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Republic of the Philippines

HOUSE OF REPRESENTATIVES [2 0° oor 0
Queson City ' TIME:
SEVENTEENTH CONGRESS \"
Second Regular Session \.

House BILL no. _8323

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

EXPLANATORY NOTE

Taxation is the very lifeblood of the State. It is an inherent power that
allows the State to provide goods and services for the jurisdiction it serves.
Thereby, it must not only be fiscally adequate and administratively feasible - it
must be fair and unhindered. In line with this, the fourth package under the
Comprehensive Tax Reform Program (CTRP) of the Duterte Administration is
hereby proposed as the Capital Income and Financial Intermediary Taxation Act
of 2018.

The bill seeks to reform the taxation of the financial sector, including
capital and financial services, to be simpler, fairer, more efficient, and revenue
neutral. As of the moment, there are some 80 tax rates and tax bases pertinent
to the financial sector. The combinations of applicable tax rates on tax bases
upon meeting certain qualifiers results in a complicated tax map with plenty of
room for tax arbitrage or sly mechanisms to reduce a taxpayer's liability. This
complexity entails high administrative and compliance cost, and discourages
more transparent returns since taxpayers end up paying different taxes derived
from the same base. The bill also encourages capital market development by
adjusting, if not removing altogether, taxes that deter legitimate movement
towards initial public listing of companies.

The specific objectives of the bill are the following:

* Provide neutrality in tax treatment across financial institutions and
financial instruments;


* Simplify complex tax system;

Improve equity across investors and savors;

* Minimize arbitrage opportunities: and

« Promote capital market development and tax competitiveness within the
context of financial globalization, increased capital mobility, and financial
inclusion.

To achieve the aforementioned goals, the Capital Income and Financial
Intermediary Taxation Act of 2018 shall reform the financial sector taxation by
the:

a) Reduction in the number of rates of withholding taxes - Due to the
difficulties posed by various tax rates on interest income, distinctions are
removed, such that a more uniform tax treatment is imposed on interest
income regardiess of currency, maturity, issuer, and other differentiating
factors. Likewise, special rates and exemptions are removed.

b) Unification of tax rates for interests, dividends, and capital gains -
Considering the complicated tax system on capital income, a more unified
rate of tax is imposed for interests, dividends, and capital gains.

¢) Harmonization of business taxes - A single GRT rate for all Fis, excluding
Premium tax on insurance, is imposed. For further harmonization of taxes,
distinction between lending and non-lending activities, as well as the term
of maturity of an instrument, is removed. A single rate of 5% is imposed.
Pre-need, pension, life, and HMO insurance are all taxed similarly at a 2%
Premium tax rate. Non-life insurance is also subjected to a similar 5%
Premium tax rate.

d) Removal or minimization of barriers to capital market development - IPO
tax, which is found to be detrimental to capital market development is
removed. Overall, the DST of the financial sector is being rationalized to
promote capital mobility,


e) Adoption of a regionally competitive tax system - Considering that
Philippine taxes on capital income is the highest in the ASEAN region,
measures are taken towards the adoption of tax rates comparable to
those of neighboring ASEAN nations and their best practices. With the
reform, the proposed rates would be at par with the rates imposed in
ASEAN to ensure competitiveness of the domestic capital market.

The Duterte Administration remains steadfast in delivering its unprecedented
economic goals, part of which is the massive Build, Build, Build infrastructure
program already underway. In order to fund the aforementioned projects, this
Representation believes that the fourth package of the Tax Reform for
Acceleration and Inclusion (TRAIN) is of critical importance and must not be
delayed.

In consideration of the foregoing premises, the passage of this bill is
urgently sought

Luis IND “URAY” F. VILLAFUERTE, JR.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Queson City

SEVENTEENTH CONGRESS
Second Regular Session
832
HOUSE BILL NO. :

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 30, 32, 34, 37,
38, 39, 42, 51, 52, 54, 56, 57, 73, 108, 121, 122, 123, 127, 174, 175, 176,
177, 178, 179, 180,181,182, 183, 184, 185, 186, 187, 188, 189, 190,
191,192, 193, 194, 195, 196, 197, 198, and 199 OF REPUBLIC ACT NO.
8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

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

SEC. 1. Title. This Act shall be known as the “Capital Income and Financial
Intermediary Taxation Act of 2018.”

SEC. 2. - The financial sector plays a significant role in the long-term growth of
the national economy. A key policy consideration is to allow the capital market to
develop as efficiently as possible, with the least intervention. The optimal
taxation of capital markets, and the products and transactions that come with
them, is an essential element in developing the capital market. Towards this end,
the State recognizes the necessity of a simpler, fairer, more efficient, and
regionally more competitive tax system for capital income and financial
intermediation to encourage savings and develop as well as deepen the capital
markets. Accordingly, the following are the declared polices of the State:

1. The State shall promote and develop a tax system that provides
neutrality in the tax treatment across financial institutions and financial
instruments.

2. The State shall endeavor to simplify an otherwise complex tax system
for easy compliance.

3. The State shall ensure that the taxation of capital income and financial
transactions is equitable across all stakeholders and discourages
arbitrage opportunities.

4. The State shall promote capital market development and tax
competitiveness within the context of globalization, increased capital
mobility, and financial inclusion.


SEC. 3. Section 22 of the National Internal Revenue Code of 1997, is hereby
amended as follows:

SEC. 22. Definitions - When used in this Title:
(A) xxx

(B) The term ‘corporation’ shall include partnerships, no matter how
created or organized, joint-stock companies, joint accounts (cuentas en
participacion SUCH AS COLLECTIVE INVESTMENT SCHEMES),
associations, or insurance companies, but does not include general
professional partnerships and a joint venture or consortium formed for the
purpose of undertaking construction projects or engaging in petroleum,
coal, geothermal and other energy operations pursuant to an operating or
consortium agreement under a service contract with the Government.
‘General professional partnerships’ are partnerships formed by persons
for the sole purpose of exercising their common profession, no part of the
income of which is derived from engaging in any trade or business. A
COLLECTIVE INVESTMENT SCHEME MAY OR MAY NOT BE
REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION.

XX XX XK

(L) The term ‘shares of stock’ shall include shares of stock of a
corporation, warrants and/or options to purchase shares of stock, as well
as units of participation in a partnership (except general professional
partnerships), joint stock companies, joint accounts; SUCH AS
COLLECTIVE INVESTMENT SCHEMES, joint ventures taxable as
corporations, associations and recreation or amusement clubs (such as
golf, polo or similar clubs), mutual funds certificates.

(M) The term ‘shareholder’ shall include holders of a share/s of stock,
warrant/s and/or option/s to purchase shares of stock of a corporation, as
well as a holder of a unit of participation in a partnership (except general
professional partnerships), in a joint stock company, a joint account SUCH
AS COLLECTIVE INVESTMENT SCHEMES, a taxable joint venture, a
member of an association, recreation or amusement club (such as golf,
polo, or similar clubs), and a holder of a mutual fund certificate, a member
in an association, joint-stock company, or insurance company.

XX = XX XX

(7) The term ‘securities’ means shares-of stock in-a-corporation-and-rights:

SHARES, PARTICIPATION, OR INTERESTS IN A CORPORATION OR


IN A COMMERCIAL ENTERPRISE OR PROFIT-MAKING VENTURE
AND EVIDENCED BY A CERTIFICATE, CONTRACT, INSTRUMENTS,
WHETHER WRITTEN OR ELECTRONIC IN CHARACTER. IT
INCLUDES:

(A) SHARES OF STOCKS, BONDS, DEBENTURES, NOTES,
EVIDENCES OF INDEBTEDNESS, ASSET-BACKED
SECURITIES;

(B) INVESTMENT CONTRACTS, CERTIFICATES OF INTEREST,
OR PARTICIPATION IN A PROFIT SHARING AGREEMENT
SUCH AS _ COLLECTIVE INVESTMENT SCHEMES,
CERTIFICATE OF DEPOSIT FOR A _ FUTURE
SUBSCRIPTION;

(C) FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS, OR
OTHER MINERAL RIGHTS;

(D) DERIVATIVES LIKE OPTION AND WARRANTS;

(E) CERTIFICATES OF ASSIGNMENTS, CERTIFICATES OF
PARTICIPATION, TRUST CERTIFICATES, VOTING TRUST
CERTIFICATES, OR SIMILAR INSTRUMENTS;

(F) PROPRIETARY OR NON-PROPRIETARY MEMBERSHIP
CERTIFICATES IN CORPORATIONS; AND

(G) OTHER INSTRUMENTS AS MAY IN THE FUTURE BE
DETERMINED BY THE SECURITIES AND EXCHANGE
COMMISSION.

XX = XK XK

(V) The term ‘bank’ means every banking institution, as defined in Section
2 Republic Act No. 337, as amended, otherwise known as the General
Banking Act. A bank may either be A UNIVERSAL BANK, a commercial
bank, a thrift bank, a development bank, a rural bank, a specialized
government bank, or a cooperative bank:

(W) The term ‘non-bank financial intermediary’ OR “QUASI-BANK”
means PERSONS OR ENTITIES ENGAGED IN THE BORROWING OF
FUNDS, FOR THE BORROWER'S OWN ACCOUNT, THROUGH THE
ISSUANCE, ENDORSEMENT, OR ACCEPTANCE OF DEBT
INSTRUMENTS OF ANY KIND OTHER THAN DEPOSITS, OR
THROUGH THE ISSUANCE OF PARTICIPATION'S, CERTIFICATES
OF ASSIGNMENT, OR SIMILAR INSTRUMENTS WITH RECOURSE,
TRUST CERTIFICATES, OR OF REPURCHASE AGREEMENTS, FROM
TWENTY OR MORE LENDERS AT ANY ONE TIME, FOR PURPOSES
OF RELENDING OR PURCHASING OF RECEIVABLES AND OTHER
OBLIGATIONS, BUT DOES NOT INCLUDE COMMERCIAL,


INDUSTRIAL, AND OTHER NON-FINANCIAL COMPANIES, WHICH
BORROW FUNDS THROUGH ANY OF THESE MEANS FOR THE
LIMITED PURPOSE OF FINANCING THEIR OWN NEEDS OR THE
NEEDS OF THEIR AGENTS OR DEALERS, OR a financial intermediary,
as defined in Section 2(D)(c) of Republic Act No. 337, as amended,
otherwise known as the General Banking Act, authorized by the Bangko
Sentral ng Pilipinas (BSP) to perform quasi-banking activities.

(X) The term ‘quasi-banking activities’ means borrowing funds from
twenty (20) or more personal or corporate lenders at any one time through
the issuance, endorsement, or acceptance of debt instruments of any kind
other than deposits for the borrower's own account, or through the
issuance of certificates of assignment or similar instruments, with
recourse, or of repurchase agreements for purposes of relending or
purchasing receivables and other similar obligations: Provided, however,
That commercial, industrial and other non-financial companies, which
borrow funds through any of these means for the limited purpose of
financing their own needs or the needs of their agents or dealers, shall not
be considered as performing quasi-banking functions. THE PHRASE “AT
ANY ONE TIME” SHALL BE COUNTED AT THE TIME OF
ORIGINATION OR ISSUANCE OF THE DEBT INSTRUMENT.

(Y) The term “deposit substitutes” shall mean an alternative from of
obtaining funds from the public (the term ‘public’ means borrowing from
twenty (20) or more individual or corporate lenders at any one time) other
than deposits, through the issuance, endorsement, or acceptance of debt
instruments for the borrowers own account, for the purpose of relending or
purchasing of receivables and other obligations, or financing their own
needs or the needs of their agent or dealer. These instruments may
include, but need not be limited to bankers’ acceptances, promissory
notes, repurchase agreements, fincluding) EXCLUDING reverse
repurchase agreements entered into by and between the Bangko Sentral
ng Pilipinas (BSP) and any authorized agent bank, certificates of
assignment or participation and similar instruments with recourse.

DEBT INSTRUMENTS ISSUED BY THE GOVERNMENT AND ANY OF
ITS AGENCIES AND __ INSTRUMENTALITIES INCLUDING
GOVERNMENT FINANCIAL INSTITUTIONS SHALL BE DEEMED
ISSUED TO THE PUBLIC AND CONSIDERED DEPOSIT
SUBSTITUTES. Provided, however, that debt instruments issued for
interbank call loans with maturity of not more than five (5) days to cover
deficiency in reserves against deposit liabilities, including those between
‘or among banks and quasi-banks, shall not be considered as deposit
substitute debt instruments.

XX XX XX
(BB) The term ‘mutual fund company’ shall mean ANY INVESTMENT

COMPANY WHICH IS OR HOLDS ITSELF OUT AS BEING ENGAGED
PRIMARILY, OR PROPOSES TO ENGAGE PRIMARILY IN THE


BUSINESS OF POOLING TOGETHER MONEY FROM VARIOUS
INVESTORS AND INVESTS, REINVESTS, OR TRADES THE SAME IN
SECURITIES, WHETHER IN STOCKS, BONDS, MONEY-MARKET
INSTRUMENTS, OTHER SECURITIES, CASH, OR ANY OTHER
ASSET, OR an open-end and close-end investment company as defined
under REPUBLIC ACT NO. 2629, ALSO KNOWN AS the Investment
Company Act OF THE PHILIPPINES.

XX XX XK

(FF) [The term_jong-term-deposit of investment certificate shall_refer-to
certificate_of time deposit or investment in- the form_of_savings,
management accounts-and_other investments with-a-maturity period
of not less than-five {5} years, the form of which shall-be prescribed
TOOT ene ee ee ee ane
(not-by-nonbank-financial-intermediaries-and-finance-companies)-
individuals-in- denominations of Ten 000)-and
other-denominations-as-may-be prescribed by the-BSP.} THE TERM
‘FINANCIAL INSTITUTIONS’ OR ‘FINANCIAL INTERMEDIARIES’
SHALL MEAN PERSONS OR ENTITIES WHOSE PRINCIPAL
FUNCTIONS INCLUDE THE BUSINESS OF LENDING, FINANCING,
INVESTING, OR PLACEMENT OF FUNDS OR EVIDENCES OF
INDEBTEDNESS OR EQUITY DEPOSITED WITH THEM, ACQUIRED
BY THEM, OR OTHERWISE COURSED THROUGH THEM, EITHER
FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS,
AND ARE AUTHORIZED BY THE BANGKO SENTRAL NG PILIPINAS
OR BY THE SECURITIES AND EXCHANGE COMMISSION
DEPENDING ON THE GOVERNMENT AGENCY AUTHORIZED TO
REGULATE THEM. IT SHALL INCLUDE BANKS, QUASI-BANKS,
TRUST ENTITIES, PAWNSHOPS, FOREIGN EXCHANGE DEALERS,
MONEY BROKER, CREDIT COOPERATIVES, FINANCING
COMPANIES, FINANCE-LEASING COMPANIES, INVESTMENT
COMPANIES, AND OTHER COLLECTIVE INVESTMENT SCHEMES,
INVESTMENT HOUSE, LENDING INVESTOR, AND OTHER TYPES OF
BUSINESSES THAT MAY BE CLASSIFIED BY THE BSP OR THE
SECURITIES AND EXCHANGE COMMISSION AS FINANCIAL
INSTITUTION.

INSURANCE COMPANIES, LIFE AND NON-LIFE, ARE ALSO
CONSIDERED FINANCIAL INSTITUTIONS UNDER THE SUPERVISION
OF THE INSURANCE COMMISSION.

(GG) THE TERM ‘UNIT-LINKED INVESTMENT INSTRUMENT’ SHALL
MEAN A CONTRACTUAL CIS ORGANIZED PURSUANT TO A
CONTRACT, SUCH AS TRUST INDENTURE, OR AS AN INVESTMENT
COMPONENT OF AN INSURANCE CONTRACT, ENGAGED OR
HOLDS ITSELF OUT AS BEING ENGAGED, OR PROPOSES TO
ENGAGE, IN THE BUSINESS OF INVESTING, REINVESTING, AND/OR
TRADING IN SECURITIES OR OTHER INVESTMENT ASSETS, AND


ISSUES UNITS OF PARTICIPATION, EACH OF WHICH REPRESENTS
AN UNDIVIDED INTEREST IN A POOL OF INVESTMENT ASSETS.

(HH) THE TERM ‘COLLECTIVE INVESTMENT SCHEMES’ OR ‘CIS’
SHALL MEAN ANY ARRANGEMENT WHEREBY FUNDS ARE
SOLICITED FROM THE INVESTING PUBLIC AND POOLED
TOGETHER FOR THE PURPOSE OF INVESTING, RE-INVESTING,
AND/OR TRADING IN SECURITIES OR OTHER ASSETS OR
DIFFERENT CLASSES THEREOF AS ALLOWED UNDER THE LAW,
WHICH MAY EITHER HAVE A CORPORATE STRUCTURE, SUCH AS
AN INVESTMENT COMPANY, OR A CONTRACTUAL STRUCTURE,
SUCH AS A UNIT INVESTMENT TRUST FUND OR SIMILAR SCHEME
HELD BY A TRUST CORPORATION OR A SEPARATE ACCOUNT
FUND ESTABLISHED PURSUANT TO A VARIABLE UNIT LINKED
LIFE INSURANCE POLICY ISSUED BY AN INSURANCE COMPANY,
AND SUCH OTHER FORMS OF COLLECTIVE INVESTMENT
SCHEMES AS MAY BE DETERMINED BY THE APPROPRIATE
GOVERNMENT REGULATORY AGENCIES SUCH AS THE BANGKO
SENTRAL NG PILIPINAS, THE SECURITIES AND EXHANGE
COMMISSION AND THE INSURANCE COMMISSION. A CIS MAY
EITHER BE OPEN-END OR CLOSED-END, DEFINED AS FOLLOWS:

“OPEN-END CIS" MEANS A CIS WHERE SECURITIES ARE OFFERED
AND ARE ALWAYS REDEEMABLE BY THE CIS; AND

"CLOSED-END CIS" MEANS A CIS WHERE A FIXED NUMBER OF
SECURITIES ARE OFFERED IN AN INITIAL PUBLIC OFFERING AND
THEREAFTER MAY BE TRADED IN AN ORGANIZED MARKET AS
DETERMINED BY THE SEC, BUT MAY NOT BE REDEEMED BY THE
CIS. A CLOSED-END CIS SHALL NOT BE ALLOWED TO INCREASE
ITS NUMBER OF SECURITIES.

(JJ) THE TERM ‘HOLDING COMPANY’ SHALL REFER TO ANY
CORPORATION ORGANIZED TO HOLD THE STOCK OF ANOTHER
OR OTHER CORPORATIONS, AND OTHER FORMS OF HOLDING
COMPANIES AS MAY BE DETERMINED BY APPROPRIATE
REGULATORY GOVERNMENT AGENCIES.

(KK) THE TERM ‘DEBT INSTRUMENT SHALL REFER TO
INSTRUMENTS REPRESENTING BORROWING AND LENDING
TRANSACTIONS INCLUDING BUT NOT LIMITED TO DEBENTURES,
CERTIFICATES OF INDEBTEDNESS, DUE BILLS, BONDS, LOAN
AGREEMENTS, INSTRUMENTS, AND SECURITIES ISSUED BY THE
GOVERNMENT OR ANY OF ITS INSTRUMENTALITIES, DEPOSIT
SUBSTITUTE DEBT INSTRUMENTS, CERTIFICATES OR OTHER
EVIDENCES OF DEPOSITS, PROMISSORY NOTES, WHETHER
NEGOTIABLE OR NON-NEGOTIABLE, OTHER SIMILAR
INSTRUMENTS, AND OTHER INSTRUMENTS AS MAY BE
DETERMINED BY APPROPRIATE GOVERNMENT AGENCIES.


(LL) THE TERM ‘ORGANIZED MARKETPLACE’ IS AN EXCHANGE,
AN OVER-THE- COUNTERMARKET, ALTERNATIVE TRADING
SYSTEM, OR OTHERWISE RECOGNIZED AS SUCH BY THE SEC,
AND GOVERNED BY, AMONG OTHERS, TRANSPARENT AND
BINDING RULES AND MARKET CONVENTIONS ON MEMBERSHIP,
TRADING, PRICE TRANSPARENCY, TRADE REPORTING, MARKET
MONITORING AND ORDERLY CONDUCT/OPERATION OF THE
MARKET WHICH ARE ENFORCEABLE ON THE MEMBERS AND
PARTICIPANTS.

(MM) THE TERM ‘CLOSELY HELD CORPORATION' MEANS ANY
CORPORATION WITH AT LEAST FIFTY PERCENT (50%) IN VALUE
OF OUTSTANDING CAPITAL STOCK OR AT LEAST FIFTY PERCENT
(50%) OF THE TOTAL COMBINED VOTING POWER OF ALL
CLASSES OF STOCK ENTITLED TO VOTE IS OWNED DIRECTLY OR
INDIRECTLY BY OR FOR NOT MORE THAN TWENTY (20)
INDIVIDUALS.

FOR PURPOSES OF DETERMINING WHETHER THE CORPORATION
IS _A CLOSELY HELD CORPORATION, INSOFAR AS SUCH
DETERMINATION IS BASED ON STOCK OWNERSHIP, THE
FOLLOWING RULES SHALL BE APPLIED:

(1) STOCK NOT OWNED BY INDIVIDUALS. - STOCK OWNED
DIRECTLY OR INDIRECTLY BY OR FOR A CORPORATION,
PARTNERSHIP, ESTATE OR TRUST SHALL BE CONSIDERED
AS BEING OWNED PROPORTIONATELY BY ITS
SHAREHOLDERS, PARTNERS OR BENEFICIARIES.

(2) FAMILY AND PARTNERSHIP OWNERSHIPS. - AN
INDIVIDUAL SHALL BE CONSIDERED AS OWNING THE
STOCK OWNED DIRECTLY OR INDIRECTLY, BY OR FOR HIS
FAMILY, OR BY OR FOR HIS PARTNER. FOR PURPOSES OF
THE PARAGRAPH, THE ‘FAMILY OF AN _ INDIVIDUAL’
INCLUDES ONLY HIS BROTHERS AND SISTERS (WHETHER
BY WHOLE OR HALF-BLOOD), SPOUSE, ANCESTORS AND
LINEAL DESCENDANTS.

(3) OPTION. — IF ANY PERSON HAS AN OPTION TO ACQUIRE
STOCK, SUCH STOCK SHALL BE CONSIDERED AS OWNED
BY SUCH PERSON. FOR PURPOSES OF THIS PARAGRAPH,
AN OPTION TO ACQUIRE SUCH AN OPTION AND EACH ONE
OF A SERIES OF OPTIONS SHALL BE CONSIDERED AS AN
OPTION TO ACQUIRE SUCH STOCK.

(4) CONSTRUCTIVE OWNERSHIP AS ACTUAL OWNERSHIP.
~— STOCK CONSTRUCTIVELY OWNED BY REASON OF THE
APPLICATION OF PARAGRAPH (1) OR (3) HEREOF SHALL,
FOR PURPOSES OF APPLYING PARAGRAPH (1) OR (2), BE
TREATED AS ACTUALLY OWNED BY SUCH PERSON; BUT


STOCK CONSTRUCTIVELY OWNED BY THE INDIVIDUAL BY
REASON OF THE APPLICATION OF PARAGRAPH (2)
HEREOF SHALL NOT BE TREATED AS OWNED BY HIM FOR
PURPOSES OF AGAIN APPLYING SUCH PARAGRAPH IN
ORDER TO MAKE ANOTHER THE CONSTRUCTIVE OWNER
OF SUCH STOCK]

SEC. 4. Section 24 (B) and (C) of the National Internal Revenue Code of 1997, is
hereby amended, as follows:

SEC. 24. Income Tax Rates. -

(A) Rates of Income Tax on Individual Citizen and Individual Resident
Alien of the Philippines. -

XX = XX = XX
(B) Rate of Tax on CERTAIN CAPITAL Gertain Passive Income: -

(1) Interests, Royalties, Prizes, and-Other Winnings. ~ A final tax at the
rate of twenty—percent-{20%) FIFTEEN PERCENT (15%) is hereby
imposed upon the amount of interest, YIELD, OR ANY OTHER
MONETARY BENEFIT EARNED OR RECEIVED FROM DEBT
INSTRUMENT, BANK DEPOSIT, DEPOSIT SUBSTITUTE, AND ANY
OTHER FORM OF DEBT INSTRUMENT AND SIMILAR
ARRANGEMENTS. IF THE PAYOR OF THE INCOME IS A
DESIGNATED WITHHOLDING AGENT AS REQUIRED UNDER THIS
CODE OR ITS IMPLEMENTING RULES AND REGULATIONS, THE
TAX IMPOSED UNDER THIS SECTION SHALL BE COLLECTED BY
WAY OF A FINAL WITHHOLDING TAX. IF THE PAYOR IS NOT A
DESIGNATED WITHHOLDING AGENT OR IF THE INCOME WAS NOT
SUBJECTED TO FINAL WITHHOLDING TAX, IT SHALL BE THE DUTY
OF THE INCOME RECIPIENT TO DECLARE THE INTEREST INCOME
RECEIVED AND PAY THE 15% FINAL TAX WITHIN THE TIME
REQUIRED UNDER REVENUE REGULATIONS. from-any-currency-bank



(2) Cash and/or Property Dividends. — A final tax at the RATE OF
FIFTEEN PERCENT (15%) ten-percent{49%} shall be imposed upon the
cash and/or property dividends actually or constructively received by an
individual from a domestic corporation or from a joint stock company,
insurance, of—mutual fund companies, COLLECTIVE INVESTMENT
SCHEMES, and regional operating headquarters of multinational
companies, or on the share of an individual in the distributable net income
after tax of a partnership (except a general professional partnership) of
which he is a partner, or on the share of an individual in the net income
after tax of an association, a joint account, or a joint venture or consortium
taxable as a corporation of which he is a member or co-venturer.

PROVIDED, HOWEVER, THAT THE FIFTEEN PERCENT (15%) TAX
ON DIVIDENDS SHALL APPLY ONLY ON INCOME EARNED ON OR
AFTER JANUARY 1, 2019. INCOME FORMING PART OF RETAINED
EARNINGS AS OF DECEMBER 31, 2018 SHALL, EVEN IF DECLARED
OR DISTRIBUTED ON OR AFTER JANUARY 1, 2019, SHALL BE
SUBJECT TO TEN PRECENT (10%) TAX.

LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 24(A)
BASED ON NET GAIN.

(G3) Capital Gains from THE Sale, EXCHANGE, BARTER, OR
DISPOSITION of Shares of Stock not-Traded-in-the-Stock-Exchange.

(a) UNLISTED SHARES OF STOCK - The provisions of Section 39(B)
notwithstanding, a final tax at the rate of 15% is hereby imposed upon the
net capital gains realized during the taxable year from the sale, barter,
exchange or other disposition of shares of stock in a domestic corporation,
except shares sold, or disposed of through A LOCAL the stock exchange-
OR A LICENSED ORGANIZED MARKETPLACE.


(b) | LISTED AND TRADED SHARES OF STOCK - THERE SHALL BE
LEVIED, ASSESSED AND COLLECTED ON EVERY SALE, BARTER,
EXCHANGE, OR OTHER DISPOSITION OF SHARES OF STOCK
LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR
A LICENSED ORGANIZED MARKETPLACE, A FINAL TAX AT THE
RATE OF SIX TENTH OF ONE PERCENT (6/10 OF 1%), AND SHALL
BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

JANUARY 1, 2020: FIVE TENTH OF ONE PERCENT (5/10 OF 1%),
JANUARY 1, 2021: FOUR TENTH OF ONE PERCENT (4/10 OF 1%),
JANUARY 1, 2022: THREE TENTH OF ONE PERCENT (3/10 OF 1%),
JANUARY 1, 2023: TWO TENTH OF ONE PERCENT (2/10 OF 1%),
JANUARY 1, 2024: ONE TENTH OF ONE PERCENT (1/10 OF 1%).

THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE SHARES OF STOCK SOLD,
BARTERED, EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE
PAID BY THE SELLER OR TRANSFEROR.

ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC
CORPORATION TRADED IN A FOREIGN EXCHANGE, SHALL BE
TAXED UNDER SECTION 24 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR
DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A
DEALER IN SECURITIES OR OTHER ENTITIES LICENSED BY THE
APPROPRIATE REGULATORY GOVERNMENT AGENCIES TO BUY
AND SELL IN SECURITIES, WHETHER OR NOT UNDERTAKEN AS A
PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT, OR
FOR THE ACCOUNT OF OTHERS, OR IN A FIDUCIARY CAPACITY,
SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION BUT
TO SECTION 24(A) AS AN ORDINARY INCOME.

(4) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER,
DISPOSITION OF DEBT INSTRUMENTS, AND OTHER SECURITIES
NOT INCLUDED IN SECTION 24(B)(3). —

ANY GAIN EARNED FROM DEBT INSTRUMENT AND OTHER
SECURITIES NOT INCLUDED IN SECTION 24(B)(3), ISSUED BY A
CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC CORPORATION,
OR BY THE GOVERNMENT OR ANY OF ITS AGENCIES OR
INSTRUMENTALITIES, SHALL BE SUBJECT TO TAX AS FOLLOWS;

(a) UNLISTED DEBT INSTRUMENTS AND OTHER SECURITIES
NOT INCLUDED IN SECTION 24(B)(3). - THE PROVISIONS OF
SECTION 39(B) NOTWITHSTANDING, A FINAL TAX AT THE RATE OF


15% IS HEREBY IMPOSED UPON THE NET CAPITAL GAINS
REALIZED DURING THE TAXABLE YEAR FROM THE SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, ISSUED BY A CITIZEN OR RESIDENT
ALIEN OR BY A DOMESTIC CORPORATION, EXCEPT DEBT
SECURITIES SOLD, OR DISPOSED OF THROUGH A LOCAL STOCK
EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE.

(b) LISTED AND TRADED DEBT INSTRUMENTS AND OTHER
SECURITIES NOT INCLUDED IN SECTION 24(B)(3). - THERE SHALL
BE LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, LISTED AND TRADED THROUGH A
LOCAL STOCK EXCHANGE OR A _ LICENSED ORGANIZED
MARKETPLACE, A FINAL TAX AT THE RATE OF ONE TENTH OF
ONE PERCENT (1/10 OF 1%) OF THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE DEBT INSTRUMENT OR
SECURITIES SOLD, BARTERED, EXCHANGED, OR OTHERWISE
DISPOSED, WHICH SHALL BE PAID BY THE SELLER OR
TRANSFEROR. IF TRADED IN A FOREIGN EXCHANGE, THE GAIN
SHALL BE SUBJECT TO TAX UNDER SECTION 24 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER OR
DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES,
LISTED OR UNLISTED, BY A DEALER IN SECURITIES OR OTHER
ENTITIES LICENSED BY THE APPROPRIATE REGULATORY
GOVERNMENT AGENCIES TO BUY AND SELL IN DEBT
INSTRUMENTS SECURITIES, WHETHER OR NOT UNDERTAKEN AS
A PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT,
OR FOR THE ACCOUNT OF OTHERS, OR DONE IN A FIDUCIARY
CAPACITY, SHALL NOT BE SUBJECT TO TAX UNDER THIS
SUBSECTION BUT TO SECTION 24(A) AS AN ORDINARY INCOME.


(D5) Capital Gains from Sale of Real Property. -

(1) In General. - The provisions of Section 39(B) notwithstanding, a final
tax of six percent (6%) based on the gross selling price or current fair
market value as determined in accordance with Section 6(E) of this Code,
whichever is higher, is hereby imposed upon capital gains presumed to
have been realized from the sale, exchange, or other disposition of real
property located in the Philippines, classified as capital assets, including
pacto de retro sales and other forms of conditional sales, by individuals,
including estates and trusts: Provided, That the tax liability, if any, on
gains from sales or other dispositions of real property to the government
or any of its political subdivisions or agencies or to government-owned or -
controlled corporations shall be determined either under Section 24(A) or
under this Subsection, at the option of the taxpayer;

(2) Exception. - The provisions of paragraph (1) of this Subsection to the
contrary notwithstanding, capital gains presumed to have been realized
from the sale or disposition of their principal residence by natural persons,
the proceeds of which is fully utilized in acquiring or constructing a new
principal residence within eighteen (18) calendar months from the date of
sale or disposition, shall be exempt from the capital gains tax imposed
under this Subsection: Provided, That the historical cost or adjusted basis
of the real property sold or disposed shall be carried over to the new
principal residence built or acquired: Provided, further, That the
Commissioner shall have been duly notified by the taxpayer within thirty
(30) days from the date of sale or disposition through a prescribed return
of his intention to avail of the tax exemption herein mentioned: Provided,
still further, That the said tax exemption can only be availed of once every
ten (10) years: Provided, finally, That if there is no full utilization of the
proceeds of sale or disposition, the portion of the gain presumed to have
been realized from the sale or disposition shall be subject to capital gains
tax. For this purpose, the gross selling price or fair market value at the
time of sale, whichever is higher, shall be multiplied by a fraction which
the unutilized amount bears to the gross selling price in order to determine
the taxable portion and the tax prescribed under paragraph (1) of this
Subsection shall be imposed thereon.

(C) ROYALTIES, PRIZES, AND OTHER WINNINGS - A FINAL TAX AT
THE RATE OF TWENTY PERCENT (20%) IS HEREBY IMPOSED ON
THE FOLLOWING INCOME DERIVED FROM SOURCES WITHIN THE
PHILIPPINES: (1) ROYALTIES EARNED AS PASSIVE INCOME,
EXCEPT ROYALTIES FROM BOOKS, AS WELL AS OTHER
LITERARY WORKS AND MUSICAL COMPOSITIONS WHICH SHALL
BE SUBJECT TO A FINAL TAX OF TEN PERCENT (10%); (2) PRIZES
(EXCEPT PRIZES AMOUNTING TO TEN THOUSAND PESOS
(P10,000) OR LESS WHICH SHALL BE SUBJECT TO TAX UNDER
SECTION 24 (A); AND (3) OTHER WINNINGS (EXCEPT WINNINGS
AMOUNTING TO PHP10,000 OR LESS FROM PHILIPPINE CHARITY
SWEEPSTAKES AND LOTTO WHICH SHALL BE EXEMPT).


SEC. 5. Section 25 (A) and (B) of the National Internal Revenue Code of 1997, is
hereby amended, as follows:

‘SEC. 25. Tax on Nonresident Alien Individual. —

(A) Nonresident Alien Engaged in Trade or Business Within the
Philippines. — (4}4#-Generat—A nonresident alien individual engaged in
trade or business in the Philippines shall be subject to an income tax
UNDER SECTION 24 OF THIS CODE. in-the-same—manneras—an
individual_citizen—and—a—resident—alien—individual, on taxable income
received from all sources within the Philippines. A nonresident alien
individual who shall come to the Philippines and stay therein for an
aggregate period of more than one hundred eighty (180) days during any
calendar year shall be deemed a ‘nonresident alien doing business in the
Philippines’, Section 22(G) of this Code notwithstanding



Four (4) years-te-less than five (5): years ~6%;

(3)- Capital Gains Capital gains realized from sale, barter-or

(B) Nonresident Alien Individual Not Engaged in Trade or Business
Within the Philippines. ~ There shall be levied, collected and paid for
each taxable year upon the entire income received from all sources within
the Philippines by every nonresident alien individual not engaged in trade
or business within the Philippines as [i a

dividends,| rents, salaries, wages, premiums, annuities, compensation,
remuneration, emoluments, or other fixed or determinable annual or
periodic or casual gains, profits, and income, -and-capital-gains-a FINAL
tax equal to twenty five percent (25%) of such income. [Gapita-gaine

(ts
Pert eat en ieee meme eee ee ony eomeere
under Subsections (G}and4D} of Section 244

INTEREST, DIVIDENDS AND CAPITAL GAINS ON SALE OF SHARES
OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES SHALL
BE SUBJECT TO TAX PRESCRIBED UNDER SECTION 24 (B), OR TO
THE PROVISIONS OF APPLICABLE TAX TREATY.

XX XK XK

SEC. 6. Section 27 (D) of the National Internal Revenue Code of 1997, is hereby
amended to read as follows:

SEC. 27. Rates of Income Tax on Domestic Corporations. —

(A) In General. - Except as otherwise provided in this Code, an income
tax of thirty-five percent (35%) is hereby imposed upon the taxable
income derived during each taxable year from all sources within and
without the Philippines by every corporation, as defined in Section 22(B)
of this Code and taxable under this Title as a corporation, organized in, or
existing under the laws of the Philippines: Provided, That effective
January 1, 2009, the rate of income tax shall be thirty percent (30%).

XX XX XK


(D) Rates of Tax on Certain CAPITAL Passive Incomes.

(1) INTERESTS. - A FINAL TAX AT THE RATE OF FIFTEEN PERCENT
(15%) IS HEREBY IMPOSED UPON THE AMOUNT OF INTEREST,
YIELD, OR OTHER MONETARY BENEFIT EARNED OR RECEIVED
FROM DEBT INSTRUMENT, BANK DEPOSIT, DEPOSIT SUBSTITUTE,
AND SIMILAR ARRANGEMENTS. IF THE PAYOR OF THE INCOME IS
A DESIGNATED WITHHOLDING AGENT AS REQUIRED UNDER THIS
CODE OR ITS IMPLEMENTING RULES AND REGULATIONS, THE
TAX IMPOSED UNDER THIS SECTION SHALL BE COLLECTED BY
WAY OF A FINAL WITHHOLDING TAX. IF THE PAYOR IS NOT A
DESIGNATED WITHHOLDING AGENT OR IF THE INCOME WAS NOT
SUBJECTED TO FINAL WITHHOLDING TAX, IT SHALL BE THE DUTY
OF THE INCOME RECIPIENT TO DECLARE THE INTEREST INCOME
RECEIVED AND PAY THE 15% FINAL TAX WITHIN THE TIME
REQUIRED UNDER REVENUE REGULATIONS.

(2) CASH AND/OR PROPERTY DIVIDENDS. - INTERCORPORATE
DIVIDENDS OR DIVIDENDS RECEIVED BY A DOMESTIC
CORPORATION FROM ANOTHER DOMESTIC CORPORATION SHALL
NOT BE SUBJECT TO TAX IMPOSED UNDER THIS SUBSECTION
EXCEPT IN THE CASE OF DIVIDENDS PAID TO A SOLE
CORPORATION AS DEFINED UNDER THE LAWS OR BY RULES AND
REGULATION ISSUED BY THE SECURITIES AND EXCHANGE
COMMISSION, WHICH SHALL BE SUBJECT TO A FINAL TAX OF
15%.

LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 27(A)
BASED ON NET GAIN.


(3) CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER OR
DISPOSITION OF SHARES OF STOCK. —

(a) UNLISTED SHARES OF STOCK - THE PROVISIONS OF
SECTION 39(B) NOTWITHSTANDING, A FINAL TAX AT THE RATE OF
15% \S HEREBY IMPOSED UPON THE NET CAPITAL GAINS
REALIZED DURING THE TAXABLE YEAR FROM THE SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF SHARES OF
STOCK IN A DOMESTIC CORPORATION, EXCEPT SHARES SOLD,
OR DISPOSED OF THROUGH A LOCAL STOCK EXCHANGE OR A
LICENSED ORGANIZED MARKETPLACE.

(b) LISTED AND TRADED SHARES OF STOCK - THERE SHALL BE
LEVIED, ASSESSED AND COLLECTED ON EVERY SALE, BARTER,
EXCHANGE, OR OTHER DISPOSITION OF SHARES OF STOCK
LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR
A LICENSED ORGANIZED MARKETPLACE, A FINAL TAX AT THE
RATE OF SIX TENTH OF ONE PERCENT (6/10 OF 1%), AND SHALL
BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

JANUARY 1, 2020: FIVE TENTH OF ONE PERCENT (5/10 OF 1%),
JANUARY 1, 2021: FOUR TENTH OF ONE PERCENT (4/10 OF 1%),
JANUARY 1, 2022: THREE TENTH OF ONE PERCENT (3/10 OF 1%),
JANUARY 1, 2023: TWO TENTH OF ONE PERCENT (2/10 OF 1%),
JANUARY 1, 2024: ONE TENTH OF ONE PERCENT (1/10 OF 1%).

THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE SHARES OF STOCK SOLD,
BARTERED, EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE
PAID BY THE SELLER OR TRANSFEROR.

ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC
CORPORATION TRADED IN A FOREIGN EXCHANGE, SHALL BE
TAXED UNDER SECTION 27 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR
DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A
DEALER IN SECURITIES OR OTHER ENTITIES LICENSED BY THE
APPROPRIATE REGULATORY GOVERNMENT AGENCIES TO BUY
AND SELL IN SECURITIES, WHETHER OR NOT UNDERTAKEN AS A
PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT, OR
FOR THE ACCOUNT OF OTHERS, OR IN A FIDUCIARY CAPACITY,
SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION BUT
TO SECTION 27(A) AS AN ORDINARY INCOME.


(4) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER,
DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES
NOT INCLUDED IN SECTION 27(D)(3). —

ANY GAIN EARNED FROM DEBT INSTRUMENT AND OTHER
SECURITIES NOT INCLUDED IN SECTION 27(D)(3), ISSUED BY A
CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC CORPORATION,
OR BY THE GOVERNMENT OR ANY OF ITS AGENCIES OR
INSTRUMENTALITIES, SHALL BE SUBJECT TO TAX AS FOLLOWS;

(a) | UNLISTED DEBT INSTRUMENTS AND OTHER SECURITIES
NOT INCLUDED IN SECTION 27(D)(3) - THE PROVISIONS OF
SECTION 39(B) NOTWITHSTANDING, A FINAL TAX AT THE RATE OF
15% |S HEREBY IMPOSED UPON THE NET CAPITAL GAINS
REALIZED DURING THE TAXABLE YEAR FROM THE SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, ISSUED BY A RESIDENT INDIVIDUAL
OR CITIZEN OR BY A DOMESTIC CORPORATION, EXCEPT DEBT
SECURITIES SOLD, OR DISPOSED OF THROUGH A LOCAL STOCK
EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE.

(b) LISTED AND TRADED DEBT INSTRUMENTS AND OTHER
SECURITIES NOT INCLUDED IN SECTION 27(D)(3) - THERE SHALL
BE LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, LISTED AND TRADED THROUGH A
LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED
MARKETPLACE, A FINAL TAX AT THE RATE OF ONE TENTH OF
ONE PERCENT (1/10 OF 1%) OF THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE DEBT INSTRUMENT OR
SECURITIES SOLD, BARTERED, EXCHANGED, OR OTHERWISE
DISPOSED, WHICH SHALL BE PAID BY THE SELLER OR
TRANSFEROR. IF TRADED IN A FOREIGN EXCHANGE, THE GAIN
SHALL BE SUBJECT TO TAX UNDER SECTION 27 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR
DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES,
LISTED OR UNLISTED, BY A DEALER IN SECURITIES OR OTHER
ENTITIES LICENSED BY THE APPROPRIATE REGULATORY
GOVERNMENT AGENCIES TO BUY AND SELL IN DEBT
INSTRUMENTS SECURITIES, WHETHER OR NOT UNDERTAKEN AS
A PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT,
OR FOR THE ACCOUNT OF OTHERS, OR DONE IN A FIDUCIARY
CAPACITY, SHALL NOT BE SUBJECT TO TAX UNDER THIS
‘SUBSECTION BUT TO SECTION 27(A) AS AN ORDINARY INCOME.


(5) Capital Gains Realized from the Sale, Exchange or Disposition of
Lands and/or Buildings. - A final tax of six percent (6%) is hereby


imposed on the gain presumed to have been realized on the sale,
exchange or disposition of lands and/or buildings which are not actually
used in the business of a corporation and are treated as capital assets,
based on the gross selling price or fair market value as determined in
accordance with Section 6(E) of this Code, whichever is higher, of such
lands and/or buildings.

(E) ROYALTIES - A FINAL TAX AT THE RATE OF TWENTY PERCENT
(20%) IS HEREBY IMPOSED ON ROYALTIES EARNED AS PASSIVE
INCOME.

(EF) Minimum Corporate Income Tax on Domestic Corporations —
XX XX XK
(4) Gross Income Defined. —XXXX XX

XX XX XK

In the case of taxpayers engaged in the sale of service, ‘gross income’
means gross receipts less sales returns, allowances, discounts and cost
of services. ‘Cost of services’ shall mean all direct costs and expenses
necessarily incurred to provide the services required by the customers
and clients including (A) salaries and employee benefits of personnel,
consultants and specialists directly rendering the service and (B) cost of
facilities directly utilized in providing the service such as depreciation or
rental of equipment used and cost of supplies: Provided, however, That in
the case of banks AND OTHER FINANCIAL INTERMEDIARIES, ‘cost of
services’ shall include interest expense.

‘SEC. 7. Section 28 (A) and (B) of the National Internal Revenue Code of 1997, is
hereby amended as follows:

SEC. 28. Rates of Income Tax on Foreign Corporations. —
(A) Tax on Resident Foreign Corporations. —

(1) In General. - Except as otherwise provided in this Code, a corporation
organized, authorized, or existing under the laws of any foreign country,
engaged in trade or business within the Philippines, shall be subject to
fan} income tax UNDER SECTION 27 OF THIS CODE. equivalent-to

XX XX XX

(2) Minimum Corporate Income Tax on Resident Foreign
Corporations. — A minimum corporate income tax of two percent (2%) of


gross income, as prescribed under Section 27(F) of this Code, shall be
imposed, under the same conditions, on a resident foreign corporation
taxable under paragraph (1) of this Subsection.

XX XX XK

AN 2-0 fesidents,-whether_individuals—orcorporations;-from
transactions with-said-offshore-banking-units-shall- be-exempt from-income

tax]

(5) Tax on Branch Profits Remittances. - Any profit remitted by a
branch to its head office shall be subject to a tax of fifteen percent (15%)
which shall be based on the total profits applied or earmarked for
remittance without any deduction for the tax component thereof. (exeept
Authority). The tax shall be collected and paid in the same manner as
provided in Sections 57 and 58 of this Code: Provided, That interests,
dividends, rents, royalties, including remuneration for technical services,
salaries, wages, premiums, annuities, emoluments or other fixed or
determinable annual, periodic or casual gains, profits, income and capital
gains received by a foreign corporation during each taxable year from all
sources within the Philippines shall not be treated as branch profits unless
the same are effectively connected with the conduct of its trade or
business in the Philippines.

XX = XX XX



(B) Tax on Nonresident Foreign Corporation. —

(1) In General. - Except as otherwise provided in this Code, a foreign
corporation not engaged in trade or business in the Philippines shall pay a
tax equal to thirty percent (35%) of the gross income received during each
taxable year from all sources within the Philippines, such as interests;
dividends, rents, royalties, salaries, premiums (except reinsurance
premiums), annuities, emoluments or other fixed or determinable annual,
Periodic or casual gains, profits and income, and capital gains, except


capital gains subject to tax under subparagraph 5(c): Provided, That
effective January 1, 2009, the rate of income tax shall be thirty percent
(30%).

XX XX XX

(5) Tax on Certain CAPITAL Incomes Received by a Nonresident
Foreign Corporation. -

INTERESTS AND CAPITAL GAINS FROM SALE, TRANSFER,
BARTER, OR DISPOSITION OF SHARES OF STOCK, DEBT
INSTRUMENTS, DEPOSIT SUBSTITUTES, AND OTHER SECURITIES
SHALL BE SUBJECT TO TAX UNDER SECTION 27(D)(1)(3) AND (4)
OF THIS CODE, OR TO THE PROVISIONS OF THE APPLICABLE TAX
TREATY.

CASH AND/OR PROPERTY DIVIDENDS RECEIVED FROM A
DOMESTIC CORPORATION SHALL BE SUBJECT TO A FINAL TAX
OF FIFTEEN PERCENT (15%) OR TO THE PROVISIONS OF THE
APPLICABLE TAX TREATY.


SEC. 8. Section 29(A), (B) AND (C) of the National Internal Revenue Code of
1997, is hereby amended as follows:

SEC. 29. imposition of Improperly Accumulated Earnings Tax. -

(A) In General — In addition to other taxes imposed by this Title, there is
hereby imposed for each taxable year on the improperly accumulated
taxable income of each corporation described in Subsection B hereof, an
improperly accumulated earnings tax equal to ten FIFTEEN percent (40
15%) of the improperly accumulated taxable income.

(B) Tax on Corporations Subject to Improperly Accumulated
Earnings Tax. —

(1) In General. - The improperly accumulated earnings tax imposed in the
preceding Section shall apply to every corporation formed or availed for
the purpose of avoiding the income tax with respect to its shareholders or
the shareholders of any other corporation, by permitting earnings and
profits to accumulate instead of being divided or distributed.


(2) Exceptions. - The improperly accumulated earnings tax as provided
for under this Section shall not apply to:

(a) Publicly-held corporations;

(b) Banks, fand-other] nonbank financial intermediaries, AND OTHER
FINANCIAL INSTITUTIONS AS MAY BE DETERMINED BY THE
APPROPRIATE GOVERNMENT REGULATORY AGENCIES; and

(c) Insurance companies, SUCH AS LIFE AND NON-LIFE,
REINSURANCE COMPANIES, PRE-NEED, PENSION FUNDS, AND
OTHER ENTITIES DOING BUSINESS SIMILAR TO OR AKIN TO
INSURANCE.

(C) Evidence of Purpose to Avoid Income Tax. ~ THE FACT THAT
THE EARNINGS OR PROFITS OF A CORPORATION ARE PERMITTED
TO ACCUMULATE BEYOND THE REASONABLE NEEDS OF THE
BUSINESS SHALL BE DETERMINATIVE OF THE PURPOSE TO
AVOID THE TAX UPON ITS SHAREHOLDERS OR MEMBERS UNLESS
THE CORPORATION, BY THE CLEAR PREPONDERANCE OF
EVIDENCE, SHALL PROVE TO THE CONTRARY.

XX XK XK

SEC. 9. Section 30(B) of the National internal Revenue Code of 1997, is hereby
amended as follows:

SEC. 30. Exemption from tax on Corporations. - The following
organizations shall not be taxed under this Title in respect to income
received by them as such:

(A) Labor, agricultural or horticultural organization not organized
principally for profit;

{G\(B) A beneficiary society, order or association, operating for the
exclusive benefit of the members such as a fraternal organization


operating under the lodge system, or a mutual aid association or a
nonstock corporation organized by employees providing for the payment
of life, sickness, accident, or other benefits exclusively to the members of
such society, order, or association, or nonstock corporation or their
dependents;

{®}(C) Cemetery company owned and operated exclusively for the benefit
of its members;

{€(D) Nonstock corporation or association organized and operated
exclusively for religious, charitable, scientific, athletic, or cultural purposes,
or for the rehabilitation of veterans, no part of its net income or asset shall
belong to or inure to the benefit of any member, organizer, officer or any
specific person;

(FXE) Business league, chamber of commerce, or board of trade, not
organized for profit and no part of the net income of which inures to the
benefit of any private stockholder or individual;

(G)(F) Civic league or organization not organized for profit but operated
exclusively for the promotion of social welfare;

(\(G) A nonstock and nonprofit educational institution;
((H) Government educational institution;

{d}(I) Farmers’ or other mutual typhoon or fire insurance company, mutual
ditch or irrigation company, mutual or cooperative telephone company, or
like organization of a purely local character, the income of which consists
solely of assessments, dues, and fees collected from members for the
sole purpose of meeting its expenses; and

(KJ) Farmers’, fruit growers’, or like association organized and operated
as a sales agent for the purpose of marketing the products of its members
and turning back to them the proceeds of sales, less the necessary selling
expenses on the basis of the quantity of produce finished by them;

Notwithstanding the provisions in the preceding paragraphs, the income of
whatever kind and character of the foregoing organizations from any of
their properties, real or personal, or from any of their activities conducted
for profit regardless of the disposition made of such income, shall be
subject to tax imposed under this Code.

XX XX XK

SEC. 10. Section 32(B)(7)(g) and (h) of the National Internal Revenue Code of
1997, is hereby amended as follows:

SEC. 32. Gross Income. —


XX XK XX

(B) Exclusions from Gross Income. - The following items shall not be
included in gross income and shall be exempt from taxation under this
Title:

XX XXX
(7) Miscellaneous Items. —
XX -XX_—XX

{tg} Gains from the Sale of Bonds, Debentures or other Certificate of
Indebtedness, ~ Gains realized from the same or exchange or retirement

(G) INTEREST INCOME FROM, AND GAINS FROM THE SALE,
TRANSFER, OR DISPOSITION OF, PROJECT SPECIFIC BONDS THAT
ARE ISSUED TO FINANCE CAPITAL EXPENDITURES OR
PROGRAMS COVERED BY THE PHILIPPINE DEVELOPMENT PLAN
OR ITS EQUIVALENT AND OTHER GOVERNMENT PROGRAMS
CONSIDERED TO BE OF HIGH-LEVEL PRIORITY OF THE COUNTRY,
PROVIDED THAT, THE EXEMPTION SHALL BE UPON THE
APPROVAL BY THE SECRETARY OF FINANCE.

(h) Gains from Redemption of Shares OR UNITS OF PARTICIPATION
in Mutual-Fund COLLECTIVE INVESTMENT SCHEMES - Gains
realized by the investor upon redemption, of shares of stock OR UNITS
OF PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME AS
DEFINED UNDER SECTION 22 OF THIS CODE.

FOR PURPOSES OF THIS EXEMPTION, A COLLECTIVE
INVESTMENT SCHEME SHALL HAVE AT LEAST 1,000 OWNERS,
INVESTORS, OR PARTICIPANTS, AND THAT THE MINIMUM PUBLIC
OWNERSHIP AS MAY BE REQUIRED BY APPROPRIATE
GOVERNMENT AGENCIES SHALL BE COMPLIED WITH.

XX XX XX

SEC. 11. Section 34(B) and (E) of the National Internal Revenue Code of 1997,
as amended, is hereby further amended as follows:


SEC. 34. Deductions from Gross Income. - Except for taxpayers
earning compensation income arising from personal services rendered
under an employer-employee relationship where no deductions shall be
allowed under this Section, in computing taxable income subject to
income tax under Sections 24(A); 25(A); 26; 27(A), (B) and (C); and
28(A)(1), there shall be allowed the following deductions from gross
income

(A) Expenses, -

(1) Ordinary and Necessary Trade, Business or Professional
Expenses. —

(a) In General. — There shall be allowed as deduction from gross
income all the ordinary and necessary expenses paid or incurred during
the taxable year in carrying on or which are directly attributable to, the
development, management, operation and/or conduct of the trade,
business or exercise of a profession, including:

XX XX XX

(b) Substantiation Requirements. - No deduction from gross income
shall be allowed under Subsection (A) hereof unless the taxpayer shall
substantiate with sufficient evidence, such as official receipts or other
adequate records: (i) the amount of the expense being deducted, and (ii)
the direct connection or relation of the expense being deducted to the
development, management, operation and/or conduct of the trade,
business or profession of the taxpayer.

(c) Bribes, Kickbacks and Other Similar Payments. - No deduction
from gross income shall be allowed under Subsection (A) hereof for any
payment made, directly or indirectly, to an official or employee of the
national government, or to an official or employee of any local government
unit, or to an official or employee of a government-owned or -controlled
corporation, or to an official or employee or representative of a foreign
government, or to a private corporation, general professional partnership,
or a similar entity, if the payment constitutes a bribe or kickback.

(D) EXPENSES RELATED TO INCOME NOT SUBJECT TO REGULAR
TAX ANDIOR EXEMPT INCOME. - NO DEDUCTION FROM GROSS
INCOME SHALL BE ALLOWED UNDER SUBSECTION (A) HEREOF,
ANY EXPENSE RELATED TO, OR IN CONNECTION WITH, THE
GENERATION OF INCOME NOT SUBJECT TO SECTIONS 24(A),
25(A)(1), 27(A) AND (B), AND 28(A) OR ANY INCOME EXEMPT FROM
INCOME TAX UNDER TITLE Il OF THIS CODE. FOR EXPENSES THAT
CANNOT BE SPECIFICALLY IDENTIFIED OR ARE COMMON, THE
SECRETARY OF FINANCE SHALL PROVIDE IN A REGULATION A
REASONABLE METHOD OF ALLOCATION BETWEEN OR AMONG
INCOME SUBJECT TO REGULAR TAX UNDER SECTIONS 24(A),
25(A)(1), 27(A) AND (B) AND 28(A), EXEMPT INCOME, AND INCOME
SUBJECT TO SPECIAL RATES, TAKING INTO CONSIDERATION


SPECIFIC UNITS OF MEASUREMENT SUCH AS AREA, MANPOWER,
BENEFIT RECEIVED, RISKS ASSUMED, AND OTHER CRITERIA.

XX XX XX
(B) Interest. -

(1) In General. - The amount of interest paid or incurred within a
taxable year on indebtedness in connection with the taxpayer's
profession, trade or business shall be allowed as deduction from gross
income: Provided, however, That the taxpayer's otherwise allowable
deduction for interest expense shall be reduced by forty-two percent
(42%) of the interest income subjected to final tax: Provided, That
effective January 1, 2009, the percentage shall be thirty-three percent
(33%). PROVIDED FURTHER, THAT EFFECTIVE JANUARY 1, 2019,
THE PERCENTAGE SHALL BE FIFTY PERCENT (50%).

ANY DIVIDEND DISGUISED AS INTEREST AND CLAIMED AS A
DEDUCTION UNDER THIS SUBSECTION SHALL NOT BE ALLOWED
AS A DEDUCTIBLE INTEREST EXPENSE.

(2) Exceptions. - No deduction shall be allowed in respect of interest
under the succeeding subparagraphs:

(a) If within the taxable year an individual taxpayer reporting income on
the cash basis incurs an indebtedness on which an interest is paid in
advance through discount or otherwise: Provided, That such interest shall
be allowed as a deduction in the year the indebtedness is paid: Provided,
further, That if the indebtedness is payable in periodic amortizations, the
amount of interest which corresponds to the amount of the principal
amortized or paid during the year shall be allowed as deduction in such
taxable year,

(b) If both the taxpayer and the person to whom the payment has been
made or is to be made are persons specified under Section 36(B); or

{0} f the indebtedness is incurred to-finance petroleum exploration.

(3}—Optional Treatment of interest Expense RELATED TO
ACQUISITION OF ASSET. — [At-the-option-of the-taxpayer,}-IfiHinterest
INTEREST EXPENSE incurred to acquire property used in trade,
business or exercise of a profession THAT WILL BENEFIT THE
BUSINESS LONGER THAN ONE YEAR SHALL{may] BE
CAPITALIZED AND THEREAFTER AMORTIZED OR DEPRECIATED
AS PART OF THE COST OF THE ASSET.

XX = XX KK


(E) Bad Debts. -

(1) In General. - Debts due to the taxpayer actually ascertained to be
worthless and charged off within the taxable year except those not
connected with profession, trade or business and those sustained in a
transaction entered into between parties mentioned under Section 36(B)
of this Code: Provided, That recovery of bad debts previously allowed as
deduction in the preceding years shall be included as part of the gross
income in the year of recovery to the extent of the income tax benefit of
said deduction.

(2) Securities Becoming Worthless. ~ \f securities, as defined in Section
22(T), are ascertained to be worthless and charged off within the taxable
year and are capital assets, the loss resulting therefrom shall

for-the-purpose-of-this—Title; be considered as a loss from the sale or
exchange OF CAPITAL ASSETS, on the last day of such taxable year[, of
capital assets]. SECURITIES HELD BY A DEALER IN SECURITIES OR
AN ENTITY LICENSED BY THE APPROPRIATE REGULATORY
AGENCY TO BUY AND SELL IN SECURITIES INCLUDING BANKS,
AND OTHER FINANCIAL INTERMEDIARIES SHALL BE CONSIDERED
AN ORDINARY ASSET AND SECURITIES HELD THAT ARE
ASCERTAINED TO BE WORTHLESS SHALL BE CONSIDERED AN
ORDINARY LOSS ALLOWED AS DEDUCTION FROM TAXABLE
INCOME.

XX XX KK

SEC. 12. Section 37(B) of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 37. Special Provisions Regarding Income and Deductions of
Insurance Companies, Whether Domestic or Foreign. ~

(A) Special Deductions Allowed to Insurance Companies. - In the
case of insurance companies, whether domestic or foreign doing business
in the Philippines, the net additions, if any, required by law to be made
within the year to reserve funds and the sums, other than dividends, paid
within the year on policy and annuity contracts may be deducted from
their gross income: Provided, however, That the released reserve be
treated as income for the year of release.

(B) Mutual Insurance Companies. - \n the case of mutual LIFE, fire and
mutual employers’ liability and mutual workmen's compensation and
mutual casualty insurance companies requiring their members to make
premium deposits to provide for losses and expenses, said companies
shall not INCLUDE return] as income any portion of the premium deposits
returned to their policyholders, but shall INCLUDE [return] as taxable


income all income received 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 expenses and reinsurance
reserves.

XX = XK XK

SEC. 13. Section 38 (A) of the National Internal Revenue Code of 1997, is
hereby amended as follows:

SEC. 38. Losses from Wash Sales of Stock or Securities. —

(A) In the case of any loss claimed to have been sustained from any sale
or other disposition of shares of stock or securities where it appears that
within a period beginning thirty (30) days before the date of such sale or
disposition and ending thirty (30) days after such date, the taxpayer has
acquired (by purchase or by exchange upon which the entire amount of
gain or loss was recognized by law), or has entered into a contract or
option so AS to acquire, substantially identical stock or securities, then no
deduction for the loss shall be allowed under Section 34 unless the claim
is made by a dealer in stock or securities, OR BY ANY ENTITY OR A
FINANCIAL INTERMEDIARY DULY LICENSED BY THE
APPROPRIATE GOVERNMENT REGULATORY AGENCY TO BUY
AND SELL IN SECURITIES EITHER FOR HIS OWN ACCOUNT OR
FOR THE ACCOUNT OF OTHERS and with respect to a transaction
made in the ordinary course of the business of such dealer.

XX = XX XX

SEC. 14, Section 39 of the National Internal Revenue Code of 1997, is hereby
amended as follows:


SEC. 39. Capital Gains and Losses. -
(A) Definitions, — As used in this Title -

XX XX XX

(G) (B) Limitation on Capital Losses. ~ Losses from sales or exchanges
of capital assets shall be allowed only to the extent of the gains from such
sales or exchanges. if-a-bank.-for}-A-trust-company IF A DEALER IN
SECURITIES OR OTHER ENTITIES OR FINANCIAL INTERMEDIARIES
DULY LICENSED BY THE APPROPRIATE REGULATORY AGENCY
TO TRADE IN SECURITIES, sells any bond, debenture, note, or
certificate or other evidence of indebtedness issued by any corporation
(including one issued by a government or political subdivision thereof),
with interest coupons or in registered form, any loss resulting from such
sale shall not be subject to the foregoing limitation and shall not be
included in determining the applicability of such limitation to other losses.

oes

SEC. 15. Section 42(A)(2) and (B)(2) of the National Internal Revenue Code of
1997, is hereby amended to read as follows:


SEC. 42. Income from Sources Within the Philippines. —

(A) Gross Income From Sources Within the Philippines. - The
following items of gross income shall be treated as gross income from
‘sources within the Philippines:

(1) Interests. - Interests AND YIELD derived-from-sources_within-the
Philippines,—and—interests FROM DEBT INSTRUMENTS, BANK
DEPOSIT, DEPOSIT SUBSTITUTES, AND SIMILAR ARRANGEMENTS
SUCH AS bonds, notes or other interest-bearing obligations of residents,
corporate or otherwise, INCLUDING DEBT INSTRUMENTS OR DEBT
SECURITIES ISSUED BY THE GOVERNMENT OR ANY OF ITS
AGENCIES OR INSTRUMENTALITIES;

(2) Dividends. - The amount received as dividends:
(a) From a domestic corporation; and

(b) From a foreign corporation [-unless-tess—}] WITH MORE than fifty
percent (50%) of the gross income of such foreign corporation for the
three-year period ending with the close of its taxable year preceding the
declaration of such dividends (or for such part of such period as the
corporation has been in existence) was derived from sources within the
Philippines as determined under the provisions of this Section; but only in
an amount which bears the same ratio to such dividends as the gross
income of the corporation for such period derived from sources within the
Philippines bears to its gross income from all sources;

XX XX KK
(B) Taxable income From Sources Within the Philippines. —
(1) General Rule. -

XX XX XX

(2) Exception. - No deductions for interest paid or incurred abroad shall
be allowed from the item of gross income specified in Subsection (A)
unless indebtedness was actually incurred to provide funds for use in
connection with the conduct or operation of trade or business in the
Philippines OR ON A TRADE OR BUSINESS OUTSIDE THE
PHILIPPINES PROVIDED THAT INCOME GENERATED OR RECEIVED
FROM THE USE OF SUCH FUNDS IS A TAXABLE INCOME IN THE
PHILIPPINES.

SEC. 16. Section 51(C)(2) of the National Internal Revenue Code of 1997, is
hereby amended as follows:


SEC. 51. Individual Return.

XX = XX XK

(C) When to File. -

(1) The return of any individual specified above shall be filed on or before
the fifteenth (15") day of April of each year covering income for the
preceding taxable year.

(2) Individuals subject to tax on capital gains:

(a) From the sale or exchange of shares of stock OR DEBT
INSTRUMENTS AND OTHER SECURITIES not traded thru a local stock
exchange as prescribed under Section 24(C)(B) (3) and (4), 25(A)(1),
shall file a return within thirty (30) days after each transaction, and-a-final

transactions of the preceding taxable year and.

(B) FROM THE SALE, EXCHANGE, OR BARTER OF SHARES OF
STOCK OR DEBT INSTRUMENTS AND OTHER SECURITIES TRADED
THRU A LOCAL STOCK EXCHANGE OR ORGANIZED MARKET AS
PRESCRIBED UNDER SECTION 24(B)(3) AND (4), THE TAX SHALL
BE COLLECTED BY THE STOCK BROKER WHO EFFECTED THE
SALE AND SHALL REMIT THE SAME TO THE BUREAU OF
INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS FROM THE
DATE OF COLLECTION THEREOF AND TO SUBMIT ON MONDAYS
OF EACH WEEK TO THE SECRETARY OF THE STOCK EXCHANGE,
OF WHICH HE IS A MEMBER, A TRUE AND COMPLETE RETURN
WHICH SHALL CONTAIN A DECLARATION OF ALL THE
TRANSACTIONS EFFECTED THROUGH HIM DURING THE
PRECEDING WEEK AND OF TAXES COLLECTED BY HIM AND
TURNED OVER TO THE BUREAU OF INTERNAL REVENUE.

(b) (C) From the sale or disposition of real property under Section 24(D)
shall file a return within thirty (30) days following each sale or other
disposition

SEC. 17. Section 52(D) of the National Internal Revenue Code of 1997, is
hereby amended as follows

SEC. 52. Corporation Returns. —

(A) Requirements. — Every corporation AS DEFINED UNDER SECTION
22(B) OF THIS CODE, AND subject to the tax herein imposed, except
foreign corporations not engaged in trade or business in the Philippines,
shall render, in duplicate, a true and accurate quarterly income tax return
and final or adjustment return in accordance with the provisions of
Chapter XII of this Title. The income tax return shall consist of a maximum


of four (4) pages in paper form or electronic form, be filed by the
president, vice-president or other principal officer, shall be sworn to by
‘such officer and by the treasurer or assistant treasurer, and shall only
contain the following information:

(1) Corporate profile and information;

(2) _ Gross sales, receipts or income from services rendered, or conduct
of trade or business, except income subject to final tax as provided under
this Code;

(3) Allowable deductions under this Code;

(4) Taxable income as defined in Section 31 of this Code; and

(5) Income tax due and payable

Provided, That the foregoing provisions shalll not affect the implementation
of Republic Act No. 10708 or TIMTA.

XX = XX XX

(0) Return on Capital Gains Realized from Sale of Shares of Stock,
DEBT INSTRUMENT, AND OTHER SECURITIES not Traded in the
Local Stock Exchange. — Every corporation deriving capital gains from
the sale or exchange of shares of stock not traded thru a local stock
exchange as prescribed under SECTION 27(D)(3)(a) and (4(a), Sections
24(G}, 25(AN3}, 27/12} 28(AK8}6}-and-28(8)(5}(6}. shall file a return
vain tity (30) days after THE END OF THE MONTH FOLLOWING THE

(E) RETURN ON CAPITAL GAINS REALIZED FROM SALE OF
SHARES OF STOCK, DEBT INSTRUMENTS, AND OTHER
SECURITIES LISTED IN THE LOCAL STOCK EXCHANGE. - IT SHALL
BE THE DUTY OF EVERY STOCK BROKER WHO EFFECTED THE
SALE SUBJECT TO THE TAX IMPOSED UNDER SECTION 27(D)(3)
AND (4) TO COLLECT THE TAX DUE AND REMIT THE SAME TO THE
BUREAU OF INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS
FROM THE DATE OF COLLECTION THEREOF AND TO SUBMIT ON
MONDAYS OF EACH WEEK TO THE SECRETARY OF THE STOCK
EXCHANGE, OF WHICH HE IS A MEMBER, A TRUE AND COMPLETE
RETURN WHICH SHALL CONTAIN A DECLARATION OF ALL THE
TRANSACTIONS EFFECTED THROUGH HIM DURING THE
PRECEDING WEEK AND OF TAXES COLLECTED BY HIM AND
TURNED OVER TO THE BUREAU OF INTERNAL REVENUE.

SEC. 18. Section 54 of the National Internal Revenue Code of 1997, is hereby
amended as follows:

SEC. 54. Returns of Receivers, Trustees, fin—Bankruptey] or
Assignees. — in-cases- wherein Receivers, ADMINISTRATORS, trustees
in AN IRREVOCABLE TRUST OR IN bankruptcy, or ANY OTHER


PERSON ASSIGNED OR assignees-are IN-CHARGE OF operating the
property or business of a ANOTHER PERSON OR corporation subject to
the tax UNDER THIS CODE imposed—by-this—Title—such—receivers,
trustees-or- assignees shall BE IMPOSED WITH THE OBLIGATION TO
FILE make THE returns AND PAY THE TAXES FOR SUCH PERSON
OR CORPORATION IN THE SAME MANNER REQUIRED UNDER THIS
CODE. of-net income :

eed Any tax due on the income as retumed by recoivers,
ADMININSTRATORS, trustees or assignees shall be assessed and
collected in the same manner as if assessed directly against the
organizations PERSON, ESTATE OR ORGANIZATION of whose
businesses or properties they have custody or control

THE TRUSTOR, NOT THE TRUSTEE, IN A REVOCABLE TRUST
SHALL BE RESPONSIBLE IN FILING THE RETURNS REQUIRED
UNDER THIS CODE AND DECLARE THE INCOME RECEIVED FROM
THE TRUST IN ACCORDANCE WITH SECTIONS 24, 25, 26 AND 27 OF
THIS CODE. INCOME OF THE TRUST SUBJECTED TO FINAL TAX
UNDER SECTIONS 24, 25, 27 AND 28 OF THE SAME CODE SHALL
NO LONGER BE SUBJECT TO TAX UPON DISTRIBUTION OF THE
INCOME TO THE TRUSTOR OR BENEFICIARY, NOR SHALL THE
TRUSTOR OR BENEFICIARY BE REQUIRED TO DECLARE THE
INCOME AS PART OF ITS TAXABLE INCOME.

ANY INCOME OF A REVOCABLE TRUST NOT SUBJECTED TO FINAL
TAX MAY BE SUBJECT TO A FINAL WITHHOLDING TAX UPON
DISTRIBUTION OF THE INCOME TO THE TRUSTOR OF
BENEFICIARY AT A RATE NOT EXCEEDING THE HIGHEST RATE OF
TAX IMPOSED ON INDIVIDUALS UNDER SECTION 24 IN THE CASE
OF INDIVIDUAL TRUSTORS, OR THE CORPORATE INCOME TAX IN
THE CASE OF CORPORATE TRUSTORS. SUCH TAX WITHHELD
SHALL BE CONSIDERED A FINAL TAX.

SEC. 19. Section 56 of the National Internal Revenue Code of 1997, is hereby
amended as follows:

SEC. 56. Payment and Assessment of Income Tax for Individuals and
Corporations. ~

(A) Payment of Tax. —

XX XX KK

(3) Payment of Capital Gains Tax. -

A. IN GENERAL - The total amount of tax imposed and prescribed under
Section 24(D), 25(A) AND (B), 28(A) fand-28{B}(5)e}] shall be paid on the

date the return prescribed therefor is filed by the person liable thereto:
Provided, That if the seller submits proof of his intention to avail himself of


the benefit of exemption of capital gains under existing special laws OR
TAX TREATY, no such payments shall be required: Provided, further,
That in case of failure to qualify for exemption under such special laws,
TAX TREATY and implementing rules and regulations, the tax due on the
gains realized from the original transaction shall immediately become due
and payable, and subject to the penalties prescribed under applicable
provisions of this Code: Provided, finally, That if the seller, having paid the
tax, submits such proof of intent within six (6) months from the registration
of the document transferring the real property, he shall be entitled to a
refund of such tax upon verification of his compliance with the
requirements for such exemption.

SEC. 20. Section 57 of the National Internal Revenue Code of 1997, is hereby
amended as follows:

SEC. 57. Withholding of Tax at Source. -

(A) Withholding of Final Tax on Certain Incomes. — Subject to rules
and regulations the Secretary of Finance may promulgate, upon the
recommendation of the Commissioner, requiring the filing of income tax
return by certain income payees , the tax imposed or prescribed by
UNDER Sections 24(B), 24(C) AND 24(D); 25(A);(2}-25(A}3}-AND
25(B), 26(C}—26{D},—25(E}; 27{DX4), 27(D){2), 2740}(3), 27(D)(5);
28(AK4): 28(A){5), 28(AK 7a}, 2B(AHF Hb}, 28(A}FH(0), 28(B)4),28(B)(2);
28(B){3)--28(B (4), 28(B{5}{a},-28(B{5}{b),-28(BY{S{e); 33; and 282 of
this Code on specified items of income SUBJECT TO FINAL TAX shall
be withheld by payor-corporation and/or person and paid in the same
manner and subject to the same conditions as provided in Section 58 of
this Code.

(B) xx Xx XK

[(C) Tax-free Covenant Bonds— In any case where bonds, mortgages,
deeds of trust-or other similar_obligations-of domestic_or-resident


SEC. 21. Section 73 of the National Internal Revenue Code of 1997, is hereby
amended as follows:

SEC. 73. Distribution of Dividends or Assets by Corporations. —

(A) Definition of Dividends. - The term ‘dividends’ when used in this
Title means any distribution made by a corporation to its shareholders out
of its earnings or profits and payable to its shareholders, whether in
money or in other property

Where a corporation distributes all of its assets in complete liquidation or
dissolution, the gain realized or loss sustained by the stockholder, whether
individual or corporate, is a taxable income or a deductible loss, UNDER
SECTIONS 24(A), 25(A), 25(B), 27(A) AND 28(A), as the case may be.

(B) Stock Dividend. - A stock dividend representing the transfer of
surplus to capital account shall not be subject to tax. However, if a
corporation cancels or redeems stock issued as a dividend at such time
and in such manner as to make the distribution and cancellation or
redemption, in whole or in part, essentially equivalent to the distribution of
a taxable dividend, the amount so distributed in redemption or
cancellation of the stock shall be considered as taxable income to the
extent that it represents a distribution of earnings or profits.

SEC. 22. Section 108 of the National Internal Revenue Code of 1997, is hereby
amended as follows:

SEC. 108. Value-added Tax on Sale of Services and Use or Lease of
Properties. —

(A) Rate and Base of Tax. — XX XX XX

The phrase ‘sale or exchange of services’ means the performance of all
kinds of services in the Philippines for others for a fee, remuneration or
consideration, including those performed or rendered by construction and
service contractors; stock, real estate, commercial, customs and
immigration brokers; lessors of property, whether personal or real;
warehousing services; lessors or distributors of cinematographic films;
persons engaged in milling, processing, manufacturing or repacking
goods for others; proprietors, operators or keepers 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-investors ; transportation
contractors on their transport of goods or cargoes, including persons who
transport goods or cargoes for hire and other domestic common carriers
by land relative to their transport of goods or cargoes; common carriers by
air and sea relative to their transport of passengers, goods or cargoes
from one place in the Philippines to another place in the Philippines; sales
of electricity by generation companies, transmission, by any entity and
distribution companies, including electric cooperatives; services of


franchise grantees of electric utilities, telephone and telegraph, radio and
television broadcasting and all other franchise grantees except those
Under Section 119 of this Coe See ert t pererien sarpenen (conte

companies ; and similar services regardless “of whether or not the
performance thereof calls for the exercise or use of the physical or mental
faculties. The phrase ‘sale or exchange of services’ shall likewise include:

XX XX XX

SEC. 23. Section 121 of the National Internal Revenue Code of 1997 is hereby
amended as follows:


SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries
Performing Quasi-Banking Functions. ~ There shall be collected a tax
on gross receipts derived from sources within the Philippines by all banks
and non-bank financial intermediaries PERFORMING QUASI-BANKING
FUNCTIONS AT THE RATE OF 5% ON INCOME SUCH AS INTEREST,
COMMISSIONS, AND DISCOUNTS FROM LENDING ACTIVITIES AS
WELL AS INCOME FROM FINANCIAL LEASING, ROYALTIES,
RENTALS OF PROPERTY, REAL OR PERSONAL, PROFITS FROM
SALE OR EXCHANGE INCLUDING GAINS DERIVED FROM SALE OR
TRANSFER OF REAL PROPERTIES, NET TRADING GAINS WITHIN
THE TAXABLE YEAR OF FOREIGN CURRENCY, DEBT SECURITIES,
DERIVATIVES, AND OTHER SIMILAR FINANCIAL INSTRUMENTS,
AND ALL OTHER ITEMS TREATED AS GROSS INCOME UNDER
SECTION 32 OF THIS CODE, EXCEPT DIVIDENDS AND EQUITY
SHARES AND NET INCOME OF SUBSIDIARIES WHICH SHALL BE
SUBJECT TO 0%. [in-accordance-with-the following schedule:

classifying the |
accordingly

Provided, That FOR PURPOSES OF COMPUTING THE GROSS
RECEIPTS, the generally accepted accounting principles OF
RECORDING INCOME AS ADOPTED BY THE BANK SHALL BE
FOLLOWED. BANKS ON ACCRUAL BASIS OF FINANCIAL
REPORTING SHALL USE THE ACCRUAL METHOD IN COMPUTING
THE GROSS RECEIPTS, PROVIDED THAT, ONCE ADOPTED, IT
SHALL BE CONSISTENT FROM YEAR TO YEAR. PROVIDED
FURTHER THAT FOR PURPOSES OF DETERMINING THE GROSS


RECEIPTS, NO DEDUCTION SHALL BE MADE ON THE INCOME
EXCEPT IN THE CASE OF GAINS FROM DEALINGS IN PROPERTY
AND TRADING GAINS, WHERE NET LOSS WITHIN THE SAME
BUSINESS ACTIVITY CAN BE OFFSET TO DETERMINE THE NET
GAIN SUBJECT TO THIS TAX. PROVIDED, FURTHER, THAT SUCH
OFFSETTING SHALL BE ON A MONTHLY BASIS, AND ANY NET
LOSS INCURRED IN A MONTH CAN BE CARRIED OVER AS
DEDUCTION IN THE SUCCEEDING MONTHI/S. PROVIDED FINALLY,
THAT NET LOSS INCURRED IN A TAXABLE YEAR CANNOT BE
CARRIED OVER TO THE SUCCEEDING TAXABLE YEAR.

SEC. 24. Section 122 of the National Internal Revenue Code of 1997 is hereby
amended as follows:


SEC. 122. Tax on Other Non-Bank Financial Intermediaries. - There
shall be collected a tax of five percent (5%) on the gross receipts derived
by other non-bank financial intermediaries doing business in the
Philippines, from interest, commissions AND discounts FROM LENDING
ACTIVITIES, AS WELL AS INCOME FROM FINANCIAL LEASING,
ROYALTIES, RENTALS OF PROPERTY, REAL OR PERSONAL,
PROFITS FROM SALE OR EXCHANGE INCLUDING GAINS DERIVED
FROM SALE OR TRANSFER OF REAL PROPERTIES, NET TRADING
GAINS WITHIN THE TAXABLE YEAR OF FOREIGN CURRENCY,
DEBT SECURITIES, DERIVATIVES, AND OTHER SIMILAR FINANCIAL
INSTRUMENTS, UNDERWRITING FEES, SERVICE INCOME, AND ALL
OTHER ITEMS TREATED AS GROSS INCOME UNDER SECTION 32
OF THIS CODE EXCEPT DIVIDENDS AND EQUITY SHARES AND NET
INCOME OF SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO

basis-of the-remaining-maturities-of_the-inetruments-from—which-such
receipts are derived. in accordance with the following schedule

Maturity-is-five-years-of e566 8%
Maturity period is more than-five years 1%

Provided,-however,That-in-case-the-maturity-
thru-pretermination,- then-the-maturity- Pest shalt berresianes te
end-as-of the-date-of pretermination-for purposes-of-classifying-the
transaction-and the-correct rate-of tax shall-be-applied-accordingly]

GROSS RECEIPTS SHALL BE COMPUTED IN THE SAME MANNER
PROVIDED UNDER SECTION 121.

FINANCIAL INTERMEDIARIES SUBJECT TO TAX UNDER THIS
SECTION SHALL INCLUDE FINANCING COMPANIES, FINANCE-
LEASING COMPANIES, INVESTMENT HOUSES, PAWNSHOPS,
FOREIGN EXCHANGE DEALERS AND MONEY BROKERS, TRUST
ENTITIES, CREDIT CARD COMPANIES, LENDING INVESTORS,
SAVINGS AND LOAN ASSOCIATIONS, AND OTHER FINANCIAL
INTERMEDIARIES EXCEPT BANKS AND NON-BANKS PERFORMING
QUASI-BANKING FUNCTIONS WHICH SHALL BE TAXED UNDER
SECTION 121 OF THIS CODE.

COLLECTIVE INVESTMENT SCHEMES SUCH AS MUTUAL FUNDS,
UNIT-LINKED INVESTMENT TRUST FUND, UNIT-LINKED VARIABLE
INSURANCE, AND OTHER COLLECTIVE INVESTMENT SCHEMES AS
MAY BE DETERMINED BY APPROPRIATE GOVERNMENT
REGULATORY AGENCIES SHALL NOT BE SUBJECT TO GROSS
RECEIPTS TAX AND OTHER PERCENTAGE TAXES IMPOSED
UNDER TITLE V AND TO VAT IMPOSED UNDER TITLE IV OF THIS
CODE. FOR PURPOSES OF THIS EXEMPTION, A CIS SHALL HAVE


AT LEAST 1,000 OWNERS, INVESTORS OR PARTICIPANTS, AND
THAT THE MINIMUM PUBLIC OWNERSHIP AS MAY BE REQUIRED
BY APPROPRIATE GOVERNMENT AGENCIES SHALL BE COMPLIED
WITH.

\F A PERSON OR COMPANY NOT LICENSED TO DO FINANCIAL
INTERMEDIATION BUT ENGAGES IN FINANCIAL INTERMEDIATION
SERVICES AS AN INCIDENT TO ITS MAIN BUSINESS ACTIVITY, AND
RECEIVING INCOME THEREFROM, SUCH INCOME FROM
FINANCIAL INTERMEDIATION SHALL BE SUBJECT TO THE TAX
IMPOSED ON ITS PRINCIPAL ACTIVITY. TO BE CONSIDERED
INCIDENTAL, THE INCOME FROM INTERMEDIATION SERVICES
SHALL NOT EXCEED 5% OF ITS TOTAL ANNUAL INCOME. IF MORE
THAN 5%, WITH AT LEAST SIX (6) TRANSACTIONS ENTERED INTO
DURING THE YEAR, THE TOTAL INCOME FROM FINANCIAL
INTERMEDIATION SHALL BE SUBJECT TO TAX UNDER THIS SUB-
SECTION.

IN-HOUSE LENDING OR SELLER FINANCING SHALL NOT BE
SUBJECT TO TAX UNDER THIS SUBSECTION. ANY INCOME
EARNED OR RECEIVED FROM IN-HOUSE LENDING OR SELLER
FINANCING SHALL BE SUBJECT TO THE SAME TAX APPLICABLE
TO THE PRINCIPAL BUSINESS ACTIVITY OR TRANSACTION.

HOLDING COMPANIES SHALL BE SUBJECT TO EITHER VAT OR
GRT DEPENDING ON THE NATURE OF ITS BUSINESS ACTIVITIES.
IF DOING FINANCING AND OTHER SIMILAR ACTIVITIES, IT IS
SUBJECT TO GRT UNDER THIS SECTION. INCOME DERIVED FROM
THE SALE OF GOODS, PROPERTIES AND OTHER SERVICES SHALL
BE SUBJECT TO VAT UNDER SECTION 105 OF THIS CODE.

calculation of gross receipts]

Nothing in this Code shall preclude the Commissioner from imposing the
same tax herein provided on persons performing similar [financing]
FINANCIAL INTERMEDIATION activities.

SEC. 24. Section 123 of the National Internal Revenue Code of 1997, as
amended, is hereby amended as follows:


SEC. 123. Tax on Life AND NON-LIFE Insurance Premiums, AND
REINSURANCE PREMIUMS. - There shall be collected from every
person, company or corporation, DOING INSURANCE BUSINESS
(except purely cooperative companies or associations) [doing—life
insurance-business] of any sort in the Philippines A PREMIUM TAX AT
THE FOLLOWING RATES:

(A) For life insurance including health insurance as a rider to life insurance
policy, a tax of two percent (2%) of the total premium collected, whether
such premiums are paid in money, notes, credits or any substitute for
money; but premiums refunded within six (6) months after payment on
account of rejection of risk or returned for other reason to a person
insured shall not be included in the taxable receipts; nor shall any tax be
paid upon reinsurance by a company IF THE TAX that has already BEEN
paid [the-+tax}-ON THE DIRECT PREMIUM; nor upon premiums collected
or received by any branch of a domestic corporation, firm or association
doing business outside the Philippines on account of any life insurance of
the insured who is a nonresident, if any tax on such premium is imposed
by the foreign country where the branch is established; nor upon
premiums collected or received on account of any reinsurance, if the
insured, in case of personal insurance, resides outside the Philippines, if
any tax on such premiums is imposed by the foreign country where the
original insurance has been issued or perfected; nor upon that portion of
the premiums collected or received by the insurance companies on
variable contracts IN A COLLECTIVE INVESTMENT SCHEME OR CIS,
in excess of the amounts necessary to insure the lives of the variable
contract owners. PROVIDED THAT THE CIS SHALL HAVE AT LEAST
1,000 OWNERS, INVESTORS OR PARTICIPANTS, AND THAT ANY
MINIMUM PUBLIC OWNERSHIP AS MAY BE REQUIRED BY
APPROPRIATE GOVERNMENT AGENCIES SHALL BE COMPLIED
WITH.

PERSONS DOING BUSINESS SIMILAR OR AKIN TO LIFE AND
HEALTH INSURANCE SUCH AS PRE-NEED COMPANIES, PENSION
FUND COMPANIES, HEALTH MAINTENANCE ORGANIZATIONS AND
OTHER COMPANIES SIMILAR TO LIFE INSURANCE, AS MAY BE
DETERMINED BY THE APPROPRIATE REGULATORY GOVERNMENT
AGENCY, SHALL BE SUBJECT TO TAX UNDER THIS SUB-SECTION
AT THE RATE OF TWO PERCENT (2%) OF THE GROSS PREMIUM,
PLAN PAYMENT, OR INSTALLMENT PAYMENTS COLLECTED
WITHOUT ANY DEDUCTION FOR THE AMOUNTS REQUIRED BY THE
APPROPRIATE REGULATORY AGENCY TO BE EARMARKED FOR
THE BENEFIT OF THE INSURED, OR PLANHOLDER.

NOTHING IN THIS CODE SHALL PRECLUDE THE COMMISSIONER
FROM IMPOSING THE SAME TAX HEREIN PROVIDED ON PERSONS
PERFORMING SIMILAR INSURANCE BUSINESS ACTIVITIES.

(B) FOR NON-LIFE INSURANCE INCLUDING FIRE, PROPERTY,
MOTOR VEHICLE, MARINE, AND OTHER TYPES OF NON-LIFE


INSURANCE (EXCEPT COOPERATIVE INSURANCE COMPANIES), A
TAX OF FIVE PERCENT (5%) OF THE TOTAL PREMIUM COLLECTED
SHALL BE PAID, WHETHER SUCH PREMIUMS ARE PAID IN MONEY,
NOTES, CREDITS, OR ANY SUBSTITUTE FOR MONEY; BUT
PREMIUMS REFUNDED WITHIN SIX (6) MONTHS AFTER PAYMENT
ON ACCOUNT OF REJECTION OF RISK OR RETURNED FOR OTHER
REASON TO A PERSON INSURED SHALL BE DEDUCTED FROM THE
GROSS RECEIPTS ON THE MONTH IT IS REFUNDED. NO TAX
SHALL BE PAID UPON PREMIUMS ON REINSURANCE IF THE TAX
HAS ALREADY BEEN PAID ON THE DIRECT PREMIUM; NOR UPON
PREMIUMS COLLECTED OR RECEIVED BY ANY BRANCH OF A
DOMESTIC CORPORATION, FIRM OR ASSOCIATION DOING
BUSINESS OUTSIDE THE PHILIPPINES ON ACCOUNT OF ANY NON-
LIFE INSURANCE OF THE INSURED WHO IS A NONRESIDENT, IF
ANY TAX ON SUCH PREMIUM IS IMPOSED BY THE FOREIGN
COUNTRY WHERE THE BRANCH IS ESTABLISHED; NOR UPON
PREMIUMS COLLECTED OR RECEIVED ON ACCOUNT OF ANY
REINSURANCE, IF THE INSURED RESIDES OUTSIDE THE
PHILIPPINES, AND IF ANY TAX ON SUCH PREMIUMS IS IMPOSED
BY THE FOREIGN COUNTRY WHERE THE ORIGINAL INSURANCE
HAS BEEN ISSUED OR PERFECTED;

(C) PERSONS DOING BUSINESS SIMILAR OR AKIN TO NON-LIFE
INSURANCE AS MAY BE DETERMINED BY THE APPROPRIATE
GOVERNMENT REGULATORY AGENCY SHALL BE SUBJECT TO
TAX UNDER THIS SUB-SECTION AS A NON-LIFE INSURANCE
COMPANY.

NOTHING IN THIS CODE SHALL PRECLUDE THE COMMISSIONER
FROM IMPOSING THE SAME TAX HEREIN PROVIDED ON PERSONS
PERFORMING SIMILAR NON-LIFE INSURANCE BUSINESS
ACTIVITIES.

REINSURANCE COMPANIES, WHETHER LIFE OR NON-LIFE, SHALL
BE SUBJECT TO PREMIUM TAX ON PREMIUMS COLLECTED
UNDER SUB-SECTIONS A OR B DEPENDING ON THE NATURE OF
THE INSURANCE ON WHICH THE INCOME ARISE. HOWEVER,
PREMIUMS COLLECTED WHERE THE TAX ON THE DIRECT
PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT INSURER
SHALL BE EXCLUDED FROM THE GROSS PREMIUM SUBJECT TO
PREMIUM TAX. FOR THE PURPOSE OF CLAIMING EXEMPTION, A
CERTIFICATION IN A FORM TO BE PRESCRIBED IN A REGULATION,
ISSUED BY THE DIRECT INSURER THAT THE TAX THEREON HAS
ALREADY BEEN PAID, SHALL BE ATTACHED TO THE QUARTERLY
PREMIUM TAX RETURN TO BE FILED. ANY MISREPRESENTATION
SHALL SUBJECT THE DIRECT INSURER TO PENALTIES UNDER
SECTIONS 248, 253, 254, 255, 256, AND 257 OF THIS CODE.

ANY INCOME, OTHER THAN RECEIPT OF PREMIUM SUCH AS
MANAGEMENT FEES, SERVICE FEES, CHARGES, AND PENALTIES,


COMMISSIONS, INCOME FROM THE SALE OR TRANSFER OF
GOODS, PROPERTIES OR SERVICES, EARNED OR RECEIVED AS
AN INCIDENT OF DOING THE BUSINESS OF LIFE, NON-LIFE AND
OTHER INSURANCE ACTIVITIES, SHALL BE SUBJECT TO THE
VALUE-ADDED TAX UNDER SECTION 105 OF THIS CODE;
PROVIDED, THAT INCOME RECEIVED FROM THE INVESTMENT AND.
REINVESTMENT OF PREMIUMS EARNED SHALL NOT BE SUBJECT
TO VALUE ADDED TAX NOR TO THE GROSS RECEIPTS TAX
IMPOSED UNDER SECTIONS 121 AND 122 OF THIS CODE.

A VARIABLE INSURANCE CONTRACT WHERE AMOUNTS IN
EXCESS OF INSURANCE COSTS ARE COLLECTED AS PART OF
THE PREMIUM AND WHERE UNITS OF PARTICIPATION IN A
POOLED FUND ARE ISSUED TO THE INSURED REPRESENTING ITS
SHARE IN THE POOLED FUNDS, IS A COLLECTIVE INVESTMENT
SCHEME. THE AMOUNTS OF PREMIUM COLLECTED IN EXCESS OF
THE INSURANCE COST |S NOT SUBJECT TO PREMIUM TAX UNDER
THIS SECTION AND TO THE GROSS RECEIPTS TAX IMPOSED
UNDER SECTIONS 121 AND 122, OR TO ANY PERCENTAGE TAX
IMPOSED UNDER TITLE V AND TO VAT UNDER SECTION 105, TITLE
\V OF THIS CODE.

SEC. 25. Section 127 of the National Internal Revenue Code of 1997, is hereby
amended and deleted:


te -Stnole Net OWiiod by incviduales— Stock cured directly-oF indirectly



SEC. 26. Section 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185,
186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 198, and 199 of the
National Internal Revenue Code of 1997, is hereby amended as follows:

SEC. 174, Stamp Tax on Original Issue of Shares of Stock. - On every
original issue, whether on organization, reorganization or for any lawful


purpose, of shares of stock by any association, company, or corporation,
INCLUDING SHARES OF STOCK OR UNITS OF PARTICIPATION IN A
COLLECTIVE INVESTMENT SCHEME, there shall be collected a
documentary stamp tax OF 0.75% OF THE PAR VALUE Two-pesos

the par-value-of such shares of stock: Provided, That in the case of the
original issue of shares of stock without par value, the amount of the
documentary stamp tax herein prescribed shall be based upon the actual
consideration for the issuance of such shares of stock: Provided, further,
That in the case of stock dividends, on the actual value represented by
each share,

SEC 175 476. Stamp Tax on Bonds, Debentures, Certificates of Stock
or Indebtedness Issued in Foreign Countries. — On all bonds,
debentures, certificates of stock, or certificates of indebtedness issued in
any foreign country, there shall be collected from the person selling or
transferring the same in the Philippines, ADOCUMENTARY STAMP TAX
OF 0.75% OF THE VALUE OF THE TRANSACTION. stch-tax-as~is



(P3:00}-

SEC. 479-176. Stamp Tax on All Debt Instruments. — On every original
issue of debt instruments, there shall be collected a documentary stamp
tax OF 0.75% {P4-50)-on-each-Fwe-hundred
; of the issue price of any such debt
instruments: Provided, That for such debt instruments with terms of less
than one (1) year, the documentary stamp tax to be collected shall be of a
Proportional amount in accordance with the ratio of its term in number of
days to three hundred sixty-five (365) days: Provided, further, That only
one documentary stamp tax shall be imposed on either loan agreement,
of promissory notes issued to secure such loan

For purposes of this section, the term debt instrument shall mean
instruments representing borrowing and lending transactions including but
not limited to debentures, certificates of indebtedness, due bills, bonds,
loan agreements, including those signed abroad wherein the object of
contract is located or used in the Philippines, instruments and securities
issued by the government or any of its instrumentalities, deposit substitute
debt instruments, certificates or other evidences of deposits that are either
drawing interest significantly higher the regular savings deposit taking into
consideration the size of the deposit and the risks involved or drawing
ieee a having a specific maturity icate

d; promissory notes,

Whether egolisbie ‘or non-negotiable, except bank notes. lssued for
circulation.

SEC. 184 177. Stamp Tax Upon Acceptance of Bills of Exchange and
Others.- Upon any acceptance or payment of any bill of exchange or
order for the payment of money purporting to be drawn in a foreign
country but payable in the Philippines, there shall be collected a
Sooumensary, Sane) Lad Gy 0.30%

f of the face value of any
such bill of ass or erin or the Philippine “equivalent of such value,
if expressed in foreign currency.

SEC. 482 178. Stamp Tax on Foreign Bills of Exchange and Letters of
Credit. — On all foreign bills of exchange and letter of credit (including
orders, by telegraph or otherwise, for the payment of money issued by
express or steamship companies or by any person or persons) drawn in


but payable out of the Philippines in a set of three (3) or more according to
the custom of merchants and bankers, there shall be collected a
documentary stamp tax OF 0.30% Sixty centavos (PO 60) on each Two
hundred. ; of the face value of any
such bill of exchange or letter of credit, or the Philippine equivalent of
such face value, if expressed in foreign currency.

PROVIDED THAT IN THE CASE OF A LETTER OF CREDIT ON WHICH
THE DOCUMENTARY STAMP TAX IMPOSED UNDER THIS SECTION
IS PAID UPON OPENING, THE SAME SHALL NOT BE SUBJECT
AGAIN TO SECTION 195 UPON AVAILMENT OF THE TRUST
RECEIPT LINE WHERE THE PROPERTY SUBJECT OF THE LETTER
OF CREDIT IS MADE A SECURITY FOR PAYMENT.

SEC. 483 179. Stamp Tax on Life Insurance Policies. — On all policies
of insurance or other instruments by whatever name the same may be
called, whereby any insurance shall be made or renewed upon any life or
lives AND HEALTH OF PERSONS, there shall be collected a one-time
documentary stamp tax at the following rates:

If the amount of insurance does not exceed P100,000 - Exempt
If the amount of insurance exceeds P100,000

but does not exceed P300,000 - P20.00
If the amount of insurance exceeds P300,000

but does not exceed P500,000 - P50,00
if the amount of insurance exceeds P500,000

but does not exceed P750,000 - P100.00
\f the amount of insurance exceeds P750,000

but does not exceed P1,000,000 -P150.00
If the amount of insurance exceeds P1,000,000 -P200.00

SEC. 484 180. Stamp Tax on Policies of Insurance Upon Property. —
On all policies of insurance or other instruments by whatever name the
same may be called, by which insurance shall be made or renewed upon
property of any description, including rents or profits, against peril by sea
or on inland waters, or by fire or lightning, there shall be collected a
documentary stamp tax OF 12.5% Fi

f of the amount of premium
charged: Provided, however, That no documentary stamp tax shall be
collected on reinsurance contracts or on any instrument by which cession
or acceptance of insurance risks under any reinsurance agreement is
effected or recorded. PROVIDED FURTHER THAT SUCH RATE SHALL
BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

JANUARY 1, 2020: 11.5 PERCENT,
JANUARY 1, 2021: 10.5 PERCENT,
JANUARY 1, 2022: 9.5 PERCENT,


JANUARY 1, 2023: 8.5 PERCENT,
JANUARY 1, 2024: 7.5 PERCENT.

SEC. 485 181, Stamp Tax on Fidelity Bonds and Other Insurance
Policies. — On all policies of insurance or bonds or obligations of the
nature of indemnity for loss, damage or liability made or renewed by any
person, association, company or corporation transacting the business of
accident, fidelity, employer's liability, plate, glass, steam boiler, burglar,
elevator, automatic sprinkler, or other branch of insurance (except life,
marine, inland, and fire insurance), and all bonds, undertakings, or
recognizances, conditioned for the performance of the duties of any office
of position, for the doing or not doing of anything therein specified, and on
all obligations guaranteeing the validity or legality of any bond or other
obligations issued by any province, city, municipality, or other public body
or organization, and on all obligations guaranteeing the title to any real
estate, or guaranteeing any mercantile credits, which may be made or
renewed by any such person, company or corporation, there shall be
collected a documentary stamp tax OF 12.5% Fifty-centavos-{P0.60)-on
each—Four—pesos—(P4.00),—oF-fractional-part-thereof, of the premium
charged. PROVIDED FURTHER THAT SUCH RATE SHALL BE
REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

JANUARY 1, 2020: 11.5 PERCENT,

JANUARY 1, 2021: 10.5 PERCENT,

JANUARY 1, 2022: 9.5 PERCENT,

JANUARY 1, 2023: 8.5 PERCENT,

JANUARY 1, 2024: 7.5 PERCENT.

SEC. 186-182. Stamp Tax on Policies of Annuities and Pre-Need
Plans. — On all policies of annuities, or other instruments by whatever
name the same may be called, whereby an annuity may be made,

transferred or redeemed, there shall be Gonected a documentary Fella
tax OF 0.5% One-p

fractional part thereof, of the premium or installment payment on contract
price, OR CONTRIBUTION coliested-CHARGED. On pre-need plans, OR
OTHER INSTRUMENTS BY WHATEVER NAME THE SAME MAY BE
CALLED, WHEREBY AN ANNUITY MAY BE MADE, TRANSFERRED
OR REDEEMED, THERE SHALL BE COLLECTED A DOCUMENTARY
STAMP TAX OF 0.2% OF THE PREMIUM OR INSTALLMENT
PAYMENT ON CONTRACT PRICE, OR CONTRIBUTION CHARGED.
Forty centavos (PO 40) on each Two hundred pesos (P200}, oF fractional

SEC. 187, 183. Stamp Tax on Indemnity Bonds. — On all bonds for
indemnifying any person, firm or corporation who shall become bound or


engaged as surety for the payment of any sum of money or for the due
execution or performance of the duties of any office or position or to
account for money received by virtue thereof, and on all other bonds of
any description, except such as may be required in legal proceedings, or
are otherwise provided for herein, there shall be collected a documentary
stamp tax of Thirty-centaves(PO.; S
fractional-part-thereof, 7.5% OF THE PREMIUM CHARGED.

SEC. 488. 184. Stamp Tax on Certificates NOTARIZED DOCUMENTS.
- = on Gal certificate of damage—orothenwise—and—on-every_other

certificate issued by a notary

ser pron on 6 uch
‘office oF which-is-issued-for the purpose-of

tablishing—pr
specified herein, there shall be collected a documentary stamp tax of
FIFTY PESOS (P50.00)-Thirty-pesos-(P-30.00),

SEC. 189 185. Stamp Tax on Warehouse Receipts. — On each
warehouse receipt for property held in storage in a public or private
warehouse or yard for any person other than the proprietor of such
warehouse or yard, there shall be collected a documentary stamp tax of
thirty pesos (P30,00): Provided, That no tax shall be collected on each
warehouse receipt issued to any one person in any one calendar month
covering property the value of which does not exceed two hundred pesos
(P200).

SEC, 490, 186. Stamp Tax on Jai-alai, Horse Race Tickets, Lotto or
Other Authorized Numbers Games. — On each jai-alai, horse race ticket,
lotto, or other authorized numbers games, there shall be collected a
documentary stamp tax of twenty centavos (P0,20); Provided, That if the
cost of the ticket exceed One peso (P1.00), an additional tax of twenty
centavos (P0.20) on every one peso (P1.00), or fractional part thereof,
shall be collected.

SEC. 484, 187. Stamp Tax on Bills of Lading or Receipts. —- On each
set of bills of lading or receipts (except charter party) for any goods,
merchandise or effects shipped from one port or place in the Philippines
(except on ferries across rivers), or to any foreign port, there shall be
collected a documentary stamp tax of two pesos (P2.00), if the value of
such goods exceeds one hundred pesos (P100) and does not exceed one
thousand pesos (P1,000); twenty pesos (P20.00), if the value exceeds
one thousand pesos (P1,000); Provided, however, that freight tickets
covering goods, merchandise or effects carried as accompanied baggage
of passengers on land and water carriers primarily engaged in the
transportation of passengers are hereby exempt.

SEC.-192.-Stamp-Tax-on Proxies. —On-each-proxy_for-voting-at-any



SEC. 494, 188 Stamp Tax on Leases and Other Hiring Agreements. —
On 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 tax of Six pesos (P6.00) for the first two thousand
pesos (P2,000), or fractional part thereof, and an additional two pesos
(P2.00) for every one thousand pesos (P1,000) or fractional part thereof,
in excess of the first Two thousand pesos (P2,000) for each year of the
term of said contract or agreement.

SEC. 196, 189. Stamp Tax on Mortgages, Pledges and Deeds of
Trust. — On every mortgage or pledge of lands, estate, or property, real or
personal, heritable or movable, whatsoever, where the same shall be
made as a security for the payment of any definite and certain sum of
money lent at the time or previously due and owing or forborne to be paid,
being payable, and on any conveyance of land, estate, or property
whatsoever, in trust or to be sold, or otherwise converted into money
which shall be and intended only as security, either by express stipulation
or otherwise, there shall be collected a documentary stamp tax OF 0.3%
OF THE AMOUNT SECURED. atthe following-rates:

On any mortgage, pledge, or deed of trust, where the same shall be made
as a security for the payment of a fluctuating account or future advances
without fixed limit, the documentary stamp tax on such mortgage, pledge
or deed of trust shall be computed on the amount actually loaned or given
at the time of the execution of the mortgage, pledge or deed of trust.
However, if subsequent advances are made on such mortgage, pledge or
deed of trust, additional documentary stamp tax shall be paid which shall
be computed on the basis of the amount advanced or loaned at the rates
‘specified above: Provided, however, That if the full amount of the loan or
credit, granted under the mortgage, pledge or deed of trust is specified in
such mortgage, pledge or deed of trust, the documentary stamp tax
prescribed in this Section shall be paid and computed on the full amount
of the loan or credit granted.


SEC. 196. 190. Stamp Tax on Deeds of Sale, Conveyances and
Donation of Real Property. — On all conveyances, donations, deeds,
instruments, or writings, other than grants, patents or original certificates
of adjudication issued by the Government, whereby any land, tenement,
or other realty sold shall be granted, assigned, transferred, donated or
otherwise conveyed to the purchaser, or purchasers, or to any other
person or persons designated by such purchaser or purchasers, or donee,
there shall be collected a documentary stamp tax, at the rates herein
below prescribed, based on the consideration contracted to be paid for
such realty or on its fair market value determined in accordance with
Section 6(E) of this Code, whichever is higher: Provided, That when one
of the contracting parties is the Government, the tax herein imposed shall
be based on the actual consideration:

(a) When the consideration, or value received or contracted to be paid
for such realty, after making proper allowance of any encumbrance, does
not exceed One thousand pesos (P1,000), Fifteen pesos (P15.00).

(b) For each additional One thousand pesos (P1,000) or fractional part
thereof in excess of One thousand pesos (P1,000) of such consideration
or value, Fifteen pesos (P15.00)

Transfers exempt from donor's tax under Section 101(a) and (b) of this
Code shall be exempt from the tax imposed under this Section.

When it appears that the amount of the documentary stamp tax payable
hereunder has been reduced by an incorrect statement of the
consideration in any conveyance, deed, instrument or writing subject to
‘such tax the Commissioner, provincial or city Treasurer, or other revenue
officer shall, from the assessment rolls or other reliable source of
information, assess the property of its true market value and collect the
proper tax thereon.

SEC. 497, 191. Stamp Tax on Charter Parties and Similar
Instruments. — On every charter party, contract or agreement for the
charter of any ship, vessel or streamer, or any letter or memorandum or
other writing between the captain, master or owner, or other person acting
as agent of any ship, vessel or steamer, and any other person or persons
for or relating to the charter of any such ship, vessel or streamer, and on
any renewal or transfer of such charter, contract, agreement, letter or
memorandum, there shall be collected a documentary stamp tax at the
following rates:

(a) If the registered gross tonnage of the ship, vessel or steamer does
not exceed one thousand (1,000) tons, and the duration of the charter or
contract does not exceed six (6) months, one thousand pesos (P1,000);
and for each month or fraction of a month in excess of six (6) months, an
additional tax of one hundred pesos (P100) shall be paid.


(b) Ifthe registered gross tonnage exceeds one thousand (1,000) tons
and does not exceed ten thousand (10,000) tons, and the duration of the
charter or contract does not exceed six (6) months, two thousand pesos
(P2,000); and for each month or fraction of a month in excess of six (6)
months, an additional tax of two hundred pesos (P200) shall be paid.

(c) If the registered gross tonnage exceeds ten thousand (10,000) tons
and the duration of the charter or contract does not exceed six (6) months,
three thousand pesos (P3,000); and for each month or fraction of a month
in excess of six (6) months, an additional tax of Three hundred pesos
(P300) shall be paid.

SEC. 498. 192. Stamp Tax on Assignments-and Renewals of Certain
Instruments. — Upon each and every

r i r renewal or continuance of
any agreement, contract, charter, or any evidence of obligation or
indebtedness by EXTENDING THE TERM OR MATURITY BY altering or
otherwise, there shall be levied, collected and paid a documentary stamp
tax, at the same rate as that imposed on the original instrument.

SEC. 199. 193. Documents and Papers Not Subject to Stamp Tax. —
The provisions of Section 173 to the contrary notwithstanding, the
following instruments, documents and papers shall be exempt from the
documentary stamp tax

(a) Policies of insurance or annuities made or granted by a fraternal or
beneficiary society, order, association or cooperative company, operated
on the lodge system or local cooperation plan and organized and
conducted solely by the members thereof for the exclusive benefit of each
member and not for profit.

XX XX XX

(n) Interbank call loans with maturity of not more than sever-(7) FIVE (5)
days to cover deficiency in reserves against deposit liabilities, including
those between or among banks and quasi-banks.

(0) REDEMPTION, SALE, BARTER, EXCHANGE, OR OTHER
DISPOSITION OR EXCHANGE OF SHARES OF STOCK OR UNITS OF
PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME OR
OTHER CIS SECURITIES LISTED AND TRADED IN A LOCAL STOCK
EXCHANGE. THE ORIGINAL ISSUANCE OF SHARES OR UNITS OF
PARTICIPATION IN A CIS SHALL NOT BE COVERED BY THIS
EXEMPTION.

‘SEC. 35. Prospectivity Clause. - The CHANGES INTRODUCED UNDER THIS
LAW SHALL TAKE EFFECT ON INCOME AND TRANSACTIONS BEGINNING
JANAURY 1, 2019. ANY TAX EXEMPTION ON INTEREST INCOME AND
GAINS GRANTED TO LONG-TERM INSTRUMENTS AND SECURITIES
PRIOR TO THE EFFECTIVITY OF THIS LAW SHALL REMAIN EXEMPT.


SEC. 36. mplementing Rules and Regulations. - The Department of Finance, in
consultation with the Securities and Exchange Commission, Bangko Sentral ng
Pilipinas, Insurance Commission, the Bureau of the Treasury, and the Bureau of
Internal Revenue, shall issue the implementing rules and regulations for the
effective implementation of this Act

SEC. 37. Separability Clause. — If for any reason any article or provision of this
Act or any portion thereof or application of such article, provision, or portion
thereof to any person, group, or circumstance is’ declared invalid or
unconstitutional, the remainder of this Act shall not be affected by such decision
or declaration,

SEC. 38. REPEALING CLAUSE. —- THE FOLLOWING LAWS OR PROVISIONS
OF LAWS ARE HEREBY REPEALED OR MODIFIED ACCORDINGLY AND
THE PERSONS AND/OR TRANSACTIONS AFFECTED HEREIN ARE
HEREBY MADE SUBJECT TO APPLICABLE TAXES ON INTEREST INCOME
AND CAPITAL GAINS, GROSS RECEIPTS TAX, PREMIUM TAX, AND
DOCUMENTARY STAMPS TAX UNDER THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED:

(a) SECTION 9, INSOFAR AS THE TAX EXEMPTION ON THE
ISSUANCE OF BONDS AND SECURITIES IS CONCERNED, OF
PRESIDENTIAL DECREE 1648, KNOWN AS “REORGANIZING THE
NATIONAL DEVELOPMENT COMPANY AND ESTABLISHING A
REVISED CHARTER THEREFOR";

(b) SECTIONS 6, 7, AND 8, INSOFAR AS TAX EXEMPTION ON
INTEREST INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP
TAX IS CONCERNED, OF EXECUTIVE ORDER 603, ENTITLED
“CREATING A LIGHT RAIL TRANSIT AUTHORITY, VESTING THE
SAME WITH AUTHORITY TO CONSTRUCT AND OPERATE THE
LIGHT RAIL TRANSIT (LRT) PROJECT AND PROVIDING FUNDS
THEREFOR";

(c) | SECTION 14, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF REPUBLIC ACT 7354, ENTITLED “AN ACT
CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS
POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR
REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES
CONNECTED THEREWITH";

(d) | SECTION 12, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF REPUBLIC ACT 4850, ENTITLED “AN ACT
CREATING THE LAGUNA LAKE DEVELOPMENT AUTHORITY,
PRESCRIBING ITS POWERS, FUNCTIONS AND DUTIES, PROVIDING
FUNDS THEREFOR, AND FOR OTHER PURPOSES”;


(e) NUMBER 8, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PRESIDENTIAL DECREE 37, ENTITLED
“CREATING THE NAYONG PILIPINO FOUNDATION”

(f) SECTION 12, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PRESIDENTIAL DECREE 205, ENTITLED
“CREATING AND ESTABLISHING THE DEVELOPMENT ACADEMY
OF THE PHILIPPINES, DEFINING ITS POWERS, FUNCTIONS, AND
RESPONSIBILITIES, AND FOR OTHER PURPOSES”;

(g) | ARTICLE 202, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, DOCUMENTARY STAMP TAX, AND
PREMIUM TAX IS CONCERNED, OF PRESIDENTIAL DECREE 442 AS
AMENDED BY PRESIDENTIAL DECREE 626, ENTITLED “LABOR
CODE OF THE PHILIPPINES”;

(h) _ SECTION 10, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX OF
SUBSIDIARIES OF PHILIPPINE AEROSPACE DEVELOPMENT
CORPORATION IS CONCERNED, OF PRESIDENTIAL DECREE 696,
ENTITLED “REVISING PRESIDENTIAL DECREE NO. 286, DATED
SEPTEMBER 5, 1973, AS AMENDED, OTHERWISE KNOWN AS THE
CHARTER OF THE PHILIPPINE AEROSPACE DEVELOPMENT
CORPORATION AND FOR OTHER PURPOSES";

(i) SECTION 2(G), INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME IS CONCERNED, OF REPUBLIC ACT 85, AS AMENDED BY
REPUBLIC ACT 2081, ENTITLED “AN ACT CREATING THE
REHABILITATION FINANCE CORPORATION";

@ SECTIONS 76, 77 AND 98, INSOFAR AS TAX EXEMPTION ON
INTEREST INCOME, DIVIDENDS, CAPITAL GAINS, AND
DOCUMENTARY STAMP TAX ON BONDS IS CONCERNED, OF
REPUBLIC ACT 3844 OR THE AGRICULTURAL LAND REFORM
CODE;

(k) | SECTION 37, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, GROSS RECEIPTS TAX, AND
DOCUMENTARY STAMP TAX IS CONCERNED, OF REPUBLIC ACT
6848 OR THE CHARTER OF THE AL-AMANAH ISLAMIC INVESTMENT
BANK OF THE PHILIPPINES;

() SECTIONS 10, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME IS CONCERNED, OF REPUBLIC ACT 3591, AS AMENDED
BY REPUBLIC ACT 9576 OR AN ACT INCREASING THE MAXIMUM
DEPOSIT INSURANCE COVERAGE, AND IN CONNECTION
THEREWITH, TO STRENGTHEN THE REGULATORY AND
ADMINISTRATIVE AUTHORITY, AND FINANCIAL CAPABILITY OF


THE PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC),
AMENDING FOR THIS PURPOSE REPUBLIC ACT NUMBERED
THREE THOUSAND FIVE HUNDRED NINETY-ONE, AS AMENDED,
OTHERWISE KNOWN AS THE PDIC CHARTER, AND FOR OTHER
PURPOSES;

(m) SECTION 12, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF EXECUTIVE ORDER 1037, ENTITLED “AN ACT
CREATING THE PHILIPPINE RETIREMENT PARK SYSTEM,
PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES";

(n) _ SECTION 19, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME AND DOCUMENTARY STAMP TAX IS CONCERNED, OF
REPUBLIC ACT 8763 OR HOME GUARANTY CORPORATION ACT OF
2000;

(0) SECTION 19, INSOFAR AS TAX EXEMPTION ON
DOCUMENTARY STAMP TAX IS CONCERNED, OF REPUBLIC ACT
7279 OR THE URBAN DEVELOPMENT AND HOUSING ACT OF 1992;

(p) | SECTION 8(A), INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX OF
BONDS IS CONCERNED, AS PROVIDED UNDER SECTION 1 OF
REPUBLIC ACT 6395 OR AN ACT REVISING THE CHARTER OF THE
NATIONAL POWER CORPORATION;

(q) _ SECTION 15, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PD 334, ENTITLED “CREATING THE PHILIPPINE
NATIONAL OIL COMPANY, DEFINING ITS POWERS AND
FUNCTIONS, PROVIDING FUNDS THEREFORE, AND FOR OTHER
PURPOSES”;

(r) SECTION 16, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PRESIDENTIAL DECREE 1467, ENTITLED “AN
ACT CREATING THE PHILIPPINE CROP INSURANCE
CORPORATION, PRESCRIBING ITS POWERS AND ACTIVITIES,
PROVIDING FOR ITS CAPITALIZATION AND FOR THE REQUIRED
GOVERNMENT PREMIUM SUBSIDY, AND FOR OTHER PURPOSES";

(s) | SECTION 3, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX OF
BONDS IS CONCERNED, OF REPUBLIC ACT 3601, ENTITLED “AN
ACT GRANTING THE NATIONAL IRRIGATION ADMINISTRATION";

() SECTION 6 (A, XVill (2)), IN SO FAR AS TAX EXEMPTION ON
INTEREST INCOME AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PD 1485, AS AMENDED BY PD 1770, ENTITLED


“RECONSTITUTING THE NATIONAL GRAINS AUTHORITY TO THE
NATIONAL FOOD AUTHORITY, BROADENING ITS FUNCTIONS AND
POWERS AND FOR OTHER PURPOSES”;

(u) | SECTION 5 (E), INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX ON
BONDS IS CONCERNED, OF REPUBLIC ACT 6260, ENTITLED “AN
ACT INSTITUTING A COCONUT INVESTMENT FUND AND CREATING

A COCONUT INVESTMENT COMPANY FOR THE ADMINISTRATION
THEREOF";

(v) _ ARTICLES 60 AND 61, INSOFAR AS TAX EXEMPTION ON
INTEREST INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP
TAX IS CONCERNED, OF REPUBLIC ACT 6938, AS AMENDED BY
REPUBLIC ACT 9520, ENTITLED “AN ACT TO ORDAIN A
COOPERATIVE CODE OF THE PHILIPPINES”;

(w) SECTION 9, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX ON
BONDS IS CONCERNED, OF REPUBLIC ACT 10744 OR CREDIT
SURETY FUND ACT OF 2014;

(x)__ SECTION 20, INSOFAR AS TAX ON INTEREST INCOME,
CAPITAL GAINS AND DOCUMENTARY STAMP TAX IS CONCERNED,
OF REPUBLIC ACT 10693, ENTITLED “AN ACT STRENGTHENING
NONGOVERNMENT ORGANIZATIONS (NGOS) ENGAGED IN
MICROFINANCE OPERATIONS FOR THE POOR";

{y) SECTION 7, INSOFAR AS TAX EXEMPTION ON
DOCUMENTARY STAMP TAX AND PREMIUM TAX IS CONCERNED,
OF REPUBLIC ACT 7111, ENTITLED “AN ACT ESTABLISHING THE
OVERSEAS WORKERS' INVESTMENT FUND TO PROVIDE
INCENTIVES TO OVERSEAS WORKERS, REDUCE THE FOREIGN
DEBT BURDEN AND FOR OTHER PURPOSES";

(z) _ SECTION 56, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF REPUBLIC ACT 10801, ENTITLED “AN ACT
GOVERNING THE OPERATIONS AND ADMINISTRATION OF THE
OVERSEAS WORKERS WELFARE ADMINISTRATION";

(aa) SECTION 5, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME IS CONCERNED, OF REPUBLIC ACT 8367, ENTITLED “AN
ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION
AND OPERATION OF NON-STOCK SAVINGS AND LOAN
ASSOCIATIONS";

(bb) SECTION 28, INSOFAR AS TAX EXEMPTION ON CAPITAL
GAINS ON SHARES OF STOCK AND DOCUMENTARY STAMP TAX IS


CONCERNED, OF REPUBLIC ACT 9267 OR THE SECURITIZATION
ACT OF 2004”;

(cc) SECTION 17, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, GROSS RECEIPTS TAX AND
DOCUMENTARY STAMP TAX IS CONCERNED, OF REPUBLIC ACT
7906, ENTITLED “AN ACT PROVIDING FOR THE REGULATION OF
THE ORGANIZATION AND OPERATIONS OF THRIFT BANKS, AND
FOR OTHER PURPOSES”;

(dd) SECTION 15, INSOFAR AS TAX EXEMPTION ON CAPITAL
GAINS AND DOCUMENTARY STAMP TAX IS CONCERNED, OF
REPUBLIC ACT 9182, AS AMENDED BY REPUBLIC ACT 9343,
ENTITLED “AN ACT GRANTING TAX EXEMPTIONS AND FEE
PRIVILEGES TO SPECIAL PURPOSE VEHICLES WHICH ACQUIRE
OR INVEST IN NON-PERFORMING ASSETS, SETTING THE
REGULATORY FRAMEWORK THEREFOR, AND FOR OTHER
PURPOSES";

(ee) SECTIONS 13 AND 14, INSOFAR AS TAX EXEMPTION ON DST
AND DIVIDENDS IS CONCERNED, OF R.A. 9856 OR THE REAL
ESTATE INVESTMENT ACT OF 2209; AND

(ff) SECTION 23, INSOFAR AS NO DEDUCTION FROM GROSS
INCOME SHALL BE ALLOWED IN RESPECT OF ANY INTEREST IF
THE INDEBTEDNESS IS INCURRED TO FINANCE PETROLEUM
EXPLORATION IS CONCERNED, OF P.D. 87, ENTITLED AMENDING
PRESIDENTIAL DECREE NO. 8 ISSUED ON OCTOBER 2, 1972, AND
PROMULGATING AN AMENDED ACT TO PROMOTE THE
DISCOVERY AND PRODUCTION OF INDIGENOUS PETROLEUM AND
APPROPRIATE FUNDS THEREFOR.

SEC. 39. Effectivity Clause. - This Act shall take effect on January 1,
2019, or fifteen (15) days after its complete publication in the Official
Gazette or in at least two (2) newspaper of general circulation, whichever
comes earlier.

Approved.