Hau
“RECEIVED.

30 JUN 2018
Republic of the Philippines pare, 59 JUN 2018
HOUSE OF REPRESENTATIVE

Quezon City

137

HOUSE BILLNO.

Introduced by the Honorable Victoria Isabel G. Noel

EXPLANATORY NOTE
This bill seeks to amend Sections 24 and 27 of the National Internal Revenue

Code of 1997, as amended, by gradually reducing individual and corporate income

taxes over a three (3) year period beginning January 1, 2017.

One of the policies enshrined in the 1987 Philippine Constitution is the duty of
the state to promote a rising standard of living and an improved quality of life for all
Our current income tax rates are proving to be inconsistent, if not contrary, to said
policy. Slowly, the salaried professionals, who comprise the middle class, are pulled
down into lower income groups because they are pushed up into higher income

brackets. Thus, there is a need to revisit and reduce the present income tax rates,

This bill is also filed in preparation for the Association of Southeast Asian
Nations (ASEAN) Integration. And while the ASEAN member countries are not
mandated to have a uniform rate for individual and corporate income taxes, most of
the member- states have begun to lower their individual and corporate income .tax

rates; the Philippines, on the other hand, has the highest corporate income tax rate of

2 F REPRESENTATIVES


30%, With the free flow of goods, services, investment, capital and of skilled labor, it
is inevitable that investors and taxpayers will bring their capital or services to a low-
tax jurisdiction. Thus, our tax rates must be competitive enough not only to attract
more investments and human capital but, more importantly, prevent the migration of

our own

While there may be apprehensions over a set back in revenues as a result of
this proposal, the reduction in income taxes will eventually stimulate the economy,
broaden the tax base and create more employment. With higher take-home pay,
Filipino families will have more money to spend on items that will generate more
taxes, such as, Value Added Tax (VAT) on goods and services. Improving the levels
of disposable income will clearly and inevitably increase economic activity
Likewise, the proposed reduction in the rate of corporate income tax will create a
more vibrant and robust economy for business and enable companies to compete
better in the global market. And, as has been the experience both here and in other

countries, lower tax rates would likewise lead to greater compliance.

In view of the foregoing, immediate approval of this bill is earnestly sought.

VICTORIATSABEL G. NOEL


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 187

Introduced by the Honorable Victoria Isabel G. Noel

ANACT
AMENDING SECTIONS 24 AND 27 OF REPUBLIC ACT 8424, AS
AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL
REVENUE CODE OF 1997.

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

SECTION 1. Section 24(A)(2) of the National Internal Revenue Code (NIRC) of 1997,
as amended, is hereby further 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. ~

“(2) Rates of Tax on Taxable Income of Individuals. ~ The tax shall be
computed in accordance with and at the rates established in the
following schedule

“[Not over P10,000 %

“Over P10,000 but not over 500 + 10% of the excess


30,000

“Over P30,000 but not over
P70,000

“Over P70,000 but not over

P 140,000

“Over P'140,000 but not over ..

250,000

“Over P250,000 but not over

500,000 over 250,000
“Over P500,000 125,000 + 32% of the excess
over P500,000}"
“xx
S00
“Taxable Income | Beginning Beginning Beginning
January 1,2017 January 1, 2018 January 1, 2019
“Not over P30,000 Exempt Exempt | Exempt
“Over P30,000 but not over P2,500 + 15% of | P2,500 + 13% of P2500 + 10% of
P70,000 excess Over excess over excess over
30,000 30,000 | P30,000
“Over P70,000 but not over P8300 + 20% of P7,700 + 18% of 650000 + 15%
P200,000 the excess over the excess over of the excess over
P70,000 70,000 70,000
Over P200,000 but not —_—_P34,500 + 25% of P30,600 + 23% of | P26,000 + 20% of
over P500,000 the excess over the excess over the excess over. ¢
200,000 200,000 _ P200,000

over 10,000

2,500 + 15% of the'excess
over P30,000

8,500 + 20% of the excess
over P 70,000

22,500 + 25% of the excess
over P140,000

50,000 + 30% of the excess



“Over P500,000 but not 109,500 + 30% | P99,600 + 25% of | P86,000 + 22% of |

‘over P1,000,000 of the excess over the excess over|the excess over|
500,000 | 500,000 P500,000

“Over P1,000,000 259,500 + 32% 224,600 + 28% | P196,000 + 25% |
of the excess over | of the excess over of the excess over
PJ,000,000 P1,000,000 1,000,000"

S&C. 2. Section 27 (A) of the National Internal Revenue Code of 1997, is hereby

amended to read as follows
“Sec. 27. Rates of Income Tax on Domestic Corporations.-
“(A) In General. - Except as otherwise provided in this Code, an income tax of
{thirty-five percent (35%)} THIRTY PERCENT (30%) BEGINNING
JANUARY 1, 2017 AND TWENTY-SEVEN PERCENT (279%) BEGINNING
JANUARY 1, 2018 AND TWENTY-FIVE PERCENT (25%) BEGINNING
JANUARY 1, 2019, 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
shail be thirty percent (30%).]”

SiC. 3. Implementing Rules and Regulations, - The Department of Finance, Bureau of

Internal Revenue and the National Tax Research Center shall promulgate, within sixty

(60) days from the effectivity of this Act, the Implementing Rules and Regulations

(IRR) that shall be necessary to implement the provisions of this Act


SEC. 4. Separability Clause. — The provisions of this Act are hereby deemed separable.
If any provision thereof is declared invalid or unconstitutional, such invalidity or

unconstitutionality shall not affect the other provisions which shall remain in effect.

SEC. 5, Repealing Clause. - All laws, decrees, executive orders, rules and regulations
or parts thereof, which are inconsistent with the provisions of this Act are hereby

repealed

Ske. 6, Effectivity. - This Act shall take effect fifteen (15) days following its complete

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

Approved,