SEVENTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
First Regular Session
)
)
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OQffire o f lhc,.‘> ' n p t ; i r y
•16 
OCT 13 
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Introduced by Senator Maria Lourdes Nancy S. Binay
AN ACT
INSTITUTING CORPORATE INCOME TAX REFORM, AMENDING FOR THIS 
PURPOSE, SECTIONS 27 AND 28 OF THE NATIONAL INTERNAL REVENUE CODE 
OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Article VI, Section 28 of the 1987 Philippine Constitution provides: “1. The rule of taxation 
shall be uniform and equitable. The Congress shall evolve a progressive system of taxation, 
xxx”. With this in mind, the current National Internal Revenue Code of 1997 or the Tax Code 
came into effect on said year and has seen minimal changes to date.
Pursuant to the above constitutional provision, this representation has previously filed a tax 
reform bill that proposes to adjust the income tax rates for individuals.
Parallel to this, there is also a need to reduce the corporate income tax rate due to the 
Association of South East Asian Nations (ASEAN) integration. This is to guarantee and 
maintain the competitiveness of the Philippines in the region. A comparison of corporate 
income tax rates puts the Philippines in number one, being the country in South East Asia 
imposing the highest corporate income tax rates.
Following the ASEAN trend of lowering corporate income tax rates, the Philippines would 
attract foreign investments that will result in increased job generation in the country and 
encourage the expansion of existing foreign investments.
The two-pronged tax reform would entail, individual tax payers with stable purchasing power 
on one hand and corporations being able to hire more employees on the other, including new 
corporations entering the Philippines. These measures would ensure unburdening the tax 
payers and provide financial stability and security for individuals as well as corporations.
In view of the foregoing, the passage of this bill is earnestly recommended.
MARIA LOU
Senator
ES NANCY S. BINAY


<9lfire of the ■'• ■ r.-' Mi
SEVENTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHIl|lPPlNES 
)
First Regular Session 
)
I 
S E N A T E
S. B. NO. 
1 90A
’16 
OCT 13 
P 2 22
Kl v. : 11 *>Y:lfL
Introduced by Senator Maria Lourdes Nancy S. Binay
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AN ACT
in stitu tin g! c o r po r a te in c o m e ta x r efo r m , a m e n d in g fo r th is
PURPOSE, 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 of Representatives of the Philippines in Congress 
assembled:
SECTION I. Section 27 of the National Internal Revenue Code, as amended, is hereby further 
amended to read as follows:
“Sec.27. Rates of Income Tax on Domestic Corporations. -
(A) In General. - Except as otherwise provided in this Code, an income 
tax of thirty-five percent (35%) 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%). PROVIDED FURTHER, THAT, BEGINNING 
JANUARY 1, 2017 THE RATE OF INCOME TAX SHALL BE 
TWENTY-EIGHT 
PERCENT 
(28%) 
AND 
AN 
ANNUAL 
REDUCTION OF ONE PERCENT (1%) FROM THE RATE OF 
INCOME 
TAX 
SHALL 
BE 
IMPLEMENTED 
STARTING 
JANUARY 1, 2018. PROVIDED FINALLY, THAT, THE RATE OF 
INCOME TAX BEGINNING JANUARY 1, 2020 SHALL BE 
TWENTY-FIVE PERCENT (25%).
X X X ”
SECTION 2. Section 28 of the National Internal Revenue Code, as amended, is hereby further 
amended to read as follows:
“SEC. 28. Rates of Income Tax on Foreign Corporations. -


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(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 in trade or business within the 
Philippines, shall be subject to an income tax equivalent to thirty- 
five percent (35%) 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%). 
PROVIDED FURTHER, 
THAT, 
BEGINNING JANUARY 1, 2017 THE RATE OF INCOME 
TAX SHALL BE TWENTY-EIGHT PERCENT (28%) AND AN 
ANNUAL REDUCTION OF ONE PERCENT (1%) FROM THE 
RATE OF INCOME TAX SHALL BE IMPLEMENTED 
STARTING JANUARY 1, 2018. PROVIDED FINALLY, 
THAT, THE RATE OF INCOME TAX BEGINNING 
JANUARY 1, 2020 SHALL BE TWENTY-FIVE PERCENT 
(25%).
X X X
(B) 
Tax on Nonresident Foreign Corporation. -
(1) In General. - 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%) 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 January 1, 2009, the rate of income tax 
shall be thirty percent (30%). PROVIDED FURTHER, THAT, 
BEGINNING JANUARY 1, 2017 THE RATE OF INCOME 
TAX SHALL BE TWENTY-EIGHT PERCENT (28%) AND AN 
ANNUAL REDUCTION OF ONE PERCENT (I %) FROM THE 
RATE OF INCOME TAX SHALL BE IMPLEMENTED 
STARTING JANUARY I, 2018. PROVIDED FINALLY, 
THAT, THE RATE OF INCOME TAX BEGINNING 
JANUARY 1, 2020 SHALL BE TWENTY-FIVE PERCENT 
(25%).
X X X
(5) Tax on Certain Incomes Received by a Nonresident Foreign 
Corporation. -


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(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 nonresident foreign corporation is 
domiciled, shall allow a credit against the tax due from the 
nonresident foreign corporation taxes deemed to have been 
paid in the Philippines equivalent to twenty percent (20%), 
which represents the difference between the regular income 
tax of thirty-five percent (35%) and the fifteen percent (15%) 
tax on dividends as provided in this subparagraph: Provided, 
that effective January 1, 2009, the credit against the tax due 
shall be equivalent to fifteen percent (15%), which represents 
the difference between the regular income tax of thirty percent 
(30%) and the fifteen percent (15%) tax on dividends.[;] 
PROVII^ED FURTHER, THAT, BEGINNING JANUARY 1, 
2017, THE ALLOWABLE CREDIT AGAINST THE TAX 
DUE AS MENTIONED ABOVE SHALL BE THIRTEEN 
PERCENT (13%) 
AND 
THEREAFTER DECREASE 
ANNUALLY BY ONE PERCENT (1%) IN ACCORDANCE 
WITH THE ANNUAL REDUCTION OF CORPORATE 
INCOME 
TAX. 
PROVIDED 
FINALLY, 
THAT, 
BEGINNING JANUARY 1, 2020, THE ALLOWABLE 
CREDIT AGAINST THE TAX DUE AS DISCUSSED 
UNDER THIS SECTION SHALL BE TEN PERCENT 
(10%);
X X X ”
SECTION 3. Implementing Rules and Regulations. The Secretary of the Department of 
Finance shall immediately promulgate the necessary rules and regulations for the effective 
implementation of this Act.
SECTION 4. Repealing Clause. All laws, decrees, executive orders, rules and regulations or 
parts thereof contrary to, or inconsistent with this act, are hereby modified or repealed 
accordingly.
SECTION 5. Separability Clause. Should any provision of this Act be declared 
unconstitutional or invalid, other parts or provisions hereof not affected thereby shall continue 
and remain to be in full force and effect.
SECTION 6. Effectivity Clause. This Act shall take effect on January 1, 2017 following its 
complete publication in at least two (2) newspapers of general circulation.
Approved,