Republic of the Philippines (3 meg EIVED
HOUSE OF REPRESENTATIVES": 7 lig 5 4 20
Quezon City, Metro Manila ‘(3 ves Use
Woe THES
NINETEENTH CONGRESS \\ ube
First Regular Session %

House BIlINo. 3244
Introduced by REP. LEX ANTHONY CRIS A. COLADA

EXPLANATORY NOTE

This bill will be the fourth part of the Comprehensive Tax Reform Program and
is called the Passive Income and Financial Intermediaries Taxation Act (PIFITA), It
has been approved on third reading during the 18" Congress of the Philippines.

This measure will basically redesign the financial sector taxation by making it
simple, fairer, and more efficient. Specifically, it aims to provide neutrality in tax
treatment across financial institutions and financial instruments, to improve equity
across investors and savors, to minimize arbitrage opportunities, and hopefully, to
promote capital market development and tax competitiveness within the context of
financial globalization, increased capital mobility, and financial inclusion.

PIFITA seeks to impose a unified 15% income tax rate on interest, dividend,
and capital gains from the current zero to thirty percent range. It also imposed a five
percent tax rate on gross receipts from the current zero to seven percent, thus,
removing distinctions according to the security type, nature and maturity.

it further standardizes at 0.75% the documentary stamp tax (DST) rate from
the current 0-1% on the sale of original issue shares of stock, bonds, debentures
certificates of stock or cerlificates of indebtedness issued in any foreign country,

The passage of this bill will give opportunity to reform the taxation system of

the financial sector, a major factor in sustaining and developing the movement of
capital correctly to where they are most needed.

In view of the foregoing, passage of this bill is earnestly La

Y

LEX ANTHONY CRIS A. COLADA
Party-list, AAMBIS-OWA


©
Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

3244

HOUSE BILL NO.

Introduced by Representative Lex Anthony Cris A. Colada

AN ACT
AMENDING SECTIONS 22, 24,25, 27,28, 29, 32,34, 37, 38, 39, 42, 51, 52; 54 $6,575 73,
108, 121, 122, 123, 174, 176, 179, 181, 182, 183, 184, 185, 186, 187, 195, 198 AND 199;
AND REPEALING SECTIONS 127, 175, 177, 178, 180, 188, 192, AND 193; ALL UNDER
REPUBLIC ACT NO, 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL
REVENUE, CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
fe it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled.
SECTION. 1. Title. ~ This Act shall be known as the “Passive Income and Financial
Intermediary Taxation Act.”
SEC. 2. Declaration of Policy. ~The financial sector plays a significant role in the long-term
growth of the national economy. A key policy consideraticn is to allow the capital market to
develop as efficiently as possible, with the least intervention. The optimal taxation of capital
markets, and the products and transactions that come with them, is an essential element in
developing the capital masket. Towards this end, the State recognizes the necessity ofasimpler,
fairer, more efficient, and regionally more competitive tax system for passive income and
financial intermediation to encourage savings and develop as well as deepen the capital

markets. Accordingly, the State edopts the following policies:


The State shall promote and develop # tax system that provides neutrality in the tax 2 treatment
across financial institutions and financial isstruments:
2, The State shall endeavor to simplify an otherwise complex tax system for easy
compliance.
3. The Suate shall ensure that the taxation of passive income and financial transactions 6 is equitable
geross all stakeholders and discourages arbitrage opportunities. 7 4. The State shall promote capital
market development and tax competitiveness within 8 the context of globalization, inereased capital

mobility, and financial inclusion.

SEC, 3: Section 22 of the National internal Revenue Code of 1997, as amended, is 11 hereby
amended to read as follows:
SEC. 22. Definitions - Whe used in this Title:
(Ax
RAK XXX AK
(L) The term ‘shares of stock? shall include] REFER TO shares of stock of a
corporation, warrants andor options [to purchase shares of stock, WHETHER TO
BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND SUCH OTHER 18
DERIVATIVE SECURITIES LISTED AND TRADED IN A LOCAL
EXCHANGE OR AN ORGANIZED MARKETPLACE, as well as units of
participation in a partnership (except general professional partnerships), joint stock
companies, joint accounts, COLLECTIVE INVESTMENT SCHEMES, joint
ventures taxable as corporations, associations, and recreation or amusement elubs (such 23a gol,

polo or similar clubs), axl mutual fund cert
(Mp The term ‘shareholder’ shall {include} REFER TO holders of « share's of 25 stock, warrants
and/or options {to purchase shares of stock of a corporation),

WHETHER TO BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND 27 SUCH
OTHER DERIVATIVE SECURITIES LISTED AND TRADED IN &

LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, as well a5 8

holder of a unit of participation ia a partnership (except general professional 20 partnerships), in a
joint stock company. a joint account, A COLLECTIVE INVESTMENT SCHEME. 3 taxzbie joint
venture, a member of ait association, recreation OF amusement club {such as: golf, polo, or similar

clubs}, anda holder ofa


mutual fund certificate, a member in an association, joint-stock company, or insurance
company.
XXX OXKX | XAK

(1) The ten ‘securities? {means] SHALL REFER TO [shares of stock in a
corporation and rights to subscribe for ot to receive such shares, The term includes
bonds, debentures, notes or certificates, or other evidence of indebtedness, issued by
any corporation, including those issued by a government or political subdivision
thereof, with interest coupons or in registered form|.], SHARES, PARTICIPATION,
OR INTERESTS IN A CORPORATION OR IN A COMMERCIAL
ENTERPRISE OR PROFIT-MAKING VENTURE EVIDENCED BY A
CERTIFICATE, CONTRACT, INSTRUMENTS, WHETHER WRITTEN OR
ELECTRONIC IN CHARACTER. THESE INCLUDE:

(1) SHARES OF STOCK, BONDS, DEBENTURES,
NOTES,

EVIDENCES OF — INDEBTEDNESS, —_ ASSET-BACKED
SECURITIES;

@)_ INVESTMENT CONTRACTS, CERTIFICATES OF INTEREST, OR
PARTICIPATION IN A PROFIT SHARING AGREEMENT SUCH
AS COLLECTIVE INVESTMENT SCHEMES OR CERTIFICATE
OF DEPOSIT FOR A FUTURE SUBSCRIPTION:

(3) FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS, OR
OTHER MINERAL RIGHTS:

(4) CERTIFICATES OF ASSIGNMENTS, CERTIFICATES OF
PARTICIPATION, TRUST CERTIFICATES, VOTING TRUST
CERTIFICATES, OR SIMILAR INSTRUMENTS;

() PROPRIETARY OR NON-PROPRIETARY MEMBERSHIP
CERTIFICATES IN CORPORATIONS; AND

(© OTHER INSTRUMENTS AS MAY BE DETERMINED BY THE
SECURITIES AND EXCHANGE COMMISSION. xxx xxx XXX

(¥) The term ‘bank? {means every banking institution, as defined in Section ?

Republic Act No, 337, as amended, otherwise known as the “General Bar ing Act.” A
bank may either be. a:commercial hank, a thrift bank, a development bank, & rural bank
or specialized government 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 OBTAINED IN THE FORM OF DEPOSITS. BANKS SHALL BE
CLASSIFIED INTO UNIVERSAL BANKS, COMMERCIAL BANKS, AND
THRIFT BANKS COMPOSED OF: (A) SAVINGS AND MORTGAGE BANKS;
(B) STOCK SAVINGS AND LOAN ASSOCIATIONS; AND (©) PRIVATE
DEVELOPMENT BANKS, AS DEFINED IN REPUBLIC ACT NO, 7906, OR
THE THRIFT BANKS ACT; RURAL BANKS, AS DEFINED IN REPUBLIC
ACT NO, 7353 OF THE RURAL BANKS ACT; COOPERATIVE BANKS, AS
DEFINED IN REPUBLIC ACT NO. 6938 OR THE COOPERATIVE CODE;
ISLAMIC BANKS AS DEFINED IN REPUBLIC ACT NO. 6848, OR THE
CHARTER OF AL AMANAH ISLAMIC INVESTMENT BANK OF THE
PHILIPPINES; AND OTHER CLASSIFICATIONS OF BANKS AS
DETERMINED BY THE MONETARY BOARD OF THE BANGKO SENTRAL
NG PILIPINAS.

(WV) The term ‘non-bunk financial intermediary” |means| SHALL REFER

TO fa 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
Sennral ng Pilipinas (BSP) to pertorm quasi-banking activities} PERSONS OR
ENTITIES ENGAGED IN THE BORROWING OF FUNDS, FOR THE
BORROWER'S OWN ACCOUNT, THROUGH THE ISSU ANCE,
ENDORSEMENT, OR ACCEPTANCE OF DEBT INSTRUMENTS OF ANY
KIND OTHER THAN DEPOSITS, OR THROUGH THE ISSUANCE OF
CERTIFICATES OF PARTICIPATIONS, CERTIFICATES OF ASSIGNMENT,
OR SIMILAR INSTRUMENTS WITH RECOURSE, TRUST CERT IFICATES,
OR OF REPURCHASE AGREEMENTS, FROM TWENTY (20) OR MORE
LENDERS AT ANY ONE TIME, FOR PURPOSES OF RELENDING OR
PURCHASING OF RECEIVABLES AND OTHER OBLIGATIONS, BUT DOES
NOT INCLUDE COMMERCIAL, INDUSTRIAL, — AND OTHER
NONFINANCIAL COMPANIES, WHICH BORROW FUNDS THROUGH ANY
OF THESE MEANS FOR THE LIMITED PURPOSE OF FINANCING THEIR
OWN NEEDS OR THE NEEDS OF THEIR AGENTS OR DEALERS.

(X) THE TERM ‘QUAS-BANK’ SHALL REFER TO ENTITIES ENGAGED IN
THE BORROWING OF FUNDS THROUGH THE ISSUANCE,
ENDORSEMENT OR ASSIGNMENT WITH RECOURSE OR ACCEPTANCE
OF DEPOSIT SUBSTITUTES, AS DEFINED IN SUBSECTION (2) HEREOF

4


FOR PURPOSES OF RELENDING OR PURCHASING OF RECEIVABLES
AND OTHER OBLIGATIONS.

{€X)] (¥) 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 instraments of ary 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 oF the needs of their agents or dealers,
shall not be considered as performing quesi-banking functions. PROVIDED,
FURTHER, THAT IF THE INTENTION IS FOR THE DEBT INSTRUMENTS
TO BE HELD BY MORE THAN NINETEEN (19) HOLDERS DURING THE
ENTIRE TERM OF THE DEBT INSTRUMENT AND IF THE TENOR AND
DENOMINATION ARE SUCH THAT THEY CAN BE HELD BY MORE THAN
NINETEEN (19) LENDERS, THEN THE INSTRUMENT SHALL BE
CONSIDERED DEPOSIT SUBSTITUTES.
[CY)] (2) The term “deposit substinutes' shall |mezn} REFER TO an alternative form
cof obtaining funds from the public (the term ‘public means borrowing fiom twenty (20)

or more individual or corporate lenders at any one time) other than deposits, through
the issuance, endorsement, or acceptance of debt instruments far the borrowers own
account, for the purpose of relending or purchasing of receivables and other obligations,
of financing their own needs or the needs of their agent or dealer, These instruments
may include, but need not be limited wo bankers! acceptances, promissory notes,
repurchase agreements, fincluding] EXCLUDING reverse repurchase sgreements
emtered into by and between the Bangko Seniral ng Pilipinas (BSP) and any authorized
agent bank, certificates of assignment or participation and similar instruments with
recourse. DEBT INSTRUMENTS ISSUED BY THE GOVERNMENT AND ANY
OF {ITS AGENCIES AND INSTRUMENTALITIES, INCLUDING
GOVERNMENT FINANCIAL INSTITUTIONS SHALL BE DEEMED ISSUED
TO THE PUBLIC AND CONSIDERED DEPOSIT

SUBSTITUTES. Provided, however, That debt instruments issued for interbank call

Loans with maturity of not more than five (5) days to cover deficiency in reserves against


deposit liabilities, including those between or among banks and quasi-banks, shall not

be considered as deposit substitute debt instruments,

[(Z)] (AA) The term ‘ordinary income’ xxx XXX XXX

[(AA)] (BB) The term “rank and file employees’ xXx XXX XK

[(BB)] (CC) The term ‘mutual fund company’ shall {mean} REFER TO ANY

INVESTMENT COMPANY WHICH IS OR HOLDS ITSELF OUT AS BEING
ENGAGED PRIMARILY, OR PROPOSES TO ENGAGE PRIMARILY IN THE
BUSINESS OF POOLING TOGETHER MONFY 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 es defined under REPUBLIC ACT
NO. 2629, ALSO KNOWN AS the Investment Company Act OF THE
PHILIPPINES,

{(CO)L (DD) The term “trade, business or profession’ xxx XXX XXX

[(DD)] (EE) The term *regional or area headquarters’ xxx Xxx _XAX
[(EE)] (FF) The ism ‘regional operating headquarters? xxx ee xxx

{(FF)] (GG) The teem [long-term deposit or investment certificate’ shall refer te
certificate of time deposit or investment in the form of savings, common or individual
trust funds, deposit substitutes, investment management accounts end other investments
with a maturity period of not less than five (5) years, the form of which shall be
prescribed by the Bangko Sentral ng Pilipinas (BSP) and issued by banks only (not by
non-bank financial intermedianes and finance companies) to individuals in
denominations of Ten thousand pesos (P10,000) and other denominations as may be
prescribed by the BSP.| FINANCIAL INSTITUTIONS’ OR ‘FINANCIAL
INTERMEDIARIES’ SHALL REFER TO PERSONS OR ENTITIES WHOSE
PRINCIPAL FUNCTIONS INCLUDE THE BUSINESS OF LENDING,
FINANCING, INVESTING, OR PLACEMENT OF FUNDS OR EVIDENC
OF INDEBTEDNESS OR FQUITY 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
ITIES AND EXCHANGE COMMISSION DEPENDING ON THE



GOVERNMENT AGENCY AUTHORIZED TO: REGULATE THEM, THESE SHALL.
INCLUDE BANKS, QUASI-BANKS, TRUST ENTITIES, PAWNSHOPS, FOREIGN
EXCHANGE DEALERS, MONEY BROKERS, CREDIT COOPERATIVES,
FINANCING COMPANIES, FINANCE LEASING COMPANIES, INVESTMENT
COMPANIES, AND OTHER ENTITIES ENGAGED IN COLLECTIVE
INVESTMENT SCHEMES, INVESTMENT HOUSES, DING 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)| CUED) The term “seanory minimune wage’ xxx XXX 7

{UHL} (LL) The term “mininam wage eurmer” XXX XXX RX

GJ) 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-INVE: ING, 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 AND THE INSURANCE COMMISSION. 4 CIS MAY ELTHER
BE OPEN-END OR CLOSED-END, DEFINED AS FOLLOWS:

?



‘OPEN-END CIS* SHALL REFER TO A CIS WHERE SECURITIES ARE
OFFERED AND ARE ALWAYS REDEEMABLE BY THE CIS; AND
‘CLOSED-END CIS’ SHALL REFER TO A CIS WHERE A FIXED NUMBER
OF SECURITIES ARE OFFERED IN AN INITIAL PUBLIC OFFERING AND
THEREAFTER MAY BE TRADED IN AN ORGANIZED MARKETPLACE AS:
DETERMINED BY THE SECURITIES AND EXCHANGE COMMISSION,
BUT MAY NOT BE REDEEMED BY THE CIS. A CLOSED-END CIS SHALL
NOT BE ALLOWED TO INCREASE ITS NUMBER OF SECURITIES.
(KK) THE TERM ‘UNIT LINKED INVESTMENT INSTRUMENT’
SHALL REFER TO A CONTRACTUAL CIS ORGANIZED PURSUANT TO A
CONTRACT, SUCH AS TRUST INDENTURE, OR AS AN INVESTMENT
COMPONENT OF AN INSURANCE CONTRACT, ENGAGED OR HOLDS
ITSELF OUT AS BEING ENGAGED, OR PROPOSES TO ENGAGE, IN THE
BUSINESS OF INVESTING, REINVESTING, OR TRADIN IN SECURITIES
OR OTHER INVESTMENT ASSETS, AND ISSUES UNITS OF
PARTICIPATION, EACH OF WHICH REPRESENTS AN UNDIVIDED
INTEREST IN A POOL OF INVESTMENT ASSETS.
(LL) THE TERM ‘HOLDING COMPANY’ SHALL REFER TO ANY
CORPORATION ORGANIZED TO HOLD THE STOCK OF ANOTHER OR
OTHER CORPORATIONS, AND OTHER FORMS OF HOLDING
COMPANIES AS MAY BE DETERMINED BY APPROPRIATE
GOVERNMENT REGULATORY AGENCIES,
(MM) THE TERM ‘DEBT INSTRUMENT SHALL REFER TO
INSTRUMENTS REPRESENTING BORROWING AND LENDING
TRANSACTIONS INCLUDING BUT NOT LIMITED TO DEBENTURES,
CERTIFICATES OF INDEBTEDNESS, DUE BILI BONDS, LOAN
AGREEMENTS, INSTRUMENTS, AND SECURITIES ISSUED BY THE
GOVERNMENT OR ANY OF ITS INSTRUMENTALITIES, DEPOSIT
SUBSTITUTES, CERTIFICATES OR OTHER EVIDENCES OF DEPOSITS,
PROMISSORY NOTES, WHETHER NEGOTIABLE OR NON-NEGOTIABLE,
OTHER SIMILAR INSTRUMENTS, AND OTHER INSTRUMENTS AS MAY
BE DETERMINED BY APPROPRIATE GOVERNMENT AGENCIES,
(NN) THE TERM ‘ORGANIZED MARKETPLACE” SHALL RE!
EXCHANGE, AN OVER-THE-COUNTER MARKET, OR AN ALTERNATIVE
TRADING SYSTEM RECOGNIZED AS SUCH BY THE SECURITIES AND
8



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 } EMBERS AND PARTICIPANTS.
(QO) THE TE! WEALTH INSURANCE PRODUCTS SHALL REFER TO
THOSE THAT ARE BEING OFFERED AND SOLD BY INSURANCE
COMPANIES, EITHER LIFE OR NON-LIFE, WHER! THERE tS 4 LIST
OF COVERED ILLNESSES OF WHICH THE COMPANIES ASSUME RISKS.
AND INDEMNIFY LOSSES BROUGHT BY THE SAID COVERED
ILLNESSES.

(PP) THE TERM HEALTH MAINTENANCE ORGANIZATION (HMO)
PRODUCTS SHALL REFER TO PRE-AGRFED OR DESIGNATED HEALTH
CARE SERVICES TO THE ENROLLED MEMBERS FOR A FIXED PRE-PAID
FEE FOR A SPECIFIED PERIOD OF TIME THROUGH THE USE OF
SELECTED NETWORK OF HEALTH CARE PROVIDERS. HMO
PRODUCTS PROVIDE A WIDE ARRAY OF MEDICAL, SURGICAL AND
HOSPITAL SERVICES THAT INCLUDE PREVENTIVE CARE AND
WELLNESS PROGRAMS AND GENERALLY HAVE NO CASH-OUT
‘TRANSACTION,

SEC. 4, Section 24 (B) and (C) of the National Internal Revenue Cade of 1997, as amended,
is hereby amended to read as follows:

SEC. 24, Income Tax Rates. ~

(A) Rates of Income Tax on Individual Citizen and Individual Resident Alien

of the Philippines. ~


(B) Rate of Tax on Certain Passive Income: ~

(1) Interests}, Royalties, Prizes, and Other Winnings.) ~ & final tax at the rate 3 of [twenty
percent (20%)] FIFTEEN PERCENT (15%) is hereby imposed upon the 4 amount of interest
{trom any currency bank deposit, and yield or any other monetary 5 benefit from deposit substitutes,
and from trast funds and similar arrangements; 6 royalties, except on books, as well as other literary
works and musical compositions, 7 which shall be imposed a fina) tax of ten percent (10%), prizes
(except prizes amounting 8 to Ten thousand pesos (P10,000) or less which shall be subject to tax
under Subsection 9 (A) of Section 24 and other winnings (except winnings amounting to Ten
Thousand 19 pesos (P10,000) oF less from Philippine Charity Sweepstakes and Latte which shall
be

exempt), derived from sources wi the Philippines:| YIELD, OR ANY OTHER
MONETARY BENEFIT EARNED OR RECEIVED FROM BANK DEPOSIT,

DEPOSIT SUBSTITUTE, TRUST FUND. AND SIMILAR ARRANGEMENTS.

[Provided, however, That interest income received by an individual taxpayer (except a 15 non-
resident individual) fFonw a depository bank under the expanded foreign currency 16 deposit system
shall be subject to a final income tax at the rate of fifteen percent (15%) 17 of such interest income:
Provided, further, That interest income from long-term deposit or investment in the form of savings.
common or individual trust funds, deposit substitutes, investment management accounts and other
investments evidenced by 20 certificates in such form prescribed by the Bangko Sentral ng Pilipinas
(BSP) shall be exempt from the tax imposed under this Subsection: Pravided, finally, That should
the 22 holder of the certificate pte-terminate the deposit or investment before the fifth (5!) year, a
Final tax shall be imposed on the entire income and shall be deducted and 24 withheld by the
depository bank from the proceeds of the long-term deposit of 25 investment certificate based on the
remaining maturity thereof:

Four (4) years to less than five (5) years ~ 5%;

Three (3) years to less than (4) years ~ 12%; and

Less than three (3) years ~ 20%]

(2) Cash and/or Property Dividends, ~ & final tax at the rate of [ren percent 30 (10%)
FIFTEEN PERCENT (15%) shall be imposed upon the cash and/or property 31 div idends actually
or constructively received by an individual from 2 domestic 32 corporation or from joint stock
‘company, insurance or mutual fund companies,

ENTITIES ENGAGED IN COLLECTIVE INVESTMENT SCHEMES, and
regional operating headquarters of multinational companies, oF on the share ofan

10


individual in the distributable net income after tax of » partnership (exezpt a general
professional partnership) of which fhe] ONE is @ partner, or on the share of an individual in
the net income after tax of an association, a joint account, oF 4 joint venture or cunsortium
texable as a corporation of which [he] ONE is a member or co-venturer:
PROVIDED, HOWEVER, THAT THE FIFTEEN PERCENT (15%) TAX ON
DIVIDENDS SHALL APPLY ONLY ON INCOME EARNED ON OR AFTER
JANUARY 1, 2020, INCOME FORMING PART OF RETAINED EARNINGS AS
OF DECEMBER 31, 2019, EVEN IF DECLARED OR DISTRIBUTED ON OR
AFTER JANUARY 1, 2020, SHALL BE SUBJECT TO TEN PERCENT (10%)
TAX.

LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 24(4) BASED
ON NET GAIN.

(CO (3) Capital Gains fiom THE Sale, EXCHANGE, BARTER, OR DISPOSITION
of Shares of Stock not Traded in the Stock Exchange OR ORGANIZED
MARKETPLACE. — |The provisions of Section 39(B) notwithstanding, a] A final ax
‘at the rate of fifteen percent (15%) is hereby imposed upon the net capital gains realized

during the taxable year from the sale, berter, 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. ~ & FINAL TAX AT THE
RATE OF SIX-TENTH OF OD 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 MARKETPLAC! AND SHALL BE REDUCED ACCORDING
TO THE FOLLOWING SCHEDUL

JANUARY 1, 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%).

My



THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR GROSS
VALUE IN MONEY OF THE SHARES OF STOCK SOLD, BARTERED,
EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE PAID BY THE
SELLER OR TRANSFEROR: PROVIDED, 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 Li ED BY THE APPROPRIATE
GOVERNMENT REGULATORY AGENCIES 10 BUY AND SELL IN
URITIES, FOR THE DEALER'S OWN ACCOUNT IN THE ORDINARY
COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER THIS
SUBSECTION BUT SUBSECTION (A) AS AN ORDINARY INCOME.
(5) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER,
DISPOSITION OF NON-LISTED AND NON-TRADED DEBT INSTRUMENTS
AND OTHER SECURITIES NOT INCLUDED IN SECTION 24(B}(3) AND (4). —
A FINAL TAX AT THE RATE OF FIFTEEN PERCENT (15%) SHALL BE
IMPOSED ON THE NET CAPITAL GAIN EARNED FROM A DEBT
INSTRUMENT AND OTHER SECURITIES NOT INCLUDED IN
SUBSECTIONS (B)(3) AND (4), ISSUED BY A CITIZEN OR RESIDENT
ALIEN, OR BY A DOMESTIC CORPORATION, OR A RESIDENT FOREIGN
CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS AGENCIES
RUMENTALITIES.

(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,

B


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 SHALI
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, 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 TAN
UNDER THIS SUBSECTION BUT TO SECTION 24(A) AS AN ORDINARY
INCOME.

[(D)[(7) Capital Gains from Sale of Real Property. ~
[0] @) Ja General, ~ [The provisions of Section 3%(B) notwithstanding, a] A final

tax of six percent (6%) based on the gross selling price or current fair market value as

determined in accordance with Section 6(E) of this Code, whichever is higher, is hereby

imposed upon capital gains presumed to have been realized from the sale, exchange, oF

other disposition of real property located in the Philippines. sified as capital assets.
including pacto de retro: sales and other forms of conditional sales, by individuals.
including estates and trusts: Provided, That the tax liability, if any, on gains from sales
or other dispositions of real property to the goverment or any of its political

subdivisions or agencies or to government-owned or -controlled corporations shall be


determined either under Section 24(A) or under this Subsection, at the option of the
taxpayer,
{@2)} (b) Exception. xxx XXX XXX

(©) ROYALTIES, PRIZES, AND OTHER WINNINGS - A FINAL TAX AT THE
RATE OF TWENTY PERCENT (20%) IS HEREBY IMPOSED ON THE
FOLLOWING INCOME DERIVED FROM SOURCES WITHIN THE
PHILIPPINES: (1) ROYALTIES EARNED AS PASSIVE INCOME, EXCEPT
ROYALTIES FROM BOOKS, AS WELL AS OTHER LITERARY WORKS
AND MUSICAL COMPOSITIONS WHICH SHALL BE SUBJECT TO A FINAL
TAX OF TEN PERCENT (10%); (2) PRIZES (EXCEPT PRIZES AMOUNTING
TO TEN THOUSAND PESOS (P10,000) OR LESS) WHICH SHALL BE
SUBJECT TO TAX UNDER SECTION 24 (A); AND (3) OTHER WINNINGS
(EXCEPT WINNINGS AMOUNTING TO TEN THOUSAND PESOS (P10,000)
OR LESS FROM PHILIPPINE CHARITY SWEEPSTAKES AND LOTTO
WHICH SHALL BE EXEMPT).

SE
is hereby amended to read as follows

SEC. 25, Tax on Nonresident Alien Individu:

(A) Nonresident Alien Engaged in Trade or Business Within the Philippines.

= (1) fn General. — JA nonresident alien individual engaged in trade or business in the

Philippines shall be subject to fan] income tax UNDER SECTION 24 OF THIS

i

‘on taxable income received from all sources within the Philippines. A nonresident alien

5, Section 25 (A)} and (B) of the National Internal Revenue Code of 1997, as amended,

CODE[, in the same manner as an individual citizen and a resident alien individu

individual who shall come to the Philippines and stay therein for an aggregate period
of more than [one hundred eighty (1$0)] ONE HUNDRED EIGHTY-THREE (183)
days during any calendar year shal! be deemed « ‘wonresident alien doing business in
the Philippines’, Section 22(G) af 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 us a Corporation ur Association, Interests, Rovulties, Prizes, and Other
Winn
joint stock company, or from an insurance or mutual fund company or from a regional

ings, ~ Cash and/or property dividends from a domestic corporation, or from a

operating headquarter of multinational company, or the share of a nonresident alien
individual in the distributable net income after tax of & partnership (except a genera]
professional partnership) of which he is @ partner, or the share of a nonresident alien

individual in the net income after tax of an association, a joint account), of # joint
venture taxable as a corporation of which he is a member or a co-venturer; interests;
royalties tin any form), and prizes (except prizes amounting to Ten thousand pesos
(10,000) or less which shall be subject 10 tx under Subsection (B) 1) of Section 24),
and other winnings (exeept Philippine Charity Sweepstakes and Lotto winnings), shall
be subject to an income tax of twenty percent (20%) on the total amount thereof:
Provided, however, That royalties on books as well as other literary works, and
royalties on musical compositions shall be subject to a final tax of ten percent (10%)
‘on the total amount thereof: Provided, fietker, That cinematographic films and similar
works shall be subject to the tax provided under Section 28 of this Code: Provided,
“furthermore, That interest income from long-term deposit or investment in the form of
savings, common or individual trust finds, deposit substitutes, investment
‘management accounts and other investments evidenced by certificates in such form
prescribed by the Bangko Seatral ng Pilipinas (BS?) shall be exempt from the tax
imposed under this Subsection: Provided. finally, That should the helder of the
certificate pre-terminate the deposit or invesiment before the fifth (S") yeor, a final tax
shall be imposed on the entire income and shal! be deducted and withheld by the
depository bark from the proceeds of the long-term deposit or investment certificate
based on the remaining matusity thereof]

[Four (4) years to less than five (5) years ~ 5%)

{Three (3) years to less than four (4) years ~ 12%; and]

[Less than three (3) years — 20%]

{(3) Capital Gains. — Capital gains realized from sale, barter or exchange of shares of

stock in domestic corporations uot traded through the local stock exchange, and real
properties shall be subject to the tax prescribed under Subsections (C) and {D) of

Section 24,]


(B) Nonresident Alien Individual Not Engaged in Trade or Business Within the
Philippines. ~ There shall be levied, collected and paid for each taxable year upon the
entire income received from all sources within the Philippines by every nonresident
lien individual not engaged in trade ot business within the Philippines as [interest, cash
andor property dividends, rents, salaries, weges, premiums, annuities, compensation.
remuneration, emoluments, or ether fixed or determinable annual or periodic or casual
gains, profits, and income, fand capital gains, Ja FINAL tax equal to twenty five percent
(25%) of such income. Capital gains realized by a nonresident alien individual not
‘engaged in trade or business in the Philippines from the sale of [shares of stock in any
domestic corporation and} real property shall be subject to the income tax preseribed
under Subsection|s (C) and (D) | (B) {7} of Seetion 24

INTEREST. DIVIDENDS AND CAPITAL GAINS ON SALE OF
SHARES OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES
SHALL BE SUBJECT TO TAX PRESCRIBED UNDER SECTION 24 (8), OR
‘TO THE PROVISIONS OF APPLICABLE TAX TREATY. xxx 1% AK

SEC. 6 Section 27 (D) of the National Internal Revenue Code of 1997, as amended, is hereby
amended to read as follows:
SEC. 27. Rates of Income Tax on Domestie Corporations, ~
(A) Int General. ~ Except as otherwise provided in this Code, an income tax of thirty-
five percent (35%) is hereby imposed upon the taxable income derived during each
taxable year from all sources within and without the Philippines by every corporaiivn,
as defined in Section 22(B) of this Code and taxable under this Title as a corporation,
organized in, or existing under the laws of the Philippines: Provided, That effective
January 1, 2009, the rate of income tax shall be thirty percent (30%).

XXX KKK XXX
(D) Rates of Tax on Certain Passive Incomes,

(1) Interest from Deposits and Yield or any other Monetary Benefit from
Deposit Substitutes and from Trust Funds and. Similar Arrangements, and Royalties.
A final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of
interest on currency bank deposit and yield or any other monetary benefit from deposit
substitutes and from trust funds and similar arrangements reccived by domestic
corporations, and royalties, derived from sources within the Philippines: Provided,


huwever, That interest income derived dy a domestic corporation from a depository
bank under the expanded foreign currency deposit system shall be subject 40 @ final
income tax at the sate of fificen perceat (15%) of such interest income,]

[(2) Capital Gains from the Sale uf Shares of Stock Not Traded in the Stock
Exchange. ~ A final tax at the cate of fifleen percent (15%) shall be imposed on net
capital gains realized during the texable year from the sale, exchange or other
disposition of shares of stock ina 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 from foreign currency transactions with nonresidents, offshore banking units in
the Philippines, local commercial banks including branches of foreign banks that may
he authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with
foreign currency deposit system units and other depository banks under the expanded
forcign currency deposit system sball be exempt feom all taxes, except net income from
such transactions as may be specified by the Secretary of Finance, upon
recommendation by the Monetary Board to be subject to the regular income tax payable
by bunks: Provided, however, That interest income (fom 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
ghall be subject to # final tax at the rate of ten pervent {10%).}

[Any income of nonresidents, whether individuals or corporations, from transactions
with depository banks under the expanded system shall be exempt from income tax.]

(4) Intercorporate Dividends, — Dividends received by a domestic corporation from
‘another domestic corporation shall not be subject to 1ax;)

(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 4
BANK DEPOSIT, DEPOSIT SUBS TE, TRUST FUND, AND SIMILAR
ARRANGEMENTS.

(2) CASH AND/OR PROPERTY DI VIDENDS, - INTERCORPORATE
DIVIDENDS OR DIVIDENDS RECEIVED FROM A DOMESTIC
CORPORATION SHALL NOT BE SUBJECT TO TAX IMPOSED UNDER



THIS SUBSECTION: PROVIDED, THAT NINETY-FIVE PERCENT (95%) OF
DIVIDENDS RECEIVED BY A DOMESTIC CORPORATION FROM
SUBSIDIARY COMPANIES LOCATED OUTSIDE THE PHILIPPINES
SHALL NOT BE SUBJECT TO TAX: PROVIDED, FURTHER, THAT THE
DOMESTIC CORPORATION HOLDS DIRECTLY OR INDIRECTLY AT
LEAST TWENTY PERCENT (20%) SHAREHOLDINGS OF THE
SUBSIDIARY COMPANY AND HAS HELD THE SHAREHOLDINGS FOR A
MINIMUM OF TWO (2) YEARS AT THE TIME OF THE DIVIDENDS
DISTRIBUTION: PROVIDED, FURTHERMORE, THAT, THE SUBSIDIARY
OPERATING COMPANY IS SUBJECT TO AT LEAST TEN PERCENT (10%)
INCOME TAX AND TO WITHHOLDING TAX ON THE DIVIDENDS
DISTRIBUTED TO THE DOMESTIC CORPORATION, UNLESS
OTHERWISE EXEMPT UNDER ITS LOCAL LAWS: PROVIDED, FINALLY,
THAT, THE LIMITATIONS UNDER SECTION 34(C ) SHALI, NOT BE
OBSERVED IN CONNECTION WITH ANY TAXES PAID OR ACCRUED IN
ANY FOREIGN COUNTRY IN RESPECT TO SUCH DIVIDEND.
LIQUIDATING DIVIDENDS SHALL BE SUBJECT TO SECTION 27(A) AND
BASED ON NET GAIN,
(3 CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER OR
DISPOSITION OF SHARES OF STOCK NOT TRADED IN THE STOCK
EXCHANGE OR AN ORGANIZED MARKETPLACE - A FINAL TAX AT THE
RATE OF FIFTEEN PERCENT (15%) IS HEREBY IMPOSED UPON THE NET
CAPITAL GAINS REALIZED DURING THE TAXABLE YEAR FROM THE
SALE, BARTER, EXCHANGE, OR OTHER MODES OF DISPOSITION OF
SHARES OF STOCK IN A DOMESTIC CORPORATION, EXCEPT SHARES
SOLD, OR DISPOSED OF THROUGH A LOCAL STOCK EXCHANGE OR AN
ORGANIZED MARKETPLACE,

(4) PRESUMPTIVE CAPITAL GAINS FROM THE SALE, EXCHANGE,
BARTER OR DISPOSITION OF SHARES OF STOCK TRADED IN THE STOCK
EXCHANGE OR AN ORGANIZED MARKETPLACE. ~ A FINAL TAX AT THE
RATE OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) SHALL BE LEVIED,
ASSESSED AND COLLECTED ON EVERY SALE, BARTER, EXCHANGE,
OR OTHER DISPOSITION OF SHARES OF STOCK LISTED AND TRADED



THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED
MARKETPLACE, AND SHALL BE REDUCED ACCORDING TO THE
FOLLOWING SCHEDULE:
JANUARY 1, 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, 2028: ONE-TENTH OF ONE PERCENT (1/10 OF 1%).
THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR GROSS
VALUE IN MONEY OF THE SHARES OF STOCK SOLD,
BARTERED, EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE PAID
BY THE SELLER OR TRANSFEROR: PROVIDED, 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) HEREOP.
ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR
DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A
DEALER IN SECURITIES LICENSED BY THE APPROPRIATE
GOVERNMENT REGULATORY AGENCIES TO BUY AND SELL IN
SECURITIES, FOR HIS OWN ACCOUNT IN THE ORDINARY COURSE OF
BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER THIS 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 INSTRUMEN
AND OTHER SECURITIES NOT INCLUDED IN SECTION 27(D)(3) AND (4),



ISSUED BY A CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC
CORPORATION. OR A RESIDENT FOREIGN CORPORATION, OR BY
THE GOVERNMENT OR ANY OF ITS AGENCIES OR
INSTRUMENTALITIES,

(6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND TRADED DEBT
INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION
21(D)(@) 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,
LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR 4
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 & DEALER IN SECURITIES OR OTHER
ENTITIES LICENSED BY THE APPROPRIATE GOVERNMENT
REGULATORY AGENCIES TO BUY AND SELL IN DEBT INSTRUMENTS
AND OTHER SECURITIES, FOR THE DEALER'S OWN ACCOUNT IN THE
ORDINARY COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX
UNDER THIS SUBSECTION BUT TO SECTION 27%(A) AS AN ORDINARY
INCOME.

(8)! (7) Capital Gains Reatived 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

20


buildings which are not actually used in the business of a corporation and are treated as
capital assets, based on the gross selling price or fair market value as determined in
accordance with Section 6(E) of this Code, whichever is higher, of such lands and/or
buildings.
(E) ROYALTIES - A FINAL TAX AT THE RATE OF TWENTY PERCENT
(20%) IS HEREBY IMPOSED ON ROYALTIES EARNED AS PASSIVE
INCOME.
{(E](F) Minimum Corporate Income Tax on Domestic Corporations —

(1) Imposition of Tax. - «xx

(2) Carry Forward uf Excess Minimum Tax. —*x*

(3) Relief from the Minimum Corporate Income Tax under Certain

Canditions. — xx %
(4) Gross Income Defined. - xxx
NNN OXKK NRX

{In the case of taxpayers engoged in the sale of service. "gross Income” means gross
receipts less sales returns, allowances, discounts and cost of services. "Cost of services’
hall mean all direct costs and expenses necessarily incurred to provide the services
required by the customers and clients including (A) salaries and employee benefits of
personnel, consultants and specialists directly rendering the service and (B) cost of
facilities directly utilized in providing the service such as depreciation or rental of
equipment used and cost of supplies: Provided. however, That in the case of banks
AND OTHER FINANCIAL INTERMEDIARIES, ‘cost of services’ shall mclude

interest expense.

SEC. 7, Section 28 (A) and (B) of the National Internal Revenue Code of 1997, as amended,
is hereby amended to read as follows:

SEC. 28. Rates of Income Tax on Foreign Corporations. ~

(A) Tax on Resident Foreign Corporations. ~
(1) In General. — Except as otherwise provided in this Code, 2 corporation organized,
authorized, or existing under the laws of any foreign country, engaged in trade or business
Within the Philippines, shall be subject to fan] income tax UNDER SECTION 27 OF THIS
CODE [equivalent to thirty-five percent (35%) of the] ON taxable income derived in the



preceding taxable year from all sources within the Philippines: Provided, That effective
Jenuary 1, 2009, the rate of income tax shall be thirty percent (30%)].


KNX XX AKI
(2) Minimum Corporate Income Tax ou Resident Foreign Corporations. —
minimum corporate income tax of two percent (2%) of gross income, as prescribed
under Section 27{E}(P} of this Code, shall be imposed, under the seme conditions, on a
resident foreign corporation taxable under paragraph (1) of this Subsection.

(3) International Carrier. - xx

14) Offshore Banking Unis, — The provisions of any law to the contrary
notwithstanding, income derived by offshore banking units authorized by the Bangko
Sentral ng Pilipinas (BSP), from foreign currency transactions with nonresidents, other
offshore banking units, local commercial banks, including branches of foreign banks
that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business
with offshore banking units shal] be exempt from al! taxes except net income from such
iransactions as may be specified by the Secretary of Finance, upon recommendation of
the Monetary Board whicl shall be subject to the regular income tax payable by banks:
Provided, however. That any interest income derived from foreign currency loans
granted to residents other then offshore banking units or local commercial Danks,
including local branches of foreign banks that may be authorized by the BSP to transact
business with offshore banking units, shall be subject only to a final tax at the rate of
ten percent (10%).1

[Any income of nonresidents, whether individuals or corporations, from transactions
with said offshore banking units shall be exempt from income tax.)

{(5)] (4) Tax on Branch Profits Remittances. — Any profit remitted by a branch to its
head office shall be subject to a tax of fifteen percent (15%) which shall be based on
the total profits applied or earmacked for remittance without sny deduction for the tax
component thereof, [except those activities which are registered with the Philippine
Ecanoric Zone Authority)] The tax shall be collected and paid in the same manner as
provided in Sections $7 and 58 of this Code: Provided, That interests, dividends, rents,
royalties, including remuneration for technival services, salaries, wages, premiums,
annuities, emoluments or other fixed or determinable annual, periodic or casual yains,
profits, income and capital yains received by a foreign corporation during each taxable
‘year from all sources within the Philippines shall not be treated as branch profits unless

23


the same are effectively connected with the conduct of its trade or business in the

Philippines.

1(6)](5) Regional or Area Headquarters and Regional Operating
Headquarters of Multinational Companies. ~ x x *
107) Tux on Certain Incomes Received bv a Resident Fureign Corporation — |

Ifa) Znterest from Deposits and Yield or any other Monetary Benefit from Deposit
Substieutes, Trust Funds and Similar Arrangements and Royalties. - Interest from any
currency bank deposit and yield or any other monetary benefit {rom deposit substitutes
and from trust funds and similar arrangements and royalties derived from sources
within the Philippines shall be subject to 4 final income tax at the rate of twenty percent
(20%) of such interest. Provided, however, That interest income derived by a resident
foreign corporation from a depository bank under the expanded foreign currency
deposit system shall be subject to a final income tax at the rate of seven and one-half
percent (7 1/2%) of such interest income.)

I(b} Income Derived under the Expanded Foreign Currency Deposit System. - Income
derived by a depository bank under the expanded foreign currency deposit system from
foreign cuvrency transactions with nonresidents, offshore banking units in the
Philippines, local commercial banks including branches of foreign banks that may be
authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with foreign
currency deposit system units and other depository banks under the expanded foreign
currency deposit system shall be exempt from al] taxes, except net income from such
transactions as may be specified by the Secretary of Finance, upon recommendation by
the Monetary Board to be subject to the regular income tax payable by banks. Provided,
however, That interest income trom fareign currency loans granted by such depository
banks under said expanded system to residents other than offshore benking units in the
Philippines or other depository banks under the expended system shall be subject to =
final tax at the rate of ten percent (10%) ]

[Any income of nonresidents, whether individuals or corporations, from transactions
with depository banks under the expanded system shall be exempt from income tax]

[(c) Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange. -®
final tax at the rates prescribed below is hereby imposed upon the net capital gains
realized during the taxable year from the sale, barter, exchange or ather disposition of

24


shares of stock in a domestic corporation except shares sold or disposed of through the
stock exchange:|

[Not over P}00,000... 5%)

{On any amount in excess of P100,000.......10%]

K(d) Intercorporate Dividends, - Dividends received by a resident foreiga corporation
from a domestic corporation liable to tax under this Code shall not be subject to tax
under 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 af business in the Philippines shall pay a tax equal to thirty-five percent
(35%) of the gross income received during each taxable year from all sources within
the Philippines, such us finterests, dividends,] rents, royalties, salaries, premiums
(except reinsuraitce premiums), annuities, emoluments or other fixed or determinable
annual, periodic or casual gains, profits and income, and capital gains, except capital
gains subject 10 tax under subparagraph S[{c}]. Provided, That effective January |,
2009, the rate of income tax shall be thirty percent (30%).

XXX XXX ARK

(5) Tax on Certain Incomes Received by a Nonresident Foreign
Corporation. \{a) Interest on Foreign Loans, ~ A tinal withholding tax at the rate oF
twenty percent (20%) is hereby imposed on the amount of interest on foreign loans
contracted on or after August 1, 1986:]

{(b) Intercorporate Dividends, — A final withholding tax at the cate of fifteen 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 as provided in Section
57(A) of this Code, subject to the condition that the country in which the nonresident
foreign corporation is domicifed, shall allow @ credit against the tax due from the
nonresident foreign corporition taxes deemed to have been paid in the Philippines
equivalent to twenty percent (20%), which represents the difference between the regular
income tax of thirty-five percent (38%) and the fifleen percent (15%) tax on dividends
as provided in this subparagraph. Provided, That effective

2s


January 1, 2009, the credit against the tax due shall be equivalent to fifteen percent
(15%), which represents the difference between the regular income tax of thirty percent
(30%) and the fifteen percent (15%) tax on dividends}

[(e) Capital Gains from Sale af Shares of Stock not Traded in the Stock
Exchange. — A final tex at the rates prescribed below is hereby imposed upon the net

26


capital gains realized during the taxable year from the sale, barter, exchange or ather disposition
of shares of stock in a domestic corporation, except shares sold, or disposed of through the
stock exchange:]
[Not over P100,000........-
[On any amount in excess of P100,000..

INTERESTS AND CAPITAL GAINS FROM SALE, TRANSFER, BARTER, OR
DISPOSITION OF SHARES OF STOCK, DEBT INSTRUMENTS, DEPOSIT
SUBSTITUTES, AND OTHER SECURITIES

SHALL BE SUBJECT TO TAX UNDER SECTION 27(D)(1), (3), (4), (5) AND (6)
OF THIS CODE, OR TO THE PROVISIONS OF THE APPLICABLE TAX
TREATY.

CASH AND/OR PROPERTY DIVIDENDS RECEIVED FROM A DOMESTIC
CORPORATION SHALL BE SUBJECT 10 A FINAL TAX OF FIFTEEN
PERCENT (15%) OR TO THE PROVISIONS OF THE APPLICABLE TAX
TREATY.

SEC. 8, Section 29 (A}, (B) AND (C) of the National Internal Revenue Code of 1997, as
‘amended, is hereby amended to read as follows:
SEC. 29. Imposition of Improperly Accumulated Earnings Tax. ~
(A) In Generat. = |n addition to other taxes imposed by this Title, there is hereby
imposed tor each taxable year on the improperly accumulated taxable income of each
corporation described in Subsection B hereof, an improperly accumulated eamings tax
‘equal to [ten] FIFTEEN percent ((10%)] (15%) of the improperly accumulated taxable
income,
(B) Tax on Corporations Subject to Improperty Accumulated Earnings Tax.
(1) In Genera}, — The improperly accumulated earnings 1x imposed in the
preceding Section shail apply to every corporation formed or availed for the purpose of
avoiding the income tax with respect to its shareholders or the shareholders of any other
corporation, by permitting camings and profits to accumulate instead of being divided
or distributed
(2) Exceptions, ~The improperly accumulated earnings tax as provided for under

this Section shall not apply to;

a


{a)  Pubticly-held corporations;

(b) Barks, [and other} nonhank financial intermediaries, AND OTHER
FINANCIAL INSTITUTIONS AS MAY BE DETERMINED BY THE
APPROPRIATE GOVERNMENT REGULATORY AGENCIES: and
{c) Insurance companies|.| SUCH AS LIFE AND NON-LIFE, REINSURANCE
COMPANIES, PRE-NEED COMPANIES, PENSION FUNDS, AND OTHER
ENTITIES DOING BUSINESS SIMILAR TO INSURANCE,

(C) Evidence of Purpose to Avoid Income Tax. —

[(1) Prima Facie Evidence, ~The fact that any corporation is a mere holding company
or investment company shall be prima facie evidence of a purpose to avoid the tax upon
its shareholders or members]

IQ) Evidence Determinative of Purpose. ~ The fact that the earnings or profits of «
corporation are permitied to accumulate beyond the reasonable needs of the business
shal! be determinative of the purpose to avoid the lux upon its shareholders or members
unless the corporation, by the clear preponderance of evidence, shall prove to the
contrary.t
THE FACT THAT THE EARNINGS OR PROFITS OF A CORPORATION
ARE PERMITTED TO ACCUMULATE BEYOND THE REASONABLE
NEEDS OF THE BUSINESS SHALL BE DETERMINATIVE
OF THE PURPOSE TO AYOID THE TAX UPON ITS SHAREHOLDERS OR
MEMBERS UNLESS THE CORPORATION, BY THE CLEAR
PREPONDERANCE OF EVIDENCE, SHALL PROVE TO THE CONTRARY.

SXX XXX RAK

EC. 9, Section 32(B)(7Xg) and (h) of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows:
SEC. 32. Gross Income. — xxx
(B) Exclusions from Gross Income. ~— The following items shall not be incheded in
gross income and shall be ¢xempt from taxation under this Title:

(7) Miscetlaneous Items, —

28


[(e) Guins from the Sale of Bonds, Debentures oe other Certificate of Indebtedness.
— Gains realized trom the same or exchange ot retirement of bonds, debentures or other
certificate of indebtedness with a maturity of more than five (5) years.

(G) INTEREST INCOME FROM, AND GAINS FROM THE SALE,
TRANSFER, OR DISPOSITION OF, PROJECT SPECIFIC BONDS THAT ARE
ISSUED BY THE REPUBLIC OF THE PHILIPPINES OR ANY OF ITS
INSTRUMENTALITIES TO FINANCE CAPITAL EXPENDITURES OR
PROGRAMS COVERED BY THE PHILIPPINE DEVELOPMENT PLAN OR
ITS EQUIVALENT AND OTHER GOVERNMENT PROGRAMS
CONSIDERED TO BE OF HIGH-LEVEL PRIORITY OF THE COUNTRY:
PROVIDED, THAT, THE EXEMPTION SHALL BE UPON THE APPROVAL.
BY THE SECRETARY OF FINANCE.

(h) Gains from Redemption of Shares OR UNITS OF PARTICIPATION in (Mutual
Fund.| COLLECTIVE INVESTMENT SCHEMES ~ Gains realized by the investor
upon cedemption of shares of stock fin a mutual find company] OR UNITS OF
PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME as defined
[in] UNDER Section 22 [BB] (JJ) of this Code,

XXX RAK OXRX

SEC. 10. Section 3A), (B}, (C) and {E) of the National Iniemal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
SEC. 34. Deductions from Gross Income. ~ Except for taxpayers earning
compensation income arising from personal services rendered under an
employeremployee relationship where no deductions shall be allowed under this
Section, in computing taxable income subject to income tax under Sections 24(A),
25(A); 26; 27(A), (B), and (C); and 28(A}(1), there shall be allowed the following
deductions from gross income;
(A) Expenses. ~
(1) Ordinary and Necessary Trade, Business or Professional Expenses.
(a) In General, ~ There shal) be allowed 2s deduction from gross income all the

ordinary and necessary expenses paid or incurred ducing the taxable yea in carrying on



or which are directly atributable to, the development, management, operation and/or
conduct of the trade, business or exercise of a profession, including:
XXX NAR OXAX

(bd) Substantiarion Requirements, ~ No deduction from gross income shall
be allowed under Subsection (A) hereof untess the taxpayer shall substantiate with
sufficient evidence, such as official reecipts 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 andior conduct af the tratle,
business or profession of the taxpayer.

(©) Bribes, Kickbacks and Other Similar Payments, ~ No deduction from
gross income shall be allowed under Subsection (A) hereof for any payment made,
directly of indirectly, to an official or employee of the nationel government, or to an
official or employee of any local government unit, or to an official or employee of a
governmentowned or -comtrolled corporation. or to an official or employee or
representative of a foreign government, er toa private corporation, general professianal
partnership, or a similar entity, if the payment constitutes a bribe or kickback.

XXX AXX XXX
(B) Interest. ~

(1) In General. — The amount of interest paid or incurred within a taxable
year on indebtedness in connection with the taxpayer's profession, trade oF business
shall be allowed as deduction from gross income: Provided, however, That the
taxpayer's otherwise allowable deduction for imerest expense shall be reduced by
fortytwo percent (42%) of the interest income subjected to final tax: Provided, That
effective January |, 2009, the percentage shall be thirty-three percent (32%).
PROVIDED
FURTHER, THAT EFFECTIVE JANUARY 1, 2020, THE PERCENTAGE
SHALL BE FIFTY PERCENT (50%).

(2) Exceptions. - No deduction shull be allowed in respect of interest under
the succeeding subparagraphs:

(a) fwithin the taxable yearan individual taxpayer reporting income on the
cash basis incurs an indebtedness on which an interest is paid in advance through
discount or otherwise: Provided, That such interest shall be allowed as a deduction in
the year the indebtedness is paid: Provided, firrther, That if the indebtedness is payable
in periodic amortizations, the amount of interest which corresponds to the amount of

30


the principal amortized or paid during the year shall be allowed as deduction in such
taxable year;

(b) If both the taxpayer and the person to whom the payment has been made
or is to be made are persons specified under Section 36(B); or

[(c) If the indebtedness is incurred to finance petroleum exploration |

(3) \Optional| Treatment of Interest Expense RELATED TO ACQUISITION
OF ASSET. - |Atthe option of the taxpayer, interest| INTEREST EXPENSE incurred
to acquire property used in trade, business or exercise of a profession THAT WILL
BENEFIT THE BUSINESS LONGER THAN ONE YEAR [may be allowed as &
deduction or treated as a capital expenditure) SHALL BE CAPITALIZED AND
‘THEREAFTER AMORTIZED OR DEPRECIATED AS PART OF THE COST
OF THE ASSET,

HAR ORKN | XXK

(E) Bad Debts. — (1)

In General, ~ xxx

(2) Securities Becoming Worthless. ~ {f securities, as defined in Section 22(T},
are ascertained to be worthless and charged off within the taxable yeur and are capital
assets, the loss resulting therefrom shall, fin the case ofa taxpayer other than a bank or
trust company incorporated under the laws of the Phitippines a substantial part of whose
business is the receipt of deposits, for the purpose of this Title,] be considered as a loss
from the sale or exchange, OF CAPITAL ASSETS, on the last day of such taxable
year], of capital assets]. SECURITIES HELD BY A DEALER IN SECURITIES
OR AN ITY LICENSED BY THE APPROPRIATE GOVERNMENT
REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES
INCLUDING BANKS, AND OTHER FINANCIAL INTERMEDIARIES, SHALL
BE CONSIDERED ORDINARY ASSETS, AND SECURITIES HELD THAT
ARE ASCERTAINED TO BE WORTHLESS SHALL BE CONSIDERED
ORDINARY LOSSES THAT ARE ALLOWED AS DEDUCTION FROM
TAXABLE INCOME.

SEC. 11. Section 37 (A) and (B) af the National Internal Revenue Code of 1997, as amended,

is hereby amended to read as follows:

a1


SEC, 37. Special Provisions Regarding Income and Deductions of Insurance
Companies, Whether Domestic or Foreign,

(A) Special Deductions Allowed to Insurance Companies, PRE-NEED
COMPANIES, AND PENSION FUNDS. - In the case of insurance companies,
PRENEED COMPANIES, AND PENSION FUNDS, whether domestic or foreign
doing business in the Philippines. the net additions, if any, required by law to be made

within the year (o ceserve funds and the suns other than dividends paid within the year
on policy and annuity contmets may be deducted from their gross income, Provided,
however, That the released reserve be treated as income for the year of release.

{B) Mutual Insurance Companies. ~ In the case of MUTUAL LIFE, mutual fire
and mutual employers’ liability ead mutual workmen's compensation and mutual
casualty insurance companies requiring their members to make premium deposits to
provide for losses and expenses, said companies shall not INCLUDE [return] as income
any portion of the premium deposits returned to their policyholders, but shall
INCLUDE Jreturn] as taxable income al! income received by them from all other
saurces plus such portion of the premium deposits as are retained by the companies for
purposes other then the payment of losses and expenses and reinsurance reserves.

NRX OXRK XRX

SEC. 12. Section 38 (A) of the National Intemal Revenue Code vf 1997, as amended, is hereby
amended to read as follows:
SEC. 38. Losses from Wash Sales of Stock or Securities. ~

(A) In the case of any loss claimed to have been sustained from any sale or other
disposition of shares of stock oF securities where it appears that within « period
beginning thirty (30) days before the date of such sale or disposition and ending thiry
(30) days afier such date, the taxpayer has acquired (by purchase or by excluange upon
which the entire amount of gain or loss was recognized by law), of has entered into a
[contact] CONTRACT or option so AS to acquire, substantially identical stock or
securities, then no deduction for the loss shall be allowed under Section 34 unless the
claim is imade by a dealer in stock or securities OR BY ANY ENTITY OR
FINANCIAL INTERMEDIARY DULY LICENSED BY THE APPROPRIATE
GOVERNMENT REGULATORY AGENCIES TO BUY AND SELL IN
SECURITIES EITHER FOR THE ENTITY'S OWN ACCOUNT OR FOR THE


ACCOUNT OF OTHERS and with respect to 9 transaction made in the ordinary
course of the business of such dealer.

XXX XX XXE

SEC. 13. Section 39 of the National Intemal Revenue Code of 1997, as amended, is hereby
amended to read as follows:

SEC. 39. Capital Gains and Losses. ~

(A) Definitions. ~ As used in this Title ~

XXX MRK XX

((B) Percentage Taken Into Account, ~ In the case of a taxpayer, other then a
corporation, only the following percentages of the gain or loss recognized upon the sale
or exchange of a capital asset shall be taken into account in computing net capital gain,
‘net capital loss, and net incomes]

[U1) One hundred percent (100%) if the capital asset has been held for not more than
twelve (12) months; and]

[(2) Fifty pereent (50%) if the capital asset has been held for more than twelve (12)
months:|

[(C)] (B) Limitation on Capital Losses. — Losses tom sales or exchanges of capital
assels shall be allowed only to the extent of the gains from such sales or exchanges. If
a [bank or trust company incorporated under the loss of the Philippines, a substantial
part of whose business is the receipt of deposits,] DEALER IN
SECURITIES OR OTHER ENTITIES OR FINANCIAL INTERMEDIARIES
DULY LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY
AGENCIES TO TRADE IN SECURITIES, sells say bond, debenture, note, of
certificate or other evidence of indebtedness issued by any corporation| (Jy including
one issued by a government or political subdivision thercofT)), with interest coupons or
in registered form. any loss resulting from such sale shall not be subject to the forsgoing
limitation and shall not be included in determining the applicability of such limitation

to other losses.

33


{(D) Ner Capital Loss Carry-over, — If any taxpayer, other than a corporation, sustains
in any taxable year a net capital loss, such loss (in an amount not in excess of the net
income for stich year) shall be treated in the succeeding taxable year as 2 loss from the
sale or exchange of a capital asset held for not more than twelve (12) months}
KEM(C) Retirement of Bonds, etc. ~ xxx

KF) Gains or Losses from Short Sales, Ete, ~ For purposes of this Title - (1) Gains
‘or losses from short sales of property shall be considered as gains or losses from sales
or exchanges of capital assets; and
(2) Gains or losses attributable to the failure to exercise privileges or options to buy or
sell property shall be considered as capital gains or lasses.

SEC, 14, Section 42(A (1), (2) and (BK2) of the National Internal Revenue Code of 1997, as

amended. is hereby amended to read as follows:

SEC, 42, Income from Sources Within the Philippines. ~
(A) Gross Income from Sources Within the Philippines. ~ The following items of
{gross income shall be treated as gross incume from sources within the Philippines:
(1) Interests. - Interests AND YIELD [derived from sources within the
Philippines, and interests on] FROM DEBT INSTRUMENTS, BANK DEPOSITS,
DEPOSIT SUBSTITUTES, TRUST FUNDS, AND SIMILAR
ARRANGEMENTS SUCH AS bonds, notes or other interest-bearing obligations of
residents, corporate or otherwise[:|, INCLUDING DEBT INSTRUMENTS OR
DEBT SECURITIES ISSUED BY THE GOVERNMENT OR ANY OF ITS
AGENCIES OR INSTRUMENTALITIES:
(2) Dividends, — The amount received as dividends:
(a) Froma domestic corporation; and
(b) From a foreign corporation, [ unless less | WITH AT LEAST [than] 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

34


the corporation for such period derived from sources within the Philippines bears [to]
ON its gross income from all sources.
XXX MAX RAN
(B) Taxable Income from Sources Within the Philippines. ~ (1)

General Rule. ~

(2) Evception. ~ No deductions for interest paid or incurred abroad shall be allowed
from the item of gross income specified in Subsection (A) unless indebtedness was
actually incurred to provide finds for use in connection with the conduet or operation
of trade or business in the Philippines|.|, OR ON A TRADE OR BUSINESS
OUTSIDE THE PHILIPPINES: PROVIDED, THAT INCOME GENERATED
OR RECELVED FROM THE USE OF SUCH FUNDS IN CONNECTION WITH
THE CONDUCT OR OPERATION OF TRADE OR BUSINESS IN THE
PHILIPPINES IS A TAXABLE INCOME IN THE PHILIPPINES.

SEC. 15. Section 51\(C2) of the National Internal Revenug Cade of 1997, as amended, is
hereby amended ta read as follows:
SEC. $1. Individual Return, ~ (A)
Requirements. ~ Xxx
(B) Where to file. xxx
(C) When to File, —x*x
(xxx
(2) Indi
(a) From the sale or exchange of shares of stock OR DEBT INSTRUMENTS AND.
OTHER SECURITIES not traded [uu] THROUGH a local [stock] exchange OR
AN ORGANIZED MARKETPLACE as preseribed under [Section] SECTIONS
24{(C)(B) (3) AND (5), AND 25(A) AND (B), [shall file] a return SHALL BE FILED
within thirty (30) days after cach transaction and a final consolidated return on or before

ualy subject to Lax on expital gains:

April 15 of each year covering all stock transactions of the preceding taxable year; and
(B) FROM THE SALE, EXCHANGE, OR BARTER OF SHARES OF STOCK
OR DEBT INSTRUMENTS AND OTHER SECURITIES TRADED
THROUGH A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE

35


AS PRESCRIBED UNDER SECTIONS 24(B)(4) AND (6), AND 25(A) AND (B),
THE TAX SHALL BE COLLECTED BY THE BROKER WHO EFFECTED
‘THE SALE, AND SHALL BE REMITTED TO THE BUREAU OF INTERNAL
REVENUE WITHIN FIVE (5) BANKING DAYS FROM THE DATE OF
COLLECTION THEREOF, THE BROKER SHALL LIKEWISE SUBMIT ON
MONDAYS OF EACH WEEK TO THE SECRETARY OF THE LOCAL
EXCHANGE OR ORGANIZED MARKETPLACE OF WHICH THE BROKER
IS A MEMBER, A TRUE AND COMPLETE RETURN WHICH SHALL
CONTAIN A DECLARATION OF ALL THE TRANSACTIONS EFFECTED
DURING THE PRECEDING WEEK, AND OF ALL TAXES COLLECTED AND
TURNED OVER TO THE BUREAU OF INTERNAL REVENUE,

[(b)] (C) From the sale or disposition of real property under Section 244(D}) (B)
(7) shall file a return within thirty (30) days following each sale or other disposition.

SEC. 16, Section 52(A) and (D) of the National internal Revenue Code of 1997, as amended,
is hereby amended to read as follows:
SEC, 52, Corporation Returns. ~
tA) Requirements. — Every corporation AS DEFINED UNDER SECTION 22(B) OF
THIS CODE, AD
engaged in trade or business in the Philippines, shall render, in duplicate, a truc and

ND subject to the tax herein imposed, except foreign corporations not

accurste quarterly income tax return and final or adjustment return in accordance with
the provisions of Chapter XII of this Title. The income tax return shall consist of a
maximum of four (4) pages in paper form or electronic form, be filed by the president,
vice-president or ether principal officer, shall be sworn to by such officer and by the
treasurer or assistant treasurer, and shall only contain the following information:

(1) Corporate profile and information;

(2) Gross sales, receipts or income fom services rendered, of conduct of trade or
business, except income subject to final tax as provided under this Code;

G) Allowable deductions under this Code;

@) Taxable income as defined in Section 31 of this Code; and

(8) Income tax due and payable.
Provided, That the foregoing provisions shall not affect the implementation of

Republic Act No. 10708 or TIMTA.

36


(D) Return on Capital Gains Realized from Sate of Shares of Stock, DEBT
INSTRUMENTS, AND OTHER SECURITIES not Traded in the Locat (Stock]
Exchange OR AN ORGANIZED MARKETPLACE. - Every corporation deriving
capital gains from the sale or exchange of shares of stock, DEBT INSTRUMENTS
AND OTHER SECURITIES not traded [thru] THROUGH a loca! [stock] exchange
OR AN ORGANIZED MARKETPLACE as prescribed under SECTIONS 27(D)(3),
AND (5), AND 28 [Sections 24(C), 25(A)(), 27(E}(2), 28(ANBMe) and 28(B)(S)(e)
shall file @ return within thirty (30) days after each teansaction and a final consolidated
relum of all transactions during the taxable year on or before the fifteenth (15") day of
the fourth (4!) month following the close of the taxable year,

() 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, ~ 1T SHALL BE
THE DUTY OF EVERY BROKER WHO EFFECTED A SALE OF SHARES OF
STOCK, DEBT INSTRUMENTS AND OTHER SECURITIES TRADED IN A
LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, SUBJECT TO
THE TAX IMPOSED UNDER SECTION 27(D)(4) AND (6), AND 28, TO
COLLECT THE TAX DUE AND REMIT THE SAME TO THE BUREAU OF
INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS FROM THE
DATE OF COLLECTION THEREOF, AND TO SUBMIT ON MONDAYS OF
EACH WEEK TO THE SECRETARY OF THE LOCAL EXCHANGE OR
ORGANIZED MARKETPLACE, OF WHICH THE BORROWER IS A
MEMBER, A TRUE AND COMPLETE RETURN WHICH SHALL CONTAIN
A DECLARATION OF ALL THE TRANSACTIONS EFFECTED DURING
THE PRECEDING WEEK, AND TAXES COLLECTED AND TURNED OVER
TO THE BUREAU OF INTERNAL REVENUE.

SEC, 17. Section 54 of the National Internal Revenue Code of 1997, as amended, is hereby

‘amended to rewd as follows:

SEC. 54. Returns of Receivers, Trustees, fin Bankruptey] or Assignees. — [In cases
wherein receivers] RECEIVERS, ADMINISTRATORS, trusices in AN
IRREVOCABLE TRUST OR bankruptcy, or ANY OTHER PERSON ASSIGNED

7


OR |assignces ar] IN CHARGE OF operating the property or business of
[s]ANOTHER PERSON OR corporation, subject to the tax UNDER THIS CODE
[imposed by this Title, such receivers, trustees or assignces| shall BE IMPOSED
WITH THE OBLIGATION TO FILE [make] THE returns AND PAY THE
TAXES FOR SUCH PERSON OR CORPORATION IN THE SAME MANNER:
REQUIRED UNDER THIS CODE. fof net income as and for such corporation, in

the same manner and form as such organization is hereinbefore required to make
retums, and any] ANY tax due on the income as returned by receivers,
ADMINISTRATORS, trustees or assignees shall be assessed and collected in the same
manner as if assessed directly against the [orgenizations| PERSON, ESTATE OR
ORGANIZATION [ol] whose businesses or properties they have custody OF or
control OVER.

THE TRUSTOR IN A REVOCABLE TRUST, NOT THE TRUSTEE, SHALL
BE RESPONSIBLE IN FILING THE RETURNS REQUIRED UNDER THIS
CODE AND IN DECLARING THE INCOME RECEIVED FROM THE TRUST
IN ACCORDANCE WITH SECTIONS 24, 25, 27 AND 28 OF THIS CODE.
INCOME OF THE TRUST SUBJECTED TO FINAL TAX UNDER SECTIONS
24, 25, 27 AND 28 SHALL NO LONGER BE SUBJECT TO TAX UPON
DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR

B IARY, NOR SHALL THE TRUSTOR OR BENEFICIARY BE
REQUIRED TO DECLARE THE INCOME AS PART OF ITS TAXABLE
INCOME.

ANY INCOME OF A REVOCABLE TRUST NOT SUBJECTED TO FINAL
TAX SHALL BE SUBJECT TO CREDITABLE WITHHOLDING TAX UPON
DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR THE
BENEFICIARY AT A RATE NOT EXCEEDING THE HIGHEST RATE OF
TAX IMPOSED ON INDIVIDUALS UNDER SECTION 24 IN THE CASE OF
INDIVIDUAL TRUSTORS, OR THE CORPORATE INCOME TAX UNDER
SECTION 27 IN THE CASE OF CORPORATE TRUSTORS.

SEC. 18. Section $6 of the National Internal Revenue Code of 1997. as amended, is hereby
amended to read as follows:
SEC. 56, Payment and Assessment of Income Tax for Individuals and
Corporations. ~

(A) Payment of Tax. ~
38


AK RAK XXX
(3) Payment of Capital Gains Tax. ~
IN GENERAL - The total amount of tax imposed and prescribed under [Section]
SECTIONS 24[(C)](B)(3), 24{(D}](BXS), 24(B\(7), 25, 27/(E\2)](DVG), 270D)(S).
27(D){7), 28(A)[{4)(c}} and 28(B)(S){(c)] shall be paid on tive date the return prescribed
therefor is filed by the person liable thereta: Provider, That if the seller submits proof
of [his] THE intertion to avait [himself] of the benefit of exemption of capital zains
under existing special laws OR TAX TREATY, no such payments shall be required
Provided, further, That in case of failure to qualify for exemption under such speciat
laws, TAX TREATY and implementing rules and regulations, the tax due on the gains
realized from the original transaction shall immediately become duc and payable, and
subject to the penalties prescribed under applicable provisions of this Code: Provided.
finaity, That if the seller, having paid the tax, submits such proof of intent within six (6)
months from the registration of the document iransferring the real property, [he] THE
SELLER shall be entitled to a refund of such tax upon verification of [his] compliance
with the requirements for such exemption.

XX XKK XXX

SEC. 19. Section 57 of the National Internal Revenue Code of 1997, as amended. is hereby
amended to read ay follows:
SEC. $7. Withholding of Tax at Source. ~

(A) Hidiholding of Final Tax on Certain Incomes, ~ Subject to rules and
regulations the Secretary of Finance may promulgate, upon the recommendation of the
Commissioner, requiring the filing of income tax retura by certain income payees , the
tax Imposed or prescribed [by] UNDER Sections (24(B)(1), 24(B)(2), 24(C), 24(D1};
2H ANZ), 25(A)3)}, 2KB), 25(C), 25¢D), 25(E}: 27(DY(1), 2D}, 27(DV3).
INDYAS), 2ANA}, ISANS). 2KAMTMA). 28CANTNb), 2SAMIME), 28BID,
28(B)(2), 28(B3), 28(B)(4), 28( BM SMa), 28(B\SKb), 28(B\(S)(c)] 24(B), 24(C),
25(A), 25(B), 27(D), 27(E), 24(A) AND 28(B){5); 33; and 282 of this Code on
specified items of income SUBJECT TO FINAL TAX shall be withheld by
payorcorporation and/or person and paid in the same manner and subject to the same
conditions as provided in Section 58 of this Code.

(By XX XXX Xxx

39


KC) Tux-free Covenant Bunds. — In any case where bonds, mortgages, deeds of trust
or other similar obligations of domestic or resident foreiga corporations, contain
contract or provision by which the obligor agrees to pay any portion of the tax imposed

in this Title upon the obtigce or to reiniburse the obligee for any portion of the tax or te
pay the interest without deduction for any tax which the obligor may be required or
permitted to pay thereon or to retain therefrom under any law of the Philippines, or any
state of country, the obligor shall deduct and withhold a tax equal §o thirty percent
(30%) of the interest or other payments upon those bonds, mortgages, deeds of trust or
other obligations, whether the interest or other payments are payable annually or at
shorter or longer periods, and whether the bonds, securities or cbligetions had been or
will be issued or marketed, and the interest o* other payment thereon paid, wi
without the Philippines, if the interest or other payment is payable to a nonresident alien

in or

‘or to a citizen or resident of the Philippines. |

SEC, 20, Section 73 (A) of the National Internal Revenue Cade of 1997, as amended, is hereby
amended to read as follows:
SEC. 73. Distribution of Dividends or Assets by Corporations. ~
(A) Definition of Dividends. — The term ‘dividends’ when used in this Tithe means
any distribution made by a corporation to its shareholders out of its camings or profits
and payable to its shareholders, whether in money or in other property.

Where a corporation distributes all of its assets in complete liquidation or dissolution,
the gain realized oF loss sustained by the stockholder, whether individual or corporate,
is a taxable income or a deductible loss, UNDER SECTIONS 24(A), 25(A), 25(B),
27(A), 28(A) AND 28 (B), as the case may be.

(B) Stock Dividend. ~x x x

SEC. 21. Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby:
amended to read as follows:

SEC. 108. Value-added Tax on Sale of Services and Use or Lease of
Properties, ~
40


(A) Rate and Base of Tax, = xxx

‘The phrase ‘sale or exchange of services’ means the performance of all kinds of
services in the Philippines for others for a fee, remuneration or consideration, including
those performed or rendered by construction and service contractors; stock, real estate,
‘commercial, customs and immigration brokers; lessors of property, whether personal
of real; warchousing services; lessors or distributors of cinematographic films, persons
engaged in milling, processing, manufacturing or repacking goods for others;
proprietors, operators or keepers of hotels, motels, resthouses, pension houses, inns,
resorts; proprietors or operators of restaurants, refreshment parlors, cafes and other
eating places, including clubs and caterers; dealers in securities; [lending investors ;]
transportation contractors on their transport of goods or cargoes, including persons who
transport goods or cargoes for hice and other domestic common carriers by land relative
to their transport of goods or cargoes; common carriers by air and sea relative to their
transport of passengers, goods or cargoes trom one place in the Philippines to another
place in the Philippines, sales of electricity by generation companies, transmission by
‘any entity, and distribution companies, including electric cooperatives; services of
franchise grantees of electric utilities, telephone and telegraph, radio and television
peoadcasting and all other franchise grantecs except those under Section 119 of this
Code and non-life insurance companies (except their crop insurances), including surety,
fidelity, indemnity and bonding companies ; and similar secvices regardless of whether
or not the performance thereof calls for the exercise or use of the physical or mental
faculties. The phrase "sale or exchange af services’ shall likewise include:

XXX OXKXAAN

SEC. 22. Section 121 of the National Internal Revenue Code of 1997, as amended, is hereby
amended to read as follows:

SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries

Performing Quasi-Banking Functions, ~ There shall be collected a tax on gross

receipts derived ftom sources within the Philippines by all banks and non-bank financial

intermediaries jin] PERFORMING QUASL-BANKING FUNCTIONS AT THE

RATE OF FIVE PERCENT (5%) ON INCOME SUCH AS INTEREST,

COMMISSIONS, AND DISCOUNTS FROM LENDING ACTIVITIES AS

WELL AS INCOME FROM FINANCIAL LEASING, ROYALTIES, RENTALS

OF PROPERTY, REAL OR PERSONAL, PROFITS FROM SALE OR

a


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, 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
accordance with the following schedule]:

[(w) On interest, commissions and discounts from lending activities as well as income
from financial leasing, on the basis of remaining maturities of instruments from which
such receipts are derived:]

5%
1%

[Maturity period is five years or less -.....

[Maturity period is more than five yeers -.

[(b) On dividends and equity shares and net income of subsidiaries-
[(c) On royalties, rentals of propesty, real or personal, profits, from exchange

and all other items treated as gross income under Section 32 of this Code -...7%4]
[(¢) On net trading gains within the taxable year of foreign currency, debt
securities, derivatives, anc other similar financial instruments-

a TI

[Provided, however, That in case the maturity period referred to in paragraph (a) is
shortened thru pre-termination, then the maturity period shall be reckoned to end as of
the date of pre-termination for purposes of classifying the transaction and the correct
rate of tax shall be applied accordingly. |

Provided, [finally.] That FOR PURPOSES OF COMPUTING THE GROSS
RECEIPTS, the generally accepted accounting principles [us may be prescribed by the
Bangko Sentral ng Pilipinas for the bank or non-bank financial intermediary performing
<quasicbanking functions shall likewise be the basis for the calculation of gross receipts]
OF RECORDING INCOME AS ADOPTED BY THE BANK SHALL BE
FOLLOWED: PROVIDED, THAT THE MERE INCREASE OR DECREASE IN
VALUE OF PROPERTY AS A RESULT OF CHANGES IN MARKET VALUES
SHALL NOT BE CONSIDERED IN THE COMPUTATION OF GROSS
RECEIPTS: PROVIDED, FURTHER, THAT FOR PURPOSES OF
DETERMINING THE GROSS RECEIPTS, NO DEDUCTION SHALL BE

a2


MADE ON THE INCOME EXCEPT IN THE CASE OF GAINS FROM
DEALINGS IN PROPERTY AND TRADING, WHERE NET LOSS WITHIN
THE SAME BUSINESS ACTIVITY CAN BE OFFSET TO DETERMINE THE
NET GAIN SUBJECT TO THIS TAX; PROVIDED, FURTHER, THAT SUCH
OFFSETTING SHALL BE ON A QUARTERLY BASIS, AND ANY NET LOSS
INCURRED IN A QUARTER CAN BE CARRIED OVER AS DEDUCTION IN
THE SUCCEEDING QUARTERS: PROVIDED FINALLY, THAT NET Loss
INCURRED IN A TAXABLE YEAR CANNOT BE CARRIED OVER TO THE
SUCCEEDING TAXABLE YEAR.

XXX XKK AK

SEC. 23. Section 122 of the National Internal Revenue Code of 1997, as amended, is hereby

amended to read as follows:
SEC, 122. Tax on Other Non-Bank Financial Intermediaries. ~ There shall be
collected a tax of five percent (596) 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 income wnder this Code:

as well as

Provided, That interests, commissions and discounts from lending activit

income from financial leasing, stiall be taxed on the basis of the remaining maturities
of the instruments from which such receipts are derived, in accordance with the
following schedule: |

5%)
[Maturity period is more than (3) five Yeats ve. - 1%)
[Provided, however, That in case the maturity period is shortened thru pretermination,

[Matarity is (5) five years of less:

43


then the maturity period shalt be reckoned to end as of the date of pretermination for
purposes of classifying the transaction snd the correct rate of tax shall be applied
aceordingly.|

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, FORFIGN
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
ACTIVITY, AND DERIVES INCOME THEREFROM, SHALL BE SUBJECT
TO THE TAX IMPOSED ON ITS PRINCIPAL ACTIVITY. TO BE
CONSIDERED INCIDENTAL, THE INCOME FROM INTERMEDLATION
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

4a


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 SHAL1, NOT BE SUBJECT
TO TAX UNDER THIS SUBSECTION, ANY INCOME EARNED OR
RECEIVED FROM IN-HOUSE LENDING OR SELLER FINANCING SHAL
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. finally, That the generally accepted accounting principles as may be
prescribed by the Securities and Exchange Commission for other non-bank financial
Intermediaries shall likewise be the basis for the calculation of gross receipts, |
Nothing in this Code shall preclude the Commissioner from imposing the same tax
herein provided on persons OR ENTITIES performing similar [financing]
FINANCIAL INTERMEDIATION activities.

SEC, 24. Section 123 of the National Internal Revenue Code of 1997, as amended, is hereby
amended to read as follows:

SEC, 123, Tax on Life Insurance AND REINSURANCE Premiums ,~ There shall
be collected from every person, company or corporation, [(]except purely cooperative
companies or associations})} doing life insurance business of any sort in the Philippines,
A PREMIUM TAX AT THE FOLLOWING RATES,

(A) FOR LIFE INSURANCE INCLUDING HEALTH INSURANCE AS 4

RIDER TO LIFE INSURANCE POLICY, 2 fax of two perceat (2%) of the total
premium collected, whether such premiums ate paid in money, notes, credits or any
substitute for money; but premiums refunded within six (6) months after payment on
account of rejection of risk or returned for other reason to a person insured shall not be

4S


ineluded in the taxable receipts; nor shall any tax be paid upon reinsurance by a
company IF THE TAX {that} has already BEEN paid [the tax] ON THE DIRECT
PREMIUM; nor upon premiums collected or received by any branch of a domestic
corporation, firm or association doing business outside the Philippines on account of
any life insurance of the insured who is 2 nonresident, if any tax on such premium is
imposed by the foreign country where the branch is established nor upon premiums
collected or received on account of any reinsurance, if the insured, in case of personal
insurance, resides outside the Philippines, if any tax on such premiums is imposed by
the foreign country where the original insurance has been issued or perfected: nor upon
that portion of the premiums collected or received by the insurance companies on
variable conteacts{,| IN A CIS in excess of the amounts necessary to insure the lives
of the variable contract owners|.|: 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-NI COMPANIES, PENSION FUND
COMPANIES, HEALTH MAINTENANCE ORGANIZATIONS AND OTHER
COMPANIES SIMILAR TO LIFE INSURANCE, AS MAY BE DETERMINED
BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES,
SHALL BE SUBJECT TO TAX UNDER THIS SUBSECTION AT THE RATE
OF TWO PERCENT (2%) OF THE GROSS PREMIUM, PLAN PAYMENT, OR
INSTALLMENT PAYMENTS COLLECTED WITHOUT ANY DEDUCTION
FOR THE AMOUNTS REQUIRED BY THE APPROPRIATE GOVERNMENT
REGULATORY AGENCIES TO BE EARMARKED FOR THE BENEFIT OF
‘THE INSURED, OR PLANHOLDER.

NOTHING IN THIS CODE SHALL PRECLUDE THE
COMMISSIONER FROM IMPOSING THE SAME TAX HEREIN PROVIDED
ON PERSONS PERFORMING SIMILAR INSURANCE BUSINESS
ACTIVITIES.

LIFE REINSURANCE COMPANIES SHALL BE SUBJECT TO

a6


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, HOWEFVER, PREMIUMS COLLECTED ON
TRANSACTIONS WHERE THE TAX ON THE DIRECT PREMIUM HAS
ALREADY BEEN PAID BY THE DIRECT INSURER SHALL BE EXCLUDED
FROM GROSS PREMIUM SUBJECT TO VALUE ADDED TAX.

FOR THE PURPOSE OF CLAIMIN 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 SERVIC EARNED OR RECEIVED AS AN INCIDENT
OF DOING THE BUSINESS OF LIFE, NON-LIFE AND OTHER INSURANCE
ACTIVITIES, SUALL BE SUBJECT TO THE VALUE ADDED TAX UNDER
SFCTION 105 OF THIS CODE: PROVIDED, THAT INCOME RECEIVED
FROM THE INVESTMENT AND REINVESTMENT OF PREMIUMS
EARNED SHALL NOT BE SUBJECT TO VALUE ADDED TAX NOR TO.
THE GROSS RECEIPTS TAX IMPOSED UNDER SECTIONS 121 AND 122
OF THIS CODE,

A VARIABLE INSURANCE CONTRACT WHERE AMOUNTS IN EXCESS
OF INSURANCE COSTS ARE COLLECTED AS PART OF THE PREMIUM

AND WHERE UNITS OF PARTICIPATION IN A POOLED FUND ARE
a7


ISSUED TO THE INSURED REPRESENTING THEIR RESPECTIVE SHARES
IN THE POOLED FUND, IS A CIS. THE AMOUNTS OF PREMIUM
COLLECTED IN EXCESS OF THE INSURANCE COST IS NOT SUBJECT TO
PREMIUM TAX UNDER THIS SECTION AND TO THE GROSS RECEIPTS:
TAX IMPOSED UNDER SECTIONS 121 AND 122, OR TO ANY
PERCENTAGE TAX IMPOSED UNDER TITLE ¥ AND TO VALUE ADDED
TAX UNDER SECTION 105, TITLE IV OF THIS CODE.

Cooperative companies or associations are such as are conducted by the

members thereof with the money collected from among themselves and solely for their
‘own protection and not for profit

SEC. 25, Section 127 of the National Internal Revenue Code of 1997, as amended, is hereby
repealed.

SEC. 26. Section 174 of the National Internal Revenue Code of 1997. as amended, is hereby
amended to read as follows
SEC, 174, Stanip Tax on Original Issue of Shares of Stock. = On every original issue,
whether on organization, rcorganization or for any lawful purpose, of shares of stock
OF

by any association, company, or corporation, INCLUDING SHA\
STOCK OR UNITS OF PARTICIPATION IN A COLLECTIVE INVESTMENT
SCHEME, there shall be collected a documentary stamp tax of [Two pesos (P2.00) on
each Two hundred pesos (P200), or fractional part thereof, of the par value,|
SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) OF THE PAR
VALUE of such shares of stock: Provided, That in the case of the original issue of
shares of stock without par value, the amount of the documentary stamp tax herein
prescribed shall be based upon the actual consideration for the isswance of such shares
of stock: Provided, further, That in the case of stack dividends, on the actual value
represented by cach share|.|: PROVIDED, FINALLY, THAT IN THE CASE OF
COLLECTIVE INVESTMENT SCHEMES WITHOUT PAR VALUE, THE
DOCUMENTARY STAMP TAX SHALL BE BASED ON THE INITIAL NET
ASSET VALUE PER UNIT.

SEC 27, Section 175 of the National Internal Revenue Code of 1997, as amended, is hereby

repealed.


SEC. 28, Section 176 of the National Internal Revenue Code of 1997, as amended, is hereby
amended to read as follows:
SEC 176. Stamp Tax on Bonds, Debentures, Certificates of Stock or Indebtedness
Issued in Foreign Countries, ~ (On ail] ADOCUMENTARY STAMP
TAX OF SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) OF THE
VALUE OF THE TRANSACTION SHALL BE COLLECTED FROM A
PERSON SELLING OR TRANSFERING bonds, debentures, certificates of stock,

of certificates of indebtedness issued in any foreign country |, there shall be collected

from the person selling or transferring the same in the Philippines, such tax as is
required by law on similar instruments when issued, suld or (ransferred in the
Philippines.|

SEC 29, Sections 177 and 178 of the National Internal Revenue Code ef 1997, as amended,
are hereby repealed.

SEC 30, Section 179 of the National internal Revenue Code of 1997, as amended, is hereby

amended to read as follows:
SEC. 179. Stamp Tax on All Debt Instruments, ~ On every original issue of debt
instruments, there shall be collecied a documentary stamp tax of [One peso and fifty
centavos (P1.50) on each Two hundred pesos (P200}, o7 fractional part thereof,|
SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) of the issue price of any
such debt instruments: Provided, That for such debt instruments with terms of less than
one (1) year, the documentary stamp tax to be collected shall be of a proportional
‘amount in accordance with the ratio of its term in number of days to three hundred
sixty-five (365) days: Provided, further, That only one documentary stamp tax shall be
imposed on either loan agreement, of promissory notes issued to secure such loan.
For purposes of this section, the term debt instrument shall mean instruments
representing borrowing and lending transactions including but not limited to
debenture:
those signed ubroad wherein the object of contract is Jocated or used in the Philippines,

ertificates of indebtedness, due bills, bonds, [own agreements, including

instruments and securities issued by the government or any of its instrumentalities,
deposit substitute debt insiruments, certificates or other evidences of deposits that are
either deawing interest significantly higher the regular savings deposit taking into
consideration the size of the deposit and the risks involved or drawing interest and

49


having a specific maturity date, [orders for payment of any sum of money otherwise
than at sight or on demand,] promissory notes, whether negotiable or non-negotiable,
except bank notes issued for circulation.

SEC 31. Section 180 of the National Intersal Revenue Code of 1997, as amended ts hereby
repealed

GEC 32. Sections 181, 182, 183, 184, 185, 186, and 187 of the National Intemat Revenue
Code of 1997, as amended, are hereby amended to read as follows:

SEC. 181. Stamp Tax Upon Acceptance of Bills of Exchange and Others. Upon a)
acceptance or payment of any bill of exchange or order for the payment of money
purporting to be drawn in a foreign country but payable in the Philippines, there shall
he collected documentary stamp tax OF THIRTY PERCENT OF ONE PERCENT
(0.30%) [Sixty centavos (PO.60) on each Two hundred pesos (P200), of fractional part
thereof} of the face value of any such bill of exchange, or order, or the Philippine
equivalent of such value, if expressed in foreign currency
SEC, 182. Stamp Tax on Foreign Bills of Exchange and Letters of Credit. ~ On all
forcign bills of exchange and fetter of credit (including orders, by telegraph oF
“otherwise, for the payment of money issued by express or steamship companies or by
any person of persons} drawn in but payable out of the Philippines in a set of three (3)
cor more according 10 the custom of merchants and bankers, there shall be collected a
documentary stamp tax OF THIRTY PERCENT OF ONE PERCENT (0.30%)
[Sixty centavos (P0.60) on each Two hundred pesos (P200), or fractional part thereof
of the face value of uny such bill of exchange or letter of credit, or the Philippine
equivalent of soch face value, if expressed in foreign eusrency| |: PROVIDED, THAT,
A LETTER OF CREDIT ON WHICH THE DOCUMENTARY STAMP TAX
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 WAERE THE PROPERTY
SUBJECT OF THE LETTER OF CREDIT IS MADE A SECURITY FOR
PAYMENT.

SEC. 183. Stamp Tax on Life AND HEALTH Insurance Policies{-]

OF ANNUITIES, AND HEALTH MAINTENANCE ORGANIZATION


PRODUCTS. - On all policies of insurance or other instruments by whatever name
the same may be called, whereby any insurance shall be made or renewed upon any life
or hives AND HEALTH OF PERSONS, there shall be collected a one-time
documentary stamp tax at the following rates;

If the amount of insurance dees not exceed P100,000 = Exempt
If the amount of insurance exceeds P100,000

but does not exceed P300,000 - P2000

If the amount of insurance exceeds P300,000

but does not exceed PS00,000 = P5000

If the amount of insurance execeds PS00,000

but does not exceed P7S0,000 ~ 100.00

If the amount of insurance exceeds P750,000

but does not exceed P1,0040,000 -P1S0.00

If the amount of insurance exceeds P1,000,000 ~P200.00

SEC. 184. Stamp Tax on Policies of Insurance Upon Property. — On ail 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, agains? peril by sea or on inland waters, or by fire or lightning, there shall be
collected a documentary stamp tax of [Fifty centavos (PO.S0) 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 sll
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

SI


transacting the business of accident, fidelity, employers liability, plate, glass, steam
boiler, burglar, elevator, automatic sprinkler, or other branch of insurance (except life,
marine, inland, and fire insurance), and all bonds, undertakings, or recognizances,
conditioned for the performance of the duties of any office or position, for the doing or
not doing of anything therein specified, and on all obligations guaranteeing the validity
or {egality of any bond or other obligations issued by any province, city, municipality,
‘or other public body or organization, and on all obligations gusrantccing the title to any
real estate, ar 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 (PO.50) on euch Four pesos (P4.00), or fractional part thereof,
TWELVE AND ONE-HALF PERCENT (12.5%) of the premium charged]:
PROVIDED, THAT SUCH RATE SHALL BE REDUCED ACCORDING TO.
THE FOLLOWING SCHEDULE:

JANUARY 1, 2021; ELEVEN AND ONE-HALF PERCENT (11.5%),
(EN 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, of other instruments by whatever name the same may be called,

JANUARY 1, 2022:

whereby en annuity may be made, transferred or redeemed, there shall be collected a
documentary stamp tax of One peso (P1.00) on each Two hundred pesos (P200), or
fractional part thercof, of the premium or installment payment on contract price
collected.| On pre-need plans, [the documentary stamp tax shall be Forty centavos
(P0.40) on each Two hundred pesos (P200), or fractional part thereof, of the premium
or contribution collected] THERE SHALL BE COLLECTED A
DOCUMENTARY STAMP TAX OF TWENTY PERCENT OF ONE PERCENT
(0.2%) OF THE PREMIUM OR INSTALLMENT PAYMENT ON CONTRACT
PRICE, OR CONTRIBUTION CHARGE!

SEC. 187. Stamp Tax on Indemnity Bonds, ~ On all bonds for indemnifying any
person, firm or corporation who shall become bound or engaged as surety for the
payment of any sum of money or for the due execution or performance of the duties of

any office or position or to account for money received by virtue thereof, and on all

s2


other bonds of any description, except such as may be cequiced in legal proceedings, oF
are otherwise provided for herein, there shall be collected a documentary stamp tax of
[Thirty centavos (P0.30) on each Four pesos (P4.00), or fractional part thereof]
SEVEN AND ONE-HALF PERCENT (7.5'%) of the premium charged.

SEC 33. Section 188 of the National Internal Revenue Code of 1997, as amended, is hereby
repealed,

SEC 3, Sections 192 and 193 of the National [nternal Revenue Code of 1997, as
amended, arc hereby repealed.

SEC 35. Sections 195, 198, and 199 of the National Intemal Revenuc Code of 1997, as
amended, are hereby amended to read as follows:
SEC. 195. Stamp Tax on Mortgages, Pledges and Deeds of Trust. — On every
mortgage or pledge of lands, estate, ar property, real or personal, heritable or movable,
whatsoever, where the same shall be made as a security for the payment of any definite
and certain sum of money lent at the time or previously due and owing or forborne to
bbe paid, being payable, and on any conveyance of land, estate, or property whatsoever,
in trust or to be sold, or otherwise converted into money which shall be and intended
only as security, either by express stipulation or otherwise, there shall be collected a
documentary stamp tax fat the following rates
(a) When the amount secured does not exceed Five thousand pesos
(P5,000), Forty pesos (P40.00).
(b) On cach Five thousand pesos (P5,000). or fractional part thereof in excess of
Five thousand pesos (P5,000), an additional tax of Twenty pesos (P20.00),] OF
THIRTY PERCENT OF ONE PERCENT (0.3%) OF THE AMOUNT
SECURED.

SEC. 198. Stamp Tax on [Assignments and] Renewals of Certain
Instruments. — Upon each and every [assignment or transfer of any mortgage, lease or
policy of insurance, or the] renewal or continuance of any agreement, contract, charter,
orany evidence of ubligation or indebtedness by THE EXTENSION OF THE TERM
OR MATURITY BY [altering or otherwise) ALTERATION OF SUCH

53


AGREEMENT, CONTRACT OR CHARTER, there shal! be levied, collected and
paid © documentary stamp tax, at the same rate as that imposed on the original
instrament.
SEC. 199. Documents and Papers Not Subject to Stamp Tax. ~ The provisions of
Section 173 to the contrary notwithstanding, the following instruments, documents and
papers shail be exempt from the documentary stamp tax:
(a) Policies of insurance or annuities made or granted by a fratemal 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.

XXK RK ARK
(n) Interbank call loans with maturity of not more than [seven (7)] FIVE (5) days to
cover deticiency in reserves against deposit liabilities, including those between or
‘among banks and quasi-banks.
(O) REDEMPTION, SALE, BARTER, EXCHANGE, OR OTHER MODES OF
DISPOSITION OR EXCHANGE OF SHARES OF STOCK OR UNITS OF
PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME OR OTHER
CIS SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR AN
ORGANIZED MARKETPLACE. THE ORIGINAL ISSUANCE OF SHARES
OR UNITS OF PARTICIPATION IN A CIS SHALL NOT BE COVERED BY
THIS EXEMPTION.

SEC. 36. Prospectivity Clause. — The changes introduced under this Act shall apply te
transections taking effect beginning January 1, 2020.

SEC. 37, Implementing Rules and Regulations. ~The Department of Finance, in consultation
with the Securities and Exchange Commission, Bangko Sentral ng Pilipinas, insurance
Commission, the Buzeat: of the Treasury, and the Bureau of Internal Revenue, shall issue the
implementing rules and regulations for the effective implementation of this Act.

SEC. 38. Separability Clause. If, for any reason any article or provision of this Act, or any
portion thereof, ar application of such article, provision, or portion thereof to any person, group,
or cizcumstance is declared invalid or unconstitutional, the remainder of this Act shail xot be

affected by such decision or declaration.


SEC. 39. Repealing Clause. — The following laws or provisions of laws are hereby repealed
or modified accordingly and the persons and/or transactions affected herein are hereby made
subject to applicable taxes on interest income, dividends, and capital gains, gross receipts tax,
premium tax, and documentary stamp tax under the National Intemal Revenue Code of 1997,
as amended

(8) Section 9, insofiir as the tax exemption on the issuance of bonds and
securities is concerned, of Presidential Decree 1648, known as "Reorganizing the
National Development Company and Establishing a Revised Charter Therefor”;

{b) Sections 6, 7, and 8, insofir as the tax exemptions on interest income,
capital gains, and documentary stamp tax and on the issuance of bonds are concemed,
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 Thereft

(c} Section 14, insofar as tax exemption on interest income, capital gains,

and documentary stamp tax js concerned, of Republic Act 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”,

(4) Seetion 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 4850, entitled “An Act Creating the Laguna Lake Development
Authority. Prescribing its Powers, Functions and Duties, Providing Funds Taerefor, and
for Other Purposes”

{e) Number 8, insofar as tax exemption on interest income, capital gains,
and documentary stump tax is concerned, of Presidential Decree 37, entitled “Creating
the Nayong Pilipino Foundation”;

(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”;

5S


(a) Article 202, insofar as tex exemption on interest income, capital gains,
documentary stamp tax. and premitiin tax is concerned, of Presidential Decree 442 as
amended by Presidential Decree 626, entitled “Labor Code of the Philippines”;

(a) Sections 10 and 11, insofar 2s the tax cxemptions 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 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 exemptions on intezest income and on the
issuance of bonds are concerned, of Republic Act 85, as amended by Republic Act
2081, entitled “An Act Creating the Rebabilitation Finance Corporation”,

@ Sections 76, 77 and 98, insofar as tax exemption on interest income,
dividends, capital gains, and documentary stamp tax on bonds is concemed, of Republic
‘Act 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-Annanah Islamic Investment Bank af the Philippines;

(J) Sections 19, insofar as the tax exemptions on interest income and issuance
of bonds are concemed, of Republic Act 3591, as amended by Republic Act
9376 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 |037, 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 inconze and decumentary stamp tax are concerned, of Republic Act 8763
‘or Home Guaranty Corporation Act of 2000;

56


{o) Sections 19 and 25, insofar as tax exemption on documentary stamp tex
is concerned, of Republic Act 7279 or The Urban Developmen! and Housing Act of
1992;

{p) Section 8(a), insofar as tax exemption on interest income, capital gains,
and documentary stamp t8x of bonds is concerned, as provided under Section tof
Republic Act 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 ‘Therefore, and for Other Purposes",

(8) Section 16, insofar as tax exemption on interest income, capital gains,
and documentary stamp tax is concerned, of Presidential Decree 1467, entitled “An Act
Creatine the Philippine Crop Insurance Corpocation, 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 3601, entitled “An
Act Granting the Netional Irrigation Administration”;

(1) Section 6 (a, xviii (2)), in so far as tax exemption on interest income and
documentary stamp tax is concemed, of PD 1485, as amended by PD 1770, emtitled
“Reconstituting the National Grains Authority to the National Food Authority,
Broadening its Functions and Powers and for Other Purposes”;

{u) Section ${e), insofar as tax exemption on interest income, capital gains,
and documentary stamp tax on bonds is concerned, of Republic Act 6260, entitled “An
Act Instituting @ Coconut Investment Fund and Creating a Coconut Investment
Company for the Administration Thereof";

(¥} Section 9, insofar as tax exemption on interest income, capital gains, and
documentary stamp tax on bonds is concemed, of Republic Act 10744 Or Credit Surety
Fund Act of 2014;

(8) — Seetion 20, insofar as tax on interest income, capital gains and
documentary stamp tax is concemed, of Republic Act 10693, entitled “An Act
Strengthening Nongovernment Organizations (NGOs) Engaged in Microfinance
Operations for the Poor’

7


(x) Section 7, insofar as tax exemption on documentary stamp tax and
premium tax is concerned, of Republic Act 7111, entitled “An Act Establishing The
Overseas Workers’ Investment Fund to Provide Incentives 1o Overseas Workers,

Reduce the Foreign Debt Burden and for Other Purpose:
(y) Section 56, insofar as tax exemption on interest income, capital gains,

and documentary stamp tax is concerned. af Republic Act 10801, entitled “An Act
Governing the Operations and Administration of the Overseas Workers Welfare
Administration”;

{2) Section 5, insofar as tux exemption on interest income is concemed, of
Republic Act 8367, entitled “An Act Providing for the Regulation of the Organization
and Operation of Non-Stock Savings and Loan Associations”;

(aa) Section 28, insofir as tax exemption on capital gains on shares of stock
and documentary stamp tax is concemed, of Republic Act 9267 or The Securitization
Act of 2004";

(bb) Scetion 17, insofar as tax exemption on interest income, capital gains,
gross receipts tax and documentacy stamp tax is concerned, of Republic Act 7906,
entitled “An Act Providing for the Regulation of the Organization and Operations of
‘Thrift Banks, and for Other Purposes”:

(ce) Section 15, insofar as tax exemption on capital gains and documentary
stamp tax is concerned, of Republic Act 9182, as amended by Republic Act 9343,
entitled “An Act Grenting 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 R.A. 9856 or The Real Estate Investment Act of 2009;

(cc) Section 23, insofar as no deduction from gross income shall be alowed
in respect of any interest ifthe 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 1o Promote the Discovery and
Production of Indigenous Petroleum and Appropriate Funds Therefor,

(ff) Section 6, insofar as tax exemption on interest income, dividends and
capital gains are concerned, of RA 6426 or the Forcign Currency Deposit Act of the
Philippines. as amended, and

58


(zg) Section 32, insofar as the tax exemptions on capital gains, interest
income and DST and issuance of bonds are concerned, of RA 6424 ot the Philippine
Export Credit Insurance and Guarantee Corporation Act.

SEC. 40. Effectivity - This Act shall take effect on January 1, 2020, or fifteen (15) days after
its complete publication in at least two (2) newspapers of general circulation.

Approved,