NINETEENTH CONGRESS OF THE )
of tijf
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
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*22 OCT-5 P5 52
SENW(;«
S B. No. iobO
RECEIVED BY; 
/T *
Introduced by SENATOR IMEE R. MARCOS
AN ACT
ENHANCING ADMINISTRATIVE FEASIBILITY 
AND EQUITABILITY OF THE TAX SYSTEM AND RATIONALIZING THE 
IMPOSITION OF THE VALUE-ADDED TAX TO ADDRESS 
INTERGENERATIONAL POVERTY, AMENDING FOR THE PURPOSE VARIOUS 
SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Article VI, Section 28 of the 1987 Constitution states that taxation shall be 
uniform and equitable. It is an inherent attribute of sovereignty and the government 
generally relies on taxation to obtain the means to carry on its operations. However, 
taxation must not be unjust, excessive, oppressive, confiscatory, or contrary to national
policy.
This bill seeks to amend certain sections of the National Internal Revenue Code 
(NIRC), as amended, to align with the true intent of the law. An amendment to Section 
24 is proposed to encourage taxpayers on having increased savings in depositary 
banks. Improved undertakings in banks will significantly benefit our economic growth.
Another amendment proposed by the measure is to synchronize corporate tax 
rates to ensure that a Philippine Corporation is not discriminated in its country of 
domicile. Section 27 (D)(1) of Republic Act No. 10963, or the Tax Reform for 
Acceleration and Inclusion (TRAIN) Act, increased the final tax imposed on interest 
income derived by resident individuals and domestic corporations from a depositary 
bank from 7.5% to 15% while resident foreign corporations enjoy the old rate of 7.5%, 
thus, giving preferential rates to the latter.


Further, amendment to Section 203 is proposed to provide for prescriptive period 
for collection of taxes. While the title of the provision is on "prescriptive periods for 
assessment and collection of taxed', its body covers only prescriptive period for 
assessment.
Given the abovementioned circumstances, the immediate passage of this bill is
sought.
IMEE R. MARCO


NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
j;l SS>C1U1U> 
''iBttnt of tl)»
72 OCT-5 P5S2
S.B. No.
SENATE
1368
RtCElVtDBY:
Introduced by SENATOR IMEE R. MARCOS
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AN ACT
ENHANCING ADMINISTRATIVE FEASIBILITY 
AND EQUITABILITY OF THE TAX SYSTEM AND RATIONALIZING THE 
IMPOSITION OF THE VALUE-ADDED TAX TO ADDRESS 
INTERGENERATIONAL POVERTY, AMENDING FOR THE PURPOSE VARIOUS 
SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
SECTION 1. Declaration of Policy. - It is hereby declared the policy of the State:
To correct the inequity of certain provisions of the National Internal Revenue 
Code (NIRC), as amended, and make the assessment and collection of taxes 
easier to administer;
To enhance the progressivity of the tax system through the rational 
imposition of the value-added tax (VAT);
To provide relief to the poorest of the poor by making VAT exempt: (a) good 
and services provided to schools; (b) school paper products; (c) drugs and 
medicines; and (d) electricity and machines used in generation, transmission, 
and distribution;
To encourage and enhance the competitive capacity of Small and Medium 
Enterprises (SMEs) by raising the VAT threshold; and 
e) To ensure intergenerational poverty alleviation and the sustainability of free 
higher education by earmarked funding for development programs
SEC. 2. Section 24 of the NIRC, as amended, is hereby further amended to read 
as follows:
"SEC. 24. Income Tax Rates. -
a)
b)
c)
d)


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(A) XXX 
XXX 
XXX 
XXX
(B) Rate of Tax on Certain Passive Income: -
(1) Interests, Royalties, Prizes, and other Winnings. -
XXX 
XXX 
XXX 
XXX 
XXX
Provided, finally. That should the holder of the certificate pre­
terminate the deposit or investment before the fifth (5th) year, a 
final tax shall be imposed on the entire income and shall be 
deducted and withheld by the depository bank from the proceeds 
of the long-term deposit or investment certificate based on the 
[remaining maturity] ACTUAL HOLDING PERIOD thereof:
Four (4) years to less than five (5) years - 5%;
Three (3) years to less than four (4) years -12%; and 
Less than three (3) years - 20%
(2) 
XXX 
XXX 
XXX 
xxx"
SEC. 3. Section 28 of the NIRC, as amended, is hereby further amended to read 
as follows:
"SEC. 28. Rates of Income Tax on Foreign Corporations. -
(A) Tax on Resident Foreign Corporations. - 
xxx 
xxx 
xxx 
xxx
(7) Tax on Certain Incomes Received by a Resident Foreign Corporation.
(a) xxx 
xxx 
xxx 
xxx
Provided, however. That interest income derived by a resident foreign 
corporation from a depository bank under the expanded foreign currency deposit 
system shall be subject to a final income tax at the rate of [seven and one-half 
percent (7 V2 %)] FIFTEEN PERCENT (15%) of such interest income.
(b) xxx 
xxx 
xxx 
xxx
(c) xxx 
xxx 
xxx 
xxx"
SEC. 4. Section 109 of the NIRC of 1997, as amended, is hereby further 
amended to read as follows:
"SEC.109. Exempt Transactions. - (1) Subject to the provisions of 
Subsections (2) hereof, the following transactions shall be exempt from the 
value-added tax:
"(A)" xxx 
"(B)" xxx 
"(C)" xxx 
"(D)" xxx 
"(E)" xxx 
"(F)" xxx 
"(G)" xxx


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"(H)" Educational services rendered by private educational institutions, duly
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accredited by the Department of Education (DepEd), the Commission on Higher
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Education (CHED), the Technical Education and skills Development Authority
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(TESDA) and those rendered by government educational institutions,
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INCLUDING ALL GOODS SUPPLIED AND SERVICES RENDERED TO SAID
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EDUCATIONAL INSTITUTIONS BY VAT-REGISTERED SUPPLIERS AND
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SERVICE PROVIDERS;
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"(I)" XXX
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"(J)" XXX
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"(K)" XXX
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"(L)" XXX
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"(M)" XXX
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"(N)" XXX
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"(0)" XXX
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"(P)" XXX
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"(Q)" XXX
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"(R)" Sale, importation, printing, or publication of books, and any newspaper, 
magazine, review or bulletin which appears at regular intervals with fixed prices 
or subscription and sale and which is not devoted principally to the publication
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of paid advertisement, AND SALE OR IMPORTATION OF SCHOOL PAPER
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PRODUCTS. PROVIDED, THAT, SCHOOL PAPER PRODUCTS SHALL
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INCLUDE PAPER COMMODITIES CONSUMED BY STUDENTS AND
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TEACHERS DURING THE SCHOOL YEAR;"
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"(S)" XXX
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"(T)" XXX
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"(U)" XXX
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"(V)" XXX
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"(W)" XXX
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"(X)" XXX
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"(Y)" XXX
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"(^)" XXX
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"(AA)" Sale OR IMPORTATION of drugs and medicines [prescribed for
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diabetes, high cholesterol, and hypertension beginning January 1, 2019]; [and]
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"(BB)" SALE OF ELECTRICITY, INCLUDING SALE OR IMPORTATION OF
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MACHINES AND EQUIPMENT TO BE DIRECTLY USED IN THE
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GENERATION TRANSMISSION, AND DISTRIBUTION OF ELECTRICITY;
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AND
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"(CC)" [BB] Sale or lease of goods or properties of the performance of services
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other than the transactions mentioned in the preceding paragraphs, the gross
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annual sales and/or receipts do not exceed the amount of [Three million pesos
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(P3,000,000)] FIVE MILLION PESOS (5,000,000).
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SEC. 5. Sec. Ill of the NIRC, as amended, is hereby further amended to read
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as follows:


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"SEC. 111. Transitional/Presumptive Input Tax Credits. -
(A) 
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XXX 
XXX 
XXX
(B) 
Presumptive Input Tax Credits. - Persons or firms engaged in the
processing of [sardines, mackerel] MEAT, FISH AND OTHER 
AGRICULTURAL AND MARINE FOOD PRODUCTS, [and milk] and in 
manufacturing refined sugar, COFFEE, cooking oil, MILK, LAUNDRY 
SOAP AND/OR DETERGENTS, and packed noodle based instant meals, 
shall be allowed a presumptive input tax, creditable against the output 
tax, equivalent to four percent (4% ) of the gross value in money of their 
purchases of primary agricultural AND MARINE FOOD products which 
are used as inputs to their production.
XXX 
XXX 
XXX 
XXX
SEC. 6. Sec. 203 of the NIRC, as amended, is hereby further amended to read
as follows:
"SEC. 203. Period of Limitation Upon Assessment and Collection. -
XXX 
XXX 
XXX 
XXX
ALL ASSESSMENTS MADE UNDER THIS SECTION MUST BE 
COLLECTED WITHIN FIVE (5) YEARS FROM THE DATE THE 
ASSESSMENT WAS MADE. PROVIDED, THAT, IF NO ASSESSMENT IS 
MADE BUT THE TAXPAYER HAS FILED THE REQUIRED TAX RETURN, 
WHICH IS NEITHER FALSE NOR FRAUDULENT, THE PERIOD TO 
COLLECT IS WITHIN FIVE (5) YEARS FROM THE DATE THE TAX IS DUE.
FOR PURPOSES OF COMPLYING WITH THE PRESCRIPTIVE 
PERIODS FOR THE ASSESSMENT AND COLLECTION OF TAXES, AN 
ASSESSMENT IS DEEMED MADE WHEN THE FINAL ASSESSMENT 
NOTICE (FAN) IS RELEASED, MAILED OR SENT TO THE TAXPAYER.
SEC. 7. Sec. 236 of the NIRC of 1997, as amended, is hereby further amended 
to read as follows:
"SEC. 236. Registration Requirements. -
"(A)" XXX 
"(B)" XXX 
"(C)" XXX 
"(D)" XXX 
"(E)M XXX 
"(F)" XXX
"(G)" Persons Required to Register for Value-Added Tax. - 
"(I)" XXX


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"(a) His gross sales or receipts for the past twelve (12) months, other than those 
that are exempt under Section 109 (A) to (BB), have exceeded [Three million pesos
(P3,000,000)] FIVE MILLION PESOS (P5,000,000); OR
"(b) There are reasonable grounds to believe that his gross sales or receipts for 
the next twelve (12) month, other than those that are exempt under Section 109 (A) to 
(BB) will exceed [Three million pesos (P3,000,000)] FIVE MILLION PESOS
(5,000,000).
"xxx
SEC. 8. Sec. 288 of the NIRC of 1997, as amended, is hereby further amended 
to read as follows:
"Sec. 288. Disposition of Incremental Revenues. —
(A) X X X
(B) X X X
(C) xxx
(D) Incremental Revenues from the Value-Added Tax. — [Fifty percent (50%)] 
THE ENTIRE [of the] local government unit's share from the incremental 
revenue from the Value-Added Tax shall be allocated and used exclusively for 
the following purposes:
(1) [Fifteen percent (15%)] TEN PERCENT (10%) for public elementary 
and secondary education to finance the ACQUISITION AND 
IMPROVEMENT OF SITES, construction of buildings, purchases of 
school furniture and in-service teacher trainings;
(2) Ten percent (10%) for health insurance premiums of enrolled 
indigents as a counterpart contributions [of the local government] to 
sustain the universal coverage of the National Health Insurance Program,
(3) [Fifteen percent (15%)] TEN PERCENT ao%) for environmental 
conservation to fully implement a comprehensive national reforestation 
program; [and]
(4) Ten percent (10%) for agricultural modernization to finance the 
construction of farm-to-market roads and irrigation facilities,
COMMUNAL IRRIGATION SYSTEMS; POST-HARVEST 
FACILITIES, SEED AND ORGANIC FERTILIZER SUBSIDIES; 
LIVESTOCK DISPERSAL PROGRAM; AND ESTABLISHMENT OF 
MARICULTURE AND AQUACULTURE PARKS [.];
(5) TEN PERCENT (10%) FOR FOOD VOUCHERS FOR THE FIRST 
TO SEVENTH INCOME DECILES OF THE NATIONAL HOUSEHOLD 
TARGETING SYSTEM FOR POVERTY REDUCTION (NHTS-PR); 
AND
(6) TEN PERCENT (10%) FOR SOCIAL MITIGATING MEASURES 
AND INVENSTEMNT IN SOCIAL PROTECTION, EMPLOYMENT,


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AND HOUSING THAT PRIORITIZE THE POOR AND NEAR-POOR 
HOUSEHOLDS, AS IDENTIFIED UNDER THE NETTS-PR.
(7) ANY REMAINDER SHALL BE USED FOR OTHER PUBLIC 
PURPOSES.
SEC 9. Separability Clause. - If any part or provision of this Act is held 
unconstitutional or invalid, the remaining parts or provisions not affected shall remain 
in full force and effect.
SEC 10. Repealing Clause. - Any law, presidential decree or issuance, executive 
order, letter of instruction, administrative order, rule or regulation contrary to or 
inconsistent with the provisions of this Act is hereby repealed, modified, or amended 
accordingly.
SEC 11. Effectivity Clause. - This Act shall take effect fifteen (15) days following 
its complete publication in at least two (2) newspapers of general circulation.
Approved,