^cnntr
NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S. No.
SENATE
1364
'iBffict of Hif feffrpinrp
■22 OCT-5 A10.13
RECEIVED BY;
Introduced by Senator Jinggoy Ejerdto Estrada
AN ACT
AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 30, 32, 34, 37, 38, 39, 42, 51, 
52, 54, 56, 57, 73, 108, 121, 122, 123, 174, 176, 179, 181, 182, 183, 184, 
185,186,187,188,189, 190,191,194,195, 196,197,198, AND 199; AND 
REPEALING SECTIONS 127, 175, 177,178, 180,192, 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
The Passive Income and Financial Intermediary Taxation Act (PIFITA) is seen 
to complement the previously passed Republic Act No. 10963 or the Tax Reform for 
Acceleration and Inclusion Law (TRAIN Law) to support recovery from the COVID-19 
pandemic and attract foreign capital and investments, which in turn could finance 
infrastructure projects that could encourage sustainable and inclusive growth through 
job generation.
PIFITA seeks to streamline the taxation for passive income, financial services 
and transactions by reducing the number combinations of tax bases and rates from 
80 to 36. The measure also seeks to harmonize the tax rates on interest, dividends, 
and capital gains to a standard fifteen percent (15%). Furthermore, this measure 
seeks to remove the Documentary Stamp Tax on non-monetary transactions.


The passage of this measure will continue the strong momentum brought in by 
measures in place that have contributed to the recovery of the economy due to the 
pandemic.
Hence, the immediate passage of this bill is earnestly requested.
JINGGOY EJERCITO ESTRADA


fecuntE
NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
itr of tiif
72 XT-5 A10:13
S. No.
)
SENATE
1364
RECEIVED BY;
Introduced by Senator Jinggoy Ejercito Estrada
AN ACT
AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 30, 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, 188, 189, 190, 191, 194, 195, 196, 197, 198, AND 199; AND 
REPEALING SECTIONS 127, 175, 177, 178,180,192, 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 House of Representative of the Philippines in Congress 
assembled:
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Section. 1. Title. - This Act shall be known as the "Passive Income and Financial
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Intermediary Taxation Act.
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Sec. 2. Declaration 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
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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. Promote and develop a tax system that provides neutrality in the tax
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treatment across financial institutions and financial instruments;
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2. Endeavor to simplify an otherwise complex tax system for easy compliance;


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3. Ensure that the taxation of passive income and financial transactions is
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equitable across all stakeholders and discourages arbitrage opportunities;
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and
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4. Promote capital market development and tax competitiveness within the
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context of globalization, increased capital mobility, and 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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"(B) The term 'corporation' shall include partnerships,
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no matter how created or organized, joint-stock companies,
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joint accounts {cuentas en participacion SUCH AS
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COLLECTIVE INVESTMENT SCHEMES), associations, or
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insurance companies, but does not include general
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professional partnerships and a joint venture or consortium
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formed for the purpose of undertaking construction projects
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or engaging in petroleum, coal, geothermal, and other energy
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operations pursuant to an operating or consortium agreement
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under a service contract with the Government. 'General
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professional partnerships' are partnerships formed by persons
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for the sole purpose of exercising their common profession,
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no part of the income of which is derived from engaging in
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any trade or business. A COLLECTIVE INVESTMENT
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SCHEME MAY OR MAY NOT BE REGISTERED WITH THE
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SECURITIES AND EXCHANGE COMMISSION.
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"X X X
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"(L) The term 'shares of stock' shall [include] REFER
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TO shares of stock of a corporation, warrants and/or options,
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WHETHER TO BUY OR SELL SECURITIES, FUTURES
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CONTRACTS, 
AND SUCH OTHER DERIVATIVE
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SECURITIES LISTED AND TRADED IN A LOCAL
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EXCHANGE OR AN ORGANIZED MARKETPLACE, as well


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as units of participation in a partnership (except general 
professional partnerships), joint stock companies, joint 
accounts SUCH AS COLLECTIVE INVESTMENT 
SCHEMES, joint ventures taxable as corporations, 
associations, and recreation or amusement clubs (such as 
gold, polo, or similar clubs), and mutual funds certificates.
"(M) The term 'shareholder' shall include holders of a 
share/s of stock, warrant/s, and/or option/s to purchase 
shares of stock if a 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 SUCH AS 
COLLECTIVE INVESTMENT SCHEMES, 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.
"x X X
"(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
mdebtedness, 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 CORPORTION 
OR IN A COMMERCIAL ENTERPRISE OR PROFIT­
MAKING VENTURE EVIDENCED BY A CERTIFICATE,


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CONTRACT, INSTRUMENTS, WHETHER WRITTEN OR 
ELECTRONIC IN CHARACTER. THESE INCLUDE:
"1. SHARES OF STOCK, BONDS, DEBENTURES, 
NOTES, EVIDENCE OF INDEBTEDNESS, ASSET- 
BACKED SECURITIES;
"2. INVESTMENT CONTRACTS, CERTIFICATES 
OF INTEREST, OR PARTICIPATION IN A PROFIT- 
SHARING AGREEMENT SUCH AS COLLECTIVE 
INVESTMENT SCHEMES OR CERTIFCATE OF DEPOSIT 
FOR A FUTURE SUBSCRIPTION;
"3. FRACTIONAL UNDIVIDED INTERESTS IN 
OIL, GAS, OR OTHER MINERAL RIGHTS;
"4. CERTIFICATES OF ASSIGNMENTS, 
CERTIFICATES OF PARTIIPATION, TRUST 
CERTIFICATES, VOTING TRUST CERTIFICATES, OR 
SIMILAR INSTRUMENTS;
"5. PROPRIETARY OR NON-PROPRIETARY 
MEMBERSHIP CERTIFICATES IN CORPORATIONS; 
AND,
"6. OTHER INSTRUMENTS AS MAY IN THE 
FUTURE BE DETERMINED BY THE SECURITIES AND 
EXCHANGE COMMISSION.
"x X X
"(V) The term 'bank' [means every banking institution, 
as defined- in Section 2 Republic Act No. 337, as omendedy
etherwise known as the General Banking Act. A bank may
either be, a commereial-bank, a thrift bank, a development
bank, a rural bank, a specialized government-bank, or a
cooperative bank] AS DEFINED IN SECTION 3 OF 
REPUBLIC ACT NO. 8791, OTHERWISE KNOWN AS THE 
GENERAL BANKING LAW OF 2000, SHALL REFER TO 
ENTITIES ENGAGED IN THE LENDING OF FUNDS


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OBTAINED IN THE FORM OF DEPOSITS. BANKS SHALL 
BE CLASSIFIED INTO UNIVERSAL BANKS, 
COMMERCIAL BANKS, THRIFT BANKS COMPOSED OF: 
(A) SAVINGS AND MORTGAGE BANKS; (B) STOCKS 
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. 6484, OR THE 
CHARTER OF AL AMANAH ISLAMIC INVESTMENT 
BANK OF THE PHIIPPINES; AND OTHER 
CLASSIFICATIONS OF BANKS AS DETERMINED BY 
THE MONETARY BOARD OF THE BANGKOSENTRAL NG 
PILIPINAS.
"(W) The term 'non-bank financial intermediary' means
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 PARTICIPATIONS, CERTIFCATES OR 
ASSIGNMENT, OR SIMILAR INSTRUMENTS WITH 
RECOURSE, TRUST CERTIFICATES, OR OF 
REPURUCHASE AGREEMENTS, FROM TWENTY (20) OR 
MORE LENDERS AT ANY ONE TIME, FOR PURPOSE OF 
RELENDING OR PURCHASING OF RECEIVABLES AND 
OTHER OBLIGATIONS, BUT DOES NOT INCLUDE 
COMMERCIAL, INDUSTRIAL, AND OTHER NON- 
FINANCIAL COMPANIES, WHICH BORROW FUNDS


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THROUGH ANY OF THESE MEANS FOR THE LIMITED 
PURPOSE OF FINANCING THEIR OWN NEEDS OF THE 
NEEDS OF THEIR AGENTS OR DEALERS, OR 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 Sentra! ng Pilipinas 
(BSP) to perform quasi-banking activities.
"(X) THE TERM 'QUASI-BANK' SHALL REFER TO 
ENTITIES ENGAGED IN THE BORROWING OF FUNDS 
THROUGH THE ISSUANCE, ENDORSEMENT OR 
ASSIGNMENT WITH RECOURSSE OR ACCEPTANCE OF 
DEPOSIT SUBSTITUTES, AS DEFINED IN SECTION 95 
OF REPUBLIC ACT NO. 7653, OR THE NEW CENTRAL 
BANKING ACT FOR PURPOSES OF RELENDING OR 
PURCHASING OF RECEIVABLES AND OTHER 
OBLIGATIONS.
(Y) The term 'quasi-banking activities' [means] 
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 or 
dealers, shall not be considered as performing quasi-banking 
functions: PROVIDED, FURTHER, THAT IF THE 
INTENTION IS FOR THE DEBT INSTRUMENTS TO BE


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HELD BY MORE THAN NINETEEN (19) HOLDERS 
DURIN 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.
"[PO] (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 dealers. 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 Sentra! 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 debts 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.


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'[(2)] (AA) The term 'ordinary income' x x x. 
'[(AA)] (BB) The term 'rank and file employees' x
X X.
"[(6B}] (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' x x x.
"[(DD)] (EE) The term 'regional or area 
headquarters' x x x.
"[(EE)] (FF) The term 'regional operating 
headquarters' x x x.
"[(i=F)] (GG) The term ['long-term—deposit or 
investment certificate' shall refer to certificate of time deposit
or investment in the form of savings, common, or individual
trust funds-deposit substitutes, investment-management
accounts and other investments with a maturity period of not
less than five (5) years, the form of which shall bo prescribed
by the Bangko Sentro! ng Pilipinas (BSP) and issued by banks
only (not by non bank financial intermediaries and finance
companies) to indivuduals in denominations of Ten thousand
pesos (P10,000) and other denominations as may bo


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proscribed by-the BSP.] 'FINANCIAL INSITUTIONS' OR 
'FINANCIAL INTERMEDIARIES' SHALL REFER TO 
PERSONS OR ENTITIES WHOSE PRINICIPAL 
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 AGENCY AUTHORIZED TO REGULATE 
THEM. THESE SHALL INCLUDE BANKS, QUASI-BANKS, 
TRUST 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.
"[(HH)] (II) The term 'minimum wage earner' x x
X.


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"(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 
SENTRAL NG PILIPINAS, THE SECURITIES AND 
EXCHANGE COMMISSION, A CIS MAY EITHER BE 
OPEN-END OR CLOSED-END, DEFINED AS FOLLOWS:
"OPEN-END CJ5SHALL 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
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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 CONTRAXT, 
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 COPORATIONS, 
AND OTHER FORMS OF HOLDING COMPANIES AS MAY 
DETERMINED BY APPORPRIATE GOVERNMENT 
REGULATORY AGENCIES.
"(MM) THE TERM 'DEBT INSTRUMENT' SHALL 
REFER TO INSTRUMENTS REPRESENTING 
BORROWING AND LENDING TRANSACTIONS 
INCLUDING, BUT NOT LIMITED TO, DEBENTURES, 
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
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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 
ORGANIZAITON (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
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CARE AND WELLNESS PROGRAMS AND GENERALLY
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HAVE NO CASH-OUT TRANSACTION."
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Sec. 4. Section 24 (B) and (C) of the National Revenue Code of 1997, as
4 
amended, is hereby amended to read as follows:
5 
"Sec. 24. Income Tax Rates. -
6 
"(A) Rates of Income Tax on Individual Citizen and
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Individual Resident Alien of the Philippines -
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"x X X
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"(B) Rate of Tax on Certain Passive Income: -
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"(1) Interests 
—Royalties}—Prizes-;—and—Other
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Winnings]. - A final tax at the rate of [twenty percent (20%)]
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FIFTEEN PERCENT (15%) is hereby imposed upon the
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amount of interest [ffem-any-curroncy bank-dcposit,-and-yieid
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or any other monetary benefit from deposit substitutes, and
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from trust funds and-similar-arrangcmcnts; royalties, except
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en-books, as well as other literary works and musical
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compositions, which shall be impose a final tax of ten percent
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(10%); prizes (except prizes amounting to Ten thousand
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peses-(P10,000)-or- less which shall be subject to tax under
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Sub5cction--(-A)-of-Section 24; and other winnings (except
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winnings amounting to Ten thousand pesos (P10,000) or less
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from the Philippine Charity Sweepstakes and Lotto which shall
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be cxempt)rdorivod-from-sources within the Philippines:]
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YIELD, OR ANY OTHER MONETARY BENEFIT EARNED
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OR RECEIVED FROM BANK DEPOSIT, DEPOSIT
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SUBSTITUTE, TRUST FUND, AND SIMILAR
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ARRANGEMENTS. [Provided,—however,—That—interest
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mceme-received-by-an-individual taxpayer (except a non-
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resident individual) from a depository bank under the
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expanded foreign currency deposit-system shall be subject to
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a final income tax at the rate-of fifteen percent (15%) of such
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interest income:-^/igwbfci<y/ further. That interest income from
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tong term deposit or investment in the form of savings,
common—or individual trust funds,—deposit—substitutes,-
investment management accounts and other investments
evidenced by certificates-to such form prescribed by the
-Bemgko-Sentral ng Pilipinas (BSP) shall be exempt from-the
tax imposed under this Subsection: Provided, finally, That
should the holder of the certificate pre-terminate the deposit
or investment before^he fifth (5th) yearra 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:-}
"[Feuf (4) years to less than five (5) years--------
"[Three (3) years to less than four (d) years------
12%; and}
"[Less than three (3) years------------------- 20%.]
"(2) Cash and/or Property Dividends. - A final tax at 
the rate of [ton 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 [he] 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 [he] ONE is a member or co-venturer: PROVIDED, 
HOWEVER, THAT THE FIFTEEN PERCENT (15%) TAX
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ON DIVIDENDS SHALL APPLY ONLY ON INCOME 
EARNED ON OR AFTER JANUARY 1, 2020. INCOME 
FORMING PART OF RETAINED EARNNGS AS OF 
DECEMBER 31, 2019, EVEN IF DECLARED OR 
DISTRIBUTED ON OR AFTER JANUARY 1, 2020 SHALL 
BE SUBJECT TO TEN PERECENT (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 Scction-39(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:
"JANUARY 1, 2021: FIVE-TENTH OF ONE 
PERCENT (5/10 OF 1%)
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"JANUARY 1, 2022; FOUR-TENTH OF ONE 
PERCENT (4/10 OF 1%)
"JANUARY lf 2023: THREE-TENTH OF ONE 
PERCENT (3/10 OF 1%)
"JANUARY 1, 2024: TWO-TENTH OF ONE 
PERCENT (2/10 OF 1%)
"JANUARY 1, 2025: ONE-TENTH OF ONE 
PERCENT (1/10 OF 1%)
"THE TAX VALUE 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, 
THAT 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 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 BUSINESS, 
SHALL NOT BE SUBJECT TO TAX UNDER THIS
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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, THAT EFFECTIVE 
JANUARY 1, 2026 EVERY SALE, BARTER, EXCHANGE, 
OR OTHER DISPOSITION OF DEBT INSTRUMENTS
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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.
"[(D}](7) Capital Gains from Sale of Real Property. - 
[Cl)](a) In General. - [The provisions of Section 39(B) 
notwithstanding,] 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 sa\es 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 its political subdivisions or agencies or 
to government-owned or -controlled corporations shall be
18


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determined either under Section 24(A) or under this
2 
Subsection, at the option of the taxpayer.
3 
''[(^](b) Exception. - x x x
4 
"(C) ROYALITES, PRIZES, AND OTHER
5 
WINNINGS. - A FINAL TAX AT THE RATE OF TWENTY
6 
PERCENT (20%) IS HEREBY IMPOSED ON THE
7 
FOLLOWING INCOME DERIVED FROM SOURCES
8 
WITHIN THE PHILIPPINES: "(1) ROYALTIES EARNED
9 
AS PASSIVE INCOME, EXCEPT ROYALTIES FROM
10 
BOOKS, AS WELL AS OTHER LITERARY WORKS AND
11 
MUSICAL COMPOSITIONS WHICH SHALL BE SUBJECT
12 
TO A FINAL TAX OF TEN PERCENT (10%); (2) PRIZES
13 
(EXCEPT PRIZES AMOUONTING TO TEN THOUSAND
14 
PESOS (P10,000) OR LESS) WHICH SHALL BE
15 
SUBJECT TO TAX UNDER SECTION 24(A); AND (3)
16 
OTHER WINNINGS (EXCEPT WINNINGS AMOUNTING
17 
TO TEN THOUSAND PESOS (P10,000) OR LESS FROM
18 
PHILIPPINE CHARITY SWEEPSTAKES AND LOTTO
19 
WHICH SHALL BE EXEMPT)."
20 
Sec. 5. Section 25(A) and (B) of the National Internal Revenue Code of 1997,
21 
as amended, is hereby amended to read as follows:
22 
"Sec. 25. Tax on Nonresident Alien Individual. -
23 
"(A) Nonresident Alien Engaged in Trade of Business
24 
Within the Philippines. -
25 
"[(1) In General.—}A nonresident alien individual
26 
engaged in trade or business in the Philippines shall be subject
27 
to [an] income tax UNDER SECTION 24 OF THIS CODE [7
28 
in the same manncr-as-an-individual citizen and a resident
29 
alien individual.] on taxable income received from all sources
30 
within the Philippines. A nonresident alien individual who shall
31 
come to the Philippines and stay therein for an aggregate
32 
period of more than [one hundred eighty (180)] ONE
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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 Mutual
Fund Company-or--Regional Operating—Headquarter - or
Multinational Company, or Share in the Distributable Net
Income of a Partnership-(Except a General-Professional
Partnership), Joint Account, Joint Venture Taxable as a
Corporation or Association—IntGrestsr-RoyaItics, Prizes, and
Qther-Winnings.---- Cash and/or property dividends from a
domestic corporation, or from a joint stock company, or-frem
an insurance or mutual fund company or from a regional
operating headquarter of multinational company,-or the share
of a nonresident alien individual in the-distributable-net
inc-eme after tax of a—partnership (except - a—general
professional partnership) of which he is a partner, -or the share
of-a-nonresident alien individual in the net income after tax of
an association, a joint account), or a joint venture taxable as
a corporation of which he is a member or a co-venturer;-
mterests;—royalties (in-any-form); and prizes (except-prizes
amounting to Ten thousand pesos (P10,000) or less which
shall be subject to tax-undepSubsection (B)(1) of Section 24);
and other-winnings-(oxcept Philippine-Charity-Sweepstakes
and Lotto winnings)/-shall-be subject to-an-income tax of
twenty percent (20%>on the total amount thereof: Provided,
however, Ihut royalties on books as well-as-other literary
wor-ksT-a-nd royalties on musical compositions shall be subject
to a final tax of ten percent (10%) on the total amount
thereof: Provided, further, That cinematographic films-and
similar works shall be subject to- the-tax provided under
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Section 28 of this Code: Providedrfurthcrmore, That interest
income from long term deposit or investment in the form of
savings,—common—of—individual—tfust—funds,—deposit
substitutes, investment—manogement accounts and other
investments evideneed-by-certificates in such form prescribed
by the Bangko Sentra! ng Pilipinas (BSP) shall be exempt from
the tax imposed under this Subsection: PrevidedrfinaHyr^hQt
should the holder of the certificate-pre terminate the deposit
or investment before the fifth (5th)-years;-a -final-tax shall- be 
imposed on the entire income and shall be deducted and
withheld by the depository-banks-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%;}
"[Threc-fS) years to less than four-{4) years-----
12%; and}
"[Loss than three (3) years------------------- 20%.]
"[(-3) Capital Gains.—Capital gains realized from-salo7 
barter or exchange of shares of stock in domestic corporations
not traded -through the local stock exchange, and real
properties shall bo subject to the tax proscribed under
Subsections (C) and (D) of Section 2d.]
"(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
21


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twenty five percent (25%) of such income. Capital gains
2 
realized by a nonresident alien individual not engaged in trade
3 
or business in the Philippines from the sale of [shares of-stock
4 
in any domestic corporation and] real property shall be
5 
subject to the income tax prescribed under Subsection[s-(€)
6 
and (D)] (B)(7) of Section 24.
7 
"INTERESTS, DIVIDENDS AND CAPITAL GAINS
8 
ON SALE OF SHARES OF STOCK, DEBT INSTRUMENTS,
9 
AND OTHER SECURITIES SHALL BE SUBJECT TO TAX
10 
PRESCRIBED UNDER SECTION 24(B), OR TO THE
11 
PROVISIONS OF APPLICABLE TAX TREATY.
12 
"X X X."
13 
Sec. 6. Section 27(D) of the National Internal Revenue Code of 1997, as
14 
amended, is hereby amended to read as follows:
15 
"Sec. 27. Rates of Income tax on Domestic
16 
Corporations. -
17 
"(A) In General. - Except as otherwise provided in this
18 
Code, an income tax rate of twenty-five percent (25%)
19 
effective July 1, 2020, is hereby imposed upon the taxable
20 
income derived during each taxable year from all sources
21 
within and without the Philippines by every corporation, as
22 
defined in Section 22(B) of this Code and taxable under this
23 
Title as a corporation, organized in, or existing under the laws
24 
of the Philippines.
25 
"x X X
26 
"(D) Rates of Tax on Certain Passive Incomes. -
27 
"[(1) Interest from Deposits and Yield or any other
28 
Monetary Benefit from Deposit Substitutes and-from Trust
29 
Funds and Similar arrangements, and Royalties;—A final tax
30 
at the rate of twenty percent (20%) is hereby-imposed upon
31 
the amount of interest on currency bank deposit and yield or
32 
any other monetary benefit-from deposit substitutes an from
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trast-funds and similar-arrangements received by domestic
corporations, and royalties, deHved-From-sources-within-the
Philippines: Provided, however, That interest income derived
by-a-domestic corporation rom-a-depository bank under the
expanded foreign currency deposit system shall be subject to
a final income 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 be imposed on net capital gains
realized during the taxable year from the sale, exchange or
ethendisposition of shares of stock in a domestic corporation
except shares sold—or—disposed of through the stock
exchange.]
"[(3)-Tax- on-Income -Derived -under the Expanded 
Foreign Currency Deposit System.-----Income-derived -by-a
depository-bank-under the expanded foreign currency deposit
system frem-forcign-eurreney transaetions-witb n0nresidontS7
offshore- banking units in the Philippines local -commercial
ba nks ineluding-branches-of—foreign -banks- that - may—be
authorized by the Bangko Scntro! ng Pilipinas (BSP) to
transact business with foreign currency deposit system shall
be exempt from all -taxes, except-net-income-from- such
transaction as may be specified by the Secretary-of Finance,-
upon■■recommendation by the Monetary Board to be subject
to the regular-income tax payable barks'-Provided-,
T^wevg/'/-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-fina I tax at the rate often percent
(-10%).]
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■^{Any incomc-ef nonresidents, whether individuals-er 
eorporations, from transactions with depository banks under
the expanded systems shall be exempt from income tax.]
[(4) Intercorporate Dividends.----- Dividends received by a
domestic corporatiofi-From-another domestic 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. - 
INTERCOPORATE 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,
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UNLESS OTHERWISE EXEMPT UNDER ITS LOCAL 
LAWS: PROVIDED, FIN ALL Y, THAT THE LIMITATIONS 
UNDER SECTION 34(C) SHALL 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 MDOES OF 
DISPOSITION OF SHARES OF STOCK IN A DOMESTIC 
CORPORATION, EXCEPT SHARES SOLD, OR DISPOSED 
OF THORUGH 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:
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"JANUARY 
lr 2021: FIVE-TENTH OF 
ONE
PERCENT (5/10 OF 1%)
"JANUARY 
1, 2022: FOUR-TENTH OF 
ONE
PERCENT (4/10 OF 1%)
"JANUARY 1, 2023: THREE-TENTH OF ONE 
PERCENT (3/10 OF 1%)
"JANUARY 
1, 2024: TWO-TENTH OF 
ONE
PERCENT (2/10 OF 1%)
"JANUARY 
1, 2025: 
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 TRANSEROR: PROVIDED, THAT 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 THIS OWN ACCOUNT IN 
THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE
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SUBJECT TO TAX UNDER THIS 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) PRESUMPTIIVE 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, THAT EFFECTIVE JANUARY 1, 2026 EVERY 
SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION 
OF DEBT INSTRUMENTS AND OTHER SECURITIES,
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LISTED 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 DENT INSTSTRUMENTS 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.
”[(^] (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 of 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.
nim (F) Minimum Corporate Income Tax on 
Domestic Corporations. -
"(1) Imposition of Tax. - x x x
28


1 
"(2) Carry Forward of Excess Minimum Tax. - x x x
2 
"(3) Relief from the Minimum Corporate Income Tax
3 
Under Certain Conditions. - x x x
4 
"(4) Gross Income Defined. - x x x
5 
"x X X
6 
"In the case of taxpayers engaged in the sale of
7 
service, 'gross income' means gross receipts less sales
8 
returns, allowances, discounts and costs of services. 'Cost of
9 
services' shall mean all direct costs and expenses necessarily
10 
incurred to provide the services required by the customers
11 
and clients including (A) salaries and employee benefits of
12 
personnel, consultants and specialists directly rendering the
13 
service and (B) cost of facilities directly utilized in providing
14 
the service such as depreciation or rental of equipment used
15 
and cost of supplies: Provided, however, That in the case of
16 
banks AND OTHER FINANCIAL INTERMEDIARIES, cost
17 
of services' shall include interest expense."
18 
Sec. 7. Section 28 (A) and (B) of the National Internal Revenue Code of 1997,
19 
as amended, is hereby amended to read as follows:
20 
"Sec. 28. Rates of Income Tax on Foreign Corporations.
21
22 
"(A) Tax on Resident Foreign Corporations. -
23 
"(1) In General. - Except as otherwise provided in this
24 
Code, a corporation organized, authorized, or existing under
25 
the laws of any foreign country, engaged in trade or business
26 
within the Philippines, shall be subject to [an] income tax
27 
UNDER SECTION 27 OF THIS CODE [equivalent to
28 
twenty-five percent (25%) of the] ON taxable income derived
29 
in the preceding taxable year from all sources within the
30 
Philippines [effective July 1, 2020].
31 
"(2) Minimum Corporate Income Tax on Resident
32 
Foreign Corporations. - A minimum corporate income tax of
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31
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two percent (2%) of gross income, as prescribed under 
Section 27(EF) of this Code, shall be imposed, under the same 
conditions, on a resident foreign corporation taxable under 
paragraph (1) of this Subsection: Provided, That effective July 
1, 2020 until June 30, 2023, the rate shall be one percent 
(1%).
"(3) International Carrier. - x x x
"(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 [(cxccpt-those 
activities which -are- registered with the Philippine Economic
Zone Authority)]. The tax shall be collected and paid in the 
same manner as provided in Section 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
"[(6) Tax on Certain Incomes Received by a Resident 
Foreign Corporation. ]
"[(a) Interest from Deposits and Yicld-OF-any other 
Monetary-Benefit-from Deposit Substitutes, Trust Funds-and
Similar Arrangements and-Royalties^----- Interest from--afiy
currency bank deposit and yield or any other monetary benefit
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from deposit substitutes ancH'rom-trust funds and similar
arrangements and royalties dertved-from-sources-within-the
Phtffppines shall be subject to a final income ta-x-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 fifteen percent (15%) of such intefesHne-emey]
"[(b) Income Derived under the Expanded Foreign 
Currency Deposit System.—Income derived by e-deposttery
bank under the expanded foreign currency deposit system
from—foreign—eur-rency—transactions—with—nonresidents,-
offshore banking units in the Philippines, local commercial
banks including branches of foreign banks that may-be
authorized by the Bongko Sentra! 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 bo subject to the-regular--income-ta-x
payable by banks: Provided, however, That interest income
from foreign curreney-loans-grantcd by such-depository banks
under said expanded system to residents other than offshore
banking units in the-Philippinos-or-othop-depesitory banks
tmder-the expanded system shall-be-subjoct to a final tax at
the rate of ton percent (10%).-}
"[Any-income of nonresidents,-whether individuals or 
eorporationsT-from-transactions-with-dopository banks under
the expanded system shall bo exempt from income tax.]
"[(c) Capital Gains from Sale of Shares of Stock Not 
Traded in the Stock Exchange.-----A final tax at the rates
31


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28
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30
31
32
prescribed-below is hereby imposed upon the net capital gains
realized during the taxable year from the sale, batter,
exchange or other disposition of shares of stock in a domestic
corporation except shares sold or dispesed-ef-through-fehe
stock exchange.]
"[(d) Intercorporate- Dividends.—Dividends received 
by a resident foreign-corporation from a domestic corporation
liable to tax tinder this Code shall not be subject to t-ax-oftder
this Title.]
"(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 the Philippines, effective January 1, 2021, shall pay a tax 
equal to twenty-five percent (25%) 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)].
"x X X
"(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 interest on foreign-loans-contractcd on or after
August-1, 1986;]
"[(b) Intcrcorporatc-Dividends^—A final withholding 
tax-at the-rate-of-fiftecn percent (15%) is hereby imposed-on
the amount of cash and/or property dividends received from
a domestic corporation, which shall-be collected and paid-us
provided in Section 57(A)-of this-Code, subject to the
32


1 
condition that the country in whieh-^ihe nonresident foreign
2 
corporation is domiciled, shall allow a credit against the tax
3 
due from the nonresident foreign-corporation taxes deemed
4 
to have been paid in-the-Philippines equivalent to fifteen
5 
percent (15%), -which represents the difference between the
6 
regular income tax and the fifteen percent (15%) tax-on-
7 
dividends as provided in this subparagraph: Provided, That
8 
effective July-1—2020, the credit against the tax due shall be
9 
equivalent to the difference betweerKhe-regular-income-tax
10 
rate provided in Section 28(B)(1) of this Code and the fifteen
11 
percent (15%) tax on dividends;]
12 
"[(c) Capital Gains from Sale of Shares of Stock not
13 
Traded in the Stock Exchange.—A final tax at the rate of
14 
fifteen percent (15%) is hereby imposed upon the not capital
15 
gains realized-during-The taxable-yeai^from the sale, barter,
16 
exehange-or other disposition of shares of stock in a domestic
17 
corporation,- except shares -sold, or disposed of through-the
18 
stock exchange.]"
19 
Sec. 8. Section 32(B)(7)(g) and (h) of the National Internal Revenue Code of
20 
1997, as amended, is hereby amended to read as follows:
21 
"Sec. 32. Gross Income. - xxx
22 
"(A) Exclusions from Gross Income. - The following
23 
items shall not be included in gross income and shall be
24 
exempt from taxation under this Title:
25 
"x x x
26 
"(7) Miscellaneous Items. -
27 
"x X x
28 
"[(g) Gains from the Sale of Bonds,-Debentures or
29 
other Certificate of Indebtedness.—Gains- realized from the
30 
same or exchange or retirement of bonds, -debentures or
31 
other-certificate-of-4ndcbtcdncss with a maturity of more than
32 
flve-(-5)-years.}
33


1 
"(G) INTEREST INCOME FROM, AND GAINS
2 
FROM THE SALE, TRANSFER, OR DISPOSITION OF,
3 
PROJECT SPECIFIC BONDS THAT ARE ISSUED BY THE
4 
REPUBLIC OF THE PHILIPPINES OR ANY OF ITS
5 
INSTRUMENNTALITIES TO FINANCE CAPITAL
6 
EXPENDITURES OR PROGRAMS COVERED BY THE
7 
PHILIPPINE DEVELOPMENT PLAN OR ITS
8 
EQUIVALENT AND OTHER GOVERNMENT PROGRAMS
9 
CONSIDERED TO BE OF HIGH-LEVEL PRIORITY OF
10 
THE COUNTRY: PROVIDED, THAT THE EXEMPTION
11 
SHALL BE UPON THE APPROVAL BY THE SECRETARY
12 
OF FINANCE.
13 
"(h) Gains from Redemption of Shares OR UNITS OF
14 
PARTICIPATION in [Myttei---- Fmdt] COLLECIVE
15 
INVESTMENT SCHEMES. - Gains realized by the investor
16 
upon redemption of shares of stock [in a mutual fund
17 
company] OR UNITS OF PARTICIPATION IN A
18 
COLLECTIVE INVESTMENT SCHEME as defined [m]
19 
UNDER Section 22 [(BB)] (JJ) of this Code.
20 
"x X X."
21 
Sec. 9. Section 34(A), (B), (C), and (E) of the National Internal Revenue Code
22 
of 1997, as amended, is hereby further amended to read as follows:
23 
"Sec. 34. Deductions from Gross Income. - Except for
24 
taxpayers earning compensation income arising from personal
25 
services rendered under an employer-employee relationship
26 
where no deductions shall be allowed under this Section, in
27 
computing taxable income subject 
to income tax under
28 
Sections 24(A); 25(A); 26; 27(A), (B), and (C); and 28(A)(1),
29 
there shall be allowed the following deductions from gross
30 
income.
31 
"(A) Expenses. -
34


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24
25
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27
28
29
30
31
32
"(1) Ordinary and Necessary Trade, Business or 
Professional Expenses. -
"(a) In General. - There shall be allowed as deduction 
from gross income all the ordinary and necessary expenses 
paid or incurred during the taxable year in carrying on or 
which are directly attributable to, the development, 
management, operation and/or conduct of the trade, business 
or exercise of a profession, including:
"x X X
"(b) Substantiation Requirements. - No deduction from 
gross income shall be allowed under Subsection (A) hereof 
unless the taxpayer shall substantiate with sufficient 
evidence, such as official receipts or other adequate records: 
(i) the amount of the expense being deducted, and (ii) the 
direct connection or relation of the expense being deducted 
to the development, management, operation and/or conduct 
of the trade, business or profession of the taxpayer.
"(c) Bribes, Kickbacks and Other Similar Payments. - 
No deduction from gross income shall be allowed under 
Subsection (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.
"x X X.
"(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
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allowed as deduction from gross income: Provided, however, 
That the taxpayer's otherwise allowable deduction for interest 
expense shall be reduced by twenty percent (20%) of the 
interest income subjected to final tax: Provided, finally. That 
if the interest income tax is adjusted in the future, the interest 
expense reduction rate shall be adjusted accordingly based on 
the prescribed standard formula as defined in the rules and 
regulations to be promulgated by the Secretary of Finance, 
upon the recommendation of the Commissioner of Internal 
Revenue.
"(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 
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; OR
"(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)[r©t:].
"[(c) If the indebtedness is incurred—to-finaftc-e 
petroleum exploration.]
"(3) [Optional] Treatment of Interest Expense
RELATED TO ACQUISITION OF ASSET. - [At the option 
of the taxpayer,] interest EXPENSE incurred to acquire 
properly 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 os a
36


1 
ea^-ot—expenditure] SHALL BE CAPITALIZED AND
2 
THEREAFTER AMORTIZED OR DEPRECIATED AS PART
3 
OF THE COST OF THE ASSET.
4 
"X X X.
5 
"(D) Bad Debts. -
6 
"(1) In General. - X X X.
7 
"(2) Securities Becoming Worthless. - If securities, as
8 
defined in Section 22 (T), are ascertained to be worthless and
9 
charged off within the taxable year and are capital assets, the
10 
loss resulting therefrom shall [, in the case of a taxpayer-other
11 
than a bank-or trust-company incorporated under the laws of
12 
the Philippines a substantial port of whose business-is-the
13 
receipt-of deposits, for the - purpose—of this Title,] be
14 
considered as a loss from the sale or exchange[7] OF
15 
CAPITAL ASSETS on the last day of such taxable year[7-ef
16 
capital assets] SECURITIES HELD BY A DEALER IN
17 
SECURITIES OR AN ENTITY LICENSED BY THE
18 
APPROPRIATE GOVERNMENT REGULATORY
19 
AGENCIES TO BUY AND SELL IN SECURITIES
20 
INCLUDING BANKS, AND OTHER FINANCIAL
21 
INTERMEDIARIES, SHALL BE CONSIDERED
22 
ORDINARY ASSETS, AND SECURITIES HELD THAT ARE
23 
ASCERTAINED TO BE WORTHLESS SHALL BE
24 
CONSIDERED ORDINARY LOSSES THAT ARE
25 
ALLOWED AS DEDUCTOIN FROM TAXABLE INCOME.
26 
"X X X."
27 
Sec. 10. Section 37 (A) and (B) of the National Internal Revenue Code of 1997,
28 
as amended, is hereby amended to read as follows:
29 
"Sec. 37. Special Provisions Regarding Income and
30 
Deductions of Insurance Companies, Whether Domestic or
31 
Foreign. -
37


1 
"(A) Special Deductions Allowed to Insurance
2 
Companies, PRE-NEED COMPANIES, AND PENSION
3 
FUNDS. - In the case of insurance companies, PRE-NEED
4 
COMPANIES, AND PENSION FUNDS, whether domestic or
5 
foreign doing business in the Philippines, the net additions, if
6 
any, required by law to be made within the year to reserve
7 
funds and the sums other than dividends paid within the year
8 
on policy and annuity contracts may be deducted from their
9 
gross income: Provided, however, That the released reserve
10 
be treated as income for the year of release.
11 
"(B) Mutual Insurance Companies. - In the case of
12 
MUTUAL LIFE, mutual fire and mutual employers' liability
13 
and mutual workmen's compensation and mutual casualty
14 
insurance companies requiring their members to make
15 
premium deposits to provide for losses and expenses, said
16 
companies shall not [return] INCLUDE as income any
17 
portion of the premium deposits returned to their
18 
policyholders, but shall [return] INCLUDE as taxable income
19 
all income received by them from all other sources plus such
20 
portion of the premium deposits as are retained by the
21 
companies for purposes other than the payment of losses and
22 
expenses and reinsurance reserves.
23 
"x X X."
24 
Sec. 11. Section 38 (A) of the National Internal Revenue Code of 1997, as
25 
amended, is hereby amended to read as follows:
26 
"Sec. 38. Losses from Wash Sales of Stock or
27 
Securities. -
28 
"(A) In the case of any loss claimed to have been
29 
sustained from any sale or other disposition of shares of stock
30 
or securities where it appears that within a period beginning
31 
thirty (30) days before the date of such sale or disposition and
32 
ending thirty (30) days after such date, the taxpayer has
38


1 
acquired (by purchase or by exchange upon which the entire
2 
amount of gain or loss was recognized by law), or has entered
3 
into a [contact] CONTRACT or option so AS to acquire,
4 
substantially identical stock or securities, then no deduction
5 
for the loss shall be allowed under Section 34 unless the claim
6 
is made by a dealer in stock or securities OR BY ANY
7 
ENTITY OR FINANCIAL INTERMEDIARY DULY
8 
LICENSED BY THE APPROPRIATE GOVERNMENT
9 
REGULATORY AGENCIES TO BUY AND SELL IN
10 
SECURITIES EITHER FOR THE ENTITY'S OWN
11 
ACCOUNT OR FOR THE ACCOUNT OF OTHERS and with
12 
respect to a transaction made in the ordinary course of the
13 
business of such dealer.
14 
"x X X."
15 
Sec. 12. Section 39 of the National Internal Revenue Code of 1997, as
16 
amended, is hereby amended to read as follows:
17 
"Sec. 39. Capital Gains and Losses. -
18 
"(A) Definitions. - As used in this Title -
19 
"x X X.
20 
"[(B) Percentage Taken Into Account.—In the case-of
21 
a taxpayer, other than a corporation, only the following
22 
percentages-of the gain or loss recognized upon the sale-of
23 
exchange of a capital asset shall bo taken into account in
24 
computing net capital gain, net capital loss, and net income;]
25 
"[(1) One hundred percent-(-l-Q0%) if the capital asset
26 
has -been held-for-net more than twelvo-(12) months; and]
27 
"[(2) Fifty percent (50%) if the capital asset has been
28 
held-for more than-twelvo (12) months;]
29 
"[(€)] (B) Limitation on Capital Losses. - Losses from
30 
sales or exchanges capital assets shall be allowed only to the
31 
extent of the grains from such sales or exchanges. If a [barik
32 
or trust company incorporated under the laws of -the
39


1 
Philippines-, a substantial part of whose business is the receipt
2 
of- deposits,] DEALER IN SECURITIES OR OTHER
3 
ENTITIES OR FINANCIAL INTERMEDIARIES DULY
4 
LICENSED BY THE APPROPRIATE GOVERNMENT
5 
REGULATORY AGENCIES TO TRADE IN SECURITIES,
6 
sells any bond, debenture, note, or certificate or other
7 
evidence of indebtedness issued by any corporation [(]
8 
including one issued by a government or political subdivision
9 
thereof [)], with interest coupons or in registered form, any
10 
loss resulting from such sale shall not be subject to the
11 
foregoing limitation and shall not be included in determining
12 
the applicability of such limitation to other losses.
13 
"[(D) Net Capital Loss Carry-over.—If any taxpayer;
14 
other than a corporation, sustains in any taxable year-a-net
15 
capital loss, such loss (in an amount not in excess of the net
16 
income for such year) shall be treated in the succeeding
17 
taxable year as a loss from the sale or exchange of a capital
18 
asset held for-net more than twelve (12) months]
19 
"[(E)] (C) Retirement of Bonds, etc. - x x x
20 
"[(F) Gains or Losses from Short Sales—Etc.----For
21 
purposes of this Title—}
22 
"t(l) Cains or losses from short sales of property-shall
23 
bo considered as gains or losses from sales or exchanges-of
24 
capital assets; and,}
25 
"[(2) Gains or losses attributable to the failure to
26 
exorcise privileges or options-to buy or sell property shaH-be
27 
considered as capital goins or I0SS057]"
28 
Sec. 13. Section 42 (A) (1), (2) and (B) (2) of the National Internal Revenue
29 
Code of 1997, as amended, is hereby amended to read as follows:
30 
"Sec. 42. Income from Sources Within the Philippines.
31
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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
31
32
"(A) Gross Income from Sources Within the Philippines. 
- The following items of gross income shall be treated as 
gross income from sources within the Philippines"
"(1) Interests. - Interests AND YIELD ^derived from 
sources within the Philippines, and interest on] FROM DEBT 
INSTRUMENTS, BANK DEPOSITS, DEPOSIT 
SUBSTITUTES, TRUST FUNDS, AND SIMILAR 
ARRANGEMENTS SUCH AS bonds, notes or other interest- 
bearing obligation of residents, corporate or otherwise [7], 
INCLUDING DEBIT INSTRUMENTS OR DEBT 
SECURITIES ISSUED BY THE GOVERNMENT OR ANY 
OF ITS AGENCIES OR INSTRUMENTALITIES;
"(2) Dividends. - The amount received as dividends: 
"(a) From a domestic corporation; and,
"(b) From a foreign corporation, [unless less than] 
WITH AT LEAST fifty percent (50%) of the gross income of 
such foreign corporation for the three-year period ending with 
the close of its taxable year preceding the declaration of such 
dividends (or for such part of such period as the corporation 
has been in existence) was derived from sources within the 
Philippines as determined under the provisions of this Section; 
but only in an amount which bears the same ratio to such 
dividends as the gross income of the corporation for such 
period derived from sources within the Philippines bears [to] 
ON its gross income from all sources.
"x X X.
"(B) Taxable Income from Sources Within the 
Philippines. -
"(1) General Rule. - x x x
"(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
41


1 
actually incurred to provide funds for use in connection with
2 
the conduct or operation of trade or business in the
3 
Philippines [t], OR ON A TRADE OR BUSINESS OUTSIDE
4 
THE PHILIPPINES: PROVIDED, THAT INCOME
5 
GENERATED OR RECEIVED FROM THE USE OF SUCH
6 
FUNDS IN CONNECTION WITH THE CONDUCT OR
7 
OPERATION OF TRADE OR BUSINESS IN THE
8 
PHILIPPINES IS A TAXABLE INCOME IN THE
9 
PHILIPPINES."
10 
Sec. 14. Section 51(C)(2) of the National Internal Revenue Code of 1997, as
11 
amended, is hereby amended to read as follows:
12 
"Sec. 51. Individual Return.-
13 
"(A) Requirements. - x x x
14 
"(B) Where to file. - x x x
15 
"(C) When to file. - x x x
16 
"(1) XXX
17 
"(2) Individuals subject to tax on capital gains:
18 
"(a) From the sale or exchange of shares of stock OR
19 
DEBT INSTRUMENTS AND OTHER SECURITIES not
20 
traded [thru] THROUGH a local [stock] exchange OR AN
21 
ORGANIZED MARKETPLACE as prescribed under Sections
22 
24 [(€}] (B)(3) AND (5), AND 25(A) AND (B) [shall file]
23 
a return SHALL BE FILED within thirty (30) days after each
24 
transaction and a final consolidated return on or before April
25 
15 of each year covering all stock transactions of the
26 
preceding taxable year; [aridj]
27 
"(B) FROM THE SALE, EXCHANGE, OR BARTER
28 
OF SHARES OF STOCK OR DEBT INSTRUMENTS AND
29 
OTHER SECURITIES TRADED THROUGH A LOCALE
30 
EXCHANGE OR AN ORGANIZED MARKETPLACE AS
31 
PRESCRIBED UNDER SECTIONS 25(B)(4) AND (6),
32 
AND 25(A) AND (B), THE TAX SHALL BE COLLECTED BY
42


1 
THE BROKER WHO EFFECTED THE SALE, AND SHALL
2 
BE REMITTED TO THE BUREAU OF INTERNAL
3 
REVENUE WITHIN FIVE (5) BANKING DAYS FROM THE
4 
DATE OF COLLECTION THEREOF. THE BROKER SHALL
5 
LIKEWISE SUBMIT ON MONDAYS OF EACH WEEK TO
6 
THE SECRETARY OF THE LOCAL EXCHANGE OR
7 
ORGANIZED MARKETPLACE OF WHICH THE BROKER
8 
IS A MEMBER, A TRUE AND COMPLETE RETURN
9 
WHICH SHALL CONTAIN A DECLARATION OF ALL THE
10 
TRANSACTIONS EFFECTED DURING THE PRECEDING
11 
WEEK, AND OF ALL TAXES COLLECTED AND TURNED
12 
OVER TO THE BUREAU OF INTERNAL REVENUE; AND,
13 
"[(fe)] (C) From the sale or disposition of real property
14 
under Section 24 [(D)] (B)(7) shall file a return within thirty
15 
(30) days following each sale or other disposition."
16 
Sec. 15. Section 52 (A) and (D) of the National Internal Revenue Code of 1997,
17 
as amended, is hereby amended to read as follows:
18 
"Sec. 52. Corporation Returns. -
19 
"(A) Requirements. - Every corporation AS DEFINED
20 
UNDER SECTION 22(B) OF THIS CODE, AND subject to
21 
the tax herein imposed, except foreign corporations not
22 
engaged in trade or business in the Philippines, shall render,
23 
in duplicate, a true and accurate quarterly income tax return
24 
and final or adjustment return in accordance with the
25 
provisions of Chapter XII of this Title. The income tax return
26 
shall consist of a maximum of four (4) pages in paper form or
27 
electronic form, be filed by the president, vice-president or
28 
other principal officer, shall be sworn to by such officer and
29 
by the treasurer or assistant treasurer, and shall only contain
30 
the following information:
31 
"(1) Corporate profile and information;
43


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
31
32
"(2) Gross sales, receipts or income from services 
rendered, conduct of trade or business, except income subject 
to final tax as provided under this Code;
"(3) Allowable deductions under this Code;
"(4) Taxable income as defined in Section 31 of this 
Code; and,
"(5) Income tax due and payable.
''Provided, That the foregoing provisions shall not 
affect the implementation of Republic Act No. 10708 or 
TIMTA.
"x X X
"(D) Return on Capital Gains Realized from Sale of 
Shares of Stock, DEBT INSTRUMENTS, AND OTHER 
SECURITIES not Traded in the Local [Stock] Exchange OR 
AN ORGANIZED MARKETPLACE. - Every corporation 
deriving capital gains from the sale or exchange of share of 
stock, DEBT INSTRUMENTS AND OTHER SECURITIES 
not traded [thm] THROUGH a local [stock] exchange OR 
AN ORGANIZED MARKETPLACE as prescribed under 
[Sections 24(C), 25(A)(3), 27(E)(2), 28(A)(8)(c) and
28(B)(5)(c)] SECTIONS 27(D)(3), AND (5), AND 28 shall 
file a return within thirty (30) days after each transaction and 
a final consolidated return of all transactions during the 
taxable year on or before the fifteenth (15th) day of the fourth 
(4th) month following the close of the taxable year.
"(E) RETURN ON CAPITAL GAINS REALIZED 
FROM SALE OF SHARES OF STOCK, DEBT 
INSTRUMENTS, AND OTHER SECURITIES TRADED IN 
A LOCAL EXCHANGE OR AN ORGANIZED 
MARKETPLACE. - IT SHALL BE THE DUTY OF EVERY 
BROKER WHO EFFECTED A SALE OF SHARES OF 
STOCK, DEBT INSTRUMENTS AND OTHER SECURITIES
44


1 
TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED
2 
MARKETPLACE, SUBJECT TO THE TAX IMPOSED
3 
UNDER SECTION 27(D)(4) AND (6), AND 28, TO
4 
COLLECT THE TAX DUE AND REMIT THE SAME TO THE
5 
BUREAU OF INTERNAL REVENUE WITHIN FIVE (5)
6 
BANKING DAYS FROM THE DATE OF COLLECTION
7 
THEREOF, AND TO SUBMIT ON MONDAYS OF EACH
8 
WEEK TO THE SECRETARY OF THE LOCAL EXCHANGE
9 
OR ORGANIZED MARKETPLACE, OF WHICH THE
10 
BORROWER IS A MEMBER, A TRUE AND COMPLETE
11 
RETURN WHICH SHALL CONTAIN A DECLARATION OF
12 
ALL THE TRANSACTIONS EFFECTED DURING THE
13 
PRECEDING WEEK, AND TAXES COLLECTED AND
14 
TURNED OVER TO THE BUREAU OF INTERNAL
15 
REVENUE."
16 
Sec. 16. Section 54 of the National Internal Revenue Code of 1997, as
17 
amended, is hereby amended to read as follows:
18 
"Sec. 54. Returns of Receivers, Trustees, [m
19 
Bankruptcy] or Assignees. - [In cases wherein] [r]Receivers,
20 
ADMINISTRATORS, trustees in AN IRREVOCABLE
21 
TRUST OR bankruptcy, or [assignees are] ANY OTHER
22 
PERSON ASSIGNED OR IN CHARGE OF operating the
23 
property or business of [a] ANOTHER PERSON OR
24 
corporation, subject to the tax UNDER THIS CODE
25 
[imposed by this Title, such receivers^ trustees or-assignees]
26 
shall BE IMPOSED WITH THE OBLIGATION TO FILE THE
27 
[make] returns AND PAY THE TAXES FOR SUCH PERSON
28 
OR CORPORATION IN THE SAME MANNER REQUIRED
29 
UNDER THIS CODE, [of net income as and for such
30 
corporation,—in the same—manner and form as sucb
31 
organization is hereinbefore-required to make returns, and]
32 
any tax due on the income as returned by receivers.
45


1 
ADMINISTRATORS, trustees or assignees shall be assessed
2 
and collected in the same manner as if assessed directly
3 
against the [organizations] PERSON, ESTATE OR
4 
ORGANIZATION [of] whose businesses or properties they
5 
have custody OF or control OVER.
6 
"THE TRUSTOR IN A REVOCABLE TRUST, NOT
7 
THE TRUSTEE, SHALL BE RESPONSIBLE IN FILING THE
8 
RETURNS REQUIRED UNDER THIS CODE AND IN
9 
DECLARING THE INCOME RECEIVED FROM THE TRUST
10 
IN ACCORDANCE WITH SECTION 24, 25, 27 AND 28
11 
OF THIS CODE. INCOME OF THE TRUST SUBJECTED
12 
TO FINAL TAX UNDER SECTION 24, 25, 27, 28 SHALL
13 
NO LONGER BE SUBJECT TO TAX UPON
14 
DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR
15 
BENEFICIARY, NOR SHALL THE TRUSTOR OR
16 
BENEFICIARY BE REQUIRED TO DECLARE THE
17 
INCOME AS PART OF ITS TAXABLE INCOME.
18 
"ANY INCOME OF A REVOCABLE TRUST NOT
19 
SUBJECTED TO FINAL TAX SHALL BE SUBJECT TO
20 
CREDITABLE WITHHOLDING TAX UPON
21 
DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR
22 
THE BENEFICIARY AT A RATE NOT EXCEEDING THE
23 
HIGHEST RATE OF TAX IMPOSED ON INDIVIDUALS
24 
UNDER SECTION 24 IN THE CASE OF INDIVIDUAL
25 
TRUSTORS, OR THE CORPORATE INCOME TAX UNDER
26 
SECTION 27 IN THE CASE OF CORPORATE
27 
TRUSTORS."
28 
Sec. 17. Section 56 of the National Internal Revenue Code of 1997, as
29 
amended, is hereby amended to read as follows:
30 
"Sec. 56. Paymentand Assessment of Income Tax for
31 
Individuals and Corporations. -
32 
"(A) Payment of Tax. -
46


1 
X X X.
2 
"(3) Payment of Capital Gains Tax. -
3 
"IN GENERAL - The total amount of tax imposed and
4 
prescribed under Sections 24 [(€)] (B)(3), (24) [(B)]
5 
(B)(5), 24 (B)(7), 25, 27 [(E)(2)] (D)(3), 27(D)(5), 27
6 
(D)(7)/ 28(A) [(8)(c)] and 28(B)(5) [(e)] shall be paid on the
7 
date the return prescribed therefor is filed by the person liable
8 
thereto: Provided, That if the seller submits proof of [his]
9 
THE intention to avail [himself] of the benefit of exemption
10 
of capital gains under existing special laws OR TAX TREATY,
11 
no such payments shall be required: Provided, further, That
12 
in case of failure to qualify for exemption under such special
13 
laws, TAX TREATY and implementing rules and regulations,
14 
the tax due on the gains realized from the original transaction
15 
shall immediately become due and payable, and subject to
16 
the penalties prescribed under applicable provisions of this
17 
Code: Provided, finally. That if the seller, having paid the tax,
18 
submits such proof of intent within six (6) months from the
19 
registration of the document transferring the real property,
20 
[he] THE SELLER shall be entitled to a refund of such tax
21 
upon verification of [his] compliance with the requirements
22 
for such exemption.
23 
"x X X."
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. -
28 
Subject to rules and regulations, the Secretary of Finance may
29 
promulgate, upon the recommendation of the Commissioner,
30 
requiring the filing of income tax return by certain income
31 
payees, the tax imposed or prescribed [by] UNDER Sections
32 
[24(B)( 1)7—24(B)(2), 24(C), 24(D)(1); 25(A)(2), 25(A)(3),-
47


1 
25(B), 25(C), 25(D), 25(E); 27(D)(1),-27(D)(2); 27(D)(3),
2 
27(D)(5); 28(A)(/1), - 28(A)(5), 28(A)(7)(d), 28(A)(7)(b),
3 
28(A)(7)(c), 
28(&X1);' 28(B)(2), 
28(B)(3),.. 28(B)(^),-
4 
28(BX5)(q), 28(B)(5)(b), 28(B)(5)(c)] 24(B), 24(C), 25(A),
5 
25(B), 27(D), 27(E), 28(A), AND 28(B)(5); 33; and 282
6 
of this Code on specified items of income SUBJECT TO
7 
FINAL TAX shall be withheld by payor-corporation and/or
8 
person and paid in the same manner and subject to the same
9 
conditions as provided in Section 58 of this Code.
10 
"(B) XXX
11 
'\{Q.)-Tax-frcc Covenant Bonds.—In any case where
12 
bond57-mortgagGS,- dGGds of trust or other similar-obligations
13 
of domestic or resident foreign corporations, contairr-a
14 
contract or provision by which the obligor agrees to pay any
15 
portion of the tax imposed in this Title upon the obligee-er to
16 
reimburse the obligee for any portion of-the tax or to pay the
17 
interest without deduction for any ta-x-which the obligor may
18 
be required or permitted to pay thereon or to retain therefrom
19 
under any law of the Philippines, or any state or country, the
20 
obligor shall deduct and withhold a tax equal to thirty percent
21 
(30%) of the-interest or other payments upon those bonds7
22 
mortgage57-deeds of-trust et1-other obligations, whether^he
23 
interest or-ethcr-payments are payable annually or at shorter
24 
or longer periods, and whether the bonds; securities or
25 
obligations had-been or will be issued or marketed, and-the
26 
interest or other payment thereon paid, within or without the
27 
Philippines, if the interest or other payment is payable to a
28 
nonresident—alien—or to a citizen or resident of the
29 
Phttipptnesr]"
30 
Sec. 19. Section 73 (A) of the National Internal Revenue Code of 1997, as
31 
amended, is hereby amended to read as follows:
48


1 
"Sec. 73. Distribution of Dividends or Assets by
2 
Corporations. -
3 
"(A) Definition of Dividends. - The term "dividends"
4 
when used in this Title means any distribution made by a
5 
corporation to its shareholders out of its earnings or profits
6 
and payable to its shareholders, whether in money or in other
7 
property.
8 
"Where a corporation distributes all of its assets in
9 
complete liquidation or dissolution, the gain realized or loss
10 
sustained by the stockholder, whether individual or corporate,
11 
is a taxable income or a deductible loss, UNDER SECTIONS
12 
24(A), 25(B), 27(A) AND 28(B), as the case may be.
13 
"(B) Stock Dividend. - x x x."
14 
Sec. 20. Section 108 of the National Internal Revenue Code of 1997,
15 
as amended, is hereby amended to read as follows:
16 
"Sec. 108. Vaiue-added Tax on Saie of Service and
17 
Use or Lease of Properties. -
18 
"(A) Rate and Base of Tax. -xxx
19 
"The phrase 'sale or exchange of services' means the
20 
performance of all kinds of services in the Philippines for
21 
others for a fee, remuneration or consideration, including
22 
those performed or rendered by construction and service
23 
contractors; stock, real estate, commercial, customs and
24 
immigration brokers; lessors of property, whether personal or
25 
real; warehousing services; lessors or distributors of
26 
cinematographic films; persons engaged in milling,
27 
processing, manufacturing or repacking goods for others;
28 
proprietors, operators or keepers of hotels, motels,
29 
resthouses, pension houses, inns, resorts, proprietors or
30 
operators of restaurants, refreshment parlors, cafes and other
31 
eating places, including clubs and caterers; dealers in
32 
securities: [lending investors;] transport goods or cargoes for
49


1 
hire and other domestic common carriers by land relative to
2 
their transport of goods or cargoes; common carriers by air
3 
and sea relative to their transport of passengers, goods or
4 
cargoes from one place in the Philippines to another place in
5 
the Philippines; sales of electricity by generation companies,
6 
transmission by any entity, and distribution companies,
7 
including electric cooperatives; services of franchise grantees
8 
of electric utilities, telephone and telegraph, radio and
9 
television broadcasting and all other franchise grantees
10 
except those under Section 119 of this Code and non-life
11 
insurance companies (except their crop insurances), including
12 
surety, fidelity, indemnity and bonding companies; and similar
13 
services regardless of whether or not the performance thereof
14 
calls for the exercise or use of the physical or mental faculties.
15 
The phrase 'sale or exchange of services' shall likewise
16 
include:
17 
"x X X."
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
21 
Intermediaries Performing Quasi-Banking Functions. - There
22 
shall be collected a tax on gross receipts derived from sources
23 
within the Philippines by all banks and non-bank financial
24 
intermediaries [m] PERFORMING QUASI-BANKING
25 
FUNCTIONS AT THE RATE OF FIVE PERCENT (5%) ON
26 
INCOME SUCH AS INTEREST, COMMISSIONS, AND
27 
DISCOUNTS FROM LENDING ACTIVITIES AS WELL AS
28 
INCOME FROM FINANCIAL LEASING, ROYALTIES,
29 
RENTALS OF PROPERTY, REAL OR PERSONAL,
30 
PROFITS FROM SALE OR EXCHANGE INCLUDING
31 
GAINS DERIVED FROM SALE OR TRANSFER OF REAL
32 
PROPERTIES, NET TRADING GAINS WITHIN THE
50


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
31
TAXABLE YEARS OF FOREIGN CURRENCY, DEBT 
SECURITIES, 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%) [in-aecordancc 
with the following schedule]:
"[(a) On interest, commissions and discounts from 
lending activities as well as income from financial leasing, on
the-basis of remaining maturitics-of-instruments from which
such rocGipts are derived:]
"[Maturity—period—is—five—years—or—less-----
.................................... 5%]
"[Maturity—period—Is—mere—then—five—years—
TTT.rTT-................................ 1%]
"[(b) On dividends and equity shares and net income 
of subsidiaries-------...................;...................... :■..........
9%]
"[(c) On royalties, rentals of property, real or personal, 
profits, from exchange and all other items-tr-eated-as-gress
income-----under---- Sectien-----32-----ef---- this-----Gede------
.......................................................7%]
"[(d) On net trading gains within the taxable year of 
foreign currency, debt—securities, derivatives, and other
similar--------------------- financial----------------------instruments-
............................ .T. rrrr.'.T7.T~.:. 
.................................................. 7%]
"[Provided, however. That in case the maturity period 
referred to in paragraph (a)-is shortened thru pre-termination,
then the maturity period shall bo reckoned-to-end as of the
date of pro termination for purposes of classifying the
51


1 
transaction and the correct rate of tax shall be applied
2 
accordingly.]
3 
"Provided, [fmalty,'] That FOR PURPOSES OF
4 
COMPUTING THE GROSS RECEIPTS, the generally
5 
accepted accounting principles [as may be prescribed by the
6 
Bangko Sentral ng Pilipinas for the bank or non bank financial
7 
intermediary—performing—quasi banking—functions—shaH
8 
tikewise be the basis for the-calculation of gross receipts.] OF
9 
RECORDING INCOME AS ADOPTED BY THE BANK
10 
SHALL BE FOLLOWED: PROVIDED, THAT THE MERE
11 
INCREASE OR DECREASE IN VALUE OF PROPERTY AS
12 
A RESULT OF CHANGES IN MARKET VALUES SHALL
13 
NOT BE CONSIDERED IN THE COMPUTATION OF
14 
GROSS RECEIPTS: PROVIDED, FURTHER, THAT FOR
15 
PURPOSES OF DETERMINING THE GROSS RECEIPTS,
16 
NO DEDUCTION SHALL BE MADE ON THE INCOME
17 
EXCEPT IN THE CASE OF GAINS FROM DEALING IN
18 
PROPERTY AND TRADING, WHERE NET LOSS WITHIN
19 
THE SAME BUSINESS ACTIVITY CAN BE OFFSET TO
20 
DETERMINE THE NET GAIN SUBJECT TO THIS TAX:
21 
PROVIDED, FURTHER, THAT SUCH OFFSETTING
22 
SHALL BE ON A QUARTERLY BASIS, AND ANY NET
23 
LOSS INCURRED IN A QUARTER CAN BE CARRIED
24 
OVER AS DEDUCTION IN THE SUCCEEDING
25 
QUARTERS: PROVIDED, FINALLY, THAT NET LOSS
26 
INCURRED IN A TAXABLE YEAR CANNOT BE CARRIED
27 
OVER TO THE SUCCEEDING TAXABLE YEAR.
28 
"X X X."
29 
Sec. 22. Sec 122 of the National Internal Revenue Code of 1997, as amended,
30 
is hereby amended to read as follows:
31 
"Sec. 122. Tax on Other Non-Bank Financial
32 
Intermediaries. -There shall be collected a tax of five percent
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
31
32
(5%) on the gross receipts derived by other non-bank 
financial intermediaries doing business in the Philippines, from 
interest, commissions, [discounts] AND DISCOUNTS FROM 
LENDING ACTIVITIES, AS WELL AS INCOME FROM 
FINANCIAL LEASING, ROYALTIES, RENTALS OF 
PROPERTY, REAL OR PERSONAL, PROFITS 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 as gross 
mc-emc—under—this—Code:—Provided,—That—interests,
commissions-and discounts-from Iending-activities7 as weti as
income from financial leasing, shall be taxed on the basis of
the remaining maturities of the instruments from which such
receipts are derived,---in--accordance--with-the following
scheduler]
"[Maturity-----is-----five-----(5)-----years-----of-----less
........................................... 5%]
"[Maturity—period—is—more—than—five—^5)—years 
..........................1%]
"[Provided, however, That in case the maturity period 
is shortened thru pretermination, then -the- maturity period
shaii-be-reckonod to end as of the date of pretermination for
purposes of classifying the transaction and the correct rate of
tax shall be applied accordingly.]
53


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
31
32
"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.
"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
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
31
32
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.
"HOLDING COMPANIES SHALL BE SUBJECT TO 
EITHER VALUE ADDED TAX OR GROSS RECEIPTS TAX 
DEPENDING ON THE NATURE OF THEIR BUSINESS 
ACTIVITIES. IF UNDERTAKING FINANCING AND 
OTHER SIMILAR ACTIVITIES, THEY SHALL BE 
SUBJECT TO GROSS RECEIPTS TAX UNDER THIS 
SECTION. INCOME DERIVED FROM THE SALE OF 
GOODS, PROPERTIES AND OTHER SERVICES SHALL 
BE SUBJECT TO VALUE ADDED TAX UNDER SECTION 
105 OF THIS CODE.
"'[Provided,—That-—t-hc—generally—accepted 
accounting principles as may be-prescribed-by-the Sccttritics
55


1 
and- Exchange Commission for other non bank-financial
2 
intermediaries shall likewise be-thebasis-for-the calculation of
3 
gross receipts.]
4 
"Nothing in this Code shall preclude the Commissioner
5 
from imposing the same tax herein provided on persons OR
6 
ENTITIES performing similar [financing] FINANCIAL
7 
INTERMEDIATION activities."
8 
Sec. 23. Section 123 of the National Internal Revenue Code of 1997, as
9 
amended, is hereby amended to read as follows:
10 
"Sec. 123. Tax on Life Insurance AND
11 
REINSURANCE Premiums. - There shall be collected from
12 
every person, company or corporation, [(jexcept purely
13 
cooperative companies or associations [)] doing life insurance
14 
business of any sort in the Philippines, A PREMIUM TAX AT
15 
THE FOLLOWING RATES:
16 
"(A) FOR LIFE INSURANCE INCLUDING HEALTH
17 
INSURANCE AS A RIDER TO LIFE INSURANCE POLICY,
18 
a tax of two percent (2%) of the total premium collected,
19 
whether such premiums are paid in money, notes, credits, or
20 
any substitute for money; but premiums refunded within six
21 
(6) months after payment on account of rejection of risk or
22 
returned for other reason to a person insured shall not be
23 
included in the taxable receipts; nor shall any tax be paid upon
24 
reinsurance by a company IF THE TAX [that] has already
25 
BEEN paid [the tax] ON THE DIRECT PREMIUM; nor upon
26 
premiums collected or received by any branch of a domestic
27 
corporation, firm or association doing business outside the
28 
Philippines on account of any life insurance of the insured who
29 
is a non-resident, if any tax on such premium is imposed by
30 
the foreign country where the branch is established nor upon
31 
premiums collected or received on account of any
32 
reinsurance, if the insured, in case of personal insurance
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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 
ownersEr]: PROVIDED, 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 INSTALMENT 
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.
"NOTHING IN THIS CODE SHALL PRECLUDE THE 
COMMISSIONER FROM IMPOSING THE SAME TAX 
HEREIN PROVIDED ON PERSONS PERFORMING 
SIMILAR INSURANCE BUSINESS ACTIVITIES.
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"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 TRANSFER OF GOODS, 
PROPERTIES OR SERVICES, EARNED OR RECEIVED AS
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AN INCIDENT OF DOING THE BUSINESS OF LIFE,
2 
NON-LIFE AND OTHER INSURANCE ACTIVITIES,
3 
SHALL BE SUBJECT TO THE VALUE ADDED TAX UNDER
4 
SECTION 105 OF THIS CODE: PROVIDED, THAT
5 
INCOME RECEIVED FROM THE INVESTMENT AND
6 
REINVESTMENT OF PREMIUMS EARNED SHALL NOT
7 
BE SUBJECT TO VALUE ADDED TAX NOR TO THE
8 
GROSS RECEIPTS TAX IMPOSED UNDER SECTIONS
9 
121 AND 122 OF THIS CODE.
10 
"A VARIABLE INSURANCE CONTRACT WHERE
11 
AMOUNTS IN EXCESS OF INSURANCE COSTS ARE
12 
COLLECTED AS PART OF THE PREMIUM AND WHERE
13 
UNITS OF PARTICIPATION IN A POOLED FUND ARE
14 
ISSUED TO THE INSURED REPRESENTING THEIR
15 
RESPECTIVE SHARES IN THE POOLED FUND, IS A CIS.
16 
THE AMOUNTS OF PREMIUM COLLECTED IN EXCESS
17 
OF THE INSURANCE COST IS NOT SUBJECT TO
18 
PREMIUM TAX UNDER THIS SECTION AND TO THE
19 
GROSS RECEIPTS TAX IMPOSED UNDER SECTIONS
20 
121 AND 122, OR TO ANY PERCENTAGE TAX IMPOSED
21 
UNDER TITLE V AND TO VALUE ADDED TAX UNDER
22 
SECTION 105, TITLE IV OF THIS CODE.
23 
"Cooperative companies or associations are such as
24 
are conducted by the members thereof with the money
25 
collected from among themselves and solely for their own
26 
protection and not for profit."
27 
Sec. 24. Section 127 of the National Internal Revenue Code of 1997, as
28 
amended is hereby repealed.
29 
Sec. 25. Section 174 of the National Internal Revenue Code of 1997, as
30 
amended, is hereby amended to read as follows:
31 
"Sec. 174. Stamp Tax on Original Issue of Shares of
32 
Stock. - On every original issue, whether on organization.
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reorganization or for any lawful purpose, of shares of stock by
2 
any association, company or corporation, INCLUDING
3 
SHARES OF STOCK OR UNITS OF PARTICIPATION IN
4 
A COLLECTIVE INVESTMENT SCHEME, there shall be
5 
collected a documentary stamp tax of [Two pesos (P2.00) on
6 
each Two hundred pesos (P200), or fractional part thereof, of
7 
the par value.] SEVENTY-FIVE PERCENT OF ONE
8 
PERCENT (0.75%) OF THE PAR VALUE of such shares of
9 
Stock: Provided, That in the case of the original issue of shares
10 
of stock without par value, the amount of the documentary
11 
stamp tax herein prescribed shall be based upon the actual
12 
consideration for the issuance of such shares of stock:
13 
Provided, further. That in the case of stock dividends, on the
14 
actual value represented by each shared] PROVIDED,
15 
FINALLY, THAT IN THE CASE OF COLLECTIVE
16 
INVESTMENT SCHEMES WITHOUT PAR VALUE, THE
17 
DOCUMENTARY STAMP TAX SHALL BE BASED ON THE
18 
INITIAL NET ASSET VALUE PER UNIT."
19 
Sec. 26. Section 175 of the National Internal Revenue Code of 1997, as
20 
amended, is hereby repealed.
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,
24 
Certificate of Stock or Indebtedness Issued in Foreign
25 
Countries. - [Gn-aW] A DOCUMENTARY STAMP TAX OF
26 
SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%)
27 
OF THE VALUE OF THE TRANSACTION SHALL BE
28 
COLLECTED FROM A PERSON SELLING OR
29 
TRANSFERRING bonds, debentures, certificates of stock, or
30 
certificates of indebtedness issued in any foreign country.[7
31 
there shall be collGctcd from the person-selling or transferring
32 
the same in the Philippines, such tax as is required by law-on
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similar instruments when issued,-sold-or-transferred in the
2 
Philippines.]"
3 
Sec. 28. Sections 177 and 178 of the National Internal Revenue Code of 1997,
4 
as amended, are hereby repealed.
5 
Sec. 29. Section 179 of the National Internal Revenue Code of 1997, as
6 
amended, is hereby amended to read as follows:
7 
"Sec. 179. Stamp Tax on AH Debt Instruments. - On
8 
every original issue of debt instruments, there shall be
9 
collected a documentary stamp tax of [One peso and fifty
10 
eeritavos (PI.50) on-each-Two hundred pesos (P200), or
11 
fractional part thereof,] SEVENTY-FIVE PERCENT OF ONE
12 
PERCENT (0.75%) of the issue of any such debt
13 
instruments: Provided, That for such debt instruments with
14 
terms of less than one (1) year, the documentary stamp tax
15 
to be collected shall be of a proportional amount in
16 
accordance with the ratio of its term in number of days to
17 
three hundred sixty-five (365) days: Provided, further. That
18 
only one documentary stamp tax shall be imposed on either
19 
loan agreement, or promissory notes issued to secure such
20 
loan.
21 
"For purposes of this section, the term debt instrument
22 
shall mean instruments representing borrowing and lending
23 
transactions including but not limited to debentures,
24 
certificates of indebtedness, due bills, bonds, loan
25 
agreements, including those signed abroad wherein the
26 
object of contract is located or used in the Philippines,
27 
instruments and securities issued by the government or any
28 
of its instrumentalities, deposit substitute debt instruments,
29 
certificates or other evidences of deposits that either drawing
30 
interest significantly higher than the regular savings deposit
31 
taking into consideration the size of the deposit and the risks
32 
involved or drawing interest and having a specific maturity
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date, [orders for payment of any sum of money otherwise
2 
than at sight or on demand,] promissory notes, whether
3 
negotiable or non-negotiable, except bank notes issued for
4 
circulation."
5 
Sec. 30. Section 180 of the National Internal Revenue Code of 1997, as
6 
amended is hereby repealed.
7 
Sec. 31. Sections 181,182,183,184,185, 186, and 187 of the National Internal
8 
Revenue Code of 1997, as amended, are hereby amended to read as follows:
9 
"Sec. 181. Stamp Tax Upon Acceptance of Bills of
10 
Exchange and Others. - Upon any acceptance or payment of
11 
any bill of exchange or order for the payment of money
12 
purporting to be drawn in a foreign country but payable in the
13 
Philippines, there shall be collected a documentary stamp tax
14 
OF THIRTY PERCENT OF ONE PERCENT (0.30%) [Sixty
15 
centavos (-P0.60) on-each Two hundred pesos (P200), or
16 
fractional part thereof,] of the face value of any such bill of
17 
exchange, or order, or the Philippine equivalent of such value,
18 
if expressed in foreign currency.
19 
"Sec. 182. Stamp Tax on Foreign Bills of Exchange and
20 
Letters of Credit - On all foreign bills of exchange and letter
21 
of credit (including order, by telegraph or otherwise, for the
22 
payment of money issued by express or steamship companies
23 
or by any person or persons) drawn in but payable out of the
24 
Philippines in a set of three (3) or more according to the
25 
custom of merchants and bankers, there shall be collected a
26 
documentary stamp tax OF THIRTY PERCENT OF ONE
27 
PERCENT (0.30%) [Sixty centavos (P0.60) on each-Two
28 
hundred pesos (P200) or fractional part thereof] of the face
29 
value of any such bill of exchange or letter of credit, or the
30 
Philippine equivalent of such face value, if expressed in
31 
foreign currency[r]; 
PROVIDED, THAT A LETTER OF
32 
CREDIT ON WHICH THE DOCUMENTARY STAMP TAX
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IMPOSED UNDER THIS SECTION IS PAID UPON 
OPENING SHALL NOT BE SUBJECT AGAIN TO THE TAX 
IMPOSED BY SECTION 195 UPON AVAILMENT OF THE 
TRUST RECEIPT LINE WHERE THE PROPERTY 
SUBJECT OF THE LETTER OF CREDIT IS MADE A 
SECURITY FOR PAYMENT.
"Sec. 183. Stamp Tax on Life AND HEALTH Insurance 
PoHdes[-. ] OF ANNUITIES, AND HEAL TH 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 PI,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
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collected a documentary stamp tax [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, 2021: ELEVEN AND ONE-HALF 
PERCENT (11.5%),
"JANUARY 1, 2022: TEN AND ONE-HALF 
PERCENT (10.5%),
"JANUARY 1, 2023: NINE AND ONE-HALF 
PERCENT (9.5%),
"JANUARY 1, 2024: EIGHT AND ONE-HALF 
PERCENT (8.5%),
"JANUARY 1, 2025: 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 officer or position, for the 
doing or not doing of anything therein specified, and on all 
obligations guaranteeing the validity or legality of any bond
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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 (P4.0Q), of-fracttonal part thereof,] TWELVE AND 
ONE-HALF PERCENT (12.5%) OF THE PREMIUM 
CHARGED[t]: provided, JHkJ SUCH RATE SHALL BE 
REDUCED ACCORDING TO THE FOLLOWING 
SCHEDULE:
"JANUARY 1, 2021: ELEVEN AND ONE-HALF 
PERCENT (11.5%),
"JANUARY 1, 2022: TEN AND ONE-HALF 
PERCENT (10.5%),
"JANUARY 1, 2023: NINE AND ONE-HALF 
PERCENT (9.5%),
"JANUARY 1, 2024: EIGHT AND ONE-HALF 
PERCENT (8.5%),
"JANUARY 1, 2025: SEVEN AND ONE-HALF 
PERCENT (7.5%).
"Sec. 186. Stamp Tax on [Policies of Annuities, 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 Two hundred pesos (P200), or fractional part
thereof, of the promium or instalment payment-on contract
price collected.] On pre-need plans, [the documentary stamp 
tax-shall be Forty centavos (P0./10-)-on each Two hundred
pesos (P200), or fractional part therof, of the premium or
eentr-ibution-collected.] THERE SHALL BE COLLECTED A
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DOCUMENTARY STAMP TAX OF TWENTY PERCENT OF
2 
ONE PERCENT (0.20%) OF THE PREMIUM OR
3 
INSTALLMENT PAYMENT ON CONTRACT PRICE, OR
4 
CONTRIBUTION CHARGED.
5 
"Sec. 187. Stamp Tax on Indemnity Bonds. - On all
6 
bonds for indemnifying any person, firm or corporation who
7 
shall become bound or engaged as surety for the payment of
8 
any sum of money or for the due execution or performance
9 
of the duties of any office or position or to account for money
10 
received by virtue thereof, and on all other bonds of any
11 
description, except such as may be required in legal
12 
proceedings, or are otherwise provided for herein, there shall
13 
be collected a documentary stamp tax of [Thirty centavos
14 
(P0.30) on each Four pc5O5-(P/1.00)-,--or fractional part
15 
thefeof7] SEVEN AND ONE-HALF PERCENT (7.5%) of the
16 
premium charged."
17 
Sec. 32. Section 188 of the National Internal Revenue Code of 1997, as
18 
amended, is hereby repealed.
19 
Sec. 33. Sections 192 and 193 of the National Internal Revenue Code of 1997,
20 
as amended, are hereby amended to read as follows:
21 
Sec. 34. Sections 195, 198, and 199 of the National Internal Revenue Code of
22 
1997, as amended, are hereby amended to read as follows:
23 
"Sec. 195. Stamp Tax on Mortgages, Pledges, and
24 
Deeds of Trust - On every mortgage or pledge of lands,
25 
estate or property, real or personal, heritable or movable,
26 
whatsoever, where the same shall be made as a security for
27 
the payment of any definite and certain sum of money lent at
28 
the time or previously due and owing or forborne to be paid,
29 
being payable, and on any conveyance of land, estate, or
30 
property whatsoever, in trust or to be sold, or otherwise
31 
converted into money which shall be and intended only as
32 
security, either by express stipulation or otherwise, there shall
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be collected a documentary stamp tax [at the following 
fates:]
"{(a) When the amount secured does not exceed Five
thousand pesos (P5,000). Forty pesos (P40.00).]
"{(b) On each-five—thousand pesos--(PS,000);-or
ffactional part thereof in excess of Five thousand pesos
(P5,000), an additional tax of Twenty pesos (P20.00)] 
OF THIRTY PERCENT OF ONE PERCENT (0.30%) OF 
THE AMOUNT SECURED.
"X X X
"Sec. 198. Stamp Tax on [Assignments and] Renewals 
of Certain Instruments. - Upon each and every [assignment 
or transfcr-of-any-mortgageT-lcase-of-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 instruments, documents and papers 
shall be exempt from the documentary stamp tax:
(a) 
"(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.
"x X X
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"(n) Interbank call loans with maturity of not more than
2 
[seven (7)] FIVE (5) days to cover deficiency in reserves
3 
against deposit liabilities, including those between or among
4 
banks and quasi-banks.
5 
"(O) REDEMPTION, SALE, BARTER, EXCHANGE,
6 
OR OTHER MODES OF DISPOSITION OR EXCHANGE OF
7 
SHARES OF STOCK OR UNITS OF PARTICIPATION IN
8 
A COLLECTIVE INVESTMENT SCHEME OR OTHER CIS
9 
SECURITIES LISTED AND TRADED IN A LOCAL
10 
EXCHANGE OR AN ORGANIZED MARKETPLACE. THE
11 
ORIGINAL ISSUANCE OF SHARES OR UNITS OF
12 
PARTICIPATION IN A CIS SHALL NOT BE COVERED BY
13 
THIS EXEMPTION."
14 
Sec. 35. Prospective Clause. - The changes introduced under this Act shall
15 
apply to transactions taking effect beginning January 1, 2020.
16 
Sec. 36. Implementing Rules and Regulations. -The Department of Finance, in
17 
consultation with the Securities and Exchange Commission, Bangko Sentrai ng
18 
Pilipinas, Insurance Commission, the Bureau of Treasury, and the Bureau of Internal
19 
Revenue, shall issue the implementing rules and regulations for the effective
20 
implementation of this Act.
21 
Sec. 37. Separability Clause. - If, for any reason any article or provision of this
22 
Act, or any portion thereof, or application of such article, provision, or portion thereof
23 
to any person, group, or circumstance is declared invalid or unconstitutional, the
24 
remainder of this Act shall not be affected by such decision or declaration.
25 
Sec. 38. Repealing Clause. - The following laws or provisions of laws are hereby
26 
repealed or modified accordingly and the persons and/or transactions affected herein
27 
are hereby made subject to applicable taxes on interest income, dividends, and capital
28 
gains, gross receipts tax, premium tax, and documentary stamp tax under the National
29 
Internal Revenue Code of 1997, as amended:
30 
(a) Section 9, insofar as the tax exemption on the issuance of bonds and
31 
securities is concerned, of Presidential Decree 1648, known as
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"Reorganizing the National Development Company and Establishing a 
Revised Charter Therefor";
(b) Sections 6, 7, and 8, insofar as the tax exemptions on interest income, 
capital gains, and documentary stamp tax and on the issuance of bonds are 
concerned, of Executive Order 603, entitled "Creating a Light Rail Transit 
Authority, Vesting the Same With Authority to Construct and Operate the 
Light Rail Transit (LRT) Project and Providing Funds Therefor";
(c) Section 14, insofar as tax exemption on interest income, capital gains, and 
documentary stamp tax is concerned, of Republic Act No. 7354, entitled "An 
Act Creating the Philippine Postal Corporation, Defining Its Powers, 
Functions and Responsibilities, Providing for Regulation of the Industry and 
for Other Purposes Connected Therewith";
(d) Section 12, insofar as the tax exemptions on interest income, capital gains 
and documentary stamp tax and on the issuance of bonds are concerned, 
of Republic Act No. 4850, entitled "An Act Creating the Laguna Lake 
Development Authority, Prescribing its Powers, Functions and Duties, 
Providing Funds Therefor, and for Other Purposes";
(e) Number 8, insofar as tax exemption on interest income, capital gains, and 
documentary stamp tax is concerned, of Presidential Decree 37, entitled 
"Creating the Nayong Pilipino Foundation";
(f) Section 12, insofar as tax exemption on interest income, capital gains, and 
documentary stamp tax is concerned, of Presidential Decree 205, entitled 
"Creating and Establishing the Development Academy of the Philippines, 
Defining its Powers, Functions, and Responsibilities, and for Other 
Purposes";
(g) Article 202, insofar as tax exemption on interest income, capital gains, 
documentary stamp tax, and premium tax is concerned, of Presidential 
Decree 442 as amended, by Presidential Decree 626, entitled "Labor Code 
of the Philippines";
(h) Sections 10 and 11, insofar as the tax exemptions on interest income, capital 
gains, and documentary stamp tax of subsidiaries of Philippine Aerospace 
Development Corporation and on the issuance of bonds are concerned, of
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Presidential Decree 696, entitled "Revising Presidential Decree No. 286, 
dated September 5, 1973, as amended, otherwise known as The Charter of 
the Philippine Aerospace Development Corporation and for Other Purposes";
(i) Section 2(g), insofar as the tax exemption on interest income and on the 
issuance of bonds are concerned, of Republic Act No. 85, as amended by 
Republic Act No. 2081, entitled "An Act Creating the Rehabilitation Finance 
Corporation";
(j) Sections 76, 77 and 98, insofar as tax exemption on interest income, 
dividends, capital gains, and documentary stamp tax on bonds is concerned, 
of Republic Act No. 3844 or The Agricultural Land Reform Code;
(k) Section 37, insofar as the tax exemption on interest income, capital gains, 
gross receipts tax, and documentary stamp tax is concerned, of Republic 
Act 6848 or The Charter of The Al-Amanah Islamic Investment Bank of the 
Philippines;
(l) Sections 19, insofar as the tax exemptions on interest income and issuance 
of bonds are concerned, of Republic Act No. 3591, as amended by Republic 
Act No. 9576 or An Act Increasing the Maximum Deposit Insurance 
Coverage, and in Connection Therewith, to Strengthen the Regulatory and 
Administrative Authority, and Financial Capability of the Philippine Deposit 
Insurance Corporation (PDIC), Amending for this Purpose Republic Act 
Numbered Three Thousand Five Hundred Ninety-One, as amended, 
otherwise known as The PDIC Charter, and for Other Purposes;
(m) 
Section 12, insofar as tax exemption on interest income, capital gains, 
and documentary stamp tax and the issuance of bonds are concerned, of 
Executive Order 1037, entitled "An Act Creating the Philippine Retirement 
Park System, Providing Funds Therefor and for Other Purposes";
(n) Sections 5 and 19, insofar as the tax exemptions on the issuance of bonds, 
interest income and documentary stamp tax are concerned, of Republic Act 
No. 8763 or Home Guaranty Corporation Act of 2000;
(o) Sections 19 and 25, insofar as tax exemption on documentary stamp tax is 
concerned, of Republic Act No. 7279 or The Urban Development and 
Housing Act of 1992;
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(p) Section 8(a), insofar as tax exemption on interest income, capital gains, and 
documentary stamp tax of bonds is concerned, as provided under Section 1 
of Republic Act No. 6395 or An Act Revising the Charter of the National 
Power Corporation;
(q) Sections 9 and 15, insofar as the tax exemptions on the issuance of bonds, 
interest income, capital gains, and documentary stamp tax are concerned, 
of PD 334, entitled "Creating the Philippine National Oil Company, Defining 
its Powers and Functions, Providing Funds Therefor, and for Other 
Purposes";
(r) Section 16, insofar as tax exemption on interest income, capital gains, and 
documentary stamp tax is concerned, of Presidential Decree 1467, entitled 
"An Act Creating the Philippine Crop Insurance Corporation, Prescribing Its 
Powers and Activities, Providing For Its Capitalization and for the Required 
Government Premium Subsidy, and for Other Purposes";
(s) Section 3, insofar as the tax exemption on interest income, capital gains, 
and documentary stamp tax of bonds is concerned, of Republic Act No. 
3601, entitled "An Act Granting the National Irrigation Administration";
(t) Section 6 (a. xviii (2)), insofar as tax exemption on interest income and 
documentary stamp tax is concerned, of PD 1485, as amended by PD 1770, 
entitled "Reconstituting the National Grains Authority to the National Food 
Authority, Broadening its Functions and Powers and for Other Purposes";
(u) Section 5 (c), insofar as tax exemption on interest income, capital gains, 
and documentary stamp tax on bonds is concerned, of Republic Act No. 
6260, entitled "An Act Instituting a Coconut Investment Fund and Creating 
a Coconut Investment Company for the Administration Thereof";
(v) Section 9, insofar as tax exemption on interest income, capital gains, and 
documentary stamp tax on bonds is concerned, of Republic Act No. 10744 
or Credit Surety Fund Act of 2014;
(w) 
Section 20, insofar as tax on interest income, capital gains and 
documentary stamp tax is concerned, of Republic Act No. 10693, entitled 
"An Act Strengthening Nongovernment Organizations (NGOs) Engaged in 
Microfinance Operations for the Poor";
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(x) Section 7, insofar as tax exemption on documentary stamp tax and premium 
tax is concerned, of Republic Act No. 7111, entitled "An Act Establishing the 
Overseas Workers' Investment Fund to Provide Incentives to Overseas 
Workers, Reduce the Foreign Debt Burden and for Other Purposes";
(y) Section 56, insofar as tax exemption on interest income, capital gains, and 
documentary stamp tax is concerned, of Republic Act No. 10801, entitled 
"An Act Governing the Operations and Administration of the Overseas 
Workers Welfare Administration";
(z) Section 5, insofar as tax exemption on interest income is concerned, of 
Republic Act No. 8367, entitled "An Act Providing for the Regulation of the 
Organization and Operation of Non-Stock Savings and Loan Associations";
(aa) Section 28, insofar as tax exemption on capital gains on shares of stock 
and documentary stamp tax is concerned, of Republic Act No. 9267 or the 
"The Securitization Act of 2004";
(bb) Section 17, insofar as tax exemption on interest income, capital gains, 
gross receipts tax and documentary stamp tax is concerned, of Republic Act 
No. 7906, entitled "An Act Providing for the Regulation of the Organization 
and Operations of Thrift Banks, and for Other Purposes";
(cc) Section 15, insofar as tax exemption on capital gains and documentary 
stamp tax is concerned, of Republic Act No. 9182, as amended by Republic 
Act No. 9343, entitled "An Act Granting Tax Exemptions and Fee Privileges 
to Special Purpose Vehicles which Acquire or Invest in Non-Performing 
Assets, Setting the Regulatory Framework Therefor, and for Other 
Purposes";
(dd) Sections 13 and 14, insofar as tax exemption on DST and dividends is 
concerned, of Republic Act No. 9586 or The Real Estate Investment Act of 
2009;
(ee) Section 23, insofar as no deduction from gross income shall be allowed 
in respect of any interest if the indebtedness is incurred to finance petroleum 
exploration is concerned, of P.D. 87, entitled Amending Presidential Decree 
No. 8 issued on October 2, 1972 and Promulgating an Amended Act to
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Promote the Discovery and Production of Indigenous Petroleum and
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Appropriate Funds Therefor;
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(ff)Section 6, insofar as tax exemption on interest income, dividends and capital
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gains are concerned, of RA 6426 or the Foreign Currency Deposit Act of the
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Philippines, as amended; and
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(gg) Section 32, insofar as the tax exemptions on capital gains, interest
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income and DST and issuance of bonds are concerned, of Republic Act No.
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6424 or the Philippine Export Credit Insurance and Guarantee Corporation
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Act.
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Sec. 39. Effectivity. - This Act shall take effect on January 1, 2023, or fifteen
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(15) days after its complete publication in the Official Gazette or in at least two (2)
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newspapers of general circulation.
Approved,
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