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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon C

SEVENTEENTH CONG

First Regular Session

HOUSE BILL NO. 35

Introduced by Representative Raul V. Del Mar

EXPLANATORY NOTE

This measure involves rightfully giving back to every ordinary Filipino taxpayer
equitable treatmem insofar as income taxation is concerned, placing him more in'@
position to provide decent living for his family “
Since January 1, 1998, when the National Internal Revenue Code of 1997 came into
effect, the rates of tax for individuals have stayed anchored on the 1998 Consumer Price
Index (CPI) of 67.8%, which has reached 141% as of August 2015. This practically
means that a regular salaried man’s monthly take-home pay of P 10,000 way back in 1998
now amounts to P20,300 which should just be taxed at the rate between 11% to 15% and
not the higher range of 16% to 20%. Going by this, his monthly tax (exclusions and
personal exemption considered) should just be around PSG0-P600 instead of P1,S00-
P1,600, With the constantly rising prices of basic commodities, the ensuing additional
income realized will certainly go a long way in making ends meet for him and his family.

By resorting to this much-needed adjustment to inflation of individual tax brackets and
providing for automatic adjustment of such to inflation after every three (3) years
thereafter, the government can teuly assert that the welfare of every ordinary Filipino
worker has been looked after.

On the other hand, the corporate income tax rate has to be reduced to regain the country’s
attractiveness to business investors. At present, the Philippine income tax rate for
corporations is the highest among Association of South East Asian Nations (ASEAN)
member-countries, While our ASEAN neighbors” corporate income tax rates range from
17% 1.30%. This has to be addressed, as well, to entice investments.



Accordingly, passage of the measure is eamestly sought.

UL V. DEL MAR


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

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. __35

Introduced by Honorable Representative Raul V. Del Mar

AN ACT
RESTRUCTURING THE INCOME TAXES IMPOSED ON INDIVIDUALS AND
CORPORATIONS, AMENDING FOR THE PURPOSE SECTIONS 24 (A) (2); 27
(A); AND 28 (A) (1) AND (B) (1) OF THE NATIONAL INTERNAL REVENUE,
CODE OF 1997, AS AMENDED

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

SECTION. 1. Section 24 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:

“SEC. 24. Income Tax Rates. —

(A) xxx

(1) xxx

(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 3%]

{Over P10,000 but not over P30,000 PS00~10% of the excess
over P10,000 |

{Over P30,000 but not over P70,000 P2,500+15% of the excess
‘over P30,000 }

[ Over P70,000 but not over P140,000 P8,500#20% of the excess


over P70,000 |

i
2 {Over P140,000 but not over P2S0.000 P22, $00125% ofthe excess
3 over PI40.000
4 {Over P250,000 but nor over PS00.000 50,00030% ofthe excess
5 ‘over P250,000 | a
6 {Over P500,000 125.000+32% of the excess
7 cer PS00.000
8
9
10
i NOT OVER P20.500 a
12 OVER P20.500 BUT NOT OVER P61.500 1.0254 1086 OF THE EXCESS*
13 OVER 20.800
14 OVER Pb $00 BUTNOT OVER 143.500 312541856 OF THE EXCESS,
15 OVER 961500
1 OVER Pi43 500 RUT NOT OVER p2s.000 1725120% OF THE EXCESS
| ‘OveR 143.500
18 OVER P287.000 BUT NOT OVER 512.800 46,125425%5 0F THE EXCESS
9 OVER Pak
20 OVER, P512500 BUT NOT OVER PL.o2s.000 P02 50D830N OF THE EXCESS
pat ‘Oven P512.500
res OVER P.028.000 " *4OF THE EXCESS
23
24

OVER PI025.000
25

26 XXX

27

28 XXX

29

3 PROVIDED, FINALLY, THAT NOT LATER THAN THREE 3)
31 YEARS AFTER THE EFFECTIVITY OF THIS ACT AND
32 EVERY THREE (3) YEARS THEREAFTER, EACH NET
33 TAXABLE INCOME LEVEL AND NOMINAL TAX RATE
34 HEREIN STATED SHALL BE ADJUSTED TO ITS PRESENT
35 VALUE USING THE CONSUMER PRICE INDEX, AS
36 PUBLISHED BY THE NATIONAL STATISTICS OFFICE
37 (NSO).,

38

39 (B) xxx

40

41 (C) Xxx

42

43 (D) xxx”

44

45

46 SI 2. Section 27 (A) of the National Internal Revenue Code of 1997, as amended, is
47° hereby further amended to read as follows:

48

49

50 “SEC, 27, Rates of Income Tax on Domestic Corporations. —

51

52 (A) In General. @ provided in this Code, an income

33 tax of [thirty -FIVE percent [(35%)] (25%) is hereby


\7
18
19
20
2I
PS)
23
24
25
26
27
28
29
30
31
32
3
34
35
36
37
40
41
2
43
44
45
46

XXX

XXX

XXX

XXX.”

SEC. 3. Section 28

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 Ph wes{: Provided, That effective January |, 2009,
the rate of income tax shall be thirty percent (30%0].

(A) (1) and (B) (1) of the National Internal Revenue Code of 1997,

as amended, is hereby further amended to read as follows:

“SEC.
(A)

(0)

(B)

(0)

28, Rates of Income Tax on Foreign Corporations. ~
Tax on Resident Foreign Corporations. -

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 equivalent to [thirty-five]
TWENTY-FIVE percent {(35%)] (25%) of the 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

Tax on Nonresident Foreign Corporations. ~

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] TWENTY-FIVE percent [(35%]
'5%) 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 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.

SEC. 4, Implementing Rules and Regulations. — The Secretary of Finance shall, upon.
the recommendation of the Commissioner of Internal Revenue, promulgate upon the
effectivity of this Act the necessary Rules and Regulations for its effective
implementation.

SEC, 5, Separability Clause. — If any provision of this Act is subsequently declared
invalid or unconstitutional, other provisions hereof which are not affected thereby shall
remain in full force and effect.

SEC, 6, Repealing Clause. - All laws, acts, presidential decrees, executive orders,
issuances, presidential proclamations, rules and regulations or parts thereof which are
contrary to and inconsistent with any provisions of this Act are hereby repealed, amended
or modified accordingly.

SEC. 7. Effectivity Clause. - This Act shall take effect fifteen (15) days after its complete
publication either in the Official Gazette, or in at least two (2) newspapers of general
circulation

Approved, : re