THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
FIRST REGULAR SESSION 
1 
S E N A T E  
11 
S .  €3. NO. 
Introduced by SENATOR JUAN PONCE ENRlllLE 
EXPLANATORY NOTE 
The weakened Philippine economy has arisen partly from the debilitating effects 
and turbulence of the financial upheavals in the Asian Region, which has weakened 
havoc on many economies; partly from the impact of global liberalized trade on our 
unprepared domestic economy; and partly because of supervening internal factors such as 
the Mindanao conflict for example. Filipinos also continue to struggle in the wake of the 
peso depreciation due to the erosion of the exchange rate, higher inflation linked with the 
increase in oil prices, and the stagnant growth of the country's economy. 
Amidst the present economic turmoil in the country, the government is provided 
with an unprecedented opportunity to help spur and revive our domestic economy and to 
reaffirm its commitment to provide for a better standard of living of its citizens. 
This proposed measure seeks to replace the present income tax rate of individual 
taxpayers as provided for in the National Internal Revenue Code. It is submitted that this 
bill reflects the goals and policies of the country's tax system which seeks a more 
effective and equitable distribution of income tax burden and at the same time accords a 
greater tax relief to the disadvantages sector, and thus provide a more meaningful 
progressivity in taxation. 
The said reduction in the income tax rates would strengthen the purchasing power 
of our people's hard-earned money in order to afford them the capability to meet the 
demands-of daily living. In this light, not only do we hope to address the present 
financial difficulties of our taxpayers by increasing their disposable income, but also to 
improve the country's economy by augmenting the current rate of consumption with the 
end view of enhancing economic activity. 
Given the urgent need to ameliorate the present plight of the Filipino taxpayers, 
the immediate passage of this bill is earnestly sought. 
/' 


THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
FIRST REGULAR SESSION 
) 
S E N A T E  
-0 
Introduced by SENATOR JUAN PONCE ENRILE 
AN ACT 
REDUCING THE INCOME TAX RATES OF INDIVIDUAL TAXPAYERS, 
AMENDING FOR THE PURPOSE CHAPTER 111, SECTION 24 (A) (1) (c) OF 
THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED 
I
.
 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Chapter 111 Section 24 (A) (1) (c) of the National Internal 
Revenue Code of 1997, as amended is hereby further amended to read as follows: 
“CHAPTER 111 
- 
TAX ON INDIVIDUALS 
SECTION 24. Income Tax Rates. - 
(A) 
Rates of Income Tax on Individual Citizen and Individual Resident 
Alien of the Philippines. - 
(1) 
An Income Tax is hereby imposed: 
&?. 
-(a)-. On the taxable income defined in Section 31 of this 
I 
Code, other than income subject to tax under 
Subsections (B), (C) and (D) of this Section, 
derived for each taxable year from all sources 
within and without the Philippines by every 
individual citizen of the Philippines residing 
/ 
therein; 
.
.
 
2 


(b) 
On the taxable income defined in Section 3 1 of this 
Code, other than income subject to tax under 
Subsections (B), (C) and (D) of this Section, 
derived for each taxable year fi-om all sources 
within the Philippines by an individual citizen of the 
Philippines who is residing outside of the 
Philippines including overseas contract workers 
referred to in Subsection (C) of Section 23 hereof; 
and 
On the taxable income derived in Section 3 1 of this 
Code, other than income subject to tax under 
Subsections (B), (C) and @) of this Section, 
derived for each taxable year f%om all sources . 
within the Philippines by an individual alien who is 
resident of the Philippines. 
_- _- 
-A . 
(c) 
. 
The tax shall be computed in accordance with and the rates 
established in the following schedule: 
Not over P10,OOO 
-------------- 
[5%] 2.5% 
Over P 10,000 but not over P30,OOO ------ 
P[SOO] 250 + [io”/sl 
5% of the excess over 
P 10,000 
Over P30,OOO but not over P70,OOO ------- P[2,500] 
1,250 
+ 
Over P70,OOO but not over P140,OOO ------ P[S,SOO] 
4,250 
+ 
[20%] 10% of the 
excess over P70,OOO 
3 


Over P140,OOO but not over P250,OOO ------ P[22,500] 11,250 -t- 
(25%] 12.5% of the 
excess over P 140,000 
Over P250,OOO but not over P500,OOO ------ P[50,000] 
25,000 
+[30%] 15% of the 
excess over P250,OOO 
Over P500,OOO BUT NOT OVER Pl,OOO,OOO ---- P[125,000] 
62,500 
+ [34%] 
17.5% of the excess 
- -  
over 
P500,OOO 
[in 
19981 
OVER Pl,OOO,OOO BUT NOT OVER P2,000,000 --- P150,OOO + 
20% 
OF 
THE 
EXCESS 
OVER 
P1,000,000 
OVER 
P2,000,000 
BUT 
NOT 
OVER 
P4,000,000. 
* 
--*I- 
P350,OOO 
+ 
22.5% 
OF 
THE 
EXCESS 
OVER 
P2,000,000 
OVER P4,000,000 BUT NOT OVER P8,000,000 ---- P800,OOO 
+ 25% OF THE 
/ 
EXCESS 
OVER 
P4,000,000 
I 
OVER PS,OOO,OOO BUT NOT OVER PlO,OOO,OOO 3--- Pl,$OO,OO 
3- 27.5% OF TEE 
EXCESS 
OVER 
P8,000,000 
4 


.
.
 
OVER P10,000,000 BUT NOT OVER ~ ~ 2 , ~ 0 0 , ~ 0 ~  
--- 
P2,350,000 
f 30% 
OF THE EXCESS 
OWR P10,000,000 
OVER p12,0~0,000 
--i---------------- 
P2,950,000 + 32% 
OF THE EXCESS 
OVER P12,000,000 
[Provided, That effective January 1, 1999, the top marginal rate shall be 
thirty-three (33%) and effective January 1, 2000, the said rate shall be thirty-two 
percent (32%).] 
- 
_ /  
~ 
---- . 
For married individuals, the husband and wife, subject to the provision of 
Section 51 (D) hereof, shall compute separately their individual income tax based 
on their respective total taxable income: Provided, That if any income cannot be 
definitely attributed to or identified as income exclusively earned or realized by 
either of the spouses, the same shall be divided equally between the spouses for 
the purpose of determining their respective taxable income.” 
.
.
 
SECTION 2. Separability Clause. - 
If any provisions of this Act 
is declared invalid or unconstitutional, other provisions hereof which are not 
affected thereby shall continue to be in full force and effect. 
SECTION 3. Repealing Clause. - All provisions of laws, orders, decrees, 
including rules and regulations inconsistent herewith are hereby repealed or modified 
accordingly. 
5 


SECTION 4. Effectivity Chase. - 
This Act shall take effect fifteen (1 5) 
days following its publication. ip the Official Gazette or at least two (2) national, 
newspaper of national circulation. 
Approved, 
JGl$4wtd?JPEttmc exempt(phk disk 
6