SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S.B. No. 2353 
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
An Act Providing for Tax Exemption of Marginal Income Earners 
EXPLANATORY NOTE 
'14 
flUG 13 
1\10 :29 
In a country where 2.96 million Filipinos are unemployed, the poor turn to various forms of self-
employment to be able to make ends meet. The farmers and fishermen in the rural areas, and the 
tricycle drivers and small sari-sari storeowners in the cities, think of innovative ways just to earn a 
decent income for their families. More than anything else, these micro-entrepreneurs, or Marginal 
Income Earners (MIEs), need the right opportunity to grow their small businesses into a more 
sustainable source of living. Charging taxes does not help them in any way; rather, it becomes a burden 
to a sector that is situated below the poverty line. 
This bill seeks to amend the National Internal Revenue Code of 1997 so as to exempt the MIEs 
from taxes. Their income from their small engagements are just enough to sustain the needs of their 
families. Such a measure provides a more enabling environment for MIEs to thrive and be given a 
chance to succeed. It further continues our campaign in achieving growth that includes everyone, even 
and especially the poor and marginalized. 
In view of the foregoing, the approval ofthis bill is earnestly sought. 


.. ~ 
.. t 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
I 
I 
I 
SENATE 
S.B. No. 2353 
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
An Act Providing for Tax Exemption of Marginal Income Earners 
'14 
AUG 13 
AlO :29 
Be it enacted by the Senate and Hause af Representatives of the Philippines in Congress 
assembled: 
1 
SECTION 1. - Section 22 of Republic Act No. 8424, as amended, otherwise known as the 
2 
National Internal Revenue Code of 1997, is hereby amended by adding the following definition after 
3 
Subsection (HH) to read as follows: 
4 
"SEC. 22. Definition-when used in this Title: 
5 
"(A) xxx. 
6 
"xxx 
7 
"(HH) x xx. 
8 
"(II) THE TERM "MARGINAL INCOME EARNER" OR "MIE" SHALL REFER TO AN INDIVIDUAL 
9 
CITIZEN ENGAGED IN AN ECONOMIC ACTIVITY EARNING LESS THAN OR AS MUCH AS 
10 
MINIMUM WAGE, AS DEFINED BY THE REGIONAL TRIPARTITE WAGE AND PRODUCTIVITY 
11 
BOARD (RTWPB). 
THE ACTIVITIES OF MARGINAL INCOME EARNERS ARE CONSIDERED 
12 
PRINCIPALLY FOR SUBSISTENCE OR LIVELIHOOD. 
13 
SECTION 2. - Section 2Ll(A) of Republic Act No. 8424, as amended, otherwise known as the 
14 
National Internal Revenue Code of 1997, is hereby further amended to read as follows: 
15 
"SEC. 24. Income Tax Rates.-
16 
"(AI Rates of Income Tax on Individual Citizen and Individual Resident Alien of the Philipines.-
17 
"(1) xxx: 
18 
"xxx 
19 
"(2) Rates of Tax on Taxable Income Individuals- The tax shall be computed in accordance 
20 
with and at the rates established in the following schedule: 
"Not over PiO,OOO 
.......... 5% 
"Over P10,OOO but not over P30,OOO 
.......... P500+10% ifthe excess over PiO,OOO 
"Over P30,OOO but not over P70,OOO 
.......... P2,500+15% of the excess over P30,OOO 
"Over P70,OOO but not over P140,OOO 
.......... P8,500+20% of the excess over P70,OOO 
"Over P140,OOO but not over P250,OOO 
.......... P22,500+25% ofthe excess over P140,OOO 
"Over P250,OOO but not over P500,OOO 
.......... P50,OOO+30% of the excess over P250,OOO 
"Over P500,OOO 
......... 
P125,OOO+32% 
of the 
excess 
over 
P500,OOO 


, . 
~." _ 
J.., 
'" 
" 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
"For married individuals, the husband and wife, subject to the provision of Section 51 
(D) hereof, shall compute separately their individual income tax based on their respective 
total taxable income: Provided, that if any income cannot be definitely attributed to or 
identified as income exclusively earned or realized by either of the spouses, the same shall 
be divided equally between the spouses for the purpose of determining their respective 
taxable income. 
"Provided, That minimum wage earners as defined in Section 22 (HH) of this Code shall 
be exempt from the payment of income tax on their taxable income: Provided,further, That 
the holiday pay, overtime pay, night shift differential pay and hazard pay received by such 
minimum wage earners shall likewise be exempt from income tax. 
"PROVIDED, FURTHER, THAT MARGINAL INCOME EARNERS, AS DEFINED, SHALL BE 
EXEMPT FROM THE PAYMENT OF INCOME TAX ON THEIR TAXABLE INCOME. PROVIDED, 
THEY SHALL LIKEWISE BE EXEMPT FROM THE 12% VALUE ADDED TAX (VAT) AND ANY 
PERCENTAGE TAX IMPOSED UNDER THE NATIONAL INTERNAL REVENUE CODE OF 1997. 
36 
SECTION 3. - Section 51 (A)(2) of Republic Act No, 8424, as amended, otherwise known as the 
37 
National Internal revenue Code of 1997, is hereby further amended to read as follows: 
38 
"SEC. 51. Individual Return.-
39 
"(A) Requirements. -
40 
"(1) Except as provided in paragraph (2) of this Subsection, the following individuals are 
41 
required to file an income tax return: 
42 
"(a) xxx; 
43 
"xxx. 
44 
"(2) The following individuals shall not be required to file an income tax return: 
45 
"(a) xxx; 
.46 
"(b) xxx; 
47 
"(c) xxx; 
48 
"(d) xxx; and 
49 
"(e) A MARGINAL INCOME EARNER AS DEFINED IN SECTION 22(11) OF THIS CODE OR AN 
50 
INDIVIDUAL WHO IS EXEMPT FROM INCOME TAX PURSUANT TO THE PROVISIONS OF THIS 
51 
CODE AND OTHER LAWS, GENERAL OR SPECIAL. 
52 
SECTION 4. Separabiliw Clause. -
If any provision of this Act is declared invalid or 
53 
unconstitutional, other provisions hereof which are not affected thereby shall continue to be in full 
54 
force and effect. 
55 
SECTION 5. Repealing Clause -
Any law, presidential decree or issuance, executive order, letter 
56 
of instruction, administrative order, rule or regulation contrary to or inconsistent with any provision of 
57 
this Act as hereby amended or modified accordingly. 
58 
SECTION 6. Effectivity Clause. - This Act shall take fifteen (15) days following its publication in 
59 
the official Gazette or in at least two (2) newspapers of general circulation. 
60 
. Approved,