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W' CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
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liAR -5 p 6 :04 
S. BILL NO. 2163 
HE(,EIVED By; .r 
Introduced by Senator Sonny M. Angara 
AN ACT REDUCING THE CORPORATE INCOME TAX RATE, 
AMENDING SECTIONS 27 AND 28 OF THE NATIONAL INTERNAL 
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES 
Expianat01Y Note 
This bill seeks to amend Sections 27 and 28 of the National Internal Revenue Code of 
1997, as amended, by gradually reduci.ng the rate of corporate income tax over a three (3) ycar 
period beginning January 1, 2015. 
The bill is part of a twin lneasure to reduce the country's income tax rates for individuals 
and corporations in preparation for the Association of South East Asian Nations (ASEAN) 
Integration. In 2007, the Philippines together with Brunei Darussalam, Cambodia, Indonesia, 
Lao People's Democratic Republic, Malaysia, Myanmar, Singapore, Thailand and Vietnam signed 
the ASEAN Economic Community (AEC) Blueprint. Each member-state shall adopt and 
implement tbe AEC Blueprint which seeks to transform ASEAN into a single market and 
production base by December 2015. 
Harmonization is both a model and requisite for regional integration. At present, 
ASEAN member-states manifest differences in their corporate and individual Income tax 
regimes with such differences coming as a result of different levels of development and 
requirements of governance. The differentiated tax rates would inevitably swing the pendulum as 
investors and taxpayers shift from a high-tax jurisdiction to a low-tax jurisdiction. Moreover, if 
the country does not adjust its high corporate income tax rate, it·will create massive trans fer 
pricing issues that will translate into revenue losses. 
The Philippines holds the distinction of having the highest corporate income tax rate at 
30-percent When the AEC Declaration was signed, .some member-states began to lower their 
corporate income tax rates. For instance, Thailand gradually reduced its corporate income tax 
rate from 30 percent in 2011, 23 percent in 2012 and 20 percent today. Vietnam also lowered its 
corporate income tax rate from 25 percent to 22 percent this year. It will be reduced further to 
20 percent in 2016. 
At present, the average rate among the ASEAN countries hovers at 23.1 percent, with 
Singapore having the lowest at 17 percent. 
In order for the Philippines to attract capital, it IS Imperative that we reduce this 
stumbling block of having the highest tax rate. While we expect as setback in our revenues as a 
result of this proposal, we could recoup the same by making the Philippines an attractive 
investment haven that would expand our tax base, increase economic activities and create 
massive employment 
In view of the foregoing, immediate approval of this bill is earnestly sought. 
o 
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NN:--Y-I~\1~. A~N-::GARA 
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Wi' CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
liAR n. t:; 
SENATE 
216~1 
S. BILL NO. ~~_ 
Intmduced by Senator Sonny M. Angara 
AN ACT REDUCING THE CORPORATE INCOME TAX RATE, 
AMENDING SECTIONS 27' AND 28 OF THE NATIONAL INTERNAL 
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES 
Be it macted by the Senate and tbe HOI/Je ofReprmntativeJ of the PhillppineJ ill CongmJ aJJembled: 
SECTION 1. 
Section 27(A) of the National Internal Revenue Code of 1997, as 
amended, is hereby further amended to read as follows: 
"Sec. 27. Rates of Income Tax on DOlnestic Corporations. -
"(A) In GeneraL - Except as otherwise provided in this Code, an income tax 
of [thirty-five percent (35%)] TWENTY-NINE PERCENT (29%) BEGINNING 
JANUARY 1, 2015, TWENTY-SEVEN PERCENT (27%) BEGINNING JANUARY 1, 
2016 AND TWENTY-FIVE PERCENT (25%) BEGINNING JANUARY 1, 2017, is 
hereby imposed upon the taxable income detlved dutlng each taxable year from all sources 
within and without the Philippines loy every corporation, as defined in Section 22(B) of this 
Code and taxable under this Title as a corporation, organized in, or ex!s Ling under the laws 
of the Philippines[: Provided, That effective January 1, 2009, the rate of income tax shall be 
thirty percent (30%)]:' 
SEC. 2. Section 28 of the National Internal Revenue Code of 1997, as amended, is 
hereby further amended to read as follows: 
"SEC. 28. Rates of Income Tax on Foreign Corporations. -
"(A) Tax on Resident Foreign Corporations. -
(1) In General. :- Except as otherwise proVIded 111 this Code, a 
corporation organized, authorized, or existing under the laws of any foreign 
countx)', engaged in trade or bUS111ess within the Phihppincs, shall be subject 
to an income tax equivalent to [thirty-five percent (35%)] TWENTY-NINE 
PERCENT (29%) BEGINNING JANUARY 1, 2015, TWENTY-SEVEN 
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PERCENT (27%) BEGINNING JANUARY 1, 2016 AND TWENTY-
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rIVE PERCENT (25%) BEGINNING JANUARY 1, 2017 of the taxable 
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income derived in the preceding taxable year from all sources within the 
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Philippines[: PIVIJzded, That effectlve January 1, 2009, the rate of income tax 
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shall be thirty percent (30%)], 
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"(B) Tax on Nonresident Foreign Corporations, -:-
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(1) In General. - Except as otherwise provided in this Code, a 
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foreign corporation not engaged in trade or business In the Philippines shall 
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pay a tax equal to [thltty-five percent (35%)] TWENTY-NINE PERCENT 
ill 
(29%) BEGINNING JANUARY 1, 2015, TWENTY-SEVEN PERCENT 
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(27%) 
BEGINNING JANUARY 
1, 
2016 
AND TWENTY-FIVE 
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PERCENT (25%) BEGINNING JANUARY 1, 2017 of the gross income 
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received dming each taxable year from all sources within the Philippines, 
IS 
such. as interests, dividends, rents, royalties, salaries, premiU1TIS (except 
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reinsurance prelniums), annuities, emoluments or other fixed or determtnable 
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annual, periodic or casual gains, profits and income, and capital gains, except 
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capital gains subject to tax under subparagraph 5(c)[: Provided, That effective 
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January 1, 2009, the rate of income tax shall be thirty percent (30%)], 
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(5) Tax on Certain Irtcomcs Received by a NonreSident Foreign 
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Corporation, -
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(b) Intercorporate Dlvide~ds, -J\ final ,':'ithholding tax at the 
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rate of fifteen percent (15%) is hereby imposed on the amount of 
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cash and/or property dividends 
received 
from 
a domestic 
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corporation, which shall be collected and paid as provided in Section 
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57(A) of this Code, subject to the condition that the country in which 
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the nonresident foreign corporation is domiciled, shall allow a credit 
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against the tax due from the nonresident foreign corporation taxes 


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deemed to have been paid 111 the PhIlippines equivalent to [twenty 
percent (20%)] FOURTEEN PERCENT (14%), which represents 
the differenc~ between the regular 111come tax of [thirty-five percent 
(35%)] 
TWENTY-NINE 
PERCENT 
(29%) 
BEGINNING 
JANUARY 1, 2015 and the fifteen percent (15%) tax on dividends as 
provided in this subparagraph:. ProlJided, That effective January 1, 
[2009] 2016, the credit agamst the tax due shall be equivalent to 
[fifteen percent (15%)] 
TWELVE PERCENT (12%), AND 
EFFECTIVE JANUARY 1, 2017, EQUIVALENT TO TEN 
PERCENT (10%), which represents the thfference between the 
regular income tax of [thirty percent (30'/'0)] TWENTY-SEVEN 
PERCENT (27%) AND TWENTY-FIVE PERCENT (25%), 
RESPECTIVELY, and the fifteen percent (15%) tax on dividends;" 
SEC 3. Implementing Rules and Regulations. - The Secretary of Finance shall 
promulgate the necessary rules and . regulations for the effective implementation of the 
provisions of this Act. 
SEC. 4. Repealing Clause. - All laws, orders, issuances, circulars, lUleS and regulations 
or parts thereof, which are inconsistent with the provisions of this Act are hereby repealed 
or modified accordingly. 
SEC 5. Separability Clause. - If any' I'rovisioll of this Act is declared unconstitutional 
or invalid, other parts or provisions hereof not affected thereby shall continue to be in full 
force and effect. 
SEC. 6. Effectivity. - This Act shall take effect on January 1, 2015 following its 
publication in at least two (2) newspapers of general circulation. 
Approved, 
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