibus In#estments 7ode of 1/.4% incurred in any of the (rst ten :1=; years
of operation may be carried o#er as a deduction from ta$able income for the ne$t (#e :-;
years immediately folloing the year of such loss. The entire amount of the loss shall be
carried o#er to the (rst of the (#e :-; ta$able years folloing the loss% and any portion of
such loss hich e$ceeds% the ta$able income of such (rst year shall be deducted in li)e
manner form the ta$able income of the ne$t remaining four :0; years.
:0; Capital *osses. -
:a; *imitation. - Goss from sales or 1$changes of capital assets shall be alloed only
to the e$tent pro#ided in Section 5/.
GSV-5=
:b; Securities Becoming &orthless. - If securities as de(ned in Section 33 :T; become
orthless during the ta$able year and are capital assets% the loss resulting therefrom
shall% for purposes of this Title% be considered as a loss from the sale or e$change% on
the last day of such ta$able year% of capital assets.
:-; Gosses 8rom Bash Sales of Stoc) or Securities. - Gosses from Jash salesJ of stoc) or
securities as pro#ided in Section 5..
:<; Bagering Gosses. - Gosses from agering transactions shall b alloed only to the e$tent
of the gains from such transactions.
:4; Abandonment Gosses. -
:a; In the e#ent a contract area here petroleum operations are underta)en is
partially or holly abandoned% all accumulated e$ploration and de#elopment
e$penditures pertaining thereto shall be alloed as a deduction: "ro#ided% That
accumulated e$penditures incurred in that area prior to @anuary 1% 1/4/ shall be
alloed as a deduction only from any income deri#ed from the same contract area. In
all cases% notices of abandonment shall be (led ith the 7ommissioner.
:b; In case a producing ell is subse'uently abandoned% the unamorti!ed costs
thereof% as ell as the undepreciated costs of e'uipment directly used therein % shall
be alloed as a deduction in the year such ell% e'uipment or facility is abandoned
by the contractor: "ro#ided% That if such abandoned ell is reentered and production
is resumed% or if such e'uipment or facility is restored into ser#ice% the said costs
shall be included as part of gross income in the year of resumption or restoration and
shall be amorti!ed or depreciated% as the case may be.
:1; Bad +ebts. -
:1; In General. - +ebts due to the ta$payer actually ascertained to be orthless and charged
o9 ithin the ta$able year e$cept those not connected ith profession% trade or business
and those sustained in a transaction entered into beteen parties mentioned under Section
5< :?; of this 7ode: "ro#ided% That reco#ery of bad debts pre#iously alloed as deduction in
the preceding years shall be included as part of the gross income in the year of reco#ery to
the e$tent of the income ta$ bene(t of said deduction.
:3; Securities ?ecoming Borthless. - If securities% as de(ned in Section 33 :T;% are
ascertained to be orthless and charged o9 ithin the ta$able year and are capital assets%
the loss resulting therefrom shall% in the case of a ta$payer other than a ban) or trust
company incorporated under the las of the "hilippines a substantial part of hose business
is the receipt of deposits% for the purpose of this Title% be considered as a loss from the sale
or e$change% on the last day of such ta$able year% of capital assets.
:8; +epreciation. -
:1; General 6ule. - There shall be alloed as a depreciation deduction a reasonable
alloance for the e$haustion% ear and tear :including reasonable alloance for
obsolescence; of property used in the trade or business. In the case of property held by one
person for life ith remainder to another person% the deduction shall be computed as if the
life tenant ere the absolute oner of the property and shall be alloed to the life tenant. In
the case of property held in trust% the alloable deduction shall be apportioned beteen the
income bene(ciaries and the trustees in accordance ith the pertinent pro#isions of the
instrument creating the trust% or in the absence of such pro#isions% on the basis of the trust
income alloable to each.
:3; Hse of 7ertain Methods and 6ates. - The term Jreasonable alloanceJ as used in the
preceding paragraph shall include% but not limited to% an alloance computed in accordance
ith rules and regulations prescribed by the Secretary of 8inance% upon recommendation of
the 7ommissioner% under any of the folloing methods:
:a; The straight-line method&
:b; +eclining-balance method% using a rate not e$ceeding tice the rate hich ould
ha#e been used had the annual alloance been computed under the method
described in Subsection :8; :1;&
:c; The sum-of-the-years-digit method& and
GSV-51
:d; any other method hich may be prescribed by the Secretary of 8inance upon
recommendation of the 7ommissioner.
:5; Agreement as to Hseful Gife on Bhich +epreciation 6ate is ?ased. - Bhere under rules
and regulations prescribed by the Secretary of 8inance upon recommendation of the
7ommissioner% the ta$payer and the 7ommissioner ha#e entered into an agreement in
riting speci(cally dealing ith the useful life and rate of depreciation of any property% the
rate so agreed upon shall be binding on both the ta$payer and the national Go#ernment in
the absence of facts and circumstances not ta)en into consideration during the adoption of
such agreement. The responsibility of establishing the e$istence of such facts and
circumstances shall rest ith the party initiating the modi(cation. Any change in the agreed
rate and useful life of the depreciable property as speci(ed in the agreement shall not be
e9ecti#e for ta$able years prior to the ta$able year in hich notice in riting by certi(ed
mail or registered mail is ser#ed by the party initiating such change to the other party to the
agreement:
"ro#ided% hoe#er% that here the ta$payer has adopted such useful life and depreciation
rate for any depreciable and claimed the depreciation e$penses as deduction from his gross
income% ithout any ritten ob*ection on the part of the 7ommissioner or his duly authori!ed
representati#es% the aforesaid useful life and depreciation rate so adopted by the ta$payer
for the aforesaid depreciable asset shall be considered binding for purposes of this
Subsection.
:0; +epreciation of "roperties Hsed in "etroleum 2perations. - An alloance for depreciation
in respect of all properties directly related to production of petroleum initially placed in
ser#ice in a ta$able year shall be alloed under the straight-line or declining-balance
method of depreciation at the option of the ser#ice contractor.
Foe#er% if the ser#ice contractor initially elects the declining-balance method% it may at
any subse'uent date% shift to the straight-line method.
The useful life of properties used in or related to production of petroleum shall be ten :1=;
years of such shorter life as may be permitted by the 7ommissioner.
"roperties not used directly in the production of petroleum shall be depreciated under the
straight-line method on the basis of an estimated useful life of (#e :-; years.
:-; +epreciation of "roperties Hsed in Mining 2perations. - an alloance for depreciation in
respect of all properties used in mining operations other than petroleum operations% shall be
computed as follos:
:a; At the normal rate of depreciation if the e$pected life is ten :1=; years or less& or
:b; +epreciated o#er any number of years beteen (#e :-; years and the e$pected
life if the latter is more than ten :1=; years% and the depreciation thereon alloed as
deduction from ta$able income: "ro#ided% That the contractor noti(es the
7ommissioner at the beginning of the depreciation period hich depreciation rate
alloed by this Section ill be used.
:<; +epreciation +eductible by ,onresident Aliens 1ngaged in Trade or ?usiness or 6esident
8oreign 7orporations. - In the case of a nonresident alien indi#idual engaged in trade or
business or resident foreign corporation% a reasonable alloance for the deterioration of
"roperty arising out of its use or employment or its non-use in the business trade or
profession shall be permitted only hen such property is located in the "hilippines.
:G; +epletion of (il and 2as 6ells and .ines. -
:1; 'n 2eneral. - In the case of oil and gas ells or mines% a reasonable alloance for
depletion or amorti!ation computed in accordance ith the cost-depletion method shall be
granted under rules and regulations to be prescribed by the Secretary of (nance% upon
recommendation of the 7ommissioner. "ro#ided% That hen the alloance for depletion shall
e'ual the capital in#ested no further alloance shall be granted: "ro#ided% further% That after
production in commercial 'uantities has commenced% certain intangible e$ploration and
de#elopment drilling costs: :a; shall be deductible in the year incurred if such e$penditures
are incurred for non-producing ells andEor mines% or :b; shall be deductible in full in the
year paid or incurred or at the election of the ta$payer% may be capitali!ed and amorti!ed if
such e$penditures incurred are for producing ells andEor mines in the same contract area.
GSV-53
JIntangible costs in petroleum operationsJ refers to any cost incurred in petroleum operations
hich in itself has no sal#age #alue and hich is incidental to and necessary for the drilling
of ells and preparation of ells for the production of petroleum: "ro#ided% That said costs
shall not pertain to the ac'uisition or impro#ement of property of a character sub*ect to the
alloance for depreciation e$cept that the alloances for depreciation on such property
shall be deductible under this Subsection.
Any intangible e$ploration% drilling and de#elopment e$penses alloed as a deduction in
computing ta$able income during the year shall not be ta)en into consideration in
computing the ad*usted cost basis for the purpose of computing alloable cost depletion.
:3; 1lection to +educt 1$ploration and +e#elopment 1$penditures. - In computing ta$able
income from mining operations% the ta$payer may at his option% deduct e$ploration and
de#elopment e$penditures accumulated as cost or ad*usted basis for cost depletion as of
date of prospecting% as ell as e$ploration and de#elopment e$penditures paid or incurred
during the ta$able year: "ro#ided% That the amount deductible for e$ploration and
de#elopment e$penditures shall not e$ceed tenty-(#e percent :3-I; of the net income
from mining operations computed ithout the bene(t of any ta$ incenti#es under e$isting
las. The actual e$ploration and de#elopment e$penditures minus tenty-(#e percent
:3-I; of the net income from mining shall be carried forard to the succeeding years until
fully deducted.
The election by the ta$payer to deduct the e$ploration and de#elopment e$penditures is
irre#ocable and shall be binding in succeeding ta$able years.
J,et income from mining operationsJ% as used in this Subsection% shall mean gross income
from operations less Jalloable deductionsJ hich are necessary or related to mining
operations. JAlloable deductionsJ shall include mining% milling and mar)eting e$penses% and
depreciation of properties directly used in the mining operations. This paragraph shall not
apply to e$penditures for the ac'uisition or impro#ement of property of a character hich is
sub*ect to the alloance for depreciation.
In no case shall this paragraph apply ith respect to amounts paid or incurred for the
e$ploration and de#elopment of oil and gas.
The term Je$ploration e$pendituresJ means e$penditures paid or incurred for the purpose of
ascertaining the e$istence% location% e$tent or 'uality of any deposit of ore or other mineral%
and paid or incurred before the beginning of the de#elopment stage of the mine or deposit.
The term Jde#elopment e$pendituresJ means e$penditures paid or incurred during the
de#elopment stage of the mine or other natural deposits. The de#elopment stage of a mine
or other natural deposit shall begin at the time hen deposits of ore or other minerals are
shon to e$ist in suAcient commercial 'uantity and 'uality and shall end upon
commencement of actual commercial e$traction.
:5; +epletion of 2il and Gas Bells and Mines +eductible by a ,onresident Alien indi#idual or
8oreign 7orporation. - In the case of a nonresident alien indi#idual engaged in trade or
business in the "hilippines or a resident foreign corporation% alloance for depletion of oil
and gas ells or mines under paragraph :1; of this Subsection shall be authori!ed only in
respect to oil and gas ells or mines located ithin the "hilippines.
:F; Charitable and (ther Contributions. -
:1; 'n 2eneral. - 7ontributions or gifts actually paid or made ithin the ta$able year to% or for
the use of the Go#ernment of the "hilippines or any of its agencies or any political
subdi#ision thereof e$clusi#ely for public purposes% or to accredited domestic corporation or
associations organi!ed and operated e$clusi#ely for religious% charitable% scienti(c% youth
and sports de#elopment% cultural or educational purposes or for the rehabilitation of
#eterans% or to social elfare institutions% or to non-go#ernment organi!ations% in accordance
ith rules and regulations promulgated by the Secretary of (nance% upon recommendation
of the 7ommissioner% no part of the net income of hich inures to the bene(t of any pri#ate
stoc)holder or indi#idual in an amount not in e$cess of ten percent :1=I; in the case of an
indi#idual% and (#e percent :-I; in the case of a corporation% of the ta$payerJs ta$able
income deri#ed from trade% business or profession as computed ithout the bene(t of this
and the folloing subparagraphs.
:3; Contributions +eductible in 0ull. - ,otithstanding the pro#isions of the preceding
subparagraph% donations to the folloing institutions or entities shall be deductible in full&
GSV-55
:a; +onations to the Go#ernment. - +onations to the Go#ernment of the "hilippines or
to any of its agencies or political subdi#isions% including fully-oned go#ernment
corporations% e$clusi#ely to (nance% to pro#ide for% or to be used in underta)ing
priority acti#ities in education% health% youth and sports de#elopment% human
settlements% science and culture% and in economic de#elopment according to a
,ational "riority "lan determined by the ,ational 1conomic and +e#elopment
Authority :,1+A;% In consultation ith appropriate go#ernment agencies% including its
regional de#elopment councils and pri#ate philantrophic persons and institutions:
"ro#ided% That any donation hich is made to the Go#ernment or to any of its
agencies or political subdi#isions not in accordance ith the said annual priority plan
shall be sub*ect to the limitations prescribed in paragraph :1; of this Subsection&
:b; +onations to 7ertain 8oreign Institutions or International 2rgani!ations. -
donations to foreign institutions or international organi!ations hich are fully
deductible in pursuance of or in compliance ith agreements% treaties% or
commitments entered into by the Go#ernment of the "hilippines and the foreign
institutions or international organi!ations or in pursuance of special las&
:c; +onations to Accredited ,ongo#ernment 2rgani!ations. - the term
Jnongo#ernment organi!ationJ means a non pro(t domestic corporation:
:1; 2rgani!ed and operated e$clusi#ely for scienti(c% research% educational%
character-building and youth and sports de#elopment% health% social elfare%
cultural or charitable purposes% or a combination thereof% no part of the net
income of hich inures to the bene(t of any pri#ate indi#idual&
:3; Bhich% not later than the 1-th day of the third month after the close of the
accredited nongo#ernment organi!ations ta$able year in hich contributions
are recei#ed% ma)es utili!ation directly for the acti#e conduct of the acti#ities
constituting the purpose or function for hich it is organi!ed and operated%
unless an e$tended period is granted by the Secretary of 8inance in
accordance ith the rules and regulations to be promulgated% upon
recommendation of the 7ommissioner&
:5; The le#el of administrati#e e$pense of hich shall% on an annual basis%
conform ith the rules and regulations to be prescribed by the Secretary of
8inance% upon recommendation of the 7ommissioner% but in no case to e$ceed
thirty percent :5=I; of the total e$penses& and
:0; The assets of hich% in the e#en of dissolution% ould be distributed to
another nonpro(t domestic corporation organi!ed for similar purpose or
purposes% or to the state for public purpose% or ould be distributed by a court
to another organi!ation to be used in such manner as in the *udgment of said
court shall best accomplish the general purpose for hich the dissol#ed
organi!ation as organi!ed.
Sub*ect to such terms and conditions as may be prescribed by the Secretary of
8inance% the term Jutili!ationJ means:
:i; Any amount in cash or in )ind :including administrati#e e$penses; paid or
utili!ed to accomplish one or more purposes for hich the accredited
nongo#ernment organi!ation as created or organi!ed.
:ii; Any amount paid to ac'uire an asset used :or held for use; directly in
carrying out one or more purposes for hich the accredited nongo#ernment
organi!ation as created or organi!ed.
An amount set aside for a speci(c pro*ect hich comes ithin one or more purposes
of the accredited nongo#ernment organi!ation may be treated as a utili!ation% but
only if at the time such amount is set aside% the accredited nongo#ernment
organi!ation has established to the satisfaction of the 7ommissioner that the amount
ill be paid for the speci(c pro*ect ithin a period to be prescribed in rules and
regulations to be promulgated by the Secretary of 8inance% upon recommendation of
the 7ommissioner% but not to e$ceed (#e :-; years% and the pro*ect is one hich can
be better accomplished by setting aside such amount than by immediate payment of
funds.
GSV-50
:5; 3aluation. - The amount of any charitable contribution of property other than money shall
be based on the ac'uisition cost of said property.
:0; Proof of +eductions. - 7ontributions or gifts shall be alloable as deductions only if
#eri(ed under the rules and regulations prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner.
:I; Research and +evelopment.-
:1; 'n 2eneral. - a ta$payer may treat research or de#elopment e$penditures hich are paid
or incurred by him during the ta$able year in connection ith his trade% business or
profession as ordinary and necessary e$penses hich are not chargeable to capital account.
The e$penditures so treated shall be alloed as deduction during the ta$able year hen
paid or incurred.
:3; morti5ation of Certain Research and +evelopment $xpenditures. - At the election of the
ta$payer and in accordance ith the rules and regulations to be prescribed by the Secretary
of 8inance% upon recommendation of the 7ommissioner% the folloing research and
de#elopment e$penditures may be treated as deferred e$penses:
:a; "aid or incurred by the ta$payer in connection ith his trade% business or
profession&
:b; ,ot treated as e$penses under paragraph /1; hereof& and
:c; 7hargeable to capital account but not chargeable to property of a character hich
is sub*ect to depreciation or depletion.
In computing ta$able income% such deferred e$penses shall be alloed as deduction
ratably distributed o#er a period of not less than si$ty :<=; months as may be elected
by the ta$payer :beginning ith the month in hich the ta$payer (rst reali!es
bene(ts from such e$penditures;.
The election pro#ided by paragraph :3; hereof may be made for any ta$able year
beginning after the e9ecti#ity of this 7ode% but only if made not later than the time
prescribed by la for (ling the return for such ta$able year. The method so elected%
and the period selected by the ta$payer% shall be adhered to in computing ta$able
income for the ta$able year for hich the election is made and for all subse'uent
ta$able years unless ith the appro#al of the 7ommissioner% a change to a di9erent
method is authori!ed ith respect to a part or all of such e$penditures. The election
shall not apply to any e$penditure paid or incurred during any ta$able year for hich
the ta$payer ma)es the election.
:5; *imitations on deduction. - This Subsection shall not apply to:
:a; Any e$penditure for the ac'uisition or impro#ement of land% or for the
impro#ement of property to be used in connection ith research and de#elopment of
a character hich is sub*ect to depreciation and depletion& and
:b; Any e$penditure paid or incurred for the purpose of ascertaining the e$istence%
location% e$tent% or 'uality of any deposit of ore or other mineral% including oil or gas.
:@; Pension Trusts. - An employer establishing or maintaining a pension trust to pro#ide for the
payment of reasonable pensions to his employees shall be alloed as a deduction :in addition to
the contributions to such trust during the ta$able year to co#er the pension liability accruing during
the year% alloed as a deduction under Subsection :A; :1; of this Section ; a reasonable amount
transferred or paid into such trust during the ta$able year in e$cess of such contributions% but only
if such amount :1;has not theretofore been alloed as a deduction% and :3; is apportioned in e'ual
parts o#er a period of ten :1=; consecuti#e years beginning ith the year in hich the transfer or
payment is made.
:K; dditional Re/uirements for +eductibility of Certain Payments. - Any amount paid or payable
hich is otherise deductible from% or ta)en into account in computing gross income or for hich
depreciation or amorti!ation may be alloed under this Section% shall be alloed as a deduction
only if it is shon that the ta$ re'uired to be deducted and ithheld therefrom has been paid to the
?ureau of Internal 6e#enue in accordance ith this Section -. and .1 of this 7ode.
GSV-5-
:G; (ptional Standard +eduction. - In lieu of the deductions alloed under the preceding
Subsections% an indi#idual sub*ect to ta$ under Section 30% other than a nonresident alien% may
elect a standard deduction in an amount not e$ceeding ten percent :1=I; of his gross income.
Hnless the ta$payer signi(es in his return his intention to elect the optional standard deduction% he
shall be considered as ha#ing a#ailed himself of the deductions alloed in the preceding
Subsections. Such election hen made in the return shall be irre#ocable for the ta$able year for
hich the return is made: "ro#ided% That an indi#idual ho is entitled to and claimed for the
optional standard deduction shall not be re'uired to submit ith his ta$ return such (nancial
statements otherise re'uired under this 7ode: "ro#ided% further% That e$cept hen the
7ommissioner otherise permits% the said indi#idual shall )eep such records pertaining to his gross
income during the ta$able year% as may be re'uired by the rules and regulations promulgated by
the Secretary of 8inance% upon recommendation of the 7ommissioner.
:M; Premium Payments on Health and;or Hospitali5ation 'nsurance of an 'ndividual Taxpayer. - the
amount of premiums not to e$ceed To thousand four hundred pesos :"3%0==; per family or To
hundred pesos :"3==; a month paid during the ta$able year for health andEor hospitali!ation
insurance ta)en by the ta$payer for himself% including his family% shall be alloed as a deduction
from his gross income: "ro#ided% That said family has a gross income of not more than To hundred
(fty thousand pesos :"3-=%===; for the ta$able year: "ro#ided% (nally% That in the case of married
ta$payers% only the spouse claiming the additional e$emption for dependents shall be entitled to
this deduction.
,otithstanding the pro#ision of the preceding Subsections% The Secretary of 8inance% upon
recommendation of the 7ommissioner% after a public hearing shall ha#e been held for this purpose% may
prescribe by rules and regulations% limitations or ceilings for any of the itemi!ed deductions under
Subsections :A; to :@; of this Section: "ro#ided% That for purposes of determining such ceilings or
limitations% the Secretary of 8inance shall consider the folloing factors: :1; ade'uacy of the prescribed
limits on the actual e$penditure re'uirements of each particular industry& and :3;e9ects of inCation on
e$penditure le#els: "ro#ided% further% That no ceilings shall further be imposed on items of e$pense already
sub*ect to ceilings under present la.
*ection ,A. llo&ance of Personal $xemption for 'ndividual Taxpayer. -
:A; In General. - 8or purposes of determining the ta$ pro#ided in Section 30 :A; of this Title% there
shall be alloed a basic personal e$emption as follos:
8or single indi#idual or married
indi#idual *udicially decreed as
legally separated ith no 'uali(ed
dependents
"3=%==
=
8or Fead of 8amily
"3-%==
=
8or each married indi#idual
"53%==
=
In the case of married indi#iduals here only one of the spouses is deri#ing gross income% only such
spouse shall be alloed the personal e$emption.
8or purposes of this paragraph% the term Jhead of familyJ means an unmarried or legally separated
man or oman ith one or both parents% or ith one or more brothers or sisters% or ith one or
more legitimate% recogni!ed natural or legally adopted children li#ing ith and dependent upon him
for their chief support% here such brothers or sisters or children are not more than tenty-one :31;
years of age% unmarried and not gainfully employed or here such children% brothers or sisters%
regardless of age are incapable of self-support because of mental or physical defect.
:?; Additional 1$emption for +ependents. - There shall be alloed an additional e$emption of 1ight
thousand pesos :".%===; for each dependent not e$ceeding four :0;.
The additional e$emption for dependent shall be claimed by only one of the spouses in the case of
married indi#iduals.
In the case of legally separated spouses% additional e$emptions may be claimed only by the spouse
ho has custody of the child or children: "ro#ided% That the total amount of additional e$emptions
that may be claimed by both shall not e$ceed the ma$imum additional e$emptions herein alloed.
8or purposes of this Subsection% a JdependentJ means a legitimate% illegitimate or legally adopted
child chieCy dependent upon and li#ing ith the ta$payer if such dependent is not more than
GSV-5<
tenty-one :31; years of age% unmarried and not gainfully employed or if such dependent%
regardless of age% is incapable of self-support because of mental or physical defect.
:7; 7hange of Status. - If the ta$payer marries or should ha#e additional dependent:s; as de(ned
abo#e during the ta$able year% the ta$payer may claim the corresponding additional e$emption% as
the case may be% in full for such year.
If the ta$payer dies during the ta$able year% his estate may still claim the personal and additional
e$emptions for himself and his dependent:s; as if he died at the close of such year.
If the spouse or any of the dependents dies or if any of such dependents marries% becomes tenty-
one :31; years old or becomes gainfully employed during the ta$able year% the ta$payer may still
claim the same e$emptions as if the spouse or any of the dependents died% or as if such
dependents married% became tenty-one :31; years old or became gainfully employed at the close
of such year.
:+; "ersonal 1$emption Alloable to ,onresident Alien Indi#idual. - A nonresident alien indi#idual
engaged in trade% business or in the e$ercise of a profession in the "hilippines shall be entitled to a
personal e$emption in the amount e'ual to the e$emptions alloed in the income ta$ la in the
country of hich he is a sub*ect - or citi!en% to citi!ens of the "hilippines not residing in such
country% not to e$ceed the amount ($ed in this Section as e$emption for citi!ens or resident of the
"hilippines: "ro#ided% That said nonresident alien should (le a true and accurate return of the total
income recei#ed by him from all sources in the "hilippines% as re'uired by this Title.
*ection ,B. 'tems not +eductible.-
:A; 2eneral Rule. - In computing net income% no deduction shall in any case be alloed in respect to
-
:1; "ersonal% li#ing or family e$penses&
:3; Any amount paid out for ne buildings or for permanent impro#ements% or betterments
made to increase the #alue of any property or estate&
This Subsection shall not apply to intangible drilling and de#elopment costs incurred in
petroleum operations hich are deductible under Subsection :G; :1; of Section 50 of this
7ode.
:5; Any amount e$pended in restoring property or in ma)ing good the e$haustion thereof for
hich an alloance is or has been made& or
:0; "remiums paid on any life insurance policy co#ering the life of any oAcer or employee%
or of any person (nancially interested in any trade or business carried on by the ta$payer%
indi#idual or corporate% hen the ta$payer is directly or indirectly a bene(ciary under such
policy.
:?; *osses from Sales or $xchanges of Property. - In computing net income% no deductions shall in
any case be alloed in respect of losses from sales or e$changes of property directly or indirectly -
:1; ?eteen members of a family. 8or purposes of this paragraph% the family of an indi#idual
shall include only his brothers and sisters :hether by the hole or half-blood;% spouse%
ancestors% and lineal descendants& or
:3; 1$cept in the case of distributions in li'uidation% beteen an indi#idual and corporation
more than (fty percent :-=I; in #alue of the outstanding stoc) of hich is oned% directly or
indirectly% by or for such indi#idual& or
:5; 1$cept in the case of distributions in li'uidation% beteen to corporations more than
(fty percent :-=I; in #alue of the outstanding stoc) of hich is oned% directly or indirectly%
by or for the same indi#idual if either one of such corporations% ith respect to the ta$able
year of the corporation preceding the date of the sale of e$change as under the la
applicable to such ta$able year% a personal holding company or a foreign personal holding
company&
:0; ?eteen the grantor and a (duciary of any trust& or
GSV-54
:-; ?eteen the (duciary of and the (duciary of a trust and the (duciary of another trust if
the same person is a grantor ith respect to each trust& or
:<; ?eteen a (duciary of a trust and bene(ciary of such trust.
*ection ,. Special Provisions Regarding 'ncome and +eductions of 'nsurance Companies, 6hether
+omestic or 0oreign. -
:A; Special +eduction llo&ed to 'nsurance Companies. - In the case of insurance companies%
hether domestic or foreign doing business in the "hilippines% the net additions% if any% re'uired by
la to be made ithin the year to reser#e funds and the sums other than di#idends paid ithin the
year on policy and annuity contracts may be deducted from their gross income: "ro#ided% hoe#er%
That the released reser#e be treated as income for the year of release.
:?; .utual 'nsurance Companies. - In the case of mutual (re and mutual employersJ liability and
mutual or)menJs compensation and mutual casualty insurance companies re'uiring their
members to ma)e premium deposits to pro#ide for losses and e$penses% said companies shall not
return as income any portion of the premium deposits returned to their policyholders% but shall
return as ta$able income all income recei#ed by them from all other sources plus such portion of
the premium deposits as are retained by the companies for purposes other than the payment of
losses and e$penses and reinsurance reser#es.
:7; .utual .arine 'nsurance Companies. - Mutual marine insurance companies shall include in their
return of gross income% gross premiums collected and recei#ed by them less amounts paid to
policyholders on account of premiums pre#iously paid by them and interest paid upon those
amounts beteen the ascertainment and payment thereof.
:+; ssessment 'nsurance Companies. - Assessment insurance companies% hether domestic or
foreign% may deduct from their gross income the actual deposit of sums ith the oAcers of the
Go#ernment of the "hilippines pursuant to la% as additions to guarantee or reser#e funds.
*ection ,8. *osses from 6ash Sales of Stoc- or Securities. -
:A; In the case of any loss claimed to ha#e been sustained from any sale or other disposition of
shares of stoc) or securities here it appears that ithin a period beginning thirty :5=; days before
the date of such sale or disposition and ending thirty :5=; days after such date% the ta$payer has
ac'uired :by purchase or by e$change upon hich the entire amount of gain or loss as recogni!ed
by la;% or has entered into a contact or option so to ac'uire% substantially identical stoc) or
securities% then no deduction for the loss shall be alloed under Section 50 unless the claim is
made by a dealer in stoc) or securities and ith respect to a transaction made in the ordinary
course of the business of such dealer.
:?; If the amount of stoc) or securities ac'uired :or co#ered by the contract or option to ac'uire; is
less than the amount of stoc) or securities sold or otherise disposed of% then the particular shares
of stoc) or securities% the loss form the sale or other disposition of hich is not deductible% shall be
determined under rules and regulations prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner.
:7; If the amount of stoc) or securities ac'uired :or co#ered by the contract or option to ac'uire
hich; resulted in the non-deductibility of the loss% shall be determined under rules and regulations
prescribed by the Secretary of 8inance% upon recommendation of the 7ommissioner.
*ection ,9. Capital 2ains and *osses. -
:A; +e:nitions. - As used in this Title -
:1; Capital ssets. - the term Jcapital assetsJ means property held by the ta$payer :hether
or not connected ith his trade or business;% but does not include stoc) in trade of the
ta$payer or other property of a )ind hich ould properly be included in the in#entory of the
ta$payer if on hand at the close of the ta$able year% or property held by the ta$payer
primarily for sale to customers in the ordinary course of his trade or business% or property
used in the trade or business% of a character hich is sub*ect to the alloance for
depreciation pro#ided in Subsection :8; of Section 50& or real property used in trade or
business of the ta$payer.
:3; 4et Capital 2ain. - The term Jnet capital gainJ means the e$cess of the gains from sales
or e$changes of capital assets o#er the losses from such sales or e$changes.
GSV-5.
:5; 4et Capital *oss. - The term Jnet capital lossJ means the e$cess of the losses from sales
or e$changes of capital assets o#er the gains from such sales or e$changes.
:?; Percentage Ta-en into ccount. - In the case of a ta$payer% other than a corporation% only the
folloing percentages of the gain or loss recogni!ed upon the sale or e$change of a capital asset
shall be ta)en into account in computing net capital gain% net capital loss% and net income:
:1;2ne hundred percent :1==I; if the capital asset has been held for not more than tel#e
:13; months& and
:3;8ifty percent :-=I; if the capital asset has been held for more than tel#e :13; months&
:7; *imitation on Capital *osses. - Gosses from sales or e$changes of capital assets shall be alloed
only to the e$tent of the gains from such sales or e$changes. If a ban) or trust company
incorporated under the las of the "hilippines% a substantial part of hose business is the receipt of
deposits% sells any bond% debenture% note% or certi(cate or other e#idence of indebtedness issued by
any corporation :including one issued by a go#ernment or political subdi#ision thereof;% ith
interest coupons or in registered form% any loss resulting from such sale shall not be sub*ect to the
foregoing limitation and shall not be included in determining the applicability of such limitation to
other losses.
:+; 4et Capital *oss Carry1over. - If any ta$payer% other than a corporation% sustains in any ta$able
year a net capital loss% such loss :in an amount not in e$cess of the net income for such year; shall
be treated in the succeeding ta$able year as a loss from the sale or e$change of a capital asset
held for not more than tel#e :13; months.
:1; Retirement of Bonds, $tc. - 8or purposes of this Title% amounts recei#ed by the holder upon the
retirement of bonds% debentures% notes or certi(cates or other e#idences of indebtedness issued by
any corporation :including those issued by a go#ernment or political subdi#ision thereof; ith
interest coupons or in registered form% shall be considered as amounts recei#ed in e$change
therefor.
:8; 2ains or losses from Short Sales, $tc. - 8or purposes of this Title -
:1; Gains or losses from short sales of property shall be considered as gains or losses from
sales or e$changes of capital assets& and
:3; Gains or losses attributable to the failure to e$ercise pri#ileges or options to buy or sell
property shall be considered as capital gains or losses.
*ection 4D. +etermination of mount and Recognition of 2ain or *oss. -
:A; Computation of 2ain or *oss. - The gain from the sale or other disposition of property shall be
the e$cess of the amount reali!ed therefrom o#er the basis or ad*usted basis for determining gain%
and the loss shall be the e$cess of the basis or ad*usted basis for determining loss o#er the amount
reali!ed. The amount reali!ed from the sale or other disposition of property shall be the sum of
money recei#ed plus the fair mar)et #alue of the property :other than money; recei#ed&
:?; Basis for +etermining 2ain or *oss from Sale or +isposition of Property. - The basis of property
shall be -
:1; The cost thereof in the case of property ac'uired on or after March 1% 1/15% if such
property as ac'uired by purchase& or
:3; The fair mar)et price or #alue as of the date of ac'uisition% if the same as ac'uired by
inheritance& or
:5; If the property as ac'uired by gift% the basis shall be the same as if it ould be in the
hands of the donor or the last preceding oner by hom it as not ac'uired by gift% e$cept
that if such basis is greater than the fair mar)et #alue of the property at the time of the gift
then% for the purpose of determining loss% the basis shall be such fair mar)et #alue& or
:0; If the property as ac'uired for less than an ade'uate consideration in money or
moneyJs orth% the basis of such property is the amount paid by the transferee for the
property& or
GSV-5/
:-; The basis as de(ned in paragraph :7;:-; of this Section% if the property as ac'uired in a
transaction here gain or loss is not recogni!ed under paragraph :7;:3; of this Section.
:7; $xchange of Property. -
:1; 2eneral Rule. - 1$cept as herein pro#ided% upon the sale or e$change or property% the
entire amount of the gain or loss% as the case may be% shall be recogni!ed.
:3; $xception. - ,o gain or loss shall be recogni!ed if in pursuance of a plan of merger or
consolidation -
:a; A corporation% hich is a party to a merger or consolidation% e$changes property
solely for stoc) in a corporation% hich is a party to the merger or consolidation& or
:b; A shareholder e$changes stoc) in a corporation% hich is a party to the merger or
consolidation% solely for the stoc) of another corporation also a party to the merger or
consolidation& or
:c; A security holder of a corporation% hich is a party to the merger or consolidation%
e$changes his securities in such corporation% solely for stoc) or securities in such
corporation% a party to the merger or consolidation.
,o gain or loss shall also be recogni!ed if property is transferred to a corporation by a
person in e$change for stoc) or unit of participation in such a corporation of hich as a
result of such e$change said person% alone or together ith others% not e$ceeding four :0;
persons% gains control of said corporation: "ro#ided% That stoc)s issued for ser#ices shall not
be considered as issued in return for property.
:5; $xchange 4ot Solely in 8ind. -
:a; If% in connection ith an e$change described in the abo#e e$ceptions% an
indi#idual% a shareholder% a security holder or a corporation recei#es not only stoc) or
securities permitted to be recei#ed ithout the recognition of gain or loss% but also
money andEor property% the gain% if any% but not the loss% shall be recogni!ed but in
an amount not in e$cess of the sum of the money and fair mar)et #alue of such other
property recei#ed: "ro#ided% That as to the shareholder% if the money andEor other
property recei#ed has the e9ect of a distribution of a ta$able di#idend% there shall be
ta$ed as di#idend to the shareholder an amount of the gain recogni!ed not in e$cess
of his proportionate share of the undistributed earnings and pro(ts of the corporation&
the remainder% if any% of the gain recogni!ed shall be treated as a capital gain.
:b; If% in connection ith the e$change described in the abo#e e$ceptions% the
transferor corporation recei#es not only stoc) permitted to be recei#ed ithout the
recognition of gain or loss but also money andEor other property% then :i; if the
corporation recei#ing such money andEor other property distributes it in pursuance of
the plan of merger or consolidation% no gain to the corporation shall be recogni!ed
from the e$change% but :ii; if the corporation recei#ing such other property andEor
money does not distribute it in pursuance of the plan of merger or consolidation% the
gain% if any% but not the loss to the corporation shall be recogni!ed but in an amount
not in e$cess of the sum of such money and the fair mar)et #alue of such other
property so recei#ed% hich is not distributed.
:0; ssumption of *iability. -
:a; If the ta$payer% in connection ith the e$changes described in the foregoing
e$ceptions% recei#es stoc) or securities hich ould be permitted to be recei#ed
ithout the recognition of the gain if it ere the sole consideration% and as part of the
consideration% another party to the e$change assumes a liability of the ta$payer% or
ac'uires from the ta$payer property% sub*ect to a liability% then such assumption or
ac'uisition shall not be treated as money andEor other property% and shall not pre#ent
the e$change from being ithin the e$ceptions.
:b; If the amount of the liabilities assumed plus the amount of the liabilities to hich
the property is sub*ect e$ceed the total of the ad*usted basis of the property
transferred pursuant to such e$change% then such e$cess shall be considered as a
gain from the sale or e$change of a capital asset or of property hich is not a capital
asset% as the case may be.!avvphil?@et
GSV-0=
:-; Basis -
:a; The basis of the stoc) or securities recei#ed by the transferor upon the e$change
speci(ed in the abo#e e$ception shall be the same as the basis of the property% stoc)
or securities e$changed% decreased by :1; the money recei#ed% and :3; the fair
mar)et #alue of the other property recei#ed% and increased by :a; the amount treated
as di#idend of the shareholder and :b; the amount of any gain that as recogni!ed
on the e$change: "ro#ided% That the property recei#ed as JbootJ shall ha#e as basis
its fair mar)et #alue: "ro#ided% further% That if as part of the consideration to the
transferor% the transferee of property assumes a liability of the transferor or ac'uires
form the latter property sub*ect to a liability% such assumption or ac'uisition :in the
amount of the liability; shall% for purposes of this paragraph% be treated as money
recei#ed by the transferor on the e$change: "ro#ided% (nally% That if the transferor
recei#es se#eral )inds of stoc) or securities% the 7ommissioner is hereby authori!ed
to allocate the basis among the se#eral classes of stoc)s or securities.
:b; The basis of the property transferred in the hands of the transferee shall be the
same as it ould be in the hands of the transferor increased by the amount of the
gain recogni!ed to the transferor on the transfer.
:<; +e:nitions. -
:a; The term JsecuritiesJ means bonds and debentures but not Jnotes> of hate#er
class or duration.
:b; The term JmergerJ or JconsolidationJ% hen used in this Section% shall be
understood to mean: :i; the ordinary merger or consolidation% or :ii; the ac'uisition by
one corporation of all or substantially all the properties of another corporation solely
for stoc): "ro#ided% That for a transaction to be regarded as a merger or consolidation
ithin the pur#ie of this Section% it must be underta)en for a bona (de business
purpose and not solely for the purpose of escaping the burden of ta$ation: "ro#ided%
further% That in determining hether a bona (de business purpose e$ists% each and
e#ery step of the transaction shall be considered and the hole transaction or series
of transaction shall be treated as a single unit: "ro#ided% (nally % That in determining
hether the property transferred constitutes a substantial portion of the property of
the transferor% the term JpropertyJ shall be ta)en to include the cash assets of the
transferor.
:c; The5term JcontrolJ% hen used in this Section% shall mean onership of stoc)s in a
corporation possessing at least (fty-one percent :-1I; of the total #oting poer of all
classes of stoc)s entitled to #ote.
:d; The Secretary of 8inance% upon recommendation of the 7ommissioner% is hereby
authori!ed to issue rules and regulations for the purpose Jsubstantially allJ and for the
proper implementation of this Section.
*ection 41. 'nventories. - hene#er in the *udgment of the 7ommissioner% the use of in#entories is
necessary in order to determine clearly the income of any ta$payer% in#entories shall be ta)en by such
ta$payer upon such basis as the Secretary of 8inance% upon recommendation of the 7ommissioner% may%
by rules and regulations% prescribe as conforming as nearly as may be to the best accounting practice in
the trade or business and as most clearly reCecting the income.
If a ta$payer% after ha#ing complied ith the terms and a conditions prescribed by the 7ommissioner% uses
a particular method of #aluing its in#entory for any ta$able year% then such method shall be used in all
subse'uent ta$able years unless:
:i; ith the appro#al of the 7ommissioner% a change to a di9erent method is authori!ed& or
:ii; the 7ommissioner (nds that the nature o the stoc) on hand :e.g.% its scarcity% li'uidity%
mar)etability and price mo#ements; is such that in#entory gains should be considered reali!ed for
ta$ purposes and% therefore% it is necessary to modify the #aluation method for purposes of
ascertaining the income% pro(ts% or loss in a mo#e realistic manner: "ro#ided% hoe#er% That the
7ommissioner shall not e$ercise his authority to re'uire a change in in#entory method more often
than once e#ery three :5 years: "ro#ided% further% That any change in an in#entory #aluation
method must be sub*ect to appro#al by the Secretary of 8inance.
*ection 42. 'ncome from Sources 6ithin the Philippines.-
GSV-01
:A; 2ross 'ncome 0rom Sources 6ithin the Philippines. - The folloing items of gross income shall
be treated as gross income from sources ithin the "hilippines:
:1; 'nterests. - Interests deri#ed from sources ithin the "hilippines% and interests on bonds%
notes or other interest-bearing obligation of residents% corporate or otherise&
:3; +ividends. - The amount recei#ed as di#idends:
:a; from a domestic corporation& and
:b; from a foreign corporation% unless less than (fty percent :-=I; of the gross
income of such foreign corporation for the three-year period ending ith the close of
its ta$able year preceding the declaration of such di#idends or for such part of such
period as the corporation has been in e$istence; as deri#ed from sources ithin the
"hilippines as determined under the pro#isions of this Section& but only in an amount
hich bears the same ration to such di#idends as the gross income of the corporation
for such period deri#ed from sources ithin the "hilippines bears to its gross income
from all sources.
:5; Services. - 7ompensation for labor or personal ser#ices performed in the "hilippines&
:0; Rentals and royalties. - 6entals and royalties from property located in the "hilippines or
from any interest in such property% including rentals or royalties for -
:a; The use of or the right or pri#ilege to use in the "hilippines any copyright% patent%
design or model% plan% secret formula or process% goodill% trademar)% trade brand or
other li)e property or right&
:b; The use of% or the right to use in the "hilippines any industrial% commercial or
scienti(c e'uipment&
:c; The supply of scienti(c% technical% industrial or commercial )noledge or
information&
:d; The supply of any assistance that is ancillary and subsidiary to% and is furnished
as a means of enabling the application or en*oyment of% any such property or right as
is mentioned in paragraph :a;% any such e'uipment as is mentioned in paragraph :b;
or any such )noledge or information as is mentioned in paragraph :c;&!avvphil?@et
:e; The supply of ser#ices by a nonresident person or his employee in connection
ith the use of property or rights belonging to% or the installation or operation of any
brand% machinery or other apparatus purchased from such nonresident person&
:f; Technical ad#ice% assistance or ser#ices rendered in connection ith technical
management or administration of any scienti(c% industrial or commercial
underta)ing% #enture% pro*ect or scheme& and
:g; The use of or the right to use:
:i; Motion picture (lms&
:ii; 8ilms or #ideo tapes for use in connection ith tele#ision& and
:iii; Tapes for use in connection ith radio broadcasting.
:-; Sale of Real Property. - gains% pro(ts and income from the sale of real property located in
the "hilippines& and
:<; Sale of Personal Property. - gains& pro(ts and income from the sale of personal property%
as determined in Subsection :1; of this Section.
:?; Taxable 'ncome 0rom Sources 6ithin the Philippines. -
:1; 2eneral Rule. - 8rom the items of gross income speci(ed in Subsection :A; of this Section%
there shall be deducted the e$penses% losses and other deductions properly allocated
thereto and a ratable part of e$penses% interests% losses and other deductions e9ecti#ely
connected ith the business or trade conducted e$clusi#ely ithin the "hilippines hich
GSV-03
cannot de(nitely be allocated to some items or class of gross income: "ro#ided% That such
items of deductions shall be alloed only if fully substantiated by all the information
necessary for its calculation. The remainder% if any% shall be treated in full as ta$able income
from sources ithin the "hilippines.
:3; $xception. - ,o deductions for interest paid or incurred abroad shall be alloed from the
item of gross income speci(ed in subsection :A; unless indebtedness as actually incurred
to pro#ide funds for use in connection ith the conduct or operation of trade or business in
the "hilippines.
:7; 2ross 'ncome 0rom Sources 6ithout the Philippines. - The folloing items of gross income shall
be treated as income from sources ithout the "hilippines:
:1; Interests other than those deri#ed from sources ithin the "hilippines as pro#ided in
paragraph :1; of Subsection :A; of this Section&
:3; +i#idends other than those deri#ed from sources ithin the "hilippines as pro#ided in
paragraph :3; of Subsection :A; of this Section&
:5; 7ompensation for labor or personal ser#ices performed ithout the "hilippines&
:0; 6entals or royalties from property located ithout the "hilippines or from any interest in
such property including rentals or royalties for the use of or for the pri#ilege of using ithout
the "hilippines% patents% copyrights% secret processes and formulas% goodill% trademar)s%
trade brands% franchises and other li)e properties& and
:-; Gains% pro(ts and income from the sale of real property located ithout the "hilippines.
:+; Taxable 'ncome 0rom Sources 6ithout the Philippines. - 8rom the items of gross income
speci(ed in Subsection :7; of this Section there shall be deducted the e$penses% losses% and other
deductions properly apportioned or allocated thereto and a ratable part of any e$pense% loss or
other deduction hich cannot de(nitely be allocated to some items or classes of gross income. The
remainder% if any% shall be treated in full as ta$able income from sources ithout the "hilippines.
:1; 'ncome 0rom Sources Partly 6ithin and Partly 6ithout the Philippines.- Items of gross income%
e$penses% losses and deductions% other than those speci(ed in Subsections :A; and :7; of this
Section% shall be allocated or apportioned to sources ithin or ithout the "hilippines% under the
rules and regulations prescribed by the Secretary of 8inance% upon recommendation of the
7ommissioner. Bhere items of gross income are separately allocated to sources ithin the
"hilippines% there shall be deducted :for the purpose of computing the ta$able income therefrom;
the e$penses% losses and other deductions properly apportioned or allocated thereto and a ratable
part of other e$penses% losses or other deductions hich cannot de(nitely be allocated to some
items or classes of gross income. The remainder% if any% shall be included in full as ta$able income
from sources ithin the "hilippines. In the case of gross income deri#ed from sources partly ithin
and partly ithout the "hilippines% the ta$able income may (rst be computed by deducting the
e$penses% losses or other deductions apportioned or allocated thereto and a ratable part of any
e$pense% loss or other deduction hich cannot de(nitely be allocated to some items or classes of
gross income& and the portion of such ta$able income attributable to sources ithin the "hilippines
may be determined by processes or formulas of general apportionment prescribed by the Secretary
of 8inance. Gains% pro(ts and income from the sale of personal property produced :in hole or in
part; by the ta$payer ithin and sold ithout the "hilippines% or produced :in hole or in part; by
the ta$payer ithout and sold ithin the "hilippines% shall be treated as deri#ed partly from sources
ithin and partly from sources ithout the "hilippines.
Gains% pro(ts and income deri#ed from the purchase of personal property ithin and its sale
ithout the "hilippines% or from the purchase of personal property ithout and its sale ithin the
"hilippines shall be treated as deri#ed entirely form sources ithin the country in hich sold:
"ro#ided% hoe#er% That gain from the sale of shares of stoc) in a domestic corporation shall be
treated as deri#ed entirely form sources ithin the "hilippines regardless of here the said shares
are sold. The transfer by a nonresident alien or a foreign corporation to anyone of any share of
stoc) issued by a domestic corporation shall not be e9ected or made in its boo) unless: :1; the
transferor has (led ith the 7ommissioner a bond conditioned upon the future payment by him of
any income ta$ that may be due on the gains deri#ed from such transfer% or :3; the 7ommissioner
has certi(ed that the ta$es% if any% imposed in this Title and due on the gain reali!ed from such sale
or transfer ha#e been paid. It shall be the duty of the transferor and the corporation the shares of
hich are sold or transferred% to ad#ise the transferee of this re'uirement.
GSV-05
:8; +e:nitions. - As used in this Section the ords JsaleJ or JsoldJ include Je$changeJ or Je$changedJ&
and the ord JproducedJ includes JcreatedJ% Jfabricated%J JmanufacturedJ% Je$tracted%J JprocessedJ%
JcuredJ or Jaged.J
C%APT"R (### ; ACC&)NT#N$ P"R#&D* AND !"T%&D* &+ ACC&)NT#N$
*ection 4,. 2eneral Rule. - The ta$able income shall be computed upon the basis of the ta$payerJs
annual accounting period :(scal year or calendar year% as the case may be; in accordance ith the method
of accounting regularly employed in )eeping the boo)s of such ta$payer% but if no such method of
accounting has been so employed% or if the method employed does not clearly reCect the income% the
computation shall be made in accordance ith such method as in the opinion of the 7ommissioner clearly
reCects the income. If the ta$payerJs annual accounting period is other than a (scal year% as de(ned in
Section 33:L;% or if the ta$payer has no annual accounting period% or does not )eep boo)s% or if the
ta$payer is an indi#idual% the ta$able income shall be computed on the basis of the calendar year.
*ection 44. Period in &hich 'tems of 2ross 'ncome 'ncluded. - The amount of all items of gross income
shall be included in the gross income for the ta$able year in hich recei#ed by the ta$payer% unless% under
methods of accounting permitted under Section 05% any such amounts are to be properly accounted for as
of a di9erent period. In the case of the death of a ta$payer% there shall be included in computing ta$able
income for the ta$able period in hich falls the date of his death% amounts accrued up to the date of his
death if not otherise properly includible in respect of such period or a prior period.
*ection 4A. Period for &hich +eductions and Credits Ta-en. - The deductions pro#ided for in this Title shall
be ta)en for the ta$able year in hich Jpaid or accruedJ or Jpaid or incurredJ% dependent upon the method
of accounting the basis of hich the net income is computed% unless in order to clearly reCect the income%
the deductions should be ta)en as of a di9erent period. In the case of the death of a ta$payer% there shall
be alloed as deductions for the ta$able period in hich falls the date of his death% amounts accrued up to
the date of his death if not otherise properly alloable in respect of such period or a prior period.
*ection 4B. Change of ccounting Period. If a ta$payer% other than an indi#idual% changes his accounting
period from (scal year to calendar year% from calendar year to (scal year% or from one (scal year to
another% the net income shall% ith the appro#al of the 7ommissioner% be computed on the basis of such
ne accounting period% sub*ect to the pro#isions of Section 04.
*ection 4. 0inal or d7ustment Returns for a Period of *ess than T&elve =!B> .onths.
:A; Returns for Short Period Resulting from Change of ccounting Period. - If a ta$payer% other than
an indi#idual% ith the appro#al of the 7ommissioner% changes the basis of computing net income
from (scal year to calendar year% a separate (nal or ad*ustment return shall be made for the period
beteen the close of the last (scal year for hich return as made and the folloing +ecember 51.
If the change is from calendar year to (scal year% a separate (nal or ad*ustment return shall be
made for the period beteen the close of the last calendar year for hich return as made and the
date designated as the close of the (scal year. If the change is from one (scal year to another (scal
year% a separate (nal or ad*ustment return shall be made for the period beteen the close of the
former (scal year and the date designated as the close of the ne (scal year.
:?; 'ncome Computed on Basis of Short Period. - Bhere a separate (nal or ad*ustment return is
made under Subsection :A; on account of a change in the accounting period% and in all other cases
here a separate (nal or ad*ustment return is re'uired or permitted by rules and regulations
prescribed by the Secretary of 8inance% upon recommendation of the 7ommissioner% to be made for
a fractional part of a year% then the income shall be computed on the basis of the period for hich
separate (nal or ad*ustment return is made.
*ection 48. ccounting for *ong1term Contracts. - Income from long-term contracts shall be reported for
ta$ purposes in the manner as pro#ided in this Section. As used herein% the term Jlong-term contractsJ
means building% installation or construction contracts co#ering a period in e$cess of one :1; year. "ersons
hose gross income is deri#ed in hole or in part from such contracts shall report such income upon the
basis of percentage of completion. The return should be accompanied by a return certi(cate of architects
or engineers shoing the percentage of completion during the ta$able year of the entire or) performed
under contract. There should be deducted from such gross income all e$penditures made during the
ta$able year on account of the contract% account being ta)en of the material and supplies on hand at the
beginning and end of the ta$able period for use in connection ith the or) under the contract but not yet
so applied. If upon completion of a contract% it is found that the ta$able net income arising thereunder has
not been clearly reCected for any year or years% the 7ommissioner may permit or re'uire an amended
return.
*ection 49. 'nstallment Basis. -
GSV-00
:A; Sales of +ealers in Personal Property. - Hnder rules and regulations prescribed by the Secretary
of 8inance% upon recommendation of the 7ommissioner% a person ho regularly sells or otherise
disposes of personal property on the installment plan may return as income therefrom in any
ta$able year that proportion of the installment payments actually recei#ed in that year% hich the
gross pro(t reali!ed or to be reali!ed hen payment is completed% bears to the total contract price.
:?; Sales of Realty and Casual Sales of Personality. - In the case :1; of a casual sale or other casual
disposition of personal property :other than property of a )ind hich ould properly be included in
the in#entory of the ta$payer if on hand at the close of the ta$able year;% for a price e$ceeding 2ne
thousand pesos :"1%===;% or :3; of a sale or other disposition of real property% if in either case the
initial payments do not e$ceed tenty-(#e percent :3-I; of the selling price% the income may%
under the rules and regulations prescribed by the Secretary of 8inance% upon recommendation of
the 7ommissioner% be returned on the basis and in the manner abo#e prescribed in this Section. As
used in this Section% the term Jinitial paymentsJ means the payments recei#ed in cash or property
other than e#idences of indebtedness of the purchaser during the ta$able period in hich the sale
or other disposition is made.
:7; Sales of Real Property Considered as Capital sset by 'ndividuals. - An indi#idual ho sells or
disposes of real property% considered as capital asset% and is otherise 'uali(ed to report the gain
therefrom under Subsection :?; may pay the capital gains ta$ in installments under rules and
regulations to be promulgated by the Secretary of 8inance% upon recommendation of the
7ommissioner.
:+; Change from ccrual to 'nstallment Basis. - If a ta$payer entitled to the bene(ts of Subsection
:A; elects for any ta$able year to report his ta$able income on the installment basis% then in
computing his income for the year of change or any subse'uent year% amounts actually recei#ed
during any such year on account of sales or other dispositions of property made in any prior year
shall not be e$cluded.
*ection AD. llocation of 'ncome and +eductions. - In the case of to or more organi!ations% trades or
businesses :hether or not incorporated and hether or not organi!ed in the "hilippines; oned or
controlled directly or indirectly by the same interests% the 7ommissioner is authori!ed to distribute%
apportion or allocate gross income or deductions beteen or among such organi!ation% trade or business%
if he determined that such distribution% apportionment or allocation is necessary in order to pre#ent
e#asion of ta$es or clearly to reCect the income of any such organi!ation% trade or business.
C%APT"R #5 ; R"T)RN* AND PAE!"NT &+ TA5
*ection A1. 'ndividual Return. -
:A; Re/uirements. -
:1; 1$cept as pro#ided in paragraph :3; of this Subsection% the folloing indi#iduals are
re'uired to (le an income ta$ return:
:a; 1#ery 8ilipino citi!en residing in the "hilippines&
:b; 1#ery 8ilipino citi!en residing outside the "hilippines% on his income from sources
ithin the "hilippines&
:c; 1#ery alien residing in the "hilippines% on income deri#ed from sources ithin the
"hilippines& and
:d; 1#ery nonresident alien engaged in trade or business or in the e$ercise of
profession in the "hilippines.
:3; The folloing indi#iduals shall not be re'uired to (le an income ta$ return&
:a; An indi#idual hose gross income does not e$ceed his total personal and
additional e$emptions for dependents under Section 5-: "ro#ided% That a citi!en of
the "hilippines and any alien indi#idual engaged in business or practice of profession
ithin the "hilippine shall (le an income ta$ return% regardless of the amount of gross
income&
:b; An indi#idual ith respect to pure compensation income% as de(ned in Section 53
:A;:1;% deri#ed from sources ithin the "hilippines% the income ta$ on hich has been
correctly ithheld under the pro#isions of Section 4/ of this 7ode: "ro#ided% That an
indi#idual deri#ing compensation concurrently from to or more employers at any
GSV-0-
time during the ta$able year shall (le an income ta$ return: "ro#ided% further% That
an indi#idual hose compensation income deri#ed from sources ithin the
"hilippines e$ceeds Si$ty thousand pesos :"<=%===; shall also (le an income ta$
return&
:c; An indi#idual hose sole income has been sub*ected to (nal ithholding ta$
pursuant to Section -4:A; of this 7ode& and
:d; An indi#idual ho is e$empt from income ta$ pursuant to the pro#isions of this
7ode and other las% general or special.
:5; The forgoing notithstanding% any indi#idual not re'uired to (le an income ta$ return
may ne#ertheless be re'uired to (le an information return pursuant to rules and regulations
prescribed by the Secretary of 8inance% upon recommendation of the 7ommissioner.
:0; The income ta$ return shall be (led in duplicate by the folloing persons:
:a; A resident citi!en - on his income from all sources&
:b; A nonresident citi!en - on his income deri#ed from sources ithin the "hilippines&
:c; A resident alien - on his income deri#ed from sources ithin the "hilippines& and
:d; A nonresident alien engaged in trade or business in the "hilippines - on his
income deri#ed from sources ithin the "hilippines.
:?; 6here to 0ile. - 1$cept in cases here the 7ommissioner otherise permits% the return shall be
(led ith an authori!ed agent ban)% 6e#enue +istrict 2Acer% 7ollection Agent or duly authori!ed
Treasurer of the city or municipality in hich such person has his legal residence or principal place
of business in the "hilippines% or if there be no legal residence or place of business in the
"hilippines% ith the 2Ace of the 7ommissioner.
:7; 6hen to 0ile. -
:1; The return of any indi#idual speci(ed abo#e shall be (led on or before the (fteenth :1-th;
day of April of each year co#ering income for the preceding ta$able year.
:3; Indi#iduals sub*ect to ta$ on capital gains&
:a; 8rom the sale or e$change of shares of stoc) not traded thru a local stoc)
e$change as prescribed under Section 30:c; shall (le a return ithin thirty :5=; days
after each transaction and a (nal consolidated return on or before April 1- of each
year co#ering all stoc) transactions of the preceding ta$able year& and
:b; 8rom the sale or disposition of real property under Section 30:+; shall (le a return
ithin thirty :5=; days folloing each sale or other disposition.
:+; Husband and 6ife. - Married indi#iduals% hether citi!ens% resident or nonresident aliens% ho
do not deri#e income purely from compensation% shall (le a return for the ta$able year to include
the income of both spouses% but here it is impracticable for the spouses to (le one return% each
spouse may (le a separate return of income but the returns so (led shall be consolidated by the
?ureau for purposes of #eri(cation for the ta$able year.
:1; Return of Parent to 'nclude 'ncome of Children. - The income of unmarried minors deri#ed from
properly recei#ed from a li#ing parent shall be included in the return of the parent% e$cept :1; hen
the donorJs ta$ has been paid on such property% or :3; hen the transfer of such property is e$empt
from donorJs ta$.
:8; Persons Cnder +isability. - If the ta$payer is unable to ma)e his on return% the return may be
made by his duly authori!ed agent or representati#e or by the guardian or other person charged
ith the care of his person or property% the principal and his representati#e or guardian assuming
the responsibility of ma)ing the return and incurring penalties pro#ided for erroneous% false or
fraudulent returns.
:G; Signature Presumed Correct. - The fact that an indi#idualJs name is signed to a (led return shall
be prima facie e#idence for all purposes that the return as actually signed by him.
GSV-0<
*ection A2. Corporation Returns. -
:A; Re/uirements. - 1#ery corporation sub*ect to the ta$ herein imposed% e$cept foreign
corporations not engaged in trade or business in the "hilippines% shall render% in duplicate% a true
and accurate 'uarterly income ta$ return and (nal or ad*ustment return in accordance ith the
pro#isions of 7hapter MII of this Title. The return shall be (led by the president% #ice-president or
other principal oAcer% and shall be sorn to by such oAcer and by the treasurer or assistant
treasurer.
:?; Taxable Aear of Corporation. - A corporation may employ either calendar year or (scal year as a
basis for (ling its annual income ta$ return: "ro#ided% That the corporation shall not change the
accounting period employed ithout prior appro#al from the 7ommissioner in accordance ith the
pro#isions of Section 04 of this 7ode.
:7; Return of Corporation Contemplating +issolution or Reorgani5ation. - 1#ery corporation shall%
ithin thirty :5=; days after the adoption by the corporation of a resolution or plan for its
dissolution% or for the li'uidation of the hole or any part of its capital stoc)% including a corporation
hich has been noti(ed of possible in#oluntary dissolution by the Securities and 1$change
7ommission% or for its reorgani!ation% render a correct return to the 7ommissioner% #eri(ed under
oath% setting forth the terms of such resolution or plan and such other information as the Secretary
of 8inance% upon recommendation of the commissioner% shall% by rules and regulations% prescribe.
The dissol#ing or reorgani!ing corporation shall% prior to the issuance by the Securities and
1$change 7ommission of the 7erti(cate of +issolution or 6eorgani!ation% as may be de(ned by
rules and regulations prescribed by the Secretary of 8inance% upon recommendation of the
7ommissioner% secure a certi(cate of ta$ clearance from the ?ureau of Internal 6e#enue hich
certi(cate shall be submitted to the Securities and 1$change 7ommission.
:+; Return on Capital 2ains Reali5ed from Sale of Shares of Stoc- not Traded in the *ocal Stoc-
$xchange. - 1#ery corporation deri#ing capital gains from the sale or e$change of shares of stoc)
not traded thru a local stoc) e$change as prescribed under Sections 30 :c;% 3- :A;:5;% 34 :1;:3;%
3.:A;:.;:c; and 3. :?;:-;:c;% shall (le a return ithin thirty :5=; days after each transactions and a
(nal consolidated return of all transactions during the ta$able year on or before the (fteenth :1-th;
day of the fourth :0th; month folloing the close of the ta$able year.
*ection A,. $xtension of Time to 0ile Returns. - The 7ommissioner may% in meritorious cases% grant a
reasonable e$tension of time for (ling returns of income :or (nal and ad*ustment returns in case of
corporations;% sub*ect to the pro#isions of Section -< of this 7ode.
*ection A4. Returns of Receivers, Trustees in Ban-ruptcy or ssignees. - In cases herein recei#ers%
trustees in ban)ruptcy or assignees are operating the property or business of a corporation% sub*ect to the
ta$ imposed by this Title% such recei#ers% trustees or assignees shall ma)e returns of net income as and for
such corporation% in the same manner and form as such organi!ation is hereinbefore re'uired to ma)e
returns% and any ta$ due on the income as returned by recei#ers% trustees or assignees shall be assessed
and collected in the same manner as if assessed directly against the organi!ations of hose businesses or
properties they ha#e custody or control.
*ection AA. Returns of 2eneral Professional Partnerships. - 1#ery general professional partnership shall
(le% in duplicate% a return of its income% e$cept income e$empt under Section 53 :?; of this Title% setting
forth the items of gross income and of deductions alloed by this Title% and the names% Ta$payer
Identi(cation ,umbers :TI,;% addresses and shares of each of the partners.
*ection AB. Payment and ssessment of 'ncome Tax for 'ndividuals and Corporation. -
:A; "ayment of Ta$. -
:1; 'n 2eneral. - The total amount of ta$ imposed by this Title shall be paid by the person
sub*ect thereto at the time the return is (led. In the case of tramp #essels% the shipping
agents andEor the husbanding agents% and in their absence% the captains thereof are
re'uired to (le the return herein pro#ided and pay the ta$ due thereon before their
departure. Hpon failure of the said agents or captains to (le the return and pay the ta$% the
?ureau of 7ustoms is hereby authori!ed to hold the #essel and pre#ent its departure until
proof of payment of the ta$ is presented or a suAcient bond is (led to anser for the ta$
due.
:3; 'nstallment of Payment. - Bhen the ta$ due is in e$cess of To thousand pesos :"3%===;%
the ta$payer other than a corporation may elect to pay the ta$ in to :3; e'ual installments
in hich case% the (rst installment shall be paid at the time the return is (led and the second
GSV-04
installment% on or before @uly 1- folloing the close of the calendar year. If any installment is
not paid on or before the date ($ed for its payment% the hole amount of the ta$ unpaid
becomes due and payable% together ith the delin'uency penalties.
:5; Payment of Capital 2ains Tax. - The total amount of ta$ imposed and prescribed under
Section 30 :c;% 30:+;% 34:1;:3;% 3.:A;:.;:c; and 3.:?;:-;:c; shall be paid on the date the
return prescribed therefor is (led by the person liable thereto: "ro#ided% That if the seller
submits proof of his intention to a#ail himself of the bene(t of e$emption of capital gains
under e$isting special las% no such payments shall be re'uired : "ro#ided% further% That in
case of failure to 'ualify for e$emption under such special las and implementing rules and
regulations% the ta$ due on the gains reali!ed from the original transaction shall immediately
become due and payable% sub*ect to the penalties prescribed under applicable pro#isions of
this 7ode: "ro#ided% (nally% That if the seller% ha#ing paid the ta$% submits such proof of
intent ithin si$ :<; months from the registration of the document transferring the real
property% he shall be entitled to a refund of such ta$ upon #eri(cation of his compliance ith
the re'uirements for such e$emption.
>In case the ta$payer elects and is 'uali(ed to report the gain by installments under Section 0/ of
this 7ode% the ta$ due from each installment payment shall be paid ithin :5=; days from the
receipt of such payments.
,o registration of any document transferring real property shall be e9ected by the 6egister of
+eeds unless the 7ommissioner or his duly authori!ed representati#e has certi(ed that such
transfer has been reported% and the ta$ herein imposed% if any% has been paid.
:?; Assessment and "ayment of +e(ciency Ta$. - After the return is (led% the 7ommissioner shall
e$amine it and assess the correct amount of the ta$. The ta$ or de(ciency income ta$ so
disco#ered shall be paid upon notice and demand from the 7ommissioner.
As used in this 7hapter% in respect of a ta$ imposed by this Title% the term Jde(ciencyJ means:
:1; The amount by hich the ta$ imposed by this Title e$ceeds the amount shon as the ta$
by the ta$payer upon his return& but the amount so shon on the return shall be increased
by the amounts pre#iously assessed :or collected ithout assessment; as a de(ciency% and
decreased by the amount pre#iously abated% credited% returned or otherise repaid in
respect of such ta$& or
:3; If no amount is shon as the ta$ by the ta$payer upon this return% or if no return is made
by the ta$payer% then the amount by hich the ta$ e$ceeds the amounts pre#iously
assessed :or collected ithout assessment; as a de(ciency& but such amounts pre#iously
assessed or collected ithout assessment shall (rst be decreased by the amounts pre#iously
abated% credited returned or otherise repaid in respect of such ta$.
*ection A. 6ithholding of Tax at Source. -
:A; 6ithholding of 0inal Tax on Certain 'ncomes. - Sub*ect to rules and regulations the Secretary of
8inance may promulgate% upon the recommendation of the 7ommissioner% re'uiring the (ling of
income ta$ return by certain income payees% the ta$ imposed or prescribed by Sections 30:?;:1;%
30:?;:3;% 30:7;% 30:+;:1;& 3-:A;:3;% 3-:A;:5;% 3-:?;% 3-:7;% 3-:+;% 3-:1;% 34:+;:R;% 34:+;:3;% 34:+;:5;%
34:+;:-;% 3. :A;:0;% 3.:A;:-;% 3.:A;:4;:a;% 3.:A;:4;:b;% 3.:A;:4;:c;% 3.:?;:1;% 3.:?;:3;% 3.:?;:5;% 3.:?;
:0;% 3.:?;:-;:a;% 3.:?;:-;:b;% 3.:?;:-;:c;& 55& and 3.3 of this 7ode on speci(ed items of income shall
be ithheld by payor-corporation andEor person and paid in the same manner and sub*ect to the
same conditions as pro#ided in Section -. of this 7ode.
:?; 6ithholding of Creditable Tax at Source. - The Secretary of 8inance may% upon the
recommendation of the 7ommissioner% re'uire the ithholding of a ta$ on the items of income
payable to natural or *uridical persons% residing in the "hilippines% by payor-corporationEpersons as
pro#ided for by la% at the rate of not less than one percent :1I; but not more than thirty-to
percent :53I; thereof% hich shall be credited against the income ta$ liability of the ta$payer for
the ta$able year.
:7; Tax1free Covenant Bonds. In any case here bonds% mortgages% deeds of trust or other similar
obligations of domestic or resident foreign corporations% contain a contract or pro#isions by hich
the obligor agrees to pay any portion of the ta$ imposed in this Title upon the obligee or to
reimburse the obligee for any portion of the ta$ or to pay the interest ithout deduction for any ta$
hich the obligor may be re'uired or permitted to pay thereon or to retain therefrom under any la
of the "hilippines% or any state or country% the obligor shall deduct bonds% mortgages% deeds of trust
or other obligations% hether the interest or other payments are payable annually or at shorter or
GSV-0.
longer periods% and hether the bonds% securities or obligations had been or ill be issued or
mar)eted% and the interest or other payment thereon paid% ithin or ithout the "hilippines% if the
interest or other payment is payable to a nonresident alien or to a citi!en or resident of the
"hilippines.
*ection A8. Returns and Payment of Taxes 6ithheld at Source. -
:A; Duarterly Returns and Payments of Taxes 6ithheld. - Ta$es deducted and ithheld under
Section -4 by ithholding agents shall be co#ered by a return and paid to% e$cept in cases here
the 7ommissioner otherise permits% an authori!ed Treasurer of the city or municipality here the
ithholding agent has his legal residence or principal place of business% or here the ithholding
agent is a corporation% here the principal oAce is located.
The ta$es deducted and ithheld by the ithholding agent shall be held as a special fund in trust
for the go#ernment until paid to the collecting oAcers.
The return for (nal ithholding ta$ shall be (led and the payment made ithin tenty-(#e :3-;
days from the close of each calendar 'uarter% hile the return for creditable ithholding ta$es shall
be (led and the payment made not later than the last day of the month folloing the close of the
'uarter during hich ithholding as made: "ro#ided% That the 7ommissioner% ith the appro#al of
the Secretary of 8inance% may re'uire these ithholding agents to pay or deposit the ta$es
deducted or ithheld at more fre'uent inter#als hen necessary to protect the interest of the
go#ernment.
:?; Statement of 'ncome Payments .ade and Taxes 6ithheld. - 1#ery ithholding agent re'uired to
deduct and ithhold ta$es under Section -4 shall furnish each recipient% in respect to his or its
receipts during the calendar 'uarter or year% a ritten statement shoing the income or other
payments made by the ithholding agent during such 'uarter or year% and the amount of the ta$
deducted and ithheld therefrom% simultaneously upon payment at the re'uest of the payee% but
not late than the tentieth :3=th; day folloing the close of the 'uarter in the case of corporate
payee% or not later than March 1 of the folloing year in the case of indi#idual payee for creditable
ithholding ta$es. 8or (nal ithholding ta$es% the statement should be gi#en to the payee on or
before @anuary 51 of the succeeding year.
:7; nnual 'nformation Return. - 1#ery ithholding agent re'uired to deduct and ithhold ta$es
under Section -4 shall submit to the 7ommissioner an annual information return containing the list
of payees and income payments% amount of ta$es ithheld from each payee and such other
pertinent information as may be re'uired by the 7ommissioner. In the case of (nal ithholding
ta$es% the return shall be (led on or before @anuary 51 of the succeeding year% and for creditable
ithholding ta$es% not later than March 1 of the year folloing the year for hich the annual report
is being submitted. This return% if made and (led in accordance ith the rules and regulations
appro#ed by the Secretary of 8inance% upon recommendation of the 7ommissioner% shall be
suAcient compliance ith the re'uirements of Section <. of this Title in respect to the income
payments.
The 7ommissioner may% by rules and regulations% grant to any ithholding agent a reasonable
e$tension of time to furnish and submit the return re'uired in this Subsection.
:+; 'ncome of Recipient. - Income upon hich any creditable ta$ is re'uired to be ithheld at source
under Section -4 shall be included in the return of its recipient but the e$cess of the amount of ta$
so ithheld o#er the ta$ due on his return shall be refunded to him sub*ect to the pro#isions of
Section 3=0& if the income ta$ collected at source is less than the ta$ due on his return% the
di9erence shall be paid in accordance ith the pro#isions of Section -<.
All ta$es ithheld pursuant to the pro#isions of this 7ode and its implementing rules and
regulations are hereby considered trust funds and shall be maintained in a separate account and
not commingled ith any other funds of the ithholding agent.
:1; Registration &ith Register of +eeds. - ,o registration of any document transferring real property
shall be e9ected by the 6egister of +eeds unless the 7ommissioner or his duly authori!ed
representati#e has certi(ed that such transfer has been reported% and the capital gains or
creditable ithholding ta$% if any% has been paid: "ro#ided% hoe#er% That the information as may
be re'uired by rules and regulations to be prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner% shall be annotated by the 6egister of +eeds in the Transfer
7erti(cate of Title or 7ondominium 7erti(cate of Title: "ro#ided% further% That in cases of transfer of
property to a corporation% pursuant to a merger% consolidation or reorgani!ation% and here the la
allos deferred recognition of income in accordance ith Section 0=% the information as may be
re'uired by rules and regulations to be prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner% shall be annotated by the 6egister of +eeds at the bac) of
GSV-0/
the Transfer 7erti(cate of Title or 7ondominium 7erti(cate of Title of the real property in#ol#ed:
"ro#ided% (nally% That any #iolation of this pro#ision by the 6egister of +eeds shall be sub*ect to the
penalties imposed under Section 3</ of this 7ode.
*ection A9. Tax on Pro:ts Collectible from (&ner or (ther Persons. - The ta$ imposed under this Title
upon gains% pro(ts% and income not falling under the foregoing and not returned and paid by #irtue of the
foregoing or as otherise pro#ided by la shall be assessed by personal return under rules and regulations
to be prescribed by the Secretary of 8inance% upon recommendation of the 7ommissioner. The intent and
purpose of the Title is that all gains% pro(ts and income of a ta$able class% as de(ned in this Title% shall be
charged and assessed ith the corresponding ta$ prescribed by this Title% and said ta$ shall be paid by the
oners of such gains% pro(ts and income% or the proper person ha#ing the receipt% custody% control or
disposal of the same. 8or purposes of this Title% onership of such gains% pro(ts and income or liability to
pay the ta$ shall be determined as of the year for hich a return is re'uired to be rendered.
C%APT"R 5 ; "*TAT"* AND TR)*T*
*ection BD. 'mposition of Tax. -
:A; pplication of Tax. - The ta$ imposed by this Title upon indi#iduals shall apply to the income of
estates or of any )ind of property held in trust% including:
:1; Income accumulated in trust for the bene(t of unborn or unascertained person or
persons ith contingent interests% and income accumulated or held for future distribution
under the terms of the ill or trust&
:3; Income hich is to be distributed currently by the (duciary to the bene(ciaries% and
income collected by a guardian of an infant hich is to be held or distributed as the court
may direct&
:5; Income recei#ed by estates of deceased persons during the period of administration or
settlement of the estate& and
:0; Income hich% in the discretion of the (duciary% may be either distributed to the
bene(ciaries or accumulated.
:?; $xception. - The ta$ imposed by this Title shall not apply to employeeJs trust hich forms part of
a pension% stoc) bonus or pro(t-sharing plan of an employer for the bene(t of some or all of his
employees :1; if contributions are made to the trust by such employer% or employees% or both for
the purpose of distributing to such employees the earnings and principal of the fund accumulated
by the trust in accordance ith such plan% and :3; if under the trust instrument it is impossible% at
any time prior to the satisfaction of all liabilities ith respect to employees under the trust% for any
part of the corpus or income to be :ithin the ta$able year or thereafter; used for% or di#erted to%
purposes other than for the e$clusi#e bene(t of his employees: "ro#ided% That any amount actually
distributed to any employee or distributee shall be ta$able to him in the year in hich so distributed
to the e$tent that it e$ceeds the amount contributed by such employee or distributee.
:7; Computation and Payment. -
:1; 'n 2eneral. - The ta$ shall be computed upon the ta$able income of the estate or trust
and shall be paid by the (duciary% e$cept as pro#ided in Section <5 :relating to re#ocable
trusts; and Section <0 :relating to income for the bene(t of the grantor;.
:3; Consolidation of 'ncome of T&o or .ore Trusts. - Bhere% in the case of to or more trusts%
the creator of the trust in each instance is the same person% and the bene(ciary in each
instance is the same% the ta$able income of all the trusts shall be consolidated and the ta$
pro#ided in this Section computed on such consolidated income% and such proportion of said
ta$ shall be assessed and collected from each trustee hich the ta$able income of the trust
administered by him bears to the consolidated income of the se#eral trusts.
*ection B1. Taxable 'ncome. - The ta$able income of the estate or trust shall be computed in the same
manner and on the same basis as in the case of an indi#idual% e$cept that:
:A; There shall be alloed as a deduction in computing the ta$able income of the estate or trust the
amount of the income of the estate or trust for the ta$able year hich is to be distributed currently
by the (duciary to the bene(ciaries% and the amount of the income collected by a guardian of an
infant hich is to be held or distributed as the court may direct% but the amount so alloed as a
deduction shall be included in computing the ta$able income of the bene(ciaries% hether
distributed to them or not. Any amount alloed as a deduction under this Subsection shall not be
GSV--=
alloed as a deduction under Subsection :?; of this Section in the same or any succeeding ta$able
year.
:?; In the case of income recei#ed by estates of deceased persons during the period of
administration or settlement of the estate% and in the case of income hich% in the discretion of the
(duciary% may be either distributed to the bene(ciary or accumulated% there shall be alloed as an
additional deduction in computing the ta$able income of the estate or trust the amount of the
income of the estate or trust for its ta$able year% hich is properly paid or credited during such year
to any legatee% heir or bene(ciary but the amount so alloed as a deduction shall be included in
computing the ta$able income of the legatee% heir or bene(ciary.
:7; In the case of a trust administered in a foreign country% the deductions mentioned in
Subsections :A; and :?; of this Section shall not be alloed: "ro#ided% That the amount of any
income included in the return of said trust shall not be included in computing the income of the
bene(ciaries.
*ection B2. $xemption llo&ed to $states and Trusts. - 8or the purpose of the ta$ pro#ided for in this
Title% there shall be alloed an e$emption of Tenty thousand pesos :"3=%===; from the income of the
estate or trust.
*ection B,. Revocable trusts. - Bhere at any time the poer to re#est in the grantor title to any part of
the corpus of the trust is #ested :1; in the grantor either alone or in con*unction ith any person not
ha#ing a substantial ad#erse interest in the disposition of such part of the corpus or the income therefrom%
or :3; in any person not ha#ing a substantial ad#erse interest in the disposition of such part of the corpus
or the income therefrom% the income of such part of the trust shall be included in computing the ta$able
income of the grantor.
*ection B4. 'ncome for Bene:t of 2rantor.-
:A; Bhere any part of the income of a trust :1; is% or in the discretion of the grantor or of any person
not ha#ing a substantial ad#erse interest in the disposition of such part of the income may be held
or accumulated for future distribution to the grantor% or :3; may% or in the discretion of the grantor
or of any person not ha#ing a substantial ad#erse interest in the disposition of such part of the
income% be distributed to the grantor% or :5; is% or in the discretion of the grantor or of any person
not ha#ing a substantial ad#erse interest in the disposition of such part of the income may be
applied to the payment of premiums upon policies of insurance on the life of the grantor% such part
of the income of the trust shall be included in computing the ta$able income of the grantor.
:?; As used in this Section% the term Jin the discretion of the grantorJ means in the discretion of the
grantor% either alone or in con*unction ith any person not ha#ing a substantial ad#erse interest in
the disposition of the part of the income in 'uestion.
*ection BA. 0iduciary Returns. - Guardians% trustees% e$ecutors% administrators% recei#ers% conser#ators
and all persons or corporations% acting in any (duciary capacity% shall render% in duplicate% a return of the
income of the person% trust or estate for hom or hich they act% and be sub*ect to all the pro#isions of
this Title% hich apply to indi#iduals in case such person% estate or trust has a gross income of Tenty
thousand pesos :"3=%===; or o#er during the ta$able year. Such (duciary or person (ling the return for him
or it% shall ta)e oath that he has suAcient )noledge of the a9airs of such person% trust or estate to enable
him to ma)e such return and that the same is% to the best of his )noledge and belief% true and correct%
and be sub*ect to all the pro#isions of this Title hich apply to indi#iduals: "ro#ided% That a return made by
or for one or to or more *oint (duciaries (led in the pro#ince here such (duciaries reside& under such
rules and regulations as the Secretary of 8inance% upon recommendation of the 7ommissioner% shall
prescribe% shall be a suAcient compliance ith the re'uirements of this Section.
*ection BB. 0iduciaries 'ndemni:ed gainst Claims for Taxes Paid. - Trustees% e$ecutors% administrators
and other (duciaries are indemni(ed against the claims or demands of e#ery bene(ciary for all payments
of ta$es hich they shall be re'uired to ma)e under the pro#isions of this Title% and they shall ha#e credit
for the amount of such payments against the bene(ciary or principal in any accounting hich they ma)e
as such trustees or other (duciaries.
C%APT"R 5# ; &T%"R #NC&!" TA5 R"8)#R"!"NT*
*ection B. Collection of 0oreign Payments. - All persons% corporations% duly registered general co-
partnerships :companias colecti#as; underta)ing for pro(t or otherise the collection of foreign payments
of interests or di#idends by means of coupons% chec)s or bills of e$change shall obtain a license from the
7ommissioner% and shall be sub*ect to such rules and regulations enabling the go#ernment to obtain the
information re'uired under this Title% as the Secretary of 8inance% upon recommendation of the
7ommissioner% shall prescribe.
GSV--1
*ection B8. 'nformation at Source as to 'ncome Payments. - all persons% corporations or duly registered
co- partnerships :companias colecti#as;% in hate#er capacity acting% including lessees or mortgagors of
real or personal property% trustees% acting in any trust capacity% e$ecutors% administrators% recei#ers%
conser#ators and employees ma)ing payment to another person% corporation or duly registered general
co-partnership :compania colecti#a;% of interests% rents% salaries% ages% premiums% annuities%
compensations% remunerations% emoluments or other ($ed or determinable gains% pro(ts and income%
other than payment described in Section </% in any ta$able year% or in the case of such payments made by
the Go#ernment of the "hilippines% the oAcers or employees of the Go#ernment ha#ing information as to
such payments and re'uired to ma)e returns in regard thereto% are authori!ed and re'uired to render a
true and accurate return to the 7ommissioner% under such rules and regulations% and in such form and
manner as may be prescribed by the Secretary of 8inance% upon recommendation of the 7ommissioner%
setting forth the amount of such gains% pro(ts and income and the name and address of the recipient of
such payments: "ro#ided% That such returns shall be re'uired% in the case of payments of interest upon
bonds and mortgages or deeds of trust or other similar obligations of corporations% and in the case of
collections of items% not payable in the "hilippines% of interest upon the bonds of foreign countries and
interest from the bonds and di#idends from the stoc) of foreign corporations by persons% corporations or
duly registered general co-partnerships :companias colecti#as;% underta)ing as a matter of business or for
pro(t or otherise the collection of foreign payments of such interests or di#idends by means of coupons
or bills of e$change.
*ection B9. Return of 'nformation of Bro-ers. - 1#ery person% corporation or duly registered general co-
partnership :compania colecti#a;% doing business as a bro)er in any e$change or board or other similar
place of business% shall% hen re'uired by the 7ommissioner% render a correct return duly #eri(ed under
oath under such rules and regulations as the Secretary of 8inance% upon recommendation of the
7ommissioner% may prescribe% shoing the names of customers for hom such person% corporation or duly
registered general co-partnership :compania colecti#a; has transacted any business% ith such details as
to the pro(ts% losses or other information hich the 7ommissioner% may re'uire as to each of such
customers as ill enable the 7ommissioner to determine hether all income ta$ due on pro(ts or gains of
such customers has been paid.
*ection D. Returns of 0oreign Corporations. -
:A; Re/uirements. - Hnder rules and regulations prescribed by the Secretary of (nance% upon the
recommendation of the 7ommissioner% any attorney% accountant% (duciary% ban)% trust company%
(nancial institution or other person% ho aids% assists% counsels or ad#ises in% o ith respect to& the
formation% organi!ation or reorgani!ation of any foreign corporation% shall% ithin thirty :5=; days
thereafter% (le ith the 7ommissioner a return.
:?; 0orm and Contents of Return. - Such return shall be in such form and shall set forth& under oath%
in respect of each such corporation% to the full e$tent of the information ithin the possession or
)noledge or under the control of the person re'uired to (le the return% such information as the
Secretary of 8inance% upon recommendation of the 7ommissioner% shall prescribe by rules and
regulations as necessary for carrying out the pro#isions of this Title. ,othing in this Section shall be
construed to re'uire the di#ulging of pri#ileged communications beteen attorney and client.
*ection 1. +isposition of 'ncome Tax Returns, Publication of *ists of Taxpayers and 0ilers. - After the
assessment shall ha#e been made% as pro#ided in this Title% the returns% together ith any corrections
thereof hich may ha#e been made by the 7ommissioner% shall be (led in the 2Ace of the 7ommissioner
and shall constitute public records and be open to inspection as such upon the order of the "resident of the
"hilippines% under rules and regulations to be prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner.
The 7ommissioner may% in each year% cause to be prepared and published in any nespaper the lists
containing the names and addresses of persons ho ha#e (led income ta$ returns.
*ection 2. Suit to Recover Tax Based on 0alse or 0raudulent Returns. - Bhen an assessment is made in
case of any list% statement or return% hich in the opinion of the 7ommissioner as false or fraudulent or
contained any understatement or under#aluation% no ta$ collected under such assessment shall be
reco#ered by any suit% unless it is pro#ed that the said list% statement or return as not false nor fraudulent
and did not contain any understatement or under#aluation& but this pro#ision shall not apply to statements
or returns made or to be made in good faith regarding annual depreciation of oil or gas ells and mines.
*ection ,. +istribution of dividends or ssets by Corporations. -
:A; +e:nition of +ividends. - The term Jdi#idendsJ hen used in this Title means any distribution
made by a corporation to its shareholders out of its earnings or pro(ts and payable to its
shareholders% hether in money or in other property.
GSV--3
Bhere a corporation distributes all of its assets in complete li'uidation or dissolution% the gain
reali!ed or loss sustained by the stoc)holder% hether indi#idual or corporate% is a ta$able income
or a deductible loss% as the case may be.
:?; Stoc- +ividend. - A stoc) di#idend representing the transfer of surplus to capital account shall
not be sub*ect to ta$. Foe#er% if a corporation cancels or redeems stoc) issued as a di#idend at
such time and in such manner as to ma)e the distribution and cancellation or redemption% in hole
or in part% essentially e'ui#alent to the distribution of a ta$able di#idend% the amount so distributed
in redemption or cancellation of the stoc) shall be considered as ta$able income to the e$tent that
it represents a distribution of earnings or pro(ts.
:7; +ividends +istributed are +eemed .ade from .ost Recently ccumulated Pro:ts. - Any
distribution made to the shareholders or members of a corporation shall be deemed to ha#e been
made form the most recently accumulated pro(ts or surplus% and shall constitute a part of the
annual income of the distributee for the year in hich recei#ed.
:+; 4et 'ncome of a Partnership +eemed Constructively Received by Partners. - The ta$able income
declared by a partnership for a ta$able year hich is sub*ect to ta$ under Section 34 :A; of this
7ode% after deducting the corporate income ta$ imposed therein% shall be deemed to ha#e been
actually or constructi#ely recei#ed by the partners in the same ta$able year and shall be ta$ed to
them in their indi#idual capacity% hether actually distributed or not.
C%APT"R 5## ; 8)ART"R'E C&RP&RAT" #NC&!" TA5 ANN)A' D"C'ARAT#&N AND 8)ART"R'E
PAE!"NT* &+ #NC&!" TA5"*
*ection 4. +eclaration of 'ncome Tax for 'ndividuals. -
:A; 'n 2eneral. - 1$cept as otherise pro#ided in this Section% e#ery indi#idual sub*ect to income ta$
under Sections 30 and 3-:A; of this Title% ho is recei#ing self-employment income% hether it
constitutes the sole source of his income or in combination ith salaries% ages and other ($ed or
determinable income% shall ma)e and (le a declaration of his estimated income for the current
ta$able year on or before April 1- of the same ta$able year. In general% self-employment income
consists of the earnings deri#ed by the indi#idual from the practice of profession or conduct of trade
or business carried on by him as a sole proprietor or by a partnership of hich he is a member.
,onresident 8ilipino citi!ens% ith respect to income from ithout the "hilippines% and nonresident
aliens not engaged in trade or business in the "hilippines% are not re'uired to render a declaration
of estimated income ta$. The declaration shall contain such pertinent information as the Secretary
of 8inance% upon recommendation of the 7ommissioner% may% by rules and regulations prescribe. An
indi#idual may ma)e amendments of a declaration (led during the ta$able year under the rules and
regulations prescribed by the Secretary of 8inance% upon recommendation of the 7ommissioner.
:?; Return and Payment of $stimated 'ncome Tax by 'ndividuals. - The amount of estimated income
as de(ned in Subsection :7; ith respect to hich a declaration is re'uired under Subsection :A;
shall be paid in four :0; installments. The (rst installment shall be paid at the time of the
declaration and the second and third shall be paid on August 1- and ,o#ember 1- of the current
year% respecti#ely. The fourth installment shall be paid on or before April 1- of the folloing
calendar year hen the (nal ad*usted income ta$ return is due to be (led.
:7; +e:nition of $stimated Tax. - In the case of an indi#idual% the term Jestimated ta$J means the
amount hich the indi#idual declared as income ta$ in his (nal ad*usted and annual income ta$
return for the preceding ta$able year minus the sum of the credits alloed under this Title against
the said ta$. If% during the current ta$able year% the ta$payer reasonable e$pects to pay a bigger
income ta$% he shall (le an amended declaration during any inter#al of installment payment dates.
*ection A. +eclaration of Duarterly Corporate 'ncome Tax. - 1#ery corporation shall (le in duplicate a
'uarterly summary declaration of its gross income and deductions on a cumulati#e basis for the preceding
'uarter or 'uarters upon hich the income ta$% as pro#ided in Title II of this 7ode% shall be le#ied% collected
and paid. The ta$ so computed shall be decreased by the amount of ta$ pre#iously paid or assessed during
the preceding 'uarters and shall be paid not later than si$ty :<=; days from the close of each of the (rst
three :5; 'uarters of the ta$able year% hether calendar or (scal year.
*ection B. 0inal d7ustment Return. - 1#ery corporation liable to ta$ under Section 34 shall (le a (nal
ad*ustment return co#ering the total ta$able income for the preceding calendar or (scal year. If the sum of
the 'uarterly ta$ payments made during the said ta$able year is not e'ual to the total ta$ due on the
entire ta$able income of that year% the corporation shall either:
:A;"ay the balance of ta$ still due& or
GSV--5
:?;7arry-o#er the e$cess credit& or
:7;?e credited or refunded ith the e$cess amount paid% as the case may be.
In case the corporation is entitled to a ta$ credit or refund of the e$cess estimated 'uarterly income ta$es
paid% the e$cess amount shon on its (nal ad*ustment return may be carried o#er and credited against the
estimated 'uarterly income ta$ liabilities for the ta$able 'uarters of the succeeding ta$able years. 2nce
the option to carry-o#er and apply the e$cess 'uarterly income ta$ against income ta$ due for the ta$able
'uarters of the succeeding ta$able years has been made% such option shall be considered irre#ocable for
that ta$able period and no application for cash refund or issuance of a ta$ credit certi(cate shall be
alloed therefor.
*ection . Place and Time of 0iling and Payment of Duarterly Corporate 'ncome Tax. -
:A; Place of 0iling. -1$cept as the 7ommissioner other ise permits% the 'uarterly income ta$
declaration re'uired in Section 4- and the (nal ad*ustment return re'uired I Section 4< shall be
(led ith the authori!ed agent ban)s or 6e#enue +istrict 2Acer or 7ollection Agent or duly
authori!ed Treasurer of the city or municipality ha#ing *urisdiction o#er the location of the principal
oAce of the corporation (ling the return or place here its main boo)s of accounts and other data
from hich the return is prepared are )ept.
:?; Time of 0iling the 'ncome Tax Return. - The corporate 'uarterly declaration shall be (led ithin
si$ty :<=; days folloing the close of each of the (rst three :5; 'uarters of the ta$able year. The
(nal ad*ustment return shall be (led on or before the (fteenth :1-th; day of April% or on or before
the (fteenth :1-th; day of the fourth :0th; month folloing the close of the (scal year% as the case
may be.
:7; Time of Payment of the 'ncome Tax. - The income ta$ due on the corporate 'uarterly returns
and the (nal ad*ustment income ta$ returns computed in accordance ith Sections 4- and 4< shall
be paid at the time the declaration or return is (led in a manner prescribed by the 7ommissioner.
C%APT"R 5### ; 9#T%%&'D#N$ &N 9A$"*
*ection 8. +e:nitions. - As used in this 7hapter:
:A; 6ages. - The term JagesJ means all remuneration :other than fees paid to a public oAcial; for
ser#ices performed by an employee for his employer% including the cash #alue of all remuneration
paid in any medium other than cash% e$cept that such term shall not include remuneration paid:
:1; 8or agricultural labor paid entirely in products of the farm here the labor is performed%
or
:3; 8or domestic ser#ice in a pri#ate home% or
:5; 8or casual labor not in the course of the employerJs trade or business% or
:0; 8or ser#ices by a citi!en or resident of the "hilippines for a foreign go#ernment or an
international organi!ation.
If the remuneration paid by an employer to an employee for ser#ices performed during one-half
:1E3; or more of any payroll period of not more than thirty-one :51; consecuti#e days constitutes
ages% all the remuneration paid by such employer to such employee for such period shall be
deemed to be ages& but if the remuneration paid by an employer to an employee for ser#ices
performed during more than one -half :1E3; of any such payroll period does not constitute ages%
then none of the remuneration paid by such employer to such employee for such period shall be
deemed to be ages.
:?; Payroll Period. - The term Jpayroll periodJ means a period for hich payment of ages is
ordinarily made to the employee by his employer% and the term Jmiscellaneous payroll periodJ
means a payroll period other than% a daily% ee)ly% biee)ly% semi-monthly% monthly% 'uarterly%
semi-annual% or annual period.
:7; $mployee. - The term JemployeeJ refers to any indi#idual ho is the recipient of ages and
includes an oAcer% employee or elected oAcial of the Go#ernment of the "hilippines or any political
subdi#ision% agency or instrumentality thereof. The term JemployeeJ also includes an oAcer of a
corporation.
GSV--0
:+; $mployer. - The term JemployerJ means the person for hom an indi#idual performs or
performed any ser#ice% of hate#er nature% as the employee of such person% e$cept that:
:1; If the person for hom the indi#idual performs or performed any ser#ice does not ha#e
control of the payment of the ages for such ser#ices% the term JemployerJ :e$cept for the
purpose of Subsection:A; means the person ha#ing control of the payment of such ages&
and
:3; In the case of a person paying ages on behalf of a nonresident alien indi#idual% foreign
partnership or foreign corporation not engaged in trade or business ithin the "hilippines%
the term JemployerJ :e$cept for the purpose of Subsection:A; means such person.
*ection 9. 'ncome Tax Collected at Source.-
:A; Re/uirement of 6ithholding. - 1#ery employer ma)ing payment of ages shall deduct and
ithhold upon such ages a ta$ determined in accordance ith the rules and regulations to be
prescribed by the Secretary of 8inance% upon recommendation of the 7ommissioner: "ro#ided%
hoe#er% That no ithholding of a ta$ shall be re'uired here the total compensation income of an
indi#idual does not e$ceed the statutory minimum age% or (#e thousand pesos :"-%===.==; per
month% hiche#er is higher.
:?; Tax Paid by Recipient. - If the employer% in #iolation of the pro#isions of this 7hapter% fails to
deduct and ithhold the ta$ as re'uired under this 7hapter% and thereafter the ta$ against hich
such ta$ may be credited is paid% the ta$ so re'uired to be deducted and ithheld shall not be
collected from the employer& but this Subsection shall in no case relie#e the employer from liability
for any penalty or addition to the ta$ otherise applicable in respect of such failure to deduct and
ithhold.
:7; Refunds or Credits. -
:1; $mployer. - Bhen there has been an o#erpayment of ta$ under this Section% refund or
credit shall be made to the employer only to the e$tent that the amount of such
o#erpayment as not deducted and ithheld hereunder by the employer.
:3; $mployees. -The amount deducted and ithheld under this 7hapter during any calendar
year shall be alloed as a credit to the recipient of such income against the ta$ imposed
under Section 30:A; of this Title. 6efunds and credits in cases of e$cessi#e ithholding shall
be granted under rules and regulations promulgated by the Secretary of 8inance% upon
recommendation of the 7ommissioner.
Any e$cess of the ta$es ithheld o#er the ta$ due from the ta$payer shall be returned or
credited ithin three :5; months from the (fteenth :1-th; day of April. 6efunds or credits
made after such time shall earn interest at the rate of si$ percent :<I; per annum% starting
after the lapse of the three-month period to the date the refund of credit is made.
6efunds shall be made upon arrants dran by the 7ommissioner or by his duly authori!ed
representati#e ithout the necessity of counter-signature by the 7hairman% 7ommission on
Audit or the latterJs duly authori!ed representati#e as an e$ception to the re'uirement
prescribed by Section 0/% 7hapter .% Subtitle ?% Title 1 of ?oo) V of 1$ecuti#e 2rder ,o. 3/3%
otherise )non as the Administrati#e 7ode of 1/.4.
:+; Personal $xemptions. -
:1; 'n 2eneral. - Hnless otherise pro#ided by this 7hapter% the personal and additional
e$emptions applicable under this 7hapter shall be determined in accordance ith the main
pro#isions of this Title.
:3; $xemption Certi:cate. -
:a; 6hen to 0ile. - 2n or before the date of commencement of employment ith an
employer% the employee shall furnish the employer ith a signed ithholding
e$emption certi(cate relating to the personal and additional e$emptions to hich he
is entitled.
:b; Change of Status. - In case of change of status of an employee as a result of
hich he ould be entitled to a lesser or greater amount of e$emption% the employee
shall% ithin ten :1=; days from such change% (le ith the employer a ne
ithholding e$emption certi(cate reCecting the change.
GSV---
:c; Cse of Certi:cates. - The certi(cates (led hereunder shall be used by the
employer in the determination of the amount of ta$es to be ithheld.
:d; 0ailure to 0urnish Certi:cate. - Bhere an employee% in #iolation of this 7hapter%
either fails or refuses to (le a ithholding e$emption certi(cate% the employer shall
ithhold the ta$es prescribed under the schedule for !ero e$emption of the
ithholding ta$ table determined pursuant to Subsection :A; hereof.
:1; 6ithholding on Basis of verage 6ages. - The 7ommissioner may% under rules and
regulations promulgated by the Secretary of 8inance% authori!e employers to:
:1; estimate the ages hich ill be paid to an employee in any 'uarter of the
calendar year&
:3; determine the amount to be deducted and ithheld upon each payment of ages
to such employee during such 'uarter as if the appropriate a#erage of the ages so
estimated constituted the actual ages paid& and
:5; deduct and ithhold upon any payment of ages to such employee during &such
'uarter such amount as may be re'uired to be deducted and ithheld during such
'uarter ithout regard to this Subsection.
:8; Husband and 6ife. - Bhen a husband and ife each are recipients of ages% hether
from the same or from di9erent employers% ta$es to be ithheld shall be determined on the
folloing bases:
:1; The husband shall be deemed the head of the family and proper claimant of the
additional e$emption in respect to any dependent children% unless he e$plicitly
ai#es his right in fa#or of his ife in the ithholding e$emption certi(cate.
:3; Ta$es shall be ithheld from the ages of the ife in accordance ith the
schedule for !ero e$emption of the ithholding ta$ table prescribed in Subsection :+;
:3;:d; hereof.
:G; 4onresident liens. - Bages paid to nonresident alien indi#iduals engaged in trade or
business in the "hilippines shall be sub*ect to the pro#isions of this 7hapter.
:F; Aear1end d7ustment. - 2n or before the end of the calendar year but prior to the
payment of the compensation for the last payroll period% the employer shall determine the
ta$ due from each employee on ta$able compensation income for the entire ta$able year in
accordance ith Section 30:A;. The di9erence beteen the ta$ due from the employee for
the entire year and the sum of ta$es ithheld from @anuary to ,o#ember shall either be
ithheld from his salary in +ecember of the current calendar year or refunded to the
employee not later than @anuary 3- of the succeeding year.
*ection 8D. *iability for Tax. -
:A; $mployer. - The employer shall be liable for the ithholding and remittance of the correct
amount of ta$ re'uired to be deducted and ithheld under this 7hapter. If the employer fails to
ithhold and remit the correct amount of ta$ as re'uired to be ithheld under the pro#ision of this
7hapter% such ta$ shall be collected from the employer together ith the penalties or additions to
the ta$ otherise applicable in respect to such failure to ithhold and remit.
:?; $mployee. - Bhere an employee fails or refuses to (le the ithholding e$emption certi(cate or
illfully supplies false or inaccurate information thereunder% the ta$ otherise re'uired to be
ithheld by the employer shall be collected from him including penalties or additions to the ta$
from the due date of remittance until the date of payment. 2n the other hand% e$cess ta$es
ithheld made by the employer due to:
:1; failure or refusal to (le the ithholding e$emption certi(cate& or
:3; false and inaccurate information shall not be refunded to the employee but shall be
forfeited in fa#or of the Go#ernment.
*ection 81. 0iling of Return and Payment of Taxes 6ithheld. - 1$cept as the 7ommissioner otherise
permits% ta$es deducted and ithheld by the employer on ages of employees shall be co#ered by a
return and paid to an authori!ed agent ban)& 7ollection Agent% or the duly authori!ed Treasurer of the city
GSV--<
or municipality here the employer has his legal residence or principal place of business% or in case the
employer is a corporation% here the principal oAce is located.
The return shall be (led and the payment made ithin tenty-(#e :3-; days from the close of each
calendar 'uarter: "ro#ided% hoe#er% That the 7ommissioner may% ith the appro#al of the Secretary of
8inance% re'uire the employers to pay or deposit the ta$es deducted and ithheld at more fre'uent
inter#als% in cases here such re'uirement is deemed necessary to protect the interest of the Go#ernment.
The ta$es deducted and ithheld by employers shall be held in a special fund in trust for the Go#ernment
until the same are paid to the said collecting oAcers.
*ection 82. Return and Payment in Case of 2overnment $mployees. - If the employer is the Go#ernment
of the "hilippines or any political subdi#ision% agency or instrumentality thereof% the return of the amount
deducted and ithheld upon any age shall be made by the oAcer or employee ha#ing control of the
payment of such age% or by any oAcer or employee duly designated for the purpose.
*ection 8,. Statements and Returns. -
:A; Re/uirements. - 1#ery employer re'uired to deduct and ithhold a ta$ shall furnish to each such
employee in respect of his employment during the calendar year% on or before @anuary thirty-(rst
:51st; of the succeeding year% or if his employment is terminated before the close of such calendar
year% on the same day of hich the last payment of ages is made% a ritten statement con(rming
the ages paid by the employer to such employee during the calendar year% and the amount of ta$
deducted and ithheld under this 7hapter in respect of such ages. The statement re'uired to be
furnished by this Section in respect of any age shall contain such other information% and shall be
furnished at such other time and in such form as the Secretary of 8inance% upon the
recommendation of the 7ommissioner% may% by rules and regulation% prescribe.
:?; nnual 'nformation Returns. - 1#ery employer re'uired to deduct and ithhold the ta$es in
respect of the ages of his employees shall% on or before @anuary thirty-(rst :51st; of the
succeeding year% submit to the 7ommissioner an annual information return containing a list of
employees% the total amount of compensation income of each employee% the total amount of ta$es
ithheld therefrom during the year% accompanied by copies of the statement referred to in the
preceding paragraph% and such other information as may be deemed necessary. This return% if made
and (led in accordance ith rules and regulations promulgated by the Secretary of 8inance% upon
recommendation of the 7ommissioner% shall be suAcient compliance ith the re'uirements of
Section <. of this Title in respect of such ages.
:7; $xtension of time. - The 7ommissioner% under such rules and regulations as may be
promulgated by the Secretary of 8inance% may grant to any employer a reasonable e$tension of
time to furnish and submit the statements and returns re'uired under this Section.
T#T'" ###
"*TAT" AND D&N&R:* TA5"*
C%APT"R # ; "*TAT" TA5
*ection 84. Rates of $state Tax. There shall be le#ied% assessed% collected and paid upon the transfer of
the net estate as determined in accordance ith Sections .- and .< of e#ery decedent% hether resident
or nonresident of the "hilippines% a ta$ based on the #alue of such net estate% as computed in accordance
ith the folloing schedule:
If the net estate is:
(ver
But 4ot
(ver
The Tax shall
be
Plus
(f the $xcess
(ver
" 3==%=== 1$empt
" 3==%=== --=%=== = -I " 3==%===
-==%=== 3%===%=== " 1-%=== .I -==%===
3%===%=== -%===%=== 15-%===
11
I
3%===%===
-%===%=== 1=%===%=== 0<-%===
1-
I
-%===%===
1=%===%== And 2#er 1%31-%=== 3= 1=%===%===
GSV--4
= I
*ection 8A. 2ross $state. - the #alue of the gross estate of the decedent shall be determined by including
the #alue at the time of his death of all property% real or personal% tangible or intangible% here#er
situated: "ro#ided% hoe#er% that in the case of a nonresident decedent ho at the time of his death as
not a citi!en of the "hilippines% only that part of the entire gross estate hich is situated in the "hilippines
shall be included in his ta$able estate.
:A; +ecedent9s 'nterest. - To the e$tent of the interest therein of the decedent at the time of his
death&
:?; Transfer in Contemplation of +eath. - To the e$tent of any interest therein of hich the decedent
has at any time made a transfer% by trust or otherise% in contemplation of or intended to ta)e
e9ect in possession or en*oyment at or after death% or of hich he has at any time made a transfer%
by trust or otherise% under hich he has retained for his life or for any period hich does not in
fact end before his death :1; the possession or en*oyment of% or the right to the income from the
property% or :3; the right% either alone or in con*unction ith any person% to designate the person
ho shall possess or en*oy the property or the income therefrom& e$cept in case of a bona(de sale
for an ade'uate and full consideration in money or moneyJs orth.
:7; Revocable Transfer. -
:1; To the e$tent of any interest therein% of hich the decedent has at any time made a
transfer :e$cept in case of a bona (de sale for an ade'uate and full consideration in money
or moneyJs orth; by trust or otherise% here the en*oyment thereof as sub*ect at the
date of his death to any change through the e$ercise of a poer :in hate#er capacity
e$erciseable; by the decedent alone or by the decedent in con*unction ith any other person
:ithout regard to hen or from hat source the decedent ac'uired such poer;% t o alter%
amend% re#o)e% or terminate% or here any such poer is relin'uished in contemplation of
the decedentJs death.
:3; 8or the purpose of this Subsection% the poer to alter% amend or re#o)e shall be
considered to e$ist on the date of the decedentJs death e#en though the e$ercise of the
poer is sub*ect to a precedent gi#ing of notice or e#en though the alteration% amendment
or re#ocation ta)es e9ect only on the e$piration of a stated period after the e$ercise of the
poer% hether or not on or before the date of the decedentJs death notice has been gi#en
or the poer has been e$ercised. In such cases% proper ad*ustment shall be made
representing the interests hich ould ha#e been e$cluded from the poer if the decedent
had li#ed% and for such purpose if the notice has not been gi#en or the poer has not been
e$ercised on or before the date of his
death% such notice shall be considered to ha#e been gi#en% or the poer e$ercised% on the
date of his death.
:+; Property Passing Cnder 2eneral Po&er of ppointment. - To the e$tent of any property passing
under a general poer of appointment e$ercised by the decedent: :1; by ill% or :3; by deed
e$ecuted in contemplation of% or intended to ta)e e9ect in possession or en*oyment at% or after his
death% or :5; by deed under hich he has retained for his life or any period not ascertainable
ithout reference to his death or for any period hich does not in fact end before his death :a; the
possession or en*oyment of% or the right to the income from% the property% or :b; the right% either
alone or in con*unction ith any person% to designate the persons ho shall possess or en*oy the
property or the income therefrom& e$cept in case of a bona (de sale for an ade'uate and full
consideration in money or moneyJs orth.
:1; Proceeds of *ife 'nsurance. - To the e$tent of the amount recei#able by the estate of the
deceased% his e$ecutor% or administrator% as insurance under policies ta)en out by the decedent
upon his on life% irrespecti#e of hether or not the insured retained the poer of re#ocation% or to
the e$tent of the amount recei#able by any bene(ciary designated in the policy of insurance%
e$cept hen it is e$pressly stipulated that the designation of the bene(ciary is irre#ocable.
:8; Prior 'nterests. - 1$cept as otherise speci(cally pro#ided therein% Subsections :?;% :7; and :1; of
this Section shall apply to the transfers% trusts% estates% interests% rights% poers and relin'uishment
of poers% as se#erally enumerated and described therein% hether made% created% arising%
e$isting% e$ercised or relin'uished before or after the e9ecti#ity of this 7ode.
:G; Transfers of 'nsu)cient Consideration. - If any one of the transfers% trusts% interests% rights or
poers enumerated and described in Subsections :?;% :7; and :+; of this Section is made% created%
e$ercised or relin'uished for a consideration in money or moneyJs orth% but is not a bona (de sale
GSV--.
for an ade'uate and full consideration in money or moneyJs orth% there shall be included in the
gross estate only the e$cess of the fair mar)et #alue% at the time of death% of the property otherise
to be included on account of such transaction% o#er the #alue of the consideration recei#ed therefor
by the decedent.
:F; Capital of the Surviving Spouse. - The capital of the sur#i#ing spouse of a decedent shall not% for
the purpose of this 7hapter% be deemed a part of his or her gross estate.
*ection 8B. Computation of 4et $state. - 8or the purpose of the ta$ imposed in this 7hapter% the #alue of
the net estate shall be determined:
:A; +eductions llo&ed to the $state of Citi5en or a Resident. - In the case of a citi!en or resident of
the "hilippines% by deducting from the #alue of the gross estate -
:1; 1$penses% Gosses% Indebtedness% and ta$es. - Such amounts -
:a; 8or actual funeral e$penses or in an amount e'ual to (#e percent :-I; of the
gross estate% hiche#er is loer% but in no case to e$ceed To hundred thousand
pesos :"3==%===;&
:b; 8or *udicial e$penses of the testamentary or intestate proceedings&
:c; 8or claims against the estate: "ro#ided% That at the time the indebtedness as
incurred the debt instrument as duly notari!ed and% if the loan as contracted
ithin three :5; years before the death of the decedent% the administrator or e$ecutor
shall submit a statement shoing the disposition of the proceeds of the loan&
:d; 8or claims of the deceased against insol#ent persons here the #alue of
decedentJs interest therein is included in the #alue of the gross estate& and
:e; 8or unpaid mortgages upon% or any indebtedness in respect to% property here
the #alue of decedentJs interest therein% undiminished by such mortgage or
indebtedness% is included in the #alue of the gross estate% but not including any
income ta$ upon income recei#ed after the death of the decedent% or property ta$es
not accrued before his death% or any estate ta$. The deduction herein alloed in the
case of claims against the estate% unpaid mortgages or any indebtedness shall% hen
founded upon a promise or agreement% be limited to the e$tent that they ere
contracted bona (de and for an ade'uate and full consideration in money or moneyJs
orth. There shall also be deducted losses incurred during the settlement of the
estate arising from (res% storms% shiprec)% or other casualties% or from robbery% theft
or embe!!lement% hen such losses are not compensated for by insurance or
otherise% and if at the time of the (ling of the return such losses ha#e not been
claimed as a deduction for the income ta$ purposes in an income ta$ return% and
pro#ided that such losses ere incurred not later than the last day for the payment of
the estate ta$ as prescribed in Subsection :A; of Section /1.
:3; "roperty "re#iously Ta$ed. - An amount e'ual to the #alue speci(ed belo of any
property forming a part of the gross estate situated in the "hilippines of any person ho
died ithin (#e :-; years prior to the death of the decedent% or transferred to the decedent
by gift ithin (#e :-; years prior to his death% here such property can be identi(ed as
ha#ing been recei#ed by the decedent from the donor by gift% or from such prior decedent
by gift% be'uest% de#ise or inheritance% or hich can be identi(ed as ha#ing been ac'uired in
e$change for property so recei#ed:
2ne hundred percent :1==I; of the #alue% if the prior decedent died ithin one :1;
year prior to the death of the decedent% or if the property as transferred to him by
gift ithin the same period prior to his death&
1ighty percent :.=I; of the #alue% if the prior decedent died more than one :1; year
but not more than to :3; years prior to the death of the decedent% or if the property
as transferred to him by gift ithin the same period prior to his death&
Si$ty percent :<=I; of the #alue% if the prior decedent died more than to :3; years
but not more than three :5; years prior to the death of the decedent% or if the
property as transferred to him by gift ithin the same period prior to his death&
GSV--/
8orty percent :0=I; of the #alue% if the prior decedent died more than three :5; years
but not more than four :0; years prior to the death of the decedent% or if the property
as transferred to him by gift ithin the same period prior to his death&
Tenty percent :3=I; of the #alue% if the prior decedent died more than four :0;
years but not more than (#e :-; years prior to the death of the decedent% or if the
property as transferred to him by gift ithin the same period prior to his death&
These deductions shall be alloed only here a donorJs ta$ or estate ta$ imposed
under this Title as (nally determined and paid by or on behalf of such donor% or the
estate of such prior decedent% as the case may be% and only in the amount (nally
determined as the #alue of such property in determining the #alue of the gift% or the
gross estate of such prior decedent% and only to the e$tent that the #alue of such
property is included in the decedentJs gross estate% and only if in determining the
#alue of the estate of the prior decedent% no deduction as alloable under
paragraph :3; in respect of the property or properties gi#en in e$change therefor.
Bhere a deduction as alloed of any mortgage or other lien in determining the
donorJs ta$% or the estate ta$ of the prior decedent% hich as paid in hole or in
part prior to the decedentJs death% then the deduction alloable under said
Subsection shall be reduced by the amount so paid. Such deduction alloable shall
be reduced by an amount hich bears the same ratio to the amounts alloed as
deductions under paragraphs :1; and :5; of this Subsection as the amount otherise
deductible under said paragraph :3; bears to the #alue of the decedentJs estate.
Bhere the property referred to consists of to or more items% the aggregate #alue of
such items shall be used for the purpose of computing the deduction.
:5; Transfers for "ublic Hse. - The amount of all the be'uests% legacies% de#ises or transfers
to or for the use of the Go#ernment of the 6epublic of the "hilippines% or any political
subdi#ision thereof% for e$clusi#ely public purposes.
:0; The 8amily Fome. - An amount e'ui#alent to the current fair mar)et #alue of the
decedentJs family home: "ro#ided% hoe#er% That if the said current fair mar)et #alue
e$ceeds 2ne million pesos :"1%===%===;% the e$cess shall be sub*ect to estate ta$. As a sine
'ua non condition for the e$emption or deduction% said family home must ha#e been the
decedentJs family home as certi(ed by the barangay captain of the locality.
:-; Standard +eduction. - An amount e'ui#alent to 2ne million pesos :"1%===%===;.
:<; Medical 1$penses. - Medical 1$penses incurred by the decedent ithin one :1; year prior
to his death hich shall be duly substantiated ith receipts: "ro#ided% That in no case shall
the deductible medical e$penses e$ceed 8i#e Fundred Thousand "esos :"-==%===;.
:4; Amount 6ecei#ed by Feirs Hnder 6epublic Act ,o. 0/14. - Any amount recei#ed by the
heirs from the decedent - employee as a conse'uence of the death of the decedent-
employee in accordance ith 6epublic Act ,o. 0/14: "ro#ided% That such amount is included
in the gross estate of the decedent.
:?; +eductions Alloed to ,onresident 1states. - In the case of a nonresident not a citi!en of the
"hilippines% by deducting from the #alue of that part of his gross estate hich at the time of his
death is situated in the "hilippines:
:1; 1$penses% Gosses% Indebtedness and Ta$es. - That proportion of the deductions speci(ed
in paragraph :1; of Subsection :A; of this Section hich the #alue of such part bears to the
#alue of his entire gross estate here#er situated&
:3; "roperty "re#iously Ta$ed. - An amount e'ual to the #alue speci(ed belo of any
property forming part of the gross estate situated in the "hilippines of any person ho died
ithin (#e :-; years prior to the death of the decedent% or transferred to the decedent by gift
ithin (#e :-; years prior to his death% here such property can be identi(ed as ha#ing been
recei#ed by the decedent from the donor by gift% or from such prior decedent by gift%
be'uest% de#ise or inheritance% or hich can be identi(ed as ha#ing been ac'uired in
e$change for property so recei#ed:
2ne hundred percent :1==I; of the #alue if the prior decedent died ithin one :1;
year prior to the death of the decedent% or if the property as transferred to him by
gift% ithin the same period prior to his death&
GSV-<=
1ighty percent :.=I; of the #alue% if the prior decedent died more than one :1; year
but not more than to :3; years prior to the death of the decedent% or if the property
as transferred to him by gift ithin the same period prior to his death&
Si$ty percent :<=I; of the #alue% if the prior decedent died more than to :3; years
but not more than three :5; years prior to the death of the decedent% or if the
property as transferred to him by gift ithin the same period prior to his death&
8orty percent :0=I; of the #alue% if the prior decedent died more than three :5; years
but not more than four :0; years prior to the death of the decedent% or if the property
as transferred to him by gift ithin the same period prior to his death& and
Tenty percent :3=I; of the #alue% if the prior decedent died more than four :0;
years but not more than (#e :-; years prior to the death of the decedent% or if the
property as transferred to him by gift ithin the same period prior to his death.
These deductions shall be alloed only here a donorJs ta$% or estate ta$ imposed
under this Title is (nally determined and paid by or on behalf of such donor% or the
estate of such prior decedent% as the case may be% and only in the amount (nally
determined as the #alue of such property in determining the #alue of the gift% or the
gross estate of such prior decedent% and only to the e$tent that the #alue of such
property is included in that part of the decedentJs gross estate hich at the time of
his death is situated in the "hilippines& and only if% in determining the #alue of the net
estate of the prior decedent% no deduction is alloable under paragraph :3; of
Subsection :?; of this Section% in respect of the property or properties gi#en in
e$change therefore. Bhere a deduction as alloed of any mortgage or other lien in
determining the donorJs ta$% or the estate ta$ of the prior decedent% hich as paid
in hole or in part prior to the decedentJs death% then the deduction alloable under
said paragraph shall be reduced by the amount so paid. Such deduction alloable
shall be reduced by an amount hich bears the same ratio to the amounts alloed as
deductions under paragraphs :1; and :5; of this Subsection as the amount otherise
deductible under paragraph :3; bears to the #alue of that part of the decedentJs
gross estate hich at the time of his death is situated in the "hilippines. Bhere the
property referred to consists of to :3; or more items% the aggregate #alue of such
items shall be used for the purpose of computing the deduction.
:5; Transfers for "ublic Hse. - The amount of all be'uests% legacies% de#ises or transfers to or
for the use of the Go#ernment of the 6epublic of the "hilippines or any political subdi#ision
thereof% for e$clusi#ely public purposes.
:7; Share in the Con7ugal Property. - the net share of the sur#i#ing spouse in the con*ugal
partnership property as diminished by the obligations properly chargeable to such property shall%
for the purpose of this Section% be deducted from the net estate of the decedent.
:+; .iscellaneous Provisions. - ,o deduction shall be alloed in the case of a nonresident not a
citi!en of the "hilippines% unless the e$ecutor% administrator% or anyone of the heirs% as the case
may be% includes in the return re'uired to be (led under Section /= the #alue at the time of his
death of that part of the gross estate of the nonresident not situated in the "hilippines.
:1; Tax Credit for $state Taxes paid to a 0oreign Country. -
:1; 'n 2eneral. - The ta$ imposed by this Title shall be credited ith the amounts of any
estate ta$ imposed by the authority of a foreign country.
:3; *imitations on Credit. - The amount of the credit ta)en under this Section shall be sub*ect
to each of the folloing limitations:
:a; The amount of the credit in respect to the ta$ paid to any country shall not
e$ceed the same proportion of the ta$ against hich such credit is ta)en% hich the
decedentJs net estate situated ithin such country ta$able under this Title bears to
his entir net estate& and
:b; The total amount of the credit shall not e$ceed the same proportion of the ta$
against hich such credit is ta)en% hich the decedentJs net estate situated outside
the "hilippines ta$able under this Title bears to his entire net estate.
*ection 8. $xemption of Certain c/uisitions and Transmissions. - The folloing shall not be ta$ed:
GSV-<1
:A; The merger of usufruct in the oner of the na)ed title&
:?; The transmission or deli#ery of the inheritance or legacy by the (duciary heir or legatee to the
(deicommissary&
:7; The transmission from the (rst heir% legatee or donee in fa#or of another bene(ciary% in
accordance ith the desire of the predecessor& and
:+; All be'uests% de#ises% legacies or transfers to social elfare% cultural and charitable institutions%
no part of the net income of hich insures to the bene(t of any indi#idual: "ro#ided% hoe#er% That
not more than thirty percent :5=I; of the said be'uests% de#ises% legacies or transfers shall be used
by such institutions for administration purposes.
*ection 88. +etermination of the 3alue of the $state. -
:A; Csufruct. - To determine the #alue of the right of usufruct% use or habitation% as ell as that of
annuity% there shall be ta)en into account the probable life of the bene(ciary in accordance ith the
latest ?asic Standard Mortality Table% to be appro#ed by the Secretary of 8inance% upon
recommendation of the Insurance 7ommissioner.
:?; Properties. - The estate shall be appraised at its fair mar)et #alue as of the time of death.
Foe#er% the appraised #alue of real property as of the time of death shall be% hiche#er is higher
of -
:1; The fair mar)et #alue as determined by the 7ommissioner% or
:3; The fair mar)et #alue as shon in the schedule of #alues ($ed by the "ro#incial and 7ity
Assessors.
*ection 89. 4otice of +eath to be 0iled. - In all cases of transfers sub*ect to ta$% or here% though e$empt
from ta$% the gross #alue of the estate e$ceeds Tenty thousand pesos :"3=%===;% the e$ecutor%
administrator or any of the legal heirs% as the case may be% ithin to :3; months after the decedentJs
death% or ithin a li)e period after 'ualifying as such e$ecutor or administrator% shall gi#e a ritten notice
thereof to the 7ommissioner.
*ection 9D. $state Tax Returns. -
:A; Re/uirements. - In all cases of transfers sub*ect to the ta$ imposed herein% or here% though
e$empt from ta$% the gross #alue of the estate e$ceeds To hundred thousand pesos :"3==%===;% or
regardless of the gross #alue of the estate% here the said estate consists of registered or
registrable property such as real property% motor #ehicle% shares of stoc) or other similar property
for hich a clearance from the ?ureau of Internal 6e#enue is re'uired as a condition precedent for
the transfer of onership thereof in the name of the transferee% the e$ecutor% or the administrator%
or any of the legal heirs% as the case may be% shall (le a return under oath in duplicate% setting
forth:
:1; The #alue of the gross estate of the decedent at the time of his death% or in case of a
nonresident% not a citi!en of the "hilippines% of that part of his gross estate situated in the
"hilippines&
:3; The deductions alloed from gross estate in determining the estate as de(ned in Section
.<& and
:5; Such part of such information as may at the time be ascertainable and such
supplemental data as may be necessary to establish the correct ta$es.
"ro#ided% hoe#er% That estate ta$ returns shoing a gross #alue e$ceeding To million
pesos :"3%===%===; shall be supported ith a statement duly certi(ed to by a 7erti(ed "ublic
Accountant containing the folloing:
:a; Itemi!ed assets of the decedent ith their corresponding gross #alue at the time
of his death% or in the case of a nonresident% not a citi!en of the "hilippines% of that
part of his gross estate situated in the "hilippines&
:b; Itemi!ed deductions from gross estate alloed in Section .<& and
:c; The amount of ta$ due hether paid or still due and outstanding.
GSV-<3
:?; Time for :ling. - 8or the purpose of determining the estate ta$ pro#ided for in Section .0 of this
7ode% the estate ta$ return re'uired under the preceding Subsection :A; shall be (led ithin si$ :<;
months from the decedentJs death.
A certi(ed copy of the schedule of partition and the order of the court appro#ing the same shall be
furnished the 7ommissioner ithin thirty :5=; after the promulgation of such order.
:7; $xtension of Time. - The 7ommissioner shall ha#e authority to grant% in meritorious cases% a
reasonable e$tension not e$ceeding thirty :5=; days for (ling the return.
:+; Place of 0iling. - 1$cept in cases here the 7ommissioner otherise permits% the return re'uired
under Subsection :A; shall be (led ith an authori!ed agent ban)% or 6e#enue +istrict 2Acer%
7ollection 2Acer% or duly authori!ed Treasurer of the city or municipality in hich the decedent as
domiciled at the time of his death or if there be no legal residence in the "hilippines% ith the 2Ace
of the 7ommissioner.
*ection 91. Payment of Tax. -
:A; Time of Payment. - The estate ta$ imposed by Section .0 shall be paid at the time the return is
(led by the e$ecutor% administrator or the heirs.
:?; $xtension of Time. - Bhen the 7ommissioner (nds that the payment on the due date of the
estate ta$ or of any part thereof ould impose undue hardship upon the estate or any of the heirs%
he may e$tend the time for payment of such ta$ or any part thereof not to e$ceed (#e :-; years% in
case the estate is settled through the courts% or to :3; years in case the estate is settled
e$tra*udicially. In such case% the amount in respect of hich the e$tension is granted shall be paid
on or before the date of the e$piration of the period of the e$tension% and the running of the Statute
of Gimitations for assessment as pro#ided in Section 3=5 of this 7ode shall be suspended for the
period of any such e$tension.
Bhere the ta$es are assessed by reason of negligence% intentional disregard of rules and
regulations% or fraud on the part of the ta$payer% no e$tension ill be granted by the 7ommissioner.
If an e$tension is granted% the 7ommissioner may re'uire the e$ecutor% or administrator% or
bene(ciary% as the case may be% to furnish a bond in such amount% not e$ceeding double the
amount of the ta$ and ith such sureties as the 7ommissioner deems necessary% conditioned upon
the payment of the said ta$ in accordance ith the terms of the e$tension.
:7; *iability for Payment - The estate ta$ imposed by Section .0 shall be paid by the e$ecutor or
administrator before deli#ery to any bene(ciary of his distributi#e share of the estate. Such
bene(ciary shall to the e$tent of his distributi#e share of the estate% be subsidiarily liable for the
payment of such portion of the estate ta$ as his distributi#e share bears to the #alue of the total
net estate.
8or the purpose of this 7hapter% the term Je$ecutorJ or JadministratorJ means the e$ecutor or
administrator of the decedent% or if there is no e$ecutor or administrator appointed% 'uali(ed% and
acting ithin the "hilippines% then any person in actual or constructi#e possession of any property
of the decedent.
*ection 92. +ischarge of $xecutor or dministrator from Personal *iability. - If the e$ecutor or
administrator ma)es a ritten application to the 7ommissioner for determination of the amount of the
estate ta$ and discharge from personal liability therefore% the 7ommissioner :as soon as possible% and in
any e#ent ithin one :1; year after the ma)ing of such application% or if the application is made before the
return is (led% then ithin one :1; year after the return is (led% but not after the e$piration of the period
prescribed for the assessment of the ta$ in Section 3=5 shall not notify the e$ecutor or administrator of the
amount of the ta$. The e$ecutor or administrator% upon payment of the amount of hich he is noti(ed%
shall be discharged from personal liability for any de(ciency in the ta$ thereafter found to be due and shall
be entitled to a receipt or riting shoing such discharge.
*ection 9,. +e:nition of +e:ciency. - As used in this 7hapter% the term Jde(ciencyJ means:
:a; The amount by hich the ta$ imposed by this 7hapter e$ceeds the amount shon as the ta$ by
the e$ecutor% administrator or any of the heirs upon his return& but the amounts so shon on the
return shall (rst be increased by the amounts pre#iously assessed :or collected ithout
assessment; as a de(ciency and decreased by the amount pre#iously abated% refunded or
otherise repaid in respect of such ta$& or
GSV-<5
:b; If no amount is shon as the ta$ by the e$ecutor% administrator or any of the heirs upon his
return% or if no return is made by the e$ecutor% administrator% or any heir% then the amount by hich
the ta$ e$ceeds the amounts pre#iously assessed :or collected ithout assessment; as a de(ciency&
but such amounts pre#iously assessed or collected ithout assessment shall (rst be decreased by
the amounts pre#iously abated% refunded or otherise repaid in respect of such ta$.
*ection 94. Payment before +elivery by $xecutor or dministrator. - ,o *udge shall authori!e the e$ecutor
or *udicial administrator to deli#er a distributi#e share to any party interested in the estate unless a
certi(cation from the 7ommissioner that the estate ta$ has been paid is shon.
*ection 9A. +uties of Certain ()cers and +ebtors. - 6egisters of +eeds shall not register in the 6egistry
of "roperty any document transferring real property or real rights therein or any chattel mortgage% by ay
of gifts inter #i#os or mortis causa% legacy or inheritance% unless a certi(cation from the 7ommissioner that
the ta$ ($ed in this Title and actually due thereon had been paid is sho% and they shall immediately notify
the 7ommissioner% 6egional +irector% 6e#enue +istrict 2Acer% or 6e#enue 7ollection 2Acer or Treasurer of
the city or municipality here their oAces are located% of the non payment of the ta$ disco#ered by them.
Any layer% notary public% or any go#ernment oAcer ho% by reason of his oAcial duties% inter#enes in the
preparation or ac)noledgment of documents regarding partition or disposal of donation inter#i#os or
mortis causa% legacy or inheritance% shall ha#e the duty of furnishing the 7ommissioner% 6egional +irector%
6e#enue +istrict 2Acer or 6e#enue 7ollection 2Acer of the place here he may ha#e his principal oAce%
ith copies of such documents and any information hatsoe#er hich may facilitate the collection of the
aforementioned ta$. ,either shall a debtor of the deceased pay his debts to the heirs% legatee% e$ecutor or
administrator of his creditor% unless the certi(cation of the 7ommissioner that the ta$ ($ed in this 7hapter
had been paid is shon& but he may pay the e$ecutor or *udicial administrator ithout said certi(cation if
the credit is included in the in#entory of the estate of the deceased.
*ection 9B. Restitution of Tax Cpon Satisfaction of (utstanding (bligations. - If after the payment of the
estate ta$% ne obligations of the decedent shall appear% and the persons interested shall ha#e satis(ed
them by order of the court% they shall ha#e a right to the restitution of the proportional part of the ta$ paid.
*ection 9. Payment of Tax ntecedent to the Transfer of Shares, Bonds or Rights. - There shall not be
transferred to any ne oner in the boo)s of any corporation% sociedad anonima% partnership% business% or
industry organi!ed or established in the "hilippines any share% obligation% bond or right by ay of gift inter
#i#os or mortis causa% legacy or inheritance% unless a certi(cation from the 7ommissioner that the ta$es
($ed in this Title and due thereon ha#e been paid is shon.
If a ban) has )noledge of the death of a person% ho maintained a ban) deposit account alone% or *ointly
ith another% it shall not allo any ithdraal from the said deposit account% unless the 7ommissioner has
certi(ed that the ta$es imposed thereon by this Title ha#e been paid: "ro#ided% hoe#er% That the
administrator of the estate or any one :1; of the heirs of the decedent may% upon authori!ation by the
7ommissioner% ithdra an amount not e$ceeding Tenty thousand pesos :"3=%===; ithout the said
certi(cation. 8or this purpose% all ithdraal slips shall contain a statement to the e9ect that all of the *oint
depositors are still li#ing at the time of ithdraal by any one of the *oint depositors and such statement
shall be under oath by the said depositors.
C%APT"R ## ; D&N&R:* TA5
*ection 98. 'mposition of Tax. -
:A; There shall be le#ied% assessed% collected and paid upon the transfer by any person% resident or
nonresident% of the property by gift% a ta$% computed as pro#ided in Section //.
:?; The ta$ shall apply hether the transfer is in trust or otherise% hether the gift is direct or
indirect% and hether the property is real or personal% tangible or intangible.
*ection 99. Rates of Tax Payable by +onor. -
:A; 'n 2eneral. - The ta$ for each calendar year shall be computed on the basis of the total net gifts
made during the calendar year in accordance ith the folloing schedule:
If the net gift is:
(ver
But 4ot
(ver
The Tax shall
be
Plus
(f the $xcess
(ver
" 1==%=== 1$empt
" 1==%=== 3==%=== = 3I "1==%===
GSV-<0
3==%=== -==%=== 3%=== 0I 3==%===
-==%=== 1%===%=== 10%=== <I -==%===
1%===%=== 5%===%=== 00%=== .I 1%===%===
5%===%=== -%===%=== 3=0%===
1=
I
5%===%===
-%===%=== 1=%===%=== 0=0%===
13
I
-%===%===
1=%===%==
=
1%==0%===
1-
I
1=%===%===
:?; Tax Payable by +onor if +onee is a Stranger. - Bhen the donee or bene(ciary is stranger% the
ta$ payable by the donor shall be thirty percent :5=I; of the net gifts. 8or the purpose of this ta$% a
Jstranger%J is a person ho is not a:
:1; ?rother% sister :hether by hole or half-blood;% spouse% ancestor and lineal descendant&
or
:3; 6elati#e by consanguinity in the collateral line ithin the fourth degree of relationship.
:7; Any contribution in cash or in )ind to any candidate% political party or coalition of parties for
campaign purposes shall be go#erned by the 1lection 7ode% as amended.
*ection 1DD. Transfer for *ess Than de/uate and full Consideration. - Bhere property% other than real
property referred to in Section 30:+;% is transferred for less than an ade'uate and full consideration in
money or moneyJs orth% then the amount by hich the fair mar)et #alue of the property e$ceeded the
#alue of the consideration shall% for the purpose of the ta$ imposed by this 7hapter% be deemed a gift% and
shall be included in computing the amount of gifts made during the calendar year.
*ection 1D1. $xemption of Certain 2ifts. - The folloing gifts or donations shall be e$empt from the ta$
pro#ided for in this 7hapter:
:A; In the 7ase of Gifts Made by a 6esident. -
:1; +ories or gifts made on account of marriage and before its celebration or ithin one
year thereafter by parents to each of their legitimate% recogni!ed natural% or adopted
children to the e$tent of the (rst Ten thousand pesos :"1=%===;:
:3; Gifts made to or for the use of the ,ational Go#ernment or any entity created by any of
its agencies hich is not conducted for pro(t% or to any political subdi#ision of the said
Go#ernment& and
:5; Gifts in fa#or of an educational andEor charitable% religious% cultural or social elfare
corporation% institution% accredited nongo#ernment organi!ation% trust or philanthrophic
organi!ation or research institution or organi!ation: "ro#ided% hoe#er% That not more than
thirty percent :5=I; of said gifts shall be used by such donee for administration purposes.
8or the purpose of the e$emption% a Jnon-pro(t educational andEor charitable corporation%
institution% accredited nongo#ernment organi!ation% trust or philanthrophic organi!ation
andEor research institution or organi!ationJ is a school% college or uni#ersity andEor charitable
corporation% accredited nongo#ernment organi!ation% trust or philanthrophic organi!ation
andEor research institution or organi!ation% incorporated as a nonstoc) entity% paying no
di#idends% go#erned by trustees ho recei#e no compensation% and de#oting all its income%
hether studentsJ fees or gifts% donation% subsidies or other forms of philanthrophy% to the
accomplishment and promotion of the purposes enumerated in its Articles of Incorporation.
:?; In the 7ase of Gifts Made by a ,onresident not a 7iti!en of the "hilippines. -
:1; Gifts made to or for the use of the ,ational Go#ernment or any entity created by any of
its agencies hich is not conducted for pro(t% or to any political subdi#ision of the said
Go#ernment.
:3; Gifts in fa#or of an educational andEor charitable% religious% cultural or social elfare
corporation% institution% foundation% trust or philanthrophic organi!ation or research
institution or organi!ation: "ro#ided% hoe#er% That not more than thirty percent :5=I of
said gifts shall be used by such donee for administration purposes.
GSV-<-
:7; Ta$ 7redit for +onorJs Ta$es "aid to a 8oreign 7ountry. -
:1; 'n 2eneral. - The ta$ imposed by this Title upon a donor ho as a citi!en or a resident
at the time of donation shall be credited ith the amount of any donorJs ta$ of any character
and description imposed by the authority of a foreign country.
:3; *imitations on Credit. - The amount of the credit ta)en under this Section shall be sub*ect
to each of the folloing limitations:
:a; The amount of the credit in respect to the ta$ paid to any country shall not
e$ceed the same proportion of the ta$ against hich such credit is ta)en% hich the
net gifts situated ithin such country ta$able under this Title bears to his entire net
gifts& and
:b; The total amount of the credit shall not e$ceed the same proportion of the ta$
against hich such credit is ta)en% hich the donorJs net gifts situated outside the
"hilippines ta$able under this title bears to his entire net gifts.
*ection 1D2. 3aluation of 2ifts .ade in Property. - If the gift is made in property% the fair mar)et #alue
thereof at the time of the gift shall be considered the amount of the gift. In case of real property% the
pro#isions of Section ..:?; shall apply to the #aluation thereof.
*ection 1D,. 0iling of Return and Payment of Tax. -
:A; Re/uirements. - any indi#idual ho ma)es any transfer by gift :e$cept those hich% under
Section 1=1% are e$empt from the ta$ pro#ided for in this 7hapter; shall% for the purpose of the said
ta$% ma)e a return under oath in duplicate. The return shall se forth:
:1; 1ach gift made during the calendar year hich is to be included in computing net gifts&
:3; The deductions claimed and alloable&
:5; Any pre#ious net gifts made during the same calendar year&
:0; The name of the donee& and
:-; Such further information as may be re'uired by rules and regulations made pursuant to
la.
:?; Time and "lace of 8iling and "ayment. - The return of the donor re'uired in this Section shall be
(led ithin thirty :5=; days after the date the gift is made and the ta$ due thereon shall be paid at
the time of (ling. 1$cept in cases here the 7ommissioner otherise permits% the return shall be
(led and the ta$ paid to an authori!ed agent ban)% the 6e#enue +istrict 2Acer% 6e#enue 7ollection
2Acer or duly authori!ed Treasurer of the city or municipality here the donor as domiciled at the
time of the transfer% or if there be no legal residence in the "hilippines% ith the 2Ace of the
7ommissioner. In the case of gifts made by a nonresident% the return may be (led ith the
"hilippine 1mbassy or 7onsulate in the country here he is domiciled at the time of the transfer% or
directly ith the 2Ace of the 7ommissioner.
*ection 1D4. +e:nitions. - 8or purposes of this Title% the terms Jgross estateJ and JgiftsJ include real and
personal property% hether tangible or intangible% or mi$ed% here#er situated: "ro#ided% hoe#er% That
here the decedent or donor as a nonresident alien at the time of his death or donation% as the case may
be% his real and personal property so transferred but hich are situated outside the "hilippines shall not be
included as part of his Jgross estateJ or Jgross giftJ: "ro#ided% further% That franchise hich must be
e$ercised in the "hilippines& shares% obligations or bonds issued by any corporation or sociedad anonima
organi!ed or constituted in the "hilippines in accordance ith its las& shares% obligations or bonds by any
foreign corporation eighty-(#e percent :.-I; of the business of hich is located in the "hilippines& shares%
obligations or bonds issued by any foreign corporation if such shares% obligations or bonds ha#e ac'uired a
business situs in the "hilippines& shares or rights in any partnership% business or industry established in the
"hilippines% shall be considered as situated in the "hilippines: "ro#ided% still further% that no ta$ shall be
collected under this Title in respect of intangible personal property: :a; if the decedent at the time of his
death or the donor at the time of the donation as a citi!en and resident of a foreign country hich at the
time of his death or donation did not impose a transfer ta$ of any character% in respect of intangible
personal property of citi!ens of the "hilippines not residing in that foreign country% or :b; if the las of the
foreign country of hich the decedent or donor as a citi!en and resident at the time of his death or
donation allos a similar e$emption from transfer or death ta$es of e#ery character or description in
respect of intangible personal property oned by citi!ens of the "hilippines not residing in that foreign
country.
GSV-<<
The term Jde(ciencyJ means: :a; the amount by hich ta$ imposed by this 7hapter e$ceeds the amount
shon as the ta$ by the donor upon his return& but the amount so shon on the return shall (rst be
increased by the amount pre#iously assessed :or 7ollected ithout assessment; as a de(ciency% and
decreased by the amounts pre#iously abated% refunded or otherise repaid in respect of such ta$% or :b; if
no amount is shon as the ta$ by the donor% then the amount by hich the ta$ e$ceeds the amounts
pre#iously assessed% :or collected ithout assessment; as a de(ciency% but such amounts pre#iously
assessed% or collected ithout assessment% shall (rst be decreased by the amount pre#iously abated%
refunded or otherise repaid in respect of such ta$.
T#T'" #(
(A')"; ADD"D TA5
C%APT"R # ; #!P&*#T#&N &+ TA5
*ection 1DA. Persons *iable. - Any person ho% in the course of trade or business% sells barters%
e$changes% leases goods or properties% renders ser#ices% and any person ho imports goods shall be
sub*ect to the #alue-added ta$ :VAT; imposed in Sections 1=< to 1=. of this 7ode.
The #alue-added ta$ is an indirect ta$ and the amount of ta$ may be shifted or passed on to the buyer%
transferee or lessee of the goods% properties or ser#ices. This rule shall li)eise apply to e$isting contracts
of sale or lease of goods% properties or ser#ices at the time of the e9ecti#ity of 6epublic Act ,o. 441<.
The phrase Jin the course of trade or businessJ means the regular conduct or pursuit of a commercial or an
economic acti#ity% including transactions incidental thereto% by any person regardless of hether or not the
person engaged therein is a nonstoc)% nonpro(t pri#ate organi!ation :irrespecti#e of the disposition of its
net income and hether or not it sells e$clusi#ely to members or their guests;% or go#ernment entity.
The rule of regularity% to the contrary notithstanding% ser#ices as de(ned in this 7ode rendered in the
"hilippines by nonresident foreign persons shall be considered as being course of trade or business.
*ection 1DB. 3alue1dded Tax on Sale of 2oods or Properties. -
:A; 6ate and ?ase of Ta$. - There shall be le#ied% assessed and collected on e#ery sale% barter or
e$change of goods or properties% #alue-added ta$ e'ui#alent to ten percent :1=I; of the gross
selling price or gross #alue in money of the goods or properties sold% bartered or e$changed% such
ta$ to be paid by the seller or transferor.
:1; The term JgoodsJ or JpropertiesJ shall mean all tangible and intangible ob*ects hich are
capable of pecuniary estimation and shall include:
:a; 6eal properties held primarily for sale to customers or held for lease in the
ordinary course of trade or business&
:b; The right or the pri#ilege to use patent% copyright% design or model% plan% secret
formula or process% goodill% trademar)% trade brand or other li)e property or right&
:c; The right or the pri#ilege to use in the "hilippines of any industrial% commercial or
scienti(c e'uipment&
:d; The right or the pri#ilege to use motion picture (lms% tapes and discs& and
:e; 6adio% tele#ision% satellite transmission and cable tele#ision time.
The term Jgross selling priceJ means the total amount of money or its e'ui#alent
hich the purchaser pays or is obligated to pay to the seller in consideration of the
sale% barter or e$change of the goods or properties% e$cluding the #alue-added ta$.
The e$cise ta$% if any% on such goods or properties shall form part of the gross selling
price.
:3; The folloing sales by VAT-registered persons shall be sub*ect to !ero percent :=I; rate:
:a; 1$port Sales. - The term Je$port salesJ means:
:1; The sale and actual shipment of goods from the "hilippines to a foreign
country% irrespecti#e of any shipping arrangement that may be agreed upon
hich may inCuence or determine the transfer of onership of the goods so
e$ported and paid for in acceptable foreign currency or its e'ui#alent in goods
GSV-<4
or ser#ices% and accounted for in accordance ith the rules and regulations of
the ?ang)o Sentral ng "ilipinas :?S";&
:3; Sale of ra materials or pac)aging materials to a nonresident buyer for
deli#ery to a resident local e$port-oriented enterprise to be used in
manufacturing% processing% pac)ing or repac)ing in the "hilippines of the said
buyerJs goods and paid for in acceptable foreign currency and accounted for
in accordance ith the rules and regulations of the ?ang)o Sentral ng "ilipinas
:?S";&
:5; Sale of ra materials or pac)aging materials to e$port-oriented enterprise
hose e$port sales e$ceed se#enty percent :4=I; of total annual production&
:0; Sale of gold to the ?ang)o Sentral ng "ilipinas :?S";& and
:-; Those considered e$port sales under 1$ecuti#e 2rder ,2. 33<% otherise
)non as the 2mnibus In#estment 7ode of 1/.4% and other special las.
:b; 8oreign 7urrency +enominated Sale. - The phrase Jforeign currency denominated
saleJ means sale to a nonresident of goods% e$cept those mentioned in Sections 10/
and 1-=% assembled or manufactured in the "hilippines for deli#ery to a resident in
the "hilippines% paid for in acceptable foreign currency and accounted for in
accordance ith the rules and regulations of the ?ang)o Sentral ng "ilipinas :?S";.
:c; Sales to persons or entities hose e$emption under special las or international
agreements to hich the "hilippines is a signatory e9ecti#ely sub*ects such sales to
!ero rate.
:?; Transactions +eemed Sale. - The folloing transactions shall be deemed sale:
:1; Transfer% use or consumption not in the course of business of goods or properties
originally intended for sale or for use in the course of business&
:3; +istribution or transfer to:
:a; Shareholders or in#estors as share in the pro(ts of the VAT-registered persons& or
:b; 7reditors in payment of debt&
:5; 7onsignment of goods if actual sale is not made ithin si$ty :<=; days folloing the date
such goods ere consigned& and
:0; 6etirement from or cessation of business% ith respect to in#entories of ta$able goods
e$isting as of such retirement or cessation.
:7; 7hanges in or 7essation of Status of a VAT-registered "erson. - The ta$ imposed in Subsection
:A; of this Section shall also apply to goods disposed of or e$isting as of a certain date if under
circumstances to be prescribed in rules and regulations to be promulgated by the Secretary of
8inance% upon recommendation of the 7ommissioner% the status of a person as a VAT-registered
person changes or is terminated.
:+; +etermination of the Ta$. -
:1; The ta$ shall be computed by multiplying the total amount indicated in the in#oice by
one-ele#enth :1E11;.
:3; Sales 6eturns% Alloances and Sales +iscounts. - The #alue of goods or properties sold
and subse'uently returned or for hich alloances ere granted by a VAT-registered person
may be deducted from the gross sales or receipts for the 'uarter in hich a refund is made
or a credit memorandum or refund is issued. Sales discount granted and indicated in the
in#oice at the time of sale and the grant of hich does not depend upon the happening of a
future e#ent may be e$cluded from the gross sales ithin the same 'uarter it as gi#en.
:5; Authority of the 7ommissioner to +etermine the Appropriate Ta$ ?ase. - The
7ommissioner shall% by rules and regulations prescribed by the Secretary of 8inance%
determine the appropriate ta$ base in cases here a transaction is deemed a sale% barter or
GSV-<.
e$change of goods or properties under Subsection :?; hereof% or here the gross selling
price is unreasonably loer than the actual mar)et #alue.
*ection 1D. 3alue1dded Tax on 'mportation of 2oods. -
:A; 'n 2eneral. - There shall be le#ied% assessed and collected on e#ery importation of goods a
#alue-added ta$ e'ui#alent to ten percent :1=I; based on the total #alue used by the ?ureau of
7ustoms in determining tari9 and customs duties plus customs duties% e$cise ta$es% if any% and
other charges% such ta$ to be paid by the importer prior to the release of such goods from customs
custody: "ro#ided% That here the customs duties are determined on the basis of the 'uantity or
#olume of the goods% the #alue-added ta$ shall be based on the landed cost plus e$cise ta$es% If
any.
:?; Transfer of 2oods by Tax1exempt Persons. - In the case of ta$-free importation of goods into the
"hilippines by persons% entities or agencies e$empt from ta$ here such goods are subse'uently
sold% transferred or e$changed in the "hilippines to non-e$empt persons or entities% the purchasers%
transferees or recipients shall be considered the importers thereof% ho shall be liable for any
internal re#enue ta$ on such importation. The ta$ due on such importation shall constitute a lien on
the goods superior to all charges or liens on the goods% irrespecti#e of the possessor thereof.
*ection 1D8. 3alue1added Tax on Sale of Services and Cse or *ease of Properties. -
:A; Rate and Base of Tax. - There shall be le#ied% assessed and collected% a #alue-added ta$
e'ui#alent to ten percent :1=I; of gross receipts deri#ed from the sale or e$change of ser#ices%
including the use or lease of properties.
The phrase Jsale or e$change of ser#icesJ means the performance of all )inds or ser#ices in the
"hilippines for others for a fee% remuneration or consideration% including those performed or
rendered by construction and ser#ice contractors& stoc)% real estate% commercial% customs and
immigration bro)ers& lessors of property% hether personal or real& arehousing ser#ices& lessors or
distributors of cinematographic (lms& persons engaged in milling processing% manufacturing or
repac)ing goods for others& proprietors% operators or )eepers of hotels% motels% resthouses% pension
houses% inns% resorts& proprietors or operators of restaurants% refreshment parlors% cafes and other
eating places% including clubs and caterers& dealers in securities& lending in#estors& transportation
contractors on their transport of goods or cargoes% including persons ho transport goods or
cargoes for hire another domestic common carriers by land% air and ater relati#e to their transport
of goods or cargoes& ser#ices of franchise grantees of telephone and telegraph% radio and tele#ision
broadcasting and all other franchise grantees e$cept those under Section 11/ of this 7ode& ser#ices
of ban)s% non-ban) (nancial intermediaries and (nance companies& and non-life insurance
companies :e$cept their crop insurances;% including surety% (delity% indemnity and bonding
companies& and similar ser#ices regardless of hether or not the performance thereof calls for the
e$ercise or use of the physical or mental faculties. The phrase Jsale or e$change of ser#icesJ shall
li)eise include:
:1; The lease or the use of or the right or pri#ilege to use any copyright% patent% design or
model% plan secret formula or process% goodill% trademar)% trade brand or other li)e
property or right&
:3; The lease of the use of% or the right to use of any industrial% commercial or scienti(c
e'uipment&
:5; The supply of scienti(c% technical% industrial or commercial )noledge or information&
:0; The supply of any assistance that is ancillary and subsidiary to and is furnished as a
means of enabling the application or en*oyment of any such property% or right as is
mentioned in subparagraph :3; or any such )noledge or information as is mentioned in
subparagraph :5;&
:-; The supply of ser#ices by a nonresident person or his employee in connection ith the
use of property or rights belonging to% or the installation or operation of any brand%
machinery or other apparatus purchased from such nonresident person.
:<; The supply of technical ad#ice% assistance or ser#ices rendered in connection ith
technical management or administration of any scienti(c% industrial or commercial
underta)ing% #enture% pro*ect or scheme&
:4; The lease of motion picture (lms% (lms% tapes and discs& and
GSV-</
:.; The lease or the use of or the right to use radio% tele#ision% satellite transmission and
cable tele#ision time.
Gease of properties shall be sub*ect to the ta$ herein imposed irrespecti#e of the place
here the contract of lease or licensing agreement as e$ecuted if the property is leased or
used in the "hilippines.
The term Jgross receiptsJ means the total amount of money or its e'ui#alent representing
the contract price% compensation% ser#ice fee% rental or royalty% including the amount
charged for materials supplied ith the ser#ices and deposits and ad#anced payments
actually or constructi#ely recei#ed during the ta$able 'uarter for the ser#ices performed or
to be performed for another person% e$cluding #alue-added ta$.
:?; Transactions Sub7ect to Eero Percent =FG> Rate - The folloing ser#ices performed in the
"hilippines by VAT- registered persons shall be sub*ect to !ero percent :=I; rate.
:1; "rocessing% manufacturing or repac)ing goods for other persons doing business outside
the "hilippines hich goods are subse'uently e$ported% here the ser#ices are paid for in
acceptable foreign currency and accounted for in accordance ith the rules and regulations
of the ?ang)o Sentral ng "ilipinas :?S";&
:3; Ser#ices other than those mentioned in the preceding paragraph% the consideration for
hich is paid for in acceptable foreign currency and accounted for in accordance ith the
rules and regulations of the ?ang)o Sentral ng "ilipinas :?S";&
:5; Ser#ices rendered to persons or entities hose e$emption under special las or
international agreements to hich the "hilippines is a signatory e9ecti#ely sub*ects the
supply of such ser#ices to !ero percent :=I; rate&
:0; Ser#ices rendered to #essels engaged e$clusi#ely in international shipping& and
:-; Ser#ices performed by subcontractors andEor contractors in processing% con#erting% of
manufacturing goods for an enterprise hose e$port sales e$ceed se#enty percent :4=I; of
total annual production.
:7; +etermination of the Tax. - The ta$ shall be computed by multiplying the total amount indicated
in the oAcial receipt by one-ele#enth :1E11;.
*ection 1D9. $xempt Transactions. - The folloing shall be e$empt from the #alue-added ta$:
:a; Sale of nonfood agricultural products& marine and forest products in their original state by the
primary producer or the oner of the land here the same are produced&
:b; Sale of cotton seeds in their original state& and copra&
:c; Sale or importation of agricultural and marine food products in their original state% li#estoc) and
poultry of or )ing generally used as% or yielding or producing foods for human consumption& and
breeding stoc) and genetic materials therefor.
"roducts classi(ed under this paragraph and paragraph :a; shall be considered in their original state
e#en if they ha#e undergone the simple processes of preparation or preser#ation for the mar)et%
such as free!ing% drying% salting% broiling% roasting% smo)ing or stripping.
"olished andEor hus)ed rice% corn grits% ra cane sugar and molasses% and ordinary salt shall be
considered in their original state&
:d; Sale or importation of fertili!ers& seeds% seedlings and (ngerlings& (sh% pran% li#estoc) and
poultry feeds% including ingredients% hether locally produced or imported% used in the manufacture
of (nished feeds :e$cept specialty feeds for race horses% (ghting coc)s% a'uarium (sh% !oo animals
and other animals generally considered as pets;&
:e; Sale or importation of coal and natural gas% in hate#er form or state% and petroleum products
:e$cept lubricating oil% processed gas% grease% a$ and petrolatum; sub*ect to e$cise ta$ imposed
under Title VI&
GSV-4=
:f; Sale or importation of ra materials to be used by the buyer or importer himself in the
manufacture of petroleum products sub*ect to e$cise ta$% e$cept lubricating oil% processed gas%
grease% a$ and petrolatum&
:g; Importation of passenger andEor cargo #essels of more than (#e thousand tons :-%===; hether
coastise or ocean-going% including engine and spare parts of said #essel to be used by the
importer himself as operator thereof&
:h; Importation of personal and household e9ects belonging to the residents of the "hilippines
returning from abroad and nonresident citi!ens coming to resettle in the "hilippines: "ro#ided% That
such goods are e$empt from customs duties under the Tari9 and 7ustoms 7ode of the "hilippines&
:i; Importation of professional instruments and implements% earing apparel% domestic animals% and
personal household e9ects :e$cept any #ehicle% #essel% aircraft% machinery other goods for use in
the manufacture and merchandise of any )ind in commercial 'uantity; belonging to persons coming
to settle in the "hilippines% for their on use and not for sale% barter or e$change% accompanying
such persons% or arri#ing ithin ninety :/=; days before or after their arri#al% upon the production of
e#idence satisfactory to the 7ommissioner% that such persons are actually coming to settle in the
"hilippines and that the change of residence is bona (de&
:*; Ser#ices sub*ect to percentage ta$ under Title V&
:); Ser#ices by agricultural contract groers and milling for others of palay into rice% corn into grits
and sugar cane into ra sugar&
:l; Medical% dental% hospital and #eterinary ser#ices sub*ect to the pro#isions of Section 14 of
6epublic Act ,o. 441<% as amended:
:m; 1ducational ser#ices rendered by pri#ate educational institutions% duly accredited by the
+epartment of 1ducation% 7ulture and Sports :+17S; and the 7ommission on Figher 1ducation
:7F1+;% and those rendered by go#ernment educational institutions&
:n; Sale by the artist himself of his or)s of art% literary or)s% musical compositions and similar
creations% or his ser#ices performed for the production of such or)s&
:o; Ser#ices rendered by indi#iduals pursuant to an employer-employee relationship&
:p; Ser#ices rendered by regional or area head'uarters established in the "hilippines by
multinational corporations hich act as super#isory% communications and coordinating centers for
their aAliates% subsidiaries or branches in the Asia-"aci(c 6egion and do not earn or deri#e income
from the "hilippines&
:'; Transactions hich are e$empt under international agreements to hich the "hilippines is a
signatory or under special las% e$cept those under "residential +ecree ,os. <<% -3/ and 1-/=&
:r; Sales by agricultural cooperati#es duly registered ith the 7ooperati#e +e#elopment Authority
to their members as ell as sale of their produce% hether in its original state or processed form% to
non-members& their importation of direct farm inputs% machineries and e'uipment% including spare
parts thereof% to be used directly and e$clusi#ely in the production andEor processing of their
produce&
:s; Sales by electric cooperati#es duly registered ith the 7ooperati#e +e#elopment authority or
,ational 1lectri(cation Administration% relati#e to the generation and distribution of electricity as
ell as their importation of machineries and e'uipment% including spare parts% hich shall be
directly used in the generation and distribution of electricity&
:t; Gross receipts from lending acti#ities by credit or multi-purpose cooperati#es duly registered
ith the 7ooperati#e +e#elopment Authority hose lending operation is limited to their members&
:u; Sales by non-agricultural% non- electric and non-credit cooperati#es duly registered ith the
7ooperati#e +e#elopment Authority: "ro#ided% That the share capital contribution of each member
does not e$ceed 8ifteen thousand pesos :"1-%===; and regardless of the aggregate capital and net
surplus ratably distributed among the members&
:#; 1$port sales by persons ho are not VAT-registered&
GSV-41
:; Sale of real properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business or real property utili!ed for lo-cost and sociali!ed housing as de(ned
by 6epublic Act ,o. 434/% otherise )non as the Hrban +e#elopment and Fousing Act of 1//3%
and other related las% house and lot and other residential dellings #alued at 2ne million pesos
:"1%===%===; and belo: "ro#ided% That not later than @anuary 51st of the calendar year subse'uent
to the e9ecti#ity of this Act and each calendar year thereafter% the amount of 2ne million pesos
:"1%===%===; shall be ad*usted to its present #alue using the 7onsumer "rice Inde$% as published by
the national Statistics 2Ace :,S2;&
:$; Gease of a residential unit ith a monthly rental not e$ceeding 1ight thousand pesos:".%===;&
"ro#ided% That not later than @anuary 51st of the calendar year subse'uent to the e9ecti#ity of
6epublic Act ,o. .301 and each calendar year thereafter% the amount of 1ight thousand pesos
:".%===; shall be ad*usted to its present #alue using the 7onsumer "rice Inde$ as published by the
,ational Statistics 2Ace :,S=;&
:y; Sale% importation% printing or publication of boo)s and any nespaper% maga!ine re#ie or
bulletin hich appears at regular inter#als ith ($ed prices for subscription and sale and hich is
not de#oted principally to the publication of paid ad#ertisements& and
:!; Sale or lease of goods or properties or the performance of ser#ices other than the transactions
mentioned in the preceding paragraphs% the gross annual sales andEor receipts do not e$ceed the
amount of 8i#e hundred (fty thousand pesos :"--=%===;: "ro#ided% That not later than @anuary 51st
of the calendar year subse'uent to the e9ecti#ity of 6epublic Act ,o. .301 and each calendar year
thereafter% the amount of 8i#e hundred (fty thousand pesos :--=%===; shall be ad*usted to its
present #alue using the 7onsumer "rice Inde$% as published by the ,ational Statistics 2Ace :,S2;.
The foregoing e$emptions to the contrary notithstanding% any person hose sale of goods or properties
or ser#ices hich are otherise not sub*ect to VAT% but ho issues a VAT in#oice or receipt therefor shall% in
addition to his liability to other applicable percentage ta$% if any% be liable to the ta$ imposed in Section
1=< or 1=. ithout the bene(t of input ta$ credit% and such ta$ shall also be recogni!ed as input ta$ credit
to the purchaser under Section 11=% all of this 7ode.
*ection 11D. Tax Credits. -
A. Creditable 'nput Tax. -
:1; Any input ta$ e#idenced by a VAT in#oice or oAcial receipt issued in accordance ith
Section 115 hereof on the folloing transactions shall be creditable against the output ta$:
:a; "urchase or importation of goods:
:i; 8or sale& or
:ii; 8or con#ersion into or intended to form part of a (nished product for sale
including pac)aging materials& or
:iii; 8or use as supplies in the course of business& or
:i#; 8or use as materials supplied in the sale of ser#ice& or
:#; 8or use in trade or business for hich deduction for depreciation or
amorti!ation is alloed under this 7ode% e$cept automobiles% aircraft and
yachts.
:b; "urchase of ser#ices on hich a #alue-added ta$ has been actually paid.
:3; The input ta$ on domestic purchase of goods or properties shall be creditable:
:a; To the purchaser upon consummation of sale and on importation of goods or
properties& and
:b; To the importer upon payment of the #alue-added ta$ prior to the release of the
goods from the custody of the ?ureau of 7ustoms.
Foe#er% in the case of purchase of ser#ices% lease or use of properties% the input ta$
shall be creditable to the purchaser% lessee or licensee upon payment of the
compensation% rental% royalty or fee.
GSV-43
:5; A VAT-registered person ho is also engaged in transactions not sub*ect to the #alue-
added ta$ shall be alloed ta$ credit as follos:
:a; Total input ta$ hich can be directly attributed to transactions sub*ect to #alue-
added ta$& and
:b; A ratable portion of any input ta$ hich cannot be directly attributed to either
acti#ity.
The term Jinput ta$J means the #alue-added ta$ due from or paid by a VAT-registered person
in the course of his trade or business on importation of goods or local purchase of goods or
ser#ices% including lease or use of property% from a VAT-registered person. It shall also
include the transitional input ta$ determined in accordance ith Section 111 of this 7ode.
The term Joutput ta$J means the #alue-added ta$ due on the sale or lease of ta$able goods
or properties or ser#ices by any person registered or re'uired to register under Section 35<
of this 7ode.
:?; $xcess (utput or 'nput Tax. - If at the end of any ta$able 'uarter the output ta$ e$ceeds the
input ta$% the e$cess shall be paid by the Vat-registered person. If the input ta$ e$ceeds the output
ta$% the e$cess shall be carried o#er to the succeeding 'uarter or 'uarters. any input ta$
attributable to the purchase of capital goods or to !ero-rated sales by a VAT-registered person may
at his option be refunded or credited against other internal re#enue ta$es% sub*ect to the pro#isions
of Section 113.
:7; +etermination of Creditable 'nput Tax. - The sum of the e$cess input ta$ carried o#er from the
preceding month or 'uarter and the input ta$ creditable to a VAT-registered person during the
ta$able month or 'uarter shall be reduced by the amount of claim for refund or ta$ credit for #alue-
added ta$ and other ad*ustments% such as purchase returns or alloances and input ta$ attributable
to e$empt sale.
The claim for ta$ credit referred to in the foregoing paragraph shall include not only those (led ith the
?ureau of Internal 6e#enue but also those (led ith other go#ernment agencies% such as the ?oard of
In#estments the ?ureau of 7ustoms.
*ection 111. Transitional;Presumptive 'nput Tax Credits. -
:A; Transitional 'nput Tax Credits. - A person ho becomes liable to #alue-added ta$ or any person
ho elects to be a VAT-registered person shall% sub*ect to the (ling of an in#entory according to
rules and regulations prescribed by the Secretary of (nance% upon recommendation of the
7ommissioner% be alloed input ta$ on his beginning in#entory of goods% materials and supplies
e'ui#alent for eight percent :.I; of the #alue of such in#entory or the actual #alue-added ta$ paid
on such goods% materials and supplies% hiche#er is higher% hich shall be creditable against the
output ta$.
:?; Presumptive 'nput Tax Credits. -
:1; "ersons or (rms engaged in the processing of sardines% mac)erel and mil)% and in
manufacturing re(ned sugar and coo)ing oil% shall be alloed a presumpti#e input ta$%
creditable against the output ta$% e'ui#alent to one and one-half percent :1 1E3I; of the
gross #alue in money of their purchases of primary agricultural products hich are used as
inputs to their production.
As used in this Subsection% the term JprocessingJ shall mean pasteuri!ation% canning and
acti#ities hich through physical or chemical process alter the e$terior te$ture or form or
inner substance of a product in such manner as to prepare it for special use to hich it could
not ha#e been put in its original form or condition.
:3; "ublic or)s contractors shall be alloed a presumpti#e input ta$ e'ui#alent to one and
one-half percent :1 1E3I; of the contract price ith respect to go#ernment contracts only in
lieu of actual input ta$es therefrom.
*ection 112. Refunds or Tax Credits of 'nput Tax. -
:A; Eero1rated or $%ectively Eero1rated Sales. - any VAT-registered person% hose sales are !ero-
rated or e9ecti#ely !ero-rated may% ithin to :3; years after the close of the ta$able 'uarter hen
the sales ere made% apply for the issuance of a ta$ credit certi(cate or refund of creditable input
ta$ due or paid attributable to such sales% e$cept transitional input ta$% to the e$tent that such
GSV-45
input ta$ has not been applied against output ta$: "ro#ided% hoe#er% That in the case of !ero-rated
sales under Section 1=<:A;:3;:a;:1;% :3; and :?; and Section 1=. :?;:1; and :3;% the acceptable
foreign currency e$change proceeds thereof had been duly accounted for in accordance ith the
rules and regulations of the ?ang)o Sentral ng "ilipinas :?S";: "ro#ided% further% That here the
ta$payer is engaged in !ero-rated or e9ecti#ely !ero-rated sale and also in ta$able or e$empt sale
of goods of properties or ser#ices% and the amount of creditable input ta$ due or paid cannot be
directly and entirely attributed to any one of the transactions% it shall be allocated proportionately
on the basis of the #olume of sales.
:?; Capital 2oods. - A VAT-registered person may apply for the issuance of a ta$ credit certi(cate or
refund of input ta$es paid on capital goods imported or locally purchased% to the e$tent that such
input ta$es ha#e not been applied against output ta$es. The application may be made only ithin
to :3; years after the close of the ta$able 'uarter hen the importation or purchase as made.
:7; Cancellation of 3T Registration. - A person hose registration has been cancelled due to
retirement from or cessation of business% or due to changes in or cessation of status under Section
1=<:7; of this 7ode may% ithin to :3; years from the date of cancellation% apply for the issuance
of a ta$ credit certi(cate for any unused input ta$ hich may be used in payment of his other
internal re#enue ta$es.
:+; Period &ithin &hich Refund or Tax Credit of 'nput Taxes shall be .ade. - In proper cases% the
7ommissioner shall grant a refund or issue the ta$ credit certi(cate for creditable input ta$es ithin
one hundred tenty :13=; days from the date of submission of compete documents in support of
the application (led in accordance ith Subsections :A; and :?; hereof.
In case of full or partial denial of the claim for ta$ refund or ta$ credit% or the failure on the part of
the 7ommissioner to act on the application ithin the period prescribed abo#e% the ta$payer
a9ected may% ithin thirty :5=; days from the receipt of the decision denying the claim or after the
e$piration of the one hundred tenty day-period% appeal the decision or the unacted claim ith the
7ourt of Ta$ Appeals.-
:1; .anner of 2iving Refund. - 6efunds shall be made upon arrants dran by the 7ommissioner or
by his duly authori!ed representati#e ithout the necessity of being countersigned by the
7hairman% 7ommission on audit% the pro#isions of the Administrati#e 7ode of 1/.4 to the contrary
notithstanding: "ro#ided% That refunds under this paragraph shall be sub*ect to post audit by the
7ommission on Audit.
C%APT"R ## ; C&!P'#ANC" R"8)#R"!"NT*
*ection 11,. 'nvoicing and ccounting Re/uirements for 3T1Registered Persons. -
:A; 'nvoicing Re/uirements. - A VAT-registered person shall% for e#ery sale% issue an in#oice or
receipt. In addition to the information re'uired under Section 354% the folloing information shall be
indicated in the in#oice or receipt:
:1; A statement that the seller is a VAT-registered person% folloed by his ta$payerJs
identi(cation number :TI,;& and
:3; The total amount hich the purchaser pays or is obligated to pay to the seller ith the
indication that such amount includes the #alue-added ta$.
:?; ccounting Re/uirements. - ,otithstanding the pro#isions of Section 355% all persons sub*ect
to the #alue-added ta$ under Sections 1=< and 1=. shall% in addition to the regular accounting
records re'uired% maintain a subsidiary sales *ournal and subsidiary purchase *ournal on hich the
daily sales and purchases are recorded. The subsidiary *ournals shall contain such information as
may be re'uired by the Secretary of 8inance.
*ection 114. Return and Payment of 3alue1dded Tax. -
:A; 'n 2eneral. - 1#ery person liable to pay the #alue-added ta$ imposed under this Title shall (le a
'uarterly return of the amount of his gross sales or receipts ithin tenty-(#e :3-; days folloing
the close of each ta$able 'uarter prescribed for each ta$payer: "ro#ided% hoe#er% That VAT-
registered persons shall pay the #alue-added ta$ on a monthly basis.
Any person% hose registration has been cancelled in accordance ith Section 35<% shall (le a
return and pay the ta$ due thereon ithin tenty-(#e :3-; days from the date of cancellation of
registration: "ro#ided% That only one consolidated return shall be (led by the ta$payer for his
principal place of business or head oAce and all branches.
GSV-40
:?; 6here to 0ile the Return and Pay the Tax. - 1$cept as the 7ommissioner otherise permits% the
return shall be (led ith and the ta$ paid to an authori!ed agent ban)% 6e#enue 7ollection 2Acer
or duly authori!ed city or municipal Treasurer in the "hilippines located ithin the re#enue district
here the ta$payer is registered or re'uired to register.
:7; 6ithholding of Creditable 3alue1added Tax. - The Go#ernment or any of its political subdi#isions%
instrumentalities or agencies% including go#ernment-oned or -controlled corporations :G277s;
shall% before ma)ing payment on account of each purchase of goods from sellers and ser#ices
rendered by contractors hich are sub*ect to the #alue-added ta$ imposed in Sections 1=< and 1=.
of this 7ode% deduct and ithhold the #alue-added ta$ due at the rate of three percent :5I; of the
gross payment for the purchase of goods and si$ percent :<I; on gross receipts for ser#ices
rendered by contractors on e#ery sale or installment payment hich shall be creditable against the
#alue-added ta$ liability of the seller or contractor: "ro#ided% hoe#er% That in the case of
go#ernment public or)s contractors% the ithholding rate shall be eight and one-half percent
:..-I;: "ro#ided% further% That the payment for lease or use of properties or property rights to
nonresident oners shall be sub*ect to ten percent :1=I; ithholding ta$ at the time of payment.
8or this purpose% the payor or person in control of the payment shall be considered as the
ithholding agent.
The #alue-added ta$ ithheld under this Section shall be remitted ithin ten :1=; days folloing the end of
the month the ithholding as made.
*ection 11A. Po&er of the Commissioner to Suspend the Business (perations of a Taxpayer. - The
7ommissioner or his authori!ed representati#e is hereby empoered to suspend the business operations
and temporarily close the business establishment of any person for any of the folloing #iolations:
:a; In the case of a VAT-registered "erson. -
:1; 8ailure to issue receipts or in#oices&
:3; 8ailure to (le a #alue-added ta$ return as re'uired under Section 110& or
:5; Hnderstatement of ta$able sales or receipts by thirty percent :5=I; or more of his
correct ta$able sales or receipts for the ta$able 'uarter.
:b; 8ailure of any "erson to 6egister as 6e'uired under Section 35<. -
The temporary closure of the establishment shall be for the duration of not less than (#e :-; days
and shall be lifted only upon compliance ith hate#er re'uirements prescribed by the
7ommissioner in the closure order.
T#T'" (
&T%"R P"RC"NTA$" TA5"*
*ection 11B. Tax on Persons $xempt from 3alue1dded Tax =3T>. - Any person hose sales or receipts
are e$empt under Section 1=/:!; of this 7ode from the payment of #alue-added ta$ and ho is not a VAT-
registered person shall pay a ta$ e'ui#alent to three percent :5I; of his gross 'uarterly sales or receipts:
"ro#ided% That cooperati#es shall be e$empt from the three percent :5I;gross receipts ta$ herein imposed.
*ection 11. Percentage Tax on +omestic Carriers and 8eepers of 2arages. - 7ars for rent or hire dri#en
by the lessee% transportation contractors% including persons ho transport passengers for hire% and other
domestic carriers by land% air or ater% for the transport of passengers% e$cept oners of bancas and
oner of animal-dran to heeled #ehicle% and )eepers of garages shall pay a ta$ e'ui#alent to three
percent :5I; of their 'uarterly gross receipts.
The gross receipts of common carriers deri#ed from their incoming and outgoing freight shall not be
sub*ected to the local ta$es imposed under 6epublic Act ,o. 41<=% otherise )non as the Gocal
Go#ernment 7ode of 1//1.
In computing the percentage ta$ pro#ided in this Section% the folloing shall be considered the minimum
'uarterly gross receipts in each particular case:
@eepney for hire -
1. Manila and other cities " 3%0==
3. "ro#incial 1%3==
"ublic utility bus -
GSV-4-
,ot e$ceeding 5= passengers 5%<==
1$ceeding 5= but not e$ceeding -= passengers <%===
1$ceeding -= passengers 4%3==
Ta$is -
1. Manila and other cities " 5%<==
3. "ro#incial 3%0==
7ar for hire :ith chau9er; 5%===
7ar for hire :ithout chau9er; 1%.==
*ection 118. Percentage Tax on 'nternational Carriers. -
:A; International air carriers doing business in the "hilippines shall pay a ta$ of three percent :5I;
of their 'uarterly gross receipts.
:?; International shipping carriers doing business in the "hilippines shall pay a ta$ e'ui#alent to
three percent :5I; of their 'uarterly gross receipts.
*ection 119. Tax on 0ranchises. - Any pro#ision of general or special la to the contrary notithstanding%
there shall be le#ied% assessed and collected in respect to all franchises on radio andEor tele#ision
broadcasting companies hose annual gross receipts of the preceding year does not e$ceed Ten million
pesos :"1=%===.==;% sub*ect to Section 35< of this 7ode% a ta$ of three percent :5I; and on electric% gas
and ater utilities% a ta$ of to percent :3I; on the gross receipts deri#ed from the business co#ered by
the la granting the franchise: "ro#ided% hoe#er% That radio and tele#ision broadcasting companies
referred to in this Section shall ha#e an option to be registered as a #alue-added ta$payer and pay the ta$
due thereon: "ro#ided% further% That once the option is e$ercised% it shall not be re#o)ed.
The grantee shall (le the return ith% and pay the ta$ due thereon to the 7ommissioner or his duly
authori!ed representati#e% in accordance ith the pro#isions of Section 13. of this 7ode% and the return
shall be sub*ect to audit by the ?ureau of Internal 6e#enue% any pro#ision of any e$isting la to the
contrary notithstanding.
*ection 12D. Tax on (verseas +ispatch, .essage or Conversation (riginating from the Philippines. -
:A; Persons *iable. - There shall be collected upon e#ery o#erseas dispatch% message or
con#ersation transmitted from the "hilippines by telephone% telegraph% teleriter e$change%
ireless and other communication e'uipment ser#ice% a ta$ of ten percent :1=I; on the amount
paid for such ser#ices. The ta$ imposed in this Section shall be payable by the person paying for
the ser#ices rendered and shall be paid to the person rendering the ser#ices ho is re'uired to
collect and pay the ta$ ithin tenty :3=; days after the end of each 'uarter.
:?; $xemptions. - The ta$ imposed by this Section shall not apply to:
:1; 2overnment. - Amounts paid for messages transmitted by the Go#ernment of the
6epublic of the "hilippines or any of its political subdi#isions or instrumentalities&
:3; +iplomatic Services. - Amounts paid for messages transmitted by any embassy and
consular oAces of a foreign go#ernment&
:5; 'nternational (rgani5ations. - Amounts paid for messages transmitted by a public
international organi!ation or any of its agencies based in the "hilippines en*oying pri#ileges%
e$emptions and immunities hich the Go#ernment of the "hilippines is committed to
recogni!e pursuant to an international agreement& and
:0; 4e&s Services. - Amounts paid for messages from any nespaper% press association%
radio or tele#ision nespaper% broadcasting agency% or nestic)ers ser#ices% to any other
nespaper% press association% radio or tele#ision nespaper broadcasting agency% or
nestic)er ser#ice or to a bona (de correspondent% hich messages deal e$clusi#ely ith
the collection of nes items for% or the dissemination of nes item through% public press%
radio or tele#ision broadcasting or a nestic)er ser#ice furnishing a general nes ser#ice
similar to that of the public press.
*ection 121. Tax on Ban-s and 4on1ban- 0inancial 'ntermediaries. - There shall be a collected ta$ on
gross receipts deri#ed from sources ithin the "hilippines by all ban)s and non-ban) (nancial
intermediaries in accordance ith the folloing schedule:
GSV-4<
:a; 2n interest% commissions and discounts from lending acti#ities as ell as income from (nancial
leasing% on the basis of remaining maturities of instruments from hich such receipts are deri#ed:
Short-term maturity :non in e$cess of to :3; years; ..................................................... -I
Medium-term maturity :o#er to :3; years but not e$ceeding four :0; years; ............ 5I
Gong-term maturity -
:1; 2#er four :0; years but not e$ceeding se#en :4; years ............................... 1I
:3; 2#er se#en :4; years .......................................................................................... =I
:b; 2n di#idends ..................................................................................................................................
=I
:c; 2n royalties% rentals of property% real or personal% pro(ts% from e$change and all other items
treated as gross income under Section 53 of this 7ode ............................................................ -I
"ro#ided% hoe#er% That in case the maturity period referred to in paragraph :a; is shortened thru
pretermination% then the maturity period shall be rec)oned to end as of the date of pretermination for
purposes of classifying the transaction as short% medium or long-term and the correct rate of ta$ shall be
applied accordingly.
,othing in this 7ode shall preclude the 7ommissioner from imposing the same ta$ herein pro#ided on
persons performing similar ban)ing acti#ities.
*ection 122. Tax on 0inance Companies. - There shall be collected a ta$ of (#e percent :-I; on the gross
receipts deri#ed by all (nance companies% as ell as by other (nancial intermediaries not performing
'uasi-ban)ing functions dong business in the "hilippines% from interest% discounts and all other items
treated as gross income under this 7ode: "ro#ided% That interests% commissions and discounts from lending
acti#ities% as ell as income from (nancial leasing% shall be ta$ed on the basis of the remaining maturities
of the instruments from hich such receipts are deri#ed% in accordance ith the folloing schedule:
Short-term maturity :non in e$cess of to :3; years; ............................... -I
Medium-term maturity :o#er to :3; years
but not e$ceeding four :0; years; ................................................................. 5I
Gong-term maturity -
:1; 2#er four :0; years but not e$ceeding se#en :4; years ........... 1I
:3; 2#er se#en :4; years ..................................................................... =I
"ro#ided% hoe#er% That in case the maturity period is shortened thru pretermination% then the
maturity period shall be rec)oned to end as of the date of pretermination for purposes of classifying
the transaction as short% medium or long-term and the correct rate of ta$ shall be applied
accordingly.
,othing in this 7ode shall preclude the 7ommissioner from imposing the same ta$ herein pro#ided
on persons performing similar (nancing acti#ities.
*ection 12,. Tax on *ife 'nsurance Premiums. - There shall be collected from e#ery person% company or
corporation :e$cept purely cooperati#e companies or associations; doing life insurance business of any sort
in the "hilippines a ta$ of (#e percent :-I; of the total premium collected% hether such premiums are
paid in money% notes% credits or any substitute for money& but premiums refunded ithin si$ :<; months
after payment on account of re*ection of ris) or returned for other reason to a person insured shall not be
included in the ta$able receipts& nor shall any ta$ be paid upon reinsurance by a company that has already
paid the ta$& nor upon doing business outside the "hilippines on account of any life insurance of the
insured ho is a nonresident% if any ta$ on such premium is imposed by the foreign country here the
branch is established nor upon premiums collected or recei#ed on account of any reinsurance % if the
insured% in case of personal insurance% resides outside the "hilippines% if any ta$ on such premiums is
imposed by the foreign country here the original insurance has been issued or perfected& nor upon that
portion of the premiums collected or recei#ed by the insurance companies on #ariable contracts :as
de(ned in section 353:3; of "residential +ecree ,o. <13;% in e$cess of the amounts necessary to insure the
li#es of the #ariable contract or)ers.
GSV-44
7ooperati#e companies or associations are such as are conducted by the members thereof ith the money
collected from among themsel#es and solely for their on protection and not for pro(t.
*ection 124. Tax on gents of 0oreign 'nsurance Companies. - 1#ery (re% marine or miscellaneous
insurance agent authori!ed under the Insurance 7ode to procure policies of insurance as he may ha#e
pre#iously been legally authori!ed to transact on ris)s located in the "hilippines for companies not
authori!ed to transact business in the "hilippines shall pay a ta$ e'ual to tice the ta$ imposed in Section
135: "ro#ided% That the pro#ision of this Section shall not apply to reinsurance: "ro#ided% hoe#er% That
the pro#isions of this Section shall not a9ect the right of an oner of property to apply for and obtain for
himself policies in foreign companies in cases here said oner does not ma)e use of the ser#ices of any
agent% company or corporation residing or doing business in the "hilippines. In all cases here oners of
property obtain insurance directly ith foreign companies% it shall be the duty of said oners to report to
the Insurance 7ommissioner and to the 7ommissioner each case here insurance has been so e9ected%
and shall pay the ta$ of (#e percent :-I; on premiums paid% in the manner re'uired by Section 135.
*ection 12A. musement Taxes. - There shall be collected from the proprietor% lessee or operator of
coc)pits% cabarets% night or day clubs% bo$ing e$hibitions% professional bas)etball games% @ai-Alai and
racetrac)s% a ta$ e'ui#alent to:
:a; 1ighteen percent :1.I; in the case of coc)pits&
:b; 1ighteen percent :1.I; in the case of cabarets% night or day clubs&
:c; Ten percent :1=I; in the case of bo$ing e$hibitions: "ro#ided% hoe#er% That bo$ing e$hibitions
herein Borld or 2riental 7hampionships in any di#ision is at sta)e shall be e$empt from
amusement ta$: "ro#ided% further% That at least one of the contenders for Borld or 2riental
7hampionship is a citi!en of the "hilippines and said e$hibitions are promoted by a citi!enEs of the
"hilippines or by a corporation or association at least si$ty percent :<=I; of the capital of hich is
oned by such citi!ens&
:d; 8ifteen percent :1-I; in the case of professional bas)etball games as en#isioned in "residential
+ecree ,o. .41: "ro#ided% hoe#er% That the ta$ herein shall be in lieu of all other percentage ta$es
of hate#er nature and description& and
:e; Thirty percent :5=I; in the case of @ai-Alai and racetrac)s of their gross receipts% irrespecti#e% of
hether or not any amount is charged for admission.
8or the purpose of the amusement ta$% the term >gross receipts> embraces all the receipts of the
proprietor% lessee or operator of the amusement place. Said gross receipts also include income from
tele#ision% radio and motion picture rights% if any. A person or entity or association conducting any acti#ity
sub*ect to the ta$ herein imposed shall be similarly liable for said ta$ ith respect to such portion of the
receipts deri#ed by him or it.
The ta$es imposed herein shall be payable at the end of each 'uarter and it shall be the duty of the
proprietor% lessee or operator concerned% as ell as any party liable% ithin tenty :3=; days after the end
of each 'uarter% to ma)e a true and complete return of the amount of the gross receipts deri#ed during the
preceding 'uarter and pay the ta$ due thereon.
*ection 12B. Tax on 6innings. - 1#ery person ho ins in horse races shall pay a ta$ e'ui#alent to ten
percent :1=I; of his innings or Jdi#idendsJ% the ta$ to be based on the actual amount paid to him for
e#ery inning tic)et after deducting the cost of the tic)et: "ro#ided% That in the case of innings from
double% forecastE'uinella and trifecta bets% the ta$ shall be four percent :0I;. In the case of oners of
inning race horses% the ta$ shall be ten percent :1=I; of the pri!es.
The ta$ herein prescribed shall be deducted from the Jdi#idendsJ corresponding to each inning tic)et or
the Jpri!eJ of each inning race horse oner and ithheld by the operator% manager or person in charge of
the horse races before paying the di#idends or pri!es to the persons entitled thereto.
The operator% manager or person in charge of horse races shall% ithin tenty :3=; days from the date the
ta$ as deducted and ithheld in accordance ith the second paragraph hereof% (le a true and correct
return ith the 7ommissioner in the manner or form to be prescribed by the Secretary of 8inance% and pay
ithin the same period the total amount of ta$ so deducted and ithheld.
*ection 12. Tax on Sale, Barter or $xchange of Shares of Stoc- *isted and Traded through the *ocal
Stoc- $xchange or through 'nitial Public (%ering. -
:A; Ta$ on Sale% ?arter or 1$change of Shares of Stoc) Gisted and Traded through the Gocal Stoc)
1$change. - There shall be le#ied% assessed and collected on e#ery sale% barter% e$change% or other
GSV-4.
disposition of shares of stoc) listed and traded through the local stoc) e$change other than the sale
by a dealer in securities% a ta$ at the rate of one-half of one percent :1E3 of 1I; of the gross selling
price or gross #alue in money of the shares of stoc) sold% bartered% e$changed or otherise
disposed hich shall be paid by the seller or transferor.
:?; Ta$ on Shares of Stoc) Sold or 1$changed Through Initial "ublic 29ering. - There shall be le#ied%
assessed and collected on e#ery sale% barter% e$change or other disposition through initial public
o9ering of shares of stoc) in closely held corporations% as de(ned herein% a ta$ at the rates
pro#ided hereunder based on the gross selling price or gross #alue in money of the shares of stoc)
sold% bartered% e$changed or otherise disposed in accordance ith the proportion of shares of
stoc) sold% bartered% e$changed or otherise disposed to the total outstanding shares of stoc) after
the listing in the local stoc) e$change:
Hp to tenty-(#e percent :3-I; ...................................................... 0I
2#er tenty-(#e percent :3-I; but not o#er thirty-three
and one third percent :55 1E5I; ..................................................... 3I
2#er thirty-three and one third percent :55 1E5I; ......................... 1I
The ta$ herein imposed shall be paid by the issuing corporation in primary o9ering or by the seller
in secondary o9ering.
8or purposes of this Section% the term Jclosely held corporationJ means any corporation at least (fty
percent :-=I; in #alue of outstanding capital stoc) or at least (fty percent :-=-; of the total
combined #oting poer of all classes of stoc) entitled to #ote is oned directly or indirectly by or
for not more than tenty :3=; indi#iduals.
8or purposes of determining hether the corporation is a closely held corporation% insofar as such
determination is based on stoc) onership% the folloing rules shall be applied:
:1; Stoc- 4ot (&ned by 'ndividuals. - Stoc) oned directly or indirectly by or for a
corporation% partnership% estate or trust shall be considered as being oned proportionately
by its shareholders% partners or bene(ciaries.
:3; 0amily and Partnership (&nerships. - An indi#idual shall be considered as oning the
stoc) oned% directly or indirectly% by or for his family% or by or for his partner. 8or purposes
of the paragraph% the Jfamily of an indi#idualJ includes only his brothers and sisters :hether
by hole or half-blood;% spouse% ancestors and lineal descendants.
:5; (ption. - If any person has an option ac'uire stoc)% such stoc) shall be considered as
oned by such person. 8or purposes of this paragraph% an option to ac'uire such an option
and each one of a series of options shall be considered as an option to ac'uire such stoc).
:0; Constructive (&nership as ctual (&nership. - Stoc) constructi#ely oned by reason of
the application of paragraph :1; or :5; hereof shall% for purposes of applying paragraph :1; or
:3;% be treated as actually oned by such person& but stoc) constructi#ely oned by the
indi#idual by reason of the application of paragraph :3; hereof shall not be treated as oned
by him for purposes of again applying such paragraph in order to ma)e another the
constructi#e oner of such stoc).
:7; 6eturn on 7apital Gains 6eali!ed from Sale of Shares of Stoc)s. -
:1; 6eturn on 7apital Gains 6eali!ed from Sale of Shares of Stoc) Gisted and Traded in the
Gocal Stoc) 1$change. - It shall be the duty of e#ery stoc) bro)er ho e9ected the sale
sub*ect to the ta$ imposed herein to collect the ta$ and remit the same to the ?ureau of
Internal 6e#enue ithin (#e :-; ban)ing days from the date of collection thereof and to
submit on Mondays of each ee) to the secretary of the stoc) e$change% of hich he is a
member% a true and complete return hich shall contain a declaration of all the transactions
e9ected through him during the preceding ee) and of ta$es collected by him and turned
o#er to the ?ureau 2f Internal 6e#enue.
:3; 6eturn on "ublic 29erings of Share Stoc). - In case of primary o9ering% the corporate
issuer shall (le the return and pay the corresponding ta$ ithin thirty :5=; days from the
date of listing of the shares of stoc) in the local stoc) e$change. In the case of secondary
o9ering% the pro#ision of Subsection :7;:1; of this Section shall apply as to the time and
manner of the payment of the ta$.
GSV-4/
:+; 7ommon "ro#isions. - any gain deri#ed from the sale% barter% e$change or other disposition of
shares of stoc) under this Section shall be e$empt from the ta$ imposed in Sections 30:7;% 34:+;
:3;% 3.:A;:.;:c;% and 3.:?;:-;:c; of this 7ode and from the regular indi#idual or corporate income
ta$. Ta$ paid under this Section shall not be deductible for income ta$ purposes.
*ection 128. Returns and Payment of Percentage Taxes. -
:A; 6eturns of Gross Sales% 6eceipts or 1arnings and "ayment of Ta$. -
:1; "ersons Giable to "ay "ercentage Ta$es. - 1#ery person sub*ect to the percentage ta$es
imposed under this Title shall (le a 'uarterly return of the amount of his gross sales% receipts
or earnings and pay the ta$ due thereon ithin tenty-(#e :3-; days after the end of each
ta$able 'uarter: "ro#ided% That in the case of a person hose VAT registration is cancelled
and ho becomes liable to the ta$ imposed in Section 11< of this 7ode% the ta$ shall accrue
from the date of cancellation and shall be paid in accordance ith the pro#isions of this
Section.
:3; "erson 6etiring from ?usiness. - Any person retiring from a business sub*ect to
percentage ta$ shall notify the nearest internal re#enue oAcer% (le his return and pay the
ta$ due thereon ithin tenty :3=; days after closing his business.
:5; 1$ceptions. - The 7ommissioner may% by rules and regulations% prescribe:
:a; The time for (ling the return at inter#als other than the time prescribed in the
preceding paragraphs for a particular class or classes of ta$payers after considering
such factors as #olume of sales% (nancial condition% ade'uate measures of security%
and such other rele#ant information re'uired to be submitted under the pertinent
pro#isions of this 7ode& and
:b; The manner and time of payment of percentage ta$es other than as hereinabo#e
prescribed% including a scheme of ta$ prepayment.
:0; +etermination of 7orrect Sales or 6eceipts. - Bhen it is found that a person has failed to
issue receipts or in#oices% or hen no return is (led% or hen there is reason to belie#e that
the boo)s of accounts or other records do not correctly reCect the declarations made or to
be made in a return re'uired to be (led under the pro#isions of this 7ode% the 7ommissioner%
after ta)ing into account the sales% receipts or other ta$able base of other persons engaged
in similar businesses under similar situations or circumstances% or after considering other
rele#ant information may prescribe a minimum amount of such gross receipts% sales and
ta$able base and such amount so prescribed shall be prima facie correct for purposes of
determining the internal re#enue ta$ liabilities of such person.
:?; Bhere to 8ile. - 1$cept as the 7ommissioner otherise permits% e#ery person liable to the
percentage ta$ under this Title may% at his option% (le a separate return for each branch or place of
business% or a consolidated return for all branches or places of business ith the authori!ed agent
ban)% 6e#enue +istrict 2Acer% 7ollection Agent or duly authori!ed Treasurer of the city or
municipality here said business or principal place of business is located% as the case may be.
T#T'" (#
"5C#*" TA5 &N C"RTA#N $&&D*
C%APT"R # ; $"N"RA' PR&(#*#&N*
*ection 129. 2oods sub7ect to $xcise Taxes. - 1$cise ta$es apply to goods manufactured or produced in
the "hilippines for domestic sales or consumption or for any other disposition and to things imported. The
e$cise ta$ imposed herein shall be in addition to the #alue-added ta$ imposed under Title IV.
8or purposes of this Title% e$cise ta$es herein imposed and based on eight or #olume capacity or any
other physical unit of measurement shall be referred to as Jspeci(c ta$J and an e$cise ta$ herein imposed
and based on selling price or other speci(ed #alue of the good shall be referred to as Jad #alorem ta$.J
*ection 1,D. 0iling of Return and Payment of $xcise Tax on +omestic Products. -
:A; "ersons Giable to 8ile a 6eturn% 8iling of 6eturn on 6emo#al and "ayment of Ta$. -
:1; "ersons Giable to 8ile a 6eturn. - 1#ery person liable to pay e$cise ta$ imposed under this
Title shall (le a separate return for each place of production setting forth% among others the
GSV-.=
description and 'uantity or #olume of products to be remo#ed% the applicable ta$ base and
the amount of ta$ due thereon: "ro#ided% hoe#er% That in the case of indigenous
petroleum% natural gas or li'ue(ed natural gas% the e$cise ta$ shall be paid by the (rst
buyer% purchaser or transferee for local sale% barter or transfer% hile the e$cise ta$ on
e$ported products shall be paid by the oner% lessee% concessionaire or operator of the
mining claim.
Should domestic products be remo#ed from the place of production ithout the payment of
the ta$% the oner or person ha#ing possession thereof shall be liable for the ta$ due
thereon.
:3; Time for 8iling of 6eturn and "ayment of the Ta$. - Hnless otherise speci(cally alloed%
the return shall be (led and the e$cise ta$ paid by the manufacturer or producer before
remo#al of domestic products form place of production: "ro#ided% That the ta$ e$cise on
locally manufactured petroleum products and indigenous petroleumEle#ied under Sections
10. and 1-1:A;:0;% respecti#ely% of this Title shall be paid ithin ten :1=; days from the date
of remo#al of such products for the period from @anuary 1% 1//. to @une 5=% 1//.& ithin (#e
:-; days from the date of remo#al of such products for the period from @uly 1% 1//. to
+ecember 51% 1//.& and% before remo#al from the place of production of such products from
@anuary 1% 1/// and thereafter: "ro#ided% further% That the e$cise ta$ on nonmetallic mineral
or mineral products% or 'uarry resources shall be due and payable upon remo#al of such
products from the locality here mined or e$tracted% but ith respect to the e$cise ta$ on
locally produced or e$tracted metallic mineral or mineral products% the person liable shall (le
a return and pay the ta$ ithin (fteen :1-; days after the end of the calendar 'uarter hen
such products ere remo#ed sub*ect to such conditions as may be prescribed by rules and
regulations to be promulgated by the Secretary of 8inance% upon recommendation of the
7ommissioner. 8or this purpose% the ta$payer shall (le a bond in an amount hich
appro$imates the amount of e$cise ta$ due on the remo#als for the said 'uarter. The
foregoing rules notithstanding% for imported mineral or mineral products% hether metallic
or nonmetallic% the e$cise ta$ due thereon shall be paid before their remo#al from customs
custody.
:5; "lace of 8iling of 6eturn and "ayment of the Ta$. - 1$cept as the 7ommissioner otherise
permits% the return shall be (led ith and the ta$ paid to any authori!ed agent ban) or
6e#enue 7ollection 2Acer% or duly authori!ed 7ity or Municipal Treasurer in the "hilippines.
:0; 1$ceptions. - The Secretary of 8inance% upon recommendation of the 7ommissioner may%
by rules and regulations% prescribe:
:a; The time for (ling the return at inter#als other than the time prescribed in the
preceding paragraphs for a particular class or classes of ta$payers after considering
factors such as #olume of remo#als% ade'uate measures of security and such other
rele#ant information re'uired to be submitted under the pertinent pro#isions of this
7ode& and
:b; The manner and time of payment of e$cise ta$es other than as herein prescribed%
under a ta$ prepayment% ad#ance deposit or similar schemes. In the case of locally
produced of e$tracted minerals and mineral products or 'uarry resources here the
mine site or place of e$traction is not the same as the place of processing or
production% the return shall be (led ith and the ta$ paid to the 6e#enue +istrict
2Ace ha#ing *urisdiction o#er the locality here the same are mined% e$tracted or
'uarried: "ro#ided% hoe#er% That for metallic minerals processed abroad% the return
shall be (led and the ta$ due thereon paid to the 6e#enue +istrict 2Ace ha#ing
*urisdiction o#er the locality here the same are mined% e$tracted or 'uarried.
:?; +etermination of Gross Selling "rice of Goods Sub*ect to Ad Valorem Ta$. - Hnless otherise
pro#ided% the price% e$cluding the #alue-added ta$% at hich the goods are sold at holesale in the
place of production or through their sales agents to the public shall constitute the gross selling
price. If the manufacturer also sells or allos such goods to be sold at holesale in another
establishment of hich he is the oner or in the pro(ts of hich he has an interest% the holesale
price in such establishment shall constitute the gross selling price. Should such price be less than
the cost of manufacture plus e$penses incurred until the goods are (nally sold% then a proportionate
margin of pro(t% not less than ten percent :1=I; of such manufacturing cost and e$penses% shall be
added to constitute the gross selling price.
:7; ManufacturerJs or "roducerJs Sorn Statement. - 1#ery manufacturer or producer of goods or
products sub*ect to e$cise ta$es shall (le ith the 7ommissioner on the date or dates designated by
the latter% and as often as may be re'uired% a sorn statement shoing% among other information%
the di9erent goods or products manufactured or produced and their corresponding gross selling
GSV-.1
price or mar)et #alue% together ith the cost of manufacture or production plus e$penses incurred
or to be incurred until the goods or products are (nally sold.
:+; 7redit for 1$cise ta$ on Goods Actually 1$ported. - Bhen goods locally produced or
manufactured are remo#ed and actually e$ported ithout returning to the "hilippines% hether so
e$ported in their original state or as ingredients or parts of any manufactured goods or products%
any e$cise ta$ paid thereon shall be credited or refunded upon submission of the proof of actual
e$portation and upon receipt of the corresponding foreign e$change payment: "ro#ided% That the
e$cise ta$ on mineral products% e$cept coal and co)e% imposed under Section 1-1 shall not be
creditable or refundable e#en if the mineral products are actually e$ported.
*ection 1,1. Payment of $xcise Taxes on 'mporter rticles. -
:A; "ersons Giable. - 1$cise ta$es on imported articles shall be paid by the oner or importer to the
7ustoms 2Acers% conformably ith the regulations of the +epartment of 8inance and before the
release of such articles from the customshouse% or by the person ho is found in possession of
articles hich are e$empt from e$cise ta$es other than those legally entitled to e$emption.
In the case of ta$-free articles brought or imported into the "hilippines by persons% entitles% or
agencies e$empt from ta$ hich are subse'uently sold% transferred or e$changed in the "hilippines
to non-e$empt persons or entitles% the purchasers or recipients shall be considered the importers
thereof% and shall be liable for the duty and internal re#enue ta$ due on such importation.
The pro#ision of any special or general la to the contrary notithstanding% the importation of
cigars and cigarettes% distilled spirits and ines into the "hilippines% e#en if destined for ta$ and
duty free shops% shall be sub*ect to all applicable ta$es% duties% charges% including e$cise ta$es due
thereon: "ro#ided% hoe#er% That this shall not apply to cigars and cigarettes% distilled spirits and
ines brought directly into the duly chartered or legislated freeports of the Subic Special 1conomic
and 8reeport Oone% crated under 6epublic Act ,o. 4334& the 7agayan Special 1conomic Oone and
8reeport% created under 6epublic Act ,o. 4/33& and the Oamboanga 7ity Special 1conomic Oone%
created under 6epublic Act ,o. 4/=5% and are not transshipped to any other port in the "hilippines:
"ro#ided% further% That importations of cigars and cigarettes% distilled spirits and ines by a
go#ernment-oned and operated duty-free shop% li)e the +uty-8ree "hilippines :+8";% shall be
e$empted from all applicable ta$es% duties% charges% including e$cise ta$ due thereon: "ro#ided% still
further% That if such articles directly imported by a go#ernment-oned and operated duty-free shop
li)e the +uty-8ree "hilippines% shall be labelled Jta$ and duty-freeJ and Jnot for resaleJ: "ro#ided% still
further% That is such articles brought into the duly chartered or legislated freeports under 6epublic
Acts ,o. 4334% 4/33 and 4/=5 are subse'uently introduced into the "hilippine customs territory%
then such articles shall% upon such introduction% be deemed imported into the "hilippines and shall
be sub*ect to all imposts and e$cise ta$es pro#ided herein and other statutes: "ro#ided% (nally% That
the remo#al and transfer of ta$ and duty-free goods% products% machinery% e'uipment and other
similar articles% from one freeport to another freeport% shall not be deemed an introduction into the
"hilippine customs territory.
Articles cons(scated shall be disposed of in accordance ith the rules and regulations to be
promulgated by the Secretary of 8inance% upon recommendation of the 7ommissioner of 7ustoms
and Internal 6e#enue% upon consultation ith the Secretary of Tourism and the General manager of
the "hilippine Tourism Authority.
The ta$ due on any such goods% products% machinery% e'uipment or other similar articles shall
constitute a lien on the article itself% and such lien shall be superior to all other charges or liens%
irrespecti#e of the possessor thereof.
:?; 6ate and ?asis of the 1$cise Ta$ on Imported Articles. - Hnless otherise speci(ed imported
articles shall be sub*ect to the same rates and basis of e$cise ta$es applicable to locally
manufactured articles.
*ection 153. Mode of 7omputing 7ontents of 7as) or "ac)age. - 1#ery fractional part of a proof liter e'ual
to or greater than a half liter in a cas) or pac)age containing more than one liter shall be ta$ed as a liter%
and any smaller fractional part shall be e$empt& but any pac)age of spirits% the total content of hich are
less than a proof liter% shall be ta$ed as one liter.
C%APT"R ## ; "5"!PT#&N &R C&ND#T#&NA' TA5;+R"" R"!&(A' &+ C"RTA#N ART#C'"*
*ection 1,,. Removal of 6ines and distilled Spirits for Treatment of Tobacco *eaf. - Hpon issuance of a
permit from the 7ommissioner and sub*ect to the rules and regulations prescribed by the Secretary of
8inance% manufacturers of cigars and cigarettes may ithdra from bond% free of e$cise local and imported
ines and distilled spirits in speci(c 'uantities and grades for use in the treatment of tobacco leaf to b
GSV-.3
used in the manufacture of cigars and cigarettes& but such ines and distilled spirits must (rst be suitably
denatured.
*ection 1,4. +omestic +enatured lcohol. - +omestic alcohol of not less than one hundred eighty
degrees :1.=2; proof :ninety percent :/=I; absolute alcohol; shall% hen suitably denatured and rendered
un(t for oral inta)e% be e$empt from the e$cise ta$ prescribed in Section 101: "ro#ided% hoe#er% That
such denatured alcohol shall be sub*ect to ta$ under Section 1=<:A; of this 7ode: "ro#ided% further% That if
such alcohol is to be used for moti#e poer% it shall be ta$ed under Section 10.:d; of this 7ode: "ro#ided%
(nally% That any alcohol% pre#iously rendered un(t for oral inta)e after denaturing but subse'uently
rendered (t or oral inta)e after undergoing fermentation% dilution% puri(cation% mi$ture or any other similar
process shall be ta$ed under Section 101 of this 7ode and such ta$ shall be paid by the person in
possession of such reprocessed spirits.
*ection 1,A. Petroleum Products Sold to 'nternational Carriers and $xempt $ntities or gencies. -
"etroleum products sold to the folloing are e$empt from e$cise ta$:
:a; International carriers of "hilippine or foreign registry on their use or consumption outside the
"hilippines: "ro#ided% That the petroleum products sold to these international carriers shall be
stored in a bonded storage tan) and may be disposed of only in accordance ith the rules and
regulations to be prescribed by the Secretary of 8inance% upon recommendation of the
7ommissioner&
:b; 1$empt entities or agencies co#ered by ta$ treaties% con#entions and other international
agreements for their use of consumption: "ro#ided% hoe#er% That the country of said foreign
international carrier or e$empt entities or agencies e$empts from similar ta$es petroleum products
sold to "hilippine carriers% entities or agencies& and
:c; 1ntities hich are by la e$empt from direct and indirect ta$es.
*ection 1,B. +enaturation, 6ithdra&al and Cse of +enatured lcohol. - Any person ho produces%
ithdras% sells% transports or )noingly uses% or is in possession of denatured alcohol% or articles
containing denatured alcohol in #iolation of las or regulations no or hereafter in force pertaining thereto
shall be re'uired to pay the corresponding ta$% in addition to the penalties pro#ided for under Title M of this
7ode.
*ection 1,. Removal of Spirits Cnder Bond for Recti:cation. - Spirits re'uiring recti(cation may be
remo#ed from the place of production to another establishment for the purpose of recti(cation ithout
prepayment of the e$cise ta$: "ro#ided% That the distiller remo#ing such spirits and the recti(er recei#ing
them shall (le ith the 7ommissioner their *oint bond conditioned upon the payment by the recti(er of the
e$cise ta$ due on the recti(ed alcohol: "ro#ided% further% That in cases here alcohol has already been
recti(ed either by original and continuous distillation or by redistillation% no loss for recti(cation and
handling shall be alloed and the recti(er thereof shall pay the e$cise ta$ due on such losses: "ro#ided%
(nally% That here a recti(er ma)es use of spirits upon hich the e$cise ta$ has not been paid% he shall be
liable for the payment of the ta$ otherise due thereon.
*ection 1,8. Removal of 0ermented *i/uors to Bonded 6arehouse. - Any breer may remo#e or
transport from his breery or other place of manufacture to a bonded arehouse used by him e$clusi#ely
for the storage or sale in bul) of fermented li'uors of his on manufacture% any 'uantity of such fermented
li'uors% not less than one thousand :1%===; liters at one remo#al% ithout prepayment of the ta$ thereon
under a permit hich shall be granted by the 7ommissioner. Such permit shall be aA$ed to e#ery pac)age
so remo#ed and shall be cancelled or destroyed in such manner as the 7ommissioner may prescribe.
Thereafter% the manufacturer of such fermented li'uors shall pay the ta$ in the same manner and under
the same penalty and liability as hen paid at the breery.
*ection 1,9. Removal of +amaged *i/uors 0ree of Tax. - Bhen any fermented li'uor has become sour or
otherise damaged so as to be un(t for use as such% breers may sell and after securing a special permit
from the 7ommissioner% under such conditions as may be prescribed in the rules and regulations
prescribed by the Secretary of 8inance% remo#e the same ithout the payment of ta$ thereon in cas) or
other pac)ages% distinct from those ordinarily used for fermented li'uors% each containing not less than
one hundred se#enty-(#e :14-; liters ith a note of their contents permanently aA$ed thereon.
*ection 14D. Removal of Tobacco Products &ithout Prepayment of Tax. - "roducts of tobacco entirely un(t
for cheing or smo)ing may be remo#ed free of ta$ for agricultural or industrial use% under such conditions
as may be prescribed in the rules and regulations prescribed by the Secretary of 8inance. Stemmed leaf
tobacco% (ne-cut shorts% the refuse of (ne-cut cheing tobacco% scraps% cuttings% clippings% stems% or
midribs% and seepings of tobacco may be sold in bul) as ra material by one manufacturer directly to
another ithout payment of the ta$% under such conditions as may be prescribed in the rules and
regulations prescribed by the Secretary of 8inance.
GSV-.5
JStemmed leaf tobacco%J as herein used% means leaf tobacco hich has had the stem or midrib remo#ed.
The term does not include bro)en leaf tobacco.
C%APT"R ###; "5C#*" TA5 &N A'C&%&' PR&D)CT*
*ection 141. +istilled Spirits. - 2n distilled spirits% there shall be collected% sub*ect to the pro#isions of
Section 155 of this 7ode% e$cise ta$es as follos:
:a; If produced from the sap of nipa% coconut% cassa#a% camote% or buri palm or from the *uice% syrup
or sugar of the cane% pro#ided such materials are produced commercially in the country here they
are processed into distilled spirits% per proof liter% 1ight pesos :"..==;: "ro#ided% That if produced in
a pot still or other similar primary distilling apparatus by a distiller producing not more than one
hundred :1==; liters a day% containing not more than (fty percent :-=I; of alcohol by #olume% per
proof liter% 8our pesos :"0.==;&
:b; If produced from ra materials other than those enumerated in the preceding paragraph% the
ta$ shall be in accordance ith the net retail price per bottle of se#en hundred (fty milliliter :4-=
ml.; #olume capacity :e$cluding the e$cise ta$ and the #alue-added ta$;as follos:
:1; Gess than To hundred and (fty pesos :"3-=; - Se#enty-(#e pesos :"4-;% per proof liter&
:3; To hundred and (fty pesos :"3-=; up to Si$ hundred and Se#enty-8i#e pesos :"<4-; -
2ne hundred and (fty pesos :"1-=;% per proof liter& and
:5; More than Si$ hundred and se#enty-(#e pesos :"<4-; - Three hundred pesos :"5==;% per
proof liter.
:c; Medicinal preparations% Ca#oring e$tracts% and all other preparations% e$cept toilet preparations%
of hich% e$cluding ater% distilled spirits for the chief ingredient% shall be sub*ect to the same ta$
as such chief ingredient.
This ta$ shall be proportionally increased for any strength of the spirits ta$ed o#er proof spirits% and the ta$
shall attach to this substance as soon as it is in e$istence as such% hether it be subse'uently separated
as pure or impure spirits% or transformed into any other substance either in the process of original
production or by any subse'uent process.
JSpirits or distilled spiritsJ is the substance )non as ethyl alcohol% ethanol or spirits of ine% including all
dilutions% puri(cations and mi$tures thereof% from hate#er source% by hate#er process produced% and
shall include his)y% brandy% rum% gin and #od)a% and other similar products or mi$tures.
J"roof spiritsJ is li'uor containing one-half :1E3; of its #olume of alcohol of a speci(c gra#ity of se#en
thousand nine hundred and thirty-nine thousandths :=.4/5/; at (fteen degrees centigrade :1-2 7;. A
Jproof literJ means a liter of proof spirits.
The rates of ta$ imposed under this Section shall be increased by tel#e percent :13I; on @anuary 1%
3===.
,e brands shall be classi(ed according to their current Jnet retail priceJ.
8or the abo#e purpose% Jnet retail priceJ shall mean the price at hich the distilled spirit is sold on retail in
ten :1=; ma*or supermar)ets in Metro Manila% e$cluding the amount intended to co#er the applicable
e$cise ta$ and the #alue-added ta$ as of 2ctober 1% 1//<.
The classi(cation of each brand of distilled spirits based on the a#erage net retail price as of 2ctober 1%
1//<% as set forth in Anne$ JAJ% shall remain in force until re#ised by 7ongress.
*ection 142. 6ines, - 2n ines% there shall be collected per liter of #olume capacity% the folloing ta$es:
:a; Spar)ling inesEchampagnes regardless of proof% if the net retail price per bottle :e$cluding the
e$cise ta$ and #alue-added ta$; is:
:1; 8i#e hundred pesos :"-==; or less - 2ne hundred pesos :"1==;& and
:3; More than 8i#e hundred pesos :"-==; - Three hundred pesos :"5==;.
:b; Still ines containing fourteen percent :10I; of alcohol by #olume or less% Tel#e pesos
:"13.==;& and
GSV-.0
:c; Still ines containing more than fourteen percent :10I; but not more than tenty-(#e percent
:3-I; of alcohol by #olume% Tenty-four pesos :"30.==;.
8orti(ed ines containing more than tenty-(#e percent of alcohol by #olume shall be ta$ed as distilled
spirits. J8orti(ed inesJ shall mean natural ines to hich distilled spirits are added to increase their
alcoholic strength.
The rates of ta$ imposed under this Section shall be increased by tel#e percent :13I; on @anuary 1%
3===.
,e brands shall be classi(ed according to their current net retail price.
8or the abo#e purpose% Jnet retail priceJ shall mean the price at hich ine is sold on retail in ten :1=;
ma*or supermar)ets in Metro Manila% e$cluding the amount intended to co#er the applicable e$cise ta$ and
the #alue- added ta$ as of 2ctober 1% 1//<.
The classi(cation of each brand of ines based on its a#erage net retail price as of 2ctober 1% 1//<% as set
forth in Anne$ J?J% shall remain in force until re#ised by 7ongress.
*ection 14,. 0ermented *i/uor. - There shall be le#ied% assessed and collected an e$cise ta$ on beer%
lager beer% ale% porter and other fermented li'uors e$cept tuba% basi% tapuy and similar domestic
fermented li'uors in accordance ith the folloing schedule:
:a; If the net retail price :e$cluding the e$cise ta$ and #alue-added ta$; per liter of #olume capacity
is less than 8ourteen pesos and (fty centa#os :"10.-=;% the ta$ shall be Si$ pesos and (fteen
centa#os :"<.1-; per liter&
:b; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; the per liter of #olume
capacity is 8ourteen pesos and (fty centa#os :"10.-=; up to Tenty-to pesos :"33.==;% the ta$
shall be ,ine pesos and (fteen centa#os :"/.1-; per liter&
:c; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; per liter of #olume
capacity is more than Tenty-to pesos :"33.==;% the ta$ shall be Tel#e pesos and (fteen
centa#os :"13.1-; per liter.
Variants of e$isting brands hich are introduced in the domestic mar)et after the e9ecti#ity of 6epublic Act
,o. .30= shall be ta$ed under the highest classi(cation of any #ariant of that brand.
8ermented li'uor hich are breed and sold at micro-breeries or small establishments such as pubs and
restaurants shall be sub*ect to the rate in paragraph :c; hereof.
The e$cise ta$ from any brand of fermented li'uor ithin the ne$t three :5; years from the e9ecti#ity of
6epublic Act ,o. .30= shall not be loer than the ta$ hich as due from each brand on 2ctober 1% 1//<.
The rates of e$cise ta$ on fermented li'uor under paragraphs :a;% :b; and :c; hereof shall be increased by
tel#e percent :13I; on @anuary 1% 3===.
,e brands shall be classi(ed according to their current net retail price.
8or the abo#e purpose% Jnet retail priceJ shall mean the price at hich the fermented li'uor is sold on retail
in tenty :3=; ma*or supermar)ets in Metro Manila :for brands of fermented li'uor mar)eted nationally;
e$cluding the amount intended to co#er the applicable e$cise ta$ and the #alue-added ta$. 8or brands
hich are mar)eted only outside the Metro Manila% the Jnet retail priceJ shall mean the price at the hich
the fermented li'uor is sold in (#e :-; ma*or supermar)ets in the region e$cluding the amount intended to
co#er the applicable e$cise ta$ and the #alue-added ta$.
The classi(cation of each brand of fermented li'uor based on its a#erage net retail price as of 2ctober 1%
1//<% as set forth in Anne$ J7J% shall remain in force until re#ised by 7ongress.
JA #ariant of brandJ shall refer to a brand on hich a modi(er is pre($ed andEor suA$ed to the root name of
the brand andEor a di9erent brand hich carries the same logo or design of the e$isting brand.
1#ery breer or importer of fermented li'uor shall% ithin thirty :5=; days from the e9ecti#ity of 6.A. ,o.
.30=% and ithin the (rst (#e :-; days of e#ery month thereafter% submit to the 7ommissioner a sorn
statement of the #olume of sales for each particular brand of fermented li'uor sold at his establishment for
the three-month period immediately preceding.
GSV-.-
Any breer or importer ho% in #iolation of this Section% )noingly misdeclares or misrepresents in his or
its sorn statement herein re'uired any pertinent data or information shall be penali!ed by a summary
cancellation or ithdraal of his or its permit to engage in business as breer of importer of fermented
li'uor.
Any corporation% association of partnership liable for any of the acts or omissions in #iolation of this
Section shall be (ned treble the amount of de(ciency ta$es% surcharge% and interest hich may be
assessed pursuant to this Section.
Any person liable for any of the acts or omissions prohibited under this Section shall be criminally liable
and penali!ed under Section 3-0 of this 7ode. Any person ho illfully aids or abets in the commission of
any such act or omission shall be criminally liable in the same manner as the principal.
If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing the
sentence% ithout further proceedings for deportation.
C%APT"R #( ; "5C#*" TA5 &N T&0ACC& PR&D)CT*
*ection 144. Tobacco Products. - There shall be collected a ta$ of se#enty-(#e centa#os :"=.4-; on each
)ilogram of the folloing products of tobacco:
:a; Tobacco tisted by hand or reduced into a condition to be consumed in any manner other than
the ordinary mode of drying and curing&
:b; Tobacco prepared or partially prepared ith or ithout the use of nay machine or instruments or
ithout being pressed or seetened& and
:c; 8ine-cut shorts and refuse% scraps% clippings% cuttings% stems and seepings of tobacco.
8ine-cut shorts and refuse% scraps% clippings% cuttings% stems and seepings of tobacco resulting from the
handling or stripping of hole leaf tobacco may be transferred% disposed of% or otherise sold% ithout
prepayment of the e$cise ta$ herein pro#ided for under such conditions as may be prescribed in the rules
and regulations promulgated by the Secretary of 8inance% upon recommendation of the 7ommissioner% if
the same are to be e$ported or to be used in the manufacture of other tobacco products on hich the
e$cise ta$ ill e#entually be paid on the (nished product.
2n tobacco specially prepared for cheing so as to be unsuitable for use in any other manner% on each
)ilogram% Si$ty centa#os :"=.<=;.
*ection 14A. Cigars and Cigarettes. -
:A; 7igars. - There shall be le#ied% assessed and collected on cigars a ta$ of 2ne peso :"1.==; per
cigar.
:?; 7igarettes "ac)ed by Fand. - There shall be le#ied% assessed and collected on cigarettes pac)ed
by hand a ta$ of 8orty centa#os :"=.0=; per pac).
:7; 7igarettes "ac)ed by Machine.- There shall be le#ied% assessed and collected on cigarettes
pac)ed by machine a ta$ at the rates prescribed belo:
:1; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; is abo#e Ten
pesos :"1=.==; per pac)% the ta$ shall be Tel#e pesos :"13.==; per pac)&
:3; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; e$ceeds Si$
pesos and (fty centa#os :"<.-=; but does not e$ceed Ten pesos :"1=.==; per pac)% the ta$
shall be 1ight pesos :..==; per pac)&
:5; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; is 8i#e pesos
:"-.==; but does not e$ceed Si$ pesos and (fty centa#os :"<.-=; per pac)% the ta$ shall be
8i#e pesos :"-.==; per pac)&
:0; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$ is belo 8i#e
pesos :"-.==; per pac)% the ta$ shall be 2ne peso :"1.==; per pac)&
Variants of e$isting brands of cigarettes hich are introduced in the domestic mar)et after the e9ecti#ity of
6.A. ,o. .30= shall be ta$ed under the highest classi(cation of any #ariant of that brand.
GSV-.<
The e$cise ta$ from any brand of cigarettes ithin the ne$t three :5; years from the e9ecti#ity of 6.A. ,o.
.30= shall not be loer than the ta$% hich is due from each brand on 2ctober 1% 1//<: "ro#ided% hoe#er%
That in cases here the e$cise ta$ rates imposed in paragraphs :1;% :3;% :5; and :0; hereinabo#e ill result
in an increase in e$cise ta$ of more than se#enty percent :4=I;& for a brand of cigarette% the increase shall
ta)e e9ect in to tranches: (fty percent :-=I; of the increase shall be e9ecti#e in 1//4 and one hundred
percent :1==I; of the increase shall be e9ecti#e in 1//..
+uly registered or e$isting brands of cigarettes or ne brands thereof pac)ed by machine shall only be
pac)ed in tenties.
The rates of e$cise ta$ on cigars and cigarettes under paragraphs :1;% :3;% :5; and :0; hereof% shall be
increased by tel#e percent :13I; on @anuary 1% 3===.
,e brands shall be classi(ed according to their current net retail price.
8or the abo#e purpose% Jnet retail priceJ shall mean the price at hich the cigarette is sold on retail in
tenty :3=; ma*or supermar)ets in Metro Manila :for brands of cigarettes mar)eted nationally;% e$cluding
the amount intended to co#er the applicable e$cise ta$ and the #alue-added ta$. 8or brands hich are
mar)eted only outside Metro Manila% the Jnet retail priceJ shall mean the price at hich the cigarette is sold
in (#e :-; ma*or supermar)ets in the region e$cluding the amount intended to co#er the applicable e$cise
ta$ and the #alue-added ta$.
The classi(cation of each brand of cigarettes based on its a#erage net retail price as of 2ctober 1% 1//<% as
set forth in Anne$ J+J% shall remain in force until re#ised by 7ongress.
Variant of a brandJ shall refer to a brand on hich a modi(er is pre($ed andEor suA$ed to the root name of
the brand andEor a di9erent brand hich carries the same logo or design of the e$isting brand.
Manufactures and importers of cigars and cigarettes shall% ithin thirty :5=; days from the e9ecti#ity of 6.
A. ,o. .30= and ithin the (rst (#e :-; days of e#ery month thereafter submit to the 7ommissioner a
sorn statement of the #olume of sales for each particular brand of cigars andEor cigarettes sold at his
establishment for the three-month period immediately preceding.
Any manufacturer or importer ho% in #iolation of this Section% )noingly misdeclares or misrepresents in
his or its sorn statement herein re'uired any pertinent data or information shall% upon disco#ery% be
penali!ed by a summary cancellation or ithdraal of his or its permit to engage in business as
manufacturer or importer of cigars or cigarettes.
Any corporation% association or partnership liable for any of the acts or omissions in #iolation of this
Section shall be (ned treble the amount of de(ciency ta$es% surcharges and interest hich may be
assessed pursuant to this Section.
Any person liable for any of the acts or omissions prohibited under this Section shall be criminally liable
and penali!ed under Section 3-0 of this 7ode. Any person ho illfully aids or abets in the commission of
any such act or omission shall be criminally liable in the same manner as the principal.
If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing the
sentence ithout further proceedings for deportation.
*ection 14B. 'nspection 0ee. - 8or inspection made in accordance ith this 7hapter% there shall be
collected a fee of 8ifty centa#os :"=.-=; for each thousand cigars or fraction thereof& Ten centa#os :"=.1=;
for each thousand cigarettes of fraction thereof& To centa#os :"=.=3; for each )ilogram of leaf tobacco or
fraction thereof& and Three centa#os :"=.=5; for each )ilogram or fraction thereof% of scrap and other
manufactured tobacco.
The inspection fee on leaf tobacco% scrap% cigars% cigarettes and other tobacco products as de(ned in
Section 104 of this 7ode shall be paid by the holesaler% manufacturer% producer% oner or operator of
redrying plant% as the case may be% immediately before remo#al there of from the establishment of the
holesaler% manufacturer% oner or operator of the redrying plant. In case of imported leaf tobacco and
products thereof% the inspection fee shall be paid by the importer before remo#al from customsJ custody.
8ifty percent :-=I; of the tobacco inspection fee shall accrue to the Tobacco Inspection 8und created by
Section 13 of Act ,o. 3<15% as amended by Act ,o. 514/% and (fty percent :-=I; shall accrue to the
7ultural 7enter of the "hilippines.
*ection 14. +e:nition of Terms. - Bhen used herein and in statements or oAcial forms prescribed
hereunder% the folloing terms shall ha#e the meaning indicated:
GSV-.4
:a; J7igarsJ mean all rolls of tobacco or any substitute thereof% rapped in leaf tobacco.
:b; J7igarettesJ mean all rolls of (nely-cut leaf tobacco% or any substitute therefor% rapped in paper
or in any other material.
:c; JBholesale priceJ shall mean the amount of money or price paid for cigars or cigarettes
purchased for the purpose of resale% regardless of 'uantity.
:d; J6etail priceJ shall mean the amount of money or price hich an ultimate consumer or end-user
pays for cigars or cigarettes purchased.
C%APT"R ( ; "5C#*" TA5 &N P"TR&'")! PR&D)CT*
*ection 148. .anufactured (ils and (ther 0uels. - There shall be collected on re(ned and manufactured
mineral oils and motor fuels% the folloing e$cise ta$es hich shall attach to the goods hereunder
enumerated as soon as they are in e$istence as such:
:a; Gubricating oils and greases% including but not limited to% basestoc) for lube oils and greases%
high #acuum distillates% aromatic e$tracts% and other similar preparations% and additi#es for
lubricating oils and greases% hether such additi#es are petroleum based or not% per liter and
)ilogram respecti#ely% of #olume capacity or eight% 8our pesos and (fty centa#os :"0.-=;:
"ro#ided% hoe#er% That the e$cise ta$es paid on the purchased feedstoc) :bun)er; used in the
manufacture of e$cisable articles and forming part thereof shall be credited against the e$cise ta$
due therefrom: "ro#ided% further% That lubricating oils and greases produced from basestoc)s and
additi#es on hich the e$cise ta$ has already been paid shall no longer be sub*ect to e$cise ta$:
"ro#ided% (nally% That locally produced or imported oils pre#iously ta$ed as such but are
subse'uently reprocessed% rere(ned or recycled shall li)eise be sub*ect to the ta$ imposed under
this Section.
:b; "rocessed gas% per liter of #olume capacity% 8i#e centa#os :"=.=-;&
:c; Ba$es and petrolatum% per )ilogram% Three pesos and (fty centa#os :"5.-=;&
:d; 2n denatured alcohol to be used for moti#e poer% per liter of #olume capacity% 8i#e centa#os
:"=.=-;: "ro#ided% That unless otherise pro#ided by special las% if the denatured alcohol is mi$ed
ith gasoline% the e$cise ta$ on hich has already been paid% only the alcohol content shall be
sub*ect to the ta$ herein prescribed. 8or purposes of this Subsection% the remo#al of denatured
alcohol of not less than one hundred eighty degrees :1.=o ; proof :ninety percent :/=I; absolute
alcohol; shall be deemed to ha#e been remo#ed for moti#e poer% unless shon otherise&
:e; ,aphtha% regular gasoline and other similar products of distillation% per liter of #olume capacity%
8our pesos and eighty centa#os :"0..=;: "ro#ided% hoe#er% That naphtha% hen used as a ra
material in the production of petrochemical products or as replacement fuel for natural-gas-(red-
combined cycle poer plant% in lieu of locally-e$tracted natural gas during the non-a#ailability
thereof% sub*ect to the rules and regulations to be promulgated by the Secretary of 1nergy% in
consultation ith the Secretary of 8inance% per liter of #olume capacity% Oero :"=.==;: "ro#ided%
further% That the by-product including fuel oil% diesel fuel% )erosene% pyrolysis gasoline% li'ue(ed
petroleum gases and similar oils ha#ing more or less the same generating poer% hich are
produced in the processing of naphtha into petrochemical products shall be sub*ect to the
applicable e$cise ta$ speci(ed in this Section% e$cept hen such by-products are transferred to any
of the local oil re(neries through sale% barter or e$change% for the purpose of further processing or
blending into (nished products hich are sub*ect to e$cise ta$ under this Section&
:f; Geaded premium gasoline% per liter of #olume capacity% 8i#e pesos and thirty-(#e centa#os
:"-.5-;& unleaded premium gasoline% per liter of #olume capacity% 8our pesos and thirty-(#e
centa#os :"0.5-;&
:g; A#iation turbo *et fuel% per liter of #olume capacity% Three pesos and si$ty-se#en centa#os
:"5.<4;&
:h; Kerosene% per liter of #olume capacity% Si$ty centa#os :=.<=;: "ro#ided% That )erosene% hen
used as a#iation fuel% shall be sub*ect to the same ta$ on a#iation turbo *et fuel under the preceding
paragraph :g;% such ta$ to be assessed on the user thereof&
:i; +iesel fuel oil% an on similar fuel oils ha#ing more or less the same generating poer% per liter of
#olume capacity% 2ne peso and si$ty-three centa#os :"1.<5;&
GSV-..
:*; Gi'ue(ed petroleum gas% per liter% Oero :"=.==;: "ro#ided% That li'ue(ed petroleum gas used for
moti#e poer shall be ta$ed at the e'ui#alent rate as the e$cise ta$ on diesel fuel oil&
:); Asphalts% per )ilogram% 8ifty-si$ centa#os :"=.-<;& and
:l; ?un)er fuel oil% and on similar fuel oils ha#ing more or less the same generating poer% per liter
of #olume capacity% Thirty centa#os :"=.5=;.
C%APT"R (# ; "5C#*" TA5 &N !#*C"''AN"&)* ART#C'"*
*ection 149. utomobiles. - There shall be le#ied% assessed and collected an ad #alorem ta$ on
automobiles based on the manufacturerJs or importerJs selling price% net of e$cise and #alue-added ta$% in
accordance ith the folloing schedule:
1ngine +isplacement :in cc.;
2asoline +iesel Tax Rate
Hp to 1<== Hp to 1.== 1-I
1<=1 to 3=== 1.=1 to 35== 5-I
3==1 to 34== 35=1 to 5=== -=I
34=1 or o#er 5==1 to o#er 1==I
"ro#ided% That in the case of imported automobiles not for sale% the ta$ imposed herein shall be based on
the total #alue used by the ?ureau of 7ustoms in determining tari9 and customs duties% including customs
duty and all other charges% plus ten percent :1=I; of the total thereof.
Automobiles ac'uired for use by persons or entities operating ithin the freeport !one shall be e$empt
from e$cise ta$: pro#ided% That utility #ehicles of registered !one enterprises% hich are indispensable in
the conduct and operations of their business% such as deli#ery truc)s and cargo #ans ith gross #ehicle
eight abo#e three :5; metric tons may be alloed unrestricted use outside the freeport !one: "ro#ided%
further% That #ehicles oned by tourist-oriented enterprises% such as tourist buses and cars ith yello
plates% color-coded% and utili!ed e$clusi#ely for the purpose of transporting tourists in tourism-related
acti#ities% and ser#ice #ehicles of freeport registered enterprises and e$ecuti#es% such as company ser#ice
cars and e$patriatesJ and in#estorsJ automobiles brought in the name of such enterprises% may be used
outside the freeport !one for such periods as may be prescribed by the +epartments of 8inance% and Trade
and Industry% the ?ureau of 7ustoms and the 8reeport authorities concerned% hich in no case shall e$ceed
fourteen :10; days per month.
In case such tourist buses and cars% ser#ice #ehicles of registered freeport enterprises and company
ser#ice cars are used for more than an aggregate period of fourteen :10; days per month outside of the
freeport !one% the oner or importer shall pay the corresponding customs duties% ta$es and charges.
In the case of personally-oned #ehicles of residents% including leaseholders of residences inside the
freeport !one% the use of such #ehicles outside of the freeport !one shall be deemed an introduction into
the "hilippine customs territory% and such introduction shall be deemed an importation into the "hilippines
and shall sub*ect such #ehicles to 7ustoms duties ta$es and charges% including e$cise ta$ due on such
#ehicle.
The Secretaries of 8inance% and Trade and Industry% together ith the 7ommissioner of 7ustoms and the
administrators of the freeports concerned% shall promulgate rules and regulations for the proper
identi(cation and control of said automobiles.
*ection 1AD. 4on1essential 2oods. - There shall be le#ied% assessed and collected a ta$ e'ui#alent to
tenty-percent :3=I; based on the holesale price or the #alue of importation used by the ?ureau of
7ustoms in determining tari9 and customs duties% net of e$cise ta$ and #alue-added ta$% of the folloing
goods:
:a; All goods commonly or commercially )non as *eelry% hether real or imitation% pearls%
precious and semi-precious stones and imitations thereof& goods made of% or ornamented% mounted
or (tted ith% precious metals or imitations thereof or i#ory :not including surgical and dental
instruments% sil#er-plated ares% frames or mountings for spectacles or eyeglasses% and dental gold
or gold alloys and other precious metals used in (lling% mounting or (tting the teeth;& opera glasses
and lorgnettes. The term Jprecious metalsJ shall include platinum% gold% sil#er and other metals of
similar or greater #alue. The term Jimitations thereof shall include platings and alloys of such
metals&
GSV-./
:b; "erfumes and toilet aters&
:c; Nachts and other #essels intended for pleasure or sports.
C%APT"R (## ; "5C#*" TA5 &N !#N"RA' PR&D)CT*
*ection 1A1. .ineral Products. -
:A; Rates of Tax. - There shall be le#ied% assessed and collected on minerals% mineral products and
'uarry resources% e$cise ta$ as follos:
:1; 2n coal and co)e% a ta$ of Ten pesos :"1=.==; per metric ton&
:3; 2n all nonmetallic minerals and 'uarry resources% a ta$ of to percent :3I; based on the
actual mar)et #alue of the gross output thereof at the time of remo#al% in the case of those
locally e$tracted or produced& or the #alue used by the ?ureau of 7ustoms in determining
tari9 and customs duties% net of e$cise ta$ and #alue-added ta$% in the case of importation.
,otithstanding the pro#ision of paragraph :0; of Subsection :A; of Section 1-1% locally
e$tracted natural gas and li'ue(ed natural gas shall be ta$ed at the rate of to percent
:3I;&
:5; 2n all metallic minerals% a ta$ based on the actual mar)et #alue of the gross output
thereof at the time of remo#al% in the case of those locally e$tracted or produced& or the
#alue used by the ?ureau of 7ustoms in determining tari9 and customs duties% net of e$cise
ta$ and #alue-added ta$% in the case of importation% in accordance ith the folloing
schedule&
:a; 7opper and other metallic minerals&
:i; 2n the (rst three :5; years upon the e9ecti#ity of 6epublic Act ,o. 443/%
one percent :1I;&
:ii; 2n the fourth and the (fth years% one and a half percent :1 SI;& and
:iii; 2n the si$th year and thereafter% to percent :3I;&
:b; Gold and chromite% to percent :3I;.
:0; 2n indigenous petroleum% a ta$ of three percent :5I; of the fair international mar)et
price thereof% on the (rst ta$able sale% barter% e$change or such similar transaction% such ta$
to be paid by the buyer or purchaser before remo#al from the place of production. The
phrase J(rst ta$able sale% barter% e$change or similar transactionJ means the transfer of
indigenous petroleum in its original state to a (rst ta$able transferee. The fair international
mar)et price shall be determined in consultation ith an appropriate go#ernment agency.
8or the purpose of this Subsection% Jindigenous petroleumJ shall include locally-e$tracted
mineral oil% hydrocarbon gas% bitumen% crude asphalt% mineral gas and all other similar or
naturally associated substances ith the e$ception of coal% peat% bituminous shale andEor
strati(ed mineral deposits.
:?; 8or purposes of this Section% the term -
:1; JGross outputJ shall be interpreted as the actual mar)et #alue of minerals or mineral
products or of bullion from each mine or mineral land operated as a separate entity% ithout
any deduction from mining% milling% re(ning :including all e$penses incurred to prepare the
said minerals or mineral products in a mar)etable state;% as ell as transporting% handling%
mar)eting or any other e$penses: "ro#ided% That if the minerals or mineral products are sold
or consigned abroad by the lessee or oner of the mine under 7.I.8. terms% the actual cost of
ocean freight and insurance shall be deducted: pro#ided% hoe#er% That in the case of
mineral concentrate% not traded in commodity e$changes in the "hilippines or abroad% such
as copper concentrate% the actual mar)et #alue shall be the orld price 'uotations of the
re(ned mineral products content thereof pre#ailing in the said commodity e$changes% after
deducting the smelting% re(ning and other charges incurred in the process of con#erting the
mineral concentrates into re(ned metal traded in those commodity e$changes.
GSV-/=
:3; JMineralsJ shall mean all naturally occurring inorganic substances :found in nature;
hether in solid% li'uid% gaseous or any intermediate state.
:5; JMineral productsJ shall mean things produced and prepared in a mar)etable state by
simple treatment processes such as ashing or drying% but ithout undergoing any chemical
change or process or manufacturing by the lessee% concessionaire or oner of mineral lands.
:0; JLuarry resourcesJ shall mean any common stone or other common mineral substances
as the +irector of the ?ureau of Mines and Geo-Sciences may declare to be 'uarry resources
such as% but not restricted to% marl% marble% granite% #olcanic cinders% basalt% tu9 and roc)
phosphate: "ro#ided% That they contain no metal or other #aluable minerals in economically
or)able 'uantities.
C%APT"R (### ; AD!#N#*TRAT#(" PR&(#*#&N* R"$)'AT#N$ 0)*#N"** &+ P"R*&N* D"A'#N$ #N
ART#C'"* *)0F"CT T& "5C#*" TA5
*ection 1A2. $xtent of Supervision (ver $stablishments Producing Taxable (utput. - The ?ureau of
Internal 6e#enue has authority to super#ise establishments here articles sub*ect to e$cise ta$ are made
or )ept. The Secretary of 8inance shall prescribe rules and regulations as to the mode in hich the process
of production shall be conducted insofar as may be necessary to secure a sanitary output and to safeguard
the re#enue.
*ection 1A,. Records to be 8ept by .anufacturersH ssessment Based Thereon. - Manufacturers of
articles sub*ect to e$cise ta$ shall )eep such records as re'uired by rules and regulations recommended by
the 7ommissioner and appro#ed by the Secretary of 8inance% and such records% hether of ra materials
recei#ed into the factory or of articles produced therein% shall be deemed public and oAcial documents for
all purposes.
The records of ra materials )ept by such manufacturers may be used as e#idence by hich to determine
the amount of e$cise ta$es due from them% and hene#er the amounts of ra material recei#ed into any
factory e$ceeds the amount of manufactured or partially manufactured products on hand and lafully
remo#ed from the factory% plus aste remo#ed or destroyed% and a reasonable alloance for una#oidable
loss in manufacture% the 7ommissioner may assess and collect the ta$ due on the products hich should
ha#e been produced from the e$cess.
The e$cise ta$ due on the products as determined and assessed in accordance ith this Section shall be
payable upon demand or ithin the period speci(ed therein.
*ection 1A4. Premises Sub7ect to pproval by Commissioner. - ,o person shall engage in business as a
manufacturer of or dealer in articles sub*ect to e$cise ta$ unless the premises upon hich the business is
to conducted shall ha#e been appro#ed by the 7ommissioner.
*ection 1AA. .anufacturers to Provide Themselves &ith Counting or .etering +evices to +etermine
Production. - Manufacturers of cigarettes% alcoholic products% oil products and other articles sub*ect to
e$cise ta$ that can be similarly measured shall pro#ide themsel#es ith such necessary number of suitable
counting or metering de#ices to determine as accurately as possible the #olume% 'uantity or number of the
articles produced by them under rules and regulations promulgated by the Secretary of 8inance% upon
recommendation of the 7ommissioner.
This re'uirement shall be complied ith before commencement of operations.
*ection 1AB. *abels and 0orm of Pac-ages. - All articles of domestic manufacture sub*ect to e$cise ta$
and all leaf tobacco shall be put up and prepared by the manufacturer or producer% hen remo#ed for sale
or consumption% in such pac)ages only and bearing such mar)s or brand as shall be prescribed in the rules
and regulations promulgated by the Secretary of 8inance& and goods of similar character imported into the
"hilippines shall li)eise be pac)ed and mar)ed in such a manner as may be re'uired.
*ection 1A. Removal of rticles fter the Payment of Tax. - Bhen the ta$ has been paid on articles or
products sub*ect to e$cise ta$% the same shall not thereafter be stored or permitted to remain in the
distillery% distillery arehouse% bonded arehouse% or other factory or place here produced. Foe#er%
upon prior permit from the 7ommissioner% oil re(neries andEor companies may store or deposit ta$-paid
petroleum products and commingle the same ith its on manufactured products not yet sub*ected to
e$cise ta$. Imported petroleum products may be alloed to be ithdran from customs custody ithout
the prepayment of e$cise ta$% hich products may be commingled ith the ta$-paid or bonded products of
the importer himself after securing a prior permit from the 7ommissioner: "ro#ided% That ithdraals shall
be ta$ed and accounted for on a J(rst-in% (rst-outJ basis.
GSV-/1
*ection 1A8. Storage of 2oods in 'nternal1revenue Bonded 6arehouses. - An internal-re#enue bonded
arehouse may be maintained in any port of entry for the storing of imported or manufactured goods
hich are sub*ect to e$cise ta$. The ta$es on such goods shall be payable only upon remo#al from such
arehouse and a reasonable charge shall be made for their storage therein. The 7ommissioner% may% in his
discretion% e$act a bond to secure the payment of the ta$ on any goods so stored.
*ection 1A9. Proof of $xportationH $xporter9s Bond. - 1$porters of goods that ould be sub*ect to e$cise
ta$% if sold or remo#ed for consumption in the "hilippines% shall submit proof of e$portation satisfactory to
the 7ommissioner% and % hen the same is deemed necessary% shall be re'uired to gi#e a bond prior to the
remo#al of the goods for shipment% conditioned upon the e$portation of the same in good faith.
*ection 1BD. .anufacturers9 and 'mporters9 Bond. - Manufacturers and importers of articles sub*ect to
e$cise ta$ shall post a bond sub*ect to the folloing conditions:
:A; 'nitial Bond. - In case of initial bond% the amount shall be e'ual to 2ne Fundred thousand pesos
:"1==%===;: "ro#ided% That if after si$ :<; months of operation% the amount of initial bond is less
than the amount of the total e$cise ta$ paid during the period% the amount of the bond shall be
ad*usted to tice the ta$ actually paid for the period.
:?; Bond for the Succeeding Aears of (peration. - The bonds for the succeeding years of operation
shall be based on the actual total e$cise ta$ paid during the period the year immediately preceding
the year of operation.
Such bond shall be conditioned upon faithful compliance% during the time such business is folloed% ith
las and rules and regulations relating to such business and for the satisfaction of all (nes and penalties
imposed by this 7ode.
*ection 1B1. Records to be 8ept by 6holesale +ealers. - Bholesale dealers shall )eep records of their
purchases and sales or deli#eries of articles sub*ect to e$cise ta$% in such form as shall be prescribed in the
rules and regulations by the Secretary of 8inance. These records and the entire stoc) of goods sub*ect to
ta$ shall be sub*ect at all times to inspection of internal re#enue oAcers.
*ection 1B2. Records to be 8ept by +ealers in *eaf Tobacco. - +ealers in leaf tobacco shall )eep records
of the products sold or deli#ered by them to other persons in such manner as may be prescribed in the
rules and regulations by the Secretary of 8inance% such records to be at all times sub*ect to inspection of
internal re#enue oAcers.
*ection 1B,. Preservation of 'nvoices and Stamps. - All dealers hosoe#er shall preser#e% for the period
prescribed in Section 35-% all oAcial in#oices recei#ed by them from other dealers or from manufacturers%
together ith the fractional parts of stamps aA$ed thereto% if any% and upon demand% shall deli#er or
transmit the same to any inter#al re#enue oAcer.
*ection 1B4. 'nformation to be 2iven by .anufacturers, 'mporters, 'ndentors, and 6holesalers of any
pparatus or .echanical Contrivance Specially for the .anufacture of rticles Sub7ect to $xcise Tax and
'mporters, 'ndentors, .anufacturers or Sellers of Cigarette Paper in Bobbins, Cigarette Tipping Paper or
Cigarette 0ilter Tips. - Manufacturers% indentors% holesalers and importers of any apparatus or mechanical
contri#ance specially for the manufacture of articles sub*ect to ta$ shall% before any such apparatus or
mechanical contri#ance is remo#ed from the place of manufacture or from the customs house% gi#e ritten
information to the 7ommissioner as to the nature and capacity of the same% the time hen it is to be
remo#ed% and the place for hich it is destined% as ell as the name of the person by hom it is to be
used& and such apparatus or mechanical contri#ance shall not be set up nor dismantled or transferred
ithout a permit in riting from the 7ommissioner.
A ritten permit from the 7ommissioner for importing% manufacturing or selling of cigarette paper in
bobbins or rolls% cigarette tipping paper or cigarette (lter tips is re'uired before any person shall engage in
the importation% manufacture or sale of the said articles. ,o permit to sell said articles shall be granted
unless the name and address of the prospecti#e buyer is (rst submitted to the 7ommissioner and
appro#ed by him. 6ecords% shoing the stoc) of the said articles and the disposal thereof by sale of
persons ith their respecti#e addresses as appro#ed by the 7ommissioner% shall be )ept by the seller% and
records% shoing stoc) of said articles and consumption thereof% shall be )ept by the buyer% sub*ect to
inspection by internal re#enue oAcers.
*ection 1BA. $stablishment of +istillery 6arehouse. - 1#ery distiller% hen so re'uired by the
7ommissioner% shall pro#ide at his on e$pense a arehouse% and shall be situated in and constitute a
part of his distillery premises and to be used only for the storage of distilled spirits of his on manufacture
until the ta$ thereon shall ha#e been paid& but no delling house shall be used for such purpose. Such
arehouse% hen appro#ed by the 7ommissioner% is declared to be a bonded arehouse% and shall be
)non as a distillery arehouse.
GSV-/3
*ection 1BB. Custody of +istillery or +istillery 6arehouse. - 1#ery distillery or distillery arehouse shall
be in the *oint custody of the re#enue inspector% if one is assigned thereto% and of the proprietor thereof. It
shall be )ept securely loc)ed% and shall at no time be unloc)ed or opened or remain unloc)ed or opened
unless in the presence of such re#enue inspector or other person ho may be designated to act for him as
pro#ided by la.
*ection 1B. *imitation on Duantity of Spirits Removed from 6arehouse. - ,o distilled spirits shall be
remo#ed from any distillery% distillery arehouse% or bonded arehouse in 'uantities of less than (fteen
:1-; gauge liters at any one time% e$cept bottled goods% hich may be remo#ed by the case of not less
than tel#e :13; bottles.
*ection 1B8. +enaturing 6ithin Premises. - 8or purposes of this Title% the process of denaturing alcohol
shall be e9ected only ithin the distillery premises here the alcohol to be denatured is produced in
accordance ith formulas duly appro#ed by the ?ureau of Internal 6e#enue and only in the presence of
duly designated representati#es of said ?ureau.
*ection 1B9. Recovery of lcohol for Cse in rts and 'ndustries. - Manufacturers employing processes in
hich denatured alcohol used in arts and industries is e$pressed or e#aporated from the articles
manufactured may% under rules and regulations to be prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner% be permitted to reco#er the alcohol so used and restore it again to
a condition suitable solely for use in manufacturing processes.
*ection 1D. Re/uirements 2overning Recti:cation and Compounding of *i/uors. - "ersons engaged in
the recti(cation or compounding of li'uors shall% as to the mode of conducting their business and
super#ision o#er the same% be sub*ect to all the re'uirements of la applicable to distilleries: "ro#ided%
That here a recti(er ma)es use of spirits upon hich the e$cise ta$ has been paid% no further ta$ shall be
collected on any recti(ed spirits produced e$clusi#ely therefrom: "ro#ided% further% That compounders in
the manufacture of any into$icating be#erage hate#er% shall not be alloed to ma)e use of spirits upon
hich the e$cise ta$ has not been pre#iously paid.
*ection 11. uthority of 'nternal Revenue ()cer in Searching for Taxable rticles. - Any internal
re#enue oAcer may% in the discharge of his oAcial duties% enter any house% building or place here articles
sub*ect to ta$ under this Title are produced or )ept% or are belie#ed by him upon reasonable grounds to be
produced or )ept% so far as may be necessary to e$amine% disco#er or sei!e the same.
Fe may also stop and search any #ehicle or other means of transportation hen upon reasonable grounds
he belie#es that the same carries any article on hich the e$cise ta$ has not been paid.
*ection 12. +etention of Pac-age Containing Taxable rticles. - Any re#enue oAcer may detain any
pac)age containing or supposed to contain articles sub*ect to e$cise ta$ hen he has good reason to
belie#e that the laful ta$ has not been paid or that the pac)age has been or is being remo#ed in #iolation
of la% and e#ery such pac)age shall be held by such oAcer in a safe place until it shall be determined
hether the property so detained is liable by la to be proceeded against for forfeiture& but such summary
detention shall not continue in any case longer than se#en :4; days ithout due process of la or
inter#ention of the oAcer to hom such detention is to be reported.
T#T'" (##
D&C)!"NTARE *TA!P TA5
*ection 1,. Stamp Taxes Cpon +ocuments, *oan greements, 'nstruments and Papers. - Hpon
documents% instruments% loan agreements and papers% and upon acceptances% assignments% sales and
transfers of the obligation% right or property incident thereto% there shall be le#ied% collected and paid for%
and in respect of the transaction so had or accomplished% the corresponding documentary stamp ta$es
prescribed in the folloing Sections of this Title% by the person ma)ing% signing% issuing% accepting% or
transferring the same here#er the document is made% signed% issued% accepted or transferred hen the
obligation or right arises from "hilippine sources or the property is situated in the "hilippines% and the
same time such act is done or transaction had: "ro#ided% That hene#er one party to the ta$able
document en*oys e$emption from the ta$ herein imposed% the other party ho is not e$empt shall be the
one directly liable for the ta$.
*ection 14. Stamp Tax on +ebentures and Certi:cates of 'ndebtedness. - 2n all debentures and
certi(cates of indebtedness issued by any association% company or corporation% there shall be collected a
documentary stamp ta$ of 2ne peso and (fty centa#os :"1.-=; on each To hundred pesos :"3==;% or
fractional part thereof% of the face #alue of such documents.
*ection 1A. Stamp Tax on (riginal 'ssue of Shares of Stoc-. - 2n e#ery original issue% hether on
organi!ation% reorgani!ation or for any laful purpose% of shares of stoc) by any association% company or
corporation% there shall be collected a documentary stamp ta$ of To pesos :"3.==; on each To hundred
GSV-/5
pesos :"3==;% or fractional part thereof% of the par #alue% of such shares of stoc): "ro#ided% That in the case
of the original issue of shares of stoc) ithout par #alue the amount of the documentary stamp ta$ herein
prescribed shall be based upon the actual consideration for the issuance of such shares of stoc): pro#ided%
further% That in the case of stoc) di#idends% on the actual #alue represented by each share.
*ection 1B. Stamp Tax on Sales, greements to Sell, .emoranda of Sales, +eliveries or Transfer of +ue1
bills, Certi:cates of (bligation, or Shares of Certi:cates of Stoc-. - 2n all sales% or agreements to sell% or
memoranda of sale% or deli#eries% or transfer of due-bills% certi(cates of obligation% or shares of certi(cates
of stoc) in any association% company% or corporation% or transfer of such securities by assignment in blan)%
or by deli#ery% or by any paper or agreement% or memorandum or other e#idences of transfer or sale
hether entitling the holder in any manner to the bene(t of such due-bills% certi(cates of obligation or
stoc)% or to secure the future payment of money% or for the future transfer of any due-bill% certi(cate of
obligation or stoc)% there shall be collected a documentary stamp ta$ of 2ne peso and (fty centa#os
:"1.-=; on each To hundred pesos :"3==; or fractional part thereof% of the par #alue of such due-bill%
certi(cate of obligation or stoc)& "ro#ided% That only one ta$ shall be collected on each sale or transfer of
stoc) or securities from one person to another% regardless of hether or not a certi(cate of stoc) or
obligation is issued% indorsed% or deli#ered in pursuance of such sale or transfer: and "ro#ided% further%
That in the case of stoc) ithout par #alue the amount of documentary stamp ta$ herein prescribed shall
be e'ui#alent to tenty-(#e percent :3-I; of the documentary stamp ta$ paid upon the original issue of
said stoc).
*ection 1. Stamp Tax on Bonds, +ebentures, Certi:cate of Stoc- or 'ndebtedness 'ssued in 0oreign
Countries. - 2n all bonds% debentures% certi(cates of stoc)% or certi(cates of indebtedness issued in any
foreign country% there shall be collected from the person selling or transferring the same in the "hilippines%
such as ta$ as is re'uired by la on similar instruments hen issued% sold or transferred in the "hilippines.
*ection 18. Stamp Tax on Certi:cates of Pro:ts or 'nterest in Property or ccumulations. - 2n all
certi(cates of pro(ts% or any certi(cate or memorandum shoing interest in the property or accumulations
of any association% company or corporation% and on all transfers of such certi(cates or memoranda% there
shall be collected a documentary stamp ta$ of 8ifty centa#os :"=.-=; on each To hundred pesos :"3==;% or
fractional part thereof% of the face #alue of such certi(cate or memorandum.
*ection 19. Stamp Tax on Ban- Chec-s, +rafts, Certi:cates of +eposit not Bearing 'nterest, and (ther
'nstruments. - 2n each ban) chec)% draft% or certi(cate of deposit not draing interest% or order for the
payment of any sum of money dran upon or issued by any ban)% trust company% or any person or
persons% companies or corporations% at sight or on demand% there shall be collected a documentary stamp
ta$ of 2ne peso and (fty centa#os :"1.-=;.
*ection 18D. Stamp Tax on ll Bonds, *oan greements, promissory 4otes, Bills of $xchange, +rafts,
'nstruments and Securities 'ssued by the 2overnment or ny of its 'nstrumentalities, +eposit Substitute
+ebt 'nstruments, Certi:cates of +eposits Bearing 'nterest and (thers 4ot Payable on Sight or +emand. -
2n all bonds% loan agreements% including those signed abroad% herein the ob*ect of the contract is located
or used in the "hilippines% bills of e$change :beteen points ithin the "hilippines;% drafts% instruments and
securities issued by the Go#ernment or any of its instrumentalities% deposit substitute debt instruments%
certi(cates of deposits draing interest% orders for the payment of any sum of money otherise than at
sight or on demand% on all promissory notes% hether negotiable or non-negotiable% e$cept ban) notes
issued for circulation% and on each reneal of any such note% there shall be collected a documentary stamp
ta$ of Thirty centa#os :"=.5=; on each To hundred pesos :"3==;% or fractional part thereof% of the face
#alue of any such agreement% bill of e$change% draft% certi(cate of deposit% or note: "ro#ided% That only one
documentary stamp ta$ shall be imposed on either loan agreement% or promissory notes issued to secure
such loan% hiche#er ill yield a higher ta$: "ro#ided% hoe#er% That loan agreements or promissory notes
the aggregate of hich does not e$ceed To hundred (fty thousand pesos :"3-=%===; e$ecuted by an
indi#idual for his purchase on installment for his personal use or that of his family and not for business%
resale% barter or hire of a house% lot% motor #ehicle% appliance or furniture shall be e$empt from the
payment of the documentary stamp ta$ pro#ided under this Section.
*ection 181. Stamp Tax Cpon cceptance of Bills of $xchange and (thers. - Hpon any acceptance or
payment of any bill of e$change or order for the payment of money purporting to be dran in a foreign
country but payable in the "hilippines% there shall be collected a documentary stamp ta$ of Thirty centa#os
:"=.5=; on each To hundred pesos :"3==;% or fractional part thereof% of the face #alue of any such bill of
e$change% or order% or the "hilippine e'ui#alent to such #alue% if e$pressed in foreign currency.
*ection 182. Stamp Tax on 0oreign Bills of $xchange and *etters of Credit. - 2n all foreign bills of
e$change and letters of credit :including orders% by telegraph or otherise% for the payment of money
issued by e$press or steamship companies or by any person or persons; dran in but payable out of the
"hilippines in a set of three :5; or more according to the custom of merchants and ban)ers% there shall be
collected a documentary stamp ta$ of Thirty centa#os :"=.5=; on each To hundred pesos :"3==;% or
fractional part thereof% of the face #alue of any such bill of e$change or letter of credit% or the "hilippine
e'ui#alent of such face #alue% if e$pressed in foreign currency.
GSV-/0
*ection 18,. Stamp Tax on *ife 'nsurance Policies. - 2n all policies of insurance or other instruments by
hate#er name the same may be called% hereby any insurance shall be made or reneed upon any life or
li#es% there shall be collected a documentary stamp ta$ of 8ifty centa#os :"=.-=; on each To hundred
pesos :"3==;% or fractional part thereof% of the amount insured by any such policy.
*ection 184. Stamp Tax on Policies of 'nsurance Cpon Property. - 2n all policies of insurance or other
instruments by hate#er name the same may be called% by hich insurance shall be made or reneed
upon property of any description% including rents or pro(ts% against peril by sea or on inland aters% or by
(re or lightning% there shall be collected a documentary stamp ta$ of 8ifty centa#os :"=.-=; on each 8our
pesos :"0.==;% or fractional part thereof% of the amount of premium charged: "ro#ided% hoe#er% That no
documentary stamp ta$ shall be collected on reinsurance contracts or on any instrument by hich cession
or acceptance of insurance ris)s under any reinsurance agreement is e9ected or recorded.
*ection 18A. Stamp Tax on 0idelity Bonds and (ther 'nsurance Policies. - 2n all policies of insurance or
bonds or obligations of the nature of indemnity for loss% damage or liability made or reneed by any
person% association% company or corporation transacting the business of accident% (delity% employerJs
liability% plate% glass% steam% boiler% burglar% ele#ator% automatic sprin)ler% or other branch of insurance
:e$cept life% marine% inland% and (re insurance;% and all bonds% underta)ings% or recogni!ances% conditioned
for the performance of the duties of any oAce or position% for the doing or not doing of anything therein
speci(ed% and on all obligations guaranteeing the #alidity or legality of any bond or other obligations
issued by any pro#ince% city% municipality% or other public body or organi!ation% and on all obligations
guaranteeing the title to any real estate% or guaranteeing any mercantile credits% hich may be made or
reneed by any such person% company or corporation% there shall be collected a documentary stamp ta$ of
8ifty centa#os :"=.-=; on each 8our pesos :"0.==;% or fractional part thereof% of the premium charged.
*ection 18B. Stamp Tax on Policies of nnuities and Pre14eed Plans. - 2n all policies of annuities% or other
instruments by hate#er name the same may be called% hereby an annuity may be made% transferred or
redeemed% there shall be collected a documentary stamp ta$ of 2ne peso and (fty centa#os :"1.-=; on
each To hundred pesos :"3==; or fractional part thereof% of the capital of the annuity% or should this be
un)non% then on each To hundred :"3==; pesos% or fractional part thereof% of thirty-three and one-third
:55 1E5; times the annual income. 2n pre-need plans% the documentary stamp ta$ shall be 8ifty centa#os
:"=.-=; on each 8i#e hundred pesos :"-==;% or fractional part thereof% of the #alue or amount of the plan.
*ection 18. Stamp Tax on 'ndemnity Bonds. - 2n all bonds for indemnifying any person% (rm or
corporation ho shall become bound or engaged as surety for the payment of any sum of money or for the
due e$ecution or performance of the duties of any oAce or position or to account for money recei#ed by
#irtue thereof% and on all other bonds of any description% e$cept such as may be re'uired in legal
proceedings% or are otherise pro#ided for herein% there shall be collected a documentary stamp ta$ of
Thirty centa#os :"=.5=; on each 8our pesos :"0.==;% or fractional part thereof% of the premium charged.
*ection 188. Stamp Tax on Certi:cates. - 2n each certi(cate of damages or otherise% and on e#ery
certi(cate or document issued by any customs oAcer% marine sur#eyor% or other person acting as such%
and on each certi(cate issued by a notary public% and on each certi(cate of any description re'uired by la
or by rules or regulations of a public oAce% or hich is issued for the purpose of gi#ing information% or
establishing proof of a fact% and not otherise speci(ed herein% there shall be collected a documentary
stamp ta$ of 8ifteen pesos :"1-.==;.
*ection 189. Stamp Tax on 6arehouse Receipts. - 2n each arehouse receipt for property held in storage
in a public or pri#ate arehouse or yard for any person other than the proprietor of such arehouse or
yard% there shall be collected a documentary stamp ta$ of 8ifteen pesos :"1-.==;: "ro#ided% That no ta$
shall be collected on each arehouse receipt issued to any one person in any one calendar month co#ering
property the #alue of hich does not e$ceed To hundred pesos :"3==;.
*ection 19D. Stamp Tax on <ai1lai, Horse Racing Tic-ets, lotto or (ther uthori5ed 4umbers 2ames. - 2n
each *ai-alai% horse race tic)et% lotto% or other authori!ed number games% there shall be collected a
documentary stamp ta$ of Ten centa#os :"=.1=;: "ro#ided% That if the cost of the tic)et e$ceeds 2ne peso
:"1.==;% an additional ta$ of Ten centa#os :"=.1=; on e#ery 2ne peso :"1.==% or fractional part thereof% shall
be collected.
*ection 191. Stamp Tax on Bills of *ading or Receipts. - 2n each set of bills of lading or receipts :e$cept
charter party; for any goods% merchandise or e9ects shipped from one port or place in the "hilippines to
another port or place in the "hilippines :e$cept on ferries across ri#ers;% or to any foreign port% there shall
be collected documentary stamp ta$ of 2ne peso :"1.==;% if the #alue of such goods e$ceeds 2ne hundred
pesos :"1==; and does not e$ceed 2ne Thousand pesos :"1%===;& Ten pesos :"1=;% if the #alue e$ceeds
2ne thousand pesos :"1%===;: "ro#ided% hoe#er% That freight tic)ets co#ering goods% merchandise or
e9ects carried as accompanied baggage of passengers on land and ater carriers primarily engaged in the
transportation of passengers are hereby e$empt.
GSV-/-
*ection 192. Stamp Tax on Proxies. - 2n each pro$y for #oting at any election for oAcers of any company
or association% or for any other purpose% e$cept pro$ies issued a9ecting the a9airs of associations or
corporations organi!ed for religious% charitable or literary purposes% there shall be collected a documentary
stamp ta$ of 8ifteen pesos :"1-.==;.
*ection 19,. Stamp Tax on Po&ers of ttorney. - 2n each poer of attorney to perform any act
hatsoe#er% e$cept acts connected ith the collection of claims due from or accruing to the Go#ernment
of the 6epublic of the "hilippines% or the go#ernment of any pro#ince% city or municipality% there shall be
collected a documentary stamp ta$ of 8i#e pesos :"-.==;.
*ection 194. Stamp tax on *eases and (ther Hiring greements. - 2n each lease% agreement%
memorandum% or contract for hire% use or rent of any lands or tenements% or portions thereof% there shall
be collected a documentary stamp ta$ of Three pesos :"5.==; for the (rst To thousand pesos :"3%===;% or
fractional part thereof% and an additional 2ne peso :"1.==; for e#ery 2ne Thousand pesos :"1%===; or
fractional part thereof% in e$cess of the (rst To thousand pesos :"3%===; for each year of the term of said
contract or agreement.
*ection 19A. Stamp Tax on .ortgages, Pledges and +eeds of Trust. - 2n e#ery mortgage or pledge of
lands% estate% or property% real or personal% heritable or mo#able% hatsoe#er% here the same shall be
made as a security for the payment of any de(nite and certain sum of money lent at the time or pre#iously
due and oing of forborne to be paid% being payable and on any con#eyance of land% estate% or property
hatsoe#er% in trust or to be sold% or otherise con#erted into money hich shall be and intended only as
security% either by e$press stipulation or otherise% there shall be collected a documentary stamp ta$ at
the folloing rates:
:a; Bhen the amount secured does not e$ceed 8i#e thousand pesos :"-%===;% Tenty pesos
:"3=.==;.
:b; 2n each 8i#e thousand pesos :"-%===;% or fractional part thereof in e$cess of 8i#e thousand
pesos :"-%===;% an additional ta$ of Ten pesos :"1=.==;.
2n any mortgage% pledge% or deed of trust% here the same shall be made as a security for the payment of
a Cuctuating account or future ad#ances ithout ($ed limit% the documentary stamp ta$ on such
mortgage% pledge or deed of trust shall be computed on the amount actually loaned or gi#en at the time of
the e$ecution of the mortgage% pledge or deed of trust% additional documentary stamp ta$ shall be paid
hich shall be computed on the basis of the amount ad#anced or loaned at the rates speci(ed abo#e:
"ro#ided% hoe#er% That if the full amount of the loan or credit% granted under the mortgage% pledge or
deed of trust shall be computed on the amount actually loaned or gi#en at the time of the e$ecution of the
mortgage% pledge or deed of trust. Foe#er% if subse'uent ad#ances are made on such mortgage% pledge
or deed of trust% additional documentary stamp ta$ shall be paid hich shall be computed on the basis of
the amount ad#anced or loaned at the rates speci(ed abo#e: "ro#ided% hoe#er% That if the full amount of
the loan or credit% granted under the mortgage% pledge or deed of trust is speci(ed in such mortgage%
pledge or deed of trust% the documentary stamp ta$ prescribed in this Section shall be paid and computed
on the full amount of the loan or credit granted.
*ection 19B. Stamp tax on +eeds of Sale and Conveyances of Real Property. - 2n all con#eyances% deeds%
instruments% or ritings% other than grants% patents or original certi(cates of ad*udication issued by the
Go#ernment% hereby any land% tenement% or other realty sold shall be granted% assigned% transferred or
otherise con#eyed to the purchaser% or purchasers% or to any other person or persons designated by such
purchaser or purchasers% there shall be collected a documentary stamp ta$% at the rates herein belo
prescribed% based on the consideration contracted to be paid for such realty or on its fair mar)et #alue
determined in accordance ith Section <:1; of this 7ode% hiche#er is higher: "ro#ided% That hen one of
the contracting parties is the Go#ernment the ta$ herein imposed shall be based on the actual
consideration.
:a; Bhen the consideration% or #alue recei#ed or contracted to be paid for such realty after ma)ing
proper alloance of any encumbrance% does not e$ceed 2ne thousand pesos :"1%===; (fteen pesos
:"1-.==;.
:b; 8or each additional 2ne thousand "esos :"1%===;% or fractional part thereof in e$cess of 2ne
thousand pesos :"1%===; of such consideration or #alue% 8ifteen pesos :"1-.==;.
Bhen it appears that the amount of the documentary stamp ta$ payable hereunder has been reduced by
an incorrect statement of the consideration in any con#eyance% deed% instrument or riting sub*ect to such
ta$ the 7ommissioner% pro#incial or city Treasurer% or other re#enue oAcer shall% from the assessment rolls
or other reliable source of information% assess the property of its true mar)et #alue and collect the proper
ta$ thereon.
GSV-/<
*ection 19. Stamp Tax on Charter Parties and Similar 'nstruments. - 2n e#ery charter party% contract or
agreement for the charter of any ship% #essel or steamer% or any letter or memorandum or other riting
beteen the captain% master or oner% or other person acting as agent of any ship% #essel or steamer% and
any other person or persons for or relating to the charter of any such ship% #essel or steamer% and on any
reneal or transfer of such charter% contract% agreement% letter or memorandum% there shall be collected a
documentary stamp ta$ at the folloing rates:
:a; If the registered gross tonnage of the ship% #essel or steamer does not e$ceed one thousand
:1%===; tons% and the duration of the charter or contract does not e$ceed si$ :<; months% 8i#e
hundred pesos :"-==;& and for each month or fraction of a month in e$cess of si$ :<; months% an
additional ta$ of 8ifty pesos :"-=.==; shall be paid.
:b; If the registered gross tonnage e$ceeds one thousand :1%===; tons and does not e$ceed ten
thousand :1=%===; tons% and the duration of the charter or contract does not e$ceed si$ :<; months%
2ne thousand pesos :"1%===;& and for each month or fraction of a month in e$cess of si$ :<;
months% an additional ta$ of 2ne hundred pesos :"1==; shall be paid.
:c; If the registered gross tonnage e$ceeds ten thousand :1=%===; tons and the duration of the
charter or contract does not e$ceed si$ :<; months% 2ne thousand (#e hundred pesos :"1%-==;& and
for each month or fraction of a month in e$cess of si$ :<; months% an additional ta$ of 2ne hundred
(fty pesos :"1-=; shall be paid.
*ection 198. Stamp Tax on ssignments and Rene&als of Certain 'nstruments. - Hpon each and e#ery
assignment or transfer of any mortgage% lease or policy of insurance% or the reneal or continuance of any
agreement% contract% charter% or any e#idence of obligation or indebtedness by altering or otherise% there
shall be le#ied% collected and paid a documentary stamp ta$% at the same rate as that imposed on the
original instrument.
*ection 199. +ocuments and Papers 4ot Sub7ect to Stamp Tax. - The pro#isions of Section 145 to the
contrary notithstanding% the folloing instruments% documents and papers shall be e$empt from the
documentary stamp ta$:
:a; "olicies of insurance or annuities made or granted by a fraternal or bene(ciary society% order%
association or cooperati#e company% operated on the lodge system or local cooperation plan and
organi!ed and conducted solely by the members thereof for the e$clusi#e bene(t of each member
and not for pro(t.
:b; 7erti(cates of oaths administered to any go#ernment oAcial in his oAcial capacity or of
ac)noledgment by any go#ernment oAcial in the performance of his oAcial duties% ritten
appearance in any court by any go#ernment oAcial% in his oAcial capacity& certi(cates of the
administration of oaths to any person as to the authenticity of any paper re'uired to be (led in
court by any person or party thereto% hether the proceedings be ci#il or criminal& papers and
documents (led in courts by or for the national% pro#incial% city or municipal go#ernments& aAda#its
of poor persons for the purpose of pro#ing po#erty& statements and other compulsory information
re'uired of persons or corporations by the rules and regulations of the national% pro#incial% city or
municipal go#ernments e$clusi#ely for statistical purposes and hich are holly for the use of the
bureau or oAce in hich they are (led% and not at the instance or for the use or bene(t of the
person (ling them& certi(ed copies and other certi(cates placed upon documents% instruments and
papers for the national% pro#incial% city% or municipal go#ernments% made at the instance and for the
sole use of some other branch of the national% pro#incial% city or municipal go#ernments& and
certi(cates of the assessed #alue of lands% not e$ceeding To hundred pesos :"3==; in #alue
assessed% furnished by the pro#incial% city or municipal Treasurer to applicants for registration of
title to land.
*ection 2DD. Payment of +ocumentary Stamp Tax. -
:A; 'n 2eneral. - The pro#isions of "residential +ecree ,o. 1=0- notithstanding% any person liable
to pay documentary stamp ta$ upon any document sub*ect to ta$ under Title VII of this 7ode shall
(le a ta$ return and pay the ta$ in accordance ith the rules and regulations to be prescribed by
the Secretary of 8inance% upon recommendation of the 7ommissioner.
:?; Time for 0iling and Payment of the Tax. - 1$cept as pro#ided by rules and regulations
promulgated by the Secretary of 8inance% upon recommendation of the 7ommissioner% the ta$
return prescribed in this Section shall be (led ithin ten :1=; days after the close of the month
hen the ta$able document as made% signed% issued% accepted% or transferred% and the ta$
thereon shall be paid at the same time the aforesaid return is (led.
GSV-/4
:7; 6here to 0ile. - 1$cept in cases here the 7ommissioner otherise permits% the aforesaid ta$
return shall be (led ith and the ta$ due shall be paid through the authori!ed agent ban) ithin the
territorial *urisdiction of the 6e#enue +istrict 2Ace hich has *urisdiction o#er the residence or
principal place of business of the ta$payer. In places here there is no authori!ed agent ban)% the
return shall be (led ith the 6e#enue +istrict 2Acer% collection agent% or duly authori!ed Treasurer
of the city or municipality in hich the ta$payer has his legal residence or principal place of
business.
:+; $xception. - In lieu of the foregoing pro#isions of this Section% the ta$ may be paid either
through purchase and actual aA$ture& or by imprinting the stamps through a documentary stamp
metering machine% on the ta$able document% in the manner as may be prescribed by rules and
regulations to be promulgated by the Secretary of 8inance% upon recommendation of the
7ommissioner.
*ection 2D1. $%ect of 0ailure to Stamp Taxable +ocument. - An instrument% document or paper hich is
re'uired by la to be stamped and hich has been signed% issued% accepted or transferred ithout being
duly stamped% shall not be recorded% nor shall it or any copy thereof or any record of transfer of the same
be admitted or used in e#idence in any court until the re'uisite stamp or stamps are aA$ed thereto and
cancelled.
T#T'" (###
R"!"D#"*
C%APT"R # ; R"!"D#"* #N $"N"RA'
*ection 2D2. 0inal +eed to Purchaser. - In case the ta$payer shall not redeem the property as herein
pro#ided the 6e#enue +istrict 2Acer shall% as grantor% e$ecute a deed con#eying to the purchaser so much
of the property as has been sold% free from all liens of any )ind hatsoe#er% and the deed shall succintly
recite all the proceedings upon hich the #alidity of the sale depends.
*ection 2D,. Period of *imitation Cpon ssessment and Collection. - 1$cept as pro#ided in Section 333%
internal re#enue ta$es shall be assessed ithin three :5; years after the last day prescribed by la for the
(ling of the return% and no proceeding in court ithout assessment for the collection of such ta$es shall be
begun after the e$piration of such period: "ro#ided% That in a case here a return is (led beyond the
period prescribed by la% the three :5;-year period shall be counted from the day the return as (led. 8or
purposes of this Section% a return (led before the last day prescribed by la for the (ling thereof shall be
considered as (led on such last day.
*ection 2D4. uthority of the Commissioner to Compromise, bate and Refund or Credit Taxes. - The
7ommissioner may -
:A; 7ompromise the payment of any internal re#enue ta$% hen:
:1; A reasonable doubt as to the #alidity of the claim against the ta$payer e$ists& or
:3; The (nancial position of the ta$payer demonstrates a clear inability to pay the assessed
ta$.
The compromise settlement of any ta$ liability shall be sub*ect to the folloing minimum
amounts:
8or cases of (nancial incapacity% a minimum compromise rate e'ui#alent to ten percent
:1=I; of the basic assessed ta$& and
8or other cases% a minimum compromise rate e'ui#alent to forty percent :0=I; of the basic
assessed ta$.
Bhere the basic ta$ in#ol#ed e$ceeds 2ne million pesos :"1%===.===; or here the settlement
o9ered is less than the prescribed minimum rates% the compromise shall be sub*ect to the appro#al
of the 1#aluation ?oard hich shall be composed of the 7ommissioner and the four :0; +eputy
7ommissioners.
:?; Abate or cancel a ta$ liability% hen:
:1; The ta$ or any portion thereof appears to be un*ustly or e$cessi#ely assessed& or
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:3; The administration and collection costs in#ol#ed do not *ustify the collection of the
amount due.
All criminal #iolations may be compromised e$cept: :a; those already (led in court% or :b;
those in#ol#ing fraud.
:7; 7redit or refund ta$es erroneously or illegally recei#ed or penalties imposed ithout authority%
refund the #alue of internal re#enue stamps hen they are returned in good condition by the
purchaser% and% in his discretion% redeem or change unused stamps that ha#e been rendered un(t
for use and refund their #alue upon proof of destruction. ,o credit or refund of ta$es or penalties
shall be alloed unless the ta$payer (les in riting ith the 7ommissioner a claim for credit or
refund ithin to :3; years after the payment of the ta$ or penalty: "ro#ided% hoe#er% That a
return (led shoing an o#erpayment shall be considered as a ritten claim for credit or refund.
A Ta$ 7redit 7erti(cate #alidly issued under the pro#isions of this 7ode may be applied against any
internal re#enue ta$% e$cluding ithholding ta$es% for hich the ta$payer is directly liable. Any
re'uest for con#ersion into refund of unutili!ed ta$ credits may be alloed% sub*ect to the pro#isions
of Section 35= of this 7ode: "ro#ided% That the original copy of the Ta$ 7redit 7erti(cate shoing a
creditable balance is surrendered to the appropriate re#enue oAcer for #eri(cation and
cancellation: "ro#ided% further% That in no case shall a ta$ refund be gi#en resulting from a#ailment
of incenti#es granted pursuant to special las for hich no actual payment as made.
The 7ommissioner shall submit to the 7hairmen of the 7ommittee on Bays and Means of both the
Senate and Fouse of 6epresentati#es% e#ery si$ :<; months% a report on the e$ercise of his poers
under this Section% stating therein the folloing facts and information% among others: names and
addresses of ta$payers hose cases ha#e been the sub*ect of abatement or compromise& amount
in#ol#ed& amount compromised or abated& and reasons for the e$ercise of poer: "ro#ided% That the
said report shall be presented to the 2#ersight 7ommittee in 7ongress that shall be constituted to
determine that said poers are reasonably e$ercised and that the go#ernment is not unduly
depri#ed of re#enues.
C%APT"R ## ; C#(#' R"!"D#"* +&R C&''"CT#&N &+ TA5"*
*ection 2DA. Remedies for the Collection of +elin/uent Taxes. - The ci#il remedies for the collection of
internal re#enue ta$es% fees or charges% and any increment thereto resulting from delin'uency shall be:
:a; ?y distraint of goods% chattels% or e9ects% and other personal property of hate#er character%
including stoc)s and other securities% debts% credits% ban) accounts and interest in and rights to
personal property% and by le#y upon real property and interest in rights to real property& and
:b; ?y ci#il or criminal action.
1ither of these remedies or both simultaneously may be pursued in the discretion of the authorities
charged ith the collection of such ta$es: "ro#ided% hoe#er% That the remedies of distraint and le#y shall
not be a#ailed of here the amount of ta$ in#ol#e is not more than 2ne hundred pesos :"1==;.
The *udgment in the criminal case shall not only impose the penalty but shall also order payment of the
ta$es sub*ect of the criminal case as (nally decided by the 7ommissioner.
The ?ureau of Internal 6e#enue shall ad#ance the amounts needed to defray costs of collection by means
of ci#il or criminal action% including the preser#ation or transportation of personal property distrained and
the ad#ertisement and sale thereof% as ell as of real property and impro#ements thereon.
*ection 2DB. Constructive +istraint of the Property of Taxpayer. - To safeguard the interest of the
Go#ernment% the 7ommissioner may place under constructi#e distraint the property of a delin'uent
ta$payer or any ta$payer ho% in his opinion% is retiring from any business sub*ect to ta$% or is intending to
lea#e the "hilippines or to remo#e his property therefrom or to hide or conceal his property or to perform
any act tending to obstruct the proceedings for collecting the ta$ due or hich may be due from him.
The constructi#e distraint of personal property shall be a9ected by re'uiring the ta$payer or any person
ha#ing possession or control of such property to sign a receipt co#ering the property distrained and
obligate himself to preser#e the same intact and unaltered and not to dispose of the same &in any manner
hate#er% ithout the e$press authority of the 7ommissioner.
In case the ta$payer or the person ha#ing the possession and control of the property sought to be placed
under constructi#e distraint refuses or fails to sign the receipt herein referred to% the re#enue oAcer
e9ecting the constructi#e distraint shall proceed to prepare a list of such property and% in the presence of
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to :3; itnessed% lea#e a copy thereof in the premises here the property distrained is located% after
hich the said property shall be deemed to ha#e been placed under constructi#e distraint.
*ection 2D. Summary Remedies. -
:A; +istraint of "ersonal "roperty. - Hpon the failure of the person oing any delin'uent ta$ or
delin'uent re#enue to pay the same at the time re'uired% the 7ommissioner or his duly authori!ed
representati#e% if the amount in#ol#ed is in e$cess of 2ne million pesos :"1%===%===;% or the
6e#enue +istrict 2Acer% if the amount in#ol#ed is 2ne million pesos :"1%===%===; or less% shall
sei!e and distraint any goods% chattels or e9ects% and the personal property% including stoc)s and
other securities% debts% credits% ban) accounts% and interests in and rights to personal property of
such persons &in suAcient 'uantity to satisfy the ta$% or charge% together ith any increment
thereto incident to delin'uency% and the e$penses of the distraint and the cost of the subse'uent
sale.
A report on the distraint shall% ithin ten :1=; days from receipt of the arrant% be submitted by the
distraining oAcer to the 6e#enue +istrict 2Acer% and to the 6e#enue 6egional +irector: "ro#ided%
That the 7ommissioner or his duly authori!ed representati#e shall% sub*ect to rules and regulations
promulgated by the Secretary of 8inance% upon recommendation of the 7ommissioner% ha#e the
poer to lift such order of distraint: "ro#ided% further% That a consolidated report by the 6e#enue
6egional +irector may be re'uired by the 7ommissioner as often as necessary.
:?; Ge#y on 6eal "roperty. - After the e$piration of the time re'uired to pay the delin'uent ta$ or
delin'uent re#enue as prescribed in this Section% real property may be le#ied upon% before
simultaneously or after the distraint of personal property belonging to the delin'uent. To this end%
any internal re#enue oAcer designated by the 7ommissioner or his duly authori!ed representati#e
shall prepare a duly authenticated certi(cate shoing the name of the ta$payer and the amounts of
the ta$ and penalty due from him. Said certi(cate shall operate ith the force of a legal e$ecution
throughout the "hilippines.
Ge#y shall be a9ected by riting upon said certi(cate a description of the property upon hich le#y
is made. At the same time% ritten notice of the le#y shall be mailed to or ser#ed upon the 6egister
of +eeds for the pro#ince or city here the property is located and upon the delin'uent ta$payer% or
if he be absent from the "hilippines% to his agent or the manager of the business in respect to hich
the liability arose% or if there be none% to the occupant of the property in 'uestion.
In case the arrant of le#y on real property is not issued before or simultaneously ith the arrant
of distraint on personal property% and the personal property of the ta$payer is not suAcient to
satisfy his ta$ delin'uency% the 7ommissioner or his duly authori!ed representati#e shall% ithin
thirty :5=; days after e$ecution of the distraint% proceed ith the le#y on the ta$payerJs real
property.
Bithin ten :1=; days after receipt of the arrant% a report on any le#y shall be submitted by the
le#ying oAcer to the 7ommissioner or his duly authori!ed representati#e: "ro#ided% hoe#er% That a
consolidated report by the 6e#enue 6egional +irector may be re'uired by the 7ommissioner as
often as necessary: "ro#ided% further% That the 7ommissioner or his duly authori!ed representati#e%
sub*ect to rules and regulations promulgated by the Secretary of 8inance% upon recommendation of
the 7ommissioner% shall ha#e the authority to lift arrants of le#y issued in accordance ith the
pro#isions hereof.
*ection 2D8. Procedure for +istraint and 2arnishment. - The oAcer ser#ing the arrant of distraint shall
ma)e or cause to be made an account of the goods% chattels% e9ects or other personal property distrained%
a copy of hich% signed by himself% shall be left either ith the oner or person from hose possession
such goods% chattels% or e9ects or other personal property ere ta)en% or at the delling or place of
business of such person and ith someone of suitable age and discretion% to hich list shall be added a
statement of the sum demanded and note of the time and place of sale.
Stoc)s and other securities shall be distrained by ser#ing a copy of the arrant of distraint upon the
ta$payer and upon the president% manager% treasurer or other responsible oAcer of the corporation%
company or association% hich issued the said stoc)s or securities.
+ebts and credits shall be distrained by lea#ing ith the person oing the debts or ha#ing in his
possession or under his control such credits% or ith his agent% a copy of the arrant of distraint. The
arrant of distraint shall be suAcient authority to the person oning the debts or ha#ing in his possession
or under his control any credits belonging to the ta$payer to pay to the 7ommissioner the amount of such
debts or credits.
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?an) accounts shall be garnished by ser#ing a arrant of garnishment upon the ta$payer and upon the
president% manager% treasurer or other responsible oAcer of the ban). Hpon receipt of the arrant of
garnishment% the ban) shall tun o#er to the 7ommissioner so much of the ban) accounts as may be
suAcient to satisfy the claim of the Go#ernment.
*ection 2D9. Sale of Property +istrained and +isposition of Proceeds. - The 6e#enue +istrict 2Acer or his
duly authori!ed representati#e% other than the oAcer referred to in Section 3=. of this 7ode shall%
according to rules and regulations prescribed by the Secretary of 8inance% upon recommendation of the
7ommissioner% forthith cause a noti(cation to be e$hibited in not less than to :3; public places in the
municipality or city here the distraint is made% specifying& the time and place of sale and the articles
distrained. The time of sale shall not be less than tenty :3=; days after notice. 2ne place for the posting
of such notice shall be at the 2Ace of the Mayor of the city or municipality in hich the property is
distrained.
At the time and place ($ed in such notice% the said re#enue oAcer shall sell the goods% chattels% or e9ects%
or other personal property% including stoc)s and other securities so distrained% at public auction% to the
highest bidder for cash% or ith the appro#al of the 7ommissioner% through duly licensed commodity or
stoc) e$changes.
In the case of Stoc)s and other securities% the oAcer ma)ing the sale shall e$ecute a bill of sale hich he
shall deli#er to the buyer% and a copy thereof furnished the corporation% company or association hich
issued the stoc)s or other securities. Hpon receipt of the copy of the bill of sale% the corporation% company
or association shall ma)e the corresponding entry in its boo)s% transfer the stoc)s or other securities sold
in the name of the buyer% and issue% if re'uired to do so% the corresponding certi(cates of stoc) or other
securities.
Any residue o#er and abo#e hat is re'uired to pay the entire claim% including e$penses% shall be returned
to the oner of the property sold. The e$penses chargeable upon each sei!ure and sale shall embrace only
the actual e$penses of sei!ure and preser#ation of the property pending &the sale% and no charge shall be
imposed for the ser#ices of the local internal re#enue oAcer or his deputy.
*ection 21D. Release of +istrained Property Cpon Payment Prior to Sale. - If at any time prior to the
consummation of the sale all proper charges are paid to the oAcer conducting the sale% the goods or
e9ects distrained shall be restored to the oner.
*ection 211. Report of Sale to Bureau of 'nternal Revenue. - Bithin to :3; days after the sale% the oAcer
ma)ing the same shall ma)e a report of his proceedings in riting to the 7ommissioner and shall himself
preser#e a copy of such report as an oAcial record.
*ection 212. Purchase by 2overnment at Sale Cpon +istraint. - Bhen the amount bid for the property
under distraint is not e'ual to the amount of the ta$ or is #ery much less than the actual mar)et #alue of
the articles o9ered for sale% the 7ommissioner or his deputy may purchase the same in behalf of the
national Go#ernment for the amount of ta$es% penalties and costs due thereon.
"roperty so purchased may be resold by the 7ommissioner or his deputy% sub*ect to the rules and
regulations prescribed by the Secretary of 8inance% the net proceeds therefrom shall be remitted to the
,ational Treasury and accounted for as internal re#enue.
*ection 21,. dvertisement and Sale. - Bithin tenty :3=; days after le#y% the oAcer conducting the
proceedings shall proceed to ad#ertise the property or a usable portion thereof as may be necessary to
satisfy the claim and cost of sale& and such ad#ertisement shall co#er a period of a least thirty :5=; days. It
shall be e9ectuated by posting a notice at the main entrance of the municipal building or city hall and in
public and conspicuous place in the barrio or district in hich the real estate lies and &by publication once a
ee) for three :5; ee)s in a nespaper of general circulation in the municipality or city here the
property is located. The ad#ertisement shall contain a statement of the amount of ta$es and penalties so
due and the time and place of sale% the name of the ta$payer against hom ta$es are le#ied% and a short
description of the property to be sold. At any time before the day ($ed for the sale% the ta$payer may
discontinue all proceedings by paying the ta$es% penalties and interest. If he does not do so% the sale shall
proceed and shall be held either at the main entrance of the municipal building or city hall% or on the
premises to be sold% as the oAcer conducting the proceedings shall determine and as the notice of sale
shall specify.
Bithin (#e :-; days after the sale% a return by the distraining or le#ying oAcer of the proceedings shall be
entered upon the records of the 6e#enue 7ollection 2Acer% the 6e#enue +istrict oAcer and the 6e#enue
6egional +irector. The 6e#enue 7ollection 2Acer% in consultation ith the 6e#enue district 2Acer% shall
then ma)e out and deli#er to the purchaser a certi(cate from his records% shoing the proceedings of the
sale% describing the property sold stating the name of the purchaser and setting out the e$act amount of
all ta$es% penalties and interest: "ro#ided% hoe#er% That in case the proceeds of the sale e$ceeds the
claim and cost of sale% the e$cess shall be turned o#er to the oner of the property.
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The 6e#enue 7ollection 2Acer% upon appro#al by the 6e#enue +istrict 2Acer may% out of his collection%
ad#ance an amount suAcient to defray the costs of collection by means of the summary remedies
pro#ided for in this 7ode% including &the preser#ation or transportation in case of personal property% and
the ad#ertisement and subse'uent sale% both in cases of personal and real property including
impro#ements found on the latter. In his monthly collection reports% such ad#ances shall be reCected and
supported by receipts.
*ection 214. Redemption of Property Sold. - Bithin one :1; year from the date of sale% the delin'uent
ta$payer% or any one for him% shall ha#e the right of paying to the 6e#enue +istrict 2Acer the amount of
the public ta$es% penalties% and interest thereon from the date of delin'uency to the date of sale% together
ith interest on said purchase price at the rate of (fteen percent :1-I; per annum from the date of
purchase to the date of redemption% and such payment shall entitle the person paying to the deli#ery of
the certi(cate issued to the purchaser and a certi(cate from the said 6e#enue +istrict 2Acer that he has
thus redeemed the property% and the 6e#enue +istrict 2Acer shall forthith pay o#er to the purchaser the
amount by hich such property has thus been redeemed% and said property thereafter shall be free form
the lien of such ta$es and penalties.
The oner shall not% hoe#er% be depri#ed of the possession of the said property and shall be entitled to
the rents and other income thereof until the e$piration of the time alloed for its redemption.
*ection 21A. 0orfeiture to 2overnment for 6ant of Bidder. - In case there is no bidder for real property
e$posed for sale as herein abo#e pro#ided or if the highest bid is for an amount insuAcient to pay the
ta$es% penalties and costs% the Internal 6e#enue 2Acer conducting the sale shall declare the property
forfeited to the Go#ernment in satisfaction of the claim in 'uestion and ithin to :3; days thereafter% shall
ma)e a return of his proceedings and the forfeiture hich shall be spread upon the records of his oAce. It
shall be the duty of the 6egister of +eeds concerned% upon registration ith his oAce of any such
declaration of forfeiture% to transfer the title of the property forfeited to the Go#ernment ithout the
necessity of an order from a competent court.
Bithin one :1; year from the date of such forfeiture% the ta$payer% or any one for him may redeem said
property by paying to the 7ommissioner or the latterJs 6e#enue 7ollection 2Acer the full amount of the
ta$es and penalties% together ith interest thereon and the costs of sale% but if the property be not thus
redeemed% the forfeiture shall become absolute.
*ection 21B. Resale of Real $state Ta-en for Taxes. - The 7ommissioner shall ha#e charge of any real
estate obtained by the Go#ernment of the "hilippines in payment or satisfaction of ta$es% penalties or
costs arising under this 7ode or in compromise or ad*ustment of any claim therefore% and said
7ommissioner may% upon the gi#ing of not less than tenty :3=; days notice% sell and dispose of the same
of public auction or ith prior appro#al of the Secretary of 8inance% dispose of the same at pri#ate sale. In
either case% the proceeds of the sale shall be deposited ith the ,ational Treasury% and an accounting of
the same shall rendered to the 7hairman of the 7ommission on Audit.
*ection 21. 0urther +istraint or *evy. - The remedy by distraint of personal property and le#y on realty
may be repeated if necessary until the full amount due% including all e$penses% is collected.
*ection 218. 'n7unction not vailable to Restrain Collection of Tax. - ,o court shall ha#e the authority to
grant an in*unction to restrain the collection of any national internal re#enue ta$% fee or charge imposed by
this 7ode.
*ection 219. 4ature and $xtent of Tax *ien. - If any person% corporation% partnership% *oint-account
:cuentas en participacion;% association or insurance company liable to pay an internal re#enue ta$%
neglects or refuses to pay the same after demand% the amount shall be a lien in fa#or of the Go#ernment
of the "hilippines from the time hen the assessment as made by the 7ommissioner until paid% ith
interests% penalties% and costs that may accrue in addition thereto upon all property and rights to property
belonging to the ta$payer: "ro#ided% That this lien shall not be #alid against any mortgagee purchaser or
*udgment creditor until notice of such lien shall be (led by the 7ommissioner in the oAce of the 6egister of
+eeds of the pro#ince or city here the property of the ta$payer is situated or located.
*ection 22D. 0orm and .ode of Proceeding in ctions rising under this Code. - 7i#il and criminal actions
and proceedings instituted in behalf of the Go#ernment under the authority of this 7ode or other la
enforced by the ?ureau of Internal 6e#enue shall be brought in the name of the Go#ernment of the
"hilippines and shall be conducted by legal oAcers of the ?ureau of Internal 6e#enue but no ci#il or
criminal action for the reco#ery of ta$es or the enforcement of any (ne% penalty or forfeiture under this
7ode shall be (led in court ithout the appro#al of the 7ommissioner.
*ection 221. Remedy for $nforcement of Statutory Penal Provisions. - The remedy for enforcement of
statutory penalties of all sorts shall be by criminal or ci#il action% as the particular situation may re'uire%
sub*ect to the appro#al of the 7ommissioner.
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*ection 222. $xceptions as to Period of *imitation of ssessment and Collection of Taxes.
:a; In the case of a false or fraudulent return ith intent to e#ade ta$ or of failure to (le a return%
the ta$ may be assessed% or a preceeding in court for the collection of such ta$ may be (led ithout
assessment% at any time ithin ten :1=; years after the disco#ery of the falsity% fraud or omission:
"ro#ided% That in a fraud assessment hich has become (nal and e$ecutory% the fact of fraud shall
be *udicially ta)en cogni!ance of in the ci#il or criminal action for the collection thereof.
:b; If before the e$piration of the time prescribed in Section 3=5 for the assessment of the ta$% both
the 7ommissioner and the ta$payer ha#e agreed in riting to its assessment after such time% the
ta$ may be assessed ithin the period agreed upon. The period so agreed upon may be e$tended
by subse'uent ritten agreement made before the e$piration of the period pre#iously agreed upon.
:c; Any internal re#enue ta$ hich has been assessed ithin the period of limitation as prescribed
in paragraph :a; hereof may be collected by distraint or le#y or by a proceeding in court ithin (#e
:-; years folloing the assessment of the ta$.
:d; Any internal re#enue ta$% hich has been assessed ithin the period agreed upon as pro#ided in
paragraph :b; hereinabo#e% may be collected by distraint or le#y or by a proceeding in court ithin
the period agreed upon in riting before the e$piration of the (#e :-; -year period. The period so
agreed upon may be e$tended by subse'uent ritten agreements made before the e$piration of
the period pre#iously agreed upon.
:e; "ro#ided% hoe#er% That nothing in the immediately preceding and paragraph :a; hereof shall be
construed to authori!e the e$amination and in#estigation or in'uiry into any ta$ return (led in
accordance ith the pro#isions of any ta$ amnesty la or decree.
*ection 22,. Suspension of Running of Statute of *imitations. - The running of the Statute of Gimitations
pro#ided in Sections 3=5 and 333 on the ma)ing of assessment and the beginning of distraint or le#y a
proceeding in court for collection% in respect of any de(ciency% shall be suspended for the period during
hich the 7ommissioner is prohibited from ma)ing the assessment or beginning distraint or le#y or a
proceeding in court and for si$ty :<=; days thereafter& hen the ta$payer re'uests for a rein#estigation
hich is granted by the 7ommissioner& hen the ta$payer cannot be located in the address gi#en by him
in the return (led upon hich a ta$ is being assessed or collected: "ro#ided% that% if the ta$payer informs
the 7ommissioner of any change in address% the running of the Statute of Gimitations ill not be
suspended& hen the arrant of distraint or le#y is duly ser#ed upon the ta$payer% his authori!ed
representati#e% or a member of his household ith suAcient discretion% and no property could be located&
and hen the ta$payer is out of the "hilippines.
*ection 224. Remedy for $nforcement of 0orfeitures. - The forfeiture of chattels and remo#able ($tures of
any sort shall be enforced by the sei!ure and sale% or destruction% of the speci(c forfeited property. The
forfeiture of real property shall be enforced by a *udgment of condemnation and sale in a legal action or
proceeding% ci#il or criminal% as the case may re'uire.
*ection 22A. 6hen Property to be Sold or +estroyed. - Sales of forfeited chattels and remo#able ($tures
shall be e9ected% so far as practicable% in the same manner and under the same conditions as the public
notice and the time and manner of sale as are prescribed for sales of personal property distrained for the
non-payment of ta$es.
+istilled spirits% li'uors% cigars% cigarettes% other manufactured products of tobacco% and all apparatus used
I or about the illicit production of such articles may% upon forfeiture% be destroyed by order of the
7ommissioner% hen the sale of the same for consumption or use ould be in*urious to public health or
pre*udicial to the enforcement of the la.
All other articles sub*ect to e$cise ta$% hich ha#e been manufactured or remo#ed in #iolation of this 7ode%
as ell as dies for the printing or ma)ing of internal re#enue stamps and labels hich are in imitation of or
purport to be laful stamps% or labels may% upon forfeiture% be sold or destroyed in the discretion of the
7ommissioner.
8orfeited property shall not be destroyed until at least tenty :3=; days after sei!ure.
*ection 22B. +isposition of funds Recovered in *egal Proceedings or (btained from 0orfeitures. - all
*udgments and monies reco#ered and recei#ed for ta$es% costs% forfeitures% (nes and penalties shall be
paid to the 7ommissioner or his authori!ed deputies as the ta$es themsel#es are re'uired to be paid% and
e$cept as specially pro#ided% shall be accounted for and dealt ith the same ay.
*ection 22. Satisfaction of <udgment Recovered gainst any 'nternal Revenue ()cer. - Bhen an action
is brought against any Internal 6e#enue oAcer to reco#er damages by reason of any act done in the
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performance of oAcial duty% and the 7ommissioner is noti(ed of such action in time to ma)e defense
against the same% through the Solicitor General% any *udgment% damages or costs reco#ered in such action
shall be satis(ed by the 7ommissioner% upon appro#al of the Secretary of 8inance% or if the same be paid
by the person used shall be repaid or reimbursed to him.
,o such *udgment% damages% or costs shall be paid or reimbursed in behalf of a person ho has acted
negligently or in bad faith% or ith illful oppression.
C%APT"R ### ; PR&T"*T#N$ AN A**"**!"NT, R"+)ND, "TC.
*ection 228. Protesting of ssessment. - Bhen the 7ommissioner or his duly authori!ed representati#e
(nds that proper ta$es should be assessed% he shall (rst notify the ta$payer of his (ndings: pro#ided%
hoe#er% That a preassessment notice shall not be re'uired in the folloing cases:
:a; Bhen the (nding for any de(ciency ta$ is the result of mathematical error in the computation of
the ta$ as appearing on the face of the return& or
:b; Bhen a discrepancy has been determined beteen the ta$ ithheld and the amount actually
remitted by the ithholding agent& or
:c; Bhen a ta$payer ho opted to claim a refund or ta$ credit of e$cess creditable ithholding ta$
for a ta$able period as determined to ha#e carried o#er and automatically applied the same
amount claimed against the estimated ta$ liabilities for the ta$able 'uarter or 'uarters of the
succeeding ta$able year& or
:d; Bhen the e$cise ta$ due on e$ciseable articles has not been paid& or
:e; Bhen the article locally purchased or imported by an e$empt person% such as% but not limited to%
#ehicles% capital e'uipment% machineries and spare parts% has been sold% traded or transferred to
non-e$empt persons.
The ta$payers shall be informed in riting of the la and the facts on hich the assessment is made&
otherise% the assessment shall be #oid.
Bithin a period to be prescribed by implementing rules and regulations% the ta$payer shall be re'uired to
respond to said notice. If the ta$payer fails to respond% the 7ommissioner or his duly authori!ed
representati#e shall issue an assessment based on his (ndings.
Such assessment may be protested administrati#ely by (ling a re'uest for reconsideration or
rein#estigation ithin thirty :5=; days from receipt of the assessment in such form and manner as may be
prescribed by implementing rules and regulations.
Bithin si$ty :<=; days from (ling of the protest% all rele#ant supporting documents shall ha#e been
submitted& otherise% the assessment shall become (nal.
If the protest is denied in hole or in part% or is not acted upon ithin one hundred eighty :1.=; days from
submission of documents% the ta$payer ad#ersely a9ected by the decision or inaction may appeal to the
7ourt of Ta$ Appeals ithin thirty :5=; days from receipt of the said decision% or from the lapse of one
hundred eighty :1.=;-day period& otherise% the decision shall become (nal% e$ecutory and demandable.
*ection 229. Recovery of Tax $rroneously or 'llegally Collected. - no suit or proceeding shall be
maintained in any court for the reco#ery of any national internal re#enue ta$ hereafter alleged to ha#e
been erroneously or illegally assessed or collected% or of any penalty claimed to ha#e been collected
ithout authority% of any sum alleged to ha#e been e$cessi#ely or in any manner rongfully collected
ithout authority% or of any sum alleged to ha#e been e$cessi#ely or in any manner rongfully collected%
until a claim for refund or credit has been duly (led ith the 7ommissioner& but such suit or proceeding
may be maintained% hether or not such ta$% penalty% or sum has been paid under protest or duress.
In any case% no such suit or proceeding shall be (led after the e$piration of to :3; years from the date of
payment of the ta$ or penalty regardless of any super#ening cause that may arise after payment:
"ro#ided% hoe#er% That the 7ommissioner may% e#en ithout a ritten claim therefor% refund or credit any
ta$% here on the face of the return upon hich payment as made% such payment appears clearly to ha#e
been erroneously paid.
*ection 2,D. 0orfeiture of Cash Refund and of Tax Credit. -
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:A; 0orfeiture of Refund. - A refund chec) or arrant issued in accordance ith the pertinent
pro#isions of this 7ode% hich shall remain unclaimed or uncashed ithin (#e :-; years from the
date the said arrant or chec) as mailed or deli#ered% shall be forfeited in fa#or of the
Go#ernment and the amount thereof shall re#ert to the general fund.
:?; 0orfeiture of Tax Credit. - A ta$ credit certi(cate issued in accordance ith the pertinent
pro#isions of this 7ode% hich shall remain unutili!ed after (#e :-; years from the date of issue%
shall% unless re#alidated% be considered in#alid% and shall not be alloed as payment for internal
re#enue ta$ liabilities of the ta$payer% and the amount co#ered by the certi(cate shall re#ert to the
general fund.
:7; Transitory Provision. - 8or purposes of the preceding Subsection% a ta$ credit certi(cate issued
by the 7ommissioner or his duly authori!ed representati#e prior to @anuary 1% 1//.% hich remains
unutili!ed or has a creditable balance as of said date% shall be presented for re#alidation ith the
7ommissioner or his duly authori!ed representati#e or on before @une 5=% 1//..
*ection 2,1. ction to Contest 0orfeiture of Chattel. - In case of the sei!ure of personal property under
claim of forfeiture% the oner desiring to contest the #alidity of the forfeiture may% at any time before sale
or destruction of the property% bring an action against the person sei!ing the property or ha#ing possession
thereof to reco#er the same% and upon gi#ing proper bond% may en*oin the sale& or after the sale and ithin
si$ :<; months% he may bring an action to reco#er the net proceeds reali!ed at the sale.
T#T'" #5
C&!P'#ANC" R"8)#R"!"NT*
C%APT"R # ; =""P#N$ &+ 0&&=* &+ ACC&)NT* AND R"C&RD*
*ection 2,2. 8eeping of Boo-s of ccounts. -
:A; 7orporations% 7ompanies% "artnerships or "ersons 6e'uired to Keep ?oo)s of Accounts. - All
corporations% companies% partnerships or persons re'uired by la to pay internal re#enue ta$es
shall )eep a *ournal and a ledger or their e'ui#alents: "ro#ided% hoe#er% That those hose
'uarterly sales% earnings% receipts% or output do not e$ceed 8ifty thousand pesos :"-=%===; shall
)eep and use simpli(ed set of boo))eeping records duly authori!ed by the Secretary of 8inance
here in all transactions and results of operations are shon and from hich all ta$es due the
Go#ernment may readily and accurately be ascertained and determined any time of the year:
"ro#ided% further% That corporations% companies% partnerships or persons hose gross 'uarterly
sales% earnings% receipts or output e$ceed 2ne hundred (fty thousand pesos :"1-=%===; shall ha#e
their boo)s of accounts audited and e$amined yearly by independent 7erti(ed "ublic Accountants
and their income ta$ returns accompanied ith a duly accomplished Account Information 8orm :AI8;
hich shall contain% among others% information lifted from certi(ed balance sheets% pro(t and loss
statements% schedules listing income-producing properties and the corresponding income therefrom
and other rele#ant statements.
:?; Independent 7erti(ed "ublic Accountant +e(ned. - The term JIndependent 7erti(ed "ublic
AccountantJ% as used in the preceding paragraph% means an accountant ho possesses the
independence as de(ned in the rules and regulations of the ?oard of Accountancy promulgated
pursuant to "residential +ecree ,o. </3% otherise )non as the 6e#ised Accountancy Ga.
*ection 2,,. Subsidiary Boo-s. - All corporations% companies% partnerships or persons )eeping the boo)s
of accounts mentioned in the preceding Section may% at their option% )eep subsidiary boo)s as the needs
of their business may re'uire: "ro#ided% That ere such subsidiaries are )ept% they shall form part of the
accounting system of the ta$payer and shall be sub*ect to the same rules and regulations as to their
)eeping% translation% production and inspection as are applicable to the *ournal and the ledger.
*ection 2,4. *anguage in &hich Boo-s are to be 8eptH Translation. - All such corporations% companies%
partnerships or persons shall )eep the boo)s or records mentioned in Section 353 hereof in nati#e
language% 1nglish or Spanish: "ro#ided% hoe#er% That if in addition to said boo)s or records the ta$payer
)eeps other boo)s or records in a language other than a nati#e language% 1nglish or Spanish% he shall
ma)e a true and complete translation of all the entries in suc) other boo)s or records into a nati#e
language& 1nglish or Spanish% and the said translation must be made by the boo))eeper% or such ta$payer%
or in his absence% by his manager and must be certi(ed under oath as to its correctness by the said
boo))eeper or manager% and shall form an integral part of the aforesaid boo)s of accounts. The )eeping of
such boo)s or records in any language other than a nati#e language% 1nglish or Spanish% is hereby
prohibited.
*ection 2,A. Preservation of Boo-s and ccounts and (ther ccounting Records. - All the boo)s of
accounts% including the subsidiary boo)s and other accounting records of corporations% partnerships% or
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persons% shall be preser#ed by them for a period beginning from the last entry in each boo) until the last
day prescribed by Section 3=5 ithin hich the 7ommissioner is authori!ed to ma)e an assessment. The
said boo)s and records shall be sub*ect to e$amination and inspection by internal re#enue oAcers:
"ro#ided% That for income ta$ purposes% such e$amination and inspection shall be made only once in a
ta$able year% e$cept in the folloing cases:
:a; 8raud% irregularity or mista)es% as determined by the 7ommissioner&
:b; The ta$payer re'uests rein#estigation&
:c; Veri(cation of compliance ith ithholding ta$ las and regulations&
:d; Veri(cation of capital gains ta$ liabilities& and
:e; In the e$ercise of the 7ommissionerJs poer under Section -:?; to obtain information from other
persons in hich case% another or separate e$amination and inspection may be made. 1$amination
and inspection of boo)s of accounts and other accounting records shall be done in the ta$payerJs
oAce or place of business or in the oAce of the ?ureau of Internal 6e#enue. All corporations%
partnerships or persons that retire from business shall% ithin ten :1=; days from the date of
retirement or ithin such period of time as may be alloed by the 7ommissioner in special cases%
submit their boo)s of accounts% including the subsidiary boo)s and other accounting records to the
7ommissioner or any of his deputies for e$amination% after hich they shall be returned.
7orporations and partnerships contemplating dissolution must notify the 7ommissioner and shall
not be dissol#ed until cleared of any ta$ liability.
Any pro#ision of e$isting general or special la to the contrary notithstanding% the boo)s of accounts and
other pertinent records of ta$-e$empt organi!ations or grantees of ta$ incenti#es shall be sub*ect to
e$amination by the ?ureau of Internal 6e#enue for purposes of ascertaining compliance ith the
conditions under hich they ha#e been granted ta$ e$emptions or ta$ incenti#es% and their ta$ liability% if
any.
C%APT"R ## ; AD!#N#*TRAT#(" PR&(#*#&N*
*ection 2,B. Registration Re/uirements. -
:A; Re/uirements. - 1#ery person sub*ect to any internal re#enue ta$ shall register once ith the
appropriate 6e#enue +istrict 2Acer:
:1; Bithin ten :1=; days from date of employment% or
:3; 2n or before the commencement of business%or
:5; ?efore payment of any ta$ due% or
:0; Hpon (ling of a return% statement or declaration as re'uired in this 7ode.
The registration shall contain the ta$payerJs name% style% place of residence% business and
such other information as may be re'uired by the 7ommissioner in the form prescribed
therefor.
A person maintaining a head oAce% branch or facility shall register ith the 6e#enue +istrict
2Acer ha#ing *urisdiction o#er the head oAce% brand or facility. 8or purposes of this Section%
the term JfacilityJ may include but not be limited to sales outlets% places of production%
arehouses or storage places.
:?; nnual Registration 0ee. - An annual registration fee in the amount of 8i#e hundred pesos :"-==;
for e#ery separate or distinct establishment or place of business% including facility types here
sales transactions occur% shall be paid upon registration and e#ery year thereafter on or before the
last day of @anuary: "ro#ided% hoe#er% That cooperati#es% indi#iduals earning purely compensation
income% hether locally or abroad% and o#erseas or)ers are not liable to the registration fee herein
imposed.
The registration fee shall be paid to an authori!ed agent ban) located ithin the re#enue district% or
to the 6e#enue 7ollection 2Acer% or duly authori!ed Treasurer of the city of municipality here
each place of business or branch is registered.
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:7; Registration of $ach Type of 'nternal Revenue Tax. - 1#ery person ho is re'uired to register
ith the ?ureau of Internal 6e#enue under Subsection :A; hereof% shall register each type of internal
re#enue ta$ for hich he is obligated% shall (le a return and shall pay such ta$es% and shall updates
such registration of any changes in accordance ith Subsection :1; hereof.
:+; Transfer of Registration. - In case a registered person decides to transfer his place of business or
his head oAce or branches% it shall be his duty to update his registration status by (ling an
application for registration information update in the form prescribed therefor.
:1; (ther Cpdates. - Any person registered in accordance ith this Section shall% hene#er
applicable% update his registration information ith the 6e#enue +istrict 2Ace here he is
registered% specifying therein any change in type and other ta$payer details.
:8; Cancellation of Registration. - The registration of any person ho ceases to be liable to a ta$
type shall be cancelled upon (ling ith the 6e#enue +istrict 2Ace here he is registered an
application for registration information update in a form prescribed therefor.
:G; Persons Commencing Business. - Any person% ho e$pects to reali!e gross sales or receipts
sub*ect to #alue-added ta$ in e$cess of the amount prescribed under Section 1=/:!; of this 7ode for
the ne$t 13-month period from the commencement of the business% shall register ith the 6e#enue
+istrict 2Ace hich has *urisdiction o#er the head oAce or branch and shall pay the annual
registration fee prescribed in Subsection :?; hereof.
:F; Persons Becoming *iable to the 3alue1added Tax. - Any person% hose gross sales or receipts in
any 13-month period e$ceeds the amount prescribed under Subsection 1=/:!; of this 7ode for
e$emption from the #alue-added ta$ shall register in accordance ith Subsection :A; hereof% and
shall pay the annual registration fee prescribed ithin ten :1=; days after the end of the last month
of that period% and shall be liable to the #alue-added ta$ commencing from the (rst day of the
month folloing his registration.
:I; (ptional Registration of $xempt Person. - Any person hose transactions are e$empt from #alue-
added ta$ under Section 1=/:!; of this 7ode& or any person hose transactions are e$empt from the
#alue-added ta$ under Section 1=/:a;% :b;% :c;% and :d; of this 7ode% ho opts to register as a VAT
ta$payer ith respect to his e$port sales only% may update his registration information in
accordance ith Subsection :1; hereof% not later than ten :1=; days before the beginning of the
ta$able 'uarter and shall pay the annual registration fee prescribed in Subsection :?; hereof.
In any case% the 7ommissioner may% for administrati#e reasons% deny any application for
registration including updates prescribed under Subsection :1; hereof.
8or purposes of Title IV of this 7ode% any person ho has registered #alue-added ta$ as a ta$ type
in accordance ith the pro#isions of Subsection :7; hereof shall be referred to as VAT-registered
person ho shall be assigned only one Ta$payer Identi(cation ,umber.
:@; Supplying of Taxpayer 'denti:cation 4umber =T'4>. - Any person re'uired under the authority of
this 7ode to ma)e% render or (le a return% statement or other document shall be supplied ith or
assigned a Ta$payer Identi(cation ,umber :TI,; hich he shall indicate in such return% statement or
document (led ith the ?ureau of Internal 6e#enue for his proper identi(cation for ta$ purposes%
and hich he shall indicate in certain documents% such as% but not limited to the folloing:
:1; Sugar 'uedans% re(ned sugar release order or similar instruments&
:3; +omestic bills of lading&
:5; +ocuments to be registered ith the 6egister of +eeds of AssessorJs 2Ace&
:0; 6egistration certi(cate of transportation e'uipment by land% sea or air&
:-; +ocuments to be registered ith the Securities and 1$change 7ommission&
:<; ?uilding construction permits&
:4; Application for loan ith ban)s% (nancial institutions% or other (nancial intermediaries&
:.; Application for mayorJs permit&
:/; Application for business license ith the +epartment of Trade T Industry& and
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:1=; Such other documents hich may hereafter be re'uired under rules and regulations to
be promulgated by the Secretary of 8inance% upon recommendation of the 7ommissioner.
In cases here a registered ta$payer dies% the administrator or e$ecutor shall register the estate of
the decedent in accordance ith Subsection :A; hereof and a ne Ta$payer Identi(cation ,umber
:TI,; shall be supplied in accordance ith the pro#isions of this Section.
In the case of a nonresident decedent% the e$ecutor or administrator of the estate shall register the
estate ith the 6e#enue +istrict 2Ace here he is registered: "ro#ided% hoe#er% That in case such
e$ecutor or administrator is not registered% registration of the estate shall be made ith the
Ta$payer Identi(cation ,umber :TI,; supplied by the 6e#enue +istrict 2Ace ha#ing *urisdiction
o#er his legal residence.
2nly one Ta$payer identi(cation ,umber :TI,; shall be assigned to a ta$payer. Any person ho
shall secure more than one Ta$payer Identi(cation ,umber shall be criminally liable under the
pro#ision of Section 34- on JViolation of 2ther "ro#isions of this 7ode or 6egulations in GeneralJ.
*ection 2,. 'ssuance of Receipts or Sales or Commercial 'nvoices. - All persons sub*ect to an internal
re#enue ta$ shall% for each sale or transfer of merchandise or for ser#ices rendered #alued at Tenty-(#e
pesos :"3-.==; or more% issue duly registered receipts or sales or commercial in#oices% prepared at least in
duplicate% shoing the date of transaction% 'uantity% unit cost and description of merchandise or nature of
ser#ice: "ro#ided% hoe#er% That in the case of sales% receipts or transfers in the amount of 2ne hundred
pesos :"1==.==; or more% or regardless of the amount% here the sale or transfer is made by a person
liable to #alue-added ta$ to another person also liable to #alue-added ta$& or here the receipt is issued to
co#er payment made as rentals% commissions% compensations or fees% receipts or in#oices shall be issued
hich shall sho the name% business style% if any% and address of the purchaser% customer or client:
"ro#ided% further% That here the purchaser is a VAT-registered person% in addition to the information
herein re'uired% the in#oice or receipt shall further sho the Ta$payer Identi(cation ,umber :TI,; of the
purchaser.
The original of each receipt or in#oice shall be issued to the purchaser% customer or client at the time the
transaction is e9ected% ho% if engaged in business or in the e$ercise of profession% shall )eep and
preser#e the same in his place of business for a period of three :5; years from the close of the ta$able year
in hich such in#oice or receipt as issued% hile the duplicate shall be )ept and preser#ed by the issuer%
also in his place of business% for a li)e period.
The 7ommissioner may% in meritorious cases% e$empt any person sub*ect to internal re#enue ta$ from
compliance ith the pro#isions of this Section.
*ection 2,8. Printing of Receipts or Sales or Commercial 'nvoices. - All persons ho are engaged in
business shall secure from the ?ureau of Internal 6e#enue an authority to print receipts or sales or
commercial in#oices before a printer can print the same.
,o authority to print receipts or sales or commercial in#oices shall be granted unless the receipts or
in#oices to be printed are serially numbered and shall sho% among other things% the name% business style%
Ta$payer Identi(cation ,umber :TI,; and business address of the person or entity to use the same% and
such other information that may be re'uired by rules and regulations to be promulgated by the Secretary
of 8inance% upon recommendation of the 7ommissioner.
All persons ho print receipt or sales or commercial in#oices shall maintain a logboo)Eregister of ta$payers
ho a#ailed of their printing ser#ices. The logboo)Eregister shall contain the folloing information:
:1; ,ames% Ta$payer Identi(cation ,umbers of the persons or entities for hom the receipts or
sales or commercial in#oices ere printed& and
:3; ,umber of boo)lets% number of sets per boo)let% number of copies per set and the serial
numbers of the receipts or in#oices in each boo)let.
*ection 2,9. Sign to be $xhibited by +istiller, Recti:er, Compounder, Repac-er and 6holesale *i/uor
+ealer. - 1#ery person engaged in distilling or rectifying spirits% compounding li'uors% repac)ing ines or
distilled spirits% and e#ery holesale li'uor dealer shall )eep conspicuously on the outside of his place of
business a sign e$hibiting% in letters not less than si$ centimeters :< cms.; high% his name or (rm style%
ith the ords J6egistered +istiller%J J6ecti(er of Spirits%J J7ompounder of Gi'uors%J J6epac)er of Bines or
+istilled Spirits%J or JBholesale Gi'uor +ealer%J as the case may be% and his assessment number.
*ection 24D. Sign to be exhibited by manufacturer of Products of Tobacco. - 1#ery manufacturer of cigars%
cigarettes or tobacco% and e#ery holesale dealer in leaf tobacco or manufactured products of tobacco
shall place and )eep on outside of the building herein his business is carried on% so that it can be
GSV-1=.
distinctly seen% a sign stating his full name and business in letters not less than si$ centimeters :< cms.;
high and also gi#ing his assessment number.
*ection 241. $xhibition of Certi:cate of Payment at Place of Business. - The certi(cate or receipts
shoing payment of ta$es issued to a person engaged in a business sub*ect to an annual registration fee
shall be )ept conspicuously e$hibited in plain #ie in or at the place here the business is conducted& and
in case of a peddler or other persons not ha#ing a ($ed place of business% shall be )ept in the possession
of the holder thereof% sub*ect to production upon demand of any internal re#enue oAcer.
*ection 242. Continuation of Business of +eceased Person. - Bhen any indi#idual ho has paid the
annual registration fee dies% and the same business is continued by the person or persons interested in his
estate% no additional payment shall be re'uired for the residue of the term hich the ta$ as paid:
"ro#ided% hoe#er% That the person or persons interested in the estate should% ithin thirty :5=; days from
the death of the decedent% submit to the ?ureau of Internal 6e#enue or the regional or re#enue +istrict
2Ace in#entories of goods or stoc)s had at the time of such death.
The re'uirement under this Section shall also be applicable in the case of transfer of onership or change
of name of the business establishment.
*ection 24,. Removal of Business to (ther *ocation. - Any business for hich the annual registration fee
has been paid may% sub*ect to the rules and regulations prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner% be remo#ed and continued in any other place ithout the payment
of additional ta$ during the term for hich the payment as made.
C%APT"R ### ; R)'"* AND R"$)'AT#&N*
*ection 244. uthority of Secretary of 0inance to Promulgate Rules and Regulations. - The Secretary of
8inance% upon recommendation of the 7ommissioner% shall promulgate all needful rules and regulations for
the e9ecti#e enforcement of the pro#isions of this 7ode.
*ection 24A. Speci:c Provisions to be Contained in Rules and Regulations. - The rules and regulations of
the ?ureau of Internal 6e#enue shall% among other thins% contain pro#isions specifying% prescribing or
de(ning:
:a; The time and manner in hich 6e#enue 6egional +irector shall can#ass their respecti#e
6e#enue 6egions for the purpose of disco#ering persons and property liable to national internal
re#enue ta$es% and the manner in hich their lists and records of ta$able persons and ta$able
ob*ects shall be made and )ept&
:b; The forms of labels% brands or mar)s to be re'uired on goods sub*ect to an e$cise ta$% and the
manner in hich the labelling% branding or mar)ing shall be e9ected&
:c; The conditions under hich and the manner in hich goods intended for e$port% hich if not
e$ported ould be sub*ect to an e$cise ta$% shall be labelled% branded or mar)ed&
:d; The conditions to be obser#ed by re#enue oAcers respecting the institutions and conduct of
legal actions and proceedings&
:e; The conditions under hich goods intended for storage in bonded arehouses shall be con#eyed
thither% their manner of storage and the method of )eeping the entries and records in connection
thereith% also the boo)s to be )ept by 6e#enue Inspectors and the reports to be made by them in
connection ith their super#ision of such houses&
:f; The conditions under hich denatured alcohol may be remo#ed and dealt in% the character and
'uantity of the denaturing material to be used% the manner in hich the process of denaturing shall
be e9ected% so as to render the alcohol suitably denatured and un(t for oral inta)e% the bonds to be
gi#en% the boo)s and records to be )ept% the entries to be made therein% the reports to be made to
the 7ommissioner% and the signs to be displayed in the business ort by the person for hom such
denaturing is done or by hom% such alcohol is dealt in&
:g; The manner in hich re#enue shall be collected and paid% the instrument% document or ob*ect to
hich re#enue stamps shall be aA$ed% the mode of cancellation of the same% the manner in hich
the proper boo)s% records% in#oices and other papers shall be )ept and entries therein made by the
person sub*ect to the ta$% as ell as the manner in hich licenses and stamps shall be gathered up
and returned after ser#ing their purposes&
:h; The conditions to be obser#ed by re#enue oAcers respecting the enforcement of Title III
imposing a ta$ on estate of a decedent% and other transfers mortis causa% as ell as on gifts and
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such other rules and regulations hich the 7ommissioner may consider suitable for the
enforcement of the said Title III&
:i; The manner in hich ta$ returns% information and reports shall be prepared and reported and the
ta$ collected and paid% as ell as the conditions under hich e#idence of payment shall be
furnished the ta$payer% and the preparation and publication of ta$ statistics&
:*; The manner in hich internal re#enue ta$es% such as income ta$% including ithholding ta$%
estate and donorJs ta$es% #alue-added ta$% other percentage ta$es% e$cise ta$es and documentary
stamp ta$es shall be paid through the collection oAcers of the ?ureau of Internal 6e#enue or
through duly authori!ed agent ban)s hich are hereby deputi!ed to recei#e payments of such ta$es
and the returns% papers and statements that may be (led by the ta$payers in connection ith the
payment of the ta$: "ro#ided% hoe#er% That notithstanding the other pro#isions of this 7ode
prescribing the place of (ling of returns and payment of ta$es% the 7ommissioner may% by rules and
regulations% re'uire that the ta$ returns% papers and statements that may be (led by the ta$payers
in connection ith the payment of the ta$. "ro#ided% hoe#er% That notithstanding the other
pro#isions of this 7ode prescribing the place of (ling of returns and payment of ta$es% the
7ommissioner may% by rules and regulations re'uire that the ta$ returns% papers and statements
and ta$es of large ta$payers be (led and paid% respecti#ely% through collection oAcers or through
duly authori!ed agent ban)s: "ro#ided% further% That the 7ommissioner can e$ercise this poer
ithin si$ :<; years from the appro#al of 6epublic Act ,o. 4<0< or the completion of its
comprehensi#e computeri!ation program% hiche#er comes earlier: "ro#ided% (nally% That separate
#enues for the Gu!on% Visayas and Mindanao areas may be designated for the (ling of ta$ returns
and payment of ta$es by said large ta$payers.
8or the purpose of this Section% Jlarge ta$payerJ means a ta$payer ho satis(es any of the folloing
criteria&
:1; Value-Added Ta$ :VAT; - ?usiness establishment ith VAT paid or payable of at least 2ne
hundred thousand pesos :"1==%===; for any 'uarter of the preceding ta$able year&
:3; 1$cise ta$ - ?usiness establishment ith e$cise ta$ paid or payable of at least 2ne
million pesos :"1%===%===; for the preceding ta$able year&
:5; 7orporate Income Ta$ - ?usiness establishment ith annual income ta$ paid or payable
of at least 2ne million pesos :"1%===%===; for the preceding ta$able year& and
:0; Bithholding ta$ - ?usiness establishment ith ithholding ta$ payment or remittance of
at least 2ne million pesos :"1%===%===; for the preceding ta$able year.
"ro#ided% hoe#er% That the Secretary of 8inance% upon recommendation of the 7ommissioner% may
modify or add to the abo#e criteria for determining a large ta$payer after considering such factors
as inCation% #olume of business% age and employment le#els% and similar economic factors.
The penalties prescribed under Section 30. of this 7ode shall be imposed on any #iolation of the
rules and regulations issued by the Secretary of 8inance% upon recommendation of the
7ommissioner% prescribing the place of (ling of returns and payments of ta$es by large ta$payers.
*ection 24B. 4on1 Retroactivity of Rulings. - Any re#ocation% modi(cation or re#ersal of any of the rules
and regulations promulgated in accordance ith the preceding Sections or any of the rulings or circulars
promulgated by the 7ommissioner shall not be gi#en retroacti#e application if the re#ocation% modi(cation
or re#ersal ill be pre*udicial to the ta$payers% e$cept in the folloing cases:
:a; Bhere the ta$payer deliberately misstates or omits material facts from his return or any
document re'uired of him by the ?ureau of Internal 6e#enue&
:b; Bhere the facts subse'uently gathered by the ?ureau of Internal 6e#enue are materially
di9erent from the facts on hich the ruling is based& or
:c; Bhere the ta$payer acted in bad faith.
T#T'" 5
*TAT)T&RE &++"N*"* AND P"NA'T#"*
C%APT"R # ; ADD#T#&N* T& T%" TA5
*ection 24. 2eneral Provisions. -
GSV-11=
:a; The additions to the ta$ or de(ciency ta$ prescribed in this 7hapter shall apply to all ta$es% fees
and charges imposed in this 7ode. The Amount so added to the ta$ shall be collected at the same
time% in the same manner and as part of the ta$.
:b; If the ithholding agent is the Go#ernment or any of its agencies% political subdi#isions or
instrumentalities% or a go#ernment-oned or controlled corporation% the employee thereof
responsible for the ithholding and remittance of the ta$ shall be personally liable for the additions
to the ta$ prescribed herein.
:c; the term JpersonJ% as used in this 7hapter% includes an oAcer or employee of a corporation ho
as such oAcer% employee or member is under a duty to perform the act in respect of hich the
#iolation occurs.
*ection 248. Civil Penalties. -
:A; There shall be imposed% in addition to the ta$ re'uired to be paid% a penalty e'ui#alent to
tenty-(#e percent :3-I; of the amount due% in the folloing cases:
:1; 8ailure to (le any return and pay the ta$ due thereon as re'uired under the pro#isions of
this 7ode or rules and regulations on the date prescribed& or
:3; Hnless otherise authori!ed by the 7ommissioner% (ling a return ith an internal
re#enue oAcer other than those ith hom the return is re'uired to be (led& or
:5; 8ailure to pay the de(ciency ta$ ithin the time prescribed for its payment in the notice
of assessment& or
:0; 8ailure to pay the full or part of the amount of ta$ shon on any return re'uired to be
(led under the pro#isions of this 7ode or rules and regulations% or the full amount of ta$ due
for hich no return is re'uired to be (led% on or before the date prescribed for its payment.
:?; In case of illful neglect to (le the return ithin the period prescribed by this 7ode or by rules
and regulations% or in case a false or fraudulent return is illfully made% the penalty to be imposed
shall be (fty percent :-=I; of the ta$ or of the de(ciency ta$% in case% any payment has been made
on the basis of such return before the disco#ery of the falsity or fraud: "ro#ided% That a substantial
underdeclaration of ta$able sales% receipts or income% or a substantial o#erstatement of deductions%
as determined by the 7ommissioner pursuant to the rules and regulations to be promulgated by the
Secretary of 8inance% shall constitute prima facie e#idence of a false or fraudulent return: "ro#ided%
further% That failure to report sales% receipts or income in an amount e$ceeding thirty percent :5=I;
of that declared per return% and a claim of deductions in an amount e$ceeding :5=I; of actual
deductions% shall render the ta$payer liable for substantial underdeclaration of sales% receipts or
income or for o#erstatement of deductions% as mentioned herein.
*ection 249. 'nterest. -
:A; 'n 2eneral. - There shall be assessed and collected on any unpaid amount of ta$% interest at the
rate of tenty percent :3=I; per annum% or such higher rate as may be prescribed by rules and
regulations% from the date prescribed for payment until the amount is fully paid.
:?; +e:ciency 'nterest. - Any de(ciency in the ta$ due% as the term is de(ned in this 7ode% shall be
sub*ect to the interest prescribed in Subsection :A; hereof% hich interest shall be assessed and
collected from the date prescribed for its payment until the full payment thereof.
:7; +elin/uency 'nterest. - In case of failure to pay:
:1; The amount of the ta$ due on any return to be (led% or
:3; The amount of the ta$ due for hich no return is re'uired% or
:5; A de(ciency ta$% or any surcharge or interest thereon on the due date appearing in the
notice and demand of the 7ommissioner% there shall be assessed and collected on the
unpaid amount% interest at the rate prescribed in Subsection :A; hereof until the amount is
fully paid% hich interest shall form part of the ta$.
:+; 'nterest on $xtended Payment. - If any person re'uired to pay the ta$ is 'uali(ed and elects to
pay the ta$ on installment under the pro#isions of this 7ode% but fails to pay the ta$ or any
installment hereof% or any part of such amount or installment on or before the date prescribed for
GSV-111
its payment% or here the 7ommissioner has authori!ed an e$tension of time ithin hich to pay a
ta$ or a de(ciency ta$ or any part thereof% there shall be assessed and collected interest at the rate
hereinabo#e prescribed on the ta$ or de(ciency ta$ or any part thereof unpaid from the date of
notice and demand until it is paid.
*ection 2AD. 0ailure to 0ile Certain 'nformation Returns. - In the case of each failure to (le an information
return% statement or list% or )eep any record% or supply any information re'uired by this 7ode or by the
7ommissioner on the date prescribed therefor% unless it is shon that such failure is due to reasonable
cause and not to illful neglect% there shall% upon notice and demand by the 7ommisssioner% be paid by
the person failing to (le% )eep or supply the same% 2ne thousand pesos :1%===; for each failure: "ro#ided%
hoe#er% That the aggregate amount to be imposed for all such failures during a calendar year shall not
e$ceed Tenty-(#e thousand pesos :"3-%===;.
*ection 2A1. 0ailure of a 6ithholding gent to Collect and Remit Tax. - Any person re'uired to ithhold%
account for% and remit any ta$ imposed by this 7ode or ho illfully fails to ithhold such ta$% or account
for and remit such ta$% or aids or abets in any manner to e#ade any such ta$ or the payment thereof% shall%
in addition to other penalties pro#ided for under this 7hapter% be liable upon con#iction to a penalty e'ual
to the total amount of the ta$ not ithheld% or not accounted for and remitted.
*ection 2A2. 0ailure of a 6ithholding gent to refund $xcess 6ithholding Tax. - Any employerEithholding
agent ho fails or refuses to refund e$cess ithholding ta$ shall% in addition to the penalties pro#ided in
this Title% be liable to a penalty to the total amount of refunds hich as not refunded to the employee
resulting from any e$cess of the amount ithheld o#er the ta$ actually due on their return.
C%APT"R ## ; CR#!"*, &T%"R &++"N*"* AND +&R+"#T)R"*
*ection 2A,. 2eneral Provisions. -
:a; Any person con#icted of a crime penali!ed by this 7ode shall% in addition to being liable for the
payment of the ta$% be sub*ect to the penalties imposed herein: "ro#ided% That payment of the ta$
due after apprehension shall not constitute a #alid defense in any prosecution for #iolation of any
pro#ision of this 7ode or in any action for the forfeiture of unta$ed articles.
:b; Any person ho illfully aids or abets in the commission of a crime penali!ed herein or ho
causes the commission of any such o9ense by another shall be liable in the same manner as the
principal.
:c; If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing
the sentence ithout further proceedings for deportation. If he is a public oAcer or employee% the
ma$imum penalty prescribed for the o9ense shall be imposed and% in addition% he shall be
dismissed from the public ser#ice and perpetually dis'uali(ed from holding any public oAce% to
#ote and to participate in any election. If the o9ender is a 7erti(ed "ublic Accountant% his certi(cate
as a 7erti(ed "ublic Accountant shall% upon con#iction% be automatically re#o)ed or cancelled.
:d; In the case of associations% partnerships or corporations% the penalty shall be imposed on the
partner% president% general manager% branch manager% treasurer% oAcer-in-charge% and the
employees responsible for the #iolation.
:e; The (nes to be imposed for any #iolation of the pro#isions of this 7ode shall not be loer than
the (nes imposed herein or tice the amount of ta$es% interest and surcharges due from the
ta$payer% hiche#er is higher.
*ection 2A4. ttempt to $vade or +efeat Tax. - Any person ho illfully attempts in any manner to e#ade
or defeat any ta$ imposed under this 7ode or the payment thereof shall% in addition to other penalties
pro#ided by la% upon con#iction thereof% be punished by a (ne not less than Thirty thousand :"5=%===;
but not more than 2ne hunderd thousand pesos :"1==%===; and su9er imprisonment of not less than to
:3; years but not more than four :0; years: "ro#ided% That the con#iction or ac'uittal obtained under this
Section shall not be a bar to the (ling of a ci#il suit for the collection of ta$es.
*ection 2AA. 0ailure to 0ile Return, Supply Correct and ccurate 'nformation, Pay Tax 6ithhold and Remit
Tax and Refund $xcess Taxes 6ithheld on Compensation. - Any person re'uired under this 7ode or by rules
and regulations promulgated thereunder to pay any ta$ ma)e a return% )eep any record% or supply correct
the accurate information% ho illfully fails to pay such ta$% ma)e such return% )eep such record% or supply
correct and accurate information% or ithhold or remit ta$es ithheld% or refund e$cess ta$es ithheld on
compensation% at the time or times re'uired by la or rules and regulations shall% in addition to other
penalties pro#ided by la% upon con#iction thereof% be punished by a (ne of not less than Ten thousand
pesos :"1=%===; and su9er imprisonment of not less than one :1; year but not more than ten :1=; years.
GSV-113
Any person ho attempts to ma)e it appear for any reason that he or another has in fact (led a return or
statement% or actually (les a return or statement and subse'uently ithdras the same return or
statement after securing the oAcial recei#ing seal or stamp of receipt of internal re#enue oAce herein
the same as actually (led shall% upon con#iction therefor% be punished by a (ne of not less than Ten
thousand pesos :"1=%===; but not more than Tenty thousand pesos :"3=%===; and su9er imprisonment of
not less than one :1; year but not more than three :5; years.
*ection 2AB. Penal *iability of Corporations. - Any corporation% association or general co-partnership liable
for any of the acts or omissions penali!ed under this 7ode% in addition to the penalties imposed herein
upon the responsible corporate oAcers% partners% or employees shall% upon con#iction for each act or
omission% be punished by a (ne of not less than 8ifty thousand pesos :"-=%===; but not more than 2ne
hundred thousand pesos :"1==%===;.
*ection 2A. Penal *iability for .a-ing 0alse $ntries, Records or Reports, or Csing 0alsi:ed or 0a-e
ccountable 0orms. -
:A; Any (nancial oAcer or independent 7erti(ed "ublic Accountant engaged to e$amine and audit
boo)s of accounts of ta$payers under Section 353 :A; and any person under his direction ho:
:1; Billfully falsi(es any report or statement bearing on any e$amination or audit% or renders
a report% including e$hibits% statements% schedules or other forms of accountancy or) hich
has not been #eri(ed by him personally or under his super#ision or by a member of his (rm
or by a member of his sta9 in accordance ith sound auditing practices& or
:3; 7erti(es (nancial statements of a business enterprise containing an essential
misstatement of facts or omission in respect of the transactions% ta$able income% deduction
and e$emption of his client& or
:?; Any person ho:
:1; ,ot being an independent 7erti(ed "ublic Accountant according to Section 353:?; or a
(nancial oAcer% e$amines and audits boo)s of accounts of ta$payers& or
:3; 29ers to sign and certify (nancial statements ithout audit& or
:5; 29ers any ta$payer the use of accounting boo))eeping records for internal re#enue
purposes not in conformity ith the re'uirements prescribed in this 7ode or rules and
regulations promulgated thereunder& or
:0; Knoingly ma)es any false entry or enters any false or (ctitious name in the boo)s of
accounts or record mentioned in the preceding paragraphs& or
:-; Keeps to :3; or more sets of such records or boo)s of accounts& or
:<; In any ay commits an act or omission% in #iolation of the pro#isions of this Section& or
:4; 8ails to )eep the boo)s of accounts or records mentioned in Section 353 in a nati#e
language% 1nglish or Spanish% or to ma)e a true and complete translation as re'uired in
Section 350 of this 7ode% or hose boo)s of accounts or records )ept in a nati#e language%
1nglish or Spanish% and found to be at material #ariance ith boo)s or records )ept by him
in another language& or
:.; Billfully attempts in any manner to e#ade or defeat any ta$ imposed under this 7ode% or
)noingly uses fa)e or falsi(ed re#enue oAcial receipts% Getters of Authority% certi(cates
authori!ing registration% Ta$ 7redit 7erti(cates% Ta$ +ebit Memoranda and other accountable
forms shall% upon con#iction for each act or omission% be punished by a (ne not less than
8ifty thousand pesos :"-=%===; but not more than 2ne hundred pesos :"1==%===; and su9er
imprisonment of not less than to :3; years but not more than si$ :<; years.
If the o9ender is a 7erti(ed "ublic Accountant% his certi(cate as a 7erti(ed "ublic Accountant shall
be automatically re#o)ed or cancelled upon con#iction.
In the case of foreigners% con#iction under this 7ode shall result in his immediate deportation after
ser#ing sentence% ithout further proceedings for deportation.
*ection 2A8. Cnla&ful Pursuit of Business. - Any person ho carries on any business for hich an annual
registration fee is imposed ithout paying the ta$ as re'uired by la shall% upon con#iction for each act or
GSV-115
omission% be punished by a (ne of not less than 8i#e thousand pesos :"-%===; but not more than Tenty
thousand pesos :"3=%===; and su9er imprisonment of not less than si$ :<; months but not more than to
:3; years: "ro#ided% That in the case of a person engaged in the business of distilling% rectifying% repac)ing%
compounding or manufacturing any article sub*ect to e$cise ta$% he shall% upon con#iction for each act or
omission% be punished by a (ne of not less than Thirty thousand pesos :"5=%===; but not more than 8ifty
thousand pesos :"-=%===; and su9er imprisonment of not less than to :3; years but not more than four
:0; years.
*ection 2A9. 'llegal Collection of 0oreign Payments. - Any person ho )noingly underta)es the collection
of foreign payments as pro#ided under Section <4 of this 7ode ithout ha#ing obtained a license therefor%
or ithout complying ith its implementing rules and regulations% shall% upon con#iction for each act or
omission% be punished by a (ne of not less than Tenty thousand pesos :"3=%===; but not more than 8ifty
thousand pesos :"-=%===; and su9er imprisonment of not less than one :1; year but not more than to :3;
years.
*ection 2BD. Cnla&ful Possession of Cigarette Paper in Bobbins or Rolls, $tc. - It shall be unlaful for any
person to ha#e in his possession cigarette paper in bobbins or rolls% cigarette tipping paper or cigarette
(lter tips% ithout the corresponding authority therefor issued by the 7ommissioner. Any person% importer%
manufacturer of cigar and cigarettes% ho has been found guilty under this Section% shall% upon con#iction
for each act or omission% be punished by a (ne of not less than Tenty thousand pesos :"3=%===; but not
more than 2ne hundred thousand pesos :"1===%===; and su9er imprisonment for a term of not less than
si$ :<; years and one :1; day but not more than tel#e :13; years.
*ection 2B1. Cnla&ful Cse of +enatured lcohol. - Any person ho for the purpose of manufacturing any
be#erage% uses denatured alcohol or alcohol specially denatured to be used for moti#e poer or ithdran
under bond for industrial uses or alcohol )noingly misrepresented to be denatured to be un(t for oral
inta)e or ho )noingly sells or o9ers for sale any be#erage made in hole or in part from such alcohol or
ho uses such alcohol for the manufacture of li'uid medicinal preparations ta)en internally% or )noingly
sells or o9ers for sale such preparations containing as an ingredient such alcohol% shall upon con#iction for
each act or omission be punished by a (ne of not less than Tenty thousand pesos :"3=%===; but not more
than 2ne hundred thousand pesos :"1==%===; and su9er imprisonment for a term of not less than si$ :<;
years and one :1; day but not more than tel#e :13; years.
Any person ho shall unlafully reco#er or attempt to reco#er by distillation or other process any
denatured alcohol or ho )noingly sells or o9ers for sale% conceals or otherise disposes of alcohol so
reco#ered or redistilled shall be sub*ect to the same penalties imposed under this Section.
*ection 2B2. Shipment or Removal of *i/uor or Tobacco Products under 0alse 4ame or Brand or as an
'mitation of any $xisting or (ther&ise 8no&n Product 4ame or Brand. - Any person ho ships% transports
or remo#es spirituous% compounded or fermented li'uors% ines or any manufactured products of tobacco
under any other than the proper name or brand )non to the trade as designating the )ind and 'uality of
the contents of the cas)% bottle or pac)age containing the same or as an imitation of any e$isting or
otherise )non product name or brand or causes such act to be done% shall% upon con#iction for each act
or omission% be punished by a (ne of not less than Tenty thousand pesos :"3=%===; but not more than
2ne hundred thousand pesos :"1===%===; and su9er imprisonment of not less than si$ :<; years and one
:1; day but not more than tel#e :13; years.
*ection 2B,. Hnlaful "ossession or 6emo#al of Articles Sub*ect to 1$cise Ta$ ithout "ayment of the Ta$.
- Any person ho ons andEor is found in possession of imported articles sub*ect to e$cise ta$% the ta$ on
hich has not been paid in accordance ith la% or any person ho ons andEor is found in possession of
imported ta$-e$empt articles other than those to hom they are legally issued shall be punished by:
:a; A (ne of not less than 2ne thousand pesos :"1%===; nor more than To thousand pesos :"3%===;
and su9er imprisonment of not less than si$ty :<=; days but not more than one hundred :1==; days%
if the appraised #alue% to be determined in the manner prescribed in the Tari9 and 7ustoms 7ode%
including duties and ta$es% of the articles does not e$ceed 2ne thousand pesos :"1%===;.
:b; A (ne of not less than Ten thousand pesos :"1=%===; but not more than Tenty thousand pesos
:"3=%===; and su9er imprisonment of not less than to :3; years but not more than four :0; years% if
the appraised #alue% to be determined in the manner prescribed in the Tari9 and 7ustoms 7ode%
including duties and ta$es% of the articles e$ceeds 2ne thousand pesos :"1%===; but does not
e$ceed 8ifty thousand pesos :"-=%===;&
:c; A (ne of not less than Thirty thousand pesos :"5=%===; but not more than Si$ty thousand pesos
:"<=%===; and su9er imprisonment of not less than four :0; years but not more than si$ :<; years% if
the appraised #alue% to be determined in the manner prescribed in the Tari9 and 7ustoms 7ode%
including duties and ta$es of the articles is more than 8ifty thousand pesos :"-=%===; but does not
e$ceed 2ne hundred (fty thousand pesos :"1-=%===;& or
GSV-110
:d; A (ne of not less than 8ifty thousand pesos :"-=%===; but not more than 2ne hundred thousand
pesos :"1==%===; and su9er imprisonment of not less than ten :1=; years but not more than tel#e
:13; years% if the appraised #alue% to be determined in the manner prescribed in the Tari9 and
7ustoms 7ode% including duties and ta$es% of the articles e$ceeds 2ne hundred (fty thousand pesos
:"1-=%===;.
Any person ho is found in possession of locally manufactured articles sub*ect to e$cise ta$% the ta$ on
hich has not been paid in accordance ith la% or any person ho is found in possession of such articles
hich are e$empt from e$cise ta$ other than those to hom the same is lafully issued shall be punished
ith a (ne of not less than :1=; times the amount of e$cise ta$ due on the articles found but not less than
8i#e hundred pesos :"-==; and su9er imprisonment of not less than to :3; years but not more than four
:0; years.
Any manufacturer% oner or person in charge of any article sub*ect to e$cise ta$ ho remo#es or allos or
causes the unlaful remo#al of any such articles from the place of production or bonded arehouse% upon
hich the e$cise ta$ has not been paid at the time and in the manner re'uired% and any person ho
)noingly aids or abets in the remo#al of such articles as aforesaid% or conceals the same after illegal
remo#al shall% for the (rst o9ense% be punished ith a (ne of not less than ten :1=; times the amount of
e$cise ta$ due on the articles but not less than 2ne thousand pesos :"1%===; and su9er imprisonment of
not less than one :1; year but not more than to :3; years.
The mere une$plained possession of articles sub*ect to e$cise ta$% the ta$ on hich has not been paid in
accordance ith la% shall be punishable under this Section.
*ection 2B4. 0ailure or refusal to 'ssue Receipts or Sales or Commercial 'nvoices, 3iolations related to the
Printing of such Receipts or 'nvoices and (ther 3iolations. -
:a; Any person ho% being re'uired under Section 354 to issue receipts or sales or commercial
in#oices% fails or refuses to issue such receipts of in#oices% issues receipts or in#oices that do not
truly reCect andEor contain all the information re'uired to be shon therein% or uses multiple or
double receipts or in#oices% shall% upon con#iction for each act or omission% be punished by a (ne of
not less than 2ne thousand pesos :"1%===; but not more than 8ifty thousand pesos :"-=%===; and
su9er imprisonment of not less than to :3; years but not more than four :0; years.
:b; Any person ho commits any of the acts enumerated hereunder shall be penali!ed in the same
manner and to the same e$tent as pro#ided for in this Section:
:1; "rinting of receipts or sales or commercial in#oices ithout authority from the ?ureau of
Internal 6e#enue& or
:3; "rinting of double or multiple sets of in#oices or receipts& or
:5; "rinting of unnumbered receipts or sales or commercial in#oices% not bearing the name%
business style% Ta$payer Identi(cation ,umber% and business address of the person or entity.
*ection 2BA. (%enses Relating to Stamps. - Any person ho commits any of the acts enumerated
hereunder shall% upon con#iction thereof% be punished by a (ne of not less than Tenty thousand pesos
:"3=%===; but not more than 8ifty thousand pesos :"-=%===; and su9er imprisonment of not less than four
:0; years but not more than eight :.; years:
:a; ma)ing% importing% selling% using or possessing ithout e$press authority from the
7ommissioner% any die for printing or ma)ing stamps% labels% tags or playing cards&
:b; 1rasing the cancellation mar)s of any stamp pre#iously used% or altering the ritten (gures or
letters or cancellation mar)s on internal re#enue stamps&
:c; "ossessing false% counterfeit% restored or altered stamps% labels or tags or causing the
commission of any such o9ense by another&
:d; Selling or o9ering for sale any bo$ or pac)age containing articles sub*ect to e$cise ta$ ith
false% spurious or counterfeit stamps or labels or selling from any such fraudulent bo$% pac)age or
container as aforementioned& or
:e; Gi#ing aay or accepting from another% or selling% buying or using containers on hich the
stamps are not completely destroyed.
GSV-11-
*ection 2BB. 0ailure to (bey Summons. - Any person ho% being duly summoned to appear to testify% or
to appear and produce boo)s of accounts% records% memoranda or other papers% or to furnish information
as re'uired under the pertinent pro#isions of this 7ode% neglects to appear or to produce such boo)s of
accounts% records% memoranda or other papers% or to furnish such information% shall% upon con#iction% be
punished by a (ne of not less than 8i#e thousand pesos :"-%===; but not more than ten thousand pesos
:"1=%===; and su9er imprisonment of not less than one :1; year but not more than to :3; years.
*ection 2B. +eclaration under Penalties of Per7ury. - Any declaration% return and other statement
re'uired under this 7ode% shall% in lieu of an oath% contain a ritten statement that they are made under
the penalties of per*ury. Any person ho illfully (les a declaration% return or statement containing
information hich is not true and correct as to e#ery material matter shall% upon con#iction% be sub*ect to
the penalties prescribed for per*ury under the 6e#ised "enal 7ode.
*ection 2B8. (ther Crimes and (%enses. -
:A; Misdeclaration or Misrepresentation of Manufacturers Sub*ect to 1$cise Ta$. - Any manufacturer
ho% in #iolation of the pro#isions of Title VI of this 7ode% misdeclares in the sorn statement
re'uired therein or in the sales in#oice% any pertinent data or information shall be punished by a
summary cancellation or ithdraal of the permit to engage in business as a manufacturer of
articles sub*ect to e$cise ta$.
:?; 8orfeiture of "roperty Hsed in Hnlicensed ?usiness or +ies Hsed for "rinting 8alse Stamps% 1tc. -
All chattels% machinery% and remo#able ($tures of any sort used in the unlicensed production of
articles sub*ect to e$cise ta$ shall be forfeited. +ies and other e'uipment used for the printing or
ma)ing of any internal re#enue stamp% label or tag hich is in imitation of or purports to be a laful
stamp% label or tag shall also be forfeited.
:7; 8orfeiture of Goods Illegally Stored or 6emo#ed. - Hnless otherise speci(cally authori!ed by the
7ommissioner% all articles sub*ect to e$cise ta$ should not be stored or alloed to remain in the
distillery arehouse% bonded arehouse or other place here made% after the ta$ thereon has been
paid& otherise% all such articles shall be forfeited. Articles ithdran from any such place or from
customs custody or imported into the country ithout the payment of the re'uired ta$ shall li)eise
be forfeited.
C%APT"R ### ; P"NA'T#"* #!P&*"D &N P)0'#C &++#C"R*
*ection 2B9. 3iolations Committed by 2overnment $nforcement ()cers. - 1#ery oAcial% agent% or
employee of the ?ureau of Internal 6e#enue or any other agency of the Go#ernment charged ith the
enforcement of the pro#isions of this 7ode% ho is guilty of any of the o9enses herein belo speci(ed shall%
upon con#iction for each act or omission% be punished by a (ne of not less than 8ifty thousand pesos
:"-=%===; but not more than 2ne hundred thousand pesos :"1==%===; and su9er imprisonment of not less
than ten :1=; years but not more than (fteen :1-; years and shall li)eise su9er an additional penalty of
perpetual dis'uali(cation to hold public oAce% to #ote% and to participate in any public election:
:a; 1$tortion or illful oppression through the use of his oAce or illful oppression and harassment
of a ta$payer ho refused% declined% turned don or re*ected any of his o9ers speci(ed in
paragraph :d; hereof&
:b; Knoingly demanding or recei#ing any fee% other or greater sums that are authori!ed by la or
recei#ing any fee% compensation or reard% e$cept as by la prescribed% for the performance of any
duty&
:c; Billfully neglecting to gi#e receipts% as by la re'uired% for any sum collected in the
performance of duty or illfully neglecting to perform any other duties en*oined by la&
:d; 29ering or underta)ing to accomplish% (le or submit a report or assessment on a ta$payer
ithout the appropriate e$amination of the boo)s of accounts or ta$ liability% or o9ering or
underta)ing to submit a report or assessment less than the amount due the Go#ernment for any
consideration or compensation% or conspiring or colluding ith another or others to defraud the
re#enues or otherise #iolate the pro#isions of this 7ode&
:e; ,eglecting or by design permitting the #iolation of the la by any other person&
:f; Ma)ing or signing any false entry or entries in any boo)% or ma)ing or signing any false
certi(cate or return&
GSV-11<
:g; Alloing or conspiring or colluding ith another to allo the unauthori!ed retrie#al% ithdraal
or recall of any return% statement or declaration after the same has been oAcially recei#ed by the
?ureau of Internal 6e#enue&
:h; Fa#ing )noledge or information of any #iolation of this 7ode or of any fraud committed on the
re#enues collectible by the ?ureau of Internal 6e#enue% failure to report such )noledge or
information to their superior oAcer% or failure to report as otherise re'uired by la& and
:i; Bithout the authority of la% demanding or accepting or attempting to collect% directly or
indirectly% as payment or otherise any sum of money or other thing of #alue for the compromise%
ad*ustment or settlement of any charge or complaint for any #iolation or alleged #iolation of this
7ode.
"ro#ided% That the pro#isions of the foregoing paragraph notithstanding% any internal re#enue oAcer for
hich a prima facie case of gra#e misconduct has been established shall% after due notice and hearing of
the administrati#e case and sub*ect to 7i#il Ser#ice Gas% be dismissed from the re#enue ser#ice: "ro#ided%
further% That the term Jgra#e misconductJ% as de(ned in 7i#il Ser#ice Ga% shall include the issuance of fa)e
letters of authority and receipts% forgery of signature% unsurpation of authority and habitual issuance of
unreasonable assessments.
*ection 2D. Cnla&ful +ivulgence of Trade Secrets. - 1$cept as pro#ided in Section 41 of this 7ode and
Section 3< of 6epublic Act ,o. <5..% any oAcer or employee of the ?ureau of Internal 6e#enue ho
di#ulges to any person or ma)es )non in any other manner than may be pro#ided by la information
regarding the business% income or estate of any ta$payer% the secrets% operation% style or or)% or
apparatus of any manufacturer or producer% or con(dential information regarding the business of any
ta$payer% )noledge of hich as ac'uired by him in the discharge of his oAcial duties% shall upon
con#iction for each act or omission% be punished by a (ne of not less than 8ifty thousand pesos :"-=%===;
but not more than 2ne hundred thousand pesos :"1==%===;% or su9er imprisonment of not less than to
:3; years but not more than (#e :-; years% or both.
*ection 21. Cnla&ful 'nterest of Revenue *a& $nforcers in Business. - Any internal re#enue oAcer ho is
or shall become interested% directly or indirectly% in the manufacture% sale or importation of any article
sub*ect to e$cise ta$ under Title VI of this 7ode or in the manufacture or repair or sale% of any die for
printing% or ma)ing of stamps% or labels shall upon con#iction for each act or omission% be punished by a
(ne of not less than 8i#e thousand pesos :"-%===; but not more than Ten thousand pesos :"1=%===;% or
su9er imprisonment of not less than to :3; years and one :1; day but not more than four :0; years% or
both.
*ection 22. 3iolation of 6ithholding Tax Provision. - 1#ery oAcer or employee of the Go#ernment of the
6epublic of the "hilippines or any of its agencies and instrumentalities% its political subdi#isions% as ell as
go#ernment-oned or controlled corporations% including the ?ang)o Sentral ng "ilipinas :?S";% ho% under
the pro#isions of this 7ode or rules and regulations promulgated thereunder% is charged ith the duty to
deduct and ithhold any internal re#enue ta$ and to remit the same in accordance ith the pro#isions of
this 7ode and other las is guilty of any o9ense herein belo speci(ed shall% upon con#iction for each act
or omission be punished by a (ne of not less than 8i#e thousand pesos :"-%===; but not more than 8ifty
thousand pesos :"-=%===; or su9er imprisonment of not less than si$ :<; months and one :1; day but not
more than to :3; years% or both:
:a; 8ailing or causing the failure to deduct and ithhold any internal re#enue ta$ under any of the
ithholding ta$ las and implementing rules and regulations&
:b; 8ailing or causing the failure to remit ta$es deducted and ithheld ithin the time prescribed by
la% and implementing rules and regulations& and
:c; 8ailing or causing the failure to (le return or statement ithin the time prescribed% or rendering
or furnishing a false or fraudulent return or statement re'uired under the ithholding ta$ las and
rules and regulations.
*ection 2,. Penalty for 0ailure to 'ssue and $xecute 6arrant. - Any oAcial ho fails to issue or e$ecute
the arrant of distraint or le#y ithin thirty :5=; days after the e$piration of the time prescribed in Section
3=4 or ho is found guilty of abusing the e$ercise thereof by competent authority shall be automatically
dismissed from the ser#ice after due notice and hearing.
C%APT"R #( ; &T%"R P"NA' PR&(#*#&N*
*ection 24. Penalty for Second and Subse/uent (%enses. - In the case of reincidence% the ma$imum of
the penalty prescribed for the o9ense shall be imposed.
GSV-114
*ection 2A. 3iolation of (ther Provisions of this Code or Rules and Regulations in 2eneral. - Any person
ho #iolates any pro#ision of this 7ode or any rule or regulation promulgated by the +epartment of
8inance% for hich no speci(c penalty is pro#ided by la% shall% upon con#iction for each act or omission%
be punished by a (ne of not more than 2ne thousand pesos :"1%===; or su9er imprisonment of not more
than si$ :<; months% or both.
*ection 2B. Penalty for Selling, Transferring, $ncumbering or in any &ay +isposing of Property Placed
under Constructive +istraint. - Any ta$payer% hose property has been placed under constructi#e distraint%
ho sells% transfers% encumbers or in any ay disposes of said property% or any part thereof% ithout the
)noledge and consent of the 7ommissioner% shall% upon con#iction for each act or omission% be punished
by a (ne of not less than tice the #alue of the property so sold% encumbered or disposed of but not less
than 8i#e Thousand pesos :"-%===;% or su9er imprisonment of not less than to :3; years and one :1; day
but not more than four :0; years% of both.
*ection 2. 0ailure to Surrender Property Placed under +istraint and *evy. - Any person ha#ing in his
possession or under his control any property or rights to property% upon hich a arrant of constructi#e
distraint% or actual distraint and le#y has been issued shall% upon demand by the 7ommissioner or any of
his deputies e$ecuting such arrant% surrender such property or right to property to the 7ommissioner or
any of his deputies% unless such property or right is% at the time of such demand% sub*ect to an attachment
or e$ecution under any *udicial process. Any person ho fails or refuses to surrender any of such property
or right shall be liable in his on person and estate to the Go#ernment in a sum e'ual to the #alue of the
property or rights not so surrendered but not e$ceeding the amount of the ta$es :including penalties and
interest; for the collection of hich such arrant had been issued% together ith cost and interest if any%
from the date of such arrant. In addition% such person shall% upon con#iction for each act or omission% be
punished by a (ne of not less than 8i#e thousand pesos :"-%===;% or su9er imprisonment of not less than
si$ :<; months and one :1; day but not more than to :3; years% or both.
*ection 28. Procuring Cnla&ful +ivulgence of Trade Secrets. - Any person ho causes or procures an
oAcer or employee of the ?ureau of Internal 6e#enue to di#ulge any con(dential information regarding the
business% income or inheritance of any ta$payer% )noledge of hich as ac'uired by him in the discharge
of his oAcial duties% and hich it is unlaful for him to re#eal% and any person ho publishes or prints in
any manner hate#er% not pro#ided by la% any income% pro(t% loss or e$penditure appearing in any
income ta$ return% shall be punished by a (ne of not more than To thousand pesos :"3%===;% or su9er
imprisonment of not less than si$ :<; months nor more than (#e :-; years% or both.
*ection 29. Con:scation and 0orfeiture of the Proceeds or 'nstruments of Crime. - In addition to the
penalty Imposed for the #iolation of the pro#isions of Title M of this 7ode% the same shall carry ith it the
con(scation and forfeiture in fa#or of the go#ernment of the proceeds of the crime or #alue of the goods%
and the instruments or tools ith hich the crime as committed: "ro#ided% hoe#er% That if in the course
of the proceedings% it is established that the instruments or tools used in the illicit act belong to a third
person% the same shall be con(scated and forfeited after due notice and hearing in a separate proceeding
in fa#or of the Go#ernment if such third person leased% let% chartered or otherise entrusted the same to
the o9ender: "ro#ided% further% That in case the lessee subleased% or the borroer% charterer% or trustee
alloed the use of the instruments or tools to the o9ender% such instruments or tools shall% li)eise% be
con(scated and forfeited: "ro#ided% (nally% That property of common carriers shall not be sub*ect to
forfeiture hen used in the transaction of their business as such common carrier% unless the oner or
operator of said common carrier as% at the time of the illegal act% a consenting party or pri#y thereto%
ithout pre*udice to the onerJs right of reco#ery against the o9ender in a ci#il or criminal action. Articles
hich are not sub*ect of laful commerce shall be destroyed.
*ection 28D. Subsidiary Penalty. - If the person con#icted for #iolation of any of the pro#isions of this
7ode has no property ith hich to meet the (ne imposed upon him by the court% or is unable to pay such
(ne% he shall be sub*ect to a subsidiary personal liability at the rate of one :1; day for each 1ight pesos and
(fty centa#os :"..-=; sub*ect to the rules established in Article 5/ of the 6e#ised "enal 7ode.
*ection 281. Prescription for 3iolations of any Provision of this Code. - All #iolations of any pro#ision of
this 7ode shall prescribe after 8i#e :-; years.
"rescription shall begin to run from the day of the commission of the #iolation of the la% and if the same
be not )non at the time% from the disco#ery thereof and the institution of *udicial proceedings for its
in#estigation and punishment.
The prescription shall be interrupted hen proceedings are instituted against the guilty persons and shall
begin to run again if the proceedings are dismissed for reasons not constituting *eopardy.
The term of prescription shall not run hen the o9ender is absent from the "hilippines.
*ection 282. 'nformer9s Re&ard to Persons 'nstrumental in the +iscovery of 3iolations of the 4ational
'nternal Revenue Code and in the +iscovery and Sei5ure of Smuggled 2oods. -
GSV-11.
:A; 8or Violations of the ,ational Internal 6e#enue 7ode. Any person% e$cept an internal re#enue oAcial or
employee% or other public oAcial or employee% or his relati#e ithin the si$th degree of consanguinity% ho
#oluntarily gi#es de(nite and sorn information% not yet in the possession of the ?ureau of Internal
6e#enue% leading to the disco#ery of frauds upon the internal re#enue las or #iolations of any of the
pro#isions thereof% thereby resulting in the reco#ery of re#enues% surcharges and fees andEor the
con#iction of the guilty party andEor the imposition of any of the (ne or penalty% shall be rearded in a sum
e'ui#alent to ten percent :1=I; of the re#enues% surcharges or fees reco#ered andEor (ne or penalty
imposed and collected or 2ne Million "esos :"1%===%===; per case% hiche#er is loer. The same amount of
reard shall also be gi#en to an informer here the o9ender has o9ered to compromise the #iolation of
la committed by him and his o9er has been accepted by the 7ommissioner and collected from the
o9ender: "ro#ided% That should no re#enue% surcharges or fees be actually reco#ered or collected% such
person shall not be entitled to a reard: "ro#ided% further% That the information mentioned herein shall not
refer to a case already pending or pre#iously in#estigated or e$amined by the 7ommissioner or any of his
deputies% agents or e$aminers% or the Secretary of 8inance or any of his deputies or agents: "ro#ided%
(nally% That the reard pro#ided herein shall be paid under rules and regulations issued by the Secretary
of 8inance% upon recommendation of the 7ommissioner.
:?; 8or +isco#ery and Sei!ure of Smuggled Goods. To encourage the public to e$tend full cooperation in
eradicating smuggling% a cash reard e'ui#alent to ten percent :1=I; of the fair mar)et #alue of the
smuggled and con(scated goods or 2ne Million "esos :"1%===%===; per case% hiche#er is loer% shall be
gi#en to persons instrumental in the disco#ery and sei!ure of such smuggled goods.
The cash reards of informers shall be sub*ect to income ta$% collected as a (nal ithholding ta$% at a rate
of ten percent :1=I;.
The "ro#isions of the foregoing Subsections notithstanding% all public oAcials% hether incumbent or
retired% ho ac'uired the information in the course of the performance of their duties during their
incumbency% are prohibited from claiming informerJs reard.
T#T'" 5#
A''&T!"NT &+ #NT"RNA' R"("N)"
C%APT"R 1 ; D#*P&*#T#&N AND A''&T!"NT &+ NAT#&NA' #NT"RNA' R"("N)" #N $"N"RA'
*ection 28,. +isposition of 4ational 'nternal Revenue. - ,ational Internal re#enue collected and not
applied as herein abo#e pro#ided or otherise specially disposed of by la shall accrue to the ,ational
Treasury and shall be a#ailable for the general purposes of the Go#ernment% ith the e$ception of the
amounts set apart by ay of allotment as pro#ided for under 6epublic Act ,o. 41<=% otherise )non as
the Gocal Go#ernment 7ode of 1//1.
In addition to the internal re#enue allotment as pro#ided for in the preceding paragraph% (fty percent
:-=I; of the national ta$es collected under Sections 1=<% 1=. and 11< of this 7ode in e$cess of the
increase in collections for the immediately preceding year shall be distributed as follos:
:a; Tenty percent :3=I; shall accrue to the city or municipality here such ta$es are collected and
shall be allocated in accordance ith Section 1-= of 6epublic Act ,o. 41<=% otherise )non as the
Gocal Go#ernment 7ode of 1//1& and
:b; 1ighty percent :.=I; shall accrue to the ,ational Go#ernment.
*ection 284. llotment for the Commission on udit. - 2ne-half of one percent :1E3 of 1I; of the
collections from the national internal re#enue ta$es not otherise accruing to special accounts in the
general fund of the national go#ernment shall accrue to the 7ommission on Audit as a fee for auditing
ser#ices rendered to local go#ernment units% e$cluding maintenance% e'uipment% and other operating
e$penses as pro#ided for in Section 31 of "residential +ecree ,o. ./..
The Secretary of 8inance is hereby authori!ed to deduct from the monthly internal re#enue ta$ collections
an amount e'ui#alent to the percentage as herein ($ed% and to remit the same directly to the 7ommission
on Audit under such rules and regulations as may be promulgated by the Secretary of 8inance and the
7hairman of the 7ommission on Audit.
*ection 28A. llotment for the Bureau of 'nternal Revenue. - An amount e'ui#alent to (#e percent :-I; of
the e$cess of actual collections of national internal re#enue ta$es o#er the collection goal shall accrue to
the special fund of the ?ureau of Internal 6e#enue and shall be treated as receipts automatically
appropriated. Said amount shall be utili!ed as incenti#e bonus for re#enue personnel% purchase of
necessary e'uipment and facilities for the impro#ement of ta$ administration% as appro#ed by the
7ommissioner: "ro#ided% That the "resident may% upon recommendation of the 7ommissioner% direct that
GSV-11/
the e$cess be credited to a Special Account in the ,ational Treasury to be held in the reser#e a#ailable for
distribution as incenti#e bonus in the subse'uent years.
The Secretary of 8inance is hereby authori!ed to transfer from the Treasury an amount e'ui#alent to the
percentage as herein ($ed and to remit the same directly to the ?ureau of Internal 6e#enue under such
rules and regulations as may be promulgated by the Secretary of 8inance.
C%APT"R ## ; *P"C#A' D#*P&*#T#&N &+ C"RTA#N NAT#&NA' #NT"RNA' R"("N)" TA5"*
*ection 28B. +isposition of Proceeds of insurance Premium Tax. - Tenty-(#e percent :3-I; of the
premium ta$ collected under Section 135 of this 7ode shall accrue to the Insurance 8und as contemplated
in Section 01. of "residential +ecree ,o. <13 hich shall be used for the purpose of defraying the
e$penses of the Insurance 7ommission. The 7ommissioner shall turn o#er and deli#er the said Insurance
8und to the Insurance 7ommissioner as soon as the collection is made.
*ection 28. Shares of *ocal 2overnment Cnits in the Proceeds from the +evelopment and Ctili5ation of
the 4ational 6ealth. - Gocal Go#ernment units shall ha#e an e'uitable share in the proceeds deri#ed from
the utili!ation and de#elopment of the national ealth% ithin their respecti#e areas% including sharing the
same ith the inhabitants by ay of direct bene(ts.
:A; Amount of Share of Gocal Go#ernment Hnits. - Gocal go#ernment units shall% in addition to the
internal re#enue allotment% ha#e a share of forty percent :0=I; of the gross collection deri#ed by
the national go#ernment from the preceding (scal year from e$cise ta$es on mineral products%
royalties% and such other ta$es% fees or charges% including related surcharges% interests or (nes% and
from its share in any co-production% *oint #enture or production sharing agreement in the utili!ation
and de#elopment of the national ealth ithin their territorial *urisdiction.
:?; Share of the Gocal Go#ernments from Any Go#ernment Agency or Go#ernment-oned or -
7ontrolled 7orporation. - Gocal Go#ernment Hnits shall ha#e a share% based on the preceding (scal
year% from the proceeds deri#ed by any go#ernment agency or go#ernment-oned or controlled
corporation engaged in the utili!ation and de#elopment of the national ealth based on the
folloing formula% hiche#er ill produce a higher share for the local go#ernment unit:
:1; 2ne percent :1I; of the gross sales or receipts of the preceding calendar year% or
:3; 8orty percent :0=I; of the e$cise ta$es on mineral products% royalties% and such other
ta$es% fees or charges% including related surcharges% interests or (nes the go#ernment
agency or go#ernment-oned or -controlled corporations ould ha#e paid if it ere not
otherise e$empt.
:7; Allocation of Shares. - The share in the preceding Section shall be distributed in the folloing
manner:
:1; Bhere the natural resources are located in the pro#ince:
:a; "ro#ince - tenty percent :3=I;
:b; 7omponent cityEmunicipality - forty-(#e percent :0-I;& and
:c; ?arangay - thirty-(#e percent :5-I;
"ro#ided% hoe#er% That here the natural resources are located in to :3; or more
cities% the allocation of shares shall be based on the formula on population and land
area as speci(ed in subsection :7;:1; hereof.
:3; Bhere the natural resources are located in a highly urbani!ed or independent component
city:
:a; 7ity - si$ty - (#e percent :<-I;& and
:b; ?arangay - thirty - (#e percent :5-I;
"ro#ided% hoe#er% That here the natural resources are located in to :3; or more
cities% the allocation of shares shall be based on the formula on population and land
area as speci(ed in subsection :c;:1; hereof.
*ection 288. +isposition of 'ncremental Revenues. -
GSV-13=
:A; Incremental 6e#enues from 6epublic Act ,o. 4<<=. - The incremental re#enues from the
increase in the documentary stamp ta$es under 6.A. ,o. 4<<= shall be set aside for the folloing
purposes:
:1; In 1//0 and 1//-% tenty (#e percent :3-I; thereof respecti#ely% shall accrue to the
Hni(ed Fome-Gending "rogram under 1$ecuti#e 2rder ,o. /= particularly for mass sociali!ed
housing program to be allocated as follos: (fty percent :-=I; for mass-sociali!ed housing&
thirty percent :5=I; for the community mortgage program& and tenty percent :3=I; for
land ban)ing and de#elopment to be administered by the ,ational Fousing Authority:
"ro#ided% That no more than one percent :1I; of the respecti#e allocations hereof shall be
used for administrati#e e$penses&
:3; In 1//<% tenty (#e percent :3-I; thereof to be utili!ed for the ,ational Fealth
Insurance "rogram that hereafter may be mandated by la&
:5; In 1//0 and e#ery year thereafter% tenty (#e percent :3-I; thereof shall accrue to a
Special 1ducation 8und to be Administered by the +epartment of 1ducation% 7ulture and
Sports for the construction and repair of school facilities% training or teachers% and
procurement or production of instructional materials and teaching aids& and
:0; In 1//0 and e#ery year thereafter% (fty percent :-=I; thereof shall accrue to a Special
Infrastructure 8und for the 7onstruction and repair of roads% bridges% dams and irrigation%
seaports and hydroelectric and other indigenous poer pro*ects: "ro#ided% hoe#er% That for
the years 1//0 and 1//-% thirty percent :5=I;% and for the years 1//<% 1//4 and 1//.%
tenty percent :3=I;% of this fund shall be allocated for depressed pro#inces as declared by
the "resident as of the time of the e9ecti#ity of 6.A. ,o. 4<<=: "ro#ided% further% That
a#ailments under this fund shall be determined by the "resident on the basis of e'uity.
"ro#ided% (nally% That in paragraphs :3;% :5;% and :0; of this Section% not more one percent :1I; of
the allocated funds thereof shall be used for administrati#e e$penses by the implementing
agencies.
:?; Incremental 6e#enues from 6epublic Act ,o. .30=. - 8ifteen percent :1-I; of the incremental
re#enue collected from the e$cise ta$ on tobacco products under 6.A. ,o. .30= shall be allocated
and di#ided among the pro#inces producing burley and nati#e tobacco in accordance ith the
#olume of tobacco leaf production. The fund shall be e$clusi#ely utili!ed for programs in pursuit of
the folloing ob*ecti#es:
:1; 7ooperati#e pro*ects that ill enhance better 'uality of agricultural products and
increase income and producti#ity of farmers&
:3; Gi#elihood pro*ects% particularly the de#elopment of alternati#e farming system to
enhance farmerJs income& and
:5; Agro-industrial pro*ects that ill enable tobacco farmers to be in#ol#ed in the
management and subse'uent onership of pro*ects% such as post-har#est and secondary
processing li)e cigarette manufacturing and by-product utili!ation.
The +epartment of ?udget and Management% in consultation ith the 2#ersight 7ommittee created
under said 6.A. ,o. .30=% shall issue the corresponding rules and regulations go#erning the
allocation and disbursement of this fund.
*ection 289. Special 0inancial Support to Bene:ciary Provinces Producing 3irginia Tobacco. - The (nancial
support gi#en by the ,ational Go#ernment for the bene(ciary pro#inces shall be constituted and collected
from the proceeds of (fteen percent :1-I; of the e$cise ta$es on locally manufactured Virginia-type of
cigarettes.
The funds allotted shall be di#ided among the bene(ciary pro#inces pro-rata according to the #olume of
Virginia tobacco production.
"roduction producing Virginia tobacco shall be the bene(ciary pro#inces under 6epublic Act ,o. 4141.
"ro#ided% hoe#er% that to 'ualify as bene(ciary under 6.A. ,o. 4141% a pro#ince must ha#e an a#erage
annual production of Virginia leaf tobacco in an amount not less than one million )ilos: "ro#ided% further%
that the +epartment of ?udget and Management :+?M; shall each year determine the bene(ciary
pro#inces and their computed share of the funds under 6.A. ,o. 4141% referring to the ,ational Tobacco
Administration :,TA; records of tobacco acceptances% at the tobacco trading centers for the immediate
past year.
GSV-131
The Secretary of ?udget and Management is hereby directed to retain annually the said funds e'ui#alent
to (fteen percent :1-I; of e$cise ta$es on locally manufactured Virginia type cigarettes to be remitted to
the bene(ciary pro#inces 'uali(ed under 6.A. ,o. 4141.
The pro#ision of e$isting las to the contrary notithstanding% the (fteen percent :1-I; share from
go#ernment re#enues mentioned in 6.A. ,o. 4141 and due to the Virginia tobacco-producing pro#inces
shall be directly remitted to the pro#inces concerned.
"ro#ided% That this Section shall be implemented in accordance ith the guidelines of Memorandum
7ircular ,o. <1-A dated ,o#ember 3.% 1//5% hich amended Memorandum 7ircular ,o. <1% entitled
>"rescribing Guidelines for Implementing 6epublic Act ,o. 4141>% dated @anuary 1% 1//3.
"ro#ided% further% That in addition to the local go#ernment units mentioned in the abo#e circular% the
concerned oAcials in the pro#ince shall be consulted as regards the identi(cation of pro*ects to be
(nanced.
T#T'" 5##
&("R*#$%T C&!!#TT""
*ection 29D. Congressional (versight Committee. -
A 7ongressional 2#ersight 7ommittee% hereinafter referred to as the 7ommittee% is hereby constituted in
accordance ith the pro#isions of this 7ode. The 7ommittee shall be composed of the 7hairmen of the
7ommittee on Bays and Means of the Senate and Fouse 6epresentati#es and four :0; additional members
from each house% to be designated by the Spea)er of the Fouse of 6epresentati#es and the Senate
"resident% respecti#ely.
The 7ommittee shall% among others% in aid of legislation:
:1; Monitor and ensure the proper implementation of 6epublic Act ,o. .30=&
:3; +etermine that the poer of the 7ommissioner to compromise and abate is reasonably
e$ercised&
:5; 6e#ie the collection performance of the ?ureau of Internal 6e#enue& and
:0; 6e#ie the implementation of the programs of the ?ureau of Internal 6e#enue.
In furtherance of the hereinabo#e cited ob*ecti#es% the 7ommittee is empoered to re'uire of the ?ureau
of Internal 6e#enue% submission of all pertinent information% including but not limited to: industry audits&
collection performance data& status report on criminal actions initiated against persons& and submission of
ta$payer returns: "ro#ided% hoe#er% That any return or return information hich can be associated ith%
or otherise identify% directly or indirectly% a particular ta$payer shall be furnished the 7ommittee only
hen sitting in 1$ecuti#e Session unless such ta$payer otherise consents in riting to such disclosure
T#T'" 5###
R"P"A'#N$ PR&(#*#&N*
*ection 291. 'n 2eneral. - All las% decrees% e$ecuti#e orders% rules and regulations or parts thereof hich
are contrary to or inconsistent ith this 7ode are hereby repealed% amended or modi(ed accordingly.
T#T'" 5#(
+#NA' PR&(#*#&N*
*ection 292. Separability Clause. - If any clause% sentence% paragraph or part of this 7ode shall be
ad*udged by any 7ourt of competent *urisdiction to be in#alid% such *udgment shall not a9ect% impair or
in#alidate the remainder of said 7ode% but shall be con(ned in its operation to the clause% sentence%
paragraph or part thereof directly in#ol#ed in the contro#ersy.
GSV-133
NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199 AND #T* A!"ND!"NT*
R.A. T#T'" D-te of Appro1-l D-te of "?ecti1it6
6.A.
.030
The ,ational Internal 6e#enue 7ode of 1//4 +ecember 11% 1//4 @anuary 1% 1//.
6.A.
.4<1
An Act Imposing The Value-Added Ta$ on
7ertain Ser#ices ?eginning @anuary 1% 3==1%
Amending for the "urpose Section - of 6.A. ,o.
.030 and for 2ther "urposes.
8ebruary 1-% 3=== @anuary 1% 3==1
6.A.
/=1=
An Act To 8urther +efer The Imposition 2f The
Value-Added Ta$ 2n 7ertain Ser#ices%
Amending 8or The "urpose Section - of 6.A.
,o. .030% As Amended by 6.A. ,o. .4<1.
8ebruary 34% 3==1 @anuary 1% 3==5
6.A.
/330
An Act 6ationali!ing the 1$cise Ta$ on
Automobiles% Amending for the "urpose the
,ational Internal 6e#enue 7ode of 1//4% and
for 2ther "urposes.
August 3/% 3==5 2ctober 0% 3==5 :published
on September 1.% 3==5;
6.A.
/35.
An Act Amending 7ertain Sections of the
,ational Internal 6e#enue 7ode of 1//4% as
Amended% by 1$cluding Se#eral Ser#ices from
the 7o#erage of the Value-added Ta$ and 6e-
imposing the Gross 6eceipts Ta$ on ?an)s and
,on-ban) 8inancial Intermediaries "erforming
Luasi-?an)ing 8unctions and 2ther ,on-?an)
8inancial Intermediaries ?eginning @anuary 1%
3==0.
Gapsed into la on 8eb.
-% 3==0 ithout the
signature of the
"resident in accordance
ith Article VI% Section
34:1; of the
7onstitution.
@anuary 1% 3==0
6.A.
/305
An Act 6ationali!ing the "ro#isions on the
+ocumentary Stamp Ta$ of The ,ational
Internal 6e#enue 7ode of 1//4% as Amended%
and for 2ther "urposes.
8ebruary 14% 3==0 March 3=% 3==0
6.A.
/3/0
An Act 6estoring the Ta$ 1$emption of 29shore
?an)ing Hnits :2?Hs; and 8oreign 7urrency
+eposit Hnits :87+Hs;% Amending for the
"urpose Section 34:+;:5; and Section 3.%
"aragraphs :A;:0; and :A;:4;:b; of the ,ational
Internal 6e#enue 7ode% as Amended.
Appro#ed by the
"resident on April 3.%
3==0
May 31% 3==0
6.A.
/550
An Act Increasing the 1$cise Ta$ 6ates Imposed
on Alcohol and Tobacco "roducts% Amending for
the "urpose Sections 151% 101% 103% 105% 100%
10- and 3.. of the ,ational Internal 6e#enue
7ode of 1//4% as Amended.
+ecember 51% 3==0 @anuary 1% 3==-
6.A.
/554
An Act Amending Sections 34% 3.% 50% 1=<%
1=4% 1=.% 1=/% 11=% 111% 113% 115% 110% 11<%
114% 11/% 131% 10.% 1-1% 35<% 354 and 3.. of
the ,ational Internal 6e#enue 7ode of 1//4% as
Amended% and for 2ther "urposes.
Appro#ed on May 30%
3==-.
Its e9ecti#ity clause
pro#ides that it shall ta)e
e9ect @uly 1% 3==- but due
to a T62 (led by some
ta$payers. The la (nally
too) e9ect ,o#ember 1%
3==- hen the T62 as
(nally lifted by the Supreme
7ourt
6.A.
/5<1
An Act Amending Section 11=:?; of the
,ational Internal 6e#enue 7ode of 1//4% as
Amended% and for 2ther "urposes.
Appro#ed on ,o#ember
31% 3==<
+ecember 15% 3==<
:published on ,o#ember 3.%
3==<;
6.A.
/-=0
An Act Amending Sections 33% 30% 50% 5-% -1
and 4/ of 6epublic Act ,o. .030% As Amended%
2therise Knon as the ,ational Internal
6e#enue 7ode of 1//4.
Appro#ed on @une 14%
3==. and too) e9ect
on @uly <% 3==..
@uly <% 3==.
6.A.
1===
"ublishing the full te$t of 6epublic Act ,o.
1===1 entitled >An Act 6educing Ta$es on Gife
Appro#ed 8ebruary 35%
3=1=

GSV-135
1 Insurance "olicies% Amending for this Sections
135 and 1.5 of the ,ational Internal 6e#enue
7ode of 1//4% as Amended.>
6.A.
1==3
1
An Act to Allo the 1$change of Information ?y
The ?ureau of Internal 6e#enue 2n Ta$ Matters
"ursuant to Internationally-Agreed Ta$
Standards% Amending Section <:8;% and 34= 2f
The ,ational Internal 6e#enue 7ode% As
Amended and 8or 2ther "urposes.
Appro#ed March .%
3=1=

6.A.
1==3
<
An Act Granting Income Ta$ 1$emption To Gocal
Bater +istricts by Amending Section 34 :7; of
the ,ational Internal 6e#enue 7ode of 1//4 As
Amended% and Adding Section 3./-A To The
7ode 8or the "urposes.
Gapsed into la on
March 11% 3=1= ithout
the signature of the
"resident% in
accordance ith Article
VI% Section 34 :1; of the
7onstitution.;

R"P)0'#C ACT N&. 8B1 +ebru-r6 1B, 2DDD
AN ACT #!P&*#N$ T%" (A')";ADD"D TA5 &N C"RTA#N *"R(#C"* 0"$#NN#N$ FAN)ARE 1, 2DD1,
A!"ND#N$ +&R T%" P)RP&*" *"CT#&N A &+ R"P)0'#C ACT N&. 8424 AND +&R &T%"R
P)RP&*"*
Be it enacted by the Senate and House of Representatives of the Philippines of Representatives of the
Philippines in Congress assembled:
*ection 1. Section - of 6epublic Act ,o. .030 is hereby amended to read as follos:
>S17. -. Transitory "ro#isions. - 19ecti#ity of the Imposition of VAT on 7ertain Ser#ices. - The
imposition of the #alue-added ta$ on the folloing ser#ices shall ta)e e9ect on @anuary 1% 3==1:
>:a; Ser#ices performed in the e$ercise of profession or calling sub*ect to the professional ta$ as
pro#ided for under 6epublic Act ,o. 41<=% otherise )non as the Gocal Go#ernment 7ode of 1//1%
and professional ser#ices performed by registered general professional partnerships& actors%
actresses% talents% singers and emcees& radio and tele#ision broadcasters% choreographers& musical%
radio% mo#ie% tele#ision and stage directors& and professional athletes&
>:b; Ser#ices rendered by ban)s% non-ban) (nancial intermediaries% (nance companies% and other
(nancial intermediaries not performing 'uasi-ban)ing functions& and
>:c; Ser#ices rendered by stoc)% real estate% commercial% customs and immigration bro)ers:
"ro#ided% That% for the year beginning @anuary 1 up to +ecember 51% 3===% the aforementioned
bro)ers shall% in lieu of the #alue-added ta$ prescribed under Title IV of the ,ational Internal
6e#enue 7ode of 1//4% be sub*ect to a ta$ e'ui#alent to se#en percent :4I; based on gross
receipts from bro)ering ser#ices hich shall be paid in the manner and in accordance ith the
pro#isions of Title V of the said 7ode: "ro#ided% further% That beginning @anuary 1% 3==1% the
aforementioned bro)ers shall be sub*ect to the #alue-added ta$% in lieu of the se#en percent :4I;
ta$.
>The ta$payers rendering ser#ices mentioned under paragraphs :a; and :b; hereof% shall pay the
applicable ta$es prescribed under the pertinent pro#isions of the ,ational Internal 6e#enue 7ode%
as amended.>
*ection 2. 'mplementing Rules and Regulations. - The Secretary of 8inance shall% upon the
recommendation of the 7ommissioner of Internal 6e#enue% promulgate the necessary rules and regulations
for the e9ecti#e implementation of this Act.
*ection ,. Repealing Clause. - All las% decrees% orders% issuances% rules and regulations and other
issuances or parts thereof inconsistent ith this Act are hereby repealed or modi(ed accordingly.
*ection 4. $%ectivity? - This Act shall ta)e e9ect on @anuary 1% 3===.
Appro#ed: 8ebruary 1<% 3===
:SG+.; F&*"P% ". "*TRADA
President of the Philippines
GSV-130
6epublic of the "hilippines
C&N$R"** &+ T%" P%#'#PP#N"*
Metro Manila
"le1enth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-fourth day of @uly% to thousand.
R"P)0'#C ACT N&. 9D1D +ebru-r6 2, 2DD1
AN ACT T& +)RT%"R D"+"R T%" #!P&*#T#&N &+ T%" (A')";ADD"D TA5 &N C"RTA#N *"R(#C"*,
A!"ND#N$ +&R T%" P)RP&*" *"CT#&N A &+ R"P)0'#C ACT N&. 8424, A* A!"ND"D 0E
R"P)0'#C ACT N&. 8B1
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*ection 1. Section - of 6epublic Act ,o. .030% as amended by 6epublic Act ,o. .4<1% is hereby further
amended to read as follos:
G*ection A. Transitory "ro#isions. - 19ecti#ity of the Imposition of VAT on 7ertain Ser#ices. - The
imposition of the #alue-added ta$ on the folloing ser#ices shall ta)e e9ect on @anuary 1%3==5:
>:a; Ser#ices performed in the e$ercise of profession or calling sub*ect to the professional ta$ as
pro#ided for under 6epublic Act ,o. 41<=% otherise )non as the Gocal Go#ernment 7ode of 1//1%
and professional ser#ices performed by registered general professional partnerships& actors%
actresses% talents% singers and emcees& radio and tele#ision broadcasters% choreographers& musical%
radio% mo#ie% tele#ision and stage directors& and professional athletes&
>:b; Ser#ices rendered by ban)s% nonban) (nancial intermediaries% (nance companies and other
(nancial intermediaries not performing 'uasi-ban)ing functions& and
>:c; Ser#ices rendered by stoc)% real estate% commercial% customs and immigration bro)ers:
"ro#ided% That for the years beginning @anuary 1% 3==1 up to +ecember 51% 3==3% the
aforementioned bro)ers shall% in lieu of the #alue-added ta$ prescribed under Title IV of the ,ational
Internal 6e#enue 7ode of 1//4% be sub*ect to a ta$ e'ui#alent to se#en percent :4I; based on
gross receipts from bro)ering ser#ices hich shall be paid in the manner and in accordance ith the
pro#isions of Title V of the said 7ode: "ro#ided% further% That beginning @anuary 1% 3==5% the
aforementioned bro)ers shall be sub*ect to the #alue-added ta$ in lieu of the se#en percent :4I;
ta$.
>The ta$payers rendering ser#ices mentioned under paragraphs :a; and :b; hereof% shall pay the
applicable ta$es prescribed under the pertinent pro#isions of the ,ational Internal 6e#enue 7ode%
as amended.>
*ection 2. The Secretary of 8inance shall% upon the recommendation of the 7ommissioner of Internal
6e#enue% promulgate the necessary rules and regulations for the e9ecti#e implementation of this Act.
GSV-13-
*ection ,. All las% decrees% orders% issuances% rules and regulations and other issuances or parts thereof
inconsistent ith this Act are hereby repealed or modi(ed accordingly.
*ection 4. The e9ecti#ity of this Act shall retroact to @anuary 1% 3==1.
Appro#ed%
:Sgd.; A8)#'#N& 8. P#!"NT"' FR.
"resident of the Senate
:Sgd.; ARN)'+& P. +)"NT"0"''A
Spea)er of the Fouse of 6epresentati#es
This Act hich is a consolidation of Fouse ?ill ,o. 13354 and Senate ?ill ,o. 333- as (nally passed by the
Fouse of 6epresentati#es and the Senate on @anuary 1<% 3==1and @anuary 1-% 3==1% respecti#ely.
:Sgd.; ')T$ARD& 0. 0AR0&
Secretary of Senate
:Sgd.; R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresentati#es
Appro#ed: 8ebruary 34% 3==1
:Sgd.; $'&R#A !ACAPA$A';ARR&E&
President of the Philippines
Congress of the Philippines
T4elfth Congress
Thir/ Regul-r *ession
?egun held in Metro Manila on Monday% the tenty-eighth day of @uly% to thousand three.
Republic Act No. 9224 August 29, 2DD,
AN ACT RAT#&NA'#C#N$ T%" "5C#*" TA5 &N A)T&!&0#'"*, A!"ND#N$ +&R
T%" P)RP&*" T%" NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199, AND +&R &T%"R P)RP&*"*.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*ection 1. Section 10/ of the ,ational Internal 6e#enue 7ode of 1//4 is hereby amended to read as
follos:
>S17. 10/. Automobiles. U There shall be le#ied% assessed and collected an ad #alorem ta$ on
automobiles based on the manufacturerJs or importerJs selling price% net of e$cise and #alue-added
ta$es% in accordance ith the folloing schedule:
,et manufacturerJs priceE
ImporterJs selling price
6ate
Hp to "<== Thousand 3I
2#er "<== Thousand to "1.1
Million
"13%=== Q 3=I of
#alue in e$cess of
"<== Thousand
2#er "1.1 Million to "3.1 Million "113%=== Q 0=I of
#alue in e$cess of
"1.1 Million
2#er "3.1 Million "-13%=== Q <=I of
#alue e$cess of "3.1
Million
GSV-13<
Provided, That the brac)ets reCecting the manufacturerJs price or importerJs selling price% net of
e$cise and #alue-added ta$es% ill be inde$ed by the Secretary of 8inance once e#ery to :3; years
if the change in the e$change rate of the "hilippine peso against the Hnited States :H.S; dollar is
more than ten percent :1=I; from the date of e9ecti#ity of this Act% in the case of initial ad*ustment
and from the last re#ision date in the case of subse'uent ad*ustments.
The manufacturerJs price or importerJs selling price% net of e$cise and #alue-added ta$es% shall
inde$ed by the full rate of the peso depreciation or appreciation% as the case may be.
Provided, further, That in case the change in the e$change rate of the "hilippine peso against the
H.S dollar is at least tenty percent :3=I; at anytime ithin the to-year period re9ered to abo#e%
the Secretary of 8inance shall inde$ the brac)ets reCecting the manufacturerJs price or importerJs
selling price% net of e$cise and #alue-added ta$es% by the full rate of the peso depreciation or
appreciation% as the case may be.
As used in this Section U
:a; Automobile shall mean any four :0; or more heeled motor #ehicle regardless of seating
capacity% hich is propelled by gasoline% diesel% electricity or any other moti#e
poer: Provided, That for purposes of this Act% buses% truc)s% cargo #ans% *eepsE*eepneysE*eepney
substitutes% single cab% chassis% and special-purpose #ehicles shall not be considered as
automobiles
:b; Truc)Ecargo #an shall mean a motor #ehicle of any con(guration that is e$clusi#ely designed for
the carriage of goods and ith any number of heels and a$les. Provided, That pic)-ups shall not
be considered as truc)s.
:c; @eepE*eepneysE*eepney substitutes shall mean as >"hilippine *eep or *eepney> hich are of the
*itney type locally designed and manufactured generally from surplus parts and components. It
shall also include *eepney substitutes that are manufactured from brand-nes single cab chassis or
col chassis and locally customi!ed rear body that has continuous sideay ro seats ith open
rear door and ithout retractable glass indos.
:d; ?us shall mean a motor #ehicle of any con(guration ith gross #ehicle eight of 0.= tons or
more ith any number of heels and a$les% hich is generally accepted and specially designed for
mass or public transportation.
:e; Single cab chassis shall mean a motor #ehicle ith complete engine poer train and chassis
e'uipped ith a cab that has a ma$imum of to :3; doors and only :1; ro pf seats.
:f; Special purpose #ehicle shall mean a motor #ehicle designed for speci(c application such as
cement mi$er% (re truc)% boom truc)% ambulance andEor medical unit% and o9-road #ehicles for
hea#y industries and not for the recreational acti#ities.
Provided? That in the case of imported automobiles not for sale% the ta$ imposed herein shall be
based on the total landed #alue% including transaction #alue% customs duty and all other charges.
Automobiles used e$clusi#ely ithin the freeport !ones shall be e$empt from e$cise ta$.
*ection 2. Rules and Regulations - The Secretary of 8inance% upon the recommendation of the
7ommissioner of Internal 6e#enue shall promulgated the necessary rules and regulation for the e9ecti#e
implementation of the pro#ision of the pro#isions of this Act ithin thirty :5=; days from the date of
appro#al.
*ection ,. Separablitiy Clause - If any pro#ision of this Act is held unconstitutional or in#alid% all other
pro#isions not a9ected thereby shall remain #alid.
*ection 4. Repealing Clause - All las% decrees% e$ecuti#e order% letters of instruction% rules and
regulations or parts thereof hich are inconsistent ith this Act are hereby repealed% amended or modi(ed
accordingly:
*ection A. Efectivity Clause - This Act shall ta)e e9ect (fteen :1-; days after the publication of the
appro#ed implementing ruled and regulations.
GSV-134
Appro#ed%
+RAN='#N DR#'&N
"resident of the Senate
F&*" D" ("N"C#A FR.
Spea)er of the Fouse of
6epresentati#es
This Act% hich is a consolidation of Fouse ?ill ,o. -41/ amd Senate ?ill ,o. 3-14 as (nally passed by the
the Fouse of 6epresentati#es and Senate on August 3-% 3==5 and August 1/% 3==5% respecti#ely.
&*CAR $. EA0"*
Secretary of Senate
R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresenati#es
Appro#ed: August 3/% 3==5
$'&R#A !ACAPA$A';ARR&E&
President of the Philippines
Republic of the Philippines
Congress of the Philippines
Metro Manila
T4elfth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-second day of @uly% to thousand three.
Republic Act No. 92,8 +ebru-r6 DA, 2DD4 Hl-pse/I
AN ACT A!"ND#N$ C"RTA#N *"CT#&N* &+ T%" NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199,
A* A!"ND"D, 0E "5C')D#N$ *"("RA' *"R(#C"* +R&! T%" C&("RA$" &+ T%" (A')";ADD"D
TA5 AND R";#!P&*#N$ T%" $R&** R"C"#PT* TA5 &N 0AN=* AND N&N;0AN= +#NANC#A'
#NT"R!"D#AR#"* P"R+&R!#N$ 8)A*#;0AN=#N$ +)NCT#&N* AND &T%"R N&N;0AN= +#NANC#A'
#NT"R!"D#AR#"* 0"$#NN#N$ FAN)ARE D1, 2DD4
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*ection 1. Section 1=. of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>:A; Rate and Base of Tax. U There shall be le#ied% assessed and collected% a #alue-added ta$
e'ui#alent to ten percent :1=I; of the gross receipts% deri#ed from the sale or e$change of
ser#ices% including the use or lease of properties.
>The phrase Jsale or e$change of ser#icesJ means the performance of all )inds of ser#ices in
the "hilippines for others for a fee% remuneration or consideration% including those performed
or rendered by construction and ser#ice contractors& stoc)% real estate% commercial% customs
GSV-13.
and immigration bro)ers& lessors of property% hether personal or real& arehousing
ser#ices& lessors or distributors of cinematographic (lms& persons engaged in milling%
processing% manufacturing or repac)ing goods for others& proprietors% operators or )eepers
of hotels% motels% resthouses% pension houses% inns% resorts& proprietors or operators of
restaurants% refreshment parlors% cafes and other eating places% including clubs and
caterers& dealers in securities& lending in#estors& transportation contractors on their
transport of goods or cargoes% including persons ho transport goods or cargoes for hire and
other domestic common carriers by land% air and ater relati#e to their transport of goods or
cargoes& ser#ices of franchise grantees of telephone and telegraph% radio and tele#ision
broadcasting and all other franchise grantees e$cept those under Section 11/ of this 7ode&
Vser#ices of ban)s% non-ban) (nancial intermediaries and (nance companies&W and non-life
insurance companies :e$cept their crop insurances;% including surety% (delity% indemnity and
bonding companies& and similar ser#ices regardless of hether or not the performance
thereof calls for the e$ercise or use of the physical or mental faculties. The phrase >sale or
e$change of ser#ices> shall li)eise include:
:1; The lease or the use of or the right or pri#ilege to use any copyright% patent% design or
model plan% secret formula or process% goodill% trademar)% trade brand or other li)e
property or right&
:3; The lease or the use of% or the right to use of any industrial% commercial or scienti(c
e'uipment&
:5; The supply of scienti(c% technical% industrial or commercial )noledge or information&
:0; The supply of any assistance that is ancillary and subsidiary to and is furnished as a
means of enabling the application or en*oyment of any such property% or right as is
mentioned in subparagraph :3; or any such )noledge or information as is mentioned in
subparagraph :5;&
:-; The supply of ser#ices by a nonresident person or his employee in connection ith the
use of property or rights belonging to% or the installation or operation of any brand%
machinery or other apparatus purchased from such non resident person&
:<; The supply of technical ad#ice% assistance or ser#ices rendered in connection ith
technical management or administration of any scienti(c% industrial or commercial
underta)ing% #enture pro*ect or scheme&
:4; The lease of motion picture (lms% (lms% tapes and discs& and
:.; The lease or the use of or the right to use radio% tele#ision% satellite transmission and
cable tele#ision time.
Gease of properties shall be sub*ect to the ta$ herein imposed irrespecti#e of the place
here the contract of lease or licensing agreement as e$ecuted if the property is leased or
used in the "hilippines.
The term >gross receipts> means the total amount of money or its e'ui#alent representing
the contract price% compensation% ser#ice fee% rental or royalty% including the amount
charged for materials supplied ith the ser#ices and deposits and ad#ance payments
actually or constructi#ely recei#ed during the ta$able 'uarter for the ser#ices performed or
to be performed for another person% e$cluding #alue-added ta$.
:?; Transactions Sub7ect to Eero Percent =FG> Rate. - The folloing ser#ices performed in the
"hilippines by VAT-registered persons shall be sub*ect to !ero percent :=I; rate:
:1; "rocessing% manufacturing or repac)ing goods for other persons doing business outside
the "hilippines hich goods are subse'uently e$ported% here the ser#ices are paid for in
acceptable foreign currency and accounted for in accordance ith the rules and regulations
of the ?ang)o Sentral ng "ilipinas :?S";&
:3; Ser#ices other than those mentioned in the preceding paragraph% the consideration for
hich is paid for in acceptable foreign currency and accounted for in accordance ith the
rules and regulations of the ?ang)o Sentral ng "ilipinas :?S";&
:5; Ser#ices rendered to persons or entities hose e$emption under special las or
international agreements to hich the "hilippines is a signatory e9ecti#ely sub*ects the
supply of such ser#ices to !ero percent :=I; rate&
GSV-13/
:0; Ser#ices rendered to #essels engaged e$clusi#ely in international shipping& and
:-; Ser#ices performed by subcontractors andEor contractors in processing con#erting% or
manufacturing goods for an enterprises hose e$port sales e$ceed se#enty percent :4=I; of
total annual production.
:c; +etermination of Tax. - The ta$ shall be computed by multiplying the total amount indicated in
the oAcial receipt by one-ele#enth :1E11;.>
*ection. 2. Section 1=/ of the same 7ode is hereby amended by reording paragraph :l; and inserting
additional paragraphs after :!; hich shall no read as follos:
>S17. 1=/. 1$empt Transactions. - The folloing shall be e$empt from the #alue-added ta$.
:a; Sale of nonfood agricultural products& marine and forest products in their original state
by the primary producer or the oner of the land here the same are produced&
:b; Sale of cotton and cotton seeds in their original state& and copra&
:c; Sale or important of agricultural and marine food products in their original state% li#estoc)
and poultry of a )ind generally used as% or yielding or producing foods for human
consumption& and breeding stoc) and genetic materials therefor.
"roducts classi(ed under this paragraph and paragraph :a; shall be considered in their
original state e#en if they ha#e undergone the simple processes of preparation or
preser#ation for the mar)et% such as free!ing% drying% salting% broiling% roasting% smo)ing or
stripping% "olished andEor hus)ed rice% com grits% ra cane sugar and molasses% and ordinary
salt shall be considered in their original state&
:d; Sale or importation of fertili!ers& seeds% seeding and (ngerlings& (sh% pran% li#estoc)
and poultry feeds% including ingredients% hether locally produced or imported% used in the
manufacture of (nished feeds :e$cept specialty feeds for race horses% (ghting coc)s%
aguarium (sh% !oo animals and other animals generally considered as pets;&
:e; Sale or importation of coal and natural gas% in hate#er form or state% and petroleum
products :e$cept lubricating oil% processed gas% grease% a$ and petrolatum; sub*ect to
e$cise ta$ imposed under title VI&
:f; Sale or importation of ra materials to be used by the buyer or importer himself in the
manufacture of petroleum products sub*ect to e$cise ta$% e$cept lubricating oil% processed
gas% grease% a$ and petrolatum&
:g; Importation of passenger andEor cargo #essels or more than (#e thousand tons :-%===;%
hether coastise or ocean-going% including engine and spare parts of said #essels to be
used by the importer himself as operator thereof&
:h; Importation of personal and households e9ects belonging to the residents of the
"hilippines returning from abroad and nonresident citi!ens coming to resettle in the
"hilippines& Provided% That such goods are e$emp from customs duties under the Tari9 and
7ustoms 7ode of the "hilippines&
:i; Importation of professional instruments and implements% earing apparel% domestic
animals% and personal household e9ects :e$cept any #ehicle% #essel% aircraft% machinery%
other goods for use in the manufacture and merchandise of any )ind in commercial 'uantity;
belonging to person coming to settle in the "hilippines% for their on use and not for sale%
barter or e$change% accompanying such persons% or arri#ing ithin ninety :/=; days before
or after their arri#al% upon the production of e#idence satisfactory to the 7ommissioner% that
such persons are actually coming to settle in the "hilippines and that the change of
residence is bona :de&
:*; Ser#ices sub*ect to percentage ta$ under Title V&
:); Ser#ices by agricultural contract groers and milling for others of palay into rice% corn
into grits and sugar cane into ra sugar&
:l; Medical% dental% hospital and #eterinary ser#ices e$cept those rendered by professionals&
GSV-15=
:m; 1ducational ser#ices rendered by pri#ate educational institutions% duly accredited by the
+epartment of 1ducation% 7ulture and Sports :+17S; and the 7ommission of Figher
1ducation :7F1+;% and those rendered by go#ernment educational institutions&
:n; Sale by the artist himself of his or)s of art% literary or)s% musical compositions and
similar creations% or his ser#ices performed for the production of such or)s&
:o; Ser#ices rendered by indi#iduals pursuant to an employer-employee relationship&
:p; Ser#ices rendered by regional or area head'uarters established in the "hilippines by
multinational corporations hich act as super#isory% communications and coordinating
centers for their aAliates% subsidiaries or branches in the Asia-"aci(c 6egion and do not earn
or deri#e income from the "hilippines&
:'; Transaction hich are e$empt under international agreements to hich the "hilippines is
a signatory or under special las% e$cept those under "residential +ecree ,os. <<% -3/ and
1-/=&
:r; Sales by agricultural cooperati#es duly registered ith the 7ooperati#e +e#elopment
Authority to their members as ell as sale of their produce% hether in its original state or
processed form% to non-members& their importation of direct farm inputs% machineries and
e'uipment% including spare parts thereof% to be used directly and e$clusi#ely in the
production andEor processing of their produce&
:s; Sales by electric cooperati#es duly registered ith the 7ooperati#e +e#elopment
Authority or ,ational 1lectri(cation Administration% relati#e to the generation and
distribution of electricity as ell as their importation of machineries and e'uipment%
including spare parts% hich shall be directly used in the generation and distribution of
electricity&
:t; Gross receipts from lending acti#ities by credit or multi-purpose cooperati#es duly
registered ith the 7ooperati#e +e#elopment Authority hose lending operation is limited to
their members&
:u; Sales by non-agricultural% non-electrical and non-credit cooperati#es duly registered ith
the 7ooperati#e +e#elopment Authority: Provided% That the share capital contribution of
each member does not e$ceed 8ifteen Thousand "esos :"1-%===; and regardless of the
aggregate capital and net surplus ratably distributed among the members&
:#; 1$port sales by persons ho are not VAT-registered&
:; Sale of real properties not primarily held for sale to customers or held for lease in the
ordinary course of trade or business or real property utili!ed for lo-cost and sociali!ed
housing as de(ned by 6epublic Act ,o. 434/% otherise )non as the Hrban +e#elopment
and Fousing Act of 1//3% and other related las% house and lot and other residential
dellings #alued at 2ne million pesos :"1%===%===.==; and belo: Provided% That not latter
than @anuary 51
st
of the calendar year subse'uent to the e9ecti#ity of this Act and each each
calendar thereafter% the amount of 2ne million pesos :"1%===%===; shall be ad*usted to its
present #alue using the 7ostumer "rice Inde$% as published by the ,ational Statistics 2Ace
:,S2;&
:$; Gease of a residential unit ith a monthly rental not e$ceeding 1ight thousand pesos
:".%===;: "ro#ided% That not latter than @anuary 51
st
of the calendar year subse'uent to the
e9ecti#ity of 6epublic Act ,o. .301 and each calendar year thereafter% the amount of 1ight
thousand pesos :".%===; shall be ad*usted to its present #alue using the 7onsumer "rice
Inde$ as published by the ,ational Statistics 2Ace :,S2;&
:y; Sale% importation% printing or publication of boo)s and any nespaper% maga!ine% re#ie
of bulletin hich appears at regular inter#als ith ($ed prices for subscription and sale and
hich is not de#oted principally to the publication of paid ad#ertisements&
:!; Sale or lease of goods or properties or the performance of ser#ices other than the
transactions mentioned in the preceding& paragraphs% the gross annual sales andEor receipts
do not e$ceed the amount of 8i#e hundred (fty thousand pesos :"--=%===;: Provided% That
not later than @anuary 51st of the calendar year subse'uent to the e9ecti#ity of 6epublic Act
,o. .301 and each calendar year thereafter% the amount of 8i#e hundred (fty thousand
pesos :"--=%===; shall be ad*usted to its present #alue using the 7onsumer "rice Inde$% as
published by the ,ational Statistics 2Ace :,S2;&
GSV-151
:aa; Ser#ices of ban)s% non-ban) (nancial intermediaries performing 'uasi-ban)ing
functions% and other non-ban) (nancial intermediaries&
:bb; ser#ices rendered by doctors of medicine duly registered ith the professional
regulatory commission :"67;& and
:cc; ser#ices rendered by layers duly registered ith the Integrated ?ar of the
"hilippines :I?";.
The foregoing e$emptions to the contrary notithstanding% any person hose sale of goods or
properties or ser#ices hich are otherise not sub*ect to VAT% but ho issue a VAT in#oice or receipt
therefor shall% in additional to his liability to other applicable percentage ta$% if any% be liable to the
ta$ imposed in Section 1=< or 1=. ithout the bene(t of input ta$ credit% and such ta$ shall also be
recogni!ed as input ta$ credit to the purchaser under Section 11=% all of this 7ode.>
*ection ,. Section 131 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby restored
ith amendments to read as follos:
>Sec. 131. Tax on Ban-s and 4on1Ban- 0inancial 'ntermediaries Performing Duasi1Ban-ing
0unctions. - There shall be collected a ta$ on gross receipts deri#ed from sources ithin the
"hilippines by all ban)s and non-ban) (nancial intermediaries in accordance ith the folloing
schedule:
>:a; 2n interest% commissions and discounts from lending acti#ities as ell as income from
(nancial leasing% on the basis of remaining maturities of instruments from hich such
receipts are deri#ed:
maturity period is (#e :-; years or less . . . . -I
maturity period is more than (#e :-; years. . 1I
>:b; on di#idends and e'uity shares in net income of subsidiaries . . . . . . . . . . =I
>:c; on royalties% rentals of property% real or personal% pro(ts from e$change and all other
items treated as gross income under section 53 of this code. . . . . P -I
>:d; on net trading gains ithin the ta$able year on foreign currency% debt securities%
deri#ati#es and other similar (nancial instruments P..-I
>Provided% ho&ever% that in case the maturity period referred to in paragraph :a; is shortened thru
pretermination% then the maturity period shall be rec)oned to end as of the date of pretermination
for purposes of classifying the transaction and the correct rate shall be applied accordingly.
>"rovided% :nally% that the generally accepted accounting principles as may be prescribed by the
?ang)o Sentral ng "ilipinas for the ban) or non-ban) (nancial intermediary performing 'uasi-
ban)ing functions shall li)eise be the basis for the calculation of gross receipts.
>,othing in this code shall preclude the commissioner from imposing the same ta$ herein pro#ided
on persons performing similar ban)ing acti#ities.>
*ection 4. Section 133 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby restored
ith amendments to read as follos:
>Sec. 133. Tax on (ther 4on1Ban- 0inancial 'ntermediaries. U There shall be collected a ta$ of (#e
percent :-I; on the gross receipts deri#ed by other non-ban) (nancial intermediaries doing
business in the "hilippines% from interest% commissions% discounts and all other items treated as
gross income under this code: Provided% that interests% commissions and discounts from lending
acti#ities% as ell as income from (nancial leasing% shall be ta$ed on the basis of remaining
maturities of the instruments from hich such receipts are deri#ed% in accordance ith the folloing
schedule:
maturity period is (#e :-; years or less. P. . -I
maturity period is more than (#e :-; years. . 1I
GSV-153
>Provided% ho&ever% that in case the maturity period is shortened thru pretermination% then the
maturity period shall be rec)oned to end as of the date of pretermination for purposes of classifying
the transaction and the correct rate shall be applied accordingly.
>Provided% :nally% that the generally accepted accounting principles as may be prescribed by the
Securities and 1$change 7ommission for other non-ban) (nancial intermediaries shall li)eise be
the basis for the calculation of gross receipts.
>,othing in this code shall preclude the 7ommissioner from imposing the same ta$ herein pro#ided
on persons performing similar (nancing acti#ities.>
*ection A. 'mplementing Rules and Regulations. U Bithin si$ty :<=; days from the e9ecti#ity of this Act%
the Secretary of 8inance shall% upon the recommendation of the 7ommissioner of Internal 6e#enue%
promulgate the necessary rules and regulations for the e9ecti#e implementation of this Act.
*ection B. Repealing Clause. U The pro#isions of Section 14:b; and the third paragraph% (rst sentence of
6epublic Act ,o. 441<& Section 11:b; of 6epublic Act ,o. .301& Section -% Title MIV of 6epublic Act ,o.
.030& Section 1:b; of 6epublic Act ,o. .4<1 and Section 1:b; of 6epublic Act ,o. /=1=& and all others las%
decrees% orders% rules and regulations% and issuances or parts thereof inconsistent ith this Act are hereby
repealed or modi(ed accordingly.
*ection . $%ectivity Clause. U This Act shall ta)e e9ect on @anuary 1% 3==0.
Appro#ed%
+RAN='#N DR#'&N
"resident of the Senate
F&*" D" ("N"C#A FR.
Spea)er of the Fouse of
6epresentati#es
This Act% hich is a consolidation of Fouse ?ill ,o. -351 and Senate ?ill ,o. 3<<= as (nally passed by the
Fouse of 6epresentati#es and the Senate on +ecember 14% 3==5 and ,o#ember 30% 3==5% respecti#ely.
&*CAR $. EA0"*
Secretary of Senate
R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresenati#es
Appro#ed:
$'&R#A !ACAPA$A';ARR&E&
President of the Philippines
'-pse/ into l-4 on +ebru-r6 DA, 2DD4
9ithout the sign-ture of the Presi/ent,
#n -ccor/-nce 4ith Article (#,
*ection 2 H1I of the Constitution
Republic of the Philippines
Congress of the Philippines
Metro Manila
GSV-155
T4elfth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-second day of @uly% to thousand three.
Republic Act No. 924, +ebru-r6 1, 2DD4
AN ACT RAT#&NA'#C#N$ T%" PR&(#*#&N* &N T%" D&C)!"NTARE *TA!P TA5 &+ T%" NAT#&NA'
#NT"RNA' R"("N)" C&D" &+ 199, A* A!"ND"D. AND +&R &T%"R P)RP&*"*
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*"CT#&N 1. Section 140 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby deleted.
*"CT#&N 2. Section 14- of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby
renumbered as Section 140 and further amended as follos:
>S17. 140. Stamp Tax on (riginal 'ssue of Shares of Stoc-. - 2n e#ery original issue% hether on
organi!ation% reorgani!ation or for any laful purpose% of shares of stoc) by any association%
company or corporation% there shall be collected a documentary stamp of 2ne peso :"1.==; on each
To hundred pesos :"3==;% or fractional part thereof% of the par #alue% of such shares of
stoc): Provided% That in the case of the original issue of shares of stoc) ithout par #alue% the
amount of the documentary stamp ta$ herein prescribed shall be based upon the actual
consideration for the issuance of such shares of stoc): Provided% further% That in the case of stoc)
di#idends% on the actual #alue represented by each share.>
*"CT#&N ,. Section 14< of the ,ational Internal 6e#enue code of 1//4% as amended % is hereby
renumbered as Section 14- and further amended as follos:
>S17. 14-. Stamp Tax on Sales, greements to Sell? .emoranda of Sales, +eliveries or Transfer of
Shares or Certi:cates of Stoc-. - 2n all sales% or agreements to sell% or memoranda of sales% or
deli#eries. 2r transfer of shares or certi(cates of stoc) in any association% company% or corporation%
or transfer of such securities by assignment in blan)% or by deli#ery% or by any paper or agreement%
or memorandum or other e#idences of transfer or sale hether entitling the holder in any manner
to the bene(t of such stoc)% or to secure the future payment of money% or for the future transfer of
any stoc)% there shall be collected a documentary stamp ta$ of Se#enty-(#e-centa#os :"=.4-; on
each To hundred pesos :"3==;% or fractional part thereof% of the par #alue of such stoc): Provided%
That only one ta$ shall be collected on each sale or transfer of stoc) from one person to another%
regardless of hether or not a certi(cate of stoc) is issued% indorsed% or deli#ered in pursuance of
such sale or transfer: and Provided%further% That in the case of stoc) ithout par #alue the amount
of the documentary stamp ta$ herein prescribed shall be e'ui#alent to tenty-(#e percent :3-I; of
the documentary stamp ta$ paid upon the original issue of said stoc).>
*"CT#&N 4. Section 144 to 14/ of the ,ational Internal 6e#enue 7ode of 1//4% as amended% are hereby
renumbered as Sections 14< to 14..
*"CT#&N A. Section 1.= of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby
renumbered as Section 14/ and further amended to read as follos:
>S17. 14/. Stamp Tax on ll +ebt 'nstruments. - 2n e#ery original issue of debt instruments% there
shall be collected a documentary stamp ta$ on 2ne peso :"1.==; on each To hundred pesos
:"3==;% or fractional part thereof% of the issue price of any such debt instruments: "ro#ided% That for
such debt instruments ith terms of less than one :1; year% the documentary stamp ta$ to be
collected shall be of a proportional amount in accordance ith the ration of its term in number of
days to three hundred si$ty-(#e :5<-; days: Provided% further% That only one documentary stamp
ta$ shall be imposed on either loan agreement% or promissory notes issued to secure such loan.
8or purposes of this section% the term debt instrument shall mean instruments representing
borroing and lending transactions including but not limited to debentures% certi(cates of
indebtedness% due bills% bonds% loan agreements% including those signed abroad herein the ob*ect
of contract is located or used in the "hilippines% instruments and securities issued by the
go#ernment of any of its instrumentalities% deposit substitute debt instruments% certi(cates or other
e#idences of deposits that are either draing interest signi(cantly higher than the regular sa#ings
deposit ta)ing into consideration the si!e of the deposit and the ris)s in#ol#ed or draing interest
and ha#ing a speci(c maturity date% orders for payment of any sum of money otherise than at
GSV-150
sight or on demand% promissory notes% hether negotiable or non-negotiable% e$cept ban) notes
issued for circulation.>
*"CT#&N B. A ne section numbered Section 1.= of the ,ational Internal 6e#enue 7ode of 1//4% as
amended% is hereby inserted to read as follos:
>S17. 1.=. Stamp Tax on ll Bills of $xchange or +rafts. - 2n all bills of e$change :beteen points
ithin the "hilippines; or drafts% there shall be collected a documentary stamp ta$ of Thirty
centa#os :"=.5=; on each To hundred pesos :"3==;% or fractional part thereof% of the face #alue of
any such bill of e$change or draft.>
*"CT#&N . Section 1.5 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17. 1.5. Stamp Tax on *ife 'nsurance Policies. - 2n all policies of insurance or other instruments
by hate#er name the same may be called% hereby any insurance shall be made or reneed upon
any life or li#es% there shall be collected a documentary stamp ta$ of 8ifty centa#os :"=.-=; on each
To hundred pesos :"3==;% or fractional part thereof% of the amount of premium collected.>
*"CT#&N 8. Section 1.< of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17. 1.<. Stamp Tax on Policies of nnuities and Pre14eed Plans. - 2n all policies of annuities% or
other instruments by hate#er name the same may be called% hereby an annuity may be made%
transferred or redeemed% there shall be collected a documentary stamp ta$ of 8ifty centa#os :"=.-=;
on each To hundred pesos :"3==;% or fractional part thereof% of the premium or installment
payment or contract price collected. 2n pre-need plans% the documentary stamp ta$ shall be
Tenty centa#os :"=.3=; on teach To hundred pesos :"3==;% or fractional part thereof% of the
premium or contribution collected.>
*"CT#&N 9. Section 1// of the ,ational Internal 6e#enue 7ode of 1//4% as amended is hereby further
amended to read as follos:
>S17. 1//. +ocuments and Papers 4ot Sub7ect to Stamp Tax. - The pro#isions of Section 145 to the
contrary notithstanding% the folloing instruments% documents and papers shall be e$empt from
the documentary stamp ta$:
:a; "olicies of insurance or annuities made or granted by a fraternal or bene(ciary society% order%
association or cooperati#e company% operated on the lodge system or local cooperation plan and
organi!ed and conducted solely by the members thereof for the e$clusi#e bene(t of each member
and not for pro(t.
:b; 7erti(cates of oaths administered to any go#ernment oAcial in his oAcial capacity or of
ac)noledgment by any go#ernment oAcial in the performance of his oAcial duties% ritten
appearance in any court by any go#ernment oAcial% in his oAcial capacity& certi(cates of the
administration of oaths to any person as to the authenticity of any paper re'uired to be (led in
court by any person or party thereto% hether the proceedings be ci#il or criminal& papers and
documents (led in courts by or for the national% pro#incial% city or municipal go#ernments& aAda#its
of poor persons for the purpose of pro#ing po#erty& statements and other compulsory information
re'uired of persons or corporations by the rules and regulations of the national% pro#incial% city or
municipal go#ernments e$clusi#ely for statistical purposes and hich are holly for the use of the
bureau or oAce in hich they are (led% and not at the instance or for the use or bene(t of the
person (ling them& certi(ed copies and other certi(cates placed upon documents% instruments and
papers for the national% pro#incial% city or municipal go#ernments% made at the instance and for the
sole use of some other branch of the national% pro#incial% city or municipal go#ernments& and
certi(cates of the assessed #alue of lands% not e$ceeding To hundred pesos :"3==; in #alue
assessed% furnished by the pro#incial% city or municipal Treasurer to applicants for registration of
title to land.
:c; ?orroing and lending of securities e$ecuted under the Securities ?orroing and lending
"rogram of a registered e$change% or in accordance ith regulations prescribed by the appropriate
regulatory authority: "ro#ided% hoe#er% That any borroing or lending of securities agreement as
contemplated hereof shall be duly co#ered by a master securities borroing and lending agreement
acceptable to the appropriate regulatory authority% and hich agreements is duly registered and
appro#ed by the ?ureau of Internal 6e#enue. :?I6;.
:d; Goan agreements or promissory notes% the aggregate of hich does not e$ceed To hundred
(fty thousand pesos :"3-=%===;% or any such amount as may be determined by he Secretary of
GSV-15-
8inance% e$ecuted by an indi#idual for his purchase on installment for his personal use or that of his
family and not for business or resale% barter or hire of a house% lot% motor #ehicle% appliance or
furniture: Provided%ho&ever% That the amount to be set by the Secretary of 8inance shall be in
accordance ith a rele#ant price inde$ but not to e$ceed ten percent :1=I; of the current amount
and shall remain in force at least for three :5; years.
:e; Sale% barter or e$change of shares of stoc) listed and traded through the local stoc) e$change
for a period of (#e :-; years from the e9ecti#ity of this Act.
:f; Assignment or transfer of any mortgage% lease or policy of insurance% or the reneal or
continuance of any agreement% contract% charter% or any e#idence of obligation or indebtedness% if
there is no change in the maturity date or remaining period of co#erage from that of the original
instrument.
:g; 8i$ed income and other securities traded in the secondary mar)et or through an e$change.
:h; +eri#ati#es: Provided% That for purposes of this e$emption% repurchase agreements and re#erse
repurchase agreements shall be treated similarly as deri#ati#es.
:i; Interbranch or interdepartmental ad#ances ithin the same legal entity.
:*; All forebearances arising from sales or ser#ice contracts including credit card and trade
recei#ables:Provided% That the e$emption be limited to those e$ecuted by the seller or ser#ice
pro#ider itself.
:); ?an) deposit accounts ithout a ($ed term or maturity.
:l; All contracts% deeds% documents and transactions related to the conduct of business of the ?an)o
Sentral ng "ilipinas.
:m; Transfer of property pursuant to Section 0=:c;:3; of the ,ational Internal 6e#enue 7ode of 1//4%
as amended.
:n; Interban) call loans ith maturity of not more than se#en :4; days to co#er de(ciency in
reser#es against deposit liabilities% including those beteen or among ban)s and 'uasiban)s.>
*"CT#&N 1D. 'mplementing Rules and Regulations - The Secretary of 8inance% the ?ang)o Sentral
Go#ernor and the Securities and 1$change 7ommission 7hairperson shall promulgate and publish the
necessary rules and regulations for the e9ecti#e enforcement of this Act.
*"CT#&N 11. Separability Clause? - If any pro#ision of this Act is held unconstitutional or in#alid% all other
pro#isions not a9ected thereby shall remain #alid.
*"CT#&N 12. Repealing Clause? - All las% decrees% e$ecuti#e orders% rules and regulations or parts
thereof% hich are inconsistent ith this Act% are hereby repealed% amended or modi(ed accordingly.
*"CT#&N 1,. $%ectivity? - This Act shall ta)e e9ect (fteen :1-; days folloing its publication in the ()cial
2a5ette or in to :3; nespapers of general circulation.
Appro#ed%
+RAN='#N DR#'&N
"resident of the Senate
F&*" D" ("N"C#A FR.
Spea)er of the Fouse of
6epresentati#es
This Act hich is a consolidation of Fouse ?ills ,o. 33<<% 00.= and 00.1 and Senate ?ill ,o. 3-1. as
(nally passed by the Fouse of 6epresentati#es and the Senate on @anuary 13% 3==0 and 8ebruary 3% 3==0%
respecti#ely.
&*CAR $. EA0"*
Secretary of Senate
R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresenati#es
GSV-15<
Appro#ed: 8ebruary 14% 3==0
$'&R#A !ACAPA$A';ARR&E&
President of the Philippines
Republic of the Philippines
Congress of the Philippines
Metro Manila
T4elfth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-eight day of @uly% to thousand three.
Republic Act No. 9294 April 28, 2DD4
AN ACT R"*T&R#N$ T%" TA5 "5"!PT#&N &+ &++*%&R" 0AN=#N$ )N#T* H&0)sI AND +&R"#$N
C)RR"NCE D"P&*#T )N#T* H+CD)sI, A!"ND#N$ +&R T%" P)RP&*" *"CT#&N 2 HDI AND
*"CT#&N 28, PARA$RAP%* HAI H4I AND HAI HI HbI &+ T%" NAT#&NA' #NT"RNA' R"("N)" C&D"
A* A!"ND"D
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*ection 1. Section 34% paragraph :+; :5; of the ,ational Internal 6e#enue 7ode% as amended% is hereby
further amended to read as follos:
>Sec. 34. Rates of 'ncome Tax on +omestic Corporations? -
>:+; Rates of Tax on Certain Passive 'ncomes? -
>:5; Tax on 'ncome +erived under the $xpanded 0oreign Currency +eposit System? - Income
deri#ed by a depository ban) under the e$panded foreign currency deposit system from foreign
currency transactions ith nonresidents% o9shore ban)ing units in the "hilippines% local commercial
ban)s including branches of foreign ban)s that may be authori!ed by the ?ang)o Sentral ng
"ilipinas :?S"; to transact business ith foreign currency deposit system shall be e$empt from all
ta$es% e$cept net income from such transactions as may be speci(ed by the Secretary of 8inance%
upon recommendation by the Monetary ?oard to be sub*ect to the regular income ta$ payable by
ban)s: Provided, ho&ever, That interest income from foreign currency loans granted by such
depository ban)s under said e$panded system to residents other than o9shore ban)ing units in the
"hilippines or other depository ban)s under the e$panded system shall be sub*ect to a (nal ta$ at
the rate of ten percent :1=I;.
>Any income of nonresidents% hether indi#iduals or corporations% from transactions ith depository
ban)s under the e$panded system shall be e$empt from income ta$.>
*ection 2. Section 3.% paragraph :A;:0; and :A;:4;:b; of the same 7ode are hereby amended to read as
follos:
>Sec. 3.. Rates of 'ncome Tax on 0oreign Corporations? -
>:A; Tax on Resident 0oreign Corporations? -
>:1; 'n 2eneral?-1$cept as otherise pro#ided in this 7ode% a corporation organi!ed%
authori!ed% or e$isting under the las of any foreign country% engaged in trade or business
GSV-154
ithin the "hilippines% shall be sub*ect to an income ta$ e'ui#alent to thirty (#e percent
:5-I; of the ta$able income deri#ed in the preceding ta$able year from all sources ithin
the "hilippines: Provided. That e9ecti#e @anuary 1% 1//.% the rate of income ta$ shall be
thirty-four percent :50I;& e9ecti#e @anuary 1% 1///% the rate shall be thirty-three percent
:55I;& and e9ecti#e @anuary 1% 3=== and thereafter% the rate shall be thirty-to percent
:53I;.
>In the case of corporations adopting the (scal-year accounting period the ta$able income
shall be computed ithout regard to the speci(c date hen sales% purchases and other
transactions occur. Their income and e$penses for the (scal year shall be deemed to ha#e
been earned and spent e'ually for each month of the period.
>The reduced corporate income ta$ rates shall be applied on the amount computed by
multiplying the number of months co#ered by the ne rates ithin the (scal year by the
ta$able income of the corporation for the period% di#ided by tel#e.
>Provided, ho&ever, That a resident foreign corporation shall be granted the option to be
ta$ed at (fteen percent :1-I; on gross income under the same conditions% as pro#ided in
Section 34:A;.
>:3; .inimum Corporate 'ncome Tax on Resident 0oreign Corporations? - A minimum
corporate income ta$ of to percent :3I; of gross income% as prescribed under Section
34:1; of this 7ode% shall be imposed% under the same conditions% on a resident foreign
corporation ta$able under paragraph :1; of this Subsection.
>:5; 'nternational Carrier? - An international carrier doing business in the "hilippines shall pay
a ta$ of to and one-half percent :3 1E3I; on this JGross "hilippine ?illingsJ as de(ned
hereunder:
>:a; 'nternational ir Carrier? - JGross "hilippine ?illingsJ refers to the amount of gross
re#enue deri#ed from carriage of persons% e$cess baggage% cargo and mail
originating from the "hilippines in a continuous and uninterrupted Cight% irrespecti#e
of the place of sale or issue and the place of payment of the tic)et or passage
document: Provided, That tic)ets re#alidated% e$changed andEor indorsed to another
international airline form part of the Gross "hilippine ?illings if the passenger boards
a plane in a port or point in the "hilippines: Provided, further, That for a Cight hich
originates from the "hilippines% but transshipment of passenger ta)es place at any
port outside the "hilippines on another airline% only the ali'uot portion of the cost of
the tic)et corresponding to the leg Con from the "hilippines to the point of
transshipment shall form part of Gross "hilippine ?illings.
>:b; 'nternational Shipping? - JGross "hilippine ?illingsJ means gross re#enue hether
for passenger% cargo or mail originating from the "hilippines up to (nal destination%
regardless of the place of sale or payments of the passage or freight documents.
>:0; (%shore Ban-ing Cnits? - The pro#isions of any la to the contrary notithstanding%
income deri#ed by o9shore ban)ing units authori!ed by the ?ang)o Sentral ng "ilipinas
:?S";% from foreign currency transactions ith nonresidents% other o9shore ban)ing units%
local commercial ban)s% including branches of foreign ban)s that may be authori!ed by the
?ang)o Sentral ng "ilipinas :?S"; to transact business ith o9shore ban)ing units shall be
e$empt from all ta$es e$cept net income from such transactions as may be speci(ed by the
Secretary of 8inance% upon recommendations of the Monetary ?oard hich shall be sub*ect
to the regular income ta$ payable by ban)s: Provided, ho&ever, That any interest income
deri#ed from foreign currency loans granted to residents other than o9shore ban)ing units or
local commercial ban)s% including local branches of foreign ban)s that may be authori!ed by
the ?S" to transact business ith o9shore ban)ing units% shall be sub*ect only to a (nal ta$
at the rate of ten percent :1=I;.
>Any income of nonresidents% hether indi#iduals or corporations% from transactions ith
said o9shore ban)ing units shall be e$empt from income ta$.
>:-; Tax on Branch Pro:ts Remittances? - Any pro(t remitted by a branch to its head oAce
shall be sub*ect to a ta$ of (fteen percent :1-I; hich shall be based on the total pro(ts
applied or carmar)ed for remittance ithout any deduction for the ta$ component thereof
:e$cept those acti#ities hich are registered ith the "hilippine 1conomic Oone Authority;.
The ta$ shall be collected and paid in the same manner as pro#ided in Section -4 and -. of
this 7ode: Provided,That interests% di#idends% rents% royalties% including remuneration for
technical ser#ices% salaries% ages% premiums% annuities% emoluments or other ($ed or
determinable annual% periodic or casual gains% pro(ts% income and capital gains recei#ed by
GSV-15.
a foreign corporation during each ta$able year from all sources ithin the "hilippines shall
not be treated as branch pro(ts unless the same are e9ecti#ely connected ith the conduct
of its trade or business in the "hilippines.
>:<; 6egional or Area Fead'uarters and 6egional 2perating Fead'uarters of Multinational
7ompanies. -
>:a; 6egional or area head'uarters as de(ned in Section 33:++; shall not be sub*ect
to income ta$.
>:b; 6egional operating head'uarters as de(ned in Section 33 :11; shall pay a ta$ of
ten percent :1=I; of their ta$able income.
>:4; Ta$ on 7ertain Incomes 6ecei#ed by a 6esident 8oreign 7orporation. -
>:a; 'nterest from +eposits and Aield or any other .onetary Bene:t from +eposits
Substitutes, Trust 0unds and Similar rrangements and Royaties? - Interest from any
currency ban) deposit and yield or any other monetary bene(t from deposit
substitutes and from trust funds and similar arrangements and royalties deri#ed from
sources ithin the "hilippines shall be sub*ect to a (nal income ta$ at the rate of
tenty percent :3=I; of such interest: Provided, ho&ever, That interest income
deri#ed by a resident foreign corporation from a depository ban) under he e$panded
foreign currency deposit system shall be sub*ect to a (nal income ta$ at the rate of
se#en and one-half percent :41E3I; of such interest income.
>:b; 'ncome +erived under the $xpanded 0oreign Currency +eposit System? - Income
deri#ed by a depository ban) under the e$panded foreign currency deposit system
from foreign currency transactions ith nonresidents% o9shore ban)ing units in the
"hilippines% local commercial ban)s including branches of foreign ban)s that may be
authori!ed by the ?ang)o Sentral ng "ilipinas :?S"; to transact business ith foreign
currency deposit system units and other depository ban)s under the e$panded
foreign currency deposit system shall be e$empt from all ta$es% e$cept net income
from such transactions as may be speci(ed by the secretary of 8inance% upon
recommendation by the Monetary ?oard to be sub*ect to the regular ta$ payable by
ban)s: Provided, ho&ever? That interest income from foreign currency loans granted
by such depositors ban)s under said e$panded system to residents other than
o9shore ban)ing units in the "hilippines or other depository ban)s under the
e$panded system shall be sub*ect to a (nal ta$ at the rate of ten percent :1=I;.
>Any income of nonresidents% hether indi#iduals or corporations% from transactions
ith depository ban)s under the e$panded system shall be e$empt from income ta$.
>:c; Capital 2ains from Sales of Shares of Stoc- 4ot Traded in the Stoc- $xchange? - A
(nal ta$ at the rates prescribed belo is hereby imposed upon the net capital gains
reali!ed during the ta$able year from the sale% barter% e$change or other disposition
of shares of stoc) in a domestic corporation e$cept shares sold or disposed of
through the stoc) e$change:
,ot o#er "1==%=== -I
2r any amount in e$cess of "1==%=== 1=I
>:d; 'ntercorporate +ividends? - +i#idends recei#ed by a resident foreign corporation
from a domestic corporation liable to ta$ under this 7ode shall not be sub*ect to ta$
under this Title.
>:?; Tax on 4onresident 0oreign Corporation? -
>:1; 'n 2eneral. - 1$cept as otherise pro#ided in this 7ode% a foreign corporation not
engaged in trade or business in the "hilippines shall pay a ta$ e'ual to thirty-(#e percent
:5-I; of the gross income recei#ed during each ta$able year from all sources ithin the
"hilippines% such as interests% di#idends% rents% royalties% salaries% premiums :e$cept
reinsurance premiums;% annuities% emoluments or other ($ed or determinable annual
periodic or casual gains% pro(ts and income% and capital gains% e$cept capital gains sub*ect
to ta$ under subparagraphs - :c; and :d;&Provided, That e9ecti#e @anuary 1% 1//.% the rate
of income ta$ shall be thirty-four percent :50I;& e9ecti#e @anuary 1% 1///% the rate shall be
thirty-three percent :55I;& and% e9ecti#e @anuary 1% 3=== and thereafter% the rate shall be
thirty-to percent :53I;.
GSV-15/
>:3; 4onresident Cinematographic 0ilm (&ner *essor or +istributor. - A cinematographic (lm
oner% lessor% or distributor shall pay a ta$ of tenty-(#e percent :3-I; of its gross income
from all sources ithin the "hilippines.
>:5; 4onresident (&ner or *essor of 3essels Charactered by Philippine 4ationals? - A
nonresident oner or lessor of #essels shall be sub*ect to a ta$ of four and one-half percent
:01E3I; of gross rentals% lease or charter fees from leases or charters to 8ilipino citi!ens or
corporations% as appro#ed by the Maritime Industry Authority.
>:0; 4onresident (&ner or *essor of ircraft, .achineries and (ther $/uipment? 1 6entals%
charter and other fees deri#ed by a nonresident lessor of aircraft% machineries and other
e'uipment shall be sub*ect to a ta$ of se#en and one-half percent :41E3I; of gross rentals or
fees.
>:-; Tax on Certain 'ncomes Received by a 4onresident 0oreign Corporation? -
>:a; Interest on 8oreign Goans. - A (nal ithholding ta$ at the rate of tenty percent
:3=I; is hereby imposed on the amount of interest on foreign loans contracted on or
after August 1% 1//<&
>:b; 'ntercorporate +ividends? - A (nal ithholding ta$ at the rate of (fteen percent
:1-I; is hereby imposed on the amount of cash andEor property di#idends recei#ed
from a domestic corporation hich shall be collected and paid as pro#ided in Section
-4:A; 2f this 7ode% sub*ect to the condition that the country in hich the nonresident
foreign corporation is domiciled% shall allo a credit against the ta$ due from the
nonresident foreign corporation ta$es deemed to ha#e been paid in the "hilippines
e'ui#alent to tenty percent :3=I; for 1//4% nineteen percent :1/I; for 1//.%
eighteen percent :1.I; for 1///% and se#enteen percent :14I; thereafter% hich
represents the di9erence beteen the regular income ta$ of thirty-(#e percent :5-I;
in 1//4% thirty-four percent :50I; in 1//.% thirty-three percent :55I; in 1///% and
thirty-to percent :53I; thereafter on corporations and the (fteen percent :1-I; ta$
on di#idends as pro#ided in this subparagraph&
>:c; Capital 2ains from Sale of Shares of Stoc- not Traded in the Stoc- $xchange? - A
(nal ta$ at the rates prescribed belo is hereby imposed upon the net capital gains
reali!ed during the ta$able year from the sale% barter% e$change or other disposition
of shares of stoc) in a domestic corporation% e$cept shares sold% or disposed sold% or
disposed of through the stoc) e$change&
,ot o#er " 1==%=== -I
2n any amount in e$cess of "1=%=== 1=I>
*ection ,. Separability Clause? - If any part or pro#ision of this Act shall be held unconstitutional or
in#alid% other pro#isions hereof hich are not a9ected thereby shall continue to be in full force and e9ect.
*ection 4. Repealing Clause? - All las% decrees% orders% rules and regulations and other issuances or parts
thereof inconsistent ith this Act are hereby repealed or modi(ed accordingly.
*ection A. $%ectivity? - This Act shall ta)e e9ect (fteen :1-; days after its publication in the ()cial
2a5ette or in to :3; nespapers of general circulation.
Appro#ed%
+RAN='#N DR#'&N
"resident of the Senate
F&*" D" ("N"C#A FR.
Spea)er of the Fouse of
6epresentati#es
This Act hich is a consolidation of Senate ?ill ,o. 3404 and Fouse ?ill ,o. -30< as (nally passed by the
Senate and Fouse of 6epresentati#es 8ebruary <% 3==0 and 8ebruary 4% 3==0% respecti#ely.
&*CAR $. EA0"*
Secretary of Senate
R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresenati#es
GSV-10=
Appro#ed: April 3.% 3==0
$'&R#A !ACAPA$A';ARR&E&
President of the Philippines
Republic of the Philippines
Congress of the Philippines
Metro Manila
Thirteenth Congress
+irst Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-si$th day of @uly% to thousand four.
Republic Act No. 9,,4
AN ACT #NCR"A*#N$ T%" "5C#*" TA5 RAT"* #!P&*"D &N A'C&%&' AND T&0ACC& PR&D)CT*,
A!"ND#N$ +&R T%" P)RP&*" *"CT#&N* 1,1,141, 142, 14,, 144, 14A AND 288 &+
T%" NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199, A* A!"ND"DG
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*"CT#&N 1. Section 101 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17. 101. +istilled Spirits? - 2n distilled spirits% there shall be collected% sub*ect to the pro#isions of
Section 155 of this 7ode% e$cise ta$ as follos:
>:a; If produced from the sap of nipa% coconut% cassa#a% camote% or buri palm or from the
*uice% syrup or sugar of the cane% pro#ided such materials are produced commercially in the
country here they are processed into distilled spirits% per proof liter% 1le#en pesos and
si$ty-(#e centa#os :"11.<-;&
GSV-101
>:b; If produced from ra materials other than those enumerated in the preceding
paragraph% the ta$ shall be in accordance ith the net retail price per bottle of se#en
hundred (fty milliliter :4-= ml.; #olume capacity :e$cluding the e$cise ta$ and the #alue-
added ta$; as follos:
>:1; Gess than To hundred and (fty pesos :"3-=.==; - 2ne hundred tenty-si$ pesos
:"13<.==;% per proof liter&
>:3; To hundred and (fty pesos :"3-=.==; up to Si$ hundred and se#enty-(#e pesos
:"<4-.==; - To hundred (fty-to pesos :"3-3.==;% per proof liter& and
>:5; More than Si$ hundred and se#enty (#e pesos :"<4-.==; -8i#e hundred four
pesos :"-=0.==;% per proof liter.
>:c; Medicinal preparations% Ca#oring e$tracts% and all other preparations% e$cept toilet
preparations% of hich% e$cluding ater% distilled spirits form the chief ingredient% shall be
sub*ect to the same ta$ as such chief ingredient.
>This ta$ shall be proportionally increased for any strength of the spirits ta$ed o#er proof spirits%
and the ta$ shall attach to this substance as soon as it is in e$istence as such% hether it be
subse'uently separated as pure or impure spirits% or transformed into any other substance either in
the process of original production or by any subse'uent process.
>JSpirits or distilled spiritsJ is the substance )non as ethyl alcohol% ethanol or spirits of ine%
including all dilutions% puri(cations and mi$tures thereof% from hate#er source% by hate#er
process produced% and shall indlude his)y% brandy% rum% gin and #od)a% and other similar
products or mi$tures.
>J"roof spiritsJ is li'uor containing one-half :1E3; of its #olume of alcohol of a speci(c gra#ity
of se#en thousand nine hundred and thirty-nine ten thousandths :=.4/5/; at (fteen degrees
centigrade :1-
=
7;. A Jproof literJ means a liter of proof spirits.
>J,et retail priceJ% as determined by the ?ureau of Internal 6e#enue through a price sur#ey
to be conducted by the ?ureau of Internal 6e#enue itself% or by the ,ational Statistics 2Ace
hen deputi!ed for the purpose by the ?ureau of Internal 6e#enue% shall mean the price at
hich the distilled spirits is sold on retail in at least ten :1=; ma*or supermar)ets in Metro
Manila% e$cluding the amount intended to co#er the applicable e$cise ta$ and the #alue-
added ta$. 8or brands hich are mar)eted outside Metro Manila% the Jnet retail priceJ shall
mean the price at hich the distilled spirits is sold in at least (#e :-; ma*or supermar)ets in
the region e$cluding the amount intended to co#er the applicable e$cise ta$ and the #alue-
added ta$.
>Variants of e$isting brands and #ariants of ne brands hich are introduced in the domestic
mar)et after the e9ecti#ity of this Act shall be ta$ed under the proper classifcation thereof based on
their suggested net retail price: Provided, ho&ever, That such classi(cation shall not% in any case%
be loer than the highest classi(cation of any #ariant of that brand.
>A J#ariant of a brandJ shall refer to a brand on hich a modi(er is pre($ed andEor suA$ed to the
root name of the brand.
>,e brands% as de(ned in the immediately folloing paragraph% shall initially be classi(ed
according to their suggested net retail price.
>Billful understatement of the suggested net retail price by as much as (fteen percent :1-I; of the
actual net retail price shall render the manufacturer liable for additional e$cise ta$ e'ui#alent to the
ta$ due and di9erence beteen the understated suggested net retail price and the actual net retail
price.
>J,e brandJ shall mean a brand registered after the date of e9ecti#ity of 6.A. ,o. .30=.
>JSuggested net retail priceJ shall mean the net retail price at hich ne brands% as de(ned
abo#e% of locally manufactured or imported distilled spirits are intended by the manufacturer
or importer to be sold on retail in ma*or supermar)ets or retail outlets in Metro Manila for
those mar)eted nationide% and in other regions% for those ith regional mar)ets. At the end
of three :5; months from the product launch% the ?ureau of Internal 6e#enue shall #alidate
the suggested net retail price of the ne brand against the net retail price as de(ned herein
and determine the correct ta$ brac)et to hich a particular ne brand of distilled spirits% as
de(ned abo#e% shall be classi(ed. After the end of eighteen :1.; months from such
GSV-103
#alidation% the ?ureau of Internal 6e#enue shall re#alidate the initially #alidated net retail
price against the net retail price as of the time of re#alidation in order to (nally determine
the correct ta$ brac)et hich a particular ne brand of distilled spirits shall be
classi(ed: Provided, ho&ever, That brands of distilled spirits introduced in the domestic
mar)et beteen @anuary 1% 1//4 and +ecember 51% 3==5 shall remain in the classi(cation
under hich the ?ureau of Internal 6e#enue has determined them to belong as of +ecember
51% 3==5. Such classi(cation of ne brands and brands introduced beteen @anuary 1% 1//4
and +ecember 51% 3==5 shall not be re#ised e$cept by an act of 7ongress.
>The rates of ta$ imposed under this Section shall be increased by eight percent :.I; e#ery to
years starting on @anuary 1% 3==4 until @anuary 1% 3=11.
>Any donard reclassi(cation of present categories% for ta$ purposes% of e$isting brands of
distilled spirits duly registered at the time of the e9ecti#ity of this Act hich ill reduce the ta$
imposed herein% or the payment thereof% shall be prohibited.
>The classi(cation of each brand of distilled spirits based on the a#erage net retail price as of
2ctober 1% 1//<% as set forth in Anne$ JAJ% including the classi(cation of brands for the same
products hich% although not set forth in said Anne$JAJ% ere registered and ere being
commercially produced and mar)eted on or after 2ctober 1%1//<% and hich continue to be
commercially produced and mar)eted after the e9ecti#ity of this Act% shall remain in force until
re#ised by 7ongress.
>Manufacturers and importers of distilled spirits shall% ithin thirty :5=; days from the e9ecti#ity of
this Act% and ithin the (rst (#e :-; days of e#ery third month thereafter% submit to the
7ommissioner a sorn statement of the #olume of sales for each particular brand of distilled spirits
sold at his establishment for the three-month period immediately preceding.
>Any manufacturer or importer ho% in #iolation of this Section% )noingly misdeclares or
misrepresents in his or its sorn statement herein re'uired any pertinent data or information shall%
upon (nal (ndings by the 7ommissioner that the #iolation as committed% be penali!ed by a
summary cancellation or ithdraal of his or its permit to engage in business as manufacturer or
importer of distilled spirits.
>Any corporation% association or partnership liable for any of the acts or omissions in #iolation of
this Section shall be (ned treble the amount of de(ciency ta$es% surcharges and interest hich may
be assessed pursuant to this Section.
>Any person liable for any of the acts or omissions prohibited under this Section shall be criminally
liable and penali!ed under Section 3-0 of this 7ode. Any person ho illfully aids or abets in the
commission of any such act or omission shall be criminally liable in the same manner as the
principal.
>If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing the
sentence% ithout further proceedings for deportation.>
*"C. 2. Section 103 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17 103. 6ines? - 2n ines% there shall be collected per liter of #olume capacity% the folloing
ta$es:
>:a; Spar)ling inesEchampagnes regardless of proof% if the net retail price per bottle
:e$cluding the e$cise ta$ and the #alue-added ta$; is:
>:1; 8i#e hundred pesos :"-==.==; or less - 2ne hundred forty-(#e pesos and si$ty
centa#os :"10-.<=;& and
>:3; More than 8i#e hundred pesos :"-==.==; - 8our hundred thirty-si$ pesos and
eighty centa#os :"05<..=;.
>:b; Still ines containing fourteen percent :10I; of alcohol by #olume or less% Se#enteen
pesos and forty-se#en centa#os :"14.04;& and
>:c; Still ines containing more than fourteen percent :10I; but not more than tenty-(#e
percent :3-I; of alcohol by #olume% Thirty-four pesos and ninety-four centa#os :"50./0;.
GSV-105
>8orti(ed ines containing more than tenty-(#e percent :3-I; of alcohol by #olume shall be ta$ed
as distilled spirits. J8orti(ed inesJ shall mean natural ines to hich distilled spirits are added to
increase their alcohol strength.
>J,et retail priceJ% as determined by the ?ureau of Internal 6e#enue through a price sur#ey to be
conducted by the ?ureau of Internal 6e#enue itself% or by the ,ational Statistics 2Ace hen
deputi!ed for the purpose by the ?ureau of Internal 6e#enue% shall mean the price at hich ine is
sold on retail in at least ten :1=; ma*or supermar)ets in Metro Manila% e$cluding the amount
intended to co#er the applicable e$cise ta$ and the #alue-added ta$. 8or brands hich are
mar)eted outside Metro Manila% the Jnet retail priceJ shall mean the price at hich the ine is sold
in at least (#e :-; ma*or supermar)ets in the region e$cluding the amount intended to co#er the
applicable e$cise ta$ and the #alue-added ta$.
>Variants of e$isting brands and #ariants of ne brands hich are introduced in the domestic
mar)et after the e9ecti#ity of this Act shall be ta$ed under the proper classi(cation thereof based
on their suggested net retail price: Provided, ho&ever, That such classi(cation shall not% in any
case% be loer than the highest classi(cation of any #ariant of that brand.
>A J#ariant of a brandJ shall refer to a brand on hich a modi(er is pre($ed andEor suA$ed to the
root name of the brand.
>,e brands% as de(ned in the immediately folloing paragraph% shall initially be classi(ed
according to their suggested net retail price.
>J,e brandJ shall mean a brand registered after the date of e9ecti#ity of 6. A. ,o. .30=.
>JSuggested net retail priceJ shall mean the net retail price at hich ne brands% as de(ned abo#e%
of locally manufactured or imported ines are intended by the manufacturer or importer to be sold
on retail in ma*or supermar)ets or retail outlets in Metro Manila for those mar)eted nationide% and
in other regions% for those ith regional mar)ets. At the end of three :5; months from the product
launch% the ?ureau of Internal 6e#enue shall #alidate the suggested net retail price of the ne
brand against the net retail price as de(ned herein and determine the correct ta$ brac)et to hich
a particular ne brand of ine% as de(ned abo#e% shall be classi(ed. After the end of eighteen :1.;
months from such #alidation% the ?ureau of Internal 6e#enue shall re#alidate the initially #alidated
net retail price against the net retail price as of the time of re#alidation in order to (nally determine
the correct ta$ brac)et hich a particular ne brand of ines shall be classi(ed: Provided,
ho&ever, That brands of ines introduced in the domestic mar)et beteen @anuary 1% 1//4 and
+ecember 51% 3==5 shall remain in the classi(cation under hich the ?ureau of Internal 6e#enue
has determined them to belong as of +ecember 51% 3==5. Such classi(cation of ne brands and
brands introduced beteen @anuary 1% 1//4 and +ecember 51% 3==5 shall not be re#ised e$cept by
an act of 7ongress.
>The rates of ta$ imposed under this Section shall be increased by eight percent :.I; e#ery to
years starting on @anuary 1% 3==4 until @anuary 1% 3=11.
>Any donard reclassi(cation of present categories% for ta$ purposes% of e$isting brands of ines
duly registered at the time of the e9ecti#ity of this Act hich ill reduce the ta$ imposed herein% or
the payment thereof% shall be prohibited.
>The classi(cation of each brand of ines based on the a#erage net retail price as of 2ctober
1%1//<% as set forth in Anne$ J?J% including the classi(cation of brands for the same products hich%
although not set forth in said >Anne$ ?>% ere registered and ere being commercially produced
and mar)eted on or after 2ctober 1% 1//<% and hich continue to be commercially produced and
mar)eted after the e9ecti#ity of this Act% shall remain in force until re#ised by 7ongress.
>Manufacturers and importers of ines shall% ithin thirty :5=; days from the e9ecti#ity of this Act%
and ithin the (rst (#e :-; days of e#ery month thereafter% submit to the 7ommissioner a sorn
statement of the #olume of sales for each particular brand of ines sold at his establishment for the
three-month period immediately preceding.
>Any manufacturer or importer ho% in #iolation of this Section% )noingly misdeclares or
misrepresents in his or its sorn statement herein re'uired any pertinent data or information shall%
upon disco#ery% be penali!ed by a summary cancellation or ithdraal of his or its permit to
engage in business as manufacturer or importer of ines.
>Any corporation% association or partnership liable for any of the acts or omissions in #iolation of
this Section shall be (ned treble the amount of de(ciency ta$es% surcharges and interest hich may
be assessed pursuant to this Section.
GSV-100
>Any person liable for any of the acts or omissions prohibited under this Section shall be criminally
liable and penali!ed under Section 3-0 of this 7ode. Any person ho illfully aids or abets in the
commission of any such act or omission shall be criminally liable in the same manner as the
principal.
>If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing the
sentence% ithout further proceedings for deportation.>
*"C. ,. Section 105 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17. 105. 0ermented *i/uors? - There shall be le#ied% assessed and collected an e$cise ta$ on beer%
lager beer% ale% porter and other fermented li'uors e$cept tuba, basi, tupuy and similar fermented
li'uors in accordance ith the folloing schedule:
>:a; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; per liter of
#olume capacity is less than 8ourteen pesos and (fty centa#os :"10.-=;% the ta$ shall be
1ight pesos and tenty- se#en centa#os :"..34; per liter&
>:b; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; per liter of
#olume capacity is 8ourteen pesos and (fty centa#os :p10.-=; up to Tenty-to pesos
:"33.==;% the ta$ shall be Tel#e pesos and thirty centa#os :"13.5=; per liter&
>:c; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; per liter of
#olume capacity is more than Tenty-to pesos :"33.==;% the ta$ shall be Si$teen pesos and
thirty-three centa#os :"1<.55; per liter.
>Variants of e$isting brands and #ariants of ne brands hich are introduced in the domestic
mar)et after the e9ecti#ity of this Act shall be ta$ed under the proper classi(cation thereof based
on their suggested net retail price: Provided, ho&ever, That such classi(cation shall not% in any
case% be loer than the highest classi(cation of any #ariant of that brand.
>A J#ariant of a brandJ shall refer to a brand on hich a modi(er is pre($ed andEor suA$ed to the
root name of the brand.
>8ermented li'uors hich are breed and sold at micro-breeries or small establishments such as
pubs and restaurants shall be sub*ect to the rate in paragraph :e; hereof.
>,e brands% as de(ned in the immediately folloing paragraph% shall initially be classi(ed
according to their suggested net retail price.
>J,e brandJ shall mean a brand registered after the date of e9ecti#ity of 6.A. ,o. .30=.
>JSuggested net retail priceJ shall mean the net retail price at hich ne brands% as de(ned
abo#e% of locally manufactured or imported fermented li'uor are intended by the
manufacturer or importer to be sold on retail in ma*or supermar)ets or retail outlets in Metro
Manila for those mar)eted nationide% and in other regions% for those ith regional mar)ets.
At the end of three :5; months from the product launch% the ?ureau of Internal 6e#enue shall
#alidate the suggested net retail price of the ne brand against the net retail price as
de(ned herein and determine the correct ta$ brac)et to hich a particuIar ne brand of
fermented li'uor% as de(ned abo#e% shall be classi(ed. After the end of eighteen :1.; months
from such #alidation% the ?ureau of Interns 6e#enue shall re#alidate the initially #alidated
net retail price against the net retail price as of the time of re#alidation in order to (nally
determine the correct ta$ brac)et hich a particular ne brand of fermented li'uors shall he
classi(ed: "ro#ided% hoe#er% That brands of fermented li'uors introduced in the domestic
mar)et beteen @anuary 1% 1//4 and +ecember 51% 3==5 shall remain in the classi(cation
under hich the ?ureau of Internal 6e#enue has determined them to belong as of +ecember
51%3==5. Such classi(cation of ne brands and brands introduced beteen @anuary 1% 1//4
and +ecember 51% 3==5 shall not be re#ised e$cept by an act of 7ongress.
>J,et retail priceJ% as determined by the ?ureau of Internal 6e#enue through a price sur#ey
to be conducted by the ?ureau of Internal 6e#enue itself% or the ,ational Statistics 2Ace
hen deputi!ed for the purpose by the ?ureau of Internal 6e#enue% shall mean the price at
hich the fermented li'uor is sold on retail in at least tenty :3=; ma*or supermar)ets in
Metro Manila :for brands of fermented li'uor mar)eted nationally;% e$cluding the amount
intended to co#er the applicable e$cise ta$ and the #alue-added ta$. 8or brands hich are
mar)eted outside Metro Manila% the Jnet retail priceJ shall mean the price at hich the
GSV-10-
fermented li'uor is sold in at least (#e :-; ma*or supermar)ets in the region e$cluding the
amount intended to co#er the applicable e$cise ta$ and the #alue-added ta$.
>The classi(cation of each brand of fermented li'uor based on its a#erage net retail price as of
2ctober 1% 1//<% as set forth in Anne$ J7J% including the classi(cation of brands for the same
products hich% although not set forth in said Anne$ J7J% ere registered and ere being
commercially produced and mar)eted on or after 2ctober 1% 1//<% and hich continue to be
commercially produced and mar)eted after the e9ecti#ity of this Act% shall remain in force until
re#ised by 7ongress.
>The rates of ta$ imposed under this Section shall be increased by eight percent :.I; e#ery to
years starting on @anuary 1% 3==4 until @anuary 1% 3=11.
>Any donard reclassi(cation of present categories% for ta$ purposes% of e$isting brands of
fermented li'uor duly registered at the time of the e9ecti#ity of this Act hich ill reduce the ta$
imposed herein% or the payment thereof% shall be prohibited.
>1#ery breer or importer of fermented li'uor shall% ithin thirty :5=; days from the e9ecti#ity of
this Act% and ithin the (rst (#e :-; days of e#ery month thereafter% submit to the 7ommissioner a
sorn statement of the #olume of sales for each particular brand of fermented li'uor sold at his
establishment for the three-month period immediately preceding.
>Any breer or importer ho% in #iolation of this Section% )noingly misdeclares or misrepresents in
his or its sorn statement herein re'uired any pertinent data or information shall be penali!ed by a
summary cancellation or ithdraal of his or its permit to engage in business as breer or importer
of fermented li'uor.
>Any corporation% association or partnership liable for any of the acts or omissions in #iolation of
this Section shall be (ned treble the amount of de(ciency ta$es% surcharges and interest hich may
be assessed pursuant to this Section.
>Any person liable for any of the acts or omissions prohibited under this Section shall be criminally
liable and penali!ed under Section 3-0 of this 7ode. Any person ho illfully aids or abets in the
commission of any such act or omission shall be criminally liable in the same manner as the
principal.
>If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing the
sentence% ithout further proceedings for deportation.>
*"C. 4. Section 100 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17. 100. Tobacco Products? - There shall be collected a ta$ of 2ne peso :"1.==; on each )ilogram
of the folloing products of tobacco:
>:a; Tobacco tisted by hand or reduced into a condition to be consumed in any manner
other than the ordinary mode of drying and curing&
>:b; Tobacco prepared or partially prepared ith or ithout the use of any machine or
instruments or ithout being pressed or seetened e$cept as otherise pro#ided hereunder&
and
>:c; 8ine-cut shorts and refuse% scraps% clippings% cuttings% stems and seepings of tobacco
e$cept as otherise pro#ided hereunder.
>Stemmed leaf tobacco% tobacco prepared or partially prepared ith or ithout the use of any
machine or instrument or ithout being pressed or seetened% (ne-cut shorts and refuse% scraps%
clippings% cuttings% stems% midribs% and seepings of tobacco resulting from the handling or
stripping of hole leaf tobacco shall be transferred% disposed of% or otherise sold% ithout any
prepayment of the e$cise ta$ herein pro#ided for% if the same are to be e$ported or to be used in
the manufacture of cigars% cigarettes% or other tobacco products on hich the e$cise ta$ ill
e#entually be paid on the (nished product% under such conditions as may be prescribed in the rules
and regulations promulgated by the Secretary of 8inance% upon recommendation of the
7ommissioner.
>2n tobacco specially prepared for cheing so as to be unsuitable for use in any other manner% on
each )ilogram% Se#enty-nine centa#os :"=.4/;.
GSV-10<
>The rates of ta$ imposed under this Section shall be increased by si$ percent :<I; e#ery to years
starting on @anuary 1% 3==4 until @anuary 1% 3=11.
>Manufacturers and importers of tobacco products shall% ithin thirty :5=; days from the e9ecti#ity
of this Act% and ithin the (rst (#e :-; days of e#ery month thereafter% submit to the 7ommissioner
a sorn statement of the #olume of sales for each particular brand of tobacco products sold at their
establishment for the three-month period immediately preceding.
>Any manufacturer or importer ho% in #iolation of this Section% )noingly misdeclares or
misrepresents in his or its sorn statement herein re'uired any pertinent data or information shall%
upon disco#ery% be penali!ed by a summary cancellation or ithdraal of his or its permit to
engage in business as manufacturer or importer of cigars or cigarettes.
>Any corporation% association or partnership liable for any of the acts or omissions in #iolation of
this Section shall be (ned treble the amount of de(ciency ta$es% surcharges and interest hich may
be assessed pursuant to this Section.
>Any person liable for any of the acts or omissions prohibited under this Section shall be criminally
liable and penali!ed under Section 3-0 of this 7ode. Any person ho illfully aids or abets in the
commission of any such act or omission shall be criminally liable in the same manner as the
principal.
>If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing the
sentence% ithout further proceedings for deportation.>
*"C. A. Section 10- of the ,ational Internal 6e#enue 7ode% as amended% is hereby further amended to
read as follos:
>S17. 10-. Cigars and Cigarettes? -
>:A; 7igars. - There shall be le#ied% assessed and collected on cigars an ad #alorem ta$
based on the net retail price per cigar :e$cluding the e$cise ta$ and the #alue-added ta$; in
accordance ith the folloing schedule:
>:1; If the net retail price per cigar is 8i#e hundred pesos :"-==.==; or less% ten
percent :1=I;& and
>:3; If the net retail price per cigar :e$cluding the e$cise ta$ and the #alue-added ta$;
is more than 8i#e hundred pesos :"-==.==;% 8ifty pesos :"-=.==; plus (fteen percent
:1-I; of the net retail price in e$cess of 8i#e hundred pesos :"-==.==;.
>:?; 7igarettes "ac)ed by Fand. - There shall be le#ied% assessed and collected on cigarettes
pac)ed by hand a ta$ at the rates prescribed belo:
>19ecti#e on @anuary 1% 3==-% To pesos :"3.==; per pac)&
>19ecti#e on @anuary 1%3==4% To pesos and tenty-three centa#os :"3.35; per pac)&
>19ecti#e on @anuary 1% 3==/% To pesos and forty-se#en centa#os :"3.04; per pac)&
and
>19ecti#e on @anuary 1% 3=11% To pesos and se#enty-to centa#os :"3.43; per pac).
>+uly registered or e$isting brands of cigarettes or ne brands thereof pac)ed by hand shall
only be pac)ed in thirties.
>:7; Cigarettes Pac-ed by .achine? - There shall be le#ied% assessed and collected on
cigarettes pac)ed by machine a ta$ at the rates prescribed belo:
>:1; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; is belo
8i#e pesos :"-.==; per pac)% the ta$ shall be:
>19ecti#e on @anuary 1% 3==-% To pesos :"3.==; per pac)&
>19ecti#e on @anuary 1% 3==4% To pesos and tenty-three centa#os :"3.35;
per pac)&
GSV-104
>19ecti#e on @anuary 1% 3==/% To pesos and forty-se#en centa#os :"3.04; per
pac)& and
>19ecti#e on @anuary 1% 3=11% To pesos and se#enty-to centa#os :"3.43;
per pac).
>:3; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; is 8i#e
pesos :"-.==; but does not e$ceed Si$ pesos and (fty centa#os :"<.-=; per pac)% the
ta$ shall be:
>19ecti#e on @anuary 1% 3==-% Si$ pesos and thirty-(#e centa#os :"<.5-; per
pac)&
>19ecti#e on @anuary 1% 3==4% Si$ pesos and se#enty-four centa#os :"<.40; per
pac)&
>19ecti#e on @anuary 1% 3==/% Se#en pesos and fourteen centa#os :"4.10; per
pac)& and
>19ecti#e on @anuary 1% 3=11% Se#en pesos and (fty-si$ centa#os :"4.-<; per
pac).
>:5; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; e$ceeds
Si$ pesos and (fty centa#os :"<.-=; but doesnot e$ceed Ten pesos :"l=.==; per pac)%
the ta$ shall be:
>19ecti#e on @anuary 1% 3==-% Ten pesos and thirty-(#e centa#os :"1=.5-; per
pac)&
>19ecti#e on @anuary 1% 3==4% Ten pesos and eighty-eight centa#os :"1=...;
per pac)&
>19ecti#e on @anuary 1% 3==/% 1le#en pesos and forty-three centa#os :"11.05;
per pac)& and
>19ecti#e on @anuary 1% 3=11% Tel#e pesos :"13.==; per pac).
>:0; If the net retail price :e$cluding the e$cise ta$ and the #alue-added ta$; is abo#e
Ten pesos :"1=.==; per pac)% the ta$ shall be:
>19ecti#e on @anuary 1% 3==-% Tenty-(#e pesos :"3-.==; per pac)&
>19ecti#e on @anuary 1% 3==4% Tenty-si$ pesos and si$ centa#os :"3<.=<; per
pac)&
>19ecti#e on @anuary 1% 3==/% Tenty-se#en pesos and si$teen centa#os
:"34.1<; per pac)& and
>19ecti#e on @anuary 1% 3=11% Tenty-eight pesos and thirty centa#os :"3..5=;
per pac).
>Variants of e$isting brands and #ariants of ne brands of cigarettes hich are introduced in the
domestic mar)et after the e9ecti#ity of this Act shall be ta$ed under the proper classi(cation
thereof based on their suggested% net retail price: Provided, ho&ever, That such classi(cation shall
not% in any case% be loer than the highest classi(cation of any #ariant of that brand.
>A J#ariant of a brandJ shall refer to a brand on hich a modi(er is pre($ed andEor suA$ed to the
root name of the brand.
>+uly registered or e$isting brands of cigarettes or ne brands thereof pac)ed by machine shall
only be pac)ed in tenties.
>Any donard reclassi(cation of present categories% for ta$ purposes% of e$isting brands of cigars
and cigarettes duly registered at the time of the e9ecti#ity of this Act hich ill reduce the ta$
imposed herein% or the payment thereof% shall be prohibited.
GSV-10.
>,e brands% as de(ned in the immediately folloing paragraph% shall initially be classi(ed
according to their suggested net retail price.
>J,e brandJ shall mean a brand registered after the date of e9ecti#ity of 6.A. ,o. .30=.
>JSuggested net retail priceJ shall mean the net retail price at hich ne brands% as de(ned abo#e%
of locally manufactured or imported cigarettes are intended by the manufacturer or importer to be
sold on retail in ma*or supermar)ets or retail outlets in Metro Manila for those mar)eted nationide%
and in other regions% for those ith regional mar)ets. At the end of three :5; months from the
product launch% the ?ureau of Internal 6e#enue shall #alidate the suggested net retail price of the
ne brand against the net retail price as de(ned herein and determine the correct ta$ brac)et
under hich a particular ne brand of cigarette% as de(ned abo#e% shall be classi(ed. After the end
of eighteen :1.; months from such #alidation% the ?ureau of Internal 6e#enue shall re#alidate the
initially #alidated net retail price against the net retail price as of the time of re#alidation in order to
(nally determine the correct ta$ brac)et under hich a particular ne brand of cigarettes shall be
classi(ed: Provided, ho&ever, That brands of cigarettes introduced in the domestic mar)et beteen
@anuary 1% 1//4 and +ecember 51% 3==5 shall remain in the classi(cation under hich the ?ureau
of Internal 6e#enue has determined them to belong as of +ecember 51% 3==5. Such classi(cation of
ne brands and brands introduced beteen @anuary 1% 1//4 and +ecember 51% 3==5 shall not be
re#ised e$cept by an act of 7ongress.
>J,et retail priceJ% as determined by the ?ureau of Internal 6e#enue through a price sur#ey to be
conducted by the ?ureau of Internal 6e#enue itself% or the ,ational Statistics 2Ace hen deputi!ed
for the purpose by the ?ureau of Internal 6e#enue% shall mean the price at hich the cigarette is
sold on retail in at least tenty :3=; ma*or supermar)ets in Metro Manila :for brands of cigarettes
mar)eted nationally;% e$cluding the amount intended to co#er the applicable e$cise ta$ and the
#alue-added ta$. 8or brands hich are mar)eted only outside Metro Manila% the Jnet retail priceJ
shall mean the price at hich the cigarette is sold in at least (#e :-; ma*or supermar)ets in the
region e$cluding the amount intended to co#er the applicable e$cise ta$ and the #alue-added ta$.
>The classi(cation of each brand of cigarettes based on its a#erage net retail price as of 2ctober 1%
1//<% as set forth in Anne$ J+J% including the classi(cation of brands for the same products hich%
although not set forth in said Anne$ I+J% ere registered and ere being commercially produced
and mar)eted on or after 2ctober 1% 1//<% and hich continue to be commercially produced and
mar)eted after the e9ecti#ity of this Act% shall remain in force until re#ised by 7ongress.
>Manufacturers and importers of cigars and cigarettes shall% ithin thirty :5=; days from the
e9ecti#ity of this Act and ithin the (rst (#e :-; days of e#ery month thereafter% submit to the
7ommissioner a sorn statement of the #olume of sales for each particular brand of cigars andEor
cigarettes sold at his establishment for the three-month period immediately preceding.
>Any manufacturer or importer ho% in #iolation of this Section% )noingly misdeclares or
misrepresents in his or its sorn statement herein re'uired any pertinent data or information shall%
upon disco#ery% be penali!ed by a summary cancellation or ithdraal of his or its permit to
engage in business as manufacturer or importer of cigars or cigarettes.
>Any corporation% association or partnership liable for any of the acts or omissions in #iolation of
this Section shall be (ned treble the aggregate amount of de(ciency ta$es% surcharges and interest
hich may be assessed pursuant to this Section.
>Any person liable for any of the acts or omissions prohibited under this Section shall be criminally
liable and penali!ed under Section 3-0 of this 7ode. Any person ho illfully aids or abets in the
commission of any such act or omission shall be criminally liable in the same manner as the
principal.
>If the o9ender is not a citi!en of the "hilippines% he shall be deported immediately after ser#ing the
sentence% ithout further proceedings for deportation.>
*"C. B. Section 151 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby amended to
read as follos:
>S17. 151. Payment of $xcise Taxes on 'mported rticles? -
>:A; Persons *iable? - 1$cise ta$es on imported articles shall be paid by the oner or
importer to the 7ustoms 2Acers% conformably ith the regulations of the +epartment of
8inance and before the release of such articles from the customshouse% or by the person
ho is found in possession of articles hich are e$empt from e$cise ta$es other than those
legally entitled to e$emption.
GSV-10/
>In the case of ta$-free articles brought or imported into the "hilippines by persons% entities%
or agencies e$empt from ta$ hich are subse'uently sold% transferred or e$changed in the
"hilippines to non-e$empt persons or entities% the purchasers or recipients shall be
considered the importers thereof% and shall be liable for the duty and internal re#enue ta$
due on such importation.
>The pro#ision of any special or general la to the contrary notithstanding% the importation
of cigars and cigarettes% distilled spirits% fermented li'uors and ines into the "hilippines%
e#en if destined for ta$ and duty-free shops% shall be sub*ect to all applicable ta$es% duties%
charges% including e$cise ta$es due thereon. This shall apply to cigars and cigarettes%
distilled spirits% fermented li'uors and ines brought directly into the duly chartered or
legislated freeports of the Subic Special 1conomic and 8reeport Oone% created under
6epublic Act ,o. 4334& the 7agayan Special 1conomic Oone and 8reeport% created under
6epublic Act ,o. 4/33& and the Oamboanga 7ity Special 1conomic Oone% created under
6epublic Act ,o. 4/=5% and such other freeports as may hereafter be established or created
by la: Provided, further, That importations of cigars and cigarettes% distilled spirits%
fermented li'uors and ines made directly by a go#ernment-oned and operated duty-free
shop% li)e the +uty-8ree "hilippines :+8";% shall be e$empted from all applicable duties
only: Provided, still further, That such articles directly imported by a go#ernment-oned and
operated duty-free shop% li)e the +uty-8ree "hilippines% shall be labeled Jduty-freeJ and Jnot
for resaleJ: Provided, :nally, That the remo#al and transfer of ta$ and duty-free goods%
products% machinery% e'uipment and other similar articles other than cigars and cigarettes%
distilled spirits% fermented li'uors and ines% from one freeport to another freeport% shall not
be deemed an introduction into the "hilippine customs territory.>
>7igars and cigarettes% distilled spirits and ines ithin the premises of all duty-free shops
hich are not labelled as hereinabo#e re'uired% as ell as ta$ and duty-free articles obtained
from a duty-free shop and subse'uently found in a non-duty-free shop to be o9ered for
resale shall be con(scated% and the perpetrator of such non-labelling or re-selling shall be
punishable under the applicable pro#isions of this 7ode.
>Articles con(scated shall be disposed of in accordance ith the rules and regulations to be
promulgated by the Secretary of 8inance% upon recommendation of the 7ommissioners of
7ustoms and Internal 6e#enue% upon consultation ith the Secretary of Tourism and the
General Manager of the "hilippine Tourism Authority.
>The ta$ due on any such goods% products% machinery% e'uipment or other similar articles
shall constitute a lien on the article itself% and such lien shall be superior to all other charges
or liens% irrespecti#e of the possessor thereof.
>:?; Rate and Basis of the $xcise Tax on 'mported rticles? - Hnless otherise speci(ed%
imported articles shall be sub*ect to the same rates and basis of e$cise ta$es applicable to
locally manufactured articles.>
*"C. . Section 3.. of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17. 3... +isposition of 'ncremental Revenues? -
>:A; 'ncremental Revenues front Republic ct 4o? #IIF? - The incremental re#enues from the
increase in the documentary stamp ta$es under 6.A. ,o. 4<<= shall be set aside for the
folloing purposes.
>:1; In 1//0 and 1//-% tenty-(#e percent :3-I; thereof respecti#ely% shall accrue to
the Hni(ed Fome-Gending "rogram under 1$ecuti#e 2rder ,o. /= particularly for
mass-sociali!ed housing program to be allocated as follos: (fty percent :-=I; for
mass-sociali!ed housing& thirty percent :5=I; for the community mortgage program&
and tenty percent :3=I; for land ban)ing and de#elopment to be administered by
the ,ational Fousing Authority: Provided% That not more than one percent :1I; of the
respecti#e allocations hereof shall be used for administrati#e e$penses&
>:3; In 1//<% tenty-(#e percent :3-I; thereof to be utili!ed for the ,ational Fealth
Insurance "rogram that hereafter may he mandated by la&
>:5; In 1//0 and e#ery year thereafter% tenty-(#e percent :3-I; thereof shall accrue
to a Special 1ducation 8und to be administered by the +epartment of 1ducation%
7ulture and Sports for the construction and repair of school facilities% training of
GSV-1-=
teachers% and procurement or production of instructional materials and teaching aids&
and
>:0; In 1//0 and e#ery year thereafter% (fty percent :-=I; thereof shall accrue to a
Special Infrastructure 8und for the construction and repair of roads% bridges% dams
and irrigation% seaports and hydroelectric and other indigenous poer
pro*ects: Provided, ho&ever, That for the years 1//0 and 1//-% thirty percent :5=I;%
and for the years 1//<% 1//4 and 1//.% tenty percent :3=I;% of this fund shall be
allocated for depressed pro#inces as declared by the "resident as of the time of the
e9ecti#ity of 6.A. ,o. 4<<=: Provided, further, That a#ailments under this fund shall
be determined by the "resident on the basis of e'uity.
>Provided, :nally, That in paragraphs :3;% :5; and :0; of this Section% not more than one
percent :1I; of the allocated funds thereof shall be used for administrati#e e$penses by the
implementing agencies.
>:?; 'ncremental Revenues from Republic ct 4o? JBKF? - 8ifteen percent :1-I; of the
incremental re#enue collected from the e$cise ta$ on tobacco products under 6.A. ,o. .30=
shall be allocated and di#ided among the pro#inces producing burley and nati#e tobacco in
accordance ith the #olume of tobacco leaf production. The fund shall be e$clusi#ely utili!ed
for programs in pursuit of the folloing ob*ecti#es:
>:1; 7ooperati#e pro*ects that ill enhance better 'uality of agricultural products and
increase income and producti#ity of farmers&
>:3; Gi#elihood pro*ects% particularly the de#elopment of alternati#e farming system
to enhance farmerJs income& and
>:5; Agro-industrial pro*ects that ill enable tobacco farmers to be in#ol#ed in the
management and subse'uent onership of pro*ects% such as post-har#est and
secondary processing li)e cigarette manufacturing and by-product utili!ation.
>The +epartment of ?udget and Management% in consultation ith the 2#ersight 7ommittee
created under said 6.A. ,o. .30=% shall issue the corresponding rules and regulations
go#erning the allocation and disbursement of this fund.
>:7; 'ncremental Revenues from the $xcise Tax on lcohol and Tobacco Products? -
>:1; To and a half percent :3.-I; of the incremental re#enue from the e$cise ta$ on
alcohol and tobacco products starting @anuary 3==- shall be remitted directly to the
"hilippine Fealth Insurance 7orporation for the purpose of meeting and sustaining
the goal of uni#ersal co#erage of the ,ational Fealth Insurance "rogram& and
>:3; To and a half percent :3.-I; of the incremental re#enue from the e$cise ta$ on
alcohol and tobacco products starting @anuary 3==- shall be credited to the account
of the +epartment of Fealth and constituted as a trust fund for its disease pre#ention
program.
>The earmar)ing pro#ided under this pro#ision shall be obser#ed for (#e :-; years starting
from @anuary 3==-.>
*"C. 8. Implementing Rules and Regulations. - The Secretary of 8inance shall% upon the
recommendation of the 7ommissioner of Internal 6e#enue% promulgate the necessary rules and regulations
for the e9ecti#e implementation of this Act.
*"C. 9. Separability Clause. - If any of the pro#isions of this Act is declared in#alid by a competent
court% the remainder of this Act or any pro#ision not a9ected by such declaration of in#alidity shall remain
in force and e9ect.
*"C. 1D. Repealing Clause. - All las% decrees% ordinances% rules and regulations% e$ecuti#e or
administrati#e orders% and such other presidential issuances as are inconsistent ith any of the pro#isions
of this Act are hereby repealed% amended or otherise modi(ed accordingly.
*"C. 11. Efeetiuity. - This Act shall ta)e e9ect on @anuary 1% 3==-.
GSV-1-1
Appro#ed%
+RAN='#N DR#'&N
"resident of the Senate
F&*" D" ("N"C#A FR.
Spea)er of the Fouse of
6epresentati#es
This Act hich is a consolidation of Fouse ?ill ,o. 5140 and Senate ?ill ,o. 1.-0 as (nally passed by the
Fouse of 6epresentati#es and the Senate on +ecember 1-% 3==0 and +ecember 1<% 3==0% respecti#ely.
&*CAR $. EA0"*
Secretary of Senate
R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresenati#es
Appro#ed: +ecember 31% 3==0
$'&R#A !ACAPA$A';ARR&E&
President of the Philippines
R"P)0'#C ACT N&. 9,,
AN ACT A!"ND#N$ *"CT#&N* 2, 28, ,4, 1DB, 1D, 1D8, 1D9, 11D, 111, 112, 11,, 114, 11B, 11,
119, 121, 148, 1A1, 2,B, 2, AND 288 &+ T%" NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199,
A* A!"ND"D, AND +&R &T%"R P)RP&*"*
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:
*ection 1. Section 34 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>S17. 34. 6ates of Income Ta$ on +omestic 7orporations. -
:A; In General. - 1$cept as otherise pro#ided in this 7ode% an income ta$ of thirty-(#e
percent :5-I; is hereby imposed upon the ta$able income deri#ed during each ta$able year
from all sources ithin and ithout the "hilippines by e#ery corporation% as de(ned in
Section 33:?; of this 7ode and ta$able under this Title as a corporation% organi!ed in% or
GSV-1-3
e$isting under the las of the "hilippines: "ro#ided% That e9ecti#e @anuary 1% 3==/% the rate
of income ta$ shall be thirty percent :5=I;.
>In the case of corporations adopting the (scal-year accounting period% the ta$able income
shall be computed ithout regard to the speci(c date hen speci(c sales% purchases and
other transactions occur. Their income and e$penses for the (scal year shall be deemed to
ha#e been earned and spent e'ually for each month of the period.
The corporate income ta$ rate shall be applied on the amount computed by multiplying the
number of months co#ered by the ne rate ithin the (scal year by the ta$able income of
the corporation for the period% di#ided by tel#e.
>Provided, further% That the "resident% upon the recommendation of the Secretary of
8inance% may% e9ecti#e @anuary 1% 3===% allo corporations the option to be ta$ed at (fteen
percent :1-I; of gross income as de(ned herein% after the folloing conditions ha#e been
satis(ed:
>:1; A ta$ e9ort ratio of tenty percent :3=I; of Gross ,ational "roduct :G,";&
>:3; A ratio of forty percent :0=I; of income ta$ collection to total ta$ re#enues&
>:5; A VAT ta$ e9ort of four percent :0I; of G,"& and
>:0; A =./ percent :=./I; ratio of the 7onsolidated "ublic Sector 8inancial "osition :7"S8"; to
G,".
>The option to be ta$ed based on gross income shall be a#ailable only to (rms hose ratio of
cost of sales to gross sales or receipts from all sources does not e$ceed (fty-(#e percent
:--I;.
>The election of the gross income ta$ option by the corporation shall be irre#ocable for three
:5; consecuti#e ta$able years during hich the corporation is 'uali(ed under the scheme.
>8or purposes of this Section% the term Jgross incomeJ deri#ed from business shall be
e'ui#alent to gross sales less sales returns% discounts and alloances and Jcost of goo/s
sol/.J 7ost of good soldJ shall include all business e$penses directly incurred to produce the
merchandise to bring them to their present location and use.
>8or a trading or merchandising concern% Jcost of goo/s sol/J shall include the in#oice cost
of the goods sold% plus import duties% freight in transporting the goods to the place here
the goods are actually sold% including insurance hile the goods are in transit.
>8or a manufacturing concern% Jcost of goo/s m-nuf-cture/ -n/ sol/J shall include all
costs of production of (nished goods% such as ra materials used% direct labor and
manufacturing o#erhead% freight cost% insurance premiums and other costs incurred to bring
the ra materials to the factory or arehouse.
>In the case of ta$payers engaged in the sale of ser#ice% Jgross incomeJ means gross
receipts less sales returns% alloances and discounts.
>:?; Proprietary $ducational 'nstitutions and Hospitals? - "roprietary educational institutions
and hospitals hich are non-pro(t shall pay a ta$ of ten percent :1=I; on their ta$able
income e$cept those co#ered by Subsection :+; hereof: "ro#ided% That if the gross income
from unrelated trade% business or other acti#ity e$ceeds (fty percent :-=I; of the total gross
income deri#ed by such educational institutions or hospitals from all sources% the ta$
prescribed in Subdection :A; hereof shall be imposed on the entire ta$able income. 8or
purposes of this Subsection% the term Junrel-te/ tr-/e, business or other -cti1it6J
means any trade% business or other acti#ity% the conduct of hich is not substantially related
to the e$ercise or performance by such educational institution or hospital of its primary
purpose or function. A Jpropriet-r6 e/uc-tion-l institutionJ is any pri#ate school
maintained and administered by pri#ate indi#iduals or groups ith an issued permit to
operate from the +epartment of 1ducation% 7ulture and Sports :+17S;% or the 7ommission
on Figher 1ducation :7F1+;% or the Technical 1ducation and S)ills +e#elopment Authority
:T1S+A;% as the case may be% in accordance ith e$isting las and regulations.
>:7; 2overnment1o&ned or 1Controlled Corporations, gencies or 'nstrumentalities? - The
pro#isions of e$isting special or general las to the contrary notithstanding% all
corporations% agencies% or instrumentalities oned or controlled by the Go#ernment% e$cept
GSV-1-5
the Go#ernment Ser#ice and Insurance System :GSIS;% the Social Security System :SSS;% the
"hilippine Fealth Insurance 7orporation :"FI7;% and the "hilippine 7harity Seepsta)es
2Ace :"7S2;% shall pay such rate of ta$ upon their ta$able income as are imposed by this
Section upon corporations or associations engaged in a similar business% industry% or acti#ity.
>:+; Rate of Tax on Certain Passive 'ncomes? -
>:1; 'nterest from +eposits and Aield or any other .onetary Bene:t from +eposit Substitutes
and from Trust 0unds and Similar rrangements, and Royalties? - A (nal ta$ at the rate of
tenty percent :3=I; is hereby imposed upon the amount of interest on currency ban)
deposit and yield or any other monetary bene(t from deposit substitutes and from trust
funds and similar arrangements recei#ed by domestic corporations% and royalties% deri#ed
from sources ithin the "hilippines: "ro#ided% hoe#er% That interest income deri#ed by a
domestic corporation from a depository ban) under the e$panded foreign currency deposit
system shall be sub*ect to a (nal income ta$ at the rate of se#en and one-half percent :4
1E3I; of such interest income.
>:3; Capital 2ains from the Sale of Shares of Stoc- 4ot Traded in the Stoc- $xchange? - A
(nal ta$ at the rates prescribed belo shall be imposed on net capital gains reali!ed during
the ta$able year from the sale% e$change or other disposition of shares of stoc) in a
domestic corporation e$cept shares sold or disposed of through the stoc) e$change:
>,ot o#er "1==%=== ........................................ -I
>Amount in e$cess of "1==%=== ....................... 1=I
>:5; Tax on 'ncome +erived under the $xpanded 0oreign Currency +eposit System? - Income
deri#ed by a depository ban) under the e$panded foreign currency deposit system from
foreign currency transactions ith nonresidents% o9shore ban)ing units in the "hilippines%
local commercial ban)s including branches of foreign ban)s that may be authori!ed by the
?ang)o Sentral ng "ilipinas :?S"; to transact business ith foreign currency deposit system
units and other depository ban)s under the e$panded foreign currency deposit system shall
be e$empt from all ta$es% e$cept net income from such transactions as may be speci(ed by
the Secretary of 8inance% upon recommendation by the Monetary ?oard to be sub*ect to the
regular income ta$ payable by ban)s: Provided, ho&ever, That interest income from foreign
currency loans granted by such depository ban)s under said e$panded system to residents
other than o9shore ban)ing units in the "hilippines or other depository ban)s under the
e$panded system shall be sub*ect to a (nal ta$ at the rate of ten percent :1=I;.
>Any income of nonresidents% hether indi#iduals or corporations% from transactions ith
depository ban)s under the e$panded system shall be e$empt from income ta$.
>:0; 'ntercorporate +ividends? - +i#idends recei#ed by a domestic corporation from another
domestic corporation shall not be sub*ect to ta$.
>:-; Capital 2ains Reali5ed from the Sale, $xchange or +isposition of *ands and;or
Buildings? - A (nal ta$ of si$ percent :<I; is hereby imposed on the gain presumed to ha#e
been reali!ed on the sale% e$change or disposition of lands andEor buildings hich are not
actually used in the business of a corporation and are treated as capital assets% based on the
gross selling price or fair mar)et #alue as determined in accordance ith Section% <:1; of this
7ode% hiche#er is higher% of such lands andEor buildings.
>:1; .inimum Corporate 'ncome Tax on +omestic Corporations? -
>:1; 'mposition of Tax? - A minimum corporate income ta$ of to percent :3I; of the gross
income as of the end of the ta$able year% as de(ned herein% is hereby imposed on a
corporation ta$able under this Title% beginning on the fourth ta$able year immediately
folloing the year in hich such corporation commenced its business operations% hen the
minimum income ta$ is greater than the ta$ computed under Subsection :A; of this Section
for the ta$able year.
>:3; Carry 0or&ard of $xcess .inimum Tax? - Any e$cess of the minimum corporate income%
ta$ o#er the normal income ta$ as computed under Subsection :A; of this Section shall be
carried forard and credited against the normal income ta$ for the three :5; immediately
succeeding ta$able years.
>:5; Relief from the .inimum Corporate 'ncome Tax Cnder Certain Conditions? - The
Secretary of 8inance is hereby authori!ed to suspend the imposition of the minimum
GSV-1-0
corporate income ta$ on any corporation hich su9ers losses on account of prolonged labor
dispute% or because of force ma7eure% or because of legitimate business re#erses.
>The Secretary of 8inance is hereby authori!ed to promulgate% upon recommendation of the
7ommissioner% the necessary rules and regulations that shall de(ne the terms and
conditions under hich he may suspend the imposition of the minimum corporate income
ta$ in a meritorious case.
>:0; 2ross 'ncome +e:ned? - 8or purposes of applying the minimum corporate income ta$
pro#ided under Subsection :1; hereof% the term Jgross incomeJ shall mean gross sales less
sales returns% discounts and alloances and cost of goods sold. JCost of goo/s sol/J shall
include all business e$penses directly incurred to produce the merchandise to bring them to
their present location and use.
>8or a trading or merchandising concern% JCost of goo/s sol/J shall include the in#oice of
the goods sold% plus import duties% freight in transporting the goods to the place here the
goods are actually sold including insurance hile the goods are in transit.
>8or a manufacturing concern% Jcost of goo/s m-nuf-cture/ -n/ sol/J shall include all
costs of production of (nished goods% such as ra materials used% direct labor and
manufacturing o#erhead% freight cost% insurance premiums and other costs incurred to bring
the ra materials to the factory or arehouse.
>In the case of ta$payers engaged in the sale of ser#ice% Jgross incomeJ means gross
receipts less sales returns% alloances% discounts and cost of ser#ices. JCost of ser1icesJ
shall mean all direct costs and e$penses necessarily incurred to pro#ide the ser#ices
re'uired by the customers and clients including :A; salaries and employee bene(ts of
personnel% consultants and specialists directly rendering the ser#ice and :?; cost of facilities
directly utili!ed in pro#iding the ser#ice such as depreciation or rental of e'uipment used
and cost of supplies& Provided, ho&ever% That in the case of ban)s% Jcost of ser1icesJ shall
include interest e$pense.>
*"C. 2. Section 3.:A;:1; and :?;:1; and :-;:b; of the same 7ode% as amended% are hereby further
amended to read as follos:
>S17. 3.. Rates of 'ncome Tax on 0oreign Corporations. -
:A; Tax on Resident 0oreign Corporations. -
:1; 'n 2eneral. - 1$cept as otherise pro#ided in this 7ode% a corporation organi!ed%
authori!ed% or e$isting under the las of any foreign country% engaged in trade or
business ithin the "hilippines% shall be sub*ect to an income ta$ e'ui#alent to thirty-
(#e percent :5-I; of the ta$able income deri#ed in the preceding ta$able year from
all sources ithin the "hilippines: "ro#ided% That e9ecti#e @anuary 1% 3==/% the rate of
income ta$ shall be thirty percent :5=I;.
>In the case of corporations adopting the (scal-year accounting period% the ta$able
income shall be computed ithout regard to the speci(c date hen sales% purchases
and other transactions occur. Their income and e$penses for tbe (scal year shall be
deemed to ha#e been earned and spent e'udly for each month of the period.
>The corporate income ta$ rate shall be applied on the amount computed by
multiplying the number of months co#ered by the ne rate ithin the (scal year by
the ta$able income of the corporation for the period% di#ided by tel#e.
>Provided, ho&ever% That a resident foreign corporation shall be granted the option to
be ta$ed at (fteen percent :1-I; on gross income under the same conditions% as
pro#ided in Section 34:A;.
>:3; .inimum Corporate 'ncome Tax on Resident 0oreign Corporations? - A minimum
corporate income ta$ of to percent :3I; of gross income% as prescribed under
Section 34:1; of this 7ode% shall be imposed% under the same conditions% on a
resident foreign% corporation ta$able under% paragraph :1; of this Subsection.
>:5; 'nternational Carrier? - An international carrier doing business in the "hilippines
shall pay a ta$ of to and one-half percent :3 1E3I; on its JGross "hilippine ?illingsJ
as de(ned hereunder:
GSV-1--
>:a; 'nternational ir Carrier? - JGross "hilippine ?illingsJ refers to the amount
of gross re#enue deri#ed from carriage of persons% e$cess baggage% cargo and
mail originating from the "hilippines in a continuous and uninterrupted Cight%
irrespecti#e of the place of sale or issue and the place of payment of the tic)et
or passage document: Provided% That tic)ets re#alidated% e$changed andEor
indorsed to another international airline form part of the Gross "hilippine
?illings if the passenger boards a plane in a port or point in the
"hilippines: Provided, further% That for a Cight hich originates from the
"hilippines% but transshipment of passenger ta)es place at any port outside
the "hilippines on another airline% only the ali'uot portion of the cost of the
tic)et corresponding to the leg Con from the "hilippines to the point of
transshipment shall form part of Gross "hilippine ?illings.
>:b; 'nternational Shipping? - JGross "hilippine ?illingsJ means gross re#enue
hether for passenger% cargo or mail originating from the "hilippines up to
(nal destination% regardless of the place of sale or payments of the passage or
freight documents.
>:0; (%shore Ban-ing Cnits? - The pro#isions of any la to the contrary
notithstanding% income deri#ed by o9shore ban)ing units authori!ed by the ?ang)o
Sentral ng "ilipinas :?S";% from foreign currency transactions ith nonresidents% other
o9shore ban)ing units% local commercial ban)s% including branches of foreign ban)s
that may be authori!ed by the ?ang)o Sentral ng "ilipinas :?S"; to transact business
ith o9shore ban)ing units shall be e$empt from all ta$es e$cept net income from
such transactions as may be speci(ed by the Secretary of 8inance% upon
recommendation of the Monetary ?oard hich shall be sub*ect to the regular income
ta$ payable by ban)s: Provided, ho&ever, That any interest income deri#ed from
foreign currency loans granted to residents% other than o9shore ban)ing units or local
commercial ban)s% including local branches of foreign ban)s that may be authori!ed
by the ?S" to transact business ith o9shore ban)ing units% shall be sub*ect only to a
(nal& ta$ at the rate of ten percent :1=I;.
>Any income of nonresidents% hether indi#iduals or corporations% from transactions
ith said o9shore ban)ing units shall be e$empt from income ta$.
>:-; Tax on Branch Pro:ts Remittances? - any pro(t remitted by a branch to its head
oAce shall be sub*ect to a ta$ of (fteen percent :1-I; hich shall be based on the
total pro(ts applied or earmar)ed for remittance ithout any deduction for the ta$
component thereof :e$cept those acti#ities hich are registered ith the "hilippine
1conomic Oone Authority;. The ta$ shall be collected and paid in the same manner as
pro#ided in Sections -4 and -. of this 7ode: Provided% That interests% di#idends%
rents% royalties% including renumeration for technical ser#ices% salaries% ages%
premiums% annuities% emoluments or other ($ed or determinable annual% periodic or
casual gains% pro(ts% income and capital gains recei#ed by a foreign corporation
during each ta$able year from all sources ithin the "hilippines shall not be treated
as branch pro(ts unless the same are e9ecti#ely connected ith the conduct of its
trade or business in the "hilippines.
>:<; Regional or rea Head/uarters and Regional (perating Head/uarters of
.ultinational Companies? -
>:a; 6egional or area head'uarters as de(ned in Section 33:++; shall not be
sub*ect to income ta$.
>:b; 6egional operating head'uarters as de(ned in Section 33:11; shall pay a
ta$ of ten percent :1=I; of their ta$able income.
>:4; Tax on Certain 'ncomes Received by a Resident 0oreign Corporation? -
>:a; 'nterest from +eposits and Aield or any other .onetary Bene:t from
+eposit Substitutes, Trust 0unds and Similar rrangements and Royalties? -
Interest from any currency ban) deposit and yield or any other monetary
bene(t from deposit substitutes and from trust funds and similar
arrangements and royalties deri#ed from sources ithin the "hilippines shall
be sub*ect to a (nal income ta$ at the rate of tenty percent :3=I; of such
interest: Provided, ho&ever, That interest income deri#ed by a resident foreign
corporation from a depository ban) under the e$panded foreign currency
deposit system shall be sub*ect to a (nal income ta$ at the rate of se#en and
one-half percent :4 1E3I; of such interest income.
GSV-1-<
>:b; 'ncome +erived under the $xpanded 0oreign Currency +eposit System? -
Income deri#ed by a depository ban) under the e$panded foreign currency
deposit system from foreign currency transactions ith nonresidents% o9shore
ban)ing units in the "hilippines% local commercial ban)s including branches of
foreign ban)s that may be authori!ed by the ?ang)o Sentral ng "ilipinas :?S";
to transact business ith foreign currency deposit system units and other
depository ban)s under the e$panded foreign currency deposit system shall
be e$empt from all ta$es% e$cept net income from such transactions as may
be speci(ed by the Secretary of 8inance% upon recommendation by the
Monetary ?oard to be sub*ect to the regular income ta$ payable by
ban)s: Provided, ho&ever, That interest income from foreign currency loans
granted by such depository ban)s under said e$panded system to residents
other than depository ban)s under the e$panded system shall be sub*ect to a
(nal ta$ at the rate of ten percent :1=I;.
>Any income of nonresidents% hether indi#iduals or corporations% from
transactions ith depository ban)s under the e$panded system shall be
e$empt from income ta$.
>:c; Capital 2ains from Sale of Shares of Stoc- 4ot Traded in the Stoc-
$xchange? - A (nal ta$ at the rates prescribed belo is hereby imposed upon
the net capital gains reali!ed during the ta$able year from the sale% barter%
e$change or other disposition of shares of stoc) in a domestic corporation
e$cept shares sold or disposed of through the stoc) e$change:
>,ot o#er "1==%=== ................................... -I
>2n any amount in e$cess of "1==%=== ....... 1=I
>:d; 'ntercorporate +ividends? - +i#idends recei#ed by a resident foreign
corporation from a domestic corporation liable to ta$ under this 7ode shall not
be sub*ect to ta$ under this Title.
>:?; Tax on 4onresident 0oreign Corporation? -
>:1; 'n 2eneral? - 1$cept as otherise pro#ided in this 7ode% a foreign corporation not
engaged in trade or business in the "hilippines shall pay a ta$ e'ual to thirty-(#e
percent :5-I; of the gross income recei#ed during each ta$able year from all sources
ithin the "hilippines% such as interests% di#idends% rents% royalties% salaries%
premiums :e$cept reinsurance premiums;% annuities% emoluments or other ($ed or
determinable annual% periodic or casual gains% pro(ts and income% and capital gains%
e$cept capital gains sub*ect to ta$ under subparagraph -:c;: "ro#ided% That e9ecti#e
@anuary 1% 3==/% the rate of income ta$ shall be thirty percent :5=I;.
>:3; 4onresident Cinematographic 0ilm (&ner, *essor or +istributor? - A
cinematographic (lm oner% lessor% or distributor shall pay a ta$ of tenty-(#e
percent :3-I; of its gross income from all sources ithin the "hilippines.
>:5; 4onresident (&ner or *essor of 3essels Chartered by Philippine 4ationals? - A
nonresident oner or lessor of #essels shall be sub*ect to a ta$ of four and one-half
percent :0 1E3I; of gross rentals% lease or charter fees from leases or charters to
8ilipino citi!ens or corporations% as appro#ed by the Maritime Industry Authority.
>:0; 4onresident (&ner or *essor of ircraft, .achineries and (ther $/uipment? -
6entals% charters and other fees deri#ed by a nonresident lessor of aircraft%
machineries and other e'uipment shall be sub*ect to a ta$ of se#en and one-half
percent :4 1E3I; of gross rentals or fees.
>:-; Ta$ on 7ertain Incomes 6ecei#ed by a ,onresident 8oreign 7orporation. -
>:a; 'nterest on 0oreign *oans? - A (nal ithholding ta$ at the rate of tenty
percent :3=I; is hereby imposed on the amount of interest on foreign loans
contracted on or after August 1% 1/.<&
>:b; 'ntercorporate +ividends? - A (nal ithholding ta$ at the rate of (fteen
percent :1-I; is hereby imposed on the amount of cash andEor property
di#idends recei#ed from a domestic corporation% hich shall be collected and
paid as pro#ided in Section -4:A; of this 7ode% sub*ect to the condition that
the country in hich the nonresident foreign corporation is domiciled% shall
GSV-1-4
allo a credit against the ta$ due from the nonresident foreign corporation
ta$es deemed to ha#e been paid in the "hilippines e'ui#alent to tenty
percent :3=I;% hich represents the di9erence beteen the regular income
ta$ of thirty-(#e percent :5-I; and the (fteen percent :1-I; ta$ on di#idends
as pro#ided in this subparagraph: "ro#ided% That e9ecti#e @anuary 1% 3==/% the
credit against the ta$ due shall be e'ui#alent to (fteen percent :1-I;% hich
represents the di9erence beteen the regular income ta$ of thirty percent
:5=I; and the (fteen percent :1-I; ta$ on di#idends&
>:c; Capital 2ains from Sale of Shares of Stoc- not Traded in the Stoc-
$xchange? - A (nal ta$ at the rates prescribed belo is hereby imposed upon
the net capital gains reali!ed during the ta$able year from the sale% barter%
e$change or other disposition of shares of stoc) in a domestic corporation%
e$cept shares sold% or disposed of through the stoc) e$change:
>,ot o#er "1==%=== .................................... -I
>2n any amount in e$cess of "1==%===............... 1=I>
*"C. ,. Section 50:?;:1; of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 50. +eductions from 2ross 'ncome? - 1$cept for ta$payers earning compensation income
arising from personal ser#ices rendered under an employer-employee relationship here no
deductions shall be alloed under this Section other than under Subsection :M; hereof% in
computing ta$able income sub*ect to income ta$ under Sections 30:A;& 3-:A;& 3<& 34:A;% :?; and
:7;& and 3.:A;:1;% there shall be alloed the folloing deductions from gross income:
>:A; $xpenses? -
>:1; (rdinary and 4ecessary Trade, Business or Professional $xpenses? -
>:a; 'n 2eneral? - There shall be alloed as deduction from gross income all
the ordinary and necessary e$penses paid or incurred during the ta$able year
in carrying on or hich are directly attributable to% the de#elopment%
management% operation andEor conduct of the trade% business or e$ercise of a
profession% including:
>:i; A reasonable alloance for salaries% ages% and other forms of
compensation for personal ser#ices actually rendered% including the
grossed- up monetary #alue of fringe bene(t furnished or granted by
the employer to the employee: "ro#ided% That the (nal ta$ imposed
under Section 55 hereof has been paid&
>:ii; A reasonable alloance for tra#el e$penses% here and abroad%
hile aay from home in the pursuit of trade% business or profession&
>:iii;A reasonable alloance for rentals andEor other payments hich
are re'uired as a condition for the continued use or possession% for
purposes of the trade% business or profession% of property to hich the
ta$payer has not ta)en or is not ta)ing title or in hich he has no
e'uity other than that of a lessee% user or possessor&
>:i#; A reasonable alloance for entertainment% amusement and
recreation e$penses during the ta$able year% that are directly
connected to the de#elopment% management and operation of the
trade% business or profession of the ta$payer% or that are directly
related to or in furtherance of the conduct of his or its trade% business
or e$ercise of a profession not to e$ceed such ceilings as the Secretary
of 8inance may% by rules and regulations prescribe% upon
recommendation of the 7ommissioner% ta)ing into account the needs
as ell as the special circumstances% nature and character of the
industry% trade% business% or profession of the ta$payer: "ro#ided% That
any e$pense incurred for entertainment% amusement or recreation that
is contrary to la% morals% public policy or public order shall in no case
be alloed as a deduction.
>:b; Substantiation Re/uirements? - ,o deduction from gross income shall be
alloed under Subsection :A; hereof unless the ta$payer shall substantiate
ith suAcient e#idence% such as oAcial receipts or other ade'uate records: :i;
GSV-1-.
the amount of the e$pense being deducted% and :ii; the direct connection or
relation of the e$pense being deducted to the de#elopment% management%
operation andEor conduct of the trade% business or profession of the ta$payer.
>:c; Bribes, 8ic-bac-s and (ther Similar Payments? - ,o deduction from gross
income shall be alloed under Subsection :A; hereof for any payment made%
directly or indirectly% to an oAcial or employee of the national go#ernment% or
to an oAcial or employee of any local go#ernment unit% or to an oAcial or
employee of a go#ernment-oned or-controlled corporation% or to an oAcial or
employee or representati#e of a foreign go#ernment% or to a pri#ate
corporation% general professional partnership% or a similar entity% if the
payment constitutes a bribe or )ic)bac).
>:3; $xpenses llo&able to Private $ducational 'nstitutions? - In addition to the
e$penses alloable as deductions under this 7hapter% a pri#ate educational
institution& referred to under Section 34:?; of this 7ode% may at its option elect either:
:a; to deduct e$penditures otherise considered as capital outlays of depreciable
assets incurred during the ta$able year for the e$pansion of school facilities% or :b; to
deduct alloance for depreciation thereof under .ubsection :8; hereof.
>:?; 'nterest? -
>:1; 'n 2eneral? - The amount of interest paid or incurred ithin a ta$able year on
indebtedness in connection ith the ta$payerJs profession% trade or business shall be
alloed as deduction from gross income: "ro#ided% hoe#er% That the ta$payerJs
otherise alloable deduction for interest e$pense shall be reduced by forty-to
percent :03I; of the interest income sub*ected to (nal ta$: "ro#ided% That e9ecti#e
@anuary 1% 3==/% the percentage shall be thirty-three percent :55I;.
*"C. 4. Section 1=< of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 1=<. 3alue1dded Tax on Sale of 2oods or Properties? -
>:A; Rate and Base of Tax? - There shall be le#ied% assessed and collected on e#ery sale%
barter or e$change of goods or properties% a #alue-added ta$ e'ui#alent to ten percent
:1=I; of the gross selling price or gross #alue in money of the goods or properties sold%
bartered or e$changed% such ta$ to be paid by the seller or transferor: "ro#ided% That the
"resident% upon the recommendation of the Secretary of 8inance% shall% e9ecti#e @anuary 1%
3==<% raise the rate of #alue-added ta$ to tel#e percent :13I;% after any of the folloing
conditions has been satis(ed:
>:i; Value-added ta$ collection as a percentage of Gross +omestic product :G+"; of
the pre#ious year e$ceeds to and four-(fth percent :3 0E-I;& or
>:ii; ,ational go#ernment de(cit as a percentage of G+" of the pre#ious year e$ceeds
one and one-half percent :1 1E3I;.
>:1; The term Jgoo/s or propertiesJ shall mean all tangible and intangible
ob*ects hich are capable of pecuniary estimation and shall include:
>:a; 6eal properties held primarily for sale to customers or held for
lease in the ordinary course of trade or business&
>:b; The right or the pri#ilege to use patent% copyright% design or
model% plan secret formula or process% goodill% trademar)% trade
brand or other li)e property or right&
>:c; The right or the pri#ilege to use in the "hilippines of any industrial%
commercial or scienti(c e'uipment&
>:d; The right or the pri#ilege to use motion picture (lms% (lms% tapes
and discs& and
>:e; 6adio% tele#ision% satellite transmission and cable tele#ision time.
>The term Jgross selling priceJ means the total amount of money or
its e'ui#alent hich the purchaser pays or is obligated to pay to the
GSV-1-/
seller in consideration of the sale% barter or e$change of the goods or
properties% e$cluding the #alue-added ta$. The e$cise ta$% if any% on
such goods or properties shall form part of the gross selling price.
>:3; The folloing sales by VAT-registered persons shall be sub*ect to !ero
percent :=I; rate:
>:a; $xport Sales? - The term Je2port s-lesJ means:
>:1; The sale and actual shipment of goods from the "hilippines
to a foreign country% irrespecti#e of any shipping arrangement
that may be agreed upon hich may inCuence or determine the
transfer of onership of the goods so e$ported and paid for in
acceptable foreign currency or its e'ui#alent in goods or
ser#ices% and accounted for in accordance ith the rules and
regulations of the ?ang)o Sentral ng "ilipinas%:?S";&
>:3; Sale of ra materials or pac)aging materials to a
nonresident buyer for deli#ery to a resident local e$port-
oriented enterprise to be used in manufacturing% processing%
pac)ing or repac)ing in the "hilippines of the said buyerJs goods
and paid for in acceptable foreign currency and accounted for in
accordance ith the rules and regulations of the ?ang)o Sentral
ng "ilipinas :?S";:
>:5; Sale of ra materials or pac)aging materials to e$port-
oriented enterprise hose e$port sales e$ceed se#enty percent
:4=I; of total annual production&
>:0; Sale of gold to the ?ang)o Sentral ng "ilipinas :?S";&
>:-; Those considered e$port sales under 1$ecuti#e 2rder ,o.
33<% otherise )non as the 2mnibus In#estment 7ode of
1/.4% and other special las& and
>:<; The sale of goods% supplies% e'uipment and fuel to persons
engaged in international shipping or international air transport
operations.
>:b; 0oreign Currency +enominated Sale? - The phrase Jforeign
currenc6 /enomin-te/ s-leJ means sale to a nonresident of goods%
e$cept those mentioned in Sections 10/ and 1-=% assembled or
manufactured in the "hilippines for deli#ery to a resident in the
"hilippines% paid for in acceptable foreign currency and accounted for
in accordance ith the rules and regulations of the ?ang)o Sentral ng
"ilipinas :?S";.
>:c; Sales to persons or entities hose e$emption under special las or
international agreements to hich the "hilippines is a signatory
e9ecti#ely sub*ects such sales to !ero rate.
>:?; Transactions +eemed Sale? - The folloing transactions shall be deemed sale:
>:1; Transfer% use or consumption not in the course of business of goods or properties
originally intended for sale or for use in the course of business&
>:3; +istribution or transfer to:
>:a; Shareholders or in#estors as share in the pro(ts of the VAT-registered
persons: or
>:b; 7reditors in payment of debt&
>:5; 7onsignment of goods if actual sale is not made ithin si$ty :<=; days folloing
the date such goods% ere consigned& and
GSV-1<=
>:0; 6etirement from or cessation of business% ith respect to in#entories of ta$able
aoods e$isting as of such retirement or cessation.
>:7; Changes in or Cessation of Status of a 3T1registered Person? - The ta$ imposed in
Subsection :A; of this Section shall also apply to goods disposed of or e$isting as of a certain
date if under circumstances to be prescribed in rules and regulations to be promulgated by
the Secretary of 8inance% upon recommendation of the 7ommissioner% the status of a person
as a VAT-registered person changes or is terminated.
>:+; Sales Returns, llo&ances and Sales +iscounts? - The #alue of goods or properties sold
and subse'uently returned or for hich alloances ere granted by a VAT-registered person
may be deducted from the gross sales or receipts for the 'uarter in hich a refund is made
or a credit memorandum or refund is issued. Sales discount granted and indicated in the
in#oice at the time of sale and the grant of hich does not depend upon the happening of a
future e#ent may be e$cluded from the gross sales ithin the same 'uarter it as gi#en.
>:1; uthority of the Commissioner to +etermine the ppropriate Tax Base? - The
7ommissioner shall% by rules and regulations prescribed by the Secretary of 8inance%
determine the appropriate ta$ base incases here a transaction is deemed a sale% barter or
e$change of goods or properties under Subsection :?; hereof% or here the gross selling
price is unreasonably loer than the actual mar)et #alue.>
*"C. A. Section 1=4 of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 1=4. 3alue1dded Tax on 'mportation of 2oods? -
>:A; 'n 2eneral? - There shall be le#ied% assessed and collected on e#ery importation of
goods a #alue-added ta$ e'ui#alent to ten percent :1=I; based on the total #alue used by
the ?ureau of 7ustoms in determining tari9 and customs duties% plus customs duties% e$cise
ta$es% if any% and other charges% such ta$ to be paid by the importer prior to the release of
such goods from customs custody: "ro#ided% That here the customs duties are determined
on the basis of the 'uantity or #olume of the goods% the #alue-added ta$ shall be based on
the landed cost plus e$cise ta$es% if any: "ro#ided% further% That the "resident% upon the
recommendation of the Secretary of 8inance% shall% e9ecti#e @anuary 1% 3==<% raise the rate
of #alue-added ta$ to tel#e percent :13I;% after any of the folloing conditions has been
satis(ed:
>:i; Value-added ta$ collection as a percentage of Gross +omestic "roduct :G+"; of
the pre#ious year e$ceeds to and four-(fth percent :3 0E-I;& or
>:ii; ,ational go#ernment de(cit as a percentage of G+" of the pre#ious year e$ceeds
one and one-half percent :1 1E3I;.
>:?; Transfer of 2oods by Tax1exempt Persons? - In the case of ta$ free importation of goods
into the "hilippines by persons% entities or agencies e$empt from ta$ here such goods are
subse'uently sold% transferred or e$changed in the "hilippines to non-e$empt persons or
entities% the purchasers% transferees or recipients shall be considered the importers thereof%
ho shall be liable for any internal re#enue ta$ on such importation. The ta$ due on such
importation shall constitute a lien on the goods superior to all charges or liens on the goods%
irrespecti#e of the possessor thereof.>
*"C. B. Section 1=. of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 1=.. 3alue1added Tax on Sale of Services and Cse or *ease of Properties? -
:A; Rate and Base of Tax? - There shall be le#ied% assessed and collected% a #alue-added ta$
e'ui#alent to ten percent :1=I; of gross receipts deri#ed from the sale or e$change of
ser#ices% including the use or lease of properties: "ro#ided% That the "resident% upon the
recommendation of the Secretary of 8inance% shall% e9ecti#e @anuary 1% 3==<% raise the rate
of #alue-added ta$ to tel#e percent :13I;% after any of the folloing conditions has been
satis(ed:
:i; Value-added ta$ collection as a percentage of Gross +omestic "roduct :G+"; of the
pre#ious year e$ceeds to and four-(fth percent :3 0E-I;& or
:ii; ,ational go#ernment de(cit as a percentage of G+" of the pre#ious year e$ceeds
one and one-half percent :1 1E3I;.
GSV-1<1
>The phrase Js-le or e2ch-nge of ser1icesJ means the performance of all )inds of
ser#ices in the "hilippines for others for a fee% remuneration or consideration%
including those performed or rendered by construction and ser#ice contractors&
stoc)% real estate% commercial% customs and immigration bro)ers& lessors of property%
hether personal or real& arehousing ser#ices& lessors or distributors of
cinematographic (lms& persons engaged in milling% processing% manufacturing or
repac)ing goods for others& proprietors% operators or )eepers of hotels% motels% rest-
houses% pension houses% inns% resorts& proprietors or operators of restaurants%
refreshment parlors% cafes and other eating places% including clubs and caterers&
dealers in securities& lending in#estors& transportation contractors on their transport
of goods or cargoes% including persons ho transport goods or cargoes for hire and
other domestic common carriers by land relati#e to their transport of goods or
cargoes& common carriers by air and sea relati#e to their transport of passengers%
goods or cargoes from one place in the "hilippines to another place in the "hilippines&
sales of electricity by generation companies% transmission% and distribution
companies& ser#ices of franchise grantees of electric utilities% telephone and
telegraph% radio and tele#ision broadcasting and all other franchise grantees e$cept
those under Section 11/ of this 7ode and non-life insurance companies :e$cept their
crop insurances;% including surety% (delity% indemnity and bonding companies& and
similar ser#ices regardless of hether or not the performance thereof calls for the
e$ercise or use of the physical or mental faculties. The phrase Js-le or e2ch-nge of
ser1icesJ shall li)eise include:
>:1; The lease or the use of or the right or pri#ilege to use any copyright%
patent% design or model plan% secret formula or process% goodill% trademar)%
trade brand or other li)e property or right&
>:3; The lease or the use of% or the right to use of any industrial% commercial
or% scienti(c e'uipment&
>:5; The supply of scienti(c% technical% industrial or commercial )noledge or
information&
>:0; The supply of any assistance that is ancillary and subsidiary to and is
furnished as a means of enabling the application or en*oyment of any such
property% or right as is mentioned in subparagraph :3; or any such )noledge
or information as is mentioned in subparagraph :5;&
>:-; The supply of ser#ices by a nonresident person or his employee in
connection ith the use of property or rights belonging to% or the installation
or operation of any brand% machinery or other apparatus purchased from such
nonresident person&
>:<; The supply of technicai ad#ice% assistance or ser#ices rendered in
connection ith technical management or administration of any scienti(c%
industrial or commercial underta)ing% #enture% pro*ect or scheme&
>:4; The lease of motion picture (lms% (lms% tapes and discs& and
>:.; The lease or the use of or the right to use radio% tele#ision% satellite
transmission and cable tele#ision time.
>Gease of properties shall be sub*ect to the ta$ herein imposed irrespecti#e of the
place here the contract of lease or licensing agreement as e$ecuted if the
property is leased or used in the "hilippines.
>The term Jgross receiptsJ means the total amount of money or its e'ui#alent
representing the contract price% compensation% ser#ice fee% rental or royalty%
including the amount charged for materials supplied ith the ser#ices and deposits
and ad#anced payments actually or constructi#ely recei#ed during the ta$able
'uarter for the ser#ices performed or to be performed for another person% e$cluding
#alue-added ta$.
>:?; Transactions Sub7ect to Eero Percent =FG> Rate? - The folloing ser#ices performed in
the "hilippines by VAT-registered persons shall be sub*ect to !ero percent :=I; rate:
>:1; "rocessing% manufacturing or repac)ing goods for other persons doing business
outside the "hilippines hich goods are subse'uently e$ported% here the ser#ices
GSV-1<3
are paid for in acceptable foreign currency and accounted for in accordance ith the
rules and regulations of the ?ang)o Sentral ng "ilipinas :?S";&
>:3; Ser#ices other than those mentioned in the preceding paragraph rendered to a
person engaged in business conducted outside the "hilippines or to a nonresident
person not engaged in business ho is outside the "hilippines hen the ser#ices are
performed% the consideration for hich is paid for in acceptable foreign currency and
accounted for in accordance ith the rules and regulations of the ?ang)o Sentral ng
"ilipinas :?S";&
>:5; Ser#ices rendered to persons or entities hose e$emption under special las or
international agreements to hich the "hilippines is a signatory e9ecti#ely sub*ects
the supply of such ser#ices to !ero percent :=I; rate&
>:0; Ser#ices rendered to persons engaged in international shipping or international
air transport operations% including leases of property for use thereof&
>:-; Ser#ices performed by subcontractors andEor contractors in processing%
con#erting% or manufacturing goods for an enterprise hose e$port sales e$ceed
se#enty percent :4=I; of total annual production&
>:<; Transport of passengers and cargo by air or sea #essels from the "hilippines to a
foreign country& and
>:4; Sale of poer or fuel generated through reneable sources of energy such as%
but not limited to% biomass% solar% ind% hydropoer% geothermal% ocean energy% and
other emerging energy sources using technologies such as fuel cells and hydrogen
fuels.
*"C. . Section 1=/ of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 1=/. $xempt Transactions? - :1; Sub*ect to the pro#isions of subsection :3; hereof% the
folloing transactions shall be e$empt from the #alue-added ta$:
>:A; Sale or importation of agricultural and marine food products in their original state%
li#estoc) and poultry of a )ind generally used as% or yielding or producing foods for human
consumption& and breeding stoc) and genetic materials therefor.
>"roducts classi(ed under this paragraph shall be considered in their original state e#en if
they ha#e undergone the simple processes of preparation or preser#ation for the mar)et%
such as free!ing% drying% salting% broiling% roasting% smo)ing or stripping. "olished andEor
hus)ed rice% corn grits% ra cane sugar and molasses% ordinary salt% and copra shall be
considered in their original state&
>:?; Sale or importation of fertili!ers& seeds% seedlings and (ngerlings& (sh% pran% li#estoc)
and poultry feeds% including ingredients% hether locally produced or imported% used in the
manufacture of (nished feeds :e$cept specialty feeds for race horses% (ghting coc)s%
a'uarium (sh% !oo animals and other animals generally considered as pets;&
>:7; Importation of personal and household e9ects belonging to the residents of the
"hilippines returning from abroad and nonresident citi!ens coming to resettle in the
"hilippines: "ro#ided% That such goods are e$empt from customs duties under the Tari9 and
7ustoms 7ode of the "hilippines&
>:+; Importation of professional instruments and implements% earing apparel% domestic
animals% and personal household e9ects :e$cept any #ehicle% #essel% aircraft% machinery%
other goods for use in the manufacture and merchandise of any )ind in commercial 'uantity;
belonging to persons coming to settle in the "hilippines% for their on use and not for sale%
barter or e$change% accompanying such persons% or arri#ing ithin ninety :/=; days before
or after their arri#al% upon the production of e#idence satisfactory to the 7ommissioner% that
such persons are actually coming to settle in the "hilippines and that the change of
residence is bona (de&
>:1; Ser#ices sub*ect to percentage ta$ under Title V&
>:8; Ser#ices by agricultural contract groers and milling for others of palay into rice% corn
into grits and sugar cane into ra sugar&
GSV-1<5
>:G; Medical% dental% hospital and #eterinary ser#ices e$cept those rendered by
professionals&
>:F; 1ducational ser#ices rendered by pri#ate educational institutions% duly accredited by the
+epartment of 1ducation :+1"1+;% the 7ommission on Figher 1ducation :7F1+;% the
Technical 1ducation And S)ills +e#elopment Authority :T1S+A; and those rendered by
go#ernment educational institutions&
>:I; Ser#ices rendered by indi#iduals pursuant to an employer-employee relationship&
>:@; Ser#ices rendered by regional or area head'uarters established in the "hilippines by
multinational corporations hich act as super#isory% communications and coordinating
centers for their aAliates% subsidiaries or branches in the Asia-"aci(c 6egion and do not earn
or deri#e income from the "hilippines&
>:K; Transactions hich are e$empt under international agreements to hich the "hilippines
is a signatory or under special las% e$cept those under "residential +ecree ,o. -3/&
>:G; Sales by agricultural cooperati#es duly registered ith the 7ooperati#e +e#elopment
Authority to their members as ell as sale of their produce% hether in its original state or
processed form% to non-members& their importation of direct farm inputs% machineries and
e'uipment% including spare parts thereof% to be used directly and e$clusi#ely in the
production andEor processing of their produce&
>:M; Gross receipts from lending acti#ities by credit or multi-purpose cooperati#es duly
registered ith the 7ooperati#e +e#elopment Authority&
>:,; Sales by non-agricultural% non-electric and non-credit cooperati#es duly registered ith
the 7ooperati#e +e#elopment Authority: "ro#ided% That the share capital contribution of
each member does not e$ceed 8ifteen thousand pesos :"1-%===; and regardless of the
aggregate capital and net surplus ratably distributed among the members&
>:2; 1$port sales by persons ho are not VAT-registered&
>:"; Sale of real properties not primarily held for sale to customers or held for lease in the
ordinary course of trade or business% or real property utili!ed for lo-cost and sociali!ed
housing as de(ned by 6epublic Act ,o. 434/% otherise )non as the Hrban +e#elopment
and Fousing Act of 1//3% and other related las% residential lot #alued at 2ne million (#e
hundred thousand pesos :"1%-==%===; and belo% house and lot% and other residential
dellings #alued at To million (#e hundred thousand pesos :"3%-==%===; and
belo: Provided% That not later than @anuary 51% 3==/ and e#ery three :5; years thereafter%
the amounts herein stated shall be ad*usted to their present #alues using the 7onsumer
"rice Inde$% as published by the ,ational Statistics 2Ace :,S2;&
>:L; Gease of a residential unit ith a monthly rental not e$ceeding Ten thousand pesos
:"1=%===; Provided% That not later than @anuary 51% 3==/ and e#ery three :5; years
thereafter% the amount herein stated shall be ad*usted to its present #alue using the
7onsumer "rice Inde$ as published by the ,ational Statistics 2Ace :,S2;&
>:6; Sale% importation% printing or publication of boo)s and any nespaper% maga!ine% re#ie
or bulletin hich appears at regular inter#als ith ($ed prices for subscription and sale and
hich is not de#oted principally to the publication of paid ad#ertisements&
>:S; Sale% importation or lease of passenger or cargo #essels and aircraft% including engine%
e'uipment and spare parts thereof for domestic or international transport operations&
>:T; Importation of fuel% goods and supplies by persons engaged in international shipping or
air transport operations&
>:H; Ser#ices of ban)s% non-ban) (nancial intermediaries performing 'uasi-ban)ing
functions% and other non-ban) (nancial intermediaries& and
>:V; Sale or lease of goods or properties or the performance of ser#ices other than the
transactions mentioned in the preceding paragraphs% the gross annual sales andEor receipts
do not e$ceed the amount of 2ne million (#e hundred thousand pesos :"1%-==%===;:
"ro#ided% That not later than @anuary 51% 3==/ and e#ery three :5; years thereafter% the
amount herein stated shall be ad*usted to its present #alue using the 7onsumer "rice Inde$
as published by the ,ational Statistics 2Ace :,S2;&
GSV-1<0
>:3; A VAT-registered person may elect that Subsection :1; not apply to its sale of goods or
properties or ser#ices: "ro#ided% That an election made under this Subsection shall be irre#ocable
for a period of three :5; years from the 'uarter the election as made.>
*"C 8. Section 11= of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 11=. Tax Credits? -
>:A; 7reditable Input Ta$. -
>:1; Any input ta$ e#idenced by a VAT in#oice or oAcial receipt issued in accordance
ith Section 115 hereof on the folloing transactions shall be creditable against the
output ta$:
>:a; "urchase or importation of goods:
>:i; 8or sale& or
>:ii; 8or con#ersion into or intended to form part of a (nished product
for sale including pac)aging materials& or
>:iii; 8or use as supplies in the course of business& or
>:i#; 8or use as materials supplied in the sale of ser#ice& or
>:#; 8or use in trade or business for hich deduction for depreciation or
amorti!ation is alloed under this 7ode.
>:b; "urchase of ser#ices on hich a #alue-added ta$ has actually been paid.
>:3; The input ta$ on domestic purchase or importation of goods or properties by a
VAT-registered person shall be creditable:
>:a; To the purchaser upon consummation of sale and on importation of goods
or properties& and
>:b; To the importer upon payment of the #alue-added ta$ prior to the release
of the goods from the custody of the ?ureau of 7ustoms.
>Provided% That the input ta$ on goods purchased or imported in a calendar month
for use in trade or business for hich deduction for depreciation is alloed under this
7ode% shall be spread e#enly o#er the month of ac'uisition and the (fty-nine :-/;
succeeding months if the aggregate ac'uisition cost for such goods% e$cluding the
VAT component thereof% e$ceeds 2ne million pesos :"1%===%===;: Provided, ho&ever%
That if the estimated useful life of the capital good is less than (#e :-; years% as used
for depreciation purposes% then the input VAT shall be spread o#er such a shorter
period: Provided, :nally% that in the case of purchase of ser#ices% lease or use of
properties% the input ta$ shall be creditable to the purchaser% lessee or licensee upon
payment of the compensation% rental% royalty or fee.
>:5; A VAT-registered person ho is also engaged in transactions not sub*ect to the
#alue-added ta$ shall be alloed ta$ credit as follos:
>:a; Total input ta$ hich% can be directly attributed to transactions sub*ect to
#alue-add ta$& and
>:b; A ratable portion of any input ta$ hich cannot be directly attributed to
either acti#ity.
>The term Jinput t-2J means the #alue-added ta$ due from or paid by a VAT-
registered person in the course of his trade or business on importation of goods or
local purchase of goods or ser#ices% including lease or use of property% from a VAT-
registered person. It shall also include the transitional input ta$ determined in
accordance ith Section 111 of this 7ode.
GSV-1<-
>The term Joutput t-2J means the #alue-added ta$ due on the sale or lease of
ta$able goods or properties or ser#ices by any person registered or re'uired to
register under Section 35< of this 7ode.
>:?; $xcess (utput or 'nput Tax? - If at the end of any ta$able 'uarter the output ta$ e$ceeds
the input ta$% the e$cess shall be paid by the VAT-registered person. If the input ta$ e$ceeds
the output ta$% the e$cess shall be carried o#er to the succeeding 'uarter or
'uarters: Provided% That the input ta$ inclusi#e of input VAT carried o#er from the pre#ious
'uarter that may be credited in e#ery 'uarter shall not e$ceed se#enty percent :4=I; of the
output VAT: Provided, ho&ever, That any input ta$ attributable to !ero-rated sales by a VAT-
registered person may at his option be refunded or credited against other internal re#enue
ta$es% sub*ect to the pro#isions of Section 113.
>:7; +etermination of Creditable 'nput Tax? - The sum of the e$cess input ta$ carried o#er
from the preceeding month or 'uarter and the input ta$ creditable to a VAT-registered
person during the ta$able month or 'uarter shall be reduced by the amount of claim for
refund or ta$ credit for #alue-added ta$ and other ad*ustments% such as purchase returns or
alloances and input ta$ attributable to e$empt sale.
>The claim for ta$ credit referred to in the foregoing paragraph shall include not only those
(led ith the ?ureau of Internal 6e#enue but also those (led ith other go#ernment
agencies% such as the ?oard of In#estments and the ?ureau of 7ustoms.>
*"C. 9. Section 111 of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 111. Transitional; Presumptive 'nput Tax Credits. -
>:A; Transitional 'nput Tax Credits? - A person ho becomes liable to #alue-added ta$ or any
person ho elects to be a VAT-registered person shall% sub*ect to the (ling of an in#entory
according to rules and regulations prescribed by the Secretary of 8inance% upon
recommendation of the 7ommissioner% be alloed input ta$ on his beginning in#entory of
goods% materials and supplies e'ui#alent to to percent :3I; of the #alue of such in#entory
or the actual #alue-added ta$ paid on such goods% materials and supplies% hiche#er is
higher% hich shall be creditable against the output ta$.
>:?; Presumptive 'nput Tax Credits? -
>"ersons or (rms engaged in the processing of sardines% mac)erel and mil)% and in manufacturing
re(ned sugar% coo)ing oil and pac)ed noodle based instant meals% shall be alloed a presumpti#e
input ta$% creditable against the output ta$% e'ui#alent to four percent :0I; of the gross #alue in
money of their purchases of primary agricultural products hich are used as inputs to their
production.
>As used in this Subsection% the term JprocessingJ shall mean pasteuri!ation% canning and
acti#ities hich through physical or chemical process alter the e$terior te$ture or form or inner
substance of a product in such manner as to prepare it for special use to hich it could not ha#e
been put in its original form or condition.>
*"C. 1D. Section 113 of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 113. Refunds or Tax Credits of 'nput Tax? -
>:A; Eero1Rated or $%ectively Eero1Rated Sales? - Any VAT-registered person% hose sales
are !ero-rated or e9ecti#ely !ero-rated may% ithin to :3; years after the close of the
ta$able 'uarter hen the sales ere made% apply for the issuance of a ta$ credit certi(cate
or refund of creditable input ta$ due or paid attributable to such sales% e$cept transitional
input ta$% to the e$tent that such input ta$ has not been applied against output
ta$: Provided, ho&ever, That in the case of !ero-rated sales under Section 1=<:A;:3;:a;:1;%
:3; and :b; and Section 1=. :?;:1; and :3;% the acceptable foreign currency e$change
proceeds thereof had been duly accounted for in accordance ith the rules and regulations
of the ?ang)o Sentral ng "ilipinas :?S";: Provided, further, That here the ta$payer is
engaged in !ero-rated or e9ecti#ely !ero-rated sale and also in ta$able or e$empt sale of
goods of properties or ser#ices% and the amount of creditable input ta$ due or paid cannot
be directly and entirely attributed to any one of the transactions% it shall be allocated
proportionately on the basis of the #olume of sales: Provided, :nally, That for a person
ma)ing sales that are !ero-rated under Section 1=. :?;:<;% the input ta$es shall be allocated
ratably beteen his !ero-rated and non-!ero-rated sales.
GSV-1<<
>:?; Cancellation of 3T Registration? - A person hose registration has been cancelled due
to retirement from or cessation of business% or due to changes in or cessation of status
under Section 1=<:7; of this 7ode may% ithin to :3; years from the date of cancellation%
apply for the issuance of a ta$ credit certi(cate for any unused input ta$ hich may be used
in payment of his other internal re#enue ta$es.
>:7; Period &ithin &hich Refund or Tax Credit of 'nput Taxes shall be .ade? - In proper cases%
the 7ommissioner shall grant a refund or issue the ta$ credit certi(cate for creditable input
ta$es ithin one hundred tenty :13=; days from the date of submission of complete
documents in support of the application (led in accordance ith Subsection :A; hereof.
>In case of full or partial denial of the claim for ta$ refund or ta$ credit% or the failure on the
part of the 7ommissioner to act on the application ithin the period prescribed abo#e% the
ta$payer a9ected may% ithin thirty :5=; days from the receipt of the decision denying the
claim or after the e$piration of the one hundred tenty day-period% appeal the decision or
the unacted claim ith the 7ourt of Ta$ Appeals.
>:+; .anner of 2iving Refund? - 6efunds shall be made upon arrants dran by the
7ommissioner or by his duly authori!ed representati#e ithout the necessity of being
countersigned by the 7hairman% 7ommission on Audit% the pro#isions of the Administrati#e
7ode of 1/.4 to the contrary notithstanding: "ro#ided% That refunds under this paragraph
shall be sub*ect to post audit by the 7ommission on Audit.>
*"C. 11. Section 115 of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 115. 'nvoicing and ccounting Re/uirements for 3T1Registered Persons? -
>:A; 'nvoicing Re/uirements? - A VAT-registered person shall issue:
>:1; A VAT in#oice for e#ery sale% barter or e$change of goods or properties& and
>:3; A VAT oAcial receipt for e#ery lease of goods or properties% and for e#ery sale%
barter or e$change of ser#ices.
>:?; 'nformation Contained in the 3T 'nvoice or 3T ()cial Receipt? - The folloing
information shall be indicated in the VAT in#oice or VAT oAcial receipt:
>:1; A statement that the seller is a VAT-registered person% folloed by his ta$payerJs
identi(cation number :TI,;&
>:3; The total amount hich the purchaser pays or is obligated to pay to the seller
ith the indication that such amount includes the #alue-added ta$: Provided, That:
>:a; The amount of the ta$ shall be shon as a separate item in the in#oice or
receipt&
>:b; If the sale is e$empt from #alue-added ta$% the term >(AT;e2empt s-le>
shall be ritten or printed prominently on the in#oice or receipt&
>:c; If the sale is sub*ect to !ero percent :=I; #alue-added ta$% the term
>.ero;r-te/ s-le> shall be ritten or printed prominently on the in#oice or
receipt&
>:d; If the sale in#ol#es goods% properties or ser#ices some of hich are
sub*ect to and some of hich are VAT !ero-rated or VAT-e$empt% the in#oice or
receipt shall clearly indicate the brea)don of the sale price beteen its
ta$able% e$empt and !ero-rated components% and the calculation of the #alue-
added ta$ on each portion of the sale shall be shon on the in#oice or receipt:
>Provided, That the seller may issue separate in#oices or receipts for the
ta$able% e$empt% and !ero-rated components of the sale.
>:5; The date of transaction% 'uantity% unit cost and description of the goods or
properties or nature of the ser#ice& and
>:0; In the case of sales in the amount of one thousand pesos :"1%===; or more here
the sale or transfer is made to a VAT-registered person% the name% business style% if
GSV-1<4
any% address and ta$payer identi(cation number :TI,; of the purchaser% customer or
client.
>:7; ccounting Re/uirements? - ,otithstanding the pro#isions of Section 355% all persons
sub*ect to the #alue-added ta$ under Sections 1=< and 1=. shall% in addition to the regular
accounting records re'uired% maintain a subsidiary sales *ournal and subsidiary purchase
*ournal on hich the daily sales and purchases are recorded. The subsidiary *ournals shall
contain such information as may be re'uired by the Secretary of 8inance.
>:+; Conse/uence of 'ssuing $rroneous 3at 'nvoice or 3at ()cial Receipt? -
>:1; If a person ho is not a VAT-registered person issues an in#oice or receipt
shoing his Ta$payer Identi(cation ,umber :TI,;% folloed by the ord >VAT>:
>:a; The issuer shall% in addition to any liability to other percentage ta$es% be
liable to:
>:i; The ta$ imposed in Section 1=< or 1=. ithout the bene(t of any
input ta$ credit& and
>:ii; A -=I surcharge under Section 30. :?; of this code&
>:b; The VAT shall% if the other re'uisite information re'uired under Subsection
:?; hereof is shon on the in#oice or receipt% be recogni!ed as an input ta$
credit to the purchaser under Section 11= of this 7ode.
>:3; If a VAT-registered person issues a VAT in#oice or VAT oAcial receipt for a VAT-
e$empt transaction% but fails to display prominently on the in#oice or receipt the term
>VAT-e$empt Sale>% the issuer shall be liable to account for the ta$ imposed in Section
1=< or 1=. as if Section 1=/ did not apply.
>:1; Transitional Period? - ,otithstanding Subsection :?; hereof% ta$payers may continue to
issue VAT in#oices and VAT oAcial receipts for the period @uly 1% 3==- to +ecember 51% 3==-%
in accordance ith ?ureau of Internal 6e#enue administrati#e practices that e$isted as of
+ecember 51% 3==0.>
*"C. 12. Section 110 of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 110. Return and Payment of 3alue1dded Tax? -
>:A; 'n 2eneral? - 1#ery person liable to pay the #alue-added ta$ imposed under this Title
shall (le a 'uarterly return of the amount of his gross sales or receipts ithin tenty-(#e
:3-; days folloing the close of each ta$able 'uarter prescribed for each ta$payer: Provided,
ho&ever, That VAT-registered persons shall pay the #alue-added ta$ on a monthly basis.
>Any person% hose registration has been cancelled in accordance ith Section 35<% shall
(le a return and pay the ta$ due thereon ithin tenty-(#e :3-; days from the date of
cancellation of registration: Provided, That only one consolidated return shall be (led by the
ta$payer for his principal place of business or head oAce and all branches.
>:?; 6here to 0ile the Return and Pay the Tax? - 1$cept as the 7ommissioner otherise
permits% the return shall be (led ith and the ta$ paid to an authori!ed agent ban)%
6e#eenue 7ollection 2Acer or duly authori!ed city or municipal Treasurer in the "hilippines
located ithin the re#enue district here the ta$payer is registered or re'uired to register.
>:7; 6ithholding of 3alue1dded Tax? - The Go#ernment or any of its political subdi#isions%
instrumentalities or agencies% including go#ernment-oned or -controlled corporations
:G277s; shall% before ma)ing payment on account of each purchase of goods and ser#ices
hich are sub*ect to the #alue-added ta$ imposed in Sections 1=< and 1=. of this 7ode%
deduct and ithhold a (nal #alue-added ta$ at the rate of (#e percent :-I; of the gross
payment thereof: "ro#ided% That the payment for lease or use of properties or property
rights to nonresident oners shall be sub*ect to ten percent :1=I; ithholding ta$ at the
time of payment. 8or purposes of this Section% the payor or person in control of the payment
shall be considered as the ithholding agent.
>The #alue-added ta$ ithheld under this Section shall be remitted ithin ten :1=; days
folloing the end of the month the ithholding as made.>
GSV-1<.
*"C. 1,. Section 11< of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 11<. Tax on Persons $xempt from 3alue1dded Tax =3T>? - Any person hose sales or
receipts are e$empt under Section 1=/ :V; of this 7ode from the payment of #alue-added ta$ and
ho is not a VAT-registered person shall pay a ta$ e'ui#alent to three percent :5I; of his gross
'uarterly sales or receipts: Provided, That cooperati#es shall be e$empt from the three percent
:5I; gross receipts ta$ herein imposed.>
*"C. 14. Section 114 of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 114. Percentage Tax on +omestic Carriers and 8eepers of 2arages? - 7ars for rent or hire
dri#en by the lessee& transportation contractors% including persons ho transport passengers for
hire% and other domestic carriers by land for the transport of passengers :e$cept oners of bancas
and oners of animal-dran to heeled #ehicle;% and )eepers of garages shall pay a ta$
e'ui#alent to three percent :5I; of their 'uarterly gross receipts.
>The gross receipts of common carriers deri#ed from their incoming and outgoing freight shall not
be sub*ected to the local ta$es imposed under 6epublic Act ,o. 41<=% otherise )non as the Gocal
Go#ernment 7ode of 1//1.
>In computing the percentage ta$ pro#ided in this Section% the folloing shall be considered the
minimum 'uarterly gross receipts in each particular case:
>@eepney for hire -
>1. Manila and other cities "3%0==
>3. "ro#incial 1%3==
>"ublic utility bus-
>,ot e$ceeding 5= passengers "5%<==
>1$ceeding 5= but not e$ceeding -=
passengers
<%===
>1$ceeding -= passengers 4%3==
Ta$is -
>1. Manila and other cities "5%<==
>3. "ro#incial 3%0==
*"C. 1A. Section 11/ of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 11/. Tax on 0ranchises? - Any pro#ision of general or special la to the contrary
notithstanding% there shall be le#ied% assessed and collected in respect to all franchises on radio
andEor tele#ision broadcasting companies hose annual gross receipts of the preceding year does
not e$ceed Ten million pesos :"1=%===%===;% sub*ect to Section 35< of this 7ode% a ta$ of three
percent :5I; and on gas and ater utilities% a ta$ of to percent :3I; on the gross receipts deri#ed
from the business co#ered by the la granting the franchise: Provided% hoe#er% That radio and
tele#ision broadcasting companies referred to in this Section shall ha#e an option to be registered
as a #alue-added ta$payer and pay the ta$ due thereon: Provided, further, That once the option is
e$ercised% said option shall be irre#ocable.
>The grantee shall (le the return ith% and pay the ta$ due thereon to the 7ommissioner or his duly
authori!ed representati#e% in accordance ith the pro#isions of Section 13. of this 7ode% and the
return shall be sub*ect to audit by the ?ureau of Internal 6e#enue% any pro#ision of any e$isting la
to the contrary notithstanding.>
*"C. 1B. Section 131 of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 131. Tax on Ban-s and 4on1Ban- 0inancial 'ntermediaries Performing Duasi1Ban-ing
0unctions?- There shall be collected a ta$ on gross receipts deri#ed from sources ithin the
"hilippines by all ban)s and non-ban) (nancial intermediaries in accordance ith the folloing
schedule:
GSV-1</
>:a; 2n interest% commissions and discounts from lending acti#ities as ell as income from
(nancial leasing% on the basis of remaining maturities of instruments from hich such
receipts are deri#ed:
Maturity period is (#e years or less
-
I
Maturity period is more than (#e
years
1
I
>:b; 2n di#idends and e'uity shares and net income of subsidiaries =I
>:c; 2n royalties% rentals of property% real or personal% pro(ts% from e$change and all other
items treated as gross income under Section 53 of this 7ode 4I
>:d; 2n net trading gains ithin the ta$able year on foreign currency% debt securities%
deri#ati#es% and other similar (nancial instruments 4I
>Provided, ho&ever, That in case the maturity period referred to in paragraph :a; is shortened thru
pre-termination% then the maturity period shall be rec)oned to end as of the date of pre-termination
for purposes of classifying the transaction and the correct rate of ta$ shall be applied accordingly.
>Provided, :nally, That the generally accepted accounting principles as may be prescribed by the
?ang)o Sentral ng "ilipinas for the ban) or non-ban) (nancial intermediary performing 'uasi-
ban)ing functions shall li)eise be the basis for the calculation of gross receipts.
>,othing in this 7ode shall preclude the 7ommissioner from imposing the same ta$ herein pro#ided
on persons performing similar ban)ing acti#ities.>
*"C. 1. Section 10. of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 10.. .anufactured (ils and (ther 0uels? - There shall be collected on re(ned and
manufactured mineral oils and motor fuels% the folloing e$cise ta$es hich shall attach to the
goods hereunder enumerated as soon as they are in e$istence as such:
>:a; Gubricating oils and greases% including but not limited to% basestoc) for lube oils and
greases% high #acuum distillates% aromatic e$tracts and other similar preparations% and
additi#es for lubricating oils and greases% hether such additi#es are petroleum based or
not% per liter and )ilogram% respecti#ely% of #olume capacity or eight% 8our pesos and (fty
centa#os :"0.-=;:Provided, ho&ever, That the e$cise ta$es paid on the purchased feedstoc)
:bun)er; used in the manufacture of e$cisable articles and forming part thereof shall be
credited against the e$cise ta$ due therefrom: Provided, further, That lubricating oils and
greases produced from basestoc)s and additi#es on hich the e$cise ta$ has already been
paid shall no longer be sub*ect to e$cise ta$: Provided, :nally, That locally produced or
imported oils pre#iously ta$ed as such but are subse'uently reprocessed% rere(ned or
recycled shall li)eise be sub*ect to the ta$ imposed under this Section.
>:b; "rocessed gas% per liter of #olume capacity% 8i#e centa#os :"=.=-;&
>:c; Ba$es and petroleum% per )ilogram% Three pesos and (fty centa#os :"5.-=;&
>:d; 2n denatured alcohol to be used for moti#e poer% per liter of #olume capacity% 8i#e
centa#os :"=.=-;& Provided, That unless otherise pro#ided by special las% if the denatured
alcohol is mi$ed ith gasoline% the e$cise ta$ on hich has already been paid% only the
alcohol content shall be sub*ect to the ta$ herein prescribed. 8or purposes of this
Subsection% the remo#al of denatured alcohol of not less than one hundred eighty degrees
:1.=
o
; proof :ninety percent :/=I; absolute alcohol; shall be deemed to ha#e been remo#ed
for moti#e poer% unless shon otherise&
>:e; ,aphtha% regular gasoline and other similar products of distillation% per liter of #olume
capacity% 8our pesos and thirty-(#e centa#os :"0.5-;: Provided, ho&ever, That naphtha%
hen used as a ra material in the production of petrochemical products or as replacement
fuel for natural gas-(red-combined cycle poer plant% in lieu of locally-e$tracted natural gas
during the non-a#ailability thereof% sub*ect to the rules and regulations to be promulgated by
the Secretary of 1nergy% in consultation ith the Secretary of 8inance% per liter of #olume
capacity% Oero :"=.==;:Provided, further, That the by-product including fuel oil% diesel fuel%
)erosene% pyrolysis gasoline% li'ue(ed petroleum gases and similar oils ha#ing more or less
GSV-14=
the same generating poer% hich are produced in the processing of naphtha into
petrochemical products shall be sub*ect to the applicable e$cise ta$ speci(ed in this Section%
e$cept hen such by-products are transferred to any of the local oil re(neries through sale%
barter or e$change% for the purpose of further processing or blending into (nished products
hich are sub*ect to e$cise ta$ under this Section&
>:f; Geaded premium gasoline% per liter of #olume capacity% 8i#e pesos and thirty-(#e
centa#os :"-.5-;& unleaded premium gasoline% per liter of #olume capacity% 8our pesos and
thirty-(#e centa#os :"0.5-;&
>:g; A#iation turbo *et fuel% per liter of #olume capacity% Three pesos and si$ty-se#en
centa#os :"5.<4;&
>:h; Kerosene% per liter of #olume capacity% Oero :"=.==;: Provided, That )erosene% hen
used as a#iation fuel% shall be sub*ect to the same ta$ on a#iation turbo *et fuel under the
preceding paragraph :g;% such ta$ to be assessed on the user thereof&
>:i; +iesel fuel oil% and on similar fuel oils ha#ing more or less the same generating poer%
per liter of #olume capacity% !ero :"=.==;&
>:*; Gi'ue(ed petroleum gas% per liter% !ero :"=.==;: Provided, That li'ue(ed petroleum gas
used for moti#e poer shall be ta$ed% at the e'ui#alent rate as the e$cise ta$ on diesel fuel
oil&
>:); Asphalts% per )ilogram% 8ifty-si$ centa#os :"=.-<;& and
>:l; ?un)er fuel oil% and on similar fuel oils ha#ing more or less the same generating poer%
per liter of #olume capacity% !ero :"=.==;.>
*"C. 18. Section 1-1 of the same 7ode% as amended% is hereby amended to read as follos:
>S17. 1-1. .ineral Products? -
>:A; Rates of Tax? - There shall be le#ied% assessed and collected on minerals% mineral
products and 'uarry resources% e$cise ta$ as follos:
>:1; 2n coal and co)e% a ta$ of Ten pesos :"1=.==; per metric ton&
>:3; 2n all nonmetallic minerals and 'uarry resources% a ta$ of to percent :3I;
based on the actual mar)et #alue of the gross output thereof at the time of remo#al%
in the case of those locally e$tracted or produced& or the #alue used by the ?ureau of
7ustoms in determining tari9 and customs duties% net of e$cise ta$ and #alue-added
ta$% in the case of importation.
,otithstanding the pro#ision of paragraph :0; of subsection :A; of this Section%
locally e$tracted natural gas and li'ue(ed natural gas shall not be sub*ect to the
e$cise ta$ imposed herein.
>:5; 2n all metallic minerals% a ta$ based on the actual mar)et #alue of the gross
output thereof at the time of remo#al% in the case of those locally e$tracted or
produced& or the #alue used by the ?ureau of 7ustoms in determining tari9 and
customs duties% net of e$cise ta$ and #alue-added ta$% in the case of importation% in
accordance ith the folloing schedule:
>:a; 7opper and other metallic minerals&
>:i; 2n the (rst three :5; years upon the e9ecti#ity of 6epublic Act ,o.
443/% one percent :1I;&
>:ii; 2n the fourth and the (fth years% one and a half percent :1 1E3I;&
and
>:iii; 2n the si$th year and thereafter% to percent :3I;&
>:b; Gold and chromite%J to percent :3I;.
GSV-141
>:0;. 2n indigenous petroleum% a ta$ of three percent :5I; of the fair international
mar)et price thereof% on the (rst ta$able sale% barter% e$change or such similar
transaction% such ta$ to be paid by the buyer or purchaser before remo#al from the
place of production. The phrase J3rst t-2-ble s-le, b-rter, e2ch-nge or simil-r
tr-ns-ctionJ means the transfer of indigenous petroleum in its original state to a
(rst ta$able transferee. The fair international mar)et price shall be determined in
consultation ith an appropriate go#ernment agency.
>8or the purpose of this Subsection% Jin/igenous petroleumJ shall include locally-
e$tracted mineral oil% hydrocarbon gas% bitumen% crude asphalt% mineral gas and all
other similar or naturally associated substances ith the e$ception of coal% peat%
bituminous shale andEor strati(ed mineral deposits.
>:?; 0or purposes of this Section, the term -
>:1; J$ross outputJ shall be interpreted as the actual mar)et #alue of minerals or
mineral products% or of bullion from each mine or mineral land operated as a separate
entity% ithout any deduction from mining% milling% re(ning :including all e$penses
incurred to prepare the said minerals or mineral products in a mar)etable state;% as
ell as transforting% handling% mar)eting or any other e$penses: Provided% That if the
minerals or mineral products are sold or consigned abroad by the lessee or oner of
the mine under 7.I.8. terms% the actual cost of ocean freight and insurance shall be
deducted Provided, ho&ever, That in the case of mineral concentrate not traded in
commodity e$changes in the "hilippines or abroad% such as copper concentrate% the
actual mar)et #alue shall be the orld price 'uotations of the re(ned mineral
products content thereof pre#ailing in the said commodity e$changes% after
deducting the smelting% re(ning and other charges incurred in the process of
con#erting the mineral concentrates into re(ned metal traded in those commodity
e$changes.
>:3; J!iner-ls> shall mean all naturally occurring inorganic substances :found in
nature;hether in solid% li'uid% gaseous or any intermediate state.
>:5; J!iner-l pro/uctsJ shall mean things produced and prepared in a mar)etable
state by simple treatment processes such as ashing or drying% but ithout
undergoing any chemical change or process or manufacturing by the lessee%
concessionaire or oner of mineral lands.
>:0; J8u-rr6 resourcesJ shall mean any common stone or other common mineral
substances as the +irector of the ?ureau of Mines and Geo-Sciences may declare to
be 'uarry resources such as% but not restricted to% marl% marble% granite% #olcanic
cinders% basalt% tu9 and roc) phosphate: Provided, That they contain no metal or
metals or other #aluable minerals in economically or)able 'uantities.>
*"C. 19. Section 35< of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 35<. Registration Re/uirements? -
>:A; Re/uirements? - 1#ery person sub*ect to any internal re#enue ta$ shall register once
ith the appropriate 6e#enue +istrict 2Acer:
>:1; Bithin ten :1=; days from date of employment% or
>:3; 2n or before the commencement of business% or
>:5; ?efore payment of any ta$ due% or
>:0; Hpon (ling of a return% statement or declaration as re'uired in this 7ode.
>The registration shall contain the ta$payerJs name% style% place of residence%
business% and such other information as may be re'uired by the 7ommissioner in the
form prescribed therefor.
>A person maintaining a head oAce% branch or facility shall register ith the 6e#enue
+istrict 2Acer ha#ing *urisdiction o#er the head oAce% branch or facility. 8or purposes
of this Section% the term Jf-cilit6J may include but not be limited to sales outlets%
places of production% arehouses or storage places.
GSV-143
>:?; nnual Registration 0ee? - An annual registration fee in the amount of 8i#e hundred
pesos :"-==; for e#ery separate or distinct establishment or place of business% including
facility types here sales transactions occur% shall be paid upon registration and e#ery year
thereafter on or before the last day of @anuary: Provided, ho&ever, That cooperati#es%
indi#iduals earning purely compensation income% hether locally or abroad% and o#erseas
or)ers are not liable to the registration fee herein imposed.
>The registration fee shall be paid to an authori!ed agent ban) located ithin the re#enue
district% or to the 6e#enue 7ollection 2Acer% or duly authori!ed Treasurer of the city or
municipality here each place of business or branch is registered.
>:7; Registration of $ach Type of 'nternal Revenue Tax? - 1#ery person ho is re'uired to
register ith the ?ureau of Internal 6e#enue under Subsection :A; hereof% shall register each
type of internal re#enue ta$ for hich he is obligated% shall (le a return and shall pay such
ta$es% and shall update such registration of any changes in accordance ith Subsection :1;
hereof.%
>:+; Transfer of Registration? - In case a registered person decides to transfer his place of
business or his head oAce or branches% it shall be his duty to update his registration status
by (ling an application for registration information update in the form prescribed therefor.
>:1; (ther Cpdates? - Any person registered in accordance ith this Section shall% hene#er
applicable% update his registration information ith the 6e#enue +istrict 2Ace here he is
registered% specifying therein any change in ta$ type and other ta$payer details.
>:8; Cancellation of Registration? -
>:1; 2eneral Rule? - The registration of any person ho ceases to be liable to a ta$
type shall be cancelled upon (ling ith the 6e#enue +istrict 2Ace here he is
registered% an application for registration information update in a form prescribed
therefor&
>:3; Cancellation of 3alue1dded Tax Registration? - A VAT-registered person may
cancel his registration for VAT if:
>:a; Fe ma)es ritten application and can demonstrate to the 7ommissionerJs
satisfaction that his gross sales or receipts for the folloing tel#e :13;
months% other than those that are e$empt under Section 1=/ :A; T2 :H;% ill
not e$ceed 2ne million (#e hundred thousand pesos :"1%-==%===;& or
>:b; Fe has ceased to carry on his trade or business% and does not e$pect to
recommence any trade or business ithin the ne$t tel#e :13; months.
>The cancellation of registration ill be e9ecti#e from the (rst day of the
folloing month.
>:G; Persons Re/uired to Register for 3alue1added Tax? -
>:1; Any person ho% in the course of trade or business% sells% barters or e$changes
goods or properties% or engages in the sale or e$change of ser#ices% shall be liable to
register for Value-added ta$ if:
>:a; Fis gross sales or receipts for the past tel#e :13; months% other than
those that are e$empt under section 1=/ :a; to :u;% ha#e e$ceeded 2ne million
(#e hundred thousand pesos :"1%-==%===;& or
>:b; There are reasonable grounds to belie#e that his gross sales or receipts
for the ne$t tel#e :13; months% other than those that are e$empt under
Section 1=/ :A; to :H;% ill e$ceed one million (#e hundred thousand pesos
:"1%-==%===;.
>:3; 1#ery person ho becomes liable to be registered under paragraph :1; of this
Subsection shall register ith the 6e#enue +istrict 2Ace hich has *urisdiction o#er
the head oAce or branch of that person% and shall pay the annual registration fee
prescribed in Subsection :?; hereof. If he fails to register% he shall be liable to pay the
ta$ under Title IV as if he ere a VAT-registered person% but ithout the bene(t of
input ta$ credits for the period in hich he as not properly registered.
GSV-145
>:F; (ptional Registration for 3alue1added Tax of $xempt Person? - :1; Any person ho is not
re'uired to register for Value-added ta$ under Subsection :G; hereof may elect to register for
Value-added ta$ by registering ith the 6e#enue +istrict 2Ace that has *urisdiction o#er the
head oAce of that person% and paying the annual registration fee in Subsection :?; hereof.
:3; Any person ho elects to register under this Subsection shall not be entitled to
cancel his registration under Subsection :8;:3; for the ne$t three :5; years.
>8or purposes of Title IV of this 7ode% any person ho has registered #alue-added ta$
as a ta$ type in accordance ith the pro#isions of Subsection :7; hereof shall be
referred to as a >VAT-registered person> ho shall be assigned only one Ta$payer
Identi(cation ,umber :TI,;.
>:I; Supplying of Taxpayer 'denti:cation 4umber :TI,;. - Any person re'uired under the
authority of this 7ode to ma)e% render or (le a return% statement or other document shall be
supplied ith or assigned a Ta$payer Identi(cation ,umber :TI,; hich he shall indicate in
such return% statement or document (led ith the ?ureau of Internal 6e#enue for his proper
identi(cation for ta$ purposes% and hich he shall indicate in certain documents% such as%
but not limited to% the folloing:
>:1; Sugar 'uedans% re(ned sugac release order or similar instruments&
>:3; +omestic bills of lading&
>:5; +ocuments to be registered ith the 6egister of +eeds or AssessorJs 2Ace&
>:0; 6egistration certi(cate of transportation e'uipment by land% sea or air&
>:-; +ocuments to be registered ith the Securities and 1$change 7ommission&
>:<; ?uilding construction permits&
>:4; Application for loan ith ban)s% (nancial institutions% or other (nancial
intermedieries&
>:.; Application for mayorJs permit&
>:/; Application for business license ith the +epartment of Trade and Industry& and
>:1=; Such other documents hich may hereafter be re'uired under rules and
regulations to be promulgated by the Secretary of 8inance% upon recommendation of
the 7ommissioner.
>In cases here a registered ta$payer dies% the administrator or e$ecutor shall
register the estate of the decedent in accordance ith Subsection :A; hereof and a
ne Ta$payer Identi(cation ,umber :TI,; shall be supplied in accordance ith the
pro#isions of this Section.
>In the case of a nonresident decedent% the e$ecutor or administrator of the estate
shall register the estate ith the 6e#enue +istrict 2Ace here he is
registered: Provided, ho&everH That in case such e$ecutor or administrator is not
registered% registration of the estate shall be made ith and the Ta$payer
Identi(cation ,umber :TI,; supplied by the 6e#enue +istrict 2Ace ha#ing *urisdiction
o#er his legal residence.
>2nly one Ta$payer Identi(cation ,umber :TI,; shall be assigned to a ta$payer. Any
person ho shall secure more than one Ta$payer Identi(cation ,umber shall be
criminally liable under the pro#isions of Section 34- on JViolation of 2ther "ro#isions
of this 7ode or 6egulations in General.J>
*"C. 2D. Section 354 of the 7ode% as amended% is hereby amended to read as follos:
>S17. 354. 'ssuance of Receipts or Sales or Commercial 'nvoices? - All persons sub*ect to an internal
re#enue ta$ shall% for each sale and transfer of merchandise or for ser#ices rendered #alued at
Tenty-(#e pesos :"3-.==; or more% issue duly registered receipts or sale or commercial in#oices%
prepared at least in duplicate% shoing the date of transaction% 'uantity% unit cost and description
of merchandise or nature of ser#ice: "ro#ided% hoe#er% That here the receipt is issued to co#er
GSV-140
payment made as rentals% commissions% compensation or fees% receipts or in#oices shall be issued
hich shall sho the name% business style% if any% and address of the purchaser% customer or client.
>The original of each receiptJ or in#oice shall be issued to the purchaser% customer or client at the
time the transaction is e9ected% ho% if engaged in business or in the e$ercise of profession% shall
)eep and preser#e the same in his place of business for a period of three :5; years from the close of
the ta$able year in hich such in#oice or receipt as issued% hile the duplicate shall be )ept and
preser#ed by the issuer% also in his place of business% for a li)e period.
>The 7ommissioner may% in meritorious cases% e$empt any person sub*ect to an internal re#enue
ta$ from compliance ith the pro#isions of this Section.>
*"C. 21. Section 3.. of the same 7ode% as amended% is hereby further amended to read as follos:
>S17. 3... +isposition of 'ncremental Revenues? -
>:A; 'ncremental Revenues from Republic ct 4o? #IIF? - The incremental re#enues from the
increase in the documentary stamp ta$es under 6.A. ,o. 4<<= shall be set aside for the
folloing purposes:
>:1; In 1//0 and 1//-% tenty-(#e percent :3-I; thereof respecti#ely% shall accrue to
the Hni(ed Fome-Gending "rogram under 1$ecuti#e 2rder ,o. /= particularly for
mass-sociali!ed housing program to be allocated as follos: (fty percent :-=I; for
mass-sociali!ed housing& thirty percent :5=I; for the community mortgage program&
and tenty percent :3=I; for land ban)ing and de#elopment to be administered by
the ,ational Fousing Authority: Provided, That not more than one percent :1I; of the
respecti#e allocations hereof shall be used for administrati#e e$penses&
>:3; In 1//<% tenty-(#e percent :3-I; thereof to be utili!ed for the ,ational Fealth
Insurance "rogram that hereafter may be mandated by la&
>:5; In 1//0 and e#ery year thereafter% tenty-(#e percent :3-I; thereof shall accrue
to a Special 1ducation 8und to be administered by the +epartment of 1ducation%
7ulture and Sports for the construction and repair of school facilities% training of
teachers% and procurement or production of instructional materials and teaching aids&
and
>:0; In 1//0 and e#ery year thereafter% (fty percent :-=I; thereof shall accrue to a
Special Infrastructure 8und for the construction and repair of roads% bridges% dams
and irrigation% seaports and hydroelectric and other indigenous poer
pro*ects: Provided, ho&ever, That for the years 1//0 and 1//-% thirty percent :5=I;%
and for the years 1//<% 1//4 and 1//.% tenty percent :3=I;% of this fund-shall be
allocated for depressed pro#inces as declared by the "resident as of the time of the
e9ecti#ity of 6.A. ,o. 4<<=: Provided, further, That a#ailments under this fund shall
be determined by the "resident on the basis of e'uity.
"Provided, :nally, That in paragraphs :3;% :5; and :0; of this Section% not more than
one percent :1I; of the allocated funds thereof shall be used for administrati#e
e$penses by the implementing agencies.
>:?; 'ncremental Revenues from Republic ct 4o? JBKF? - 8ifteen percent :1-I; of the
incremental re#enue collected from the e$cise ta$ on tobacco products under 6.A. ,o. .30=
shall be allocated and di#ided among the pro#inces producing burley and nati#e tobacco in
accordance ith the #o1ume of tobacco leaf production. The fund shall be e$clusi#ely
utili!ed for programs in pursuit of the folloing ob*ecti#es:
>:1; 7ooperati#e pro*ects that ill enhance better 'uality of agricultural products and
increase income and producti#ity of farmers&
>:3; Gi#elihood pro*ects% particularly the de#elopment of alternati#e farming system
to enhance farmerJs income& and
>:5; Agro-industrial pro*ects that ill enable tobacco farmers to be in#ol#ed in the
management and subse'uent onership of pro*ects% such as post-har#est and
secondary processing li)e cigarette manufacturing and by-product utili!ation.
GSV-14-
>The +epartment of ?udget and Management% in consultation ith the 2#ersight
7ommittee created under said 6.A. ,o. .30=% shall issue the corresponding rules and
regulations go#erning the allocation and disbursement of this fund.
>:7; 'ncremental Revenues from the $xcise Tax on lcohol and Tobacco Products? -
>:1; To and a half percent :3.-I; of the incremental re#enue from the e$cise ta$ on
alcohol and tobacco products starting @anuary 3==- shall be remitted directly to the
"hilippine Fealth Insurance 7orporation for the purpose of meeting and sustaining
the goal of uni#ersal co#erage of the ,ational Fealth Insurance "rogram& and
>:3; To and a half percent :3.-I; of the incremental re#enue from the e$cise ta$ on
alcohol and tobacco products starting @anuary 3==- shall he credited to the account
of the +epartment of Fealth and constituted as a trust fund for its disease pre#ention
program.
>The earmar)ing pro#ided under this pro#ision shall be obser#ed for (#e :-; years
starting from @anuary 3==-.>
:+; 'ncremental Revenue from the 3alue1added Tax? - 8ifty percent :-=I; of the local
go#ernment unitJs share from the incremental re#enue from the #alue-added ta$ shall be
allocated and used e$clusi#ely for the folloing purposes:
1. 8ifteen percent :1-I; for public elementary and secondary education% to (nance
the construction of buildings% purchases of school furniture and in-ser#ice teacher
trainings&
3. Ten percent :1=I; for health insurance premiums of enrolled indigents as a
counterpart contribution of the local go#ernment to sustain the uni#ersal co#erage of
the national health insurance program&
5. 8ifteen percent :1-I; for en#ironmental conser#ation to fully implement a
comprehensi#e national reforestation program& and
0. Ten percent :1=I; for agricultural moderni!ation to (nance the construction of
farm-to-mar)et roads and irrigation facilities.
Such allocations shall be segregated as separate trust funds by the ,ational Treasury
and shall be o#er and abo#e the annual appropriation for similar purposes.
:1; The amount of (fteen million pesos :"1-%===%===; shall be allocated for a public
information and education program to be administered by the ?ureau of Internal 6e#enue%
e$plaining clearly to businesses their registration% in#oicing and reporting re'uirements
under the Value-added ta$ rules. Such program should include seminars and #isits to
ta$payers to familiari!e them ith the ta$% and the de#elopment and publication of easy-to-
read guides on the Value-added Ta$.>
*"C. 22. 0ranchises of +omestic irlines? - The pro#isions of ".+. ,o. 1-/= on the franchise ta$ of
"hilippine Airlines% Inc.% 6.A. ,o. 41-1 on the franchise ta$ of 7ebu Air% Inc.% 6.A. ,o. 4-.5 on the franchise
ta$ of Aboiti! Air Transport 7orporation% 6.A. ,o. 4/=/ on the franchise ta$ of "aci(c Airays 7orporation%
6.A. ,o. .55/ on the franchise ta$ of Air "hilippines% or any other franchise agreement or la pertaining to
a domestic airline to the contrary notithstanding:
:A; The franchise ta$ is abolished&
:?; The franchisee shall be liable to the corporate income ta$&
:7; The franchisee shall register for #alue-added ta$ under Section 35<% and to account under Title
IV of the ,ational Internal 6e#enue 7ode of 1//4% as amended% for #alue-added ta$ on its sale of
goods% property or ser#ices and its lease of property& and
:+; The franchisee shall otherise remain e$empt from any ta$es% duties% royalties% registration%
license% and other fees and charges% as may be pro#ided by their respecti#e franchise agreement.
*"C. 2,. 'mplementing Rules and Regulations? - The Secretary of 8inance shall% upon the recommendation
of the 7ommissioner of Internal 6e#enue% promulgate not later than @une 5=% 3==-% the necessary 6ules
GSV-14<
and 6egulations for the e9ecti#e implementation of this Act. Hpon issuance of the said 6ules and
6egulations% all former rules and regulations pertaining to #alue-added ta$ shall be deemed re#o)ed.alf1itc
*"C. 24. Repealing Clause? - The folloing las or pro#isions of las are hereby repealed and the persons
andEor transactions a9ected herein are made sub*ect to the #alue-added ta$ sub*ect to the pro#isions of
Title IV of the ,ational Internal 6e#enue 7ode of 1//4% as amended:
:A; Section 15 of 6.A. ,o. <5/- on the e$emption from #alue-added ta$ of ,ational "oer
7orporation :,"7;&
:?; Section <% (fth paragraph of 6.A. ,o. /15< on the !ero VAT rate imposed on the sales of
generated poer by generation companies& and
:7; All other las% acts% decrees% e$ecuti#e orders% issuances and rules and regulations or parts
thereof hich are contrary to and inconsistent ith any pro#isions of this Act are hereby repealed%
amended or modi(ed accordingly.
*"C. 2A. Separability Clause? - If any pro#ision of this Act is subse'uently declared unconstitutional% the
#alidity of the remaining pro#isions hereof shall remain in full force and e9ect.
*"C. 2B. $%ectivity Clause? - This Act shall ta)e e9ect on @uly 1% 3==-.
Appro#ed%
+RAN='#N DR#'&N
"resident of the Senate
F&*" D" ("N"C#A FR.
Spea)er of the Fouse of
6epresentati#es
This Act hich is consolidation of Fouse ?ill ,o. 5---% Fouse ?ill ,o. 54=- and Senate ?ill ,o. 1/-= as
(nally passed by the Fouse of the 6epresentati#e and the Senate on May 11% 3==- and May 1=% 3==-%
respecti#ely.
&*CAR $. EA0"*
Secretary of Senate
R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresenati#es
Appro#ed: May 30% 3==-
$'&R#A !ACAPA$A';ARR&E&
President of the Philippines
Republic of the Philippines
Congress of the Philippines
Metro Manila
Thirteenth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-fourth day of @uly% to thousand si$.
GSV-144
Republic Act No. 9,B1 No1ember 21, 2DDB
AN ACT A!"ND#N$ *"CT#&N 11D H0I &+ T%" NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199, A*
A!"ND"D, AND +&R &T%"R P)RP&*"*
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*"CT#&N 1. Section 11= :?; of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>=B> $xcess (utput or 'nput Tax - If at the end of any ta$able 'uarter the output ta$ e$ceeds the
input ta$% the e$cess shall be paid by the VAT-registered person. If the input ta$ e$ceeds the output
ta$% the e$cess shall be carried o#er to the succeeding 'uarter or 'uarters: Provided, ho&ever, that
any input ta$ attributable to !ero-rated sales by a VAT-registered person may at his option be
refunded or credited against other internal re#enue ta$es% sub*ect to the pro#isions of Section 113.>
*"C. 2. Implementing Rules and Regulations. - The Secretary of 8inance shall% upon the
recommendation of the 7ommissioner of Internal 6e#enue% promulgate the necessary rules and regulations
for the e9ecti#e implementation of this Act.
*"C. ,. Repealing Clause. - All las% decrees% e$ecuti#e orders% rules and regulations or parts thereof of
hich are contrary to or inconsistent ith this Act are hereby repealed% amended or modi(ed accordingly.
*"C. 4. Efectivity. - This Act shall ta)e e9ect (fteen :1-; days after its publication in the ()cial
2a5ette or in any to nespapers of general circulation% hiche#er comes earlier.
Appro#ed%
!ANNE (#''AR
"resident of the Senate
F&*" D" ("N"C#A, FR.
Spea)er of the Fouse of
6epresentati#es
This Act hich originated in the Fouse of 6epresentati#es as (nally passed by the Fouse of
6epresentati#es and the Senate on September 3<% 3==< and 2ctober /%3==<% respecti#ely.
&*CAR $. EA0"*
Secretary of Senate
R&0"RT& P. NACAR"N&
Secretary General
Fouse of 6epresenati#es
Appro#ed: ,o#ember 31% 3==<
$'&R#A !ACAPA$A';ARR&E&
President of the Philippines
+ourteenth Congress
+irst Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-third day of @uly% to thousand se#en.
Republic Act No. 9AD4 Fune 1, 2DD8
Amending 6A .030
AN ACT A!"ND#N$ *"CT#&N 22, 24, ,4, ,A, A1, AND 9 &+ R"P)0'#C ACT N&. 8424, A*
A!"ND"D &T%"R9#*" =N&9N A* T%" NAT#&NA' #NT"RNA' R"("N)" &+ 199
GSV-14.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
*"CT#&N 1. Section 33 of 6epublic Act ,o. .030% as amended% otherise )non as the ,ational Internal
6e#enue 7ode of 1//4% is hereby further amended by adding the folloing de(nition after Subsection :88;
to read as follos:
>S17. 33. +e:nitions. - hen used in this Title:
>:A; $ $ $.
>$ $ $
>:88; $ $ $.
>:GG; the term Jstatutory minimum ageJ earner shall refer to rate ($ed by the 6egional Tripartite
Bage and "roducti#ity ?oard% as de(ned by the ?ureau of Gabor and 1mployment Statistics :?G1S;
of the +epartment of Gabor and 1mployment :+2G1;
>:FF; the term Jminimum age earnerJ shall refer to a or)er in the pri#ate sector paid the
statutory minimum age% or to an employee in the public sector ith compensation income of not
more than the statutory minimum age in the non-agricultural sector here heEshe is assigned.>
*"C. 2. Section 30:A; of 6epublic Act ,o. .030% as amended% otherise )non as the ,ational Internal
6e#enue 7ode of 1//4% is hereby further amended to read as follos:
>S17. 30. 'ncome Tax Rates. -
>:A; Rates of 'ncome Tax on 'ndividual Citi5en and 'ndividual Resident lien of the Philippines? -
>:1; $ $ $:
>$ $ $& and
>:c; 2n the ta$able income de(ned in Section 51 of this code% other than income sub*ect to ta$
under Subsections :?;% :7; and :+; of this Section% deri#ed for each ta$able year from all sources
ithin the "hilippines by an indi#idual alien ho is a resident of the "hilippines.
>:3; 6ates of Ta$ on Ta$able Income of Indi#iduals. - The ta$ shall be computed in accordance ith
and at the rates established in the folloing schedule:
>,ot o#er "1=%=== ........ -I
>2#er "1=%=== but not o#er "5=%=== ........ "-==Q1=I of the e$cess o#er "1=%===
>2#er "5=%=== but not o#er "4=%=== ........ "3%-==Q1-I of the e$cess o#er "5=%===
>2#er "4=%=== but not o#er "10=%=== ........ ".%-==Q3=I of the e$cess o#er "4=%===
>2#er "10=%=== but not o#er "3-=%=== ........ "33%-==Q3-I of the e$cess o#er
"10=%===
>2#er "3-=%=== but not o#er "-==%=== ........ "-=%===Q5=I of the e$cess o#er
"3-=%===
>2#er "-===%=== ........ "13-%===Q53I of the e$cess o#er
"-==%===
>8or married indi#iduals% the husband and ife% sub*ect to the pro#ision of Section -1 :+; hereof%
shall compute separately their indi#idual income ta$ based on their respecti#e total ta$able
income: Provided% that if any income cannot be de(nitely attributed to or identi(ed as income
e$clusi#ely earned or reali!ed by either of the spouses% the same shall be di#ided e'ually beteen
the spouses for the purpose of determining their respecti#e ta$able income.
>Provided% That minimum age earners as de(ned in Section 33 :FF; of this 7ode shall be e$empt
from the payment of income ta$ on their ta$able income: Provided% further% That the holiday pay%
o#ertime pay% night shift di9erential pay and ha!ard pay recei#ed by such minimum age earners
shall li)eise be e$empt from income ta$.
>$ $ $.>
GSV-14/
*"C. ,. Section 50:G; of 6epublic Act ,o. .030% as amended% otherise )non as the ,ational Internal
6e#enue 7ode of 1//4% is hereby amended to read as follos:
>S17. 50. +eductions from 2ross 'ncome. - 1$cept for ta$payers earning compensation income
arising from personal ser#ices rendered under an employer-employee relationship here no
deductions shall be alloed under this Section other than under Subsection :M;hereof% in computing
ta$able income sub*ect to income ta$ under Sections 30:A;& 3-:A;& 3<& 34:A;% :?;% :7;& and 3.:A;:1;%
there shall be alloed the folloing deductions from the gross income:
>:A; $xpenses. -
>$ $ $.
>:G; (ptional Standard +eduction. - In lieu of the deductions alloed under the preceding
Subsections% an indi#idual sub*ect to ta$ under Section 30% other than a nonresident alien% may
elect a standard deduction in an amount not e$ceeding forty percent :0=I; of his gross sales or
gross receipts% as the case may be. In the case of a corporation sub*ect to ta$ under section 34:A;
and 3.:A;:1;% it may elect a standard deduction in an amount not e$ceeding forty percent :0=I; of
it gross income as de(ned in Section 53 of this 7ode. Hnless the ta$payer signi(es in his return his
intention to elect the optional standard deduction% he shall be considered as ha#ing a#ailed himself
of the deductions alloed in the preceding Subsections. Such election hen made in the return
shall be irre#ocable for the ta$able year for hich the return is made: Provided% That an indi#idual
ho is entitled to and claimed for the optional standard shall not be re'uired to submit ith his ta$
return such (nancial statements otherise re'uired under this 7ode: Provided% further% That e$cept
hen the 7ommissioner otherise permits% the said indi#idual shall )eep such records pertaining to
his gross sales or gross receipts% or the said corporation shall )eep such records pertaining to his
gross income as de(ned in Section 53 of this 7ode during the ta$able year% as may be re'uired by
the rules and regulations promulgated by the Secretary of 8inance% upon recommendation of the
7ommissioner.
>:M; $ $ $.>
>$ $ $.>
*"C. 4. Section 5-:A; and :?; of 6epublic Act ,o. .030% as amended% otherise )non as the ,ational
Internal 6e#enue 7ode of 1//4% is hereby amended to read as follos:
>S17. 5-. llo&ance of Personal $xemption for 'ndividual Taxpayer. -
>:A; 'n 2eneral. - 8or purposes of determining the ta$ pro#ided in Section 30:A; of this title% there
shall be alloed a basic personal e$emption amounting to 8ifty thousand pesos :"-=%===; for each
indi#idual ta$payer.
>In the case of married indi#idual here only one of the spouses is deri#ing gross income% only such
spouse shall be alloed the personal e$emption.
>:?; dditional $xemption for +ependents. - There shall be alloed an additional e$emption of
Tenty-(#e thousand pesos :3-%===; for each dependent not e$ceeding four :0;.
>The additional e$emption for dependents shall be claimed by only one of the spouses in the case
of married indi#iduals.
>In the case of legally separated spouses% additional e$emptions may be claimed only by the
spouse ho has custody of the child or children:
Provided% That the total amount of additional e$emptions that may be claimed by both shall not
e$ceed the ma$imum additional e$emptions herein alloed.
>8or purposes of this Subsection% a >dependent> means a legitimate% illegitimate or legally adopted
child chieCy dependent upon and li#ing ith the ta$payer if such dependent is not more than
tenty-one :31; years of age% unmarried and not gainfully employed or if such dependent%
regardless of age% is incapable of self-support because of mental or physical defect.
>$ $ $.>
*"C. A. Section -1 :A;:3; of 6epublic Act ,o% .030% as amended% otherise )non as the ,ational Internal
re#enue 7ode of 1//4% is hereby further amended to read as follos:
GSV-1.=
>S17. -1. 'ndividual Return. -
>:A; Re/uirements. -
>:1; 1$cept as pro#ided in paragraph :3; of this Subsection% the folloing indi#iduals are re'uired to
(le an income ta$ return:
>:a; $ $ $&
>$ $ $.
>:3; The folloing indi#iduals shall not be re'uired to (le an income ta$ return:
>:a; $ $ $&
>:b; An indi#idual ith respect to pure compensation income% as de(ned in Section 53:A;:1;%
deri#ed from such sources ithin the "hilippines% the income ta$ on hich has been correctly
ithheld under the pro#isions of Section 4/ of this 7ode: Provided% That an indi#idual deri#ing
compensation concurrently from to or more employers at any time during the ta$able year shall
(le an income ta$ return&
>:c; $ $ $& and
>:d; A minimum age earner as de(ned in Section 33:FF; of this 7ode or an indi#idual ho is
e$empt from income ta$ pursuant to the pro#isions of this 7ode and other las% general or special.
>$ $ $.>
*"C B. Section 4/:A; of 6epublic Act ,o. .030% as amended% otherise )non as the ,ational Internal
6e#enue 7ode of 1//4% is hereby further amended to read as follos:
>Section 4/. 'ncome Tax Collected at Source. -
>:A; Re/uirement of 6ithholding. - 1$cept in the case of a minimum age earner as de(ned in
Section 33:FF; of this code% e#ery employer ma)ing payment of ages shall deduct and ithhold
upon such ages a ta$ determined in accordance ith the rules and regulations to be prescribed by
the Secretary of 8inance% upon recommendation of the 7ommissioner:
>$ $ $.>
*"C. . Separability Clause. - If any pro#ision of this Act is declared in#alid or unconstitutional% other
pro#isions hereof hich are not a9ected thereby shall continue to be in full force and e9ect.
*"C. 8. Repealing Clause. - Any la% presidential decree or issuance% e$ecuti#e order% letter of
instruction% administrati#e order% rule or regulation contrary to or inconsistent ith any pro#ision of this Act
as hereby amended or modi(ed accordingly.
*"C. 9. Efectivity Clause. - This Act shall ta)e (fteen :1-; days folloing its publication in the o)cial
2a5etteor in at least to :3; nespaper of general circulation.
Appro#ed%
:Sgd.; PR&*P"R& C.
N&$RA'"*
Spea)er of the Fouse of
6epresentati#es
:Sgd.; !ANNE (#''AR
"resident of the Senate
This Act hich is a consolidation of Fouse ?ill 5/41 and Senate ?ill ,o. 33/5 as (nally passed by the
Fouse of 6epresentati#es and the Senate on May 3.% 3==. and May 34% 3==. respecti#ely.
:Sgd.; !AR#'EN 0. 0AR)A;EAP
Secretary General
Fouse of 6epresenati#es
:Sgd.; "!!A '#R#&;R"E"*
Secretary of Senate
Appro#ed: Fune 1, 2DD8
GSV-1.1
6epublic of the "hilippines
C&N$R"** &+ T%" P%#'#PP#N"*
Metro Manila
+ourteenth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-se#enth day of @uly% to thousand nine.
R"P)0'#C ACT N&. 1DDD1
AN ACT R"D)C#N$ T%" TA5"* &N '#+" #N*)RANC" P&'#C#"*, A!"ND#N$ +&R T%#* P)RP&*"
*ection* 12, AND 18, &+ T%" NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199, A* A!"ND"D
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*ection 1. Section 135 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>Section 135. Tax on *ife 'nsurance Premiums? - There shall be collected from e#ery person%
company or corporation :e$cept purely cooperati#e companies or associations; doing life insurance
business of any sort in the "hilippines a ta$ of to percent :3I; of the total premium collected%
hether such premiums are paid in money% notes% credits or any substitute for money& but
premiums refunded ithin si$ :<; months after payment on account of re*ection of ris) or returned
for other reason to a person insured shall not be included in the ta$able receipts& nor shall any ta$
be paid upon reinsurance by a company that has already paid the ta$& nor upon premiums collected
or recei#ed by any branch of a domestic corporation% (rm or association doing business outside the
"hilippines on account of any life insurance of the insured ho is a nonresident% if any ta$ on such
premium is imposed by the foreign country here the branch is established nor upon premiums
collected or recei#ed on account of any reinsurance% if the insured% in case of personal insurance%
resides outside the "hilippines% if any ta$ on such premiums is imposed by the foreign country
here the original insurance has been issued or perfected& nor upon that portion of the premiums
collected or recei#ed by the insurance companies on #ariable contracts% in e$cess of the amounts
necessary. to insure the li#es of the #ariable contract oners.
>7ooperati#e companies or associations are such as are conducted by the members thereof ith
the money collected from among themsel#es and solely for their on protection and not for pro(t.>
*ection 2. The ne rate of to percent :3I; shall apply only to insurance policies that ill be issued after
the e9ecti#ity of this Act: Provided, ho&ever, That insurance policies ta)en out before the e9ecti#ity of this
Act but the premiums are not yet fully paid% the ne rate of to percent :3I; shall be applied to the
remaining balance and for the remaining years.
*ection ,. Section 1.5 of the ,ational Internal 6e#enue 7ode of 1//4% as amended% is hereby further
amended to read as follos:
>Section 1.5. Stamp Tax on *ife 'nsurance Policies? - 2n all policies of insurance or other
instruments by hate#er name the same may be called% hereby any insurance shall be made or
reneed upon any life or li#es% there shall be collected. a one-time documentary stamp ta$ at the
folloing rates:
If the amount of insurance does
not e$ceed "hp 1==%===.== e$empt

If the amount of insurance
e$ceeds "hp1==%===.== but does
not e$ceed "hp5==%===.== "hp1=.==

If the amount of insurance
e$ceeds "hp5==%===.== but does
not e$ceed "hp-==%===.== "hp3-.==

If the amount of insurance
e$ceeds "hp-==%===.== but does
"hp-=.==
GSV-1.3
not e$ceed "hp4-=%===.==

If the amount of insurance
e$ceeds "hp4-=%===.== but does
not e$ceed "hp1%===%===.== "hp4-.==

If the amount of insurance
e$ceeds "hp1%===%===.== "hp1==.==>
*ection 4. 8i#e :-; years after the e9ecti#ity of this 7ode% no ta$ on life insurance premium shall be
collected:Provided, further, That on the said date% all policies of insurance or other instruments by
hate#er name the same shall be called hereby any insurance shall be made upon any life or li#es shall
be e$empt from the documentary stamp ta$.
*ection A. Rules and Regulations? - The Secretary of 8inance shall% upon recommendation of the
7ommissioner of Internal 6e#enue% promulgate the necessary rules and regulations for the e9ecti#e
implementation of the pro#isions of this Act.
*ection B. Separability Clause? - If any pro#ision of this Act is held unconstitutional or in#alid% all other
pro#isions not a9ected thereby shall remain #alid.
*ection . Repealing Clause? - All las% decrees% e$ecuti#e orders% rules and regulations or parts thereof
hich are inconsistent ith this Act are hereby repealed% amended or modi(ed accordingly.
*ection 8. $%ectivity? - This Act shall ta)e e9ect (fteen :1-; days folloing the completion of its
publication in the ()cial 2a5ette or in a nespaper of general circulation in the "hilippines.
Appro#ed%
:Sgd.; PR&*P"R& C. N&$RA'"*
Spea)er of the Fouse of 6epresentati#es
:Sgd.; F)AN P&NC" "NR#'"
"resident of the Senate
This Act hich is a consolidation of Senate ?ill ,o. <=14 and Fouse ?ill ,o. 5-=3 as (nally passed by the
Senate and Fouse of 6epresentati#es +ecember 1-% 3==/ and +ecember 11% 3==/% respecti#ely.
:Sgd.; "!!A '#R#&;R"E"*
Secretary of Senate
:Sgd.; !AR#'EN 0. 0AR)A;EAP
Secretary General
Fouse of 6epresentati#es
Appro#ed: +"0 2, 2D1D
:Sgd.; $'&R#A !ACAPA$A';ARR&E&
President of the Philippines
GSV-1.5
6epublic of the "hilippines
C&N$R"** &+ T%" P%#'#PP#N"*
Metro Manila
+ourteenth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-se#enth day of @uly% to thousand nine.
R"P)0'#C ACT N&. 1DD21
AN ACT T& A''&9 T%" "5C%AN$" &+ #N+&R!AT#&N 0E T%" 0)R"A) &+ #NT"RNA' R"("N)"
&+ TA5 !ATT"R* P)R*)ANT T& #NT"RNAT#&NA''E;A$R""D TA5 *TANDARD*, A!"ND#N$
*"CT#&N* BH+I, 1 AND 2D &+ T%" NAT#&NA' #NT"RNA' R"("N)" C&D" &+ 199, A*
A!"ND"D, AND +&R &T%"R P)RP&*"*
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*ection 1. Title? - This Act shall be )non as the "Exchange of Information on Tax atters !ct of
"##$".
*ection 2. +eclaration of Policy? - It is the declared policy of the State to promote and pursue a ta$
en#ironment that contributes in sustaining a fa#orable international in#estment climate and instills
con(dence in the ade'uacy and capacity of the countryJs ta$ administration to comply ith its
commitments under e$isting international con#entions or agreements on ta$ matters.
"ursuant to this declared policy% the go#ernment shall comply ith or commit to the internationally-agreed
ta$ standards re'uired for the e$change of ta$ information ith its ta$ treaty partners to help combat
international ta$ e#asion and a#oidance and to help address ta$ concerns that a9ect international trade
and in#estment. The go#ernment shall li)eise adopt measures and procedures to enhance cooperation
ith other countries in the eAcient collection of ta$es% consistent ith the international understanding to
ensure the payment of ta$es due the respecti#e ta$ing *urisdictions of the treaty partners.
*ection ,. Authority of the 7ommissioner of Internal 6e#enue to In'uire into ?an) +eposit Accounts and
6elated Information Feld by 8inancial Institutions. - Section <:8; of 6epublic Act ,o. .030% as amended%
otherise )non as the ,ational 6e#enue 7ode of 1//4% as amended% is hereby further amended to read
as follos:
>S17. <. "oer of the 7ommissioner to Ma)e Assessments and "rescribe
Additional 6e'uirements for Ta$ Administration and 1nforcement. -
>$$$
>:8; Authority of the 7ommissioner to In'uire into ?an) +eposit Accounts and
2ther 6elated Information Feld by 8inancial Institutions. - ,otithstanding any contrary
pro#ision of 6epublic Act ,o. 10=-% 6epublic Act ,o. <03<% otherise )non as the 8oreign 7urrency
+eposit Act of the "hilippines% and other general and special las% the 7ommissioner is hereby authori!ed
to in'uire into the ban) deposits and other related information held by (nancial institutions of:
>:1; A decedent to determine his gross estate.
>:3; Any ta$payer ho has (led an application for compromise of his ta$ liability under Sec.
3=0 :A;:3; reason of (nancial incapacity to pay his ta$ liability.
>In case a ta$payer (les an application to compromise the payment of his ta$ liabilities on
his claim that his (nancial position demonstrates a clear inability to pay the ta$ assessed%
his application shall not be considered unless and until he ai#es in riting his pri#ilege
under 6epublic Act ,o. 10=-% 6epublic Act ,o. <03<% otherise )non as the 8oreign
7urrency +eposit Act of the "hilippines% or under other general or special las% and such
ai#er shall constitute the authority of the 7ommissioner to in'uire into the ban) deposits of
the ta$payer.
GSV-1.0
>:5; A speci(c ta$payer or ta$payers sub*ect of a re'uest for the supply of ta$ information
from a foreign ta$ authority pursuant to an international con#ention or agreement on ta$
matters to hich the "hilippines is a signatory or a party of: "ro#ided% That the information
obtained from the ban)s and other (nancial institutions may be used by the ?ureau of
Internal 6e#enue for ta$ assessment% #eri(cation% audit and enforcement purposes.
>In case of re'uest from a foreign ta$ authority for ta$ information held by ban)s and (nancial institutions%
the e$change of information shall be done in a secure manner to ensure con(dentiality thereof under such
rules and regulations as may be promulgated by the Secretary of 8inance% upon recommendation of the
7ommissioner.
>The 7ommissioner shall pro#ide the ta$ information obtained from ban)s and (nancial institutions
pursuant to a con#ention or agreement upon re'uest of the foreign ta$ authority hen such re'uesting
foreign ta$ authority has pro#ided the folloing information to demonstrate the foreseeable rele#ance of
the information to the re'uest:
>:a; The identity of the person under e$amination or in#estigation&
>:b; A statement of the information being sought including its nature and the form in hich
the said foreign ta$ authority prefers to recei#e the information from the 7ommissioner&
>:c; The ta$ purpose for hich the information is being sought&
>:d; Grounds for belie#ing that the information re'uested is held in the "hilippines or is in
the possession or control of a person ithin the *urisdiction of the "hilippines&
>:e; To the e$tent )non% the name and address of any person belie#ed to be in possession
of the re'uested information&
>:f; A Statement that the re'uest is in conformity ith the la and administrati#e practices
of the said foreign ta$ authority% such that if the re'uested information as ithin the
*urisdiction of the said foreign ta$ authority then it ould be able to obtain the information
under its la or in the normal course of administrati#e practice and that it is conformity ith
a con#ention or international agreement& and
>:g; A statement that the re'uesting foreign ta$ authority has e$hausted all means a#ailable
in its on territory to obtain the information% e$cept those that ould gi#e rise to
disproportionate diAculties.
>The 7ommissioner shall forard the information as promptly as possible to the re'uesting foreign ta$
authority. To ensure a prompt response% the 7ommissioner shall con(rm receipt of a re'uest in riting to
the re'uesting ta$ authority and shall notify the latter of de(ciencies in the re'uest% if any% ithin si$ty
:<=; days from the receipt of the re'uest.
>If the 7ommissioner is unable to obtain and pro#ide the information ithin ninety :/=; days from the
receipt of the re'uest% due to obstacles encountered in furnishing the information or hen the ban) or
(nancial institution refuses to furnish the information% he shall immediately inform the re'uesting ta$
authority of the same% e$plaining the nature of the obstacles encountered or the reasons of refusal.>
>The term Jforeign ta$ authorityJ% as used herein% shall refer to the ta$ authority or ta$ administration of the
re'uesting State under the ta$ treaty or con#ention to hich the "hilippines is a signatory or a party of.>
*ection 4. llo&ing a 0oreign Tax uthority to 'ncome Tax Returns of Taxpayers in the Philippines? -
Section 41 of 6epublic Act ,o. .030% as amended% otherise )non as the ,ational Internal 6e#enue 7ode
of 1//4% is hereby amended to read as follos:
>S17. 41. +isposition of Income Ta$ 6eturns% "ublication of Gists of Ta$payers and 8ilers. - After the
assessment shall ha#e been made% as pro#ided in this Title% the returns% together ith any corrections
thereof hich may ha#e been made by the 7ommissioner% shall be (led in the 2Ace of the 7ommissioner
and shall constitute public records and be open to inspection as such upon the order of the "resident of the
"hilippines% under rules and regulations to be presented by the Secretary of 8inance% upon
recommendation of the 7ommissioner.
>The 7ommissioner may% in each year% cause to be prepared and published in any nespaper the lists
containing the names and addresses of persons ho ha#e (led income ta$ returns.
GSV-1.-
>Income ta$ returns of speci(c ta$payers sub*ect of a re'uest for e$change of information by a foreign ta$
authority pursuant to an international con#ention or agreement on ta$ matters to hich the "hilippines is a
signatory or a party of% shall be open to inspection upon the order of the "resident if the "hilippines under
rules and regulations as may be prescribed by the Secretary of 8inance% upon recommendation of the
7ommissioner.>
*ection A. uthority of the Commissioner of 'nternal Revenue to Supply 'nformation to a 0oreign Tax
uthority 6hich is at his +isposal? - Section 34= of 6epublic Act ,o. .030% as amended% otherise )non
as the ,ational Internal 6e#enue of 1//4% is hereby amended to read as follos:
>S17. 34=. Hnlaful +i#ulgence of Information. - 1$cept as pro#ided in Sections <:8; and 41 of this 7ode
and Section 3< of 6epublic Act ,o. <5..% any oAcer or employee of the ?ureau of Internal 6e#enue ho
di#ulges to any person or ma)es )non in any other manner than may be pro#ided by la information
regarding the business% income% or estate of any ta$payer% the secrets% operation% style or or)% or
apparatus of any manufacturer or producer% or con(dential information regarding the business of any
ta$payer% )noledge of hich as ac'uired by him in the discharge of his oAcial duties% shall% upon
con#iction for each act or omission% be punished by a (ne of not less than 8ifty thousand pesos :"-=%===;
but not more than 2ne hundred thousand pesos :"1==%===;% or su9er imprisonment of not less than to
:3; years but not more than (#e :-; years% or both.
>Any oAcer or employee of the ?ureau of Internal 6e#enue ho di#ulges or ma)es )non in any other
manner to any person other than the re'uesting foreign ta$ authority information obtained from ban)s and
(nancial institutions pursuant to Section <:8;% )noledge or information ac'uired by him in the discharge
of his oAcial duties% shall% upon con#iction% be punished by a (ne of not less than 8ifty thousand pesos
:"-=%===; but not more than 2ne hundred thousand pesos :"1==%===;% or su9er imprisonment of not less
than to :3; years but not more than (#e :-; years% or both.>
*ection B. 6illful Refusal to Supply 'nformation? - Any oAcer% oner% agent% manager% director or oAcer-in
-charge of any ban) or (nancial institution ithin the pur#ie of this Act ho% being re'uired in riting by
the 7ommissioner% illfully% refuses to supply the re'uired information shall be punished by a (ne of not
less than 8ifty thousand pesos :-=%===; but not more than 2ne hundred thousand pesos :"1==%===; % or
su9er imprisonment of not less than to :3; years but not more than (#e :-; years% or both.
*ection . (bligation to .aintain Con:dentiality of 'nformation Received? - Any information recei#ed by a
foreign ta$ authority from the ?ureau of Internal 6e#enue pursuant to an International con#ention or
agreement on ta$ matters shall be treated by the authority as absolutely con(dential in nature in the same
manner as information obtained by the latter under its las and shall be disclosed only to persons or
authorities% including courts and administrati#e bodies% in#ol#es in the assessment or collection of% the
enforcement or prosecution in respect of% or the determination of appeals in relation to% the ta$es co#ered
by such con#entions of agreements.
*ection 8. 4otice to Taxpayers? - A ta$payer shall be duly noti(ed in riting by the 7ommissioner that a
foreign ta$ authority is re'uesting for e$change of information held by (nancial institutions pursuant to a
ta$ con#ention or agreement to hich the "hilippines is a signatory or a party of% under such rules and
regulations as may be prescribed by the Secretary of 8inance upon recommendations of the 7ommissioner.
*ection 9. Separability Clause? -If any pro#ision of this Act is declared in#alid or unconstitutional% other
pro#isions hereof hich are not a9ected thereby shall continue to be in full force and e9ect.
*ection 1D. Repealing Clause? - All las% presidential decrees% e$ecuti#e orders% rules and regulations%
other issuances or parts thereof hich are inconsistent ith or contrary to this Act are hereby repealed or
modi(ed accordingly.
*ection 11. $%ectivity Clause? - This Act shall ta)e e9ect (fteen :1-; days after its publication in the
2Acial Ga!ette or in at least to :3; nespapers of general circulation.
Appro#ed%
:Sgd.; F)AN P&NC" "NR#'"
"resident of the Senate
:Sgd.; PR&*P"R& C. N&$RA'"*
Spea)er of the Fouse of 6epresentati#es
This Act hich is a consolidation of Fouse ?ill ,o. <.// and Senate ?ill ,o. 533=% as (nally passed by the
Fouse of 6epresentati#es and the Senate on +ecember 1-% 3==/ and +ecember 11% 3==/% respecti#ely.
:Sgd.; "!!A '#R#&;R"E"* :Sgd.; !AR#'EN 0. 0AR)A;EAP
GSV-1.<
Secretary of Senate Secretary General
Fouse of 6epresenati#es
Appro#ed: !-rch 8, 2D1D
:Sgd.; $'&R#A !ACAPA$A';ARR&E&
President of the Philippines
6epublic of the "hilippines
C&N$R"** &+ T%" P%#'#PP#N"*
Metro Manila
+ourteenth Congress
Thir/ Regul-r *ession
?egun and held in Metro Manila% on Monday% the tenty-se#enth day of @uly% to thousand nine.
R"P)0'#C ACT N&. 1DD2B
AN ACT $RANT#N$ #NC&!" TA5 "5"!PT#&N T& '&CA' 9AT"R D#*TR#CT* 0E A!"ND#N$ *ection
2HCI &+ T%" NAT#&NA' #NT"RNA' R"("N)" C&D" HN#RCI &+ 199, A* A!"ND"D, AND ADD#N$
*ection 289;A T& T%" C&D", +&R T%" P)RP&*"
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
*ection 1. Section 34:7; of the ,ational Internal 6e#enue 7ode :,I67; of 1//4% as amended by 6epublic
Act ,o. /554% is hereby further amended to read as follos:
>Section 34. Rates of 'ncome Tax on +omestic Corporations? -
>$ $ $
>:7; 2overnment1o&ned or 1Controlled Corporations, gencies or 'nstrumentalities? - The pro#isions
of e$isting special or general las to the contrary notithstanding% all corporations% agencies% or
instrumentalities oned or controlled by the Go#ernment% e$cept the Go#ernment Ser#ice and
Insurance System :GSIS;% the Social Security System :SSS;% the "hilippine Fealth Insurance
7orporation :"FI7;% the local ater districts :GB+; and the "hilippine 7harity Seepsta)es 2Ace
:"7S2;% shall pay such rate of ta$ upon their ta$able income as are imposed by this Section upon
corporations or associations engaged in a similar business% industry% or acti#ity.
>$ $ $.>
*ection 2. A ne section% designated as Section 3./-A under 7hapter II% Title MI% of the same 7ode is
inserted to read as follos:
>Section 3./-A. Support for *ocal 6ater +istricts? - The amount that ould ha#e been paid as
income ta$ and sa#ed by the local ater district by #irtue of its e$emption to the income ta$es shall
be used by the local ater district concerned for capital e'uipment e$penditure in order to e$pand
ater ser#ices co#erage and impro#e ater 'uality in order to pro#ide safe and clean ater in the
pro#inces% cities% and municipalities: Provided, That% the ater district shall adopt internal control
reforms that ould bring about their economic and (nancial #iability: Provided, further, That the
ater district shall not increase by more than tenty percent :3=I; a year its appropriation for
personal ser#ices% as ell as for tra#el% transportation or representation e$penses and purchase of
motor #ehicles.
>All unpaid ta$es or any portion thereof due from a local ater district for the period starting August
15% 1//< until the e9ecti#ity date of this Act are hereby condoned by the Go#ernment sub*ect to
the folloing conditions: :1; that the ?ureau of Internal 6e#enue% after careful re#ie of the
(nancial statements of a ater district applying for condonation of ta$es due% establishes its
(nancial incapacity% after pro#iding for its maintenance and operating e$penses% debt ser#icing and
GSV-1.4
reser#e fund% to meet such obligations for the period stated herein& and :3; that the ater district
a#ailing of such condonation shall submit to 7ongress of the "hilippines a program of internal
reforms% duly certi(ed by the local ater utilities administration% that ould bring about its
economic and (nancial #iability.
>All ater districts% through the Gocal Bater Htilities Administration% shall furnish the 7ommittee on
Bays and Means of the Senate and Fouse of 6epresentati#es% respecti#ely% on an annual basis% ith
statistical data and (nancial statements regarding their operations and other information as may be
re'uired% for purposes of monitoring compliance ith the pro#isions of this Act and re#ieing the
rationali!ation for ta$ e$emption pri#ileges.>
*ection ,. 'mplementing Rules and Regulations? - The Secretary of 8inance shall% upon the
recommendation of the 7ommissioner of Internal 6e#enue% and upon consultation ith the appropriate
go#ernment agencies% promulgate the necessary rules and regulations for the e9ecti#e implementation of
this Act.
*ection 4. Separability Clause? - If any pro#ision of this Act is declared in#alid or unconstitutional% other
pro#isions hereof hich are not a9ected thereby shall continue to be in full force and e9ect.
*ection A. Repealing Clause? - Any la% presidential decree or issuance% e$ecuti#e order% letter of
instruction% administrati#e order% rule or regulation contrary to or inconsistent ith any pro#ision of this Act
is hereby repealed or modi(ed accordingly.
*ection B. $%ectivity Clause? - This Act shall ta)e e9ect (fteen :1-; days after its publication in the ()cial
2a5ette or in at least to :3; nespapers of general circulation% hiche#er date comes earlier.
Appro#ed%
:Sgd.; PR&*P"R& C. N&$RA'"*
Spea)er of the Fouse of 6epresentati#es
:Sgd.; F)AN P&NC" "NR#'"
"resident of the Senate
This Act hich is a consolidation of Fouse ?ill ,o. -31= and Senate ?ill ,o. 55/3 as (nally passed by the
Fouse of 6epresentati#es and the Senate on +ecember 1-% 3==/ and +ecember .% 3==/% respecti#ely.
:Sgd.; "!!A '#R#&;R"E"*
Secretary of Senate
:Sgd.; !AR#'EN 0. 0AR)A;EAP
Secretary General
Fouse of 6epresentati#es
Appro#ed:
:Sgd.; $'&R#A !ACAPA$A';ARR&E&
President of the Philippines
Gapsed into la on MA6 11 3=1= ithout the signature of the "resident% in accordance ith Article VI%
Section 34 :1; of the 7onstitution.