NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
ot Ujr Ikcf'-rfarp
*21 SEP 27 PI -13
REC0VGDIY:
SENATE 
S.B. No.
Introduced by SEN. WIN GATCHALIAN
AN ACT
AMENDING SECTIONS 22, 24, 25, 27, 28, 32, 34, 37, 38, 39, 42, 51, 52, 54, 
56, 57, 73, 108, 121, 122, 123, 174, 176, 179, 181, 182,183, 184, 185, 
186, 187, 195, 198, AND 199; AND REPEALING SECTIONS 127, 175, 177, 
178, 180, 188,192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424, 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 
1997, AS AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
According to the 2017 McKinsey Asian Capital Markets Development Index, the 
Philippines scored 2.25 out of 5.0. The index is measured using three categories: 
funding at scale, investment opportunities, and pricing efficiency. In the McKinsey 
study, the Philippines scored low in the pricing efficiency category which measures the 
quality of available data and information included in the price. Better pricing 
information facilitates more efficient resource allocation.
In the same study, it was found that the cost of raising equity in the Philippines 
is more than 14%, mainly caused by friction costs such as taxes, commissions, and 
other fees. The current scheme of taxes and charges contributes to the country's low 
score in pricing efficiency. Based on the foregoing, there is a need to rationalize the 
taxation of the financial sector to provide better pricing information to market actors 
and facilitate the long-term growth and development of our economy.


This bill proposes to reduce the cost of raising capital and debt by reducing the 
number of tax bases and rates applicable to passive income and financial 
intermediaries and harmonizing taxation of similar products. This will level the playing 
field among players with better pricing information by removing tax-induced 
distortions. This also discourages arbitrage opportunities. Specifically, the bill aims to 
push for the following reforms:
1. Reduction in the number of final withholding tax rates;
2. Unification of tax rates on passive income;
3. Harmonization of business taxes on financial intermediaries;
4. Removal of the initial public offering (IPO) tax; and
5. Rationalization of documentary stamp tax (DST).
In view of the foregoing, passage of this bill is earnestly sought.
IN GATCHALIAN


NINETEENTH CONGRESS OF THE ] 
REPUBLIC OF THE PHILIPPINES ] 
First Regular Session 
]
SENATE
S.B. No. 1347
Senate
*22 SEP 27 PI :13
RECEIVED lY:
Introduced by SEN. WIN GATCHALIAN
AN ACT
AMENDING SECTIONS 22, 24, 25, 27, 28, 32, 34, 37, 38, 39, 42, 51, 52, 54, 
56, 57, 73, 108, 121, 122,123, 174, 176,179,181, 182, 183, 184,185, 
186,187, 195, 198, AND 199; AND REPEALING SECTIONS 127,175,177, 
178,180, 188, 192, AND 193; ALL UNDER 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 the House of Representatives of the Phiiippines in 
Congress assembied:
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SECTION. 1. Tide. - This Act shall be known as the "Passive Income and
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Financiai Intermediary Taxation Act."
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SEC. 2. Deciaration of Policy. - The financial sector plays a significant role in
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the long-term growth of the national economy. A key policy consideration is to allow
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the capital market to develop as efficiently as possible, with the least intervention. The
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optimal taxation of capital markets, and the products and transactions that come with
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them, is an essential element in developing the capital market. Towards this end, the
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State recognizes the necessity of a simpler, fairer, more efficient, and regionally more 
10 competitive tax system for passive income and financial intermediation to encourage


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savings and develop as well as deepen the capital markets. Accordingly, the State
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adopts the following policies:
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1. 
The State shall promote and develop a tax system that provides
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neutrality in the tax treatment across financial institutions and financial instruments.
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2. 
The State shall endeavor to simplify an otherwise complex tax system
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for easy compliance.
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3. 
The State shall ensure that the taxation of passive income and financial
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transactions is equitable across all stakeholders and discourages arbitrage
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opportunities.
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4. 
The State shall promote capital market development and tax
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competitiveness within the context of globalization, increased capital mobility, and
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financial inclusion.
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SEC. 3. Section 22 of the National Internal Revenue Code of 1997, as amended,
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is hereby amended to read as follows:
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SEC. 22. Definitions - When used in this Title:
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(A) XXX
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XXX XXX XXX
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(L) The term 'shares of stock' shall [include] REFER TO shares of stock
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of a corporation, warrants and/or options [to purchase shares of stock],
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WHETHER TO BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND
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SUCH OTHER DERIVATIVE SECURITIES LISTED AND TRADED IN A
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LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, as well as units
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of participation in a partnership (except general professional partnerships),
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joint stock companies, joint accounts, COLLECTIVE 
INVESTMENT
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SCHEMES, joint ventures taxable as corporations, associations, and recreation
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or amusement clubs (such as golf, polo or similar clubs), and mutual fund
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certificates.
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(M) The term 'shareholder' shall [include] REFER TO holders of a
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share/s of stock, warrant/s and/or option/s [to purchase shares of stock of a


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corporation], WHETHER TO BUY OR SELL SECURITIES, FUTURES 
CONTRACTS, AND SUCH OTHER DERIVATIVE SECURITIES LISTED 
AND TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED 
MARKETPLACE, 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, A COLLECTIVE INVESTMENT SCHEME, 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] SHALL REFER TO [shares of stock in 
a corporation and rights to subscribe for or to receive such shares: The term
includes bonds, debentures, notes or certificates, or other evidence-of
indebtedness,—issued—by any corporation,—including those issued by a
government or political subdivision thereof—with-interest coupons or-in
registered form] SHARES, PARTICIPATION, OR INTERESTS IN A 
CORPORATION OR IN A COMMERCIAL ENTERPRISE OR PROFIT­
MAKING VENTURE EVIDENCED BY A CERTIFICATE, CONTRACT, 
INSTRUMENTS, WHETHER WRITTEN OR ELECTRONIC IN 
CHARACTER. THESE INCLUDE:
(1) 
SHARES OF STOCK, BONDS, DEBENTURES, NOTES, 
EVIDENCES OF INDEBTEDNESS, ASSET-BACKED SECURITIES;
(2) 
INVESTMENT CONTRACTS, CERTIFICATES OF 
INTEREST, OR PARTICIPATION IN A PROFIT-SHARING 
AGREEMENT SUCH AS COLLECTIVE INVESTMENT SCHEMES OR 
CERTIFICATE OF DEPOSIT FOR A FUTURE SUBSCRIPTION;
(3) 
FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS, 
OR OTHER MINERAL RIGHTS;


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(4) 
CERTIFICATES OF ASSIGNMENTS, CERTIFICATES 
OF PARTICIPATION, TRUST CERTIFICATES, VOTING TRUST 
CERTIFICATES, OR SIMILAR INSTRUMENTS;
(5) 
PROPRIETARY OR NON-PROPRIETARY 
MEMBERSHIP CERTIFICATES IN CORPORATIONS; AND
(6) 
OTHER INSTRUMENTS AS MAY 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 commercial bank, a thrift bank, a
development bank, a rural bank or specialized government bank] SHALL 
REFER TO ENTITIES ENGAGED IN THE LENDING OF FUNDS OBTAINED 
IN THE FORM OF DEPOSITS. BANKS SHALL BE CLASSIFIED INTO 
UNIVERSAL BANKS, COMMERCIAL BANKS, AND THRIFT BANKS 
COMPOSED OF: (A) SAVINGS AND MORTGAGE BANKS; (B) STOCK 
SAVINGS AND LOAN ASSOCIATIONS; AND (C) PRIVATE 
DEVELOPMENT BANKS, AS DEFINED IN REPUBLIC ACT NO. 7906, OR 
THE THRIFT BANKS ACT; RURAL BANKS, AS DEFINED IN REPUBLIC 
ACT NO. 7353 OF THE RURAL BANKS ACT; COOPERATIVE BANKS, AS 
DEFINED IN REPUBLIC ACT NO. 6938 OR THE COOPERATIVE CODE; 
ISLAMIC BANKS AS DEFINED IN REPUBLIC ACT NO. 6848, OR THE 
CHARTER OF AL AMANAH ISLAMIC INVESTMENT BANK OF THE 
PHILIPPINES; AND OTHER CLASSIFICATIONS OF BANKS AS 
DETERMINED BY THE MONETARY BOARD OF THE BANGKO SENTRAL 
NG PILIPINAS.
(W) The term 'non-bank financial intermediary' [means] SHALL REFER 
TO [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 bonking activities]


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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 
CERTIFICATES OF PARTICIPATIONS, CERTIFICATES OF 
ASSIGNMENT, OR SIMILAR INSTRUMENTS WITH RECOURSE, TRUST 
CERTIFICATES, OR OF REPURCHASE AGREEMENTS, FROM TWENTY 
(20) OR MORE LENDERS AT ANY ONE TIME, FOR 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.
(X) THE TERM 'QUASI-BANK' SHALL REFER TO ENTITIES 
ENGAGED IN THE BORROWING OF FUNDS THROUGH THE ISSUANCE, 
ENDORSEMENT OR ASSIGNMENT WITH RECOURSE OR ACCEPTANCE 
OF DEPOSIT SUBSTITUTES, AS DEFINED IN SUBSECTION (Z) HEREOF 
FOR PURPOSES OF RELENDING OR PURCHASING OF RECEIVABLES 
AND OTHER OBLIGATIONS.
[(X)] (Y) The term 'QUASI-BANKING ACTIVITIES' [mcons] SHALL 
REFER TO borrowing funds from twenty (20) or more [personal] 
INDIVIDUALS 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


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or dealers, shall not be considered as performing quasi-banking functions. 
PROVIDED, FURTHER, THAT IF THE INTENTION IS FOR THE DEBT 
INSTRUMENTS TO BE HELD BY MORE THAN NINETEEN (19) HOLDERS 
DURING THE ENTIRE TERM OF THE DEBT INSTRUMENT AND IF THE 
TENOR AND DENOMINATION ARE SUCH THAT THEY CAN BE HELD BY 
MORE THAN NINETEEN (19) LENDERS, THEN THE INSTRUMENT 
SHALL BE CONSIDERED DEPOSIT SUBSTITUTES.
[(¥)] (Z) The term 'deposit substitutes' shall [mean] REFER TO an 
alternative form 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, [including] 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 GOVERNMENT FINANCIAL 
INSTITUTIONS SHALL BE DEEMED 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.
[(Z)] (AA) The term 'ordinary income' xxx xxx xxx
[(AA)] (BB) The term 'rank and file employees' xxx xxx xxx


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[(BB)] (CC) The term 'mutual fund company' shall [mean] REFER TO 
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.
[(€€)] (DD) The term 'trade, business or profession' xxx xxx xxx 
[^] (EE) The term 'regional or area headquarters' xxx xxx xxx 
[(EB)] (FF) The term 'regional operating headquarters' xxx xxx xxx 
[(ff)] (GG) The term nong-tcrm deposit or investment certificate' shall 
refcpte-eertificatc of time deposit or investment in the form of savings, common
or individual trust fundsT-deposit substitutesj-investment- management accounts
and other investments with-a maturity period of-not loss than five (5) years,
the-form of which shall be prescribed by the Bangko Scntral ng Pilipinas (BSP)
and-issued by banks only (not by non bank financial intermediaries and finance
companies) to individuals in denominations of Ten thousand pesos (P10,000)
and other denominations as may bo prescribed by the BSP.] 'FINANCIAL 
INSTITUTIONS' OR 'FINANCIAL INTERMEDIARIES' SHALL REFER TO 
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


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AGENCY AUTHORIZED TO REGULATE THEM. THESE SHALL INCLUDE 
BANKS, QUASI-BANKS, TRUST ENTITIES, PAWNSHOPS, FOREIGN 
EXCHANGE DEALERS, MONEY BROKERS, FINANCING COMPANIES, 
FINANCE LEASING COMPANIES, INVESTMENT COMPANIES, AND 
OTHER ENTITIES ENGAGED IN COLLECTIVE INVESTMENT SCHEMES, 
INVESTMENT HOUSES, LENDING INVESTORS OR ENTITIES ENGAGED 
IN FINANCIAL INTERMEDIATION ACTIVITIES, AND OTHER TYPES OF 
BUSINESS THAT MAY BE CLASSIFIED BY THE BANGKO SENTRAL NG 
PILIPINAS OR THE SECURITIES AND EXCHANGE COMMISSION AS 
FINANCIAL INSTITUTIONS.
LIFE AND NON-LIFE INSURANCE COMPANIES, PRE-NEED 
COMPANIES AND HEALTH MAINTENANCE ORGANIZATIONS ARE 
ALSO CONSIDERED FINANCIAL INSTITUTIONS UNDER THE 
SUPERVISION OF THE INSURANCE COMMISSION.
[(GG)] (HH) The term 'statutory minimum wage' xxx xxx xxx
[(HH)] (II) The term 'minimum wage earner' xxx xxx xxx
(JJ) THE TERM 'COLLECTIVE INVESTMENT SCHEMES' OR 'CIS' 
SHALL REFER TO ANY ARRANGEMENT WHEREBY FUNDS ARE 
SOLICITED FROM THE INVESTING PUBLIC AND POOLED TOGETHER 
FOR THE PURPOSE OF INVESTING, RE-INVESTING, 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


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SENTRAL NG PILIPINAS, THE SECURITIES AND EXCHANGE 
COMMISSION AND THE INSURANCE COMMISSION. A CIS MAY 
EITHER BE OPEN-END OR CLOSED-END, DEFINED AS FOLLOWS:
'OPEN-END CIS' SHALL REFER TO A CIS WHERE 
SECURITIES ARE OFFERED AND ARE ALWAYS REDEEMABLE BY 
THE CIS; AND
'CLOSED-END CIS' SHALL REFER TO A CIS WHERE A 
FIXED NUMBER OF SECURITIES ARE OFFERED IN AN INITIAL 
PUBLIC OFFERING AND THEREAFTER MAY BE TRADED IN AN 
ORGANIZED MARKETPLACE AS DETERMINED BY THE 
SECURITIES AND EXCHANGE COMMISSION, BUT MAY NOT BE 
REDEEMED BY THE CIS. A CLOSED-END CIS SHALL NOT BE 
ALLOWED TO INCREASE ITS NUMBER OF SECURITIES.
(KK) THE TERM 'UNIT LINKED INVESTMENT INSTRUMENT' 
SHALL REFER TO 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, 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.
(LL) 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 
GOVERNMENT REGULATORY AGENCIES.
(MM) THE TERM DEBT INSTRUMENT' SHALL REFER TO 
INSTRUMENTS REPRESENTING BORROWING AND LENDING 
TRANSACTIONS INCLUDING BUT NOT LIMITED TO DEBENTURES,


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CERTIFICATES OF INDEBTEDNESS, DUE BILLS, BONDS, LOAN 
AGREEMENTS, INSTRUMENTS, AND SECURITIES ISSUED BY THE 
GOVERNMENT OR ANY OF ITS INSTRUMENTALITIES, DEPOSIT 
SUBSTITUTES, 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.
(NN) THE TERM 'ORGANIZED MARKETPLACE' SHALL REFER TO 
AN EXCHANGE, AN OVER-THE-COUNTER MARKET, OR AN 
ALTERNATIVE TRADING SYSTEM RECOGNIZED AS SUCH BY THE 
SECURITIES AND EXCHANGE COMMISSION AS AN EXCHANGE UNDER 
REPUBLIC ACT NO. 8799, AS AMENDED, AND GOVERNED BY, AMONG 
OTHERS, TRANSPARENT AND BINDING RULES AND MARKET 
CONVENTIONS ON MEMBERSHIP, TRADING, PRICE TRANSPARENCY, 
TRADE REPORTING, MARKET MONITORING AND ORDERLY CONDUCT 
OF THE MARKET WHICH ARE ENFORCEABLE ON THE MEMBERS AND 
PARTICIPANTS.
(00) THE TERM 'HEALTH INSURANCE PRODUCTS' SHALL REFER 
TO THOSE THAT ARE BEING OFFERED AND SOLD BY INSURANCE 
COMPANIES, EITHER LIFE OR NON-LIFE, WHEREIN THERE IS A LIST 
OF COVERED ILLNESSES OF WHICH THE COMPANIES ASSUME RISKS 
AND INDEMNIFY LOSSES BROUGHT BY THE SAID COVERED 
ILLNESSES.
(PP) THE TERM 'HEALTH MAINTENANCE ORGANIZATION 
(HMO) PRODUCTS' SHALL REFER TO PRE-AGREED OR DESIGNATED 
HEALTH CARE SERVICES TO THE ENROLLED MEMBERS FOR A FIXED 
PRE-PAID FEE FOR A SPECIFIED PERIOD OF TIME THROUGH THE USE 
OF SELECTED NETWORK OF HEALTH CARE PROVIDERS. HMO 
PRODUCTS PROVIDE A WIDE ARRAY OF MEDICAL, SURGICAL AND 
HOSPITAL SERVICES THAT INCLUDE PREVENTIVE CARE AND
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WELLNESS PROGRAMS AND GENERALLY HAVE NO CASH-OUT
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TRANSACTION.
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SEC. 4. Section 24 (B) and (C) of the National Internal Revenue Code of 1997,
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as amended, is hereby amended to read as follows:
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SEC. 24. Income Tax Rates. -
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(A) Rates of Income Tax on Individual Citizen and Individual
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Resident Alien of the Philippines. -
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XXX XXX XXX
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(B) Rate of Tax on Certain Passive Income: -
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(1) Interests [> Royalties, Prizes, and Other Winnings.] -
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A final tax at the rate of [twenty-percent (20%)] FIFTEEN
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PERCENT (15%) is hereby imposed upon the amount of
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interest [from any currency bank-deposit, and yield or any other
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monetary benefit-from deposit-substitutes, and from trust funds
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and similar arrangements; royalties, except on books—as-well as
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other literary works and musical compositions, which shall be
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imposed a final tax of ten percent (10%); prizes (except prizes
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amounting to Ten thousand pesos (P10,000) or less which shall
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be subject-to-tax-under Subsectk)n-(A)-of Section 24; and other
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winnings (except winnings amounting to Ten Thousand-pesos
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(P10,000) or loss from Philippine Charity Sweepstakes and Lotte
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which—shall -be exempt))..derived from-sources within the
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Philippines:] YIELD, OR ANY OTHER MONETARY BENEFIT
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EARNED OR RECEIVED FROM BANK DEPOSIT, DEPOSIT
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SUBSTITUTE, TRUST FUND, AND SIMILAR
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ARRANGEMENTS. {Provided, however, That interest-income
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received by an individual taxpayer (except a non-resident
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individual) from o depository bank under the expanded foreign
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currency deposit system shall-be subject to a final income tax at
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the rote of fifteen-percent—(15%) of such intcroGt income:
Provided, further, That interest income from long-term deposit or
invcGtmcnt in the form of sovings, common or individual trust
funds, deposit substitutes, investment management accounts and
ethcF investments-■ evidenced—by-ccrtificatGS in such form
prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be
exempt from the tax imposed under this Subsection: Provided,
fmally, That should the holder of the certificate pre-terminate the
deposit or investment-before the fifth (5th) year, a finol 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 thereof:
Four (4) years to less-t-hart five (5) years—5%^
Three (3) years to less than (4) years—12%; and
Less than-thfee-(3) years—20%.]
(2) Cash and/or Property Dividends. - A final tax at the 
rate of [ten percent (10%)] FIFTEEN PERCENT (15%) 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 or mutual 
fund companies, ENTITIES ENGAGED IN 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 [be] ONE 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 [be] ONE is a member or co­
venturer: PROVIDED, HOWEVER, THAT THE FIFTEEN
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PERCENT (15%) TAX ON DIVIDENDS SHALL APPLY ONLY 
ON INCOME EARNED ON OR AFTER JANUARY 1, 2023. 
INCOME FORMING PART OF RETAINED EARNINGS AS OF 
DECEMBER 31, 
2022, EVEN IF DECLARED OR
DISTRIBUTED ON OR AFTER JANUARY 1, 2023, SHALL BE 
SUBJECT TO TEN PERCENT (10%) TAX.
LIQUIDATING DIVIDEND SHALL BE SUBJECT TO 
SECTION 24(A) BASED ON NET GAIN.
[(€)] (3) Capital Gains from THE Sale, EXCHANGE, 
BARTER, OR DISPOSITION of Shares of Stock not Traded in 
the Stock Exchange OR ORGANIZED MARKETPLACE. - [The 
provisions of Section 30(B) notwithstanding, a] A final tax at the 
rate of fifteen percent (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 AN ORGANIZED 
MARKETPLACE.
(4) PRESUMPTIVE CAPITAL GAINS FROM THE 
SALE, EXCHANGE, BARTER, OR DISPOSITION OF SHARES 
OF STOCK TRADED IN THE STOCK EXCHANGE OR AN 
ORGANIZED MARKETPLACE. - A FINAL TAX AT THE RATE 
OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) SHALL BE 
LEVIED, ASSESSED AND COLLECTED ON EVERY SALE, 
BARTER, EXCHANGE, OR ANY OTHER MODE OF 
DISPOSITION OF SHARES OF STOCK LISTED AND 
TRADED THROUGH A LOCAL STOCK EXCHANGE OR AN 
ORGANIZED MARKETPLACE, AND SHALL BE REDUCED 
ACCORDING TO THE FOLLOWING SCHEDULE:
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JANUARY 1, 2023: FIVE-TENTH OF ONE 
PERCENT (5/10 OF 1%),
JANUARY lf 2024: FOUR-TENTH OF ONE 
PERCENT (4/10 OF 1%),
JANUARY 1, 2025: THREE-TENTH OF ONE 
PERCENT (3/10 OF 1%),
JANUARY 1, 2026: TWO-TENTH OF ONE 
PERCENT (2/10 OF 1%),
JANUARY 1, 2027: 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: PROVIDED, r/MTEFFECTIVE JANUARY 1, 
2028, EVERY SALE, BARTER, EXCHANGE, OR ANY OTHER 
MODE OF DISPOSITION OF SHARES OF STOCK LISTED 
AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR 
AN ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT 
TO TAX UNDER SECTION 24 OF THIS CODE.
ANY GAIN EARNED FROM SHARES OF STOCK IN A 
DOMESTIC CORPORATION TRADED IN A FOREIGN 
EXCHANGE, SHALL BE TAXED UNDER SUBSECTION (A) OF 
THIS SECTION.
ANY GAIN REALIZED FROM THE SALE, EXCHANGE, 
BARTER, OR DISPOSITION OF SHARES OF STOCK, LISTED 
OR UNLISTED, BY A DEALER IN SECURITIES LICENSED 
BY THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES TO BUY AND SELL IN SECURITIES, FOR THE 
DEALER'S OWN ACCOUNT IN THE ORDINARY COURSE OF
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BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER THIS 
SUBSECTION BUT SUBSECTION (A) AS AN ORDINARY 
INCOME.
(5) 
CAPITAL GAINS FROM SALE, EXCHANGE, 
TRANSFER, BARTER, DISPOSITION OF NON-LISTED AND 
NON-TRADED DEBT INSTRUMENTS AND OTHER 
SECURITIES NOT INCLUDED IN SECTION 24(B)(3) AND 
(4). - A FINAL TAX AT THE RATE OF FIFTEEN PERCENT 
(15%) SHALL BE IMPOSED ON THE NET CAPITAL GAIN 
EARNED FROM A DEBT INSTRUMENT AND OTHER 
SECURITIES NOT INCLUDED IN SUBSECTIONS (B)(3) 
AND (4), ISSUED BY A CITIZEN OR RESIDENT ALIEN, OR 
BY A DOMESTIC CORPORATION, OR A RESIDENT 
FOREIGN CORPORATION, OR BY THE GOVERNMENT OR 
ANY OF ITS AGENCIES OR INSTRUMENTALITIES.
(6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND 
TRADED DEBT INSTRUMENTS AND OTHER SECURITIES 
NOT INCLUDED IN SECTION 24(B)(3) AND (4) - 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 SHALL BE LEVIED, ASSESSED, AND 
COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR 
OTHER DISPOSITION OF DEBT INSTRUMENTS AND 
OTHER SECURITIES, LISTED AND TRADED THROUGH A 
LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED 
MARKETPLACE, AND SHALL BE PAID BY THE SELLER OR 
TRANSFEROR: PROVIDED, 77/>17" EFFECTIVE JANUARY 1, 
2026, EVERY SALE, BARTER, EXCHANGE, OR OTHER
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DISPOSITION OF DEBT INSTRUMENTS AND OTHER 
SECURITIES/ LISTED AND TRADED THROUGH A LOCAL 
STOCK EXCHANGE OR A LICENSED ORGANIZED 
MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER 
SECTION 24 OF THIS CODE. IF TRADED IN A FOREIGN 
EXCHANGE/ THE GAIN SHALL BE SUBJECT TO TAX UNDER 
SUBSECTION (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 GOVERNMENT REGULATORY AGENCY TO 
BUY AND SELL IN DEBT INSTRUMENTS AND OTHER 
SECURITIES FOR THE DEALER'S OWN ACCOUNT IN THE 
ORDINARY COURSE OF BUSINESS/ SHALL NOT BE 
SUBJECT TO TAX UNDER THIS SUBSECTION BUT TO 
SECTION 24(A) AS AN ORDINARY INCOME.
[(9)](7) Capital Gains from Sale of Real Property. -
[(4)] (a) In General. - [The provisions-of-Seetieft 
39(B) notwithstanding, a] 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
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as
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)] (b) Exception. - xxx xxx xxx 
(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 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 
TEN THOUSAND PESOS (P10,000) 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, 
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 [aft] income tax 
UNDER SECTION 24 OF THIS CODE [, in the same manner as an
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individual citizen and a rGGidont Qlion individuQl,] 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)] ONE 
HUNDRED EIGHTY-THREE (183) days during any calendar year shall 
be deemed a 'nonresident alien doing business in the Philippines', 
Section 22(G) of this Code notwithstanding.
[(2) Cash and/or Property Dividends from a Domestic Corporation 
or Joint Stock-Company, or Insurance -or-Mutiial Fund Company or
Regional-Qper-ating Headquarter or Multinational Company, or Share in
the Distributable Net Income of a Partnership (Except a Genoral
Professional-Partnership), Joint Account, Joint Venture Taxable as-a
Corporation -or-Association, Interests,-Royalties, Prizes,—and Other
Winnings.------ Gash—and/or property dividends from—a—domestic
corporation, or from a joint stock company, or from on insurance or
mutual fund company or from a regional-operating headquarter of
multinational company, ortho share of a nonresident alien individual in
the distributable-net income after tax of-a partnership (except a general
professional partnership) of which ho is a partner, or the share of-a
nonresident alien individuaHn the not income after tax of on ossociationj
a joint account), or a joint venture taxable as a corporation of which he
is a member or a co-venturer; interests; royalties (in any form); and
prizes (except prizes amounting to Ton thousand pesos (P 10,000) or loss
which shall bo subject to tax under Subsection (B)(1) of Section 24); and
other winnings (except Philippine Charity Sweepstakes and Lotte
winnings), shall bo subject to an income tax of twenty percent (20%)
on the total amount thereof: Provided, however, That royalties on books
as well as other litorory works, and royalties on musical compositions
shall be subject to a final tax of ten percent (10%) on the total amount
thereof: Providcdf-furthcr, That cinematographic films and similar works
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shall be Gubjcct to the tax provided under Section 28 of this Code:-
■Provided^ furthermore, That interest income-from long-term-deposit or
investment in-thc-foffn of savings, common or individual trust funds7
deposit substitutes,—investment management accounts and- othoF
Investments evidenced by certificates-in-such form prescribed by the
Bangko Sentral-ng-P4lipinas (BSP) shall be exempt from the tax imposed
under this Subsection: Provided, finally. That should the holder of the
eertificate 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 thereof:]
[Four (d) years to loss than five (5) years—5%;]
[Throe (3) years to loss than four (4) years—12%; and]
[Loss than throe (3) years—20%.]
[(3) Capital Gains.---- Capital gains realized from sale, barter or
exchange of shares-of stock in domestic-corporations not traded through
the local stock exchange,-aftd-real properties shall bo subject to the tax
prescribed under Subsections (C) and (D) of Section-24.]
(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, cash and/or property dividends,] 
rents, salaries, wages, premiums, annuities, compensation, remuneration, 
emoluments, or other fixed or determinable annual or periodic or casual gains, 
profits, and income, [and capital gains, ] a FINAL tax equal to twenty five 
percent (25%) of such income. Capital gains realized by a nonresident alien 
individual not engaged in trade or business in the Philippines from the sale of 
[shares of stock in any domestic corporation and] real property shall be subject
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to the income tax prescribed under Subsection [s (C) and (D)] (B) (7) of
2 
Section 24.
3 
INTEREST, DIVIDENDS AND CAPITAL GAINS ON SALE OF
4 
SHARES OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES
5 
SHALL BE SUBJECT TO TAX PRESCRIBED UNDER SECTION 24 (B), OR
6 
TO THE PROVISIONS OF APPLICABLE TAX TREATY.
7 
XXX XXX 
XXX
8
9 
SEC. 6. Section 27 (D) of the National Internal Revenue Code of 1997, as
10 
amended, is hereby amended to read as follows:
11 
SEC. 27. Rates of Income Tax on Domestic Corporations. -
12 
(A) In General. - Except as otherwise provided in this Code, an
13 
income tax of thirty-five percent (35%) is hereby imposed upon the
14 
taxable income derived during each taxable year from all sources within
15 
and without the Philippines by every corporation, as defined in Section
16 
22(B) of this Code and taxable under this Title as a corporation,
17 
organized in, or existing under the laws of the Philippines: Provided, That
18 
effective January 1, 2009, the rate of income tax shall be thirty percent
19 
(30%).
20 
XXX 
XXX XXX
21 
(D) Rates of Tax on Certain Passive Incomes.
22 
[(1) Interest-from Deposits and Yield or any other
23 
Monetary Benefit from Deposit Substitutes and from Trust Funds
24 
and Similar Arrangements,-and Royalties.—A final tax at the rate
25 
of twenty percent (20%) is hereby imposed upon the-ameunt of
26 
interest on-currency bank deposit and yield or any other monetary
27 
benefit from deposit substitutes and from trust funds and similar
28 
arrangements received by domestle corporations, and royalties,
29 
derived from sources within the Philippines: Provided, however^
30 
That interest income derived by a domestic corporation-from a
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depository bank under the cxpandoct- foreign currency deposit
system shall bo subject to a fioaHncome tax at the rate of fifteen
percent (15%) of such interest income.]
[(2) Capital Gains from the Sale of Shares of Stock Not 
Traded in the Stock Exchange.—A final tax at the rate of fifteen
percent (15%) shall bo imposed on not capital gains realized
during the taxable year from the sale, exchange or other
disposition of shares of stock in a domestic corporation except
shares sold or disposed of through tho-stock-exchan§e7]
[(3) Tax on Income Derived-under the Expanded Foreign 
Currency Deposit System.—Income derived by a depository barvk
under the expanded foreign currency deposit system from foreign
currency transactions with nonresidents, offshore banking units
in the Philippines, local commercial- banks- including branches of
foreign banks that--may-bc-authorized by the Bangko Sentral ng
Pilipinas-(-BSP) to transact business-with foreign-currency deposit
system units and other depository banks under the-expanded
foreign currency deposit syst-em-sheii-bc exempt from all taxes,
except net income from such transactions-as may be specified by
the Secretary of Finance, upon recommendation by the Monetary
Board to be subject to the regular income tax payable by banks:
Provided, however, That interest income from foreign currency
loans granted by such depository banks-under said expanded
system to residents other than offshore banking units-in the
Philippines or other depository banks under the expanded system
shall be subject to a final tax at the-rate of ten percent (10%).]
[Any income of nonresidents, whether individuals—or 
corporations, from transactions with depository banks under the
expanded system shall be exempt from income tax.]
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[(4-)- Intercorporate Dividends.----- Blvidcnds received by a
domcGtic-corporation from another domcGtic corporation shall not
be subject to tax;]
(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 A 
BANK DEPOSIT, DEPOSIT SUBSTITUTE, TRUST FUND, 
AND SIMILAR ARRANGEMENTS.
(2) 
CASH AND/OR PROPERTY DIVIDENDS. - 
INTERCORPORATE DIVIDENDS OR DIVIDENDS 
RECEIVED FROM A DOMESTIC CORPORATION SHALL NOT 
BE SUBJECT TO TAX IMPOSED UNDER THIS SUBSECTION: 
PROVIDED, THAT NINETY-FIVE PERCENT (95%) OF 
DIVIDENDS RECEIVED BY A DOMESTIC CORPORATION 
FROM SUBSIDIARY COMPANIES LOCATED OUTSIDE THE 
PHILIPPINES SHALL NOT BE SUBJECT TO TAX: 
PROVIDED, FURTHER, THAT THE DOMESTIC 
CORPORATION HOLDS DIRECTLY OR INDIRECTLY AT 
LEAST TWENTY PERCENT (20%) SHAREHOLDINGS OF 
THE SUBSIDIARY COMPANY AND HAS HELD THE 
SHAREHOLDINGS FOR A MINIMUM OF TWO (2) YEARS AT 
THE TIME OF THE DIVIDENDS DISTRIBUTION: 
PROVIDED, FURTHERMORE, THAT, THE SUBSIDIARY 
OPERATING COMPANY IS SUBJECT TO AT LEAST TEN 
PERCENT (10%) INCOME TAX AND TO WITHHOLDING 
TAX ON THE DIVIDENDS DISTRIBUTED TO THE 
DOMESTIC CORPORATION, UNLESS OTHERWISE 
EXEMPT UNDER ITS LOCAL LAWS: PROVIDED, FINALLY, 
THAT, THE LIMITATIONS UNDER SECTION 34(C ) SHALL
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NOT BE OBSERVED IN CONNECTION WITH ANY TAXES 
PAID OR ACCRUED IN ANY FOREIGN COUNTRY IN 
RESPECT TO SUCH DIVIDEND.
LIQUIDATING DIVIDENDS SHALL BE SUBJECT TO 
SECTION 27(A) AND BASED ON NET GAIN.
(3) CAPITAL GAINS FROM THE SALE, EXCHANGE, 
BARTER OR DISPOSITION OF SHARES OF STOCK NOT 
TRADED IN THE STOCK EXCHANGE OR AN ORGANIZED 
MARKETPLACE - A FINAL TAX AT THE RATE OF FIFTEEN 
PERCENT (15%) IS HEREBY IMPOSED UPON THE NET 
CAPITAL GAINS REALIZED DURING THE TAXABLE YEAR 
FROM THE SALE, BARTER, EXCHANGE, OR OTHER MODES 
OF DISPOSITION OF SHARES OF STOCK IN A DOMESTIC 
CORPORATION, EXCEPT SHARES SOLD, OR DISPOSED OF 
THROUGH A LOCAL STOCK EXCHANGE OR AN 
ORGANIZED MARKETPLACE.
(4) PRESUMPTIVE CAPITAL GAINS FROM THE 
SALE, EXCHANGE, BARTER OR DISPOSITION OF SHARES 
OF STOCK TRADED IN THE STOCK EXCHANGE OR AN 
ORGANIZED MARKETPLACE. - A FINAL TAX AT THE RATE 
OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) 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 AN ORGANIZED 
MARKETPLACE, AND SHALL BE REDUCED ACCORDING TO 
THE FOLLOWING SCHEDULE:
JANUARY 1, 2023: FIVE-TENTH OF ONE PERCENT 
(5/10 OF 1%),
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JANUARY 1, 2024: FOUR-TENTH OF ONE PERCENT 
(4/10 OF 1%),
JANUARY lr 2025: THREE-TENTH OF ONE PERCENT 
(3/10 OF 1%),
JANUARY lf 2026: TWO-TENTH OF ONE PERCENT 
(2/10 OF 1%),
JANUARY 1, 2027: 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: PROVIDED, r//>17'EFFECTIVE JANUARY 1, 
2026, EVERY SALE, BARTER, EXCHANGE, OR ANY OTHER 
MODE OF DISPOSITION OF SHARES OF STOCK LISTED 
AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR 
AN ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT 
TO TAX UNDER SECTION 27 OF THIS CODE.
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 LICENSED 
BY THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES TO BUY AND SELL IN SECURITIES, FOR HIS 
OWN ACCOUNT IN THE ORDINARY COURSE OF 
BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER THIS
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SUBSECTION BUT TO SECTION 27(A) AS AN ORDINARY 
INCOME.
(5) CAPITAL GAINS FROM SALE, EXCHANGE, 
TRANSFER, BARTER, DISPOSITION OF NON-LISTED AND 
NON-TRADED DEBT INSTRUMENTS AND OTHER 
SECURITIES NOT INCLUDED IN SECTION 27(D)(3) AND 
(4). - A FINAL TAX AT THE RATE OF FIFTEEN PERCENT 
(15%) SHALL BE IMPOSED ON NET CAPITAL GAINS 
EARNED FROM DEBT INSTRUMENT AND OTHER 
SECURITIES NOT INCLUDED IN SECTION 27(D)(3) AND 
(4), ISSUED BY A CITIZEN OR RESIDENT ALIEN, OR BY A 
DOMESTIC CORPORATION, OR A RESIDENT FOREIGN 
CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS 
AGENCIES OR INSTRUMENTALITIES.
(6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND 
TRADED DEBT INSTRUMENTS AND OTHER SECURITIES 
NOT INCLUDED IN SECTION 27(D)(3) AND (4) - 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 SHALL BE LEVIED, ASSESSED, AND 
COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR 
OTHER DISPOSITION OF DEBT INSTRUMENTS AND 
OTHER SECURITIES, LISTED AND TRADED THROUGH A 
LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, 
AND SHALL BE PAID BY THE SELLER OR TRANSFEROR: 
PROVIDED, r//Ar EFFECTIVE JANUARY 1, 2026, EVERY 
SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF 
DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED
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AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR A 
LICENSED ORGANIZED MARKETPLACE SHALL NOT BE 
SUBJECT TO TAX UNDER SECTION 27 OF THIS CODE. 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 GOVERNMENT REGULATORY AGENCIES 
TO BUY AND SELL IN DEBT INSTRUMENTS AND OTHER 
SECURITIES, FOR THE DEALER'S OWN ACCOUNT IN THE 
ORDINARY COURSE OF BUSINESS, SHALL NOT BE 
SUBJECT TO TAX UNDER THIS SUBSECTION BUT TO 
SECTION 27(A) AS AN ORDINARY INCOME.
[(5)] (7) 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 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.
[(^](F) Minimum Corporate Income Tax on Domestic 
Corporations -
(1) Imposition of Tax. - x x x
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21 
22
23
24
25
26
27
28
29
30
as
(2) Carry Forward of Excess Minimum Tax. - x x x
(3) Relief from the Minimum Corporate Income Tax under 
Certain Conditions. - x x x
(4) Gross Income Defined. - x x x
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, 
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 [aft] income tax UNDER SECTION 27 OF THIS CODE 
[cquivalcnt-te-thirty-five percent (35%) of the] ON taxable income 
derived in the preceding taxable year from all sources within the 
?\\\\\^d^nes[,-Providcd, 77?effective January 1, 2009, the rate of income 
tax shall be thirty pGrccnt-f30%-)].
27


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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[E](F) of this Code, shall 
be imposed, under the same conditions, on a resident foreign 
corporation taxable under paragraph (1) of this Subsection.
(3) International Carrier. - x x x
[(d) Offshore Banking Units.—The provisions of any law to the 
eentrary-notwithstanding, income-derived by offshore banking units
authorized by the- Bangko Sentral ng Pilipinas (BSP), from foreign
currency transactions with nonresidents, other offshore banking units,
local commercial banks, including branches of foreign banks that may
be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact
business with offshore-banking units shall be-exempt from all-taxes
except net-income from such transactions as may be specified by the
Secretary of Finance, upon-recommendation of-the Monetary-Board
which shall bo subject to the regular income tax payable by banks:
Provided, -however, That any interest income derived from foreign
currency loans granted to residents other than offshore banking units or
local commercial banks,-including local-branches of foreign banks that
may bo authorized by-the-BSP to transact business with offshore-banking
units, shall be subject-only-to -a -final tax at the rate of ton-percent
(-10%).]
[Any income of nonresidents, whether individuals or corperations,- 
from transoctions with sald-offshore-banking units shall bo exempt from
Income tax.]
[(5)] (4) 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 any deduction for the tax component thereof.
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[(except those DctiviticG which ore rGgiGtorod with the Philippine
Economic Zone Authority)] 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.
[(^](5) Regional or Area Headquarters and Regional Operating 
Headquarters of Multinational Companies. - x x x
[(7) Tax on Certain Incomes Received-by a Resident EorcigB 
Corporation;— ]
[(a) Interest—from Deposits and Yield or - any other
Monetary Benefit from Deposit Substitutes, Trust Funds and
Similar Arrangements and Royalties^—Interest from any currency
bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust-funds and similar arrangemente
artd-royalties derived from sources within the Philippines shall be
subject to a final fnc-eme tax at the rate of twenty percent (20%)
of such interest. 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
l/-2%) of- siich interest income.]
[(b) Income Derived under the Expanded Foreign Currency
Deposit System.—Income derived by a depository bank under the
expanded foreign currency deposit system from foreign currency
transactions with nonresidents, offshore banking units in the
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Philippines, local commercial banks including branches of foreign
banks thot may be authorized by-the Bangko Sentral ng Pilipinas
(BSP) to transact business with foreign currency deposit system
units and other depository banks under the expanded-foreign
currency deposit system shall be exempt from all taxes, except
net income from such transactions as may be specified by the
Secretary of Finance, upon recommendation by the Monetary
Board to be-subject-to the regular income-tax-payable by banks.
Provided, however, That interest income from foreign currency
loans granted-by-such-depository banks under said expanded
system to residents other than offshore banking units in the
Philippines or other depository banks under the expanded-system
shall be subject to-a-final tax at the rate of ten percent (10%).]
[Any income of nonresidents, whether individuals or 
corporations, from transactions with depository-banks under the
expanded system shall be exempt from income-ta)e-]
[(c) Capital Gains from Salo of Shares of Stock Not-Traded 
in the Stock Exchange.—A final tax at the rates prescribed below
is hereby imposed upon the not capital gains realized during the
taxable year from-thesaleT-bartor, exchange or other disposition
of shares of stock in a domestic corporation except shares sold er
disposed of through the stock exchange:]
[Not over P100,000..............  5%]
[On any amount in-excess of P100,000......10%]
[(d) Intercorporate Dividends-—Dividends received by-a 
resident foreign corporation from a domestic corporation liable to
tax under this Code-shall not-be subject to tax-under this Title7]
(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
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the Philippines shall pay a tax equal to thirty-five percent (35%) 
of the gross income received during each taxable year from all 
sources within the Philippines, such 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[(e)]. Provided, That effective January 1, 2009, the rate of 
income tax shall be thirty percent (30%).
XXX XXX XXX
(5) Tax on Certain Incomes Received by a Nonresident 
Foreign Corporation.
[(a) Interest on Foreign Loans.—A Final withholding
tax at the rate of twenty percent (20%) is hereby imposed
on the amount of intcrcst-on-forcign loons contracted on
or-after-August 1, 1986;]
[(b) Intercorporate Dividends.—A final withholding
tax at the rate of fifteen percent (15%) is hereby imposed
on the amount of cash and/or property dividends-received
from a domestic corporation, which shall be colleeted and
paid as provided in Section &7(A) of this Code, subject te
the condition that the country-in which the nonrcsidcfit
foreign corporation is domiciled, shall allow a credit against
the tax due from the nonresident foreign corporation taxes
deemed to have been paid in the Philippines equivalent to
twenty percent (20%), which represents the difference
between the regular income-tax of thirty five percent
(35%) and the fifteen percent (15%) tax on dividends-as
provided in this subparagraph. Provided, That effective
31


1 
January 1, 2009, the credit against the tax due Ghall be
2 
cquivQlcnt-to-fiftccn-perccnt-(15%), which represents the
3 
difference-between the regular income tax of thirty percent
4 
(-30%) and the fifteen percent (15%) tax on dividends;]
5 
[(c) Capital Gains from Sale of Shares of Stock not
6 
Traded in the Stock-Exchange.—A final tax at the rates
7 
preGcribed below is hereby imposed upon the net capital
8 
gains realized during the taxable year from tbe salerbarter,
9 
exchange or other-disposition of shares of stock in a
10 
domestic corporation, except-shares sold, or disposed of
11 
through the stock exchange:]
12 
[Not over PlOO,000................................ . 5%]
13 
[On any amount-in-excess of P100,000......... 10%]
14 
INTERESTS AND CAPITAL GAINS FROM SALE,
15 
TRANSFER, BARTER, OR DISPOSITION OF SHARES
16 
OF STOCK, DEBT INSTRUMENTS, DEPOSIT
17 
SUBSTITUTES, AND OTHER SECURITIES SHALL BE
18 
SUBJECT TO TAX UNDER SECTION 27(D)(1), (3),
19 
(4), (5) AND (6) OF THIS CODE, OR TO THE
20 
PROVISIONS OF THE APPLICABLE TAX TREATY.
21 
CASH AND/OR PROPERTY DIVIDENDS
22 
RECEIVED FROM A DOMESTIC CORPORATION
23 
SHALL BE SUBJECT TO A FINAL TAX OF FIFTEEN
24 
PERCENT (15%) OR TO THE PROVISIONS OF THE
25 
APPLICABLE TAX TREATY.
26
27 
SEC. 8. Section 32(B)(7)(g) and (h) of the National Internal Revenue Code of
28 
1997, as amended, is hereby amended to read as follows:
29 
SEC. 32. Gross Income. - xxx
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(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. -
XXX 
XXX XXX
[(g) Gains from the Sale of Bonds, Debentures or 
other Ccrtific-ate-of Indebtedness.-----Gains realized from
the same or exchange or retirement of bonds, debentures
e^othcr certificate of indebtedness with a maturity of more
than five (5) years.]
(G) INTEREST INCOME FROM, AND GAINS 
FROM THE SALE, TRANSFER, OR DISPOSITION OF, 
PROJECT SPECIFIC BONDS THAT ARE ISSUED BY 
THE REPUBLIC OF THE PHILIPPINES OR ANY OF 
ITS INSTRUMENTALITIES 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.
(h) Gains from Redemption of Shares OR UNITS 
OF PARTICIPATION in [Mutual-Fund.] COLLECTIVE 
INVESTMENT SCHEMES - Gains realized by the 
investor upon redemption of shares of stock [in a mutual 
fund company] OR UNITS OF PARTICIPATION IN A 
COLLECTIVE INVESTMENT SCHEME as defined [m] 
UNDER Section 22 [(6B)] (JJ) of this Code.
33


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XXX XXX XXX
2
3 
SEC. 9. Section 34(A), (B), (C) and (E) of the National Internal Revenue Code
4 
of 1997, as amended, is hereby further amended to read as follows:
5 
SEC. 34. Deductions from Gross Income. - Except for taxpayers earning
6 
compensation income arising from personal services rendered under an
7 
employer-employee relationship where no deductions shall be allowed under
8 
this Section, in computing taxable income subject to income tax under Sections
9 
24(A); 25(A); 26; 27(A), (B), and (C); and 28(A)(1), there shali be allowed the
10 
following deductions from gross income;
11 
(A) Expenses. -
12 
(1) Ordinary and Necessary Trade, Business or Professional
13 
Expenses. -
14 
(a) In General. - There shall be allowed as deduction
15 
from gross income all the ordinary and necessary expenses paid
16 
or incurred during the taxable year in carrying on or which are
17 
directly attributable to, the development, management, operation
18 
and/or conduct of the trade, business or exercise of a profession,
19 
including:
20 
XXX XXX XXX
21 
(b) Substantiation Requirements. - No deduction from
22 
gross income shall be allowed under Subsection (A) hereof unless
23 
the taxpayer shall substantiate with sufficient evidence, such as
24 
official receipts or other adequate records: (i) the amount of the
25 
expense being deducted, and (ii) the direct connection or relation
26 
of the expense being 
deducted to the development,
27 
management, operation and/or conduct of the trade, business or
28 
profession of the taxpayer.
29 
(c) Bribes, Kickbacks and Other Similar Payments. - No
30 
deduction from gross income shall be allowed under Subsection
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(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.
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 
effective January 1, 2009, the percentage shall be thirty-three percent 
(33%)[t]: provided FURTHER, THAT EFFECTIVE JANUARY 1, 
2023, THE PERCENTAGE SHALL BE FIFTY PERCENT (50%).
(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;
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(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
[(c) If the indebtedness is incurred -to financc-petfolcum 
exploration.]
(3) [Optional] Treatment of Interest Expense RELATED TO 
ACQUISITION OF ASSET. - [At the option of the taxpayer, interest] 
INTEREST EXPENSE incurred to acquire property used in trade, 
business or exercise of a profession THAT WILL BENEFIT THE 
BUSINESS LONGER THAN ONE YEAR [may be allowed as a 
deduction—or—treated—as—a—capital—expenditure] SHALL BE 
CAPITALIZED AND THEREAFTER AMORTIZED OR DEPRECIATED 
AS PART OF THE COST OF THE ASSET.
XXX XXX XXX
(E) Bad Debts. -
(1) In General. - xxx
(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 shall, 
[in the case of a taxpayer other than - a bank or trust company
incorporated under the laws of the Philippines a substantial part of
whose business is the receipt of 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 GOVERNMENT REGULATORY 
AGENCIES TO BUY AND SELL IN SECURITIES INCLUDING 
BANKS, AND OTHER FINANCIAL INTERMEDIARIES, SHALL BE 
CONSIDERED ORDINARY ASSETS, AND SECURITIES HELD 
THAT ARE ASCERTAINED TO BE WORTHLESS SHALL BE
36


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CONSIDERED ORDINARY LOSSES THAT ARE ALLOWED AS
2 
DEDUCTION FROM TAXABLE INCOME.
3 
XXX XXX XXX
4
5 
SEC. 10. Section 37 (A) and (B) of the National Internal Revenue Code of 1997,
6 
as amended, is hereby amended to read as follows:
7 
SEC. 37. Special Provisions Regarding Income and Deductions of
8 
Insurance Companies, Whether Domestic or Foreign. -
9 
(A) Special Deductions Allowed to Insurance Companies, PRE-
10 
NEED COMPANIES, AND PENSION FUNDS. - In the case of
11 
insurance companies, PRE-NEED COMPANIES, AND PENSION
12 
FUNDS, whether domestic or foreign doing business in the Philippines,
13 
the net additions, if any, required by law to be made within the year to
14 
reserve funds and the sums other than dividends paid within the year
15 
on policy and annuity contracts may be deducted from their gross
16 
income. Provided, however, That the released reserve be treated as
17 
income for the year of release.
18 
(B) Mutual Insurance Companies. - In the case of MUTUAL
19 
LIFE, mutual fire and mutual employers' liability and mutual workmen's
20 
compensation and mutual casualty insurance companies requiring their
21 
members to make premium deposits to provide for losses and expenses,
22 
said companies shall not INCLUDE [return] as income any portion of
23 
the premium deposits returned to their policyholders, but shall
24 
INCLUDE [return] as taxable income all income received by them from
25 
all other sources plus such portion of the premium deposits as are
26 
retained by the companies for purposes other than the payment of losses
27 
and expenses and reinsurance reserves.
28 
XXX XXX XXX
29
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SEC. 11. Section 38 (A) of the National Internal Revenue Code of 1997, as
2 
amended, is hereby amended to read as follows:
3 
SEC. 38. Losses from Wash Sales of Stock or Securities. -
4 
(A) In the case of any loss claimed to have been sustained from
5 
any sale or other disposition of shares of stock or securities where it
6 
appears that within a period beginning thirty (30) days before the date
7 
of such sale or disposition and ending thirty (30) days after such date,
8 
the taxpayer has acquired (by purchase or by exchange upon which the
9 
entire amount of gain or loss was recognized by law), or has entered
10 
into a [contact] CONTRACT or option so AS to acquire, substantially
11 
identical stock or securities, then no deduction for the loss shall be
12 
allowed under Section 34 unless the claim is made by a dealer in stock
13 
or securities OR BY ANY ENTITY OR FINANCIAL INTERMEDIARY
14 
DULY LICENSED BY THE APPROPRIATE GOVERNMENT
15 
REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES
16 
EITHER FOR THE ENTITY'S OWN ACCOUNT OR FOR THE
17 
ACCOUNT OF OTHERS and with respect to a transaction made in the
18 
ordinary course of the business of such dealer.
19 
XXX 
XXX 
XXX
20
21 
SEC. 12. Section 39 of the National Internal Revenue Code of 1997, as
22 
amended, is hereby amended to read as follows:
23 
SEC. 39. Capital Gains and Losses. -
24 
(A) Definitions. - As used in this Title -
25 
XXX 
XXX XXX
26 
[(B) Percentage Taken Into Account-—In the case of a taxpayer,-
27 
other than a corporation, only the following percentages of the gain-or
28 
loss recognized upon the sale or exchange of a capital asset shall be
29 
taken into account-in computing net capital gain, net capital loss, and
30 
net income:]
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K-1) One hundred percent (100%) if the capital DSGct has 
been-hcld for not more than twelve (12) months; Dod]
[(-3) Fifty percent-(50%) if the capital asset has been hold 
for more than twelve (12) months;]
[(€)] (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. If a [bank or—tr-ust c-ompany 
incorporated under the loss of the Philippinos, a substantial part of
whoso businesG is the receipt of deposits,] DEALER IN SECURITIES 
OR OTHER ENTITIES OR FINANCIAL INTERMEDIARIES DULY 
LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES TO TRADE IN SECURITIES, sells any bond, debenture, 
note, or certificate or other evidence of indebtedness issued 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.
[(B)-Net-Gapital Loss Carry-over.—If any taxpayer, other than a 
corporation, sustains in any taxable-year a-net-capital-loss-, such loss
an-amount not in excess of the net income for such year) shall be treated
in the succeeding taxable year os a loss from the sale or exchange of a
capital asset held for not more than twelve (12) months.]
[f€)](C) Retirement of Bonds, etc. - x x x
Title
[(F) Gains or Losses from Short Sales, Etc.—For purposes of this
(1) Gains or losses from short sales of property shall be 
considered as gains or losses from-sales er-exehanges of capital
assets; and
39


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(-2) Gains or losses attributable to the failure to oxcrcisc
2 
privileges OFoptions to buy or sell property shall be considorod as
3 
capital gains or losses.]
4
5 
SEC. 13. Section 42(A)(1), (2) and (B)(2) of the National Internal Revenue
6 
Code of 1997, as amended, is hereby amended to read as follows:
7 
SEC. 42. Income from Sources Within the Philippines. -
8 
(A) Gross Income from Sources Within the Philippines. - The
9 
following items of gross income shall be treated as gross income from
10 
sources within the Philippines:
11 
(1) Interests. - Interests AND YIELD [derived from
12 
sources withirnthe-PhilippinesT-and-intofests-erv] FROM DEBT
13 
INSTRUMENTS, BANK 
DEPOSITS, DEPOSIT
14 
SUBSTITUTES, TRUST FUNDS, AND SIMILAR
15 
ARRANGEMENTS SUCH AS bonds, notes or other interest-
16 
bearing obligations of residents, corporate or otherwise[7-],
17 
INCLUDING DEBT INSTRUMENTS OR DEBT SECURITIES
18 
ISSUED BY THE GOVERNMENT OR ANY OF ITS AGENCIES
19 
OR INSTRUMENTALITIES;
20 
(2) Dividends. - The amount received as dividends:
21 
(a) From a domestic corporation; and
22 
(b) From a foreign corporation, [unless less] WITH
23 
AT LEAST [theft] fifty percent (50%) of the gross income
24 
of such foreign corporation for the three-year period
25 
ending with the close of its taxable year preceding the
26 
declaration of such dividends (or for such part of such
27 
period as the corporation has been in existence) was
28 
derived from sources within the Philippines as determined
29 
under the provisions of this Section; but only in an amount
30 
which bears the same ratio to such dividends as the gross
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income of the corporation for such period derived from 
sources within the Philippines bears [to] ON 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 IN CONNECTION WITH THE CONDUCT OR 
OPERATION OF TRADE OR BUSINESS IN THE 
PHILIPPINES IS A TAXABLE INCOME IN THE 
PHILIPPINES.
SEC. 14. 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. -
(A) 
Requirements. - x x x
(B) 
Where to file. - x x x
(C) 
When to File. - x x x
(1) 
XXX
(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 [thm] THROUGH a local [stock] exchange OR
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AN ORGANIZED MARKETPLACE as prescribed under 
[Section] SECTIONS 24[(€)](B) (3) AND (5), AND 
25(A) AND (B), [shall file] a return SHALL BE FILED
within thirty (30) days after each transaction and a final 
consolidated return on or before April 15 of each year 
covering all stock transactions of the preceding taxable 
year; and
(B) FROM THE SALE, EXCHANGE, OR BARTER 
OF SHARES OF STOCK OR DEBT INSTRUMENTS AND 
OTHER SECURITIES TRADED THROUGH A LOCAL 
EXCHANGE OR AN ORGANIZED MARKETPLACE AS 
PRESCRIBED UNDER SECTIONS 24(B)(4) AND (6), 
AND 25(A) AND (B), THE TAX SHALL BE COLLECTED 
BY THE BROKER WHO EFFECTED THE SALE, AND 
SHALL BE REMITTED TO THE BUREAU OF INTERNAL 
REVENUE WITHIN FIVE (5) BANKING DAYS FROM 
THE DATE OF COLLECTION THEREOF. THE BROKER 
SHALL LIKEWISE SUBMIT ON MONDAYS OF EACH 
WEEK TO THE SECRETARY OF THE LOCAL 
EXCHANGE OR ORGANIZED MARKETPLACE OF 
WHICH THE BROKER IS A MEMBER, A TRUE AND 
COMPLETE RETURN WHICH SHALL CONTAIN A 
DECLARATION OF ALL THE TRANSACTIONS 
EFFECTED DURING THE PRECEDING WEEK, AND OF 
ALL TAXES COLLECTED AND TURNED OVER TO THE 
BUREAU OF INTERNAL REVENUE.
[(b)] (C) From the sale or disposition of real 
property under Section 24[(©)] (B) (7) shall file a return 
within thirty (30) days following each sale or other 
disposition.
42


1 
SEC. 15. Section 52(A) and (D) of the National Internal Revenue Code of 1997,
2 
as amended, is hereby amended to read as follows:
3 
SEC. 52. Corporation Returns. -
4 
(A) Requirements. - Every corporation AS DEFINED UNDER
5 
SECTION 22(B) OF THIS CODE, AND subject to the tax herein imposed,
6 
except foreign corporations not engaged in trade or business in the Philippines,
7 
shall render, in duplicate, a true and accurate quarterly income tax return and
8 
final or adjustment return in accordance with the provisions of Chapter XII of
9 
this Title. The income tax return shall consist of a maximum of four (4) pages
10 
in paper form or electronic form, be filed by the president, vice-president or
11 
other principal officer, shall be sworn to by such officer and by the treasurer or
12 
assistant treasurer, and shall only contain the following information:
13 
(1) Corporate profile and information;
14 
(2) Gross sales, receipts or income from services rendered, or
15 
conduct of trade or business, except income subject to final tax as
16 
provided under this Code;
17 
(3) Allowable deductions under this Code;
18 
(4) Taxable income as defined in Section 31 of this Code; and
19 
(5) Income tax due and payable.
20 
Provided, 
That the foregoing provisions shall not affect the
21 
implementation of Republic Act No. 10708 or TIMTA.
22 
XXX XXX XXX
23 
(D) Return on Capital Gains Realized from Sale of Shares of Stock, DEBT
24 
INSTRUMENTS, AND OTHER SECURITIES not Traded in the Local [Stock]
25 
Exchange OR AN ORGANIZED MARKETPLACE. - Every corporation deriving
26 
capital gains from the sale or exchange of shares of stock, DEBT
27 
INSTRUMENTS AND OTHER SECURITIES not traded [thw] THROUGH a
28 
local [stock] exchange OR AN ORGANIZED MARKETPLACE as prescribed
29 
under SECTIONS 27(D)(3), AND (5), AND 28 [Sections 24(C), 25(A)(3),
30 
27(E)(2), 28(A)(8)(c) and 28(B)(5)(c),] shall file a return within thirty (30) days
43


1 
after each transaction and a final consolidated return of all transactions during
2 
the taxable year on or before the fifteenth (15th) day of the fourth (4th) month
3 
following the close of the taxable year.
4 
(E) RETURN ON CAPITAL GAINS REALIZED FROM SALE OF
5 
SHARES OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES
6 
TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE.
7 
- IT SHALL BE THE DUTY OF EVERY BROKER WHO EFFECTED A SALE
8 
OF SHARES OF STOCK, DEBT INSTRUMENTS AND OTHER SECURITIES
9 
TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE,
10 
SUBJECT TO THE TAX IMPOSED UNDER SECTION 27(D)(4) AND (6),
11 
AND 28, TO COLLECT THE TAX DUE AND REMIT THE SAME TO THE
12 
BUREAU OF INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS
13 
FROM THE DATE OF COLLECTION THEREOF, AND TO SUBMIT ON
14 
MONDAYS OF EACH WEEK TO THE SECRETARY OF THE LOCAL
15 
EXCHANGE OR ORGANIZED MARKETPLACE, OF WHICH THE
16 
BORROWER IS A MEMBER, A TRUE AND COMPLETE RETURN WHICH
17 
SHALL CONTAIN A DECLARATION OF ALL THE TRANSACTIONS
18 
EFFECTED DURING THE PRECEDING WEEK, AND TAXES COLLECTED
19 
AND TURNED OVER TO THE BUREAU OF INTERNAL REVENUE.
20
21 
SEC. 16. Section 54 of the National Internal Revenue Code of 1997, as
22 
amended, is hereby amended to read as follows:
23 
SEC. 54. Returns of Receivers, Trustees, [in Bankruptcy] or Assignees.
24 
- [In cases wherein receivers] RECEIVERS, ADMINISTRATORS, trustees in
25 
AN IRREVOCABLE TRUST OR bankruptcy, or ANY OTHER PERSON
26 
ASSIGNED OR [assignees-arc] IN CHARGE OF operating the property or
27 
business of [aJANOTHER PERSON OR corporation, subject to the tax UNDER
28 
THIS CODE [imposed by this Title, such receivers, trustees or assignees] shall
29 
BE IMPOSED WITH THE OBLIGATION TO FILE [make] THE returns AND
30 
PAY THE TAXES FOR SUCH PERSON OR CORPORATION IN THE SAME
44


1 
MANNER REQUIRED UNDER THIS CODE, [of net incomo as and for such
2 
corporation, in the same-manner and form as such organization is horcinbeforG
3 
roquirod to make returns, and any] ANY tax due on the income as returned by
4 
receivers, ADMINISTRATORS, trustees or assignees shall be assessed and
5 
collected in the same manner as if assessed directly against the [organizations]
6 
PERSON, ESTATE OR ORGANIZATION [of] whose businesses or properties
7 
they have custody OF or control OVER.
8 
THE TRUSTOR IN A REVOCABLE TRUST, NOT THE TRUSTEE,
9 
SHALL BE RESPONSIBLE IN FILING THE RETURNS REQUIRED UNDER
10 
THIS CODE AND IN DECLARING THE INCOME RECEIVED FROM THE
11 
TRUST IN ACCORDANCE WITH SECTIONS 24, 25, 27 AND 28 OF THIS
12 
CODE. INCOME OF THE TRUST SUBJECTED TO FINAL TAX UNDER
13 
SECTIONS 24, 25, 27 AND 28 SHALL NO LONGER BE SUBJECT TO TAX
14 
UPON DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR
15 
BENEFICIARY, NOR SHALL THE TRUSTOR OR BENEFICIARY BE
16 
REQUIRED TO DECLARE THE INCOME AS PART OF ITS TAXABLE
17 
INCOME.
18 
ANY INCOME OF A REVOCABLE TRUST NOT SUBJECTED TO
19 
FINAL TAX SHALL BE SUBJECT TO CREDITABLE WITHHOLDING TAX
20 
UPON DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR THE
21 
BENEFICIARY AT A RATE NOT EXCEEDING THE HIGHEST RATE OF TAX
22 
IMPOSED ON INDIVIDUALS UNDER SECTION 24 IN THE CASE OF
23 
INDIVIDUAL TRUSTORS, OR THE CORPORATE INCOME TAX UNDER
24 
SECTION 27 IN THE CASE OF CORPORATE TRUSTORS.
25
26 
SEC. 17. Section 56 of the National Internal Revenue Code of 1997, as
27 
amended, is hereby amended to read as follows:
28 
SEC. 56. Payment and Assessment of Income Tax for Individuals and
29 
Corporations. -
30 
(A) Payment of Tax. -
45


1 
XXX 
XXX 
XXX
2 
(3) Payment of Capital Gains Tax. - IN GENERAL - The
3 
total amount of tax imposed and prescribed under [Section]
4 
SECTIONS 24[(€)](B)(3), 24[(©)](B)(5), 24(B)(7), 25,
5 
27[(E)(3)](D)(3), 27(D)(5), 27(D)(7), 28(A)[(^] and
6 
28(B)(5)[(e)] shall be paid on the date the return prescribed
7 
therefor is filed by the person liable thereto: Provided, That\^ the
8 
seller submits proof of [Ws] THE intention to avail [himself] of
9 
the benefit of exemption of capital gains under existing special
10 
laws OR TAX TREATY, no such payments shall be required:
11 
Provided, further. That in case of failure to qualify for exemption
12 
under such special laws, TAX TREATY and implementing rules
13 
and regulations, the tax due on the gains realized from the
14 
original transaction shall immediately become due and payable,
15 
and subject to the penalties prescribed under applicable
16 
provisions of this Code: Provided, finaiiy. That if the seller, having
17 
paid the tax, submits such proof of intent within six (6) months
18 
from the registration of the document transferring the real
19 
property, [tie] THE SELLER shall be entitled to a refund of such
20 
tax upon verification of [fHs] compliance with the requirements
21 
for such exemption.
22 
XXX 
XXX 
XXX
23
24 
SEC. 18. Section 57 of the National Internal Revenue Code of 1997, as
25 
amended, is hereby amended to read as follows:
26 
SEC. 57. Withholding of Tax at Source. -
27 
(A) Withholding of Final Tax on Certain Incomes. - Subject to
28 
rules and regulations the Secretary of Finance may promulgate, upon
29 
the recommendation of the Commissioner, requiring the filing of income
30 
tax return by certain income payees, the tax imposed or prescribed [by]
46


1 
UNDER Sections 
2^(B)(2), 2^(C), 2^(D)(1); 25(A)(2),
2 
25(A)(3), ZBCBX-ZSCC), 25(D), 25(E); 27(D)(1), 27(D)(2), 27(D)(3),
3 
27(D)(5); 28(A)(/1), 28(A)(5), 28(A)(7)(a), 28(A)(7)(b), 28(A)(7)(c),
4 
28(B)(1), 28(B)(2), 28(B)(3), 28(B)(4), 28(B)(5)(a), 28(B)(5)(b),
5 
28(B)(5)(c)] 24(B), 24(C), 25(A), 25(B), 27(D), 27(E), 28(A) AND
6 
28(B)(5); 33; and 282 of this Code on specified items of income
7 
SUBJECT TO FINAL TAX shall be withheld by payor-corporation and/or
8 
person and paid in the same manner and subject to the same conditions
9 
as provided in Section 58 of this Code.
10 
(B) XXX XXX XXX
11 
[(C) Tax free Covenant Bonds.----- In any cose where bonds,
12 
mortgages, deeds of trust-or-other similar obligations of domestie-ef
13 
resident foreign corporations, contain a contract-op-provision by which
14 
the obligor agrees-to pay any portion of the tax imposed in this Title
15 
upon the obligee or to reimburse the obligee for any portion of the-tax
16 
or to pay the interest without deduction for any tax which the obligor
17 
may be -required or permitted to pay thereon or to retain therefroTH
18 
under any law of the Phittppines, or any state or country-the obligor
19 
shall deduct and withhold a tax equal-to thirty percent (30%) of the
20 
interest-er other payments upon those bonds,-mortgages, deeds of trust
21 
or other obligations, whether the interest or other payments are payable
22 
annually or at shorter or longer periods, and whether the-bonds7
23 
securities or obligations had been or will be issued or marketed, and the
24 
interest or other payment thereon paid, within or without the Philippines7
25 
if the interest or other payment is payable to a nonresident alien or to a
26 
citizen or resident of the Philippines. ]
27
28 
SEC. 19. Section 73 (A) of the National Internal Revenue Code of 1997, as
29 
amended, is hereby amended to read as follows:
30 
SEC. 73. Distribution of Dividends or Assets by Corporations. -
47


1 
(A) Definition of Dividends. - The term 'dividends' when used in
2 
this Title means any distribution made by a corporation to its
3 
shareholders out of its earnings or profits 
and payable to its
4 
shareholders, whether in money or in other property.
5 
Where a corporation distributes all of its assets in complete
6 
liquidation or dissolution, the gain realized or loss sustained by the
7 
stockholder, whether individual or corporate, is a taxable income or a
8 
deductible loss, UNDER SECTIONS 24(A), 25(A), 25(B), 27(A),
9 
28(A) AND 28 (B), as the case may be.
10 
(B) Stock Dividend. - x x x
11
12 
SEC. 20. Section 108 of the National Internal Revenue Code of 1997, as
13 
amended, is hereby amended to read as follows:
14 
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of
15 
Properties. -
16 
(A) Rate and Base of Tax. - x x x
17 
The phrase 'sale or exchange of services' means the
18 
performance of all kinds of services in the Philippines for others
19 
for a fee, remuneration or consideration, including those
20 
performed or rendered by construction and service contractors;
21 
stock, real estate, commercial, customs and immigration brokers;
22 
lessors of property, whether personal or real; warehousing
23 
services; lessors or distributors of cinematographic films; persons
24 
engaged in milling, processing, manufacturing or repacking goods
25 
for others; proprietors, operators or keepers of hotels, motels,
26 
resthouses, pension houses, inns, resorts; proprietors or
27 
operators of restaurants, refreshment parlors, cafes and other
28 
eating places, including clubs and caterers; dealers in securities;
29 
[lending investors;] transportation contractors on their transport
30 
of goods or cargoes, including persons who transport goods or
48


1 
cargoes for hire and other domestic common carriers by land
2 
relative to their transport of goods or cargoes; common carriers
3 
by air and sea relative to their transport of passengers, goods or
4 
cargoes from one place in the Philippines to another place in the
5 
Philippines; sales of electricity by generation companies,
6 
transmission by any entity, and distribution companies, including
7 
electric cooperatives; services of franchise grantees of electric
8 
utilities, telephone and telegraph, radio and television
9 
broadcasting and all other franchise grantees except those under
10 
Section 119 of this Code and non-life insurance companies
11 
(except their crop insurances), including surety, fidelity,
12 
indemnity and bonding companies; and similar services
13 
regardless of whether or not the performance thereof calls for the
14 
exercise or use of the physical or mental faculties. The phrase
15 
'sale or exchange of services' shall likewise include:
16 
XXX XXX XXX
17
18 
SEC. 21. Section 121 of the National Internal Revenue Code of 1997, as
19 
amended, is hereby amended to read as follows:
20 
SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries
21 
Performing Quasi-Banking Functions. - There shall be collected a tax on gross
22 
receipts derived from sources within the Philippines by all banks and non-bank
23 
financial intermediaries [in] PERFORMING QUASI-BANKING FUNCTIONS
24 
AT THE RATE OF FIVE PERCENT (5%) ON INCOME SUCH AS
25 
INTEREST, COMMISSIONS, AND DISCOUNTS FROM LENDING
26 
ACTIVITIES AS WELL AS INCOME FROM FINANCIAL LEASING,
27 
ROYALTIES, RENTALS OF PROPERTY, REAL OR PERSONAL, PROFITS
28 
FROM SALE OR EXCHANGE INCLUDING GAINS DERIVED FROM SALE
29 
OR TRANSFER OF REAL PROPERTIES, NET TRADING GAINS WITHIN
30 
THE TAXABLE YEAR OF FOREIGN CURRENCY, DEBT SECURITIES,
49


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
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 ZERO 
PERCENT (0%) [m accordance with the follovviog schedule]:
K-a) On interest, commissions and discounts-from -lending
activities as well qg income from financial leasing, on the basis of
femaining maturities of instruments from which such receipts are
derived:]
[Maturity—-period-----is---- five---- years---- er---- less------
lUU 
lb 
IMUlU 
LIIUM
1 °/nl
—11 vu----yuurb-------
I 
u 11LJ 
^ ^ / 
^1 U1 
J1 iCJ
nUL IIILUIlKJ Ul
0%]
L ^ '-y wi 1 1 y t_i ■ \.i 
■ 1UCJ i 
l 
1 U 1 LJI 
JLJI lUI^ [JIWIILJ^
from exchange and all other items treated as gross income under Section
32 of this Code
[(d)-On net trading gains within the taxable year of foreign 
currency, debt securities, derivatives;—and other similar financial
instrumentG-....................................................................................
7%]
{■Provided, however, That in case the maturity period referred to 
in paragraph (a) is shortenedd:hfu-pre-termination, then the maturity
period shall be reckoned to end as of the date of pre-termination for
purpoGOG-of classifying the transaction-and-the-correct- rato-of-tax shalf
be applied accordingly.]
Provided, [Pnailyi] That FOR PURPOSES OF COMPUTING THE 
GROSS RECEIPTS, the generally accepted accounting principles [as
50


1 
may bo proGcribcd by the Bongko Sontral ng Pilipinas for the bank or
2 
non bank financial intermediary-performing quasi banking functions
3 
shall likewise-be-the basis for the calculation of gross receipts.] OF
4 
RECORDING INCOME AS ADOPTED BY THE BANK SHALL BE
5 
FOLLOWED: PROVIDED, THAT THE MERE INCREASE OR
6 
DECREASE IN VALUE OF PROPERTY AS A RESULT OF CHANGES
7 
IN MARKET VALUES SHALL NOT BE CONSIDERED IN THE
8 
COMPUTATION OF GROSS RECEIPTS: PROVIDED, FURTHER,
9 
THAT FOR PURPOSES OF DETERMINING THE GROSS RECEIPTS,
10 
NO DEDUCTION SHALL BE MADE ON THE INCOME EXCEPT IN
11 
THE CASE OF GAINS FROM DEALINGS IN PROPERTY AND
12 
TRADING, WHERE NET LOSS WITHIN THE SAME BUSINESS
13 
ACTIVITY CAN BE OFFSET TO DETERMINE THE NET GAIN
14 
SUBJECT TO THIS TAX: PROVIDED, FURTHERMORE, THAT SUCH
15 
OFFSETTING SHALL BE ON A QUARTERLY BASIS, AND ANY NET
16 
LOSS INCURRED IN A QUARTER CAN BE CARRIED OVER AS
17 
DEDUCTION IN THE SUCCEEDING QUARTERS: PROVIDED
18 
FINALLY, THAT NET LOSS INCURRED IN A TAXABLE YEAR
19 
CANNOT BE CARRIED OVER TO THE SUCCEEDING TAXABLE
20 
YEAR.
21 
XXX XXX XXX
22
23 
SEC. 22. Section 122 of the National Internal Revenue Code of 1997, as
24 
amended, is hereby amended to read as follows:
25 
SEC. 122. Tax on Other Non-Bank Financial Intermediaries. - There shall
26 
be collected a tax of five percent (5%) on the gross receipts derived by other
27 
non-bank financial intermediaries doing business in the Philippines, from
28 
interest, commissions, [discounts] AND DISCOUNTS FROM LENDING
29 
ACTIVITIES, AS WELL AS INCOME FROM FINANCIAL LEASING,
30 
ROYALTIES, RENTALS OF PROPERTY, REAL OR PERSONAL, PROFITS
51


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
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 PERCENT (0%). 
[and all other items treated os gross income under this Codo; Provided, That
mtorcsts, commissiens-and diGcountG from lending activiticG, as well as income
from financial leasing, shall be-feaxed-on-the basts of the remaining maturities
of the instruments from which-such receipts aro-derived-in accordance with
the following schedule: ]
[Maturity is (5) five years of loss.............. ......................... 5%]
[Maturity period is more than (5) five years...... .■............................. 1%]
{Provided, however, That in case the maturity period is shortened thru
pretermination, then-the-maturity- period shall be reckoned to end og of the
date of pretermination for purposes of clasGifying the transaction and the
correct rate of tax Ghail be-appHed-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.
52


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
COLLECTIVE INVESTMENT SCHEMES SUCH AS MUTUAL FUNDS, 
UNIT LINKED INVESTMENT TRUST FUNDS, 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 THE 
VALUE ADDED TAX IMPOSED UNDER TITLE IV OF THIS CODE. FOR 
PURPOSES OF THIS EXEMPTION, A CIS SHALL HAVE AT LEAST TWO 
HUNDRED (200) OWNERS, INVESTORS OR PARTICIPANTS, AND 
SHALL HAVE COMPLIED WITH THE MINIMUM PUBLIC OWNERSHIP 
REQUIREMENT OF THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES.
THE INCOME OF A PERSON OR COMPANY NOT LICENSED TO DO 
FINANCIAL INTERMEDIATION BUT WHICH ENGAGES IN FINANCIAL 
INTERMEDIATION SERVICES AS AN INCIDENT TO ITS MAIN 
BUSINESS ACTIVITY, AND DERIVES INCOME THEREFROM, SHALL BE 
SUBJECT TO THE TAX IMPOSED ON ITS PRINCIPAL ACTIVITY. TO BE 
CONSIDERED INCIDENTAL, THE INCOME FROM INTERMEDIATION 
SERVICES SHALL NOT EXCEED FIFTY PERCENT (50%) OF THE 
PERSON OR THE COMPANY'S TOTAL ANNUAL INCOME. IF THE TOTAL 
INCOME RECEIVED FROM FINANCIAL INTERMEDIATION IS MORE 
THAN FIFTY PERCENT (50%), AND THE PERSON OR COMPANY HAS 
ENTERED INTO AT LEAST SIX (6) TRANSACTIONS DURING THE YEAR, 
THE TOTAL INCOME FROM SUCH FINANCIAL INTERMEDIATION 
SHALL BE SUBJECT TO TAX UNDER THIS SUBSECTION.
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.
53


1 
HOLDING COMPANIES SHALL BE SUBJECT TO EITHER VALUE
2 
ADDED TAX OR GROSS RECEIPTS TAX DEPENDING ON THE NATURE
3 
OF THEIR BUSINESS ACTIVITIES. IF UNDERTAKING FINANCING AND
4 
OTHER SIMILAR ACTIVITIES, THEY SHALL BE SUBJECT TO GROSS
5 
RECEIPTS TAX UNDER THIS SECTION. INCOME DERIVED FROM THE
6 
SALE OF GOODS, PROPERTIES AND OTHER SERVICES SHALL BE
7 
SUBJECT TO VALUE ADDED TAX UNDER SECTION 105 OF THIS CODE.
8 
[-Provided, finally, That the generally accepted accountlrtg-pfifletplcs as
9 
may-be-prcGcribcd by-fehe Securities and Exchange Commission-for-ether non-
10 
bank-financial intermediariGS shall likowisc be the basiG for the calculation of
11 
§fe55-feeeipts.]
12 
Nothing in this Code shall preclude the Commissioner from imposing the
13 
same tax herein provided on persons OR ENTITIES performing similar
14 
[finaneing] FINANCIAL INTERMEDIATION activities.
15
16 
SEC. 23. Section 123 of the National Internal Revenue Code of 1997, as
17 
amended, is hereby amended to read as follows:
18 
SEC. 123. Tax on Life Insurance AND REINSURANCE Premiums. -
19 
There shall be collected from every person, company or corporation, [(] except
20 
purely cooperative companies or associations^] doing life insurance business
21 
of any sort in the Philippines, A PREMIUM TAX AT THE FOLLOWING
22 
RATES:
23 
(A) FOR LIFE INSURANCE INCLUDING HEALTH
24 
INSURANCE AS A RIDER TO LIFE INSURANCE POLICY, a tax of
25 
two percent (2%) of the total premium collected, whether such
26 
premiums are paid in money, notes, credits or any substitute for money;
27 
but premiums refunded within six (6) months after payment on account
28 
of rejection of risk or returned for other reason to a person insured shall
29 
not be included in the taxable receipts; nor shall any tax be paid upon
30 
reinsurance by a company IF THE TAX [that] has already BEEN paid
54


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
[the tox] 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[7] IN A CIS in excess of the amounts necessary to 
insure the lives of the variable contract ownersH: PROVIDEDf THAT 
THE CIS SHALL HAVE AT LEAST TWO HUNDRED (200) OWNERS, 
INVESTORS OR PARTICIPANTS, AND THAT ANY MINIMUM 
PUBLIC OWNERSHIP AS MAY BE REQUIRED BY APPROPRIATE 
GOVERNMENT REGULATORY AGENCIES SHALL BE COMPLIED 
WITH.
(B) PERSONS DOING BUSINESS SIMILAR OR AKIN TO 
LIFE AND HEALTH INSURANCE SUCH AS PRE-NEED 
COMPANIES, PENSION FUND COMPANIES, HEALTH 
MAINTENANCE ORGANIZATIONS AND OTHER COMPANIES 
SIMILAR TO LIFE INSURANCE, AS MAY BE DETERMINED BY THE 
APPROPRIATE GOVERNMENT REGULATORY AGENCIES, SHALL 
BE SUBJECT TO TAX UNDER THIS SUBSECTION 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 GOVERNMENT REGULATORY AGENCIES TO BE 
EARMARKED FOR THE BENEFIT OF THE INSURED, OR 
PLANHOLDER.
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NOTHING IN THIS CODE SHALL PRECLUDE THE 
COMMISSIONER FROM IMPOSING THE SAME TAX HEREIN 
PROVIDED ON PERSONS PERFORMING SIMILAR INSURANCE 
BUSINESS ACTIVITIES.
LIFE REINSURANCE COMPANIES SHALL BE SUBJECT TO 
PREMIUM TAX ON PREMIUMS COLLECTED UNDER SUBSECTION 
(A) HEREOF. HOWEVER, PREMIUMS COLLECTED ON 
TRANSACTIONS 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.
NON-LIFE REINSURANCE COMPANIES SHALL BE 
SUBJECT TO VALUE ADDED TAX ON PREMIUMS COLLECTED 
UNDER SECTION 108 OF THIS CODE. HOWEVER, PREMIUMS 
COLLECTED ON TRANSACTIONS WHERE THE TAX ON THE 
DIRECT PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT 
INSURER SHALL BE EXCLUDED FROM THE GROSS PREMIUM 
SUBJECT TO VALUE ADDED TAX.
FOR THE PURPOSE OF CLAIMING EXEMPTION ON 
REINSURANCE PREMIUMS, THE SECRETARY OF FINANCE, 
UPON THE RECOMMENDATIONS OF THE COMMISSIONER OF 
INTERNAL REVENUE AND INSURANCE COMMISSIONER, SHALL 
PROMULGATE THE REQUIRED REPORTS TO BE SUBMITTED TO 
THE BUREAU OF INTERNAL REVENUE. ANY 
MISREPRESENTATION SHALL SUBJECT THE DIRECT INSURER 
OR REINSURER TO PENALTIES UNDER SECTIONS 248, 249, 
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
56


1 
TRANSFER OF GOODS, PROPERTIES OR SERVICES, EARNED OR
2 
RECEIVED AS AN INCIDENT OF DOING THE BUSINESS OF LIFE,
3 
NON-LIFE AND OTHER INSURANCE ACTIVITIES, SHALL BE
4 
SUBJECT TO THE VALUE ADDED TAX UNDER SECTION 105 OF
5 
THIS CODE: PROVIDED, T//>iriNCOME RECEIVED FROM THE
6 
INVESTMENT AND REINVESTMENT OF PREMIUMS EARNED
7 
SHALL NOT BE SUBJECT TO VALUE ADDED TAX NOR TO THE
8 
GROSS RECEIPTS TAX IMPOSED UNDER SECTIONS 121 AND
9 
122 OF THIS CODE.
10 
A VARIABLE INSURANCE CONTRACT WHERE AMOUNTS
11 
IN EXCESS OF INSURANCE COSTS ARE COLLECTED AS PART OF
12 
THE PREMIUM AND WHERE UNITS OF PARTICIPATION IN A
13 
POOLED FUND ARE ISSUED TO THE INSURED REPRESENTING
14 
THEIR RESPECTIVE SHARES IN THE POOLED FUND, IS A CIS.
15 
THE AMOUNTS OF PREMIUM COLLECTED IN EXCESS OF THE
16 
INSURANCE COST IS NOT SUBJECT TO PREMIUM TAX UNDER
17 
THIS SECTION AND TO THE GROSS RECEIPTS TAX IMPOSED
18 
UNDER SECTIONS 121 AND 122, OR TO ANY PERCENTAGE TAX
19 
IMPOSED UNDER TITLE V AND TO VALUE ADDED TAX UNDER
20 
SECTION 105, TITLE IV OF THIS CODE.
21 
Cooperative companies or associations are such as are conducted
22 
by the members thereof with the money collected from among
23 
themselves and solely for their own protection and not for profit.
24
25 
SEC. 24. Section 127 of the National Internal Revenue Code of 1997, as
26 
amended, is hereby repealed.
27
28 
SEC. 25. Section 174 of the National Internal Revenue Code of 1997, as
29 
amended, is hereby amended to read as follows:
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SEC. 174. Stamp Tax on Original Issue of Shares of Stock. - On every
2 
original issue, whether on organization, reorganization or for any lawful
3 
purpose, of shares of stock by any association, company, or corporation,
4 
INCLUDING SHARES OF STOCK OR UNITS OF PARTICIPATION IN A
5 
COLLECTIVE INVESTMENT SCHEME, there shall be collected a
6 
documentary stamp tax of [Two pesos (P2.00) on each Two hundred pesos
7 
(P200), or-fractional part thereof, of the par value,-] SEVENTY-FIVE PERCENT
8 
OF ONE PERCENT (0.75%) OF THE PAR VALUE of such shares of stock:
9 
Provided, That in the case of the original issue of shares of stock without par
10 
value, the amount of the documentary stamp tax herein prescribed shall be
11 
based upon the actual consideration for the issuance of such shares of stock;
12 
Provided, further. That in the case of stock dividends, on the actual value
13 
represented by each shareH: PROVIDED, FINALLY, THAT IN THE CASE
14 
OF COLLECTIVE INVESTMENT SCHEMES WITHOUT PAR VALUE, THE
15 
DOCUMENTARY STAMP TAX SHALL BE BASED ON THE INITIAL NET
16 
ASSET VALUE PER UNIT.
17
18 
SEC 26. Section 175 of the National Internal Revenue Code of 1997, as
19 
amended, is hereby repealed.
20
21 
SEC. 27. Section 176 of the National Internal Revenue Code of 1997, as
22 
amended, is hereby amended to read as follows:
23 
SEC 176. Stamp Tax on Bonds, Debentures, Certificates of Stock or
24 
Indebtedness Issued in Foreign Countries. - [On all] A DOCUMENTARY
25 
STAMP TAX OF SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%)
26 
OF THE VALUE OF THE TRANSACTION SHALL BE COLLECTED FROM A
27 
PERSON SELLING OR TRANSFERING bonds, debentures, certificates of
28 
Stock, or certificates of indebtedness issued in any foreign country.[, there shall
29 
be collected from the person selling or transferring the same in the Philippines,-
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1 
such tax as is required by law on GimilaHnstrumcnts when issued, sold or
2 
transferred in the Philippines.]
3
4 
SEC 28. Sections 177 and 178 of the National Internal Revenue Code of 1997,
5 
as amended, are hereby repealed.
6
7 
SEC 29. Section 179 of the National Internal Revenue Code of 1997, as
8 
amended, is hereby amended to read as follows:
9 
SEC. 179. Stamp Tax on All Debt Instruments. - On every original issue
10 
of debt instruments, there shall be collected a documentary stamp tax of [Gfte
11 
peso and fifty centavos (PI.50) on each Two-hundred pesos (P200),-ef
12 
fractioFtel-part thereof,] SEVENTY-FIVE PERCENT OF ONE PERCENT
13 
(0.75%) of the issue price of any such debt instruments: Provided, That for
14 
such debt instruments with terms of less than one (1) year, the documentary
15 
stamp tax to be collected shall be of a proportional amount in accordance with
16 
the ratio of its term in number of days to three hundred sixty-five (365) days:
17 
Provided, further. That only one documentary stamp tax shall be imposed on
18 
either loan agreement, or promissory notes issued to secure such loan.
19 
For purposes of this section, the term debt instrument shall mean
20 
instruments representing borrowing and lending transactions including but not
21 
limited to debentures, certificates of indebtedness, due bills, bonds, loan
22 
agreements, including those signed abroad wherein the object of contract is
23 
located or used in the Philippines, instruments and securities issued by the
24 
government or any of its instrumentalities, deposit substitute debt instruments,
25 
certificates or other evidences of deposits that are either drawing interest
26 
significantly higher the regular savings deposit taking into consideration the
27 
size of the deposit and the risks involved or drawing interest and having a
28 
specific maturity date, [orders for payment of any sum of money otherwise
29 
than at sight or on demand,] promissory notes, whether negotiable or non-
30 
negotiable, except bank notes issued for circulation.
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2 
SEC 30. Section 180 of the National Internal Revenue Code of 1997, as
3 
amended, is hereby repealed.
4
5 
SEC 31. Sections 181, 182, 183, 184, 185, 186, and 187 of the National
6 
Internal Revenue Code of 1997, as amended, are hereby amended to read as follows:
7 
SEC. 181. Stamp Tax Upon Acceptance of Bills of Exchange and Others.-
8 
Upon any acceptance or payment of any bill of exchange or order for the
9 
payment of money purporting to be drawn in a foreign country but payable in
10 
the Philippines, there shall be collected a documentary stamp tax OF THIRTY
11 
PERCENT OF ONE PERCENT (0.30%) [Six-ty e-Gntavos (P0.60) on each Two
12 
hundred pesos (P200)> or fractional part thereof,] of the face value of any such
13 
bill of exchange, or order, or the Philippine equivalent of such value, if
14 
expressed in foreign currency.
15 
SEC. 182. Stamp Tax on Foreign Bills of Exchange and Letters of Credit.
16 
- On all foreign bills of exchange and letter of credit (including orders, by
17 
telegraph or otherwise, for the payment of money issued by express or
18 
steamship companies or by any person or persons) drawn in but payable out
19 
of the Philippines in a set of three (3) or more according to the custom of
20 
merchants and bankers, there shall be collected a documentary stamp tax OF
21 
THIRTY PERCENT OF ONE PERCENT (0.30%) [Sixty centavos (P0.60) on
22 
each Two hundred pesos (P20Q)7-er-fractional-part-thercof,] of the face value
23 
of any such bill of exchange or letter of credit, or the Philippine equivalent of
24 
such face value, if expressed in foreign currencyH: PROVIDED, THAT, A
25 
LETTER OF CREDIT ON WHICH THE DOCUMENTARY STAMP TAX
26 
IMPOSED UNDER THIS SECTION IS PAID UPON OPENING SHALL NOT
27 
BE SUBJECT AGAIN TO THE TAX IMPOSED BY SECTION 195 UPON
28 
AVAILMENT OF THE TRUST RECEIPT LINE WHERE THE PROPERTY
29 
SUBJECT OF THE LETTER OF CREDIT IS MADE A SECURITY FOR
30 
PAYMENT.
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SEC. 183. Stamp Tax on Life AND HEALTH Insurance Policies^ 
OF ANNUITIES, AND HEALTH MAINTENANCE ORGANIZATION 
PRODUCTS. - 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- PIOO.OO
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. 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 peril by sea or on inland waters, 
or by fire or lightning, there shall be collected a documentary stamp tax of [fifty 
centavos (P0.50) on each Four pesos (P4.00), or fractional part thereof,]
TWELVE AND ONE-HALF PERCENT (12.5%) 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, 2023: ELEVEN AND ONE-HALF PERCENT (11.5%), 
JANUARY 1, 2024: TEN AND ONE-HALF PERCENT (10.5%),
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JANUARY 1, 2025: NINE AND ONE-HALF PERCENT (9.5%), 
JANUARY 1, 2026: EIGHT AND ONE-HALF PERCENT (8.5%), 
JANUARY 1, 2027: SEVEN AND ONE-HALF PERCENT (7.5%).
SEC. 185. 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 [Fifty centavos 
(P0.50) on each Four pesos (P/I.OQ),-or fractional part thereof,] TWELVE AND 
ONE-HALF PERCENT (12.5%) of the premium charged[.]: PROVIDED, 
THAT SUCH RATE SHALL BE REDUCED ACCORDING TO THE 
FOLLOWING SCHEDULE:
JANUARY 1, 2023: ELEVEN AND ONE-HALF PERCENT (11.5%), 
JANUARY 1, 2024: TEN AND ONE-HALF PERCENT (10.5%), 
JANUARY 1, 2025: NINE AND ONE-HALF PERCENT (9.5%), 
JANUARY 1, 2026: EIGHT AND ONE-HALF PERCENT (8.5%), 
JANUARY 1, 2027: SEVEN AND ONE-HALF PERCENT (7.5%). 
SEC. 186. Stamp Tax on [Policies of Annuitiesr-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 collected a-documentary stamp tax of One peso (Pl^OO) on each
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7
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9
10
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12
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14
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16
17
18
19
20 
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23
24
25
26
27
28
29
30
Two hundred pesos (P200), or.fractional part thereof, of the premium Of
installment-payment on contract-prico collected.] On pre-need plans, [the 
documentary stamp tax shall be Forty centovos (PO.'IO) on each Two hundred
pesos (P200);--or fractional part thereof, of the-premium or- contribution
collected.] THERE SHALL BE COLLECTED A DOCUMENTARY STAMP TAX 
OF TWENTY PERCENT OF ONE PERCENT (0.2%) OF THE PREMIUM OR 
INSTALLMENT PAYMENT ON CONTRACT PRICE, OR CONTRIBUTION 
CHARGED.
SEC. 187. 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 centavos 
(P0.30) on each Four pesos (P4.60), or fractional part thereof^] SEVEN AND 
ONE-HALF PERCENT (7.5%) of the premium charged.
SEC 32. Section 188 of the National Internal Revenue Code of 1997, as 
amended, is hereby repealed.
SEC 33. Sections 192 and 193 of the National Internal Revenue Code of 1997, 
as amended, are hereby repealed.
SEC 34. Sections 195, 198, and 199 of the National Internal Revenue Code of 
1997, as amended, are hereby amended to read as follows:
SEC. 195. 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
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10
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12
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18
19
20 
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23
24
25
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27
28
29
30
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 stipulation or otherwise, there shall be collected a 
documentary stamp tax [at the following rates:
-(a3—Wherv-the-amount sccurod- docs not exceed Five thousand
pesos (P5,000), Forty pesos (P40.00).
(b)-----On each Five thousand pesos (P5,000), or fractional part
thereof in excess of Five thousand pesos (P5,000), an-additional tax-ef
Twenty pesos (P20.00).] OF THIRTY PERCENT OF ONE PERCENT 
(0.3%) OF THE AMOUNT SECURED.
XXX XXX XXX
SEC. 198. Stamp Tax on [Assignments and] Renewals of Certain 
Instruments. - Upon each and every [assignment or transfer of any mortgage, 
lease or policy of insurance, or the] renewal or continuance of any agreement, 
contract, charter, or any evidence of obligation or indebtedness by THE 
EXTENSION OF THE TERM OR MATURITY BY [altering or otherwise,] 
ALTERATION OF SUCH AGREEMENT, CONTRACT OR CHARTER, there 
shall be levied, collected and paid a documentary stamp tax, at the same rate 
as that imposed on the original instrument.
SEC. 199. 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.
XXX XXX XXX
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19
20 
21 
22
23
24
25
26
27
28 
29
(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.
(O) REDEMPTION, SALE, BARTER, EXCHANGE, OR OTHER 
MODES OF 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 EXCHANGE OR AN ORGANIZED MARKETPLACE. THE 
ORIGINAL ISSUANCE OF SHARES OR UNITS OF 
PARTICIPATION IN A CIS SHALL NOT BE COVERED BY THIS 
EXEMPTION.
SEC. 35. Prospectivity Ciause. - The changes introduced under this Act shall 
apply to transactions taking effect beginning January 1, 2023.
SEC. 36. 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. 37. 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. 38. 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, dividends, and
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1 
capital gains, gross receipts tax, premium tax, and documentary stamp tax under the
2 
National Internal Revenue Code of 1997, as amended:
3 
(a) 
Section 9, insofar as the tax exemption on the issuance of bonds and
4 
securities is concerned, of Presidential Decree 1648, known as "Reorganizing the
5 
National Development Company and Establishing a Revised Charter Therefor";
6 
(b) 
Sections 6, 7, and 8, insofar as the tax exemptions on interest income,
7 
capital gains, and documentary stamp tax and on the issuance of bonds are
8 
concerned, of Executive Order 603, entitled "Creating a Light Rail Transit Authority,
9 
Vesting the Same With Authority to Construct and Operate the Light Rail Transit (LRT)
10 
Project and Providing Funds Therefor";
11 
(c) 
Section 14, insofar as tax exemption on interest income, capital gains,
12 
and documentary stamp tax is concerned, of Republic Act 7354, entitled "An Act
13 
Creating the Philippine Postal Corporation, Defining Its Powers, Functions And
14 
Responsibilities, Providing for Regulation of the Industry and for Other Purposes
15 
Connected Therewith";
16 
(d) 
Section 12, insofar as the tax exemptions on interest income, capital
17 
gains, and documentary stamp tax and on the issuance of bonds are concerned, of
18 
Republic Act 4850, entitled "An Act Creating the Laguna Lake Development Authority,
19 
Prescribing its Powers, Functions and Duties, Providing Funds Therefor, and for Other
20 
Purposes";
21 
(e) 
Number 8, insofar as tax exemption on interest income, capital gains,
22 
and documentary stamp tax is concerned, of Presidential Decree 37, entitled "Creating
23 
the Nayong Pilipino Foundation";
24 
(f) 
Section 12, insofar as tax exemption on interest income, capital gains,
25 
and documentary stamp tax is concerned, of Presidential Decree 205, entitled
26 
"Creating and Establishing the Development Academy of the Philippines, Defining its
27 
Powers, Functions, and Responsibilities, and for Other Purposes";
28 
(g) Article 202, insofar as tax exemption on interest income, capital gains,
29 
documentary stamp tax, and premium tax is concerned, of Presidential Decree 442 as
30 
amended by Presidential Decree 626, entitled "Labor Code of the Philippines";
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1 
(h) 
Sections 10 and 11, insofar as the tax exemptions on interest income,
2 
capital gains, and documentary stamp tax of subsidiaries of Philippine Aerospace
3 
Development Corporation and on the issuance of bonds are concerned, of Presidential
4 
Decree 696, entitled "Revising Presidential Decree No. 286, dated September 5, 1973,
5 
as amended, otherwise known as The Charter of The Philippine Aerospace
6 
Development Corporation and for Other Purposes";
7 
(i) 
Section 2(g), insofar as the tax exemptions on interest income and on
8 
the issuance of bonds are concerned, of Republic Act 85, as amended by Republic Act
9 
2081, entitled "An Act Creating the Rehabilitation Finance Corporation";
10 
(j) 
Sections 76, 77 and 98, insofar as tax exemption on interest income,
11 
dividends, capital gains, and documentary stamp tax on bonds is concerned, of
12 
Republic Act 3844 or The Agricultural Land Reform Code;
13 
(k) Section 37, insofar as the tax exemption on interest income, capital
14 
gains, gross receipts tax, and documentary stamp tax is concerned, of Republic Act
15 
6848 or The Charter of The Al-Amanah Islamic Investment Bank of the Philippines;
16 
(I) Sections 19, insofar as the tax exemptions on interest income and
17 
issuance of bonds are concerned, of Republic Act 3591, as amended by Republic Act
18 
9576 or An Act Increasing the Maximum Deposit Insurance Coverage, and in
19 
Connection Therewith, to Strengthen the Regulatory and Administrative Authority, and
20 
Financial Capability of the Philippine Deposit Insurance Corporation (PDIC), Amending
21 
for this Purpose Republic Act Numbered Three Thousand Five Flundred Ninety-One,
22 
as amended, otherwise known as The PDIC Charter, and for Other Purposes;
23 
(m) Section 12, insofar as tax exemption on interest income, capital gains,
24 
and documentary stamp tax and the issuance of bonds are concerned, of Executive
25 
Order 1037, entitled "An Act Creating the Philippine Retirement Park System, Providing
26 
Funds Therefor and for Other Purposes";
27 
(n) Sections 5 and 19, insofar as the tax exemptions on the issuance of
28 
bonds, interest income and documentary stamp tax are concerned, of Republic Act
29 
8763 or Flome Guaranty Corporation Act of 2000;
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(o) 
Sections 19 and 25, insofar as tax exemption on documentary stamp tax
2 
is concerned, of Republic Act 7279 or The Urban Development and Housing Act of
3 
1992;
4 
(p) Section 8(a), insofar as tax exemption on interest income, capital gains,
5 
and documentary stamp tax of bonds is concerned, as provided under Section 1 of
6 
Republic Act 6395 or An Act Revising the Charter of the National Power Corporation;
7 
(q) 
Sections 9 and 15, insofar as the tax exemptions on the issuance of
8 
bonds, interest income, capital gains, and documentary stamp tax are concerned, of
9 
PD 334, entitled "Creating the Philippine National Oil Company, Defining its Powers
10 
and Functions, Providing Funds Therefore, and for Other Purposes";
11 
(r) 
Section 16, insofar as tax exemption on interest income, capital gains,
12 
and documentary stamp tax is concerned, of Presidential Decree 1467, entitled "An
13 
Act Creating the Philippine Crop Insurance Corporation, Prescribing Its Powers and
14 
Activities, Providing For Its Capitalization and for the Required Government Premium
15 
Subsidy, and for Other Purposes";
16 
(s) 
Section 3, insofar as the tax exemption on interest income, capital gains,
17 
and documentary stamp tax of bonds is concerned, of Republic Act 3601, entitled "An
18 
Act Granting the National Irrigation Administration";
19 
(t) 
Section 6 (a, xviii (2)), in so far as tax exemption on interest income and
20 
documentary stamp tax is concerned, of PD 1485, as amended by PD 1770, entitled
21 
"Reconstituting the National Grains Authority to the National Food Authority,
22 
Broadening its Functions and Powers and for Other Purposes";
23 
(u) 
Section 5 (e), insofar as tax exemption on interest income, capital gains,
24 
and documentary stamp tax on bonds is concerned, of Republic Act 6260, entitled "An
25 
Act Instituting a Coconut Investment Fund and Creating a Coconut Investment
26 
Company for the Administration Thereof";
27 
(v) 
Section 9, insofar as tax exemption on interest income, capital gains,
28 
and documentary stamp tax on bonds is concerned, of Republic Act 10744 Or Credit
29 
Surety Fund Act of 2014;
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(w)) Section 7, insofar as tax exemption on documentary stamp tax and
2 
premium tax is concerned, of Republic Act 7111, entitled "An Act Establishing The
3 
Overseas Workers' Investment Fund to Provide Incentives to Overseas Workers,
4 
Reduce the Foreign Debt Burden and for Other Purposes";
5 
(x) 
Section 56, insofar as tax exemption on interest income, capital gains,
6 
and documentary stamp tax is concerned, of Republic Act 10801, entitled "An Act
7 
Governing the Operations and Administration of the Overseas Workers Welfare
8 
Administration";
9 
(y) 
Section 5, insofar as tax exemption on interest income is concerned, of
10 
Republic Act 8367, entitled "An Act Providing for the Regulation of the Organization
11 
and Operation of Non-Stock Savings and Loan Associations";
12 
(z) 
Section 28, insofar as tax exemption on capital gains on shares of stock
13 
and documentary stamp tax is concerned, of Republic Act 9267 or The Securitization
14 
Act of 2004";
15 
(aa) 
Section 17, insofar as tax exemption on interest income, capital gains,
16 
gross receipts tax and documentary stamp tax is concerned, of Republic Act 7906,
17 
entitled "An Act Providing for the Regulation of the Organization and Operations of
18 
Thrift Banks, and for Other Purposes";
19 
(bb) Section 15, insofar as tax exemption on capital gains and documentary
20 
stamp tax is concerned, of Republic Act 9182, as amended by Republic Act 9343,
21 
entitled "An Act Granting Tax Exemptions and Fee Privileges to Special Purpose
22 
Vehicles which Acquire or Invest in Non-Performing Assets, Setting the Regulatory
23 
Framework Therefor, and for Other Purposes";
24 
(cc) Sections 13 and 14, insofar as tax exemption on DST and dividends is
25 
concerned, of R.A. 9856 or The Real Estate Investment Act of 2009;
26 
(dd) Section 23, insofar as no deduction from gross income shall be allowed
27 
in respect of any interest if the indebtedness is incurred to finance petroleum
28 
exploration is concerned, of P.D. 87, entitled Amending Presidential Decree No. 8
29 
issued on October 2, 1972, and Promulgating an Amended Act to Promote the
30 
Discovery and Production of Indigenous Petroleum and Appropriate Funds Therefor;
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(ee) Section 6, insofar as tax exemption on interest income, dividends and 
capital gains are concerned, of RA 6426 or the Foreign Currency Deposit Act of the 
Philippines, as amended; and
(ff) Section 32, insofar as the tax exemptions on capital gains, interest 
income and DST and issuance of bonds are concerned, of RA 6424 or the Philippine 
Export Credit Insurance and Guarantee Corporation Act.
SEC. 39. Effectivity - This Act shall take effect fifteen (15) days after its 
complete publication in at least two (2) newspapers of general circulation.
Approved,
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