EIGHTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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First Regular Session 
)
S E N A T E
S. B. No. 702
■19 
JUL 23 P 5 n i
RECEI^tDUi
Introduced by Senator SONNY ANGARA
AN ACT
REDUCING THE CORPORATE INCOME TAX RATE, AMENDING SECTIONS 27 
AND 28 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
This bill seeks to amend Sections 27 and 28 of the National Internal Revenue 
Code of 1997, as amended, by gradually reducing the rate of corporate income tax 
over a three-year period beginning January 1, 2020.
This bill was originally filed in the 16th Congress, refiled in the 17th Congress 
and is part of a twin measure to reduce the country's income tax rates for individuals 
and corporations in consideration of the Association of South East Asian Nations 
(ASEAN) Integration which seeks to transform ASEAN into a single market and 
production base effective 2016. The income tax for individuals has been lowered with 
the passage of Republic Act No 10663, otherwise known as the Tax Reform for 
Acceleration and Inclusion (TRAIN) Act.
The Philippines currently holds the distinction of having the highest corporate 
income tax rate at 30 percent (30%). When the ASEAN Economic Community (AEC) 
Declaration was signed in 2007, some member-states began to lower their corporate 
income tax rates. Thailand gradually reduced its corporate income tax rate from 30 
percent in 2011 to 23 percent in 2012, and down to 20 percent in 2013. Vietnam also 
lowered its corporate income tax rate from 25 percent to 22 percent last year and 
further reduced it to 20 percent. The differentiated tax rates would inevitably swing 
the pendulum as investors and taxpayers shift from a high-tax jurisdiction to a low- 
tax jurisdiction. At present, the average rate among the ASEAN countries is at 22.5 
percent, with Singapore having the lowest at 17 percent.


In order for the Philippines to become more competitive in the region, it is 
imperative that we reduce this stumbling block. A recent study by Dr. Stella Quimbo 
of the UP School of Economics showed that while a decrease in corporate income tax 
rate will initially lead to lower corporate income tax collection, the offset will come in 
the form of greater net collections given the projected increase in investments when 
corporate income tax rates are reduced. The study showed that a percentage point 
reduction in tax rates will lead to P30.6 billion increase in investments. Instead of 
looking at the possible revenue loss, the government must regard the reduction in 
corporate income tax rates as a means to attract foreign direct investments and boost 
job generation in the country.
In view of the foregoing, immediate approval of this bill is earnestly sought.
SONNY ANGARA


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S E N A T E  
S. B. No. 7 0 2
; C 
'• '
''•■jr, /• t f  Uiu' ai liK' S'. 
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*19 JUL23 P5 -11
RECc; 
•
Introduced by Senator SONNY ANGARA
AN ACT
REDUCING THE CORPORATE INCOME TAX RATE, AMENDING 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 the House o f Representatives o f the Philippines in 
Congress assembled:
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Section 1. Section 27(A) of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"Sec. 27. Rates of Income Tax on Domestic Corporations. -
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"(A) In General. -  Except as otherwise provided in this Code, an income tax of
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[ thirty five percent (35%)] TW ENTY-NINE PERCENT (2 9 % ) BEGINNING
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JANUARY 1, 2020, TWENTY-SEVEN PERCENT (2 7 % ) BEGINNING
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JANUARY 1, 2021 AND TWENTY-FIVE PERCENT (2 5 % ) BEGINNING
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JANUARY 1, 2022, is hereby imposed upon the taxable income derived during
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each taxable year from all sources within and without the Philippines by every
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corporation, as defined in Section 22(B) of this Code and taxable under this
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Title as a corporation, organized in, or existing under the laws of the
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Philippines[: Provided,- That effective Januopy 1, 2009, the rate ef-incomc tax
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shall be thirty percent (30% )].
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XXX."
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Sec. 2. Section 28 of the National Internal Revenue Code of 1997, as amended,
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is hereby further amended to read as follows:
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"Sec. 28. Rates of Income Tax on Foreign Corporations. -
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"(A) Tax on Resident Foreign Corporations. -
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(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% )] TWENTY-NINE 
PERCENT (2 9 % ) BEGINNING JANUARY 1, 2020, TWENTY-SEVEN 
PERCENT (2 7 % ) BEGINNING JANUARY 1, 2021 AND TWENTY-FIVE 
PERCENT (2 5 % ) BEGINNING JANUARY 1, 2022 of the taxable income 
derived in the preceding taxable year from all sources within the Philippines[f 
Provided, That cffcctive-Jaftuary 1—2000, the rote of income tax shall be thirty 
percent (30% )].
XXX
"(B) Tax on Nonresident Foreign Corporations. -
(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 [th irty five percent (35%^] TWENTY-NINE PERCENT (2 9 % ) 
BEGINNING JANUARY 1, 2020, TWENTY-SEVEN PERCENT (2 7 % ) 
BEGINNING JANUARY 1, 2021 AND TWENTY-FIVE PERCENT (2 5 % ) 
BEGINNING JANUARY 1, 2022 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 tox shall be thirty percent (30%)].
XXX
(5) Tax on Certain Incomes Received by a Nonresident Foreign 
Corporation. -
(a) X X X
(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


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country in which the nonresident foreign corporation is domiciled, shall allow a
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credit against the tax due from the nonresident foreign corporation taxes
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deemed to have been paid in the Philippines equivalent to [twenty percent
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(20% )] FOURTEEN PERCENT (1 4 % ), which represents the difference
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between the regular income tax of [ thirty five percent (35% )] TWENTY-NINE
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PERCENT (2 9 % ) BEGINNING JANUARY 1, 2020 and the fifteen percent
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(15%) tax on dividends as provided in this subparagraph: Provided, That
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effective January 1, [2009] 2021, the credit against the tax due shall be
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equivalent to [ fifteen percent (15% )] TWELVE PERCENT (1 2 % ), AND
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EFFECTIVE JANUARY 1, 2022, EQUIVALENT TO TEN PERCENT (1 0 % ),
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which represents the difference between the regular income tax of [thirty
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percent (30%) ] TWENTY-SEVEN PERCENT (2 7 % ) AND TWENTY-FIVE
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PERCENT (2 5 % ), RESPECTIVELY, and the fifteen percent (15%) tax on
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dividends.
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XXX."
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Sec. 3. Implementing Rules and Regulations. -  The Secretary of Finance shall
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promulgate the necessary rules and regulations for the effective implementation of
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the provisions of this Act.
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Sec. 4. Separability Clause. -  If any portion or provision of this Act is
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subsequently declared invalid or unconstitutional, other provisions hereof which are
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not affected thereby shall remain in full force and effect.
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Sec. 5. Repealing Clause. -  All other laws, acts, presidential decrees, executive
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orders, presidential proclamations, issuances, rules and regulations, or parts thereof
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which are contrary to or inconsistent with any of the provisions of this Act are hereby
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repealed, amended, or modified accordingly.
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Sec. 6. Effectivity. -  This Act shall take effect on January 1, 2020 following its
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publication in the Official Gazette or in a newspaper of general circulation.
Approved,