1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. _______ 
Introduced by HON. GUS S. TAMBUNTING 
AN ACT 
AMENDING SECTIONS, 22, 24, 25, 27, 28, 29, 30, 32, 34, 37, 38, 39, 42,51, 52, 54, 56, 
73, 108, 121, 122, 123, 174, 176, 179, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 
191,194, 195, 196, 197, 198, AND 199: AND REPEALING SECTIONS 127, 175, 178, 
180, 192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424 OTHERWISE 
KNOWN AS TILE NATIONAL INTERNAL REVENUE CODE OF 1997 AS AMENDED, 
AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
One of the priority bills of President Ferdinand R. Marcos, Jr. in his 2022 State of the Nation 
Address (SONA) is the Passive Income and Financial Intermediary Taxation Act also known 
as (PIFITA).  
This seeks to reform the taxation of capital income and financial services by redesigning the 
financial sector taxation into a simpler, fairer, more efficient, and revenue-neutral tax system. 
It also represents adopting a regionally competitive tax system. 
This bill complements the TRAIN Act since it makes passive income and intermediary 
financial taxes more straightforward, effective, and competitive in the Association of 
Southeast Asian Nations (ASEAN) region.  
With PIFITA, the Philippines can be more competitive in attracting capital and investments 
that are urgently needed to finance large-scale infrastructure, create more and better jobs, 
and boost economic growth. 
On behalf of the people of Parañaque City’s Second District, and for the common good of 
the Filipino people, the approval of the said measure is earnestly sought. 
REP. GUS S. TAMBUNTING 
2nd District, Parañaque City 
August 31, 2022
8:54 am
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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. _______ 
Introduced by HON. GUS S. TAMBUNTING 
AN ACT 
AMENDING SECTIONS, 22, 24, 25, 27, 28, 29, 30, 32, 34, 37, 38, 39, 42,51, 52, 54, 56, 
73, 108, 121, 122, 123, 174, 176, 179, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 
191,194, 195, 196, 197, 198, AND 199: AND REPEALING SECTIONS 127, 175, 178, 
180, 192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424 OTHERWISE 
KNOWN AS TILE NATIONAL INTERNAL REVENUE CODE OF 1997 AS AMENDED, 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION. 1. Title. — This Act shall be known as the "Passive Income and Financial 
Intermediary Taxation Act." 
SEC. 2. Declaration of Policy. — The financial sector plays a significant role in the long-term 
growth of the national economy. A key policy consideration is to allow the capital market to 
develop as efficiently as possible, with the least intervention. The optimal taxation of capital 
markets, and the products and transactions that come with them, is an essential element in 
developing the capital market. Towards this end, the State recognizes the necessity of a 
simpler, fairer, more efficient, and regionally more competitive tax system for passive income 
and financial intermediation to encourage savings and develop as well as deepen the capital 
markets. Accordingly, the State adopts the following policies: 
1. The State shall promote and develop a tax system that provides neutrality in the tax
treatment across financial institutions and financial instruments.
2. The State shall endeavor to simplify an otherwise complex tax system for easy
compliance. 
3. The State shall ensure that the taxation of passive income and financial transactions
is equitable across all stakeholders and discourages arbitrage opportunities, 
4. The State shall promote capital market development and tax competitiveness within
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the context of globalization, increased capital mobility, and financial inclusion. 
SEC. 3. Section 22 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows: 
SEC. 22. Definitions - When used in this Title:  (A) xxx 
xxx xxx xxx 
(L) The term 'shares of stock' shall [include] REFER TO shares of stock of a 
corporation, warrants and/or options Ito purchase shares of stock], WHETHER TO BUY OR 
SELL SECURITIES, FUTURES CONTRACTS, AND SUCH OTHER DERIVATIVE 
SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED 
MARKETPLACE, as well as units of 
participation in a partnership (except general professional partnerships), joint stock 
companies, joint accounts, COLLECTIVE NVESTMENT SCHEMES, joint 
ventures taxable as corporations, associations, and recreation or amusement clubs (such as 
golf, polo or similar clubs), and mutual fund certificates. 
(M) The term 'shareholder' shall [include] REFER TO holders of a share/s of 
stock, warrant/s and/or option/s [to purchase shares of stock of a corporation], 
WHETHER TO BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND SUCH OTHER 
DERIVATIVE SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR AN 
ORGANIZED MARKETPLACE, as well as a 
holder of a unit of participation in a partnership (except general professional partnerships), 
in a joint stock company, a joint account, A COLLECTIVE 
INVESTMENT SCHEME, a taxable joint venture, a member of an association, 
recreation or amusement club (such as golf, polo, or similar clubs), and a holder of a mutual 
fund certificate, a member in an association, joint-stock company, or insurance company. 
xxx xxx xxx 
(T) The term 'securities' [means] SHALL REFER TO [shares of stock in a 
corporation and rights to subscribe for or to receive such shares. The term includes 
bonds, debentures, notes or certificates, or other evidence of indebtedness, issued by 
any corporation, including those issued by a government or political subdivision 
thereof, with interest coupons or in registered form [. l, SHARES, PARTICIPATION, 


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OR INTERESTS IN A CORPORATION OR IN A COMMERCIAL 
ENTERPRISE OR PROFIT-MAKING VENTURE EVIDENCED BY A CERTIFICATE, 
CONTRACT, 
INSTRUMENTS, 
WHETHER 
WRITTEN 
OR 
ELECTRONIC 
IN 
CHARACTER. THESE INCLUDE: 
(1) SHARES OF STOCK, BONDS, DEBENTURES, NOTES,
EVIDENCES OF INDEBTEDNESS, ASSET-BACKED SECURITIES; 
(2) INVESTMENT CONTRACTS, CERTIFICATES OF INTEREST, OR
PARTICIPATION IN A PROFIT- SHARING AGREEMENT SUCH 
AS COLLECTIVE INVESTMENT SCHEMES OR CERTIFICATE OF DEPOSIT FOR A 
FUTURE SUBSCRIPTION; 
20 (3) FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS, OR OTHER MINERAL 
RIGHTS; 
(4) CERTIFICATES OF ASSIGNNIENTS, CERTIFICATES OF
PARTICIPATION, TRUST CERTIFICATES, VOTING TRUST 
CERTIFICATES, OR SIMILAR INSTRUMENTS; 
(5) PROPRIETARY OR NON-PROPRIETARY MEMBERSHIP
CERTIFICATES IN CORPORATIONS; AND 
(6) OTHER INSTRUMENTS AS MAY BE DETERMINED BY THE SECURITIES AND
EXCHANGE COMMISSION.
xxx xxx xxx 
(V) The term 'bank' [means every banking institution, as defined in Section 2
Republic Act No. 337, as amended, otherwise known as the "General Banking Act." 
A bank may either be, a commercial bank, a thrift bank, a development bank, a rural 
bank or specialized government bank AS DEFINED IN SECTION 3 OF 
REPUBLIC ACT NO. 8791, OTHERWISE KNOWN AS THE GENERAL BANKING LAW 
OF 2000, SHALL REFER TO ENTITIES ENGAGED IN THE LENDING OF FUNDS 
OBTAINED IN THE FORM OF DEPOSITS. BANKS SHALL BE CLASSIFIED INTO 
UNIVERSAL BANKS, COMMERCIAL 
BANKS, AND THRIFT BANKS COMPOSED OF: (A) SAVINGS AND 
MORTGAGE BANKS; (B) STOCK SAVINGS AND LOAN ASSOCIATIONS; 


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AND (C) PRIVATE DEVELOPMENT BANKS, AS DEFINED IN REPUBLIC 7 ACT NO. 
7906, OR THE THRIFT BANKS ACT; RURAL BANKS, AS DEFINED IN REPUBLIC 
ACT NO. 7353 OF THE RURAL BANKS ACT; COOPERATIVE BANKS, AS DEFINED 
IN REPUBLIC ACT NO. 6938 OR 10 THE COOPERATIVE CODE; ISLAMIC BANKS 
AS DEFINED IN REPUBLIC 11 ACT NO. 6848, OR THE CHARTER OF AL AMANAH 
ISLAMIC 
INVESTMENT BANK OF THE PHILIPPINES; AND OTHER CLASSIFICATIONS OF 
BANKS AS DETERMINED BY THE MONETARY 14 BOARD OF THE BANGKO 
SENTRAL NG PILIPINAS. 
(W) The term 'non-bank financial intermediary' [means) SHALL REFER TO [a financial 
intermediary, as defined in Section 2(D)(C) of Republic Act No. 337, as amended, 
otherwise known as the "General Banking Act," authorized by the Bangko 
Sentral ng Pilipinas (BSP) to perform quasi-banking activities] 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 PARTICIPATIONS, CERTIFICATES OF ASSIGNMENT, 
OR SIMILAR INSTRUMENTS WITH RECOURSE, TRUST CERTIFICATES, OR OF 
REPURCHASE AGREEMENTS, FROM TWENTY (20) OR MORE LENDERS AT ANY 
ONE TIME, FOR PURPOSES OF RELENDING OR PURCHASING OF RECEIVABLES 
AND THER OBLIGATIONS, 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 ENTITIES ENGAGED IN THE 
BORROWING OF FUNDS THROUGH THE ISSUANCE, 
ENDORSEMENT OR ASSIGNMENT WITH RECOURSE OR ACCEPTANCE OF 
DEPOSIT SUBSTITUTES, AS DEFINED IN SUBSECTION (Z) HEREOF FOR 
PURPOSES OF RELENDING OR PURCHASING OF RECEIVABLES 3 AND OTHER 
OBLIGATIONS. 
[(X)I (Y) The term 'QUASI-BANKING ACTIVITIES' [means] SHALL 
REFER TO borrowing funds from twenty (20) or more [personal] 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 


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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, 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 performing quasi-banking functions. PROVIDED, FURTHER, 
THAT IF THE INTENTION IS FOR THE DEBT INSTRUMENTS 
TO BE HELD BY MORE THAN NINETEEN (19) HOLDERS DURING THE ENTIRE 
TERM OF THE DEBT INSTRUMENT AND IF THE TENOR AND DENOMINATION 
ARE SUCH THAT THEY CAN BE HELD BY MORE THAN NINETEEN (19) 
LENDERS, THEN THE INSTRUMENT SHALL BE CONSIDERED DEPOSIT 
SUBSTITUTES. 
 [(Y)I (Z) The term 'deposit substitutes' shall mean to refer to an alternative form of 
obtaining funds from the public (the term 'public' means borrowing from twenty (20) or 
more individual or corporate lenders at any one time) other than deposits, 
through the issuance, endorsement, or acceptance of debt instruments for the borrowers 
own account, for the purpose of relending or purchasing of receivables and other 
obligations, or financing their own needs or the needs of their agent or dealer. These 
instruments may include, but need not be limited to bankers' acceptances, promissory 
notes, repurchase agreements, [including] EXCLUDING reverse repurchase 
agreements entered into by and between the Bangko Sentral ng Pilipinas 
(BSP) and any 
authorized agent bank, certificates of assignment or participation and similar 
instruments with recourse. DEBT INSTRUMENTS ISSUED BY THE 
GOVERNMENT AND ANY OF ITS AGENCIES AND INSTRUMENTALITIES, 
INCLUDING GOVERNMENT FINANCIAL INSTITUTIONS SHALL BE 
DEEMED ISSUED TO THE PUBLIC AND CONSIDERED DEPOSIT 
SUBSTITUTES. Provided, however, that debt instruments issued for interbank 
call 


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loans with maturity of not more than five (5) days to cover deficiency in reserves 
against deposit liabilities, including those between or among banks and quasi-banks, 
shall not 
be considered as deposit substitute debt instruments. 
(AA) The term 'ordinary income' xxx xxx xxx 
(BB) The term 'rank and file employees' xxx xxx xxx 
[(BB)I (CC) The term 'mutual fund company' shall mean to REFER TO ANY 
INVESTMENT CONTANY WHICH IS OR HOLDS ITSELF OUT AS BEING 
ENGAGED PRIMARILY, OR PROPOSES TO ENGAGE PRIMARILY IN THE BUSINESS 
OF POOLING TOGETHER MONEY FROM VARIOUS INVESTORS AND INVESTS, 
REINVESTS, OR TRADES THE SAME IN 
SECURITIES, WHETHER IN STOCKS, BONDS, MONEY MARKET 
INSTRUMENTS, OTHER SECURITIES, CASH, OR ANY OTHER ASSET, OR 
an open-end and close-end investment company as defined under REPUBLIC ACT NO. 
2629, ALSO KNOWN AS the Investment Company Act OF THE PHILIPPINES. 
[(CC)] (DD) The term 'trade, business or profession' xxx xxx xxx 
[(DD)I (EE) The term 'regional or area headquarters' xxx xxx xxx 18 
[(EE)I (FF) The term 'regional operating headquarters' xxx xxx xxx 
[(FF)] (GG) The term ['long-term deposit or investment certificate' shall refer 
to certificate of time deposit or investment in the form of savings, common or individual 
trust funds, deposit substitutes, investment management accounts and other investments 
with a maturity period of not less than five (5) years, the form of which shall be prescribed 
by the Bangko Sentral ng Pilipinas (BSP) and issued by banks only (not by non-bank 
financial intermediaries and finance companies) to individuals in denominations of Ten 
thousand pesos (P 10,000) and other denominations as may be 
prescribed by the BSP.I 'FINANCIAL INSTITUTIONS' OR 'FINANCIAL 
INTERMEDIARIES SHALL REFER TO PERSONS OR ENTITIES WHOSE PRINCIPAL 
FUNCTIONS INCLUDE THE BUSINESS OF LENDING, FINANCING, INVESTING, OR 
PLACEMENT OF FUNDS OR EVIDENCES 
OF INDEBTEDNESS OR EQUITY DEPOSITED WITH THEM, ACQUIRED 
BY THEM, OR OTHERWISE COURSED THROUGH THEM, EITHER FOR 


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THEIR OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS, AND ARE 
AUTHORIZED BY THE BANGKO SENTRAL NG PILIPINAS OR BY THE 
SECURITIES 
AND 
EXCHANGE 
COMMISSION 
DEPENDING 
ON 
THE 
GOVERNMENT AGENCY AUTHORIZED TO REGULATE THEM. THESE SHALL 
INCLUDE BANKS, QUASI-BANKS, TRUST ENTITIES, PAWNSHOPS, FOREIGN 
EXCHANGE 
DEALERS, 
MONEY 
BROKERS, 
CREDIT 
COOPERATIVES, 
FINANCING COMPANIES, FINANCE LEASING 
CONIPANIES, INVESTMENT COMPANIES, AND OTHER ENTITIES ENGAGED IN 
COLLECTIVE INVESTMENT SCHEMES, INVESTMENT HOUSES, LENDING 
INVESTORS OR ENTITIES ENGAGED IN FINANCIAL INTERMEDIATION 
ACTIVITIES, AND OTHER TYPES OF BUSINESS THAT MAY BE CLASSIFIED BY 
THE BANGKO SENTRAL NG PILIPINAS OR THE SECURITIES AND EXCHANGE 
COMMISSION AS FINANCIAL INSTITUTIONS. 
 LIFE AND NON-LIFE INSURANCE COMPANIES, PRE-NEED CONIPANIES AND 
HEALTH MAINTENANCE ORGANIZATIONS ARE ALSO CONSIDERED FINANCIAL 
INSTITUTIONS UNDER THE 
SUPERVISION OF THE INSURANCE cortnnss10N. 
[(GG)] (HH) The term 'statutory minimum wage' xxx xxx xxx 
[(HH)] (Il) The term 'minimum wage earner' xxx xxx xxx 
(JJ) THE TERM 'COLLECTIVE INVESTMENT SCHEMES' OR 'CIS' 
SHALL REFER TO ANY ARRANGEMENT WHEREBY FUNDS ARE SOLICITED FROM 
THE INVESTING PUBLIC AND POOLED TOGETHER FOR THE PURPOSE OF 
INVESTING, RE-INVESTING, OR TRADING IN SECURITIES OR OTHER ASSETS OR 
DIFFERENT CLASSES THEREOF AS 
ALLOWED UNDER THE LAW, WHICH MAY EITHER HAVE A 
CORPORATE STRUCTURE, SUCH AS AN INVESTMENT CONIPANY, OR A 
CONTRACTUAL STRUCTURE, SUCH AS A UNIT INVESTMENT TRUST 
FUND OR SIMILAR SCHEME HELD BY A TRUST CORPORATION OR A SEPARATE 
ACCOUNT FUND ESTABLISHED PURSUANT TO A VARIABLE UNIT LINKED LIFE 
INSURANCE POLICY ISSUED BY AN INSURANCE 
COMPANY, AND SUCH OTHER FORMS OF COLLECTIVE INVESTMENT 
SCHEMES AS MAY BE DETERMINED BY THE APPROPRIATE GOVERNMENT 
REGULATORY AGENCIES SUCH AS THE BANGKO 


9 
 
SENTRAL NG PILIPINAS, THE SECURITIES AND EXCHANGE COMMISSION AND 
THE INSURANCE COMMISSION. A CIS MAY EITHER BE OPEN-END OR 
CLOSED-END, DEFINED AS FOLLOWS: 
'OPEN-END CIS' SHALL REFER TO A CIS WHERE SECURITIES ARE OFFERED 
AND ARE ALWAYS REDEEMABLE BY THE CIS; AND 'CLOSED-END CIS' SHALL 
REFER TO A CIS WHERE A FIXED NUMBER OF SECURITIES ARE OFFERED IN 
AN NITIAL PUBLIC 
OFFERING 
AND 
THEREAFTER 
MAY 
BE 
TRADED 
AN 
ORGANIZED 
MARKETPLACE AS DETERMINED BY THE SECURITIES AND EXCHANGE 
COMMISSION, BUT MAY NOT BE REDEEMED BY THE CIS.  A CLOSED-END CIS 
SHALL NOT BE ALLOWED TO INCREASE ITS 11 NUMBER OF SECURITIES. 
(KK) THE TERM 'UNIT LINKED INVESTMENT INSTRUMENT' SHALL REFER TO A 
CONTRACTUAL CIS ORGANIZED PURSUANT TO A CONTRACT, SUCH AS 
TRUST INDENTURE, OR AS AN INVESTMENT COMPONENT OF AN INSURANCE 
CONTRACT, ENGAGED OR HOLDS ITSELF OUT AS BENG ENGAGED, OR 
PROPOSES TO ENGAGE, THE BUSINESS OF NVESTING, REINVESTING, OR 
TRADNG SECURITIES OR OTÆÆR INVESTNÆNT ASSETS, AND ISSUES UNITS 
OF 19 PARTICIPATION, EACH OF WHICH REPRESENTS AN UNDIVIDED 20 
NTEREST IN A POOL OF INVESTMENT ASSETS. 
(LL) THE TERM 'HOLDING COMPANY' SHALL REFER TO ANY CORPORATION 
ORGANIZED TO HOLD THE STOCK OF ANOTHER OR OTHER CORPORATIONS, 
AND OTHER FORMS OF HOLDING COMPANIES AS MAY BE DETERNNNED BY 
APPROPRIATE GOVERNMENT REGULATORY AGENCIES. 
(MM) THE TERM 'DEBT INSTRUMENT SHALL REFER TO INSTRUMENTS 
REPRESENTING BORROWING AND LENDING TRANSACTIONS INCLUDRNG 
BUT NOT LIMITED TO DEBENTURES, CERTIFICATES OF NDEBTEDNESS, DUE 
BILLS, BONDS, LOAN AGREEMENTS, INSTRUMENTS, AND SECURITIES 
ISSUED BY THE GOVERNMENT OR ANY OF ITS INSTRUMENTALITIES, 
DEPOSIT 
SUBSTITUTES, 
CERTIFICATES 
OR 
OTHER EVIDENCES 
OF 
DEPOSITS, PROMISSORY NOTES, WHETHER NEGOTIABLE OR NON-
NEGOTIABLE, OTHER SIMILAR INSTRUMENTS, AND OTHER INSTRUMENTS AS 
MAY BE DETERMINED BY APPROPRIATE GOVERNIVÆNT AGENCIES. 
(NN) THE TERM 'ORGANIZED MARKETPLACE' SHALL REFER TO AN 
EXCHANGE, AN OVER-THE-COUNTER MARKET, OR AN ALTERNATIVE 
TRADING SYSTEM RECOGNIZED AS SUCH BY THE SECURITIES AND 
EXCHANGE COMMISSION AS AN EXCHANGE UNDER REPUBLIC ACT NO. 8799, 
AS AMENDED, AND GOVERNED BY, AMONG OTHERS, TRANSPARENT AND 
BINDING RULES AND MARKET  CONVENTIONS ON MEMBERSHIP, TRADING, 
PRICE TRANSPARENCY, TRADE REPORTING, MARKET MONITORING AND 
ORDERLY CONDUCT OF THE MARKET WHICH ARE ENFORCEABLE ON THE 
MEMBERS AND  
PARTICIPANTS. 


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(00) THE TERM HEALTH INSURANCE PRODUCTS SHALL REFER 14 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 COMPANIES ASSUME RISKS 
AND INDENNIFY LOSSES BROUGHT BY THE SAID COVERED ILLNESSES. 
(PP) THE TERM HEALTH MAINTENANCE ORGANIZATION (HMO) PRODUCTS 
SHALL REFER TO PRE-AGREED OR DESIGNATED HEALTH CARE SERVICES 
TO THE ENROLLED MEMBERS FOR A FIXED PRE-PAID FEE FOR A SPECIFIED 
PERIOD OF TIME THROUGH THE USE OF 
SELECTED NETWORK OF HEALTH CARE PROVIDERS. HMO 
PRODUCTS PROVIDE A WIDE ARRAY OF MEDICAL, SURGICAL AND 
HOSPITAL SERVICES THAT INCLUDE PREVENTIVE CARE AND 26 WELLNESS 
PROGRAMS AND GENERALLY HAVE NO CASH-OUT 
TRANSACTION. 
 
SEC. 4. Section 24 (B) and (C) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows; 
SEC. 24. Income Tax Rates.  
(A) Rates of Income Tax on Individual Citizen and Individual Resident Alien 
Of the Philippines. — 
xxx xxx xxx 
(B) Rate of Tax on Certain Passive Income: — 
(l) Interests [, Royalties, Prizes, and Other Winnings.] — A final tax at the rate 
of [twenty percent (20%)] FIFTEEN PERCENT (15%) is hereby imposed upon the 
amount of interest [from any currency bank deposit, and yield or any other monetary 
benefit from deposit substitutes, and from trust funds and similar arrangements; 
royalties, except on books, as well as other literary works and musical compositions, 
which shall be imposed a final tax often percent (10%); prizes (except prizes amounting 
to Ten thousand pesos (P10,000) or less which shall be subject to tax under Subsection 
(A) of Section 24; and other winnings (except winnings amounting to Ten Thousand 


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pesos (P 10,000) or less from Philippine Charity Sweepstakes and Lotto which shall be 
exempt), derived from sources within the Philippines:] YIELD, OR ANY OTHER 
 MONETARY BENEFIT EARNED OR RECEIVED FROM BANK DEPOSIT, DEPOSIT 
SUBSTITUTE, TRUST FUND, AND SIMILAR ARRANGEMENTS. 
[Provided, however, that interest income received by an individual taxpayer (except a 
non-resident individual) from a depository bank under the expanded foreign currency 
deposit system shall be subject to a final income tax at the rate of fifteen percent 
(15%) of such interest income: Provided, further, That interest income from long-term 
deposit 
or investment in the form of savings, common or individual trust funds, deposit 
substitutes, investment management accounts and other investments evidenced by 
certificates in such form prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be 
exempt from the tax imposed under this Subsection: Provided, finally, That should the 
holder of the certificate pre-terminates the deposit or investment before the fifth (5th) 
year, a final tax shall be imposed on the entire income and shall be deducted and withheld 
by the depository bank from the proceeds of the long-term deposit or 
investment certificate based on the remaining maturity thereof: 
Four (4) years to less than five (5) years — 5%; 
Three (3) years to less than (4) years — 12%; and 
Less than three (3) years — 20%.] 
(2) Cash and/or Property Dividends. — A final tax at the rate of [ten percent (10%)] 
FIFTEEN PERCENT (15%) shall be imposed upon the cash and/or property dividends 
actually or constructively received by an individual from a domestic 
corporation or from a joint stock company, insurance or mutual fund company, 
ENTITIES ENGAGED IN COLLECTIVE INVESTMENT SCHEMES, and 
regional operating headquarters of multinational companies, or on the share of an 
individual in the distributable net income after tax of a partnership (except a general 
professional partnership) of which the ONE is a partner, or on the share of an individual 
in the net income after tax of an association, a joint account, or a joint venture or 
consortium taxable as a corporation of which ONE is a member or co-venturer: 
PROVIDED, HOWEVER, THAT THE FIFTEEN PERCENT (15%) TAX ON 
DIVIDENDS SHALL APPLY ONLY ON INCOME EARNED ON OR AFTER JANUARY 
1, 2020. INCOME FORMING PART OF RETAINED EARNINGS AS OF DECEMBER 
31, 2019, EVEN IF DECLARED OR DISTRIBUTED ON OR AFTER JANUARY 1, 
2020, SHALL BE SUBJECT TO TEN PERCENT 10 (10%) TAX. 


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LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 24(A) 
BASED 
ON NET GAIN. 
[(C)I (3) Capital Gains from THE sale, EXCHANGE, BARTER, OR 
DISPOSITION of Shares of Stock not Traded in the Stock Exchange OR 
ORGANIZED MARKETPLACE. - [The provisions of Section 39(B) notwithstanding, a] A 
final tax at the rate of fifteen percent (15%) is hereby imposed upon the net capital gains 
realized during the taxable year from the sale, barter, exchange or other disposition of 
shares of stock in a domestic corporation, except shares sold, or disposed 
of through A LOCAL [the] stock exchange [. l OR AN ORGANIZED MARKETPLACE. 
 (4) PRESUMPTIVE CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER, OR 
DISPOSITION OF SHARES OF STOCK TRADED IN THE STOCK EXCHANGE OR 
AN ORGANIZED MARKETPLACE. - A FINAL TAX AT THE RATE OF SIX-TENTH 
OF ONE PERCENT (6/10 OF 1%) SHALL BE LEVIED,  ASSESSED AND 
COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR ANY OTHER MODE 
OF DISPOSITION OF SHARES OF STOCK LISTED AND TRADED THROUGH A 
LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE, AND SHALL BE 
REDUCED ACCORDING TO THE FOLLOWING SCHEDULE: 
 JANUARY 1, 2021: FIVE-TENTH OF ONE PERCENT (5/10 OF 1 0/0), 31 JANUARY 
1, 2022: FOUR-TENTH OF ONE PERCENT (4/10 OF 1%), 
JANUARY 1, 2023: THREE-TENTH OF ONE PERCENT (3/10 OF 1 0/0), 
JANUARY 1, 2024.• TWO-TENTH OF ONE PERCENT (2/10 OF 1%), 34
 
JANUARY 1, 2025.• ONE-TENTH OF ONE PERCENT (1/10 OF 1%), 1 THE TAX 
SHALL BE BASED ON THE GROSS SELLING PRICE OR 2 GROSS VALUE m MONEY 
OF THE SHARES OF STOCK SOLD, 3 BARTERED, EXCHANGED, OR OTHERWISE 
DISPOSED OF, TO BE PAID 4 BY THE SELLER OR TRANSFEROR: PROVIDED, THAT 
EFFECTIVE 5 JANUARY 1, 2026, EVERY SALE, BARTER, EXCHANGE, OR ANY 
OTHER 6 MODE OF DISPOSITION OF SHARES OF STOCK LISTED AND TRADED  
THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE 
SHALL NOT BE SUBJECT TO TAX UNDER SECTION 24 
OF THIS CODE, 
ANY GAIN EARNED FROM SHARES OF STOCK IN A DONIESTIC CORPORATION 
TRADED IN A FOREIGN EXCHANGE, SHALL BE TAXED UNDER SUBSECTION (A) 
OF THIS SECTION. 
 ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR 
DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A DEALER IN 
SECURITIES LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES TO BUY AND SELL SECURITIES, FOR THE DEALER'S ACCOUNT IN 
THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX 
UNDER THIS SUBSECTION BUT SUBSECTION (A) AS AN ORDINARY INCOME. 


13 
 
20 (5) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER, 
DISPOSITION OF NON-LISTED AND NON-TRADED DEBT INSTRUMENTS AND 
OTHER SECURITIES NOT INCLUDED IN SECTION AND A FINAL TAX AT THE 
RATE OF FIFTEEN PERCENT (15%) SHALL BE IMPOSED 0N THE NET CAPITAL 
GAIN EARNED FROM A DEBT INSTRUMENT AND OTHER SECURITIES NOT 
INCLUDED IN 
SUBSEC'TIONS  AND (4), ISSUED BY A CITIZEN OR RESIDENT 
ALIEN, OR BY A DOMESTIC CORPORATION, OR A RESIDENT FOREIGN 
CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS AGENCIES OR 
INSTRUMENTALITIES. 
 (6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND TRADED DEBT 
INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION 32 AND 
(4) A FINAL TAX AT THE RATE OF ONE-TENTH OF ONE PERCENT (1/10 OF 1%) 
OF THE GROSS SELLING PRICE OR GROSS VALUE IN MONEY OF THE DEBT 
INSTRUMENT OR SECURITIES SOLD,  
BARTERED, 
EXCHANGED, 
OR 
OTHERWISE DISPOSED SHALL BE 
LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE, BARTER, 
EXCHANGE, OR OTHER DISPOSITION OF DEBT INSTRUNÆNTS AND 
OTHER SECURITIES, LISTED AND TRADED THROUGH A LOCAL STOCK 
EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE, AND SHALL 
BE PAID BY THE SELLER OR TRANSFEROR: PROVIDED, THAT 
EFFECTIVE JANUARY 1, 2026, EVERY SALE, BARTER, EXCHANGE, OR 
OTHER DISPOSITION OF DEBT INSTRUMENTS AND OTHER 
SECURITIES, LISTED AND TRADED THROUGH A LOCAL STOCK 
EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE SHALL NOT 
BE SUBJECT TO TAX UNDER SECTION 24 OF THIS CODE, IF TRADED IN A 
FOREIGN EXCHANGE, THE GAIN SHALL BE SUBJECT TO TAX UNDER 
SUBSECTION (A) HEREOF. 
ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER OR IMPOSITION 
OF DEBT INSTRUMENTS AND OTHER SECURITIES, 
LISTED OR UNLISTED, BY A DEALER IN SECURITIES OR OTHER 
ENTITIES LICENSED BY THE APPROPRIATE GOVERNMENT 
REGULATORY AGENCY TO BUY AND SELL IN DEBT INSTRUMENTS 


14 
 
AND OTHER SECURITIES FOR THE DEALER'S OWN ACCOUNT IN THE 
ORDINARY COURSE oi BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER 
SUBSECTION BUT TO SECTION 24(A) AS AN ORDINARY 22 INCOME. 
Capital Gains from Sale of Real Property. — 
[(1)1 (a) In General. — [The provisions of Section 39(B) notwithstanding, al A final tax of 
six percent (6%) based on the gross selling price or current fair market value as 
determined in accordance with Section 6(E) of this Code, whichever is higher, is hereby 
imposed upon capital gains presumed to have been realized from the sale, 
exchange, or other disposition of real property located in the Philippines, classified as 
capital assets, including pacto de retro sales and other forms of conditional sales, by 
individuals, including estates and trusts: Provided, That the tax liability, if any, on gains 
from sales or other dispositions of real property to the government or any of its political 
subdivisions or agencies or to government owned or -controlled corporations shall be
 
determined either under Section 24(A) or under this Subsection, at the option 
of the 
taxpayer. 
(b) Exception. — xxx xxx xxx 
(C) ROYALTIES, PRIZES, AND OTHER WINNINGS - A FINAL TAX AT THE RATE OF 
TWENTY PERCENT (20%) IS HEREBY INTOSED 0N 
THE FOLLOWING INCOME DERIVED FROM SOURCES WITHIN THE 
PHILIPPINES: (1) ROYALTIES EARNED AS PASSIVE INCOME, EXCEPT ROYALTIES 
FROM BOOKS, AS WELL AS OTI-ÆR LITERARY WORKS AND MUSICAL 
COMPOSITIONS WHICH SHALL BE SUBJECT TO A FINAL TAX OF TEN PERCENT 
(10%); (2) PRIZES (EXCEPT PRIZES AMOUNTING TO TEN THOUSAND PESOS (PHP 
10,000) OR LESS) WHICH SHALL BE SUBJECT TO TAX UNDER SECTION 24 AND (3) 
OTHER WINNINGS (EXCEPT WINNINGS AMOUNTING TO TEN THOUSAND 14 
PESOS (PHP 10,000) OR LESS FROM PHILIPPINE CHARITY SWEEPSTAKES 
 
AND LOTTO WHICH SHALL BE EXEMPT 
 
SEC. 5. Section 25 (A) and (B) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows: 
SEC. 25. Tax on Nonresident Alien Individual.  
(A) Nonresident Alien Engaged in Trade or Business Within the Philippines. 


15 
 
[(1) In General. — IA nonresident alien individual engaged in trade or business in the 
Philippines shall be subject to income tax UNDER SECTION 24 OF THIS CODE, in the same 
manner as an individual citizen and a resident alien individual,] on taxable income received 
from all sources within the Philippines. A nonresident alien individual who shall come to the 
Philippines and stay therein for an aggregate period 
 of more than [one hundred eighty (180)] ONE HUNDRED EIGHTY-THREE (183) 
days during any calendar year shall be deemed a 'nonresident alien doing business 
in the Philippines', Section 22(G) of this Code notwithstanding. 
 [(2) Cash and/or Property Dividends from a Domestic Corporation or Joint Stock 
Company, or Insurance or Mutual Fund Company or Regional Operating Headquarter 
or Multinational Company, or Share in the Distributable Net Income of a Partnership 
(Except a General Professional Partnership), Joint Account, Joint Venture 
 
Taxable as a Corporation or Association, Interests, Royalties, Prizes, and Other 
Winnings. — Cash and/or property dividends from a domestic corporation, or from a 
joint stock company, or from an insurance or mutual fund company or from a regional 
operating headquarter of multinational company, or the share of a nonresident alien 
individual in the distributable net income after tax of a partnership (except a general 
professional partnership) of which he is a partner, or the share of a nonresident alien 
individual in the net income after tax of an association, a joint account), or a joint venture 
taxable as a corporation of which he is a member or a co-venturer; interests; 
royalties (in any form); and prizes (except prizes amounting to Ten thousand pesos 
(PHP 10,000) or less which shall be subject to tax under Subsection (B)(l) of Section 24); 
and other winnings (except Philippine Charity Sweepstakes and Lotto winnings), shall be 
subject to an income tax of twenty percent (20%) on the total amount thereof: Provided, 
however, That royalties on books as well as other literary works, and royalties 
on musical compositions shall be subject to a final tax often percent (10%) on the total 
amount thereof: Provided, further, that cinematographic films and similar works shall 
be subject to the tax provided under Section 28 of this Code: Provided, furthermore, 
That interest income from long-term deposit or investment in the form of savings, 
common or individual trust funds, deposit substitutes, investment management 
accounts and other investments evidenced by certificates in such form prescribed by 
the Bangko Sentral ng Pilipinas (BSP) shall be exempt from the tax imposed under 
this 
Subsection: Provided, finally, that should the holder of the certificate pre-terminate the 
deposit or investment before the fifth (5th) year, a final tax shall be imposed on the entire 
income and shall be deducted and withheld by the depository bank from the proceeds of 
the long-term deposit or investment certificate based on the remaining maturity 


16 
 
thereof:] 
[Four (4) years to less than five (5) years — 5%;] [Three (3) years to less than four (4) 
years — 12%; and] 
[Less than three (3) years — 200/0.1 
[(3) Capital Gains. — Capital gains realized from sale, barter or exchange of 
shares of stock in domestic corporations not traded through the local stock exchange, and 
real properties shall be subject to the tax prescribed under Subsections (C) and (D) 31 of 
Section 24.1 
(B) Nonresident Alien Individual Not Engaged in Trade or Business Within 
the Philippines. — There shall be levied, collected and paid for each taxable year upon 
the entire income received from all sources within the Philippines by every nonresident 
alien individual not engaged in trade or business within the Philippines as [interest, cash 
and/or property dividends,] rents, salaries, wages, premiums, annuities, compensation, 
remuneration, emoluments, or other fixed or determinable annual or periodic or casual 
gains, profits, and income, [and capital gains, la FINAL tax equal to twenty five percent 
(25%) of such income. Capital gains realized by a nonresident alien individual not 6 
engaged in trade or business in the Philippines from the sale of [shares of stock in any 
7 domestic corporation and) real property shall be subject to the income tax prescribed 
8 under Subsection [s (C) and (D) I (B) (7) of Section 24. 
INTEREST, DIVIDENDS AND CAPITAL GANS ON SALE OF 
SHARES OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES 11 SHALL 
BE SUBJECT TO TAX PRESCRIBED UNDER SECTION 24 (B), OR 
TO THE PROVISIONS OF APPLICABLE TAX TREATY. 
xxx xxx xxx 
 
SEC. 6. Section 27 (D) of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows: 
SEC. 27. Rates of Income Tax on Domestic Corporations. — 
(A) In General, — Except as otherwise provided in this Code, an income tax of thirty-five 
percent (35%) is hereby imposed upon the taxable income derived during each taxable 
year from all sources within and without the Philippines by every 


17 
 
corporation, as defined in Section 22(B) of this Code and taxable under this Title as a 
22 corporation, organized in, or existing under the laws of the Philippines: Provided, 
That 
effective January l, 2009, the rate of income tax shall be thirty percent (30%). 
xxx xxx xxx 
(D) Rates of Tax on Certain Passive Incomes. 
[(1) Interest from Deposits and Yield or any other Monetary Benefit from 
Deposit Substitutes and from Trust Funds and Similar Arrangements, and Royalties, 
— A final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of 
29 interest on currency bank deposit and yield or any other monetary benefit from 
deposit 30 substitutes and from trust funds and similar arrangements received by 
domestic 31 corporations, and royalties, derived from sources within the Philippines: 
Provided, 32 however, That interest income derived by a domestic corporation from a 
depository 1 
bank under the expanded foreign currency deposit system shall be 
subject to a final 
income tax at the rate of fifteen percent (15%) of such interest income.] 
1(2) Capital Gains from the Sale of Shares of Stock Not Traded in the Stock 
Exchange. — A final tax at the rate of fifteen percent (15%) shall be imposed on net 
capital gains realized during the taxable year from the sale, exchange or other 
disposition of shares of stock in a domestic corporation except shares sold or disposed 
of through the stock exchange. 
[(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 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 


18 
 
shall be subject to a final tax at the rate often percent (10%)  
[Any income of nonresidents, whether individuals or corporations, from transactions with 
depository banks under the expanded system shall be exempt from 
income tax.] 
[(4) Intercorporate Dividends. — Dividends received by a domestic corporation from 
another domestic corporation shall not be subject to tax;] 
(1) INTERESTS. - A FINAL TAX AT THE RATE OF FIFTEEN PERCENT (15%) IS 
HEREBY IMPOSED UPON THE AMOUNT OF INTEREST, YIELD, OR OTHER 
MONETARY BENEFIT EARNED OR RECEIVED FROM A BANK DEPOSIT, 
DEPOSIT SUBSTITUTE, TRUST 30 FUND, AND SIMILAR ARRANGEMENTS. 
(2) CASH AND/OR PROPERTY DIVIDENDS. - INTERCORPORATE DIVIDENDS OR 
DIVIDENDS RECEIVED FROM A DOMESTIC CORPORATION SHALL NOT BE 
SUBJECT TO TAX INIPOSED UNDER 
 
THIS SUBSECTION: PROVIDED, THAT NINETY-FIVE PERCENT (95%) OF 
DIVIDENDS RECEIVED BY A DOMESTIC CORPORATION FROM SUBSIDIARY 
COMPANIES LOCATED OUTSIDE THE PHILIPPINES SHALL NOT BE SUBJECT 
TO TAX: PROVIDED, FURTHER, THAT TH DOMESTIC CORPORATION HOLDS 
DIRECTLY 
OR 
INDIRECTLY 
AT 
LEAST 
TWENTY 
PERCENT 
(20%) 
SHAREHOLDINGS OF THE SUBSIDIARY COMPANY AND HAS HELD THE 
SHAREHOLDINGS FOR A MINIMUM OF TWO (2) YEARS AT THE TIME OF THE 
DIVIDENDS 
DISTRIBUTION: 
PROVIDED, 
FURTHERMORE, 
THAT, 
THE 
SUBSIDIARY OPERATING COMPANY IS SUBJECT TO AT LEAST TEN PERCENT 
(10%) 10 INCOME TAX AND TO WITHHOLDING TAX ON THE DIVIDENDS  
DISTRIBUTED TO THE DOMESTIC CORPORATION, UNLESS OTHERWISE 
EXEMPT UNDER ITS LOCAL LAWS: PROVIDED, FINALLY,  THAT, THE 
LIMITATIONS UNDER SECTION 34(C ) SHALL NOT BE OBSERVED IN 
CONNECTION WITH ANY TAXES PAID OR ACCRUED IN  ANY FOREIGN 
COUNTRY IN RESPECT TO SUCH DIVIDEND. 
LIQUIDATING DIVIDENDS SHALL BE SUBJECT TO SECTION 27(A) AND BASED 
ON NET GAIN. 
(3) CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER OR DISPOSITION 
OF SHARES OF STOCK NOT TRADED IN THE STOCK 
EXCHANGE OR AN ORGANIZED MARKETPLACE - A FINAL TAX AT THE 
RATE OF FIFTEEN PERCENT (15%) IS HEREBY IMPOSED UPON THE 
NET CAPITAL GAINS REALIZED DURNG THE TAXABLE YEAR FROM 
THE SALE, BARTER, EXCHANGE, OR OTHER MODES OF IMPOSITION OF 
SHARES OF STOCK IN A DOMESTIC CORPORATION, EXCEPT SHARES 


19 
 
SOLD, OR DISPOSED OF THROUGH A LOCAL STOCK EXCHANGE OR AN 
ORGANIZED MARKETPLACE. 
(4) PRESUMPTIVE CAPITAL GAINS FROM THE SALE, EXCHANGE, 
BARTER OR DISPOSITION OF SHARES OF STOCK TRADED IN THE 
STOCK 
EXCHANGE OR AN ORGANIZED MARKETPLACE. - A FINAL TAX AT 
THE RATE OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) SHALL 
BE LEVIED, 31 ASSESSED AND COLLECTED ON EVERY SALE, 
BARTER, EXCHANGE, 32 OR OTHER Dispos1T10N OF SHARES OF 
STOCK LISTED AND TRADED 33 THROUGH A LOCAL STOCK 
EXCHANGE OR AN ORGANIZED 
MARKETPLACE, AND SHALL BE REDUCED ACCORDING TO THE 2 FOLLOWING 
SCHEDULE: 
JANUARY 1, 2021: FIVE-TENTH OF ONE PERCENT (5/10 OF 1%), 
JANUARY 1, 2022: FOUR-TENTH OF ONE PERCENT (4/10 OF 1 0/0), 
JANUARY 1, 2023: THREE-TENTH OF ONE PERCENT (3/10 OF 1 0/0), JANUARY 1, 
2024: TWO-TENTH OF ONE PERCENT (2/10 OF 1%), 7 JANUARY 1, 2025: ONE-
TENTH OF ONE PERCENT (1/10 OF 1%). 
THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR GROSS VALUE 
IN MONEY OF THE SHARES OF STOCK SOLD, BARTERED, EXCHANGED, OR 
OTHERWISE DISPOSED OF, TO BE PAID BY THE SELLER OR TRANSFEROR: 
PROVIDED, THAT EFFECTIVE JANUARY 1, 2026, EVERY SALE, BARTER, 
EXCHANGE, OR ANY OTHER 
 
 
MODE OF DISPOSITION OF SHARES OF STOCK LISTED AND 
TRADED 
THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED 
MARKETPLACE 
SHALL NOT BE SUBJECT TO TAX UNDER SECTION 27  OF THIS CODE. 
ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC CORPORATION 
TRADED IN A FOREIGN EXCHANGE, SHALL BE TAXED UNDER SECTION 27 (A) 
HEREOF. 
ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR DISPOSITION 
OF SHARES OF STOCK, LISTED OR UNLISTED, BY A DEALER IN SECURITIES 
LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES 
TO BUY AND SELL IN SECURITIES, FOR HIS OWN ACCOUNT IN THE ORDINARY 
COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER THIS 
SUBSECTION BUT TO SECTION 27(A) AS AN ORDINARY INCOME. 


20 
 
(5) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER, 
DISPOSITION OF NON-LISTED AND NON-TRADED DEBT INSTRUMENTS AND 
OTHER SECURITIES NOT INCLUDED IN SECTION AND (4). A FINAL TAX AT THE 
RATE OF FIFTEEN PERCENT (15%) SHALL BE IMPOSED ON NET CAPITAL 
GAINS EARNED FROM DEBT INSTRUMENT AND OTHER SECURITIES N0T 
INCLUDED IN SECTION AND (4), ISSUED BY A CITIZEN OR RESIDENT ALIEN, 
OR BY A DOMESTIC 1 CORPORATION, OR A RESIDENT FOREIGN 
CORPORATION, OR BY THE 2 GOVERNMENT OR ANY OF ITs AGENCIES OR 
INSTRUMENTALITIES. (6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND 
TRADED DEBT 4 INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN 
SECTION 5 AND (4) - A FNAL TAX AT THE RATE OF ONE-TENTH OF ONE 
PERCENT (1/10 OF 1%) OF THE GROSS SELLNG PRICE OR GROSS VALUE IN 
MONEY OF THE DEBT INSTRUMENT OR SECURITIES SOLD, BARTERED, 
EXCHANGED, OR OTHERWISE DISPOSED SHALL BE LEVIED, ASSESSED, AND 
COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION 
OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED AND TRADED 
THROUGH A LOCAL 
EXCHANGE OR AN ORGANIZED MARKETPLACE, AND SHALL BE PAID BY THE 
SELLER OR TRANSFEROR: PROVIDED, THAT EFFECTIVE 14 JANUARY 1, 2026, 
EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT 
INSTRUMENTS AND OTHER SECURITIES, 
LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR A 
LICENSED ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO 
TAX UNDER SECTION 27 OF THIS CODE. IF TRADED IN A FOREIGN EXCHANGE, 
THE GAIN SHALL BE SUBJECT TO TAX UNDER SECTION 20 27 (A) HEREOF. 
 ANY GAN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR DISPOSITION 
OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED OR UNLISTED, BY 
A DEALER SECURITIES OR OTHER 
ENTITIES LICENSED BY THE APPROPRIATE GOVERNMENT 
REGULATORY AGENCIES TO BUY AND SELL IN DEBT INSTRUMENTS 
AND OTHER SECURITIES, FOR THE DEALER'S OWN ACCOUNT IN THE 
ORDINARY COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX 
r 
UNDER SUBSECTION BUT TO SECTION 27(A) AS AN ORDINARY 29 INCOME. 
[(5)] (7) Capital Gains Realized from the Sale, Exchange or Disposition of 
Lands and/or Buildings. — A final tax of six percent (6%) is hereby imposed on the 


21 
 
gain presumed to have been realized on the sale, exchange or disposition of lands 
and/or buildings which are not actually used in the business of a corporation and are 
treated as 
 
capital assets, based on the gross selling price or fair market value as 
determined in 
accordance with Section 6(E) of this Code, whichever is higher, of such lands and/or 
buildings. 
(E) ROYALTIES - A FINAL TAX AT Tl--m RATE OF TWENTY 4 
PERCENT 
(20%) IS HEREBY IMPOSED 0N ROYALTIES EARNED AS 5 
PASSIVE 
mc0ME. 
[(EI(F) Minimum Corporate Income Tax on Domestic Corporations — 
(1) Imposition of Tax. — x x x 
(2) Carry Forward of Excess Minimum Tax, — x x x 
(3) Relief from the Minimum Corporate Income Tax under Certain 
Conditions, — x x x 
(4) Gross Income Defined. — x x x 
xxx xxx xxx 
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 the case of banks 
AND OTHER FINANCIAL INTERMEDIARIES, 'cost of services' shall include 
interest expense. 
 
SEC. 7. Section 28 (A) and (B) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows; 


22 
 
SEC. 28. Rates of Income Tax on Foreign Corporations. — 26 (A) Tax on Resident 
Foreign Corporations. — 
(1) In General. — Except as otherwise provided in this Code, a corporation 
organized, authorized, or existing under the laws of any foreign country, engaged in 
trade or business within the Philippines, shall be subject to [an] income tax UNDER 
SECTION 27 OF THIS CODE [equivalent to thirty-five percent (35%) of the] ON 
taxable income derived in the preceding taxable year from all sources within the 32 
Philippines [: Provided, that effective January l, 2009, the rate of income tax shall be 33 
thirty percent (30%)]. 
xxx xxx xxx 
(2) Minimum Corporate Income Tax on Resident Foreign Corporations. — 3 A minimum 
corporate income tax of two percent (2%) of gross income, as prescribed 4 under Section 
of this Code, shall be imposed, under the same conditions, on a 
resident foreign corporation taxable under paragraph (l) of this Subsection. 
(3) International Carrier. — x x x 
[(4) Offshore Banking Units. — The provisions of any law to the contrary notwithstanding, 
income derived by offshore banking units authorized by the Bangko Sentral ng Pilipinas 
(BSP), from foreign currency transactions with nonresidents, other  offshore banking 
units, local commercial banks, including branches of foreign banks that may be 
authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business  with offshore 
banking units shall be exempt from all taxes except net income from such transactions 
as may be specified by the Secretary of Finance, upon recommendation of  the Monetary 
Board which shall be subject to the regular income tax payable by banks Provided, 
however, That any interest income derived from foreign currency loans granted to 
residents other than offshore banking units or local commercial banks,  including local 
branches of foreign banks that may be authorized by the BSP to transact  business with 
offshore banking units, shall be subject only to a final tax at the rate of  ten percent (10%). 
 [Any income of nonresidents, whether individuals or corporations, from transactions 
with said offshore banking units shall be exempt from income tax.] 
[(5)] (4) Tax on Branch Profits Remittances. — Any profit remitted by a branch 
to its head office shall be subject to a tax of fifteen percent (15%) which shall be based 
2on the total profits applied or earmarked for remittance without any deduction for the 
tax component thereof. [(except those activities which are registered with the Philippine 
25 Economic Zone Authority)) The tax shall be collected and paid in the same manner 
as 


23 
 
provided in Sections 57 and 58 of this Code: Provided, That interests, dividends, rents, 
royalties, including remuneration for technical services, salaries, wages, premiums, 
annuities, emoluments or other fixed or determinable annual, periodic or casual gains, 
profits, income and capital gains received by a foreign corporation during each taxable  
year from all sources within the Philippines shall not be treated as branch profits unless 
the same are effectively connected with the conduct of its trade or business in the 
Philippines. 
Regional or Area Headquarters and Regional Operating 
Headquarters of Multinational Companies. — x x x 
[(7) Tax on Certain Incomes Received by a Resident Foreign Corporation. — I 
[(a) Interest from Deposits and Yield or any other Monetary Benefit from Deposit 
Substitutes, Trust Funds and Similar Arrangements and Royalties. - Interest 
from any currency bank deposit and yield or any other monetary benefit from deposit 
substitutes and from trust funds and similar arrangements and royalties derived from 8 
sources within the Philippines shall be subject to a final income tax at the rate of twenty 
percent (20%) of such interest. Provided, however, that interest income derived by a 
resident foreign corporation from a depository bank under the expanded foreign 11 currency 
deposit system shall be subject to a final income tax at the rate of seven and 
one-half percent (7 1/2%) of such interest income.] 
[(b) Income Derived under the Expanded Foreign Currency Deposit System. 14 Income 
derived by a depository bank under the expanded foreign currency deposit 15 system from 
foreign currency transactions with nonresidents, offshore banking units in 16 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 


24 
 
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 often percent (10%). 
[Any income of nonresidents, whether individuals or corporations, from transactions 
with depository banks under the expanded system shall be exempt from income tax.] 
[(c) Capital Gains from Sale of Shares of Stock Not Traded in the Stock 
Exchange. - A final tax at the rates prescribed below is hereby imposed 
upon the net 
capital gains realized during the taxable year from the sale, barter, 
exchange or other 
disposition of shares of stock in a domestic corporation except shares sold 
or disposed 
of through the stock exchange:] 
[Not 
over PHP 100, 000
 
[On any amount in excess of PHP 100,000
 
[(d) Intercorporate Dividends. - Dividends received by a resident foreign 4 corporation 
from a domestic corporation liable to tax under this Code shall not be 
subject to tax under this Title.] 
(B) Tax on Nonresident Foreign Corporation. — 
(1) In General. — Except as otherwise provided in this Code, a foreign corporation not 
engaged in trade or business in the Philippines shall pay a tax equal to thirty-five percent 
(35%) of the gross income received during each taxable year from all sources within the 
Philippines, such as [interests, dividends,) rents, royalties, salaries, premiums (except 
reinsurance premiums), annuities, emoluments or other 
fixed or determinable annual, periodic or casual gains, profits and income, and capital 
gains, except capital gains subject to tax under subparagraph 5[(c)l. Provided, That 
effective January l, 2009, the rate of income tax 
shall be thirty percent (30%). 
xxx xxx xxx 
 
(5) Tax on Certain Incomes Received by a Nonresident Foreign Corporation. [(a) 
Interest on Foreign Loans. — A final withholding tax at the rate of twenty percent 
(20%) is hereby imposed on the amount of interest on foreign loans contracted 


25 
 
on or after August l, 1986;]"[(b) Intercorporate Dividends — A final withholding tax at the rate 
of fifteen percent (15%) is hereby imposed on the amount of cash and/or property dividends 
received from a domestic corporation, which shall be collected and paid as provided in 
Section 57(A) of this Code, subject to the condition that the country in which the 
nonresident foreign corporation is domiciled, shall allow a credit against the tax due 
from the nonresident foreign corporation taxes deemed to have been paid in the 
Philippines equivalent to twenty percent (20%), which represents the difference 
between the regular income tax of thirty-five percent (35%) and the fifteen percent 
(15%) tax on dividends as provided in this subparagraph. Provided, that effective 
January 1, 2009, the credit against the tax due shall be equivalent to fifteen percent 
(15%), which represents the difference between the regular income tax of thirty 
percent 32 (30%) and the fifteen percent (15%) tax on dividends;] 
 [(c) Capital Gains from Sale of Shares of Stock not Traded in the Stock 34 Exchange. 
— A final tax at the rates prescribed below is hereby imposed upon the net 
1 capital gains realized during the taxable year from the sale, barter, exchange or 
other 2 disposition of shares of stock in a domestic corporation, except shares sold, 
or disposed 
of through the stock exchange:] 
[Not over PHP 100,000 
 
[On any amount in excess of P 100,000
 
 
 
INTERESTS AND CAPITAL GAINS FROM SALE, TRANSFER,  
BARTER, 
OR DISPOSITION OF SHARES OF STOCK, DEBT  IINSTRUMENTS, 
DEPOSIT 
SUBSTITUTES, AND OTHER SECURITIES 
SHALL BE SUBJECT TO TAX 
UNDER SECTION  (3), (4), (5) AND (6)  OF THIS CODE, OR TO THE PROVISIONS 
OF THE APPLICABLE TAX 12 
TREATY. 
CASH AND/OR PROPERTY DIVIDENDS RECEIVED FROM A 14 DONTSTIC 
CORPORATION SHALL BE SUBJECT TO A FINAL TAX OF 15 FIFTEEN PERCENT 
(15%) OR TO THE PROVISIONS OF THE 
 
APPLICABLE TAX TREATY. 
 
SEC. 8. Section 29 (A), (B) AND (C) of the National Internal Revenue code of 1997, 
as amended, is hereby amended to read as follows: 
SEC. 29. Imposition of lmproperly Accumulated Earnings Tax. — 
(A) In General. — In addition to other taxes imposed by this Title, there is hereby 


26 
 
imposed for each taxable year on the improperly accumulated taxable income of each 
corporation described in Subsection B hereof, an improperly accumulated earnings tax 
 
equal to ten percent of the improperly accumulated taxable income. 
(B) Tax on Corporations Subject to Improperly Accumulated Earnings Tax 27 (1) In 
General. — The improperly accumulated earnings tax imposed in the 
preceding Section shall apply to every corporation formed or availed for the purpose of 
avoiding the income tax with respect to its shareholders or the shareholders of any other 
corporation, by permitting earnings and profits to accumulate instead of being divided or 
distributed. 
(2) Exceptions. — The improperly accumulated earnings tax as provided for 33 under 
this Section shall not apply to: 
(a) Publicly-held corporations; 
(b) Banks, [and other] nonbank financial intermediaries, AND OTHER 3 FINANCIAL 
INSTITUTIONS AS MAY BE DETERMINED BY THE 4 APPROPRIATE GOVERNMENT 
REGULATORY AGENCIES; and 
(c) Insurance companies [. l SUCH AS LIFE AND NON-LIFE, 6 REINSURANCE 
COIWANIES, PRE-NEED CONTANIES, PENSION FUNDS, 7 AND OTHER 
ENTITIES DOING BUSINESS SIMILAR TO INSURANCE. 
(C) Evidence of Purpose to Avoid Income Tax. — 
[(1) Prima Facie Evidence. — The fact that any corporation is a mere 
holding 10 
company or investment company shall be prima facie 
evidence of a purpose to avoid 
the tax upon its shareholders or members.] 
[(2) Evidence Determinative of Purpose. — The fact that the earnings or profits 
of a corporation are permitted to accumulate beyond the reasonable needs of the 
business shall be determinative of the purpose to avoid the tax upon its shareholders or 
members unless the corporation, by the clear preponderance of evidence, shall prove to 
the contrary.] 
THE FACT THAT THE EARNINGS OR PROFITS OF A CORPORATION ARE 
PERMITTED TO ACCUMULATE BEYOND THE REASONABLE NEEDS OF THE 
BUSINESS SHALL BE DETERMINATIVE OF THE PURPOSE TO AVOID THE TAX 
UPON ITS SHAREHOLDERS OR MEMBERS UNLESS THE CORPORATION, BY THE 
CLEAR 


27 
 
PREPONDERANCE OF EVIDENCE, SHALL PROVE TO THE CONTRARY. 
xxx xxx xxx 
 
SEC. 9. Section 32(B)(7)(g) and (h) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows: 
SEC. 32. Gross Income. — xxx 
(B) Exclusions from Gross Income. — The following items shall not be 
included in gross income and shall be exempt from taxation under this Title: 
xxx xxx xxx 
(7) Miscellaneous Items. — 
xxx xxx xxx 
[(g) Gains from the Sale of Bonds, Debentures or another Certificate of 34 Indebtedness. 
— Gains realized from the same or exchange or retirement of bonds, 
debentures or other certificate of indebtedness with a maturity of more than five (5) 2 
years. 
(G) INTEREST INCOME FROM, AND GAINS FROM THE SALE, 4 TRANSFER, OR 
DISPOSITION OF, PROJECT SPECIFIC BONDS THAT ARE 5 ISSUED BY THE 
REPUBLIC OF THE PHILIPPINES OR ANY OF ITS 6 INSTRUMENTALITIES TO 
FINANCE CAPITAL EXPENDITURES OR 7 PROGRAMS COVERED BY THE 
PHILIPPINE DEVELOPMENT PLAN OR 8 ITS EQUIVALENT AND OTHER 
GOVERNMENT PROGRAMS 9 CONSIDERED TO BE OF I-HGH-LEVEL PRIORITY 
OF THE COUNTRY: 10 PROVIDED, THAT, THE EXEMPTION SHALL BE UPON 
THE APPROVAL 
 
BY THE SECRETARY OF FINANCE. 
 
 
 (h) Gains from Redemption of Shares OR UNITS OF PARTICIPATION in 15 [Mutual 
Fund.] COLLECTIVE INVESTMENT SCHEMES - Gains realized by the 
 investor upon redemption of shares of stock [in a mutual fund company] OR UNITS 
17 OF PARTICIPATION IN A COLLECTIVE INVESTNÆNT SCHEME as defined 
[in] UNDER Section 22 [BB] (JJ) of this Code. 


28 
 
xxx xxx xxx 
 
SEC. 10. Section 34(A), (B), (C) and (E) of the National Internal Revenue Code of 
1997, as amended, is hereby further amended to read as follows: 
SEC. 34. Deductions from Gross Income. — Except for taxpayers earning 
compensation income arising from personal services rendered under an employer25 
employee relationship where no deductions shall be allowed under this Section, in 26 
computing taxable income subject to income tax under Sections 24(A); 25(A); 26; 27 27(A), 
(B), and (C); and 28(A)(l), there shall be allowed the following deductions from 
gross income; 
(A) Expenses. — 
(1) Ordinary and Necessary Trade, Business or Professional Expenses.  
(a) In General. — There shall be allowed as deduction from gross income 32 all the ordinary 
and necessary expenses paid or incurred during the taxable year in 1 carrying on or which 
are directly attributable to, the development, management, 2 operation and/or conduct of 
the trade, business or exercise of a profession, including: 
xxx xxx xxx 
(b) Substantiation Requirements. — No deduction from gross income shall be 5 allowed 
under Subsection (A) hereof unless the taxpayer shall substantiate with sufficient 
evidence, such as official receipts or other adequate records: (i) the amount 
of the expense being deducted, and (ii) the direct connection or relation of the expense 8 
being deducted to the development, management, operation and/or conduct of the trade, 9 
business or profession of the taxpayer. 
(c) Bribes, Kickbacks and Other Similar Payments. — No deduction from gross 
income shall be allowed under Subsection (A) hereof for any payment made, directly 
or indirectly, to an official or employee of the national government, or to an official or 
employee of any local government unit, or to an official or employee of a government owned 
or -controlled corporation, or to an official or employee or representative of a foreign 
government, or to a private corporation, general professional partnership, or a 
similar entity, if the payment constitutes a bribe or kickback. 
xxx xxx xxx 
(B) Interest. — 


29 
 
(1) 
In General. — The amount of interest paid or incurred within a taxable 
year on indebtedness in connection with the taxpayer's profession, trade or business shall 
be allowed as deduction from gross income: Provided, however, That the taxpayer's 
otherwise allowable deduction for interest expense shall be reduced by forty two percent 
(42%) of the interest income subjected to final tax: Provided, That effective 
January l, 2009, the percentage shall be thirty-three percent (33%). PROVIDED 
FURTHER, THAT EFFECTIVE JANUARY 1, 2020, THE PERCENTAGE SHALL BE 
FIFTY PERCENT (50%). 
 (2) Exceptions. — No deduction shall be allowed in respect of interest under the 
succeeding subparagraphs: 
(a) If within the taxable year an individual taxpayer reporting income on the 30 cash 
basis incurs an indebtedness on which an interest is paid in advance through 
discount or otherwise: Provided, that such interest shall be allowed as a deduction in 
the year the indebtedness is paid: Provided, further, That if the indebtedness is payable  
in periodic amortizations, the amount of interest which corresponds to the amount of the 
principal amortized or paid during the year shall be allowed as deduction in such 
taxable year; 
(b) If both the taxpayer and the person to whom the payment has been made or 
is to be made are persons specified under Section 36(B); or 
[(c) If the indebtedness is incurred to finance petroleum exploration.] 
(3) [Optional] Treatment of interest Expense REL4TED TO ACQUISITION 
OFASSET. - [At the option of the taxpayer, interest) INTEREST EXPENSE incurred 
to acquire property used in trade, business or exercise of a profession THAT WILL 9 
BENEFIT THE BUSINESS LONGER 'THAN ONE YEAR [may be allowed as a 
deduction or treated as a capital expenditure] SHALL BE CAPITALIZED AND 11 
THEREAFTER AMORTIZED OR DEPRECIATED AS PART OF THE COST 
OF THE ASSET. 
xxx 
xxx 
xxx 
(E) Bad Debts. - 
(1) In General. — xxx 
(2) Securities Becoming Worthless. — If securities, as defined in Section 22(T), 


30 
 
are ascertained to be worthless and charged off within the taxable year and are capital 
assets, the loss resulting therefrom shall, [in the case of a taxpayer other than a bank or 
trust company incorporated under the laws of the Philippines a substantial part of whose 
business is the receipt of deposits, for the purpose of this Title,] be considered as a loss 
from the sale or exchange, OF CAPITAL ASSETS, on the last day of such taxable 
year, of capital assets]. SECURI'HES HELD BY A DEALER IN SECURITIES OR AN 
ENTITY LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY 
AGENCIES TO BUY AND SELL IN SECURITIES INCLUDING BANKS, AND OTHER 
FINANCIAL INTERMEDIARIES, SHALL BE CONSIDERED ORDINARY ASSETS, AND 
SECURITIES HELD THAT ARE ASCERTAINED TO BE WORTHLESS SHALL BE 
CONSIDERED ORDINARY LOSSES THAT ARE ALLOWED AS DEDUCTION FROM 
TAXABLE INCOME. 
xxx 
xxx 
xxx 
 
SEC. 11. Section 37 (A) and (B) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows: 
SEC. 37. Special Provisions Regarding Income and Deductions of Insurance 
Companies, Whether Domestic or Foreign. — 
(A) Special Deductions Allowed to Insurance Companies, PRE-NEED COMPANIES, 
AND PENSION FUNDS. - In the case of insurance companies, PRE- NEED 
COMPANIES, AND PENSION FUNDS, whether domestic or foreign doing business 
in the Philippines, the net additions, if any, required by law to be made within the year 
to reserve funds and the sums other than dividends paid within the year on policy and 
annuity contracts may be deducted from their gross income. Provided, however, That 
the released reserve be treated as income for the year of release. 
 (B) Mutual Insurance Companies.• - In the case of MUTUAL LIFE, mutual  fire and 
mutual employers' liability and mutual workmen's compensation and mutual casualty 
insurance companies requiring their members to make premium deposits to provide 
for losses and expenses, said companies shall not INCLUDE [return] as income any 
portion of the premium deposits returned to their policyholders, but shall INCLUDE 
[return] as taxable income all income received by them from all other sources plus 
such portion of the premium deposits as are retained by the companies for purposes 
other than the payment of losses and expenses and reinsurance reserves. 
 
xxx xxx xxx 
 
SEC. 12. Section 38 (A) of the National Internal Revenue Code of 1997, as amended, 


31 
 
is hereby amended to read as follows: 
SEC. 38. Losses from Wash Sales of Stock or Securities. — 
(A) In the case of any loss claimed to have been sustained from any sale or other  
disposition of shares of stock or securities where it appears that within a period beginning 
thirty (30) days before the date of such sale or disposition and ending thirty  (30) days after 
such date, the taxpayer has acquired (by purchase or by exchange upon  which the entire 
amount of gain or loss was recognized by law), or has entered into a  [contact] CONTRACT 
or option so AS to acquire, substantially identical stock or securities, then no deduction for 
the loss shall be allowed under Section 34 unless the  claim is made by a dealer in stock 
or securities OR BY ANY ENTITY OR 31 FINANCIAL NTERMEDIARY DULY LICENSED 
BY THE APPROPRIATE  GOVERNMENT REGULATORY AGENCIES TO BUY AND 
SELL SECURITIES EITHER FOR THE ENTITY'S OWN ACCOUNT OR FOR THE 
 
ACCOUNT OF OTHERS and with respect to a transaction made in the ordinary 
course of the business of such dealer. 
xxx xxx 
xxx 
 
SEC. 13. Section 39 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows: 
SEC. 39. Capital Gains and Losses.  
(A) Definitions. — As used in this Title  
xxx xxx 
xxx 
[(B) Percentage Taken into Account. — In the case of a taxpayer, other than a 
corporation, only the following percentages of the gain or loss recognized upon the 
sale or exchange of a capital asset shall be taken into account in computing net capital 
gain, net capital loss, and net income:] One hundred percent (100%) if the capital 
asset has been held for not more 
than twelve (12) months; and] 
[(2) Fifty percent (50%) if the capital asset has been held for more than twelve 20
 
(12) months;] 
[(C)I (B) Limitation on Capital Losses. — Losses from sales or exchanges of 
capital assets shall be allowed only to the extent of the gains from such sales or 
exchanges. If a [bank or trust company incorporated under the loss of the Philippines, 
a substantial part of whose business is the receipt of deposits,] DEALER IN 


32 
 
SECURITIES OR OTHER ENTITIES OR FINANCIAL INTERMEDIARIES DULY LICENSED 
BY THE APPROPRIATE GOVERNMENT REGULATORY 
 AGENCIES TO TRADE IN SECURITIES, sells any bond, debenture, note, or 
certificate or other evidence of indebtedness issued by any corporation [ (including 
one issued by a government or political subdivision thereof), with interest coupons or 
 
in registered form, any loss resulting from such sale shall not be subject to the 
foregoing limitation and shall not be included in determining the applicability of such 
limitation to other losses. 
[(D) Net Capital Loss Carry-over. If any taxpayer, other than a corporation, 
sustains in any taxable year a net capital loss, such loss (in an amount not in excess of 
the net income for such year) shall be treated in the succeeding taxable year as a loss 
from the sale or exchange of capital asset held for not more than twelve (12) months.] 
Retirement of Bonds, etc. — x x x 
[(F) Gains or Losses from Short Sales, Etc. For purposes of this Title 9 (l) Gains or losses 
from short sales of property shall be considered as gains or 
losses from sales or exchanges of capital assets; and 
(2) Gains or losses attributable to the failure to exercise privileges or 
options to 
buy or sell property shall be considered as capital gains or losses.] 
 
 
SEC 14. Section 42(A)(l), (2) and (B)(2) of the National Internal Revenue Code of 16 
1997, as amended, is hereby amended to read as follows: 
SEC. 42. Income from Sources Within the Philippines. — 
(A) Gross Income from Sources Within the Philippines. — The following items 19 of gross 
income shall be treated as gross income from sources within the Philippines: 
(1) Interests, - Interests AND YIELD [derived from sources within the 
Philippines, and interests on! FROM DEBT INSTRUMENTS, BANK DEPOSITS, 
DEPOSIT SUBSTITUTES, TRUST FUNDS, AND SIMILAR ARRANGEMENTS SUCH AS 
bonds, notes or other interest-bearing obligations of residents, corporate or otherwise 


33 
 
INCLUDING DEBT INSTRUNÆNTS OR DEBT SECURITIES ISSUED BY THE 
GOVERNMENT OR ANY OF ITS AGENCIES OR INSTRUMENTALITIES; 
(2) Dividends. — The amount received as dividends: 
(a) From a domestic corporation; and 
(b) From a foreign corporation, [ unless less I WITH AT LEAST [than] fifty 
percent (50%) of the gross income of such foreign corporation for the three-year period 
ending with the close of its taxable year preceding the declaration of such dividends (or 
for such part of such period as the corporation has been in existence) was derived from 
sources within the Philippines as determined under the provisions of this Section; but only 
in an amount which bears the same ratio to such dividends as the gross income of the 
corporation for such period derived from sources within the Philippines bears ON its gross 
income from all sources. 
xxx xxx xxx 
(B) Taxable Income from Sources Within the Philippines. — 6 (1) General Rule. — 
xxx xxx xxx 
(2) Exception. — No deductions for interest paid or incurred abroad shall be 
allowed from the item of gross income specified in Subsection (A) unless indebtedness 
was actually incurred to provide funds for use in connection with the conduct or operation 
of trade or business in the Philippines[.], OR ON A TRADE OR BUSINESS 
OUTSIDE THE PHILIPPINES: PROVIDED, THAT INCOME GENERATED OR 
RECEIVED FROM THE USE OF SUCH FUNDS CONNECTION WITH THE 
CONDUCT OR OPERATION OF TRADE OR BUSINESS IN THE PHILIPPINES IS A 
TAXABLE INCOME IN THE PHILIPPINES. 
 
SEC 15. Section 5 1 (C)(2) of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read as follows: 19 SEC. 51. Individual Return.  
(A) Requirements. x x x 
(B) Where to file. - x x x 22 (C) When to File, -x x x 
 
(2) Individuals subject to tax on, capital gains: 


34 
 
(a) From the sale or exchange of shares of stock OR DEBT INSTRUMENTS AND OTHER 
SECURITIES not traded [thru] THROUGH a local stock exchange 
OR AN ORGANIZED MARKETPLACE as prescribed under [Section) SECTIONS 
24 C (B) (3) AND (5), AND 25(A) AND (B), [shall file] a return SHALL BE FILED within 
thirty (30) days after each transaction and a final consolidated return on or before 30 April 
15 of each year covering all stock transactions of the preceding taxable year; and 31 (B) 
FROM THE SALE, EXCHANGE, OR BARTER OF SHARES OF 
STOCK OR DEBT INSTRUMENTS AND OTHER SECURITIES TRADED 
THROUGH A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE 1 AS 
PRESCRIBED UNDER SECTIONS AND (6), AND 25(A) AND (B), 2 THE TAX SHALL 
BE COLLECTED BY THE BROKER WHO EFFECTED 3 THE SALE, AND SHALL BE 
REMITTED TO THE BUREAU OF NTERNAL 4 REVENUE WITHIN FIVE (5) BANKING 
DAYS FROM THE DATE OF 5 COLLECTION THEREOF. THE BROKER SHALL 
LIKEWISE SUBMIT ON 6 MONDAYS OF EACH WEEK TO THE SECRETARY OF THE 
LOCAL 7 EXCHANGE OR ORGANIZED MARKETPLACE OF WHICH THE BROKER 8 
IS A MENDER, A TRUE AND COMPLETE RETURN WHICH SHALL 9 CONTAIN A 
DECLARATION OF ALL THE TRANSACTIONS EFFECTED 10 DURING THE 
PRECEDING WEEK, AND OF ALL TAXES COLLECTED AND 
 
TURNED OVER TO THE BUREAU OF INTERNAL REVENUE. 
 
[(b)] (C) From the sale or disposition of real property under Section 24[(D)l (B) 
(7) shall file a return within thirty (30) days following each sale or other disposition. 
 
SEC. 16. Section 52(A) and (D) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows: 
SEC. 52. Corporation Returns. — 
(A) Requirements. - Every corporation AS DEFINED UNDER SECTION 20 22(B) OF THIS 
CODE, AND subject to the tax herein imposed, except foreign 
corporations not engaged in trade or business in the Philippines, shall render, in 
duplicate, a true and accurate quarterly income tax return and final or adjustment 
return in accordance with the provisions of Chapter XII of this Title. The income tax 
return shall consist of a maximum of four (4) pages in paper form or electronic form, 
be filed by the president, vice-president or other principal officer, shall be sworn to by 
such officer and by the treasurer or assistant treasurer, and shall only contain the 
following 


35 
 
information: 
(l) Corporate profile and information; 
(2) Gross sales, receipts or income from services rendered, or conduct 
of trade 
or business, except income subject to final tax as provided under this 
Code; 
(3) Allowable deductions under this Code; 
(4) Taxable income as defined in Section 3 1 of this Code; and 
(5) Income tax due and payable. 
Provided, That the foregoing provisions shall not affect the implementation of 
Republic Act No. 10708 or TIMTA. 
xxx xxx xxx 
(D) Return on Capital Gains Realized from Sale of Shares of Stock, DEBT 
INSTRUMENTS, AND OTHER SECURITIES not Traded in the Local [Stock] 
Exchange OR AN ORGANIZED MARKETPLACE. - Every corporation deriving 
capital gains from the sale or exchange of shares of stock, DEBT INSTRUMENTS 8 AND 
OTHER SECURITIES not traded [thru] THROUGH a local stock exchange 
OR AN ORGANIZED MARKETPLACE as prescribed under SECTIONS 27 (D) (3) no 
AND (5), AND 28 [Sections 24(C), 25(A)(3) 27(E) (2) 28(A) C 28(B) (5)  
shall file a return within thirty (30) days after each transaction and a final consolidated 
 
return of all transactions during the taxable year on or before the fifteenth (15th) day 
of  the fourth (4th) month following the close of the taxable year. 
 
(E) RETURN 0N CAPITAL GAINS REALIZED FROM SALE OF SHARES 
 
OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES TRADED IN 
A  
LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE. - IT SHALL BE 
THE DUTY OF EVERY BROKER WHO EFFECTED A SALE OF SHARES OF STOCK, 
DEBT INSTRUMENTS AND OTHER SECURITIES TRADED IN A LOCAL EXCHANGE OR 
AN ORGANIZED MARKETPLACE, SUBJECT TO THE TAX IMPOSED UNDER SECTION 
AND (6), AND, TO COLLECT THE TAX DUE AND REMIT THE SANT TO THE BUREAU OF 
INTERNAL REVENUE w1THIN FIVE (5) BANKING DAYS FROM THE 


36 
 
 DATE OF COLLECTION THEREOF, AND TO SUBMIT ON MONDAYS OF EACH 
WEEK TO THE SECRETARY OF THE LOCAL EXCHANGE OR ORGANIZED 
MARKETPLACE, OF WHICH THE BORROWER IS A MEMBER, A TRUE AND 
CONWLETE RETURN WHICH SHALL CONTAIN A DECLARATION OF ALL THE 
TRANSACTIONS EFFECTED DURING THE PRECEDING WEEK, AND TAXES 
COLLECTED AND TURNED OVER 
 
 
TO THE BUREAU OF INTERNAL REVENUE. 
 
SEC. 17. Section 54 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows: 
SEC. 54. Returns of Receivers, Trustees, [in Bankruptcy] or Assignees. — [In 
cases wherein receivers] RECEIVERS, ADMINISTRATORS, trustees in AN 
IRREVOCABLE TRUST OR bankruptcy, or  OTHER PERSON ASSIGNED 
OR [assignees are] IN CHARGE OF operating the property or business of 
ANOTHER PERSON OR corporation, subject to the tax UNDER THIS CODE 
[imposed by this Title, such receivers, trustees or assignees] shall BE IMPOSED 
WITH THE OBLIGATION TO FILE [make] THE returns AND PAY THE 
TAXES FOR SUCH PERSON OR CORPORATION IN THE SAME MANNER 
REQUIRED UNDER THIs CODE. [of net income as and for such corporation, in 
the same manner and form as such organization is hereinbefore required to make 
returns, and any] ANY tax due on the income as returned by receivers, 
ADMINISTRATORS, trustees or assignees shall be assessed and collected in the same 
manner as if assessed directly against the [organizations] PERSON, ESTATE OR 
ORGANIZATION [of) whose businesses or properties they have custody OF or control 
OVER. 
HE TRUSTOR IN A REVOCABLE TRUST, NOT THE TRUSTEE, 
SHALL BE RESPONSIBLE IN FILNG THE RETURNS REQUIRED UNDER 
THIS CODE AND IN DECLARING THE INCOME RECEIVED FROM THE 
TRUST IN ACCORDANCE WITH SECTIONS 24, 25, 27 AND 28 OF THIS 


37 
 
CODE. INCOME OF THE TRUST SUBJECTED TO FINAL TAX UNDER 
SECTIONS 24, 25, 27 AND 28 SHALL No LONGER BE SUBJECT TO TAX 
UPON DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR 
BENEFICIARY, N0R SHALL THE TRUSTOR OR BENEFICIARY BE REQUIRED TO 
DECLARE THE INCOME AS PART OF ITS TAXABLE INCOME 
ANY INCOME OF A REVOCABLE TRUST NOT SUBJECTED TO 
FINAL TAX SHALL BE SUBJECT TO CREDITABLE WITHHOLDING TAX 
UPON DISTRIBUTION OF THE INCOME To THE TRUSTOR OR THE 
BENEFICIARY AT A RATE NOT EXCEEDING THE HIGHEST RATE OF 
TAX INTOSED ON INDIVIDUALS UNDER SECTION 24 IN THE CASE OF INDIVIDUAL 
TRUSTORS, OR THE CORPORATE INCOME TAX UNDER SECTION 27 IN THE CASE 
OF CORPORATE TRUSTORS. 


 
SEC. 18. Section 56 of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read as follows: 
SEC. 56. Payment and Assessment of Income Tax for Individuals and 
Corporations. — 
(A) Payment of Tax. — 
xxx xxx 
xxx  
(3) Payment of Capital Gains Tax.  
IN GENERAL - The total amount of tax imposed and prescribed under 
[Section] SECTIONS 
 
 shall be paid on the date the return 
prescribed therefor is filed by the person liable thereto: Provided, That if the seller 
submits proof of [his] THE intention to avail himself of the benefit of exemption of capital 
gains under existing special laws OR TAX TREATY, no such payments shall be 
required: Provided, further, that in case of failure to qualify for exemption under such 
special laws, TAX TREATY and implementing rules and regulations, the tax due 
on the gains realized from the original transaction shall immediately become due and 
payable, and subject to the penalties prescribed under applicable provisions of this 
Code: Provided, finally, that if the seller, having paid the tax, submits such proof of 
intent within six (6) months from the registration of the document transferring the real 
property, THE SELLER shall be entitled to a refund of such tax upon verification of [his] 
compliance with the requirements for such exemption. 
xxx xxx xxx 
 
SEC. 19. Section 57 of the National internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows: 
SEC. 57. Withholding of Tax at Source. - 
(A) Withholding of Final Tax on Certain Incomes. — Subject to rules and 
regulations the Secretary of Finance may promulgate, upon the recommendation of the 
Commissioner, requiring the filing of income tax return by certain income payees, the 
imposed or prescribed [by UNDER Sections  
1), 
 24(C),
 


 
30 
25(B), 25(C), 25(D), 25(E)•,
 
32
 
33
24(B), 24(C), 34 
25(A), 25(B), 27(D), 27(E), 28(A) AND 
33; and 282 of this Code on 
 specified items of income SUBJECT TO FINAL TAX shall be withheld by payor 
corporation and/or person and paid in the same manner and subject to the same 
conditions as provided in Section 58 of this Code. 
(B) xxx xxx xxx 
[(C) Tax-free Covenant Bonds. — In any case where bonds, mortgages, deeds of 
trust or other similar obligations of domestic or resident foreign corporations, contain a 
contract or provision by which the obligor agrees to pay any portion of the tax imposed 
in this Title upon the obligee or to reimburse the obligee for any portion of the tax or to 
pay the interest without deduction for any tax which the obligor may be required or 
permitted to pay thereon or to retain therefrom under any law of the Philippines, or any 
state or country, the obligor shall deduct and withhold a tax equal to thirty percent  (30%) 
of the interest or other payments upon those bonds, mortgages, deeds of trust or other 
obligations, whether the interest or other payments are payable annually or at  shorter 
or longer periods, and whether the bonds, securities or obligations had been or  will be 
issued or marketed, and the interest or other payment thereon paid, within or without 
the Philippines, if the interest or other payment is payable to a nonresident alien 
or to a citizen or resident of the Philippines.  
 
SEC. 20. Section 73 (A) of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read as follows: 
SEC. 73. Distribution of Dividends or Assets by Corporations. — 
(A) Definition of Dividends. — The term 'dividends' when used in this Title means any 
distribution made by a corporation to its shareholders out of its earnings or profits and 
payable to its shareholders, whether in money or in other property. 
 Where a corporation distributes all of its assets in complete liquidation or 
dissolution, the gain realized or loss sustained by the stockholder, whether 
individual or corporate, is a taxable income or a deductible loss, UNDER 
SECTIONS 24(A), 


 
25(A), 25(B), 27(A), 28(A) AND 28 (B), as the case may be. 
(B) Stock Dividend. — x x x 
 
SEC. 21. Section 108 of the National Internal Revenue Code of 1997, as amended, is 
hereby amended to read as follows: 
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of 
Properties. — 
(A)  Rate and Base of Tax. — x x x 
The phrase 'sale or exchange of services' means the performance of all kinds of 
services in the Philippines for others for a fee, remuneration or consideration, including 
 those performed or rendered by construction and service contractors; stock, real 
estate, commercial, customs and immigration brokers; lessors of property, 
whether personal 
or real; warehousing services; lessors or distributors of cinematographic films; persons 
engaged in milling, processing, manufacturing or repacking goods for others; 10 
proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, 
resorts; proprietors or operators of restaurants, refreshment parlors, cafes and other 
eating places, including clubs and caterers; dealers in securities; [lending 
investors; transportation contractors on their transport of goods or cargoes, 
including persons who transport goods or cargoes for hire and other domestic 
common carriers by land relative to their transport of goods or cargoes; common 
carriers by air and sea relative to them 
transport of passengers, goods or cargoes from one place in the Philippines to 
another place in the Philippines; sales of electricity by generation companies, 
transmission by 
any entity, and distribution companies, including electric cooperatives; services of 
franchise grantees of electric utilities, telephone and telegraph, radio and 
television 
 broadcasting and all other franchise grantees except those under Section 119 of 
this Code and non-life insurance companies (except their crop insurances), 
including surety, 
 fidelity, indemnity and bonding companies; and similar services regardless of 
whether or not the performance thereof calls for the exercise or use of the physical 
or mental 


 
faculties. The phrase 'sale or exchange of services' shall likewise include: 
xxx xxx xxx 
 
SEC. 22. Section 121 of the National Internal Revenue Code of 1997, as 
amended, is 28 hereby amended to read as follows: 
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 [in] PERFORMING QUASI-BANKING FUNCTIONS AT 
THE RATE OF FIVE PERCENT (5%) ON INCONT SUCH AS INTEREST, 
COMMISSIONS, AND DISCOUNTS FROM LENDING ACTIVITIES AS 
 
WELL AS INCOME FROM FNANCIAL LEASING, ROYALTIES, RENTALS 
 OF PROPERTY, REAL OR PERSONAL, PROFITS FROM SALE OR 
EXCHANGE INCLUDING GANS DERIVED FROM SALE OR TRANSFER OF 
REAL PROPERTIES, NET TRADNG GAINS WITHIN THE TAXABLE YEAR OF 
FOREIGN CURRENCY, DEBT SECURITIES, DERIVATIVES, AND OTHER 
SIMILAR FINANCIAL INSTRUMENTS, AND ALL OTHER ITEMS 7 TREATED 
AS GROSS INCOME UNDER SECTION 32 OF TMS CODE, 8 EXCEPT 
DIVIDENDS AND EQUITY SHARES AND NET INCOME OF 
9 
SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO PERCENT (0%) 
[in accordance with the following schedule]: 
 [(a) On interest, commissions and discounts from lending activities as well as 
income from financial leasing, on the basis of remaining maturities of instruments 
from 
which such receipts are derived:] 
[Maturity period is five years or less -
 
[Maturity period is more than five years - ..... ..... .
 
On dividends and equity shares and net income of subsidiaries- 
 
 
 [(c) On royalties, rentals of property, real or personal, profits, from exchange 19 
and all other items treated as gross income under Section 32 of this Code -.. [(d) 
On net trading gains within the taxable year of foreign currency, debt 21 securities, 
derivatives, 
and 
other 
similar 
financial 
instruments 
 


 
 [Provided, however, That in case the maturity period referred to in paragraph (a) 
is shortened thru pre-termination, then the maturity period shall be reckoned to 
end as of the date of pre-termination for purposes of classifying the transaction 
and the correct rate of tax shall be applied accordingly.  
Provided, [finally,] That FOR PURPOSES OF COMPUTING THE GROSS 
RECEIPTS, the generally accepted accounting principles [as may be prescribed by the 
Bangko Sentral ng Pilipinas for the bank or non-bank financial intermediary performing 
quasi-banking functions shall likewise be the basis for the calculation of gross receipts.] 
 OF RECORDNG INCOME AS ADOPTED BY THE BANK SHALL BE 
FOLLOWED: PROVIDED, THAT THE INCREASE OR DECREASE VALUE OF 
PROPERTY AS A RESULT OF CHANGES m MARKET VALUES SHALL NOT 
BE CONSIDERED m THE CONTUTATION OF GROSS RECEIPTS: PROVIDED, 
FURTHER, THAT FOR PURPOSES OF DETERNf1NNG THE GROSS 
RECEIPTS, NO DEDUCTION SHALL BE MADE ON THE INCOME EXCEPT m 
THE CASE OF GAINS FROM 4 DEALNGS IN PROPERTY AND TRADNG, 
WHERE NET LOSS WITHIN  
5 THE SAME BUSINESS ACTIVITY CAN BE OFFSET TO DETERNIINE THE 6 
NET GAIN SUBJECT TO THIS TAX: PROVIDED, FURTHER, THAT SUCH 7 
OFFSETTING SHALL BE ON A QUARTERLY BASIS, AND ANY NET LOSS 8 
NCURRED IN A QUARTER CAN BE CARRIED OVER AS DEDUCTION m 9 THE 
SUCCEEDING QUARTERS: PROVIDED FINALLY, THAT NET LOSS 10 
NCURRED m A TAXABLE YEAR CANNOT BE CARRIED OVER TO THE 
SUCCEEDING TAXABLE YEAR. 
xxx xxx xxx 
 
SEC. 23. Section 122 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows: 
SEC. 122. Tax on Other Non-Bank Financial Intermediaries. — There shall be 
collected a tax of five percent (5%) on the gross receipts derived by other non-
bank financial intermediaries doing business in the Philippines, from interest, 
commissions, [discounts] AND DISCOUNTS FROM LENDNG ACTIVITIES, AS 
WELL AS INCOME FROM FINANCIAL LEASNG, ROYALTIES, RENTALS OF 
PROPERTY, REAL OR PERSONAL, PROFITS FROM SALE OR EXCHANGE 
INCLUDING GAMES 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 
NSTRUMENTS, UNDERWRITING FEES, SERVICE NCOME, AND ALL OTHER ITEMS 
TREATED AS GROSS INCOME UNDER SECTION 32 OF THIS CODE, EXCEPT 
DIVIDENDS AND EQUITY SHARES  AND NET INCOME OF SUBSIDIARIES WHICH 


 
SHALL BE SUBJECT TO  ZERO PERCENT (0%), [and all other items treated as gross 
income under this Code: Provided, That interests, commissions and discounts from 
lending activities, as well as 
income from financial leasing, shall be taxed on the basis of the remaining 
maturities 


 
ACTIVITY, AND DERIVES INCOME THEREFROM, SHALL BE SUBJECT 
TO THE TAX MPOSED ON ITS PRNCIPAL ACTIVITY. TO BE 
CONSIDERED INCIDENTAL, THE INCOME, FROM NTERNÆDIATION 
SERVICES SHALL NOT EXCEED FIFTY PERCENT (50%) OF THE PERSON 
OR THE COMPANY’s TOTAL ANNUAL INCOME IF THE TOTAL INCOME 
RECEIVED FROM FINANCIAL NTERNÆDIATION IS MORE THAN FIFTY 
PERCENT (50%), AND THE PERSON OR CONTANY HAS ENTERED INTO AT 
LEAST SIX (6) TRANSACTIONS DURING THE YEAR, THE TOTAL INCOME FROM 
SUCH FNANCIAL INTERMEDIATION SHALL BE SUBJECT TO TAX UNDER TMS 
SUBSECTION. 
HOUSE LENDING OR SELLER FINANCNG SHALL NOT BE SUBJECT TO 
TAX UNDER THIS SUBSECTION. ANY INCOME EARNED OR RECEIVED 
FROM m-HOUSE LENDNG OR SELLER FINANCNG SHALL BE SUBJECT TO 
THE SAME TAX APPLICABLE TO THE PRNCIPAL BUSINESS ACTIVITY OR 
TRANSACTION. 
HOLDING COMPANIES SHALL BE SUBJECT TO EITHER VALUE ADDED 
TAX OR GROSS RECEIPTS TAX DEPENDING ON THE NATURE 
OF THEIR BUSINESS ACTIVITIES. IF UNDERTAKING FNANCNG AND 
OTHER SIMILAR ACTIVITIES, THEY SHALL BE SUBJECT TO GROSS RECEIPTS 
TAX UNDER THIS SECTION. INCOME DERIVED FROM THE SALE OF GOODS, 
PROPERTIES AND OTHER SERVICES SHALL BE SUBJECT TO VALUE ADDED 
TAX UNDER SECTION 105 OF TMS CODE. [Provided, finally, That the generally 
accepted accounting principles as may be prescribed by the Securities and Exchange 
Commission for other non-bank financial intermediaries shall likewise be the basis for 
the calculation of gross receipts.] 
 Nothing in this Code shall preclude the Commissioner from imposing the same 
tax herein provided on persons OR ENTITIES performing similar [financing] 
FINANCIAL INTERMEDIATION activities. 
 
 
SEC. 24. Section 123 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows: 
SEC. 123. Tax on Life Insurance AND REINSURANCE Premiums. - 
There 
shall be collected from every person, company or corporation


 
of the instruments from which such receipts are derived, in accordance with 
1 
the following schedule:] 
2 
[Maturity 
is 
(5) 
five 
years 
of 
less
3 
 
4 
[Maturity' 
period 
is 
more 
than 
(5) 
five 
years
5 
 
6 
[Provided, however, that in case the maturity period is shortened thru 
7 
pretermination, then the maturity period shall be reckoned to end as of 
8 
the date of pretermination for purposes of classifying the transaction 
9 
and the correct rate of tax shall be applied accordingly.] 
10 
GROSS RECEIPTS SHALL BE COMPUTED IN THE SAME MANNER 
11 
PROVIDED UNDER SECTION 121. 
12 
FINANCIAL NTERIMEDIARIES SUBJECT TO TAX UNDER THIS 
13 
SECTION SHALL INCLUDE FNANCING CONTANIES, FNANCE 
14 
LEASNG CONIPANIES, INVESTIWENT HOUSES, PAWNSHOPS, 
15 
FOREIGN 
16 
EXCHANGE DEALERS AND MONEY BROKERS, TRUST ENTITIES, 
17 
CREDIT CARD CONIPANIES, LENDNG INVESTORS SAVINGS 
18 
AND 
LOAN 
ASSOCIATIONS, 
AND 
OTHER 
FINANCIAL 
19 
NTER1ffEDIARIES 
20 
EXCEPT BANKS AND NON-BANKS PERFORMING QUASI-
21 
BANKING FUNCTIONS WHICH SHALL BE TAXED UNDER 
22 
SECTION 121 OF THIS CODE. 
23 
COLLECTIVE INVESTMENT SCHEIWES SUCH AS MUTUAL 
24 
FUNDS, UNIT LINKED INVESTMENT TRUST FUNDS, UMT- 
25 
LINKED VARIABLE INSURANCE, AND OTHER COLLECTIVE 
26 
INVESTMENT 
SCHEMES 
AS 
MAY 
BE 
DETERMINED 
BY 
27 
APPROPRIATE GOVERNMENT 
28 
REGULATORY AGENCIES SHALL NOT BE SUBJECT TO GROSS 
29 
RECEIPTS TAX AND OTHER PERCENTAGE TAXES EVTOSED 
30 
UNDER 
31 
TITLE V, AND THE VALUE ADDED TAX IMPOSED UNDER TITLE 
32 
IV OF 
33 
THIS CODE. FOR PURPOSES OF THIS EXEMPTION, A CIS SHALL 
34 
HAVE 
35 


 
AT LEAST TWO HUNDRED (200) OWNERS, NVESTORS OR 
36 
PARTICIPANTS, AND SHALL HAVE CONTLIED WITH THE 
37 
MINIMUM 
PUBLIC 
OWNERSHIP 
REQUIREMENT 
OF 
THE 
38 
APPROPRIATE GOVERNMENT REGULATORY AGENCIES. 
39 
THE INCOME OF A PERSON OR CONTANY NOT LICENSED TO 
40 
DO FINANCIAL INTERMEDIATION BUT WHICH ENGAGES 
41 
FINANCIAL 
42 
INTERMEDIATION SERVICES AS AN INCIDENT TO ITS MAIN 
43 
BUSINESS 
44 
42 
45 
cooperative companies or associations [) l doing life insurance 
46 
business of any sort in the Philippines, A PREMIUM TAX AT THE 
47 
FOLLOWING RATES: 
48 
(A) 
FOR LIFE NSURANCE NCI,UDING HEALTH INSURANCE AS A 
49 
RIDER TO LIFE INSURANCE POLICY, a tax of two percent (2%) of the total 
50 
premium collected, whether such premiums are paid in money, notes, credits 
51 
or any substitute for money; but premiums refunded within six (6) months 
52 
after payment on account of rejection of risk or returned for other reason to a 
53 
person insured shall not be included in the taxable receipts; nor shall any tax 
54 
be paid upon reinsurance by a company IF THE TAX [that] has already BEEN 
55 
paid [the tax] 0N THE DIRECT PRENIIUM•, nor upon premiums collected or 
56 
received by any branch of a domestic corporation, firm or association doing 
57 
business outside the Philippines on account of any life insurance of the 
58 
insured who is a nonresident, if any tax on such premium is imposed by the 
59 
foreign country where the branch is established nor upon premiums collected 
60 
or received on account of any reinsurance, if the insured, in case of personal 
61 
insurance, resides outside the Philippines, if any tax on such premiums is 
62 
imposed by the foreign country where the original insurance has been issued 
63 
or perfected; nor upon that portion of the premiums collected or received by 
64 
the insurance companies on variable contracts[,l IN A CIS in excess of the 
65 
amounts necessary to insure the lives of the variable contract owners[.l : 
66 
PROVIDED, THAT THE CIS SHALL HAVE AT LEAST TWO HUNDRED 
67 
(200) OWNERS, NVESTORS OR PARTICIPANTS, 
68 
AND THAT ANY MINIMUM PUBLIC OWNERSHIP AS MAY BE 
69 
REQUIRED 
BY 
APPROPRIATE 
Government 
REGULATORY 
70 
AGENCIES SHALL BE CONTLIED WITH. 
71 
(B) 
PERSONS DONG BUSINESS SIMILAR OR AKIN TO LIFE AND 
72 
HEALTH INSURANCE SUCH AS PRE-NEED COMPANIES, PENSION 
73 
FUND 
74 


 
CONTANIES, HEALTH MAINTENANCE ORGANIZATIONS AND 
75 
OTHER 
76 
COMPANIES SMILAR TO LIFE INSURANCE, AS MAY BE 
77 
DETERMINED 
BY 
THE 
APPROPRIATE 
GOVERNMENT 
78 
REGULATORY AGENCIES, SHALL BE SUBJECT TO TAX UNDER 
79 
TENS SUBSECTION AT THE RATE 
80 
OF TWO PERCENT (2%) OF THE GROSS PREMIUM, PLAN 
81 
PAYMENT, OR 
82 
NSTALLMENT 
PAYMENTS 
COLLECTED 
WITHOUT 
ANY 
83 
DEDUCTION 
84 
FOR THE AMOUNTS REQUIRED BY THE APPROPRIATE 
85 
GOVERNMENT REGULATORY AGENCIES TO BE EARMARKED 
86 
FOR THE BENEFIT OF 
87 
THE INSURED, OR PLANHOLDER. 
88 


 
NOTHING IN THIS CODE SHALL PRECLUDE THE 
COMMISSIONER FROM IMPOSING THE SAME TAX HEREN PROVIDED ON 
PERSONS PERFORNf1NG SINf1LAR INSURANCE BUSINESS 
ACTIVITIES. 
 
LIFE REINSURANCE COIWPANIES SHALL BE SUBJECT TO PREMIUM TAX ON 
PREMIUMS COLLECTED UNDER SUBSECTION (A) HEREOF. HOWEVER, 
PRENHUMS COLLECTED ON TRANSACTIONS WHERE THE TAX ON THE 
DIRECT PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT NSURER SHALL 
BE EXCLUDED FROM THE GROSS 11 PREMIUM SUBJECT TO PREMIUM TAX. 
 NON-LIFE RENSURANCE COMPANIES SHALL BE SUBJECT TO VALUE ADDED 
TAX ON PREMUMS COLLECTED UNDER SECTION 108 OF THIS CODE. 
HOWEVER, PRENAUMS COLLECTED ON 15 TRANSACTIONS WI-ÆRE THE TAX 
0N THE DIRECT PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT INSURER 
SHALL BE EXCLUDED FROM THE GROSS PRENf1UM SUBJECT TO VALUE 
ADDED TAX. FOR THE PURPOSE OF CLAIMING EXEMPTION ON REINSURANCE 
PRENHUMS, THE SECRETARY OF FINANCE, UPON THE 
RECOMNÆNDATIONS OF THE COMMISSIONER OF NTERNAL 
REVENUE AND INSURANCE COMMISSIONER, SHALL PROMULGATE THE 
REQUIRED REPORTS TO BE SUBMITTED TO THE BUREAU OF 
INTERNAL REVENUE. ANY MISREPRESENTATION SHALL SUBJECT THE 
DIRECT INSURER OR RENSURER TO PENALTIES UNDER SECTIONS 248, 249, 
253, 254, 255, 256, AND 257 OF THIS CODE. 
ANY INCOME, OTHER THAN RECEIPT OF PREMIUM SUCH AS MANAGENIENT 
FEES, SERVICE FEES, CHARGES, AND PENALTIES, COMMISSIONS, INCOME 
FROM THE SALE OR TRANSFER OF GOODS, PROPERTIES OR SERVICES, 
EARNED OR RECEIVED AS AN NCIDENT 
OF DOING THE BUSNESS OF LIFE, NON-LIFE AND OTHER NSURANCE 
ACTIVITIES, SHALL BE SUBJECT TO THE VALUE ADDED TAX UNDER SECTION 105 
OF THIS CODE: PROVIDED, THAT THE INCOME RECEIVED FROM THE INVESTMENT 
AND REINVESTMENT OF PREMIUMS 1 EARNED SHALL NOT BE SUBJECT TO VALUE 
ADDED TAX NOR TO THE 2 GROSS RECEIPTS TAX INQOSED UNDER SECTIONS 121 
AND 122 OF THIS 
 
CODE. 
 


 
 
A VARIABLE INSURANCE CONTRACT WHERE AMOUNTS IN EXCESS OF 
INSURANCE COSTS ARE COLLECTED AS PART OF THE PREMIUM AND WHERE 
UNITS OF PARTICIPATION m A POOLED FUND ARE ISSUED TO THE INSURED 
REPRESENTING THEIR RESPECTIVE SHARES IN THE POOLED FUND, IS A CIS. 
THE AMOUNTS OF PREMIUM COLLECTED IN EXCESS OF THE NSURANCE 
COST IS NOT SUBJECT TO 
PREWIIUM TAX UNDER THIS SECTION AND TO THE GROSS RECEIPTS TAX 
INQOSED UNDER SECTIONS 121 AND 122, OR TO ANY PERCENTAGE TAX 
IMPOSED UNDER TITLE V AND TO VALUE ADDED TAX UNDER SECTION 105, 
TITLE IV OF THIS CODE. 
Cooperative companies or associations are such as are conducted by the members 
thereof with the money collected from among themselves and solely for their own 
protection and not for profit. 
 
SEC. 25. Section 127 of the National Internal Revenue Code of 1997, as 
amended, is 
hereby repealed. 
 
 SEC. 26. Section 174 of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read as follows:  
SEC. 174. Stamp Tax on Original Issue of Shares of Stock. — On every original 
issue, whether on organization, reorganization or for any lawful purpose, of shares of 
stock by any association, company, or corporation, INCLUDING SHARES OF 
STOCK OR UNITS OF PARTICIPATION m A COLLECTIVE INVESTMENT 
SCHEME, there shall be collected a documentary stamp tax of [Two pesos (P2.00) on 30 
each Two hundred pesos (P200), or fractional part thereof, of the par value,] SEVENTY-
FIVE PERCENT OF ONE PERCENT (0.75%) OF THE PAR VALUE of such shares of 
stock: Provided, That in the case of the original issue of shares of stock without par value, 
the amount of the documentary stamp tax herein 
prescribed shall be based upon the actual consideration for the issuance of such 
shares of stock: Provided, further, That in the case of stock dividends, on the actual 
value 


 
represented by each share[.]: PROVIDED, FINALLY, THAT m THE CASE OF 3 
COLLECTIVE INVESTMENT SCHEMES WITHOUT PAR VALUE, THE 4 
DOCUMENTARY STAMP TAX SHALL BE BASED ON Tl--m INITIAL NET 5 ASSET 
VALUE PER UNIT. 
SEC 27. Section 175 of the National Internal Revenue Code of 1997, as amended, is 
hereby repealed. 
 
SEC. 28. Section 1 76 of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read as follows:  
SEC 176. Stamp Tax on Bonds, Debentures, Certificates of Stock or Indebtedness 
Issued in Foreign Countries. - [On all] A DOCUMENTARY STAMP TAX OF 
SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) OF THE VALUE OF THE 
TRANSACTION SHALL BE COLLECTED FROM A 15 PERSON SELLING OR 
TRANSFERIING bonds, debentures, certificates of stock, 
or certificates of indebtedness issued in any foreign country., there shall be collected 
from the person selling or transferring the same in the Philippines, such tax as is 
required by law on similar instruments when issued, sold or transferred in the 
 
Philippines.] 
 
SEC 29. Sections 177 and 178 of the National Internal Revenue Code of 1997, 
as amended, are hereby repealed. 
 
SEC 30. Section 179 of the National Internal Revenue Code of 1997, as amended, is 
25 hereby amended to read as follows: 
SEC. 179. Stamp Tax on All Debt Instruments. — On every original issue of 
debt instruments, there shall be collected a documentary stamp tax of [One peso and 28 
fifty centavos (PI .50) on each Two hundred pesos (P200), or fractional part thereof,] 
SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) of the issue price of any 
such debt instruments: Provided, That for such debt instruments with terms of less than 
one (l) year, the documentary stamp tax to be collected shall be of a proportional 
amount in accordance with the ratio of its term in number of days to three hundred 


 
sixty-five (365) days: Provided, further, that only one documentary stamp tax shall be 
imposed on either loan agreement, or promissory notes issued to secure such loan. 
For purposes of this section, the term debt instrument shall mean instruments 
representing borrowing and lending transactions including but not limited to 
debentures, certificates of indebtedness, due bills, bonds, loan agreements, including 
those signed abroad wherein the object of contract is located or used in the Philippines, 
instruments and securities issued by the government or any of its instrumentalities, 
deposit substitute debt instruments, certificates or other evidences of deposits that are 
either drawing interest significantly higher the regular savings deposit taking into 
consideration the size of the deposit and the risks involved or drawing interest and 
having a specific maturity date, [orders for payment of any sum of money otherwise 10 
than at sight or on demand,] promissory notes, whether negotiable or non-negotiable, 
except bank notes issued for circulation. 
 
SEC 31. Section 180 of the National Internal Revenue Code of 1997, as amended, is 
hereby repealed. 
 
SEC 32. Sections 181, 182, 183, 184, 185, 186, and 187 of the National Internal 
Revenue Code of 1997, as amended, are hereby amended to read as follows: 
SEC. 181. Stamp Tax Upon Acceptance of Bills of Exchange and Others.  
Upon any acceptance or payment of any bill of exchange or order for the payment of 
20 money purporting to be drawn in a foreign country but payable in the Philippines, 
there 
shall be collected a documentary  tax OF THIRTY PERCENT OF ONE 
PERCENT (0.30%) [Sixty centavos (PHP 0.60) on each Two hundred pesos (PHP 200), 
or a fractional part thereof,] of the face value of any such bill of exchange, or order, or 
the Philippine equivalent of such value, if expressed in foreign currency. 
SEC. 182. Stamp Tax on Foreign Bills of Exchange and Letters of Credit.  
On all foreign bills of exchange and letter of credit (including orders, by telegraph or 
otherwise, for the payment of money issued by express or steamship companies or by 


 
any person or persons) drawn in but payable out of the Philippines in a set of three (3) 
or more according to the custom of merchants and bankers, there shall be collected a 
documentary stamp tax OF THIRTY PERCENT OF ONE PERCENT (0.30%) 
[Sixty centavos (PO.60) on each Two hundred pesos (P200), or fractional part thereof,] 
of the face value of any such bill of exchange or letter of credit, or the Philippine 
equivalent of such face value, if expressed in foreign currency [. l: PROVIDED, THAT, 
A LETTER OF CREDIT ON WHICH THE DOCUMENTARY STAMP TAX  IMPOSED 
UNDER THIS SECTION IS PAD UPON OPENIPG SHALL NOT 
BE SUBJECT AGAIN TO THE TAX INTOSED BY SECTION 195 UPON 3 
AVAILMENT OF THE TRUST RECEIPT WHERE THE PROPERTY 4 SUBJECT OF 
THE LETTER OF CREDIT IS MADE A SECURITY FOR 5 PAYMENT. 
SEC. 183. stamp Tax on Life AND HEALTH Insurance Policies[.] 7 OF ANNUITIES, 
AND HEALTH MAINTENANCE ORGANIZATION 8 PRODUCTS. — On all policies of 
insurance or other instruments by whatever name 9 the same may be called, whereby 
any insurance shall be made or renewed upon any life 10 or lives AND HEALTH OF 
PERSONS, there shall be collected a one-time 
 
documentary stamp tax at the following rates: 
If the amount of insurance does not exceed PI 00,000 
If the amount of insurance exceeds PI 00,000 
- Exempt 
but does not exceed P300,000 
If the amount of insurance exceeds P300,000 
- P20.OO 
but does not exceed P500,000 
If the amount of insurance exceeds P500,000 
- P50.OO 
but does not exceed P750,000 
If the amount of insurance exceeds P750,000 
- 
PIOO.OO 
but does not exceed P 1,000,000 
- 
P150.OO 
If the amount of insurance exceeds PI 
- 
P200.OO 


 
 
 SEC. 184. Stamp Tax on Policies of Insurance Upon Property. On all policies of 
insurance or other instruments by whatever name the same may be called, 25 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 (PO.50) on each 
28 Four pesos (P4.OO), or fractional part thereof,] TWELVE AND ONE-HALF 29 
PERCENT (12.5%) of the amount of premium charged: Provided, however, That no 
30 documentary stamp tax shall be collected on reinsurance contracts or on any 
instrument 31 by which cession or acceptance of insurance risks under any 
reinsurance agreement is 32 effected or recorded. PROVIDED, FURTHER, THAT 
SUCH RATE SHALL BE 
 
33 
REDUCED ACCORDING TO THE FOLLOWING SCHEDULE: 
 
JANUARY 1, 2021: ELEVEN AND ONE-HALF PERCENT (11.5%), 2
 
JANUARY 1, 2022: TEN AND ONE-HALF PERCENT (10.5%), 3
 
JANUARY 1, 2023: NINE AND ONE-HALF PERCENT (9.5%), 4
 
JANUARY 1, 2024: EIGHT AND ONE-HALF PERCENT (8.5%), 5
 
JANUARY 1, 2025: SEVEN AND ONE-HALF PERCENT (7.5%). 
 
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, 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 centavos (PHP 0.50) on each Four pesos 
20 (PHP 4.00), or fractional part thereof,] TWELVE AND ONE-HALF PERCENT 
(12.5%) 21 of the premium charged[.l: PROVIDED, THAT SUCH RATE SHALL BE 22 
REDUCED ACCORDING TO THE FOLLOWING SCHEDULE•. 23 JANUARY 1, 2021: 
ELEVEN AND ONE-HALF PERCENT (11.5%), 24 JANUARY 1, 2022: TEN AND 
ONE-HALF PERCENT (10.5%), 25 JANUARY 1, 2023: NINE AND ONE-HALF 
PERCENT (9.5%), 26 JANUARY 1, 2024: EIGHT AND ONE-HALF PERCENT (8.5%), 
JANUARY 1, 2025: SEVEN AND ONE-HALF PERCENT (7.5%). 


 
SEC. 186. Stamp Tax on [Policies of Annuities, and] Pre-Need Plans. — [On all policies of 
annuities, or other instruments by whatever name the same may be called, whereby an 
annuity may be made, transferred or redeemed, there shall be collected a documentary 
stamp tax of One peso (PHP 1.00) on each Two hundred pesos (P200), or fractional part 
thereof, of the premium or installment payment on contract price 
collected.] On pre-need plans, [the documentary stamp tax shall be Forty centavos 
(PO.40) on each Two hundred pesos (P200), or fractional part thereof, of the premium 
or contribution collected.] SHALL BE COLLECTED A 2 DOCUNÆNTARY STAMP 
TAX OF TWENTY PERCENT OF ONE PERCENT 3 (0.2%) OF THE PREMIUM OR 
INSTALLMENT PAYMENT ON CONTRACT 
PRICE, OR CONTRIBUTION CHARGED. 
 
SEC. 187. Stamp Tax on Indemnity Bonds. — On all bonds for indemnifying 
any person, firm or corporation who shall become bound or engaged as surety for the 
payment of any sum of money or for the due execution or performance of the duties of 
any office or position or to account for money received by virtue thereof, and on all other 
bonds of any description, except such as may be required in legal proceedings, or 
are otherwise provided for herein, there shall be collected a documentary stamp tax 
of 12 [Thirty centavos (PO.30) on each Four pesos (P4.00), or fractional part thereof,] 
SEVEN AND ONE-HALF PERCENT (7.5%) of the premium charged. 
 
SEC 33. Section 188 of the National Internal Revenue Code of 1997, as 
amended, is 
hereby repealed. 
 
SEC 34. Sections 192 and 193 of the National Internal Revenue Code of 1997, 
as amended, are hereby repealed. 
 
SEC 35. Sections 195, 198, and 199 of the National Internal Revenue Code of 1997, 
as amended, are hereby amended to read as follows: 


 
SEC. 195. Stamp Tax on Mortgages, Pledges and Deeds of Trust. — On every 
mortgage or pledge of lands, estate, or property, real or personal, heritable or 
movable, 
whatsoever, where the same shall be made as a security for the payment of any definite 
and certain sum of money lent at the time or previously due and owing or forborne to 
be paid, being payable, and on any conveyance of land, estate, or property whatsoever, in 
trust or to be sold, or otherwise converted into money which shall be and intended only as 
security, either by express stipulation or otherwise, there shall be collected a documentary 
stamp tax [at the following rates: 
 (a) When the amount secured does not exceed Five thousand pesos (PHP 5,000), 
Forty pesos (PHP 40.00). 
(b) On each Five thousand pesos (P5,000), or fractional part thereof in excess of Five 
thousand pesos (P5,000), an additional tax of Twenty pesos (P20.00).] 
OF THIRTY PERCENT OF ONE PERCENT (0.3%) OF THE AMOUNT 
SECURED.  
xxx 
xxx 
xxx 
 
SEC. 198. Stamp Tax on [Assignments and/ Renewals of Certain Instruments. — 
Upon each and every [assignment or transfer of any mortgage, lease or  policy 
of 
insurance, or the] renewal or continuance of any agreement, contract, charter, 
or 
any evidence of obligation or indebtedness by THE EXTENSION OF THE TERM OR 
MATURITY BY [altering or otherwise,] ALTERATION OF SUCH 
AGREEMENT, 
CONTRACT OR CHARTER, there shall be levied, collected and  
paid 
a 
documentary stamp tax, at the same rate as that imposed on the original 
 
instrument. 
1SEC. 199. Documents and Papers Not Subject to Stamp Tax. — The provisions of 
Section 173 to the contrary notwithstanding, the following instruments, documents and 
papers shall be exempt from the documentary stamp tax: 
(a) Policies of insurance or annuities made or granted by a fraternal or 
beneficiary society, order, association or cooperative company, operated on the lodge 
system or local cooperation plan and organized and conducted solely by the members 
thereof for the exclusive benefit of each member and not for profit.  xxx xxx xxx 
(n) Interbank call loans with maturity of not more than 7 days to cover deficiency in 
reserves against deposit liabilities, including those between or among banks and 
quasi-banks. 


 
24 ZERO REDEMPTION, SALE, BARTER, EXCHANGE, OR OTHER MODES OF 
DISPOSITION OR EXCHANGE OF SHARES OF STOCK OR UNITS OF 
PARTICIPATION IN A COLLECTIVE NVESTMENT SCHEME OR OTHER CIS 
SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED 
MARKETPLACE. THE ORIGINAL ISSUANCE OF SHARES OR UNITS OF 
PARTICIPATION IN A CIS SHALL 
          NOT BE COVERED BY THIS EXEMPTION. 
 
SEC. 36. Prospectivity Clause. — The changes introduced under this Act shall apply to 
transactions taking effect beginning January l, 2020. 
 
SEC. 37. Implementing Rules and Regulations. — The Department of Finance, in 
consultation with the Securities and Exchange Commission, Bangko Sentral ng Pilipinas, 
Insurance Commission, the Bureau of the Treasury, and the Bureau of Internal Revenue, 
shall issue the implementing rules and regulations for the effective implementation of this 
Act. 
SEC. 38. Separability Clause, — If, for any reason any article or provision of this Act, 
or any portion thereof, or application of such article, provision, or portion thereof to any 
person, group, or circumstance is declared invalid or unconstitutional, the remainder of 
this Act shall  not be affected by such decision or declaration. 
 
SEC. 39. Repealing Clause. — The following laws or provisions of laws are hereby 
repealed or modified accordingly and the persons and/or transactions affected herein are 
hereby 
made subject to applicable taxes on interest income, dividends, and capital gains, gross 
receipts tax, premium tax, and documentary stamp tax under the National Internal 
Revenue Code of 14 1997, as amended: 
(a) Section 9, insofar as the tax exemption on the issuance of bonds and securities is 
concerned, of Presidential Decree 1648, known as "Reorganizing the 
National Development Company and Establishing a Revised Charter 
Therefor"; 


 
(b) 
Sections 6, 7, and 8, insofar as the tax exemptions on interest 
income, 
capital gains, and documentary stamp tax and on the issuance of bonds 
are concerned, 
of Executive Order 603, entitled "Creating a Light Rail Transit Authority, 
Vesting the 
Same With Authority to Construct and Operate the Light Rail Transit 
(LRT) Project 
and Providing Funds Therefor"; 
(c) 
Section 14, insofar as tax exemption on interest income, capital 
gains, 
and documentary stamp tax is concerned, of Republic Act 7354, entitled 
"An Act 
Creating the Philippine Postal Corporation, Defining Its Powers, 
Functions And 
Responsibilities, Providing for Regulation of the Industry and for Other 
Purposes 
Connected Therewith"; 
(d) 
Section 12, insofar as the tax exemptions on interest income, 
capital 
gains, and documentary stamp tax and on the issuance of bonds are 
concerned, of 
Republic Act 4850, entitled "An Act Creating the Laguna Lake 
Development 
Authority, prescribing its Powers, Functions and Duties, Providing Funds 
Therefor, and 
for Other Purposes"; 


58 
(e) Number 8, insofar as tax exemption on interest income, 
1 
capital gains, and documentary stamp tax is concerned, of 
2 
Presidential Decree 37, entitled "Creating the Nayong Pilipino 
3 
Foundation"; 
4 
(f) Section 12, insofar as tax exemption on interest income, 
5 
capital gains, and documentary stamp tax is concerned, of 
6 
Presidential Decree 205, entitled "Creating and Establishing the 
7 
Development Academy of the Philippines, Defining its Powers, 
8 
Functions, and Responsibilities, and for Other Purposes"; 
9 
(g) Article 202, insofar as tax exemption on interest income, 
10 
capital gains, documentary stamp tax, and premium tax is 
11 
concerned, of Presidential Decree 442 as amended by 
12 
Presidential Decree 626, entitled "Labor Code of the Philippines"; 
13 
(h) Sections 10 and I l , insofar as the tax exemptions on interest 
14 
income, capital gains, and documentary stamp tax of subsidiaries 
15 
of Philippine Aerospace Development Corporation and on the 
16 
issuance of bonds are concerned, of Presidential Decree 696, 
17 
entitled "Revising Presidential Decree No. 286, dated September 
18 
5, 1973, as amended, otherwise known as The Charter of The 
19 
Philippine Aerospace 
20 
Development Corporation and for Other Purposes"; 
21 
Section 2(g), insofar as the tax exemptions on interest income and 
22 
on the issuance of bonds are concerned, of Republic Act 85, as 
23 
amended by Republic Act 
24 
2081, entitled "An Act Creating the Rehabilitation Finance 
25 
Corporation"; 
26 
Sections 76, 77 and 98, insofar as tax exemption on interest income, 
27 
dividends, capital gains, and documentary stamp tax on bonds is 
28 
concerned, of Republic 
29 
Act 3844 or The Agricultural Land Reform Code; 
30 
(k) Section 37, insofar as the tax exemption on interest income, 
31 
capital gains, gross receipts tax, and documentary stamp tax is 
32 
concerned, of Republic Act 
33 
6848 or The Charter of The Al-Amanah Islamic Investment Bank of 
34 
the Philippines; 
35 


59 
Sections 19, insofar as the tax exemptions on interest income and 
36 
issuance of bonds are concerned, of Republic Act 3591, as amended 
37 
by Republic Act 9576 or An Act Increasing the Maximum Deposit 
38 
Insurance Coverage, and in 
39 
Connection 
Therewith, 
to 
Strengthen 
the 
Regulatory 
and 
40 
Administrative Authority, and 
41 
Financial Capability of the Philippine Deposit Insurance Corporation 
42 
(PDIC), Amending for this Purpose Republic Act Numbered Three 
43 
Thousand Five Hundred 
44 


 
 
 
Ninety-One, as amended, otherwise known as The PDIC Charter, 
and for Other 
Purposes; 
(m)  Section 12, insofar as tax exemption on interest income, capital gains, 
and documentary stamp tax and the issuance of bonds are concerned, of 
Executive 
Order 1037, entitled "An Act Creating the Philippine Retirement Park System, 
Providing Funds Therefor and for Other Purposes"; 
(n) 
Sections 5 and 19, insofar as the tax exemptions on the issuance of 
bonds, interest income and documentary stamp tax are concerned, of Republic 
Act 8763 
or Home Guaranty Corporation Act of 2000; 
(o) Sections 19 and 25, insofar as tax exemption on documentary stamp tax 
11 is concerned, of Republic Act 7279 or The Urban Development and Housing 
Act of 1992; 
(p) 
Section 8(a), insofar as tax exemption on interest income, capital gains, 
and documentary stamp tax of bonds is concerned, as provided under Section 
I of 
Republic Act 6395 or An Act Revising the Charter of the National Power 
Corporation; 
(q) 
Sections 9 and 15, insofar as the tax exemptions on the issuance of 
bonds, interest income, capital gains, and documentary stamp tax are 
concerned, of PD 
334, entitled "Creating the Philippine National Oil Company, Defining its Powers 
and 
Functions, Providing Funds Therefore, and for Other Purposes"; 
(r) 
Section 16, insofar as tax exemption on interest income, capital gains, 
and documentary stamp tax is concerned, of Presidential Decree 1467, entitled 
"An Act 
Creating the Philippine Crop Insurance Corporation, Prescribing Its Powers and 


61 
Activities, Providing for Its Capitalization and for the Required Government 
Premium 
Subsidy, and for Other Purposes"; 
(s) Section 3, insofar as the tax exemption on interest income, capital gains, 26 
and documentary stamp tax of bonds is concerned, of Republic Act 3601, 
entitled "An 
Act Granting the National Irrigation Administration"; 
Section 6 (a, xviii (2)), in so far as tax exemption on 
interest income and 
documentary stamp tax is concerned, of PD 1485, as 
amended by PD 1770, entitled 
"Reconstituting the National Grains Authority to the 
National Food Authority, 
Broadening its Functions and Powers and for Other 
Purposes"; 
(u) Section 5 (e), insofar as tax exemption on interest 
income, capital gains, 
and documentary stamp tax on bonds is concerned, of 
Republic Act 6260, entitled "An 
1 Act Instituting a Coconut Investment Fund and Creating a Coconut Investment 
2 Company for the Administration Thereof'; 
3 (v) Section 9, insofar as tax exemption on interest income, capital gains, and 4 
documentary stamp tax on bonds is concerned, of Republic Act 10744 Or Credit 
Surety Fund Act of2014.  
 
 
(w)  
Section 20, insofar as tax on interest income, capital gains and 
 
 documentary stamp tax is concerned, of Republic Act 10693, entitled 
"An Act 
Strengthening Nongovernment Organizations (NGOs) Engaged in Microfinance 
Operations for the Poor"; 
Section 7, insofar as tax exemption on documentary stamp tax and 


62 
premium tax is concerned, of Republic Act 7111, entitled "An Act Establishing The 
Overseas Workers' Investment Fund to Provide Incentives to Overseas Workers, 
Reduce the Foreign Debt Burden and for Other Purposes"; 
Section 56, insofar as tax exemption on interest income, capital gains, 
and documentary stamp tax is concerned, of Republic Act 10801, entitled "An Act 
Governing the Operations and Administration of the Overseas Workers Welfare 
Administration"; 
(z) 
Section 5, insofar as tax exemption on interest income is concerned, of 
Republic Act 8367, entitled "An Act Providing for the Regulation of the 
Organization 
and Operation of Non-Stock Savings and Loan Associations"; 
(aa) Section 28, insofar as tax exemption on capital gains on shares of stock 
and documentary stamp tax is concerned, of Republic Act 9267 or The 
Securitization Act of 2004"; 
(bb) Section 17, insofar as tax exemption on interest income, capital gains, 
gross receipts tax and documentary stamp tax is concerned, of Republic Act 7906, 
27 entitled "An Act Providing for the Regulation of the Organization and Operations 
of Thrift Banks, and for Other Purposes"; 
(cc) Section 15, insofar as tax exemption on capital gains and 
documentary 
stamp tax is concerned, of Republic Act 9182, as amended by 
Republic Act 9343, 
entitled "An Act Granting Tax Exemptions and Fee Privileges to 
Special Purpose 
Vehicles which Acquire or Invest in Non-Performing Assets, 
Setting the Regulatory 
Framework Therefor, and for Other Purposes"; 
(dd) Sections 13 and 14, insofar as tax exemption on DST and dividends is 
concerned, of R.A* 9856 or The Real Estate Investment Act of 2009; 


63 
(ee) Section 23, insofar as no deduction from gross income shall be allowed 
in respect of any interest if the indebtedness is incurred to finance petroleum 
exploration is concerned, of P.D. 87, entitled Amending Presidential Decree No. 8 
issued on October 2, 1972, and Promulgating an Amended Act to Promote the 
Discovery and 7 Production of Indigenous Petroleum and Appropriate Funds 
Therefor; 
 (ff) Section 6, insofar as tax exemption on interest income, dividends and 
capital gains are concerned, of RA 6426 or the Foreign Currency Deposit Act 
of the Philippines, as amended; and 
 (gg) Section 32, insofar as the tax exemptions on capital gains, interest income 
and DST and issuance of bonds are concerned, of RA 6424 or the Philippine 
Export Credit Insurance and Guarantee Corporation Act. 
 
SEC. 40. Effectivity - This Act shall take effect on fifteen (15) days after 
its complete publication in at least two (2) newspapers of general 
circulation. 
 
Approved,