HOUSE OF REPIMESENTATIVES:

Republic of the Philippines RECEn ED

HOUSE OF REPRESENTATIVES| pa 1 2919
Quezon City, Metro Manila

TING:
Seventeenth Congress : BY:

First Regular Session RECISTRATION UNT
1000 BILLS AND INDEX SERVIC

House Bill No.

Introduced by Honorable Luis Jose Angel N. Campos, Jr.

EXPLANATORY NOTE

Article II, Section 9 of the Constitution provides that “[t]he State shall promote a
just and dynamic social order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living, and an improved quality
of life for all.”

Article II, Section 18 of the Constitution further provides that “[t]he State affirms
labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare.”

In line with the above given policies, when a worker strives harder by putting in
more hours into his or her work in excess of the required maximum working hours
mandated by the Labor Code, the fruits of his or her extra effort should be given to him
or her in full without any deduction for income taxes. Indeed, the government should
aid the hardworking Filipino worker in ensuring that the latter’s standard of living is
raised and the quality of life improved by allowing the income earned from overtime
work to be enjoyed and made available in full.

‘This bill seeks to include under Section 32 (B) (7) of the National Internal
Revenue Code to include Overtime pay or any other type of compensation earned by the
Filipino workers in excess of the required maximum working hours per day in order to
have the said item of income expressly excluded in the computation of the gross income
of the taxpayer.

By allowing workers to bring home the pay of the additional labor in full and free
from taxation, the State would not only promote the well of the worker but would
also indirectly boost growth in the economy through the rippling effect of a financially
stronger Filipino workforce.

jis earnestly sought.

LUIS JOSE ANGEL 5

For the above given reasons the passage of this bill


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Seventeenth Congres
First Regular Session

1000

House Bill No.

Introduced by: Rep. Luis Jose Angel N. Campos, Jr.

AN ACT
EXCLUDING OVERTIME PAY FROM THE COMPUTATION OF TAXABLE
INCOME AMENDING FOR THE PURPOSE SECTION 32 (B) (7) OF
REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS E NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 32 (B) (7) (e) of Republic Act No. 8424, otherwise known as
the “National Internal Revenue Code of 1997”, as amended is hereby further amended to
read as follows:

“Sec. 32. Gross Income.-
“(A)_ General Definition. = xx x
“(B) Exclusions from Gross Income. = x x x

Miscellaneous items. —
“(a) xxx
“(b) xxx
“(@)XXX
“(xxx
“(@) XxX

“(F) OVERTIME PAY — COMPENASTION
DUE TO HOURS WORKED IN EXCESS
OF THE REQUIRED MAXIMUM
WORKING HOURS

“(G) LI xxx
“CHD [(g)] xxx.
“C) [h)] xxx.”

SEC. 2. Implementing Rules and Regulations. — The Bureau of
Internal Revenue (BIR), Department of Finance (DoF), and Department of Labor and
Employment (DOLE) and Civil Service Commission (CSC) shall promulgate not later
than (30) days upon the effectivity of this Act the necessary rules and regulations for its
effective implementation.



Repealing Clause. — All other laws, decrees, orders, issuances

and regulations or parts thereof inconsistent with this Act are hereby amended
or repealed accordingly.

SEC. 4. Effectivity. — This Act shall take effect fifteen (15) days after its

publication either in the Official Gazette or in at least two (2) newspapers of general
circulation.

Approved,