FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
Senate Bill No. 
INTRODUCED BY HON. MANNY VILLAR 
EXPLANATORYNOTE 
Based on the latest records of the Department of Labor and Employment, 
the country has an estimated three million minimum wage earners and the bulk 
of which are in Metro Manila. Considering that the latest wage order mandates 
Php 350.00-pay per day work and that the cost of living allowance for a family of 
six is computed at Php 510.00 or P 15,300.00 (as computed by the National 
Wages and Productivity Commission), 
poverty remains a great problem for 
many of our kababayans. 
It seeks to help the country's minimum 
wage earners. The legislation will exempt 
individuals 
with 
pure 
compensation income that does not exceed the annual statutory minimum 
compensation from payment of income tax. 
This bill is a social legislation. 
This will simplify the country's tax collection and administration system 
particularly for fixed income earners. Moreover, it will improve BIRs processing 
of ITRs as the Bureau will now channel its efforts to the other types of taxpayers 
perceived to be more problematic and difficult such as corporate taxpayers and 
business income earners. 
Passage of this bill is earnestly sought. 


FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
Senate Bill No. 
INTRODUCED BY HON. MANNY VILLAR 
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 
Be it enacted by the Senate and House of Represenfafives of the 
Philippines in Congress assembled: 
SECTION 1. Section 24(A) of the National Internal Revenue Code 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) 
"(a) 
x x x. 
"(b) 
x x x. 
"(c) 
An income tax is hereby imposed: 
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. 


“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 
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 P30,OOO but not 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.. P50,000+30% of 
excess over P250,OOO 
“Over P500,OOO 
P125,000+34% of the 
excess over P500,OOO 
in 1998. 
Provided, 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%): PROVIDED, FURTHER, 
THAT INDIVIDUALS WITH PURE COMPENSATION INCOME THAT 
DOES NOT EXCEED THE ANNUAL STATUTORY MINIMUM 
COMPENSATION ARE EXEMPT FROM PAYMENT OF INCOME 
TAX.” 
“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 income: 
Provided, That if any income 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. 
"x x x." 
SEC. 2. Section 51(A)(2)(b) of the National Internal Revenue Code of 
1997, as amended, is hereby further amended to read as follows: 
"SEC. 51. Individual Return. - 
" ( 4  
Requirements. - 
"(I) 
Except as provided in paragraph (2) of this Subsection, 
the following individuals are required to file an income tax return: 
"(a) 
x x x; 
"(b) 
x x x; 
"(c) 
x x x; and 
"(d) 
x x x. 
"(2) 
The following individuals shall not be required to file an 
income tax return: 
"(a) 
x x x; 
"(b) 
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 
DOES NOT exceed[s Sixty thousand pesos (P60,000)] THE 
STATUTORY MINIMUM COMPENSATION shall NOT [also] file an 
income tax return; 
"(c) 
x x x; and 


"(d) 
x x x. 
"(3) 
x x x. 
"x x x. " 
SEC. 3. Implementing Rules and Regulations. - The Secretary of Finance 
shall, upon recommendation of the Commissioner of Internal Revenue, 
promulgate within thirty (30) days from the date of approval of this Act, the rules 
and regulations necessary for the implementation of this Act. 
SEC. 4. 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. 
SEC. 5. Repealing Clause. - Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation 
contrary to, or inconsistent with any provision of this Act is hereby repealed or 
modified accordingly. 
SEC. 6. Effectivity Clause. -This Act shall take effect upon approval. 
Approved,