SIXTEENTH CONGRESS OF THE }
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES

*
HOUSE BILL NO. 4600

INTRODUCED BY REPRESENTATIVE DAKILA CARLO E. CUA

EXPLANATORY NOTE

‘The power of taxation is an inherent prerogative of sovereignty, the
purpose of which is to secure revenue for the support of the government and
its functions. In its quest for additional tax revenues, the Bureau of Internal
Revenue (BIR) continues to look to widen the country’s tax net; and has
been targeting, in particular, self-employed professionals, such as doctors,
lawyers, accountants and other high-carning self-employed individuals as it
has already been pointed out that a problem with tax compliance still exists
in their sector of the economy.

President Benigno Aquino III, in his State of the Union Address in July
2011, pointed out that, “according to the BIR, we have around 1.7m self-
employed and professional taxpayers who paid a total of PHP9.8bn
(USD227m) in 2010, (and) must have earned only PHP8,500 a month, which
is below the minimum wage. I find this hard to believe.” It is quite alarming
that there is approximately a ninety-percent tax evasion rate among
professionals such as doctors, lawyers, accountants, engineers and
architects.

‘This representation hopes that simplifying the taxes for professionals
by introducing a flat tax scheme will significantly increase their tax
contribution; thereby increasing government revenue. For this reason,
approval of this bill is earnestly requested.

D ‘CARLO E. CUA


SIXTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES }
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES

HOUSE BILL No, 4600

INTRODUCED BY REPRESENTATIVE DAKILA CARLO E. CUA

AN ACT ADOPTING A FLAT NET INCOME TAXATION SCHEME FOR
INDIVIDUALS ENGAGED IN THE PRACTICE OF A PROFESSION,
AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AS AMENDED.

Be_it enacted _by the Senate and the House of Representatives of the
Philippi in Congress assembled:

SECTION 1. Title. This Act shall be known as the “Flat Tax for
Professionals Act.”

SECTION 2. Section 22 of the National Internal Revenue Code (NIRC)
of 1997, as amended is hereby further amended by adding the following
definitions after Subsection (GG) to read as follows:

“Sec. 22.Definitions. - When used in this Title:

om

“(FF) xxx

“(GG) THE TERM PROFESSIONALS SHALL MEAN PERSONS WHO,
INDEPENDENT OF EMPLOYER-EMPLOYEE RELATIONSHIP, DERIVE
FROM THEIR PROFESSION, THE PRACTICE OR EXERCISE OF WHICH
REQUIRE AN EXAMINATION AND/OR LICENSE FROM A GOVERNMENT
AGENCY.


SECTION 3. Section 24 of the 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. —

“(1) xxx

XXX

(3) SIMPLIFIED FINAL FLAT INCOME TAX FOR PROFESSIONALS.
- IN GENERAL. - THE PROVISIONS OF THIS SECTION
NOTWITHSTANDING, A FINAL FLAT TAX OF 10% BASED ON THE
PROFESSIONAL FEES IS HEREBY IMPOSED UPON THE TAXABLE
INCOME FROM ALL SOURCES WITHIN AND WITHOUT THE
PHILIPPINES BY AN INDIVIDUAL RESIDENT CITIZEN AND FROM ALL
SOURCES WITHIN THE PHILIPPINES BY AN INDIVIDUAL NON
RESIDENT CITIZEN ENGAGED IN THE PRACTICE OF A PROFESSION.

INCOME OF THE PROFESSIONAL FROM OTHER SOURCES SHALL NOT
BE ENTITLED TO THE FLAT TAX RATE UNDER THIS PROVISION.

SECTION 4. Registration by Self-Employed Professionals. ~ All self-employed
professionals, as defined in this Act, shall register with the Bureau of
Internal Revenue (BIR) for purposes of a unified list of taxpayers qualified to
avail of this taxation.

SECTION 5. Applicability Clause. - This Act shall apply to income earned or
paid to professionals, effective beginning taxable year 2015.

SECTION 6. Separability Clause. - If any provision of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall
remain in full force and effect.

SECTION 7. Repealing Clause. - All laws, executive orders and issuances, or
any part thereof, which are inconsistent herewith are hereby repealed or
amended accordingly.

SECTION 8. Effectivity Clause.- This Act shall take effect upon its
publication in the Official Gazette or in at least one newspaper of general
circulation.

Approved,