• • 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
Sllmlir 
(~th;f llf lije *,Hutaf\l 
'14 
MAY 15 P2 :16 
RECEIVED BY, 
An Act Exempting Marginal Income Earners from Income Tax, Value Added Tax and Percentage Tax 
Amending for that Purpose the Pertinent Provisions of Republic Act No. 8424, Otherwise Known as 
the National Internal Revenue Code of 1997, as Amended, and for Other Purposes 
EXPLANATORY NOTE 
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 fisherfolk in the rural areas, and the 
tricycle drivers, vendors and small sari-sari storeowners in the cities, think of innovative ways everyday 
just to earn 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 si~uated below the poverty line. 
This bill seeks to amend the National Internal Revenue Code of 1997 so as to exempt from taxes 
the MIEs, whose gross sales from their small engagements in business would just be enough to sustain 
the needs of their families. Such a measure provides a less repressive and 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 of this bill is earnestly sought. 
fjtm- ~LM'~ 
Senator Paolo Benigno "Bam" A. Aquino IV 


" 
' 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
'14 
MAY 15 P2 :16 
SEN~fi... 
S.B. No. ~~27 
nl'X'EIVED BY: --t, 
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
An Act Exempting Marginal Income Earners from Income Tax, Value Added Tax and Percentage Tax 
Amending for that Purpose the Pertinent Provisions 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 Hause of 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 A WORKER 
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NEITHER IN THE PRIVATE SECTOR NOR AN EMPLOYEE IN THE PUBLIC SECTOR WHO EARNS 
10 
AS MUCH INCOME AS MINIMUM WAGE EARNERS. THEY ARE SELF-EMPLOYED INDIVIDUALS 
11 
DERIVING GROSS SALES/RECEIPTS NOT EXCEEDING ONE HUNDRED FIFTY THOUSAND PESOS 
12 
(P150,OOO.OO) DURING ANY 12-MONTH PERIOD. THE ACTIVITIES OF SUCH MARGINAL 
13 
INCOME EARNERS ARE CONSIDERED PRINCIPALLY FOR SUBSISTENCE OR LIVELIHOOD." 
14 
"(JJ) THE TERM "INCOME CAP" SHALL REFER TO THE THRESHOLD AMOUNT OF ONE 
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HUNDRED FIFTY THOUSAND PESOS (P150,OOO.OO). 
16 
SECTION 2. Cap Adjustment. - The BIR Commissioner shall accordingly adjust the increase of the 
17 
income cap on the gross sales or receipts of the marginal income earners in relation to the minimum 
18 
wage income earner's yearly salary rates every 3 years, 
19 
SECTION 3. - Section 24(A) of Republic Act No. 8424, as amended, otherwise known as the 
20 
National Internal Revenue Code of 1997, is hereby further amended to read as follows: 
21 
"SEC. 24. Income Tax Rates.-
22 
"(A) Rates of Income Tax on Individual Citizen and Individual Resident Alien of the 
23 
Philippines.-
24 
"(1) xxx: 
25 
"xxx 
26 
"(2) Rates of Tax on Taxable Income Individuals- The tax shall be computed in accordance 
27 
with and at the rates established in the following schedule: 
2 


"Not over Pl0,OOO 
.......... S% 
"Over Pl0,OOO but not over P30,OOO 
.......... P500=10% if the excess over Pl0,OOO 
"Over P30,OOO but not over P70,OOO 
.......... P2,500+15% of the excess over P30,OOO 
"Over P70,000 but not over P140,000 
.......... P8,SOO+20% of the excess over P70,OOO 
"Over P140,000 but not over P250,000 
.......... P2.2.,500+ 25% of the excess over P140,000 
"Over P250,000 but not over P500,000 
.......... P50,000+30% of the excess over P250,000 
"Over P500,OOO 
......... 
P125,OOO+32% 
of the 
excess 
over 
PSOO,OOO 
1 
"For married individuals, the husband and wife, subject to the provision of Section 51 
2 
(D) hereof, shall compute separately their individual income tax based on their respective 
3 
total taxable income: Provided, that if any income cannot be definitely attributed to or 
4 
identified as income exclusively earned or realized by either of the spouses, the same shall 
5 
be divided equally between the spouses for the purpose of determining their respective 
6 
taxable income. 
7 
8 
"Provided, That minimum wage earners as defined in Section 22 (HH) of this Code shall 
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be exempt from the payment of income tax on their taxable income: Provided, further, That 
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the holiday pay, overtime pay, night shift differential pay and hazard pay received by such 
11 
minimum wage earners shall likewise be exempt from income tax. 
12 
"PROVIDED, FURTHER, THAT MARGINAL INCOME EARNERS, AS DEFINED, SHALL BE EXEMPT 
13 
FROM THE PAYMENT OF INCOME TAX ON THEIR TAXABLE INCOME. PROVIDED, THEY SHALL' 
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LIKEWISE BE EXEMPT FROM THE 12% VALUE ADDED TAX (VAT) AND ANY PERCENTAGE TAX 
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IMPOSED UNDER THE NATIONAL INTERNAL REVENUE CODE OF 1997 AS THEY ARE NOT 
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CONSIDERED ENGAGED IN THE TRADE OR BUSINESS WITH A VIEW TO PROFIT FOR WHICH 
17 
THESE BUSINESS TAXES ARE IMPOSED. 
18 
"xxx/' 
19 
SECTION 4. - Section .51 (A)(2) of Republic Act No, 8424, as amended, otherwise known as the 
20 
National Internal revenue Code of 1997, is hereby further amended to read as follows: 
21 
"SEC. 51. Individual Return.-
22 
"(A) Requirements.-
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"(1) Except as provided in paragraph (2) of this Subsection, the following individuals are 
24 
required to file an income tax return: 
25 
"(a) xxx; 
26 
"xxx. 
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"(2) The following individuals shall not be required to file an income tax return: 
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"(a) xxx; 
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"(b) xxx; 
30 
"(c) xxx; 
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"(d) xxx; and 
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"(e) A MARGINAL INCOME EARNER AS DEFINED IN SECTION 22(11) OF THIS CODE OR AN 
33 
INDIVIDUAL WHO IS EXEMPT FROM INCOME TAX PURSUANT TO THE PROVISIONS OF THIS 
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CODE AND OTHER LAWS, GENERAL OR SPECIAL. 
3 


" . 
1 
SECTION 5. Separability Clause. - If any provision of this Act is declared invalid or 
2 
unconstitutional, other provisions hereof which are not affected thereby shall continue to be in full 
3 
force and effect. 
4 
SECTION 6. Repealing Clause -
Any law, presidential decree or issuance, executive order, letter 
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of instruction, administrative order, rule or regulation contrary to or inconsistent with any provision of 
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this Act as hereby amended or modified accordingly. 
7 
SECTION 7. Effectivity Clause. - This Act shall take fifteen (15) days following its publication in . 
8 
the official Gazette or in at least two (2) newspapers of general circulation. 
9 
Approved, 
4