Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

HouseBin_ 4925

Introduced,by Hon. Victoria G. Noel

EXPLANATORY NOTE

‘This bill seeks to amend Sections 24 and 27 of the National Internal Revenue
Code of 1997, as amended, by gradually reducing individual and corporate income taxes

over a three (3) year period beginning January 1, 2015.

One of the policies enshrined in the 1987 Philippine Constitution is the duty of the
state to promote a rising standard of living and an improved quality of life for all. Our
current income tax rates are proving to be inconsistent, if not contrary, to said policy.
Slowly, the salaried professionals, who comprise the middle class, are pulled down into
lower income groups because they are pushed up into higher income brackets. Thus,

there is a need to revisit and reduce the present income tax rates.

This bill is also filed in preparation for the Association of Southeast Asian
Nations (ASEAN) Integration. And while the ASEAN member countries are not

mandated to have a unifé

m rate for individual and corporate income taxes, most of the
member- states have begun to lower their individual and corporate income tax rates; the

Philippines, on the other hand, has the highest corporate income tax rate of 30%. With

the free flow of goods, services, investment, capital and of skilled labor, it is inevitable
that investors and taxpayers will bring their capital or services to a low-tax jurisdiction
Thus, our tax rates must be competitive enough not only to attract more investments and

human capital but, more importantly, prevent the migration of our own.

While there may be apprehensions over a set back in revenues as a result of this

proposal, the reduction in income taxes will eventually stimulate the economy, broaden

the tax base and create more employment. With higher take-home pay, Filipino fami

s
will have more money to spend on items that will generate more taxes, such as, Value
‘Added Tax (VAT) on goods and services. Improving the levels of disposable income
will clearly and inevitably increase economic activity. Likewise, the proposed reduction

in the rate of corporate income tax will create a more vibrant and robust economy for


business and enable companies to compete better in the global market. And, as has been
the experience both here and in other countries, lower tax rates would likewise lead to

greater compliance.

In view of the foregoing, immediate approval of this bill is earnestly sought.

Vietoria


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

SIXTEENTH CONGRE!
Second Regular Session

4925

House Bill

Introduced hy Hon. Vietoria G. Noel

AN ACT
AMENDING SECTIONS 24 AND 27 OF REPUBLIC ACT 8424, AS AMENDED,
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF
1997.

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION |, Section 24(A)(2) of the National Internal Revenue Code (NIRC) of 1997, as
amended, is hereby further amended to read as follows:

“See, 24, Income Tax Rates.

“(A) Rates of Income Tax on Individual Citizen and Individual Resident
Alien of the Philippines.

“(2) Rates of Tax on Taxable Income of Individuals. ~ The tax shall be
computed in accordance with and at the rates established in the following
schedule:

“[Not over P10,000 ...... 5%

“Over P10,000 but not over P500 + 10% of the excess

30,000 over P10,000

“Over P30,000 but not over ..........+ P2,500 + 15% of the excess
70,000 ‘over P30,000

“Over P70,000 but not over .... P8,500 + 20% of the excess
140,000 over P70,000

“Over P140,000 but not over . P22,500 + 25% of the excess

250,000 over P140,000

“Over P250,000 but not over ... . P50,000 + 30% of the excess

500,000 over P250,000


“Over P500,000. P125,000 + 32% of the excess
over P500,000)”
xxx
xxx,
[Taxable Income Beginning Beginning Beginning
| January 1,2015 | January 1,2016 | January 1, 2017
Not over P30,000 Exempt Exempt Exempt

“Over P30,000 but not over
70,000

P2500 + 15% of
excess over
P30,000

P2,500 + 13% of
excess over
30,000

P2,500 + 10% of
excess over
30,000

“Over P70,000 but not over
200,000

P8500 + 20% of
the excess. over
70,000

P7,700 + 18% of
the excess over
P 70,000

P6,50000 + 15% of
the excess over,
70,000

“Over P200,000 but not over
500,000

P34,500 + 25% of
the excess over
200,000

1P30,600 + 23% of

the excess over
200,000

P26,000 + 20% of
the excess. over
200,000

“Over P500,000 but not over
1,000,000

P109,500 + 30% of
the ‘excess over
500,000

99,600 + 25% of
the excess over
500,000

P86,000 + 22% of
the excess over
PS00,000

“Over P1,000,000

“259,500 + 32% of
the excess over
1,000,000

224,600 + 28% of

the excess over
1,000,000

P196,000 + 25% of |
the excess over
1,000,000"

SEC. 2, Section 27 (A) of the National Internal Revenue Code of 1997, 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%)] THIRTY PERCENT (30%) BEGINNING JANUARY
1, 2015 AND TWENTY-SEVEN PERCENT (27%) BEGINNING JANUARY 1,
2016 AND TWENTY-FIVE PERCENT (25%) BEGINNING JANUARY 1,

2017, is hereby imposed upon the taxable income derived during each taxable

year from all sources within and without the Philippines by every corporation, as
defined in section 22 (B) of this Code and taxable under this Title as a
corporation, organized in, or existing under the laws of the Philippines [:
Provided, That effective January 1, 2009, the rate of income tax shall be thirty

percent (30%).]”


si

©, 3, Implementing Rules and Regulations, - The Department of Finance, Bureau of
Internal Revenue and the National Tax Research Center shall promulgate, within sixty
(60) days from the effectivity of this Act, the Implementing Rules and Regulations (IRR)

that shall be necessary to implement the provisions of this Act.

Sec, 4, Separabi

Clause. ~ The provisions of this Act are hereby deemed separable, If

any provision thereof is declared invalid or unconstitutional, such invalidity or

unconstitutionality shall not affect the other provisions which shall remain in effect.

SEC. 5. Repealing Clause, - All laws, decrees, executive orders, rules and regulations or

parts thereof, which are inconsistent with the provisions of this Act are hereby repealed,

Ste, 6. Effe

this Act shall (ake effect fifteen (15) days following its complete

tivity. -
publication in the Official Gazette or in two (2) newspapers of general circulation

Approved,