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16'" CONGRESS OF THE REPUBLIC OF THE PHILIPPINES jyj¢
FIRST REGULAR SESSION \\x ay

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House of Representatives ¥
HOUSE BILL NO. 40: SH) \!

INTRODUCED BY HONORABLE GUS S. TAMBUNTING

EXPLANATORY NOTE

This bill seeks to amend Section 32 of RA 8424, otherwise known as the National Internal
revenue Code of 1997 with the purpose of excluding the 13" month pay and other benefits

exceeding P30,000 from the computation of taxable income.

‘The purpose of this legislation is to cushion the diminishing purchasing power of the employees
and workers both in the private and public sectors hereby increasing their disposable income.
This Act edit out the mandate of taxation on the economic benefits received by the employees
from the ceiling of P30,000.

Hence, the 13" month pay, productivity incentives and Christmas bonus resulting total earnings
in excess of P30,000 will be totally excluded from the computation of taxable income resulting
more financial potential for the employees/workers.

The cap of P30,000 as provided under the law decreases the probability of workers and
employees be in receipt of additional monetary benefits from its equitable share in the fruits of
production, more so undermines management’ act of generosity.

The amount not to be withheld from the taxable income means financial flexibility - more food

on the table, education, savings and investments.

PD 851 as amended by Memorandum Order No. 28 is an additional income based on wage but
not part of the wage hence, the spirit and full intent of the law is therefore, to mandate an
additional and full monetary benefit for the workers and employees regardless of their
designation or employment status and irrespective of the method by which their wages and
salaries are paid

‘The proposed legislation will benefit an estimated 38 million total employed persons.

Further, it is the policy of the State to promote a just and dynamic social order that will ensure
the prosperity and independence of the nation and free the people from poverty through policies
that provide adequate social services, promote full employment, a rising standard of living and
improved quality of life for all

Hence, immediat this bill is earnestly sought.


16TH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES
First Regular §

Introduced by HONORABLE GUS S. TAMBUNTING

AN ACT
‘CLUSION OF THE 13" MONTH PAY AND OTHER
BENE} ING THIRTY THOUSAND PESOS (P30,000) FROM THE
COMPUTATION OF TAXABLE INCOME THEREBY AMENDING SECTION 32 OF
REPUBLIC ACT 8424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL
REVENUE CODE OF 1997

AUTHOR!

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

ional

Section 1. Section 32 of Republic Act No. $424, otherwise known as the N
Internal Revenue Code of 1997 is hereby amended to read as follows

‘Sec. 32. Gross Income. —

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13" month pay and other benefits.- Gross benefits received by of Is
and employees of public and private entities |; provided, however, that the total exclusion
under this paragraph shall not exceed thirty thousand pesos (P30,000)] which shall cover:

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(iv) Other benefits such as productivity incentives [and]. Christmas bonus
AND OTHER GRATUITY BONUS OR INCENTIVES |; provided, further, that the
ceiling of Thirty thousand pesos (P30,000) may be increased through the rules and
regulations issued by the Secretary of Finance, upon recommendation of the
Commissioner, after considering, among others, the effect on the same of the inflation rate
at the end of taxable year].



Sec.2, Implementing Rules and Regulations. - The Bureau of Internal Revenue (BIR),
Department of Finance (DoF), and Department of Labor and Employment (DOLE), Civil Service
Commission (CSC) and other appropriate government agencies shall promulgate rules and
regulations necessary for the effective implementation of this Act

Sec.3. Repealing Clause.- all other laws, decrees, orders, issuances and rules and
regulations or parts thereof inconsistent with this Act are hereby amended or repealed
accordingly

Sec.4. Separability Clause. - The provisions of this Act are hereby declared to be
separable and in the event any of such provisions is declared unconstitutional, the other provision
which is nhot affected thereby shall remain in full force and effect.

Sec.$. Effectivity. - This Act shall take effect fifteen (15) days after its complete
publication in at least two (2) newspapers of general circulation.

GUS S,