in,”
RECEIVED ‘\

*

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress

First Regular Session

House Bill No. 2836

Introduced by Honorable Mar-Len Abigail S. Binay

EXPLANATORY NOTE

Article II, Section 9 of the Constitution provides that “[t]he State shall promote a just
and dynamic social order that will ensure the prosperity and independence of the nation and
free the people from poverty through policies that provide adequate social services, promote
full employment, a rising standard of living, and an improved quality of life for all”

Article II, Section 18 of the Constitution further provides that “[t]he State affirms
labor as a primary social economic force. It shall protect the rights of workers and promote
their welfare.”

In line with the above given policies, when a worker strives harder by putting in more
hours into his or her work in excess of the required maximum working hours mandated by
the Labor Code, the fruits of his or her extra effort should be given to him or her in full
without any deduction for income taxes, Indeed, the government should aid the hardworking
Filipino worker in ensuring that the latter's standard of living is raised and the quality of life
improved by allowing the income earned from overtime work to be enjoyed and made
available in full

This bill seeks to include under Section 32 (B) (7) of the National Internal Revenue
Code to include Overtime pay or any other type of compensation earned by the Filipino
workers in excess of the required maximum working hours per day in order to have the said
item of income expressly excluded in the computation of the gross income of the taxpayer.

By allowing workers to bring home the pay of the additional labor in full and free
from taxation, the State would not only promote the welfare of the worker but would also
indirectly boost growth in the economy through the rippling effect of a financially stronger
Filipino workforce.

For the above given reasons the passage of this bill is earnestly sought.

san tif S. BINAY


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress
st Regular Session

House Bill No. 2836

E

Introduced by: Rep. Mar-Len Abigail S. Binay

ANACT
EXCLUDING OVERTIME PAY FROM THE COMPUTATION OF TAXABLE INCOME
AMENDING FOR THE PURPOSE SECTION 32 (B) (7) OF REPUBLIC ACT NO, 8424
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 32 (B) (7) (e) of Republic Act No. 8424, otherwise known as the
“National Internal Revenue Code of 1997”, as amended is hereby further amended to read as
follows:

“Sec. 32, Gross Income.-
“(A) General Definition. ~ x xx
“(B) Exclusions from Gross Income. =x xx
“(xxx
“Q)xxx
“Q)xxx
“@) xxx
(5) xxx
“@)xxx
(7) Miscellaneous items. —
“(a)xxx
“(b) xx x
(0) xxx
“@) xxx
“(e) xxx
“(F) OVERTIME PAY - COMPENASTION
DUE TO HOURS WORKED IN EXCESS OF
THE REQUIRED MAXIMUM WORKING
HOURS
“(G) [OI xxx
“CD [(g)] xxx.
“DM [®)] xxx”


ES camara dvAavuaun

as}

SEC. 2, Implementing Rules and Regulations, — The Bureau of Internal Revenue
GIR), Department of Finance (DoF), and Department of Labor and Employment (DOLE) and
Civil Service Commission (CSC) shall promulgate not later than (30) days upon the effectivity of

this Act the necessary rules and regulations for its effective implementation.

SEC. 3. Repealing Clause. ~ All other laws, decrees, orders, issuances and rules
and regulations or parts thereof inconsistent with this Act are hereby amended or repealed

accordingly.

SEC. 4. Effectivity, — This Act shall take effect fifteen (15) days after its
publication either in the Official Gazette or in at least two (2) newspapers of general circulation.

‘Approved,