Republic of the Philippines

HOUSE OF REPRESENTATIVES RECEIVED

Quezon City, Metro Manila pave: 3 0 JUN 2016
SEVENTEENTH CONGRESS we °
BY: er

First Regular Session

REGISTRATION UNIT
403 | BILLS AND INDEX SERVICE

HOUSE BILL NO.

Introduced by Representative Rodrigo A. Abellanosa

EXPLANATORY NOTE.

For many years, our nation has been experiencing the migration of skilled labor looking for
better-paying employment abroad. As movements to increase salary levels have shown to be
minimally productive because of the opposition primarily of the private sector, it is necessary
that the government seek other ways of making our countrymen’s lives easier, thus making local
employment more attractive. In this connection, this bill seeks to amend Section 24 of the
National Internal Revenue Code of 1997, as amended, to address the bracket creep
phenomenon resulting from inflation throughout the years since said law was passed.

Lower taxes, through the proposed income bracket adjustments, translate to higher ‘take-home’
pays for income-eamers, easing some of the burden from our people and diminishing their need
to look for employment outside the country.

To illustrate the impact of this income re-bracketing, let us take for example a call center agent
with no dependents earning Php21,000 a month, net of all non-taxable compensation income. In
the current income tax schedule, said call center agent pays an annual income tax of
Php38,000:

Total annual taxable income [Php21,000 x 12' months} = Php 252,000
Personal exemption = 50,000
Net taxable income = 202,000
Tax due [22,500 + 25% x (202,000 - 140,000)] = Php_ 38,000
Net take-home pay = Php 214,000

With the proposed amendment, however, the same income yields a higher net take home pay
by Php 8,100:

Total annual taxable income [Php21,000 x 12 months] = Php 252,000
Personal exemption = 50,000
Net taxable income = 202,000
Tax due [17,000 + 20% x (202,000 - 140,000)) = Php 29.900

4 Although the 13" month pay is mandatory for all regular employees, the illustration does not include it in the computation
since RA 10853 exempts this from income tax for as long as it does not exceed Php82,000.

HOUSE OF REPRESENTATIVES



Net take-home pay = Php 222,100

Our people are among the most vitalresource. Let us ensure that they earn their just
compensation, and that they are able to make the most out of it.

In view of the foregoing, immediate approval of this bill is eamestly sought

as

RODRIGO A. ABELLANOSA


Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City, Metro Manila
SEVENTEENTH CONGRESS

First Regular Session

nouse sino, 403

Introduced by Representative Rodrigo A. Abellanosa

AN ACT

RESTRUCTURING INCOME TAXES IMPOSED ON INDIVIDUALS, AMENDING FOR THE

PURPOSE SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE
OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the. Philippines in

Congress assembled:

SECTION 1. Short Title.
Restructuring Act.”

- This Act shall be

SEC. 2. Amendments. - Section 24(A)(2) of the National Internal Revenue Code of 1997, as

known as the “Individual Income Taxes

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..... coe
Over P10,000 but not over P30,000.....

Over P30,000 but not over P70,000.
Over P70,000 but not over P140,000...
Over P140,000 but not over P250,000...
Over P250,000 but not over P500,000...

Over P500,000 .....

Not over P20,000..
Over P20,000 but not over P60,000.

Over P60,000 but not over P140,000.

5%

P500+10% of the excess over
10,000
.P2,500+15% of the excess over
30,000
P8,500+20% of the excess over
P70,000
P22,500+25% of the excess over
140,000
P50,000+30% of the excess over
250,000

.P125,000+32% of the excess over

500,000)

5%

.. P1,000+10% of the excess
over P20,000

P5,000+15% of the excess
over P60,000



Over P140,000 but not over P280,000..... P17,000+20% of the excess

over P140,000

‘Over P280,000 but not over P500,000...... P45,000+25% of the excess
over P280,000

Over P500,000 but not over P1,000,000... P100,000+30% of the excess
‘over P500,000

Over P1,000,000 .. .. P250,000+32% of the excess

over P1,000,000

peed

XXX,

SEC. 4. Implementing Rules and Regulations, - The Secretary of Finance shall promulgate the
necessary rules and regulations for the effective implementation of the provisions of this Act.

SEC. 5. Separability Clause. - If any provision of this Act is declared unconstitutional or invalid,
other parts or provisions hereof not affected thereby shall continue to be in full force and effect.

SEC. 6. Repealing Clause. - All laws, orders, issuances, circulars, rules and regulations or parts
thereof, which are inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SEC. 7. Effectivity. - This Act shall take effect on January 1, 2017, following its publication in at
least two (2) newspapers of general circulation.

Approved,