EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE
S.B. No. 
8 0 8
r.u u i
(Pfftif of llir Ai'crrtnrp
*19 JUL 29 P4 ^3
RECl; 
L'l;'.
Introduced by SENATOR IMEE R. MARCOS
AN ACT
ENHANCING ADMINISTRATIVE FEASIBILITY 
AND EQUITABILITY OF THE TAX SYSTEM AND RATIONALIZING 
THE IMPOSITION OF THE VALUE-ADDED TAX TO ADDRESS 
INTERGENERATIONAL POVERTY, AMENDING FOR THE PURPOSE VARIOUS 
SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Article VI, Section 28 of the 1987 Constitution states that taxation shall be 
uniform and equitable. It is an inherent attribute of sovereignty and the government 
generally relies on taxation to obtain the means to carry on its operations. However, 
it must not be unjust, excessive, oppressive, confiscatory, or contrary to national 
policy.
This bill seeks to amend certain sections of the National Internal Revenue 
Code (NIRC), as amended, to align with the true intent of the law. An amendment to 
Section 24 is proposed to encourage taxpayers on having increased savings in 
depositary banks. Improved undertakings in banks will significantly benefit our 
economic growth.
Another amendment proposed by the measure is to synchronize the rates 
taxed to corporations to ensure that a Philippine Corporation is not discriminated in 
its country of domicile. Due to the Tax Reform for Acceleration and Inclusion 
(TRAIN) Act, domestic corporations are taxed at 15% while Resident Foreign 
Corporations enjoy the old rate of 7.5%, thus, giving lower rates to the latter.
Further, amendment to Section 203 is proposed to provide for prescriptive 
period for collection of taxes. While the title of the provision is on "prescriptive 
periods for assessment and collection of taxes", its body covers only prescriptive 
period for assessment.


Given the abovementioned drcumstances, the immediate passage of this bill is
sought.
MARCOS
Senator


EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
S E N A ^ ft
S.B. No.
^niaic
(©Iticf O tiljr fe iri clnrp
*19 
JUL 29 P4-03
Introduced by SENATOR IM EE R. MARCOfitcEi
AN ACT
ENHANCING ADMINISTRATIVE FEASIBILITY 
AND EQUITABILITY OF THE TAX SYSTEM AND RATIONALIZING 
THE IM POSITION OF THE VALUE-ADDED TAX TO ADDRESS 
INTERGENERATIONAL POVERTY, AMENDING FOR THE PURPOSE VARIOUS 
SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER PURPOSES
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Be it  enacted by the Senate and the House o f Representatives o f  the Philippines in 
Congress assembled.
Section 1. Declaration o f Policy. It is hereby declared the policy of the State:
a) To correct the inequity of certain provisions of the National Internal 
Revenue Code (NIRC) and make the assessment and collection of taxes 
easier to administer;
b) To enhance the progressivity of the tax system through the rational 
imposition of the value-added tax (VAT);
c) To provide relief to the poorest o f the poor by making VAT exempt: (a) 
good and services provided to schools; (b) school paper products; (c) 
drugs and medicines; and (d) electricity and machines used in generation, 
transmission, and distribution;
d) To encourage and enhance the competitive capacity of Small and Medium 
Enterprises (SMEs) by raising the VAT threshold; and
e) To ensure intergenerational poverty alleviation and the sustainability of 
free higher education by earmarked funding for development programs.
Section 2. Section 24 of the National Internal Revenue Code (NIRC) of 1997, 
as amended, is hereby further amended to read as follows:
"SEC. 24. Incom e Tax Rates. -
(A) XXX 
XXX 
XXX
(B) Rate o f Tax on Certain Passive Income: -
XXX


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(1) Interests, Royalties, Prizes, and other Winnings. -
XXX 
XXX 
XXX 
XXX 
XXX
Provided, finally. That should the holder of the certificate pre­
terminate the deposit or investment before the fifth (5th) year, a 
final tax shall be imposed on the entire income and shall be 
deducted and withheld by the depository bank from the 
proceeds o f the long-term deposit or investment certificate 
based on the [remaining maturity] ACTUAL HOLDING PERIOD 
thereof:
Four (4) years to less than five (5) years -  5%;
Three (3) years to less than four (4) years -  12%; and 
Less than three (3) years -  20%
(2) XXX 
XXX 
XXX 
XXX "
Section 3. Section 28 o f the NIRC of 1997, as amended, is hereby further 
amended to read as follows:
"SEC. 28. Rates o f Incom e Tax on Foreign Corporations. -
(A) 
Tax on Resident Foreign Corporations. -
XXX 
XXX 
XXX 
XXX
(7) 
Tax on Certain Incomes Received by a Resident Foreign 
Corporation. -
(a) XXX 
XXX 
XXX 
x x x
Provided, however. That interest income derived by a 
resident foreign corporation from a depository bank under 
the expanded foreign currency deposit system shall be 
subject to a final income tax at the rate o f [seven and one- 
half percent (7 V2 % )] FIFTEEN PERCENT (15% ) of such 
interest income.
(b) 
x x x  
x x x  
x x x  
x x x
(c) 
x x x  
x x x  
x x x  
x x x "
Section 4. Section 109 o f the NIRC of 1997, as amended, is hereby further 
amended to read as follows:
"SEC.109. E x e m p t Transactions. - ( 1 )  Subject to the provisions of 
Subsections (2) hereof, the following transactions shall be exempt from the 
value-added tax:
"(A)" xxx 
"(B )" xxx 
"(C)" xxx 
"(D )" xxx 
"(E)" xxx 
"(F)" xxx 
"(G )" xxx
"(HX' Educational services rendered by private educational institutions, 
duly accredited by the Department of Education (DepEd), the


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Commission 
on 
Higher 
Education 
(CHED), 
the 
Technical 
Education and skills Development Authority (TESDA) and those 
rendered by government educational institutions, INCLUDING 
ALL GOODS SUPPLIED AND SERVICES RENDERED TO SAID 
EDUCATIONAL INSTITUnONS BY VAT-REGISTERED SUPPLIERS 
AND SERVICE PROVIDERS.
"(I)" XXX 
" ( J ) "  XXX 
"(K )" XXX 
"(L)" XXX 
"(M )" XXX 
"(N )" XXX 
"(0 )" XXX 
"(P)" XXX 
"(Q )" XXX
"(R)" Sale, importation, printing, or publication of books, and any 
newspaper, magazine, review or bulletin which appears at 
regular intervals with fixed prices or subscription and sale and 
which is not devoted principally to the publication of paid 
advertisement; AND SALE OR IMPORTATION OF SCHOOL PAPER 
PRODUCTS. PROVIDED, 
THAT, SCHOOL PAPER PRODUCTS 
SHALL 
INCLUDE 
PAPER 
COMMODITIES 
CONSUMED 
BY 
STUDENTS AND TEACHERS DURING THE SCHOOL YEAR;"
"(S)" XXX 
"(T )" XXX 
"(U )" XXX 
"(V)" XXX 
"(W )" XXX 
"(X)" XXX 
"(Y)" XXX 
"(Z)" XXX
"(AA)" Sale OR IMPORTATION of drugs and medicines [prescribed for 
diabetes, high cholesterol, and hypertension beginning January 
1, 2019]; [and]
"(BB)" SALE OF ELECTRICITY, INCLUDING SALE OR IMPORTATION OF 
MACHINES AND EQUIPMENT TO BE DIRECTLY USED IN THE 
GENERATION 
TRANSMISSION, 
AND 
DISTRIBUTION 
OF 
ELECTRICITY; AND
"(CC)"[BB] Sale or lease of goods or properties of the performance of 
services other than the transactions mentioned in the preceding 
paragraphs, the gross annual sales and/or receipts do not 
exceed the amount of [Three million pesos (P3,000,000)] FIVE 
MILLION PESOS (5,000,000).
Section 5. Sec. I l l  of the NIRC of 1997, as amended, is hereby further 
amended to read as follows:
"SEC. 111. Transitionat/Presum ptive In p u t Tax Credits. -


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(A) 
XXX 
XXX 
XXX 
XXX
(B) 
Presumptive In p u t Tax Credits. -  Persons or firms engaged in 
the processing of [sardines, mackerel] MEAT, FISH AND OTHER 
AGRICULTURAL AND MARINE FOOD PRODUCTS, [and milk] and 
in manufacturing refined sugar, COFFEE, cooking oil, MILK, 
LAUNDRY SOAP AND/OR DETERGENTS, and packed noodle- 
based instant meals, shall be allowed a presumptive input tax, 
creditable against the output tax, equivalent to four percent 
(4% ) of the gross value in money of their purchases o f primary 
agricultural AND MARINE FOOD products which are used as 
inputs to their production.
XXX 
XXX 
XXX 
XXX 
XXX
Section 6. Sec. 203 of the NIRC of 1997, as amended, is hereby further 
amended to read as follows:
"SEC. 203. Period o f Lim itation Upon Assessment and 
Collection. -  xxx 
xxx 
xxx 
xxx
All assessments made under this Section must be collected within five 
(5) years from the date the assessment was made. Provided, that, if no 
assessment is made but the taxpayer has filed the required tax return which 
is neither false nor fraudulent, the period to collect is within five (5) years 
from the date the tax is due.
For purposes of complying with the prescriptive periods for the 
assessment and collection of taxes, an assessment is deemed made when the 
Final Assessment Notice (FAN) is released, mailed or sent to the taxpayer.
Section 7. Sec. 236 of the NIRC of 1997, as amended, is hereby further 
amended to read as follows:
"SEC. 236. Registration Requirements. -
"(A)" xxx 
"(B )" xxx 
"(C)" xxx 
"(D )" xxx 
"(E)" xxx 
"(F)" xxx
"(G )" Persons Required to Register fo r Value-Added Tax. - 
"(1 )" xxx
"(a) His gross sales or receipts for the past twelve (12) months, other 
than those that are exempt under Section 109 (A) to (BB), have exceeded 
[Three million pesos (P3,000,000)] FIVE MILLION PESOS (P5,000,000); OR 
"(b) There are reasonable grounds to believe that his gross sales or 
receipts for the next twelve (12) month, other than those that are exempt 
under Section 109 (A) to (BB) will exceed [Three million pesos (P3,000,000)] 
FIVE MILLION PESOS (5,000,000).


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Section 8. Sec. 288 of the NIRC of 1997, as amended, is hereby further 
amended to read as follows:
"Sec. 288. Disposition o f Increm ental Revenues. —
(A ) x X X
(B ) x X X
(C ) x X X
(D ) Incremental Revenues from the Value-Added Tax. -  [Fifty percent (50% )]
THE ENTIRE [of the] local government unit's share from the incremental
revenue from the Value-Added Tax shall be allocated and used exclusively
for the following purposes:
(1) [Fifteen percent (15% )] TEN PERCENT (10% ) for public elementary 
and 
secondary 
education 
to 
finance 
the 
ACQUISITION 
AND 
IMPROVEMENT OF SITES, construction of buildings, purchases of 
school furniture and in-service teacher trainings;
(2) Ten percent (10% ) for health insurance premiums of enrolled indigents 
as a counterpart contributions [of the local government] to sustain the 
universal coverage of the National Health Insurance Program;
(3) [Fifteen percent (15% )] TEN PERCENT (10% ) for environmental 
conservation to fully implement a comprehensive national reforestation 
program; [and]
(4) Ten percent (10% ) for agricultural modernization to finance the 
construction 
of 
farm-to-market 
roads 
and 
irrigation 
facilities, 
COMMUNAL IRRIGATION SYSTEMS; POST-HARVEST FACILITIES, SEED 
AND 
ORGANIC 
FERTILIZER 
SUBSIDIES; 
LIVESTOCK 
DISPERSAL 
PROGRAM; 
AND 
ESTABLISHMENT 
OF 
MARICULTURE 
AND 
AQUACULTURE PARKS [.];
(5) TEN PERCENT (10% ) FOR FOOD VOUCHERS FOR THE FIRST TO 
SEVENTH 
INCOME 
DECILES 
OF 
THE 
NATIONAL 
HOUSEHOLD 
TARGETING SYSTEM FOR POVERPf REDUCTION (NHTS-PR); AND
(6) TEN PERCENT (10% ) FOR SOCIAL MITIGATING MEASURES AND 
INVENSTEMNT 
IN 
SOCIAL 
PROTECTION, 
EMPLOYMENT, 
AND 
HOUSING 
THAT 
PRIORITIZE 
THE 
POOR 
AND 
NEAR-POOR 
HOUSEHOLDS, AS IDENTIFIED UNDER THE NETTS-PR.
(7) ANY REMAINDER SHALL BE USED FOR OTHER PUBLIC PURPOSES.
Section 9. Separability Clause. -  If any part or provision of this Act is held 
unconstitutional or invalid, the remaining parts or provisions not affected shall 
remain in full force and effect.
"XXX


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Section 10. Repealing Clause. -  Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation contrary 
to or inconsistent with the provisions of this Act is hereby repealed, modified , or 
amended accordingly.
Section 11. Effectivity Clause. -  This Act shall take effect on January 1, 2020 
following its complete publication in the Official Gazette or in at least one (1) 
newspaper of general circulation.
Approved,