EIGHTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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First Regular Session 
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o ' t. O 
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S E N A T E  
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JUL 16 All :42
Senate Bill No. 
535
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Introduced by Senator Juan Miguel F. Zubiri
AN ACT
REDUCING THE CORPORATE INCOME TAX RATE, AMENDING SECTIONS 27
AND 28 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
In the ASEAN region, the Philippines has the highest corporate income tax at 30 percent, 
followed by Indonesia with 25 percent, Thailand with 23 percent; Vietnam with 22 percent and 
Cambodia with 20 percent. Singapore levies the lowest rate of 17 percent and attracts the most 
foreign direct investments. The Philippines, with its highest tax rate, remains one of the lowest 
recipients of FDI inflows in the region.
I f  we intend to compete in the ASEAN region, it is imperative that we adopt measures to 
make the Philippine economy at par with its neighbors as an excellent location for foreign 
investors. In addition to addressing inadequate infrastructure, bureaucratic inefficiencies, high 
cost of power and corruption, the Philippine government can push for competitive tax rates for 
businesses in the country to attract the entry of new investors and encourage the expansion of 
existing ones.
In view of the foregoing, this bill seeks to reduce the corporate Income tax rate by 
January 1, 2020 to 25 percent from the current 30 percent. 
Any foregone revenue as a 
consequence of the reduction o f the corporate income tax rate will be offset by the projected 
increase in economic activities and employment opportunities arising from Increase In 
investments. Moreover, an expansion of the tax base as a result of this measure may bode well 
for increased revenue collections in the long term.
The Immediate approval of this bill Is therefore earnestly sought.
GUEL F. ZUBIRI


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EIGHTEENTH CONGRESS OF TH E 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
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'19 
JUL 16 
All :42
S E N A T E
Introduced by Senator Juan Miguel F. Zubiri
AN ACT
REDUCING THE CORPORATE INCOME TAX RATE, AMENDING SECTIONS 27 
AND 28 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
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SECTION 1. Section 27(A) of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
"Sec. 27. Rates o f Income Tax on Domestic Corporations. -
"(A) In  General- Except as otherwise provided in this Code, an income tax 
of [thirty-five percent (35% )] TWENTY-FIVE PERCENT (2 5 % ) BEGINNING 
JANUARY 1, 2020, 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% ).]"
"X  X X."
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SEC. 2. Section 28 of the National Internal Revenue Code of 1997, as amended,
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is hereby further amended to read as follows:
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"SEC. 28. Rates o f 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


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in trade or business within the Philippines, shall be subject to an income tax 
equivalent to [thirty-five percent (35% )] TWENTY-FIVE PERCENT (2 5% ) 
BEGINNING JANUARY 1, 2020, 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% ).]
"x X X
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"(B) Tax on Non-resident Foreign Corporations. -
"(1) In  Generai. - 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% )] TWENTY-FIVE PERCENT (2 5 % ) 
BEGINNING JANUARY 1, 2020, 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 19 January 1, 2009, the rate of 
income tax shall be thirty percent (30% ).]
"x  X X
"(5) 
Tax on Certain Incomes Received by a Non-resident Foreign 
Corporation. -
"x  X X
"(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 non-resident foreign corporation is domiciled, shall allow a 
credit against the tax due from the non-resident foreign corporation taxes 
deemed to have been paid in the Philippines equivalent to [twenty percent 
(20% )] TEN PERCENT (10% ), which represents the difference between the 
regular income tax of [thirty-five percent (35% )] TWENTY-FIVE PERCENT 
(2 5 % ) BEGINNING JANUARY 1, 2020, and the fifteen percent (15%) tax on 
dividends as provided in this subparagraph:
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"X x  X."


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SEC. 3. Im plem enting Rules and Regulations. - The Secretary of Finance 
shall promulgate the necessary rules and regulations for the effective implementation of 
the provisions of this Act.
SEC. 4. Repealing Clause. - All laws, orders, issuances, circulars, rules and 
regulations or parts thereof, which are inconsistent with the provisions of this Act are 
hereby repealed or modified accordingly.
SEC 5. Separability Clause. - If any provision of this Act is declared 
unconstitutional or invalid, other parts or provisions hereof not affected thereby shall 
continue to be in full force and effect.
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SEC. 6. Effectivity Clause. - This Act shall take effect on January 1, 2020
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following its publication in at least two (2) newspapers of general circulation.
Approved,