Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. 
HORIBATA AND HON. NICOLAS ENCISO VIII 
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 Passive Income and 
Financial Intermediary Taxation Act. 
The bill seeks to reform the taxation of the financial sector, including capital and 
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;
•
Simply 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: 
July 18, 2022
5:29 pm
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2
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 more
uniform tax treatment is imposed on interest income regardless 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.
c) 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 this proposed bill is of critical importance and must not be delayed. 
In consideration of the foregoing premises, the passage if this bill is urgently sought. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
 MIGUEL LUIS R. VILLAFUERTE 
TSUYOSHI ANTHONY G. HORIBATA 
NICOLAS ENCISO VIII 


3
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. 
HORIBATA AND HON. NICOLAS ENCISO VIII 
“AN ACT AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 32, 34, 37, 38, 39, 42, 51, 
52, 54, 56, 57, 73, 108, 121, 122, 123, 174, 176, 179, 181, 182, 183, 184, 185, 186, 
187, 195, 198, AND 199; AND REPEALING SECTIONS 127, 175, 177, 178, 180, 
188, 192, AND 193; ALL UNDER 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: 
SECTION 1. Short Title. – This Act shall be known as the “Passive Income and 
Financial Intermediary Taxation Act.”  
SEC. 2. Declaration of Policy. – 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 passive income and financial intermediation to encourage 
savings and develop as well as deepen the capital markets. Accordingly, the State 
adopts the following policies: 
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. 
2111


 
4
3. The State shall ensure that the taxation of passive 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, as amended, is 
hereby amended to read as follows:  
SEC. 22. Definitions - When used in this Title:  
(A) XXX 
XXX XXX XXX 
 
(L) The term 'shares of stock' shall (include] REFER TO shares of stock of a 
corporation, warrants and/or options (to purchase shares of stock], WHETHER TO 
BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND SUCH OTHER 
DERIVATIVE SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR 
AN ORGANIZED MARKETPLACE, as well as units of participation in a partnership 
(except general professional partnerships), joint stock companies, joint accounts, 
COLLECTIVE INVESTMENT SCHEMES, joint ventures taxable as corporations, 
associations, and recreation or amusement clubs (such as golf, polo or similar clubs), 
and mutual fund certificates.  
 
(M) The term 'shareholder' shall [include] REFER TO holders of a share/s of 
stock, warrant/s and/or option/s (to purchase shares of stock of a corporation), 
WHETHER TO BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND SUCH 
OTHER DERIVATIVE SECURITIES LISTED AND TRADED IN A LOCAL 
EXCHANGE OR AN ORGANIZED MARKETPLACE, 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, A COLLECTIVE INVESTMENT SCHEME, 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.  
 


5
XXX XXX XXX 
(T) The term 'securities' (means) SHALL REFER TO [shares of stock in a
corporation and rights to subscribe for or to receive such shares. The term includes  
bonds, debentures, notes or certificates, or other evidence of indebtedness, issued by 
any corporation, including those issued by a government or political subdivision 
thereof, with interest coupons or in registered form[.], SHARES, PARTICIPATION, OR 
INTERESTS IN A CORPORATION OR IN A COMMERCIAL ENTERPRISE OR 
PROFIT-MAKING VENTURE EVIDENCED BY A CERTIFICATE, CONTRACT, 
INSTRUMENTS, WHETHER WRITTEN OR ELECTRONIC IN CHARACTER. THESE 
INCLUDE:  
(1) SHARES OF STOCK, BONDS, DEBENTURES, NOTES, EVIDENCES OF
INDEBTEDNESS, ASSET-BACKED SECURITIES; 
(2)
INVESTMENT CONTRACTS, CERTIFICATES OF INTEREST, OR
PARTICIPATION IN A PROFIT SHARING AGREEMENT SUCH AS COLLECTIVE 
INVESTMENT SCHEMES OR CERTIFICATE OF DEPOSIT FOR A FUTURE 
SUBSCRIPTION; 
(3) FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS, OR OTHER
MINERAL RIGHTS; 
(4) CERTIFICATES OF ASSIGNMENTS, CERTIFICATES OF
PARTICIPATION, TRUST CERTIFICATES, VOTING TRUST CERTIFICATES, OR 
SIMILAR INSTRUMENTS;  
(5) 
PROPRIETARY 
OR 
NON-PROPRIETARY 
MEMBERSHIP 
CERTIFICATES IN CORPORATIONS; 
(6) AND OTHER INSTRUMENTS AS MAY BE DETERMINED BY THE
SECURITIES AND EXCHANGE COMMISSION. 
XXX   XXX   XXX 
(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 commercial bank, a thrift bank, a development bank, a rural 
bank or specialized government bank] AS DEFINED IN SECTION 3 OF REPUBLIC 
ACT NO. 8791, OTHERWISE KNOWN AS THE GENERAL  
BANKING LAW OF 2000, SHALL REFER TO ENTITIES ENGAGED IN THE 
LENDING OF FUNDS OBTAINED IN THE FORM OF DEPOSITS. BANKS SHALL 


 
6
BE CLASSIFIED INTO UNIVERSAL BANKS, COMMERCIAL BANKS, AND THRIFT 
BANKS COMPOSED OF: (A) SAVINGS AND MORTGAGE BANKS; (B) STOCK 
SAVINGS AND LOAN ASSOCIATIONS; AND (C) PRIVATE DEVELOPMENT 
BANKS, AS DEFINED IN REP ACT NO. 7906, OR THE THRIFT BANKS ACT; 
RURAL BANKS, AS DEFINED IN REPUBLIC ACT NO. 7353 OF THE RURAL 
BANKS ACT; COOPERATIVE BANKS, AS DEFINED IN REPUBLIC ACT NO. 6938 
OR THE COOPERATIVE CODE; ISLAMIC BANKS AS DEFINED IN REPUBLIC 
ACT NO. 6848, OR THE CHARTER OF AL AMANAH ISLAMIC INVESTMENT 
BANK OF THE PHILIPPINES; AND OTHER CLASSIFICATIONS OF BANKS AS 
DETERMINED BY THE MONETARY BOARD OF THE BANGKO SENTRAL NG 
PILIPINAS.  
(W) The term 'non-bank financial intermediary' (means) SHALL REFER TO [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] 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 
CERTIFICATES 
OF 
PARTICIPATIONS, 
CERTIFICATES 
OF 
ASSIGNMENT, 
OR 
SIMILAR 
INSTRUMENTS 
WITH 
RECOURSE, 
TRUST 
CERTIFICATES, 
OR 
OF 
REPURCHASE AGREEMENTS, FROM TWENTY (20) 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.  
(X) THE TERM QUASI-BANK'SHALL REFER TO ENTITIES ENGAGED IN 
THE BORROWING OF FUNDS THROUGH THE ISSUANCE, ENDORSEMENT OR 
ASSIGNMENT WITH RECOURSE OR ACCEPTANCE  
OF DEPOSIT SUBSTITUTES, AS DEFINED IN SUBSECTION (Z) HEREOF 
FOR PURPOSES OF RELENDING OR PURCHASING OF RECEIVABLES AND 
OTHER OBLIGATIONS.  


 
7
[(x)} (Y) The term 'QUASI-BANKING ACTIVITIES' [means) SHALL REFER TO 
borrowing funds from twenty (20) or more (personal] INDIVIDUALS 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. PROVIDED, FURTHER, THAT 
IF THE INTENTION IS FOR THE DEBT INSTRUMENTS TO BE HELD BY MORE 
THAN NINETEEN (19) HOLDERS DURING THE ENTIRE TERM OF THE DEBT 
INSTRUMENT AND IF THE TENOR AND DENOMINATION ARE SUCH THAT THEY 
CAN BE HELD BY MORE THAN NINETEEN (19) LENDERS, THEN THE 
INSTRUMENT SHALL BE CONSIDERED DEPOSIT SUBSTITUTES.  
 
[(y)] (Z) The term 'deposit substitutes' shall [mean] REFER TO an alternative 
form 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, (including) 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 recourse 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.   


8
[(Z)] (AA) The term ‘ordinary income'    XXX   XXX   XXX  
[(AA)] (BB) The term 'rank and file employees'    XXX   XXX   XXX  
[(BB)] (CC) The term 'mutual fund company' shall [mean] REFER TO 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.  
[(CC)] (DD) The term 'trade, business or profession’ xxx XXX XXX  
[(DD)] (EE) The term “regional or area headquarters’ XXX XXX Xxx  
[(EE)] (FF) The term 'regional operating headquarters’ xxx XXX XXX  
((FF)] (GG) The term [ʻlong-term deposit or investment certificate shall refer to 
certificate of time deposit or investment in the form of savings, common or individual 
trust funds, deposit substitutes, investment management accounts and other 
investments with a maturity period of not less than five (5) years, the form of which 
shall be prescribed by the Bangko Sentral ng Pilipinas (BSP) and issued by banks 
only (not by non-bank financial intermediaries and finance companies) to individuals 
in denominations of Ten thousand pesos (P10,000) and other denominations as may 
be prescribed by the BSP.] 'FINANCIAL INSTITUTIONS' OR 'FINANCIAL 
INTERMEDIARIES' SHALL REFER TO 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. THESE SHALL INCLUDE BANKS, QUASI-BANKS, TRUST ENTITIES, 
PAWNSHOPS, FOREIGN EXCHANGE DEALERS, MONEY BROKERS, CREDIT 
COOPERATIVES, FINANCING COMPANIES, FINANCE LEASING COMPANIES, 
INVESTMENT COMPANIES, AND OTHER ENTITIES ENGAGED IN COLLECTIVE 


9
INVESTMENT SCHEMES, INVESTMENT HOUSES, LENDING INVESTORS OR 
ENTITIES ENGAGED IN FINANCIAL INTERMEDIATION ACTIVITIES, AND OTHER 
TYPES OF BUSINESS THAT MAY BE CLASSIFIED BY THE BANGKO SENTRAL 
NG PILIPINAS OR THE SECURITIES AND EXCHANGE COMMISSION AS 
FINANCIAL INSTITUTIONS.  
LIFE AND NON-LIFE INSURANCE COMPANIES, PRE-NEED COMPANIES 
AND HEALTH MAINTENANCE ORGANIZATIONS ARE ALSO CONSIDERED 
FINANCIAL INSTITUTIONS UNDER THE SUPERVISION OF THE INSURANCE 
COMMISSION.  
[(GG)] (HH) The term 'statutory minimum wage’xxx XXX XXX  
[(HH)] (II) The term “minimum wage earner' xxx XXX XXX  
(JJ) THE TERM 'COLLECTIVE INVESTMENT SCHEMES' OR 'CIS' SHALL 
REFER TO ANY ARRANGEMENT WHEREBY FUNDS ARE SOLICITED FROM THE 
INVESTING PUBLIC AND POOLED TOGETHER FOR THE PURPOSE OF 
INVESTING, RE-INVESTING, 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 EXCHANGE COMMISSION AND THE INSURANCE COMMISSION. A CIS 
MAY EITHER BE OPEN-END OR CLOSED-END, DEFINED AS FOLLOWS:  
"OPEN-END CIS' SHALL REFER TO A CIS WHERE SECURITIES ARE 
OFFERED AND ARE ALWAYS REDEEMABLE BY THE CIS; AND  
'CLOSED-END CIS' SHALL REFER TO A CIS WHERE A FIXED NUMBER 
OF SECURITIES ARE OFFERED IN AN INITIAL PUBLIC OFFERING AND 
THEREAFTER MAY BE TRADED IN AN ORGANIZED MARKETPLACE AS 
DETERMINED BY THE SECURITIES AND EXCHANGE COMMISSION, BUT MAY 
NOT BE REDEEMED BY THE CIS. A CLOSED-END CIS SHALL NOT BE 
ALLOWED TO INCREASE ITS NUMBER OF SECURITIES.  


10
(KK) THE TERM 'UNIT LINKED INVESTMENT INSTRUMENT' SHALL 
REFER TO 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, 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.  
(LL)
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 GOVERNMENT REGULATORY AGENCIES.  
(MM) 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 
SUBSTITUTES, 
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.  
(NN) THE TERM ‘ORGANIZED MARKETPLACE'SHALL REFER TO AN 
EXCHANGE, AN OVER-THE-COUNTER MARKET, OR AN ALTERNATIVE 
TRADING SYSTEM RECOGNIZED AS SUCH BY THE SECURITIES AND 
EXCHANGE COMMISSION AS AN EXCHANGE UNDER REPUBLIC ACT NO. 8799, 
AS AMENDED, AND GOVERNED BY, AMONG OTHERS, TRANSPARENT AND 
BINDING RULES AND MARKET CONVENTIONS ON MEMBERSHIP, TRADING, 
PRICE TRANSPARENCY, TRADE REPORTING, MARKET MONITORING AND 
ORDERLY CONDUCT OF THE MARKET WHICH ARE ENFORCEABLE ON THE 
MEMBERS AND PARTICIPANTS.  
(00) THE TERM HEALTH INSURANCE PRODUCTS SHALL REFER TO
THOSE THAT ARE BEING OFFERED AND SOLD BY INSURANCE COMPANIES, 
EITHER LIFE OR NON-LIFE, WHEREIN THERE IS A LIST OF COVERED 


 
11
ILLNESSES OF WHICH THE COMPANIES ASSUME RISKS AND INDEMNIFY 
LOSSES BROUGHT BY THE SAID COVERED  
ILLNESSES.  
(PP) THE TERM HEALTH MAINTENANCE ORGANIZATION (HMO) 
PRODUCTS SHALL REFER TO PRE-AGREED OR DESIGNATED HEALTH CARE 
SERVICES TO THE ENROLLED MEMBERS FOR A FIXED PRE-PAID FEE FOR A 
SPECIFIED PERIOD OF TIME THROUGH THE USE OF SELECTED NETWORK OF 
HEALTH CARE PROVIDERS. HMO PRODUCTS PROVIDE A WIDE ARRAY OF 
MEDICAL, SURGICAL AND HOSPITAL SERVICES THAT INCLUDE PREVENTIVE 
CARE AND WELLNESS PROGRAMS AND GENERALLY HAVE NO CASH-OUT 
TRANSACTION.  
SEC. 4. Section 24 (B) and (C) of the National Internal Revenue Code of 1997, 
as amended, is hereby amended to read as follows:  
SEC. 24. Income Tax Rates.  
(A) Rates of Income Tax on Individual Citizen and Individual Resident 
Alien of the Philippines. -  
XXX XXX XXX 
(B) Rate of Tax on Certain 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 (from any currency bank deposit, and yield or any other monetary 
benefit from deposit substitutes, and from trust funds and similar arrangements; 
royalties, except on books, as well as other literary works and musical compositions, 
which shall be imposed a final tax of ten percent (10%); prizes (except prizes 
amounting to Ten thousand pesos (P10,000) or less which shall be subject to tax under 
Subsection (A) of Section 24; and other winnings (except winnings amounting to Ten 
Thousand pesos (P10,000) or less from Philippine Charity Sweepstakes and Lotto 
which shall be exempt), derived from sources within the Philippines:] YIELD, OR ANY 
OTHER MONETARY BENEFIT EARNED OR RECEIVED FROM BANK DEPOSIT, 
DEPOSIT SUBSTITUTE, TRUST FUND, AND SIMILAR ARRANGEMENTS. 
[Provided, however, That interest income received by an individual taxpayer (except a 
non-resident individual) from a depository bank under the expanded foreign currency 
deposit system shall be subject to a final income tax at the rate of fifteen percent (15%) 
of such interest income: Provided, further, That interest income from long-term deposit 


 
12
or investment in the form of savings, common or individual trust funds, deposit 
substitutes, investment management accounts and other investments evidenced by 
certificates in such form prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be 
exempt from the tax imposed under this Subsection: Provided, finally, That should the 
holder of the certificate pre-terminate the deposit or investment before the fifth (5th) 
year, a final tax shall be imposed on the entire income and shall be deducted and 
withheld by the depository bank from the proceeds of the long-term deposit or 
investment certificate based on the remaining maturity thereof:  
Four (4) years to less than five (5) years – 5%;  
Three (3) years to less than (4) years – 12%; and  
Less than three (3) years – 20%.)  
(2) Cash and/or Property Dividends. – A final tax at the rate of sten percent 
(10%)] FIFTEEN PERCENT (15%) 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 or mutual fund companies, 
ENTITIES ENGAGED IN 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] ONE 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] ONE 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, 2020. INCOME 
FORMING PART OF RETAINED EARNINGS AS OF DECEMBER 31, 2019, EVEN 
IF DECLARED OR DISTRIBUTED ON OR AFTER JANUARY 1, 2020, SHALL BE 
SUBJECT TO TEN PERCENT (10%) TAX.  
LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 24(A) BASED 
ON NET GAIN.  
[(C) (3) Capital Gains from THE Sale, EXCHANGE, BARTER, OR 
DISPOSITION of Shares of Stock not Traded in the Stock Exchange OR 
ORGANIZED MARKETPLACE. - [The provisions of Section 39(B) notwithstanding, a] 
A final tax at the rate of fifteen percent (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 


 
13
disposed of through A LOCAL (the) stock exchangel.] OR AN ORGANIZED 
MARKETPLACE.  
(4) PRESUMPTIVE CAPITAL GAINS FROM THE SALE, EXCHANGE, 
BARTER, OR DISPOSITION OF SHARES OF STOCK TRADED IN THE STOCK 
EXCHANGE OR AN ORGANIZED MARKETPLACE. – A FINAL TAX AT THE RATE 
OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) SHALL BE LEVIED, ASSESSED 
AND COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR ANY OTHER 
MODE OF DISPOSITION OF SHARES OF STOCK LISTED AND TRADED 
THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE, 
AND SHALL BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:  
JANUARY 1, 2023: FIVE-TENTH OF ONE PERCENT (5/10 OF 1%), 
JANUARY 1, 2024: FOUR-TENTH OF ONE PERCENT (4/10 OF 1%), 
JANUARY 1, 2025: THREE-TENTH OF ONE PERCENT (3/10 OF 1%), 
JANUARY 1, 2026: TWO-TENTH OF ONE PERCENT (2/10 OF 1%), 
JANUARY 1, 2027: 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: PROVIDED, THAT EFFECTIVE JANUARY 1, 2026, EVERY SALE, 
BARTER, EXCHANGE, OR ANY OTHER MODE OF DISPOSITION OF SHARES OF 
STOCK LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR AN 
ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER 
SECTION 24 OF THIS CODE.  
ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC 
CORPORATION TRADED IN A FOREIGN EXCHANGE, SHALL BE TAXED UNDER 
SUBSECTION (A) OF THIS SECTION.  
ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR 
DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A DEALER IN 
SECURITIES LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES TO BUY AND SELL IN SECURITIES, FOR THE DEALER'S OWN 
ACCOUNT IN THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE 
SUBJECT TO TAX UNDER THIS SUBSECTION BUT SUBSECTION (A) AS AN 
ORDINARY INCOME.  


 
14
(5) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER, 
DISPOSITION OF NON-LISTED AND NON-TRADED DEBT INSTRUMENTS AND 
OTHER SECURITIES NOT INCLUDED IN SECTION 24(B)(3) AND (4). – A FINAL 
TAX AT THE RATE OF FIFTEEN PERCENT (15%) SHALL BE IMPOSED ON THE 
NET CAPITAL GAIN EARNED FROM A DEBT INSTRUMENT AND OTHER 
SECURITIES NOT INCLUDED IN SUBSECTIONS (B)(3) AND (4), ISSUED BY A 
CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC CORPORATION, OR A 
RESIDENT FOREIGN CORPORATION, OR BY THE GOVERNMENT OR ANY OF 
ITS AGENCIES OR INSTRUMENTALITIES.  
(6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND TRADED DEBT 
INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION 24(B)(3) 
AND (4) - 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 SHALL BE LEVIED, ASSESSED, AND COLLECTED ON 
EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT 
INSTRUMENTS AND OTHER SECURITIES, LISTED AND TRADED THROUGH A 
LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE, 
AND SHALL BE PAID BY THE SELLER OR TRANSFEROR: PROVIDED, THAT 
EFFECTIVE JANUARY 1, 2026, EVERY SALE, BARTER, EXCHANGE, OR OTHER 
DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED AND 
TRADED THROUGH A LOCAL STOCK EXCHANGE OR A LICENSED 
ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER 
SECTION 24 OF THIS CODE. IF TRADED IN A FOREIGN EXCHANGE, THE GAIN 
SHALL BE SUBJECT TO TAX UNDER SUBSECTION (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 GOVERNMENT REGULATORY AGENCY TO BUY AND SELL 
IN DEBT INSTRUMENTS AND OTHER SECURITIES FOR THE DEALER'S OWN 
ACCOUNT IN THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE 
SUBJECT TO TAX UNDER THIS SUBSECTION BUT TO SECTION 24(A) AS AN 
ORDINARY INCOME.  
[(D(7) Capital Gains from Sale of Real Property. -  


 
15
[(1)] (a) In General. – [The provisions of Section 39(B) notwithstanding, a] 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)] (b) Exception. - XXX XXX XXX  
(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 TEN THOUSAND PESOS 
(P10,000) 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, as 
amended, is hereby amended to read as follows:  
SEC. 25. Tax on Nonresident Alien Individual. -  
(A) Nonresident Alien Engaged in Trade or Business Within the 
Philippines. [(1) In General. - JA 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 manner as 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 


 
16
aggregate period of more than fone hundred eighty (180) ONE HUNDRED EIGHTY-
THREE (183) days during any calendar year shall be deemed a 'nonresident alien 
doing business in the Philippines', Section 22(G) of this Code notwithstanding.  
[(2) Cash and/or Property Dividends from a Domestic Corporation or Joint Stock 
Company, or Insurance or Mutual Fund Company or Regional Operating Headquarter 
or Multinational Company, or Share in the Distributable Net Income of a Partnership 
(Except a General Professional Partnership), Joint Account, Joint Venture Taxable as 
a Corporation or Association, Interests, Royalties, Prizes, and Other Winnings. – Cash 
and/or property dividends from a domestic corporation, or from a joint stock company, 
or from an insurance or mutual fund company or from a regional operating headquarter 
of multinational company, or the share of a nonresident alien individual in the 
distributable net income after tax of a partnership (except a general professional 
partnership) of which he is a partner, or the share of a nonresident alien individual in 
the net income after tax of an association, a joint account), or a joint venture taxable 
as a corporation of which he is a member or a co-venturer; interests; royalties in any 
form); and prizes (except prizes amounting to Ten thousand pesos (P10,000) or less 
which shall be subject to tax under Subsection (B)(1) of Section 24); and other 
winnings (except Philippine Charity Sweepstakes and Lotto winnings), shall be subject 
to an income tax of twenty percent (20%) on the total amount thereof:  
Provided, however, That royalties on books as well as other literary works, and 
royalties on musical compositions shall be subject to a final tax of ten percent (10%) 
on the total amount thereof: Provided, further, That cinematographic films and similar 
works shall be subject to the tax provided under Section 28 of this Code: Provided, 
furthermore, That interest income from long-term deposit or investment in the form of 
savings, common or individual trust funds, deposit substitutes, investment 
management accounts and other investments evidenced by certificates in such form 
prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be exempt from the tax 
imposed under this Subsection: Provided, finally, That should the holder of the 
certificate pre-terminate the deposit or investment before the fifth (5th) year, a final tax 
shall be imposed on the entire income and shall be deducted and withheld by the 
depository bank from the proceeds of the long-term deposit or investment certificate 
based on the remaining maturity thereof:]  
 
 


 
17
[Four (4) years to less than five (5) years - 5%;]  
[Three (3) years to less than four (4) years – 12%; and] 
[Less than three (3) years – 20%.]  
[(3) Capital Gains. - Capital gains realized from sale, barter or exchange of 
shares of stock in domestic corporations not traded through the local stock exchange, 
and real properties shall be subject to the tax prescribed under Subsections (C) and 
(D) of Section 24.]  
(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 [interest, 
cash and/or property 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. Capital gains realized by a nonresident 
alien individual not engaged in trade or business in the Philippines from the sale of 
(shares of stock in any domestic corporation and) real property shall be subject to the 
income tax prescribed under Subsection[s (C) and (D) J (B) (7) of Section 24.  
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.  
XXX     XXX     XXX 
 
SEC. 6. Section 27 (D) of the National Internal Revenue Code of 1997, as amended, 
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%).  
 


 
18
XXX     XXX     XXX 
(D) Rates of Tax on Certain Passive Incomes.  
[(1) Interest from Deposits and Yield or any other Monetary Benefit from 
Deposit Substitutes and from Trust Funds and Similar Arrangements, and 
Royalties. - A final tax at the rate of twenty percent (20%) is hereby imposed upon the 
amount of interest on currency bank deposit and yield or any other monetary benefit 
from deposit substitutes and from trust funds and similar arrangements received by 
domestic corporations, and royalties, derived from sources within the Philippines: 
Provided, however, That interest income derived by a domestic corporation from a 
depository bank under the expanded foreign currency deposit system shall be subject 
to a final income tax at the rate of fifteen percent (15%) of such interest income.]  
[(2) Capital Gains from the Sale of Shares of Stock Not Traded in the Stock 
Exchange. – A final tax at the rate of fifteen percent (15%) shall be imposed on net 
capital gains realized during the taxable year from the sale, exchange or other 
disposition of shares of stock in a domestic corporation except shares sold or disposed 
of through the stock exchange.]  
[(3) Tax on Income Derived under the Expanded Foreign Currency Deposit 
System. – Income derived by a depository bank under the expanded foreign currency 
deposit system from foreign currency transactions with nonresidents, offshore banking 
units in the Philippines, local commercial banks including branches of foreign banks 
that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business 
with foreign currency deposit system units and other depository banks under the 
expanded foreign currency deposit system shall be exempt from all taxes, except net 
income from such transactions as may be specified by the Secretary of Finance, upon  
recommendation by the Monetary Board to be subject to the regular income tax 
payable by banks: Provided, however, That interest income from foreign currency 
loans granted by such depository banks under said expanded system to residents 
other than offshore banking units in the Philippines or other depository banks under 
the expanded system shall be subject to a final tax at the rate of ten percent (10%).)  
[Any income of nonresidents, whether individuals or corporations, from 
transactions with depository banks under the expanded system shall be exempt from 
income tax.)  
[(4) Intercorporate Dividends. - Dividends received by a domestic corporation 
from another domestic corporation shall not be subject to tax;]  


 
19
(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 A BANK DEPOSIT, 
DEPOSIT SUBSTITUTE, TRUST FUND, AND SIMILAR ARRANGEMENTS.  
(2) CASH AND/OR PROPERTY DIVIDENDS. - INTERCORPORATE 
DIVIDENDS OR DIVIDENDS RECEIVED FROM A DOMESTIC CORPORATION 
SHALL NOT BE SUBJECT TO TAX IMPOSED UNDER THIS SUBSECTION: 
PROVIDED, THAT NINETY-FIVE PERCENT (95%) OF DIVIDENDS RECEIVED BY 
A DOMESTIC CORPORATION FROM SUBSIDIARY COMPANIES LOCATED 
OUTSIDE THE PHILIPPINES SHALL NOT BE SUBJECT TO TAX: PROVIDED, 
FURTHER, THAT THE DOMESTIC CORPORATION HOLDS DIRECTLY OR 
INDIRECTLY AT LEAST TWENTY PERCENT (20%) SHAREHOLDINGS OF THE 
SUBSIDIARY COMPANY AND HAS HELD THE SHAREHOLDINGS FOR A 
MINIMUM OF TWO (2) YEARS AT THE TIME OF THE DIVIDENDS DISTRIBUTION: 
PROVIDED, FURTHERMORE, THAT, THE SUBSIDIARY OPERATING COMPANY 
IS SUBJECT TO AT LEAST TEN PERCENT (10%) INCOME TAX AND TO 
WITHHOLDING TAX ON THE DIVIDENDS DISTRIBUTED TO THE DOMESTIC 
CORPORATION, UNLESS OTHERWISE EXEMPT UNDER ITS LOCAL LAWS: 
PROVIDED, FINALLY, THAT, THE LIMITATIONS UNDER SECTION 34(C) SHALL 
NOT BE OBSERVED IN CONNECTION WITH ANY TAXES PAID OR ACCRUED IN 
ANY FOREIGN COUNTRY IN RESPECT TO SUCH DIVIDEND.  
LIQUIDATING DIVIDENDS SHALL BE SUBJECT TO SECTION 27(A) AND 
BASED ON NET GAIN.  
(3) CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER OR 
DISPOSITION OF SHARES OF STOCK NOT TRADED IN THE STOCK EXCHANGE 
OR AN ORGANIZED MARKETPLACE - A FINAL TAX AT THE RATE OF FIFTEEN 
PERCENT (15%) IS HEREBY IMPOSED UPON THE NET CAPITAL GAINS 
REALIZED DURING THE TAXABLE YEAR FROM THE SALE, BARTER, 
EXCHANGE, OR OTHER MODES OF DISPOSITION OF SHARES OF STOCK IN A 
DOMESTIC CORPORATION, EXCEPT SHARES SOLD, OR DISPOSED OF 
THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE.  
(4) PRESUMPTIVE CAPITAL GAINS FROM THE SALE, EXCHANGE, 
BARTER OR DISPOSITION OF SHARES OF STOCK TRADED IN THE STOCK 
EXCHANGE OR AN ORGANIZED MARKETPLACE. - A FINAL TAX AT THE RATE 


 
20
OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) 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 AN ORGANIZED MARKETPLACE, AND SHALL 
BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:  
JANUARY 1, 2023: FIVE-TENTH OF ONE PERCENT (5/10 OF 1%), 
JANUARY 1, 2024: FOUR-TENTH OF ONE PERCENT (4/10 OF 1%),  
JANUARY 1, 2025: THREE-TENTH OF ONE PERCENT (3/10 OF 1%),  
JANUARY 1, 2026: TWO-TENTH OF ONE PERCENT (2/10 OF 1%), 
JANUARY 1, 2027: 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: PROVIDED, THAT EFFECTIVE JANUARY 1, 2026, EVERY SALE, 
BARTER, EXCHANGE, OR ANY OTHER MODE OF DISPOSITION OF SHARES OF 
STOCK LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR AN 
ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER 
SECTION 27 OF THIS CODE.  
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 LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES TO BUY AND SELL IN SECURITIES, FOR HIS OWN ACCOUNT IN THE 
ORDINARY COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER 
THIS SUBSECTION BUT TO SECTION 27(A) AS AN ORDINARY INCOME.  
(5) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER, 
DISPOSITION OF NON-LISTED AND NON-TRADED DEBT INSTRUMENTS AND 
OTHER SECURITIES NOT INCLUDED IN SECTION 27(D)(3) AND (4). - A FINAL 
TAX AT THE RATE OF FIFTEEN PERCENT (15%) SHALL BE IMPOSED ON NET 
CAPITAL GAINS EARNED FROM DEBT INSTRUMENT AND OTHER SECURITIES 
NOT INCLUDED IN SECTION 27(D)(3) AND (4), ISSUED BY A CITIZEN OR 
RESIDENT ALIEN, OR BY A DOMESTIC CORPORATION, OR A RESIDENT 


 
21
FOREIGN CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS 
AGENCIES OR INSTRUMENTALITIES. 
(6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND TRADED DEBT 
INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION 27(D) (3) 
AND (4) - 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 SHALL BE LEVIED, ASSESSED, AND COLLECTED ON 
EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT 
INSTRUMENTS AND OTHER SECURITIES, LISTED AND TRADED THROUGH A 
LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, AND SHALL BE PAID 
BY THE SELLER OR TRANSFEROR: PROVIDED, THAT EFFECTIVE JANUARY 1, 
2026, EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT 
INSTRUMENTS AND OTHER SECURITIES, LISTED AND TRADED THROUGH A 
LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE 
SHALL NOT BE SUBJECT TO TAX UNDER SECTION 27 OF THIS CODE. 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 GOVERNMENT REGULATORY AGENCIES TO BUY AND 
SELL IN DEBT INSTRUMENTS AND OTHER SECURITIES, FOR THE DEALER'S 
OWN ACCOUNT IN THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE 
SUBJECT TO TAX UNDER THIS SUBSECTION BUT TO SECTION 27(A) AS AN 
ORDINARY INCOME.  
[(5)] (7) 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.  


 
22
(E) ROYALTIES - A FINAL TAX AT THE RATE OF TWENTY PERCENT 
(20%) IS HEREBY IMPOSED ON ROYALTIES EARNED AS PASSIVE INCOME.  
[(E)(F) Minimum Corporate Income Tax on Domestic Corporations –  
(1) Imposition of Tax. –    x x x  
(2) Carry Forward of Excess Minimum Tax. -  x x x  
(3) Relief from the Minimum Corporate Income Tax under Certain 
Conditions. - x x x 
4) Gross Income Defined. – x x x 
XXX XXX XXX 
 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, as 
amended, is hereby amended to read 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 [an] income tax UNDER 
SECTION 27 OF THIS CODE (equivalent to thirty-five percent (35%) of the] ON 
taxable income derived in the preceding taxable year from all sources within the 
Philippines[: Provided, That effective January 1, 2009, the rate of income tax shall be 
thirty percent (30%)].  
XXX XXX XXX 
 
(2) Minimum Corporate Income Tax on Resident Foreign Corporations. — 
A minimum corporate income tax of two percent (2%) of gross income, as prescribed 


 
23
under Section 27[E](F) of this Code, shall be imposed, under the same conditions, on 
a resident foreign corporation taxable under paragraph (1) of this Subsection.  
(3) International Carrier. – x x x 
[(4) Offshore Banking Units. - The provisions of any law to the contrary 
notwithstanding, income derived by offshore banking units authorized by the Bangko 
Sentral ng Pilipinas (BSP), from foreign currency transactions with nonresidents, other 
offshore banking units, local commercial banks, including branches of foreign banks 
that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business 
with offshore banking units shall be exempt from all taxes except net income from such 
transactions as may be specified by the Secretary of Finance, upon recommendation 
of the Monetary Board which shall be subject to the regular income tax payable by 
banks: Provided, however, That any interest income derived from foreign currency 
loans granted to residents other than offshore banking units or local commercial 
banks, including local branches of foreign banks that may be authorized by the BSP 
to transact business with offshore banking units, shall be subject only to a final tax at 
the rate of ten percent (10%).]  
(Any income of nonresidents, whether individuals or corporations, from 
transactions with said offshore banking units shall be exempt from income tax.]  
[(5)] (4) 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. [(except those activities which are registered with the 
Philippine Economic Zone 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.  
[(6)](5) Regional or Area Headquarters and Regional Operating 
Headquarters of Multinational Companies. – XXX  
[(7) Tax on Certain Incomes Received by a Resident Foreign Corporation. - ]  


 
24
[(a) Interest from Deposits and Yield or any other Monetary Benefit from Deposit 
Substitutes, Trust Funds and Similar Arrangements and Royalties. - Interest from any 
currency bank deposit and yield or any other monetary benefit from deposit substitutes 
and from trust funds and similar arrangements and royalties derived from sources 
within the Philippines shall be subject to a final income tax at the rate of twenty percent 
(20%) of such interest. Provided, however, That interest income derived by a resident 
foreign corporation from a depository bank under the expanded foreign currency 
deposit system shall be subject to a final income tax at the rate of seven and one-half 
percent (7 1/2%) of such interest income.)  
[(b) Income Derived under the Expanded Foreign Currency Deposit System. - 
Income derived by a depository bank under the expanded foreign currency deposit 
system from foreign currency transactions with nonresidents, offshore banking units 
in the Philippines, local commercial banks including branches of foreign banks that 
may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with 
foreign currency deposit system units and other depository banks under the expanded 
foreign currency deposit system shall be exempt from all taxes, except net income 
from such transactions as may be specified by the Secretary of Finance, upon 
recommendation by the Monetary Board to be subject to the regular income tax 
payable by banks. Provided, however, That interest income from foreign currency 
loans granted by such depository banks under said expanded system to residents 
other than offshore banking units in the Philippines or other depository banks under 
the expanded system shall be subject to a final tax at the rate of ten percent (10%).]  
[Any income of nonresidents, whether individuals or corporations, from 
transactions with depository banks under the expanded system shall be exempt from 
income tax.)  
[(c) Capital Gains from Sale of Shares of Stock Not Traded in the Stock 
Exchange. - A final tax at the rates prescribed below 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 the stock exchange:]  
 
 
 
 


 
25
[Not     over     P100,000..................              5%] 
(On any amount in excess of P100,000.......10%)  
[(d) Intercorporate Dividends. - Dividends received by a resident foreign 
corporation from a domestic corporation liable to tax under this Code shall not be 
subject to tax under this Title.]  
(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-five 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%).  
XXX XXX XXX 
(5) Tax on Certain Incomes Received by a Nonresident Foreign 
Corporation.  
[(a) Interest on Foreign Loans. - A final withholding tax at the rate of twenty 
percent (20%) is hereby imposed on the amount of interest on foreign loans contracted 
on or after August 1, 1986;]  
[(b) Intercorporate Dividends. -- A final withholding tax at the rate of fifteen 
percent (15%) is hereby imposed on the amount of cash and/or property dividends 
received from a domestic corporation, which shall be collected and paid as provided 
in Section 57(A) of this Code, subject to the condition that the country in which the 
nonresident foreign corporation is domiciled, shall allow a credit against the tax due  
from the nonresident foreign corporation taxes deemed to have been paid in the 
Philippines equivalent to twenty percent (20%), which represents the difference 
between the regular income tax of thirty-five percent (35%) and the fifteen percent 
(15%) tax on dividends as provided in this subparagraph. Provided, That effective 
January 1, 2009, the credit against the tax due shall be equivalent to fifteen percent 
(15%), which represents the difference between the regular income tax of thirty 
percent (30%) and the fifteen percent (15%) tax on dividends;]  
[(c) Capital Gains from Sale of Shares of Stock not Traded in the Stock 
Exchange. – A final tax at the rates prescribed below is hereby imposed upon the net 


 
26
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 the stock exchange:]  
[Not over P100,000.............. 5%] 
[On any amount in excess of P100,000......... 10%)  
 
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), (4), (5) AND (6) 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, 
19, as amended, is hereby amended to read 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 [(10%)].(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;  


 
27
(b) Banks, (and 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 COMPANIES, PENSION FUNDS, AND OTHER 
ENTITIES DOING BUSINESS SIMILAR TO INSURANCE.  
(C) Evidence of Purpose to Avoid Income Tax. –  
[(1) Prima Facie Evidence. – The fact that any corporation is a mere holding  
company or investment company shall be prima facie evidence of a purpose to 
avoid the tax upon its shareholders or members.]  
- 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.)  
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.  
XXX     XXX     XXX 
SEC. 9. Section 32(B)(7)(g) and (h) of the National Internal Revenue Code of 1997, 
as amended, is hereby amended to read as follows:  
SEC. 32. Gross Income. - XXX  
(B) Exclusions from Gross Income. – The following items shall not be 
included in gross income and shall be exempt from taxation under this Title:  
XXX     XXX     XXX 
(7) Miscellaneous Items. –  
XXX     XXX     XXX 
 
 [(g) Gains from the Sale of Bonds, Debentures or other Certificate of 
Indebtedness. – Gains realized from the same or exchange or retirement of bonds, 
debentures or other certificate of indebtedness with a maturity of more than five (5) 
years.]  


 
28
(G) INTEREST INCOME FROM, AND GAINS FROM THE SALE, TRANSFER, 
OR DISPOSITION OF, PROJECT SPECIFIC BONDS THAT ARE ISSUED BY THE 
REPUBLIC OF THE PHILIPPINES OR ANY OF ITS INSTRUMENTALITIES 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 [in a mutual fund company] OR UNITS 
OF PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME as defined [in] 
UNDER Section 22 [BB] (JJ) of this Code.  
XXX     XXX     XXX 
SEC. 10. Section 34(A), (B), (C) and (E) of the National Internal Revenue Code of 
1997, as amended, is hereby further amended to read 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:  
 
XXX     XXX     XXX 
(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 


 
29
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.  
 
XXX     XXX    XXX 
(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, 2020, THE PERCENTAGE SHALL BE 
FIFTY PERCENT (50%).  
(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  
[(c) If the indebtedness is incurred to finance petroleum exploration.)  


 
30
(3) (Optional] Treatment of Interest Expense RELATED TO ACQUISITION 
OF ASSET. - [At the option of the taxpayer, interest] INTEREST EXPENSE incurred 
to acquire property used in trade, business or exercise of a profession THAT WILL 
BENEFIT THE BUSINESS LONGER 'THAN ONE YEAR [may be allowed as a 
deduction or treated as a capital expenditure] SHALL BE CAPITALIZED AND 
THEREAFTER AMORTIZED OR DEPRECIATED AS PART OF THE COST OF THE 
ASSET.  
XXX     XXX     XXX 
(E) Bad Debts. –  
(1) In General. – XXX  
(2) Securities Becoming Worthless. – If 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, [in the case of a taxpayer other than 
a bank or trust company incorporated under the laws of the Philippines a substantial 
part of whose business is the receipt of deposits, 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 years, of capital assets). SECURITIES HELD BY A DEALER IN 
SECURITIES OR AN ENTITY LICENSED BY THE APPROPRIATE GOVERNMENT 
REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES INCLUDING 
BANKS, AND OTHER FINANCIAL INTERMEDIARIES, SHALL BE CONSIDERED 
ORDINARY ASSETS, AND SECURITIES HELD THAT ARE ASCERTAINED TO BE 
WORTHLESS SHALL BE CONSIDERED ORDINARY LOSSES THAT ARE 
ALLOWED AS DEDUCTION FROM TAXABLE INCOME.  
XXX    XXX     XXX 
  
SEC. 11. Section 37 (A) and (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, PRE-NEED 
COMPANIES, AND PENSION FUNDS. – In the case of insurance companies, PRE 
NEED COMPANIES, AND PENSION FUNDS, 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 


 
31
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. - In the case of MUTUAL LIFE, mutual 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.  
XXX     XXX     XXX 
 
SEC. 12. Section 38 (A) of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read 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 [contact] 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 FINANCIAL 
INTERMEDIARY 
DULY 
LICENSED BY 
THE 
APPROPRI 
GOVERNMENT 
REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES EITHER FOR THE 
ENTITY'S 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.  
 
XXX     XXX     XXX 
 
SEC. 13. Section 39 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows:  
SEC. 39. Capital Gains and Losses. –  


 
32
(A) Definitions. - As used in this Title –  
XXX     XXX     XXX 
 
 [(B) Percentage Taken Into Account. - In the case of a taxpayer, other than 
a corporation, only the following percentages of the gain or loss recognized upon the 
sale or exchange of a capital asset shall be taken into account in computing net capital 
gain, net capital loss, and net income:)  
[(1) One hundred percent (100%) if the capital asset has been held for not more 
than twelve (12) months; and]  
[(2) Fifty percent (50%) if the capital asset has been held for more than twelve 
(12) months;]  
[(C)] (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 or trust company incorporated under the loss of the 
Philippines, a substantial part of whose business is the receipt of deposits,] DEALER 
IN SECURITIES OR OTHER ENTITIES OR FINANCIAL INTERMEDIARIES DULY 
LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES 
TO TRADE IN SECURITIES, sells any bond, debenture, note, or certificate or other 
evidence of indebtedness issued by any corporation[ (1, including one issued by a 
government or political subdivision thereofD), 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.  
[(D) Net Capital Loss Carry-over. - If any taxpayer, other than a corporation, 
sustains in any taxable year a nei capital loss, such loss in an amount not in excess 
of the net income for such year) shall be treated in the succeeding taxable year as a 
loss from the sale or exchange of a capital asset held for not more than twelve (12) 
months.)  
[(E)](C) Retirement of Bonds, etc. –   X  X  X  
[(F) Gains or Losses from Short Sales, Etc. -- For purposes of this Title -  
(1) Gains or losses from short sales of property shall be considered as gains or 
losses from sales or exchanges of capital assets; and  
(2) Gains or losses attributable to the failure to exercise privileges or options to 
buy or sell property shall be considered as capital gains or losses.]  


 
33
 
SEC. 14. Section 42(A)(1), (2) and ()(2) of the National Internal Revenue Code of 
1997, as amended, 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 on} FROM DEBT INSTRUMENTS, BANK DEPOSITS, 
DEPOSIT SUBSTITUTES, TRUST FUNDS, AND SIMILAR ARRANGEMENTS 
SUCH AS bonds, notes or other interest-bearing obligations of residents, corporate or 
otherwisel;], 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 less] WITH AT LEAST (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] ON its gross income from all sources.  
XXX     XXX     XXX 
 
(B) Taxable Income from Sources Within the Philippines. –  
(1) General Rule. -  
XXX     XXX     XXX 
 
(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 


 
34
RECEIVED FROM THE USE OF SUCH FUNDS IN CONNECTION WITH THE 
CONDUCT OR OPERATION OF TRADE OR BUSINESS IN THE PHILIPPINES IS A 
TAXABLE INCOME IN THE PHILIPPINES.  
 
SEC. 15. Section 51(C)(2) of the National Internal Revenue Code of 1997, as 
amended,is hereby amended to read as follows:  
SEC. 51. Individual Return. -  
(A) Requirements. -- XXX  
B) Where to file. – X X X  
(C) When to File. – XXX  
(1) xxx  
(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] THROUGH a local (stock) exchange OR 
AN ORGANIZED MARKETPLACE as prescribed under (Section) SECTIONS 
24[(C)(B)(3) AND (5), AND 25(A) AND (B), (shall file) a return SHALL BE FILED 
within thirty (30) days after each transaction and a final consolidated return on or 
before April 15 of each year covering all stock 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 THROUGH A 
LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE AS PRESCRIBED 
UNDER SECTIONS 24(B)(4) AND (6), AND 25(A) AND (B), THE TAX SHALL BE 
COLLECTED BY THE BROKER WHO EFFECTED THE SALE, AND SHALL BE 
REMITTED TO THE BUREAU OF INTERNAL REVENUE WITHIN FIVE (5) 
BANKING DAYS FROM THE DATE OF COLLECTION THEREOF. THE BROKER 
SHALL LIKEWISE SUBMIT ON MONDAYS OF EACH WEEK TO THE SECRETARY 
OF THE LOCAL EXCHANGE OR ORGANIZED MARKETPLACE OF WHICH THE 
BROKER IS A MEMBER, A TRUE AND COMPLETE RETURN WHICH SHALL 
CONTAIN A DECLARATION OF ALL THE TRANSACTIONS EFFECTED DURING 
THE PRECEDING WEEK, AND OF ALL TAXES COLLECTED AND TURNED OVER 
TO THE BUREAU OF INTERNAL REVENUE.  
 


 
35
[(b)] (C) From the sale or disposition of real property under Section 24[(D)] (B) 
(7) shall file a return within thirty (30) days following each sale or other disposition.  
 
SEC. 16. Section 52(A) and (D) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read 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 shall not affect the implementation of 
Republic Act No. 10708 or TIMTA.  
XXX    XXX     XXX 
 
 (D) Return on Capital Gains Realized from Sale of Shares of Stock, DEBT 
INSTRUMENTS, AND OTHER SECURITIES not Traded in the Local [Stock] 
Exchange OR AN ORGANIZED MARKETPLACE. – Every corporation deriving 
capital gains from the sale or exchange of shares of stock, DEBT INSTRUMENTS 
AND OTHER SECURITIES not traded [thru] THROUGH a local [stock exchange OR 
AN ORGANIZED MARKETPLACE as prescribed under SECTIONS 27(D)(3), AND 
(5), AND 28 (Sections 24(C), 25(A)(3), 27(E)(2), 28(A)(8)(c) and 28(B)(5)(C),] shall file 
a return within thirty (30) days after each transaction and a final consolidated return of 


 
36
all transactions during the taxable year on or before the fifteenth (15th) day of the 
fourth (4th) month following the close of the taxable year.  
(E) RETURN ON CAPITAL GAINS REALIZED FROM SALE OF SHARES OF 
STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES TRADED IN A LOCAL 
EXCHANGE OR AN ORGANIZED MARKETPLACE. – IT SHALL BE THE DUTY OF 
EVERY BROKER WHO EFFECTED A SALE OF SHARES OF STOCK, DEBT 
INSTRUMENTS AND OTHER SECURITIES TRADED IN A LOCAL EXCHANGE OR 
AN ORGANIZED MARKETPLACE, SUBJECT TO THE TAX IMPOSED UNDER 
SECTION 27(D)(4) AND (6), AND 28, 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 LOCAL 
EXCHANGE OR ORGANIZED MARKETPLACE, OF WHICH THE BORROWER IS 
A MEMBER, A TRUE AND COMPLETE RETURN WHICH SHALL CONTAIN A 
DECLARATION OF ALL THE TRANSACTIONS EFFECTED DURING THE 
PRECEDING WEEK, AND TAXES COLLECTED AND TURNED OVER TO THE 
BUREAU OF INTERNAL REVENUE.  
 
SEC. 17, Section 54 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows:  
SEC. 54. Returns of Receivers, Trustees, (in Bankruptcy) or Assignees. - 
[In cases wherein receivers) RECEIVERS, ADMINISTRATORS, trustees in AN 
IRREVOCABLE TRUST OR 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 as and for such corporation, in the same manner and form as 
such organization is hereinbefore required to make returns, and any] ANY tax due on 
the income as returned by receivers, ADMINISTRATORS, 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 OF or control OVER.  


 
37
THE TRUSTOR IN A REVOCABLE TRUST, NOT THE TRUSTEE, SHALL BE 
RESPONSIBLE IN FILING THE RETURNS REQUIRED UNDER THIS CODE AND 
IN DECLARING THE INCOME RECEIVED FROM THE TRUST IN ACCORDANCE 
WITH SECTIONS 24, 25, 27 AND 28 OF THIS CODE. INCOME OF THE TRUST 
SUBJECTED TO FINAL TAX UNDER SECTIONS 24, 25, 27 AND 28 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 
SHALL 
BE 
SUBJECT 
TO 
CREDITABLE 
WITHHOLDING 
TAX 
UPON 
DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR THE 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 UNDER SECTION 27 IN THE CASE OF 
CORPORATE TRUSTORS.  
 
SEC. 18. Section 56 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows:  
SEC. 56. Payment and Assessment of Income Tax for Individuals and 
Corporations. -  
(A) Payment of Tax. -  
XXX     XXX     XXX 
(3) Payment of Capital Gains Tax. -  
IN GENERAL - The total amount of tax imposed and prescribed under (Section) 
SECTIONS 24[(C)}(B)(3), 24[(D)](B)(5), 24(B)(7), 25, 27[(E)(2)](D)(3), 27(D)(5), 
27(D)(7), 28(A)[(8)(c) and 28(B)(5)[(c)] 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] THE 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, 


 
38
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] THE 
SELLER shall be entitled to a refund of such tax upon verification of (his) compliance 
with the requirements for such exemption.  
XXX     XXX     XXX 
 
SEC. 19. Section 57 of the National internal Revenue Code of 1997, as amended, is 
hereby amended to read 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)(1), 24(B)(2), 24(C), 
24(D)(1); 25(A)(2), 25(A)(3), 25(B), 25(C), 25(D), 25(E); 27(D)(1), 27(D)(2), 27(D)(3), 
27(D)(5); 28(A)(4), 28(A)(5), 28(A)(7)(a), 28(A)(7)(b), 28(A)(7)(0), 28(B)(1), 28(B)(2), 
28(B)(3), 28(B)(4), 28(B)(5)(a), 28(B)(5)(b), 28(B)(5)(C)] 24(B), 24(C), 25(A), 25(B), 
27(D), 27(E), 28(A) AND 28(B)(5); 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)   XXX     XXX     XXX 
[(C) Tax-free Covenant Bonds. – In any case where bonds, mortgages, deeds 
of trust or other similar obligations of domestic or resident foreign corporations, contain 
a contract or provision by which the obligor agrees to pay any portion of the tax 
imposed in this Title upon the obligee or to reimburse the obligee for any portion of the 
tax or to pay the interest without deduction for any tax which the obligor may be 
required or permitted to pay thereon or to retain therefrom under any law of the 
Philippines, or any state or country, the obligor shall deduct and withhold a tax equal 
to thirty percent (30%) of the interest or other payments upon those bonds, mortgages, 
deeds of trust or other obligations, whether the interest or other payments are payable 
annually or at shorter or longer periods, and whether the bonds, securities or 
obligations had been or will be issued or marketed, and the interest or other payment 
thereon paid, within or without the Philippines, if the interest or other payment is 
payable to a nonresident alien or to a citizen or resident of the Philippines.] 


 
39
SEC. 20. Section 73 (A) of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read 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), 28(A) AND 28 (B), as the case may be.  
(B) Stock Dividend. –      X    X    X  
 
SEC. 21. Section 108 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows: 
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of 
Properties. -  
(A) Rate and Base of Tax. – X    X    X  
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, rest 
houses, pension houses, inns, resorts; proprietors or operators of restaurants, 
refreshment parlors, cafes and other eating places, including clubs and caterers; 
dealers in securities; slending 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 


 
40
franchise grantees except those under Section 119 of this Code and non-life insurance 
companies (except their crop insurances), including surety, fidelity, indemnity and 
bonding 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:  
XXX     XXX     XXX 
 
SEC. 22. Section 121 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows:  
SEC. 121. Tar 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 (in) PERFORMING QUASI-BANKING FUNCTIONS AT THE 
RATE OF FIVE PERCENT (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 ZERO PERCENT (0%) [in 
accordance with the following schedule]:  
 
[(a) On interest, commissions and discounts from lending activities as well as 
income from financial leasing, on the basis of remaining maturities of instruments from 
which such receipts are derived:]  
[Maturity period is five years or less -..............................5%]  
[Maturity period is more than five years - ...........1%)  
 
[(b) On dividends and equity shares and net income of subsidiaries  
…………………………………………………………………………………...... 0%] 


 
41
[(c) On royalties, rentals of property, real or personal, profits, from exchange 
and all other items treated as gross income under Section 32 of this Code ...7%]  
[(d) On net trading gains within the taxable year of foreign currency, debt 
securities, derivatives, and other similar financial instruments…….............. 7%] 
(Provided, however, That in case the maturity period referred to in paragraph 
(a) is shortened thru pre-termination, then the maturity period shall be reckoned to end 
as of the date of pre-termination for purposes of classifying the transaction and the 
correct rate of tax shall be applied accordingly.]  
Provided, (finally,] That FOR PURPOSES OF COMPUTING THE GROSS 
RECEIPTS, the generally accepted accounting principles (as may be prescribed by 
the Bangko Sentral ng Pilipinas for the bank or non-bank financial intermediary 
performing quasi-banking functions shall likewise be the basis for the calculation of 
gross receipts.] OF RECORDING INCOME AS ADOPTED BY THE BANK SHALL 
BE FOLLOWED: PROVIDED, THAT THE MERE INCREASE OR DECREASE IN 
VALUE OF PROPERTY AS A RESULT OF CHANGES IN MARKET VALUES 
SHALL NOT BE CONSIDERED IN THE COMPUTATION OF GROSS RECEIPTS: 
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, 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 QUARTERLY BASIS, AND ANY NET 
LOSS INCURRED IN A QUARTER CAN BE CARRIED OVER AS DEDUCTION IN 
THE SUCCEEDING QUARTERS: PROVIDED FINALLY, THAT NET LOSS 
INCURRED IN A TAXABLE YEAR CANNOT BE CARRIED OVER TO THE 
SUCCEEDING TAXABLE YEAR.  
XXX     XXX      XXX 
 
SEC. 23. Section 122 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read 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, 
[discounts] AND DISCOUNTS FROM LENDING ACTIVITIES, AS WELL AS INCOME 


 
42
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 PERCENT (0%). (and all other items treated as gross income 
under this Code: Provided, That interests, commissions and discounts from lending 
activities, as well as income from financial leasing, shall be taxed on the basis of the 
remaining maturities   
ACTIVITY, AND DERIVES INCOME THEREFROM, SHALL BE SUBJECT TO 
THE TAX IMPOSED ON ITS PRINCIPAL ACTIVITY. TO BE CONSIDERED 
INCIDENTAL, THE INCOME FROM INTERMEDIATION SERVICES SHALL NOT 
EXCEED FIFTY PERCENT (50%) OF THE PERSON OR THE COMPANY'S TOTAL 
ANNUAL INCOME. IF THE TOTAL INCOME RECEIVED FROM FINANCIAL 
INTERMEDIATION IS MORE THAN FIFTY PERCENT (50%), AND THE PERSON 
OR COMPANY HAS ENTERED INTO AT LEAST SIX (6) TRANSACTIONS DURING 
THE YEAR, THE TOTAL INCOME FROM SUCH FINANCIAL INTERMEDIATION 
SHALL BE SUBJECT TO TAX UNDER THIS SUBSECTION.  
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 VALUE ADDED 
TAX OR GROSS RECEIPTS TAX DEPENDING ON THE NATURE OF THEIR 
BUSINESS ACTIVITIES. IF UNDERTAKING FINANCING AND OTHER SIMILAR 
ACTIVITIES, THEY SHALL BE SUBJECT TO GROSS RECEIPTS TAX UNDER 
THIS SECTION. INCOME DERIVED FROM THE SALE OF GOODS, PROPERTIES 
AND OTHER SERVICES SHALL BE SUBJECT TO VALUE ADDED TAX UNDER 
SECTION 105 OF THIS CODE.  


 
43
(Provided, finally, That the generally accepted accounting principles as may be 
prescribed by the Securities and Exchange Commission for other non-bank financial 
intermediaries shall likewise be the basis for the calculation of gross receipts.]  
Nothing in this Code shall preclude the Commissioner from imposing the same 
tax herein provided on persons OR ENTITIES performing similar (financing] 
FINANCIAL INTERMEDIATION activities.  
 
SEC. 24. Section 123 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows:  
SEC. 123. Tax on Life Insurance AND REINSURANCE Premiums . - There 
shall be collected from every person, company or corporation, [(except purely of the 
instruments from which such receipts are derived, in accordance with the following 
schedule:] 
[Maturity is (5) five years of less ................................................................... 5%] 
[Maturity period is more than (5) five years…………………………………….1%]  
[Provided, however, That in case the maturity period is shortened thru 
pretermination, then the maturity period shall be reckoned to 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 FUNDS, 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 


 
44
PERCENTAGE TAXES IMPOSED UNDER TITLE V, AND THE VALUE ADDED TAX 
IMPOSED UNDER TITLE IV OF THIS CODE. FOR PURPOSES OF THIS 
EXEMPTION, A CIS SHALL HAVE AT LEAST TWO HUNDRED (200) OWNERS, 
INVESTORS OR PARTICIPANTS, AND SHALL HAVE COMPLIED WITH THE 
MINIMUM PUBLIC OWNERSHIP REQUIREMENT OF THE APPROPRIATE 
GOVERNMENT REGULATORY AGENCIES.  
THE INCOME OF A PERSON OR COMPANY NOT LICENSED TO DO 
FINANCIAL 
INTERMEDIATION 
BUT 
WHICH 
ENGAGES 
IN 
FINANCIAL 
INTERMEDIATION SERVICES AS AN INCIDENT TO ITS MAIN BUSINESS 
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 CIS in excess of the amounts necessary to insure the lives of the 
variable contract owners[.]: PROVIDED, THAT THE CIS SHALL HAVE AT LEAST 
TWO HUNDRED (200) OWNERS, INVESTORS OR PARTICIPANTS, AND THAT 
ANY MINIMUM PUBLIC OWNERSHIP AS MAY BE REQUIRED BY APPROPRIATE 
GOVERNMENT REGULATORY AGENCIES SHALL BE COMPLIED WITH.  
(B) PERSONS DOING BUSINESS SIMILAR OR AKIN TO LIFE AND HEALTH 
INSURANCE SUCH AS PRE-NEED COMPANIES, PENSION FUND COMPANIES, 


 
45
HEALTH MAINTENANCE ORGANIZATIONS AND OTHERS SIMILAR TO LIFE 
INSURANCE, AS MAY BE DETERMINED BY THE APPROPRIATE GOVERNMENT 
REGULATORY AGENCIES, SHALL BE SUBJECT TO TAX UNDER THIS 
SUBSECTION 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 
GOVERNMENT REGULATORY AGENCIES 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.  
LIFE REINSURANCE COMPANIES SHALL BE SUBJECT TO PREMIUM 
TAX ON PREMIUMS COLLECTED UNDER SUBSECTION (A) HEREOF. 
HOWEVER, PREMIUMS COLLECTED ON TRANSACTIONS WHERE THE TAX ON 
THE DIRECT PREMIUM HAS ALREADY BEEN PADD BY THE DIRECT INSURER 
SHALL BE EXCLUDED FROM THE GROSS PREMIUM SUBJECT TO PREMIUM 
TAX.  
NON-LIFE REINSURANCE COMPANIES SHALL BE SUBJECT TO VALUE 
ADDED TAX ON PREMIUMS COLLECTED UNDER SECTION 108 OF THIS CODE. 
HOWEVER, PREMIUMS COLLECTED ON TRANSACTIONS WHERE THE TAX ON 
THE DIRECT PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT INSURER 
SHALL BE EXCLUDED FROM THE GROSS PREMIUM SUBJECT TO VALUE 
ADDED TAX.  
FOR THE PURPOSE OF CLAIMING EXEMPTION ON REINSURANCE 
PREMIUMS, THE SECRETARY OF FINANCE, UPON THE RECOMMENDATIONS 
OF THE COMMISSIONER OF INTERNAL REVENUE AND INSURANCE 
COMMISSIONER, SHALL PROMULGATE THE REQUIRED REPORTS TO BE 
SUBMITTED 
TO 
THE 
BUREAU 
OF 
INTERNAL 
REVENUE. 
ANY 
MISREPRESENTATION 
SHALL 
SUBJECT 
THE 
DIRECT 
INSURER 
OR 
REINSURER TO PENALTIES UNDER SECTIONS 248, 249, 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, 


 
46
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 THEIR RESPECTIVE SHARES IN THE POOLED 
FUND, IS A CIS. THE AMOUNTS OF PREMIUM COLLECTED IN EXCESS OF THE 
INSURANCE COST IS 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 VALUE 
ADDED TAX UNDER SECTION 105, TITLE IV OF THIS CODE.  
Cooperative companies or associations are such as are conducted by the 
members thereof with the money collected from among themselves and solely for their 
own protection and not for profit.  
 
SEC. 25. Section 127 of the National Internal Revenue Code of 1997, as amended, is 
hereby repealed.  
 
SEC. 26. Section 174 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read 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 [Two pesos (P2.00) on each Two 
hundred pesos (P200), or fractional part thereof, of the par value,] SEVENTY-FIVE 
PERCENT OF ONE PERCENT (0.75%) OF THE PAR VALUE of such shares of stock: 
Provided, That in the case of the original issue of shares of stock without par value, 


 
47
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[.]: 
PROVIDED, FINALLY, THAT IN THE CASE OF COLLECTIVE INVESTMENT 
SCHEMES WITHOUT PAR VALUE, THE DOCUMENTARY STAMP TAX SHALL BE 
BASED ON THE INITIAL NET ASSET VALUE PER UNIT.  
 
SEC 27. Section 175 of the National Internal Revenue Code of 1997, as amended, is 
hereby repealed.  
 
SEC. 28. Section 176 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows:  
SEC 176. Stamp Tax on Bonds, Debentures, Certificates of Stock or 
Indebtedness Issued in Foreign Countries. - [On all] A DOCUMENTARY STAMP 
TAX OF SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) OF THE VALUE 
OF THE TRANSACTION SHALL BE COLLECTED FROM A PERSON SELLING OR 
TRANSFERING 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, such tax as is required by law on 
similar instruments when issued, sold or transferred in the Philippines.] 
 
SEC 29. Sections 177 and 178 of the National Internal Revenue Code of 1997, as 
amended, are hereby repealed.  
 
SEC 30. Section 179 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows:  
SEC. 179. Stamp Tax on All Debt Instruments. – On every original issue of 
debt instruments, there shall be collected a documentary stamp tax of [One peso and 
fifty centavos (P1.50) on each Two hundred pesos (P200), or fractional part thereof, 
SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) 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 


 
48
sixty-five (365) days: Provided, further, That only one documentary stamp tax shall be 
imposed on either loan agreement, or 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 interest and having a specific maturity date, [orders for payment of any sum 
of money otherwise than at sight or on demand,] promissory notes, whether negotiable 
or non-negotiable, except bank notes issued for circulation.  
 
SEC 31. Section 180 of the National Internal Revenue Code of 1997, as amended, is 
hereby repealed.  
 
SEC 32. Sections 181, 182, 183, 184, 185, 186, and 187 of the National Internal 
Revenue Code of 1997, as amended, are hereby amended to read as follows:  
SEC. 181. 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 documentary stamp tax OF THIRTY PERCENT OF ONE PERCENT 
(0.30%) [Sixty centavos (P0.60) on each Two hundred pesos (P200), or fractional part 
thereof,] of the face value of any such bill of exchange, or order, or the Philippine 
equivalent of such value, if expressed in foreign currency.  
SEC. 182. 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 THIRTY PERCENT OF ONE PERCENT (0.30%)  


 
49
[Sixty centavos (P0.60) on each Two hundred pesos (P200), or fractional part 
thereof,] 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 currencyl.]: 
PROVIDED, THAT, A LETTER OF CREDIT ON WHICH THE DOCUMENTARY 
STAMP TAX IMPOSED UNDER THIS SECTION IS PAID UPON OPENING SHALL 
NOT BE SUBJECT AGAIN TO THE TAX IMPOSED BY 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. 183. Stamp Tax on Life AND HEALTH Insurance Policies[:] OF 
ANNUITIES, AND HEALTH MAINTENANCE ORGANIZATION PRODUCTS. - 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 
If 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. 184. 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 [Fifty centavos (P0.50) on each 
Four pesos (P4.00), or fractional part thereof,] TWELVE AND ONE-HALF PERCENT 
(12.5%) 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 


 
50
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, 2023: ELEVEN AND ONE-HALF PERCENT (11.5%) 
JANUARY 1, 2024: TEN AND ONE-HALF PERCENT (10.5%) 
JANUARY 1, 2025: NINE AND ONE-HALF PERCENT (9.5%) 
JANUARY 1, 2026: EIGHT AND ONE-HALF PERCENT (8.5%) 
JANUARY 1, 2027: SEVEN AND ONE-HALF PERCENT (7.5%) 
 
SEC. 185. 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 or 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 [Fifty centavos (P0.50) on each Four pesos 
(P4.00), or fractional part thereof,] TWELVE AND ONE-HALF PERCENT (12.5%) of 
the premium charged[.]: PROVIDED, THAT SUCH RATE SHALL BE REDUCED 
ACCORDING TO THE FOLLOWING SCHEDULE:  
JANUARY 1, 2023: ELEVEN AND ONE-HALF PERCENT (11.5%),  
JANUARY 1, 2024: TEN AND ONE-HALF PERCENT (10.5%),  
JANUARY 1, 2025: NINE AND ONE-HALF PERCENT (9.5%),  
JANUARY 1, 2026: EIGHT AND ONE-HALF PERCENT (8.5%),  
JANUARY 1, 2027: SEVEN AND ONE-HALF PERCENT (7.5%).  
SEC. 186. 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 


 
51
collected a documentary stamp tax of One peso (P1.00) on each Two hundred pesos 
(P200), or fractional part thereof, of the premium or installment payment on contract 
price collected.] On pre-need plans, [the documentary stamp tax shall be Forty 
centavos (P0.40.) on each Two hundred pesos (P200), or fractional part thereof, of 
the premium or contribution collected.] THERE SHALL BE COLLECTED A 
DOCUMENTARY STAMP TAX OF TWENTY PERCENT OF ONE PERCENT (0.2%) 
OF THE PREMIUM OR INSTALLMENT PAYMENT ON CONTRACT PRICE, OR 
CONTRIBUTION CHARGED.  
 
SEC. 187. 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 centavos (P0.30) on each Four pesos (P4.00), or fractional part thereof,] 
SEVEN AND ONE-HALF PERCENT (7.5%) of the premium charged.  
 
SEC 33. Section 188 of the National Internal Revenue Code of 1997, as amended, is 
hereby repealed.  
  
SEC 34. Sections 192 and 193 of the National Internal Revenue Code of 1997, as 
amended, are hereby repealed.  
 
SEC 35. Sections 195, 198, and 199 of the National Internal Revenue Code of 1997, 
as amended, are hereby amended to read as follows:  
SEC. 195. 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 (at the following rates:  


 
52
(a) When the amount secured does not exceed Five thousand pesos (P5,000), 
Forty pesos (P40.00).  
(b) On each Five thousand pesos (P5,000), or fractional part thereof in excess 
of Five thousand pesos (P5,000), an additional tax of Twenty pesos (P20.00).]  
OF THIRTY PERCENT OF ONE PERCENT (0.3%) OF THE AMOUNT SECURED.  
 
XXX     XXX     XXX 
 
SEC. 198. Stamp Tax on Assignments and] Renewals of Certain 
Instruments. – Upon each and every (assignment or transfer of any mortgage, lease 
or policy of insurance, or the) renewal or continuance of any agreement, contract, 
charter, or any evidence of obligation or indebtedness by THE EXTENSION OF THE 
TERM OR MATURITY BY [altering or otherwise,] ALTERATION OF SUCH 
AGREEMENT, CONTRACT OR CHARTER, there shall be levied, collected and paid 
a documentary stamp tax, at the same rate as that imposed on the original instrument.  
SEC. 199. 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.  
XXX    XXX    XXX 
(n) Interbank call loans with maturity of not more than (seven (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 MODES OF 
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 EXCHANGE OR AN 
ORGANIZED MARKETPLACE. THE ORIGINAL ISSUANCE OF SHARES OR 
UNITS OF PARTICIPATION IN A CIS SHALL NOT BE COVERED BY THIS 
EXEMPTION.  


 
53
SEC. 36. Prospectivity Clause. – The changes introduced under this Act shall apply 
to transactions taking effect beginning January 1, 2020.  
 
SEC. 37. Implementing 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. 38. 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. 39. 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, dividends, and capital 
gains, gross receipts tax, premium tax, and documentary stamp tax under the National 
Internal Revenue Code of 1997, 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 the tax exemptions on interest income, 
capital gains, and documentary stamp tax and on the issuance of bonds are 
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 the tax exemptions on interest income, capital 
gains, and documentary stamp tax and on the issuance of bonds are concerned, of 


 
54
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)  
Sections 10 and 11, insofar as the tax exemptions on interest income, 
capital gains, and documentary stamp tax of subsidiaries of Philippine Aerospace 
Development Corporation and on the issuance of bonds are 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 the tax exemptions on interest income and on 
the issuance of bonds are concerned, of Republic Act 85, as amended by Republic 
Act 2081, entitled “An Act Creating the Rehabilitation Finance Corporation”;  
(j)  
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 the 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;  
(l)  
Sections 19, insofar as the tax exemptions on interest income and 
issuance of bonds are concerned, of Republic Act 3591, as amended by Republic Act 
9576 or An Act Increasing the Maximum Deposit Insurance Coverage, and in 


 
55
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 and the issuance of bonds are concerned, of Executive 
Order 1037, entitled “An Act Creating the Philippine Retirement Park System, 
Providing Funds Therefor and for Other Purposes”;  
(n)  
Sections 5 and 19, insofar as the tax exemptions on the issuance of 
bonds, interest income and documentary stamp tax are concerned, of Republic Act 
8763 or Home Guaranty Corporation Act of 2000;  
(o)  
Sections 19 and 25, 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)  
Sections 9 and 15, insofar as the tax exemptions on the issuance of 
bonds, interest income, capital gains, and documentary stamp tax are 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 the 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”;  
(t)  
Section 6 (a, xviii (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 


 
56
"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)  
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;  
(w)  
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”;  
(x)  
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”;  
(y)  
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";  
(z)  
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";  
(aa)  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”;  
(bb)  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”;  
(cc)  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 


 
57
Vehicles which Acquire or Invest in Non-Performing Assets, Setting the Regulatory 
Framework Therefor, and for Other Purposes”;  
(dd)  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 2009;  
(ee)  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;  
(ff) 
 Section 6, insofar as tax exemption on interest income, dividends and 
capital gains are concerned, of RA 6426 or the Foreign Currency Deposit Act of the 
Philippines, as amended; and  
(gg) 
 Section 32, insofar as the tax exemptions on capital gains, interest 
income and DST and issuance of bonds are concerned, of RA 6424 or the Philippine 
Export Credit Insurance and Guarantee Corporation Act.  
 
SEC. 40. Effectivity - This Act shall take effect on/or fifteen (15) days after its 
complete publication in at least two (2) newspapers of general circulation.  
 
Approved, 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
58