HOUSE OF REPRESENTATIVES |
RECEIVED

Republic of the Philippinés
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS peaiciatiON UNIT
First Regular Session! gi. AND INDEX SERVICE

House Bill No. 295

Introduced by Representatives
Horacio P. Suansing, Jr. and Estrellita B. Suansing

EXPLANATORY NOTE

This bill seeks to amend Sections 24 and 27 of the National Internal
Revenue Code of 1997, as amended, by gradually reducing individual and
corporate income taxes over a three (3) year period beginning January 1,
2017.

One of the policies enshrined in the 1987 Philippine Constitution is
the duty of the State to promote a rising standard of living and an improved
quality of life for all. Our current income tax rates are proving to be
inconsistent, if not contrary, to said policy. Slowly, the salaried
professionals, who comprise the middle class, are pulled down into lower
income groups because they are pushed up into higher income brackets.
Thus, there is a need to revisit and reduce the income tax rates.

Many of our neighboring Southeast Asian countries gave lowered their
individual and corporate income taxes; the Philippines, on the other hand,
remain to have the highest corporate income tax rate of 30%, making
investors and taxpayers to bring their capital and services to a low-tax
jurisdiction. The Philippines needs to be competitive enough not only to
attract more investments and human capital, but more importantly, prevent
the migration of our own.

While there may be apprehensions over a setback in revenues as a
result of this proposal, the reduction in income taxes will eventually
stimulate the economy, broaden the tax base and create more employment.
With higher take-home pay, Filipino families will have more money to spend
on items that will generate more taxes, such as Value Added Tax (VAT) on
goods and services. Improving the levels of disposable income will clearly
and inevitably increase economic activity. Likewise, the proposed reduction
in the rate of corporate income tax will create a more vibrant and robust
economy for business and enable companies to compete better in the global



market. And, as has been the experience both here and in other countries,
lower tax rates would likewise lead to greater compliance.

In view of the foregoing, immediate approval of this bill is earnestly

sought.

}
HON. wosdon, SUANSING, JR. HON. ESTRELLITA B. S|
264 District, Sultan Kudarat 1% District, Nuev:


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Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No.

295

Introduced by Representatives

Horacio P, Suansing, J;

and Estrellita B. Suansing

AMENDING SECTIONS 24 AND

REVENUE CODE OF 1997

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress be assembled:

SECTION 1. Section 24 (A)(2) of the National Internal Revenue Code (NIRC)

AN ACT
27 OF REPUBLIC ACT 8424, AS
AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL

of 1997, as amended, is hereby further 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. ~

“(2) Rates of Tax on Taxable Income of Individuals. - The tax
shall be computed in accordance with and at the rates
established in the following schedule:

“(Not over P10,000

“Over P10,000 but not over
30,000

“Over P30,000 but not over
70,000

“Over P70,000 but not over
140,000

“Over P140,000 but not over
250,000

“Over P250,000 but not over
500,000

“Over P500,000

5%

P500 + 10% of the excess
over P10,000

2,500 + 15% of the excess
over P30,000

P8,500 + 20% of the excess
over P70,000

22,500 + 25% of the excess
over P140,000

50,000 + 30% of the excess
over P250,000

125,000 + 32% of the excess
Over P500,000)”


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24.

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“Taxable Income

Beginning
January 1, 2017

Beginning
January 1, 2018

Beginning
January 1, 2019

“Not over P30,000

Exempt

Exempt

Exempt

| “Over P30,000 but
not over P70,000

2,500 + 15% of
the excess over
30,000

P2,500 +13% of
the excess over
P30,000

P2,500 + 10% of
the excess over
30,000

“Over P70,000 but
not over P200,000

P8,500 + 20% of
the excess over
70,000

P7,700 + 18% of
the excess over
P70,000

6,500 +15% of |
the excess over
70,000

[“Over — P200,000
but not over
P500,000

34,500 + 25% of
the excess over
200,000

P30,600 + 23% of
the excess over
200,000

26,000 + 20% of
the excess over
| P200,000

“Over — P500,000
but not — over
| P1,000,000

P109,500 + 30%
of the excess over
500,000

P99,600 + 25% of
the excess over
500,000.

86,000 + 22% of
the excess over
500,000 _

“Over P1,000,000

259,500 + 32%
of the excess over
P1,000,000

P224,600 + 28%
of the excess over

196,000 + 25%
of the excess over

P1,000,000

| P1,000,000

SEC. 2. Section 27 (A) of the National Internal Revenue Code of 1997, is
hereby amended to read as follows:
“Sec, 27. Rates of Income Tax on Domestic Corporation. ~

“(A) In General. - Except as otherwise provided in this Code, an income
tax of [thirty-five percent (35%)] THIRTY PERCENT (30%) BEGINNING
JANUARY 1, 2017 AND TWENTY-SEVEN PERCENT (27%) BEGINNING
JANUARY 1, 2018 AND TWENTY-FIVE PERCENT (25%) BEGINNING
JANUARY 1, 2019, is hereby imposed upon the taxable income derived
during cach taxable year from all sources within and without the
Philippines by every corporation, 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%).]”

SEC. 3, Implementing Rules and Regulations. - The Department of Finance,

Bureau of Internal Revenue and the National Tax Research Center
shall promulgate, within sixty (60) days from the effectivity of this Act,
the Implementing Rules and Regulations (IRR) that shall be necessary
to implement the provisions of this Act.


SEC. 4. Separability Clause. - The provisions of this Act are hereby deemed

SEC.

SEC.

separable. If any provision thereof is declared invalid or
unconstitutional, such invalidity or unconstitutionality shall not affect
the other provisions which shall remain in effect.

5. Repealing Clause. — All laws, decrees, executive orders, rules and
regulations or parts thereof, which are inconsistent with the provisions
of this Act are hereby repealed, amended or modified accordingly.

6. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette and a newspaper of general
circulation.

Approved,