SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES }
Second Regular Session

HOUSE OF REPRESENTATIVES

~ Introduced by Representative Rufus B. Rodriquez and
Representative Maximo B. Rodriguez, Jr.

House Bill No. 4890
EXPLANATORY NOTE

This bill seeks to amend Section 24 of the National Internal Revenue Code of 1997, as
amended, by adjusting the individual income tax brackets and reducing the rates of individual
income tax beginning January 1, 2016. The bill is aimed at reducing the country's income tax
rates for individuals in preparation for the Association of South East Asian Nations (ASEAN)
Integration, This legislative measure is consistent with the Philippine commitment to the 10-
member ASEAN Economic Community (AEC) Blueprint, which seeks to transform ASEAN into
a single market and production base by December 2016.

The AEC shalll be guided by five (5) core elements, such as free flow of goods, free flow
of services, free flow of investment, freer flow of capital, and free flow of skilled labor.

While the ASEAN Blueprint does not mandate member countries to amend their income
tax schedules, itis highly expected that human capital would flow to where it could eam best.
Next to Thailand and Vietnam, the Philippines has the highest top rate at 32-percent. When the
AEC Declaration was signed in 2007, some member-states began to lower their corporate and
individual income tax rates, with further reductions In the subsequent years. In order for the
Philippines to attract human capital and to prevent the migration of our own, it is imperative that
we reduce the existing income tax rates while maintaining the progressivity of our income tax
system, as mandated by the 1987 Philippine Constitution

The current individual income tax bracket has been unchanged since 1997 until today
when the consumer price index (cpr) has almost doubled’ already. In order to buffer the revenue
impact of the individual income bracket adjustments and the reduction of individual income tax
rates, this bill spreads the reduction over a period of three (3) years.

In view of the foregoing, immediate approval of this billis earnestly sought

RUFUS B. RODRI@DEZ

MAXIMO B. ——_ JR.


SIXTEENTH CONGRESS

d
REPUBLIC OF THE PHILIPPINES }

Second Regular Session

HOUSE OF REPRESENTATIVES

Representative Maximo B. Rodriguez, Jr.

Introduced by Representative Rufus B. Rodriguez and

House Bill No.

AN ACT
AMENDING SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED, AND FOR OTHER PURPOSES

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

assembled:

SECTION 1. Section 24(A)(2) of the National Internal Revenue Code of 1997, as amended, is
hereby further 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. -
(2) Rates of Tax on Taxable Income of Individuals, - The tax shall be computed in accordance
with and at the rates established in the following schedule:

Taxable income Beginning Beginning Beginning

—_ — |_ January 1, 2015 | January 1, 2016 | January 1, 2017
20,000 but not over 15% 13% 10%

0,000 _
‘Over P70,000 butnot over | P10,500 + 20% of | P9,100 +18% of | P7,000 + 16%
200,000 the excess over | the excess over | of the excess

70,000 70,000 over P70,000__|
36,500 + 25% of | P32,500 + 23% | P26,500 + 20%
500,000 the excess over | of the excess _| of the excess
7 200,000 over P200,000_| over P200,000
‘Over P500,000 but not over | P111,600+30% | P101,600+ | P86,600 + 22%
1,000,000 of the excess over | 25% of the of the excess
500,000 excess over —_| over P500,000
500,000
Over P7,000,000 261,500 +32% | P226,500+ | P196,500+
of the excess over | 28% of the 25% of the
P1,000,000 excess over | excess over
|__| P4,000,000 1,000,000
[Not over P10,000. 5%

‘Over P10,000 but not over P30,000..
‘Over P30,000 but not over P70,000..
Over P70,000 but not over P140,000.
Over P140,000 but not over P250,000.

P500+10% of the excess over P10,000
P2,500+15% of the excess over P30,000
P8,500+20% of the excess over P70,000
P22,500+25% of the excess over P140,000


Over P250,000 but not over P500,000. P60,000+30% of the excess over P250,000
Over P500,000 P126,000+34% of the excess over
500,000 in 1998,]

XXX

XXX
SEC 2. Implementing Rules and Regulations. - The Secretary of Finance shall promulgate the
necessary rules and regulations for the effective implementation of the provisions of this Act.
SEC 3. Repealing Clause. - All aws, orders, issuances, circulars, rules and regulations or parts
thereof, which are inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SEC 4, Separability Clause. - If any provision of this Act is declared unconstitutional or invalid,
other parts or provisions hereof not affected thereby shall continue to be in full force and effect.

SEC 5, Effectivity. - This Act shall take effect on January 1, 2015 following its publication in at
least two (2) newspapers of general circulation,

Approved,