Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
TWENTIETH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. KENNETH T. GATCHALIAN 
EXPLANATORY NOTE 
The passage of Republic Act No. 12214 (Capital Market Efficiency Promotion 
Act) shows the government’s commitment to strengthening the Philippine capital 
market. 
This bill builds on CMEPA’s progress by addressing current problems in taxing 
passive income and financial intermediaries, such as a complex tax structure with 
multiple rates and bases, unfair tax burdens due to different rules for similar financial 
products and high compliance costs from complicated regulations and Documentary 
Stamp Taxes. 
To solve these issues, the bill proposes simplifying and redesigning financial 
sector taxation to make it fairer, more efficient, and easier to comply with. To achieve 
this end, this measure specifically proposes the following reforms in the Tax Code: 
1. Harmonization of business taxes of financial intermediaries such as banks,
non-bank financial intermediaries performing quasi-banking functions, and
other non-bank financial intermediaries, by imposing uniform tax on financial
intermediaries providing similar financial services;
2. Alignment of tax-treatment of life insurance, health-related insurance and
other business with similar nature such as pre-need companies, pension fund
companies and health maintenance organizations;
3. Rationalization of the documentary stamp taxes; and
4. Repeal of antiquated provisions on the imposition of documentary stamp
taxes.
In view of the foregoing, the immediate passage of this measure is earnestly 
sought.  
KENNETH T.GATCHALIAN 
July 30, 2025
12:44 pm
2652


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. KENNETH T. GATCHALIAN 
AN ACT 
AMENDING SECTIONS 22, 25, 27, 28, 37, 54, 73, 108, 109, 121, 122, 123, 
130, 175, 180, 181, 182, 183, 184, 185, 187, 188, 190, 194, 195, 198, 204, 
222, 255, 256, 257, 261, 263, 264, 266, AND 275; AND REPEALING 
SECTIONS 177, 186, 192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424, 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 
1997, AS AMENDED, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SEC. 1. Section 22 of the National Internal Revenue Code of 1997, as amended, 
is hereby further amended to read as follows: 
“SEC. 22. Definitions. – When used in this Title:  
“x x x 
“(E) The term ‘non-resident citizen’ means: 
“(1) x x x 
“x x x 
“(3) A citizen of the Philippines who works and derives income from 
abroad and whose employment thereat requires [him to be] BEING 
physically present abroad [most of the time] FOR ONE HUNDRED 
EIGHTY-THREE (183) DAYS OR MORE during the taxable year. 
“(4) A citizen who has been previously considered as A nonresident 
citizen and who arrives in the Philippines at any time during the taxable 
year to reside permanently in the Philippines shall likewise be treated as 
a nonresident citizen for [the taxable] SUCH year [in which he arrives] 
OF ARRIVAL in the Philippines with respect to [his] income derived from 
sources abroad until the date of his arrival in the Philippines. 
[(5)] A [The] taxpayer shall submit proof to the Commissioner to 
show [his] THE intention of leaving the Philippines to reside permanently 
abroad or to return to and reside in the Philippines, as the case may be 
for purposes of this Section. 
“x x x 
2652


“(V) The term [‘bank’] ‘BANKS’ [means every banking institution, 
as defined in Section 2 of 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] SHALL REFER TO ENTITIES ENGAGED IN THE 
LENDING OF FUNDS OBTAINED IN THE FORM OF DEPOSITS AS 
DEFINED AND CLASSIFIED IN SECTION 3 OF REPUBLIC ACT NO. 
8791, OTHERWISE KNOWN AS THE ‘GENERAL BANKING LAW OF 
2000.’   
 “(W) The term ‘non-bank financial intermediary’  [means 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] 
SHALL REFER TO PERSONS OR ENTITIES ENGAGED IN THE 
BORROWING OF FUNDS, FOR THE BORROWER'S OWN ACCOUNT, 
THROUGH THE ISSUANCE, ENDORSEMENT, OR ACCEPTANCE OF 
DEBT INSTRUMENTS OF ANY KIND OTHER THAN DEPOSITS, OR 
THROUGH 
THE 
ISSUANCE 
OF 
CERTIFICATES 
OF 
PARTICIPATION, CERTIFICATES OF ASSIGNMENT, OR SIMILAR 
INSTRUMENTS WITH RECOURSE, TRUST CERTIFICATES, OR OF 
REPURCHASE AGREEMENTS FROM TWENTY (20) OR MORE 
LENDERS AT ANY GIVEN TIME, FOR PURPOSES OF RELENDING 
OR PURCHASING OF RECEIVABLES AND OTHER OBLIGATIONS, 
BUT DOES NOT INCLUDE COMMERCIAL, INDUSTRIAL, AND 
OTHER NON-FINANCIAL COMPANIES WHICH BORROW FUNDS 
THROUGH ANY OF THESE MEANS FOR THE LIMITED PURPOSE OF 
FINANCING THEIR OWN NEEDS OR THE NEEDS OF THEIR 
AGENTS OR DEALERS.  
“(X) THE TERM ‘QUASI-BANK’ SHALL REFER TO A NON-
BANK FINANCIAL INSTITUTION AUTHORIZED BY THE BANGKO 
SENTRAL NG PILIPINAS TO ENGAGE IN QUASI-BANKING 
FUNCTIONS AND TO BORROW FUNDS FROM TWENTY (20) OR 
MORE 
OR 
MORE 
LENDERS 
THROUGH 
THE 
ISSUANCE, 
ENDORSEMENT 
OR 
ASSIGNMENT 
WITH 
RECOURSE 
OR 
ACCEPTANCE OF DEPOSIT SUBSTITUTES FOR PURPOSES OF 
RELENDING OR PURCHASING OF RECEIVABLES AND OTHER 
OBLIGATIONS.  
 “[(X)] (Y) The term ‘quasi-banking activities’ [means] SHALL 
REFER TO borrowing OF 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 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 ENTITIES performing quasi-banking functions.  
“(NN) THE TERM ‘HEALTH INSURANCE PRODUCTS’ SHALL 
REFER TO THOSE THAT ARE BEING OFFERED AND SOLD BY 
INSURANCE COMPANIES, EITHER LIFE OR NON-LIFE, WHEREIN 
THERE IS A LIST OF COVERED ILLNESSES OF WHICH THE 
COMPANIES ASSUME RISKS AND INDEMNIFY LOSSES BROUGHT 
BY THE SAID COVERED ILLNESSES.  
“(OO) THE TERM ‘HEALTH MAINTENANCE ORGANIZATION 
PRODUCTS’ SHALL REFER TO PRE-AGREED OR DESIGNATED 
HEALTH CARE SERVICES TO THE ENROLLED MEMBERS FOR A 
FIXED PREPAID FEE FOR A SPECIFIED PERIOD OF TIME 
THROUGH THE USE OF SELECTED NETWORK OF HEALTH CARE 
PROVIDERS. HEALTH MAINTENANCE ORGANIZATION (HMO) 
PRODUCTS PROVIDE A WIDE ARRAY OF MEDICAL, SURGICAL, 
AND HOSPITAL SERVICES THAT INCLUDE PREVENTIVE CARE 
AND WELLNESS PROGRAMS AND GENERALLY HAVE NO CASH-
OUT TRANSACTIONS.”  
SEC. 2. Section 25 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. – [(1) In General. −] A nonresident alien individual engaged 
in trade or business in the Philippines shall be subject to [an] 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.  
“X X X”  
SEC. 3. Section 27 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. – x x x  
“x x x  
“(D) Rates of Tax on Certain Passive Income. –   
“x x x  
(3) Tax on Income Derived under the Expanded Foreign 
Currency Deposit System. – Income derived by a depository bank under 
the expanded foreign currency deposit system from foreign currency 
transactions with nonresidents, offshore banking units in the Philippines, 
local commercial banks including branches of foreign banks that may be 
authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business 
with foreign currency deposit system shall be exempt from all taxes, except 
net income from such transactions as may be specified by the Secretary of 
Finance, upon recommendation by the Monetary Board to be subject to the 


regular income tax payable by banks: Provided, however, That interest 
income from foreign currency loans granted by such depository banks 
under said expanded system to residents other than offshore banking units 
in the Philippines or other depository banks under the expanded system, 
shall be subject to a final tax at the rate of ten percent (10%).  
[Any income of nonresidents, whether individuals or corporations, 
from transactions with depository banks under the expanded system shall 
be exempt from income tax.]   
“x x x  
“(E) Minimum Corporate Income Tax on Domestic Corporations. –  
“x x x    
   
“(4) Gross Income Defined. –   
“x x x   
“In the case of taxpayers engaged in the sale of service, ‘gross 
income’ means gross receipts less sales returns, allowances, discounts and 
cost of services. ‘Cost of services’ shall mean all direct costs and expenses 
necessarily incurred to provide the services required by the customers and 
clients including (A) salaries and employee benefits of personnel, 
consultants and specialists directly rendering the service and (B) cost of 
facilities directly utilized in providing the service such as depreciation or 
rental of equipment used and cost of supplies: Provided, however, That in 
the case of banks AND OTHER FINANCIAL INTERMEDIARIES, ‘cost 
of services’ shall include interest expense.  
 “x x x”  
SEC. 4. Section 28 of the National Internal Revenue Code of 1997, as amended, 
is hereby further amended to read as follows:  
“SEC. 28. Rates of Income Tax on Foreign Corporations. –   
(A) Tax on Resident Foreign Corporations. – x x x  
x x x  
(6) Income Derived under the Expanded Foreign Currency Deposit 
System. – Income derived by a depository bank under the expanded 
foreign currency deposit system from foreign currency transactions with 
nonresidents, offshore banking units in the Philippines, local commercial 
banks including branches of foreign banks that may be authorized by the 
Bangko Sentral ng Pilipinas (BSP) to transact business with foreign 
currency deposit system units, and other depository banks under the 
expanded foreign currency deposit system shall be exempt from all taxes, 
except net income from such transactions as may be specified by the 
Secretary of Finance, upon recommendation by the Monetary Board to be 
subject to the regular income tax payable by banks: Provided, however, 
That interest income from foreign currency loans granted by such 
depository banks under said expanded system to residents other than 
offshore banking units in the Philippines or other depository banks under 
the expanded system shall be subject to a final tax at the rate of ten 
percent (10%).  
[Any income of nonresidents, whether individuals or corporations, from 
transactions with depository banks under the expanded system shall be 
exempt from income tax.]  


x x x.”  
SEC. 5. Section 37 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 Deduction 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 [return] INCLUDE as income any portion of the 
premium deposits returned to their policyholders, but shall [return] 
INCLUDE 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.  
“x x x.”   
(E) 
INSURANCE 
COMPANIES 
AND 
REINSURANCE 
COMPANIES – PREMIUMS CEDED BY AN INSURANCE COMPANY 
TO 
ANOTHER 
INSURANCE 
OR 
REINSURANCE 
COMPANY, 
WHETHER 
DOMESTIC 
OR 
FOREIGN, 
FOR 
REINSURANCE 
PURPOSES SHALL NOT BE INCLUDED IN THE GROSS INCOME 
SUBJECT TO WITHHOLDING TAX UNDER THIS TITLE.  
SEC. 6. Section 54 of the National Internal Revenue Code of 1997, as amended, 
is hereby amended to read as follows:  
“SEC. 54. Returns of Receivers, ADMINISTRATORS, Trustees, [in 
Bankruptcy] or Assignees. – [In cases wherein receivers] RECEIVERS, 
ADMINISTRATORS, trustees, OR ASSIGNEES in AN IRREVOCABLE 
TRUST OR bankruptcy, or ANY OTHER PERSON ASSIGNED OR 
[assignees are] IN CHARGE OF operating the property or business of 
[a]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.”  
THE TRUSTOR IN A REVOCABLE TRUST, NOT THE TRUSTEE, 
SHALL BE RESPONSIBLE IN FILING 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 CODE.  
SEC. 7. Section 73 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, as the case may be.]  
“(B) Stock Dividend. – x x x  
“(C) 
LIQUIDATING 
DIVIDENDS. 
– 
LIQUIDATING 
DIVIDENDS ARE DIVIDENDS REPRESENTING THE REMAINING 
GAINS REALIZED OR LOSS SUSTAINED BY THE STOCKHOLDER 
IN A COMPLETE [OR PARTIAL] LIQUIDATION OR DISSOLUTION 
BY A CORPORATION AND SHALL BE CONSIDERED AS 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.  
[(C)](D) Dividends Distributed are Deemed Made from Most 
Recently Accumulated Profits. – x x x  
[(D)](E) Net Income of a Partnership Deemed Constructively 
Received by Partners. – x x x  
“x x x.”  
SEC. 8. Section 108 of the National Internal Revenue Code of 1997, as 
amended, is hereby further 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; proprietors, operators or keepers of hotels, motels, 
resthouses, 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 their 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:  
“x x x.”  
SEC. 9. Section 109 of the National Internal Revenue Code of 1997, as 
amended, is hereby further amended to read as follows:  
“SEC. 109. Exempt Transactions. –   
(1) Subject to the provisions of Subsection (2) hereof, the following 
transactions shall be exempt from the value-added tax:  
“(A) x x x  
“x x x”   
“(DD) REINSURANCE PREMIUMS COLLECTED BY NON-LIFE 
INSURANCE AND REINSURANCE COMPANIES.  
“x x x.”  
SEC. 10. Section 121 of the National Internal Revenue Code of 1997, as 
amended, is hereby further 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 PERFORMING QUASI-
BANKING FUNCTIONS AT THE RATE OF FIVE PERCENT (5%) ON 
INCOME SUCH AS INTEREST, COMMISSIONS, AND DISCOUNTS 
FROM LENDING ACTIVITIES AS WELL AS INCOME FROM 
FINANCIAL LEASING, ROYALTIES, RENTALS OF PROPERTY, 
REAL OR PERSONAL, PROFITS FROM SALE OR EXCHANGE 
INCLUDING GAINS DERIVED FROM SALE OR TRANSFER OF REAL 
PROPERTIES, NET TRADING GAINS WITHIN THE TAXABLE YEAR 
OF FOREIGN CURRENCY, DEBT SECURITIES, DERIVATIVES, AND 
OTHER SIMILAR FINANCIAL INSTRUMENTS, AND ALL OTHER 
ITEMS TREATED AS GROSS INCOME UNDER SECTION 32 OF 
THIS CODE, EXCEPT DIVIDENDS, EQUITY SHARES, AND NET 
INCOME OF SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO 
PERCENT (0%) TAX [in accordance with the following schedule]:   
[(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…….............................................5%]  
[Maturity period is more than five years ……….……………………1%]  
[(b) On dividends and equity shares and net income of subsidiaries.. 
0%]  
[(c) On royalties, rentals of property, real or personal, profits, from 
exchange and all other items treated as gross income under Section 32 
of this Code…7%]  
[(d) On net trading gains within the taxable year of foreign 
currency,    debt securities, derivatives, and other similar financial 
instruments…………………………….. 7%]  
[“Provided, however, That in case the maturity period referred to in 
paragraph (a) is shortened [thru] THROUGH pretermination, then the 
maturity period shall be reckoned to end as of the date of pretermination 
for purposes of classifying the transaction and the correct rate of tax shall 
be applied accordingly.]  
“Provided,[ finally,] That 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.   
“x x x.”   
SEC. 11. 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 LENDING ACTIVITIES, AS WELL AS INCOME FROM 
FINANCIAL LEASING, ROYALTIES, RENTALS OF PROPERTY, 
REAL OR PERSONAL, PROFITS FROM SALE OR EXCHANGE 
INCLUDING GAINS DERIVED FROM SALE OR TRANSFER OF REAL 
PROPERTIES, NET TRADING GAINS WITHIN THE TAXABLE YEAR 
OF FOREIGN CURRENCY, DEBT SECURITIES, DERIVATIVES, AND 
OTHER SIMILAR FINANCIAL INSTRUMENTS, UNDERWRITING 
FEES, SERVICE INCOME, MANAGEMENT FEES AND ALL OTHER 
ITEMS TREATED AS GROSS INCOME UNDER SECTION 32 OF 
THIS CODE, EXCEPT DIVIDENDS, EQUITY SHARES, AND NET 
INCOME OF SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO 
PERCENT (0%). [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 of the instruments from which 
such receipts are derived, in accordance with the following schedule:]  
[Maturity is five (5) years or less ………………………………….. 5%]  
[Maturity period is more than five (5) years .……………………… 1%]  
[Provided, however, That in case the maturity period is shortened 
thru pretermination, then the maturity period shall be reckoned to end as 


of the date of pretermination for purposes of classifying the transaction 
and the correct rate of tax shall be applied accordingly.]   
“FINANCIAL INTERMEDIARIES SUBJECT TO TAX UNDER 
THIS SECTION SHALL INCLUDE FINANCING COMPANIES, 
FINANCE 
LEASING 
COMPANIES, 
INVESTMENT 
HOUSES, 
PAWNSHOPS, FOREIGN EXCHANGE DEALERS AND MONEY 
BROKERS, TRUST ENTITIES, CREDIT CARD COMPANIES, 
LENDING 
INVESTORS, 
AND 
OTHER 
FINANCIAL 
INTERMEDIARIES 
EXCEPT 
BANKS 
AND 
NON-BANKS 
PERFORMING QUASI-BANKING FUNCTIONS WHICH SHALL BE 
TAXED UNDER SECTION 121 OF THIS CODE.   
“THE INCOME OF A PERSON OR COMPANY NOT LICENSED 
TO DO FINANCIAL INTERMEDIATION BUT WHICH ENGAGES IN 
FINANCIAL 
INTERMEDIATION 
SERVICES 
RELATED 
AND 
INCIDENTAL TO ITS MAIN ACTIVITY, AND DERIVES INCOME 
THEREFROM, SHALL BE SUBJECT TO THE TAX IMPOSED ON ITS 
PRINCIPAL ACTIVITY. TO BE CONSIDERED INCIDENTAL, THE 
INCOME FROM INTERMEDIATION SERVICES SHALL NOT 
EXCEED FIFTY PERCENT (50%) OF THE PERSON’S OR THE 
COMPANY’S TOTAL ANNUAL INCOME. IF THE TOTAL INCOME 
RECEIVED FROM FINANCIAL INTERMEDIATION IS MORE THAN 
FIFTY PERCENT (50%),THE TOTAL INCOME FROM SUCH 
FINANCIAL INTERMEDIATION SHALL BE SUBJECT TO TAX 
UNDER THIS SUBSECTION.  
“Provided, finally, That the generally accepted accounting principles 
as may be prescribed by the Securities and Exchange Commission, 
INSURANCE COMMISSION, BANGKO SENTRAL NG PILIPINAS, 
OR OTHER APPROPRIATE GOVERNMENT AGENCIES, AS THE 
CASE MAY BE, 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. 12. 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 Premiums. − There shall be 
collected from every person, company or corporation, (except purely 
cooperative companies or associations, AND MUTUAL AID OR 
BENEFIT  ASSOCIATIONS) doing life insurance business of any sort in 
the Philippines, A PREMIUM TAX AT THE FOLLOWING RATES:   
“(A) FOR LIFE INSURANCE, a tax of two percent (2%) of the 
total premium collected, whether such premiums are paid in money, 
notes, credits or any substitute for money; but premiums refunded within 
six (6) months after payment on account of rejection of risk or returned 
for other reason to a person insured shall not be included in the taxable 
receipts; nor shall any tax be paid upon reinsurance by a company IF 
THE TAX [that] has already BEEN paid [the tax]; nor upon premiums 


collected or received by any branch of a domestic corporation, firm or 
association doing business outside the Philippines on account of any life 
insurance of the insured who is a nonresident, if any tax on such premium 
is imposed by the foreign country where the branch is established nor 
upon premiums collected or received on account of any reinsurance, if 
the insured, in case of personal insurance, resides outside the Philippines, 
if any tax on such premiums is imposed by the foreign country where the 
original insurance has been issued or perfected; nor upon that portion of 
the premiums collected or received by the insurance companies on 
variable contracts AS DEFINED UNDER REPUBLIC ACT NO. 10607, 
OTHERWISE KNOWN AS THE ‘INSURANCE CODE OF THE 
PHILIPPINES, in excess of the amounts necessary to insure the lives of 
the variable contract owners.  
“(B) PERSONS DOING BUSINESS SIMILAR OR AKIN TO LIFE 
AND HEALTH INSURANCE SUCH AS PRE-NEED COMPANIES, 
PENSION 
FUND 
COMPANIES, 
HEALTH 
MAINTENANCE 
ORGANIZATIONS AND OTHER COMPANIES SIMILAR TO LIFE 
INSURANCE SHALL BE SUBJECT TO TAX UNDER THIS 
SUBSECTION AT THE RATE OF TWO PERCENT (2%) OF THE 
GROSS 
PREMIUM, 
PLAN 
PAYMENT, 
OR 
INSTALLMENT 
PAYMENTS COLLECTED WITHOUT ANY DEDUCTION FOR THE 
AMOUNTS REQUIRED BY THE APPROPRIATE GOVERNMENT 
REGULATORY AGENCIES TO BE EARMARKED FOR THE BENEFIT 
OF THE INSURED, OR PLANHOLDER.   
“x x x.”   
SEC. 13.  Section 130 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 130.  Filing of Return and Payment of Excise Tax on Domestic 
Products. –   
“(A) Persons Liable To File A Return, Filing Of Return On Removal And 
Payment Of Tax:  
“(1) Persons Liable To File A Return.  X X X  
“(2) Time For Filing Of Return And Payment Of The Tax.  X X X  
“(3) Place [of] FOR Filing of THE Return and Payment of the Tax. X X X  
“(4) Exceptions:  
“(a) X X X  
“(b) X X X  
“x x x.”  
SEC. 14. Section 175 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
SEC. 175. Stamp Tax on Sales, Agreements to Sell, Memoranda of 
Sales, Deliveries or Transfer of Shares or Certificates of Stock. — On all 
sales, or agreements to sell, or memoranda of sales, or deliveries, or 
transfer of shares or certificates of stock in any association, company, or 
corporation, or transfer of such securities by assignment in blank, or by 
delivery, or by any paper or agreement, or memorandum or other 
evidences of transfer or sale whether entitling the holder in any manner 
to the benefit of such stock, or to secure the future payment of money, 


or for the future transfer of any stock, there shall be collected a 
documentary stamp tax of [One peso and fifty centavos (₱1.50) on each 
Two hundred pesos (₱200), or fractional part thereof, of the par value 
of] SEVENTY-FIVE PERCENT OF ONE PERCENT (75% of 1% ) OF 
THE PAR VALUE (such stock: Provided, That only one tax shall be 
collected on each sale or transfer of stock from one person to another, 
regardless of whether or not a certificate of stock is issued, indorsed, or 
delivered in pursuance of such sale or transfer: and Provided, further, 
That in the case of stock without par value the amount of the 
documentary stamp tax herein prescribed shall be equivalent to fifty 
percent (50%) of the documentary stamp tax paid upon the original issue 
of said stock, PROVIDED, FINALLY, THAT, BEGINNING JANUARY 
1, 2028, THE SAID INSTRUMENTS, DOCUMENTS AND PAPERS 
SHALL BE EXEMPT FROM THE DOCUMENTARY STAMP TAX.  
SEC. 15. Section 177 of the National Internal Revenue Code of 1997, as 
amended, is hereby repealed.   
SEC. 16. Section 180 of the National Internal Revenue Code of 1997, as 
amended is hereby amended to read as follows:   
SEC. 180. Stamp Tax on All Bills of Exchange or Drafts. — On all 
bills of exchange (between points within the Philippines) or drafts, there 
shall be collected a documentary stamp tax of THIRTY PERCENT OF 
ONE PERCENT (30% OF 1%) [Sixty centavos (₱0.60) on each Two 
hundred pesos (₱200), or fractional part thereof, ] of the face value of 
any such bill of exchange or draft: PROVIDED, THAT, BEGINNING 
JANUARY 01, 2028, NO TAX SHALL BE IMPOSED UNDER THIS 
SECTION.  
SEC. 17. Section 181 of the National Internal Revenue Code of 1997, as 
amended, is 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 
NEGOTIABLE  bill of exchange [or order for the payment of money] 
purporting to be drawn in a foreign country but payable in the Philippines, 
there shall be collected a documentary stamp tax OF THIRTY PERCENT 
OF ONE PERCENT (30% OF 1%) [Sixty centavos (₱0.60) on each 
Two hundred pesos (P200), or 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. 18. Section 182 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 182. Stamp Tax on Foreign Bills of Exchange and Letters 
of             Credit. – On all foreign bills of exchange and [letter]LETTERS 
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 (30% OF 1%) [Sixty centavos (₱0.60) on each Two 
hundred pesos (₱200), 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[.]: PROVIDED, 
THAT A LETTER OF CREDIT ON WHICH THE DOCUMENTARY 
STAMP TAX IMPOSED UNDER THIS SECTION IS PAID UPON 
OPENING SHALL NOT BE SUBJECT AGAIN TO THE TAX IMPOSED 
BY SECTION 195 UPON AVAILMENT OF THE TRUST RECEIPT 
LINE WHERE THE PROPERTY SUBJECT OF THE LETTER OF 
CREDIT IS MADE A SECURITY FOR PAYMENT.”  
SEC. 19. Section 183 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 183.  Stamp Tax on Life AND HEALTH Insurance Policies[.], 
ON ANNUITIES, PRE-NEED, AND HEALTH MAINTENANCE 
ORGANIZATION PRODUCTS. – On all policies of insurance or other 
instruments by whatever name the same may be called, whereby any 
insurance, POLICY ON ANNUITY, PRE-NEED, OR HEALTH 
MAINTENANCE ORGANIZATION PRODUCT shall be made or 
renewed upon any life 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 OR OTHER INSTRUMENTS does not 
exceed ₱[100,000] 320,000 -  Exempt       
“If the amount of insurance OR OTHER INSTRUMENTS exceeds 
₱[100,000] 320,000 but does not exceed ₱[300,000] 960,000 
-  ₱20.00        
“If the amount of insurance OR OTHER INSTRUMENTS exceeds 
₱[300,000] 960,000 but does not exceed ₱[500,000] 1,600,000 
-  ₱50.00        
“If the amount of insurance OR OTHER INSTRUMENTS exceeds 
₱[500,000]1,600,000 
but 
does 
not 
exceed 
₱[750,000]2,400,000  -  ₱100.00        
“If the amount of insurance OR OTHER INSTRUMENTS exceeds 
₱[750,000]2,400,000 
but 
does 
not 
exceed 
₱[1,000,000]3,200,000 -  ₱150.00   
“If the amount of insurance OR OTHER INSTRUMENTS exceeds 
P[1,000,000]3,200,000  - ₱200.00  
SEC. 20. Section 184 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“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, [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 (₱0.50) on each Four pesos 
(₱4.00), or fractional part thereof,] TWELVE AND ONE-HALF 
PERCENT (12.5%) of the amount of premium charged: Provided, 
however, That no documentary stamp tax shall be collected on 
reinsurance contracts or on any instrument by which cession or 
acceptance of insurance risks under any reinsurance agreement is 
effected or recorded: PROVIDED, FURTHER, THAT SUCH TAX RATE 


SHALL 
BE 
IMPOSED 
ACCORDING 
TO 
THE 
FOLLOWING 
SCHEDULE:  
EFFECTIVITY  
DOCUMENTARY STAMP TAX RATE ON 
PROPERTY INSURANCE POLICIES  
JANUARY 1, 2026  
ELEVEN AND ONE-HALF PERCENT 
(11.5%)  
JANUARY 1, 2027  
TEN AND ONE-HALF PERCENT (10.5%)  
JANUARY 1, 2028  
NINE AND ONE-HALF PERCENT (9.5%)  
JANUARY 1, 2029  
EIGHT AND ONE-HALF PERCENT 
(8.5%)  
JANUARY 1, 2030  
SEVEN AND ONE-HALF PERCENT 
(7.5%)  
 
  
SEC. 21. Section 185 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 185. Stamp Tax on Fidelity Bonds and Other Insurance 
Policies. – On all policies of insurance or bonds or obligations of the 
nature of indemnity for loss, damage or liability made or renewed by any 
person, association, company or corporation transacting the business of 
accident, fidelity, employer’s liability, plate, glass, steam boiler, burglar, 
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 (₱0.50) on each 
Four pesos (₱4.00), or fractional part thereof,] TWELVE AND ONE-
HALF PERCENT (12.5%) of the premium charged[.]: PROVIDED, 
THAT SUCH TAX RATE SHALL BE IMPOSED ACCORDING TO THE 
FOLLOWING SCHEDULE:  
EFFECTIVITY  
DOCUMENTARY STAMP TAX RATE 
ON FIDELITY BONDS AND OTHER 
INSURANCE POLICIES  
JANUARY 1, 2026  
ELEVEN AND ONE-HALF PERCENT 
(11.5%)  
JANUARY 1, 2027  
TEN AND ONE-HALF PERCENT 
(10.5%)  
JANUARY 1, 2028  
NINE AND ONE-HALF PERCENT 
(9.5%)  
JANUARY 1, 2029  
EIGHT AND ONE-HALF PERCENT 
(8.5%)  
JANUARY 1, 2030  
SEVEN AND ONE-HALF PERCENT 
(7.5%)  


  
  
SEC. 22. Section 186 of the National Internal Revenue Code of 1997, as 
amended, is hereby repealed.  
SEC. 23. Section 187 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“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 [Thirty centavos (₱0.30) on each Four pesos (₱4.00), or 
fractional part thereof,] SEVEN AND ONE-HALF PERCENT (7.5%) of 
the premium charged.”  
SEC. 24. Section 188 of the National Internal Revenue Code of 1997, as 
amended as follows:   
“SEC. 188. Stamp Tax on Certificates. - On each certificate of 
damages or otherwise, and on every other certificate or document issued 
by any customs officer, marine surveyor, or other person acting as such, 
and on each certificate issued by a notary public, and on each certificate 
of any description required by law or by rules or regulations of a public 
office, or which is issued for the purpose of giving information, or 
establishing proof of a fact, and not otherwise specified herein, there shall 
be collected a documentary stamp tax of Thirty pesos (₱30.00): 
PROVIDED, THAT, BEGINNING JANUARY 01, 2028, STAMP TAX 
IMPOSED UNDER THIS SECTION SHALL BE EXEMPT.”  
SEC. 25. Section 190 of the National Internal Revenue Code of 1997, as 
amended, is hereby further amended as follows:  
“SEC. 190. Stamp Tax on Jai-Alai, Horse Racing Tickets, Lotto or Other 
Authorized Numbers Games. - On each jai-alai, horse race ticket, lotto, or other 
authorized number games, there shall be collected a documentary stamp tax 
of Twenty centavos (P0.20): Provided, That if the cost of the ticket exceeds 
One peso (P1.00), an additional tax of Twenty centavos (P0.20) on every One 
peso (P1.00), or fractional part thereof, shall be collected: PROVIDED, 
FURTHER, THAT THE DOCUMENTARY STAMP TAX ON LOTTO AND 
OTHER NUMBER GAMES CONDUCTED BY THE PHILIPPINE CHARITY 
SWEEPSTAKES OFFICE (PCSO) SHALL BE IMPOSED ON THE BETTOR 
AND NOT ON PCSO OR ANY OF ITS FUNDS.”  
SEC. 26. Section 192 of the National Internal Revenue Code of 1997, as 
amended, is hereby repealed.   
SEC. 27. Section 193 of the National Internal Revenue Code of 1997, as 
amended, is hereby repealed.  
SEC. 28. Section 194 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
 “SEC. 194. Stamp Tax on Leases and Other Hiring Agreements. — On 
each lease, agreement, memorandum, or contract for hire, use or rent of any 
lands or tenements, or portions thereof, there shall be collected a documentary 


stamp tax of [Six pesos (₱6.00) for the first Two thousand pesos (₱2,000), or 
fractional part thereof, and an additional Two pesos (₱2.00) for every One 
thousand pesos (₱1,000) or fractional part thereof, in excess of the first Two 
thousand pesos (₱2,000)] TWENTY PERCENT OF ONE PERCENT (20% OF 
1%) FOR EACH YEAR OF THE TERM OF SAID CONTRACT OR 
AGREEMENT:  PROVIDED, THAT, IF THE CONTRACT OR AGREEMENT 
STIPULATES A FIXED LEASE VALUE, THE DOCUMENTARY STAMP TAX 
SHALL BE COLLECTED for [each year of] the ENTIRE term of said contract 
or agreement: PROVIDED, FURTHER, THAT, IF THE CONTRACT OR 
AGREEMENT STIPULATES A VARIABLE LEASE VALUE OR BOTH A 
FIXED LEASE VALUE AND A VARIABLE LEASE VALUE, THE 
DOCUMENTARY STAMP TAX COMPUTED USING THE VARIABLE LEASE 
VALUE SHALL BE COLLECTED, INSTEAD, ON A MONTHLY BASIS: 
PROVIDED, FINALLY, THAT ANY ADVANCE RENT PAID SHALL 
AUTOMATICALLY BE SUBJECT TO DOCUMENTARY STAMP TAX, 
REGARDLESS OF WHETHER SUCH ADVANCE RENT IS COMPUTED ON 
THE BASIS OF A FIXED LEASE VALUE OR VARIABLE LEASE VALUE.  
“FOR PURPOSES OF THIS SECTION, THE TERM ‘FIXED LEASE 
VALUE’ REFERS TO A FIXED RENT AMOUNT, AS STIPULATED IN THE 
CONTRACT OR AGREEMENT, WHILE THE TERM ‘VARIABLE LEASE 
VALUE’ REFERS TO RENT COMPUTED AS A PERCENTAGE OF A BASE 
AGREED TO BY THE PARTIES, SUCH AS GROSS SALES, NET SALES, 
GROSS INCOME, NET INCOME AND THE LIKE.”  
SEC. 29. Section 195 of the National Internal Revenue Code of 1997, as 
amended, is 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:] OF THIRTY PERCENT OF ONE PERCENT (0.30%) 
OF THE AMOUNT SECURED.  
[(a)  When the amount secured does not exceed Five thousand 
pesos (₱5,000), Forty pesos (₱40.00).]  
[(b) On each Five thousand pesos (₱5,000), or fractional part 
thereof in excess of Five thousand pesos (₱5,000), an additional tax of 
Twenty pesos (₱20.00).]  
“x x x.”   
SEC. 30. Section 198 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“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 SUBJECT TO DOCUMENTARY STAMP TAX UNDER 
THIS TITLE by THE EXTENSION OF THE TERM OR MATURITY 
[altering or otherwise,] 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.”  
SEC. 31. Section 204 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 204. Authority of the Commissioner to Compromise, Abate 
and Refund or Credit Taxes. – The Commissioner may –  
“(A) Compromise the payment of any internal revenue tax, when:  
“x x x 
  
“Where the basic tax involved exceeds [One million pesos 
(₱1,000,000)] THREE MILLION PESOS (₱3,000,000) or where the 
settlement offered is less than the prescribed minimum rates, the 
compromise shall be subject to the approval of the Evaluation Board 
which shall be composed of the Commissioner and the four (4) Deputy 
Commissioners.  
“x x x.”   
SEC. 32. Section 222 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 222.  Exceptions as to Period of Limitation of Assessment 
and Collection of Taxes. –   
“(a) x x x  
“(b) If before the expiration of the time prescribed in Section 203 
for the assessment of the tax, [both the Commissioner and] the taxpayer 
[have agreed] APPLIES WITH THE COMMISSIONER in writing [to 
its] FOR assessment [after such time], the tax may be assessed within 
the period [agreed upon] SPECIFIED IN THE APPLICATION WHICH 
SHALL NOT EXCEED SIX (6) MONTHS AT ANY GIVEN TIME. [The] 
SUCH period [so agreed upon] may be extended by subsequent written 
[agreement] APPLICATION made before the expiration of the period 
previously [agreed upon] APPLIED FOR.  
“x x x.”   
SEC. 33. Section 255 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 255. Failure to File Return, Supply Correct and Accurate 
Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes 
Withheld on Compensation. – Any person required under this Code or by 
rules and regulations promulgated thereunder to pay any tax, make a 
return, keep any record, or supply correct and accurate information, who 
willfully fails to pay such tax, make such return, keep such record, or 
supply such correct and accurate information, or withhold or remit taxes 
withheld, or refund excess taxes withheld on compensation, at the time 
or times required by law or rules and regulations shall, in addition to other 
penalties provided by law, upon conviction thereof, be punished by a fine 
of not less than [Ten thousand pesos (₱10,000)] FORTY THOUSAND 
PESOS (P40,000) and [suffer] imprisonment of not less than one (1) 
year but not more than ten (10) years.  


“Any person who attempts to make it appear for any reason that 
[he] THE TAXPAYER or another has in fact filed a return or statement, 
or actually files a return or statement and subsequently withdraws the 
same return or statement after securing the official receiving seal or 
stamp of receipt of an internal revenue office wherein the same was 
actually filed shall, upon conviction therefor, be punished by a fine of not 
less than [Ten thousand pesos (₱10,000) but not more than Twenty 
thousand pesos (₱20,000)] FORTY THOUSAND PESOS (₱40,000) 
BUT NOT MORE THAN EIGHTY THOUSAND PESOS (₱80,000) and 
[suffer] imprisonment of not less than one (1) year but not more than 
three (3) years.”  
SEC. 34. Section 256 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 256. Penal Liability of Corporations. – Any corporation, 
association or general co-partnership liable for any of the acts or 
omissions penalized under this Code, in addition to the penalties imposed 
herein upon the responsible corporate officers, partners, or employees 
shall, upon conviction for each act or omission, be punished by a fine of 
not less than [Fifty thousand pesos (₱50,000) but not more than One 
hundred thousand pesos (₱100,000)] TWO HUNDRED THOUSAND 
PESOS (₱200,000) BUT NOT MORE THAN TWO MILLION EIGHT 
HUNDRED THOUSAND PESOS (₱2,800,000).”  
SEC. 35. Section 257 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 257. Penal Liability for Making False Entries, Records or 
Reports, or Using Falsified or Fake Accountable Forms.  –  
“(A) Any financial officer or independent Certified Public Accountant 
engaged to examine and audit books of accounts of taxpayers under 
Section 232(A) and any person under his direction who:  
“x x x 
  
“(B) Any person who:  
“(1) Not being an independent Certified Public Accountant according 
to Section 232(B) or a financial officer, examines and audits books of 
accounts of taxpayers; or  
“x x x 
  
“(8) Willfully attempts in any manner to evade or defeat any tax 
imposed under this Code, or knowingly uses fake or falsified revenue 
official receipts, Letters of Authority, certificates authorizing registration, 
Tax Credit Certificates, Tax Debit Memoranda and other accountable 
forms shall, upon conviction for each act or omission, be punished by a 
fine of not less than [Fifty thousand pesos (₱50,000) but not more than 
One hundred thousand pesos (₱100,000)] ONE HUNDRED THIRTY 
THOUSAND PESOS (₱130,000) BUT NOT MORE THAN TWO 
HUNDRED SEVENTY THOUSAND PESOS (₱270,000) and [suffer] 
imprisonment of not less than two (2) years but not more than six (6) 
years.   
“If the offender is a Certified Public Accountant, [his] THE 
OFFENDER’S [certificate as a Certified Public Accountant] LICENSE TO 


PRACTICE THE ACCOUNTING PROFESSION AND CERTIFICATE 
OF REGISTRATION shall be automatically revoked or cancelled upon 
conviction.  
“In the case of foreigners, conviction under this Code shall result in 
[his] THEIR immediate deportation after serving sentence, without 
further proceedings for deportation.”  
SEC. 36. Section 261 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 261.  Unlawful Use of Denatured Alcohol. – Any person who 
for the purpose of manufacturing any beverage, uses denatured alcohol 
or alcohol specially denatured to be used for motive power or withdrawn 
under bond for industrial uses or alcohol knowingly misrepresented to be 
denatured to be unfit for oral intake or who knowingly sells or offers for 
sale any beverage made in whole or in part from such alcohol or who 
uses such alcohol for the manufacture of liquid medicinal preparations 
taken internally, or knowingly sells or offers for sale such preparations 
containing as an ingredient such alcohol, shall, upon conviction for each 
act or omission be punished by a fine of not less than [Twenty thousand 
pesos (₱20,000) but not more than One hundred thousand pesos 
(₱100,000)] FIVE HUNDRED SIXTY THOUSAND PESOS (₱560,000) 
BUT NOT MORE THAN TWO MILLION EIGHT HUNDRED 
THOUSAND PESOS (₱2,800,000) and [suffer] imprisonment for a 
term of not less than six (6) years and one (1) day but not more than 
twelve (12) years.  
“x x x.”   
SEC. 37. Section 263 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 263. Unlawful Possession or Removal of Articles Subject 
to            Excise Tax without Payment of the Tax. – Any person who 
owns and/or is found in possession of imported articles subject to excise 
tax, the tax on which has not been paid in accordance with law, or any 
person who owns and/or is found in possession of imported tax-exempt 
articles other than those to whom they are legally issued shall be 
punished by:  
 “(a) A fine of not less than [One hundred thousand pesos 
(₱100,000.00)] THIRTY THOUSAND PESOS (₱30,000) but not more 
than [Two hundred thousand pesos (₱200,000.00)] THREE MILLION 
PESOS (₱3,000,000) and imprisonment of not less than sixty (60) days 
but not more than one hundred (100) days if the appraised value, to be 
determined in the manner prescribed in Republic Act No. 10863, 
otherwise known as the ‘Customs Modernization and Tariff Act (CMTA)’, 
including duties and taxes, of the articles does not exceed [Two hundred 
fifty thousand pesos (₱250,000.00)] TWO MILLION PESOS: Provided, 
That if the appraised value, including duties and taxes, does not exceed 
[Ten thousand pesos (₱10,000.00)] TWENTY THOUSAND PESOS, the 
penalty shall only be a fine in the amount of Twelve thousand pesos 
(₱12,000.00);  


(b) A fine of not less than [One million pesos (₱1,000,000.00)] 
THREE MILLION PESOS (₱3,000,000) but not more than [Two million 
pesos (₱2,000,000.00)] THIRTY MILLION PESOS (₱30,000,000) and 
imprisonment of not less than two (2) years but not more than four (4) 
years if the appraised value, to be determined in the manner prescribed in 
Republic Act No. 10863, otherwise known as the ‘Customs Modernization 
and Tariff Act (CMTA)" including duties and taxes, of the articles exceeds 
[Two hundred fifty thousand pesos (₱250,000.00)] TWO MILLION 
PESOS but does not exceed [Five hundred thousand pesos (₱500,000.00)] 
TWENTY MILLION PESOS;   
(c) A fine of not less than [Three million pesos (₱3,000,000.00)] 
THIRTY MILLION PESOS (₱30,000,000) but not more than [Four 
million pesos (₱4,000,000.00)] ONE HUNDRED FIFTY MILLION PESOS 
(₱150,000,000) and imprisonment of not less than four (4) years but not 
more than six (6) years, if the appraised value, to be determined in the 
manner prescribed in Republic Act No. 10863, otherwise known as the 
‘Customs Modernization and Tariff Act (CMTA)’, including duties and taxes 
of the articles is more than [Five hundred thousand pesos (₱500,000.00)] 
TWENTY MILLION PESOS but does not exceed [One million pesos 
(₱1,000,000.00)] ONE HUNDRED MILLION PESOS;   
(d) A fine of not less than [Ten million pesos (₱10,000,000.00)] 
ONE HUNDRED FIFTY MILLION PESOS (₱150,000,000) but not 
more than [Twenty million pesos (₱20,000,000.00)] THREE HUNDRED 
MILLION PESOS (P300,000,000) and imprisonment of not less than 
ten (10) years but not more than twelve (12) years, if the appraised value, 
to be determined in the manner prescribed in Republic Act No. 10863, 
otherwise known as the ‘Customs Modernization and Tariff Act (CMTA)’, 
including duties and taxes, of the articles [exceeds One million pesos 
(₱1,000,000.00)] MORE THAN ONE HUNDRED MILLION PESOS 
(₱100,000,000) BUT DOES NOT EXCEED TWO HUNDRED MILLION 
PESOS (₱200,000,000);  
“(E) A FINE OF NOT LESS THAN THREE HUNDRED MILLION 
PESOS (₱300,000,000) BUT NOT MORE THAN TWICE THE 
APPRAISED VALUE OF THE ARTICLE, AND IMPRISONMENT OF 
NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT MORE 
THAN TWELVE (12) YEARS, IF THE APPRAISED VALUE, TO BE 
DETERMINED IN THE MANNER PRESCRIBED IN REPUBLIC ACT 
NO.  
10863, 
OTHERWISE 
KNOWN 
AS 
THE 
CUSTOMS 
MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND 
TAXES, OF THE ARTICLES IS MORE THAN TWO HUNDRED 
MILLION PESOS (₱200,000,000);  
“x x x.”   
SEC. 38. Section 264 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 264.  Failure or Refusal to Issue Receipts or Sales or 
Commercial Invoices, Violations Related to the Printing of such Receipts 
or Invoices and Other Violations. –  


“(a) Any person who, being required under Section 237 to issue 
receipts or sales or commercial invoices, fails or refuses to issue such 
receipts or invoices, issues receipts or invoices that do not truly reflect 
and/or contain all the information required to be shown therein, or uses 
multiple or double receipts or invoices, shall, upon conviction for each act 
or omission, be punished by a fine of not less than [One thousand pesos 
(₱1,000) but not more than Fifty thousand pesos (₱50,000)] THIRTY 
THOUSAND PESOS (₱30,000) BUT NOT MORE THAN ONE 
MILLION FOUR HUNDRED THOUSAND PESOS (₱1,400,000) and 
[suffer] imprisonment of not less than two (2) years but not more than 
four (4) years.  
“x x x.”   
SEC. 39. Section 266 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 266. Failure to Obey Summons. – Any person who, 
AFTER  HAVING BEEN [being] duly summoned to appear to testify, or 
to appear and produce books of accounts, records, memoranda or other 
papers, or to furnish information as required under the pertinent 
provisions of this Code, neglects to appear or to produce such books of 
accounts, records, memoranda or other papers, or to furnish such 
information, shall, upon conviction, be punished by a fine of not less than 
[Five thousand pesos (₱5,000)] ONE HUNDRED THOUSAND PESOS 
(P100,000) but not more than [Ten thousand pesos (₱10,000)] THREE 
HUNDRED 
THOUSAND 
PESOS 
(₱300,000) 
and 
[suffer] 
imprisonment of not less than one (1) year but not more than two (2) 
years.”  
SEC. 40. Section 275 of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows:  
“SEC. 275. Violation of Other Provisions of this Code or Rules and 
Regulations in General. – Any person who WILFULLY violates any 
provision of this Code or any rule or regulation promulgated by the 
Department of Finance, for which no specific penalty is provided by law, 
shall, upon conviction for each act or omission, be punished by a fine of 
not more than [One thousand pesos (₱1,000)] THIRTY THOUSAND 
PESOS (₱30,000) or [suffer] imprisonment of not more than [six (6) 
months,] TWO (2) YEARS, or both.”  
SEC. 41. Implementing Rules and Regulations. – Within ninety (90) 
calendar days from the effectivity of this Act, 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, after due consultation with the private sector, shall issue rules and 
regulations for the effective implementation of this Act.  
SEC. 42. 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. 43. Repealing Clause. – The following laws or provisions are hereby 
repealed or modified accordingly and the persons and/or transactions affected herein 


are hereby made subject to applicable taxes under the National Internal Revenue Code 
of 1997, as amended:  
a) Section 3, insofar as the tax exemption on interest income, capital 
gains, and documentary stamp tax of bonds is concerned, of Republic Act No. 
3601, entitled “An Act Granting the National Irrigation Administration”; and  
b) Section 5(e), insofar as tax exemption on interest income, capital 
gains, and documentary stamp tax on bonds is concerned, of Republic Act No. 
6260, entitled “An Act Instituting a Coconut Investment Fund and Creating a 
Coconut Investment Company for the Administration Thereof”.  
All laws, decrees, executive orders, implementing rules and regulations, 
issuances, or any part thereof inconsistent with the provisions of this Act are deemed 
repealed, amended, or modified accordingly.  
SEC. 44. Transitory Provision. - The changes introduced under this Act shall 
apply to financial instruments issued on and transactions entered into on or after 
January 1, 2026. Any tax exemption and preferential rates on financial instruments 
issued or transactions entered into prior to the effectivity of this Act shall remain valid 
for the remaining maturity of the relevant agreement.  
SEC. 45. Effectivity. – This Act shall take effect on January 1, 2026, following 
its complete publication in the Official Gazette or in at least one (1) newspaper of 
general circulation.  
  
Approved,