IED 2
17 2008

Republic of the Philippines
House of Representatives
Quezon City

Seventeenth Congress
Third Regular Session

8252

Introduced by Representatives
and Horacio P.

EXPLANATORY NOTE

This bill covers the fourth package of the Duterte Administration's
comprehensive tax reform program. It complements the recently-passed Tax
Reform for Acceleration and Inclusion Act (R.A. No. 10963) by making capital
income taxes and financial intermediary taxes simpler, fairer, and more efficient.

With the sizable contribution of the financial sector to the economy and the
crucial role it plays in financing large-scale investments, including the Build,
Build, Build (BBB) program, there are many compelling reasons to undertake a
comprehensive tax reform in this sector given several deficiencies:

a. Complicated tax structure — The taxation of capital income and financial
services has become overly complex. Based on the current tax system,
there are 80 tax base and tax rate combinations applicable to financial
income, financial intermediation services, and financial transactions, Tax
‘on income also depends on many factors and conditions which are difficult
to ascertain. Factors that affect the taxation of income include the type of
product, type of lending, issuer, currency, maturity, taxpayer, residency,
business status, and various special laws. These result in the variations
in the tax base and tax rate, even among comparable financial instruments
and transactions.

b. Susceptibility to arbitrage — The variations in tax rates and unequal tax
treatment of equivalent or comparable financial instruments give rise to
arbitrage. Different tax treatment among sectors, or between financial
institutions and non-financial institutions offering the same service
and/or product, or between interests and dividends, open window for
arbitrage and leveraging. These disparities in tax treatment distort
investment decisions considering that tax impositions overshadow all
other considerations. Competitive advantage arises in favor of the financial
sector favored by the law's tax treatment.


. Uneven playing field — The current tax system provides certain concessions

or different tax treatments of certain transactions for some types of
financial institutions (FIs) compared to similar transactions of other Fis.
For instance, there are exemptions allowed on long-term investments,
bank deposits, individual trust funds, and investment management
accounts in favor of resident individuals. Such exemptions do not cover
long-term savings offered by other Fis, such as life insurance, pre-
need/pension plans, investment houses, among others.

Also, classifications between different Fls cause unequal treatment,
considering that some are subject to gross receipts tax (GRT), while some
are subject to premium tax, while others are subject to the value-added
tax (VAT). For instance, banks, quasi-banks, and other Fis are subject to
GRT, while life insurance companies are subject to premium tax, and
lending investors, property insurers, pre-need companies, health
maintenance organizations (HMOs}, and money remitters are subject to
VAT.

. Inequitable distribution of tax burden — Investments in equity and some

forms of long-terms instruments are subject to lower tax rates. Hence,
those who have more money to place in these kinds of investment tend to
pay lower taxes compared to working class individuals who are content
with placing their funds in short-term investments or savings deposit with
higher taxes.

Uncompetitive tax system — A comparison of taxes on capital income in
ASEAN nations shows that Philippine tax on capital income remains the
highest in the region. Considering this, the Philippine capital market
remains shallow and uncompetitive, and continues to lag behind ASEAN
neighbors.

High administrative and compliance cost - The complicated structure of
the current tax system makes administration and compliance difficult and
costly. For instance, firms have to pay different taxes that are derived from
the same tax base.

Not supportive of capital market development — There are a number of
taxes on financial transactions that hinder capital market development.
Initial public offering (IPO) tax, for instance, is essentially a tax on capital,
and does not take into consideration income generation. Such an
imposition serves as a deterrent to public listing. This results in the
Philippine Stock Exchange (PSE) lagging behind other ASEAN countries in
terms of market capitalization.


‘The inclusion of the capital income and financial services in the current
administration's comprehensive tax reform program provides a window of
opportunity to achieve the much-needed reform in the financial sector. The
taxation of the financial system should indeed be viewed as a major component
of these reforms, an ingredient that could fuel and direct the movement of capital
rightly to where they are most needed, so that higher, sustainable, and more
inclusive growth can be achieved.

And so, this bill seeks to reform the taxation of capital income and financial
services in the country, by redesigning the financial sector taxation into a
simpler, fairer, more efficient, and a revenue neutral tax system. This bill aims
to achieve the following objectives:

a. Provide neutrality in the tax treatment across financial institutions and
financial instruments.

b. Simplify what has become a complex tax system.
c, Improve equity across investors and savers.
d. Minimize arbitrage opportunities.

¢. Promote capital market development and tax competitiveness within the
context of financial globalization, increased capital mobility, and financial
inclusion.

To achieve these, this bill proposes the following reforms:

a. Reduction in the number of rates of withholding taxes - Due to the
difficulties posed by various tax rates on interest income, distinctions are
removed, such that a more uniform tax treatment is imposed on interest
income regardless of currency, maturity, issuer, and other differentiating
factors. Likewise, special rates and exemptions are removed.

b. Unification of tax rates for interests, dividends, and capital gains -
Considering the complicated tax system on capital income, a more unified
rate of tax is imposed for interests, dividends, and capital gains.

c. Harmonization of business taxes - A single GRT rate for all Fis, excluding
premium tax on insurance, is imposed. For further harmonization of taxes,
distinction between lending and non-lending activities, as well as the term
of maturity of an instrument, is removed. A single rate of 5% is imposed.

Pre-need, pension, life, and HMO insurance are all taxed similarly at a 2%
premium tax rate. Non-life insurance is also subjected to a similar 5%
premium tax rate.


d. Removal or minimization of barriers to capital market development - IPO
tax, which is found to be detrimental to capital market development is
removed.

Overall, the DST of the financial sector is being rationalized to promote
capital mobility.

¢. Adoption of a regionally competitive tax system - Considering that
Philippine taxes on capital income is the highest in the ASEAN region,
measures are taken towards the adoption of tax rates comparable to those
of neighboring ASEAN nations and their best practices. With the reform,
the proposed rates would be at par with the rates imposed in ASEAN to
ensure competitiveness of the domestic capital market.

Financial sector taxation is indeed ripe for reform. The approval of this bill is
earnestly sought so we can compete better in attracting capital and investment,
which is urgently needed to finance infrastructure, create more and better jobs,
and boost the inclusive and sustainable growth of the economy.

IG REP. Hi SUANSING, JR.
Sultan Kudarat

REP. ESTRELLITA B. SU/
1* District, Nueva



Republic of the Philippines
House of Representatives
Quezon City

Seventeenth Congress

Third Regular Session
8252

House BillNo,

Introduced by Representatives
Estrellita B. Suansing and Horacio P. Suansing, Jr.

AN ACT
AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 30, 32, 34, 37, 38, 39, 42,
51, 52, 54, 56, 57, 73, 108, 121, 122, 123, 127, 174, 175, 176, 177, 178,
179, 180,181,182, 183, 184, 185, 186, 187, 188, 189, 190, 191,192, 193,
194, 195, 196, 197, 198, and 199 OF REPUBLIC ACT NO. 8424,
OTHERWISE KNOWN AS 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, 1. Title. - This Act shall be known as the “Capital Income and
Financial Intermediary Taxation Act of 2019.”

SEC. 2. Declaration of Policy. - The financial sector plays a significant role
in the long-term growth of the national economy. A key policy consideration
is to allow the capital market to develop as efficiently as possible, with the
least intervention. The optimal taxation of capital markets, and the products
and transactions that come with them, is an essential element in developing
the capital market. Towards this end, the State recognizes the necessity of a
simpler, fairer, more efficient, and regionally more competitive tax system for
capital income and financial intermediation to encourage savings and develop
as well as deepen the capital markets. Accordingly, the following are the
declared polices of the State:

1. The State shall promote and develop a tax system that provides
neutrality in the tax treatment across financial institutions and
financial instruments.

2. The State shall endeavor to simplify an otherwise complex tax
system for easy compliance.

3. The State shall ensure that the taxation of capital income and
financial transactions is equitable across all stakeholders and
discourages arbitrage opportunities.

4. The State shall promote capital market development and tax
competitiveness within the context of globalization, increased capital
mobility, and financial inclusion.


SEC. 3. Section 22 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 22. Definitions - When used in this Title:
(A) xxx

(B) The term ‘corporation’ shall include partnerships, no matter how
created or organized, joint-stock companies, joint accounts (cuentas en
participacion SUCH AS COLLECTIVE INVESTMENT SCHEMES),
associations, or insurance companies, but does not include general
professional partnerships and a joint venture or consortium formed for
the purpose of undertaking construction projects or engaging in
petroleum, coal, geothermal and other energy operations pursuant to
an operating or consortium agreement under a service contract with the
Government. ‘General professional partnerships’ are partnerships
formed by persons for the sole purpose of exercising their common
profession, no part of the income of which is derived from engaging in
any trade or business. A COLLECTIVE INVESTMENT SCHEME MAY
OR MAY NOT BE REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION.

XXX XXX XXX

(L) The term ‘shares of stock’ shall include shares of stock of a
corporation, warrants and/or options to purchase shares of stock, as
well as units of participation in a partnership (except general
professional partnerships), joint stock companies, joint accounts;
SUCH AS COLLECTIVE INVESTMENT SCHEMES, joint ventures
taxable as corporations, associations and recreation or amusement
clubs (such as golf, polo or similar clubs), mutual funds certificates.

(M) The term ‘shareholder’ shall include holders of a share/s of stock,
warrant/s and/or option/s to purchase shares of stock of a
corporation, as well as a holder of a unit of participation in a
partnership (except general professional partnerships), in a joint stock
company, a joint account SUCH AS COLLECTIVE INVESTMENT
SCHEMES, a taxable joint venture, a member of an association,
recreation or amusement club (such as golf, polo, or similar clubs), and
a holder of a mutual fund certificate, a member in an association, joint-
stock company, or insurance company.

XXX XXX XXX

(T) The term ‘securities’ means shares-of steck-in-a-_corperation,-and



registered_ferm—SHARES, PARTICIPATION, OR INTERESTS IN A
CORPORATION OR IN A COMMERCIAL ENTERPRISE OR PROFIT-
MAKING VENTURE AND EVIDENCED BY A _ CERTIFICATE,
CONTRACT, INSTRUMENTS, WHETHER WRITTEN OR
ELECTRONIC IN CHARACTER. IT INCLUDES:

(A) SHARES OF STOCKS, BONDS, DEBENTURES, NOTES,
EVIDENCES OF INDEBTEDNESS, ASSET-BACKED
SECURITIES;

(B) INVESTMENT CONTRACTS, CERTIFICATES OF
INTEREST, OR PARTICIPATION IN A PROFIT SHARING
AGREEMENT SUCH AS COLLECTIVE INVESTMENT
SCHEMES, CERTIFICATE OF DEPOSIT FOR A FUTURE
‘SUBSCRIPTION;

(C) FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS, OR
OTHER MINERAL RIGHTS;

(D) DERIVATIVES LIKE OPTION AND WARRANTS;

(E) CERTIFICATES OF ASSIGNMENTS, CERTIFICATES OF
PARTICIPATION, TRUST CERTIFICATES, VOTING TRUST
CERTIFICATES, OR SIMILAR INSTRUMENTS;

(F) PROPRIETARY OR NON-PROPRIETARY MEMBERSHIP
CERTIFICATES IN CORPORATIONS; AND

(G) OTHER INSTRUMENTS AS MAY IN THE FUTURE BE
DETERMINED BY THE SECURITIES AND EXCHANGE
COMMISSION.

XXX XXX XXX

(V) The term ‘bank’ means every banking institution, as defined in
Section 2 Republic Act No. 337, as amended, otherwise known as the
General Banking Act. A bank may either be A UNIVERSAL BANK, a
commercial bank, a thrift bank, a development bank, a rural bank, a
specialized government bank, or a cooperative bank-

(W) The term ‘non-bank financial intermediary’ OR “QUASI-BANK”
means PERSONS OR ENTITIES ENGAGED IN THE BORROWING OF
FUNDS, FOR THE BORROWER'S OWN ACCOUNT, THROUGH THE
ISSUANCE, ENDORSEMENT, OR ACCEPTANCE OF DEBT
INSTRUMENTS OF ANY KIND OTHER THAN DEPOSITS, OR
THROUGH THE ISSUANCE OF PARTICIPATION’S, CERTIFICATES
OF ASSIGNMENT, OR SIMILAR INSTRUMENTS WITH RECOURSE,
TRUST CERTIFICATES, OR OF REPURCHASE AGREEMENTS,
FROM TWENTY OR MORE LENDERS AT ANY ONE TIME, FOR

3


PURPOSES OF RELENDING OR PURCHASING OF RECEIVABLES
AND OTHER OBLIGATIONS, BUT DOES NOT INCLUDE
COMMERCIAL, INDUSTRIAL, AND OTHER NON-FINANCIAL
COMPANIES, WHICH BORROW FUNDS THROUGH ANY OF THESE
MEANS FOR THE LIMITED PURPOSE OF FINANCING THEIR OWN
NEEDS OR THE NEEDS OF THEIR AGENTS OR DEALERS, OR a
financial intermediary, as defined in Section 2(D)(c) of Republic Act No.
337, as amended, otherwise known as the General Banking Act,
authorized by the Bangko Sentral ng Pilipinas (BSP) to perform quasi-
banking activities.

(X) The term ‘quasi-banking activities’ means borrowing funds from
twenty (20) or more personal or corporate lenders at any one time
through the issuance, endorsement, or acceptance of debt instruments
of any kind other than deposits for the borrower's own account, or
through the issuance of certificates of assignment or similar
instruments, with recourse, or of repurchase agreements for purposes
of relending or purchasing receivables and other similar obligations:
Provided, however, That commercial, industrial and other non-financial
companies, which borrow funds through any of these means for the
limited purpose of financing their own needs or the needs of their agents
or dealers, shall not be considered as performing quasi-banking
functions. THE PHRASE “AT ANY ONE TIME” SHALL BE COUNTED
AT THE TIME OF ORIGINATION OR ISSUANCE OF THE DEBT
INSTRUMENT.

(Y) The term “deposit substitutes” shall mean an alternative from of
obtaining funds from the public (the term ‘public’ means borrowing
from twenty (20) or more individual or corporate lenders at any one
time) other than deposits, through the issuance, endorsement, or
acceptance of debt instruments for the borrowers own account, for the
purpose of relending or purchasing of receivables and other obligations,
or financing their own needs or the needs of their agent or dealer. These
instruments may include, but need not be limited to bankers’
acceptances, promissory notes, repurchase agreements, fineluding}
EXCLUDING reverse repurchase agreements entered into by and
between the Bangko Sentral ng Pilipinas (BSP) and any authorized
agent bank, certificates of assignment or participation and similar
instruments with recourse.

DEBT INSTRUMENTS ISSUED BY THE GOVERNMENT AND ANY OF
ITS AGENCIES AND INSTRUMENTALITIES INCLUDING

ISSUED TO THE PUBLIC AND CONSIDERED DEPOSIT
SUBSTITUTES. Provided, however, that debt instruments issued for
interbank call loans with maturity of not more than five (5) days to cover
deficiency in reserves against deposit liabilities, including those


between or among banks and quasi-banks, shall not be considered as
deposit substitute debt instruments.

XXX XXX XXX

(BB) The term ‘mutual fund company’ shall mean ANY INVESTMENT
COMPANY WHICH IS OR HOLDS ITSELF OUT AS BEING ENGAGED
PRIMARILY, OR PROPOSES TO ENGAGE PRIMARILY IN THE
BUSINESS OF POOLING TOGETHER MONEY FROM VARIOUS
INVESTORS AND INVESTS, REINVESTS, OR TRADES THE SAME IN
SECURITIES, WHETHER IN STOCKS, BONDS, MONEY-MARKET
INSTRUMENTS, OTHER SECURITIES, CASH, OR ANY OTHER
ASSET, OR an open-end and close-end investment company as defined
under REPUBLIC ACT NO. 2629, ALSO KNOWN AS the Investment
Company Act OF THE PHILIPPINES.

XXX XXX XXX

(FF) [Phe term-jong-term-deposit-or investment-certificate' shall refer

BSP.}-THE TERM ‘FINANCIAL INSTITUTIONS’ OR ‘FINANCIAL
INTERMEDIARIES’ SHALL MEAN PERSONS OR ENTITIES WHOSE
PRINCIPAL FUNCTIONS INCLUDE THE BUSINESS OF LENDING,
FINANCING, INVESTING, OR PLACEMENT OF FUNDS OR
EVIDENCES OF INDEBTEDNESS OR EQUITY DEPOSITED WITH
THEM, ACQUIRED BY THEM, OR OTHERWISE COURSED
THROUGH THEM, EITHER FOR THEIR OWN ACCOUNT OR FOR
THE ACCOUNT OF OTHERS, AND ARE AUTHORIZED BY THE
BANGKO SENTRAL NG PILIPINAS OR BY THE SECURITIES AND
EXCHANGE COMMISSION DEPENDING ON THE GOVERNMENT
AGENCY AUTHORIZED TO REGULATE THEM. IT SHALL INCLUDE
BANKS, QUASI-BANKS, TRUST ENTITIES, PAWNSHOPS, FOREIGN
EXCHANGE DEALERS, MONEY BROKER, CREDIT COOPERATIVES,
FINANCING COMPANIES, FINANCE-LEASING COMPANIES,
INVESTMENT COMPANIES, AND OTHER COLLECTIVE
INVESTMENT SCHEMES, INVESTMENT HOUSE, LENDING
INVESTOR, AND OTHER TYPES OF BUSINESSES THAT MAY BE
CLASSIFIED BY THE BSP OR THE SECURITIES AND EXCHANGE
COMMISSION AS FINANCIAL INSTITUTION.


INSURANCE COMPANIES, LIFE AND NON-LIFE, ARE ALSO
CONSIDERED FINANCIAL INSTITUTIONS UNDER THE
SUPERVISION OF THE INSURANCE COMMISSION.

(GG) THE TERM ‘UNIT-LINKED INVESTMENT INSTRUMENT’ SHALL
MEAN A CONTRACTUAL CIS ORGANIZED PURSUANT TO A
CONTRACT, SUCH AS TRUST INDENTURE, OR AS AN INVESTMENT
COMPONENT OF AN INSURANCE CONTRACT, ENGAGED OR HOLDS
ITSELF OUT AS BEING ENGAGED, OR PROPOSES TO ENGAGE, IN
THE BUSINESS OF INVESTING, REINVESTING, AND/OR TRADING
IN SECURITIES OR OTHER INVESTMENT ASSETS, AND ISSUES
UNITS OF PARTICIPATION, EACH OF WHICH REPRESENTS AN
UNDIVIDED INTEREST IN A POOL OF INVESTMENT ASSETS.

(HH) THE TERM ‘COLLECTIVE INVESTMENT SCHEMES’ OR ‘CIS’
SHALL MEAN ANY ARRANGEMENT WHEREBY FUNDS ARE
SOLICITED FROM THE INVESTING PUBLIC AND POOLED
TOGETHER FOR THE PURPOSE OF INVESTING, RE-INVESTING,
AND/OR TRADING IN SECURITIES OR OTHER ASSETS OR
DIFFERENT CLASSES THEREOF AS ALLOWED UNDER THE LAW,
WHICH MAY EITHER HAVE A CORPORATE STRUCTURE, SUCH AS
AN INVESTMENT COMPANY, OR A CONTRACTUAL STRUCTURE,
SUCH AS A UNIT INVESTMENT TRUST FUND OR SIMILAR SCHEME
HELD BY A TRUST CORPORATION OR A SEPARATE ACCOUNT
FUND ESTABLISHED PURSUANT TO A VARIABLE UNIT LINKED
LIFE INSURANCE POLICY ISSUED BY AN INSURANCE COMPANY,
AND SUCH OTHER FORMS OF COLLECTIVE INVESTMENT
SCHEMES AS MAY BE DETERMINED BY THE APPROPRIATE
GOVERNMENT REGULATORY AGENCIES SUCH AS THE BANGKO
SENTRAL NG PILIPINAS, THE SECURITIES AND EXHANGE
COMMISSION AND THE INSURANCE COMMISSION. A CIS MAY
EITHER BE OPEN-END OR CLOSED-END, DEFINED AS FOLLOWS:

“OPEN-END CIS" MEANS A CIS WHERE SECURITIES ARE OFFERED
AND ARE ALWAYS REDEEMABLE BY THE CIS; AND

"CLOSED-END CIS" MEANS A CIS WHERE A FIXED NUMBER OF
SECURITIES ARE OFFERED IN AN INITIAL PUBLIC OFFERING AND
THEREAFTER MAY BE TRADED IN AN ORGANIZED MARKET AS
DETERMINED BY THE SEC, BUT MAY NOT BE REDEEMED BY THE
CIS. A CLOSED-END CIS SHALL NOT BE ALLOWED TO INCREASE
ITS NUMBER OF SECURITIES.

(JJ) THE TERM ‘HOLDING COMPANY’ SHALL REFER TO ANY
CORPORATION ORGANIZED TO HOLD THE STOCK OF ANOTHER
OR OTHER CORPORATIONS, AND OTHER FORMS OF HOLDING
COMPANIES AS MAY BE DETERMINED BY APPROPRIATE
REGULATORY GOVERNMENT AGENCIES.


(KK) THE TERM ‘DEBT INSTRUMENT SHALL REFER TO
INSTRUMENTS REPRESENTING BORROWING AND LENDING
‘TRANSACTIONS INCLUDING BUT NOT LIMITED TO DEBENTURES,
CERTIFICATES OF INDEBTEDNESS, DUE BILLS, BONDS, LOAN
AGREEMENTS, INSTRUMENTS, AND SECURITIES ISSUED BY THE
GOVERNMENT OR ANY OF ITS INSTRUMENTALITIES, DEPOSIT
SUBSTITUTE DEBT INSTRUMENTS, CERTIFICATES OR OTHER
EVIDENCES OF DEPOSITS, PROMISSORY NOTES, WHETHER
NEGOTIABLE OR NON-NEGOTIABLE, OTHER SIMILAR
INSTRUMENTS, AND OTHER INSTRUMENTS AS MAY BE
DETERMINED BY APPROPRIATE GOVERNMENT AGENCIES.

(LL) THE TERM ‘ORGANIZED MARKETPLACE’ IS AN EXCHANGE, AN
OVER-THE-COUNTER MARKET, ALTERNATIVE TRADING SYSTEM,
OR OTHERWISE RECOGNIZED AS SUCH BY THE SEC, AND
GOVERNED BY, AMONG OTHERS, TRANSPARENT AND BINDING
RULES AND MARKET CONVENTIONS ON MEMBERSHIP, TRADING,
PRICE TRANSPARENCY, TRADE REPORTING, MARKET
MONITORING AND ORDERLY CONDUCT/OPERATION OF THE
MARKET WHICH ARE ENFORCEABLE ON THE MEMBERS AND
PARTICIPANTS.

(MM) THE TERM ‘CLOSELY HELD CORPORATION’ MEANS ANY
CORPORATION WITH AT LEAST FIFTY PERCENT (50%) IN VALUE
OF OUTSTANDING CAPITAL STOCK OR AT LEAST FIFTY PERCENT
(80%) OF THE TOTAL COMBINED VOTING POWER OF ALL
CLASSES OF STOCK ENTITLED TO VOTE IS OWNED DIRECTLY OR
INDIRECTLY BY OR FOR NOT MORE THAN TWENTY (20)
INDIVIDUALS.

FOR PURPOSES OF DETERMINING WHETHER THE CORPORATION
IS A CLOSELY HELD CORPORATION, INSOFAR AS SUCH
DETERMINATION IS BASED ON STOCK OWNERSHIP, THE
FOLLOWING RULES SHALL BE APPLIED:

(1) STOCK NOT OWNED BY INDIVIDUALS. - STOCK OWNED
DIRECTLY OR INDIRECTLY BY OR FOR A CORPORATION,
PARTNERSHIP, ESTATE OR TRUST SHALL BE CONSIDERED
AS BEING OWNED PROPORTIONATELY BY ITS
SHAREHOLDERS, PARTNERS OR BENEFICIARIES.

(2) FAMILY AND PARTNERSHIP OWNERSHIPS. - AN
INDIVIDUAL SHALL BE CONSIDERED AS OWNING THE
STOCK OWNED DIRECTLY OR INDIRECTLY, BY OR FOR HIS
FAMILY, OR BY OR FOR HIS PARTNER. FOR PURPOSES OF
THE PARAGRAPH, THE ‘FAMILY OF AN INDIVIDUAL’
INCLUDES ONLY HIS BROTHERS AND SISTERS (WHETHER


BY WHOLE OR HALF-BLOOD), SPOUSE, ANCESTORS AND
LINEAL DESCENDANTS.

(3) OPTION. - IF ANY PERSON HAS AN OPTION TO ACQUIRE
STOCK, SUCH STOCK SHALL BE CONSIDERED AS OWNED
BY SUCH PERSON. FOR PURPOSES OF THIS PARAGRAPH,
AN OPTION TO ACQUIRE SUCH AN OPTION AND EACH ONE
OF A SERIES OF OPTIONS SHALL BE CONSIDERED AS AN
OPTION TO ACQUIRE SUCH STOCK.

(4) CONSTRUCTIVE OWNERSHIP AS ACTUAL OWNERSHIP. ~
STOCK CONSTRUCTIVELY OWNED BY REASON OF THE
APPLICATION OF PARAGRAPH (1) OR (3) HEREOF SHALL,
FOR PURPOSES OF APPLYING PARAGRAPH (1) OR (2), BE
TREATED AS ACTUALLY OWNED BY SUCH PERSON; BUT
STOCK CONSTRUCTIVELY OWNED BY THE INDIVIDUAL BY
REASON OF THE APPLICATION OF PARAGRAPH (2) HEREOF
SHALL NOT BE TREATED AS OWNED BY HIM FOR
PURPOSES OF AGAIN APPLYING SUCH PARAGRAPH IN
ORDER TO MAKE ANOTHER THE CONSTRUCTIVE OWNER
OF SUCH STOCK]

SEC. 4. Section 24 (B) and (C) of the National Internal Revenue Code of 1997,
as amended, is hereby 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. -

XXX XXX XXX
(B) Rate of Tax on CERTAIN CAPITAL Certain-Passive Income: -

(1) Interests, Royalties, Prizes,and-Other Winnings. - A final tax at
the rate of twenty-percent{20%) FIFTEEN PERCENT (15%) is hereby
imposed upon the amount of interest, YIELD, OR ANY OTHER
MONETARY BENEFIT EARNED OR RECEIVED FROM DEBT
INSTRUMENT, BANK DEPOSIT, DEPOSIT SUBSTITUTE, AND ANY
OTHER FORM OF DEBT INSTRUMENT AND SIMILAR
ARRANGEMENTS. IF THE PAYOR OF THE INCOME IS A
DESIGNATED WITHHOLDING AGENT AS REQUIRED UNDER THIS
CODE OR ITS IMPLEMENTING RULES AND REGULATIONS, THE
TAX IMPOSED UNDER THIS SECTION SHALL BE COLLECTED BY
WAY OF A FINAL WITHHOLDING TAX. IF THE PAYOR IS NOT A
DESIGNATED WITHHOLDING AGENT OR IF THE INCOME WAS NOT
SUBJECTED TO FINAL WITHHOLDING TAX, IT SHALL BE THE
DUTY OF THE INCOME RECIPIENT TO DECLARE THE INTEREST

8


INCOME RECEIVED AND PAY THE 15% FINAL TAX WITHIN THE
TIME REQUIRED UNDER REVENUE REGULATIONS. from—any

Less-than-three-{3}-years—20%

(2) Cash and/or Property Dividends. - A final tax at the RATE OF
FIFTEEN PERCENT (15%) ten-percent-{10%) shall be imposed upon the
cash and/or property dividends actually or constructively received by
an individual from a domestic corporation or from a joint stock
company, insurance, er—mutual fund companies, COLLECTIVE
INVESTMENT SCHEMES, and regional operating headquarters of
multinational companies, or on the share of an individual in the
distributable net income after tax of a partnership (except a general
professional partnership) of which he is a partner, or on the share of an
individual in the net income after tax of an association, a joint account,
or a joint venture or consortium taxable as a corporation of which he is
a member or co-venturer.

PROVIDED, HOWEVER, THAT THE FIFTEEN PERCENT (15%) TAX

ON DIVIDENDS SHALL APPLY ONLY ON INCOME EARNED ON OR
AFTER JANUARY 1, 2019. INCOME FORMING PART OF RETAINED

9


EARNINGS AS OF DECEMBER 31, 2018 SHALL, EVEN IF
DECLARED OR DISTRIBUTED ON OR AFTER JANUARY 1, 2019,
SHALL BE SUBJECT TO TEN PRECENT (10%) TAX.

LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 24{A)
BASED ON NET GAIN.

(C3) Capital Gains from THE Sale, EXCHANGE, BARTER, OR
DISPOSITION of Shares of Stock not—Traded—in—the—Stock
Exchange. -

(a) UNLISTED SHARES OF STOCK - The provisions of Section 39(B)
notwithstanding, a final tax at the rate of 15% is hereby imposed upon
the net capital gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of stock in a domestic
corporation, except shares sold, or disposed of through A LOCAL the
stock exchange-OR A LICENSED ORGANIZED MARKETPLACE.

(b) LISTED AND TRADED SHARES OF STOCK - THERE SHALL BE
LEVIED, ASSESSED AND COLLECTED ON EVERY SALE, BARTER,
EXCHANGE, OR OTHER DISPOSITION OF SHARES OF STOCK
LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR
A LICENSED ORGANIZED MARKETPLACE, A FINAL TAX AT THE
RATE OF SIX TENTH OF ONE PERCENT (6/10 OF 1%), AND SHALL
BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

JANUARY 1, 2020: FIVE TENTH OF ONE PERCENT (5/10 OF 1%),
JANUARY 1, 2021: FOUR TENTH OF ONE PERCENT (4/10 OF 1%),
JANUARY 1, 2022: THREE TENTH OF ONE PERCENT (3/10 OF 1%),
JANUARY 1, 2023: TWO TENTH OF ONE PERCENT (2/10 OF 1%),
JANUARY 1, 2024: ONE TENTH OF ONE PERCENT (1/10 OF 1%).
THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE SHARES OF STOCK SOLD,
BARTERED, EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE
PAID BY THE SELLER OR TRANSFEROR.

ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC
CORPORATION TRADED IN A FOREIGN EXCHANGE, SHALL BE
TAXED UNDER SECTION 24 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR
DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A
DEALER IN SECURITIES OR OTHER ENTITIES LICENSED BY THE
APPROPRIATE REGULATORY GOVERNMENT AGENCIES TO BUY

10


AND SELL IN SECURITIES, WHETHER OR NOT UNDERTAKEN AS A
PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT, OR
FOR THE ACCOUNT OF OTHERS, OR IN A FIDUCIARY CAPACITY,
SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION BUT
TO SECTION 24(A) AS AN ORDINARY INCOME.

(4) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER,
DISPOSITION OF DEBT INSTRUMENTS, AND OTHER SECURITIES
NOT INCLUDED IN SECTION 24{B)(3). —

ANY GAIN EARNED FROM DEBT INSTRUMENT AND OTHER
SECURITIES NOT INCLUDED IN SECTION 24(B\(3), ISSUED BY A
CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC
CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS
AGENCIES OR INSTRUMENTALITIES, SHALL BE SUBJECT TO TAX
AS FOLLOWS:

(a) UNLISTED DEBT INSTRUMENTS AND OTHER SECURITIES
NOT INCLUDED IN SECTION 24(B)(3). - THE PROVISIONS OF
SECTION 39(B) NOTWITHSTANDING, A FINAL TAX AT THE RATE
OF 15% IS HEREBY IMPOSED UPON THE NET CAPITAL GAINS
REALIZED DURING THE TAXABLE YEAR FROM THE SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, ISSUED BY A CITIZEN OR RESIDENT
ALIEN OR BY A DOMESTIC CORPORATION, EXCEPT DEBT
SECURITIES SOLD, OR DISPOSED OF THROUGH A LOCAL STOCK
EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE.

(b) LISTED AND TRADED DEBT INSTRUMENTS AND OTHER
SECURITIES NOT INCLUDED IN SECTION 24(B)(3). - THERE SHALL
BE LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, LISTED AND TRADED THROUGH A
LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED
MARKETPLACE, A FINAL TAX AT THE RATE OF ONE TENTH OF
ONE PERCENT (1/10 OF 1%) OF THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE DEBT INSTRUMENT OR
SECURITIES SOLD, BARTERED, EXCHANGED, OR OTHERWISE
DISPOSED, WHICH SHALL BE PAID BY THE SELLER OR
TRANSFEROR. IF TRADED IN A FOREIGN EXCHANGE, THE GAIN
SHALL BE SUBJECT TO TAX UNDER SECTION 24 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER OR
DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES,
LISTED OR UNLISTED, BY A DEALER IN SECURITIES OR OTHER
ENTITIES LICENSED BY THE APPROPRIATE REGULATORY

12


GOVERNMENT AGENCIES TO BUY AND SELL IN DEBT
INSTRUMENTS SECURITIES, WHETHER OR NOT UNDERTAKEN AS
A PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT,
OR FOR THE ACCOUNT OF OTHERS, OR DONE IN A FIDUCIARY
CAPACITY, SHALL NOT BE SUBJECT TO TAX UNDER THIS
SUBSECTION BUT TO SECTION 24(A) AS AN ORDINARY INCOME.

(D5) Capital Gains from Sale of Real Property. ~

(1) In General. - The provisions of Section 39(B) notwithstanding, a
final tax of six percent (6%) based on the gross selling price or current
fair market value as determined in accordance with Section 6(E) of this
Code, whichever is higher, is hereby imposed upon capital gains
presumed to have been realized from the sale, exchange, or other
disposition of real property located in the Philippines, classified as
capital assets, including pacto de retro sales and other forms of
conditional sales, by individuals, including estates and trusts: Provided,
That the tax liability, if any, on gains from sales or other dispositions of
real property to the government or any of its political subdivisions or
agencies or to government-owned or -controlled corporations shall be
determined either under Section 24(A) or under this Subsection, at the
option of the taxpayer;

(2) Exception. - The provisions of paragraph (1) of this Subsection to
the contrary notwithstanding, capital gains presumed to have been
realized from the sale or disposition of their principal residence by
natural persons, the proceeds of which is fully utilized in acquiring or
constructing a new principal residence within cighteen (18) calendar
months from the date of sale or disposition, shall be exempt from the
capital gains tax imposed under this Subsection: Provided, That the
historical cost or adjusted basis of the real property sold or disposed
shall be carried over to the new principal residence built or acquired:
Provided, further, That the Commissioner shall have been duly notified
by the taxpayer within thirty (30) days from the date of sale or
disposition through a prescribed return of his intention to avail of the
tax exemption herein mentioned: Provided, still further, That the said
tax exemption can only be availed of once every ten (10) years: Provided,
finally, That if there is no full utilization of the proceeds of sale or
disposition, the portion of the gain presumed to have been realized from
the sale or disposition shall be subject to capital gains tax. For this
purpose, the gross selling price or fair market value at the time of sale,
whichever is higher, shall be multiplied by a fraction which the
unutilized amount bears to the gross selling price in order to determine
the taxable portion and the tax prescribed under paragraph (1) of this
Subsection shall be imposed thereon.

(C) ROYALTIES, PRIZES, AND OTHER WINNINGS - A FINAL TAX AT
THE RATE OF TWENTY PERCENT (20%) IS HEREBY IMPOSED ON
‘THE FOLLOWING INCOME DERIVED FROM SOURCES WITHIN THE

12


PHILIPPINES: (1) ROYALTIES EARNED AS PASSIVE INCOME,
EXCEPT ROYALTIES FROM BOOKS, AS WELL AS OTHER
LITERARY WORKS AND MUSICAL COMPOSITIONS WHICH SHALL
BE SUBJECT TO A FINAL TAX OF TEN PERCENT (10%); (2) PRIZES
(EXCEPT PRIZES AMOUNTING TO TEN THOUSAND PESOS
{P10,000) OR LESS WHICH SHALL BE SUBJECT TO TAX UNDER
SECTION 24 (A); AND (3) OTHER WINNINGS (EXCEPT WINNINGS
AMOUNTING TO PHP10,000 OR LESS FROM PHILIPPINE CHARITY
SWEEPSTAKES AND LOTTO WHICH SHALL BE EXEMPT).

SEC. 5. Section 25 (A) and (B) of the National Internal Revenue Code of 1997,
as amended, is hereby amended to read as follows:

SEC. 25. Tax on Nonresident Alien Individual. —

(A) Nonresident Alien Engaged in Trade or Business Within the
Philippines. ~ (1}-In-General-~A nonresident alien individual engaged
in trade or business in the Philippines shall be subject to an income tax
UNDER SECTION 24 OF THIS COD!
individual-citizen-and-a-resident-alien-individual, on taxable income
received from all sources within the Philippines. A nonresident alien
individual who shall come to the Philippines and stay therein for an
aggregate period of more than one hundred eighty (180) days during
any calendar year shall be deemed a ‘nonresident alien doing business
in the Philippines’, Section 22(G) of this Code notwithstanding.

13


(B) Nonresident Alien Individual Not Engaged in Trade or Business
Within the Philippines. - There shall be levied, collected and paid for
each taxable year upon the entire income received from all sources
within the Philippines by every nonresident alien individual not engaged
in trade or business within the Philippines as |interest;-eash-and/or
rents, salaries, wages, premiums, annuities,
compensation, remuneration, emoluments, or other fixed or
determinable annual or periodic or casual gains, profits, and income, ;
a FINAL tax equal to twenty five percent (25%) of

such income. |

not engaged-intrade on besinene inthe Hhilippines frome aekeof
: . : rae ter

Seetion-244

INTEREST, DIVIDENDS AND CAPITAL GAINS ON SALE OF SHARES

OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES SHALL

BE SUBJECT TO TAX PRESCRIBED UNDER SECTION 24 (B), OR TO
THE PROVISIONS OF APPLICABLE TAX TREATY.

XXX XXX XXX

SEC. 6. Section 27 (D) of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

14


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%).

XXX XXX XXX
(D) Rates of Tax on Certain CAPITAL Passive Incomes.

(1) INTERESTS. - A FINAL TAX AT THE RATE OF FIFTEEN
PERCENT (15%) IS HEREBY IMPOSED UPON THE AMOUNT OF
INTEREST, YIELD, OR OTHER MONETARY BENEFIT EARNED OR
RECEIVED FROM DEBT INSTRUMENT, BANK DEPOSIT, DEPOSIT
SUBSTITUTE, AND SIMILAR ARRANGEMENTS. IF THE PAYOR OF
THE INCOME IS A DESIGNATED WITHHOLDING AGENT AS
REQUIRED UNDER THIS CODE OR ITS IMPLEMENTING RULES
AND REGULATIONS, THE TAX IMPOSED UNDER THIS SECTION
SHALL BE COLLECTED BY WAY OF A FINAL WITHHOLDING TAX.
IF THE PAYOR IS NOT A DESIGNATED WITHHOLDING AGENT OR
IF THE INCOME WAS NOT SUBJECTED TO FINAL WITHHOLDING
TAX, IT SHALL BE THE DUTY OF THE INCOME RECIPIENT TO
DECLARE THE INTEREST INCOME RECEIVED AND PAY THE 15%
FINAL TAX WITHIN THE TIME REQUIRED UNDER REVENUE
REGULATIONS.

(2) CASH AND/OR PROPERTY DIVIDENDS. - INTERCORPORATE
DIVIDENDS OR DIVIDENDS RECEIVED BY A DOMESTIC
CORPORATION FROM ANOTHER DOMESTIC CORPORATION
SHALL NOT BE SUBJECT TO TAX IMPOSED UNDER THIS
SUBSECTION EXCEPT IN THE CASE OF DIVIDENDS PAID TO A
SOLE CORPORATION AS DEFINED UNDER THE LAWS OR BY
RULES AND REGULATION ISSUED BY THE SECURITIES AND
EXCHANGE COMMISSION, WHICH SHALL BE SUBJECT TO A FINAL
TAX OF 15%.

LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 27(A)
BASED ON NET GAIN.

(3) CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER OR
DISPOSITION OF SHARES OF STOCK. —

(a) UNLISTED SHARES OF STOCK - THE PROVISIONS OF
SECTION 39(B) NOTWITHSTANDING, A FINAL TAX AT THE RATE
OF 15% IS HEREBY IMPOSED UPON THE NET CAPITAL GAINS
REALIZED DURING THE TAXABLE YEAR FROM THE SALE,

1s


BARTER, EXCHANGE, OR OTHER DISPOSITION OF SHARES OF
STOCK IN A DOMESTIC CORPORATION, EXCEPT SHARES SOLD,
OR DISPOSED OF THROUGH A LOCAL STOCK EXCHANGE OR A
LICENSED ORGANIZED MARKETPLACE.

(b) LISTED AND TRADED SHARES OF STOCK - THERE SHALL BE
LEVIED, ASSESSED AND COLLECTED ON EVERY SALE, BARTER,
EXCHANGE, OR OTHER DISPOSITION OF SHARES OF STOCK
LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR
A LICENSED ORGANIZED MARKETPLACE, A FINAL TAX AT THE
RATE OF SIX TENTH OF ONE PERCENT (6/10 OF 1%), AND SHALL
BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

JANUARY 1, 2020: FIVE TENTH OF ONE PERCENT (5/10 OF 1%),
JANUARY 1, 2021: FOUR TENTH OF ONE PERCENT (4/10 OF 1%),
JANUARY 1, 2022: THREE TENTH OF ONE PERCENT (3/10 OF 1%),
JANUARY 1, 2023: TWO TENTH OF ONE PERCENT (2/10 OF 1%),
JANUARY 1, 2024: ONE TENTH OF ONE PERCENT (1/10 OF 1%).

THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE SHARES OF STOCK SOLD,
BARTERED, EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE
PAID BY THE SELLER OR TRANSFEROR.

ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC
CORPORATION TRADED IN A FOREIGN EXCHANGE, SHALL BE
TAXED UNDER SECTION 27 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR
DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A
DEALER IN SECURITIES OR OTHER ENTITIES LICENSED BY THE
APPROPRIATE REGULATORY GOVERNMENT AGENCIES TO BUY
AND SELL IN SECURITIES, WHETHER OR NOT UNDERTAKEN AS A
PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT, OR
FOR THE ACCOUNT OF OTHERS, OR IN A FIDUCIARY CAPACITY,
SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION BUT
TO SECTION 27(A) AS AN ORDINARY INCOME.

(4) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER,
DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES
NOT INCLUDED IN SECTION 27(D\(3). —

ANY GAIN EARNED FROM DEBT INSTRUMENT AND OTHER
SECURITIES NOT INCLUDED IN SECTION 27(Dj(3), ISSUED BY A
CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC

16


CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS
AGENCIES OR INSTRUMENTALITIES, SHALL BE SUBJECT TO TAX
AS FOLLOWS:

(a) UNLISTED DEBT INSTRUMENTS AND OTHER SECURITIES
NOT INCLUDED IN SECTION 27(D\(3) - THE PROVISIONS OF
SECTION 39(B) NOTWITHSTANDING, A FINAL TAX AT THE RATE
OF 15% IS HEREBY IMPOSED UPON THE NET CAPITAL GAINS
REALIZED DURING THE TAXABLE YEAR FROM THE SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, ISSUED BY A RESIDENT INDIVIDUAL
OR CITIZEN OR BY A DOMESTIC CORPORATION, EXCEPT DEBT
SECURITIES SOLD, OR DISPOSED OF THROUGH A LOCAL STOCK
EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE.

(b) LISTED AND TRADED DEBT INSTRUMENTS AND OTHER
SECURITIES NOT INCLUDED IN SECTION 27(D)(3) - THERE SHALL
BE LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE,
BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT
INSTRUMENTS AND OTHER SECURITIES AS DEFINED UNDER
SECTION 22 OF THIS CODE, LISTED AND TRADED THROUGH A
LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED
MARKETPLACE, A FINAL TAX AT THE RATE OF ONE TENTH OF
ONE PERCENT (1/10 OF 1%) OF THE GROSS SELLING PRICE OR
GROSS VALUE IN MONEY OF THE DEBT INSTRUMENT OR
SECURITIES SOLD, BARTERED, EXCHANGED, OR OTHERWISE
DISPOSED, WHICH SHALL BE PAID BY THE SELLER OR
TRANSFEROR. IF TRADED IN A FOREIGN EXCHANGE, THE GAIN
SHALL BE SUBJECT TO TAX UNDER SECTION 27 (A) HEREOF.

ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR
DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES,
LISTED OR UNLISTED, BY A DEALER IN SECURITIES OR OTHER
ENTITIES LICENSED BY THE APPROPRIATE REGULATORY
GOVERNMENT AGENCIES TO BUY AND SELL IN DEBT
INSTRUMENTS SECURITIES, WHETHER OR NOT UNDERTAKEN AS
A PRIMARY BUSINESS UNDERTAKING, FOR HIS OWN ACCOUNT,
OR FOR THE ACCOUNT OF OTHERS, OR DONE IN A FIDUCIARY
CAPACITY, SHALL NOT BE SUBJECT TO TAX UNDER THIS
SUBSECTION BUT TO SECTION 27(A) AS AN ORDINARY INCOME.

7


(5) Capital Gains Realized from the Sale, Exchange or Disposition
of Lands and/or Buildings. - A final tax of six percent (6%) is hereby
imposed on the gain presumed to have been realized on the sale,
exchange or disposition of lands and/or buildings which are not
actually used in the business of a corporation and are treated as capital
assets, based on the gross selling price or fair market value as

18


determined in accordance with Section 6(E) of this Code, whichever is
higher, of such lands and/or buildings.

(E) ROYALTIES - A FINAL TAX AT THE RATE OF TWENTY PERCENT
(20%) IS HEREBY IMPOSED ON ROYALTIES EARNED AS PASSIVE
INCOME.

(EF) Minimum Corporate Income Tax on Domestic Corporations —
XXX XXX XXX

(4) Gross Income Defined. - XXX XXX XXX

XXX XXX XXX

In the case of taxpayers engaged in the sale of service, ‘gross income’
means gross receipts less sales returns, allowances, discounts and cost
of services. ‘Cost of services’ shall mean all direct costs and expenses
necessarily incurred to provide the services required by the customers
and clients including (A) salaries and employee benefits of personnel,
consultants and specialists directly rendering the service and (B) cost
of facilities directly utilized in providing the service such as depreciation
or rental of equipment used and cost of supplies: Provided, however,
That in the case of banks AND OTHER FINANCIAL INTERMEDIARIES,
‘cost of services’ shall include interest expense.

SEC. 7. Section 28 (A) and (B) of the National Internal Revenue Code of 1997,
as amended, is hereby amended to read as follows;

SEC. 28. Rates of Income Tax on Foreign Corporations. —

(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 fan} income tax UNDER SECTION 27 OF THIS

XXX XXX XXX

(2) Minimum Corporate Income Tax on Resident Foreign
‘Corporations. — A minimum corporate income tax of two percent (2%)
of gross income, as prescribed under Section 27(F) of this Code, shall

19


be imposed, under the same conditions, on a resident foreign
corporation taxable under paragraph (1) of this Subsection.

XXX XXX XXX

(5) Tax on Branch Profits Remittances. - Any profit remitted by a
branch to its head office shall be subject to a tax of fifteen percent (15%)
which shall be based on the total profits applied or earmarked for
remittance without fae ideaacton for the tax epg thereof.

Eocnomic Zone-Authori@. The tax shall be collected and paid in the
same manner as provided in Sections 57 and 58 of this Code: Provided,
That interests, dividends, rents, royalties, including remuneration for
technical services, salaries, wages, premiums, annuities, emoluments
or other fixed or determinable annual, periodic or casual gains, profits,
income and capital gains received by a foreign corporation during each
taxable year from all sources within the Philippines shall not be treated
as branch profits unless the same are effectively connected with the
conduct of its trade or business in the Philippines.

XXX XXX XXX

20


(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 percent (35%) of the gross income received
during each taxable year from all sources within the Philippines, such

2


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%).

XXX XXX XXX

(5) Tax on Certain CAPITAL Incomes Received by a Nonresident
Foreign Corporation. -

INTERESTS AND CAPITAL GAINS FROM SALE, TRANSFER,
BARTER, OR DISPOSITION OF SHARES OF STOCK, DEBT
INSTRUMENTS, DEPOSIT SUBSTITUTES, AND OTHER SECURITIES
SHALL BE SUBJECT TO TAX UNDER SECTION 27(D)(1)(3) AND (4)
OF THIS CODE, OR TO THE PROVISIONS OF THE APPLICABLE TAX
TREATY.

CASH AND/OR PROPERTY DIVIDENDS RECEIVED FROM A
DOMESTIC CORPORATION SHALL BE SUBJECT TO A FINAL TAX
OF FIFTEEN PERCENT (15%) OR TO THE PROVISIONS OF THE
APPLICABLE TAX TREATY.

22


SEC. 8. Section 29(A), (B) AND (C) of the National Internal Revenue Code of
1997, as amended, is hereby amended to read as follows:

SEC. 29. Imposition of Improperly Accumulated Earnings Tax. -

(A) In General — In addition to other taxes imposed by this Title, there
is hereby imposed for each taxable year on the improperly accumulated
taxable income of each corporation described in Subsection B hereof,
an improperly accumulated earnings tax equal to ten FIFTEEN percent
(40 15%) of the improperly accumulated taxable income.

(B) Tax on Corporations Subject to Improperly Accumulated
Earnings Tax. —

(1) In General. - The improperly accumulated earnings tax imposed in
the preceding Section shall apply to every corporation formed or availed
for the purpose of avoiding the income tax with respect to its
shareholders or the shareholders of any other corporation, by
permitting earnings and profits to accumulate instead of being divided
or distributed.

(2) Exceptions. - The improperly accumulated earnings tax as provided
for under this Section shall not apply to:

(a) Publicly-held corporations;

(b) Banks, fand—ether} nonbank financial intermediaries, AND
OTHER FINANCIAL INSTITUTIONS AS MAY BE DETERMINED
BY THE APPROPRIATE GOVERNMENT REGULATORY
AGENCIES; and

(c) Insurance companies, SUCH AS LIFE AND NON-LIFE,
REINSURANCE COMPANIES, PRE-NEED, PENSION FUNDS, AND
OTHER ENTITIES DOING BUSINESS SIMILAR TO OR AKIN TO
INSURANCE.

(C) Evidence of Purpose to Avoid Income Tax. - THE FACT THAT
THE EARNINGS OR PROFITS OF A CORPORATION ARE
PERMITTED TO ACCUMULATE BEYOND THE REASONABLE NEEDS
OF THE BUSINESS SHALL BE DETERMINATIVE OF THE PURPOSE
TO AVOID THE TAX UPON ITS SHAREHOLDERS OR MEMBERS

23


BRE Seavanaune

UNLESS THE CORPORATION, BY THE CLEAR PREPONDERANCE
OF EVIDENCE, SHALL PROVE TO THE CONTRARY.

y F i i rf

contrary:
XXX XXX XXX

SEC. 9. Section 30(B) of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 30. Exemption from tax on Corporations. - The following
organizations shall not be taxed under this Title in respect to income
received by them as such:

(A) Labor, agricultural or horticultural organization not organized
principally for profit;

{CB) A beneficiary society, order or association, operating for the
exclusive benefit of the members such as a fraternal organization
operating under the lodge system, or a mutual aid association or a
nonstock corporation organized by employees providing for the payment
of life, sickness, accident, or other benefits exclusively to the members
of such society, order, or association, or nonstock corporation or their

dependent:

{P\(C) Cemetery company owned and operated exclusively for the benefit
of its members;

{&\(D) Nonstock corporation or association organized and operated

exclusively for religious, charitable, scientific, athletic, or cultural
purposes, or for the rehabilitation of veterans, no part of its net income

24


BREE Sweaevaveune

or asset shall belong to or inure to the benefit of any member, organizer,
officer or any specific person;

(FE) Business league, chamber of commerce, or board of trade, not
organized for profit and no part of the net income of which inures to the
benefit of any private stockholder or individual;

{G)(F) Civic league or organization not organized for profit but operated
exclusively for the promotion of social welfare;

{H\(G) A nonstock and nonprofit educational institution;
{9(H) Government educational institution;

{J)(l) Farmers’ or other mutual typhoon or fire insurance company,
mutual ditch or irrigation company, mutual or cooperative telephone
company, or like organization of a purely local character, the income of
which consists solely of assessments, dues, and fees collected from
members for the sole purpose of meeting its expenses; and

(KJ) Farmers’, fruit growers’, or like association organized and
operated as a sales agent for the purpose of marketing the products of
its members and turning back to them the proceeds of sales, less the
necessary selling expenses on the basis of the quantity of produce
finished by them;

Notwithstanding the provisions in the preceding paragraphs, the
income of whatever kind and character of the foregoing organizations
from any of their properties, real or personal, or from any of their
activities conducted for profit regardless of the disposition made of such
income, shall be subject to tax imposed under this Code.

XXX XXX XXX

SEC. 10. Section 32(B)(7)(g) and (h) of the National Internal Revenue Code of
1997, as amended, is hereby amended to read as follows:

SEC. 32, Gross Income. -

XXX XXX XXX

(B) Exclusions from Gross Income. - The following items shall not be
included in gross income and shall be exempt from taxation under this
Title;

XXX XXX XXX

(7) Miscellaneous Items. —

25


(G) INTEREST INCOME FROM, AND GAINS FROM THE SALE,
TRANSFER, OR DISPOSITION OF, PROJECT SPECIFIC BONDS
THAT ARE ISSUED TO FINANCE CAPITAL EXPENDITURES OR
PROGRAMS COVERED BY THE PHILIPPINE DEVELOPMENT PLAN
OR ITS EQUIVALENT AND OTHER GOVERNMENT PROGRAMS
CONSIDERED TO BE OF HIGH-LEVEL PRIORITY OF THE
COUNTRY, PROVIDED THAT, THE EXEMPTION SHALL BE UPON
THE APPROVAL BY THE SECRETARY OF FINANCE.

m) Gains from Redemption of Shares OR UNITS OF PARTICIPATION

in Mutual_Fund INVESTMENT - Gains
realized by the investor upon redemption, of shares of stock OR UNITS
OF PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME AS
DEFINED UNDER SECTION 22 OF THIS CODE.

FOR PURPOSES OF THIS EXEMPTION, A COLLECTIVE
INVESTMENT SCHEME SHALL HAVE AT LEAST 1,000 OWNERS,
INVESTORS, OR PARTICIPANTS, AND THAT THE MINIMUM PUBLIC
OWNERSHIP AS MAY BE REQUIRED BY APPROPRIATE
GOVERNMENT AGENCIES SHALL BE COMPLIED WITH.

XXX XXX XXX

SEC. 11. Section 34(B) and (E) of the National Internal Revenue Code of 1997,
as amended, is hereby further amended to read as follows:

SEC. 34. Deductions from Gross Income. ~ Except for taxpayers
earning compensation income arising from personal services rendered
under an employer-employee relationship where no deductions shall be
allowed under this Section, in computing taxable income subject to
income tax under Sections 24(A); 25(A); 26; 27(A), (B) and (C); and
28(A)(1), there shall be allowed the following deductions from gross
income:

{A) Expenses. -
(1) Ordinary and Necessary Trade, Business or Professional
Expenses. -

(a) In General. - There shall be allowed as deduction from gross
income all the ordinary and necessary expenses paid or incurred during
the taxable year in carrying on or which are directly attributable to, the

26


development, management, operation and/or conduct of the trade,
business or exercise of a profession, including:

XXX XXX XXX

{b) Substantiation Requirements. - No deduction from gross income
shall be allowed under Subsection (A) hereof unless the taxpayer shall
substantiate with sufficient evidence, such as official receipts or other
adequate records: (i) the amount of the expense being deducted, and (ii)
the direct connection or relation of the expense being deducted to the
development, management, operation and/or conduct of the trade,
business or profession of the taxpayer.

{c) Bribes, Kickbacks and Other Similar Payments. — No deduction
from gross income shall be allowed under Subsection (A) hereof for any
payment made, directly or indirectly, to an official or employee of the
national government, or to an official or employee of any local
government unit, or to an official or employee of a government-owned
or -controlled corporation, or to an official or employee or representative
of a foreign government, or to a private corporation, general professional
partnership, or a similar entity, if the payment constitutes a bribe or
kickback.

{D) EXPENSES RELATED TO INCOME NOT SUBJECT TO REGULAR
TAX AND/OR EXEMPT INCOME. - NO DEDUCTION FROM GROSS
INCOME SHALL BE ALLOWED UNDER SUBSECTION (A) HEREOF,
ANY EXPENSE RELATED TO, OR IN CONNECTION WITH, THE
GENERATION OF INCOME NOT SUBJECT TO SECTIONS 24(A),
25(A)(1), 27(A) AND (B), AND 28(A) OR ANY INCOME FROM
INCOME TAX UNDER TITLE II OF THIS CODE. FOR EXPENSES
THAT CANNOT BE SPECIFICALLY IDENTIFIED OR ARE COMMON,
THE SECRETARY OF FINANCE SHALL PROVIDE IN A REGULATION
A REASONABLE METHOD OF ALLOCATION BETWEEN OR AMONG
INCOME SUBJECT TO REGULAR TAX UNDER SECTIONS 24(A),
25(A)(1), 27(A) AND (B) AND 28(A), EXEMPT INCOME, AND INCOME
SUBJECT TO SPECIAL RATES, TAKING INTO CONSIDERATION
SPECIFIC UNITS OF MEASUREMENT SUCH AS AREA, MANPOWER,
BENEFIT RECEIVED, RISKS ASSUMED, AND OTHER CRITERIA.

XXX XXX XXX
(B) Interest. -

(1) In General. - The amount of interest paid or incurred within a
taxable year on indebtedness in connection with the taxpayer's
profession, trade or business shall be allowed as deduction from gross
income: Provided, however, That the taxpayer's otherwise allowable
deduction for interest expense shall be reduced by forty-two percent
(42%) of the interest income subjected to final tax: Provided, That

27


effective January 1, 2009, the percentage shall be thirty-three percent
(33%). PROVIDED FURTHER, THAT EFFECTIVE JANUARY 1, 2019,
THE PERCENTAGE SHALL BE FIFTY PERCENT (50%).

ANY DIVIDEND DISGUISED AS INTEREST AND CLAIMED AS A
DEDUCTION UNDER THIS SUBSECTION SHALL NOT BE ALLOWED
AS A DEDUCTIBLE INTEREST EXPENSE.

(2) Exceptions. - No deduction shall be allowed in respect of interest
under the succeeding subparagraphs:

(a) If within the taxable year an individual taxpayer reporting income on
the cash basis incurs an indebtedness on which an interest is paid in
advance through discount or otherwise: Provided, That such interest
shall be allowed as a deduction in the year the indebtedness is paid:
Provided, further, That if the indebtedness is payable in periodic
amortizations, the amount of interest which corresponds to the amount
of the principal amortized or paid during the year shall be allowed as
deduction in such taxable year;

(b) If both the taxpayer and the person to whom the payment has been
made or is to be made are persons specified under Section 36(B); or

Treatment of Interest Expense RELATED TO

{3}— Optional

ACQUISITION OF ASSET. - {At

INTEREST EXPENSE incurred to acquire property used in trade,
business or exercise of a profession THAT WILL BENEFIT THE
BUSINESS LONGER THAN ONE YEAR SHALL{may] BE CAPITALIZED
AND THEREAFTER AMORTIZED OR DEPRECIATED AS PART OF
THE COST OF THE ASSET.

XXX XXX XXX
(E) Bad Debts. -

(1) In General. - Debts due to the taxpayer actually ascertained to be
worthless and charged off within the taxable year except those not
connected with profession, trade or business and those sustained in a
transaction entered into between parties mentioned under Section
36(B) of this Code: Provided, That recovery of bad debts previously
allowed as deduction in the preceding years shall be included as part
of the gross income in the year of recovery to the extent of the income
tax benefit of said deduction.

(2) Securities Becoming Worthless. - If securities, as defined in
Section 22(T), are ascertained to be worthless and charged off within
the taxable year and are capital assets, the loss resulting therefrom

28


deposits for the purpose-of-this Title, be considered as a loss from the
sale or exchange OF CAPITAL ASSETS, on the last day of such taxable
year|, of capital assets]. SECURITIES HELD BY A DEALER IN
SECURITIES OR AN ENTITY LICENSED BY THE APPROPRIATE
REGULATORY AGENCY TO BUY AND SELL IN SECURITIES
INCLUDING BANKS, AND OTHER FINANCIAL INTERMEDIARIES
SHALL BE CONSIDERED AN ORDINARY ASSET AND SECURITIES
HELD THAT ARE ASCERTAINED TO BE WORTHLESS SHALL BE
CONSIDERED AN ORDINARY LOSS ALLOWED AS DEDUCTION
FROM TAXABLE INCOME.

XXX XXX XXX

SEC. 12. Section 37(B) of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 37. Special Provisions Regarding Income and Deductions of
Insurance Companies, Whether Domestic or Foreign. -

(A) Special Deductions Allowed to Insurance Companies. - In the
case of insurance companies, whether domestic or foreign doing
business in the Philippines, the net additions, if any, required by law to
be made within the year to reserve funds and the sums, other than
dividends, paid within the year on policy and annuity contracts may be
deducted from their gross income: Provided, however, That the released
reserve be treated as income for the year of release.

{B) Mutual Insurance Companies. - In the case of mutual LIFE, fire
and mutual employers’ liability and mutual workmen's compensation
and mutual casualty insurance companies requiring their members to
make premium deposits to provide for losses and expenses, said
companies shall not INCLUDE return] as income any portion of the
premium deposits returned to their policyholders, but shall INCLUDE
{return} as taxable income all income received by them from all other
sources plus such portion of the premium deposits as are retained by
the companies for purposes other than the payment of losses and
expenses and reinsurance reserves.

XXX XXX XXX

SEC. 13. Section 38 (A) of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

29


SEC. 38. Losses from Wash Sales of Stock or Securities. —

(A) In the case of any loss claimed to have been sustained from any sale
or other disposition of shares of stock or securities where it appears
that within a period beginning thirty (30) days before the date of such
sale or disposition and ending thirty (30) days after such date, the
taxpayer has acquired (by purchase or by exchange upon which the
entire amount of gain or loss was recognized by law), or has entered
into a contract or option so AS to acquire, substantially identical stock
or securities, then no deduction for the loss shall be allowed under
Section 34 unless the claim is made by a dealer in stock or securities,
OR BY ANY ENTITY OR A FINANCIAL INTERMEDIARY DULY
LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY
AGENCY TO BUY AND SELL IN SECURITIES EITHER FOR HIS OWN
ACCOUNT OR FOR THE ACCOUNT OF OTHERS and with respect to
a transaction made in the ordinary course of the business of such
dealer.

XXX XXX XXX

SEC. 14. Section 39 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 39. Capital Gains and Losses. -
(A) Definitions. - As used in this Title -
XXX XXX XXX

{C) (B) Limitation on Capital Losses. - Losses from sales or exchanges
of capital assets shall be allowed only to the extent of the gains from
such sales or exchanges. ifa-bank-jor}A trust. company IF A DEALER
IN SECURITIES OR OTHER ENTITIES OR FINANCIAL
INTERMEDIARIES DULY LICENSED BY THE APPROPRIATE
REGULATORY AGENCY TO TRADE IN SECURITIES, sells any bond,
debenture, note, or certificate or other evidence of indebtedness issued

30


Beavaueune

SRRERESBESRRREBERSERT ARES

by any corporation (including one issued by a government or political
subdivision thereof), with interest coupons or in registered form, any
loss resulting from such sale shall not be subject to the foregoing
limitation and shall not be included in determining the applicability of
such limitation to other losses.

SEC. 15. Section 42(A)(2) and (B)(2) of the National Internal Revenue Code of
1997, as amended, is hereby amended to read as follows:

SEC. 42. Income from Sources Within the Philippines. -

{A) Gross Income From Sources Within the Philippines. - The
following items of gross income shall be treated as gross income from
sources within the Philippines:

(1) Interests. - Interests AND YIELD derived from-sources-within-the

FROM DEBT INSTRUMENTS, BANK
DEPOSIT, DEPOSIT SUBSTITUTES, AND SIMILAR ARRANGEMENTS
SUCH AS bonds, notes or other interest-bearing obligations of
residents, corporate or otherwise, INCLUDING DEBT INSTRUMENTS
OR DEBT SECURITIES ISSUED BY THE GOVERNMENT OR ANY OF
ITS AGENCIES OR INSTRUMENTALITIES;

(2) Dividends. — The amount received as dividends:
(a) From a domestic corporation; and

(b) From a foreign corporation |+aslesstess4 WITH MORE than fifty
percent (50%) of the gross income of such foreign corporation for the
three-year period ending with the close of its taxable year preceding the
declaration of such dividends (or for such part of such period as the

31


corporation has been in existence) was derived from sources within the
Philippines as determined under the provisions of this Section; but only
in an amount which bears the same ratio to such dividends as the gross
income of the corporation for such period derived from sources within
the Philippines bears to its gross income from all sources;

XXX XXX XXX
{B) Taxable Income From Sources Within the Philippines. —
(1) General Rule. -

XXX XXX XXX

(2) Exception. - No deductions for interest paid or incurred abroad
shall be allowed from the item of gross income specified in Subsection
(A) unless indebtedness was actually incurred to provide funds for use
in connection with the conduct or operation of trade or business in the
Philippines OR ON A TRADE OR BUSINESS OUTSIDE THE
PHILIPPINES PROVIDED THAT INCOME GENERATED OR
RECEIVED FROM THE USE OF SUCH FUNDS IS A TAXABLE
INCOME IN THE PHILIPPINES.

SEC. 16. Section 51(C)(2) of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 51. Individual Return. -

XXX XXX XXX

(C) When to File. -

(1) The return of any individual specified above shall be filed on or before
the fifteenth (15%) day of April of each year covering income for the
preceding taxable year.

(2) Individuals subject to tax on capital gains:

(a) From the sale or exchange of shares of stock OR DEBT
INSTRUMENTS AND OTHER SECURITIES not traded thru a local

stock exchange as prescribed under Section 24{}B) (3) and (4),
25(A)(1), shall file a return within thirty (30) days after each transaction.

(8B) FROM THE SALE, EXCHANGE, OR BARTER OF SHARES OF
STOCK OR DEBT INSTRUMENTS AND OTHER SECURITIES
TRADED THRU A LOCAL STOCK EXCHANGE OR ORGANIZED
MARKET AS PRESCRIBED UNDER SECTION 24{B)(3) AND (4), THE

32


TAX SHALL BE COLLECTED BY THE STOCK BROKER WHO
EFFECTED THE SALE AND SHALL REMIT THE SAME TO THE
BUREAU OF INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS
FROM THE DATE OF COLLECTION THEREOF AND TO SUBMIT ON
MONDAYS OF EACH WEEK TO THE SECRETARY OF THE STOCK
EXCHANGE, OF WHICH HE IS A MEMBER, A TRUE AND COMPLETE
RETURN WHICH SHALL CONTAIN A DECLARATION OF ALL THE
TRANSACTIONS EFFECTED THROUGH HIM DURING THE
PRECEDING WEEK AND OF TAXES COLLECTED BY HIM AND
TURNED OVER TO THE BUREAU OF INTERNAL REVENUE.

(&} (C) From the sale or disposition of real property under Section 24(D)
shall file a return within thirty (30) days following each sale or other
disposition.

SEC. 17. Section 52(D) of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 52. Corporation Returns. -

(a) ts. - Every corporation AS DEFINED UNDER SECTION
22(B) OF THIS CODE, AND subject to the tax herein imposed, except
foreign corporations not engaged in trade or business in the Philippines,
shall render, in duplicate, a true and accurate quarterly income tax
return and final or adjustment return in accordance with the provisions
of Chapter XII of this Title, The income tax return shall consist of a
maximum of four (4) pages in paper form or electronic form, be filed by
the president, vice-president or other principal officer, shall be sworn to
by such officer and by the treasurer or assistant treasurer, and shall
only contain the following information:

(1) Corporate profile and information;

(2) Gross sales, receipts or income from services rendered, or
conduct of trade or business, except income subject to final tax as
provided under this Code;

(3) | Allowable deductions under this Code;

(4) Taxable income as defined in Section 31 of this Code; and

(5) Income tax due and payable.

Provided, That the foregoing provisions shall not affect the
implementation of Republic Act No. 10708 or TIMTA.

XXX XXX XXX

{D) Return on Capital Gains Realized from Sale of Shares of Stock,
DEBT INSTRUMENT, AND OTHER SECURITIES not Traded in the
Local Stock Exchange. - Every corporation deriving capital gains from
the sale or exchange of shares of stock not traded thru a local stock
exchange as prescribed under SECTION 27(D)(3)(a) and (4(a), Seetions

33


24{C}, 25(A}3},- 274EH2}, 28(AH8}(c} and 28(BYS}e}; shall file a return
within thirty (30) days after THE END OF THE MONTH FOLLOWING
THE jecch} transaction end—a—final—consolidated—return—of—all

tie ar ta

(E) RETURN ON CAPITAL GAINS REALIZED FROM SALE OF SHARES
OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES LISTED
IN THE LOCAL STOCK EXCHANGE. ~ IT SHALL BE THE DUTY OF
EVERY STOCK BROKER WHO EFFECTED THE SALE SUBJECT TO
THE TAX IMPOSED UNDER SECTION 27(D)(3) AND (4) TO COLLECT
THE TAX DUE AND REMIT THE SAME TO THE BUREAU OF
INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS FROM THE
DATE OF COLLECTION THEREOF AND TO SUBMIT ON MONDAYS
OF EACH WEEK TO THE SECRETARY OF THE STOCK EXCHANGE,
OF WHICH HE IS A MEMBER, A TRUE AND COMPLETE RETURN
WHICH SHALL CONTAIN A DECLARATION OF ALL THE
TRANSACTIONS EFFECTED THROUGH HIM DURING THE
PRECEDING WEEK AND OF TAXES COLLECTED BY HIM AND
TURNED OVER TO THE BUREAU OF INTERNAL REVENUE.

SEC. 18. Section 54 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 54. Returns of Receivers, Trustees, fin Bankruptcy) or
Assignees. ~ tn—cases—wherein—rReceivers, ADMINISTRATORS,
trustees in AN IRREVOCABLE TRUST OR IN bankruptcy, or ANY
OTHER PERSON ASSIGNED OR assignees—are IN-CHARGE OF
operating the property or business of e-ANOTHER PERSON OR
corporation subject to the tax UNDER THIS CODE imposed_by-this
Title _such-receivers, trustees-orassignees shall BE IMPOSED WITH
THE OBLIGATION TO FILE make THE returns AND PAY THE TAXES
FOR SUCH PERSON OR CORPORATION IN THE SAME MANNER
REQUIRED UNDER THIS CODE. of net_income-as—and_for_suich

Scandia alec vecaised siaailasstesese teak hay ta: doe onthe taconite
as returned by receivers, ADMININSTRATORS, trustees or assignees
shall be assessed and collected in the same manner as if assessed
directly against the organizations PERSON, ESTATE OR
ORGANIZATION of whose businesses or properties they have custody
or control.

THE TRUSTOR, NOT THE TRUSTEE, IN A REVOCABLE TRUST
SHALL BE RESPONSIBLE IN FILING THE RETURNS REQUIRED
UNDER THIS CODE AND DECLARE THE INCOME RECEIVED FROM
THE TRUST IN ACCORDANCE WITH SECTIONS 24, 25, 26 AND 27
OF THIS CODE. INCOME OF THE TRUST SUBJECTED TO FINAL
TAX UNDER SECTIONS 24, 25, 27 AND 28 OF THE SAME CODE
SHALL NO LONGER BE SUBJECT TO TAX UPON DISTRIBUTION OF

34


THE INCOME TO THE TRUSTOR OR BENEFICIARY, NOR SHALL
THE TRUSTOR OR BENEFICIARY BE REQUIRED TO DECLARE THE
INCOME AS PART OF ITS TAXABLE INCOME.

ANY INCOME OF A REVOCABLE TRUST NOT SUBJECTED TO FINAL
TAX MAY BE SUBJECT TO A FINAL WITHHOLDING TAX UPON
DISTRIBUTION OF THE INCOME TO THE TRUSTOR OF
BENEFICIARY AT A RATE NOT EXCEEDING THE HIGHEST RATE
OF TAX IMPOSED ON INDIVIDUALS UNDER SECTION 24 IN THE
CASE OF INDIVIDUAL TRUSTORS, OR THE CORPORATE INCOME
TAX IN THE CASE OF CORPORATE TRUSTORS. SUCH TAX
WITHHELD SHALL BE CONSIDERED A FINAL TAX.

SEC. 19. Section 56 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 56. Payment and Assessment of Income Tax for Individuals
and Corporations. ~

{A) Payment of Tax. -
XXX XXX XXX

(3) Payment of Capital Gains Tax. -

A. IN GENERAL - The total amount of tax imposed and prescribed
under Section 24(D), 25(A) AND (B), 28(A) [and-28(B}(S}{e}} shall be paid
on the date the return prescribed therefor is filed by the person liable
thereto: Provided, That if the seller submits proof of his intention to
avail himself of the benefit of exemption of capital gains under existing
special laws OR TAX TREATY, no such payments shall be required:
Provided, further, That in case of failure to qualify for exemption under
such special laws, TAX TREATY and implementing rules and
regulations, the tax due on the gains realized from the original
transaction shall immediately become due and payable, and subject to
the penalties prescribed under applicable provisions of this Code:
Provided, finally, That if the seller, having paid the tax, submits such
proof of intent within six (6) months from the registration of the
document transferring the real property, he shall be entitled to a refund
of such tax upon verification of his compliance with the requirements
for such exemption.

SEC. 20. Section 57 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 57. Withholding of Tax at Source. -

(A) Withholding of Final Tax on Certain Incomes. - Subject to rules
and regulations the Secretary of Finance may promulgate, upon the

35


recommendation of the Commissioner, requiring the filing of income tax
return by certain income payees , the tax imposed or prescribed by
UNDER Sections 24({B), 24{C) AND 24(D); 25(A);(2}—25{AH3}-AND
25(B), 25(C}- 25D} 2B} HPWH, 27(D}{2}, 2743), 27(D)(5); 28tAK4:
28(A)(S), 28AHF Ha} 2S{ANAHb} 28tAHFHe), 28(BH4};-28(B}2},-28(BH3)
28684, ; 33; and 282 of this Code on
specified items of income SUBJECT TO FINAL TAX shall be withheld
by payor-corporation and/or person and paid in the same manner and
subject to the same conditions as provided in Section 58 of this Code.

(B) XXX XXX XXX

SEC. 21. Section 73 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 73. Distribution of Dividends or Assets by Corporations. ~

(A) Definition of Dividends. - ‘The term ‘dividends’ when used in this
Title means any distribution made by a corporation to its shareholders
out of its earnings or profits and payable to its shareholders, whether
in money or in other property.

Where a corporation distributes all of its assets in complete liquidation
or dissolution, the gain realized or loss sustained by the stockholder,
whether individual or corporate, is a taxable income or a deductible
loss, UNDER SECTIONS 24(A), 25(A), 25(B), 27(A) AND 28(A), as the
case may be.

(B) Stock Dividend. - A stock dividend representing the transfer of
surplus to capital account shall not be subject to tax. However, if a
corporation cancels or redeems stock issued as a dividend at such time

36


and in such manner as to make the distribution and cancellation or
redemption, in whole or in part, essentially equivalent to the
distribution of a taxable dividend, the amount so distributed in
redemption or cancellation of the stock shall be considered as taxable
income to the extent that it represents a distribution of earnings or
profits,

SEC. 22. Section 108 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 108, Value-added Tax on Sale of Services and Use or Lease
of Properties.

(A) Rate and Base of Tax.-XX XX XX

The phrase ‘sale or exchange of services’ means the performance of all
kinds of services in the Philippines for others for a fee, remuneration or
consideration, including those performed or rendered by construction
and service contractors; stock, real estate, commercial, customs and
immigration brokers; lessors of property, whether personal or real;
warehousing services; lessors or distributors of cinematographic films;
persons engaged in milling, processing, manufacturing or repacking
goods for others; proprietors, operators or keepers of hotels, motels,
resthouses, pension houses, inns, resorts; proprietors or operators of
restaurants, refreshment parlors, cafes and other eating naa
including clubs and caterers; dealers in securities;

transportation contractors on their transport of goods or cargoes,
including persons who transport goods or cargoes for hire and other
domestic common carriers by land relative to their transport of goods
or cargoes; common carriers by air and sea relative to their transport of
passengers, goods or cargoes from one place in the Philippines to
another place in the Philippines; sales of electricity by generation
companies, transmission, by any entity and distribution companies,
including electric cooperatives; services of franchise grantees of electric
utilities, telephone and telegraph, radio and television broadcasting and
all anima franchise grantees except those under Section 119 of this (Code

iinillac eccvizes regartllecs Of wheter or riot the:periormance thereat
calls for the exercise or use of the physical or mental faculties. The
phrase ‘sale or exchange of services’ shall likewise include:

XX XX XX

SEC. 23. Section 121 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries
Performing Quasi-Banking Functions. - There shall be collected a

37


tax on gross receipts derived from sources within the Philippines by all
banks and non-bank financial intermediaries PERFORMING QUASI-
BANKING FUNCTIONS AT THE RATE OF 5% ON INCOME SUCH AS
INTEREST, COMMISSIONS, AND DISCOUNTS FROM LENDING
ACTIVITIES AS WELL AS INCOME FROM FINANCIAL LEASING,
ROYALTIES, RENTALS OF PROPERTY, REAL OR PERSONAL,
PROFITS FROM SALE OR EXCHANGE INCLUDING GAINS DERIVED
FROM SALE OR TRANSFER OF REAL PROPERTIES, NET TRADING
GAINS WITHIN THE TAXABLE YEAR OF FOREIGN CURRENCY,
DEBT SECURITIES, DERIVATIVES, AND OTHER SIMILAR
FINANCIAL INSTRUMENTS, AND ALL OTHER ITEMS TREATED AS
GROSS INCOME UNDER SECTION 32 OF THIS CODE, EXCEPT
DIVIDENDS AND EQUITY SHARES AND NET INCOME OF
SUBSIDIARIES WHICH SHALL BE SUBJECT TO 0%. {in-accordance

purposes-of-< m

Provided, That FOR PURPOSES OF COMPUTING THE GROSS
RECEIPTS, the generally accepted accounting principles OF
RECORDING INCOME AS ADOPTED BY THE BANK SHALL BE
FOLLOWED. BANKS ON ACCRUAL BASIS OF FINANCIAL
REPORTING SHALL USE THE ACCRUAL METHOD IN COMPUTING
THE GROSS RECEIPTS, PROVIDED THAT, ONCE ADOPTED, IT
SHALL BE CONSISTENT FROM YEAR TO YEAR. PROVIDED
FURTHER THAT FOR PURPOSES OF DETERMINING THE GROSS

38


RECEIPTS, NO DEDUCTION SHALL BE MADE ON THE INCOME
EXCEPT IN THE CASE OF GAINS FROM DEALINGS IN PROPERTY
AND TRADING GAINS, WHERE NET LOSS WITHIN THE SAME
BUSINESS ACTIVITY CAN BE OFFSET TO DETERMINE THE NET
GAIN SUBJECT TO THIS TAX. PROVIDED, FURTHER, THAT SUCH
OFFSETTING SHALL BE ON A MONTHLY BASIS, AND ANY NET
LOSS INCURRED IN A MONTH CAN BE CARRIED OVER AS
DEDUCTION IN THE SUCCEEDING MONTH/S. PROVIDED FINALLY,
THAT NET LOSS INCURRED IN A TAXABLE YEAR CANNOT BE
CARRIED OVER TO THE SUCCEEDING TAXABLE YEAR.

| b ie
oo an Sania —oanaial iesieonsdiaey performing —quasi-banking
functions -shall—likewise—be—the—basis—for_the-caleulation—of gross
receipt}

XXX XXX XXX

SEC. 24. Section 122 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 122. Tax on Other Non-Bank Financial Intermediaries. -
There shall be collected a tax of five percent (5%) on the gross receipts
derived by other non-bank financial intermediaries doing business in
the Philippines, from interest, commissions AND discounts FROM
LENDING ACTIVITIES, AS WELL AS INCOME FROM FINANCIAL
LEASING, ROYALTIES, RENTALS OF PROPERTY, REAL OR
PERSONAL, PROFITS FROM SALE OR EXCHANGE INCLUDING
GAINS DERIVED FROM SALE OR TRANSFER OF REAL
PROPERTIES, NET TRADING GAINS WITHIN THE TAXABLE YEAR
OF FOREIGN CURRENCY, DEBT SECURITIES, DERIVATIVES, AND
OTHER SIMILAR FINANCIAL INSTRUMENTS, UNDERWRITING
FEES, SERVICE INCOME, AND ALL OTHER ITEMS TREATED AS
GROSS INCOME UNDER SECTION 32 OF THIS CODE EXCEPT
DIVIDENDS AND EQUITY SHARES AND NET INCOME OF
SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO (0%). anda

intersete, commisnlons ead dleesurits irorn-lending activitioe, a¢-vvell ae

39


transaction—and—the—correct—rate—of—tax—shall_be—applied
accordingly.]

GROSS RECEIPTS SHALL BE COMPUTED IN THE SAME MANNER
PROVIDED UNDER SECTION 121.

FINANCIAL INTERMEDIARIES SUBJECT TO TAX UNDER THIS
SECTION SHALL INCLUDE FINANCING COMPANIES, FINANCE-
LEASING COMPANIES, INVESTMENT HOUSES, PAWNSHOPS,
FOREIGN EXCHANGE DEALERS AND MONEY BROKERS, TRUST
ENTITIES, CREDIT CARD COMPANIES, LENDING INVESTORS,
SAVINGS AND LOAN ASSOCIATIONS, AND OTHER FINANCIAL
INTERMEDIARIES EXCEPT BANKS AND NON-BANKS PERFORMING
QUASI-BANKING FUNCTIONS WHICH SHALL BE TAXED UNDER
SECTION 121 OF THIS CODE.

COLLECTIVE INVESTMENT SCHEMES SUCH AS MUTUAL FUNDS,
UNIT-LINKED INVESTMENT TRUST FUND, UNIT-LINKED
VARIABLE INSURANCE, AND OTHER COLLECTIVE INVESTMENT
SCHEMES AS MAY BE DETERMINED BY APPROPRIATE
GOVERNMENT REGULATORY AGENCIES SHALL NOT BE SUBJECT
TO GROSS RECEIPTS TAX AND OTHER PERCENTAGE TAXES
IMPOSED UNDER TITLE V AND TO VAT IMPOSED UNDER TITLE IV
OF THIS CODE. FOR PURPOSES OF THIS EXEMPTION, A CIS
SHALL HAVE AT LEAST 1,000 OWNERS, INVESTORS OR
PARTICIPANTS, AND THAT THE MINIMUM PUBLIC OWNERSHIP AS
MAY BE REQUIRED BY APPROPRIATE GOVERNMENT AGENCIES
SHALL BE COMPLIED WITH.

IF A PERSON OR COMPANY NOT LICENSED TO DO FINANCIAL
INTERMEDIATION BUT ENGAGES IN FINANCIAL INTERMEDIATION
SERVICES AS AN INCIDENT TO ITS MAIN BUSINESS ACTIVITY,
AND RECEIVING INCOME THEREFROM, SUCH INCOME FROM
FINANCIAL INTERMEDIATION SHALL BE SUBJECT TO THE TAX
IMPOSED ON ITS PRINCIPAL ACTIVITY. TO BE CONSIDERED
INCIDENTAL, THE INCOME FROM INTERMEDIATION SERVICES
SHALL NOT EXCEED 5% OF ITS TOTAL ANNUAL INCOME. IF MORE
THAN 5%, WITH AT LEAST SIX (6) TRANSACTIONS ENTERED INTO
DURING THE YEAR, THE TOTAL INCOME FROM FINANCIAL
INTERMEDIATION SHALL BE SUBJECT TO TAX UNDER THIS SUB-
SECTION.

IN-HOUSE LENDING OR SELLER FINANCING SHALL NOT BE
SUBJECT TO TAX UNDER THIS SUBSECTION. ANY INCOME
EARNED OR RECEIVED FROM IN-HOUSE LENDING OR SELLER
FINANCING SHALL BE SUBJECT TO THE SAME TAX APPLICABLE
TO THE PRINCIPAL BUSINESS ACTIVITY OR TRANSACTION.

40


HOLDING COMPANIES SHALL BE SUBJECT TO EITHER VAT OR
GRT DEPENDING ON THE NATURE OF ITS BUSINESS ACTIVITIES.
IF DOING FINANCING AND OTHER SIMILAR ACTIVITIES, IT IS
SUBJECT TO GRT UNDER THIS SECTION. INCOME DERIVED FROM
THE SALE OF GOODS, PROPERTIES AND OTHER SERVICES SHALL
BE SUBJECT TO VAT UNDER SECTION 105 OF THIS CODE.

Nothing in this Code shall preclude the Commissioner from imposing
the same tax herein provided on persons performing similar [financing]
FINANCIAL INTERMEDIATION activities.

SEC. 25. Section 123 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

SEC. 123. Tax on Life AND NON-LIFE Insurance Premiums, AND
REINSURANCE PREMIUMS. - There shall be collected from every
person, company or corporation, DOING INSURANCE BUSINESS
(except purely cooperative companies or associations) |deing—ife
insurance business] of any sort in the Philippines A PREMIUM TAX AT
THE FOLLOWING RA’

(A) For life insurance including health insurance as a rider to life
insurance policy, a tax of two percent (2%) of the total premium
collected, whether such premiums are paid in money, notes, credits or
any substitute for money; but premiums refunded within six (6) months
after payment on account of rejection of risk or returned for other
reason to a person insured shall not be included in the taxable receipts;
nor shall any tax be paid upon reinsurance by a company IF THE TAX
that has already BEEN paid {the-tax}-ON THE DIRECT PREMIUM; nor
upon premiums collected or received by any branch of a domestic
corporation, firm or association doing business outside the Philippines
on account of any life insurance of the insured who is a nonresident, if
any tax on such premium is imposed by the foreign country where the
branch is established; nor upon premiums collected or received on
account of any reinsurance, if the insured, in case of personal
insurance, resides outside the Philippines, if any tax on such premiums
is imposed by the foreign country where the original insurance has been
issued or perfected; nor upon that portion of the premiums collected or
received by the insurance companies on variable contracts IN A
COLLECTIVE INVESTMENT SCHEME OR CIS, in excess of the
amounts necessary to insure the lives of the variable contract owners.
PROVIDED THAT THE CIS SHALL HAVE AT LEAST 1,000 OWNERS,
INVESTORS OR PARTICIPANTS, AND THAT ANY MINIMUM PUBLIC

a


OWNERSHIP AS MAY BE REQUIRED BY APPROPRIATE
GOVERNMENT AGENCIES SHALL BE COMPLIED WITH.

PERSONS DOING BUSINESS SIMILAR OR AKIN TO LIFE AND
HEALTH INSURANCE SUCH AS PRE-NEED COMPANIES, PENSION
FUND COMPANIES, HEALTH MAINTENANCE ORGANIZATIONS AND
OTHER COMPANL SIMILAR TO LIFE INSURANCE, AS MAY BE
DETERMINED BY THE APPROPRIATE REGULATORY
GOVERNMENT AGENCY, SHALL BE SUBJECT TO TAX UNDER THIS
SUB-SECTION AT THE RATE OF TWO PERCENT (2%) OF THE
GROSS PREMIUM, PLAN PAYMENT, OR INSTALLMENT PAYMENTS
COLLECTED WITHOUT ANY DEDUCTION FOR THE AMOUNTS
REQUIRED BY THE APPROPRIATE REGULATORY AGENCY TO BE
EARMARKED FOR THE BENEFIT OF THE INSURED, OR
PLANHOLDER.

NOTHING IN THIS CODE SHALL PRECLUDE THE COMMISSIONER
FROM IMPOSING THE SAME TAX HEREIN PROVIDED ON PERSONS
PERFORMING SIMILAR INSURANCE BUSINESS ACTIVITIES.

(B) FOR NON-LIFE INSURANCE INCLUDING FIRE, PROPERTY,
MOTOR VEHICLE, MARINE, AND OTHER TYPES OF NON-LIFE
INSURANCE (EXCEPT COOPERATIVE INSURANCE COMPANIES), A
TAX OF FIVE PERCENT (5%) OF THE TOTAL PREMIUM
COLLECTED SHALL BE PAID, WHETHER SUCH PREMIUMS ARE
PAID IN MONEY, NOTES, CREDITS, OR ANY SUBSTITUTE FOR
MONEY; BUT PREMIUMS REFUNDED WITHIN SIX (6) MONTHS
AFTER PAYMENT ON ACCOUNT OF REJECTION OF RISK OR
RETURNED FOR OTHER REASON TO A PERSON INSURED SHALL
BE DEDUCTED FROM THE GROSS RECEIPTS ON THE MONTH IT
IS REFUNDED. NO TAX SHALL BE PAID UPON PREMIUMS ON
REINSURANCE IF THE TAX HAS ALREADY BEEN PAID ON THE
DIRECT PREMIUM; NOR UPON PREMIUMS COLLECTED OR
RECEIVED BY ANY BRANCH OF A DOMESTIC CORPORATION,
FIRM OR ASSOCIATION DOING BUSINESS OUTSIDE THE
PHILIPPINES ON ACCOUNT OF ANY NON-LIFE INSURANCE OF THE
INSURED WHO IS A NONRESIDENT, IF ANY TAX ON SUCH
PREMIUM IS IMPOSED BY THE FOREIGN COUNTRY WHERE THE
BRANCH IS ESTABLISHED; NOR UPON PREMIUMS COLLECTED OR
RECEIVED ON ACCOUNT OF ANY REINSURANCE, IF THE INSURED
RESIDES OUTSIDE THE PHILIPPINES, AND IF ANY TAX ON SUCH
PREMIUMS IS IMPOSED BY THE FOREIGN COUNTRY WHERE THE
ORIGINAL INSURANCE HAS BEEN ISSUED OR PERFECTED;

(C) PERSONS DOING BUSINESS SIMILAR OR AKIN TO NON-LIFE
INSURANCE AS MAY BE DETERMINED BY THE APPROPRIATE
GOVERNMENT REGULATORY AGENCY SHALL BE SUBJECT TO
TAX UNDER THIS SUB-SECTION AS A NON-LIFE INSURANCE
COMPANY.

42


NOTHING IN THIS CODE SHALL PRECLUDE THE COMMISSIONER
FROM IMPOSING THE SAME TAX HEREIN PROVIDED ON PERSONS
PERFORMING SIMILAR NON-LIFE INSURANCE BUSINESS
ACTIVITIES.

REINSURANCE COMPANIES, WHETHER LIFE OR NON-LIFE, SHALL
BE SUBJECT TO PREMIUM TAX ON PREMIUMS COLLECTED
UNDER SUB-SECTIONS A OR B DEPENDING ON THE NATURE OF
THE INSURANCE ON WHICH THE INCOME ARISE. HOWEVER,
PREMIUMS COLLECTED WHERE THE TAX ON THE DIRECT
PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT INSURER
SHALL BE EXCLUDED FROM THE GROSS PREMIUM SUBJECT TO
PREMIUM TAX. FOR THE PURPOSE OF CLAIMING EXEMPTION, A
CERTIFICATION IN A FORM TO BE PRESCRIBED IN A
REGULATION, ISSUED BY THE DIRECT INSURER THAT THE TAX
THEREON HAS ALREADY BEEN PAID, SHALL BE ATTACHED TO
THE QUARTERLY PREMIUM TAX RETURN TO BE FILED. ANY
MISREPRESENTATION SHALL SUBJECT THE DIRECT INSURER TO
PENALTIES UNDER SECTIONS 248, 253, 254, 255, 256, AND 257
OF THIS CODE.

ANY INCOME, OTHER THAN RECEIPT OF PREMIUM SUCH AS
MANAGEMENT FEES, SERVICE FEES, CHARGES, AND PENALTIES,
COMMISSIONS, INCOME FROM THE SALE OR TRANSFER OF
GOODS, PROPERTIES OR SERVICES, EARNED OR RECEIVED AS
AN INCIDENT OF DOING THE BUSINESS OF LIFE, NON-LIFE AND
OTHER INSURANCE ACTIVITIES, SHALL BE SUBJECT TO THE
VALUE-ADDED TAX UNDER SECTION 105 OF THIS CODE;
PROVIDED, THAT INCOME RECEIVED FROM THE INVESTMENT
AND REINVESTMENT OF PREMIUMS EARNED SHALL NOT BE
SUBJECT TO VALUE ADDED TAX NOR TO THE GROSS RECEIPTS
TAX UNDER SECTIONS 121 AND 122 OF THIS CODE.

A VARIABLE INSURANCE CONTRACT WHERE AMOUNTS IN
EXCESS OF INSURANCE COSTS ARE COLLECTED AS PART OF THE
PREMIUM AND WHERE UNITS OF PARTICIPATION IN A POOLED
FUND ARE ISSUED TO THE INSURED REPRESENTING ITS SHARE
IN THE POOLED FUNDS, IS A COLLECTIVE INVESTMENT SCHEME.
THE AMOUNTS OF PREMIUM COLLECTED IN EXCESS OF THE
INSURANCE COST IS NOT SUBJECT TO PREMIUM TAX UNDER
THIS SECTION AND TO THE GROSS RECEIPTS TAX IMPOSED
UNDER SECTIONS 121 AND 122, OR TO ANY PERCENTAGE TAX
IMPOSED UNDER TITLE V AND TO VAT UNDER SECTION 105,
TITLE IV OF THIS CODE.

SEC. 26. Section 127 of the National Internal Revenue Code of 1997, as
amended, is hereby amended and deleted:

43






individual or-corporate-income tax. _Tax-paid-under this Section
shall not -be deductible for income tan_purposes:]

SEC. 27. Sections 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184,
185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 198, and
199 of the National Internal Revenue Code of 1997, as amended, is hereby
amended to read as follows:

SEC. 174. Stamp Tax on Original Issue of Shares of Stock. - On
every original issue, whether on organization, reorganization or for any
lawful purpose, of shares of stock by any association, company, or
corporation, INCLUDING SHARES OF STOCK OR UNITS OF
PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME, there
shall be collected a documentary stamp tax OF 0.75% OF THE PAR
VALUE

f such shares of stock:
Provided, That in the case of the original issue of shares of stock without
par value, the amount of the documentary stamp tax herein prescribed
shall be based upon the actual consideration for the issuance of such
shares of stock: Provided, further, That in the case of stock dividends,
on the actual value represented by each share.

SEC 175 176. Stamp Tax on Bonds, Debentures, Certificates of
Stock or Indebtedness Issued in Foreign Countries. - On all bonds,
debentures, certificates of stock, or certificates of indebtedness issued
in any foreign country, there shall be collected from the person selling
or transferring the same in the Philippines, A DOCUMENTARY STAMP
TAX OF 0.75% OF THE VALUE OF THE TRANSACTION. such-+taxas
Ce paners lc oe ng eme ms


SEC. 179-176. Stamp Tax on All Debt Instruments. - On every
original issue of debt instruments, there shall be collected a
documentary stamp tax OF 0.75% Gne-pese-and-fifty-centaves-{P150)
on-each—Two-hundred-peses{P200},-or-fractional_part-thereef, of the
issue price of any such debt instruments: Provided, That for such debt
instruments with terms of less than one (1) year, the documentary
stamp tax to be collected shall be of a proportional amount in
accordance with the ratio of its term in number of days to three hundred
sixty-five (365) days: Provided, further, That only one documentary
stamp tax shall be imposed on either loan agreement, or promissory
notes issued to secure such loan

For purposes of this section, the term debt instrument shall mean
instruments representing borrowing and lending transactions including
but not limited to debentures, certificates of indebtedness, due bills,
bonds, loan agreements, including those signed abroad wherein the
object of contract is located or used in the Philippines, instruments and
securities issued by the government or any of its instrumentalities,
deposit substitute debt instruments, certificates or other evidences of
deposits that are either drawing interest significantly higher the regular
savings deposit taking into consideration the size of the deposit and the
risks involved or drawing interest and having a specific maturity date,

orders-for- payment of any-sum-of money_otherwise than-at-sightor-on
demand, promissory notes, whether negotiable or non-negotiable,
except bank notes issued for circulation.



SEC. 181 177. Stamp Tax Upon Acceptance of Bills of Exchange
and Others.— Upon any acceptance or payment of any bill of exchange
or order for the payment of money purporting to be drawn in a foreign
country but payable in the Philippines, there shall be collected a
documentary stamp tax OF 0.30% Si z

" i of the face value of any
such bill of exchange, or order, or the Philippine equivalent of such
value, if expressed in foreign currency.

SEC. 182 178. Stamp Tax on Foreign Bills of Exchange and Letters
of Credit. - On all foreign bills of exchange and letter of credit
(including orders, by telegraph or otherwise, for the payment of money
issued by express or steamship companies or by any person or persons)
drawn in but payable out of the Philippines in a set of three (3) or more
according to the custom of merchants and bankers, there shall be
collected a documentary stamp tax OF 0.30% Si
i of the face
value of any such bill of exchange or letter of credit, or the Philippine
equivalent of such face value, if expressed in foreign currency.

PROVIDED THAT IN THE CASE OF A LETTER OF CREDIT ON
WHICH THE DOCUMENTARY STAMP TAX IMPOSED UNDER THIS
SECTION IS PAID UPON OPENING, THE SAME SHALL NOT BE
SUBJECT AGAIN TO SECTION 195 UPON AVAILMENT OF THE
TRUST RECEIPT LINE WHERE THE PROPERTY SUBJECT OF THE
LETTER OF CREDIT IS MADE A SECURITY FOR PAYMENT.

SEC. 183 179. Stamp Tax on Life Insurance Policies. ~ On all
policies of insurance or other instruments by whatever name the same
may be called, whereby any insurance shall be made or renewed upon
any life or lives AND HEALTH OF PERSONS, there shall be collected a
‘one-time documentary stamp tax at the following rates:

If the amount of insurance does not exceed P100,000 - Exempt
If the amount of insurance exceeds P100,000

but does not exceed P300,000 - P20.00

If the amount of insurance exceeds P300,000

but does not exceed P500,000 - P50.00

If the amount of insurance exceeds P500,000

but does not exceed P750,000 ~ P100.00

If the amount of insurance exceeds P750,000

but does not exceed P1,000,000 - P150.00
If the amount of insurance exceeds P1,000,000 ~ P200.00

SEC. 184 180. Stamp Tax on Policies of Insurance Upon Property.
- On all policies of insurance or other instruments by whatever name
the same may be called, by which insurance shall be made or renewed
upon property of any description, including rents or profits, against

43


peril by sea or on inland waters, or by fire or lightning, there shall be
collected a documentary stamp tax OF 12.5% Fi

of the amount of
premium charged: Provided, however, That no documentary stamp tax
shall be collected on reinsurance contracts or on any instrument by
which cession or acceptance of insurance risks under any reinsurance
agreement is effected or recorded. PROVIDED FURTHER THAT SUCH
RATE SHALL BE REDUCED ACCORDING TO THE FOLLOWING
SCHEDULE:

JANUARY 1, 2020: 11.5 PERCENT,
JANUARY 1, 2021: 10.5 PERCENT,
JANUARY 1, 2022: 9.5 PERCENT,
JANUARY 1, 2023: 8.5 PERCENT,
JANUARY 1, 2024: 7.5 PERCENT.

SEC. 185 181. Stamp Tax on Fidelity Bonds and Other Insurance
Policies. — On all policies of insurance or bonds or obligations of the
nature of indemnity for loss, damage or liability made or renewed by
any person, association, company or corporation transacting the
business of accident, fidelity, employer's liability, plate, glass, steam
boiler, burglar, elevator, automatic sprinkler, or other branch of
insurance (except life, marine, inland, and fire insurance), and all
bonds, undertakings, or recognizances, conditioned for the
performance of the duties of any office or position, for the doing or not
doing of anything therein specified, and on all obligations guaranteeing
the validity or legality of any bond or other obligations issued by any
province, city, municipality, or other public body or organization, and
on all obligations guaranteeing the title to any real estate, or
guaranteeing any mercantile credits, which may be made or renewed
by any such person, company or corporation, there shall be collected a
documentary stamp tax OF 12.5% Fi

; of the premium charged.
PROVIDED FURTHER THAT SUCH RATE SHALL BE REDUCED
ACCORDING TO THE FOLLOWING SCHEDULE:

JANUARY 1, 2020: 11.5 PERCENT,
JANUARY 1, 2021: 10.5 PERCENT,
JANUARY 1, 2022: 9.5 PERCENT,
JANUARY 1, 2023: 8.5 PERCENT,
JANUARY 1, 2024: 7.5 PERCENT.

49


SEC. 186-182. Stamp Tax on Policies of Annuities and Pre-Need
Plans. — On all policies of annuities, or other instruments by whatever
name the same may be called, whereby an annuity may be made,
transferred or redeemed, there shall ‘be enmected a Gocsimentary; sean
tax OF 0.5% Gne-p ch Run “ 2

fractional_part_thereef, of ae ‘premium or installment payment on
contract price, OR CONTRIBUTION collected: CHARGED. On pre-need
plans, OR OTHER INSTRUMENTS BY WHATEVER NAME THE SAME
MAY BE CALLED, WHEREBY AN ANNUITY MAY BE MADE,
TRANSFERRED OR REDEEMED, THERE SHALL BE COLLECTED A
DOCUMENTARY STAMP TAX OF 0.2% OF THE PREMIUM OR
INSTALLMENT PAYMENT ON CONTRACT PRICE, OR
Neogene CHARGED. Forty centavos {PO40}-on each Two

SEC. 187. 183. Stamp Tax on Indemnity Bonds. — On all bonds for
indemnifying any person, firm or corporation who shall become bound
or engaged as surety for the payment of any sum of money or for the
due execution or performance of the duties of any office or position or
to account for money received by virtue thereof, and on all other bonds
of any description, except such as may be required in legal proceedings,
or are otherwise provided for herein, there shall be collected a
documentary stamp tax of Thirty-centaves {20.30} en-each Fourpeses
{P4.00}, or fractional part thereef, 7.5% OF THE PREMIUM CHARGED.

SEC. 188, 184. Stamp Tax on Certificates NOTARIZED
DOCUMENTS. - On each

fact,and—not_otherwise—specified-herein, there sant collected a
documentary stamp tax of FIFTY PESOS (P50.00
(P20-00}.

SEC. 189 185. Stamp Tax on Warehouse Receipts. — On cach
warehouse receipt for property held in storage in a public or private
warehouse or yard for any person other than the proprietor of such
warehouse or yard, there shall be collected a documentary stamp tax of
thirty pesos (P30.00): Provided, That no tax shall be collected on each
warehouse receipt issued to any one person in any one calendar month
covering property the value of which does not exceed two hundred pesos
(P200).

SEC. 190. 186. Stamp Tax on Jai-alai, Horse Race Tickets, Lotto
or Other Authorized Numbers Games. — On each jai-alai, horse race

sO


ticket, lotto, or other authorized numbers games, there shall be
collected a documentary stamp tax of twenty centavos (PO.20): Provided,
That if the cost of the ticket exceed One peso (P1.00), an additional tax
of twenty centavos (PO.20) on every one peso (P1.00), or fractional part
thereof, shall be collected.

SEC. 191, 187. Stamp Tax on Bills of Lading or Receipts. - On cach
set of bills of lading or receipts (except charter party) for any goods,
merchandise or effects shipped from one port or place in the Philippines
(except on ferries across rivers), or to any foreign port, there shall be
collected a documentary stamp tax of two pesos (P2.00), if the value of
such goods exceeds one hundred pesos (P100) and does not exceed one
thousand pesos (P1,000); twenty pesos (P20.00), if the value exceeds
one thousand pesos (P1,000); Provided, however, that freight tickets
covering goods, merchandise or effects carried as accompanied baggage
of passengers on land and water carriers primarily engaged in the
transportation of passengers are hereby exempt.

SEC. 194, 188 Stamp Tax on Leases and Other Hiring Agreements.
- On each lease, agreement, memorandum, or contract for hire, use or
rent of any lands or tenements, or portions thereof, there shall be
collected a documentary stamp tax of Six pesos (P6.00) for the first two
thousand pesos (P2,000), or fractional part thereof, and an additional
two pesos (P2.00) for every one thousand pesos (P1,000) or fractional
part thereof, in excess of the first Two thousand pesos (P2,000) for each
year of the term of said contract or agreement.

SEC. 195. 189. Stamp Tax on Mortgages, Pledges and Deeds of
Trust. — On every mortgage or pledge of lands, estate, or property, real
or personal, heritable or movable, whatsoever, where the same shall be
made as a security for the payment of any definite and certain sum of
money lent at the time or previously due and owing or forborne to be
paid, being payable, and on any conveyance of land, estate, or property
whatsoever, in trust or to be sold, or otherwise converted into money
which shall be and intended only as security, either by express

51


BEERESeavaneune

stipulation or otherwise, there shall be collected a documentary stamp
tax OF 0.3% OF THE AMOUNT SECURED. at-thefollowing rates:

On any mortgage, pledge, or deed of trust, where the same shall be
made as a security for the payment of a fluctuating account or future
advances without fixed limit, the documentary stamp tax on such
mortgage, pledge or deed of trust shall be computed on the amount
actually loaned or given at the time of the execution of the mortgage,
pledge or deed of trust. However, if subsequent advances are made on
such mortgage, pledge or deed of trust, additional documentary stamp
tax shall be paid which shall be computed on the basis of the amount
advanced or loaned at the rates specified above: Provided, however,
That if the full amount of the loan or credit, granted under the
mortgage, pledge or deed of trust is specified in such mortgage, pledge
or deed of trust, the documentary stamp tax prescribed in this Section
shall be paid and computed on the full amount of the loan or credit
granted.

SEC, 196, 190. Stamp Tax on Deeds of Sale, Conveyances and
Donation of Real Property. - On all conveyances, donations, deeds,
instruments, or writings, other than grants, patents or original
certificates of adjudication issued by the Government, whereby any
land, tenement, or other realty sold shall be granted, assigned,
transferred, donated or otherwise conveyed to the purchaser, or
purchasers, or to any other person or persons designated by such
purchaser or purchasers, or donee, there shall be collected a
documentary stamp tax, at the rates herein below prescribed, based on
the consideration contracted to be paid for such realty or on its fair
market value determined in accordance with Section 6(E) of this Code,
whichever is higher: Provided, That when one of the contracting parties
is the Government, the tax herein imposed shall be based on the actual
consideration:

(a) | When the consideration, or value received or contracted to be
paid for such realty, after making proper allowance of any
encumbrance, does not exceed One thousand pesos (P1,000), Fifteen
pesos (P15.00).

(b) For each additional One thousand pesos (P1,000) or fractional
part thereof in excess of One thousand pesos (P1,000) of such
consideration or value, Fifteen pesos (P15.00).


Transfers exempt from donor's tax under Section 101(a) and (b) of this
Code shall be exempt from the tax imposed under this Section.

When it appears that the amount of the documentary stamp tax payable
hereunder has been reduced by an incorrect statement of the
consideration in any conveyance, deed, instrument or writing subject
to such tax the Commissioner, provincial or city Treasurer, or other
revenue officer shall, from the assessment rolls or other reliable source
of information, assess the property of its true market value and collect
the proper tax thereon.

SEC. 197. 191. Stamp Tax on Charter Parties and Similar
Instruments. - On every charter party, contract or agreement for the
charter of any ship, vessel or streamer, or any letter or memorandum
or other writing between the captain, master or owner, or other person
acting as agent of any ship, vessel or steamer, and any other person or
persons for or relating to the charter of any such ship, vessel or
streamer, and on any renewal or transfer of such charter, contract,
agreement, letter or memorandum, there shall be collected a
documentary stamp tax at the following rates:

(a) If the registered gross tonnage of the ship, vessel or steamer does
not exceed one thousand (1,000) tons, and the duration of the charter
or contract does not exceed six (6) months, one thousand pesos
(P1,000); and for each month or fraction of a month in excess of six (6)
months, an additional tax of one hundred pesos (P100) shall be paid.

(b) Ifthe registered gross tonnage exceeds one thousand (1,000) tons
and does not exceed ten thousand (10,000) tons, and the duration of
the charter or contract does not exceed six (6) months, two thousand
pesos (P2,000); and for each month or fraction of a month in excess of
six (6) months, an additional tax of two hundred pesos (P200) shall be
paid.

{c) If the registered gross tonnage exceeds ten thousand (10,000)
tons and the duration of the charter or contract does not exceed six (6)
months, three thousand pesos (P3,000); and for each month or fraction
of a month in excess of six (6) months, an additional tax of Three
hundred pesos (P300) shall be paid.

SEC. 198, 192. Stamp Tax on Assignments-and Renewals of
Certain Instruments. - Upon each and every assignment-or-transfer
ofa ie : 6+ or _poley—oef ins ce he renewal or
continuance of any agreement, contract, charter, or any evidence of
obligation or indebtedness by EXTENDING THE TERM OR MATURITY
BY altering or otherwise, there shall be levied, collected and paid a
documentary stamp tax, at the same rate as that imposed on the
original instrument.

53


SEC, 199. 193, Documents and Papers Not Subject to Stamp Tax.
- The provisions of Section 173 to the contrary notwithstanding, the
following instruments, documents and papers shall be exempt from the
documentary stamp tax:

(a) Policies of insurance or annuities made or granted by a fraternal or
beneficiary society, order, association or cooperative company, operated
on the lodge system or local cooperation plan and organized and
conducted solely by the members thereof for the exclusive benefit of
each member and not for profit.

XX XX = XX

(n) Interbank call loans with maturity of not more than seven-{7) FIVE
(5) days to cover deficiency in reserves against deposit liabilities,
including those between or among banks and quasi-banks.

(0) REDEMPTION, SALE, BARTER, EXCHANGE, OR OTHER
DISPOSITION OR EXCHANGE OF SHARES OF STOCK OR UNITS OF
PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME OR
OTHER CIS SECURITIES LISTED AND TRADED IN A LOCAL STOCK
EXCHANGE. THE ORIGINAL ISSUANCE OF SHARES OR UNITS OF
PARTICIPATION IN A CIS SHALL NOT BE COVERED BY THIS
EXEMPTION.

SEC, 28. Prospectivity Clause. - The changes introduced under this Act
shall take effect on income and transactions beginning January 1, 2019. Any
tax exemption on interest income and gains granted to long-term instruments
and securities prior to the effectivity of this Act shall remain exempt.

SEC. 29. Implementing Rules and Regulations. - The Department of
Finance, in consultation with the Securities and Exchange Commission,
Bangko Sentral ng Pilipinas, Insurance Commission, the Bureau of the
‘Treasury, and the Bureau of Internal Revenue, shall issue the implementing
rules and regulations for the effective implementation of this Act.

SEC. 30. Separability Clause. - If, for any reason any article or provision of
this Act, or any portion thereof, or application of such article, provision, or
portion thereof to any person, group, or circumstance is declared invalid or
unconstitutional, the remainder of this Act shall not be affected by such
decision or declaration.

SEC. 31. Repealing Clause. ~ The following laws or provisions of laws are
hereby repealed or modified accordingly and the persons and/or transactions
affected herein are hereby made subject to applicable taxes on interest income
and capital gains, gross receipts tax, premium tax, and documentary stamps
tax under the national internal revenue code, as amended:


(a) SECTION 9, INSOFAR AS THE TAX EXEMPTION ON THE
ISSUANCE OF BONDS AND SECURITIES IS CONCERNED, OF
PRESIDENTIAL DECREE 1648, KNOWN AS “REORGANIZING THE
NATIONAL DEVELOPMENT COMPANY AND ESTABLISHING A
REVISED CHARTER THEREFOR”;

(b) SECTIONS 6, 7, AND 8, INSOFAR AS TAX EXEMPTION ON
INTEREST INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP
TAX IS CONCERNED, OF EXECUTIVE ORDER 603, ENTITLED
“CREATING A LIGHT RAIL TRANSIT AUTHORITY, VESTING THE
SAME WITH AUTHORITY TO CONSTRUCT AND OPERATE THE
LIGHT RAIL TRANSIT (LRT) PROJECT AND PROVIDING FUNDS
THEREFOR”;

{c) SECTION 14, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF REPUBLIC ACT 7354, ENTITLED “AN ACT
CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING
ITS POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING
FOR REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES
CONNECTED THEREWITH”;

(d) SECTION 12, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF REPUBLIC ACT 4850, ENTITLED “AN ACT
CREATING THE LAGUNA LAKE DEVELOPMENT AUTHORITY,
PRESCRIBING ITS POWERS, FUNCTIONS AND DUTIES, PROVIDING
FUNDS THEREFOR, AND FOR OTHER PURPOSES”;

(ec) NUMBER 8, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PRESIDENTIAL DECREE 37, ENTITLED
“CREATING THE NAYONG PILIPINO FOUNDATION”

(f SECTION 12, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PRESIDENTIAL DECREE 205, ENTITLED
“CREATING AND ESTABLISHING THE DEVELOPMENT ACADEMY
OF THE PHILIPPINES, DEFINING ITS POWERS, FUNCTIONS, AND
RESPONSIBILITIES, AND FOR OTHER PURPOSES”;

(g) ARTICLE 202, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, DOCUMENTARY STAMP TAX, AND
PREMIUM TAX IS CONCERNED, OF PRESIDENTIAL DECREE 442
AS AMENDED BY PRESIDENTIAL DECREE 626, ENTITLED “LABOR
CODE OF THE PHILIPPINES”;

(bh) SECTION 10, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX OF

5s


SUBSIDIARIES OF PHILIPPINE AEROSPACE DEVELOPMENT
CORPORATION IS CONCERNED, OF PRESIDENTIAL DECREE 696,
ENTITLED “REVISING PRESIDENTIAL DECREE NO. 286, DATED
SEPTEMBER 5, 1973, AS AMENDED, OTHERWISE KNOWN AS THE
CHARTER OF THE PHILIPPINE AEROSPACE DEVELOPMENT
CORPORATION AND FOR OTHER PURPOSES”;

(i) _ SECTION 2(G), INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME IS CONCERNED, OF REPUBLIC ACT 85, AS AMENDED BY
REPUBLIC ACT 2081, ENTITLED “AN ACT CREATING THE
REHABILITATION FINANCE CORPORATION”;

a SECTIONS 76, 77 AND 98, INSOFAR AS TAX EXEMPTION ON
INTEREST INCOME, DIVIDENDS, CAPITAL GAINS, AND
DOCUMENTARY STAMP TAX ON BONDS IS CONCERNED, OF
REPUBLIC ACT 3844 OR THE AGRICULTURAL LAND REFORM
CODE;

(k) SECTION 37, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, GROSS RECEIPTS TAX, AND
DOCUMENTARY STAMP TAX IS CONCERNED, OF REPUBLIC ACT
6848 OR THE CHARTER OF THE AL-AMANAH ISLAMIC
INVESTMENT BANK OF THE PHILIPPINES;

tu} SECTIONS 10, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME IS CONCERNED, OF REPUBLIC ACT 3591, AS AMENDED
BY REPUBLIC ACT 9576 OR AN ACT INCREASING THE MAXIMUM
DEPOSIT INSURANCE COVERAGE, AND IN CONNECTION
THEREWITH, TO STRENGTHEN THE REGULATORY AND
ADMINISTRATIVE AUTHORITY, AND FINANCIAL CAPABILITY OF
THE PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC),
AMENDING FOR THIS PURPOSE REPUBLIC ACT NUMBERED
THREE THOUSAND FIVE HUNDRED NINETY-ONE, AS AMENDED,
OTHERWISE KNOWN AS THE PDIC CHARTER, AND FOR OTHER
PURPOSES;

(m) SECTION 12, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF EXECUTIVE ORDER 1037, ENTITLED “AN ACT
CREATING THE PHILIPPINE RETIREMENT PARK SYSTEM,
PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES”;

(n) SECTION 19, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME AND DOCUMENTARY STAMP TAX IS CONCERNED, OF
REPUBLIC ACT 8763 OR HOME GUARANTY CORPORATION ACT OF
2000;

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(o) SECTION 19, INSOFAR AS TAX EXEMPTION ON
DOCUMENTARY STAMP TAX IS CONCERNED, OF REPUBLIC ACT
7279 OR THE URBAN DEVELOPMENT AND HOUSING ACT OF 1992;

(p) SECTION 8(A), INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX OF
BONDS IS CONCERNED, AS PROVIDED UNDER SECTION 1 OF
REPUBLIC ACT 6395 OR AN ACT REVISING THE CHARTER OF THE
NATIONAL POWER CORPORATION;

(q) SECTION 15, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PD 334, ENTITLED “CREATING THE PHILIPPINE
NATIONAL OIL COMPANY, DEFINING ITS POWERS AND
FUNCTIONS, PROVIDING FUNDS THEREFORE, AND FOR OTHER
PURPOSES”;

(r) SECTION 16, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PRESIDENTIAL DECREE 1467, ENTITLED “AN
ACT CREATING THE PHILIPPINE CROP INSURANCE
CORPORATION, PRESCRIBING ITS POWERS AND ACTIVITIES,
PROVIDING FOR ITS CAPITALIZATION AND FOR THE REQUIRED
GOVERNMENT PREMIUM SUBSIDY, AND FOR OTHER PURPOSES”;

(s) SECTION 3, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX OF
BONDS IS CONCERNED, OF REPUBLIC ACT 3601, ENTITLED “AN
ACT GRANTING THE NATIONAL IRRIGATION ADMINISTRATION”;

{t) SECTION 6 (A, XVIII (2)), IN SO FAR AS TAX EXEMPTION ON
INTEREST INCOME AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF PD 1485, AS AMENDED BY PD 1770, ENTITLED
“RECONSTITUTING THE NATIONAL GRAINS AUTHORITY TO THE
NATIONAL FOOD AUTHORITY, BROADENING ITS FUNCTIONS AND
POWERS AND FOR OTHER PURPOSES”;

(u) SECTION 5 (E), INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX ON
BONDS IS CONCERNED, OF REPUBLIC ACT 6260, ENTITLED “AN
ACT INSTITUTING A COCONUT INVESTMENT FUND AND
CREATING A COCONUT INVESTMENT COMPANY FOR THE
ADMINISTRATION THEREOF”;

{v) ARTICLES 60 AND 61, INSOFAR AS TAX EXEMPTION ON
INTEREST INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP
TAX IS CONCERNED, OF REPUBLIC ACT 6938, AS AMENDED BY
REPUBLIC ACT 9520, ENTITLED “AN ACT TO ORDAIN A
COOPERATIVE CODE OF THE PHILIPPINES”;

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(w) SECTION 9, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX ON
BONDS IS CONCERNED, OF REPUBLIC ACT 10744 OR CREDIT
SURETY FUND ACT OF 2014;

(x) SECTION 20, INSOFAR AS TAX ON INTEREST INCOME,
CAPITAL GAINS AND DOCUMENTARY STAMP TAX IS CONCERNED,
OF REPUBLIC ACT 10693, ENTITLED “AN ACT STRENGTHENING
NONGOVERNMENT ORGANIZATIONS (NGOS) ENGAGED IN
MICROFINANCE OPERATIONS FOR THE POOR”;

(y) SECTION 7, INSOFAR AS TAX EXEMPTION ON
DOCUMENTARY STAMP TAX AND PREMIUM TAX IS CONCERNED,
OF REPUBLIC ACT 7111, ENTITLED “AN ACT ESTABLISHING THE
OVERSEAS WORKERS’ INVESTMENT FUND TO PROVIDE
INCENTIVES TO OVERSEAS WORKERS, REDUCE THE FOREIGN
DEBT BURDEN AND FOR OTHER PURPOSES”;

(z) SECTION 56, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF REPUBLIC ACT 10801, ENTITLED “AN ACT
GOVERNING THE OPERATIONS AND ADMINISTRATION OF THE
OVERSEAS WORKERS WELFARE ADMINISTRATION”;

(aa) SECTION 5, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME IS CONCERNED, OF REPUBLIC ACT 8367, ENTITLED “AN
ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION
AND OPERATION OF NON-STOCK SAVINGS AND LOAN
ASSOCIATIONS”;

(bb) SECTION 28, INSOFAR AS TAX EXEMPTION ON CAPITAL
GAINS ON SHARES OF STOCK AND DOCUMENTARY STAMP TAX IS
CONCERNED, OF REPUBLIC ACT 9267 OR THE SECURITIZATION
ACT OF 2004’

(cc) SECTION 17, INSOFAR AS TAX EXEMPTION ON INTEREST
INCOME, CAPITAL GAINS, GROSS RECEIPTS TAX AND
DOCUMENTARY STAMP TAX IS CONCERNED, OF REPUBLIC ACT
7906, ENTITLED “AN ACT PROVIDING FOR THE REGULATION OF
THE ORGANIZATION AND OPERATIONS OF THRIFT BANKS, AND
FOR OTHER PURPOSES”;

(dd) SECTION 15, INSOFAR AS TAX EXEMPTION ON CAPITAL
GAINS AND DOCUMENTARY STAMP TAX IS CONCERNED, OF
REPUBLIC ACT 9182, AS AMENDED BY REPUBLIC ACT 9343,
ENTITLED “AN ACT GRANTING TAX EXEMPTIONS AND FEE
PRIVILEGES TO SPECIAL PURPOSE VEHICLES WHICH ACQUIRE
OR INVEST IN NON-PERFORMING ASSETS, SETTING THE

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REGULATORY FRAMEWORK THEREFOR, AND FOR OTHER
PURPOSES”;

(ee) SECTIONS 13 AND 14, INSOFAR AS TAX EXEMPTION ON DST
AND DIVIDENDS IS CONCERNED, OF R.A. 9856 OR THE REAL
ESTATE INVESTMENT ACT OF 2209; AND

(f{ SECTION 23, INSOFAR AS NO DEDUCTION FROM GROSS
INCOME SHALL BE ALLOWED IN RESPECT OF ANY INTEREST IF
THE INDEBTEDNESS IS INCURRED TO FINANCE PETROLEUM
EXPLORATION IS CONCERNED, OF P.D. 87, ENTITLED AMENDING
PRESIDENTIAL DECREE NO. 8 ISSUED ON OCTOBER 2, 1972, AND
PROMULGATING AN AMENDED ACT TO PROMOTE THE
DISCOVERY AND PRODUCTION OF INDIGENOUS PETROLEUM AND
APPROPRIATE FUNDS THEREFOR.

SEC. 32. Effectivity Clause. - This Act shall take effect on January 1, 2019,
or fifteen (15) days after its complete publication in the Official Gazette or in
at least two (2) newspaper of general circulation, whichever comes earlier.

Approved,

s9