*&i 
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BY : 
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THIRTEENTH CONGRESS OF THE REPUBLIC 
First Regular Session 
) 
OF THE PHILIPPINES 
) 
) 
dJ 
S E N A T E  
Introduced by Senator S. R. OsmeRa 111 
EXPLANATORY NOTE 
Taxes are the lifeblood of the government. Even if the principle is well 
established, in the Philippines, the practice of paying taxes and paying the right 
amount is not. 
Rampant tax evasion lies behind the government's nagging 
budget deficit, which last year totaled P199.9 billion, equivalent to 4.6% of the 
country's gross domestic product (GDP). The budget deficit of the government 
has been increasing from 1.9% of GDP in 1998 to a high of 5.2% in 2002. The 
projected full year deficit for 2004 is estimated to be roughly P197.8 billion, or 
4.2% of GDP. Public debt has also ballooned to more than $60 billion, and 
economists say it is dragging down the Philippine economy. 
From 1998 to 2002, the National Tax Research Center (NTRC) estimated 
the tax leakage to have reached P634.7 billion. This significant amount of money 
that had escaped the state's coffers jeopardizes the government's responsibility 
to deliver basic goods and services to the people. Tax revenue in the Philippines 
currently amounts to only 12.5% of GDP, ranking it much behind our Asian 
neighbors. 
The Philippines is cited, with increasing frequency, as a country where 
corruption is a factor that inhibits foreign and domestic investment and which 
may be eroding the country's competitive position. Perhaps nowhere else is 
corruption so deeply entrenched as at the country's tax authority, the Bureau of 
Internal Revenue (BIR). 
The country's burgeoning fiscal crisis emphasizes the need to restructure 
the BIR because it has continuously failed to meet its targets despite being 
responsible for almost 80 per cent of the revenues of government. 
The uncompetitive compensation and benefits for the bureaucracy has 
failed to attract the most qualified personnel to the BIR. Budget constraints also 
prevent the BIR from employing the best personnel and using the latest 
technology in attaining its functions. 


The proposed bill seeks to restructure the graft-ridden Bureau of Internal 
Revenue into the National Revenue Authority (NRA), which will be governed by a 
board of directors and managed by a chief executive officer (CEO) to be 
appointed by the board. The salient provisions of the bill are: 
The NRA is envisioned to be a performance-based organization, endowed 
with corporate powers that allow it sufficient flexibility in managing its 
operations. Management will thus be allowed to either reward or punish 
employees based on their performance. 
It will be de-politicized or insulated from politics, with automatic budget 
appropriation. 
It will be governed by a board composed of ex-officio members from the 
Department of Finance, Department of Budget and Management, 
Securities and Exchange Commission and National Economic and 
Development Authority, and three representatives from the private sector. 
It will be run by a board-selected CEO covered by a performance-based 
contract. 
It will be governed by a board that has power to create the appropriate 
organizational structure needed by the new revenue agency to fulfill its 
mandate. The NRA board of directors is authorized to create a 
streamlined organization within six months and will also be tasked to 
decide on the separation package to be offered to employees who shall 
retire or are separated from the service. 
It strengthens transparency by mandating that records and documents of 
the Revenue Board will be made available to the public without, of course, 
violating the confidentiality requirements of the National Internal Revenue 
Code. 
In view of the uraent need to address the Berennial problems of tax 
s 
administration and, consequently, the budgetary problems of the'government, the 
approval of this bill is earnestly requested. 
SEGGIO 
OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
'&i 5EP -6 
All :oz 
First Regular Session 
) 
G 
1~~~~~~~~~ 
BY : - .. -.-.' 
S E N A T E  
~~ 
Introduced by Senator S. R. OsmeAa 111 
AN ACT 
CREATING THE NATIONAL REVENUE AUTHORITY, PROVIDING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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PART I 
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Preliminary Provisions 
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SECTION 1. 
Shod Title. - This Act shall be known and cited as the 
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To this end, the State shall provide such framework through the creation 
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of an 'Internal Revenue Authority' that shall be imbued under the principles of 
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honesty and integrity, fairness and equity. The State shall therefore endow the 
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Authority with the appropriate autonomous fiscal and administrative powers 
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SEC. 3. Scope - This Act shall provide the framework for the restructuring 
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of the BIR, its transition to the desired corporate body structure, under an 
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"National Revenue Authority Act of 2004." 
SEC. 2. Declaration of Policy - It is the policy of the State to reform and 
restructure its tax administration system to meet its objectives of providing 
Government the necessary resources to competently govern and operate. It shall 
also satisfy its co-equal mandate and responsibility to provide its customers the 
taxpayers, efficient, effective and responsive service. 
necessary to the discharge of and the attainment of its mandate. 
autonomous decentralized system of administration 


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SEC. 4. Definition of Terms. -As used in this Act, the following terms shall 
mean as follows: 
a) BIR - refers to the Bureau of Internal Revenue which is government 
agency created under Title 11, Sec. 16 of the Administrative Code of 
2987 as amended by the Republic Act No. 8424. 
b) Board - refers to the Revenue Board which is the governing body of 
the Authority composed of representatives from the government and 
non-government sector, as established in Section 9 of this Act. 
c) CEO - refers to the Chief-Executive-Officer, who shall be the head of 
the Authority as provided in Section 13 of this Act. 
d) COA - otherwise known as Commission on Audit refers to the 
of the 1987 
government agency created under Art. IX, C, Sec. 
Philippine Constitution. 
e) CSC - otherwise known as Civil Service Commission refers to the 
government agency created under Art. IX, B, Sec. 1 of the 1987 
Philippine Constitution. 
f) DBM - otherwise known as the Department of Budget and 
Management refers to the government entity responsible for the 
formulation and implementation of National Budget created under Sec. 
1, Title XVll of the Administrative Code of 1987. 
g) DOF - otherwise known as the Department of Finance refers to a 
government agency primarily responsible for the sound and efficient 
management of 
financial 
resources 
of 
the 
Government, 
its 
subdivisions, agencies and instrumentalities. 
h) Government - refers to the Government of the Republic of the 
Philippines as a corporate governmental authority through which the 
functions of governance are exercised through out the Philippines 
including the various arms and through which political authority is 
made effective. 
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i) National Revenue Authority - refers to the body corporate, endowed 
with fiscal and administrative powers, hereinafter referred to as the 
"Authority". 
j) NEDA - otherwise known as the National Economic and Development 
Authority refers to the government agency mandated to perform 
functions relative to development planning and policy formulation. It 
was re-organized by virtue of the passage of Executive Order No. 230 
last July 22, 1987. 
k) NlRC of 1997, as amended - refers to the National Internal Revenue 
Code, as amended by RA 8424 otherwise known as "The Tax Reform 
Act of 1997". 
I) SEC - refers to the collegial body created under Sec. 4.1 of Republic 
Act No. 8799 otherwise referred to as the Securities and Exchange 
Commission. 
m) Taxpayer- refers to any person subject to tax imposed by the National 
Internal Revenue Code as amended by RA 8424 and other special 
laws. 
PART II 
Establishment of the National Revenue Authority 
SEC. 5. Creation of the National Revenue Authority. - There is hereby 
established a body corporate to be known as the National Revenue Authority, 
which shall be attached to the Department of Finance (DOF). The Authority shall 
have its principal place of business in Metro Manila and may establish branches 
and offices. In such other places as may be deemed necessary for the 
performance of its mandate. It shall be organized within 180 days from the date 
of effectivity of this Act. 
SEC. 6. Capitalization. - The Authority shall be a non-stock corporation. 
Its capitalization shall be equal to the fixed assets and facilities, including other 
assets and properties, real and personal, transferred from the Bureau of Internal 
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Revenue and valued as of the effectivity of this Act. Additional asset build-up 
may be financed from the National Revenue Authority's Service Fee. 
SEC. 7. Powers of the Authority. -The Authority shall exercise the powers 
and duties heretofore exercised by the BIR under the NlRC of 1997, as amended 
and other pertinent laws, such as assessment and collection of all national 
internal revenue taxes, fees and charges and the enforcement of all forfeitures, 
penalties, and fines connected therewith, including the execution of judgements 
in all cases decided in its favor by the Court of Tax Appeals and the ordinary 
courts, Further, the Authority shall give effect to and administer the supervisory 
and police powers conferred to the BIR by the NlRC of 1997, as amended and by 
other pertinent laws. 
In addition, the Authority shall have the following corporate powers: 
a) To adopt, alter, and use an official seal which shall be judicially 
notices; 
b) To acquire, hold and lease or own, real and personal property and sell, 
encumber or otherwise dispose of the same; 
c) To incur loans, obligations and other liabilities to be used solely for the 
improvement of the Authority's capital systems and infrastructure 
needs; Provided that the amounts to be used for the repayment of 
such loans and other obligations incurred under this provision, 
including the interest payments thereto shall be taken only from a 
portion of the service fee as specified in Section 28 of this Act, subject 
to such debt ceiling as determined by the Board: Provided further, that 
at no such time shall the total debt service impair the capital structure 
of the Authority and its budget for both capital outlay and maintenance 
and other operating expenses; 
d) To enter into contracts; 
e) To sue and be sued; and 
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9 To perform any and all acts necessary or incidental to achieve the 
objectives and purposes of this Act. 
SEC. 8. Funcfions of the Authority. - The Authority shall perform the 
following functions - 
a) 
To competently collect revenues for the Government consistent 
with its fiscal policy and revenue collection targets; 
b) 
To provide effective, efficient, and responsive service to its 
customers-the taxpayers; 
c) 
To formulate, advise, and make policy recommendations to the 
various Branches of Government on issues concerning taxation; 
d) 
To represent, and liaise for the Government internationally in 
matters relating to taxation; 
e) 
To increase awareness and understanding of tax obligations 
through information dissemination campaigns in order to enhance tax 
compliance; and 
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To perform other functions, as may be deemed necessary by the 
Board, in consultation with the CEO, in pursuit of its mandate as specified in this 
Act, and the Implementing Rules and Regulations (IRR) as approved, the NlRC 
of 1997, as amended and other applicable laws, rules and regulations. 
SEC. 9. Esfablishment of the Revenue Board - There is hereby created 
an Internal Revenue Board, hereinafter referred to as the "Board", to be 
composed of the Secretary of the Department of Finance (DOF), as Chairperson, 
and the following as Members: the Secretary of the Department of Budget and 
Management (DBM), 
Director-General 
of the 
National 
Economic and 
Development Authority (NEDA) and the Chairperson of the Securities and 
Exchange Commission (SEC), and three (3) representatives from the non- 
government sector to be appointed by the President. The three (3) members 
from the non-government sector shall be an economist, lawyer and accountant. 
Each shall be selected and appointed by the President from a pool of candidates 
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to be nominated by the Professional Organization of their professions. The 
standards and procedures of the nomination process shall be provided for in the 
IRR of this Act. 
a) Term of Office - The representatives from the government sector shall 
serve in ex-officio capacity without compensation, while the members 
appointed from the non-government sector shall serve full-time for a 
term of three years respectively and may be re-appointed once. There 
shall be a staggered term for the first set of non-government sector 
appointees, such that the first appointee shall serve for three (3) years, 
the second appointee for two (2) years, and the third appointee for one 
(1) year: Provided however, that the reappointment of representatives 
from the non-government sector shall follow the nomination process 
outlined in this Section and the IRR of this Act. 
An appointment to fill the vacancy created by the death, resignation 
or removal of a member from the non-government sector shall only be 
for the un-expired period of such member's term. 
b) Qualifications for Appointees from Non-Government Sector - Any 
person may be appointed as member of the Board representing the 
non-government sector provided that he shall be a citizen of the 
Philippines, of good moral character, or unquestionable integrity, and a 
recognized expert in the field of taxation, fiscal policy, public finance, 
fiscal administration, accounting, management, or law: Provided 
however, that no person who has been connected as a director, 
partner, officer, lawyer, accountant, consultant or in any other capacity 
with individuals, general professional partnerships, or professional 
corporations who prepare and file tax returns, statements, protests and 
other papers with, or who appear before the Authority shall be 
appointed within one (1) year from the cessation of such connection. 
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c) Conflict of lnterest - In addition to the requirements of Republic Act 
No. 6713, otherwise known as the Code of Conduct and Ethical 
Standards for Public Officials and Employees, any member of the 
Board with personal or pecuniary interest in any matter in the agenda 
of the Board shall disclose such interest to the Board and shall inhibit 
himself during the deliberations when such matter is taken up. The 
decision taken on the matter shall be made public and the minutes of 
the meeting shall reflect the disclosure made and the inhibition of the 
member concerned. 
d) Disqualification for Board Members - In addition to the disqualifications 
imposed by the Code of Conduct and Ethical Standards for Public 
Officials and Employees, a member of the Board shall be disqualified 
from being connected as director, partner, officer, lawyer, accountant, 
consultant or in any other capacity with individuals, general 
professional partnerships, or professional corporations who prepare 
and file tax returns, statements, protests and other papers with, or who 
appear before the Authority, in which case such member shall 
terminate his or her association with such individuals and resign from, 
and divest himself or herself of any and all interests in such general 
professional partnerships, or professional corporations. 
e) Grounds for Removal of Appointees from Non-Government Sector - 
The President may remove any member of the Board from the non- 
government sector for any of the following reasons: 
(i) 
The member suffers from physical or mental incapacity that 
renders him or her incapable of property discharging the 
duties and responsibilities of membership in the Board and 
such incapacity has lasted for more than six (6) months; or 
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(ii) 
(iii) 
(iv) 
The member has committed acts or operations that are 
shown prima facie to be fraudulent or illegal or manifestly 
opposed to the aims and interests of the Authority; 
The member no longer possesses the qualifications 
specified in Section 9 (b) of this Act; or 
The member is subsequently disqualified 
under the 
provisions of existing laws. 
SEC. 10. Powers and Duties of the Revenue Board - The Board shall 
exercise the following powers: 
a) To formulate, formally approve and adopt, the fiscal and administrative 
policy framework for the effective implementation by the Authority, of 
the provisions of this Act, the NlRC of 1997, as amended and other 
revenue regulations as well as to evaluate and monitor the adoption 
and implementation of the same; 
b) Upon the recommendation of the CEO, approve the annual and 
supplemental budget of receipt and expenditures of the Authority, and 
authorize such capital and operating expenditures of the Authority as 
may be necessary or proper for the effective management, operation 
and administration of the Authority; 
c) Upon the recommendation of the CEO, form committees that shall 
assist in the performance of its functions. Such committees shall 
include, but are not limited to the following: an executive committee 
and an inter-agency tax coordinating body that shall be convened to 
identify and provide data for the forecasting of potential revenue 
collections of the Authority; 
d) Direct the management, operations and administration of the Authority 
and issue such rules and regulations, as it may deem necessary or 
convenient for this purpose; 
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e) Reorganize the Authority, which shall include, but which shall not be 
limited to, outsourcing of services and implementation of a 
Voluntary/Mandatory Retirement Program as it may deem necessary 
to fulfill its mandate; 
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Establish a Human Resource Management System geared towards 
the improvement of capabilities of the organization. Appointment to the 
Authority shall be based on merit and fitness to be determined as far 
as practicable by competitive examinations or based on highly 
technical qualifications and applicants may likewise be subject to 
lifestyle and integrity checks to ensure suitability of appointment to a 
new position; 
g) The Board shall have the exclusive and final authority to hire, promote, 
transfer, assign, reassign or remove personnel of the Authority who are 
found unfit to render further service to the Authority and these 
personnel actions are deemed made in the interest of achieving the 
right size of the organization and not disciplinary in nature; 
h) Impose disciplinary measures pursuant to existing Civil Service laws; 
i) Fix the remunerations and other emoluments of the personnel of the 
Authority based on the recommendations of the CEO and subject to 
pertinent compensation laws; 
j) Upon the recommendation of the CEO, appoint the top management 
officials, middle-management officials, employees and other personnel 
of the Authority as maybe further specified in the IRR; 
k) Exercise such powers and perform such other acts as may be 
necessary, useful, incidental or auxiliary to carry out the provisions of 
this Act, or to perform the purposes and objectives of this Act, the 
NlRC of 1997, as amended and other pertinent agreements, revenue 
rules and regulations. 
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2s 
All rules and regulations approved by the Secretary of Finance, as 
recommended by the BIR Commissioner, and all such other references 
in the NlRC of 1997 as amended, where appropriate, shall henceforth 
refer to the Board. 
SEC. 11, organization of the NRA - The Revenue Board shall organize 
the by adopting as necessary a staffing pattern or organizational structure, 
subject to the approval of the President of the Philippines upon the 
recommendation of the Department of Budget and Management to efficiently 
fulfill its mandate under this act. 
The formulation of the Program of Organization shall be completed within 
a period of six (6) months from the effectivity of this Act. During this period, the 
Board shall have the option to provide a Voluntary/Mandatory Retirement 
Package, subject to the approval of the President of the Philippines upon the 
recommendation of the Department of Budget and Management. 
SEC. 12. Meetings - The Board shall hold meetings at least twice a month 
for the conduct of its business or as often as maybe necessary upon the call of 
four (4) of its members. Any regular meeting shall be called by the Chairperson 
or in his absence, by any of the representatives of the Government to the Board. 
The presence of four (4) members shall constitute a quorum. Provided, 
that meetings shall only be held if there is a quorum and that at least one non- 
government sector representative is present. 
All decisions of the Board shall require the concurrence of majority of its 
members. Provided, that for matters such as, the approval of the Authority's 
Fiscal and Administrative policy framework and/or any major amendments 
thereto, removal and appointment of the CEO, approval of and subsequent 
changes to the organizational structure and staffing pattern and compensation 
scheme, contracting of loans, obligations and liabilities, a vote of two thirds (2/3) 
of all the members of the Board shall be required. 
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Any Authority shall maintain and preserve a complete record of the 
proceedingslminutes of the Board which can be made available to the public 
when national interests so requires as may be determined by the Board. 
Whenever the Chairperson or any of the Members serving in ex officio 
capacity is unable to attend a meeting of the Board, the representative shall be 
an Undersecretary or its equivalent rank Provided, that the highest ranking ex 
officio member present shall preside over the meeting in case the Chairperson is 
absent. 
SEC. 13. The Chief-fxecutive-Officer - The Authority shall be headed by 
a CEO who shall be a citizen of the Philippines, of good moral character, of 
unquestionable integrity, with a least seven (7) years experience in management, 
and a recognized expert in the field of taxation, finance, fiscal administration, 
economics, public administration or public finance. 
The CEO of the Authority shall be appointed by the Board from a list of at 
least three (3) nominees prepared by a Selection Committee created by the 
Board and chaired by any of its members. 
The CEO shall be appointed for a term of four (4) years, which must be 
covered by a Performance Contract between the Authority and the CEO. Said 
contract may be pre-terminated by the Board for reasons such as failure to meet 
the revenue collection target and other pertinent commitments in the 
performance contract unless such failure is attributable to a cause or causes 
beyond the control of the CEO. The CEO may also be removed from office due 
to serious, misconducts, gross and habitual neglect of duties, fraud or willful 
breach of trust, commission of a crime or offense and other causes analogous to 
the foregoing, as provided under the Administration Code of 1987, the Revised 
Penal Code and other special laws, rules and regulations. 
SEC. 14. Powers and Duties of the CEO - The CEO shall exercise the 
powers and functions of the Commissioner of the BIR under Sections 4, 5, 6, 7, 


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regulations; 
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c) Determine, with the approval of the Board, the organizational structure, 
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staffing pattern including the geographical location of the branches and 
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offices of the Authority; reorganize its personnel and issue such rules 
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and regulations, as he or she may deem necessary or convenient for 
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these purposes; 
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d) Establish, with the approval of the Board, a Performance-Based 
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Management System in accordance with existing laws, rules and 
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regulations, which shall govern the selection, hiring, appointment, 
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transfer, promotion, or dismissal of all officials and personnel of the 
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Authority. A continuing program for resource and capacity building but 
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not limited to education and training, shall likewise be made an integral 
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component of this system; 
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consequence of such Plan; 
8, 14, 15, 16, 17, 19, 20, and other provisions of the NlRC of 1997, as amended. 
In addition to such powers, the CEO shall: 
a) Direct, execute and administer the Fiscal and Administrative policies 
as approved, and such directives and agreements approved by the 
Board, and submit for consideration of the Board such other policies 
and measures as he or she believes necessary to carry out the 
purposes and objectives of this Act: 
b) Promulgate, with the approval of the Board, all necessary rules and 
regulations for the effective enforcement of this Act, the provisions of 
the NlRC of 1997, as amended and other revenue laws, rules and 
e) Adopt with the approval of the Board, a Workforce Rationalization Plan 
including the provision of incentives and/or financial assistance to 
Authority personnel who retire or are separated from the service as a 
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9 Recommend for Board approval prior to engagement, the proposed 
outsourcing agreements of non-core corporate functions and services 
and thereafter implement the same; 
g) Represent the Authority in all external official acts with offices, 
agencies and instrumentalities of the Government and with all persons 
and entities, public or private, domestic or foreign: Provided that, and 
where appropriate, prior Board approval and authorization shall be 
obtained; 
h) To exercise such other powers and functions as may be vested in the 
CEO by the Board. 
The CEO shall have the authority to delegate any of the foregoing powers 
to such official or officials of the Authority, as he or she may deem necessary. 
Such delegation of any of the above powers and duties, in whole or in part, shall 
be documented: Provided that, such documents shall form part of the official 
records of the Authority: Provided further, that any delegation heretofore, shall 
require ratification in the Board meeting immediately following such delegation. 
Should any of the above powers and functions be made permanent in nature, 
Board approval and authorization shall be secured before such delegation is 
made operative. 
All references in the NlRC of 1997, as amended and other revenue laws, 
and in the rules and regulations issued thereunder to the Commissioner of the 
BIR, shall be deemed to refer to the CEO. Henceoforth, all powers and functions 
of the aforementioned Commissioner of the BIR are deemed transferred to the 
CEO, where appropriate. 
SEC. 15. Compensation - Upon the recommendation of the Department 
of Budget and Management, the President of the Philippines shall fix the 
compensation of the Members of the Board from the Non-Government sector 
and the CEO taking into account the compensation structure of the Government 
and the importance and responsibilities attached to their positions, 


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The compensation of other personnel of the Authority shall be in 
accordance with the Salary Standardization Law. 
The Board may also grant a performance bonus to all officials and 
employees of the Authority based on the actual collection of the Authority in 
excess of the target set by the Development Budget Coordinating Council 
(DBCC): Provided, that the DBCC shall set this target in terms of a tax effort 
reckoned with respect to the Gross Domestic Product and other accepted 
economic and management measures of performance 
PART 111 
Human Resource Management 
SEC. 16. Policy on Selection and Hiring - 
The Authority shall be organized by the Board, by adopting if it so desires, 
an entirely new organizational structure and staffing pattern to suit the operations 
of the Authority under this Act. Selection of its personnel shall be based strictly 
on merit and fitness and applicants may likewise be subject to lifestyle and 
integrity checks to ensure their suitability for appointment to the new 
organization. The formulation of the organizational structure and staffing pattern 
shall be completed within six (6) months after the effectivity of this Act, and shall 
be fully implemented within a period of six (6) months thereafter, both of which 
periods shall be collectively referred to as the transition period. 
SEC. 17. Absorpfion of BlR Employees - All employees of the BIR are 
deemed transferred and absorbed by the NRA upon the effectivity of this Act. 
SEC. 18. Performance - Based Management System - A Performance- 
Based Management System shall govern the selection, hiring, appointment, 
transfer, promotion, or dismissal of all personnel. Such system shall aim to attract 
and retain professionally competent, well-trained, hones, courteous and efficient 
personnel and to establish professionahsm and excellence at all levels of the 
Authority. Furthermore, the system shall also include measures for the periodic 
conduct of lifestyle and integrity checks of Authority personnel. 
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Appointments in the Authority, except those which are policy-determining, 
primarily confidential or highly technical in nature, shall be made in accordance 
with the Civil Service Law, rules and regulations; Provided, That no qualification 
requirements for positions in the Authority shall be imposed, other than those set 
by the CEO upon approval of the Board and consistent with existing laws, deploy 
and utilize all officers, staff and employees under the organizational structure, 
staffing pattern and workforce rationalization plan as approved, without need of 
obtaining prior approval from any and all other Government Agencies, so as not 
to affect nor disrupt the operations of the Authority, and to assure the efficient 
and effective discharge of the Authority's mandate as herein set forth. 
SEC. 19. €xfraordinary Diligence - The officials and personnel of the 
Authority who willfully violate the NlRC of 1997, as amended or who are guilty of 
negligence, abuse or acts of malfeasance or fail to exercise extraordinary 
diligence in the performance of their duties shall, in addition to the penalties 
provided for in the NlRC of 1997, as amended, be held liable for any loss or 
injury suffered by the Authority or other institutions as a result of such violation, 
negligence, abuse, malfeasance, or failure to exercise extraordinary diligence. 
SEC. 20. lndemnificafion 
for Legal Defense Costs and Expenses - 
Section 227 of the NlRC of 1997, as amended is hereby amended to read as 
follows: 
"The National Revenue Authority shall indemnify members of the Revenue 
Board and other officials of the Authority, including personnel of the units 
performing assessment, audit and collection functions, against all costs and 
expenses reasonably incurred by such persons in connection with any civil or 
criminal action, suit or proceeding to which they may be or made a party by 
reason of their performance of their functions or duties, unless they are finally 
adjudged in such action or proceeding to be liable for gross negligence or 
misconduct. 
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"In the event of settlement or compromise, indemnification shall be 
provided only in connection with such matters covered by the settlement as to 
which the Authority is advised by external counsel that the persons to be 
indemnified did not commit any gross negligence or misconduct. 
"The costs and expenses incurred in defending the aforementioned action, 
suit or proceeding may be paid by the Authority in advance of the final disposition 
of such action, suit or proceeding upon receipt of an undertaking by or on behalf 
of the member of the Board, official or employee to repay the amount advanced 
should it ultimately be determined by the Authority that said member of the 
Board, official or employee is not entitled to be indemnified as provided in this 
Section." 
The Board and the CEO shall provide for alternative means to cover legal 
defense, costs and expenses, including but not limited to litigation insurance. The 
details in implementing this Section shall be in accordance with the IRR of this 
Act. 
SEC. 21, Applicability of Prohibitions and Sanctions; Administrative 
Complaints - 
The penalties imposed on officials, agents or employees of the BIR who 
are guilty of the offenses enumerated in the NlRC of 1997, as amended and 
other criminal statutes shall be applied to members of the Revenue Board and 
officials, agents and employees of the Authority who are found guilty of such 
offenses. 
For purposes of adminisfrafive complaints against officers and employees 
of the Authority, an internal audit unit to be created by and reporting directly to 
the Board shall conduct the investigations on such complaints. For this purpose, 
such internal audit unit shall be deemed deputized by the Office of the 
Ombudsman under RA 6770 or the Ombudsman Act of 1989. 
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The internal audit herein created may likewise be tasked by the Board with 
the conduct of periodic background and lifestyle and integrity checks of officials, 
employees, agents and other personnel of the Authority. 
PART IV 
Transparency and Accountability 
SEC. 22. Annual and Semi-Annual Reports. - In addition to the 
requirements of Section 20 of the NlRC of 1997, as amended, the CEO through 
the Board, shall submit within the first quarter of every year, an annual report 
which shall include, but shall not be limited to, reports on the operations and 
condition of the Authority and the implementation of this Act. 
Likewise, the Authority shall submit semi-annual reports on the projected 
revenue targets and forecasts and the status of all revenue collections, including 
a review of the policies and procedures adopted by the Board, on the last 
Monday of the third and eight month of the year. These annual and semi-annual 
reports shall be turned over to the Chairpersons of the Committee on Ways and 
Means of the Senate and the House of Representatives, and to the 
Congressional Oversight Committee, created pursuant to Section 290 of the 
NlRC of 1997, as amended and to the President of the Republic of the 
Philippines. 
SEC. 23. Joint Congressional Revenue Commission - Upon effectivity of 
this Act, a congressional commission, hereinafter referred to as the "Revenue 
Commission", is hereby constituted. The Revenue Commission shall be 
composed of fourteen (14) members with the Chairmen of the Committee on 
Ways and Means of the Senate and the House of Representatives as Co- 
Chairmen and six (6) additional Members from each House, to be designated by 
the Senate President and the Speaker of the House of Representatives, 
respectively. The minority shall be entitled to pro rata representation, but shall 
have at least one (1) representative in the Revenue Commission. 
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The Revenue Commission is created pursuant to and for the purpose of 
ensuring that the mandate of the Authority shall be pursued and implemented in 
accordance with the spirit and intent of the Act. Its shall perform the following 
functions in aid of legislation, among others: 
a) Set the guidelines and overall framework to monitor and ensure the 
proper implementation of the Act; 
b) Ensure transparency and accountability responsibilities of the 
Authority, through a regular review of the semi-annual reports of the 
Authority, and through consultations with the Board and CEO of the 
Authority; 
c) Review and evaluate the implementation of this Act, after the first year 
of actual operations of the Authority, and every six months thereafter, 
until the end of the term existence of the Revenue Commission; 
d) Provide for the methodology and procedures in the turn-over of the 
functions herein stated, after its term of existence ends, to the 
Congressional Oversight Committee pursuant to Section 290 of the 
NlRC of 1997, as amended. 
e) Perform such other duties and functions as may be necessary to attain 
its objectives. 
The Revenue Commission shall adopt its internal rules of procedure; 
conduct hearings and receive testimonies, reports and technical advice; invite or 
summon by subpoena ad testificandum any public official, private citizen or any 
person to testify before it on information and date it may require, or require any 
person by subpoena duces tecum to produce before it such records, reports, 
documents or other materials as it may require; and generally require all the 
powers necessary to attain the purposes for which it is created. The Secretariat 
of the Revenue Commission shall be drawn from the existing secretariat 
personnel of the Standing Committees comprising the Joint Congressional 
Revenue Commission. 
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The Revenue Commission shall exist for a period of three (3) years from 
the effectivity of this Act: Provided that if deemed necessary, the life of the 
Commission may be extended for a period not exceeding two (2) years, by an 
Act of Congress. 
SEC. 24. Access to Information; Income Tax Return, List of Tax Payers 
and Filers Constitute Public Records - After the assessment shall have been 
made, as provided in Title II, Chapter XI, Section 71 of the NlRC of 1997, as 
amended, the returns, together with any corrections thereof which may have 
been made by the CEO, including the lists of containing the names, addresses, 
type of business whether a corporation, partnership or sole proprietorship with 
information on the gross salelreceipts during the year, and the amount of income 
taxes paid, taxes paid by individual income tax payers and the estate of the 
taxpayers, shall all be filed with the Office of the CEO and shall constitute public 
records, which shall be made request, in the premises and during regular office 
hours of the Authority, in accordance with the IRR of this Act. 
To strengthen transparency and the accountability responsibilities of the 
Authority, the annual and semi-annual reports, minutes of Board meetings and 
proceedings thereof, shall constitute public records. 
SEC. 25. Exception to the Unlawful Procurement and Divulgence of Trade 
Secrefs Clause - As provided in Sections 270 and 278 of the NlRC of 1997, as 
amended, any officer or employee of the Authority, including service providers 
and their personnel who are granted access to taxpayers records by virtue of the 
outsourcing, as well as any person who is not in any way connected to the 
Authority, who gains access and uses for personal benefit, or who causes or 
procures an officer or employee of the Authority to divulge, reveal, cause to 
publish or print in any manner not provided by law, or makes known to any 
person, in any other manner than may be provided by law the following: 
confidential information regarding the business of the taxpayer or confidential 
information about the secrets, operation, style or work, or apparatus of any 
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manufacturer or producer, knowledge of which are acquired by such person in 
the discharge of his official duties or by virtue of his access to such information: 
except as herein allowed in Section 24 of this Act, shall, upon conviction for 
each or omission, be punished by a fine of not less than Fifty thousand pesos 
(Php 50,000.00) but not more than One hundred pesos (PhP 100,000.00) or 
suffer imprisonment of not less than two (2) years, but not more than five years, 
or both. The details of implementation of this provision shall be specified in the 
IRR of this Act. 
PART V 
Transitory Provisions 
SEC. 26. Transfer of Powers - All powers, duties and functions vested by 
law in the BIR shall be deemed transferred to the Authority. The powers, duties 
'and functions of the NlRC of 1997, as amended and other revenue laws as 
vested in the Deputy Commissioners, Service Chiefs, Assistant Chiefs, Revenue 
Regional Directors, Assistant Revenue Regional Directors, Chiefs and Assistant 
Chiefs of Divisions, Revenue District Officers, the special deputies of the 
Commissioner, internal revenue officers and other employees of the BIR, shall be 
deemed transferred to the officers and employees of the Authority who are 
appointed to exercise the same powers, duties and functions as the 
abovementioned BIR officers and employees: Provided, however, that pursuant 
to the power of the CEO in Sections 14 and 18 of this Act to determine the 
organizational structure of the Authority and the powers of the Board to 
reorganize its personnel under Sections 10, 11, 14 and 26 of this Act, the 
positions, bodies, acts and functions mentioned in Sections 7, 9, 10, 11, 12, 13, 
14, 15, 16, 17, 18, 51(B), 58, 77(A), 81, 90(D), 95, 103(B), 114(B), 128(B), 
130(A)(3), 130(A)(4)(b), 163, 164, 166, 171, 172, 196, 200(C), 202, 204, 206, 
207(A), 207(B), 208, 209, 213, 214, 215, 227, 236(A), 236(B), 236(E), 236(F), 
236(G), 236(J), 241, 242, 243, 244 to 282 and 290 of the NlRC of 1997, as 
amended, may be changed, abolished, combined with or be substituted with 
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another position, body, or with other powers and functions granted by these 
provisions to said positions and bodies to be performed by such officials or 
employees as may be deemed appropriate by the CEO, upon concurrence of the 
Board: Provided further, That for purposes of applications for abatement, upon 
recommendation of the CEO, the Board shall be authorized to fix the terms and 
conditions, including the levels of approving authority and the creation of 
committees to process said applications. The details for the implementation of 
this provisions shall be specified in the IRR of this Act. 
All references to the BIR in the NlRC of 1997, as amended and other 
revenue laws, and in the rules and regulations issued thereunder shall 
henceforth be deemed to refer to the National Revenue Authority. 
SEC. 27. Transfer of Assets. - (a) Upon the effectivity of this Act, an 
Appraisal Committee composed of the Chairperson and ex officio members of 
the Board and the Chairpersons of the Committees on Ways and Means of the 
Senate and the House of Representatives shall determine the assets of the BIR 
which shall be transferred to the Authority. The Committee shall be assisted by 
the COA in the appraisal of the value of the assets to be transferred to the 
Authority. The Chairperson of COA shall assign a group of auditors to assist the 
Appraisal Committee in its work. 
(b) The Appraisal Committee shall complete its work within ninety (90) 
days from the commencement of its work. It shall submit a comprehensive report 
of its findings and justifications to Congress and the President within fifteen (15) 
days from the completion of its work. 
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SEC. 28. Service Fee - All revenue collections shall be remitted to the 
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National Treasury. However, the Authority shall receive an annual appropriation 
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from the National Government which shall be automatically released in an 
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(DBCC) created under E.O. No, 232, s. of 1970, as amended, which shall not fall 
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below one percent (7%) nor exceed two and a half percent (2.5%) of actual cash 
collection of all national internal revenue taxes, fees, charges and interest 
collected by the Authority based on the second preceding calendar year, net of 
the Internal Revenue Allotment (IRA), tax refunds, tax expenditure subsidy, 
rewards and other collections earmarked by law for special purposes. Provided, 
that for a maximum period of five (5) years of operation of the Authority, the 
Service Fee shall be 2.5% of all national internal revenue taxes, fees, charges 
and interest collected by the Authority based on the second preceding calendar 
year, net of IRA, tax refunds, tax expenditure subsidy, rewards and other 
collections earmarked by law for special purposes. Provided, finally, that in no 
case shall the Service Fee for a particular year be lower than the preceding year. 
SEC. 29. Transition Committee. -The Secretary of Finance shall create a 
Transition Committee to manage the organization of the Authority, including the 
initial selection and appointment of its officials. These officials shall be subject to 
confirmation once the Revenue Board has been constituted: Provided further, 
that the initial selection and appointment of the officials of the Authority by the 
Transition Committees shall be recommended and endorsed to the Revenue 
Commission for its ratification. The officials of the Authority shall thereafter meet 
with and submit reports to the Revenue Commission, as may be required. The 
Transition Committee shall be headed by an Undersecretary of the Department 
of Finance and include, among others, the incumbent Commissioner of the BIR. 
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Towards the same end, the hiring of Authority personnel, suspension of 
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assessments, institution of voluntary assessment programs, conduct of a 
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taxpayer census, and similar measures are hereby authorized during the 
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transition period to augment revenue collection and ensure that the operations of 
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SEC. 30. Transitory Provision. - This Act shall be construed in favor of the 
establishment of the Authority, achievement of right size of personnel 
complement and attainment of the declaration of policy as stated herein. 
SEC. 31. lmplemenfing Rules and Regulations. - The Revenue Board 
shall promulgate the IRR shall not affect the implementation of the self-executory 
Drovisions of this Act. 
SEC. 32. lnjunction and Restraining Order - The implementation of the 
provisions of this Act shall not be restrained or enjoined except by an order 
issued by the Supreme Court of the Philippines. 
SEC. 33. Separability C/ause - If any provision or section of this Act is 
held invalid, the other provisions and sections not affected thereby remain in full 
force and effect. 
SEC. 34. Repealing Clause - The provisions of Sections 18, 19, 20, 21, 
and 22 of Chapter 4, Title II, Book IV of Executive Order No. 292, otherwise 
known as the Administrative Code of 1987, are hereby repealed. The provisions 
of Title I of the NlRC of 1997, as amended insofar as they are inconsistent with 
the provisions of this Act, are hereby amended or repealed accordingly. The 
other provisions of the NlRC of 1997, as amended including Sections 51(B), 58, 
71, 77(A), 81, 90(D), 95, 103(B), 114(B), 128(B), 130(A)(3), 130(A)(4)(b), 163, 
164, 166, 171, 172, 196, 200(C), 202, 204, 206, 207(A), 207(B), 208, 209, 213, 
214, 21 5, 227, 236(B), 236(E), 236(F), 236(G), 236(J), 241, 242, 243, 244 to 282 
and 290 are hereby repealed, amended or modified accordingly. 
All other laws, including charters of government-owned or controlled 
corporations, decrees, orders or regulations or parts thereof issued pursuant to 
the NlRC of 1997, as amended that are inconsistent with this Act are hereby 
repealed, amended or modified accordingly. 
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general circulation. 
SEC. 35. Effectivity Clause - This Act shall take effect fifteen (1 5) days 
following its publication in the Official Gazette or in two (2) newspapers of 
Approved, 
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