TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
^5 JUL-2 P6:04
SENATE
S. No. 59
Introduced by Senator Win Gatchalian
AN ACT
AMENDING SECTIONS 22, 2S, 27, 28, 37, 54, 73, 108, 109, 121, 122, 123, 
130, 175, 180, 181, 182, 183, 184, 185, 187, 188, 190, 194, 195, 198, 204, 
222, 255, 256, 257, 261, 263, 264, 266, AND 275; AND REPEALING 
SECTIONS 177, 186, 192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424, 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, 
AS AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
The passage of Republic Act No. 12214 or the Capital Market Efficiency 
Promotion Act is a signal to the government's staunch stance to promote the 
development and deepening of the Philippine's capital market.
The measure at hand aims to complement the strides that have been made in 
CMEPA to take economic development one step further. This bill addresses issues 
currently faced in the taxation of passive income and financial intermediary such as: 
complex tax structure owing to having multiple tax rates and bases, inequitable 
distribution of tax burden due to the different taxation regimes for akin to or similar 
products, and high administrative compliance cost brought about by the cost of 
complying with complicated tax regulations as well the incurrence of friction costs 
from the imposition of Documentary Stamp Taxes.
To address these problems, this measure seeks to introduce a redesigned 
taxation for the financial sector making it more simple, fair, and efficient. To achieve 
this end, this measure specifically proposes the following reforms in the Tax Code:
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1. Harmonization of business taxes of financial intermediaries such as banks, 
non-bank financial intermediaries performing quasi-banking functions, and 
other non-bank financial intermediaries, by imposing uniform tax on 
financial intermediaries providing similar financial services;
2. Alignment of tax-treatment of life insurance, health-related insurance and 
other business with similar nature such as pre-need companies, pension 
fund companies and health maintenance organizations;
3. Rationalization of the documentary stamp taxes; and
4. Repeal of antiquated provisions on the imposition of documentary stamp
taxes.
view of the foregoing, the passage of this measure^earnesfly sought.


TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
SENATE
S. NO. 5 9
25 JUL-2 ?6:04
Introduced by Senator Win Gatchalian
AN ACT
AMENDING SECTIONS 22, 2S, 27, 28, 37, 54, 73, 108, 109, 121, 122, 123, 
130, 175, 180, 181, 182, 183, 184, 185, 187, 188, 190, 194, 195, 198, 204, 
222, 255, 256, 257, 261, 263, 264, 266, AND 275; AND REPEALING 
SECTIONS 177, 186, 192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424, 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 
1997, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
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SEC. 1. Section 22 of the National Internal Revenue Code of 1997, as amended,
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is hereby further amended to read as follows:
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"SEC. 22. Definitions. - When used in this Title:
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"x X X
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"(E) The term 'non-resident citizen'means:
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"(1) XXX
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"x X X
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"(3) A citizen of the Philippines who works and derives income from
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abroad and whose employment thereat requires [him to be] BEING
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physically present abroad [most of the time] FOR ONE HUNDRED
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EIGHTY-THREE (183) DAYS OR MORE during the taxable year.
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"(4) A citizen who has been previously considered as A nonresident
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citizen and who arrives in the Philippines at any time during the taxable
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year to reside permanently in the Philippines shall likewise be treated as 
a nonresident citizen for [the taxable] SUCH year [in which he arrives] 
OF ARRIVAL in the Philippines with respect to [bis] income derived from 
sources abroad until the date of his arrival in the Philippines.
[(5)] A [The] taxpayer shall submit proof to the Commissioner to 
show [his] THE intention of leaving the Philippines to reside permanently 
abroad or to return to and reside in the Philippines, as the case may be 
for purposes of this Section.
”x X X
"(V) The term [ 'bonk’\ 'BANKS'\v(\Qum every banking institution, 
as defined in Section 2 of Republic Act No. 337, os amended, otherwise
known as the 'General Banking Act.' A bonk moy cither be, o commorcial
bank, □ thrift bank, a development bonk, o rural bank or spcciolizcd
government bank] SHALL REFER TO ENTITIES ENGAGED IN THE 
LENDING OF FUNDS OBTAINED IN THE FORM OF DEPOSITS AS 
DEFINED AND CLASSIFIED IN SECTION 3 OF REPUBLIC ACT NO. 
8791, OTHERWISE KNOWN AS THE 'GENERAL BANKING LAW OF 
2000.'
"(W) The term 'non-bank financial intermediary' [means o financial 
intermediary, os defined in Section 2(D)(c) of Republic Act No. 337, os
amended, otherwise known os the 'General Banking Act,' authorized by
the Bongko Sentral ng Pilipinas (BSP) to perform quasi banking octivities]
SHALL REFER TO PERSONS OR ENTITIES ENGAGED IN THE 
BORROWING OF FUNDS, FOR THE BORROWER'S OWN ACCOUNT, 
THROUGH THE ISSUANCE, ENDORSEMENT, OR ACCEPTANCE OF 
DEBT INSTRUMENTS OF ANY KIND OTHER THAN DEPOSITS, OR 
THROUGH THE ISSUANCE OF CERTIFICATES OF 
PARTICIPATION, CERTIFICATES OF ASSIGNMENT, OR SIMILAR 
INSTRUMENTS WITH RECOURSE, TRUST CERTIFICATES, OR OF 
REPURCHASE AGREEMENTS FROM TWENTY (20) OR MORE 
LENDERS AT ANY GIVEN TIME, FOR PURPOSES OF RELENDING 
OR PURCHASING OF RECEIVABLES AND OTHER OBLIGATIONS,


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BUT DOES NOT INCLUDE COMMERCIAL, INDUSTRIAL, AND 
OTHER NON-FINANCIAL COMPANIES WHICH BORROW FUNDS 
THROUGH ANY OF THESE MEANS FOR THE LIMITED PURPOSE OF 
FINANCING THEIR OWN NEEDS OR THE NEEDS OF THEIR 
AGENTS OR DEALERS.
"(X) THE TERM 'QUASI-BANK' SHALL REFER TO A NON­
BANK FINANCIAL INSTITUTION AUTHORIZED BY THE BANGKO 
SENTRAL NG PILIPINAS TO ENGAGE IN QUASI-BANKING 
FUNCTIONS AND TO BORROW FUNDS FROM TWENTY (20) OR 
MORE OR MORE LENDERS THROUGH THE ISSUANCE, 
ENDORSEMENT OR ASSIGNMENT WITH RECOURSE OR 
ACCEPTANCE OF DEPOSIT SUBSTITUTES FOR PURPOSES OF 
RELENDING OR PURCHASING OF RECEIVABLES AND OTHER 
OBLIGATIONS.
"[(X)] (Y) The term 'quasi-banking activities' [moons] SHALL 
REFER TO borrowing OF funds from twenty (20) or more [porsonol] 
INDIVIDUALS or corporate lenders at any one time through the 
issuance, endorsement, or acceptance of debt instruments of any kind 
other than deposits for the borrower's own account, or through the 
issuance of certificates of assignment or similar instruments, with 
recourse, or of repurchase agreements for purposes of relending or 
purchasing receivables and other similar obligations: Provided, however, 
That commercial, industrial, and other non-financial companies[7] which 
borrow funds through any of these means for the limited purpose of 
financing their own needs or the needs of their agents or dealers, shall 
not be considered as ENTITIES performing quasi-banking functions.
"(NN) THE TERM 'HEALTH INSURANCE PRODUCTS'SHALL 
REFER TO THOSE THAT ARE BEING OFFERED AND SOLD BY 
INSURANCE COMPANIES, EITHER LIFE OR NON-LIFE, WHEREIN 
THERE IS A LIST OF COVERED ILLNESSES OF WHICH THE


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COMPANIES ASSUME RISKS AND INDEMNIFY LOSSES BROUGHT
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BY THE SAID COVERED ILLNESSES.
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"(00) THE TERM 'HEALTH MAINTENANCE ORGANIZATION
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PRODUCTS' SHALL REFER TO PRE-AGREED OR DESIGNATED
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HEALTH CARE SERVICES TO THE ENROLLED MEMBERS FOR A
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FIXED PREPAID FEE FOR A SPECIFIED PERIOD OF TIME
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THROUGH THE USE OF SELECTED NETWORK OF HEALTH 
CARE
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PROVIDERS. HEALTH MAINTENANCE ORGANIZATION (HMO)
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PRODUCTS PROVIDE A WIDE ARRAY OF MEDICAL, SURGICAL,
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AND HOSPITAL SERVICES THAT INCLUDE PREVENTIVE CARE
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AND WELLNESS PROGRAMS AND GENERALLY HAVE NO CASH-
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OUT TRANSACTIONS."
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SEC. 2. Section 25 of the National Internal Revenue Code of 1997, as amended,
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is hereby amended to read as follows:
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"SEC. 25. Tax on Nonresident Alien Individual.-
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"(A) Nonresident Alien Engaged in Trade or Business Within the
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Philippines. - [(1) In General.—] A nonresident alien individual engaged
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in trade or business in the Philippines shall be subject to [aft] income tax
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UNDER SECTION 24 OF THIS CODE[, in the samo manner as an
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individual citizen and a resident alien individual,] on taxable income
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received from all sources within the Philippines. A nonresident alien
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individual who shall come to the Philippines and stay therein for an
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aggregate period of more than [one hundred eighty (180)]ONE
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HUNDRED EIGHTY-THREE (183) days during any calendar year shall
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be deemed a 'nonresident alien doing business in the Philippines'[T],
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Section 22(G) of this Code notwithstanding.
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"X X X"
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SEC. 3. Section 27 of the National Internal Revenue Code of 1997, as amended,
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is hereby amended to read as follows:
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"SEC. 27. Rates of Income Tax on Domestic Corporations. - x x x
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"x X X
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" (D) Rates of Tax on Certain Passive Income. -


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X X X
(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 be 
authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business 
with foreign currency deposit system shall be exempt from all taxes, except 
net income from such transactions as may be specified by the Secretary of 
Finance, upon recommendation by the Monetary Board to be subject to the 
regular income tax payable by banks: Provided, however. That interest 
income from foreign currency loans granted by such depository banks 
under said expanded system to residents other than offshore banking units 
in the Philippines or other depository banks under the expanded system, 
shall be subject to a 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
bo exempt from income tax.]
"x X X
"(E) Minimum Corporate Income Tax on Domestic Corporations. -
"x X X
"(4) Gross Income Defined. -
"x X X
"In the case of taxpayers engaged in the sale of service, 'gross 
income' means gross receipts less sales returns, allowances, discounts and 
cost of services. 'Cost of services' shall 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


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the case of banks AND OTHER FINANCIAL INTERMEDIARIES, cost 
of services' shall include interest expense.
"X X X"
SEC. 4. Section 28 of the National Internal Revenue Code of 1997, as amended, 
is hereby further amended to read as follows:
"SEC. 28. Rates of Income Tax on Foreign Corporations. -
(A) Tax on Resident Foreign Corporations. - x x x
XXX
(6) 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 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 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 banks: Provided, however, 
That interest income from foreign currency loans granted by such 
depository banks under said expanded system to residents other than 
offshore banking units in the Philippines or other depository banks under 
the expanded system shall be subject to a final tax at the rate of ten 
percent (10%).


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[Any incomo of nonroGidcnts, whether individuals or corporations, from
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tranGOCtionG with depository banks under the expanded system sholl bo
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exempt from income tax.]
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XX X."
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SEC. 5. Section 37 of the National Internal Revenue Code of 1997, as amended,
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is hereby amended to read as follows:
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"SEC. 37. Special Provisions Regarding Income and Deductions of Insurance
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Companies, Whether Domestic or Foreign.-
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"(A) Special Deduction Allowed to Insurance Companies, PRE-NEED
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COMPANIES, AND PENSION FUNDS. - In the case of insurance
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companies, PRE-NEED COMPANIES, AND PENSION FUNDS, whether
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domestic or foreign doing business in the Philippines, the net additions, if any,
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required by law to be made within the year to reserve funds and the sums other
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than dividends paid within the year on policy and annuity contracts may be
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deducted from their gross income: Provided, however. That the released
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reserve be treated as income for the year of release.
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"(B) Mutual Insurance Companies. - In the case of MUTUAL LIFE,
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mutual fire and mutual employers' liability and mutual workmen's
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compensation and mutual casualty insurance companies requiring their
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members to make premium deposits to provide for losses and expenses,
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said companies shall not [fetwm] INCLUDE as income any portion of the
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premium deposits returned to their policyholders, but shall [return]
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INCLUDE as taxable income all income received by them from all other
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sources plus such portion of the premium deposits as are retained by the
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companies for purposes other than the payment of losses and expenses
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and reinsurance reserves.
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"x X x."
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(E) INSURANCE COMPANIES AND REINSURANCE
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COMPANIES - PREMIUMS CEDED BY AN INSURANCE COMPANY
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TO ANOTHER INSURANCE OR REINSURANCE COMPANY,
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WHETHER DOMESTIC OR FOREIGN, FOR REINSURANCE
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PURPOSES SHALL NOT BE INCLUDED IN THE GROSS INCOME
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SUBJECT TO WITHHOLDING TAX UNDER THIS TITLE.
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SEC. 6. Section 54 of the National Internal Revenue Code of 1997, as amended,
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is hereby amended to read as follows;
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"SEC. 54. Returns of Receivers, ADMINISTRATORS, Trustees, [in
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Bankruptcy^ or Assignees. - [In cases wherein receivers] RECEIVERS,
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ADMINISTRATORS, trustees, OR ASSIGNEES in AN IRREVOCABLE
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TRUST OR bankruptcy, or ANY OTHER PERSON ASSIGNED OR
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[assignees arc] IN CHARGE OF operating the property or business of
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[a]ANOTHER PERSON OR corporation, subject to the tax UNDER
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THIS CODE [imposed by this Title, such receivers, trustees or assignees]
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Shall BE IMPOSED WITH THE OBLIGATION TO FILE [make] THE
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returns AND PAY THE TAXES FOR SUCH PERSON OR
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CORPORATION IN THE SAME MANNER REQUIRED UNDER THIS
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CODE, [of net income as and for such corporation, in the same manner
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and form as such organization is hereinbefore required to make returns,
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and any] ANY tax due on the income as returned by receivers,
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ADMINISTRATORS, trustees or assignees shall be assessed and
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collected in the same manner as if assessed directly against the
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[organizations] PERSON, ESTATE OR ORGANIZATION [of] whose
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businesses or properties they have custody OF or control OVER."
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THE TRUSTOR IN A REVOCABLE TRUST, NOT THE TRUSTEE,
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SHALL BE RESPONSIBLE IN FILING THE RETURNS REQUIRED
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UNDER THIS CODE AND IN DECLARING THE INCOME RECEIVED
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FROM THE TRUST IN ACCORDANCE WITH SECTIONS 24, 25, 27
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AND 28 OF THIS CODE.
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SEC. 7. Section 73 of the National Internal Revenue Code of 1997, as amended,
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is hereby amended to read as follows:
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"SEC. 73. Distribution of Dividends or Assets by Corporations. -
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"(A) Definition of Dividends. - The term 'dividends' when used in
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this Title means any distribution made by a corporation to its


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shareholders out of its earnings or profits and payable to its shareholders,
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whether in money or in other property.
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[Whoro a corporation distributes all of its assets in compiGtc
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liquidation or dissolution, the goin realized or loss sustained by the
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stockholder, whether individual or corporate, is a taxable income or a
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deductible loss, as the case may bo.]
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"(B) Stock Dividend. - x x x
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"(C) LIQUIDATING DIVIDENDS. - LIQUIDATING
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DIVIDENDS ARE DIVIDENDS REPRESENTING THE REMAINING
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GAINS REALIZED OR LOSS SUSTAINED BY THE STOCKHOLDER
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IN A COMPLETE [OR PARTIAL] LIQUIDATION OR DISSOLUTION
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BY A CORPORATION AND SHALL BE CONSIDERED AS TAXABLE
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INCOME OR A DEDUCTIBLE LOSS, UNDER SECTIONS 24(A),
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25(A), 25(B), 27(A), 28(A), AND 28(B), AS THE CASE MAY BE.
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Ef€)](D) Dividends Distributed are Deemed Made from Most
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Recentiy Accumulated Profits. - x x x
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EWKE) Net Income of a Partnership Deemed Constructively
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Received by Partners. — x x x
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"x X X."
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SEC. 8. Section 108 of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"SEC. 108. Value-added Tax on Sale of Services and Use or Lease
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of Properties. -
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"(A) Rate and Base of Tax. - x x x
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"The phrase 'sale or exchange of serviced means the performance
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of all kinds of services in the Philippines for others for a fee, remuneration
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or consideration, including those performed or rendered by construction
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and service contractors; stock, real estate, commercial, customs and
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immigration brokers; lessors of property, whether personal or real;
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warehousing services; lessors or distributors of cinematographic films;
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persons engaged in milling processing, manufacturing or repacking goods
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for others; proprietors, operators or keepers of hotels, motels.


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resthouses, pension houses, inns, resorts; proprietors or operators of
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restaurants, refreshment parlors, cafes and other eating places, including
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clubs and caterers; dealers in securities; [lending—investors;]
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transportation contractors on their transport of goods or cargoes,
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including persons who transport goods or cargoes for hire and other
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domestic common carriers by land relative to their transport of goods or
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cargoes; common carriers by air and sea relative to their transport of
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passengers, goods or cargoes from one place in the Philippines to another
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place in the Philippines; sales of electricity by generation companies,
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transmission by any entity, and distribution companies, including electric
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cooperatives; services of franchise grantees of electric utilities, telephone
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and telegraph, radio and television broadcasting and all other franchise
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grantees except those under Section 119 of this Code, and non-life
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insurance companies (except their crop insurances), including surety,
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fidelity, indemnity, and bonding companies; and similar services
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regardless of whether or not the performance thereof calls for the
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exercise or use of the physical or mental faculties. The phrase 'sale or
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exchange of services' shall likewise include:
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"x X X."
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SEC. 9. Section 109 of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"SEC. 109. Exempt Transactions. -
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(1) Subject to the provisions of Subsection (2) hereof, the following
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transactions shall be exempt from the value-added tax;
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"(A) XXX
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"x X x"
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"(DD) REINSURANCE PREMIUMS COLLECTED BY NON-LIFE
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INSURANCE AND REINSURANCE COMPANIES.
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"X X X."
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SEC. 10. Section 121 of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries 
Performing Quasi-Banking Functions. - There shall be collected a tax on 
gross receipts derived from sources within the Philippines by all banks 
and non-bank financial intermediaries PERFORMING QUASI­
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 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, EQUITY SHARES, AND NET 
INCOME OF SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO 
PERCENT (0%) TAX [in accordance with the following schedule]:
[(o) On interest, commissions and discounts from lending activitioG
os well as income from financial leoGing, on the basis of remaining
moturitics of instruments from which such receipts arc derived:]
[Maturity----------period----------is----------five----------years----------or
less.................................................... 5%]
[Maturity period is more thon-fivc-years................................1%]
[(b) On dividends and equity shares and not income of subsidiaries..
G%]
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[(c) On royalties, rentals of property, real or pcrsonol, profits, from
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GxchDngc and all other items treatod as gress income under Section 32
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of this Code. ■ .7%]
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[(d) On net trading gains within the taxable year of foreign currency,
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debt-----securities,-----derivatives,-----aed-----other---- similar---- financial
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instruments.................................7%]
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{^'Provided, however, That in case the maturity period referred to in
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paragraph (a) is shortened £thru] THROUGH pretermination, then the
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maturity period shall be reckoned to end as of the date of pretermination
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for purposes of classifying the transaction and the correct rate of tax shall
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be applied accordingly.]
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Provided,[ ftnoHy,] That the generally accepted accounting
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principles [as may be] prescribed by the Bangko Sentral ng Pilipinas for
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the bank or non-bank financial intermediary performing quasi-banking
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functions shall [likewise] be the basis for the calculation of gross receipts.
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"x x X."
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SEC. 11. Section 122 of the National Internal Revenue Code of 1997, as
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amended, is hereby amended to read as follows:
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"SEC. 122. Tax on Other Non-Bank Financial Intermediaries. -
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There shall be collected a tax of five percent (5%) on the gross receipts
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derived by other non-bank financial intermediaries doing business in the
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Philippines, from interest, commissions, discounts AND DISCOUNTS
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FROM LENDING ACTIVITIES, AS WELL AS INCOME FROM
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FINANCIAL LEASING, ROYALTIES, RENTALS OF PROPERTY,
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REAL OR PERSONAL, PROFITS FROM SALE OR EXCHANGE
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INCLUDING GAINS DERIVED FROM SALE OR TRANSFER OF REAL
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PROPERTIES, NET TRADING GAINS WITHIN THE TAXABLE YEAR
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OF FOREIGN CURRENCY, DEBT SECURITIES, DERIVATIVES, AND
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OTHER SIMILAR FINANCIAL INSTRUMENTS, UNDERWRITING
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FEES, SERVICE INCOME, MANAGEMENT FEES AND ALL OTHER
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ITEMS TREATED AS GROSS INCOME UNDER SECTION 32 OF
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THIS CODE, EXCEPT DIVIDENDS, EQUITY SHARES, AND NET
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INCOME OF SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO 
PERCENT (0%). [and all other items treated 05 gross income under 
this Code: Provided, That interests, commissions and-dfscounts from
lending activities, as well as incomo from finonciol loosing, sholl be taxed
on the basis of the remaining nroturitios of the instruments from which
such receipts are derived, in accordance with the following schedule-:]
[Maturity is five (5) years or loss...................................... 5%]
[Maturity period is more than five (5) yoors.........—..............1%]
[Provided, however, That in case the maturity period is shortened
thru protermination, then the moturity period shall be reckoned to end as
of the date of protormination for purposes of classifying the tronsaction
and the correct rate of tax sholl bo opplied accordingly.]
"FINANCIAL INTERMEDIARIES SUBJECT TO TAX UNDER 
THIS SECTION SHALL INCLUDE FINANCING COMPANIES, 
FINANCE LEASING COMPANIES, INVESTMENT HOUSES, 
PAWNSHOPS, FOREIGN EXCHANGE DEALERS AND MONEY 
BROKERS, TRUST ENTITIES, CREDIT CARD COMPANIES, 
LENDING INVESTORS, AND OTHER FINANCIAL 
INTERMEDIARIES EXCEPT BANKS AND NON-BANKS 
PERFORMING QUASI-BANKING FUNCTIONS WHICH SHALL BE 
TAXED UNDER SECTION 121 OF THIS CODE.
"THE INCOME OF A PERSON OR COMPANY NOT LICENSED 
TO DO FINANCIAL INTERMEDIATION BUT WHICH ENGAGES IN 
FINANCIAL INTERMEDIATION SERVICES RELATED AND 
INCIDENTAL TO ITS MAIN ACTIVITY, AND DERIVES INCOME 
THEREFROM, SHALL BE SUBJECT TO THE TAX IMPOSED ON ITS 
PRINCIPAL ACTIVITY. TO BE CONSIDERED INCIDENTAL, THE 
INCOME FROM INTERMEDIATION SERVICES SHALL NOT 
EXCEED FIFTY PERCENT (50%) OF THE PERSON'S OR THE 
COMPANY'S TOTAL ANNUAL INCOME. IF THE TOTAL INCOME 
RECEIVED FROM FINANCIAL INTERMEDIATION IS MORE THAN 
FIFTY PERCENT (50%),THE TOTAL INCOME FROM SUCH
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FINANCIAL INTERMEDIATION SHALL BE SUBJECT TO TAX
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UNDER THIS SUBSECTION.
3 
''Provided, finally, That the generally accepted accounting principles
4 
as may be prescribed by the Securities and Exchange Commission,
5 
INSURANCE COMMISSION, BANGKO SENTRAL NG PILIPINAS,
6 
OR OTHER APPROPRIATE GOVERNMENT AGENCIES, AS THE
7 
CASE MAY BE, for other non-bank financial intermediaries shall likewise
8 
be the basis for the calculation of gross receipts.
9 
"Nothing in this Code shall preclude the Commissioner from
10 
imposing the same tax herein provided on persons OR ENTITIES
11 
performing similar [financing] FINANCIAL INTERMEDIATION
12 
activities."
13 
SEC. 12. Section 123 of the National Internal Revenue Code of 1997, as
14 
amended, is hereby amended to read as follows:
15 
"SEC. 123. Tax on Life Insurance Premiums. - There shall be
16 
collected from every person, company or corporation, (except purely
17 
cooperative companies or associations, AND MUTUAL AID OR
18 
BENEFIT ASSOCIATIONS) doing life insurance business of any sort in
19 
the Philippines, A PREMIUM TAX AT THE FOLLOWING RATES:
20 
"(A) FOR LIFE INSURANCE, a tax of two percent (2%) of the
21 
total premium collected, whether such premiums are paid in money,
22 
notes, credits or any substitute for money; but premiums refunded within
23 
six (6) months after payment on account of rejection of risk or returned
24 
for other reason to a person insured shall not be included in the taxable
25 
receipts; nor shall any tax be paid upon reinsurance by a company IF
26 
THE TAX [that] has already BEEN paid [the tax]; nor upon premiums
27 
collected or received by any branch of a domestic corporation, firm or
28 
association doing business outside the Philippines on account of any life
29 
insurance of the insured who is a nonresident, if any tax on such premium
30 
is imposed by the foreign country where the branch is established nor
31 
upon premiums collected or received on account of any reinsurance, if
32 
the insured, in case of personal insurance, resides outside the Philippines,
14


1 
if any tax on such premiums is imposed by the foreign country where the
2 
original insurance has been issued or perfected; nor upon that portion of
3 
the premiums collected or received by the insurance companies on
4 
variable contracts AS DEFINED UNDER REPUBLIC ACT NO. 10607,
5 
OTHERWISE KNOWN AS THE 'INSURANCE CODE OF THE
6 
PHILIPPINES, in excess of the amounts necessary to insure the lives of
7 
the variable contract owners.
8 
"(B) PERSONS DOING BUSINESS SIMILAR OR AKIN TO LIFE
9 
AND HEALTH INSURANCE SUCH AS PRE-NEED COMPANIES,
10 
PENSION FUND COMPANIES, HEALTH MAINTENANCE
11 
ORGANIZATIONS AND OTHER COMPANIES SIMILAR TO LIFE
12 
INSURANCE SHALL BE SUBJECT TO TAX UNDER THIS
13 
SUBSECTION AT THE RATE OF TWO PERCENT (2%) OF THE
14 
GROSS PREMIUM, PLAN PAYMENT, OR INSTALLMENT
15 
PAYMENTS COLLECTED WITHOUT ANY DEDUCTION FOR THE
16 
AMOUNTS REQUIRED BY THE APPROPRIATE GOVERNMENT
17 
REGULATORY AGENCIES TO BE EARMARKED FOR THE BENEFIT
18 
OF THE INSURED, OR PLANHOLDER.
19 
"x X X."
20 
SEC. 13. Section 130 of the National Internal Revenue Code of 1997, as
21 
amended, is hereby amended to read as follows:
22 
"SEC. 130. Filing of Return and Payment of Excise Tax on Domestic
23 
Products. -
24 
"(A) Persons Liable To File A Return, Filing Of Return On Removal And
25 
Payment Of Tax.
26 
"(1) Persons Liable To File A Return. XXX
27 
'(2) Time For Filing Of Return And Payment Of The Tax. XXX
28 
"(3) Place [ef\ FOR Filing of THE Return and Payment of the Tax. XXX
29 
"(4) Exceptions:
30 
"(a) XXX
31 
"(b) XXX
32 
"x X X."
15


1 
SEC. 14. Section 175 of the National Internal Revenue Code of 1997, as
2 
amended, is hereby amended to read as follows:
3 
SEC. 175. Stamp Tax on Sales, Agreements to Sell, Memoranda of
4 
Sales, Deliveries or Transfer of Shares or Certificates of Stock. — On all
5 
sales, or agreements to sell, or memoranda of sales, or deliveries, or
6 
transfer of shares or certificates of stock in any association, company, or
7 
corporation, or transfer of such securities by assignment in blank, or by
8 
delivery, or by any paper or agreement, or memorandum or other
9 
evidences of transfer or sale whether entitling the holder in any manner
10 
to the benefit of such stock, or to secure the future payment of money,
11 
or for the future transfer of any stock, there shall be collected a
12 
documentary stamp tax of [One peso and fifty centavos (PI.50) on each
13 
Two hundred pesos (P200), or fractional part thereof, of the par value
14 
ef] SEVENTY-FIVE PERCENT OF ONE PERCENT (75% of 1% ) OF
15 
THE PAR VALUE (such stock: Provided, That only one tax shall be
16 
collected on each sale or transfer of stock from one person to another,
17 
regardless of whether or not a certificate of stock is issued, indorsed, or
18 
delivered in pursuance of such sale or transfer: and Provided, further,
19 
That in the case of stock without par value the amount of the
20 
documentary stamp tax herein prescribed shall be equivalent to fifty
21 
percent (50%) of the documentary stamp tax paid upon the original issue
22 
of said stock, PROVIDED, FINALLY, THAT, BEGINNING JANUARY
23 
1, 20 28, THE SAID INSTRUMENTS, DOCUMENTS AND PAPERS
24 
SHALL BE EXEMPT FROM THE DOCUMENTARY STAMP TAX.
25 
SEC. 15. Section 177 of the National Internal Revenue Code of 1997, as
26 
amended, is hereby repealed.
27 
SEC. 16. Section 180 of the National Internal Revenue Code of 1997, as
28 
amended is hereby amended to read as follows:
29 
SEC. 180. Stamp Tax on AH Bills of Exchange or Drafts. — On all
30 
bills of exchange (between points within the Philippines) or drafts, there
31 
shall be collected a documentary stamp tax of THIRTY PERCENT OF
32 
ONE PERCENT (30% OF 1%) [Sixty centavos (P0.60) on each Two
16


1 
hundred pesos (P200), or froctional port thereof, ] of the face value of
2 
any such bill of exchange or draft: PROVIDED, THAT, BEGINNING
3 
JANUARY 01, 2028, NO TAX SHALL BE IMPOSED UNDER THIS
4 
SECTION.
5 
SEC. 17. Section 181 of the National Internal Revenue Code of 1997, as
6 
amended, is hereby amended to read as follows:
7 
"SEC. 181. Stamp Tax Upon Acceptance of Bills of Exchange and
8 
Others. - Upon any acceptance or payment of any NEGOTIABLE bill of
9 
exchange [or order for the payment of money] purporting to be drawn
10 
in a foreign country but payable in the Philippines, there shall be collected
11 
a documentary stamp tax OF THIRTY PERCENT OF ONE PERCENT
12 
(30% OF 1%) [Sixty centavos (P0.60) on each Two hundred pesos
13 
(P200), or froctional part thereof,] of the face value of any such bill of
14 
exchange [7-or order, or the Philippine equivalent of such value, if
15 
expressed in foreign currency]."
16 
SEC. 18. Section 182 of the National Internal Revenue Code of 1997, as
17 
amended, is hereby amended to read as follows:
18 
"SEC. 182. Stamp Tax on Foreign Bills of Exchange and Letters of
19 
Credit - On all foreign bills of exchange and [tetter]LETTERS of credit
20 
[(including orders, by telegraph or otherwise, for the payment of money
21 
issued by express or steamship companies or by any-person or persons)]
22 
drawn in but payable out of the Philippines [in a sot of three (3) or more
23 
according to the custom of merchants and bonkers], there shall be
24 
collected a documentary stamp tax OF THIRTY PERCENT OF ONE
25 
PERCENT (30% OF 1%) [Sixty centovos (P0.60) on each Two hundred
26 
pesos (P2Q0), or fractional part thereof,] of the face value of any such
27 
bill of exchange or tetter of credit, or the Philippine equivalent of such
28 
face value, if expressed in foreign currency^]: PROVIDED, THAT A
29 
LETTER OF CREDIT ON WHICH THE DOCUMENTARY STAMP TAX
30 
IMPOSED UNDER THIS SECTION IS PAID UPON OPENING SHALL
31 
NOT BE SUBJECT AGAIN TO THE TAX IMPOSED BY SECTION 195
32 
UPON AVAILMENT OF THE TRUST RECEIPT LINE WHERE THE
17


1 
PROPERTY SUBJECT OF THE LETTER OF CREDIT IS MADE A
2 
SECURITY FOR PAYMENT."
3 
SEC. 19. Section 183 of the National Internal Revenue Code of 1997, as
4 
amended, is hereby amended to read as follows;
5 
"SEC. 183. Stamp Tax on Life AND HEALTH Insurance PoHcies[-.]f
6 
ON ANNUITIES, PRE-NEED, AND HEALTH MAINTENANCE
7 
ORGANIZATION PRODUCTS. - On all policies of insurance or other
8 
instruments by whatever name the same may be called, whereby any
9 
insurance, POLICY ON ANNUITY, PRE-NEED, OR HEALTH
10 
MAINTENANCE ORGANIZATION PRODUCT shall be made or
11 
renewed upon any life or lives AND HEALTH OF PERSONS, there shall
12 
be collected a one-time documentary stamp tax at the following rates:
13 
"If the amount of insurance OR OTHER INSTRUMENTS does not
14 
exceed P[ 100,000] 320,000 - Exempt
15 
"If the amount of insurance OR OTHER INSTRUMENTS exceeds
16 
P[100,000] 320,000 but does not exceed P[300,000] 960,000 -
17 
P20.00
18 
"If the amount of insurance OR OTHER INSTRUMENTS exceeds
19 
P[300,000] 960,000 but does not exceed P[500,000] 1,600,000
20 
- P50.00
21 
"If the amount of insurance OR OTHER INSTRUMENTS exceeds
22 
P[500,000]1,600,000 but does not exceed P[750,000]2,400,000
23 
- PIOO.OO
24 
"If the amount of insurance OR OTHER INSTRUMENTS exceeds
25 
P[750,000]2,400,000 but does not exceed
26 
P[i70G070G9]3,200,000 - P150.00
27 
"If the amount of insurance OR OTHER INSTRUMENTS exceeds
28 
P[i70GG7©GG]3,200,000 - P200.00
29 
SEC. 20. Section 184 of the National Internal Revenue Code of 1997, as
30 
amended, is hereby amended to read as follows:
31 
"SEC. 184. Stamp Tax on Policies of Insurance Upon Property. - On
32 
all policies of insurance or other instruments by whatever name the same
18


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18 
19
may be called, [by which insurance shall be] made or renewed upon 
property of any description, including rents or profits, against peril by sea 
or on inland waters, or by fire or lightning, there shall be collected a 
documentary stamp tax of [Fifty centavos (P0.50) on each Four poses 
(P4.00), or fractional port 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 TAX RATE 
SHALL BE IMPOSED ACCORDING TO THE FOLLOWING 
SCHEDULE:
EFFECnVITY
DOCUMENTARY STAMP TAX RATE ON
PROPERTY INSURANCE POLICIES
JANUARY 1, 2026
ELEVEN AND ONE-HALF PERCENT
(11.5%)
JANUARY 1, 2027
TEN AND ONE-HALF PERCENT
(10.5%)
JANUARY 1, 2028
NINE AND ONE-HALF PERCENT
(9.5%)
JANUARY 1, 2029
EIGHT AND ONE-HALF PERCENT
(8.5%)
JANUARY 1, 2030
SEVEN AND ONE-HALF PERCENT
(7.5%)
SEC. 21. Section 185 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:
"SEC. 185. Stamp Tax on Fidelity Bonds and Other Insurance 
Policies. - On all policies of insurance or bonds or obligations of the 
nature of indemnity for loss, damage or liability made or renewed by any 
person, association, company or corporation transacting the business of 
accident, fidelity, employer's liability, plate, glass, steam boiler, burglar.
19


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
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 legality of any bond or other 
obligations issued by any province, city, municipality, or other public body 
or organization, and on all obligations guaranteeing the title to any real 
estate, or guaranteeing any mercantile credits, which may be made or 
renewed by any such person, company or corporation, there shall be 
collected a documentary stamp tax of [Fifty contovoG (P0.50) on each 
Four pesos (P4.00), or fractional port thereof,] TWELVE AND ONE- 
HALF PERCENT (12.5%) of the premium charged[T]: PROVIDED, 
THAT SUCH TAX RATE SHALL BE IMPOSED ACCORDING TO THE 
FOLLOWING SCHEDULE:
EFFECTIVITY
DOCUMENTARY STAMP TAX RATE ON
FIDELITY BONDS AND OTHER
INSURANCE POLICIES
JANUARY 1, 2026
ELEVEN AND ONE-HALF PERCENT
(11.5%)
JANUARY 1, 2027
TEN AND ONE-HALF PERCENT
(10.5%)
JANUARY 1, 2028
NINE AND ONE-HALF PERCENT
(9.5%)
JANUARY 1, 2029
EIGHT AND ONE-HALF PERCENT
(8.5%)
JANUARY 1, 2030
SEVEN AND ONE-HALF PERCENT
(7.5%)
SEC. 22. Section 186 of the National Internal Revenue Code of 1997, as 
amended, is hereby repealed.
SEC. 23. Section 187 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:
20


1 
"SEC. 187. Stamp Tax on Indemnity Bonds. - On all bonds for
2 
indemnifying any person, firm or corporation who shall become bound or
3 
engaged as surety for the payment of any sum of money or for the due
4 
execution or performance of the duties of any office or position or to
5 
account for money received by virtue thereof, and on all other bonds of
6 
any description, except such as may be required in legal proceedings, or
7 
are otherwise provided for herein, there shall be collected a documentary
8 
stamp tax of [Thirty centavos (f0.30) on each Four pesos (P4.00), or
9 
fractional part thereof,] SEVEN AND ONE-HALF PERCENT (7.5%) of
10 
the premium charged."
11 
SEC. 24. Section 188 of the National Internal Revenue Code of 1997, as
12 
amended as follows:
13 
"SEC. 188. Stamp Tax on Certificates. - On each certificate of
14 
damages or otherwise, and on every other certificate or document issued
15 
by any customs officer, marine surveyor, or other person acting as such,
16 
and on each certificate issued by a notary public, and on each certificate
17 
of any description required by law or by rules or regulations of a public
18 
office, or which is issued for the purpose of giving information, or
19 
establishing proof of a fact, and not otherwise specified herein, there shall
20 
be collected a documentary stamp tax of Thirty pesos (P30.00):
21 
PROVIDED, THAT, BEGINNING JANUARY 01f 2028, STAMP TAX
22 
IMPOSED UNDER THIS SECTION SHALL BE EXEMPT.'
23 
SEC. 25. Section 190 of the National Internal Revenue Code of 1997, as
24 
amended, is hereby further amended as follows:
25 
"SEC. 190. Stamp Tax on Jai-Alai, Horse Racing Tickets, Lotto or Other
26 
Authorized Numbers Games. - On each jai-alai, horse race ticket, lotto, or
27 
other authorized number games, there shall be collected a documentary stamp
28 
tax of Twenty centavos (P0.20): Provided, That if the cost of the ticket exceeds
29 
One peso (PI.00), an additional tax of Twenty centavos (P0.20) on every One
30 
peso (PI.00), or fractional part thereof, shall be collected: PROVIDED,
21


1 
FURTHER, THAT THE DOCUMENTARY STAMP TAX ON LOTTO AND
2 
OTHER NUMBER GAMES CONDUCTED BY THE PHILIPPINE CHARITY
3 
SWEEPSTAKES OFFICE (PCSO) SHALL BE IMPOSED ON THE BETTOR
4 
AND NOT ON PCSO OR ANY OF ITS FUNDS."
5 
SEC. 26. Section 192 of the National Internal Revenue Code of 1997, as
6 
amended, is hereby repealed.
7 
SEC. 27. Section 193 of the National Internal Revenue Code of 1997, as
8 
amended, is hereby repealed.
9 
SEC. 28. Section 194 of the National Internal Revenue Code of 1997, as
10 
amended, is hereby amended to read as follows:
11 
"SEC. 194. Stamp Tax on Leases and Other Hiring Agreements. — On
12 
each lease, agreement, memorandum, or contract for hire, use or rent of any
13 
lands or tenements, or portions thereof, there shall be collected a documentary
14 
stamp tax of [Six pesos (P6.00) for the first Two thousand pesos (P2,090), or
15 
fractional part thereof, and on additional Two pesos (P2.00) for every One
16 
thousand pesos (P1,000) or fractional part thereof, in excess of the first Two
17 
thousand pesos (P2,000)] TWENTY PERCENT OF ONE PERCENT (20% OF
18 
1%) FOR EACH YEAR OF THE TERM OF SAID CONTRACT OR
19 
AGREEMENT: PROVIDED, THAT, IF THE CONTRACT OR AGREEMENT
20 
STIPULATES A FIXED LEASE VALUE, THE DOCUMENTARY STAMP TAX
21 
SHALL BE COLLECTED for [each yeor of] the ENTIRE term of said contract
22 
or agreement: PROVIDED, FURTHER, THAT, IF THE CONTRACT OR
23 
AGREEMENT STIPULATES A VARIABLE LEASE VALUE OR BOTH A
24 
FIXED LEASE VALUE AND A VARIABLE LEASE VALUE, THE
25 
DOCUMENTARY STAMP TAX COMPUTED USING THE VARIABLE LEASE
26 
VALUE SHALL BE COLLECTED, INSTEAD, ON A MONTHLY BASIS:
27 
PROVIDED, FINALLY, THAT ANY ADVANCE RENT PAID SHALL
28 
AUTOMATICALLY BE SUBJECT TO DOCUMENTARY STAMP TAX,
29 
REGARDLESS OF WHETHER SUCH ADVANCE RENT IS COMPUTED ON
30 
THE BASIS OF A FIXED LEASE VALUE OR VARIABLE LEASE VALUE.
22


1 
"FOR PURPOSES OF THIS SECTION, THE TERM 'FIXED LEASE
2 
VALUE' REFERS TO A FIXED RENT AMOUNT, AS STIPULATED IN THE
3 
CONTRACT OR AGREEMENT, WHILE THE TERM 'VARIABLE LEASE
4 
VALUE' REFERS TO RENT COMPUTED AS A PERCENTAGE OF A BASE
5 
AGREED TO BY THE PARTIES, SUCH AS GROSS SALES, NET SALES,
6 
GROSS INCOME, NET INCOME AND THE LIKE."
7 
SEC. 29. Section 195 of the National Internal Revenue Code of 1997, as
8 
amended, is hereby amended to read as follows:
9 
"SEC. 195. Stamp Tax on Mortgages, Pledges and Deeds of Trust -
10 
On every mortgage or pledge of lands, estate, or property, real or
11 
personal, heritable or movable, whatsoever, where the same shall be
12 
made as a security for the payment of any definite and certain sum of
13 
money lent at the time or previously due and owing or forborne to be
14 
paid, being payable, and on any conveyance of land, estate, or property
15 
whatsoever, in trust or to be sold, or otherwise converted into money
16 
which shall be and intended only as security, either by express stipulation
17 
or otherwise, there shall be collected a documentary stamp tax [ot the
18 
following rotes:] OF THIRTY PERCENT OF ONE PERCENT (0.30%)
19 
OF THE AMOUNT SECURED.
20 
[(a) When the amount secured docs not exceed Five thousand
21 
pesos (P5,000), Forty pesos (P40.00).]
22 
[(b) On each Five thousand pesos (P5,000), er-4ractional part
23 
thereof in exc-ess ef Five thousand pesos (P5,000), an additional tax of
24 
Twenty pesos (P20.00).]
25 
"x X X."
26 
SEC. 30. Section 198 of the National Internal Revenue Code of 1997, as
27 
amended, is hereby amended to read as follows:
28 
"SEC. 198. Stamp Tax on [Assignments ond\ Renewals of Certain
29 
Instruments. - Upon each and every [assignment or transfer of any
30 
mortgage, lease or policy of insurance, or the] renewal or continuance of
31 
any agreement, contract, charter, or any evidence of obligation or
32 
indebtedness SUBJECT TO DOCUMENTARY STAMP TAX UNDER
23


1 
THIS TITLE by THE EXTENSION OF THE TERM OR MATURITY
2 
[altering or othcrwiGcJ OF SUCH AGREEMENT, CONTRACT OR
3 
CHARTER, there shall be levied, collected and paid a documentary
4 
stamp tax, at the same rate as that imposed on the original instrument."
5 
SEC. 31. Section 204 of the National Internal Revenue Code of 1997, as
6 
amended, is hereby amended to read as follows:
7 
"SEC. 204, Authority of the Commissioner to Compromise, Abate
8 
and Refund or Credit Taxes. - The Commissioner may -
9 
"(A) Compromise the payment of any internal revenue tax, when:
10 
"x X X
11 
"Where the basic tax involved exceeds [One million pesos
12 
(PI,000,000)] THREE MILLION PESOS (P3,000,000) or where the
13 
settlement offered is less than the prescribed minimum rates, the
14 
compromise shall be subject to the approval of the Evaluation Board
15 
which shall be composed of the Commissioner and the four (4) Deputy
16 
Commissioners.
17 
"x X X."
18 
SEC. 32. Section 222 of the National Internal Revenue Code of 1997, as
19 
amended, is hereby amended to read as follows:
20 
"SEC. 222. Exceptions as to Period of Limitation of Assessment
21 
and Collection of Taxes. -
22 
"(a) XXX
23 
"(b) If before the expiration of the time prescribed in Section 203
24 
for the assessment of the tax, [both the Commissioner and] the taxpayer
25 
[have agreed] APPLIES WITH THE COMMISSIONER in writing [to
26 
its] FOR assessment [after such time], the tax may be assessed within
27 
the period [agreed upon] SPECIFIED IN THE APPLICATION WHICH
28 
SHALL NOT EXCEED SIX (6) MONTHS AT ANY GIVEN TIME. [The]
29 
SUCH period [so agreed upon] may be extended by subsequent written
30 
[agreement] APPLICATION made before the expiration of the period
31 
previously [agreed upon] APPLIED FOR.
32 
"x X X."
24


1 
SEC. 33. Section 255 of the National Internal Revenue Code of 1997, as
2 
amended, is hereby amended to read as follows:
3 
"SEC. 255. Failure to File Return, Supply Correct and Accurate
4 
Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes
5 
Withheld on Compensation. - Any person required under this Code or by
6 
rules and regulations promulgated thereunder to pay any tax, make a
7 
return, keep any record, or supply correct and accurate information, who
8 
willfully fails to pay such tax, make such return, keep such record, or
9 
supply such correct and accurate information, or withhold or remit taxes
10 
withheld, or refund excess taxes withheld on compensation, at the time
11 
or times required by law or rules and regulations shall, in addition to other
12 
penalties provided by law, upon conviction thereof, be punished by a fine
13 
of not less than [Ton thousand pesos (PI0,000)] FORTY THOUSAND
14 
PESOS (PAO/OOO) and [suffer] imprisonment of not less than one (1)
15 
year but not more than ten (10) years.
16 
"Any person who attempts to make it appear for any reason that
17 
[f»e] THE TAXPAYER or another has in fact filed a return or statement,
18 
or actually files a return or statement and subsequently withdraws the
19 
same return or statement after securing the official receiving seal or
20 
stamp of receipt of an internal revenue office wherein the same was
21 
actually filed shall, upon conviction therefor, be punished by a fine of not
22 
less than [Ten thousand-pesos (P10,000) but not more-than Twenty
23 
thousand pesos (P20,00Q-)] FORTY THOUSAND PESOS (#40,000)
24 
BUT NOT MORE THAN EIGHTY THOUSAND PESOS (#80,000) and
25 
[suffer] imprisonment of not less than one (1) year but not more than
26 
three (3) years."
27 
SEC. 34. Section 256 of the National Internal Revenue Code of 1997, as
28 
amended, is hereby amended to read as follows:
29 
"SEC. 256. Pena! Liability of Corporations. - Any corporation,
30 
association or general co-partnership liable for any of the acts or
31 
omissions penalized under this Code, in addition to the penalties imposed
32 
herein upon the responsible corporate officers, partners, or employees
25


1 
shall, upon conviction for each act or omission, be punished by a fine of
2 
not less than [Fifty thousond pesos (P50,000) but not more than One
3 
hundred thousand pesos (^100,000)] TWO HUNDRED THOUSAND
4 
PESOS (#200,000) BUT NOT MORE THAN TWO MILLION EIGHT
5 
HUNDRED THOUSAND PESOS (#2,800,000)."
6 
SEC. 35. Section 257 of the National Internal Revenue Code of 1997, as
7 
amended, is hereby amended to read as follows:
8 
"SEC. 257. Pena! Liability for Making False Entries, Records or
9 
Reports, or Using Falsified or Fake Accountable Forms. -
10 
"(A) Any financial officer or independent Certified Public Accountant
11 
engaged to examine and audit books of accounts of taxpayers under
12 
Section 232(A) and any person under his direction who:
13 
"x X X
14 
"(B) Any person who:
15 
"(1) Not being an independent Certified Public Accountant according
16 
to Section 232(B) or a financial officer, examines and audits books of
17 
accounts of taxpayers; or
18 
"x X X
19 
"(8) Willfully attempts in any manner to evade or defeat any tax
20 
imposed under this Code, or knowingly uses fake or falsified revenue
21 
official receipts. Letters of Authority, certificates authorizing registration,
22 
Tax Credit Certificates, Tax Debit Memoranda and other accountable
23 
forms shall, upon conviction for each act or omission, be punished by a
24 
fine of not less than [Fifty thousand pesos (P50,000) but not more than
25 
One hundred thousand pesos (P100,000)] ONE HUNDRED THIRTY
26 
THOUSAND PESOS (#130,000) BUT NOT MORE THAN TWO
27 
HUNDRED SEVENTY THOUSAND PESOS (#270,000) and [suffer]
28 
imprisonment of not less than two (2) years but not more than six (6)
29 
years.
30 
"If the offender is a Certified Public Accountant, [fns] THE
31 
OFFENDER'S [certificate as □ Certified Public Accountant] LICENSE TO
32 
PRACTICE THE ACCOUNTING PROFESSION AND CERTIFICATE
26


1 
OF REGISTRATION shall be automatically revoked or cancelled upon
2 
conviction.
3 
"In the case of foreigners, conviction under this Code shall result in
4 
[Ws] THEIR immediate deportation 
after serving sentence, without
5 
further proceedings for deportation."
6 
SEC. 36. Section 261 of the National Internal Revenue Code of 1997, as
7 
amended, is hereby amended to read as follows:
8 
"SEC. 261. Unlawful Use of Denatured Alcohol. - Any person who
9 
for the purpose of manufacturing any beverage, uses denatured alcohol
10 
or alcohol specially denatured to be used for motive power or withdrawn
11 
under bond for industrial uses or alcohol knowingly misrepresented to be
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denatured to be unfit for oral intake or who knowingly sells or offers for
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sale any beverage made in whole or in part from such alcohol or who
14 
uses such alcohol for the manufacture of liquid medicinal preparations
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taken internally, or knowingly sells or offers for sale such preparations
16 
containing as an ingredient such alcohol, shall, upon conviction for each
17 
act or omission be punished by a fine of not less than [Twenty thousand
18 
pesos (P20,000) but not more than One hundred thousand pesos
19 
(P100,09Q)] FIVE HUNDRED SIXTY THOUSAND PESOS (^560,000)
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BUT NOT MORE THAN TWO MILLION EIGHT HUNDRED
21 
THOUSAND PESOS (#2,800,000) and [suffer] imprisonment for a
22 
term of not less than six (6) years and one (1) day but not more than
23 
twelve (12) years.
24 
"x X X."
25 
SEC. 37. Section 263 of the National Internal Revenue Code of 1997, as
26 
amended, is hereby amended to read as follows:
27 
"SEC. 263. Unlawful Possession or Removal of Articles Subject to
28 
Excise Tax without Payment of the Tax. - Any person who owns and/or
29 
is found in possession of imported articles subject to excise tax, the tax
30 
on which has not been paid in accordance with law, or any person who
31 
owns and/or is found in possession of imported tax-exempt articles other
32 
than those to whom they are legally issued shall be punished by:
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"(a) A fine of not less than [One hundred thousand pesos 
100,090.00)] THIRTY THOUSAND PESOS (^30,000) but not more 
than [Two hundred thousand pesos (P200,000.00)] THREE MILLION 
PESOS (#3,000,000) and imprisonment of not less than sixty (60) days 
but not more than one hundred (100) days if the appraised value, to be 
determined in the manner prescribed in Republic Act No. 10863, 
otherwise known as the 'Customs Modernization and Tariff Act (CMTA)', 
including duties and taxes, of the articles does not exceed [Two hundred 
fifty thousand pesos (#250,000.00)] TWO MILLION PESOS: Provided, 
That if the appraised value, including duties and taxes, does not exceed 
[Ton thousand pesos (#10,000.00)] TWENTY THOUSAND PESOS, the 
penalty shall only be a fine in the amount of Twelve thousand pesos 
(#12,000.00);
(b) A fine of not less than [One million pesos (#1,000,000.00)] 
THREE MILLION PESOS (#3,000,000) but not more than [Two million 
pesos (#2,000,000.00)] THIRTY MILLION PESOS (#30,000,000) and 
imprisonment of not less than two (2) years but not more than four (4) 
years if the appraised value, to be determined in the manner prescribed in 
Republic Act No. 10863, otherwise known as the 'Customs Modernization 
and Tariff Act (CMTA)" including duties and taxes, of the articles exceeds 
[Two hundred fifty thousand pesos (#250,000.00)] TWO MILLION 
PESOS but does not exceed [Five hundred thousand pesos (#500,000.00)] 
TWENTY MILLION PESOS;
(c) A fine of not less than [Throe million pesos (#3,000,000.00)] 
THIRTY MILLION PESOS (#30,000,000) but not more than [few 
million pesos (#4,000,000.00)] ONE HUNDRED FIFTY MILLION PESOS 
(#150,000,000) and imprisonment of not less than four (4) years but not 
more than six (6) years, if the appraised value, to be determined in the 
manner prescribed in Republic Act No. 10863, otherwise known as the 
'Customs Modernization and Tariff Act (CMTA)', including duties and taxes 
of the articles is more than [Five hundred thousand pesos (#500,000.00)]
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TWENTY MILLION PESOS but does not exceed [One million pesos
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(PI,000,000.00)] ONE HUNDRED MILLION PESOS;
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(d) A fine of not less than [Ton million pesos (P10,000,000.00)]
4 
ONE HUNDRED FIFTY MILLION PESOS (P150/000/000) but not
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more than [Twenty million pesos (P20,000,000.-00)] THREE HUNDRED
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MILLION PESOS (P300,000/000) and imprisonment of not less than
7 
ten (10) years but not more than twelve (12) years, if the appraised value,
8 
to be determined in the manner prescribed in Republic Act No. 10863,
9 
otherwise known as the 'Customs Modernization and Tariff Act (CMTA)',
10 
including duties and taxes, of the articles [cxcGcdG One million pesos
11 
(P1,000,000.00)] MORE THAN ONE HUNDRED MILLION PESOS
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(PIOO.OOO^OOO) BUT DOES NOT EXCEED TWO HUNDRED MILLION
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PESOS (P200/000,000);
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"(E) A FINE OF NOT LESS THAN THREE HUNDRED MILLION
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PESOS (PSOO^OOO^OOO) BUT NOT MORE THAN TWICE THE
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APPRAISED VALUE OF THE ARTICLE, AND IMPRISONMENT OF
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NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT MORE
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THAN TWELVE (12) YEARS, IF THE APPRAISED VALUE, TO BE
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DETERMINED IN THE MANNER PRESCRIBED IN REPUBLIC ACT
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NO. 10863, OTHERWISE KNOWN AS THE CUSTOMS
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MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND
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TAXES, OF THE ARTICLES IS MORE THAN TWO HUNDRED
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MILLION PESOS (P200,000,000);
24 
"X X X."
25 
SEC. 38. Section 264 of the National Internal Revenue Code of 1997, as
26 
amended, is hereby amended to read as follows:
27 
"SEC. 264. Failure or Refusal to Issue Receipts or Sales or
28 
Commercial Invoices, Violations Related to the Printing of such Receipts
29 
or Invoices and Other Violations. -
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"(a) Any person who, being required under Section 237 to issue
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receipts or sales or commercial invoices, fails or refuses to issue such
32 
receipts or invoices, issues receipts or invoices that do not truly reflect
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and/or contain all the information required to be shown therein, or uses
2 
multiple or double receipts or invoices, shall, upon conviction for each act
3 
or omission, be punished by a fine of not less than [One thousand pesos
4 
(P1,000) but not more than Fifty thousand pesos (P50,000)] THIRTY
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THOUSAND PESOS (#30,000) BUT NOT MORE THAN ONE
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MILLION FOUR HUNDRED THOUSAND PESOS (#1,400,000) and
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[suffer] imprisonment of not less than two (2) years but not more than
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four (4) years.
9 
"x X X."
10 
SEC. 39. Section 266 of the National Internal Revenue Code of 1997, as
11 
amended, is hereby amended to read as follows:
12 
"SEC. 266. Failure to Obey Summons. - Any person who, AFTER
13 
HAVING BEEN [being] duly summoned to appear to testify, or to
14 
appear and produce books of accounts, records, memoranda or other
15 
papers, or to furnish information as required under the pertinent
16 
provisions of this Code, neglects to appear or to produce such books of
17 
accounts, records, memoranda or other papers, or to furnish such
18 
information, shall, upon conviction, be punished by a fine of not less than
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[Five thousand pesos (P5,000)] ONE HUNDRED THOUSAND PESOS
20 
(P100,000) but not more than [Ten thousand pesos (P10,00Q)] THREE
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HUNDRED THOUSAND PESOS (#300,000) and [suffer]
22 
imprisonment of not less than one (1) year but not more than two (2)
23 
years."
24 
SEC. 40. Section 275 of the National Internal Revenue Code of 1997, as
25 
amended, is hereby amended to read as follows:
26 
"SEC. 275. Violation of Other Provisions of this Code or Rules and
27 
Regulations in General. - Any person who WILFULLY violates any
28 
provision of this Code or any rule or regulation promulgated by the
29 
Department of Finance, for which no specific penalty is provided by law,
30 
shall, upon conviction for each act or omission, be punished by a fine of
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not more than [One thousand pesos (P1,000)] THIRTY THOUSAND
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PESOS (#30,000) or [suffer] imprisonment of not more than [six (6)
2 
months,] TWO (2) YEARS, or both."
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SEC. 41. Implementing Rules and Regulations. - Within ninety (90)
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calendar days from the effectivity of this Act, the Department of Finance, in
5 
consultation with the Securities and Exchange Commission, Bangko Sentral ng
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Pilipinas, Insurance Commission, the Bureau of the Treasury, and the Bureau of
7 
Internal Revenue, after due consultation with the private sector, shall issue rules and
8 
regulations for the effective implementation of this Act.
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SEC. 42. Separability Clause. - If, for any reason any article or provision of
10 
this Act, or any portion thereof, or application of such article, provision, or portion
11 
thereof to any person, group, or circumstance is declared invalid or unconstitutional,
12 
the remainder of this Act shall not be affected by such decision or declaration.
13 
SEC. 43. Repealing Clause. - The following laws or provisions are hereby
14 
repealed or modified accordingly and the persons and/or transactions affected herein
15 
are hereby made subject to applicable taxes under the National Internal Revenue Code
16 
of 1997, as amended:
17 
a) Section 3, insofar as the tax exemption on interest income, capital
18 
gains, and documentary stamp tax of bonds is concerned, of Republic Act No.
19 
3601, entitled "An Act Granting the National Irrigation Administratiori') and
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b) Section 5(e), insofar as tax exemption on interest income, capital
21 
gains, and documentary stamp tax on bonds is concerned, of Republic Act No.
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6260, entitled "An Act Instituting a Coconut Investment Fund and Creating a
2 3 
Coconut Investment Company for the Administration Thereof.
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All laws, decrees, executive orders, implementing rules and regulations,
25 
issuances, or any part thereof inconsistent with the provisions of this Act are deemed
26 
repealed, amended, or modified accordingly.
27 
SEC. 44. Transitory Provision. - The changes introduced under this Act shall
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apply to financial instruments issued on and transactions entered into on or after
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January 1, 2026. Any tax exemption and preferential rates on financial instruments
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issued or transactions entered into prior to the effectivity of this Act shall remain valid
31 
for the remaining maturity of the relevant agreement.
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SEC. 45. Effectivity. - This Act shall take effect on January 1, 2026, following 
its complete publication in the Official Gazette or in at least one (1) newspaper of 
general circulation.
Approved,
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