FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Reaular Session 
COMMITTEE REPORT NO. 
Submitted by the Committee on Ways & Means on 
Re: 
S.B. No. 2293 
MAY 1 9 7
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Recommending its approval in substitution of H.B. No. 3971, taking into consideration S.B. 
Nos. 103,125,126,302,419,448,568,1576,1615,1616,2177 and 2217. 
Sponsor: 
Senator Francis G. Escudero 
MR. PRESIDENT: 
The Committee on Ways and Means to which were referred House Bill No. 3971, 
introduced by Representatives Biazon, Angara, Syjuco, Lim, Villafuerte, Romuladez, Arroyo 
(D.M.), Del Rosario, Bichara, Romulo, Singson (E.), Arroyo (I.T.), Rodriguez (R.B.), Teodoro, 
Casiho, Ocampo, Beltran, Maza, Ilagan, Javier, Alvarez (A,), Tieng, Velarde, Coscolluela, Del 
Mar, Susano, Almario, Pablo, Cua (G.), 
Abante, Codilla, Chatto, Chipeco, Lazatin, Hataman, 
and Roxas, entitled: 
“AN ACT 
GRANTING TAX RELIEF FOR INDIVIDUAL TAXPAYERS BY REPEALING 
SECTION 34(L) AND AMENDING SECTIONS 22, 24, 34, 35 AND 79 OF THE 
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR 
OTHER PURPOSES, 
Senate Bill No. 103, introduced by Senator Roxas, entitled: 
“AN ACT 
EXEMPTING FROM INDIVIDUAL TAX WORKERS IN THE PRIVATE SECTOR 
RECEIVING MINIMUM WAGE, AS WELL AS GOVERNMENT WORKERS IN 
SALARY GRADES 1 TO 3, AMENDING FOR THIS PURPOSE REPUBLIC 
ACT 8424, AND FOR OTHER PURPOSES, 
Senate Bill No. 125, introduced by Senator Enrile, entitled: 
“AN ACT 
INCREASING 
THE 
ALLOWABLE 
PERSONAL 
AND 
ADDITIONAL 
EXEMPTIONS OF INDIVIDUAL TAXPAYERS, AMENDING 
FOR THE 
PURPOSE SECTION 35(A) AND (6) OF THE NATIONAL INTERNAL 
REVENUE CODE OF 1997, AS AMENDED”, 
Senate Bill No. 126, introduced by Senator Enrile. entitled: 
“AN ACT 
REDUCING THE INCOME TAX RATES OF INDIVIDUAL TAXPAYERS, 
AMENDING FOR THE PURPOSE CHAPTER 111, SECTION 24(A)(l)(c) OF 
THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED”, 
Senate Bill No. 302, introduced by Senator Estrada, entitled: 
“AN ACT 
GRANTING UNMARRIED WOMEN WITH CHILDREN SAME BASIC 
PERSONAL 
EXEMPTION 
AND 
ADDITIONAL 
EXEMPTION 
FOR 
DEPENDENTS AS ENJOYED BY MARRIED WOMEN AMENDING FOR THE 
PURPOSE OF THE NATIONAL INTERNATIONAL REVENUE CODE OF 1997” 


Senate Bill No. 419, introduced by Senator Estrada, entitled: 
“AN ACT 
PROVIDING TAX EXEMPTION ON THE EDUCATIONAL EXPENSES 
INCURRED BY A TAXPAYER, AMENDING SECTION 35 OF THE NATIONAL 
INTERNAL REVENUE CODE, 
AS AMENDED, 
AND 
FOR 
OTHER 
PURPOSES“, 
Senate Bill No. 448, introduced by Senator Estrada, entitled: 
“AN ACT 
INCREASING THE ALLOWABLE PERSONAL EXEMPTIONS OF INDIVIDUAL 
TAXPAYERS, AMENDING FOR THE PURPOSE SECTION 35(A) AND (B) OF 
THE NATIONAL INTERNAL REVENUE CODE OF 1987, AS AMENDED”, 
Senate Bill No. 568, introduced by Senator Estrada, entitled: 
“AN ACT 
AMENDING SECTIONS 24, 31, 34, 35 AND 110 OF THE NATIONAL 
INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER 
PURPOSES, 
Senate Bill No. 1576, introduced by Senator Villar, entitled: 
“AN ACT 
EXEMPTING MINIMUM WAGE EARNERS FROM PAYMENT OF INCOME 
TAX AMENDING FOR THE PURPOSE RELEVANT PROVISIONS OF THE 
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR 
OTHER PURPOSES”, 
Senate Bill No. 1615, introduced by Senator Gordon, entitled: 
“AN ACT 
AMENDING SECTION 35 OF REPUBLIC ACT NO. 8424, OTHERWISE 
KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, 
Senate Bill No. 1616, introduced by Senator Gordon, entitled: 
“AN ACT 
AMENDING SECTION 24(A) AND SEC. 51(A) OF REPUBLIC ACT NO. 8424, 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 
1997, AS AMENDED”, 
Senate Bill No. 2177, introduced by Senator Zubiri, entitled: 
“AN ACT 
EXEMPTING MINIMUM WAGE EARNERS FROM PAYMENT OF INCOME 
TAX AMENDING FOR THE PURPOSE RELEVANT PROVISIONS OF THE 
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR 
OTHER PURPOSES, 
and Senate Bill No. 2217, introduced by Senator Revilla,’Jr., entitled: 
“AN ACT 
AMENDING SECTIONS 24(A), 35(A) AND (B) AND 51(A)(2)(B) OF REPUBLIC 
ACT NO. 8424 OTHERWISE KNOWN AS THE NATIONAL 
INTERNAL 
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES 
has considered the same and has 
recommendation that the attached SB 
report them back to the Senate with the 
prepared by the Committee, entitled: 


“AN ACT 
AMENDING SECTIONS 22, 24, 34, 35, 51, AND 79 OF REPUBLIC ACT NO. 
8424, AS AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL 
REVENUE CODE OF 1997” 
be approved in substitution of H.B. No. 3971, taking into consideration S.B. Nos. 103, 125, 
126, 302, 419, 448, 568, 1576, 1615, 1616, 2177 and 2217 with Senators Roxas, Enrile, 
Estrada, Villar, Gordon, Zubiri, Revilla, Jr. and Escudero as authors thereof. 
Respectfully submitted: 
FRANCIS “Chiz” G. ESCUDERO 
Chairman 
Members: 
JOKER P. ARROYO 
EDGARDO J. ANGARA 
RICHARD J. GORDON 
1 
GREGORIO B. HONASAN II 
ALAN PETER S. CAYETANO 
PAN IL 
.LACSON 
FF 
M A R ROXAS 
RAMON B. REVILLA, JR. 
/+7 
ANTONIO F. TRILLANES IV - 
Ex-Officio Members: T- 
NGlLlNAN 
r Leader 
HON. MANNY VILLAR 
Senate Ptesident 
Pasay City 


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I ,  
FOURTEENTH CONGRESS OF THE 
) 
First Regular Session 
1 
REPUBLIC OF THE PHILIPPINES 
) 
8 M Y  '19 ;))l:lt) 
Y 
S.NO. 2293 
(In substitution of HB No. 3971, takina into consideration SB Nos. 103. 125. 126. 302. 
419,448,568, 157%, 1615,1616,2177 and 2217) 
Prepared by the Committee with Senators Roxas, Enrile, Estrada, Villar, Gordon, Zubiri, 
Revilla, Jr., and Escudero as authors thereof 
AMENDING 
AMENDED, 
1997 
AN ACT 
, SECTIONS 22, 24, 34, 35, 51, AND 79 OF REPUBLIC ACT NO. 8424, AS 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 
Be it enacted by the Senate and the House of Representatives in Congress assembled: 
SECTION 1. Section 22 of Republic Act No. 8424, as amended, otherwise known as the 
National Internal Revenue Code of 1997, is hereby further amended by adding the 
following definition after subsection (FF) to read as follows: 
"SEC. 22. Definifions. -When used in this Title: 
"(A) 
x xx. 
"(FF) x x  x. 
"(GG) THE TERM 'STATUTORY MINIMUM WAGE' SHALL REFER TO THE 
RATE FIXED BY THE REGIONAL TRIPARTITE WAGE AND PRODUCTIVITY 
BOARD, AS DEFINED BY THE BUREAU OF LABOR AND EMPLOYMENT 
STATISTICS 
(BLES) OF THE DEPARTMENT OF 
LABOR AND 
EMPLOYMENT (DOLE). 
"(HH) THE TERM 'MINIMUM WAGE EARNER' SHALL REFER TO A 
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WORKER IN THE PRIVATE SECTOR PAID THE STATUTORY MINIMUM 
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WAGE, OR TO AN EMPLOYEE IN THE PUBLIC SECTOR RECEIVING 
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COMPENSATION INCOME EQUIVALENT TO SALARY GRADE FIVE (5) AND 
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BELOW." 
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SEC. 2. Section 24(A) of Republic Act No. 8424, as amended, otherwise known as the 
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"SEC. 24. Income Tax Rates. - 
National Internal Revenue Code of 1997, is hereby further amended to read as follows: 


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(A) Rates of Income Tax on Individual Citizen and Individual Resident 
Alien of the Philippines. - 
“(1) x x x: 
“x x x; 
“(c) On the taxable income defined in Section 31 of this Code, other 
than income subject to tax under Subsections (B), (C), and (D) of this 
Section, derived for each taxable year from all sources within the Philippines 
by an individual alien who is a resident 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,OOO .............................. :.. ....... 5% 
“Over P10,OOO but not over P30,OOO ............... P500 + 10% of excess 
over P10,OOO 
“Over P30,OOO but not over P70,OOO ............... P2,500 + 15% of 
excess over P30,OOO 
“Over P70,OOO but not over P140,OOO .............. P8,500 + 20% of 
excess over P70,OOO 
“Over P140,OOO but not over P250,OOO .............. P22,500 + 25% of 
excess over P140,OOO 
“Over P250,OOO but not over P500,OOO ........... P50,OOO + 30% of 
excess over P250,OOO 
“Over P500,OOO .......................................... 
P125,OOO + 32% [34%] 
of excess over 
P500,OOO [in 19981. 
PProvided, That effective January 1, 1999, the top marginal rate shall 
be thirty-three percent (33%) and effective January 1, 2000, the said rate 
shall be thirty-two percent (32%).] 
“For married individuals, the husband and wife, subject to the provision 
of Section 51(D) hereof, shall compute separately their individual income tax 
based on their respective total taxable incomes: Provided, That if any income 
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cannot be definitely attributed to or identified as income exclusively earned or 
realized by either of the spouses, the same shall be divided equally between 
the spouses for the purpose of determining their respective taxable income. 
"PROVIDED, THAT MINIMUM WAGE EARNERS AS DEFINED IN 
SECTION 22(HH) OF THIS CODE SHALL BE EXEMPT FROM THE 
PAYMENT OF INCOME TAX ON THEIR TAXABLE INCOME: PROVIDED, 
FURTHER, THAT THE HOLIDAY PAY, OVERTIME PAY, NIGHT SHIFT 
DIFFERENTIAL PAY AND HAZARD PAY RECEIVED BY SUCH MINIMUM 
WAGE EARNERS SHALL LIKEWISE BE EXEMPT FROM INCOME TAX. 
"x x x." 
SEC. 3. Section 34(L) of Republic Act No. 8424, as amended, otherwise known as the 
National Internal Revenue Code of 1997, is hereby 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 other than under Subsection (M) hereof, in computing taxable 
income subject to income tax under Sections 24 (A); 25 (A); 26; 27 (A), (B) and 
(C); and 28 (A) (I), there shall be allowed the following deductions from gross 
income; 
"(A) Expenses. - 
"x x x. 
"(L) Optional Sfandaid 'Deduction (OSD). - In lieu of the deductions allowed 
under the preceding Subsections, an individual subject to tax under Section 24, 
other than a nonresident alien, may elect a standard deduction in an amount 
not exceeding FORTY [ten] percent (40%) [(IO%)] of his gross SALES OR 
GROSS RECEIPTS, AS THE CASE MAY BE [income]. IN THE CASE OF A 
CORPORATION SUBJECT TO TAX UNDER SECTIONS 27(A) AND 28(A)(1), 
IT MAY ELECT A STANDARD DEDUCTION IN AN AMOUNT NOT 
EXCEEDING FORTY PERCENT (40%) OF ITS GROSS INCOME AS 
DEFINED IN SECTION 32 OF THIS CODE. Unless the taxpayer signifies in his 
return his intention to elect the optional standard deduction, he shall be 
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considered as having availed himself of the deductions allowed in the 
preceding Subsections. Such election when made in the return shall be 
irrevocable for the taxable year for which the return is made: Provided, That an 
individual who is entitled to and claimed for the optional standard deduction 
shall not be required to submit with his tax return such financial statements 
otherwise required under this Code: Provided, further, That except when the 
Commissioner otherwise permits, the said individual SHALL KEEP SUCH 
RECORDS PERTAINING TO HIS GROSS SALES OR GROSS RECEIPTS, 
OR THE SAID CORPORATION shall keep such records pertaining to his gross 
income AS DEFINED IN SECTION 32 OF THIS CODE during the taxable year, 
as may be required by the rules and regulations promulgated by the Secretary 
of Finance, upon recommendation of the Commissioner.” 
“(M) x XX. - 
”x x x. 
SEC. 4. Section 35 (A) and (B) of Republic Act No. 8424, as amended, otherwise known 
as the National Internal Revenue Code of 1997, is hereby amended to read as follows: 
“SEC. 35. Allowance of Personal Exemption for Individual Taxpayers.- 
“(A) In General. - For purposes of determining the tax provided in Section 24 
(A) of this Title, there shall be allowed a basic personal exemption [as follows:] 
AMOUNTING TO FIFTY THOUSAND 
PESOS (P50,OOO) FOR EACH 
INDIVIDUAL TAXPAYER. 
[For single individual or married 
individual judicially decreed as legally 
separated with qualified dependents 
P20,000.00] 
[For head of the family 
P25,000.00] 
[For each married individual 
P32,000.00] 
“In the case of married individuals where only one of the spouses is deriving 
gross income, only such spouse shall be allowed the personal exemption. 
rFor purposes of this paragraph, the term ”head of the family” means an 
unmarried or legally separated man or woman with one or both parents, or with 
one or more brothers and sisters, or with one or more legitimate, recognized 
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natural or legally adopted children living with and dependent upon him for their 
chief support, where such brothers or sisters or children are not more than 
twenty-one (21) years of age, unmarried and not gainfully employed or where 
such children, brothers or sisters, regardless of age are incapable of self- 
support because of mental or physical defect.] 
“(B) Additional Exemption for Dependents. - There shall be allowed an 
additional exemption of [Eight Thousand Pesos (P8,OOO)l TWENTY-FIVE 
THOUSAND PESOS (P25,OOO) for each dependent not exceeding four (4). 
“The additional exemption for dependents shall be claimed by only one of 
the spouses in the case of married individuals. 
“In the case of legally separated spouses, additional exemptions may be 
claimed only by the spouse who has custody of the child or children: Provided, 
That the total amount of additional exemptions that may be claimed by both 
shall not exceed the maximum additional exemptions herein allowed. 
“For purposes of this Subsection, a “dependent” means a legitimate, 
illegitimate or legally adopted child chiefly dependent upon and living with the 
taxpayer if such dependent is not more than twenty one (21) years of age, 
unmarried and not gainfully employed or if such dependent, regardless of age, 
is incapable of self support because of mental physical defect.” 
‘IX x x.” 
SEC. 5. Section 51(A)(2) of Republic Act No. 8424, as amended, otherwise known as the 
National Internal Revenue Code of 1997, is hereby further amended to read as follows: 
“SEC. 51. Individual Return. - 
“(A) Requirements. - 
“(1) Except as provided in paragraph (2) of this Subsection, the following 
individuals are required to file an income tax return: 
“(a) x x x; 
“x x x. 
“(2) The following individuals shall not be required to file an income tax return: 
”(a) x x x; 
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“(a) An individual with respect to pure compensation income, as defined in 
Section 32(A)(1), derived from sources within the Philippines, the income tax 
on which has been correctly withheld under the provisions of Section 79 of this 
Code: Provided, That an individual deriving compensation concurrently from 
two or more employers at any time during the taxable year shall file an income 
tax return[: Provided, further, That an individual whose pure compensation 
income derived from sources within the Philippines exceeds Sixty thousand 
pesos (PS0,OOO) shall also file an income tax return]; 
“(c) x x x; and 
“(d) A MINIMUM WAGE EARNER AS DEFINED IN SECTION 22(HH) OF THIS 
CODE OR an individual who is exempt from income tax pursuant to the 
provisions of this Code and other laws, general or special. 
“x x x.” 
SEC. 6. Section 79(A) of Republic Act No. 8424, as amended, otherwise known as the 
National Internal Revenue Code of 1997, is hereby further amended to read as follows: 
“SEC. 79. Income Tax Collectedat Source.- 
(A) Requirement of Withholding. - EXCEPT IN THE CASE OF A MINIMUM 
WAGE EARNER AS DEFINED IN SECTION 22(HH) OF THIS CODE, every 
employer making payment of wages shall deduct and withhold upon such 
wages a tax determined in accordance with the rules and regulations to be 
prescribed by the Secretary of Finance, upon recommendation of the 
Commissioner[: Provided, however, That no withholding of a tax shall be 
required where the total compensation income of an individual does not exceed 
the statutory minimum wage, or Five thousand pesos (P5,OOO.OO) per month, 
whichever is higher], 
”x x x.” 
SEC. 7. Separability Clause - If any provision of this Act is declared invalid or 
unconstitutional, other provisions hereof which are not affected thereby shall continue to 
be in full force and effect. 
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SEC. 8. Repealing Clause. - Any law, presidential decree or issuance, executive order, 
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letter of instruction, administrative order, rule or regulation contrary to or inconsistent with 
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any provision of this Act is hereby amended or modified accordingly. 
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SEC. 9. Effectivity Clause - This Act shall take effect fifteen (15) days following its 
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publication in the Official Gazette or in at least two (2) newspapers of general circulation. 
Approved,