13Ih CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
S E N A T E  
S. BILL No. 
Introduced bv Senator Ralah G. Recto 
Explanatory Note 
The filing of income tax returns by fixed income earners or pure compensation 
income earners who have been issued certificates of withholding tax by employers is 
superfluous. The certificate of withholding tax issued by the employer already serves as 
proof of both income and tax payment, in lieu of income tax returns. 
It is estimated that the cost of the Income Tax Return (ITR) form is Two Pesos and 
Seventy Centavos (3'2.70) per set. Hence, if we had 4.5 million registered compensation 
earners for CY 2003, this means, the Government would have generated a saving of 
approximately P12.15 MiUlon on the ITR forms alone.. The Government wiU also save on 
expenses for the safekeeping of said documents and the manpower to undertake the record 
management. 
This bill, which expands the coverage o f  the individual income taxpayers who are 
no longer required to file an ITR, will simplify the country's tax collection and 
administration system particularly for fixed income earners. It will also improve BE'S 
processing of ITRs as the Bureau will now have the opportunity to redirect its efforts to 
the other types o f  taxpayers perceived to be more problematic, such as business income 
earners and corporate taxpayers. 
MRC/SB 2380 ITR.doc 


’04 <.IN- -6 ;i:.:j 
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Wh CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
1 
SENATE 
S. B. No. 
Introduced by Senator Ralph G. Recto 
AN ACT 
PROVIDING FOR THE EXEMPTION OF FIXED INCOME EARNERS FROM 
THE FILING OF INCOME TAX RETURNS, AMENDING FOR THE PURPOSE 
SEC. 51, (A) (2) (b) OF REPUBLIC ACT N O  8424, OTHERWISE KNOWN AS 
THE “TAX REFORM ACT OF 1997” 
Be it enacted 
the Senate and House 4Representatives dthe Phihppines in Congress assembled: 
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“SEC. 51. Individual Return. - 
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“(A) Requirements. - 
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w i b  the Philippines; and 
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return: 
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SECTION 1. Section 51, (A) (2) @) of Republic Act No. 8424, otherwise known as 
the Tax Reform Act of 1997 is hereby amended to read as follows: 
“(1) Except as provided in paragraph (2) of this SLbsection, the following 
individuals are required to file an income tax return: 
“(a) Every Filipino citizen residing in the Philippines; 
‘ I @ )  Every Filipino citizen residing outside the Philippines, on his income 
from sources within the Pwppines; 
“(c) Every alien residing in the Philippines, on income derived from sources 
“(d) Every nonresident alien engaged in trade or business or in the exercise 
of profession in the Philippines. 
“(2) The following individuals shall not be required to file an income tax 
“(a) An individual whose gross income does not exceed his total personal 
and additional exemptions for dependents under Section 35: Provided, That a citizen 
of the Philippines and any alien individual engaged in business or practice of 
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profession within the Philippines shall file an income tax return, regardless of the 
amount of gross income; 
"@) An individual [with respect to] RECEIVING pure compensation 
income, as defined in Section 32(A)(1), derived from soutces within the Philippines, 
the income tax on which has been correctly withheld BY HIS EMPLOYER AS 
EVIDENCED 
BY 
THE 
EMPLOYER'S 
CERTIFICATE 
OF 
COMPENSATION PAYMENT TAX 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 s h d  
file an income tax return: 
[Prokhd, further, That an individual whose pure 
compensation income derived from sources withtn the Philippines exceeds Sixty 
thousand pesos (l?60,000.00) shall also file an income tax rehim]; 
SEC. 2. Repealing Clatlse - All laws, decrees, executive orders, issuances, rules and 
regulations inconsistent with t h i s  Act are hereby repealed or modified accordingly. 
SEC. 3. Effectivig - This Act shall take effect upon approval. 
Appmoed 
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