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THENATIONAL INTERNAL REVENUE CODEOF THE PHILIPPINES[Tax Reform Act of 1997]
Republic Act No. 8424 AN ACT
AMENDING
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR
OTHER
PURPOSES
SECTION 1.
Short Title
- This Act shall be cited as the "Tax Reform Act of 1997"
SEC. 2.
State Policy. – It is hereby declared the policy of the State to promote sustainable
economic growth through the rationalization of the Philippine internal
revenue tax system, including tax administration; to provide, as much
as
possible, an equitable relief to a greater number of taxpayers in order
to improve levels of disposable income and increase economic activity;
and to create a robust environment for business to enable firms to
compete
better in the regional as well as the global market, at the same time
that
the State ensures that Government is able to provide for the needs of
those
under its jurisdiction and care.
SEC. 3.
Presidential Decree No. 1158, as amended by, among others, Presidential
Decree No. 1994 and Executive Order No. 273, otherwise known as the
National
Internal Revenue Code, is hereby further amended.
TITLE
IORGANIZATION
AND FUNCTION OF
THE
BUREAU
OF INTERNAL REVENUE
SECTION 1. Title
of the Code - This Code shall be known as the National Internal Revenue Code of
1997.
SEC. 2. Powers and Duties of the Bureau of Internal Revenue - The Bureau of Internal Revenue shall be under the supervision and
control
of the Department of Finance and its powers and duties shall comprehend
the assessment and collection of all national internal revenue taxes,
fees,
and charges, and the enforcement of all forfeitures, penalties, and
fines
connected therewith, including the execution of judgments in all cases
decided in its favor by the Court of Tax Appeals and the ordinary
courts.
The Bureau shall give effect to and administer the supervisory and
police
powers conferred to it by this Code or other laws.
SEC. 3. Chief Officials of the Bureau of Internal Revenue - The Bureau of Internal Revenue shall have a chief to be known
as
Commissioner of Internal Revenue, hereinafter referred to as the
Commissioner
and four (4) assistant chiefs to be known as Deputy Commissioners.
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax
Cases - The power to interpret the provisions of this Code and other
tax
laws shall be under the exclusive and original jurisdiction of the
Commissioner,
subject to review by the Secretary of Finance.
The power to
decide
disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters
arising
under this Code or other laws or portions thereof administered by the
Bureau
of Internal Revenue is vested in the Commissioner, subject to the
exclusive
appellate jurisdiction of the Court of Tax Appeals.
SEC. 5 Power of the Commissioner to Obtain Information, and to Summon,
Examine,
and Take Testimony of Persons - In ascertaining the correctness of any return, or in making a return
when none has been made, or in determining the liability of any person
for any internal revenue tax, or in collecting any such liability, or
in
evaluating tax compliance, the Commissioner is authorized:
(A)
To examine any book, paper, record, or other data which may be relevant
or material to
such inquiry;
(B) To obtain
on
a regular basis from any person other than the person whose internal
revenue tax liability is subject to audit or investigation, or from any
office or officer of the national and local governments, government agencies and
instrumentalities,
including the Bangko Sentral ng Pilipinas and government-owned or -controlled
corporations,
any
information such as, but not limited to, costs and volume of
production,
receipts or sales
and gross incomes of taxpayers, and the names, addresses, and financial
statements of
corporations, mutual fund companies, insurance companies, regional
operating headquarters of multinational companies, joint accounts, associations,
joint ventures of consortia and registered partnerships, and their members;
(C) To summon
the
person liable for tax or required to file a return, or any officer or
employee of such person, or any person having possession, custody, or
care
of the books of accounts and other accounting records containing entries
relating
to the business of the person liable for tax, or any other person, to appear
before
the Commissioner or his duly authorized representative at a time and place
specified
in the summons and to produce such books, papers, records, or other
data,
and
to give testimony;
(D) To take
such
testimony of the person concerned, under oath, as may be relevant or
material to such inquiry; and
(E) To cause
revenue
officers and employees to make a canvass from time to time of any revenue district or region and inquire after and concerning all persons
therein who may be liable to pay any internal revenue tax, and all persons owning or
having
the care, management or possession of any object with respect to which a tax is
imposed.
The
provisions
of the foregoing paragraphs notwithstanding, nothing in this Section
shall
be construed as granting the Commissioner the authority to inquire into
bank deposits other than as provided for in Section 6(F) of this Code.
SEC. 6. Power of the Commissioner to Make assessments and Prescribe
additional
Requirements for Tax Administration and Enforcement. - (A) Examination
of Returns and Determination of Tax Due - After a return has been
filed as required under the provisions of this Code, the Commissioner or his
duly
authorized representative may authorize the examination of any taxpayer and the
assessment of the correct amount of tax: Provided, however; That failure
to
file a return shall not
prevent the Commissioner from authorizing the examination of any
taxpayer.
Any return,
statement
of declaration filed in any office authorized to receive the same shall
not be withdrawn: Provided, That within three (3) years from
the
date of such filing, the same may be modified, changed, or amended: Provided,
further, That no notice for audit or investigation of such return,
statement or declaration has in the meantime been actually served upon
the taxpayer.
(B) Failure to
Submit
Required Returns, Statements, Reports and other Documents - When a report required by law as a basis for the assessment of any national
internal revenue
tax shall not be forthcoming within the time fixed by laws or rules and
regulations or
when there is reason to believe that any such report is false,
incomplete
or erroneous,
the Commissioner shall assess the proper tax on the best evidence
obtainable.
In case a
person
fails to file a required return or other document at the time
prescribed
by law, or willfully or otherwise files a false or fraudulent return or
other document, the Commissioner shall make or amend the return from
his
own knowledge and from such information as he can obtain through
testimony
or otherwise, which shall be prima facie correct and sufficient for all
legal purposes.
(C) Authority
to
Conduct Inventory-taking, surveillance and to Prescribe Presumptive
Gross
Sales and Receipts - The Commissioner may, at any time during the
taxable year, order
inventory-taking of goods of any taxpayer as a basis for determining
his
internal revenue
tax liabilities, or may place the business operations of any person,
natural
or juridical,
under observation or surveillance if there is reason to believe that
such
person is not
declaring his correct income, sales or receipts for internal revenue
tax
purposes.
The
findings may be used as the basis for assessing the taxes for the other
months or
quarters of the same or different taxable years and such assessment
shall
be deemed
prima facie correct.
When it is
found
that a person has failed to issue receipts and invoices in violation of
the requirements of Sections 113 and 237 of this Code, or when there is
reason to believe that the books of accounts or other records do not
correctly
reflect the declarations made or to be made in a return required to be
filed under the provisions of this Code, the Commissioner, after taking
into account the sales, receipts, income or other taxable base of other
persons engaged in similar businesses under similar situations or
circumstances
or after considering other relevant information may prescribe a minimum
amount of such gross receipts, sales and taxable base, and such amount
so prescribed shall be prima facie correct for purposes of determining
the internal revenue tax liabilities of such person.
(D) Authority
to
Terminate Taxable Period - When it shall come to the knowledge of
the
Commissioner that a taxpayer is retiring from business subject to tax,
or is intending to
leave the Philippines or to remove his property therefrom or to hide or
conceal his
property, or is performing any act tending to obstruct the proceedings
for the collection of
the tax for the past or current quarter or year or to render the same
totally
or partly
ineffective unless such proceedings are begun immediately, the
Commissioner
shall
declare the tax period of such taxpayer terminated at any time and
shall
send the
taxpayer a notice of such decision, together with a request for the
immediate
payment
of the tax for the period so declared terminated and the tax for the
preceding
year or
quarter, or such portion thereof as may be unpaid, and said taxes shall
be due and
payable immediately and shall be subject to all the penalties hereafter
prescribed,
unless paid within the time fixed in the demand made by the
Commissioner.
(E) Authority
of the Commissioner to Prescribe Real Property Values - The
Commissioner
is
hereby authorized to divide the Philippines into different zones or
areas
and shall, upon
consultation with competent appraisers both from the private and public
sectors,
determine the fair market value of real properties located in each zone
or area.
For
purposes of computing any internal revenue tax, the value of the
property
shall be,
whichever is the higher of:
(1) the fair
market
value as determined by the Commissioner, or
(2) the fair
market
value as shown in the schedule of values of the Provincial and City Assessors.
(F) Authority
of
the Commissioner to inquire into Bank Deposit Accounts -
Notwithstanding
any contrary provision of Republic Act No. 1405 and other general or
special
laws, the
Commissioner is hereby authorized to inquire into the bank deposits of:
(1) a
decedent
to determine his gross estate; and
(2) any
taxpayer
who has filed an application for compromise of his tax liability under Sec. 204 (A) (2) of this Code by reason of financial incapacity to pay
his tax liability.
In case a taxpayer
files an application to compromise the payment of his tax liabilities
on
his claim that his financial position demonstrates a clear inability to
pay the tax assessed, his application shall not be considered unless
and
until he waives in writing his privilege under Republic Act No. 1405 or
under other general or special laws, and such waiver shall constitute
the
authority of the Commissioner to inquire into the bank deposits of the
taxpayer.
(G) Authority
to
Accredit and Register Tax Agents - The Commissioner shall
accredit
and
register, based on their professional competence, integrity and moral
fitness,
individuals
and general professional partnerships and their representatives who
prepare
and file tax
returns, statements, reports, protests, and other papers with or who
appear
before, the
Bureau for taxpayers.
Within one hundred twenty (120) days from January
1, 1998, the
Commissioner shall create national and regional accreditation boards,
the
members of
which shall serve for three (3) years, and shall designate from among
the
senior officials
of the Bureau, one (1) chairman and two (2) members for each board,
subject
to such
rules and regulations as the Secretary of Finance shall promulgate upon
the
recommendation of the Commissioner.
Individuals
and
general professional partnerships and their representatives who are
denied
accreditation by the Commissioner and/or the national and regional
accreditation
boards may appeal such denial to the Secretary of Finance, who shall
rule
on the appeal within sixty (60) days from receipt of such appeal.
Failure
of the Secretary of Finance to rule on the Appeal within the prescribed
period shall be deemed as approval of the application for accreditation
of the appellant.
(H) Authority
of
the Commissioner to Prescribe Additional Procedural or Documentary
Requirements - The Commissioner may prescribe the manner of
compliance
with any
documentary or procedural requirement in connection with the submission
or preparation
of financial statements accompanying the tax returns.
SEC. 7. Authority of the Commissioner to Delegate Power - The Commissioner may delegate the powers vested in him under the
pertinent
provisions of this Code to any or such subordinate officials with the
rank
equivalent to a division chief or higher, subject to such limitations
and
restrictions as may be imposed under rules and regulations to be
promulgated
by the Secretary of finance, upon recommendation of the Commissioner: Provided,
however, That the following powers of the Commissioner shall not be
delegated:(a) The power
to
recommend the promulgation of rules and regulations by the Secretary of Finance;(b) The power
to
issue rulings of first impression or to reverse, revoke or modify any
existing ruling of the Bureau;(c) The power
to
compromise or abate, under Sec. 204 (A) and (B) of this Code, any tax
liability: Provided, however, That assessments issued by the
regional
offices involving
basic deficiency taxes of Five hundred thousand pesos (P500,000) or
less,
and minor criminal violations, as may be determined by rules and regulations to
be
promulgated by
the Secretary of finance, upon recommendation of the Commissioner,
discovered
by
regional and district officials, may be compromised by a regional
evaluation
board which
shall be composed of the Regional Director as Chairman, the Assistant
Regional
Director,
the heads of the Legal, Assessment and Collection Divisions and the
Revenue
District
Officer having jurisdiction over the taxpayer, as members; and(d) The power
to
assign or reassign internal revenue officers to establishments where
articles
subject to excise tax are produced or kept.
SEC. 8. Duty of the Commissioner to Ensure the Provision and
Distribution
of forms, Receipts, Certificates, and Appliances, and the
Acknowledgment
of Payment of Taxes. - (A) Provision
and Distribution to Proper Officials. - It shall be the duty of the
Commissioner, among other things, to prescribe, provide, and distribute
to the
proper officials the requisite licenses internal revenue stamps, labels
all other
forms, certificates, bonds, records, invoices, books, receipts,
instruments,
appliances and apparatus used in administering the laws falling within
the
jurisdiction of the Bureau.
For this purpose, internal revenue stamps,
strip
stamps and labels shall be caused by the Commissioner to be printed with
adequate security features.
Internal
revenue
stamps, whether of a bar code or fusion design, shall be firmly and
conspicuously
affixed on each pack of cigars and cigarettes subject to excise tax in
the manner and form as prescribed by the Commissioner, upon approval of
the Secretary of Finance.
(B) Receipts
for
Payment Made - It shall be the duty of the Commissioner or his
duly
authorized representative or an authorized agent bank to whom any
payment
of
any tax is made under the provision of this Code to acknowledge the
payment
of such tax, expressing the amount paid and the particular account for
which such
payment was made in a form and manner prescribed therefor by the
Commissioner.
SEC. 9. Internal Revenue Districts - With the approval of the Secretary of Finance, the Commissioner shall
divide the Philippines into such number of revenue districts as may
form
time to time be required for administrative purposes. Each of these
districts
shall be under the supervision of a Revenue District Officer.
SEC. 10. Revenue Regional Director. - Under rules and regulations, policies and standards formulated by the
Commissioner, with the approval of the Secretary of Finance, the
Revenue
Regional director shall, within the region and district offices under
his
jurisdiction, among others:
(a) Implement
laws,
policies, plans, programs, rules and regulations of the department or
agencies in the regional area;
(b)
Administer
and enforce internal revenue laws, and rules and regulations, including
the
assessment and collection of all internal revenue taxes, charges and
fees.
(c) Issue
Letters
of authority for the examination of taxpayers within the region;(d) Provide
economical,
efficient and effective service to the people in the area;(e)
Coordinate
with regional offices or other departments, bureaus and agencies in the
area;(f)
Coordinate
with local government units in the area;(g) Exercise
control
and supervision over the officers and employees within the region; and(h) Perform
such
other functions as may be provided by law and as may be delegated
by the Commissioner.
SEC. 11. Duties of Revenue District Officers and Other Internal Revenue
Officers - It shall be the duty of every Revenue District Officer or other
internal
revenue officers and employees to ensure that all laws, and rules and
regulations
affecting national internal revenue are faithfully executed and
complied
with, and to aid in the prevention, detection and punishment of frauds
of delinquencies in connection therewith.
It shall be the
duty
of every Revenue District Officer to examine the efficiency of all
officers
and employees of the Bureau of Internal Revenue under his supervision,
and to report in writing to the Commissioner, through the Regional
Director,
any neglect of duty, incompetency, delinquency, or malfeasance in
office
of any internal revenue officer of which he may obtain knowledge, with
a statement of all the facts and any evidence sustaining each case.
SEC. 12. Agents and Deputies for Collection of National Internal Revenue
Taxes - The following are hereby constituted agents of the Commissioner:(a) The
Commissioner
of Customs and his subordinates with respect to the collection of
national internal revenue taxes on imported goods;(b) The head
of
the appropriate government office and his subordinates with respect to
the
collection of energy tax; and(c) Banks
duly
accredited by the Commissioner with respect to receipt of payments
internal
revenue taxes authorized to be made thru bank.Any officer
or
employee of an authorized agent bank assigned to receive internal
revenue
tax payments and transmit tax returns or documents to the Bureau of
Internal
Revenue shall be subject to the same sanctions and penalties prescribed
in Sections 269 and 270 of this Code.
SEC. 13. Authority of a Revenue Offices. - subject to the rules and regulations to be prescribed by the
Secretary
of Finance, upon recommendation of the Commissioner, a Revenue Officer
assigned to perform assessment functions in any district may, pursuant
to a Letter of Authority issued by the Revenue Regional Director,
examine
taxpayers within the jurisdiction of the district in order to collect
the
correct amount of tax, or to recommend the assessment of any deficiency
tax due in the same manner that the said acts could have been performed
by the Revenue Regional Director himself.
SEC. 14. Authority of Officers to Administer Oaths and Take Testimony. - The Commissioner, Deputy Commissioners, Service Chiefs, Assistant
Service
Chiefs, Revenue Regional Directors, Assistant Revenue Regional
Directors,
Chiefs and Assistant Chiefs of Divisions, Revenue District Officers,
special
deputies of the Commissioner, internal revenue officers and any other
employee
of the Bureau thereunto especially deputized by the Commissioner shall
have the power to administer oaths and to take testimony in any
official
matter or investigation conducted by them regarding matters within the
jurisdiction of the Bureau.
SEC. 15. Authority of Internal Revenue Officers to Make Arrests and
Seizures. - The Commissioner, the Deputy Commissioners, the Revenue Regional
Directors, the Revenue District Officers and other internal revenue
officers
shall have authority to make arrests and seizures for the violation of
any penal law, rule or regulation administered by the Bureau of
Internal
Revenue.
Any person so arrested shall be forthwith brought before a
court,
there to be dealt with according to law.
SEC. 16. Assignment of Internal Revenue Officers Involved in Excise Tax
Functions
to Establishments Where Articles subject to Excise Tax are Produced or
Kept. - The Commissioner shall employ, assign, or reassign internal
revenue
officers involved in excise tax functions, as often as the exigencies
of
the revenue service may require, to establishments or places where
articles
subject to excise tax are produced or kept: Provided, That an
internal
revenue officer assigned to any such establishment shall in no case
stay
in his assignment for more than two (2) years, subject to rules and
regulations
to be prescribed by the Secretary of Finance, upon recommendation of
the
Commissioner.
SEC. 17. Assignment of Internal Revenue Officers and Other Employees to
Other
Duties. - The Commissioner may, subject to the provisions of Section 16
and
the laws on civil service, as well as the rules and regulations to be
prescribed
by the Secretary of Finance upon the recommendation of the
Commissioner,
assign or reassign internal revenue officers and employees of the
Bureau
of Internal Revenue, without change in their official rank and salary,
to other or special duties connected with the enforcement or
administration
of the revenue laws as the exigencies of the service may require: Provided,
That internal revenue officers assigned to perform assessment or
collection
function shall not remain in the same assignment for more than three
(3)
years; Provided, further, That assignment of internal revenue
officers
and employees of the Bureau to special duties shall not exceed one (1)
year.
SEC. 18. Reports of Violation of Laws. - When an internal revenue officer discovers evidence of a violation of
this Code or of any law, rule or regulations administered by the Bureau
of Internal Revenue of such character as to warrant the institution of
criminal proceedings, he shall immediately report the facts to the
Commissioner
through his immediate superior, giving the name and address of the
offender
and the names of the witnesses if possible: Provided, That in
urgent
cases, the Revenue Regional director or Revenue District Officer, as
the
case may be, may send the report to the corresponding prosecuting
officer
in the latter case, a copy of his report shall be sent to the
Commissioner.
SEC. 19. Contents of Commissioner's Annual Report. - The Annual Report of the Commissioner shall contain detailed
statements
of the collections of the Bureau with specifications of the sources of
revenue by type of tax, by manner of payment, by revenue region and by
industry group and its disbursements by classes of expenditures.
In case the
actual
collection exceeds or falls short of target as set in the annual
national
budget by fifteen percent (15%) or more, the Commissioner shall explain
the reason for such excess or shortfall.
SEC. 20. Submission of Report and Pertinent Information by the
Commissioner - (A) Submission
of Pertinent Information to Congress. - The provision of Section
270
of this
Code to the contrary notwithstanding, the Commissioner shall, upon
request
of
Congress and in aid of legislation, furnish its appropriate Committee
pertinent
information including but not limited to: industry audits, collection
performance
data,
status reports in criminal actions initiated against persons and
taxpayer's
returns:
Provided, however, That any return or return information
which can
be associated
with, or otherwise identify, directly or indirectly, a particular
taxpayer
shall be
furnished the appropriate Committee of Congress only when sitting in
Executive
Session Unless such taxpayer otherwise consents in writing to such
disclosure.
(B) Report
to
Oversight Committee. - The Commissioner shall, with reference to
Section
204
of this Code, submit to the Oversight Committee referred to in Section
290 hereof,
through the Chairmen of the Committee on Ways and Means of the Senate
and
House
of Representatives, a report on the exercise of his powers pursuant to
the said section,
every six (6) months of each calendar year.
SEC. 21. Sources of Revenue - The following taxes, fees and charges are deemed to be national
internal
revenue taxes:
(a) Income tax;
(b) Estate and
donor's
taxes;
(c) Value-added
tax;
(d) Other percentage
taxes;
(e) Excise taxes;
(f)
Documentary
stamp taxes; and
(g) Such other taxes
as are or hereafter may be imposed and collected by the Bureau of
Internal Revenue.
TITLE II
TAX ON INCOME
CHAPTER I
DEFINITIONS
SEC. 22Definitions - When used in this Title:
(A) The term "person"means an individual, a trust, estate or corporation cralaw:red
(B) The term "corporation"
shall include partnerships, no matter how created or organized,
joint-stock
companies, joint accounts (cuentas en participacion), association, or
insurance
companies, but does not include general professional partnerships and a
joint venture or consortium formed for the purpose of undertaking
construction
projects or engaging in petroleum, coal, geothermal and other energy
operations
pursuant to an operating consortium agreement under a service contract
with the Government"General professional partnerships" are
partnerships formed by persons for the sole purpose of exercising their
common profession, no part of the income of which is derived from
engaging
in any trade or business cralaw:red
(C) The term "domestic",
when applied to a corporation, means created or organized in the
Philippines
or under its laws cralaw:red
(D) The term "foreign",
when applied to a corporation, means a corporation which is not
domestic cralaw:red
(E) The term "nonresident
citizen" means:
(1) A citizen
of
the Philippines who establishes to the satisfaction of the Commissioner
the fact of his physical presence abroad with a definite intention to
reside
therein.
(2) A citizen
of
the Philippines who leaves the Philippines during the taxable year to
reside
abroad, either as an immigrant or for employment on a permanent basis.
(3) A citizen
of
the Philippines who works and derives income from abroad and whose
employment
thereat requires him to be physically present abroad most of the time
during
the taxable year.
(4) A citizen
who
has been previously considered as 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 year in which he arrives in the Philippines with respect to
his income derived from sources abroad until the date of his arrival in
the Philippines.
(5) The
taxpayer
shall submit proof to the Commissioner to show his intention of leaving
the Philippines to reside permanently abroad or to return to and reside
in the Philippines as the case may be for purpose of this Section.
(F) The term "resident
alien" means an individual whose residence is within the
Philippines
and who is not a citizen thereof.
(G) The term "nonresident
alien" means an individual whose residence is not within the
Philippines
and who is not a citizen thereof.
(H) The term
"resident foreign corporation" applies to a foreign corporation
engaged
in trade or business within the Philippines.
(I) The term 'nonresident
foreign corporation' applies to a foreign corporation not engaged
in
trade or business within the Philippines.
(J) The term "fiduciary"
means a guardian, trustee, executor, administrator, receiver,
conservator
or any person acting in any fiduciary capacity for any person.
(K) The term
"withholding agent" means any person required to deduct and
withhold
any tax under the provisions of Section 57.
(L) The term "shares
of stock" shall include shares of stock of a corporation, warrants
and/or options to purchase shares of stock, as well as units of
participation
in a partnership (except general professional partnerships), joint
stock
companies, joint accounts, 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 holders of a share/s of stock,
warrant/s
and/or option/s to purchase shares of stock of a corporation, 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 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.
(N) The term
"taxpayer"means any person subject to tax imposed by this
Title.
(O) The terms "including"and "includes", when used in a definition contained
in
this Title, shall not be deemed to exclude other things otherwise
within
the meaning of the term defined.
(P) The term
"taxable year" means the calendar year, or the fiscal year ending
during
such calendar year, upon the basis of which the net income is computed
under this Title.
'Taxable year' includes, in the case of a return made
for a fractional part of a year under the provisions of this Title or
under
rules and regulations prescribed by the Secretary of Finance, upon
recommendation
of the commissioner, the period for which such return is made.
(Q) The term
"fiscal year" means an accounting period of twelve (12) months
ending
on the last day of any month other than December.
(R) The terms
"paid or incurred" and 'paid or accrued' shall be construed
according
to the method of accounting upon the basis of which the net income is
computed
under this Title.
(S) The term "trade
or business" includes the performance of the functions of a public
office.
(T) The term
"securities" means 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 or indebtedness, issued by any
corporation,
including those issued by a government or political subdivision
thereof,
with interest coupons or in registered form.
(U) The term "dealer
in securities" means a merchant of stocks or securities, whether an
individual, partnership or corporation, with an established place of
business,
regularly engaged in the purchase of securities and the resale thereof
to customers; that is, one who, as a merchant, buys securities and
re-sells
them to customers with a view to the gains and profits that may be
derived
therefrom.
(V) The term
"bank"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.
(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.
(X) The term "quasi-banking
activities" means borrowing funds from twenty (20) or more personal
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 performing quasi-banking functions.
(Y) The term "deposit
substitutes" shall mean an alternative from 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
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: Provided,
however,
That debt instruments issued for interbank call 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.
(Z) The term "ordinary
income" includes any gain from the sale or exchange of property
which
is not a capital asset or property described in Section 39(A)(1).
Any
gain
from the sale or exchange of property which is treated or considered,
under
other provisions of this Title, as 'ordinary income' shall be treated
as
gain from the sale or exchange of property which is not a capital asset
as defined in Section 39(A)(1).
The term 'ordinary loss' includes any
loss
from the sale or exchange of property which is not a capital asset.
Any
loss from the sale or exchange of property which is treated or
considered,
under other provisions of this Title, as 'ordinary loss' shall be
treated
as loss from the sale or exchange of property which is not a capital
asset.
(AA) The term "rank
and file employees" shall mean all employees who are holding
neither
managerial nor supervisory position as defined under existing
provisions
of the Labor Code of the Philippines, as amended.
(BB) The term "mutual
fund company" shall mean an open-end and close-end investment
company
as defined under the Investment Company Act.
(CC) The term "trade,
business or profession" shall not include performance of services
by
the taxpayer as an employee.
(DD) The term "regional
or area headquarters" shall mean a branch established in the
Philippines
by multinational companies and which headquarters do not earn or derive
income from the Philippines and which act as supervisory,
communications
and coordinating center for their affiliates, subsidiaries, or branches
in the Asia-Pacific Region and other foreign markets.
(EE) The term "regional
operating headquarters" shall mean a branch established in the
Philippines
by multinational companies which are engaged in any of the following
services:
general administration and planning; business planning and
coordination;
sourcing and procurement of raw materials and components; corporate
finance
advisory services; marketing control and sales promotion; training and
personnel management; logistic services; research and development
services
and product development; technical support and maintenance; data
processing
and communications; and business development.
(FF) The term
"long-term
deposit or investment certificates" 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 nonbank financial intermediaries and finance
companies)
to individuals in denominations of Ten thousand pesos (P10,000) and
other
denominations as may be prescribed by the BS.
CHAPTER IIGENERAL
PRINCIPLES
SEC. 23. General Principles of Income Taxation in the Philippines- Except when otherwise provided in this Code:(A) A citizen of the
Philippines residing therein is taxable on all income derived from
sources
within and without the Philippines;(B) A nonresident
citizen
is taxable only on income derived from sources within the Philippines;(C) An individual
citizen
of the Philippines who is working and deriving income from abroad as an
overseas contract worker is taxable only on income derived from sources
within the Philippines: Provided, That a seaman who is a
citizen
of the Philippines and who receives compensation for services rendered
abroad as a member of the complement of a vessel engaged exclusively in
international trade shall be treated as an overseas contract worker;(D) An alien
individual,
whether a resident or not of the Philippines, is taxable only on income
derived from sources within the Philippines;(E) A domestic
corporation
is taxable on all income derived from sources within and without the
Philippines;
and
(F) A foreign
corporation,
whether engaged or not in trade or business in the Philippines, is
taxable
only on income derived from sources within the Philippines.
CHAPTER
IIITAX ON
INDIVIDUALS
SEC. 24. Income Tax Rates-
(A) Rates of Income
Tax on Individual Citizen and Individual Resident Alien of the
Philippines.
(1) An income tax is
hereby imposed:
(a) On the taxable
income defined in Section 31 of this Code, other than income subject to
tax under Subsections (B), (C) and (D) of this Section, derived for
each
taxable year from all sources within and without the Philippines be
every
individual citizen of the Philippines residing therein;
(b) On the taxable
income defined in Section 31 of this Code, other than income subject to
tax under Subsections (B), (C) and (D) of this Section, derived for
each
taxable year from all sources within the Philippines by an individual
citizen
of the Philippines who is residing outside of the Philippines including
overseas contract workers referred to in Subsection(C) of Section 23
hereof;
and
(c) On the taxable
income defined in Section 31 of this Code, other than income subject to
tax under Subsections (b), (C) and (D) of this Section, derived for
each
taxable year from all sources within the Philippines by an individual
alien
who is a resident of the Philippines.
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 P30,000.. |
P500+10% of the excess over P10,000 |
Over P30,000 but not over P70,000.. |
P2,500+15% of the excess over P30,000 |
Over P70,000 but not over P140,000. |
P8,500+20% of the excess over P70,000 |
Over P140,000 but not over P250,000. |
P22,500+25% of the excess over P140,000 |
Over P250,000 but not over P500,000. |
P50,000+30% of the excess over P250,000 |
Over P500,000 ..... |
P125,000+34% of the excess over P500,000 in 1998. |
Provided, That
effective January 1, 1999, the top marginal rate shall be thirty-three
percent (33%) and effective January 1, 2000, the said rate shall be
thirty-two
percent (32%)
For married
individuals,
the husband and wife, subject to the provision of Section 51 (D)
hereof,
shall compute separately their individual income tax based on their
respective
total taxable income: Provided, That if any income cannot be
definitely
attributed to or identified as income exclusively earned or realized by
either of the spouses, the same shall be divided equally between the
spouses
for the purpose of determining their respective taxable income.
(B) Rate of Tax on Certain
Passive Income
(1) Interests,
Royalties,
Prizes, and Other Winnings. - A final tax at the rate of twenty
percent
(20%) 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 of ten 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 Philippine
Charity
Sweepstakes and Lotto winnings), derived from sources within the
Philippines:
Provided, however, That interest income received by an
individual
taxpayer (except a nonresident individual) from a depository bank under
the expanded foreign 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: 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-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 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 following rates 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 companies 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 he 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 he is a member or co-venturer:
Six percent (6%)
beginning
January 1, 1998;
Eight percent (8%)
beginning January 1, 1999; and
Ten percent (10%
beginning
January 1, 2000
Provided, however, That the tax on dividends shall apply only on income earned on or after
January 1, 1998.
Income forming part of retained earnings as of
December
31, 1997 shall not, even if declared or distributed on or after January
1, 1998, be subject to this tax.
(C) Capital Gains from
Sale of Shares of Stock not Traded in the Stock Exchange - The
provisions
of Section 39(B) notwithstanding, 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
P100,000……………. 5%
On any amount in
excess
of P100,000………… 10%
(D) Capital Gains from
Sale of Real Property. -
(1) In General. - The provisions of Section 39(B) notwithstanding, 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.
(2) Exception - The provisions of paragraph (1) of this Subsection to the contrary
notwithstanding,
capital gains presumed to have been realized from the sale or
disposition
of their principal residence by natural persons, the proceeds of which
is fully utilized in acquiring or constructing a new principal
residence
within eighteen (18) calendar months from the date of sale or
disposition,
shall be exempt from the capital gains tax imposed under this
Subsection:
Provided, That the historical cost or adjusted basis of the
real
property sold or disposed shall be carried over to the new principal
residence
built or acquired: Provided, further, That the Commissioner
shall
have been duly notified by the taxpayer within thirty (30) days from
the
date of sale or disposition through a prescribed return of his
intention
to avail of the tax exemption herein mentioned: Provided, still
further,
That the said tax exemption can only be availed of once every ten (10)
years: Provided, finally, that if there is no full utilization
of
the proceeds of sale or disposition, the portion of the gain presumed
to
have been realized from the sale or disposition shall be subject to
capital
gains tax.
For this purpose, the gross selling price or fair market
value
at the time of sale, whichever is higher, shall be multiplied by a
fraction
which the unutilized amount bears to the gross selling price in order
to
determine the taxable portion and the tax prescribed under paragraph
(1)
of this Subsection shall be imposed thereon.
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 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) 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 Headquarters 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 headquarters 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 (P10,000) or less which shall be subject to tax
under
Subsection (B)(1) 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 of ten 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
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 - 20%.
(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) of Section 24.
(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, a tax equal to twenty-five percent (25%)
of such income.
Capital gains realized by a nonresident alien
individual
not engaged in trade or business in the Philippines from the sale of
shares
of stock in any domestic corporation and real property shall be subject
to the income tax prescribed under Subsections (C) and (D) of Section
24.
(C) Alien Individual
Employed by Regional or Area Headquarters and Regional Operating
Headquarters
of Multinational Companies. - There shall be levied, collected and
paid for each taxable year upon the gross income received by every
alien
individual employed by regional or area headquarters and regional
operating
headquarters established in the Philippines by multinational companies
as salaries, wages, annuities, compensation, remuneration and other
emoluments,
such as honoraria and allowances, from such regional or area
headquarters
and regional operating headquarters, a tax equal to fifteen percent
(15%)
of such gross income: Provided, however, That the same tax
treatment
shall apply to Filipinos employed and occupying the same position as
those
of aliens employed by these multinational companies.
For purposes of
this
Chapter, the term 'multinational company' means a foreign firm or
entity
engaged in international trade with affiliates or subsidiaries or
branch
offices in the Asia-Pacific Region and other foreign markets. cralaw:red
(D) Alien Individual
Employed by Offshore Banking Units. - There shall be levied,
collected
and paid for each taxable year upon the gross income received by every
alien individual employed by offshore banking units established in the
Philippines as salaries, wages, annuities, compensation, remuneration
and
other emoluments, such as honoraria and allowances, from such off-shore
banking units, a tax equal to fifteen percent (15%) of such gross
income:
Provided, however, That the same tax treatment shall apply to
Filipinos
employed and occupying the same positions as those of aliens employed
by
these offshore banking units. cralaw:red
(E) Alien Individual
Employed by Petroleum Service Contractor and Subcontractor - An
Alien
individual who is a permanent resident of a foreign country but who is
employed and assigned in the Philippines by a foreign service
contractor
or by a foreign service subcontractor engaged in petroleum operations
in
the Philippines shall be liable to a tax of fifteen percent (15%) of
the
salaries, wages, annuities, compensation, remuneration and other
emoluments,
such as honoraria and allowances, received from such contractor or
subcontractor:
Provided, however, That the same tax treatment shall apply to a
Filipino
employed and occupying the same position as an alien employed by
petroleum
service contractor and subcontractor. cralaw:red
Any income earned from
all other sources within the Philippines by the alien employees
referred
to under Subsections (C), (D) and (E) hereof shall be subject to the
pertinent
income tax, as the case may be, imposed under this Code.
SEC. 26. Tax Liability of Members of General Professional Partnerships. - A general professional partnership as such shall not be subject to
the
income tax imposed under this Chapter.
Persons engaging in business as
partners in a general professional partnership shall be liable for
income
tax only in their separate and individual capacities. cralaw:red
For purposes of computing
the distributive share of the partners, the net income of the
partnership
shall be computed in the same manner as a corporation.
Each partner shall report
as gross income his distributive share, actually or constructively
received,
in the net income of the partnership.
CHAPTER IVTAX ON
CORPORATIONS
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 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,
1998,
the rate of income tax shall be thirty-four percent (34%); effective
January
1, 1999, the rate shall be thirty-three percent (33%); and effective
January
1, 2000 and thereafter, the rate shall be thirty-two percent (32%). cralaw:red
In the case of corporations
adopting the fiscal-year accounting period, the taxable income shall be
computed without regard to the specific date when specific sales,
purchases
and other transactions occur.
Their income and expenses for the fiscal
year shall be deemed to have been earned and spent equally for each
month
of the period. cralaw:red
The reduced corporate
income tax rates shall be applied on the amount computed by multiplying
the number of months covered by the new rates within the fiscal year by
the taxable income of the corporation for the period, divided by twelvecralaw:redProvided, further,
That the President, upon the recommendation of the Secretary of
Finance,
may effective January 1, 2000, allow corporations the option to be
taxed
at fifteen percent (15%) of gross income as defined herein, after the
following
conditions have been satisfied:
(1) A tax effort
ratio
of twenty percent (20%) of Gross National Product (GNP);
(2) A ratio of forty
percent (40%) of income tax collection to total tax revenues;
(3) A VAT tax effort
of four percent (4%) of GNP; and
(4) A 0.9 percent
(0.9%)
ratio of the Consolidated Public Sector Financial Position (CPSFP) to
GNP.
The option to be taxed
based on gross income shall be available only to firms whose ratio of
cost
of sales to gross sales or receipts from all sources does not exceed
fifty-five
percent (55%).
The election of the
gross income tax option by the corporation shall be irrevocable for
three
(3) consecutive taxable years during which the corporation is qualified
under the scheme. cralaw:red
For purposes of this
Section, the term 'gross income' derived from business shall be
equivalent
to gross sales less sales returns, discounts and allowances and cost of
goods sold"Cost of goods sold" shall include all business
expenses
directly incurred to produce the merchandise to bring them to their
present
location and use. cralaw:red
For a trading or merchandising
concern, "cost of goods" sold shall include the invoice cost of
the goods sold, plus import duties, freight in transporting the goods
to
the place where the goods are actually sold, including insurance while
the goods are in transit. cralaw:red
For a manufacturing
concern, "cost of goods manufactured and sold" shall include
all
costs of production of finished goods, such as raw materials used,
direct
labor and manufacturing overhead, freight cost, insurance premiums and
other costs incurred to bring the raw materials to the factory or
warehouse. cralaw:red
In the case of taxpayers
engaged in the sale of service, 'gross income' means gross receipts
less
sales returns, allowances and discounts. cralaw:red
(B) Proprietary Educational
Institutions and Hospitals. - Proprietary educational institutions
and hospitals which are nonprofit shall pay a tax of ten percent (10%)
on their taxable income except those covered by Subsection (D) hereof:
Provided, that if the gross income from unrelated trade, business
or
other activity exceeds fifty percent (50%) of the total gross income
derived
by such educational institutions or hospitals from all sources, the tax
prescribed in Subsection (A) hereof shall be imposed on the entire
taxable
income.
For purposes of this Subsection, the term 'unrelated trade,
business
or other activity' means any trade, business or other activity, the
conduct
of which is not substantially related to the exercise or performance by
such educational institution or hospital of its primary purpose or
function.
A "Proprietary educational institution" is any private school
maintained
and administered by private individuals or groups with an issued permit
to operate from the Department of Education, Culture and Sports (DECS),
or the Commission on Higher Education (CHED), or the Technical
Education
and Skills Development Authority (TESDA), as the case may be, in
accordance
with existing laws and regulations.
(C) Government-owned
or Controlled-Corporations, Agencies or Instrumentalities - The
provisions
of existing special or general laws to the contrary notwithstanding,
all
corporations, agencies, or instrumentalities owned or controlled by the
Government, except the Government Service Insurance System (GSIS), the
Social Security System (SSS), the Philippine Health Insurance
Corporation
(PHIC), the Philippine Charity Sweepstakes Office (PCSO) and the
Philippine
Amusement and Gaming Corporation (PAGCOR), shall pay such rate of tax
upon
their taxable income as are imposed by this Section upon corporations
or
associations engaged in s similar business, industry, or activity. cralaw:red
(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 interest on currency bank deposit and yield or any other monetary
benefit
from deposit substitutes and from trust funds and similar arrangements
received by domestic corporations, and royalties, derived from sources
within the Philippines: Provided, however, That interest
income
derived by a domestic corporation from a depository bank under the
expanded
foreign 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.
(2) Capital
Gains
from the Sale of Shares of Stock Not Traded in the Stock Exchange. -
A final tax at the rates prescribed below 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:
Not over
P100,000………….5%
Amount in excess of
P100,000…………….10%
(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 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
depository
system units and other depository banks under the expanded foreign
currency
deposit system, including interest income from foreign currency loans
granted
by such depository banks under said expanded foreign currency deposit
system
to residents, shall be subject to a final income tax at the rate of ten
percent (10%) of such income.
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.
(5) 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 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 of
fair market value as determined in accordance with Section 6(E) of this
Code, whichever is higher, of such lands and/or buildings.
(E) Minimum
Corporate
Income Tax on Domestic Corporations. -
(1) Imposition of
Tax - A minimum corporate income tax of two percent (2%0 of the
gross
income as of the end of the taxable year, as defined herein, is hereby
imposed on a corporation taxable under this Title, beginning on the
fourth
taxable year immediately following the year in which such corporation
commenced
its business operations, when the minimum income tax is greater than
the
tax computed under Subsection (A) of this Section for the taxable year.
(2) Carry Forward
of Excess Minimum Tax. - Any excess of the minimum corporate income
tax over the normal income tax as computed under Subsection (A) of this
Section shall be carried forward and credited against the normal income
tax for the three (3) immediately succeeding taxable years.
(3) Relief
from
the Minimum Corporate Income Tax Under Certain Conditions. - The
Secretary
of Finance is hereby authorized to suspend the imposition of the
minimum
corporate income tax on any corporation which suffers losses on account
of prolonged labor dispute, or because of force majeure, or because of
legitimate business reverses.
The Secretary of
Finance
is hereby authorized to promulgate, upon recommendation of the
Commissioner,
the necessary rules and regulation that shall define the terms and
conditions
under which he may suspend the imposition of the minimum corporate
income
tax in a meritorious case.
(4) Gross
Income
Defined - For purposes of applying the minimum corporate income
tax
provided under Subsection (E) hereof, the term 'gross income' shall
mean
gross sales less sales returns, discounts and allowances and cost of
goods
sold"Cost of goods sold' shall include all business expenses
directly
incurred to produce the merchandise to bring them to their present
location
and use.
For a trading or
merchandising
concern, "cost of goods sold' shall include the invoice cost of
the goods sold, plus import duties, freight in transporting the goods
to
the place where the goods are actually sold including insurance while
the
goods are in transit.
For a
manufacturing
concern, cost of "goods manufactured and sold" shall include
all
costs of production of finished goods, such as raw materials used,
direct
labor and manufacturing overhead, freight cost, insurance premiums and
other costs incurred to bring the raw materials to the factory or
warehouse.
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,
"cost of services" shall include interest expense.
SEC. 28. Rates of Income Tax on Foreign Corporations. -
(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
equivalent
to thirty-five percent (35%) of the taxable income derived in the
preceding
taxable year from all sources within the Philippines: Provided, That
effective January 1, 1998, the rate of income tax shall be thirty-four
percent (34%); effective January 1, 1999, the rate shall be
thirty-three
percent (33%), and effective January 1, 2000 and thereafter, the rate
shall
be thirty-two percent (32%).
In the case of
corporations
adopting the fiscal-year accounting period, the taxable income shall be
computed without regard to the specific date when sales, purchases and
other transactions occur.
Their income and expenses for the fiscal year
shall be deemed to have been earned and spent equally for each month of
the period.
The reduced
corporate
income tax rates shall be applied on the amount computed by multiplying
the number of months covered by the new rates within the fiscal year by
the taxable income of the corporation for the period, divided by twelveProvided,
however,
That a resident foreign corporation shall be granted the option to be
taxed
at fifteen percent (15%) on gross income under the same conditions, as
provided in Section 27 (A).
(2) Minimum
Corporate
Income Tax on Resident Foreign Corporations. - A minimum corporate
income tax of two percent (2%) of gross income, as prescribed under
Section
27 (E) of this Code, shall be imposed, under the same conditions, on a
resident foreign corporation taxable under paragraph (1) of this
Subsection.
(3) International
Carrier. - An international carrier doing business in the
Philippines
shall pay a tax of two and one-half percent (2 1/2%) on its "Gross
Philippine
Billings" as defined hereunder:
(a)
International
Air Carrier. - "Gross Philippine Billings" refers to the amount of
gross revenue derived from carriage of persons, excess baggage, cargo
and
mail originating from the Philippines in a continuous and uninterrupted
flight, irrespective of the place of sale or issue and the place of
payment
of the ticket or passage document: Provided, That tickets
revalidated,
exchanged and/or indorsed to another international airline form part of
the Gross Philippine Billings if the passenger boards a plane in a port
or point in the Philippines: Provided, further, That for a
flight
which originates from the Philippines, but transshipment of passenger
takes
place at any port outside the Philippines on another airline, only the
aliquot portion of the cost of the ticket corresponding to the leg
flown
from the Philippines to the point of transshipment shall form part of
Gross
Philippine Billings.
(b)
International
Shipping. - "Gross Philippine Billings" means gross revenue
whether for passenger, cargo or mail originating from the Philippines
up
to final destination, regardless of the place of sale or payments of
the
passage or freight documents.
(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) to transact business with offshore banking units,
including
any interest income derived from foreign currency loans granted to
residents,
shall be subject to a final income tax at the rate of ten percent (10%)
of such income.
Any income of
nonresidents,
whether individuals or corporations, from transactions with said
offshore
banking units shall be exempt from income tax.
(5) Tax on
Branch
Profits Remittances. - Any profit remitted by a branch to its head
office shall be subject to a tax of fifteen (15%) which shall be based
on 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 Economic Zone Authority).
The tax shall be
collected
and paid in the same manner as 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.
(6) Regional or
Area Headquarters and Regional Operating Headquarters of Multinational
Companies. -
(a) Regional or
area
headquarters as defined in Section 22(DD) shall not be subject to
income
tax.
(b) Regional
operating
headquarters as defined in Section 22(EE) shall pay a tax of ten
percent
(10%) of their taxable income.
(7) Tax on
Certain
Incomes Received by a Resident Foreign Corporation. -
(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 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 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 - Income
derived
by a depository bank under the expanded foreign currency deposit system
from foreign currency transactions with 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, including interest income from foreign currency loans granted by
such depository banks under said expanded foreign currency deposit
system
to residents, shall be subject to a final income tax at the rate of ten
percent (10%) of such income.
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
P100,000………….…
5%
On any amount in excess
of P100,000…….10%
(d) Intercorporate
Dividends. - Dividends received by a resident foreign 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 subparagraphs (C) and (d): Provided, That effective
1,
1998, the rate of income tax shall be thirty-four percent (34%);
effective
January 1, 1999, the rate shall be thirty-three percent (33%); and,
effective
January 1, 2000 and thereafter, the rate shall be thirty-two percent
(32%).
(2) Nonresident
Cinematographic Film Owner, Lessor or Distributor. - A
cinematographic
film owner, lessor, or distributor shall pay a tax of twenty-five
percent
(25%) of its gross income from all sources within the Philippines.
(3) Nonresident
Owner or Lessor of Vessels Chartered by Philippine Nationals. - A
nonresident
owner or lessor of vessels shall be subject to a tax of four and
one-half
percent (4 1/2%) of gross rentals, lease or charter fees from leases or
charters to Filipino citizens or corporations, as approved by the
Maritime
Industry Authority.
(4) Nonresident
Owner or Lessor of Aircraft, Machineries and Other Equipment. -
Rentals,
charters and other fees derived by a nonresident lessor of aircraft,
machineries
and other equipment shall be subject to a tax of seven and one-half
percent
(7 1/2%) of gross rentals or fees.
(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
on or after August 1, 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%) for 1997, nineteen percent (19%) for 1998, eighteen
percent
(18%) for 1999, and seventeen percent (17%) thereafter, which
represents
the difference between the regular income tax of thirty-five percent
(35%)
in 1997, thirty-four percent (34%) in 1998, and thirty-three percent
(33%)
in 1999, and thirty-two percent (32%) thereafter on corporations and
the
fifteen percent (15%) tax on dividends as provided in this subparagraph;
(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
P100,000…………..5%
On any amount in excess
of P100,000………… 10%
SEC. 29. Imposition of Improperly Accumulated Earnings Tax
-
(A) In General. - In addition to other taxes imposed by this Title, there is hereby
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 (10%) of the improperly accumulated
taxable
income. cralaw:red
(B) Tax on Corporations
Subject to Improperly Accumulated Earnings Tax. -
(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 under this
Section
shall not apply to:.
(a) Publicly-held
corporations;
(b) Banks and other
nonbank financial intermediaries; and
(c) Insurance companies.
(C) Evidence of
Purpose
to Avoid Income Tax. -
(1) Prima
Facie
Evidence. - the fact that any corporation is a mere holding 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.
(D) Improperly
Accumulated
Taxable Income - For purposes of this Section, the term
'improperly
accumulated taxable income' means taxable income' adjusted by:
(1) Income exempt
from tax;
(2) Income excluded
from gross income;
(3) Income subject
to final tax; and
(4) The amount of net
operating loss carry-over deducted;
And reduced by the
sum of:
(1) Dividends
actually
or constructively paid; and
(2) Income tax paid
for the taxable yearProvided,
however,
That for corporations using the calendar year basis, the accumulated
earnings
under tax shall not apply on improperly accumulated income as of
December
31, 1997.
In the case of corporations adopting the fiscal year
accounting
period, the improperly accumulated income not subject to this tax,
shall
be reckoned, as of the end of the month comprising the twelve
(12)-month
period of fiscal year 1997-1998.
(E) Reasonable Needs
of the Business - For purposes of this Section, the term
'reasonable
needs of the business' includes the reasonably anticipated needs of the
business.
SEC. 30Exemptions from Tax on Corporations chanrobles virtual law library
- The following organizations shall not be taxed under this Title in
respect
to income received by them as such:
(A) Labor, agricultural
or horticultural organization not organized principally for profit;
(B) Mutual savings bank
not having a capital stock represented by shares, and cooperative bank
without capital stock organized and operated for mutual purposes and
without
profit;
(C) A beneficiary society,
order or association, operating fort he exclusive benefit of the
members
such as a fraternal organization operating under the lodge system, or
mutual
aid association or a nonstock corporation organized by employees
providing
for the payment of life, sickness, accident, or other benefits
exclusively
to the members of such society, order, or association, or nonstock
corporation
or their dependents;
(D) Cemetery company
owned and operated exclusively for the benefit of its members;
(E) Nonstock corporation
or association organized and operated exclusively for religious,
charitable,
scientific, athletic, or cultural purposes, or for the rehabilitation
of
veterans, no part of its net income or asset shall belong to or inures
to the benefit of any member, organizer, officer or any specific person;
(F) Business league
chamber of commerce, or board of trade, not organized for profit and no
part of the net income of which inures to the benefit of any private
stock-holder,
or individual;
(G) Civic league or
organization not organized for profit but operated exclusively for the
promotion of social welfare;
(H) A nonstock and nonprofit
educational institution;
(I) Government educational
institution;
(J) Farmers' or other
mutual typhoon or fire insurance company, mutual ditch or irrigation
company,
mutual or cooperative telephone company, or like organization of a
purely
local character, the income of which consists solely of assessments,
dues,
and fees collected from members for the sole purpose of meeting its
expenses;
and
(K) Farmers', fruit
growers', or like association organized and operated as a sales agent
for
the purpose of marketing the products of its members and turning back
to
them the proceeds of sales, less the necessary selling expenses on the
basis of the quantity of produce finished by them;
Notwithstanding the
provisions in the preceding paragraphs, the income of whatever kind and
character of the foregoing organizations from any of their properties,
real or personal, or from any of their activities conducted for profit
regardless of the disposition made of such income, shall be subject to
tax imposed under this Code.
CHAPTER VCOMPUTATION
OF TAXABLE INCOME
SEC. 31Taxable Income Defined - The
term taxable income means the pertinent items of gross income specified
in this Code, less the deductions and/or personal and additional
exemptions,
if any, authorized for such types of income by this Code or other
special
laws.
CHAPTER VICOMPUTATION
OF GROSS INCOME
SEC. 32Gross Income. -
(A) General
Definition. - Except when otherwise provided in this Title, gross income means all
income derived from whatever source, including (but not limited to) the
following items:
(1)
Compensation
for services in whatever form paid, including, but not limited to fees,
salaries,
wages, commissions, and similar items;
(2) Gross income
derived from the conduct of trade or business or the exercise of a
profession;
(3) Gains derived
from dealings in property;
(4) Interests;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Prizes and
winnings;
(10) Pensions; and
(11) Partner's
distributive
share from the net income of the general professional partnership.
(B) Exclusions
from Gross Income. - The following items shall not be included in gross income and shall
be
exempt from taxation under this title:
(1) Life
Insurance - The proceeds of life insurance policies paid to the heirs or
beneficiaries
upon the death of the insured, whether in a single sum or otherwise,
but
if such amounts are held by the insurer under an agreement to pay
interest
thereon, the interest payments shall be included in gross income.
(2) Amount
Received by Insured as Return of Premium - The amount received by
the insured, as a return of premiums paid by him under life insurance,
endowment, or annuity contracts, either during the term or at the
maturity
of the term mentioned in the contract or upon surrender of the contract.
(3) Gifts,
Bequests, and Devises. - The value of property acquired by gift,
bequest,
devise, or descent: Provided, however, That income from such property,
as well as gift, bequest, devise or descent of income from any
property,
in cases of transfers of divided interest, shall be included in gross
income.
(4) Compensation
for Injuries or Sickness - amounts received, through Accident or
Health
Insurance or under Workmen's Compensation Acts, as compensation for
personal
injuries or sickness, plus the amounts of any damages received, whether
by suit or agreement, on account of such injuries or sickness.
(5) Income
Exempt under Treaty. - Income of any kind, to the extent required
by
any treaty obligation binding upon the Government of the Philippines.
(6) Retirement
Benefits, Pensions, Gratuities, etc. -
(a)
Retirement
benefits received under Republic Act No. 7641 and those received by
officials
and employees of private firms, whether individual or corporate, in
accordance
with a reasonable private benefit plan maintained by the employer:
Provided,
That the retiring official or employee has been in the service of the
same
employer for at least ten (10) years and is not less than fifty (50)
years
of age at the time of his retirement: Provided, further, That
the
benefits granted under this subparagraph shall be availed of by an
official
or employee only once.
For purposes of this Subsection, the term
'reasonable
private benefit plan' means a pension, gratuity, stock bonus or
profit-sharing
plan maintained by an employer for the benefit of some or all of his
officials
or employees, wherein contributions are made by such employer for the
officials
or employees, or both, for the purpose of distributing to such
officials
and employees the earnings and principal of the fund thus accumulated,
and wherein its is provided in said plan that at no time shall any part
of the corpus or income of the fund be used for, or be diverted to, any
purpose other than for the exclusive benefit of the said officials and
employees.
(b) Any
amount
received by an official or employee or by his heirs from the employer
as
a consequence of separation of such official or employee from the
service
of the employer because of death sickness or other physical disability
or for any cause beyond the control of the said official or employee.
(c) The
provisions
of any existing law to the contrary notwithstanding, social security
benefits,
retirement gratuities, pensions and other similar benefits received by
resident or nonresident citizens of the Philippines or aliens who come
to reside permanently in the Philippines from foreign government
agencies
and other institutions, private or public.
(d) Payments
of benefits due or to become due to any person residing in the
Philippines
under the laws of the United States administered by the United States
Veterans
Administration.
(e) Benefits
received from or enjoyed under the Social Security System in accordance
with the provisions of Republic Act No. 8282.
(f) Benefits
received from the GSIS under Republic Act No. 8291, including
retirement
gratuity received by government officials and employees.
(7) Miscellaneous
Items. -
(a) Income
Derived by Foreign Government - Income derived from investments in
the Philippines in loans, stocks, bonds or other domestic securities,
or
from interest on deposits in banks in the Philippines by (i) foreign
governments,
(ii) financing institutions owned, controlled, or enjoying refinancing
from foreign governments, and (iii) international or regional financial
institutions established by foreign governments.
(b) Income
Derived by the Government or its Political Subdivisions. - Income
derived
from any public utility or from the exercise of any essential
governmental
function accruing to the Government of the Philippines or to any
political
subdivision thereof.
(c) Prizes
and Awards - Prizes and awards made primarily in recognition of
religious,
charitable, scientific, educational, artistic, literary, or civic
achievement
but only if:
(i) The
recipient
was selected without any action on his part to enter the contest or
proceeding; and
(ii) The
recipient
is not required to render substantial future services as a condition to
receiving the prize or award.
(d) Prizes
and Awards in Sports Competition. - All prizes and awards granted
to
athletes in local and international sports competitions and tournaments
whether held in the Philippines or abroad and sanctioned by their
national
sports associations.
(e) 13th
Month Pay and Other Benefits. - Gross benefits received by
officials
and employees of public and private entities: Provided, however,
That the total exclusion under this subparagraph shall not exceed
Thirty
thousand pesos (P30,000) which shall cover:
(i)
Benefits
received by officials and employees of the national and local government
pursuant to Republic Act No. 6686;
(ii)
Benefits
received by employees pursuant to Presidential Decree No. 851, as
amended by Memorandum Order No. 28, dated August 13, 1986;
(iii)
Benefits
received by officials and employees not covered by Presidential decree
No. 851, as amended by Memorandum Order No. 28, dated August 13, 1986; and
(iv) Other
benefits
such as productivity incentives and Christmas bonus: Provided,
further, That the ceiling of Thirty thousand pesos (P30,000) may be
increased
through rules and regulations issued by the Secretary of Finance, upon
recommendation of the Commissioner, after considering among others, the
effect on the same of the inflation rate at the end of the taxable year.
(f) GSIS,
SSS, Medicare and Other Contributions. - GSIS, SSS, Medicare and
Pag-ibig
contributions, and union dues of individuals.
(g) Gains
from the Sale of Bonds, Debentures or other Certificate of
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) years.
(h) Gains
from Redemption of Shares in Mutual Fund. - Gains realized by the
investor
upon redemption of shares of stock in a mutual fund company as defined
in Section 22 (BB) of this Code.
SEC. 33. Special Treatment of Fringe Benefit. -
(A) Imposition
of Tax.-
A final tax of thirty-four percent (34%) effective January 1, 1998;
thirty-three
percent (33%) effective January 1, 1999; and thirty-two percent (32%)
effective
January 1, 2000 and thereafter, is hereby imposed on the grossed-up
monetary
value of fringe benefit furnished or granted to the employee (except
rank
and file employees as defined herein) by the employer, whether an
individual
or a corporation (unless the fringe benefit is required by the nature
of,
or necessary to the trade, business or profession of the employer, or
when
the fringe benefit is for the convenience or advantage of the
employer).
The tax herein imposed is payable by the employer which tax shall be
paid
in the same manner as provided for under Section 57 (A) of this Code.
The
grossed-up monetary value of the fringe benefit shall be determined by
dividing the actual monetary value of the fringe benefit by sixty-six
percent
(66%) effective January 1, 1998; sixty-seven percent (67%) effective
January
1, 1999; and sixty-eight percent (68%) effective January 1, 2000 and
thereafter:
Provided, however, That fringe benefit furnished to employees
and
taxable under Subsections (B), (C), (D) and (E) of Section 25 shall be
taxed at the applicable rates imposed thereat: Provided, further,
That the grossed -Up value of the fringe benefit shall be determined by
dividing the actual monetary value of the fringe benefit by the
difference
between one hundred percent (100%) and the applicable rates of income
tax
under Subsections (B), (C), (D), and (E) of Section 25. cralaw:red
(B) Fringe
Benefit defined. -
For purposes of this Section, the term "fringe benefit" means
any
good, service or other benefit furnished or granted in cash or in kind
by an employer to an individual employee (except rank and file
employees
as defined herein) such as, but not limited to, the following:.
(1) Housing;
(2) Expense
account;
(3) Vehicle of
any kind;
(4) Household
personnel, such as maid, driver and others;
(5) Interest
on loan at less than market rate to the extent of the difference
between
the
market rate and actual rate granted;
(6) Membership
fees, dues and other expenses borne by the employer for the employee in
social and athletic clubs or other similar organizations;
(7) Expenses
for foreign travel;
(8) Holiday and
vacation expenses;
(9) Educational
assistance to the employee or his dependents; and
(10) Life or health
insurance and other non-life insurance premiums or similar amounts in
excess of what the law allows.
(C) Fringe
Benefits Not Taxable. - The following fringe benefits are not taxable under this Section:
(1) fringe
benefits
which are authorized and exempted from tax under special laws;
(2)
Contributions
of the employer for the benefit of the employee to retirement, insurance
and hospitalization benefit plans;
(3) Benefits
given to the rank and file employees, whether granted under a collective
bargaining agreement or not; and
(4) De minimis
benefits as defined in the rules and regulations to be promulgated by
the Secretary of Finance, upon recommendation of the Commissioner.
The Secretary of Finance
is hereby authorized to promulgate, upon recommendation of the
Commissioner,
such rules and regulations as are necessary to carry out efficiently
and
fairly the provisions of this Section, taking into account the peculiar
nature and special need of the trade, business or profession of the
employer.
CHAPTER
VIIALLOWABLE
DEDUCTIONS
SEC. 34. Deductions from Gross Income.
- Except for taxpayers earning compensation income arising from
personal
services rendered under an employer-employee relationship where no
deductions
shall be allowed under this Section other than under subsection (M)
hereof,
in computing taxable income subject to income tax under Sections 24
(A);
25 (A); 26; 27 (A), (B) and (C); and 28 (A) (1), 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 all the
ordinary
and necessary expenses paid or incurred during the taxable year in
carrying
on or which are directly attributable to, the development, management,
operation and/or conduct of the trade, business or exercise of a
profession,
including:
(i) A reasonable
allowance
for salaries, wages, and other forms of compensation for personal
services
actually rendered, including the grossed-up monetary value of fringe
benefit
furnished or granted by the employer to the employee: Provided, That
the final tax imposed under Section 33 hereof has been paid;
(ii) A reasonable
allowance for travel expenses, here and abroad, while away from home in
the pursuit of trade, business or profession;
(iii) A reasonable
allowance for rentals and/or other payments which are required as a
condition
for the continued use or possession, for purposes of the trade,
business
or profession, of property to which the taxpayer has not taken or is
not
taking title or in which he has no equity other than that of a lessee,
user or possessor;
(iv) A reasonable
allowance for entertainment, amusement and recreation expenses during
the
taxable year, that are directly connected to the development,
management
and operation of the trade, business or profession of the taxpayer, or
that are directly related to or in furtherance of the conduct of his or
its trade, business or exercise of a profession not to exceed such
ceilings
as the Secretary of Finance may, by rules and regulations prescribe,
upon
recommendation of the Commissioner, taking into account the needs as
well
as the special circumstances, nature and character of the industry,
trade,
business, or profession of the taxpayer: Provided, That any
expense
incurred for entertainment, amusement or recreation that is contrary to
law, morals public policy or public order shall in no case be allowed
as
a deduction.
(b) Substantiation
Requirements. - No deduction from gross income shall be 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 being deducted to the development, management,
operation and/or conduct of the trade, 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.
(2) Expenses
Allowable to Private Educational Institutions. - In addition to the expenses allowable as deductions under this
Chapter,
a private educational institution, referred to under Section 27 (B) of
this Code, may at its option elect either: (a) to deduct expenditures
otherwise
considered as capital outlays of depreciable assets incurred during the
taxable year for the expansion of school facilities or (b) to deduct
allowance
for depreciation thereof under Subsection (F) hereof.
(B) Interest.-
(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 an amount equal to the following percentages of the
interest
income subjected to final tax:
Forty-one percent
(41%) beginning January 1, 1998;
Thirty-nine
percent
(39%) beginning January 1, 1999; and
Thirty-eight
percent
(38%) beginning January 1, 2000;
(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 cash
basis
incurs an indebtedness on which an interest is paid in advance through
discount or otherwise: Provided, That such interest shall be allowed a
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. - At the option of the taxpayer, interest incurred to acquire property
used in trade business or exercise of a profession may be allowed as a
deduction or treated as a capital expenditure.
(C) Taxes. -
(1) In General. - Taxes paid or incurred within the taxable year in connection with the
taxpayer's profession, trade or business, shall be allowed as
deduction,
except
(a) The income tax
provided for under this Title;
(b) Income taxes
imposed
by authority of any foreign country; but this deduction shall be
allowed
in the case of a taxpayer who does not signify in his return his desire
to have to any extent the benefits of paragraph (3) of this subsection
(relating to credits for taxes of foreign countries);
(c) Estate and
donor's
taxes; and
(d) Taxes assessed
against local benefits of a kind tending to increase the value of the
property
assessed. Provided,
That
taxes allowed under this Subsection, when refunded or credited, shall
be
included as part of gross income in the year of receipt to the extent
of
the income tax benefit of said deduction.
(2) Limitations
on Deductions. - In the case of a nonresident alien individual engaged in trade or
business
in the Philippines and a resident foreign corporation, the deductions
for
taxes provided in paragraph (1) of this Subsection (C) shall be allowed
only if and to the extent that they are connected with income from
sources
within the Philippines.
(3) Credit
Against
Tax for Taxes of Foreign Countries. - If the taxpayer signifies in his return his desire to have the
benefits
of this paragraph, the tax imposed by this Title shall be credited with:
(a) Citizen and
Domestic Corporation. - In the case of a citizen of the Philippines
and of a domestic corporation, the amount of income taxes paid or
incurred
during the taxable year to any foreign country; and
(b) Partnerships
and Estates. - In the case of any such individual who is a member
of
a general professional partnership or a beneficiary of an estate or
trust,
his proportionate share of such taxes of the general professional
partnership
or the estate or trust paid or incurred during the taxable year to a
foreign
country, if his distributive share of the income of such partnership or
trust is reported for taxation under this Title.
An alien
individual
and a foreign corporation shall not be allowed the credits against the
tax for the taxes of foreign countries allowed under this paragraph.
(4) Limitations
on Credit. - The amount of the credit taken under this Section shall be subject to
each of the following limitations:
(a) The amount of
the credit in respect to the tax paid or incurred to any country shall
not exceed the same proportion of the tax against which such credit is
taken, which the taxpayer's taxable income from sources within such
country
under this Title bears to his entire taxable income for the same
taxable
year; and
(b) The total
amount
of the credit shall not exceed the same proportion of the tax against
which
such credit is taken, which the taxpayer's taxable income from sources
without the Philippines taxable under this Title bears to his entire
taxable
income for the same taxable year.
(5) Adjustments
on Payment of Incurred Taxes. - If accrued taxes when paid differ from the amounts claimed as credits
by the taxpayer, or if any tax paid is refunded in whole or in part,
the
taxpayer shall notify the Commissioner; who shall redetermine the
amount
of the tax for the year or years affected, and the amount of tax due
upon
such redetermination, if any, shall be paid by the taxpayer upon notice
and demand by the Commissioner, or the amount of tax overpaid, if any,
shall be credited or refunded to the taxpayer.
In the case of such a
tax
incurred but not paid, the Commissioner as a condition precedent to the
allowance of this credit may require the taxpayer to give a bond with
sureties
satisfactory to and to be approved by the Commissioner in such sum as
he
may require, conditioned upon the payment by the taxpayer of any amount
of tax found due upon any such redetermination.
The bond herein
prescribed
shall contain such further conditions as the Commissioner may require.
(6) Year in
Which Credit Taken. - The credits provided for in Subsection (C)(3) of this Section may, at
the option of the taxpayer and irrespective of the method of accounting
employed in keeping his books, be taken in the year which the taxes of
the foreign country were incurred, subject, however, to the conditions
prescribed in Subsection (C)(5) of this Section.
If the taxpayer elects
to take such credits in the year in which the taxes of the foreign
country
accrued, the credits for all subsequent years shall be taken upon the
same
basis and no portion of any such taxes shall be allowed as a deduction
in the same or any succeeding year.
(7) Proof
of
Credits. - The credits provided in Subsection (C)(3) hereof shall be allowed
only
if the taxpayer establishes to the satisfaction of the Commissioner the
following:
(a) The total
amount
of income derived from sources without the Philippines;
(b) The amount of
income derived from each country, the tax paid or incurred to which is
claimed as a credit under said paragraph, such amount to be determined
under rules and regulations prescribed by the Secretary of Finance; and
(c) All other
information
necessary for the verification and computation of such credits.
(D) Losses. -
(1) In
General. -
Losses actually sustained during the taxable year and not compensated
for
by insurance or other forms of indemnity shall be allowed as deductions:
(a) If incurred in
trade, profession or business;
(b) Of property
connected
with the trade, business or profession, if the loss arises from fires,
storms, shipwreck, or other casualties, or from robbery, theft or
embezzlement.
The Secretary of
Finance,
upon recommendation of the Commissioner, is hereby authorized to
promulgate
rules and regulations prescribing, among other things, the time and
manner
by which the taxpayer shall submit a declaration of loss sustained from
casualty or from robbery, theft or embezzlement during the taxable
year:
Provided, however, That the time limit to be so prescribed in
the
rules and regulations shall not be less than thirty (30) days nor more
than ninety (90) days from the date of discovery of the casualty or
robbery,
theft or embezzlement giving rise to the loss.
(c) No loss shall
be allowed as a deduction under this Subsection if at the time of the
filing
of the return, such loss has been claimed as a deduction for estate tax
purposes in the estate tax return.
(2) Proof of
Loss. - In the case of a nonresident alien individual or foreign
corporation,
the losses deductible shall be those actually sustained during the year
incurred in business, trade or exercise of a profession conducted
within
the Philippines, when such losses are not compensated for by insurance
or other forms of indemnity.
The Secretary of Finance, upon
recommendation
of the Commissioner, is hereby authorized to promulgate rules and
regulations
prescribing, among other things, the time and manner by which the
taxpayer
shall submit a declaration of loss sustained from casualty or from
robbery,
theft or embezzlement during the taxable year: Provided, That
the
time to be so prescribed in the rules and regulations shall not be less
than thirty (30) days nor more than ninety (90) days from the date of
discovery
of the casualty or robbery, theft or embezzlement giving rise to the
loss;
and
(3) Net
Operating
Loss Carry-Over. - The net operating loss of the business or enterprise for any taxable
year immediately preceding the current taxable year, which had not been
previously offset as deduction from gross income shall be carried over
as a deduction from gross income for the next three (3) consecutive
taxable
years immediately following the year of such loss: Provided,
however,
That any net loss incurred in a taxable year during which the
taxpayer
was exempt from income tax shall not be allowed as a deduction under
this
Subsection: Provided, further, That a net operating loss
carry-over
shall be allowed only if there has been no substantial change in the
ownership
of the business or enterprise in that -
(i) Not less than
seventy-five percent (75%) in nominal value of outstanding issued
shares, if the business is in the name of a corporation, is held by or
on behalf of
the same persons; or
(ii) Not less than
seventy-five percent (75%) of the paid up capital of the corporation,
if the business is in the name of a corporation, is held by or on
behalf
of the same
persons.
For purposes of
this
subsection, the term "not operating loss" shall mean the excess
of allowable deduction over gross income of the business in a taxable
year. Provided,
That
for mines other than oil and gas wells, a net operating loss without
the
benefit of incentives provided for under Executive Order No. 226, as
amended,
otherwise known as the Omnibus Investments Code of 1987, incurred in
any
of the first ten (10) years of operation may be carried over as a
deduction
from taxable income for the next five (5) years immediately following
the
year of such loss.
The entire amount of the loss shall be carried over
to the first of the five (5) taxable years following the loss, and any
portion of such loss which exceeds, the taxable income of such first
year
shall be deducted in like manner form the taxable income of the next
remaining
four (4) years.
(4) Capital
Losses. -
(a) Limitation. - Loss from sales or Exchanges of capital assets shall be allowed only
to the extent provided in Section 39.
(b) Securities
Becoming Worthless. - If securities as defined in Section 22 (T)
become
worthless during the taxable year and are capital assets, the loss
resulting
therefrom shall, for purposes of this Title, be considered as a loss
from
the sale or exchange, on the last day of such taxable year, of capital
assets.
(5) Losses
From
Wash Sales of Stock or Securities. - Losses from "wash sales" of stock or securities as provided
in
Section 38.
(6) Wagering
Losses. - Losses from wagering transactions shall b allowed only to the extent
of the gains from such transactions.
(7) Abandonment
Losses. -
(a) In the event a
contract area where petroleum operations are undertaken is partially or
wholly abandoned, all accumulated exploration and development
expenditures
pertaining thereto shall be allowed as a deduction: Provided,
That
accumulated expenditures incurred in that area prior to January 1, 1979
shall be allowed as a deduction only from any income derived from the
same
contract area.
In all cases, notices of abandonment shall be filed with
the Commissioner.
(b) In case a
producing
well is subsequently abandoned, the unamortized costs thereof, as well
as the undepreciated costs of equipment directly used therein, shall be
allowed as a deduction in the year such well, equipment or facility is
abandoned by the contractor: Provided, That if such abandoned
well
is reentered and production is resumed, or if such equipment or
facility
is restored into service, the said costs shall be included as part of
gross
income in the year of resumption or restoration and shall be amortized
or depreciated, as the case may be.
(E) Bad Debts. -
(1) In
General. - Debts due to the taxpayer actually ascertained to be worthless and
charged
off within the taxable year except those not connected with profession,
trade or business and those sustained in a transaction entered into
between
parties mentioned under Section 36 (B) of this Code: Provided, That
recovery
of bad debts previously allowed as deduction in the preceding years
shall
be included as part of the gross income in the year of recovery to the
extent of the income tax benefit of said deduction.
(2) Securities
Becoming Worthless. - If securities, as defined in Section 22 (T), 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, on the last
day
of such taxable year, of capital assets.
(F) Depreciation. -
(1) General
Rule. - There shall be allowed as a depreciation deduction a reasonable
allowance
for the exhaustion, wear and tear (including reasonable allowance for
obsolescence)
of property used in the trade or business.
In the case of property held
by one person for life with remainder to another person, the deduction
shall be computed as if the life tenant were the absolute owner of the
property and shall be allowed to the life tenant.
In the case of
property
held in trust, the allowable deduction shall be apportioned between the
income beneficiaries and the trustees in accordance with the pertinent
provisions of the instrument creating the trust, or in the absence of
such
provisions, on the basis of the trust income allowable to each.
(2) Use of
Certain
Methods and Rates. - The term "reasonable allowance" as used in the preceding
paragraph
shall include, but not limited to, an allowance computed in accordance
with rules and regulations prescribed by the Secretary of Finance, upon
recommendation of the Commissioner, under any of the following methods:
(a) The
straight-line
method;
(b) Declining-balance
method, using a rate not exceeding twice the rate which would
have been used had the annual allowance been computed under the method
described in Subsection (F) (1);
(c) The
sum-of-the-years-digit
method; and
(d) any other method
which may be prescribed by the Secretary of Finance upon
recommendation of the Commissioner.
(3) Agreement
as to Useful Life on Which Depreciation Rate is Based. - Where under rules and regulations prescribed by the Secretary of
Finance upon recommendation of the Commissioner, the taxpayer and the
Commissioner
have entered into an agreement in writing specifically dealing with the
useful life and rate of depreciation of any property, the rate so
agreed
upon shall be binding on both the taxpayer and the national Government
in the absence of facts and circumstances not taken into consideration
during the adoption of such agreement.
The responsibility of
establishing
the existence of such facts and circumstances shall rest with the party
initiating the modification.
Any change in the agreed rate and useful
life
of the depreciable property as specified in the agreement shall not be
effective for taxable years prior to the taxable year in which notice
in
writing by certified mail or registered mail is served by the party
initiating
such change to the other party to the agreement:
Provided,
however,
that where the taxpayer has adopted such useful life and depreciation
rate
for any depreciable and claimed the depreciation expenses as deduction
from his gross income, without any written objection on the part of the
Commissioner or his duly authorized representatives, the aforesaid
useful
life and depreciation rate so adopted by the taxpayer for the aforesaid
depreciable asset shall be considered binding for purposes of this
Subsection.
(4) Depreciation
of Properties Used in Petroleum Operations. - An allowance for depreciation in respect of all properties directly
related
to production of petroleum initially placed in service in a taxable
year
shall be allowed under the straight-line or declining-balance method of
depreciation at the option of the service contractor.
However, if the
service
contractor initially elects the declining-balance method, it may at any
subsequent date, shift to the straight-line method.
The useful life of
properties used in or related to production of petroleum shall be ten
(10)
years of such shorter life as may be permitted by the Commissioner.
Properties not
used
directly in the production of petroleum shall be depreciated under the
straight-line method on the basis of an estimated useful life of five
(5)
years.
(5)
Depreciation
of Properties Used in Mining Operations.
- an allowance for depreciation in respect of all properties used in
mining
operations other than petroleum operations, shall be computed as
follows:
(a) At the normal
rate of depreciation if the expected life is ten (10) years or less; or
(b) Depreciated
over
any number of years between five (5) years and the expected life if the
latter is more than ten (10) years, and the depreciation thereon
allowed
as deduction from taxable income: Provided, That the contractor
notifies the Commissioner at the beginning of the depreciation period
which
depreciation rate allowed by this Section will be used.
(6)
Depreciation
Deductible by Nonresident Aliens Engaged in Trade or Business or
Resident
Foreign Corporations. - In the case of a nonresident alien individual engaged in trade or
business
or resident foreign corporation, a reasonable allowance for the
deterioration
of Property arising out of its use or employment or its non-use in the
business trade or profession shall be permitted only when such property
is located in the Philippines.
(G) Depletion of
Oil and Gas Wells and Mines. -
(1) In
General. - In the case of oil and gas wells or mines, a reasonable allowance for
depletion or amortization computed in accordance with the
cost-depletion
method shall be granted under rules and regulations to be prescribed by
the Secretary of finance, upon recommendation of the Commissioner. Provided,
That when the allowance for depletion shall equal the capital
invested
no further allowance shall be granted: Provided, further, That
after
production in commercial quantities has commenced, certain intangible
exploration
and development drilling costs: (a) shall be deductible in the year
incurred
if such expenditures are incurred for non-producing wells and/or mines,
or (b) shall be deductible in full in the year paid or incurred or at
the
election of the taxpayer, may be capitalized and amortized if such
expenditures
incurred are for producing wells and/or mines in the same contract area. "Intangible
costs
in petroleum operations" refers to any cost incurred in petroleum
operations
which in itself has no salvage value and which is incidental to and
necessary
for the drilling of wells and preparation of wells for the production
of
petroleum: Provided, That said costs shall not pertain to the
acquisition
or improvement of property of a character subject to the allowance for
depreciation except that the allowances for depreciation on such
property
shall be deductible under this Subsection.
Any intangible
exploration,
drilling and development expenses allowed as a deduction in computing
taxable
income during the year shall not be taken into consideration in
computing
the adjusted cost basis for the purpose of computing allowable cost
depletion.
(2) Election
to Deduct Exploration and Development Expenditures. - In computing taxable income from mining operations, the taxpayer
may at his option, deduct exploration and development expenditures
accumulated
as cost or adjusted basis for cost depletion as of date of prospecting,
as well as exploration and development expenditures paid or incurred
during
the taxable year: Provided, That the amount deductible for
exploration
and development expenditures shall not exceed twenty-five percent (25%)
of the net income from mining operations computed without the benefit
of
any tax incentives under existing laws.
The actual exploration and
development
expenditures minus twenty-five percent (25%) of the net income from
mining
shall be carried forward to the succeeding years until fully deducted.
The election by
the
taxpayer to deduct the exploration and development expenditures is
irrevocable
and shall be binding in succeeding taxable years. "Net income
from
mining operations", as used in this Subsection, shall mean gross
income
from operations less "allowable deductions" which are necessary
or related to mining operations. "Allowable deductions" shall
include
mining, milling and marketing expenses, and depreciation of properties
directly used in the mining operations.
This paragraph shall not apply
to expenditures for the acquisition or improvement of property of a
character
which is subject to the allowance for depreciation.
In no case shall
this
paragraph apply with respect to amounts paid or incurred for the
exploration
and development of oil and gas.
The term
"exploration
expenditures" means expenditures paid or incurred for the purpose
of
ascertaining the existence, location, extent or quality of any deposit
of ore or other mineral, and paid or incurred before the beginning of
the
development stage of the mine or deposit.
The term "development
expenditures" means expenditures paid or incurred during the
development
stage of the mine or other natural deposits.
The development stage of a
mine or other natural deposit shall begin at the time when deposits of
ore or other minerals are shown to exist in sufficient commercial
quantity
and quality and shall end upon commencement of actual commercial
extraction.
(3) Depletion
of Oil and Gas Wells and Mines Deductible by a Nonresident Alien
individual
or Foreign Corporation. - In the case of a nonresident alien individual engaged in trade or
business
in the Philippines or a resident foreign corporation, allowance for
depletion
of oil and gas wells or mines under paragraph (1) of this Subsection
shall
be authorized only in respect to oil and gas wells or mines located
within
the Philippines.
(H) Charitable
and
Other Contributions. -
(1) In
General. - Contributions or gifts actually paid or made within the taxable
year
to, or for the use of the Government of the Philippines or any of its
agencies
or any political subdivision thereof exclusively for public purposes,
or
to accredited domestic corporation or associations organized and
operated
exclusively for religious, charitable, scientific, youth and sports
development,
cultural or educational purposes or for the rehabilitation of veterans,
or to social welfare institutions, or to non-government organizations,
in accordance with rules and regulations promulgated by the Secretary
of
finance, upon recommendation of the Commissioner, no part of the net
income
of which inures to the benefit of any private stockholder or individual
in an amount not in excess of ten percent (10%) in the case of an
individual,
and five percent (%) in the case of a corporation, of the taxpayer's
taxable
income derived from trade, business or profession as computed without
the
benefit of this and the following subparagraphs.
(2)
Contributions
Deductible in Full.
- Notwithstanding the provisions of the preceding subparagraph,
donations
to the following institutions or entities shall be deductible in full;
(a) Donations
to
the Government. - Donations to the Government of the Philippines or
to any of its agencies or political subdivisions, including fully-owned
government corporations, exclusively to finance, to provide for, or to
be used in undertaking priority activities in education, health, youth
and sports development, human settlements, science and culture, and in
economic development according to a National Priority Plan determined
by
the National Economic and Development Authority (NEDA), In consultation
with appropriate government agencies, including its regional
development
councils and private philantrophic persons and institutions:
Provided, That any donation which is made to the Government or to any of its
agencies
or political subdivisions not in accordance with the said annual
priority
plan shall be subject to the limitations prescribed in paragraph (1) of
this Subsection;
(b) Donations
to
Certain Foreign Institutions or International Organizations. -
Donations
to foreign institutions or international organizations which are fully
deductible in pursuance of or in compliance with agreements, treaties,
or commitments entered into by the Government of the Philippines and
the
foreign institutions or international organizations or in pursuance of
special laws;
(c) Donations
to
Accredited Nongovernment Organizations. - The term "nongovernment
organization" means a non profit domestic corporation:
(1) Organized and
operated exclusively for scientific, research, educational,
character-building
and youth and sports development, health, social welfare, cultural or
charitable
purposes, or a combination thereof, no part of the net income of which
inures to the benefit of any private individual;
(2) Which, not
later
than the 15th day of the third month after the close of the
accredited nongovernment organizations taxable year in which
contributions
are received, makes utilization directly for the active conduct of the
activities constituting the purpose or function for which it is
organized
and operated, unless an extended period is granted by the Secretary of
Finance in accordance with the rules and regulations to be promulgated,
upon recommendation of the Commissioner;
(3) The level of
administrative
expense of which shall, on an annual basis, conform with the rules and
regulations to be prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner, but in no case to exceed thirty percent (30%) of
the
total expenses; and
(4) The assets of
which, in the even of dissolution, would be distributed to another
nonprofit
domestic corporation organized for similar purpose or purposes, or to
the
state for public purpose, or would be distributed by a court to another
organization to be used in such manner as in the judgment of said court
shall best accomplish the general purpose for which the dissolved
organization
was organized.
Subject to such
terms
and conditions as may be prescribed by the Secretary of Finance, the
term
"utilization" means:
(i) Any amount in
cash or in kind (including administrative expenses) paid or utilized to
accomplish one or more purposes for which the accredited nongovernment
organization was created or organized.
(ii) Any amount
paid
to acquire an asset used (or held for use) directly in carrying out one
or more purposes for which the accredited nongovernment organization
was
created or organized.
An amount set
aside
for a specific project which comes within one or more purposes of the
accredited
nongovernment organization may be treated as a utilization, but only if
at the time such amount is set aside, the accredited nongovernment
organization
has established to the satisfaction of the Commissioner that the amount
will be paid for the specific project within a period to be prescribed
in rules and regulations to be promulgated by the Secretary of Finance,
upon recommendation of the Commissioner, but not to exceed five (5)
years,
and the project is one which can be better accomplished by setting
aside
such amount than by immediate payment of funds.
(3) Valuation.chanrobles virtual law library
- The amount of any charitable contribution of property other than
money
shall be based on the acquisition cost of said property.
(4) Proof
of
Deductions.chanrobles virtual law library
- Contributions or gifts shall be allowable as deductions only if
verified
under the rules and regulations prescribed by the Secretary of Finance,
upon recommendation of the Commissioner.
(I) Research and
Development. -
(1) In
General.
- a taxpayer may treat research or development expenditures which are
paid
or incurred by him during the taxable year in connection with his
trade,
business or profession as ordinary and necessary expenses which are not
chargeable to capital account.
The expenditures so treated shall be
allowed
as deduction during the taxable year when paid or incurred.
(2)
Amortization
of Certain Research and Development Expenditures. - At the election of the taxpayer and in accordance with the rules
and regulations to be prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner, the following research and development
expenditures
may be treated as deferred expenses:
(a) Paid or
incurred
by the taxpayer in connection with his trade, business or profession;
(b) Not treated as
expenses under paragraph 91) hereof; and
(c) Chargeable to
capital
account but not chargeable to property of a character which is
subject to depreciation or depletion.
In computing
taxable
income, such deferred expenses shall be allowed as deduction ratably
distributed
over a period of not less than sixty (60) months as may be elected by
the
taxpayer (beginning with the month in which the taxpayer first realizes
benefits from such expenditures).
The election
provided
by paragraph (2) hereof may be made for any taxable year beginning
after
the effectivity of this Code, but only if made not later than the time
prescribed by law for filing the return for such taxable year.
The
method
so elected, and the period selected by the taxpayer, shall be adhered
to
in computing taxable income for the taxable year for which the election
is made and for all subsequent taxable years unless with the approval
of
the Commissioner, a change to a different method is authorized with
respect
to a part or all of such expenditures.
The election shall not apply to
any expenditure paid or incurred during any taxable year for which the
taxpayer makes the election.
(3)
Limitations
on Deduction.chanrobles virtual law library
- This Subsection shall not apply to:
(a) Any
expenditure
for the acquisition or improvement of land, or for the improvement of
property
to be used in connection with research and development of a character
which
is subject to depreciation and depletion; and
(b) Any
expenditure
paid or incurred for the purpose of ascertaining the existence,
location,
extent, or quality of any deposit of ore or other mineral, including
oil
or gas.
(J) Pension
Trusts.chanrobles virtual law library
- An employer establishing or maintaining a pension trust to provide
for
the payment of reasonable pensions to his employees shall be allowed as
a deduction (in addition to the contributions to such trust during the
taxable year to cover the pension liability accruing during the year,
allowed
as a deduction under Subsection (A) (1) of this Section ) a reasonable
amount transferred or paid into such trust during the taxable year in
excess
of such contributions, but only if such amount (1) has not theretofore
been allowed as a deduction, and (2) is apportioned in equal parts over
a period of ten (10) consecutive years beginning with the year in which
the transfer or payment is made.
(K) Additional
Requirements for Deductibility of Certain Payments. - Any amount paid or payable which is otherwise deductible from, or
taken into account in computing gross income or for which depreciation
or amortization may be allowed under this Section, shall be allowed as
a deduction only if it is shown that the tax required to be deducted
and
withheld therefrom has been paid to the Bureau of Internal Revenue in
accordance
with this Section 58 and 81 of this Code.
(L) Optional
Standard Deduction.
- In lieu of the deductions allowed under the preceding Subsections, an
individual subject to tax under Section 24, other than a nonresident
alien,
may elect a standard deduction in an amount not exceeding ten percent
(10%)
of his gross income.
Unless the taxpayer signifies in his return his
intention
to elect the optional standard deduction, he shall be considered as
having
availed himself of the deductions allowed in the preceding Subsections.
Such election when made in the return shall be irrevocable for the
taxable
year for which the return is made: Provided, That an
individual
who is entitled to and claimed for the optional standard deduction
shall
not be required to submit with his tax return such financial statements
otherwise required under this Code: Provided, further, That
except
when the Commissioner otherwise permits, the said individual shall keep
such records pertaining to his gross income during the taxable year, as
may be required by the rules and regulations promulgated by the
Secretary
of Finance, upon recommendation of the Commissioner.
(M) Premium
Payments
on Health and/or Hospitalization Insurance of an Individual Taxpayer. - The amount of premiums not to exceed Two thousand four hundred
pesos
(P2,400) per family or Two hundred pesos (P200) a month paid during the
taxable year for health and/or hospitalization insurance taken by the
taxpayer
for himself, including his family, shall be allowed as a deduction from
his gross income: Provided, That said family has a gross
income
of not more than Two hundred fifty thousand pesos (P250,000) for the
taxable
year: Provided, finally, That in the case of married taxpayers,
only the spouse claiming the additional exemption for dependents shall
be entitled to this deduction.
Notwithstanding the
provision of the preceding Subsections, The Secretary of Finance, upon
recommendation of the Commissioner, after a public hearing shall have
been
held for this purpose, may prescribe by rules and regulations,
limitations
or ceilings for any of the itemized deductions under Subsections (A) to
(J) of this Section: Provided, That for purposes of determining
such ceilings or limitations, the Secretary of Finance shall consider
the
following factors: (1) adequacy of the prescribed limits on the actual
expenditure requirements of each particular industry; and (2) effects
of
inflation on expenditure levels: Provided, further, That no
ceilings
shall further be imposed on items of expense already subject to
ceilings
under present law.
SEC. 35. Allowance of Personal Exemption for Individual Taxpayer. -
(A) In General.chanrobles virtual law library
- For purposes of determining the tax provided in Section 24 (A) of
this
Title, there shall be allowed a basic personal exemption as follows:
For single
individual
or married individual judicially decreed as legally
separated
with no qualified
dependents
P20,000
For Head of
Family
P25,000
For each married
individual
P32,000
In the case of married
individuals where only one of the spouses is deriving gross income,
only
such spouse shall be allowed the personal exemption.
For purposes of this
paragraph, the term "head of family" means an unmarried or
legally
separated man or woman with one or both parents, or with one or more
brothers
or sisters, or with one or more legitimate, recognized natural or
legally
adopted children living with and dependent upon him for their chief
support,
where such brothers or sisters or children are not more than twenty-one
(21) years of age, unmarried and not gainfully employed or where such
children,
brothers or sisters, regardless of age are incapable of self-support
because
of mental or physical defect.
(B) Additional
Exemption for Dependents.chanrobles virtual law library
- There shall be allowed an additional exemption of Eight thousand
pesos
(P8,000) for each dependent not exceeding four (4).
The additional exemption
for dependent shall be claimed by only one of the spouses in the case
of
married individuals.
In the case of legally
separated spouses, additional exemptions may be claimed only by the
spouse
who has custody of the child or children: Provided, That the
total
amount of additional exemptions that may be claimed by both shall not
exceed
the maximum additional exemptions herein allowed. cralaw:red
For purposes of this
Subsection, a "dependent" means a legitimate, illegitimate or
legally
adopted child chiefly dependent upon and living with the taxpayer if
such
dependent is not more than twenty-one (21) years of age, unmarried and
not gainfully employed or if such dependent, regardless of age, is
incapable
of self-support because of mental or physical defect.
(C) Change of
Status.chanrobles virtual law library
- If the taxpayer marries or should have additional dependent(s) as
defined
above during the taxable year, the taxpayer may claim the corresponding
additional exemption, as the case may be, in full for such year. cralaw:red
If the taxpayer dies
during the taxable year, his estate may still claim the personal and
additional
exemptions for himself and his dependent(s) as if he died at the close
of such year.
If the spouse or any
of the dependents dies or if any of such dependents marries, becomes
twenty-one
(21) years old or becomes gainfully employed during the taxable year,
the
taxpayer may still claim the same exemptions as if the spouse or any of
the dependents died, or as if such dependents married, became
twenty-one
(21) years old or became gainfully employed at the close of such year.
(D) Personal
Exemption Allowable to Nonresident Alien Individual.
- A nonresident alien individual engaged in trade, business or in the
exercise
of a profession in the Philippines shall be entitled to a personal
exemption
in the amount equal to the exemptions allowed in the income tax law in
the country of which he is a subject - or citizen, to citizens of the
Philippines
not residing in such country, not to exceed the amount fixed in this
Section
as exemption for citizens or resident of the Philippines: Provided,
That said nonresident alien should file a true and accurate return
of the total income received by him from all sources in the
Philippines,
as required by this Title.
SEC. 36. Items Not Deductible. -
(A) General Rule. - In computing net income, no deduction shall in any case be allowed in
respect to -
(1) Personal,
living
or family expenses;
(2) Any amount
paid
out for new buildings or for permanent improvements, or betterments
made to increase the value of any property or estate;
This Subsection
shall
not apply to intangible drilling and development costs incurred in
petroleum
operations which are deductible under Subsection (G) (1) of Section 34
of this Code.
(3) Any amount
expended
in restoring property or in making good the exhaustion thereof for
which an allowance is or has been made; or
(4) Premiums paid
on any life insurance policy covering the life of any officer or
employee,
or of any person financially interested in any trade or business
carried
on by the taxpayer, individual or corporate, when the taxpayer is
directly
or indirectly a beneficiary under such policy.
(B) Losses from
Sales
or Exchanges of Property.chanrobles virtual law library
- In computing net income, no deductions shall in any case be allowed
in
respect of losses from sales or exchanges of property directly or
indirectly
-
(1) Between
members
of a family.
For purposes of this paragraph, the family of an
individual
shall include only his brothers and sisters (whether by the whole or
half-blood),
spouse, ancestors, and lineal descendants; or
(2) Except in the
case of distributions in liquidation, between an individual and
corporation
more than fifty percent (50%) in value of the outstanding stock of
which
is owned, directly or indirectly, by or for such individual; or
(3) Except in the
case of distributions in liquidation, between two corporations more
than
fifty percent (50%) in value of the outstanding stock of which is
owned,
directly or indirectly, by or for the same individual if either one of
such corporations, with respect to the taxable year of the corporation
preceding the date of the sale of exchange was under the law applicable
to such taxable year, a personal holding company or a foreign personal
holding company;
(4) Between the
grantor
and a fiduciary of any trust; or
(5) Between the
fiduciary
of and the fiduciary of a trust and the fiduciary of another trust if
the
same person is a grantor with respect to each trust; or
(6) Between a
fiduciary
of a trust and beneficiary of such trust.
SEC. 37. Special Provisions Regarding Income and Deductions of Insurance
Companies, Whether Domestic or Foreign. -
(A) Special Deduction
Allowed to Insurance Companies.chanrobles virtual law library-
In the case of insurance companies, 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 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 as income any portion of the premium
deposits
returned to their policyholders, but shall 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.
(C) Mutual Marine
Insurance Companies. - Mutual marine insurance companies shall include in their return of
gross
income, gross premiums collected and received by them less amounts paid
to policyholders on account of premiums previously paid by them and
interest
paid upon those amounts between the ascertainment and payment
thereof.
(D) Assessment
Insurance Companies. -
Assessment insurance companies, whether domestic or foreign, may deduct
from their gross income the actual deposit of sums with the officers of
the Government of the Philippines pursuant to law, as additions to
guarantee
or reserve funds. cralaw:red
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 or option so 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 and with respect to a transaction made in the
ordinary
course of the business of such dealer.
(B) If the amount of
stock or securities acquired (or covered by the contract or option to
acquire)
is less than the amount of stock or securities sold or otherwise
disposed
of, then the particular shares of stock or securities, the loss form
the
sale or other disposition of which is not deductible, shall be
determined
under rules and regulations prescribed by the Secretary of Finance,
upon
recommendation of the Commissioner.
(C) If the amount of
stock or securities acquired (or covered by the contract or option to
acquire
which) resulted in the non-deductibility of the loss, shall be
determined
under rules and regulations prescribed by the Secretary of Finance,
upon
recommendation of the Commissioner. cralaw:red
SEC. 39. Capital Gains and Losses. -
(A) Definitions.chanrobles virtual law library
- As used in this Title -
(1) Capital
Assets. - The term "capital assets" means property held by the taxpayer
(whether or not connected with his trade or business), but does not
include
stock in trade of the taxpayer or other property of a kind which would
properly be included in the inventory of the taxpayer if on hand at the
close of the taxable year, or property held by the taxpayer primarily
for
sale to customers in the ordinary course of his trade or business, or
property
used in the trade or business, of a character which is subject to the
allowance
for depreciation provided in Subsection (F) of Section 34; or real
property
used in trade or business of the taxpayer.
(2) Net
Capital
Gain. - The term "net capital gain" means the excess of the gains
from
sales or exchanges of capital assets over the losses from such sales or
exchanges.
(3) Net
Capital
Loss. - The term "net capital loss" means the excess of the losses
from
sales or exchanges of capital assets over the gains from such sales or
exchanges.
(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:
(1) 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 (12)
months;(C) 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 laws of the Philippines, a substantial
part
of whose business is the receipt of deposits, 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 a capital asset held for not more than
twelve
(12) months.
(E) Retirement
of Bonds, Etc. - For purposes of this Title, amounts received by the holder upon the
retirement
of bonds, debentures, notes or certificates or other evidences of
indebtedness
issued by any corporation (including those issued by a government or
political
subdivision thereof) with interest coupons or in registered form, shall
be considered as amounts received in exchange therefor. cralaw:red
(F) Gains or Losses
From Short Sales, Etc. - For purposes of this Title -
(1) 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. 40. Determination of Amount and Recognition of Gain or Loss. -
(A) Computation
of Gain or Loss. - The gain from the sale or other disposition of property shall be the
excess of the amount realized therefrom over the basis or adjusted
basis
for determining gain, and the loss shall be the excess of the basis or
adjusted basis for determining loss over the amount realized.
The
amount
realized from the sale or other disposition of property shall be the
sum
of money received plus the fair market value of the property (other
than
money) received;
(B) Basis for
Determining Gain or Loss from Sale or Disposition of Property. - The basis of property shall be -
(1) The cost
thereof
in the case of property acquired on or after March 1, 1913, if such
property
was acquired by purchase; or
(2) The fair
market
price or value as of the date of acquisition, if the same was acquired
by inheritance; or
(3) If the
property
was acquired by gift, the basis shall be the same as if it would be in
the hands of the donor or the last preceding owner by whom it was not
acquired
by gift, except that if such basis is greater than the fair market
value
of the property at the time of the gift then, for the purpose of
determining
loss, the basis shall be such fair market value; or
(4) If the
property
was acquired for less than an adequate consideration in money or
money's
worth, the basis of such property is the amount paid by the transferee
for the property; or
(5) The basis as
defined
in paragraph (C)(5) of this Section, if the property was acquired in a
transaction where gain or loss is not recognized under paragraph (C)(2)
of this Section.
(C) Exchange of
Property. -
(1) General
Rule. - Except as herein provided, upon the sale or exchange or property, the
entire amount of the gain or loss, as the case may be, shall be
recognized.
(2) Exception. - No gain or loss shall be recognized if in pursuance of a plan of
merger
or consolidation -
(a) A corporation,
which is a party to a merger or consolidation, exchanges property
solely
for stock in a corporation, which is a party to the merger or
consolidation;
or
(b) A shareholder
exchanges stock in a corporation, which is a party to the merger or
consolidation,
solely for the stock of another corporation also a party to the merger
or consolidation; or
(c) A security
holder
of a corporation, which is a party to the merger or consolidation,
exchanges
his securities in such corporation, solely for stock or securities in
such
corporation, a party to the merger or consolidation.
No gain or loss
shall
also be recognized if property is transferred to a corporation by a
person
in exchange for stock or unit of participation in such a corporation of
which as a result of such exchange said person, alone or together with
others, not exceeding four (4) persons, gains control of said
corporation:
Provided, That stocks issued for services shall not be
considered
as issued in return for property.
(3) Exchange
Not Solely in Kind. -
(a) If, in
connection
with an exchange described in the above exceptions, an individual, a
shareholder,
a security holder or a corporation receives not only stock or
securities
permitted to be received without the recognition of gain or loss, but
also
money and/or property, the gain, if any, but not the loss, shall be
recognized
but in an amount not in excess of the sum of the money and fair market
value of such other property received: Provided, That as to the
shareholder, if the money and/or other property received has the effect
of a distribution of a taxable dividend, there shall be taxed as
dividend
to the shareholder an amount of the gain recognized not in excess of
his
proportionate share of the undistributed earnings and profits of the
corporation;
the remainder, if any, of the gain recognized shall be treated as a
capital
gain.
(b) If, in
connection
with the exchange described in the above exceptions, the transferor
corporation
receives not only stock permitted to be received without the
recognition
of gain or loss but also money and/or other property, then (i) if the
corporation
receiving such money and/or other property distributes it in pursuance
of the plan of merger or consolidation, no gain to the corporation
shall
be recognized from the exchange, but (ii) if the corporation receiving
such other property and/or money does not distribute it in pursuance of
the plan of merger or consolidation, the gain, if any, but not the loss
to the corporation shall be recognized but in an amount not in excess
of
the sum of such money and the fair market value of such other property
so received, which is not distributed.
(4) Assumption
of Liability. -
(a) If the
taxpayer, in connection with the exchanges described in the foregoing
exceptions,
receives stock or securities which would be permitted to be received
without
the recognition of the gain if it were the sole consideration, and as
part
of the consideration, another party to the exchange assumes a liability
of the taxpayer, or acquires from the taxpayer property, subject to a
liability,
then such assumption or acquisition shall not be treated as money
and/or
other property, and shall not prevent the exchange from being within
the
exceptions.
(b) If the amount
of the liabilities assumed plus the amount of the liabilities to which
the property is subject exceed the total of the adjusted basis of the
property
transferred pursuant to such exchange, then such excess shall be
considered
as a gain from the sale or exchange of a capital asset or of property
which
is not a capital asset, as the case may be.
(5) Basis
-
(a) The basis of
the
stock or securities received by the transferor upon the exchange
specified
in the above exception shall be the same as the basis of the property,
stock or securities exchanged, decreased by (1) the money received, and
(2) the fair market value of the other property received, and increased
by (a) the amount treated as dividend of the shareholder and (b) the
amount
of any gain that was recognized on the exchange: Provided, That
the property received as "boot" shall have as basis its fair
market
value: Provided, further, That if as part of the consideration
to
the transferor, the transferee of property assumes a liability of the
transferor
or acquires form the latter property subject to a liability, such
assumption
or acquisition (in the amount of the liability) shall, for purposes of
this paragraph, be treated as money received by the transferor on the
exchange:
Provided, finally, That if the transferor receives several kinds of
stock or securities, the Commissioner is hereby authorized to allocate
the basis among the several classes of stocks or securities.
(b) The basis of
the
property transferred in the hands of the transferee shall be the same
as
it would be in the hands of the transferor increased by the amount of
the
gain recognized to the transferor on the transfer.
(6)
Definitions. -
(a) The term
"securities"
means bonds and debentures but not "notes" of whatever class or
duration.
(b) The term "merger"
or "consolidation", when used in this Section, shall be
understood
to mean: (i) the ordinary merger or consolidation, or (ii) the
acquisition
by one corporation of all or substantially all the properties of
another
corporation solely for stock: Provided, That for a transaction
to
be regarded as a merger or consolidation within the purview of this
Section,
it must be undertaken for a bona fide business purpose and not solely
for
the purpose of escaping the burden of taxation: Provided, further,
That in determining whether a bona fide business purpose exists, each
and
every step of the transaction shall be considered and the whole
transaction
or series of transaction shall be treated as a single unit: Provided,
finally , That in determining whether the property transferred
constitutes
a substantial portion of the property of the transferor, the term
'property'
shall be taken to include the cash assets of the transferor.
(c) The term
"control",
when used in this Section, shall mean ownership of stocks in a
corporation
possessing at least fifty-one percent (51%) of the total voting power
of
all classes of stocks entitled to vote.
(d) The Secretary
of Finance, upon recommendation of the Commissioner, is hereby
authorized
to issue rules and regulations for the purpose "substantially all"
and for the proper implementation of this Section.
SEC. 41. Inventories.chanrobles virtual law library
- Whenever in the judgment of the Commissioner, the use of inventories
is necessary in order to determine clearly the income of any taxpayer,
inventories shall be taken by such taxpayer upon such basis as the
Secretary
of Finance, upon recommendation of the Commissioner, may, by rules and
regulations, prescribe as conforming as nearly as may be to the best
accounting
practice in the trade or business and as most clearly reflecting the
income.
If a taxpayer, after
having complied with the terms and a conditions prescribed by the
Commissioner,
uses a particular method of valuing its inventory for any taxable year,
then such method shall be used in all subsequent taxable years unless:
(i) with the
approval
of the Commissioner, a change to a different method is authorized; or
(ii) the
Commissioner
finds that the nature of the stock on hand (e.g., its scarcity,
liquidity, marketability and price movements) is such that inventory
gains
should be considered realized for tax purposes and, therefore, it is
necessary
to modify the valuation method for purposes of ascertaining the income,
profit, or loss in a more realistic manner: Provided, however,
That
the Commissioner shall not exercise his authority to require a change
in
inventory method more often than once every three (3) years:
Provided,
further, That any change in an inventory valuation method must be
subject
to approval by the Secretary of Finance.
SEC. 42. Income from Sources Within the Philippines. -
(A) Gross Income
From Sources Within the Philippines. - The following items of gross income shall be treated as gross income
from sources within the Philippines:
(1) Interests. - Interests derived from sources within the Philippines, and interests
on bonds, notes or other interest-bearing obligation of residents,
corporate
or otherwise;
(2) Dividends. - The amount received as dividends:.
(a) from a
domestic
corporation; and
(b) from a foreign
corporation, unless less 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 ration to
such
dividends as the gross income of the corporation for such period
derived
from sources within the Philippines bears to its gross income from all
sources.
(3) Services.chanrobles virtual law library
- Compensation for labor or personal services performed in the
Philippines;
(4) Rentals
and Royalties. - Rentals and royalties from property located in the Philippines or
from
any interest in such property, including rentals or royalties for -
(a) The use of or
the right or privilege to use in the Philippines any copyright, patent,
design or model, plan, secret formula or process, goodwill, trademark,
trade brand or other like property or right;
(b) The use of, or
the right to use in the Philippines any industrial, commercial or
scientific
equipment;
(c) The supply of
scientific, technical, industrial or commercial knowledge or
information;
(d) The supply of
any assistance that is ancillary and subsidiary to, and is furnished as
a means of enabling the application or enjoyment of, any such property
or right as is mentioned in paragraph (a), any such equipment as is
mentioned
in paragraph (b) or any such knowledge or information as is mentioned
in
paragraph (c);
(e) The supply of
services by a nonresident person or his employee in connection with the
use of property or rights belonging to, or the installation or
operation
of any brand, machinery or other apparatus purchased from such
nonresident
person;
(f) Technical
advice,
assistance or services rendered in connection with technical management
or administration of any scientific, industrial or commercial
undertaking,
venture, project or scheme; and
(g) The use of or
the right to use:
(i) Motion
picture
films;
(ii) Films or
video tapes for use in connection with television; and
(iii) Tapes for use
in connection with radio broadcasting.
(5) Sale of
Real Property.chanrobles virtual law library
- Gains, profits and income from the sale of real property located in
the
Philippines; and
(6) Sale of
Personal Property. chanrobles virtual law library - Gains; profits and income from the sale of personal property, as
determined
in Subsection (E) of this Section.
(B) Taxable
Income
From Sources Within the Philippines. -
(1) General
Rule. - From the items of gross income specified in Subsection (A) of this
Section,
there shall be deducted the expenses, losses and other deductions
properly
allocated thereto and a ratable part of expenses, interests, losses and
other deductions effectively connected with the business or trade
conducted
exclusively within the Philippines which cannot definitely be allocated
to some items or class of gross income: Provided, That such
items
of deductions shall be allowed only if fully substantiated by all the
information
necessary for its calculation.
The remainder, if any, shall be treated
in full as taxable income from sources within the Philippines.
(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.
(C) Gross Income
From Sources Without the Philippines. - The following items of gross income shall be treated as income from
sources
without the Philippines:
(1) Interests
other
than those derived from sources within the Philippines as provided in
paragraph (1) of Subsection (A) of this Section;
(2) Dividends
other
than those derived from sources within the Philippines as provided in
paragraph (2) of Subsection (A) of this Section;
(3) Compensation
for
labor or personal services performed without the Philippines;
(4) Rentals or
royalties
from property located without the Philippines or from any interest in
such property including rentals or royalties for the use of or for the
privilege of using
without the Philippines, patents, copyrights, secret processes and
formulas,
goodwill,
trademarks, trade brands, franchises and other like properties; and
(5) Gains, profits
and income from the sale of real property located without the
Philippines.
(D) Taxable
Income
From Sources Without the Philippines. - From the items of gross income specified in Subsection (C) of
this
Section there shall be deducted the expenses, losses, and other
deductions
properly apportioned or allocated thereto and a ratable part of any
expense,
loss or other deduction which cannot definitely be allocated to some
items
or classes of gross income.
The remainder, if any, shall be treated in
full as taxable income from sources without the Philippines.
(E) Income From
Sources Partly Within and Partly Without the Philippines. - Items of gross income, expenses, losses and deductions, other than
those specified in Subsections (A) and (C) of this Section, shall be
allocated
or apportioned to sources within or without the Philippines, under the
rules and regulations prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner.
Where items of gross income are separately
allocated
to sources within the Philippines, there shall be deducted (for the
purpose
of computing the taxable income therefrom) the expenses, losses and
other
deductions properly apportioned or allocated thereto and a ratable part
of other expenses, losses or other deductions which cannot definitely
be
allocated to some items or classes of gross income.
The remainder, if
any,
shall be included in full as taxable income from sources within the
Philippines.
In the case of gross income derived from sources partly within and
partly
without the Philippines, the taxable income may first be computed by
deducting
the expenses, losses or other deductions apportioned or allocated
thereto
and a ratable part of any expense, loss or other deduction which cannot
definitely be allocated to some items or classes of gross income; and
the
portion of such taxable income attributable to sources within the
Philippines
may be determined by processes or formulas of general apportionment
prescribed
by the Secretary of Finance.
Gains, profits and income from the sale of
personal property produced (in whole or in part) by the taxpayer within
and sold without the Philippines, or produced (in whole or in part) by
the taxpayer without and sold within the Philippines, shall be treated
as derived partly from sources within and partly from sources without
the
Philippines. cralaw:red
Gains, profits and income
derived from the purchase of personal property within and its sale
without
the Philippines, or from the purchase of personal property without and
its sale within the Philippines shall be treated as derived entirely
form
sources within the country in which sold: Provided, however,
That
gain from the sale of shares of stock in a domestic corporation shall
be
treated as derived entirely form sources within the Philippines
regardless
of where the said shares are sold.
The transfer by a nonresident alien
or a foreign corporation to anyone of any share of stock issued by a
domestic
corporation shall not be effected or made in its book unless: (1) the
transferor
has filed with the Commissioner a bond conditioned upon the future
payment
by him of any income tax that may be due on the gains derived from such
transfer, or (2) the Commissioner has certified that the taxes, if any,
imposed in this Title and due on the gain realized from such sale or
transfer
have been paid.
It shall be the duty of the transferor and the
corporation
the shares of which are sold or transferred, to advise the transferee
of
this requirement.
(F) Definitions. - As used in this Section the words "sale" or "sold"
include
"exchange" or "exchanged"; and the word "produced"
includes "created", "fabricated", "manufactured",
"extracted",
"processed", "cured" or "aged".
CHAPTER
VIIIACCOUNTING
PERIODSAND
METHODS
OF ACCOUNTING
SEC. 43. General Rule. - The taxable income shall be computed upon the basis of the taxpayer's
annual accounting period (fiscal year or calendar year, as the case may
be) in accordance with the method of accounting regularly employed in
keeping
the books of such taxpayer, but if no such method of accounting has
been
so employed, or if the method employed does not clearly reflect the
income,
the computation shall be made in accordance with such method as in the
opinion of the Commissioner clearly reflects the income.
If the
taxpayer's
annual accounting period is other than a fiscal year, as defined in
Section
22(Q), or if the taxpayer has no annual accounting period, or does not
keep books, or if the taxpayer is an individual, the taxable income
shall
be computed on the basis of the calendar year. cralaw:red
SEC. 44. Period in which Items of Gross Income Included. - The amount of all items of gross income shall be included in the
gross
income for the taxable year in which received by the taxpayer, unless,
under methods of accounting permitted under Section 43, any such
amounts
are to be properly accounted for as of a different period.
In the case
of the death of a taxpayer, there shall be included in computing
taxable
income for the taxable period in which falls the date of his death,
amounts
accrued up to the date of his death if not otherwise properly
includible
in respect of such period or a prior period. cralaw:red
SEC. 45. Period for which Deductions and Credits Taken. - The deductions provided for in this Title shall be taken for the
taxable
year in which "paid or accrued" or "paid or incurred",
dependent
upon the method of accounting the basis of which the net income is
computed,
unless in order to clearly reflect the income, the deductions should be
taken as of a different period.
In the case of the death of a taxpayer,
there shall be allowed as deductions for the taxable period in which
falls
the date of his death, amounts accrued up to the date of his death if
not
otherwise properly allowable in respect of such period or a prior
period. cralaw:red
SEC. 46. Change of Accounting Period.
If a taxpayer, other than an individual, changes his accounting period
from fiscal year to calendar year, from calendar year to fiscal year,
or
from one fiscal year to another, the net income shall, with the
approval
of the Commissioner, be computed on the basis of such new accounting
period,
subject to the provisions of Section 47. cralaw:red
SEC. 47. Final or Adjustment Returns for a Period of Less than Twelve
(12)
Months.
-
(A) Returns for
Short Period Resulting from Change of Accounting Period. - If a taxpayer, other than an individual, with the approval of
the
Commissioner, changes the basis of computing net income from fiscal
year
to calendar year, a separate final or adjustment return shall be made
for
the period between the close of the last fiscal year for which return
was
made and the following December 31.
If the change is from calendar year
to fiscal year, a separate final or adjustment return shall be made for
the period between the close of the last calendar year for which return
was made and the date designated as the close of the fiscal year.
If
the
change is from one fiscal year to another fiscal year, a separate final
or adjustment return shall be made for the period between the close of
the former fiscal year and the date designated as the close of the new
fiscal year. cralaw:red
(B) Income Computed
on Basis of Short Period. - Where a separate final or adjustment return is made under Subsection
(A) on account of a change in the accounting period, and in all other
cases
where a separate final or adjustment return is required or permitted by
rules and regulations prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner, to be made for a fractional part of a year, then
the
income shall be computed on the basis of the period for which separate
final or adjustment return is made. cralaw:red
SEC. 48. Accounting for Long-Term Contracts. - Income from long-term contracts shall be reported for tax purposes in
the manner as provided in this Section.
As used herein, the term
'long-term
contracts' means building, installation or construction contracts
covering
a period in excess of one (1) year.
Persons whose gross income is
derived
in whole or in part from such contracts shall report such income upon
the
basis of percentage of completion.
The return should be accompanied by
a return certificate of architects or engineers showing the percentage
of completion during the taxable year of the entire work performed
under
contract.
There should be deducted from such gross income all
expenditures
made during the taxable year on account of the contract, account being
taken of the material and supplies on hand at the beginning and end of
the taxable period for use in connection with the work under the
contract
but not yet so applied.
If upon completion of a contract, it is found
that
the taxable net income arising thereunder has not been clearly
reflected
for any year or years, the Commissioner may permit or require an
amended
return. cralaw:red
SEC. 49. Installment Basis. -
(A) Sales of Dealers
in Personal Property. - Under rules and regulations prescribed by the Secretary of Finance,
upon
recommendation of the Commissioner, a person who regularly sells or
otherwise
disposes of personal property on the installment plan may return as
income
therefrom in any taxable year that proportion of the installment
payments
actually received in that year, which the gross profit realized or to
be
realized when payment is completed, bears to the total contract price. cralaw:red
(B) Sales of Realty
and Casual Sales of Personality. - In the case (1) of a casual sale or other casual disposition of
personal
property (other than property of a kind which would properly be
included
in the inventory of the taxpayer if on hand at the close of the taxable
year), for a price exceeding One thousand pesos (P1,000), or (2) of a
sale
or other disposition of real property, if in either case the initial
payments
do not exceed twenty-five percent (25%) of the selling price, the
income
may, under the rules and regulations prescribed by the Secretary of
Finance,
upon recommendation of the Commissioner, be returned on the basis and
in
the manner above prescribed in this Section.
As used in this Section,
the
term "initial payments" means the payments received in cash or
property
other than evidences of indebtedness of the purchaser during the
taxable
period in which the sale or other disposition is made. cralaw:red
(C) Sales of Real
Property Considered as Capital Asset by Individuals. - An individual who sells or disposes of real property, considered as
capital
asset, and is otherwise qualified to report the gain therefrom under
Subsection
(B) may pay the capital gains tax in installments under rules and
regulations
to be promulgated by the Secretary of Finance, upon recommendation of
the
Commissioner. cralaw:red
(D) Change from
Accrual to Installment Basis. - If a taxpayer entitled to the benefits of Subsection (A) elects for
any
taxable year to report his taxable income on the installment basis,
then
in computing his income for the year of change or any subsequent year,
amounts actually received during any such year on account of sales or
other
dispositions of property made in any prior year shall not be excluded.
SEC. 50. Allocation of Income and Deductions. - In the case of two or more organizations, trades or businesses
(whether
or not incorporated and whether or not organized in the Philippines)
owned
or controlled directly or indirectly by the same interests, the
Commissioner
is authorized to distribute, apportion or allocate gross income or
deductions
between or among such organization, trade or business, if he determined
that such distribution, apportionment or allocation is necessary in
order
to prevent evasion of taxes or clearly to reflect the income of any
such
organization, trade or business.
CHAPTER IXRETURNS
AND
PAYMENT OF TAX
SEC. 51. Individual Return. -
(A) Requirements. -
(1) Except
as
provided in paragraph (2) of this Subsection, the following individuals
are required to file an income tax return:
(a) Every Filipino
citizen residing in the Philippines;
(b) Every Filipino
citizen residing outside the Philippines, on his income from sources
within the Philippines;
(c) Every alien
residing
in the Philippines, on income derived from sources within
the Philippines; and
(d) Every
nonresident
alien engaged in trade or business or in the exercise of profession
in the Philippines.
(2) The following
individuals shall not be required to file an income tax return;
(a) An individual
whose gross income does not exceed his total personal and additional
exemptions
for dependents under Section 35: Provided, That a citizen of
the
Philippines and any alien individual engaged in business or practice of
profession within the Philippine shall file an income tax return,
regardless
of the amount of gross income;
(b) An individual
with respect to pure compensation income, as defined in Section 32
(A)(1),
derived from sources within the Philippines, the income tax on which
has
been correctly withheld under the provisions of Section 79 of this
Code:
Provided, That an individual deriving compensation concurrently
from two or more employers at any time during the taxable year shall
file
an income tax return: Provided, further, That an individual
whose
compensation income derived from sources within the Philippines exceeds
Sixty thousand pesos (P60,000) shall also file an income tax return;
(c) An individual
whose sole income has been subjected to final withholding tax pursuant
to Section 57(A) of this Code; and
(d) An individual
who is exempt from income tax pursuant to the provisions of this Code
and
other laws, general or special.
(3) The forgoing
notwithstanding,
any individual not required to file an income tax return may
nevertheless
be required to file an information return pursuant to rules and
regulations
prescribed by the Secretary of Finance, upon recommendation of the
Commissioner.
(4) The income tax
return shall be filed in duplicate by the following persons:
(a) A resident
citizen
- on his income from all sources;
(b) A nonresident
citizen - on his income derived from sources within the Philippines;
(c) A resident
alien
- on his income derived from sources within the Philippines; and
(d) A nonresident
alien engaged in trade or business in the Philippines - on his income
derived from sources within the Philippines.
(B) Where to File.chanrobles virtual law library
- Except in cases where the Commissioner otherwise permits, the return
shall be filed with an authorized agent bank, Revenue District Officer,
Collection Agent or duly authorized Treasurer of the city or
municipality
in which such person has his legal residence or principal place of
business
in the Philippines, or if there be no legal residence or place of
business
in the Philippines, with the Office of the Commissioner.
(C) When to File. -
(1) The return of any
individual specified above shall be filed on or before the fifteenth
(15th)
day of April of each year covering income for the preceding taxable
year.
(2) Individuals
subject
to tax on capital gains;
(a) From the sale
or
exchange of shares of stock not traded thru a local stock exchange as
prescribed
under Section 24(c) shall file a return within thirty (30) days after
each
transaction and a final consolidated return on or before April 15 of
each
year covering all stock transactions of the preceding taxable year; and
(b) From the sale
or
disposition of real property under Section 24(D) shall file a return
within
thirty (30) days following each sale or other disposition.
(D) Husband
and Wife. - Married individuals, whether citizens, resident or
nonresident aliens, who do not derive income purely from compensation,
shall file a return for the taxable year to include the income of both
spouses, but where it is impracticable for the spouses to file one
return,
each spouse may file a separate return of income but the returns so
filed
shall be consolidated by the Bureau for purposes of verification for
the
taxable year.
(E) Return of
Parent to Include Income of Children.
- The income of unmarried minors derived from properly received from a
living parent shall be included in the return of the parent, except (1)
when the donor's tax has been paid on such property, or (2) when the
transfer
of such property is exempt from donor's tax.
(F) Persons Under
Disability. - If the taxpayer is unable to make his own return, the return may be
made
by his duly authorized agent or representative or by the guardian or
other
person charged with the care of his person or property, the principal
and
his representative or guardian assuming the responsibility of making
the
return and incurring penalties provided for erroneous, false or
fraudulent
returns.
(G) Signature
Presumed Correct. - The fact that an individual's name is signed to a filed return shall
be prima facie evidence for all purposes that the return was
actually
signed by him.
SEC. 52. Corporation Returns. -
(A) Requirements. - Every corporation 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 return shall be filed by the president, vice-president or other
principal
officer, and shall be sworn to by such officer and by the treasurer or
assistant treasurer. cralaw:red
(B) Taxable Year
of Corporation. - A corporation may employ either calendar year or fiscal year as a
basis
for filing its annual income tax return: Provided, That the corporation
shall not change the accounting period employed without prior approval
from the Commissioner in accordance with the provisions of Section 47
of
this Code. cralaw:red
(C) Return of
Corporation Contemplating Dissolution or Reorganization. - Every corporation shall, within thirty (30) days after the
adoption
by the corporation of a resolution or plan for its dissolution, or for
the liquidation of the whole or any part of its capital stock,
including
a corporation which has been notified of possible involuntary
dissolution
by the Securities and Exchange Commission, or for its reorganization,
render
a correct return to the Commissioner, verified under oath, setting
forth
the terms of such resolution or plan and such other information as the
Secretary of Finance, upon recommendation of the commissioner, shall,
by
rules and regulations, prescribe. cralaw:red
The dissolving or reorganizing
corporation shall, prior to the issuance by the Securities and Exchange
Commission of the Certificate of Dissolution or Reorganization, as may
be defined by rules and regulations prescribed by the Secretary of
Finance,
upon recommendation of the Commissioner, secure a certificate of tax
clearance
from the Bureau of Internal Revenue which certificate shall be
submitted
to the Securities and Exchange Commission. cralaw:red
(D) Return on
Capital Gains Realized from Sale of Shares of Stock not Traded in the
Local
Stock Exchange. - Every corporation deriving capital gains from the sale or exchange of
shares of stock not traded thru a local stock exchange as prescribed
under
Sections 24 (c), 25 (A)(3), 27 (E)(2), 28(A)(8)(c) and 28 (B)(5)(c),
shall
file a return within thirty (30) days after each transactions 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. cralaw:red
SEC. 53. Extension of Time to File Returns. - The Commissioner may, in meritorious cases, grant a reasonable
extension
of time for filing returns of income (or final and adjustment returns
in
case of corporations), subject to the provisions of Section 56 of this
Code. cralaw:red
SEC. 54. Returns of Receivers, Trustees in Bankruptcy or Assignees. - In cases wherein receivers, trustees in bankruptcy or assignees
are
operating the property or business of a corporation, subject to the tax
imposed by this Title, such receivers, trustees or assignees shall make
returns 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 tax due on the income as returned by receivers, trustees or
assignees
shall be assessed and collected in the same manner as if assessed
directly
against the organizations of whose businesses or properties they have
custody
or control.
SEC. 55. Returns of General Professional Partnerships. - Every general professional partnership shall file, in duplicate, a
return
of its income, except income exempt under Section 32 (B) of this Title,
setting forth the items of gross income and of deductions allowed by
this
Title, and the names, Taxpayer Identification Numbers (TIN), addresses
and shares of each of the partners.
SEC. 56. Payment and Assessment of Income Tax for Individuals and
Corporation. -
(A) Payment of
Tax. -
(1) In General. - The total amount of tax imposed by this Title shall be paid by the
person
subject thereto at the time the return is filed.
In the case of tramp
vessels,
the shipping agents and/or the husbanding agents, and in their absence,
the captains thereof are required to file the return herein provided
and
pay the tax due thereon before their departure.
Upon failure of the
said
agents or captains to file the return and pay the tax, the Bureau of
Customs
is hereby authorized to hold the vessel and prevent its departure until
proof of payment of the tax is presented or a sufficient bond is filed
to answer for the tax due.
(2) Installment
of Payment.chanrobles virtual law library
- When the tax due is in excess of Two thousand pesos (P2,000), the
taxpayer
other than a corporation may elect to pay the tax in two (2) equal
installments
in which case, the first installment shall be paid at the time the
return
is filed and the second installment, on or before July 15 following the
close of the calendar year.
If any installment is not paid on or before
the date fixed for its payment, the whole amount of the tax unpaid
becomes
due and payable, together with the delinquency penalties.
(3) Payment of
Capital Gains Tax.
- The total amount of tax imposed and prescribed under Section 24 (c),
24(D), 27(E)(2), 28(A)(8)(c) and 28(B)(5)(c) 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 intention to avail
himself
of the benefit of exemption of capital gains under existing special
laws,
no such payments shall be required : Provided, further, That in
case of failure to qualify for exemption under such special laws and
implementing
rules and regulations, the tax due on the gains realized from the
original
transaction shall immediately become due and payable, 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, he shall be entitled to a refund of such tax upon
verification
of his compliance with the requirements for such exemption.
In case the taxpayer elects
and is qualified to report the gain by installments under Section 49 of
this Code, the tax due from each installment payment shall be paid
within
(30) days from the receipt of such payments.
No registration of any
document transferring real property shall be effected by the Register
of
Deeds unless the Commissioner or his duly authorized representative has
certified that such transfer has been reported, and the tax herein
imposed,
if any, has been paid.
(B) Assessment
and Payment of Deficiency Tax. - After the return is filed, the Commissioner shall examine it and
assess the correct amount of the tax.
The tax or deficiency income tax
so discovered shall be paid upon notice and demand from the
Commissioner. cralaw:red
As used in this Chapter,
in respect of a tax imposed by this Title, the term "deficiency" means:.
(1) The amount by
which
the tax imposed by this Title exceeds the amount shown as the tax by
the
taxpayer upon his return; but the amount so shown on the return shall
be
increased by the amounts previously assessed (or collected without
assessment)
as a deficiency, and decreased by the amount previously abated,
credited,
returned or otherwise repaid in respect of such tax; or
(2) If no amount
is
shown as the tax by the taxpayer upon this return, or if no return is
made
by the taxpayer, then the amount by which the tax exceeds the amounts
previously
assessed (or collected without assessment) as a deficiency; but such
amounts
previously assessed or collected without assessment shall first be
decreased
by the amounts previously abated, credited returned or otherwise repaid
in respect of such tax.
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 tax imposed or prescribed by
Sections
24(B)(1), 24(B)(2), 24(C), 24(D)(1); 25(A)(2), 25(A)(3), 25(B), 25(C),
25(D), 25(E), 27(D)(!), 27(D)(2), 27(D)(3), 27(D)(5), 28 (A)(4),
28(A)(5),
28(A)(7)(a), 28(A)(7)(b), 28(A)(7)(c), 28(B)(1), 28(B)(2), 28(B)(3),
28(B)(4),
28(B)(5)(a), 28(B)(5)(b), 28(B)(5)(c); 33; and 282 of this Code on
specified
items of income 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. cralaw:red
(B) Withholding
of Creditable Tax at Source.chanrobles virtual law library
- The Secretary of Finance may, upon the recommendation of the
Commissioner,
require the withholding of a tax on the items of income payable to
natural
or juridical persons, residing in the Philippines, by
payor-corporation/persons
as provided for by law, at the rate of not less than one percent (1%)
but
not more than thirty-two percent (32%) thereof, which shall be credited
against the income tax liability of the taxpayer for the taxable year. cralaw:red
(C) Tax-free Covenant
Bonds.chanrobles virtual law library
In any case where bonds, mortgages, deeds of trust or other similar
obligations
of domestic or resident foreign corporations, contain a contract or
provisions
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 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. 58. Returns and Payment of Taxes Withheld at Source. -
(A) Quarterly
Returns and Payments of Taxes Withheld.
- Taxes deducted and withheld under Section 57 by withholding agents
shall
be covered by a return and paid to, except in cases where the
Commissioner
otherwise permits, an authorized Treasurer of the city or municipality
where the withholding agent has his legal residence or principal place
of business, or where the withholding agent is a corporation, where the
principal office is located. cralaw:red
The taxes deducted and
withheld by the withholding agent shall be held as a special fund in
trust
for the government until paid to the collecting officers. cralaw:red
The return for final
withholding tax shall be filed and the payment made within twenty-five
(25) days from the close of each calendar quarter, while the return for
creditable withholding taxes shall be filed and the payment made not
later
than the last day of the month following the close of the quarter
during
which withholding was made: Provided, That the Commissioner,
with
the approval of the Secretary of Finance, may require these withholding
agents to pay or deposit the taxes deducted or withheld at more
frequent
intervals when necessary to protect the interest of the government. cralaw:red
(B) Statement
of Income Payments Made and Taxes Withheld.
- Every withholding agent required to deduct and withhold taxes
under
Section 57 shall furnish each recipient, in respect to his or its
receipts
during the calendar quarter or year, a written statement showing the
income
or other payments made by the withholding agent during such quarter or
year, and the amount of the tax deducted and withheld therefrom,
simultaneously
upon payment at the request of the payee, but not late than the
twentieth
(20th) day following the close of the quarter in the case of corporate
payee, or not later than March 1 of the following year in the case of
individual
payee for creditable withholding taxes.
For final withholding taxes,
the
statement should be given to the payee on or before January 31 of the
succeeding
year. cralaw:red
(C) Annual Information
Return. - Every withholding agent required to deduct and withhold taxes under
Section
57 shall submit to the Commissioner an annual information return
containing
the list of payees and income payments, amount of taxes withheld from
each
payee and such other pertinent information as may be required by the
Commissioner.
In the case of final withholding taxes, the return shall be filed on or
before January 31 of the succeeding year, and for creditable
withholding
taxes, not later than March 1 of the year following the year for which
the annual report is being submitted.
This return, if made and filed in
accordance with the rules and regulations approved by the Secretary of
Finance, upon recommendation of the Commissioner, shall be sufficient
compliance
with the requirements of Section 68 of this Title in respect to the
income
payments. cralaw:red
The Commissioner may,
by rules and regulations, grant to any withholding agent a reasonable
extension
of time to furnish and submit the return required in this Subsection. cralaw:red
(D) Income of
Recipient. - Income upon which any creditable tax is required to be withheld at
source
under Section 57 shall be included in the return of its recipient but
the
excess of the amount of tax so withheld over the tax due on his return
shall be refunded to him subject to the provisions of Section 204; if
the
income tax collected at source is less than the tax due on his return,
the difference shall be paid in accordance with the provisions of
Section
56. cralaw:red
All taxes withheld pursuant
to the provisions of this Code and its implementing rules and
regulations
are hereby considered trust funds and shall be maintained in a separate
account and not commingled with any other funds of the withholding
agent.
(E) Registration
with Register of Deeds. - No registration of any document transferring real property shall be
effected
by the Register of Deeds unless the Commissioner or his duly authorized
representative has certified that such transfer has been reported, and
the capital gains or creditable withholding tax, if any, has been paid:
Provided, however, That the information as may be required by
rules
and regulations to be prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner, shall be annotated by the Register of Deeds in the
Transfer Certificate of Title or Condominium Certificate of Title: Provided,
further, That in cases of transfer of property to a corporation,
pursuant
to a merger, consolidation or reorganization, and where the law allows
deferred recognition of income in accordance with Section 40, the
information
as may be required by rules and regulations to be prescribed by the
Secretary
of Finance, upon recommendation of the Commissioner, shall be annotated
by the Register of Deeds at the back of the Transfer Certificate of
Title
or Condominium Certificate of Title of the real property involved:
Provided,
finally, That any violation of this provision by the Register of
Deeds
shall be subject to the penalties imposed under Section 269 of this
Code.
SEC. 59. Tax on Profits Collectible from Owner or Other Persons. - The tax imposed under this Title upon gains, profits, and income
not falling under the foregoing and not returned and paid by virtue of
the foregoing or as otherwise provided by law shall be assessed by
personal
return under rules and regulations to be prescribed by the Secretary of
Finance, upon recommendation of the Commissioner.
The intent and
purpose
of the Title is that all gains, profits and income of a taxable class,
as defined in this Title, shall be charged and assessed with the
corresponding
tax prescribed by this Title, and said tax shall be paid by the owners
of such gains, profits and income, or the proper person having the
receipt,
custody, control or disposal of the same.
For purposes of this Title,
ownership
of such gains, profits and income or liability to pay the tax shall be
determined as of the year for which a return is required to be rendered.
CHAPTER XESTATES
AND
TRUSTS
SEC. 60. Imposition of Tax. -
(A) Application
of Tax. - The tax imposed by this Title upon individuals shall apply to the
income
of estates or of any kind of property held in trust, including:.
(1) Income
accumulated
in trust for the benefit of unborn or unascertained person or persons
with contingent interests, and income accumulated or held for future
distribution
under
the terms of the will or trust;
(2) Income which
is
to be distributed currently by the fiduciary to the beneficiaries, and
income
collected by a guardian of an infant which is to be held or distributed
as the court may direct;
(3) Income
received
by estates of deceased persons during the period of administration or
settlement of the estate; and
(4) Income which,
in the discretion of the fiduciary, may be either distributed to the
beneficiaries
or accumulated.
(B) Exception. - The tax imposed by this Title shall not apply to employee's trust
which forms part of a pension, stock bonus or profit-sharing plan of an
employer for the benefit of some or all of his employees (1) if
contributions
are made to the trust by such employer, or employees, or both for the
purpose
of distributing to such employees the earnings and principal of the
fund
accumulated by the trust in accordance with such plan, and (2) if under
the trust instrument it is impossible, at any time prior to the
satisfaction
of all liabilities with respect to employees under the trust, for any
part
of the corpus or income to be (within the taxable year or thereafter)
used
for, or diverted to, purposes other than for the exclusive benefit of
his
employees: Provided, That any amount actually distributed to
any
employee or distributee shall be taxable to him in the year in which so
distributed to the extent that it exceeds the amount contributed by
such
employee or distributee.
(C) Computation
and Payment. -
(1) In General. - The tax shall be computed upon the taxable income of the estate or
trust
and shall be paid by the fiduciary, except as provided in Section 63
(relating
to revocable trusts) and Section 64 (relating to income for the benefit
of the grantor).
(2) Consolidation
of Income of Two or More Trusts. - Where, in the case of two or
more
trusts, the creator of the trust in each instance is the same person,
and
the beneficiary in each instance is the same, the taxable income of all
the trusts shall be consolidated and the tax provided in this Section
computed
on such consolidated income, and such proportion of said tax shall be
assessed
and collected from each trustee which the taxable income of the trust
administered
by him bears to the consolidated income of the several trusts.
SEC. 61. Taxable Income. - The taxable income of the estate or trust shall be computed in the
same
manner and on the same basis as in the case of an individual, except
that:
(A) There shall be allowed
as a deduction in computing the taxable income of the estate or trust
the
amount of the income of the estate or trust for the taxable year which
is to be distributed currently by the fiduciary to the beneficiaries,
and
the amount of the income collected by a guardian of an infant which is
to be held or distributed as the court may direct, but the amount so
allowed
as a deduction shall be included in computing the taxable income of the
beneficiaries, whether distributed to them or not.
Any amount allowed
as
a deduction under this Subsection shall not be allowed as a deduction
under
Subsection (B) of this Section in the same or any succeeding taxable
year. cralaw:red
(B) In the case of income
received by estates of deceased persons during the period of
administration
or settlement of the estate, and in the case of income which, in the
discretion
of the fiduciary, may be either distributed to the beneficiary or
accumulated,
there shall be allowed as an additional deduction in computing the
taxable
income of the estate or trust the amount of the income of the estate or
trust for its taxable year, which is properly paid or credited during
such
year to any legatee, heir or beneficiary but the amount so allowed as a
deduction shall be included in computing the taxable income of the
legatee,
heir or beneficiary. cralaw:red
(C) In the case of a
trust administered in a foreign country, the deductions mentioned in
Subsections
(A) and (B) of this Section shall not be allowed: Provided,
That
the amount of any income included in the return of said trust shall not
be included in computing the income of the beneficiaries. cralaw:red
SEC. 62. Exemption Allowed to Estates and Trusts. - For the purpose of the tax provided for in this Title, there shall be
allowed an exemption of Twenty thousand pesos (P20,000) from the income
of the estate or trust.
SEC. 63. Revocable Trusts. - Where at any time the power to revest in the grantor title to any
part
of the corpus of the trust is vested (1) in the grantor either alone or
in conjunction with any person not having a substantial adverse
interest
in the disposition of such part of the corpus or the income therefrom,
or (2) in any person not having a substantial adverse interest in the
disposition
of such part of the corpus or the income therefrom, the income of such
part of the trust shall be included in computing the taxable income of
the grantor.
SEC. 64. Income for Benefit of Grantor. -
(A) Where any part of
the income of a trust (1) is, or in the discretion of the grantor or of
any person not having a substantial adverse interest in the disposition
of such part of the income may be held or accumulated for future
distribution
to the grantor, or (2) may, or in the discretion of the grantor or of
any
person not having a substantial adverse interest in the disposition of
such part of the income, be distributed to the grantor, or (3) is, or
in
the discretion of the grantor or of any person not having a substantial
adverse interest in the disposition of such part of the income may be
applied
to the payment of premiums upon policies of insurance on the life of
the
grantor, such part of the income of the trust shall be included in
computing
the taxable income of the grantor.
(B) As used in this
Section, the term 'in the discretion of the grantor' means in the
discretion
of the grantor, either alone or in conjunction with any person not
having
a substantial adverse interest in the disposition of the part of the
income
in question.
SEC. 65. Fiduciary Returns. - Guardians, trustees, executors, administrators, receivers,
conservators
and all persons or corporations, acting in any fiduciary capacity,
shall
render, in duplicate, a return of the income of the person, trust or
estate
for whom or which they act, and be subject to all the provisions of
this
Title, which apply to individuals in case such person, estate or trust
has a gross income of Twenty thousand pesos (P20,000) or over during
the
taxable year.
Such fiduciary or person filing the return for him or it,
shall take oath that he has sufficient knowledge of the affairs of such
person, trust or estate to enable him to make such return and that the
same is, to the best of his knowledge and belief, true and correct, and
be subject to all the provisions of this Title which apply to
individuals:
Provided, That a return made by or for one or two or more joint
fiduciaries filed in the province where such fiduciaries reside; under
such rules and regulations as the Secretary of Finance, upon
recommendation
of the Commissioner, shall prescribe, shall be a sufficient compliance
with the requirements of this Section.
SEC. 66. Fiduciaries Indemnified Against Claims for Taxes Paid. - Trustees, executors, administrators and other fiduciaries are
indemnified
against the claims or demands of every beneficiary for all payments of
taxes which they shall be required to make under the provisions of this
Title, and they shall have credit for the amount of such payments
against
the beneficiary or principal in any accounting which they make as such
trustees or other fiduciaries.
CHAPTER XIOTHER
INCOME
TAX REQUIREMENTS
SEC. 67. Collection of Foreign Payments. -
All persons, corporations, duly registered general co-partnerships
(companias
colectivas) undertaking for profit or otherwise the collection of
foreign
payments of interests or dividends by means of coupons, checks or bills
of exchange shall obtain a license from the Commissioner, and shall be
subject to such rules and regulations enabling the government to obtain
the information required under this Title, as the Secretary of Finance,
upon recommendation of the Commissioner, shall prescribe.
SEC. 68. Information at Source as to Income Payments. - all persons, corporations or duly registered co- partnerships
(companias
colectivas), in whatever capacity acting, including lessees or
mortgagors
of real or personal property, trustees, acting in any trust capacity,
executors,
administrators, receivers, conservators and employees making payment to
another person, corporation or duly registered general co-partnership
(compania
colectiva), of interests, rents, salaries, wages, premiums, annuities,
compensations, remunerations, emoluments or other fixed or determinable
gains, profits and income, other than payment described in Section 69,
in any taxable year, or in the case of such payments made by the
Government
of the Philippines, the officers or employees of the Government having
information as to such payments and required to make returns in regard
thereto, are authorized and required to render a true and accurate
return
to the Commissioner, under such rules and regulations, and in such form
and manner as may be prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner, setting forth the amount of such gains, profits
and
income and the name and address of the recipient of such payments:
Provided,
That such returns shall be required, in the case of payments of
interest
upon bonds and mortgages or deeds of trust or other similar obligations
of corporations, and in the case of collections of items, not payable
in
the Philippines, of interest upon the bonds of foreign countries and
interest
from the bonds and dividends from the stock of foreign corporations by
persons, corporations or duly registered general co-partnerships
(companias
colectivas), undertaking as a matter of business or for profit or
otherwise
the collection of foreign payments of such interests or dividends by
means
of coupons or bills of exchange.
SEC. 69. Return of Information of Brokers.chanrobles virtual law library
- Every person, corporation or duly registered general co-partnership
(compania
colectiva), doing business as a broker in any exchange or board or
other
similar place of business, shall, when required by the Commissioner,
render
a correct return duly verified under oath under such rules and
regulations
as the Secretary of Finance, upon recommendation of the Commissioner,
may
prescribe, showing the names of customers for whom such person,
corporation
or duly registered general co-partnership (compania colectiva) has
transacted
any business, with such details as to the profits, losses or other
information
which the Commissioner, may require as to each of such customers as
will
enable the Commissioner to determine whether all income tax due on
profits
or gains of such customers has been paid.
SEC. 70. Returns of Foreign Corporations. -
(A)
Requirements. - Under rules and regulations prescribed by the Secretary of finance,
upon
the recommendation of the Commissioner, any attorney, accountant,
fiduciary,
bank, trust company, financial institution or other person, who aids,
assists,
counsels or advises in, o with respect to; the formation, organization
or reorganization of any foreign corporation, shall, within thirty (30)
days thereafter, file with the Commissioner a return.
(B)
Form and Contents of Return. - Such return shall be in such form and shall set forth; under oath, in
respect of each such corporation, to the full extent of the information
within the possession or knowledge or under the control of the person
required
to file the return, such information as the Secretary of Finance, upon
recommendation of the Commissioner, shall prescribe by rules and
regulations
as necessary for carrying out the provisions of this Title.
Nothing in
this Section shall be construed to require the divulging of privileged
communications between attorney and client.
SEC. 71. Disposition of Income Tax Returns, Publication of Lists of
Taxpayers
and Filers.
- After the assessment shall have been made, as provided in this
Title,
the returns, together with any corrections thereof which may have been
made by the Commissioner, shall be filed in the Office of the
Commissioner
and shall constitute public records and be open to inspection as such
upon
the order of the President of the Philippines, under rules and
regulations
to be prescribed by the Secretary of Finance, upon recommendation of
the
Commissioner.
The Commissioner may,
in each year, cause to be prepared and published in any newspaper the
lists
containing the names and addresses of persons who have filed income tax
returns. cralaw:red
SEC. 72. Suit to Recover Tax Based on False or Fraudulent Returns.chanrobles virtual law library
- When an assessment is made in case of any list, statement or return,
which in the opinion of the Commissioner was false or fraudulent or
contained
any understatement or undervaluation, no tax collected under such
assessment
shall be recovered by any suit, unless it is proved that the said list,
statement or return was not false nor fraudulent and did not contain
any
understatement or undervaluation; but this provision shall not apply to
statements or returns made or to be made in good faith regarding annual
depreciation of oil or gas wells and mines. cralaw:red
SEC. 73. Distribution of dividends or Assets by Corporations. -
(A)
Definition of Dividends. chanrobles virtual law library
- 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.
- A stock dividend representing the transfer of surplus to capital
account
shall not be subject to tax.
However, if a corporation cancels or
redeems
stock issued as a dividend at such time and in such manner as to make
the
distribution and cancellation or redemption, in whole or in part,
essentially
equivalent to the distribution of a taxable dividend, the amount so
distributed
in redemption or cancellation of the stock shall be considered as
taxable
income to the extent that it represents a distribution of earnings or
profits.
(C)
Dividends Distributed are Deemed Made from Most Recently
Accumulated
Profits.
- Any distribution made to the shareholders or members of a
corporation
shall be deemed to have been made form the most recently accumulated
profits
or surplus, and shall constitute a part of the annual income of the
distributee
for the year in which received.
(D)
Net Income of a Partnership Deemed Constructively Received by
Partners.-
The taxable income declared by a partnership for a taxable year which
is
subject to tax under Section 27 (A) of this Code, after deducting the
corporate
income tax imposed therein, shall be deemed to have been actually or
constructively
received by the partners in the same taxable year and shall be taxed to
them in their individual capacity, whether actually distributed or not.
CHAPTER
XIIQUARTERLY
CORPORATE INCOME TAX, ANNUAL DECLARATIONAND
QUARTERLY
PAYMENTS OF INCOME TAXES
SEC. 74. Declaration of Income Tax for Individuals. -
(A) In General.chanrobles virtual law library
- Except as otherwise provided in this Section, every individual
subject
to income tax under Sections 24 and 25(A) of this Title, who is
receiving
self-employment income, whether it constitutes the sole source of his
income
or in combination with salaries, wages and other fixed or determinable
income, shall make and file a declaration of his estimated income for
the
current taxable year on or before April 15 of the same taxable year.
In
general, self-employment income consists of the earnings derived by the
individual from the practice of profession or conduct of trade or
business
carried on by him as a sole proprietor or by a partnership of which he
is a member.
Nonresident Filipino citizens, with respect to income from
without the Philippines, and nonresident aliens not engaged in trade or
business in the Philippines, are not required to render a declaration
of
estimated income tax.
The declaration shall contain such pertinent
information
as the Secretary of Finance, upon recommendation of the Commissioner,
may,
by rules and regulations prescribe.
An individual may make amendments
of
a declaration filed during the taxable year under the rules and
regulations
prescribed by the Secretary of Finance, upon recommendation of the
Commissioner. cralaw:red
(B) Return
and Payment of Estimated Income Tax by Individuals. - The amount of estimated income as defined in Subsection (C) with
respect
to which a declaration is required under Subsection (A) shall be paid
in
four (4) installments.
The first installment shall be paid at the time
of the declaration and the second and third shall be paid on August 15
and November 15 of the current year, respectively.
The fourth
installment
shall be paid on or before April 15 of the following calendar year when
the final adjusted income tax return is due to be filed. cralaw:red
(C) Definition
of Estimated Tax.
- In the case of an individual, the term "estimated tax" means
the
amount which the individual declared as income tax in his final
adjusted
and annual income tax return for the preceding taxable year minus the
sum
of the credits allowed under this Title against the said tax.
If,
during
the current taxable year, the taxpayer reasonable expects to pay a
bigger
income tax, he shall file an amended declaration during any interval of
installment payment dates. cralaw:red
SEC. 75. Declaration of Quarterly Corporate Income Tax. -
Every corporation shall file in duplicate a quarterly summary
declaration
of its gross income and deductions on a cumulative basis for the
preceding
quarter or quarters upon which the income tax, as provided in Title II
of this Code, shall be levied, collected and paid.
The tax so computed
shall be decreased by the amount of tax previously paid or assessed
during
the preceding quarters and shall be paid not later than sixty (60) days
from the close of each of the first three (3) quarters of the taxable
year,
whether calendar or fiscal year. cralaw:red
SEC. 76. Final Adjustment Return. chanrobles virtual law library
- Every corporation liable to tax under Section 27 shall file a final
adjustment
return covering the total taxable income for the preceding calendar or
fiscal year.
If the sum of the quarterly tax payments made during the
said
taxable year is not equal to the total tax due on the entire taxable
income
of that year, the corporation shall either:
(A) Pay the
balance of tax still due; or
(B) Carry-over
the excess credit; or
(C) Be credited
or refunded with the excess amount paid, as the case may be.
In case the corporation
is entitled to a tax credit or refund of the excess estimated quarterly
income taxes paid, the excess amount shown on its final adjustment
return
may be carried over and credited against the estimated quarterly income
tax liabilities for the taxable quarters of the succeeding taxable
years.
Once the option to carry-over and apply the excess quarterly income tax
against income tax due for the taxable quarters of the succeeding
taxable
years has been made, such option shall be considered irrevocable for
that
taxable period and no application for cash refund or issuance of a tax
credit certificate shall be allowed therefor.
SEC. 77. Place and Time of Filing and Payment of Quarterly Corporate
Income
Tax. -
(A) Place of Filing.- Except as the Commissioner other wise permits, the quarterly
income
tax declaration required in Section 75 and the final adjustment return
required in Section 76 shall be filed with the authorized agent banks
or
Revenue District Officer or Collection Agent or duly authorized
Treasurer
of the city or municipality having jurisdiction over the location of
the
principal office of the corporation filing the return or place where
its
main books of accounts and other data from which the return is prepared
are kept. cralaw:red
(B) Time of Filing
the Income Tax Return. - The corporate quarterly declaration shall be filed within sixty (60)
days following the close of each of the first three (3) quarters of the
taxable year.
The final adjustment return shall be filed on or before
the
fifteenth (15th) day of April, or on or before the fifteenth
(15th) day of the fourth (4th) month following
the
close of the fiscal year, as the case may be.
(C) Time of Payment
of the Income Tax. chanrobles virtual law library
- The income tax due on the corporate quarterly returns and the final
adjustment
income tax returns computed in accordance with Sections 75 and 76 shall
be paid at the time the declaration or return is filed in a manner
prescribed
by the Commissioner.
CHAPTER
XIIIWITHHOLDING
ON WAGES
SEC. 78. Definitions. - As used in this Chapter:
(A) Wages. - The term 'wages' means all remuneration (other than fees paid to a
public
official) for services performed by an employee for his employer,
including
the cash value of all remuneration paid in any medium other than cash,
except that such term shall not include remuneration paid:.
(1) For
agricultural
labor paid entirely in products of the farm where the labor is
performed,
or(2) For
domestic
service in a private home, or(3) For casual
labor not in the course of the employer's trade or business, or(4) For
services
by a citizen or resident of the Philippines for a foreign government or
an
international organization.
If the remuneration paid
by an employer to an employee for services performed during one-half
(1/2)
or more of any payroll period of not more than thirty-one (31)
consecutive
days constitutes wages, all the remuneration paid by such employer to
such
employee for such period shall be deemed to be wages; but if the
remuneration
paid by an employer to an employee for services performed during more
than
one -half (1/2) of any such payroll period does not constitute wages,
then
none of the remuneration paid by such employer to such employee for
such
period shall be deemed to be wages.
(B) Payroll
Period. - The term 'payroll period' means a period for which payment of wages
is
ordinarily made to the employee by his employer, and the term "miscellaneous
payroll period" means a payroll period other than, a daily, weekly,
biweekly, semi-monthly, monthly, quarterly, semi-annual, or annual
period.
(C) Employee. - The term 'employee' refers to any individual who is the recipient of
wages and includes an officer, employee or elected official of the
Government
of the Philippines or any political subdivision, agency or
instrumentality
thereof.
The term "employee" also includes an officer of a
corporation.
(D) Employer. - The term "employer" means the person for whom an individual
performs
or performed any service, of whatever nature, as the employee of such
person,
except that:
(1) If the
person
for whom the individual performs or performed any service does not
have control of the payment of the wages for such services, the term "employer"
(except for the purpose of Subsection (A) means the person having
control
of the
payment of such wages; and(2) In the case
of a person paying wages on behalf of a nonresident alien individual,
foreign
partnership or foreign corporation not engaged in trade or business
within
the Philippines,
the term "employer" (except for the purpose of Subsection (A)
means
such person.
SEC. 79. Income Tax Collected at Source. -
(A) Requirement
of Withholding. - Every employer making payment of wages shall deduct and withhold
upon such wages a tax determined in accordance with the rules and
regulations
to be prescribed by the Secretary of Finance, upon recommendation of
the
Commissioner: Provided, however, That no withholding of a tax
shall
be required where the total compensation income of an individual does
not
exceed the statutory minimum wage, or five thousand pesos (P5,000.00)
per
month, whichever is higher.
(B) Tax
Paid by Recipient. - If the employer, in violation of the provisions of this Chapter,
fails
to deduct and withhold the tax as required under this Chapter, and
thereafter
the tax against which such tax may be credited is paid, the tax so
required
to be deducted and withheld shall not be collected from the employer;
but
this Subsection shall in no case relieve the employer from liability
for
any penalty or addition to the tax otherwise applicable in respect of
such
failure to deduct and withhold.
(C) Refunds
or Credits. -
(1) Employer. - When there has been an overpayment of tax under this Section, refund
or credit shall be made to the employer only to the extent that the
amount
of such overpayment was not deducted and withheld hereunder by the
employer.
(2)
Employees. -The amount deducted and withheld under this Chapter during any
calendar
year shall be allowed as a credit to the recipient of such income
against
the tax imposed under Section 24(A) of this Title.
Refunds and credits
in cases of excessive withholding shall be granted under rules and
regulations
promulgated by the Secretary of Finance, upon recommendation of the
Commissioner.
Any excess of the taxes
withheld over the tax due from the taxpayer shall be returned or
credited
within three (3) months from the fifteenth (15th) day of
April.
Refunds or credits made after such time shall earn interest at the rate
of six percent (6%) per annum, starting after the lapse of the
three-month
period to the date the refund of credit is made.
Refunds shall be made
upon warrants drawn by the Commissioner or by his duly authorized
representative
without the necessity of counter-signature by the Chairman, Commission
on Audit or the latter's duly authorized representative as an exception
to the requirement prescribed by Section 49, Chapter 8, Subtitle B,
Title
1 of Book V of Executive Order No. 292, otherwise known as the
Administrative
Code of 1987.
(D) Personal
Exemptions.
-
(1) In
General. - Unless otherwise provided by this Chapter, the personal and
additional
exemptions applicable under this Chapter shall be determined in
accordance
with the main provisions of this Title.
(2) Exemption
Certificate. -
(a) When
to
File. - On or before the date of commencement of employment with an
employer, the employee shall furnish the employer with a signed
withholding
exemption certificate relating to the personal and additional
exemptions
to which he is entitled.
(b) Change
of Status. - In case of change of status of an employee as a result
of which he would be entitled to a lesser or greater amount of
exemption,
the employee shall, within ten (10) days from such change, file with
the
employer a new withholding exemption certificate reflecting the change.
(c) Use
of
Certificates. - The certificates filed hereunder shall be used by
the
employer in the determination of the amount of taxes to be withheld.
(d) Failure
to Furnish Certificate. - Where an employee, in violation of this
Chapter,
either fails or refuses to file a withholding exemption certificate,
the
employer shall withhold the taxes prescribed under the schedule for
zero
exemption of the withholding tax table determined pursuant to
Subsection
(A) hereof.
(E) Withholding
on Basis of Average Wages. - The Commissioner may, under rules and regulations promulgated by the
Secretary of Finance, authorize employers to:
(1) estimate
the wages which will be paid to an employee in any quarter of the
calendar
year;(2) determine
the amount to be deducted and withheld upon each payment of wages to
such employee during such quarter as if the appropriate average of the
wages so
estimated constituted the actual wages paid; and(3) deduct and
withhold upon any payment of wages to such employee during ;such quarter
such amount as may be required to be deducted and withheld during such
quarter
without regard to this Subsection.
(F) Husband
and Wife. - When a husband and wife each are recipients of wages, whether from
the
same or from different employers, taxes to be withheld shall be
determined
on the following bases:
(1) The
husband
shall be deemed the head of the family and proper claimant of the
additional
exemption in respect to any dependent children, unless he explicitly
waives
his right in
favor of his wife in the withholding exemption certificate.
(2) Taxes
shall
be withheld from the wages of the wife in accordance with the schedule
for
zero exemption of the withholding tax table prescribed in Subsection
(D)(2)(d)
hereof.
(G) Nonresident
Aliens. - Wages paid to nonresident alien individuals engaged in trade or
business
in the Philippines shall be subject to the provisions of this Chapter.
(H) Year-End
Adjustment. - On or before the end of the calendar year but prior to the payment of
the compensation for the last payroll period, the employer shall
determine
the tax due from each employee on taxable compensation income for the
entire
taxable year in accordance with Section 24(A).
The difference between
the
tax due from the employee for the entire year and the sum of taxes
withheld
from January to November shall either be withheld from his salary in
December
of the current calendar year or refunded to the employee not later than
January 25 of the succeeding year.
SEC. 80. Liability for Tax. -
(A) Employer. - The employer shall be liable for the withholding and remittance of
the
correct amount of tax required to be deducted and withheld under this
Chapter.
If the employer fails to withhold and remit the correct amount of tax
as
required to be withheld under the provision of this Chapter, such tax
shall
be collected from the employer together with the penalties or additions
to the tax otherwise applicable in respect to such failure to withhold
and remit.
(B) Employee. - Where an employee fails or refuses to file the withholding exemption
certificate or willfully supplies false or inaccurate information
thereunder,
the tax otherwise required to be withheld by the employer shall be
collected
from him including penalties or additions to the tax from the due date
of remittance until the date of payment.
On the other hand, excess
taxes
withheld made by the employer due to:
(1) failure
or refusal to file the withholding exemption certificate; or
(2) false
and
inaccurate information shall not be refunded to the employee but shall
be forfeited
in favor of the Government.
SEC. 81. Filing of Return and Payment of Taxes Withheld. - Except as the Commissioner otherwise permits, taxes deducted and
withheld
by the employer on wages of employees shall be covered by a return and
paid to an authorized agent bank; Collection Agent, or the duly
authorized
Treasurer of the city or municipality where the employer has his legal
residence or principal place of business, or in case the employer is a
corporation, where the principal office is located.
The return shall be
filed and the payment made within twenty-five (25) days from the close
of each calendar quarter: Provided, however, That the
Commissioner
may, with the approval of the Secretary of Finance, require the
employers
to pay or deposit the taxes deducted and withheld at more frequent
intervals,
in cases where such requirement is deemed necessary to protect the
interest
of the Government. cralaw:red
The taxes deducted and
withheld by employers shall be held in a special fund in trust for the
Government until the same are paid to the said collecting officers. cralaw:red
SEC. 82. Return and Payment in Case of Government Employees. - If the employer is the Government of the Philippines or any political
subdivision, agency or instrumentality thereof, the return of the
amount
deducted and withheld upon any wage shall be made by the officer or
employee
having control of the payment of such wage, or by any officer or
employee
duly designated for the purpose. cralaw:red
SEC. 83. Statements and Returns. -
(A) Requirements. - Every employer required to deduct and withhold a tax shall furnish to
each such employee in respect of his employment during the calendar
year,
on or before January thirty-first (31st) of the succeeding
year,
or if his employment is terminated before the close of such calendar
year,
on the same day of which the last payment of wages is made, a written
statement
confirming the wages paid by the employer to such employee during the
calendar
year, and the amount of tax deducted and withheld under this Chapter in
respect of such wages.
The statement required to be furnished by this
Section
in respect of any wage shall contain such other information, and shall
be furnished at such other time and in such form as the Secretary of
Finance,
upon the recommendation of the Commissioner, may, by rules and
regulation,
prescribe. cralaw:red
(B) Annual
Information Returns. - Every employer required to deduct and withhold the taxes in respect
of
the wages of his employees shall, on or before January thirty-first (31st)
of the succeeding year, submit to the Commissioner an annual
information
return containing a list of employees, the total amount of compensation
income of each employee, the total amount of taxes withheld therefrom
during
the year, accompanied by copies of the statement referred to in the
preceding
paragraph, and such other information as may be deemed necessary.
This
return, if made and filed in accordance with rules and regulations
promulgated
by the Secretary of Finance, upon recommendation of the Commissioner,
shall
be sufficient compliance with the requirements of Section 68 of this
Title
in respect of such wages. cralaw:red
(C) Extension
of time. - The Commissioner, under such rules and regulations as may be
promulgated
by the Secretary of Finance, may grant to any employer a reasonable
extension
of time to furnish and submit the statements and returns required under
this Section.
TITLE III
CHAPTER IESTATE TAX
SEC. 84. Rates of Estate Tax. - There shall be levied, assessed, collected and paid upon the transfer
of the net estate as determined in accordance with Sections 85 and 86
of
every decedent, whether resident or nonresident of the Philippines, a
tax
based on the value of such net estate, as computed in accordance with
the
following schedule:
If the net estate is:chanroblesvirtuallawlibrary
OVER |
BUT
NOT OVER |
THE
TAX SHALL BE |
PLUS |
OF
THE EXCESS OVER |
|
P
200,000 |
Exempt |
|
|
P
200,000 |
550,000 |
0 |
5%
|
P
200,000 |
500,000 |
2,000,000 |
P
15,000 |
8%
|
500,000 |
2,000,000 |
5,000,000 |
135,000 |
11%
|
2,000,000 |
5,000,000 |
10,000,000 |
465,000 |
15%
|
5,000,000 |
10,000,000 |
And
Over |
1,215,000 |
20%
|
10,000,000 |
SEC. 85. Gross Estate. - the value of the gross estate of the decedent shall be determined by
including the value at the time of his death of all property, real or
personal,
tangible or intangible, wherever situated: Provided, however,
that
in the case of a nonresident decedent who at the time of his death was
not a citizen of the Philippines, only that part of the entire gross
estate
which is situated in the Philippines shall be included in his taxable
estate.
(A) Decedent's
Interest. - To the extent of the interest therein of the decedent at the time of
his death;
(B) Transfer
in Contemplation of Death. - To the extent of any interest therein of which the decedent has at
any
time made a transfer, by trust or otherwise, in contemplation of or
intended
to take effect in possession or enjoyment at or after death, or of
which
he has at any time made a transfer, by trust or otherwise, under which
he has retained for his life or for any period which does not in fact
end
before his death (1) the possession or enjoyment of, or the right to
the
income from the property, or (2) the right, either alone or in
conjunction
with any person, to designate the person who shall possess or enjoy the
property or the income therefrom; except in case of a bonafide sale for
an adequate and full consideration in money or money's worth.
(C) Revocable
Transfer. -
(1) To the extent of
any interest therein, of which the decedent has at any time made a
transfer
(except in case of a bona fide sale for an adequate and full
consideration
in money or money's worth) by trust or otherwise, where the enjoyment
thereof
was subject at the date of his death to any change through the exercise
of a power (in whatever capacity exerciseable) by the decedent alone or
by the decedent in conjunction with any other person (without regard to
when or from what source the decedent acquired such power), t o alter,
amend, revoke, or terminate, or where any such power is relinquished in
contemplation of the decedent's death.
(2) For the purpose
of this Subsection, the power to alter, amend or revoke shall be
considered
to exist on the date of the decedent's death even though the exercise
of
the power is subject to a precedent giving of notice or even though the
alteration, amendment or revocation takes effect only on the expiration
of a stated period after the exercise of the power, whether or not on
or
before the date of the decedent's death notice has been given or the
power
has been exercised.
In such cases, proper adjustment shall be made
representing
the interests which would have been excluded from the power if the
decedent
had lived, and for such purpose if the notice has not been given or the
power has not been exercised on or before the date of his
death, such notice
shall be considered to have been given, or the power exercised, on the
date of his death.
(D) Property Passing
Under General Power of Appointment. - To the extent of any property passing under a general power of
appointment
exercised by the decedent: (1) by will, or (2) by deed executed in
contemplation
of, or intended to take effect in possession or enjoyment at, or after
his death, or (3) by deed under which he has retained for his life or
any
period not ascertainable without reference to his death or for any
period
which does not in fact end before his death (a) the possession or
enjoyment
of, or the right to the income from, the property, or (b) the right,
either
alone or in conjunction with any person, to designate the persons who
shall
possess or enjoy the property or the income therefrom; except in case
of
a bona fide sale for an adequate and full consideration in money or
money's
worth.
(E) Proceeds
of Life Insurance. - To the extent of the amount receivable by the estate of the deceased,
his executor, or administrator, as insurance under policies taken out
by
the decedent upon his own life, irrespective of whether or not the
insured
retained the power of revocation, or to the extent of the amount
receivable
by any beneficiary designated in the policy of insurance, except when
it
is expressly stipulated that the designation of the beneficiary is
irrevocable.
(F) Prior
Interests. - Except as otherwise specifically provided therein, Subsections (B),
(C)
and (E) of this Section shall apply to the transfers, trusts, estates,
interests, rights, powers and relinquishment of powers, as severally
enumerated
and described therein, whether made, created, arising, existing,
exercised
or relinquished before or after the effectivity of this Code.
(G)Transfers
of Insufficient Consideration. - If any one of the transfers,
trusts,
interests, rights or powers enumerated and described in Subsections
(B),
(C) and (D) of this Section is made, created, exercised or relinquished
for a consideration in money or money's worth, but is not a bona fide
sale
for an adequate and full consideration in money or money's worth, there
shall be included in the gross estate only the excess of the fair
market
value, at the time of death, of the property otherwise to be included
on
account of such transaction, over the value of the consideration
received
therefor by the decedent.
(H) Capital of
the Surviving Spouse. - The capital of the surviving spouse of a decedent shall not, for the
purpose of this Chapter, be deemed a part of his or her gross estate.
SEC. 86. Computation of Net Estate. - For the purpose of the tax imposed in this Chapter, the value of the
net estate shall be determined:
(A) Deductions
Allowed to the Estate of Citizen or a Resident. - In the case of a citizen or resident of the Philippines, by deducting
from the value of the gross estate -.
(1) Expenses, Losses,
Indebtedness, and taxes. - Such amounts:
(a) For actual
funeral
expenses or in an amount equal to five percent (5%) of the gross
estate,
whichever is lower, but in no case to exceed Two hundred thousand pesos
(P200,000);
(b) For judicial
expenses
of the testamentary or intestate proceedings;
(c) For claims
against
the estate: Provided, That at the time the indebtedness was
incurred
the debt instrument was duly notarized and, if the loan was contracted
within three (3) years before the death of the decedent, the
administrator
or executor shall submit a statement showing the disposition of the
proceeds
of the loan;
(d) For claims of
the
deceased against insolvent persons where the value of decedent's
interest
therein is included in the value of the gross estate; and
(e) For unpaid
mortgages
upon, or any indebtedness in respect to, property where the value of
decedent's
interest therein, undiminished by such mortgage or indebtedness, is
included
in the value of the gross estate, but not including any income tax upon
income received after the death of the decedent, or property taxes not
accrued before his death, or any estate tax.
The deduction herein
allowed
in the case of claims against the estate, unpaid mortgages or any
indebtedness
shall, when founded upon a promise or agreement, be limited to the
extent
that they were contracted bona fide and for an adequate and full
consideration
in money or money's worth.
There shall also be deducted losses incurred
during the settlement of the estate arising from fires, storms,
shipwreck,
or other casualties, or from robbery, theft or embezzlement, when such
losses are not compensated for by insurance or otherwise, and if at the
time of the filing of the return such losses have not been claimed as a
deduction for the income tax purposes in an income tax return, and
provided
that such losses were incurred not later than the last day for the
payment
of the estate tax as prescribed in Subsection (A) of Section 91.
(2) Property
Previously
Taxed. - An amount equal to the value specified below of any
property
forming a part of the gross estate situated in the Philippines of any
person
who died within five (5) years prior to the death of the decedent, or
transferred
to the decedent by gift within five (5) years prior to his death, where
such property can be identified as having been received by the decedent
from the donor by gift, or from such prior decedent by gift, bequest,
devise
or inheritance, or which can be identified as having been acquired in
exchange
for property so received:One hundred percent
(100%) of the value, if the prior decedent died within one (1) year
prior
to the death of the decedent, or if the property was transferred to him
by gift within the same period prior to his death;Eighty percent (80%)
of the value, if the prior decedent died more than one (1) year but not
more than two (2) years prior to the death of the decedent, or if the
property
was transferred to him by gift within the same period prior to his
death;Sixty percent (60%)
of the value, if the prior decedent died more than two (2) years but
not
more than three (3) years prior to the death of the decedent, or if the
property was transferred to him by gift within the same period prior to
his death;Forty percent (40%)
of the value, if the prior decedent died more than three (3) years but
not more than four (4) years prior to the death of the decedent, or if
the property was transferred to him by gift within the same period
prior
to his death;Twenty percent (20%)
of the value, if the prior decedent died more than four (4) years but
not
more than five (5) years prior to the death of the decedent, or if the
property was transferred to him by gift within the same period prior to
his death;These deductions
shall
be allowed only where a donor's tax or estate tax imposed under this
Title
was finally determined and paid by or on behalf of such donor, or the
estate
of such prior decedent, as the case may be, and only in the amount
finally
determined as the value of such property in determining the value of
the
gift, or the gross estate of such prior decedent, and only to the
extent
that the value of such property is included in the decedent's gross
estate,
and only if in determining the value of the estate of the prior
decedent,
no deduction was allowable under paragraph (2) in respect of the
property
or properties given in exchange therefor.
Where a deduction was allowed
of any mortgage or other lien in determining the donor's tax, or the
estate
tax of the prior decedent, which was paid in whole or in part prior to
the decedent's death, then the deduction allowable under said
Subsection
shall be reduced by the amount so paid.
Such deduction allowable shall
be reduced by an amount which bears the same ratio to the amounts
allowed
as deductions under paragraphs (1) and (3) of this Subsection as the
amount
otherwise deductible under said paragraph (2) bears to the value of the
decedent's estate.
Where the property referred to consists of two or
more
items, the aggregate value of such items shall be used for the purpose
of computing the deduction.
(3) Transfers for
Public Use. - The amount of all the bequests, legacies, devises or
transfers to or for the use of the Government of the Republic of the
Philippines,
or any political subdivision thereof, for exclusively public purposes.
(4) The Family
Home. - An amount equivalent to the current fair market value of the
decedent's
family home: Provided, however, That if the said current fair market
value
exceeds One million pesos (P1,000,000), the excess shall be subject to
estate tax.
As a sine qua non condition for the exemption or
deduction,
said family home must have been the decedent's family home as certified
by the barangay captain of the locality.
(5) Standard
Deduction. - An amount equivalent to One million pesos (P1,000,000).
(6) Medical
Expenses. - Medical Expenses incurred by the decedent within one (1) year prior
to
his death which shall be duly substantiated with receipts: Provided,
That in no case shall the deductible medical expenses exceed Five
Hundred
Thousand Pesos (P500,000).
(7) Amount Received
by Heirs Under Republic Act No. 4917. - Any amount received by the
heirs
from the decedent - employee as a consequence of the death of the
decedent-employee
in accordance with Republic Act No. 4917: Provided, That such
amount
is included in the gross estate of the decedent.
(B) Deductions Allowed
to Nonresident Estates. - In the case of a nonresident not a citizen of the Philippines, by
deducting
from the value of that part of his gross estate which at the time of
his
death is situated in the Philippines:
(1) Expenses,
Losses,
Indebtedness and Taxes. - That proportion of the deductions
specified
in paragraph (1) of Subsection (A) of this Section which the value of
such
part bears to the value of his entire gross estate wherever situated;(2) Property
Previously
Taxed. - An amount equal to the value specified below of any
property
forming part of the gross estate situated in the Philippines of any
person
who died within five (5) years prior to the death of the decedent, or
transferred
to the decedent by gift within five (5) years prior to his death, where
such property can be identified as having been received by the decedent
from the donor by gift, or from such prior decedent by gift, bequest,
devise
or inheritance, or which can be identified as having been acquired in
exchange
for property so received:One hundred percent
(100%) of the value if the prior decedent died within one (1) year
prior
to the death of the decedent, or if the property was transferred to him
by gift, within the same period prior to his death;Eighty percent (80%)
of the value, if the prior decedent died more than one (1) year but not
more than two (2) years prior to the death of the decedent, or if the
property
was transferred to him by gift within the same period prior to his
death;Sixty percent (60%)
of the value, if the prior decedent died more than two (2) years but
not
more than three (3) years prior to the death of the decedent, or if the
property was transferred to him by gift within the same period prior to
his death;Forty percent (40%)
of the value, if the prior decedent died more than three (3) years but
not more than four (4) years prior to the death of the decedent, or if
the property was transferred to him by gift within the same period
prior
to his death; andTwenty percent (20%)
of the value, if the prior decedent died more than four (4) years but
not
more than five (5) years prior to the death of the decedent, or if the
property was transferred to him by gift within the same period prior to
his death.These deductions
shall
be allowed only where a donor's tax, or estate tax imposed under this
Title
is finally determined and paid by or on behalf of such donor, or the
estate
of such prior decedent, as the case may be, and only in the amount
finally
determined as the value of such property in determining the value of
the
gift, or the gross estate of such prior decedent, and only to the
extent
that the value of such property is included in that part of the
decedent's
gross estate which at the time of his death is situated in the
Philippines;
and only if, in determining the value of the net estate of the prior
decedent,
no deduction is allowable under paragraph (2) of Subsection (B) of this
Section, in respect of the property or properties given in exchange
therefore.
Where a deduction was allowed of any mortgage or other lien in
determining
the donor's tax, or the estate tax of the prior decedent, which was
paid
in whole or in part prior to the decedent's death, then the deduction
allowable
under said paragraph shall be reduced by the amount so paid.
Such
deduction
allowable shall be reduced by an amount which bears the same ratio to
the
amounts allowed as deductions under paragraphs (1) and (3) of this
Subsection
as the amount otherwise deductible under paragraph (2) bears to the
value
of that part of the decedent's gross estate which at the time of his
death
is situated in the Philippines.
Where the property referred to consists
of two (2) or more items, the aggregate value of such items shall be
used
for the purpose of computing the deduction.
(3) Transfers for
Public Use. - The amount of all bequests, legacies, devises or
transfers
to or for the use of the Government of the Republic of the Philippines
or any political subdivision thereof, for exclusively public purposes.
(C) Share in the
Conjugal Property. - the net share of the surviving spouse in the conjugal partnership
property
as diminished by the obligations properly chargeable to such property
shall,
for the purpose of this Section, be deducted from the net estate of the
decedent.
(D) Miscellaneous
Provisions. - No deduction shall be allowed in the case of a nonresident not a
citizen
of the Philippines, unless the executor, administrator, or anyone of
the
heirs, as the case may be, includes in the return required to be filed
under Section 90 the value at the time of his death of that part of the
gross estate of the nonresident not situated in the Philippines.
(E) Tax Credit
for Estate Taxes paid to a Foreign Country. -
(1) In General. - The tax imposed by this Title shall be credited with the amounts of
any
estate tax imposed by the authority of a foreign country.
(2) Limitations
on Credit. - The amount of the credit taken under this Section
shall
be subject to each of the following limitations:
(a) The amount of
the
credit in respect to the tax paid to any country shall not exceed the
same
proportion of the tax against which such credit is taken, which the
decedent's
net estate situated within such country taxable under this Title bears
to his entire net estate; and
(b) The total
amount
of the credit shall not exceed the same proportion of the tax against
which
such credit is taken, which the decedent's net estate situated outside
the Philippines taxable under this Title bears to his entire net estate.
SEC. 87. Exemption of Certain Acquisitions and Transmissions. - The following shall not be taxed:
(A) The merger of
usufruct
in the owner of the naked title;(B) The transmission
or delivery of the inheritance or legacy by the fiduciary heir or
legatee
to the fideicommissary;(C) The transmission
from the first heir, legatee or donee in favor of another beneficiary,
in accordance with the desire of the predecessor; and(D) All bequests,
devises,
legacies or transfers to social welfare, cultural and charitable
institutions,
no part of the net income of which insures to the benefit of any
individual:
Provided, however, That not more than thirty percent (30%) of
the
said bequests, devises, legacies or transfers shall be used by such
institutions
for administration purposes.
SEC. 88. Determination of the Value of the Estate. -
(A) Usufruct. - To determine the value of the right of usufruct, use or habitation,
as
well as that of annuity, there shall be taken into account the probable
life of the beneficiary in accordance with the latest Basic Standard
Mortality
Table, to be approved by the Secretary of Finance, upon recommendation
of the Insurance Commissioner. cralaw:red
(B) Properties. - The estate shall be appraised at its fair market value as of the time
of death.
However, the appraised value of real property as of the time
of death shall be, whichever is higher of:
(1) The fair
market value as determined by the Commissioner, or
(2) The fair market
value as shown in the schedule of values fixed by the Provincial and
City
Assessors.
SEC. 89. Notice of Death to be Filed. - In all cases of transfers subject to tax, or where, though exempt
from
tax, the gross value of the estate exceeds Twenty thousand pesos
(P20,000),
the executor, administrator or any of the legal heirs, as the case may
be, within two (2) months after the decedent's death, or within a like
period after qualifying as such executor or administrator, shall give a
written notice thereof to the Commissioner.
SEC. 90. Estate Tax Returns. -
(A) Requirements. - In all cases of transfers subject to the tax imposed herein, or
where,
though exempt from tax, the gross value of the estate exceeds Two
hundred
thousand pesos (P200,000), or regardless of the gross value of the
estate,
where the said estate consists of registered or registrable property
such
as real property, motor vehicle, shares of stock or other similar
property
for which a clearance from the Bureau of Internal Revenue is required
as
a condition precedent for the transfer of ownership thereof in the name
of the transferee, the executor, or the administrator, or any of the
legal
heirs, as the case may be, shall file a return under oath in duplicate,
setting forth:
(1) The value of the
gross estate of the decedent at the time of his death, or in case of a
nonresident, not a citizen of the Philippines, of that part of his
gross
estate situated in the Philippines;(2) The deductions
allowed from gross estate in determining the estate as defined in
Section
86; and(3) Such part of such
information as may at the time be ascertainable and such supplemental
data
as may be necessary to establish the correct taxes. Provided, however,
That estate tax returns showing a gross value exceeding Two million
pesos
(P2,000,000) shall be supported with a statement duly certified to by a
Certified Public Accountant containing the following:
(a) Itemized assets
of the decedent with their corresponding gross value at the time of his
death, or in the case of a nonresident, not a citizen of the
Philippines,
of that part of his gross estate situated in the Philippines;
(b) Itemized
deductions
from gross estate allowed in Section 86; and
(c) The amount of
tax
due whether paid or still due and outstanding.
(B) Time for Filing.
- For the purpose of determining the estate tax provided for in Section
84 of this Code, the estate tax return required under the preceding
Subsection
(A) shall be filed within six (6) months from the decedent's death.
A certified copy of
the schedule of partition and the order of the court approving the same
shall be furnished the Commissioner within thirty (30) after the
promulgation
of such order.
(C) Extension
of Time. - The Commissioner shall have authority to grant, in meritorious cases,
a reasonable extension not exceeding thirty (30) days for filing the
return.
(D) Place of
Filing. - Except in cases where the Commissioner otherwise permits, the return
required under Subsection (A) shall be filed with an authorized agent
bank,
or Revenue District Officer, Collection Officer, or duly authorized
Treasurer
of the city or municipality in which the decedent was domiciled at the
time of his death or if there be no legal residence in the Philippines,
with the Office of the Commissioner.
SEC. 91. Payment of Tax. -
(A) Time of
Payment. - The estate tax imposed by Section 84 shall be paid at the time the
return
is filed by the executor, administrator or the heirs.
(B) Extension
of Time. - When the Commissioner finds that the payment on the due date of the
estate
tax or of any part thereof would impose undue hardship upon the estate
or any of the heirs, he may extend the time for payment of such tax or
any part thereof not to exceed five (5) years, in case the estate is
settled
through the courts, or two (2) years in case the estate is settled
extrajudicially.
In such case, the amount in respect of which the extension is granted
shall
be paid on or before the date of the expiration of the period of the
extension,
and the running of the Statute of Limitations for assessment as
provided
in Section 203 of this Code shall be suspended for the period of any
such
extension. cralaw:red
Where the taxes are
assessed by reason of negligence, intentional disregard of rules and
regulations,
or fraud on the part of the taxpayer, no extension will be granted by
the
Commissioner. cralaw:red
If an extension is granted,
the Commissioner may require the executor, or administrator, or
beneficiary,
as the case may be, to furnish a bond in such amount, not exceeding
double
the amount of the tax and with such sureties as the Commissioner deems
necessary, conditioned upon the payment of the said tax in accordance
with
the terms of the extension.
(C) Liability
for Payment.- The estate tax imposed by Section 84 shall be paid by the
executor
or administrator before delivery to any beneficiary of his distributive
share of the estate.
Such beneficiary shall to the extent of his
distributive
share of the estate, be subsidiarily liable for the payment of such
portion
of the estate tax as his distributive share bears to the value of the
total
net estate. cralaw:red
For the purpose of this
Chapter, the term "executor" or "administrator" means
the
executor or administrator of the decedent, or if there is no executor
or
administrator appointed, qualified, and acting within the Philippines,
then any person in actual or constructive possession of any property of
the decedent. cralaw:red
SEC. 92. Discharge of Executor or Administrator from Personal Liability.
- If the executor or administrator makes a written application to the
Commissioner
for determination of the amount of the estate tax and discharge from
personal
liability therefore, the Commissioner (as soon as possible, and in any
event within one (1) year after the making of such application, or if
the
application is made before the return is filed, then within one (1)
year
after the return is filed, but not after the expiration of the period
prescribed
for the assessment of the tax in Section 203 shall not notify the
executor
or administrator of the amount of the tax.
The executor or
administrator,
upon payment of the amount of which he is notified, shall be discharged
from personal liability for any deficiency in the tax thereafter found
to be due and shall be entitled to a receipt or writing showing such
discharge. cralaw:red
SEC. 93. Definition of Deficiency. - As used in this Chapter, the term "deficiency" means:
(a) The amount by which
the tax imposed by this Chapter exceeds the amount shown as the tax by
the executor, administrator or any of the heirs upon his return; but
the
amounts so shown on the return shall first be increased by the amounts
previously assessed (or collected without assessment) as a deficiency
and
decreased by the amount previously abated, refunded or otherwise repaid
in respect of such tax; or
(b) If no amount is
shown as the tax by the executor, administrator or any of the heirs
upon
his return, or if no return is made by the executor, administrator, or
any heir, then the amount by which the tax exceeds the amounts
previously
assessed (or collected without assessment) as a deficiency; but such
amounts
previously assessed or collected without assessment shall first be
decreased
by the amounts previously abated, refunded or otherwise repaid in
respect
of such tax. cralaw:red
SEC. 94. Payment Before Delivery by Executor or Administrator. - No judge shall authorize the executor or judicial administrator to
deliver
a distributive share to any party interested in the estate unless a
certification
from the Commissioner that the estate tax has been paid is shown. cralaw:red
SEC. 95. Duties of Certain Officers and Debtors. - Registers of Deeds shall not register in the Registry of Property any
document transferring real property or real rights therein or any
chattel
mortgage, by way of gifts inter vivos or mortis causa,
legacy
or inheritance, unless a certification from the Commissioner that the
tax
fixed in this Title and actually due thereon had been paid is show, and
they shall immediately notify the Commissioner, Regional Director,
Revenue
District Officer, or Revenue Collection Officer or Treasurer of the
city
or municipality where their offices are located, of the non payment of
the tax discovered by them.
Any lawyer, notary public, or any
government
officer who, by reason of his official duties, intervenes in the
preparation
or acknowledgment of documents regarding partition or disposal of
donation
inter vivos or mortis causa, legacy or inheritance, shall have the duty
of furnishing the Commissioner, Regional Director, Revenue District
Officer
or Revenue Collection Officer of the place where he may have his
principal
office, with copies of such documents and any information whatsoever
which
may facilitate the collection of the aforementioned tax.
Neither shall
a debtor of the deceased pay his debts to the heirs, legatee, executor
or administrator of his creditor, unless the certification of the
Commissioner
that the tax fixed in this Chapter had been paid is shown; but he may
pay
the executor or judicial administrator without said certification if
the
credit is included in the inventory of the estate of the deceased. cralaw:red
SEC. 96. Restitution of Tax Upon Satisfaction of Outstanding Obligations. - If after the payment of the estate tax, new obligations of the
decedent
shall appear, and the persons interested shall have satisfied them by
order
of the court, they shall have a right to the restitution of the
proportional
part of the tax paid. cralaw:red
SEC. 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds or
Rights.-
There shall not be transferred to any new owner in the books of any
corporation,
sociedad anonima, partnership, business, or industry organized or
established
in the Philippines any share, obligation, bond or right by way of gift
inter vivos or mortis causa, legacy or inheritance,
unless
a certification from the Commissioner that the taxes fixed in this
Title
and due thereon have been paid is shownIf a bank has knowledge
of the death of a person, who maintained a bank deposit account alone,
or jointly with another, it shall not allow any withdrawal from the
said
deposit account, unless the Commissioner has certified that the taxes
imposed
thereon by this Title have been paid: Provided, however, That
the
administrator of the estate or any one (1) of the heirs of the decedent
may, upon authorization by the Commissioner, withdraw an amount not
exceeding
Twenty thousand pesos (P20,000) without the said certification.
For
this
purpose, all withdrawal slips shall contain a statement to the effect
that
all of the joint depositors are still living at the time of withdrawal
by any one of the joint depositors and such statement shall be under
oath
by the said depositors.
CHAPTER IIDONOR'S
TAX
SEC. 98. Imposition of Tax. -
(A) There shall
be levied, assessed, collected and paid upon the transfer by any
person,
resident or nonresident, of the property by gift, a tax, computed as
provided
in Section 99.
(B)
The tax shall apply whether the transfer is in trust or otherwise,
whether
the gift is direct or indirect, and whether the property is real or
personal,
tangible or intangible.
SEC. 99. Rates of Tax Payable by Donor. -
(A) In
General. - The tax for each calendar year shall be computed on the basis of the
total net gifts made during the calendar year in accordance with the
following
schedule:
If the net
gift is:
OVER |
BUT
NOT OVER |
THE
TAX SHALL BE |
PLUS |
OF
THE EXCESS OVER |
|
P
100,000 |
Exempt |
|
|
P
100,000 |
200,000 |
0 |
2%
|
P100,000 |
200,000 |
500,000 |
2,000 |
4%
|
200,000 |
500,000 |
1,000,000 |
14,000 |
6%
|
500,000 |
1,000,000 |
3,000,000 |
44,000 |
8%
|
1,000,000 |
3,000,000 |
5,000,000 |
204,000 |
10%
|
3,000,000 |
5,000,000 |
10,000,000 |
404,000 |
12%
|
5,000,000 |
10,000,000 |
|
1,004,000 |
15%
|
10,000,000 |
(B) Tax Payable
by Donor if Donee is a Stranger. - When the donee or beneficiary is stranger, the tax payable by the
donor
shall be thirty percent (30%) of the net gifts.
For the purpose of this
tax, a "stranger", is a person who is not a:
(1) Brother,
sister (whether by whole or half-blood), spouse, ancestor and lineal
descendant;
or
(2) Relative
by consanguinity in the collateral line within the fourth degree of
relationship.
(C) Any contribution
in cash or in kind to any candidate, political party or coalition of
parties
for campaign purposes shall be governed by the Election Code, as
amended.
SEC. 100. Transfer for Less Than Adequate and Full Consideration.
- Where property, other than real property referred to in Section
24(D),
is transferred for less than an adequate and full consideration in
money
or money's worth, then the amount by which the fair market value of the
property exceeded the value of the consideration shall, for the purpose
of the tax imposed by this Chapter, be deemed a gift, and shall be
included
in computing the amount of gifts made during the calendar year.
SEC. 101. Exemption of Certain Gifts.
- The following gifts or donations shall be exempt from the tax
provided
for in this Chapter:
(A) In the
Case of Gifts Made by a Resident.-
(1) Dowries or
gifts made on account of marriage and before its celebration or within
one year thereafter by parents to each of their legitimate, recognized
natural, or adopted children to the extent of the first Ten thousand
pesos
(P10,000):
(2) Gifts made
to or for the use of the National Government or any entity created by
any
of its agencies which is not conducted for profit, or to any political
subdivision of the said Government; and
(3) Gifts in
favor of an educational and/or charitable, religious, cultural or
social
welfare corporation, institution, accredited nongovernment
organization,
trust or philanthropic organization or research institution or
organization:
Provided, however, That not more than thirty percent (30%) of
said
gifts shall be used by such donee for administration purposes.
For the
purpose of the exemption, a 'non-profit educational and/or charitable
corporation,
institution, accredited nongovernment organization, trust or
philanthropic
organization and/or research institution or organization' is a school,
college or university and/or charitable corporation, accredited
nongovernment
organization, trust or philanthropic organization and/or research
institution
or organization, incorporated as a nonstock entity, paying no
dividends,
governed by trustees who receive no compensation, and devoting all its
income, whether students' fees or gifts, donation, subsidies or other
forms
of philanthropy, to the accomplishment and promotion of the purposes
enumerated
in its Articles of Incorporation.
(B) In the
Case of Gifts Made by a Nonresident Not a Citizen of the Philippines. -
(1) Gifts made
to or for the use of the National Government or any entity created by
any
of its agencies which is not conducted for profit, or to any political
subdivision of the said Government.
(2) Gifts in
favor of an educational and/or charitable, religious, cultural or
social
welfare corporation, institution, foundation, trust or philanthropic
organization
or research institution or organization: Provided, however,
That
not more than thirty percent (30%) of said gifts shall be used by such
donee for administration purposes.
(C) Tax Credit
for Donor's Taxes Paid to a Foreign Country. -
(1) In
General.-
The tax imposed by this Title upon a donor who was a citizen or a
resident
at the time of donation shall be credited with the amount of any
donor's
tax of any character and description imposed by the authority of a
foreign
country.
(2) Limitations
on Credit.
- The amount of the credit taken under this Section shall be subject to
each of the following limitations:
(a) The
amount
of the credit in respect to the tax paid to any country shall not
exceed
the same proportion of the tax against which such credit is taken,
which
the net gifts situated within such country taxable under this Title
bears
to his entire net gifts; and
(b) The total
amount of the credit shall not exceed the same proportion of the tax
against
which such credit is taken, which the donor's net gifts situated
outside
the Philippines taxable under this title bears to his entire net gifts.
SEC. 102. Valuation of Gifts Made in Property.
- If the gift is made in property, the fair market value thereof at the
time of the gift shall be considered the amount of the gift.
In case of
real property, the provisions of Section 88(B) shall apply to the
valuation
thereof.
SEC. 103. Filing of Return and Payment of Tax. -
(A) Requirements.- any individual who makes any transfer by gift (except those
which,
under Section 101, are exempt from the tax provided for in this
Chapter)
shall, for the purpose of the said tax, make a return under oath in
duplicate.
The return shall se forth:
(1) Each gift
made during the calendar year which is to be included in computing net
gifts;
(2) The
deductions
claimed and allowable;
(3) Any
previous
net gifts made during the same calendar year;
(4) The name
of the donee; and
(5) Such
further
information as may be required by rules and regulations made pursuant
to
law.
(B) Time and
Place of Filing and Payment.
- The return of the donor required in this Section shall be filed
within
thirty (30) days after the date the gift is made and the tax due
thereon
shall be paid at the time of filing.
Except in cases where the
Commissioner
otherwise permits, the return shall be filed and the tax paid to an
authorized
agent bank, the Revenue District Officer, Revenue Collection Officer or
duly authorized Treasurer of the city or municipality where the donor
was
domiciled at the time of the transfer, or if there be no legal
residence
in the Philippines, with the Office of the Commissioner.
In the case of
gifts made by a nonresident, the return may be filed with the
Philippine
Embassy or Consulate in the country where he is domiciled at the time
of
the transfer, or directly with the Office of the Commissioner.
SEC. 104. Definitions.
- For purposes of this Title, the terms "gross estate" and "gifts"
include real and personal property, whether tangible or intangible, or
mixed, wherever situated: Provided, however, That where the
decedent
or donor was a nonresident alien at the time of his death or donation,
as the case may be, his real and personal property so transferred but
which
are situated outside the Philippines shall not be included as part of
his
"gross estate" or "gross gift": Provided, further, That
franchise
which must be exercised in the Philippines; shares, obligations or
bonds
issued by any corporation or sociedad anonima organized or constituted
in the Philippines in accordance with its laws; shares, obligations or
bonds by any foreign corporation eighty-five percent (85%) of the
business
of which is located in the Philippines; shares, obligations or bonds
issued
by any foreign corporation if such shares, obligations or bonds have
acquired
a business situs in the Philippines; shares or rights in any
partnership,
business or industry established in the Philippines, shall be
considered
as situated in the Philippines: Provided, still further, that
no
tax shall be collected under this Title in respect of intangible
personal
property: (a) if the decedent at the time of his death or the donor at
the time of the donation was a citizen and resident of a foreign
country
which at the time of his death or donation did not impose a transfer
tax
of any character, in respect of intangible personal property of
citizens
of the Philippines not residing in that foreign country, or (b) if the
laws of the foreign country of which the decedent or donor was a
citizen
and resident at the time of his death or donation allows a similar
exemption
from transfer or death taxes of every character or description in
respect
of intangible personal property owned by citizens of the Philippines
not
residing in that foreign country.
The term "deficiency"
means: (a) the amount by which tax imposed by this Chapter exceeds the
amount shown as the tax by the donor upon his return; but the amount so
shown on the return shall first be increased by the amount previously
assessed
(or collected without assessment) as a deficiency, and decreased by the
amounts previously abated, refunded or otherwise repaid in respect of
such
tax, or (b) if no amount is shown as the tax by the donor, then the
amount
by which the tax exceeds the amounts previously assessed, (or collected
without assessment) as a deficiency, but such amounts previously
assessed,
or collected without assessment, shall first be decreased by the amount
previously abated, refunded or otherwise repaid in respect of such tax.
TITLE IVVALUE-ADDED
TAXCHAPTER IIMPOSITION
OF TAX
SEC. 105. Persons Liable.
- Any person who, in the course of trade or business, sells barters,
exchanges,
leases goods or properties, renders services, and any person who
imports
goods shall be subject to the value-added tax (VAT) imposed in Sections
106 to 108 of this Code.
The value-added tax
is an indirect tax and the amount of tax may be shifted or passed on to
the buyer, transferee or lessee of the goods, properties or services.
This
rule shall likewise apply to existing contracts of sale or lease of
goods,
properties or services at the time of the effectivity of Republic Act
No. 7716. cralaw:red
The phrase "in the
course of trade or business" means the regular conduct or pursuit
of
a commercial or an economic activity, including transactions incidental
thereto, by any person regardless of whether or not the person engaged
therein is a nonstock, nonprofit private organization (irrespective of
the disposition of its net income and whether or not it sells
exclusively
to members or their guests), or government entity. cralaw:red
The rule of regularity,
to the contrary notwithstanding, services as defined in this Code
rendered
in the Philippines by nonresident foreign persons shall be considered
as
being course of trade or business. cralaw:red
SEC. 106. Value-Added Tax on Sale of Goods or Properties. -
(A) Rate
and Base of Tax.
- There shall be levied, assessed and collected on every sale, barter
or
exchange of goods or properties, value-added tax equivalent to ten
percent
(10%) of the gross selling price or gross value in money of the goods
or
properties sold, bartered or exchanged, such tax to be paid by the
seller
or transferor.
(1) The term
"goods" or "properties" shall mean all tangible and
intangible
objects which are capable of pecuniary estimation and shall include:
(a) Real
properties
held primarily for sale to customers or held for lease in the ordinary
course of trade or business;
(b) The right
or the privilege to use patent, copyright, design or model, plan,
secret
formula or process, goodwill, trademark, trade brand or other like
property
or right;
(c) The right
or the privilege to use in the Philippines of any industrial,
commercial
or scientific equipment;
(d) The right
or the privilege to use motion picture films, tapes and discs; and
(e) Radio,
television,
satellite transmission and cable television time.
The term "gross
selling price" means the total amount of money or its equivalent
which
the purchaser pays or is obligated to pay to the seller in
consideration
of the sale, barter or exchange of the goods or properties, excluding
the
value-added tax.
The excise tax, if any, on such goods or properties
shall
form part of the gross selling price.
(2) The
following
sales by VAT-registered persons shall be subject to zero percent (0%)
rate:
(a) Export
Sales. - The term "export sales" means:
(1) The
sale
and actual shipment of goods from the Philippines to a foreign country,
irrespective of any shipping arrangement that may be agreed upon which
may influence or determine the transfer of ownership of the goods so
exported
and paid for in acceptable foreign currency or its equivalent in goods
or services, and accounted for in accordance with the rules and
regulations
of the Bangko Sentral ng Pilipinas (BSP);
(2) Sale
of
raw materials or packaging materials to a nonresident buyer for
delivery
to a resident local export-oriented enterprise to be used in
manufacturing,
processing, packing or repacking in the Philippines of the said buyer's
goods and paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas
(BSP);
(3) Sale
of
raw materials or packaging materials to export-oriented enterprise
whose
export sales exceed seventy percent (70%) of total annual production;
(4) Sale
of
gold to the Bangko Sentral ng Pilipinas (BSP); and
(5) Those
considered
export sales under Executive Order No. 226, otherwise known as the
Omnibus
Investment Code of 1987, and other special laws.
(b) Foreign
Currency Denominated Sale. - The phrase "foreign currency
denominated
sale" means sale to a nonresident of goods, except those mentioned
in Sections 149 and 150, assembled or manufactured in the Philippines
for
delivery to a resident in the Philippines, paid for in acceptable
foreign
currency and accounted for in accordance with the rules and regulations
of the Bangko Sentral ng Pilipinas (BSP).
(c) Sales to
persons or entities whose exemption under special laws or international
agreements to which the Philippines is a signatory effectively subjects
such sales to zero rate.
(B) Transactions
Deemed Sale. - The following transactions shall be deemed sale:
(1) Transfer,
use or consumption not in the course of business of goods or properties
originally intended for sale or for use in the course of business;(2)
Distribution
or transfer to:
(a)
Shareholders
or investors as share in the profits of the VAT-registered persons; or
(b) Creditors
in payment of debt;
(3) Consignment
of goods if actual sale is not made within sixty (60) days following
the
date such goods were consigned; and(4) Retirement
from or cessation of business, with respect to inventories of taxable
goods
existing as of such retirement or cessation.
(C) Changes
in or Cessation of Status of a VAT-registered Person. - The tax imposed in Subsection (A) of this Section shall also
apply
to goods disposed of or existing as of a certain date if under
circumstances
to be prescribed in rules and regulations to be promulgated by the
Secretary
of Finance, upon recommendation of the Commissioner, the status of a
person
as a VAT-registered person changes or is terminated.
(D)Determination
of the Tax. -
(1) The tax
shall
be computed by multiplying the total amount indicated in the invoice by
one-eleventh (1/11).
(2) Sales
Returns, Allowances and Sales Discounts. - The value of goods or
properties
sold and subsequently returned or for which allowances were granted by
a VAT-registered person may be deducted from the gross sales or
receipts
for the quarter in which a refund is made or a credit memorandum or
refund
is issued.
Sales discount granted and indicated in the invoice at the
time
of sale and the grant of which does not depend upon the happening of a
future event may be excluded from the gross sales within the same
quarter
it was given.
(3)
Authority
of the Commissioner to Determine the Appropriate Tax Base. - The
Commissioner
shall, by rules and regulations prescribed by the Secretary of Finance,
determine the appropriate tax base in cases where a transaction is
deemed
a sale, barter or exchange of goods or properties under Subsection (B)
hereof, or where the gross selling price is unreasonably lower than the
actual market value.
SEC. 107. Value-Added Tax on Importation of Goods. -
(A) In
General.-
There shall be levied, assessed and collected on every importation of
goods
a value-added tax equivalent to ten percent (10%) based on the total
value
used by the Bureau of Customs in determining tariff and customs duties
plus customs duties, excise taxes, if any, and other charges, such tax
to be paid by the importer prior to the release of such goods from
customs
custody: Provided, That where the customs duties are determined on the
basis of the quantity or volume of the goods, the value-added tax shall
be based on the landed cost plus excise taxes, If any.
(B) Transfer
of Goods by Tax-Exempt Persons.
- In the case of tax-free importation of goods into the Philippines by
persons, entities or agencies exempt from tax where such goods are
subsequently
sold, transferred or exchanged in the Philippines to non-exempt persons
or entities, the purchasers, transferees or recipients shall be
considered
the importers thereof, who shall be liable for any internal revenue tax
on such importation.
The tax due on such importation shall constitute a
lien on the goods superior to all charges or liens on the goods,
irrespective
of the possessor thereof.
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of
Properties. -
(A) Rate
and Base of Tax.
- There shall be levied, assessed and collected, a value-added tax
equivalent
to ten percent (10%) of gross receipts derived from the sale or
exchange
of services, including the use or lease of properties.
The phrase "sale
or exchange of services" means the performance of all kinds or
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 another domestic common
carriers by land, air and water relative to their transport of goods or
cargoes; services of franchise grantees of telephone and telegraph,
radio
and television broadcasting and all other franchise grantees except
those
under Section 119 of this Code; services of banks, non-bank financial
intermediaries
and finance companies; 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:
(1) The lease or the
use of or the right or privilege to use any copyright, patent, design
or
model, plan secret formula or process, goodwill, trademark, trade brand
or other like property or right;
(2) The lease of the
use of, or the right to use of any industrial, commercial or scientific
equipment;
(3) The supply of
scientific,
technical, industrial or commercial knowledge or information;(4) The supply
of any assistance that is ancillary and subsidiary to and is furnished
as a means of enabling the application or enjoyment of any such
property,
or right as is mentioned in subparagraph (2) or any such knowledge or
information
as is mentioned in subparagraph (3);(5) The supply
of services by a nonresident person or his employee in connection with
the use of property or rights belonging to, or the installation or
operation
of any brand, machinery or other apparatus purchased from such
nonresident
person.
(6) The supply
of technical advice, assistance or services rendered in connection with
technical management or administration of any scientific, industrial or
commercial undertaking, venture, project or scheme;(7) The lease
of motion picture films, films, tapes and discs; and(8) The lease
or the use of or the right to use radio, television, satellite
transmission
and cable television time.
Lease of properties shall
be subject to the tax herein imposed irrespective of the place where
the
contract of lease or licensing agreement was executed if the property
is
leased or used in the Philippines.
The term "gross receipts"
means the total amount of money or its equivalent representing the
contract
price, compensation, service fee, rental or royalty, including the
amount
charged for materials supplied with the services and deposits and
advanced
payments actually or constructively received during the taxable quarter
for the services performed or to be performed for another person,
excluding
value-added tax.
(B)
Transactions
Subject to Zero Percent (0%) Rate.-
The following services performed in the Philippines by VAT- registered
persons shall be subject to zero percent (0%) rate.
(1) Processing,
manufacturing or repacking goods for other persons doing business
outside
the Philippines which goods are subsequently exported, where the
services
are paid for in acceptable foreign currency and accounted for in
accordance
with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);(2) Services other
than those mentioned in the preceding paragraph, the consideration for
which is paid for in acceptable foreign currency and accounted for in
accordance
with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);(3) Services
rendered to persons or entities whose exemption under special laws or
international
agreements to which the Philippines is a signatory effectively subjects
the supply of such services to zero percent (0%) rate;(4) Services
rendered to vessels engaged exclusively in international shipping; and(5) Services
performed by subcontractors and/or contractors in processing,
converting,
of manufacturing goods for an enterprise whose export sales exceed
seventy
percent (70%) of total annual production.
(C) Determination
of the Tax.
- The tax shall be computed by multiplying the total amount indicated
in
the official receipt by one-eleventh (1/11).
SEC. 109. Exempt Transactions.
- The following shall be exempt from the value-added tax:
(a) Sale of nonfood
agricultural products; marine and forest products in their original
state
by the primary producer or the owner of the land where the same are
produced;
(b) Sale of cotton
seeds in their original state; and copra;
(c) Sale or
importation
of agricultural and marine food products in their original state,
livestock
and poultry of or king generally used as, or yielding or producing
foods
for human consumption; and breeding stock and genetic materials
therefor.Products classified
under this paragraph and paragraph (a) shall be considered in their
original
state even if they have undergone the simple processes of preparation
or
preservation for the market, such as freezing, drying, salting,
broiling,
roasting, smoking or stripping.Polished and/or
husked
rice, corn grits, raw cane sugar and molasses, and ordinary salt shall
be considered in their original state;
(d) Sale or
importation
of fertilizers; seeds, seedlings and fingerlings; fish, prawn,
livestock
and poultry feeds, including ingredients, whether locally produced or
imported,
used in the manufacture of finished feeds (except specialty feeds for
race
horses, fighting cocks, aquarium fish, zoo animals and other animals
generally
considered as pets);
(e) Sale or
importation
of coal and natural gas, in whatever form or state, and petroleum
products
(except lubricating oil, processed gas, grease, wax and petrolatum)
subject
to excise tax imposed under Title VI;
(f) Sale or
importation
of raw materials to be used by the buyer or importer himself in the
manufacture
of petroleum products subject to excise tax, except lubricating oil,
processed
gas, grease, wax and petrolatum;
(g) Importation
of passenger and/or cargo vessels of more than five thousand tons
(5,000)
whether coastwise or ocean-going, including engine and spare parts of
said
vessel to be used by the importer himself as operator thereof;
(h) Importation
of personal and household effects belonging to the residents of the
Philippines
returning from abroad and nonresident citizens coming to resettle in
the
Philippines: Provided, That such goods are exempt from customs
duties
under the Tariff and Customs Code of the Philippines;
(i) Importation
of professional instruments and implements, wearing apparel, domestic
animals,
and personal household effects (except any vehicle, vessel, aircraft,
machinery
other goods for use in the manufacture and merchandise of any kind in
commercial
quantity) belonging to persons coming to settle in the Philippines, for
their own use and not for sale, barter or exchange, accompanying such
persons,
or arriving within ninety (90) days before or after their arrival, upon
the production of evidence satisfactory to the Commissioner, that such
persons are actually coming to settle in the Philippines and that the
change
of residence is bona fide;
(j) Services
subject to percentage tax under Title V;
(k) Services
by agricultural contract growers and milling for others of palay into
rice,
corn into grits and sugar cane into raw sugar;
(l) Medical,
dental, hospital and veterinary services subject to the provisions of
Section
17 of Republic Act No. 7716, as amended;
(m) Educational
services rendered by private educational institutions, duly accredited
by the Department of Education, Culture and Sports (DECS) and the
Commission
on Higher Education (CHED), and those rendered by government
educational
institutions;
(n) Sale by the
artist himself of his works of art, literary works, musical
compositions
and similar creations, or his services performed for the production of
such works;
(o) Services
rendered by individuals pursuant to an employer-employee relationship;
(p) Services
rendered by regional or area headquarters established in the
Philippines
by multinational corporations which act as supervisory, communications
and coordinating centers for their affiliates, subsidiaries or branches
in the Asia-Pacific Region and do not earn or derive income from the
Philippines;
(q)
Transactions
which are exempt under international agreements to which the
Philippines
is a signatory or under special laws, except those under Presidential Decree
Nos. 66, 529 and 1590;
(r) Sales by
agricultural cooperatives duly registered with the Cooperative
Development
Authority to their members as well as sale of their produce, whether in
its original state or processed form, to non-members; their importation
of direct farm inputs, machineries and equipment, including spare parts
thereof, to be used directly and exclusively in the production and/or
processing
of their produce;
(s) Sales by
electric cooperatives duly registered with the Cooperative Development
authority or National Electrification Administration, relative to the
generation
and distribution of electricity as well as their importation of
machineries
and equipment, including spare parts, which shall be directly used in
the
generation and distribution of electricity;
(t) Gross
receipts
from lending activities by credit or multi-purpose cooperatives duly
registered
with the Cooperative Development Authority whose lending operation is
limited
to their members;
(u) Sales by
non-agricultural, non- electric and non-credit cooperatives duly
registered
with the Cooperative Development Authority: Provided, That the
share
capital contribution of each member does not exceed Fifteen thousand
pesos
(P15,000) and regardless of the aggregate capital and net surplus
ratably
distributed among the members;
(v) Export
sales
by persons who are not VAT-registered;
(w) Sale of
real
properties not primarily held for sale to customers or held for lease
in
the ordinary course of trade or business or real property utilized for
low-cost and socialized housing as defined by Republic Act No. 7279,
otherwise
known as the Urban Development and Housing Act of 1992, and other
related
laws, house and lot and other residential dwellings valued at One
million
pesos (P1,000,000) and below: Provided, That not later than
January
31st of the calendar year subsequent to the effectivity of this Act and
each calendar year thereafter, the amount of One million pesos
(P1,000,000)
shall be adjusted to its present value using the Consumer Price Index,
as published by the national Statistics Office (NSO);
(x) Lease of
a residential unit with a monthly rental not exceeding Eight thousand
pesos
(P8,000); Provided, That not later than January 31st of the
calendar
year subsequent to the effectivity of Republic Act No. 8241 and each
calendar
year thereafter, the amount of Eight thousand pesos (P8,000) shall be
adjusted
to its present value using the Consumer Price Index as published by the
National Statistics Office (NS0);
(y) Sale,
importation,
printing or publication of books and any newspaper, magazine review or
bulletin which appears at regular intervals with fixed prices for
subscription
and sale and which is not devoted principally to the publication of
paid
advertisements; and
(z) Sale or
lease
of goods or properties or the performance of services other than the
transactions
mentioned in the preceding paragraphs, the gross annual sales and/or
receipts
do not exceed the amount of Five hundred fifty thousand pesos
(P550,000): Provided, That not later than January 31st of the calendar
year
subsequent to the effectivity of Republic Act No. 8241 and each
calendar
year thereafter, the amount of Five hundred fifty thousand pesos
(550,000)
shall be adjusted to its present value using the Consumer Price Index,
as published by the National Statistics Office (NSO).
The foregoing exemptions
to the contrary notwithstanding, any person whose sale of goods or
properties
or services which are otherwise not subject to VAT, but who issues a
VAT
invoice or receipt therefor shall, in addition to his liability to
other
applicable percentage tax, if any, be liable to the tax imposed in
Section
106 or 108 without the benefit of input tax credit, and such tax shall
also be recognized as input tax credit to the purchaser under Section
110,
all of this Code.
SEC. 110. Tax Credits. -
(A) Creditable
Input Tax. -
(1) Any input
tax evidenced by a VAT invoice or official receipt issued in accordance
with Section 113 hereof on the following transactions shall be
creditable
against the output tax:
(a) Purchase
or importation of goods:
(i)
For
sale; or
(ii) For
conversion
into or intended to form part of a finished product for sale including
packaging materials; or
(iii) For
use
as supplies in the course of business; or
(iv) For
use
as materials supplied in the sale of service; or
(v)
For
use in trade or business for which deduction for depreciation or
amortization
is allowed under this Code, except automobiles, aircraft and yachts.
(b) Purchase
of services on which a value-added tax has been actually paid.
(2) The
input tax on domestic purchase of goods or properties shall be
creditable:
(a) To the
purchaser
upon consummation of sale and on importation of goods or properties; and
(b) To the
importer
upon payment of the value-added tax prior to the release of the goods
from
the custody of the Bureau of Customs.
However, in the
case
of purchase of services, lease or use of properties, the input tax
shall
be creditable to the purchaser, lessee or licensee upon payment of the
compensation, rental, royalty or fee.
(3) A
VAT-registered
person who is also engaged in transactions not subject to the
value-added
tax shall be allowed tax credit as follows:
(a) Total
input
tax which can be directly attributed to transactions subject to
value-added
tax; and
(b) A ratable
portion of any input tax which cannot be directly attributed to either
activity.
The term "input
tax" means the value-added tax due from or paid by a VAT-registered
person in the course of his trade or business on importation of goods
or
local purchase of goods or services, including lease or use of
property,
from a VAT-registered person.
It shall also include the transitional
input
tax determined in accordance with Section 111 of this Code.The term "output
tax" means the value-added tax due on the sale or lease of taxable
goods or properties or services by any person registered or required to
register under Section 236 of this Code.
(B) Excess
Output or Input Tax.- If at the end of any taxable quarter the output tax exceeds the
input
tax, the excess shall be paid by the VAT-registered person.
If the
input
tax exceeds the output tax, the excess shall be carried over to the
succeeding
quarter or quarters.
any input tax attributable to the purchase of
capital
goods or to zero-rated sales by a VAT-registered person may at his
option
be refunded or credited against other internal revenue taxes, subject
to
the provisions of Section 112.
(C) Determination
of Creditable Input Tax.- The sum of the excess input tax carried over from the preceding
month
or quarter and the input tax creditable to a VAT-registered person
during
the taxable month or quarter shall be reduced by the amount of claim
for
refund or tax credit for value-added tax and other adjustments, such as
purchase returns or allowances and input tax attributable to exempt
sale. cralaw:red
The claim for tax credit
referred to in the foregoing paragraph shall include not only those
filed
with the Bureau of Internal Revenue but also those filed with other
government
agencies, such as the Board of Investments the Bureau of Customs.
SEC. 111. Transitional/Presumptive Input Tax Credits. -
(A) Transitional
Input Tax Credits.- A person who becomes liable to value-added tax or any person who
elects to be a VAT-registered person shall, subject to the filing of an
inventory according to rules and regulations prescribed by the
Secretary
of finance, upon recommendation of the Commissioner, be allowed input
tax
on his beginning inventory of goods, materials and supplies equivalent
for eight percent (8%) of the value of such inventory or the actual
value-added
tax paid on such goods, materials and supplies, whichever is higher,
which
shall be creditable against the output tax. cralaw:red
(B) Presumptive
Input Tax Credits. -
(1) Persons or
firms engaged in the processing of sardines, mackerel and milk, and in
manufacturing refined sugar and cooking oil, shall be allowed a
presumptive
input tax, creditable against the output tax, equivalent to one and
one-half
percent (1 1/2%) of the gross value in money of their purchases of
primary
agricultural products which are used as inputs to their production.As used in this
Subsection,
the term "processing" shall mean pasteurization, canning and
activities
which through physical or chemical process alter the exterior texture
or
form or inner substance of a product in such manner as to prepare it
for
special use to which it could not have been put in its original form or
condition.
(2) Public
works
contractors shall be allowed a presumptive input tax equivalent to one
and one-half percent (1 1/2%) of the contract price with respect to
government
contracts only in lieu of actual input taxes therefrom.
SEC. 112. Refunds or Tax Credits of Input Tax. -
(A) Zero-Rated
or Effectively Zero-Rated Sales.- any VAT-registered person, whose sales are zero-rated or
effectively
zero-rated may, within two (2) years after the close of the taxable
quarter
when the sales were made, apply for the issuance of a tax credit
certificate
or refund of creditable input tax due or paid attributable to such
sales,
except transitional input tax, to the extent that such input tax has
not
been applied against output tax: Provided, however, That in the case of
zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section
108 (B)(1) and (2), the acceptable foreign currency exchange proceeds
thereof
had been duly accounted for in accordance with the rules and
regulations
of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where
the taxpayer is engaged in zero-rated or effectively zero-rated sale
and
also in taxable or exempt sale of goods of properties or services, and
the amount of creditable input tax due or paid cannot be directly and
entirely
attributed to any one of the transactions, it shall be allocated
proportionately
on the basis of the volume of sales. cralaw:red
(B) Capital
Goods.- A VAT-registered person may apply for the issuance of a tax
credit
certificate or refund of input taxes paid on capital goods imported or
locally purchased, to the extent that such input taxes have not been
applied
against output taxes.
The application may be made only within two (2)
years
after the close of the taxable quarter when the importation or purchase
was made.
(C) Cancellation
of VAT Registration.
- A person whose registration has been cancelled due to retirement from
or cessation of business, or due to changes in or cessation of status
under
Section 106(C) of this Code may, within two (2) years from the date of
cancellation, apply for the issuance of a tax credit certificate for
any
unused input tax which may be used in payment of his other internal
revenue
taxes.
(D) Period
Within Which Refund or Tax Credit of Input Taxes Shall be Made.
- In proper cases, the Commissioner shall grant a refund or issue the
tax
credit certificate for creditable input taxes within one hundred twenty
(120) days from the date of submission of compete documents in support
of the application filed in accordance with Subsections (A) and (B)
hereof.
In case of full or
partial denial of the claim for tax refund or tax credit, or the
failure
on the part of the Commissioner to act on the application within the
period
prescribed above, the taxpayer affected may, within thirty (30) days
from
the receipt of the decision denying the claim or after the expiration
of
the one hundred twenty day-period, appeal the decision or the unacted
claim
with the Court of Tax Appeals.
(E) Manner
of Giving Refund.-
Refunds shall be made upon warrants drawn by the Commissioner or by his
duly authorized representative without the necessity of being
countersigned
by the Chairman, Commission on audit, the provisions of the
Administrative
Code of 1987 to the contrary notwithstanding: Provided, That refunds
under
this paragraph shall be subject to post audit by the Commission on
Audit.
CHAPTER IICOMPLIANCE
REQUIREMENTS
SEC. 113. Invoicing and Accounting Requirements for VAT-Registered
Persons. -
(A) Invoicing
Requirements. - A VAT-registered person shall, for every sale, issue an invoice or
receipt.
In addition to the information required under Section 237, the
following
information shall be indicated in the invoice or receipt:
(1) A statement that
the seller is a VAT-registered person, followed by his taxpayer's
identification
number (TIN); and(2) The total amount
which the purchaser pays or is obligated to pay to the seller with the
indication that such amount includes the value-added tax.
(B) Accounting Requirements. - Notwithstanding the provisions of Section 233, all persons subject to
the value-added tax under Sections 106 and 108 shall, in addition to
the
regular accounting records required, maintain a subsidiary sales
journal
and subsidiary purchase journal on which the daily sales and purchases
are recorded.
The subsidiary journals shall contain such information as
may be required by the Secretary of Finance.
SEC. 114. Return and Payment of Value-Added Tax. -
(A) In General.
- Every person liable to pay the value-added tax imposed under this
Title
shall file a quarterly return of the amount of his gross sales or
receipts
within twenty-five (25) days following the close of each taxable
quarter
prescribed for each taxpayer: Provided, however, That
VAT-registered
persons shall pay the value-added tax on a monthly basis. cralaw:red
Any person, whose registration
has been cancelled in accordance with Section 236, shall file a return
and pay the tax due thereon within twenty-five (25) days from the date
of cancellation of registration: Provided, That only one
consolidated
return shall be filed by the taxpayer for his principal place of
business
or head office and all branches. cralaw:red
(B) Where to File
the Return and Pay the Tax. - Except as the Commissioner otherwise permits, the return shall be
filed with and the tax paid to an authorized agent bank, Revenue
Collection
Officer or duly authorized city or municipal Treasurer in the
Philippines
located within the revenue district where the taxpayer is registered or
required to register. cralaw:red
(C) Withholding
of Creditable Value-Added Tax.
- The Government or any of its political subdivisions,
instrumentalities
or agencies, including government-owned or -controlled corporations
(GOCCs)
shall, before making payment on account of each purchase of goods from
sellers and services rendered by contractors which are subject to the
value-added
tax imposed in Sections 106 and 108 of this Code, deduct and withhold
the
value-added tax due at the rate of three percent (3%) of the gross
payment
for the purchase of goods and six percent (6%) on gross receipts for
services
rendered by contractors on every sale or installment payment which
shall
be creditable against the value-added tax liability of the seller or
contractor:
Provided, however, That in the case of government public works
contractors,
the withholding rate shall be eight and one-half percent (8.5%): Provided,
further, That the payment for lease or use of properties or
property
rights to nonresident owners shall be subject to ten percent (10%)
withholding
tax at the time of payment.
For this purpose, the payor or person in
control
of the payment shall be considered as the withholding agent. cralaw:red
The value-added tax
withheld under this Section shall be remitted within ten (10) days
following
the end of the month the withholding was made. cralaw:red
SEC. 115. Power of the Commissioner to Suspend the Business Operations of
a Taxpayer.
- The Commissioner or his authorized representative is hereby
empowered
to suspend the business operations and temporarily close the business
establishment
of any person for any of the following violations:
(a) In the case of
a VAT-registered Person. -
(1) Failure to
issue
receipts or invoices;
(2) Failure to file
a value-added tax return as required under Section 114; or
(3) Understatement
of taxable sales or receipts by thirty percent (30%) or more of his
correct
taxable sales or receipts for the taxable quarter.
(b) Failure of any
Person
to Register as Required under Section 236. - The temporary closure of
the establishment shall be for the duration of not less than five (5)
days
and shall be lifted only upon compliance with whatever requirements
prescribed
by the Commissioner in the closure order.
TITLE VOTHER
PERCENTAGE
TAXES
SEC. 116. Tax on Persons Exempt From Value-Added Tax (VAT).
- Any person whose sales or receipts are exempt under Section 109(z) of
this Code from the payment of value-added tax and who is not a
VAT-registered
person shall pay a tax equivalent to three percent (3%) of his gross
quarterly
sales or receipts: Provided, That cooperatives shall be exempt from the
three percent (3%)gross receipts tax herein imposed.
SEC. 117. Percentage Tax on Domestic Carriers and Keepers of Garages. - Cars for rent or hire driven by the lessee, transportation
contractors,
including persons who transport passengers for hire, and other domestic
carriers by land, air or water, for the transport of passengers, except
owners of bancas and owner of animal-drawn two wheeled vehicle, and
keepers
of garages shall pay a tax equivalent to three percent (3%) of their
quarterly
gross receipts. cralaw:red
The gross receipts of
common carriers derived from their incoming and outgoing freight shall
not be subjected to the local taxes imposed under Republic Act No. 7160,
otherwise known as the Local Government Code of 1991. cralaw:red
In computing the percentage
tax provided in this Section, the following shall be considered the
minimum
quarterly gross receipts in each particular case:
Jeepney for
hire
-
1. Manila
and
other
cities
P 2,400
2. Provincial
1,200
Public utility bus -
Not exceeding 30
passengers
3,600
Exceeding 30 but not
exceeding 50
passengers 6,000
Exceeding 50
passengers
7,200
Taxis -
1. Manila
and
other
cities
P 3,600
2. Provincial
2,400
Car for hire (with
chauffer)
3,000
Car for hire (without
chauffer)
1,800
SEC. 118. Percentage Tax on International Carriers. -
(A) International air
carriers doing business in the Philippines shall pay a tax of three
percent
(3%) of their quarterly gross receipts. cralaw:red
(B) International shipping
carriers doing business in the Philippines shall pay a tax equivalent
to
three percent (3%) of their quarterly gross receipts. cralaw:red
SEC. 119. Tax on Franchises. - Any provision of general or special law to the contrary
notwithstanding,
there shall be levied, assessed and collected in respect to all
franchises
on radio and/or television broadcasting companies whose annual gross
receipts
of the preceding year does not exceed Ten million pesos (P10,000.00),
subject
to Section 236 of this Code, a tax of three percent (3%) and on
electric,
gas and water utilities, a tax of two percent (2%) on the gross
receipts
derived from the business covered by the law granting the franchise:
Provided,
however, That radio and television broadcasting companies referred to
in
this Section shall have an option to be registered as a value-added
taxpayer
and pay the tax due thereon: Provided, further, That once the option is
exercised, it shall not be revoked. cralaw:red
The grantee shall file
the return with, and pay the tax due thereon to the Commissioner or his
duly authorized representative, in accordance with the provisions of
Section
128 of this Code, and the return shall be subject to audit by the
Bureau
of Internal Revenue, any provision of any existing law to the contrary
notwithstanding. cralaw:red
SEC. 120. Tax on Overseas Dispatch, Message or Conversation Originating
from
the Philippines.
-
(A) Persons Liable. - There shall be collected upon every overseas dispatch, message or
conversation
transmitted from the Philippines by telephone, telegraph, telewriter
exchange,
wireless and other communication equipment service, a tax of ten
percent
(10%) on the amount paid for such services.
The tax imposed in this
Section
shall be payable by the person paying for the services rendered and
shall
be paid to the person rendering the services who is required to collect
and pay the tax within twenty (20) days after the end of each quarter. cralaw:red
(B) Exemptions. - The tax imposed by this Section shall not apply to:
(1) Government. - Amounts paid for messages transmitted by the Government of the
Republic
of the Philippines or any of its political subdivisions or
instrumentalities;
(2) Diplomatic
Services. - Amounts paid for messages transmitted by any embassy
and
consular offices of a foreign government;
(3) International
Organizations. - Amounts paid for messages transmitted by a public
international organization or any of its agencies based in the
Philippines
enjoying privileges, exemptions and immunities which the Government of
the Philippines is committed to recognize pursuant to an international
agreement; and
(4) News
Services. - Amounts paid for messages from any newspaper, press association,
radio
or television newspaper, broadcasting agency, or newstickers services,
to any other newspaper, press association, radio or television
newspaper
broadcasting agency, or newsticker service or to a bona fide
correspondent,
which messages deal exclusively with the collection of news items for,
or the dissemination of news item through, public press, radio or
television
broadcasting or a newsticker service furnishing a general news service
similar to that of the public press.
SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries.
- There shall be a collected tax on gross receipts derived from sources
within the Philippines by all banks and non-bank financial
intermediaries
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:
Short-term
maturity
(non in excess of two (2)
years)
5%
Medium-term maturity
(over two (2) years but
not exceeding four (4)
years)
3%
Long-term maturity -
(1) Over four
(4) years but not exceeding seven (7)
years 1%
(2) Over seven
(7)
years
0%.
(b) On
dividends
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
5%.
Provided, however,
That in case the maturity period referred to in paragraph (a) 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
as short, medium or long-term and the correct rate of tax shall be
applied
accordingly.
Nothing in this Code
shall preclude the Commissioner from imposing the same tax herein
provided
on persons performing similar banking activities. cralaw:red
SEC. 122. Tax on Finance Companies.-
There shall be collected a tax of five percent (5%) on the gross
receipts
derived by all finance companies, as well as by other financial
intermediaries
not performing quasi-banking functions dong business in the
Philippines,
from interest, discounts 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:
Short-term
maturity
(non in excess of two (2)
years)
5%
Medium-term
maturity
(over two (2) years
but not exceeding four (4)
years)
3%
Long-term maturity
-
(1) Over four
(4) years but not exceeding seven
(7)
1%
(2) Over seven
(7)
years
0%
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 as short, medium or
long-term
and the correct rate of tax shall be applied accordingly.
Nothing in this Code
shall preclude the Commissioner from imposing the same tax herein
provided
on persons performing similar financing activities. cralaw:red
SEC. 123. Tax on Life Insurance Premiums.
- There shall be collected from every person, company or corporation
(except
purely cooperative companies or associations) doing life insurance
business
of any sort in the Philippines a tax of five percent (5%) 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 that has already
paid
the tax; nor upon 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 in section 232(2) of Presidential Decree No. 612),
in excess of the amounts necessary to insure the lives of the variable
contract workers. cralaw:red
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. cralaw:red
SEC. 124. Tax on Agents of Foreign Insurance Companies.
- Every fire, marine or miscellaneous insurance agent authorized under
the Insurance Code to procure policies of insurance as he may have
previously
been legally authorized to transact on risks located in the Philippines
for companies not authorized to transact business in the Philippines
shall
pay a tax equal to twice the tax imposed in Section 123: Provided,
That the provision of this Section shall not apply to reinsurance: Provided,
however, That the provisions of this Section shall not affect the
right
of an owner of property to apply for and obtain for himself policies in
foreign companies in cases where said owner does not make use of the
services
of any agent, company or corporation residing or doing business in the
Philippines.
In all cases where owners of property obtain insurance
directly
with foreign companies, it shall be the duty of said owners to report
to
the Insurance Commissioner and to the Commissioner each case where
insurance
has been so effected, and shall pay the tax of five percent (5%) on
premiums
paid, in the manner required by Section 123. cralaw:red
SEC. 125. Amusement Taxes.
- There shall be collected from the proprietor, lessee or operator of
cockpits,
cabarets, night or day clubs, boxing exhibitions, professional
basketball
games, Jai-Alai and racetracks, a tax equivalent to:
(a) Eighteen percent
(18%) in the case of cockpits;(b) Eighteen percent
(18%) in the case of cabarets, night or day clubs;(c) Ten percent (10%)
in the case of boxing exhibitions: Provided, however, That
boxing
exhibitions wherein World or Oriental Championships in any division is
at stake shall be exempt from amusement tax: Provided, further, That at
least one of the contenders for World or Oriental Championship is a
citizen
of the Philippines and said exhibitions are promoted by a citizen/s of
the Philippines or by a corporation or association at least sixty
percent
(60%) of the capital of which is owned by such citizens;(d) Fifteen percent
(15%) in the case of professional basketball games as envisioned in
Presidential
Decree No. 871: Provided, however, That the tax herein shall be
in lieu of all other percentage taxes of whatever nature and
description;
and(e) Thirty percent
(30%) in the case of Jai-Alai and racetracks of their gross receipts,
irrespective,
of whether or not any amount is charged for admission.
For the purpose of the
amusement tax, the term "gross receipts" embraces all the
receipts
of the proprietor, lessee or operator of the amusement place.
Said
gross
receipts also include income from television, radio and motion picture
rights, if any.
A person or entity or association conducting any
activity
subject to the tax herein imposed shall be similarly liable for said
tax
with respect to such portion of the receipts derived by him or it.
The taxes imposed herein
shall be payable at the end of each quarter and it shall be the duty of
the proprietor, lessee or operator concerned, as well as any party
liable,
within twenty (20) days after the end of each quarter, to make a true
and
complete return of the amount of the gross receipts derived during the
preceding quarter and pay the tax due thereon. cralaw:red
SEC. 126. Tax on Winnings.
- Every person who wins in horse races shall pay a tax equivalent to
ten
percent (10%) of his winnings or 'dividends', the tax to be based on
the
actual amount paid to him for every winning ticket after deducting the
cost of the ticket: Provided, That in the case of winnings from
double, forecast/quinella and trifecta bets, the tax shall be four
percent
(4%).
In the case of owners of winning race horses, the tax shall be
ten
percent (10%) of the prizes. cralaw:red
The tax herein prescribed
shall be deducted from the 'dividends' corresponding to each winning
ticket
or the "prize" of each winning race horse owner and withheld by
the operator, manager or person in charge of the horse races before
paying
the dividends or prizes to the persons entitled thereto. cralaw:red
The operator, manager
or person in charge of horse races shall, within twenty (20) days from
the date the tax was deducted and withheld in accordance with the
second
paragraph hereof, file a true and correct return with the Commissioner
in the manner or form to be prescribed by the Secretary of Finance, and
pay within the same period the total amount of tax so deducted and
withheld. cralaw:red
SEC. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and
Traded
Through the Local Stock Exchange or Through Initial Public Offering.
-
(A) Tax on Sale,
Barter or Exchange of Shares of Stock Listed and Traded Through the
Local
Stock Exchange.-
There shall be levied, assessed and collected on every sale, barter,
exchange,
or other disposition of shares of stock listed and traded through the
local
stock exchange other than the sale by a dealer in securities, a tax at
the rate of one-half of one percent (1/2 of 1%) of the gross selling
price
or gross value in money of the shares of stock sold, bartered,
exchanged
or otherwise disposed which shall be paid by the seller or transferor. cralaw:red
(B) Tax on Shares
of Stock Sold or Exchanged Through Initial Public Offering.
- There shall be levied, assessed and collected on every sale, barter,
exchange or other disposition through initial public offering of shares
of stock in closely held corporations, as defined herein, a tax at the
rates provided hereunder based on the gross selling price or gross
value
in money of the shares of stock sold, bartered, exchanged or otherwise
disposed in accordance with the proportion of shares of stock sold,
bartered,
exchanged or otherwise disposed to the total outstanding shares of
stock
after the listing in the local stock exchange:
Up to twenty-five
percent
(25%)&
4%
Over twenty-five
percent
(25%) but not over thirty-three
and one third percent (33
1/3%)
2%
Over thirty-three
and one third percent (33
1/3%)
1%
The tax herein imposed
shall be paid by the issuing corporation in primary offering or by the
seller in secondary offering.
For purposes of this
Section, the term "closely held corporation" means any
corporation
at least fifty percent (50%) in value of outstanding capital stock or
at
least fifty percent (505) of the total combined voting power of all
classes
of stock entitled to vote is owned directly or indirectly by or for not
more than twenty (20) individuals. cralaw:red
For purposes of determining
whether the corporation is a closely held corporation, insofar as such
determination is based on stock ownership, the following rules shall be
applied:
(1) Stock Not
Owned
by Individuals. - Stock owned directly or indirectly by or for a
corporation,
partnership, estate or trust shall be considered as being owned
proportionately
by its shareholders, partners or beneficiaries.
(2) Family and
Partnership Ownerships. - An individual shall be considered as
owning
the stock owned, directly or indirectly, by or for his family, or by or
for his partner.
For purposes of the paragraph, the 'family of an
individual'
includes only his brothers and sisters (whether by whole or
half-blood),
spouse, ancestors and lineal descendants.
(3) Option. - If any person has an option acquire stock, such stock shall be
considered
as owned by such person.
For purposes of this paragraph, an option to
acquire
such an option and each one of a series of options shall be considered
as an option to acquire such stock.
(4) Constructive
Ownership as Actual Ownership. - Stock constructively owned by
reason
of the application of paragraph (1) or (3) hereof shall, for purposes
of
applying paragraph (1) or (2), be treated as actually owned by such
person;
but stock constructively owned by the individual by reason of the
application
of paragraph (2) hereof shall not be treated as owned by him for
purposes
of again applying such paragraph in order to make another the
constructive
owner of such stock.
(C) Return on
Capital
Gains Realized from Sale of Shares of Stocks. -
(1) Return on
Capital
Gains Realized from Sale of Shares of Stock Listed and Traded in the
Local
Stock Exchange. - It shall be the duty of every stock
broker
who effected the sale subject to the tax imposed herein to collect the
tax and remit the same to the Bureau of Internal Revenue within five
(5)
banking days from the date of collection thereof and to submit on
Mondays
of each week to the secretary of the stock exchange, of which he is a
member,
a true and complete return which shall contain a declaration of all the
transactions effected through him during the preceding week and of
taxes
collected by him and turned over to the Bureau Of Internal Revenue.
(2) Return on
Public
Offerings of Share Stock. - In case of primary offering, the
corporate
issuer shall file the return and pay the corresponding tax within
thirty
(30) days from the date of listing of the shares of stock in the local
stock exchange.
In the case of secondary offering, the provision of
Subsection
(C)(1) of this Section shall apply as to the time and manner of the
payment
of the tax.
(D) Common
Provisions.
- Any gain derived from the sale, barter, exchange or other disposition
of shares of stock under this Section shall be exempt from the tax
imposed
in Sections 24(C), 27(D)(2), 28(A)(8)(c), and 28(B)(5)(c) of this Code
and from the regular individual or corporate income tax.
Tax paid under
this Section shall not be deductible for income tax purposes.
SEC. 128. Returns and Payment of Percentage Taxes. - (A) Returns of
Gross Sales, Receipts or Earnings and Payment of Tax. -
(1) Persons
Liable
to Pay Percentage Taxes. - Every person subject to the percentage
taxes
imposed under this Title shall file a quarterly return of the amount of
his gross sales, receipts or earnings and pay the tax due thereon
within
twenty-five (25) days after the end of each taxable quarter: Provided,
That in the case of a person whose VAT registration is cancelled
and
who becomes liable to the tax imposed in Section 116 of this Code, the
tax shall accrue from the date of cancellation and shall be paid in
accordance
with the provisions of this Section.
(2) Person
Retiring
from Business. - Any person retiring from a business subject to
percentage
tax shall notify the nearest internal revenue officer, file his return
and pay the tax due thereon within twenty (20) days after closing his
business.
(3) Exceptions. - The Commissioner may, by rules and regulations, prescribe:
(a) The time for
filing
the return at intervals other than the time prescribed in the preceding
paragraphs for a particular class or classes of taxpayers after
considering
such factors as volume of sales, financial condition, adequate measures
of security, and such other relevant information required to be
submitted
under the pertinent provisions of this Code; and
(b) The manner and
time
of payment of percentage taxes other than as hereinabove prescribed,
including
a scheme of tax prepayment.
(4) Determination
of
Correct Sales or Receipts. - When it is found that a person has
failed
to issue receipts or invoices, or when no return is filed, or when
there
is reason to believe that the books of accounts or other records do not
correctly reflect the declarations made or to be made in a return
required
to be filed under the provisions of this Code, the Commissioner, after
taking into account the sales, receipts or other taxable base of other
persons engaged in similar businesses under similar situations or
circumstances,
or after considering other relevant information may prescribe a minimum
amount of such gross receipts, sales and taxable base and such amount
so
prescribed shall be prima facie correct for purposes of determining the
internal revenue tax liabilities of such person.
(B) Where to
File.
- Except as the Commissioner otherwise permits, every person liable to
the percentage tax under this Title may, at his option, file a separate
return for each branch or place of business, or a consolidated return
for
all branches or places of business with the authorized agent bank,
Revenue
District Officer, Collection Agent or duly authorized Treasurer of the
city or municipality where said business or principal place of business
is located, as the case may be.
TITLE VIEXCISE
TAXES
ON CERTAIN GOODSCHAPTER IGENERAL
PROVISIONS
SEC. 129. Goods Subject to Excise Taxes.
- Excise taxes apply to goods manufactured or produced in the
Philippines
for domestic sales or consumption or for any other disposition and to
things
imported.
The excise tax imposed herein shall be in addition to the
value-added
tax imposed under Title IV.
For purposes of this
Title, excise taxes herein imposed and based on weight or volume
capacity
or any other physical unit or measurement shall be referred to as "specific
tax" and an excise tax herein imposed and based on selling price or
other specified value of the good shall be referred to as "ad
valorem
tax".
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. - Every person liable to pay excise tax imposed
under
this Title shall file a separate return for each place of production
setting
forth, among others, the description and quantity or volume of products
to be removed, the applicable tax base and the amount of tax due
thereon:
Provided, however, That in the case of indigenous petroleum,
natural
gas or liquefied natural gas, the excise tax shall be paid by the first
buyer, purchaser or transferee for local sale, barter or transfer,
while
the excise tax on exported products shall be paid by the owner, lessee,
concessionaire or operator of the mining claim.Should domestic
products
be removed from the place of production without the payment of the tax,
the owner or person having possession thereof shall be liable for the
tax
due thereon.
(2) Time for
Filing
of Return and Payment of the Tax. - Unless otherwise specifically
allowed,
the return shall be filed and the excise tax paid by the manufacturer
or
producer before removal of domestic products form place of production:
Provided, That the excise tax on locally manufactured petroleum
products
and indigenous petroleum levied under Sections 148 and 151(A)(4),
respectively,
of this Title shall be paid within ten (10) days from the date of
removal
of such products for the period from January 1, 1998 to June 30, 1998;
within five (5) days from the date of removal of such products for the
period from July 1, 1998 to December 31, 1998; and, before removal from
the place of production of such products from January 1, 1999 and
thereafter:
Provided, further, That the excise tax on nonmetallic mineral
or
mineral products, or quarry resources shall be due and payable upon
removal
of such products from the locality where mined or extracted, but with
respect
to the excise tax on locally produced or extracted metallic mineral or
mineral products, the person liable shall file a return and pay the tax
within fifteen (15) days after the end of the calendar quarter when
such
products were removed subject to such conditions as may be prescribed
by
rules and regulations to be promulgated by the Secretary of Finance,
upon
recommendation of the Commissioner.
For this purpose, the taxpayer
shall
file a bond in an amount which approximates the amount of excise tax
due
on the removals for the said quarter.
The foregoing rules
notwithstanding,
for imported mineral or mineral products, whether metallic or
nonmetallic,
the excise tax due thereon shall be paid before their removal from
customs
custody.
(3) Place of
Filing
of Return and Payment of the Tax. - Except as the Commissioner
otherwise
permits, the return shall be filed with and the tax paid to any
authorized
agent bank or Revenue Collection Officer, or duly authorized City or
Municipal
Treasurer in the Philippines.
(4) Exceptions. -
The Secretary of Finance, upon recommendation of the Commissioner may,
by rules and regulations, prescribe:
(a) The time for
filing
the return at intervals other than the time prescribed in the preceding
paragraphs for a particular class or classes of taxpayers after
considering
factors such as volume of removals, adequate measures of security and
such
other relevant information required to be submitted under the pertinent
provisions of this Code; and
(b) The manner and
time of payment of excise taxes other than as herein prescribed, under
a tax prepayment, advance deposit or similar schemes.
In the case of
locally
produced of extracted minerals and mineral products or quarry resources
where the mine site or place of extraction is not the same as the place
of processing or production, the return shall be filed with and the tax
paid to the Revenue District Office having jurisdiction over the
locality
where the same are mined, extracted or quarried: Provided, however,
That for metallic minerals processed abroad, the return shall be filed
and the tax due thereon paid to the Revenue District Office having
jurisdiction
over the locality where the same are mined, extracted or quarried.
(B) Determination
of Gross Selling Price of Goods Subject to Ad Valorem Tax.
- Unless otherwise provided, the price, excluding the value-added tax,
at which the goods are sold at wholesale in the place of production or
through their sales agents to the public shall constitute the gross
selling
price.
If the manufacturer also sells or allows such goods to be sold
at
wholesale in another establishment of which he is the owner or in the
profits
of which he has an interest, the wholesale price in such establishment
shall constitute the gross selling price.
Should such price be less
than
the cost of manufacture plus expenses incurred until the goods are
finally
sold, then a proportionate margin of profit, not less than ten percent
(10%) of such manufacturing cost and expenses, shall be added to
constitute
the gross selling price.
(C) Manufacturer's
or Producer's Sworn Statement.
- Every manufacturer or producer of goods or products subject to excise
taxes shall file with the Commissioner on the date or dates designated
by the latter, and as often as may be required, a sworn statement
showing,
among other information, the different goods or products manufactured
or
produced and their corresponding gross selling price or market value,
together
with the cost of manufacture or production plus expenses incurred or to
be incurred until the goods or products are finally sold. cralaw:red
(D) Credit for
Excise Tax on Goods Actually Exported.- When goods locally produced or manufactured are removed and
actually
exported without returning to the Philippines, whether so exported in
their
original state or as ingredients or parts of any manufactured goods or
products, any excise tax paid thereon shall be credited or refunded
upon
submission of the proof of actual exportation and upon receipt of the
corresponding
foreign exchange payment: Provided, That the excise tax on
mineral
products, except coal and coke, imposed under Section 151 shall not be
creditable or refundable even if the mineral products are actually
exported. cralaw:red
SEC. 131. Payment of Excise Taxes on Importer Articles. -
(A) Persons
Liable.- Excise taxes on imported articles shall be paid by the owner or
importer
to the Customs Officers, conformably with the regulations of the
Department
of Finance and before the release of such articles from the customs
house,
or by the person who is found in possession of articles which are
exempt
from excise taxes other than those legally entitled to exemption.In the case of
tax-free
articles brought or imported into the Philippines by persons, entitles,
or agencies exempt from tax which are subsequently sold, transferred or
exchanged in the Philippines to non-exempt persons or entitles, the
purchasers
or recipients shall be considered the importers thereof, and shall be
liable
for the duty and internal revenue tax due on such importation.The provision of any
special or general law to the contrary notwithstanding, the importation
of cigars and cigarettes, distilled spirits and wines into the
Philippines,
even if destined for tax and duty free shops, shall be subject to all
applicable
taxes, duties, charges, including excise taxes due thereon: Provided,
however, That this shall not apply to cigars and cigarettes,
distilled
spirits and wines brought directly into the duly chartered or
legislated
freeports of the Subic Special Economic and Freeport Zone, crated under
Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport,
created under Republic Act No. 7922; and the Zamboanga City Special
Economic
Zone, created under Republic Act No. 7903, and are not transshipped to
any other port in the Philippines: Provided, further, That
importations
of cigars and cigarettes, distilled spirits and wines by a
government-owned
and operated duty-free shop, like the Duty-Free Philippines (DFP),
shall
be exempted from all applicable taxes, duties, charges, including
excise
tax due thereon: Provided, still further, That if such
articles
directly imported by a government-owned and operated duty-free shop
like
the Duty-Free Philippines, shall be labeled "tax and duty-free" and
"not for resale": Provided, still further, That is
such articles
brought into the duly chartered or legislated freeports under Republic
Acts No. 7227, 7922 and 7903 are subsequently introduced into the
Philippine
customs territory, then such articles shall, upon such introduction, be
deemed imported into the Philippines and shall be subject to all
imposts
and excise taxes provided herein and other statutes: Provided,
finally,
That the removal and transfer of tax and duty-free goods, products,
machinery,
equipment and other similar articles, from one freeport to another
freeport,
shall not be deemed an introduction into the Philippine customs
territory.Articles confiscated
shall be disposed of in accordance with the rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the
Commissioner
of Customs and Internal Revenue, upon consultation with the Secretary
of
Tourism and the General manager of the Philippine Tourism Authority.The tax due on any
such goods, products, machinery, equipment or other similar articles
shall
constitute a lien on the article itself, and such lien shall be
superior
to all other charges or liens, irrespective of the possessor thereof.
(B) Rate and Basis
of the Excise Tax on Imported Articles.- Unless otherwise specified imported articles shall be subject to
the same rates and basis of excise taxes applicable to locally
manufactured
articles.
SEC. 132. Mode of Computing Contents of Cask or Package.
- Every fractional part of a proof liter equal to or greater than a
half
liter in a cask or package containing more than one liter shall be
taxed
as a liter, and any smaller fractional part shall be exempt; but any
package
of spirits, the total content of which are less than a proof liter,
shall
be taxed as one liter.
CHAPTER IIEXEMPTION
OR CONDITIONAL TAX-FREE REMOVAL OF CERTAIN ARTICLES
SEC. 133. Removal of Wines and Distilled Spirits for Treatment of
Tobacco
Leaf.
- Upon issuance of a permit from the Commissioner and subject to the
rules
and regulations prescribed by the Secretary of Finance, manufacturers
of
cigars and cigarettes may withdraw from bond, free of excise local and
imported wines and distilled spirits in specific quantities and grades
for use in the treatment of tobacco leaf to be used in the manufacture
of cigars and cigarettes; but such wines and distilled spirits must
first
be suitably denatured.
SEC. 134. Domestic Denatured Alcohol.
- Domestic alcohol of not less than one hundred eighty degrees (180O)
proof (ninety percent [90%] absolute alcohol) shall, when suitably
denatured
and rendered unfit for oral intake, be exempt from the excise tax
prescribed
in Section 141: Provided, however, That such denatured alcohol
shall
be subject to tax under Section 106(A) of this Code: Provided,
further,
That if such alcohol is to be used for automotive power, it shall be
taxed
under Section 148(d) of this Code: Provided, finally, That any
alcohol,
previously rendered unfit for oral intake after denaturing but
subsequently
rendered fit for oral intake after undergoing fermentation, dilution,
purification,
mixture or any other similar process shall be taxed under Section 141
of
this Code and such tax shall be paid by the person in possession of
such
reprocessed spirits.
SEC. 135. Petroleum Products Sold to International Carriers and Exempt
Entities
or Agencies. - Petroleum products sold to the following are exempt from excise tax:
(a) International
carriers of Philippine or foreign registry on their use or consumption
outside the Philippines: Provided, That the petroleum products
sold
to these international carriers shall be stored in a bonded storage
tank
and may be disposed of only in accordance with the rules and
regulations
to be prescribed by the Secretary of Finance, upon recommendation of
the
Commissioner;
(b) Exempt
entities
or agencies covered by tax treaties, conventions and other
international
agreements for their use or consumption: Provided, however, That
the country of said foreign international carrier or exempt entities or
agencies exempts from similar taxes petroleum products sold to
Philippine
carriers, entities or agencies; and
(c) Entities which
are by law exempt from direct and indirect taxes.
SEC. 136. Denaturation, Withdrawal and Use of Denatured Alcohol. - Any person who produces, withdraws, sells, transports or knowingly
uses,
or is in possession of denatured alcohol, or articles containing
denatured
alcohol in violation of laws or regulations now or hereafter in force
pertaining
thereto shall be required to pay the corresponding tax, in addition to
the penalties provided for under Title X of this Code.
SEC. 137. Removal of Spirits Under Bond for Rectification. -
Spirits requiring rectification may be removed from the place of
production
to another establishment for the purpose of rectification without
prepayment
of the excise tax: Provided, That the distiller removing such
spirits
and the rectifier receiving them shall file with the Commissioner their
joint bond conditioned upon the payment by the rectifier of the excise
tax due on the rectified alcohol: Provided, further, That in
cases
where alcohol has already been rectified either by original and
continuous
distillation or by redistillation, no loss for rectification and
handling
shall be allowed and the rectifier thereof shall pay the excise tax due
on such losses: Provided, finally, That where a rectifier makes
use of spirits upon which the excise tax has not been paid, he shall be
liable for the payment of the tax otherwise due thereon.
SEC. 138. Removal of Fermented Liquors to Bonded Warehouse. - Any brewer may remove or transport from his brewery or other place of
manufacture to a bonded warehouse used by him exclusively for the
storage
or sale in bulk of fermented liquors of his own manufacture, any
quantity
of such fermented liquors, not less than one thousand (1,000) liters at
one removal, without prepayment of the tax thereon under a permit which
shall be granted by the Commissioner.
Such permit shall be affixed to
every
package so removed and shall be cancelled or destroyed in such manner
as
the Commissioner may prescribe.
Thereafter, the manufacturer of such
fermented
liquors shall pay the tax in the same manner and under the same penalty
and liability as when paid at the brewery.
SEC. 139. Removal of Damaged Liquors Free of Tax.
- When any fermented liquor has become sour or otherwise damaged so as
to be unfit for use as such, brewers may sell and after securing a
special
permit from the Commissioner, under such conditions as may be
prescribed
in the rules and regulations prescribed by the Secretary of Finance,
remove
the same without the payment of tax thereon in cask or other packages,
distinct from those ordinarily used for fermented liquors, each
containing
not less than one hundred seventy-five (175) liters with a note of
their
contents permanently affixed thereon.
SEC. 140. Removal of Tobacco Products Without Prepayment of Tax.
- Products of tobacco entirely unfit for chewing or smoking may be
removed
free of tax for agricultural or industrial use, under such conditions
as
may be prescribed in the rules and regulations prescribed by the
Secretary
of Finance.
Stemmed leaf tobacco, fine-cut shorts, the refuse of
fine-cut
chewing tobacco, scraps, cuttings, clippings, stems, or midribs, and
sweepings
of tobacco may be sold in bulk as raw material by one manufacturer
directly
to another without payment of the tax, under such conditions as may be
prescribed in the rules and regulations prescribed by the Secretary of
Finance.
"Stemmed leaf tobacco",
as herein used, means leaf tobacco which has had the stem or midrib
removed.
The term does not include broken leaf tobacco.
CHAPTER
IIIEXCISE
TAX
ON ALCOHOL PRODUCTS
SEC. 141. Distilled Spirits. -
On distilled spirits, there shall be collected, subject to the
provisions
of Section 133 of this Code, excise taxes as follows:
(a) If produced from
the sap of nipa, coconut, cassava, camote, or buri palm or from the
juice,syrup or sugar of the cane, provided such materials are produced
commercially
in the
country where they are processed into distilled spirits, per proof
liter,
Eight pesos (P8.00):
Provided, That if produced in a pot still or other similar primary
distilling apparatus by a
distiller producing not more than one hundred (100) liters a day,
containing
not more than
fifty percent (50%) of alcohol by volume, per proof liter, Four pesos
(P4.00);
(b) If produced from
raw materials other than those enumerated in the preceding paragraph,
the tax shall be in accordance with the net retail price per bottle of
seven hundred fifty
milliliter (750 ml.) volume capacity (excluding the excise tax and the
value-added tax)
as follows:
(1) Less than Two
hundred
and fifty pesos (P250) - Seventy-five pesos (P75), per proof liter;
(2) Two hundred and
fifty pesos (P250) up to Six hundred and Seventy-Five pesos
(P675) - One hundred and fifty pesos (P150), per proof liter; and
(3) More than Six
hundred
and seventy-five pesos (P675) - Three hundred pesos (P300),
per proof liter.
(c) Medicinal
preparations,
flavoring extracts, and all other preparations, except toilet
preparations, of which, excluding water, distilled spirits for the
chief
ingredient, shall be
subject to the same tax as such chief ingredient.
This tax shall be proportionally
increased for any strength of the spirits taxed over proof spirits, and
the tax shall attach to this substance as soon as it is in existence as
such, whether it be subsequently separated as pure or impure spirits,
or
transformed into any other substance either in the process of original
production or by any subsequent process"Spirits or distilled
spirits" is the substance known as ethyl alcohol, ethanol or
spirits
of wine, including all dilutions, purifications and mixtures thereof,
from
whatever source, by whatever process produced, and shall include
whisky,
brandy, rum, gin and vodka, and other similar products or mixtures.
cralaw:red"Proof spirits"
is liquor containing one-half (1/2) of its volume of alcohol of a
specific
gravity of seven thousand nine hundred and thirty-nine thousandths
(0.7939)
at fifteen degrees centigrade (15O
C).
A "proof liter" means a liter of proof spirits. cralaw:red
The rates of tax imposed
under this Section shall be increased by twelve percent (12%) on
January
1, 2000. cralaw:red
New brands shall be
classified according to their current "net retail price".
For the above purpose,
"net retail price" shall mean the price at which the distilled
spirit
is sold on retail in ten (10) major supermarkets in Metro Manila,
excluding
the amount intended to cover the applicable excise tax and the
value-added
tax as of October 1, 1996. cralaw:red
The classification of
each brand of distilled spirits based on the average net retail price
as
of October 1, 1996, as set forth in Annex "A", shall remain in
force
until revised by Congress.
SEC. 142. Wines. -
On wines, there shall be collected per liter of volume capacity, the
following
taxes:
(a) Sparkling
wines/champagnes
regardless of proof, if the net retail price per bottle
(excluding the excise tax and value-added tax) is:
(1) Five hundred
pesos
(P500) or less - One hundred pesos (P100); and
(2) More than Five
hundred pesos (P500) - Three hundred pesos (P300).
(b) Still wines
containing
fourteen percent (14%) of alcohol by volume or less, Twelve
pesos (P12.00); and
(c) Still wines
containing
more than fourteen percent (14%) but not more than twenty-five
percent (25%) of alcohol by volume, Twenty-four pesos (P24.00).
Fortified wines containing
more than twenty-five percent of alcohol by volume shall be taxed as
distilled
spirits. "Fortified wines" shall mean natural wines to which
distilled
spirits are added to increase their alcoholic strength.
The rates of tax imposed
under this Section shall be increased by twelve percent (12%) on
January
1, 2000. cralaw:red
New brands shall be
classified according to their current net retail price. cralaw:red
For the above purpose,
"net retail price" shall mean the price at which wine is sold on
retail in ten (10) major supermarkets in Metro Manila, excluding the
amount
intended to cover the applicable excise tax and the value-added tax as
of October 1, 1996. cralaw:red
The classification of
each brand of wines based on its average net retail price as of October
1, 1996, as set forth in Annex "B", shall remain in force until
revised by Congress.
SEC. 143. Fermented Liquor. -
There shall be levied, assessed and collected an excise tax on beer,
lager
beer, ale, porter and other fermented liquors except tuba, basi, tapuy
and similar domestic fermented liquors in accordance with the following
schedule:
(a) If the net retail
price (excluding the excise tax and value-added tax) per liter of volume
capacity is less than Fourteen pesos and fifty centavos (P14.50), the
tax
shall be Six
pesos and fifteen centavos (P6.15) per liter;
(b) If the net retail
price (excluding the excise tax and the value-added tax) the per liter
of
volume capacity is Fourteen pesos and fifty centavos (P14.50) up to
Twenty-two
pesos
(P22.00), the tax shall be Nine pesos and fifteen centavos (P9.15) per
liter;
(c) If the net retail
price (excluding the excise tax and the value-added tax) per liter of
volume
capacity is more than Twenty-two pesos (P22.00), the tax shall be
Twelve
pesos and
fifteen centavos (P12.15) per liter.
Variants of existing brands
which are introduced in the domestic market after the effectivity of
Republic
Act No. 8240 shall be taxed under the highest classification of any
variant
of that brand.
Fermented liquor which
are brewed and sold at micro-breweries or small establishments such as
pubs and restaurants shall be subject to the rate in paragraph (c)
hereof. cralaw:red
The excise tax from
any brand of fermented liquor within the next three (3) years from the
effectivity of Republic Act No. 8240 shall not be lower than the tax
which
was due from each brand on October 1, 1996. cralaw:red
The rates of excise
tax on fermented liquor under paragraphs (a), (b) and (c) hereof shall
be increased by twelve percent (12%) on January 1, 2000. cralaw:red
New brands shall be
classified according to their current net retail price. cralaw:red
For the above purpose,
"net retail price" shall mean the price at which the fermented
liquor
is sold on retail in twenty (20) major supermarkets in Metro Manila
(for
brands of fermented liquor marketed nationally) excluding the amount
intended
to cover the applicable excise tax and the value-added tax.
For brands
which are marketed only outside Metro Manila, the "net retail price"
shall mean the price at the which the fermented liquor is sold in five
(5) major supermarkets in the region excluding the amount intended to
cover
the applicable excise tax and the value-added tax. cralaw:red
The classification of
each brand of fermented liquor based on its average net retail price as
of October 1, 1996, as set forth in Annex "C", shall remain in
force
until revised by Congress.
cralaw:red"A variant of brand"
shall refer to a brand on which a modifier is prefixed and/or suffixed
to the root name of the brand and/or a different brand which carries
the
same logo or design of the existing brand. cralaw:red
Every brewer or importer
of fermented liquor shall, within thirty (30) days from the effectivity
of R. A. No. 8240, and within the first five (5) days of every month
thereafter,
submit to the Commissioner a sworn statement of the volume of sales for
each particular brand of fermented liquor sold at his establishment for
the three-month period immediately preceding. cralaw:red
Any brewer or importer
who, in violation of this Section, knowingly misdeclares or
misrepresents
in his or its sworn statement herein required any pertinent data or
information
shall be penalized by a summary cancellation or withdrawal of his or
its
permit to engage in business as brewer or importer of fermented liquor. cralaw:red
Any corporation, association
or partnership liable for any of the acts or omissions in violation of
this Section shall be fined treble the amount of deficiency taxes,
surcharge,
and interest which may be assessed pursuant to this Section. cralaw:red
Any person liable for
any of the acts or omissions prohibited under this Section shall be
criminally
liable and penalized under Section 254 of this Code.
Any person who
willfully
aids or abets in the commission of any such act or omission shall be
criminally
liable in the same manner as the principal.
If the offender is not
a citizen of the Philippines, he shall be deported immediately after
serving
the sentence, without further proceedings for deportation.
CHAPTER IVEXCISE
TAX
ON TOBACCO PRODUCTS
SEC. 144. Tobacco Products. - There
shall be collected a tax of seventy-five centavos (P0.75) on each
kilogram
of the following products of tobacco:
(a) Tobacco twisted
by hand or reduced into a condition to be consumed in any manner
other than the ordinary mode of drying and curing;
(b) Tobacco prepared
or partially prepared with or without the use of any machine or instruments or without being pressed or sweetened; and
(c) Fine-cut shorts
and refuse, scraps, clippings, cuttings, stems and sweepings of tobacco.
Fine-cut shorts and refuse,
scraps, clippings, cuttings, stems and sweepings of tobacco resulting
from
the handling or stripping of whole leaf tobacco may be transferred,
disposed
of, or otherwise sold, without prepayment of the excise tax herein
provided
for under such conditions as may be prescribed in the rules and
regulations
promulgated by the Secretary of Finance, upon recommendation of the
Commissioner,
if the same are to be exported or to be used in the manufacture of
other
tobacco products on which the excise tax will eventually be paid on the
finished product.
On tobacco specially
prepared for chewing so as to be unsuitable for use in any other
manner,
on each kilogram, Sixty centavos (P0.60).
SEC. 145. Cigars and Cigarettes. -
(A) Cigars.-
There
shall be levied, assessed and collected on cigars a tax of One peso
(P1.00)
per cigar. cralaw:red
(B) Cigarettes
Packed by Hand.-
There shall be levied, assessed and collected on cigarettes packed by
hand
a tax of Forty centavos (P0.40) per pack. cralaw:red
(C) Cigarettes
Packed by Machine.-
There shall be levied, assessed and collected on cigarettes packed by
machine
a tax at the rates prescribed below:
(1) If the net retail
price (excluding the excise tax and the value-added tax) is above Ten
pesos (P10.00) per pack, the tax shall be Twelve pesos (P12.00) per
pack;
(2) If the net
retail
price (excluding the excise tax and the value-added tax) exceeds Six
pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00)
per pack,
the tax shall be Eight pesos (8.00) per pack;
(3) If the net
retail
price (excluding the excise tax and the value-added tax) is Five pesos
(P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per
pack,
the tax
shall be Five pesos (P5.00) per pack;
(4) If the net
retail
price (excluding the excise tax and the value-added tax is below Five
pesos (P5.00) per pack, the tax shall be One peso (P1.00) per pack;
Variants of existing brands
of cigarettes which are introduced in the domestic market after the
effectivity
of R.A. No. 8240 shall be taxed under the highest classification of any
variant of that brand.
The excise tax from
any brand of cigarettes within the next three (3) years from the
effectivity
of R. A. No. 8240 shall not be lower than the tax, which is due from
each
brand on October 1, 1996: Provided, however, That in cases
where
the excise tax rates imposed in paragraphs (1), (2), (3) and (4)
hereinabove
will result in an increase in excise tax of more than seventy percent
(70%);
for a brand of cigarette, the increase shall take effect in two
tranches:
fifty percent (50%) of the increase shall be effective in 1997 and one
hundred percent (100%) of the increase shall be effective in 1998. cralaw:red
Duly registered or existing
brands of cigarettes or new brands thereof packed by machine shall only
be packed in twenties. cralaw:red
The rates of excise
tax on cigars and cigarettes under paragraphs (1), (2), (3) and (4)
hereof,
shall be increased by twelve percent (12%) on January 1, 2000. cralaw:red
New brands shall be
classified according to their current net retail price. cralaw:red
For the above purpose,
"net retail price" shall mean the price at which the cigarette is
sold
on retail in twenty (20) major supermarkets in Metro Manila (for brands
of cigarettes marketed nationally), excluding the amount intended to
cover
the applicable excise tax and the value-added tax.
For brands which are
marketed only outside Metro Manila, the "net retail price" shall
mean the price at which the cigarette is sold in five (5) major
supermarkets
in the region excluding the amount intended to cover the applicable
excise
tax and the value-added tax. cralaw:red
The classification of
each brand of cigarettes based on its average net retail price as of
October
1, 1996, as set forth in Annex "D", shall remain in force until
revised by Congress.
cralaw:red"Variant of a brand"
shall refer to a brand on which a modifier is prefixed and/or
suffixed
to the root name of the brand and/or a different brand which carries
the
same logo or design of the existing brand. cralaw:red
Manufactures and importers
of cigars and cigarettes shall, within thirty (30) days from the
effectivity
of R. A. No. 8240 and within the first five (5) days of every month
thereafter
submit to the Commissioner a sworn statement of the volume of sales for
each particular brand of cigars and/or cigarettes sold at his
establishment
for the three-month period immediately preceding. cralaw:red
Any manufacturer or
importer who, in violation of this Section, knowingly misdeclares or
misrepresents
in his or its sworn statement herein required any pertinent data or
information
shall, upon discovery, be penalized by a summary cancellation or
withdrawal
of his or its permit to engage in business as manufacturer or importer
of cigars or cigarettes. cralaw:red
Any corporation, association
or partnership liable for any of the acts or omissions in violation of
this Section shall be fined treble the amount of deficiency taxes,
surcharges
and interest which may be assessed pursuant to this Section. cralaw:red
Any person liable for
any of the acts or omissions prohibited under this Section shall be
criminally
liable and penalized under Section 254 of this Code.
Any person who
willfully
aids or abets in the commission of any such act or omission shall be
criminally
liable in the same manner as the principal. cralaw:red
If the offender is not
a citizen of the Philippines, he shall be deported immediately after
serving
the sentence without further proceedings for deportation.
SEC. 146. Inspection Fee. - For
inspection madein accordance with this Chapter, there shall be
collected a fee of Fifty centavos (P0.50) for each thousand cigars or
fraction
thereof; Ten centavos (P0.10) for each thousand cigarettes of fraction
thereof; Two centavos (P0.02) for each kilogram of leaf tobacco or
fraction
thereof; and Three centavos (P0.03) for each kilogram or fraction
thereof,
of scrap and other manufactured tobacco. cralaw:red
The inspection fee on
leaf tobacco, scrap, cigars, cigarettes and other tobacco products as
defined
in Section 147 of this Code shall be paid by the wholesaler,
manufacturer,
producer, owner or operator of redrying plant, as the case may be,
immediately
before removal there of from the establishment of the wholesaler,
manufacturer,
owner or operator of the redrying plant.
In case of imported leaf
tobacco
and products thereof, the inspection fee shall be paid by the importer
before removal from customs' custody. cralaw:red
Fifty percent (50%)
of the tobacco inspection fee shall accrue to the Tobacco Inspection
Fund
created by Section 12 of Act No. 2613, as amended by Act No. 3179, and
fifty percent (50%) shall accrue to the Cultural Center of the
Philippines.
SEC. 147. Definition of Terms. - When
used herein and in statements or official forms prescribed hereunder,
the
following terms shall have the meaning indicated:
(a) "Cigars"
mean all rolls of tobacco or any substitute thereof, wrapped in leaf
tobacco.
(b) "Cigarettes"
mean all rolls of finely-cut leaf tobacco, or any substitute therefor,
wrapped
in paper or in any other material.
(c) "Wholesale
price"
shall mean the amount of money or price paid for cigars or cigarettes
purchased for the purpose of resale, regardless of quantity.
(d) "Retail price"
shall mean the amount of money or price which an ultimate consumer or
end-user pays for cigars or cigarettes purchased.
CHAPTER VEXCISE
TAX
ON PETROLEUM PRODUCTS
SEC. 148. Manufactured Oils and Other Fuels. - There
shall be collected on refined and manufactured mineral oils and motor
fuels,
the following excise taxes which shall attach to the goods hereunder
enumerated
as soon as they are in existence as such:
(a) Lubricating oils
and greases, including but not limited to, base stock for lube oils and
greases, high vacuum distillates, aromatic extracts, and other similar
preparations, and additives for lubricating oils and greases, whether
such
additives are petroleum based or not, per liter and kilogram
respectively,
of volume capacity or weight, Four pesos and fifty centavos (P4.50): Provided,
however, That the excise taxes paid on the purchased feedstock
(bunker)
used in the manufacture of excisable articles and forming part thereof
shall be credited against the excise tax due therefrom: Provided,
further,
That lubricating oils and greases produced from base stocks and
additives
on which the excise tax has already been paid shall no longer be
subject
to excise tax: Provided, finally, That locally produced or
imported
oils previously taxed as such but are subsequently reprocessed,
rerefined
or recycled shall likewise be subject to the tax imposed under this
Section.
(b) Processed gas,
per liter of volume capacity, Five centavos (P0.05);(c) Waxes and
petrolatum,
per kilogram, Three pesos and fifty centavos (P3.50);(d) On denatured
alcohol
to be used for motive power, per liter of volume capacity, Five
centavos
(P0.05): Provided, That unless otherwise provided by special
laws,
if the denatured alcohol is mixed with gasoline, the excise tax on
which
has already been paid, only the alcohol content shall be subject to the
tax herein prescribed.
For purposes of this Subsection, the removal of
denatured alcohol of not less than one hundred eighty degrees (180o
) proof (ninety percent (90%) absolute alcohol) shall be deemed to have
been removed for motive power, unless shown otherwise;(e) Naphtha, regular
gasoline and other similar products of distillation, per liter of
volume
capacity, Four pesos and eighty centavos (P4.80): Provided, however,
That naphtha, when used as a raw material in the production of
petrochemical
products or as replacement fuel for natural-gas-fired-combined cycle
power
plant, in lieu of locally-extracted natural gas during the
non-availability
thereof, subject to the rules and regulations to be promulgated by the
Secretary of Energy, in consultation with the Secretary of Finance, per
liter of volume capacity, Zero (P0.00): Provided, further, That
the by-product including fuel oil, diesel fuel, kerosene, pyrolysis
gasoline,
liquefied petroleum gases and similar oils having more or less the same
generating power, which are produced in the processing of naphtha into
petrochemical products shall be subject to the applicable excise tax
specified
in this Section, except when such by-products are transferred to any of
the local oil refineries through sale, barter or exchange, for the
purpose
of further processing or blending into finished products which are
subject
to excise tax under this Section;(f) Leaded premium
gasoline, per liter of volume capacity, Five pesos and thirty-five
centavos
(P5.35); unleaded premium gasoline, per liter of volume capacity, Four
pesos and thirty-five centavos (P4.35);(g) Aviation turbo
jet fuel, per liter of volume capacity, Three pesos and sixty-seven
centavos
(P3.67);(h) Kerosene, per
liter
of volume capacity, Sixty centavos (0.60): Provided, That
kerosene,
when used as aviation fuel, shall be subject to the same tax on
aviation
turbo jet fuel under the preceding paragraph (g), such tax to be
assessed
on the user thereof;(i) Diesel fuel oil,
an on similar fuel oils having more or less the same generating power,
per liter of volume capacity, One peso and sixty-three centavos (P1.63);(j) Liquefied
petroleum
gas, per liter, Zero (P0.00): Provided, That liquefied
petroleum
gas used for motive power shall be taxed at the equivalent rate as the
excise tax on diesel fuel oil;(k) Asphalts, per
kilogram,
Fifty-six centavos (P0.56); and(l) Bunker fuel oil,
and on similar fuel oils having more or less the same generating power,
per liter of volume capacity, Thirty centavos (P0.30).
CHAPTER VIEXCISE
TAX
ON MISCELLANEOUS ARTICLES
SEC. 149. Automobiles. - There shall be levied, assessed and collected an ad valorem tax on
automobiles
based on the manufacturer’s or importer’s selling price, net of excise
and value-added tax, in accordance with the following schedule:
ENGINE
DISPLACEMENT
[in cc.]
GASOLINE |
DIESEL |
TAX
RATE |
Up
to 1600
|
Up
to 1800
|
15%
|
1601
to 2000
|
1801
to 2300
|
35%
|
2001
to 2700
|
2301
to 3000
|
50%
|
2701
or over
|
3001
to over
|
100%
|
Provided, That in
the case of imported automobiles not for sale, the tax imposed herein
shall
be based on the total value used by the Bureau of Customs in
determining
tariff and customs duties, including customs duty and all other
charges,
plus ten percent (10%) of the total thereof.
Automobiles acquired
for use by persons or entities operating within the freeport zone shall
be exempt from excise tax: Provided, That utility vehicles of
registered
zone enterprises, which are indispensable in the conduct and operations
of their business, such as delivery trucks and cargo vans with gross
vehicle
weight above three (3) metric tons may be allowed unrestricted use
outside
the freeport zone: Provided, further, That vehicles owned by
tourist-oriented
enterprises, such as tourist buses and cars with yellow plates,
color-coded,
and utilized exclusively for the purpose of transporting tourists in
tourism-related
activities, and service vehicles of freeport registered enterprises and
executives, such as company service cars and expatriates’ and
investors’
automobiles brought in the name of such enterprises, may be used
outside
the freeport zone for such periods as may be prescribed by the
Departments
of Finance, and Trade and Industry, the Bureau of Customs and the
Freeport
authorities concerned, which in no case shall exceed fourteen (14) days
per month. cralaw:red
In case such tourist
buses and cars, service vehicles of registered freeport enterprises and
company service cars are used for more than an aggregate period of
fourteen
(14) days per month outside of the freeport zone, the owner or importer
shall pay the corresponding customs duties, taxes and charges. cralaw:red
In the case of personally-owned
vehicles of residents, including leaseholders of residences inside the
freeport zone, the use of such vehicles outside of the freeport zone
shall
be deemed an introduction into the Philippine customs territory, and
such
introduction shall be deemed an importation into the Philippines and
shall
subject such vehicles to Customs duties taxes and charges, including
excise
tax due on such vehicle. cralaw:red
The Secretaries of Finance,
and Trade and Industry, together with the Commissioner of Customs and
the
administrators of the freeports concerned, shall promulgate rules and
regulations
for the proper identification and control of said automobiles. cralaw:red
SEC. 150. Non-Essential Goods. -
There shall be levied, assessed and collected a tax equivalent to
twenty
percent (20%) based on the wholesale price or the value of importation
used by the Bureau of Customs in determining tariff and customs duties,
net of excise tax and value-added tax, of the following goods:
(a) All goods
commonly
or commercially known as jewelry, whether real or imitation, pearls,
precious
and semi-precious stones and imitations thereof; goods made of, or
ornamented,
mounted or fitted with, precious metals or imitations thereof or ivory
(not including surgical and dental instruments, silver-plated wares,
frames
or mountings for spectacles or eyeglasses, and dental gold or gold
alloys
and other precious metals used in filling, mounting or fitting the
teeth);
opera glasses and lorgnettes.
The term "precious metals" shall
include
platinum, gold, silver and other metals of similar or greater value.
The
term ‘imitations thereof shall include platings and alloys of such
metals;
(b) Perfumes and
toilet
waters;
(c) Yachts and other
vessels intended for pleasure or sports.
CHAPTER
VIIEXCISE
TAX
ON MINERAL PRODUCTS
SEC. 151. Mineral Products. -
(A) Rates of Tax. -
There shall be levied, assessed and collected on minerals, mineral
products
and quarry resources, excise tax as follows:
(1) On coal and coke,
a tax of Ten pesos (P10.00) per metric ton;(2) On all
nonmetallic
minerals and quarry resources, a tax of two percent (2%) based on
the actual market value of the gross output thereof at the time of
removal,
in the case
of those locally extracted or produced; or the value used by the Bureau
of Customs in
determining tariff and customs duties, net of excise tax and
value-added
tax, in the case
of importation.
Notwithstanding
the
provision of paragraph (4) of Subsection (A) of Section 151, locally
extracted
natural gas and liquefied natural gas shall be taxed at the rate of two
percent (2%);
(3) On all
metallic
minerals, a tax based on the actual market value of the gross output
thereof
at the time of removal, in the case of those locally extracted or
produced;
or the value used
by the Bureau of Customs in determining tariff and customs duties, net
of excise tax and
value-added tax, in the case of importation, in accordance with the
following
schedule:
(a) Copper and
other
metallic minerals;
(i) On the first
three
(3) years upon the effectivity of Republic Act No. 7729,
one percent (1%);
(ii) On the
fourth
and the fifth years, one and a half percent (1 ½%); and
(iii) On the
sixth
year and thereafter, two percent (2%);
(b) Gold and
chromite,
two percent (2%).
(4) On indigenous
petroleum,
a tax of three percent (3%) of the fair international market price
thereof, on the first taxable sale, barter, exchange or such similar
transaction,
such tax
to be paid by the buyer or purchaser before removal from the place of
production.
The
phrase "first taxable sale, barter, exchange or similar transaction"
means the transfer
of indigenous petroleum in its original state to a first taxable
transferee.
The fair
international market price shall be determined in consultation with an
appropriate
government agency.For the purpose of
this Subsection, "indigenous petroleum" shall include
locally-extracted
mineral oil, hydrocarbon gas, bitumen, crude asphalt, mineral gas and
all
other similar or naturally associated substances with the exception of
coal, peat, bituminous shale and/or stratified mineral deposits.
(B) For Purposes
of This Section, the Term:
(1) "Gross output"
shall be interpreted as the actual market value of minerals or mineral
products or of bullion from each mine or mineral land operated as a
separate
entity, without any deduction from mining, milling, refining (including
all expenses incurred to prepare the said minerals or mineral products
in a marketable state), as well as transporting, handling, marketing or
any other expenses: Provided, That if the minerals or mineral
products
are sold or consigned abroad by the lessee or owner of the mine under
C.I.F.
terms, the actual cost of ocean freight and insurance shall be
deducted:
Provided, however, That in the case of mineral concentrate,
not
traded in commodity exchanges in the Philippines or abroad, such as
copper
concentrate, the actual market value shall be the world price
quotations
of the refined mineral products content thereof prevailing in the said
commodity exchanges, after deducting the smelting, refining and other
charges
incurred in the process of converting the mineral concentrates into
refined
metal traded in those commodity exchanges.
(2) "Minerals"
shall mean all naturally occurring inorganic substances (found in
nature)
whether in solid, liquid, gaseous or any intermediate state.
(3) "Mineral
products"
shall mean things produced and prepared in a marketable state by simple
treatment processes such as washing or drying, but without undergoing
any
chemical change or process or manufacturing by the lessee,
concessionaire
or owner of mineral lands.
(4) "Quarry
resources"
shall mean any common stone or other common mineral substances as the
Director
of the Bureau of Mines and Geo-Sciences may declare to be quarry
resources
such as, but not restricted to, marl, marble, granite, volcanic
cinders,
basalt, tuff and rock phosphate: Provided, That they contain no
metal or other valuable minerals in economically workable quantities.
CHAPTER
VIIIADMINISTRATIVE
PROVISIONS REGULATING BUSINESSOR
PERSONS
DEALING IN ARTICLES SUBJECT TO EXCISE TAX
SEC. 152. Extent of Supervision Over Establishments Producing Taxable
Output.
- The Bureau of Internal Revenue has authority to supervise
establishments
where articles subject to excise tax are made or kept.
The Secretary of
Finance shall prescribe rules and regulations as to the mode in which
the
process of production shall be conducted insofar as may be necessary to
secure a sanitary output and to safeguard the revenue.
SEC. 153. Records to be Kept by Manufacturers; Assessment Based Thereon.- Manufacturers of articles subject to excise tax shall keep such
records
as required by rules and regulations recommended by the Commissioner
and
approved by the Secretary of Finance, and such records, whether of raw
materials received into the factory or of articles produced therein,
shall
be deemed public and official documents for all purposes. cralaw:red
The records of raw materials
kept by such manufacturers may be used as evidence by which to
determine
the amount of excise taxes due from them, and whenever the amounts of
raw
material received into any factory exceeds the amount of manufactured
or
partially manufactured products on hand and lawfully removed from the
factory,
plus waste removed or destroyed, and a reasonable allowance for
unavoidable
loss in manufacture, the Commissioner may assess and collect the tax
due
on the products which should have been produced from the excess. cralaw:red
The excise tax due on
the products as determined and assessed in accordance with this Section
shall be payable upon demand or within the period specified therein.
SEC. 154. Premises Subject to Approval by Commissioner.
- No person shall engage in business as a manufacturer of or dealer in
articles subject to excise tax unless the premises upon which the
business
is to conducted shall have been approved by the Commissioner.
SEC. 155. Manufacturers to Provide Themselves with Counting or Metering
Devices
to Determine Production.-
Manufacturers of cigarettes, alcoholic products, oil products and other
articles subject to excise tax that can be similarly measured shall
provide
themselves with such necessary number of suitable counting or metering
devices to determine as accurately as possible the volume, quantity or
number of the articles produced by them under rules and regulations
promulgated
by the Secretary of Finance, upon recommendation of the Commissioner. cralaw:red
This requirement shall
be complied with before commencement of operations.
SEC. 156. Labels and Form of Packages.
- All articles of domestic manufacture subject to excise tax and all
leaf
tobacco shall be put up and prepared by the manufacturer or producer,
when
removed for sale or consumption, in such packages only and bearing such
marks or brand as shall be prescribed in the rules and regulations
promulgated
by the Secretary of Finance; and goods of similar character imported
into
the Philippines shall likewise be packed and marked in such a manner as
may be required. cralaw:red
SEC. 157. Removal of Articles After the Payment of Tax. - When
the tax has been paid on articles or products subject to excise tax,
the
same shall not thereafter be stored or permitted to remain in the
distillery,
distillery warehouse, bonded warehouse, or other factory or place where
produced.
However, upon prior permit from the Commissioner, oil
refineries
and/or companies may store or deposit tax-paid petroleum products and
commingle
the same with its own manufactured products not yet subjected to excise
tax.
Imported petroleum products may be allowed to be withdrawn from
customs
custody without the prepayment of excise tax, which products may be
commingled
with the tax-paid or bonded products of the importer himself after
securing
a prior permit from the Commissioner: Provided, That
withdrawals
shall be taxed and accounted for on a "first-in, first-out"
basis.
SEC. 158. Storage of Goods in Internal-Revenue Bonded Warehouses.
- An internal-revenue bonded warehouse may be maintained in any port of
entry for the storing of imported or manufactured goods which are
subject
to excise tax.
The taxes on such goods shall be payable only upon
removal
from such warehouse and a reasonable charge shall be made for their
storage
therein.
The Commissioner, may, in his discretion, exact a bond to
secure
the payment of the tax on any goods so stored.
SEC. 159. Proof of Exportation; Exporter's Bond.
- Exporters of goods that would be subject to excise tax, if sold or
removed
for consumption in the Philippines, shall submit proof of exportation
satisfactory
to the Commissioner and, when the same is deemed necessary, shall be
required
to give a bond prior to the removal of the goods for shipment,
conditioned
upon the exportation of the same in good faith.
SEC. 160. Manufacturers' and Importers' Bond.
- Manufacturers and importers of articles subject to excise tax shall
post
a bond subject to the following conditions:
(A) Initial Bond.
- In case of initial bond, the amount shall be equal to One Hundred
thousand
pesos (P100,000): Provided, That if after six (6) months of
operation,
the amount of initial bond is less than the amount of the total excise
tax paid during the period, the amount of the bond shall be adjusted to
twice the tax actually paid for the period. cralaw:red
(B) Bond for the
Succeeding Years of Operation.
- The bonds for the succeeding years of operation shall be based on the
actual total excise tax paid during the period the year immediately
preceding
the year of operation. cralaw:red
Such bond shall be conditioned
upon faithful compliance, during the time such business is followed,
with
laws and rules and regulations relating to such business and for the
satisfaction
of all fines and penalties imposed by this Code. cralaw:red
SEC. 161. Records to be Kept by Wholesale Dealers.
- Wholesale dealers shall keep records of their purchases and sales or
deliveries of articles subject to excise tax, in such form as shall be
prescribed in the rules and regulations by the Secretary of Finance.
These
records and the entire stock of goods subject to tax shall be subject
at
all times to inspection of internal revenue officers.
SEC. 162. Records to be Kept by Dealers in Leaf Tobacco.
- Dealers in leaf tobacco shall keep records of the products sold or
delivered
by them to other persons in such manner as may be prescribed in the
rules
and regulations by the Secretary of Finance, such records to be at all
times subject to inspection of internal revenue officers.
SEC. 163. Preservation of Invoices and Stamps. -
All dealers whosoever shall preserve, for the period prescribed in
Section
235, all official invoices received by them from other dealers or from
manufacturers, together with the fractional parts of stamps affixed
thereto,
if any, and upon demand, shall deliver or transmit the same to any
interval
revenue officer.
SEC. 164. Information to be Given by Manufacturers, Importers,
Indentors,
and Wholesalers of any Apparatus or Mechanical Contrivance Specially
for
the Manufacture of Articles Subject to Excise Tax and Importers,
Indentors,
Manufacturers or Sellers of Cigarette Paper in Bobbins, Cigarette
Tipping
Paper or Cigarette Filter Tips. -
Manufacturers, indentors, wholesalers and importers of any apparatus or
mechanical contrivance specially for the manufacture of articles
subject
to tax shall, before any such apparatus or mechanical contrivance is
removed
from the place of manufacture or from the customs house, give written
information
to the Commissioner as to the nature and capacity of the same, the time
when it is to be removed, and the place for which it is destined, as
well
as the name of the person by whom it is to be used; and such apparatus
or mechanical contrivance shall not be set up nor dismantled or
transferred
without a permit in writing from the Commissioner. cralaw:red
A written permit from
the Commissioner for importing, manufacturing or selling of cigarette
paper
in bobbins or rolls, cigarette tipping paper or cigarette filter tips
is
required before any person shall engage in the importation, manufacture
or sale of the said articles.
No permit to sell said articles shall be
granted unless the name and address of the prospective buyer is first
submitted
to the Commissioner and approved by him.
Records, showing the stock of
the said articles and the disposal thereof by sale of persons with
their
respective addresses as approved by the Commissioner, shall be kept by
the seller, and records, showing stock of said articles and consumption
thereof, shall be kept by the buyer, subject to inspection by internal
revenue officers.
SEC. 165. Establishment of Distillery Warehouse. -
Every distiller, when so required by the Commissioner, shall provide at
his own expense a warehouse, and shall be situated in and constitute a
part of his distillery premises and to be used only for the storage of
distilled spirits of his own manufacture until the tax thereon shall
have
been paid; but no dwelling house shall be used for such purpose.
Such
warehouse,
when approved by the Commissioner, is declared to be a bonded
warehouse,
and shall be known as a distillery warehouse.
SEC. 166. Custody of Distillery or Distillery Warehouse. -
Every distillery or distillery warehouse shall be in the joint custody
of the revenue inspector, if one is assigned thereto, and of the
proprietor
thereof.
It shall be kept securely locked, and shall at no time be
unlocked
or opened or remain unlocked or opened unless in the presence of such
revenue
inspector or other person who may be designated to act for him as
provided
by law.
SEC. 167. Limitation on Quantity of Spirits Removed from Warehouse. -
No
distilled
spirits shall be removed from any distillery, distillery warehouse, or
bonded warehouse in quantities of less than fifteen (15) gauge liters
at
any one time, except bottled goods, which may be removed by the case of
not less than twelve (12) bottles.
SEC. 168. Denaturing Within Premises. - For
purposes of this Title, the process of denaturing alcohol shall be
effected
only within the distillery premises where the alcohol to be denatured
is
produced in accordance with formulas duly approved by the Bureau of
Internal
Revenue and only in the presence of duly designated representatives of
said Bureau.
SEC. 169. Recovery of Alcohol for Use in Arts and Industries. -
Manufacturers employing processes in which denatured alcohol used in
arts
and industries is expressed or evaporated from the articles
manufactured
may, under rules and regulations to be prescribed by the Secretary of
Finance,
upon recommendation of the Commissioner, be permitted to recover the
alcohol
so used and restore it again to a condition suitable solely for use in
manufacturing processes.
SEC. 170. Requirements Governing Rectification and Compounding of Liquors. - Persons
engaged in the rectification or compounding of liquors shall, as to the
mode of conducting their business and supervision over the same, be
subject
to all the requirements of law applicable to distilleries: Provided,
That where a rectifier makes use of spirits upon which the excise tax
has
been paid, no further tax shall be collected on any rectified spirits
produced
exclusively therefrom: Provided, further, That compounders in
the
manufacture of any intoxicating beverage whatever, shall not be allowed
to make use of spirits upon which the excise tax has not been
previously
paid.
SEC. 171. Authority of Internal Revenue Officer in Searching for Taxable
Articles. -
Any internal revenue officer may, in the discharge of his official
duties,
enter any house, building or place where articles subject to tax under
this Title are produced or kept, or are believed by him upon reasonable
grounds to be produced or kept, so far as may be necessary to examine,
discover or seize the same.
He may also stop and
search any vehicle or other means of transportation when upon
reasonable
grounds he believes that the same carries any article on which the
excise
tax has not been paid.
SEC. 172. Detention of Package Containing Taxable Articles.-
Any revenue officer may detain any package containing or supposed to
contain
articles subject to excise tax when he has good reason to believe that
the lawful tax has not been paid or that the package has been or is
being
removed in violation of law, and every such package shall be held by
such
officer in a safe place until it shall be determined whether the
property
so detained is liable by law to be proceeded against for forfeiture;
but
such summary detention shall not continue in any case longer than seven
(7) days without due process of law or intervention of the officer to
whom
such detention is to be reported.
TITLE VIIDOCUMENTARY
STAMP TAX
SEC. 173. Stamp Taxes Upon Documents, Loan Agreements, Instruments and
Papers. - Upon
documents, instruments, loan agreements and papers, and upon
acceptances,
assignments, sales and transfers of the obligation, right or property
incident
thereto, there shall be levied, collected and paid for, and in respect
of the transaction so had or accomplished, the corresponding
documentary
stamp taxes prescribed in the following Sections of this Title, by the
person making, signing, issuing, accepting, or transferring the same
wherever
the document is made, signed, issued, accepted or transferred when the
obligation or right arises from Philippine sources or the property is
situated
in the Philippines, and the same time such act is done or transaction
had:
Provided, That whenever one party to the taxable document enjoys
exemption from the tax herein imposed, the other party who is not
exempt
shall be the one directly liable for the tax.
SEC. 174. Stamp Tax on Debentures and Certificates of Indebtedness.
- On all debentures and certificates of indebtedness issued by any
association, company or corporation, there shall be collected a
documentary
stamp tax of One peso and fifty centavos (P1.50) on each Two hundred
pesos
(P200), or fractional part thereof, of the face value of such documents.
SEC. 175. 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,
there shall be collected a documentary stamp tax of Two pesos (P2.00)
on
each Two hundred pesos (P200), or fractional part thereof, 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.
SEC. 176. Stamp Tax on Sales, Agreements to Sell, Memoranda of Sales,
Deliveries
or Transfer of Due-bills, Certificates of Obligation, or Shares of
Certificates
of Stock. -
On all sales, or agreements to sell, or memoranda of sale, or
deliveries,
or transfer of due-bills, certificates of obligation, or shares of
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 due-bills, certificates
of obligation or stock, or to secure the future payment of money, or
for
the future transfer of any due-bill, certificate of obligation or
stock,
there shall be collected a documentary stamp tax of One peso and fifty
centavos (P1.50) on each Two hundred pesos (P200) or fractional part
thereof,
of the par value of such due-bill, certificate of obligation or stock;
Provided, That only one tax shall be collected on each sale or
transfer
of stock or securities from one person to another, regardless of
whether
or not a certificate of stock or obligation 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 documentary
stamp
tax herein prescribed shall be equivalent to twenty-five percent (25%)
of the documentary stamp tax paid upon the original issue of said stock.
SEC. 177. Stamp Tax on Bonds, Debentures, Certificate of Stock or
Indebtedness
Issued in Foreign Countries. - On
all 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 as tax as is
required by law on similar instruments when issued, sold or transferred
in the Philippines.
SEC. 178. Stamp Tax on Certificates of Profits or Interest in Property
or
Accumulations. -
On all certificates of profits, or any certificate or memorandum
showing
interest in the property or accumulations of any association, company
or
corporation, and on all transfers of such certificates or memoranda,
there
shall be collected a documentary stamp tax of Fifty centavos (P0.50) on
each Two hundred pesos (P200), or fractional part thereof, of the face
value of such certificate or memorandum.
SEC. 179. Stamp Tax on Bank Checks, Drafts, Certificates of Deposit not
Bearing
Interest, and Other Instruments. -
On each bank check, draft, or certificate of deposit not drawing
interest,
or order for the payment of any sum of money drawn upon or issued by
any
bank, trust company, or any person or persons, companies or
corporations,
at sight or on demand, there shall be collected a documentary stamp tax
of One peso and fifty centavos (P1.50).
SEC. 180. Stamp Tax on All Bonds, Loan Agreements, promissory Notes,
Bills
of Exchange, Drafts, Instruments and Securities Issued by the
Government
or Any of its Instrumentalities, Deposit Substitute Debt Instruments,
Certificates
of Deposits Bearing Interest and Others Not Payable on Sight or Demand. - On
all bonds, loan agreements, including those signed abroad, wherein the
object of the contract is located or used in the Philippines, bills of
exchange (between points within the Philippines), drafts, instruments
and
securities issued by the Government or any of its instrumentalities,
deposit
substitute debt instruments, certificates of deposits drawing interest,
orders for the payment of any sum of money otherwise than at sight or
on
demand, on all promissory notes, whether negotiable or non-negotiable,
except bank notes issued for circulation, and on each renewal of any
such
note, there shall be collected a documentary stamp tax of Thirty
centavos
(P0.30) on each Two hundred pesos (P200), or fractional part thereof,
of
the face value of any such agreement, bill of exchange, draft,
certificate
of deposit, or note: Provided, That only one documentary stamp
tax
shall be imposed on either loan agreement, or promissory notes issued
to
secure such loan, whichever will yield a higher tax: Provided,
however,
That loan agreements or promissory notes the aggregate of which does
not
exceed Two hundred fifty thousand pesos (P250,000) executed by an
individual
for his purchase on installment for his personal use or that of his
family
and not for business, resale, barter or hire of a house, lot, motor
vehicle,
appliance or furniture shall be exempt from the payment of the
documentary
stamp tax provided under this Section.
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 money purporting to be drawn in a foreign country but payable in the
Philippines, there shall be collected a documentary stamp tax of Thirty
centavos (P0.30) 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 to 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 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 centavos (P0.30) 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.
SEC. 183. Stamp Tax on Life Insurance Policies. -
On all policies of insurance or other instruments by whatever name the
same may be called, whereby any insurance shall be made or renewed upon
any life or lives, there shall be collected a documentary stamp tax of
Fifty centavos (P0.50) on each Two hundred pesos (P200), or fractional
part thereof, of the amount insured by any such policy.
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 (P0.50) on each Four pesos (P4.00), or
fractional
part thereof, 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.
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 (P0.50) on each Four pesos (P4.00), or fractional
part
thereof, of the premium charged.
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 and fifty
centavos (P1.50) on each Two hundred pesos (P200) or fractional part
thereof,
of the capital of the annuity, or should this be unknown, then on each
Two hundred (P200) pesos, or fractional part thereof, of thirty-three
and
one-third (33 1/3) times the annual income.
On pre-need plans, the
documentary
stamp tax shall be Fifty centavos (P0.50) on each Five hundred pesos
(P500),
or fractional part thereof, of the value or amount of the plan.
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 (P0.30) on each Four pesos (P4.00), or
fractional
part thereof, of the premium charged.
SEC. 188. Stamp Tax on Certificates. -
On each certificate of damages or otherwise, and on every 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 Fifteen pesos (P15.00).
SEC. 189. Stamp Tax on Warehouse Receipts. -
On each warehouse receipt for property held in storage in a public or
private
warehouse or yard for any person other than the proprietor of such
warehouse
or yard, there shall be collected a documentary stamp tax of Fifteen
pesos
(P15.00): Provided, That no tax shall be collected on each
warehouse
receipt issued to any one person in any one calendar month covering
property
the value of which does not exceed Two hundred pesos (P200).
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 Ten centavos
(P0.10): Provided, That if the cost of the ticket exceeds One
peso
(P1.00), an additional tax of Ten centavos (P0.10) on every One peso
(P1.00,
or fractional part thereof, shall be collected.
SEC. 191. Stamp Tax on Bills of Lading or Receipts. -
On each set of bills of lading or receipts (except charter party) for
any
goods, merchandise or effects shipped from one port or place in the
Philippines
to another port or place in the Philippines (except on ferries across
rivers),
or to any foreign port, there shall be collected documentary stamp tax
of One peso (P1.00), if the value of such goods exceeds One hundred
pesos
(P100) and does not exceed One Thousand pesos (P1,000); Ten pesos
(P10),
if the value exceeds One thousand pesos (P1,000): Provided, however,
That freight tickets covering goods, merchandise or effects carried as
accompanied baggage of passengers on land and water carriers primarily
engaged in the transportation of passengers are hereby exempt.
SEC. 192. Stamp Tax on Proxies. -
On each proxy for voting at any election for officers of any company or
association, or for any other purpose, except proxies issued affecting
the affairs of associations or corporations organized for religious,
charitable
or literary purposes, there shall be collected a documentary stamp tax
of Fifteen pesos (P15.00).
SEC. 193. Stamp Tax on Powers of Attorney. -
On each power of attorney to perform any act whatsoever, except acts
connected
with the collection of claims due from or accruing to the Government of
the Republic of the Philippines, or the government of any province,
city
or municipality, there shall be collected a documentary stamp tax of
Five
pesos (P5.00).
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 Three pesos (P3.00) for the first Two
thousand
pesos (P2,000), or fractional part thereof, and an additional One peso
(P1.00) for every One Thousand pesos (P1,000) or fractional part
thereof,
in excess of the first Two thousand pesos (P2,000) for each year of the
term of said contract or agreement.
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 of 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 (P5,000), Twenty
pesos (P20.00).
(b) On each Five
thousand
pesos (P5,000), or fractional part thereof in excess of Five
thousand pesos (P5,000), an additional tax of Ten pesos (P10.00).
On any mortgage, pledge,
or deed of trust, where the same shall be made as a security for the
payment
of a fluctuating account or future advances without fixed limit, the
documentary
stamp tax on such mortgage, pledge or deed of trust shall be computed
on
the amount actually loaned or given at the time of the execution of the
mortgage, pledge or deed of trust, additional documentary stamp tax
shall
be paid which shall be computed on the basis of the amount advanced or
loaned at the rates specified above: Provided, however, That if
the full amount of the loan or credit, granted under the mortgage,
pledge
or deed of trust shall be computed on the amount actually loaned or
given
at the time of the execution of the mortgage, pledge or deed of trust.
However, if subsequent advances are made on such mortgage, pledge or
deed
of trust, additional documentary stamp tax shall be paid which shall be
computed on the basis of the amount advanced or loaned at the rates
specified
above: Provided, however, That if the full amount of the loan
or
credit, granted under the mortgage, pledge or deed of trust is
specified
in such mortgage, pledge or deed of trust, the documentary stamp tax
prescribed
in this Section shall be paid and computed on the full amount of the
loan
or credit granted.
SEC. 196. Stamp tax on Deeds of Sale and Conveyances of Real Property. - On
all conveyances, deeds, instruments, or writings, other than grants,
patents
or original certificates of adjudication issued by the Government,
whereby
any land, tenement, or other realty sold shall be granted, assigned,
transferred
or otherwise conveyed to the purchaser, or purchasers, or to any other
person or persons designated by such purchaser or purchasers, there
shall
be collected a documentary stamp tax, at the rates herein below
prescribed,
based on the consideration contracted to be paid for such realty or on
its fair market value determined in accordance with Section 6(E) of
this
Code, whichever is higher: Provided, That when one of the
contracting
parties is the Government the tax herein imposed shall be based on the
actual consideration.
(a) When the
consideration,
or value received or contracted to be paid for such realty after
making proper allowance of any encumbrance, does not exceed One
thousand
pesos
(P1,000) fifteen pesos (P15.00).
(b) For each
additional
One thousand Pesos (P1,000), or fractional part thereof in excess of One thousand pesos (P1,000) of such consideration or value, Fifteen
pesos (P15.00).
When it appears that the
amount of the documentary stamp tax payable hereunder has been reduced
by an incorrect statement of the consideration in any conveyance, deed,
instrument or writing subject to such tax the Commissioner, provincial
or city Treasurer, or other revenue officer shall, from the assessment
rolls or other reliable source of information, assess the property of
its
true market value and collect the proper tax thereon.
SEC. 197. Stamp Tax on Charter Parties and Similar Instruments. -
On every charter party, contract or agreement for the charter of any
ship,
vessel or steamer, or any letter or memorandum or other writing between
the captain, master or owner, or other person acting as agent of any
ship,
vessel or steamer, and any other person or persons for or relating to
the
charter of any such ship, vessel or steamer, and on any renewal or
transfer
of such charter, contract, agreement, letter or memorandum, there shall
be collected a documentary stamp tax at the following rates:
(a) If the registered
gross tonnage of the ship, vessel or steamer does not exceed one
thousand (1,000) tons, and the duration of the charter or contract does
not exceed
six (6) months, Five hundred pesos (P500); and for each month or
fraction
of a month
in excess of six (6) months, an additional tax of Fifty pesos (P50.00)
shall be paid.
(b) If the registered
gross tonnage exceeds one thousand (1,000) tons and does not exceed
ten thousand (10,000) tons, and the duration of the charter or contract
does not exceed
six (6) months, One thousand pesos (P1,000); and for each month or
fraction
of a month
in excess of six (6) months, an additional tax of One hundred pesos
(P100)
shall be paid.
(c) If the registered
gross tonnage exceeds ten thousand (10,000) tons and the duration of
the charter or contract does not exceed six (6) months, One thousand
five
hundred
pesos (P1,500); and for each month or fraction of a month in excess of
six (6) months,
an additional tax of One hundred fifty pesos (P150) shall be paid.
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 altering or
otherwise,
there shall be levied, collected and paid a documentary stamp tax, at
the
same rate as that imposed on the original instrument.
SEC. 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.
(b) Certificates of
oaths administered to any government official in his official capacity
or
of acknowledgment by any government official in the performance of his
official duties,
written appearance in any court by any government official, in his
official
capacity;
certificates of the administration of oaths to any person as to the
authenticity
of any
paper required to be filed in court by any person or party thereto,
whether
the proceedings
be civil or criminal; papers and documents filed in courts by or for
the
national, provincial,
city or municipal governments; affidavits of poor persons for the
purpose
of proving
poverty; statements and other compulsory information required of
persons
or corporations
by the rules and regulations of the national, provincial, city or
municipal
governments
exclusively for statistical purposes and which are wholly for the use
of
the bureau or office
in which they are filed, and not at the instance or for the use or
benefit
of the person
filing them; certified copies and other certificates placed upon
documents,
instruments
and papers for the national, provincial, city, or municipal
governments,
made at the
instance and for the sole use of some other branch of the national,
provincial,
city or municipal governments; and certificates of the assessed value of lands,
not exceeding
Two hundred pesos (P200) in value assessed, furnished by the
provincial,
city or
municipal Treasurer to applicants for registration of title to land.
SEC. 200. Payment of Documentary Stamp Tax. -
(A) In General.- The provisions of Presidential Decree No. 1045
notwithstanding,
any person liable to pay documentary stamp tax upon any document
subject
to tax under Title VII of this Code shall file a tax return and pay the
tax in accordance with the rules and regulations to be prescribed by
the
Secretary of Finance, upon recommendation of the Commissioner. cralaw:red
(B) Time for Filing
and Payment of the Tax.- Except as provided by rules and regulations promulgated by
the Secretary of Finance, upon recommendation of the Commissioner, the
tax return prescribed in this Section shall be filed within ten (10)
days
after the close of the month when the taxable document was made,
signed,
issued, accepted, or transferred, and the tax thereon shall be paid at
the same time the aforesaid return is filed. cralaw:red
(C) Where to File.- Except in cases where the Commissioner otherwise permits, the
aforesaid tax return shall be filed with and the tax due shall be paid
through the authorized agent bank within the territorial jurisdiction
of
the Revenue District Office which has jurisdiction over the residence
or
principal place of business of the taxpayer.
In places where there is
no
authorized agent bank, the return shall be filed with the Revenue
District
Officer, collection agent, or duly authorized Treasurer of the city or
municipality in which the taxpayer has his legal residence or principal
place of business.
(D) Exception.- In lieu of the foregoing provisions of this Section, the tax may
be paid either through purchase and actual affixture; or by imprinting
the stamps through a documentary stamp metering machine, on the taxable
document, in the manner as may be prescribed by rules and regulations
to
be promulgated by the Secretary of Finance, upon recommendation of the
Commissioner.
SEC. 201. Effect of Failure to Stamp Taxable Document. -
An instrument, document or paper which is required by law to be stamped
and which has been signed, issued, accepted or transferred without
being
duly stamped, shall not be recorded, nor shall it or any copy thereof
or
any record of transfer of the same be admitted or used in evidence in
any
court until the requisite stamp or stamps are affixed thereto and
cancelled.
TITLE VIIIREMEDIES
CHAPTER IREMEDIES
IN GENERAL
SEC. 202. Final Deed to Purchaser.- In case the taxpayer shall not redeem the property as herein
provided
the Revenue District Officer shall, as grantor, execute a deed
conveying
to the purchaser so much of the property as has been sold, free from
all
liens of any kind whatsoever, and the deed shall succintly recite all
the
proceedings upon which the validity of the sale depends.
SEC. 203. Period of Limitation Upon Assessment and Collection. -
Except as provided in Section 222, internal revenue taxes shall be
assessed
within three (3) years after the last day prescribed by law for the
filing
of the return, and no proceeding in court without assessment for the
collection
of such taxes shall be begun after the expiration of such period: Provided,
That in a case where a return is filed beyond the period prescribed by
law, the three (3)-year period shall be counted from the day the return
was filed.
For purposes of this Section, a return filed before the last
day prescribed by law for the filing thereof shall be considered as
filed
on such last day.
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:
(1) A
reasonable
doubt as to the validity of the claim against the taxpayer exists; or(2) The
financial
position of the taxpayer demonstrates a clear inability to pay the
assessed
tax.
The compromise
settlement
of any tax liability shall be subject to the following minimum amounts:
For cases of
financial
incapacity, a minimum compromise rate equivalent to ten percent (10%)
of
the basic assessed tax; and
For other cases, a
minimum compromise rate equivalent to forty percent (40%) of the basic
assessed tax.
Where the basic tax
involved
exceeds One million pesos (P1,000.000) 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.
(B) Abate or
Cancel a Tax Liability, when:
(1) The tax or
any portion thereof appears to be unjustly or excessively assessed; or(2) The
administration
and collection costs involved do not justify the collection of the
amount due.
All criminal
violations
may be compromised except: (a) those already filed in court, or (b)
those
involving fraud.
(C) Credit
or refund taxes erroneously or illegally received or penalties imposed
without authority, refund the value of internal revenue stamps when
they
are returned in good condition by the purchaser, and, in his
discretion,
redeem or change unused stamps that have been rendered unfit for use
and
refund their value upon proof of destruction.
No credit or refund of
taxes
or penalties shall be allowed unless the taxpayer files in writing with
the Commissioner a claim for credit or refund within two (2) years
after
the payment of the tax or penalty: Provided, however, That a
return
filed showing an overpayment shall be considered as a written claim for
credit or refund.
A Tax Credit Certificate
validly issued under the provisions of this Code may be applied against
any internal revenue tax, excluding withholding taxes, for which the
taxpayer
is directly liable.
Any request for conversion into refund of
unutilized
tax credits may be allowed, subject to the provisions of Section 230 of
this Code: Provided, That the original copy of the Tax Credit
Certificate
showing a creditable balance is surrendered to the appropriate revenue
officer for verification and cancellation: Provided, further,
That
in no case shall a tax refund be given resulting from availment of
incentives
granted pursuant to special laws for which no actual payment was made.
The Commissioner shall
submit to the Chairmen of the Committee on Ways and Means of both the
Senate
and House of Representatives, every six (6) months, a report on the
exercise
of his powers under this Section, stating therein the following facts
and
information, among others: names and addresses of taxpayers whose cases
have been the subject of abatement or compromise; amount involved;
amount
compromised or abated; and reasons for the exercise of power: Provided,
That the said report shall be presented to the Oversight Committee in
Congress
that shall be constituted to determine that said powers are reasonably
exercised and that the government is not unduly deprived of revenues.
CHAPTER IICIVIL
REMEDIES
FOR COLLECTION OF TAXES
SEC. 205. Remedies for the Collection of Delinquent Taxes. - The
civil remedies for the collection of internal revenue taxes, fees or
charges,
and any increment thereto resulting from delinquency shall be:
(a) By
distraint
of goods, chattels, or effects, and other personal property of whatever
character, including stocks and other securities, debts, credits, bank
accounts and interest in and rights to personal property, and by levy
upon
real property and interest in rights to real property; and
(b) By civil
or
criminal action.
Either of these
remedies
or both simultaneously may be pursued in the discretion of the
authorities
charged with the collection of such taxes: Provided, however,
That
the remedies of distraint and levy shall not be availed of where the
amount
of tax involve is not more than One hundred pesos (P100).
The judgment in
the
criminal case shall not only impose the penalty but shall also order
payment
of the taxes subject of the criminal case as finally decided by the
Commissioner.
The Bureau of
Internal
Revenue shall advance the amounts needed to defray costs of collection
by means of civil or criminal action, including the preservation or
transportation
of personal property distrained and the advertisement and sale thereof,
as well as of real property and improvements thereon.
SEC. 206. Constructive Distraint of the Property of a Taxpayer. - To
safeguard the interest of the Government, the Commissioner may place
under
constructive distraint the property of a delinquent taxpayer or any
taxpayer
who, in his opinion, is retiring from any business subject to tax, or
is
intending to leave the Philippines or to remove his property therefrom
or to hide or conceal his property or to perform any act tending to
obstruct
the proceedings for collecting the tax due or which may be due from him.
The constructive distraint
of personal property shall be affected by requiring the taxpayer or any
person having possession or control of such property to sign a receipt
covering the property distrained and obligate himself to preserve the
same
intact and unaltered and not to dispose of the same ;in any manner
whatever,
without the express authority of the Commissioner. cralaw:red
In case the taxpayer
or the person having the possession and control of the property sought
to be placed under constructive distraint refuses or fails to sign the
receipt herein referred to, the revenue officer effecting the
constructive
distraint shall proceed to prepare a list of such property and, in the
presence of two (2) witnessed, leave a copy thereof in the premises
where
the property distrained is located, after which the said property shall
be deemed to have been placed under constructive distraint.
SEC. 207. Summary Remedies. -
(A) Distraint
of Personal Property.
- Upon the failure of the person owing any delinquent tax or delinquent
revenue to pay the same at the time required, the Commissioner or his
duly
authorized representative, if the amount involved is in excess of One
million
pesos (P1,000,000), or the Revenue District Officer, if the amount
involved
is One million pesos (P1,000,000) or less, shall seize and distraint
any
goods, chattels or effects, and the personal property, including stocks
and other securities, debts, credits, bank accounts, and interests in
and
rights to personal property of such persons ;in sufficient quantity to
satisfy the tax, or charge, together with any increment thereto
incident
to delinquency, and the expenses of the distraint and the cost of the
subsequent
sale. cralaw:red
A report on the distraint
shall, within ten (10) days from receipt of the warrant, be submitted
by
the distraining officer to the Revenue District Officer, and to the
Revenue
Regional Director: Provided, That the Commissioner or his duly
authorized
representative shall, subject to rules and regulations promulgated by
the
Secretary of Finance, upon recommendation of the Commissioner, have the
power to lift such order of distraint: Provided, further, That
a
consolidated report by the Revenue Regional Director may be required by
the Commissioner as often as necessary. cralaw:red
(B) Levy
on Real Property.- After the expiration of the time required to pay the delinquent
tax
or delinquent revenue as prescribed in this Section, real property may
be levied upon, before simultaneously or after the distraint of
personal
property belonging to the delinquent.
To this end, any internal revenue
officer designated by the Commissioner or his duly authorized
representative
shall prepare a duly authenticated certificate showing the name of the
taxpayer and the amounts of the tax and penalty due from him.
Said
certificate
shall operate with the force of a legal execution throughout the
Philippines. cralaw:red
Levy shall be affected
by writing upon said certificate a description of the property upon
which
levy is made.
At the same time, written notice of the levy shall be
mailed
to or served upon the Register of Deeds for the province or city where
the property is located and upon the delinquent taxpayer, or if he be
absent
from the Philippines, to his agent or the manager of the business in
respect
to which the liability arose, or if there be none, to the occupant of
the
property in question. cralaw:red
In case the warrant
of levy on real property is not issued before or simultaneously with
the
warrant of distraint on personal property, and the personal property of
the taxpayer is not sufficient to satisfy his tax delinquency, the
Commissioner
or his duly authorized representative shall, within thirty (30) days
after
execution of the distraint, proceed with the levy on the taxpayer's
real
property. cralaw:red
Within ten (10) days
after receipt of the warrant, a report on any levy shall be submitted
by
the levying officer to the Commissioner or his duly authorized
representative:
Provided, however, That a consolidated report by the Revenue
Regional
Director may be required by the Commissioner as often as necessary:
Provided,
further, That the Commissioner or his duly authorized representative,
subject
to rules and regulations promulgated by the Secretary of Finance, upon
recommendation of the Commissioner, shall have the authority to lift
warrants
of levy issued in accordance with the provisions hereof.
SEC. 208. Procedure for Distraint and Garnishment. -
The officer serving the warrant of distraint shall make or cause to be
made an account of the goods, chattels, effects or other personal
property
distrained, a copy of which, signed by himself, shall be left either
with
the owner or person from whose possession such goods, chattels, or
effects
or other personal property were taken, or at the dwelling or place of
business
of such person and with someone of suitable age and discretion, to
which
list shall be added a statement of the sum demanded and note of the
time
and place of sale. cralaw:red
Stocks and other securities
shall be distrained by serving a copy of the warrant of distraint upon
the taxpayer and upon the president, manager, treasurer or other
responsible
officer of the corporation, company or association, which issued the
said
stocks or securities. cralaw:red
Debts and credits shall
be distrained by leaving with the person owing the debts or having in
his
possession or under his control such credits, or with his agent, a copy
of the warrant of distraint.
The warrant of distraint shall be
sufficient
authority to the person owning the debts or having in his possession or
under his control any credits belonging to the taxpayer to pay to the
Commissioner
the amount of such debts or credits. cralaw:red
Bank accounts shall
be garnished by serving a warrant of garnishment upon the taxpayer and
upon the president, manager, treasurer or other responsible officer of
the bank.
Upon receipt of the warrant of garnishment, the bank shall
tun
over to the Commissioner so much of the bank accounts as may be
sufficient
to satisfy the claim of the Government.
SEC. 209. Sale of Property Distrained and Disposition of Proceeds. -
The Revenue District Officer or his duly authorized representative,
other
than the officer referred to in Section 208 of this Code shall,
according
to rules and regulations prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner, forthwith cause a notification to be exhibited in
not less than two (2) public places in the municipality or city where
the
distraint is made, specifying; the time and place of sale and the
articles
distrained.
The time of sale shall not be less than twenty (20) days
after
notice.
One place for the posting of such notice shall be at the Office
of the Mayor of the city or municipality in which the property is
distrained. cralaw:red
At the time and place
fixed in such notice, the said revenue officer shall sell the goods,
chattels,
or effects, or other personal property, including stocks and other
securities
so distrained, at public auction, to the highest bidder for cash, or
with
the approval of the Commissioner, through duly licensed commodity or
stock
exchanges. cralaw:red
In the case of Stocks
and other securities, the officer making the sale shall execute a bill
of sale which he shall deliver to the buyer, and a copy thereof
furnished
the corporation, company or association which issued the stocks or
other
securities.
Upon receipt of the copy of the bill of sale, the
corporation,
company or association shall make the corresponding entry in its books,
transfer the stocks or other securities sold in the name of the buyer,
and issue, if required to do so, the corresponding certificates of
stock
or other securities. cralaw:red
Any residue over and
above what is required to pay the entire claim, including expenses,
shall
be returned to the owner of the property sold.
The expenses chargeable
upon each seizure and sale shall embrace only the actual expenses of
seizure
and preservation of the property pending ;the sale, and no charge shall
be imposed for the services of the local internal revenue officer or
his
deputy.
SEC. 210. Release of Distrained Property Upon Payment Prior to Sale. - If
at any time prior to the consummation of the sale all proper charges
are
paid to the officer conducting the sale, the goods or effects
distrained
shall be restored to the owner.
SEC. 211. Report of Sale to Bureau of Internal Revenue. -
Within two (2) days after the sale, the officer making the same shall
make
a report of his proceedings in writing to the Commissioner and shall
himself
preserve a copy of such report as an official record.
SEC. 212. Purchase by Government at Sale Upon Distraint. -
When the amount bid for the property under distraint is not equal to
the
amount of the tax or is very much less than the actual market value of
the articles offered for sale, the Commissioner or his deputy may
purchase
the same in behalf of the national Government for the amount of taxes,
penalties and costs due thereon. cralaw:red
Property so purchased
may be resold by the Commissioner or his deputy, subject to the rules
and
regulations prescribed by the Secretary of Finance, the net proceeds
therefrom
shall be remitted to the National Treasury and accounted for as
internal
revenue.
SEC. 213. Advertisement and Sale. - Within
twenty (20) days after levy, the officer conducting the proceedings
shall
proceed to advertise the property or a usable portion thereof as may be
necessary to satisfy the claim and cost of sale; and such advertisement
shall cover a period of a least thirty (30) days.
It shall be
effectuated
by posting a notice at the main entrance of the municipal building or
city
hall and in public and conspicuous place in the barrio or district in
which
the real estate lies and ;by publication once a week for three (3)
weeks
in a newspaper of general circulation in the municipality or city where
the property is located.
The advertisement shall contain a statement of
the amount of taxes and penalties so due and the time and place of
sale,
the name of the taxpayer against whom taxes are levied, and a short
description
of the property to be sold.
At any time before the day fixed for the
sale,
the taxpayer may discontinue all proceedings by paying the taxes,
penalties
and interest.
If he does not do so, the sale shall proceed and shall be
held either at the main entrance of the municipal building or city
hall,
or on the premises to be sold, as the officer conducting the
proceedings
shall determine and as the notice of sale shall specify. cralaw:red
Within five (5) days
after the sale, a return by the distraining or levying officer of the
proceedings
shall be entered upon the records of the Revenue Collection Officer,
the
Revenue District officer and the Revenue Regional Director.
The Revenue
Collection Officer, in consultation with the Revenue district Officer,
shall then make out and deliver to the purchaser a certificate from his
records, showing the proceedings of the sale, describing the property
sold
stating the name of the purchaser and setting out the exact amount of
all
taxes, penalties and interest: Provided, however, That in case
the
proceeds of the sale exceeds the claim and cost of sale, the excess
shall
be turned over to the owner of the property. cralaw:red
The Revenue Collection
Officer, upon approval by the Revenue District Officer may, out of his
collection, advance an amount sufficient to defray the costs of
collection
by means of the summary remedies provided for in this Code, including
;the
preservation or transportation in case of personal property, and the
advertisement
and subsequent sale, both in cases of personal and real property
including
improvements found on the latter.
In his monthly collection reports,
such
advances shall be reflected and supported by receipts.
SEC. 214. Redemption of Property Sold. - Within
one (1) year from the date of sale, the delinquent taxpayer, or any one
for him, shall have the right of paying to the Revenue District Officer
the amount of the public taxes, penalties, and interest thereon from
the
date of delinquency to the date of sale, together with interest on said
purchase price at the rate of fifteen percent (15%) per annum from the
date of purchase to the date of redemption, and such payment shall
entitle
the person paying to the delivery of the certificate issued to the
purchaser
and a certificate from the said Revenue District Officer that he has
thus
redeemed the property, and the Revenue District Officer shall forthwith
pay over to the purchaser the amount by which such property has thus
been
redeemed, and said property thereafter shall be free form the lien of
such
taxes and penalties. cralaw:red
The owner shall not,
however, be deprived of the possession of the said property and shall
be
entitled to the rents and other income thereof until the expiration of
the time allowed for its redemption.
SEC. 215. Forfeiture to Government for Want of Bidder. -
In case there is no bidder for real property exposed for sale as herein
above provided or if the highest bid is for an amount insufficient to
pay
the taxes, penalties and costs, the Internal Revenue Officer conducting
the sale shall declare the property forfeited to the Government in
satisfaction
of the claim in question and within two (2) days thereafter, shall make
a return of his proceedings and the forfeiture which shall be spread
upon
the records of his office.
It shall be the duty of the Register of
Deeds
concerned, upon registration with his office of any such declaration of
forfeiture, to transfer the title of the property forfeited to the
Government
without the necessity of an order from a competent court. cralaw:red
Within one (1) year
from the date of such forfeiture, the taxpayer, or any one for him may
redeem said property by paying to the Commissioner or the latter's
Revenue
Collection Officer the full amount of the taxes and penalties, together
with interest thereon and the costs of sale, but if the property be not
thus redeemed, the forfeiture shall become absolute.
SEC. 216. Resale of Real Estate Taken for Taxes. -
The Commissioner shall have charge of any real estate obtained by the
Government
of the Philippines in payment or satisfaction of taxes, penalties or
costs
arising under this Code or in compromise or adjustment of any claim
therefore,
and said Commissioner may, upon the giving of not less than twenty (20)
days notice, sell and dispose of the same of public auction or with
prior
approval of the Secretary of Finance, dispose of the same at private
sale.
In either case, the proceeds of the sale shall be deposited with the
National
Treasury, and an accounting of the same shall rendered to the Chairman
of the Commission on Audit.
SEC. 217. Further Distraint or Levy. - The
remedy by distraint of personal property and levy on realty may be
repeated
if necessary until the full amount due, including all expenses, is
collected.
SEC. 218. Injunction not Available to Restrain Collection of Tax. -
No court shall have the authority to grant an injunction to restrain
the
collection of any national internal revenue tax, fee or charge imposed
by this Code.
SEC. 219. Nature and Extent of Tax Lien. -
If any person, corporation, partnership, joint-account (cuentas en
participacion),
association or insurance company liable to pay an internal revenue tax,
neglects or refuses to pay the same after demand, the amount shall be a
lien in favor of the Government of the Philippines from the time when
the
assessment was made by the Commissioner until paid, with interests,
penalties,
and costs that may accrue in addition thereto upon all property and
rights
to property belonging to the taxpayer: Provided, That this lien
shall not be valid against any mortgagee purchaser or judgment creditor
until notice of such lien shall be filed by the Commissioner in the
office
of the Register of Deeds of the province or city where the property of
the taxpayer is situated or located.
SEC. 220. Form and Mode of Proceeding in Actions Arising under this
Code. - Civil
and criminal actions and proceedings instituted in behalf of the
Government
under the authority of this Code or other law enforced by the Bureau of
Internal Revenue shall be brought in the name of the Government of the
Philippines and shall be conducted by legal officers of the Bureau of
Internal
Revenue but no civil or criminal action for the recovery of taxes or
the
enforcement of any fine, penalty or forfeiture under this Code shall be
filed in court without the approval of the Commissioner.
SEC. 221. Remedy for Enforcement of Statutory Penal Provisions. - The
remedy for enforcement of statutory penalties of all sorts shall be by
criminal or civil action, as the particular situation may require,
subject
to the approval of the Commissioner.
SEC. 222. Exceptions as to Period of Limitation of Assessment and
Collection
of Taxes. -
(a) In the case
of a false or fraudulent return with intent to evade tax or of failure
to file a return, the tax may be assessed, or a proceeding in court for
the collection of such tax may be filed without assessment, at any time
within ten (10) years after the discovery of the falsity, fraud or
omission:
Provided, That in a fraud assessment which has become final and
executory,
the fact of fraud shall be judicially taken cognizance of in the civil
or criminal action for the collection thereof.
(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 in
writing
to its assessment after such time, the tax may be assessed within the
period
agreed upon.
The period so agreed upon may be extended by subsequent
written
agreement made before the expiration of the period previously agreed
upon.
(c) Any
internal
revenue tax which has been assessed within the period of limitation as
prescribed in paragraph (a) hereof may be collected by distraint or
levy
or by a proceeding in court within five (5) years following the
assessment
of the tax.
(d) Any
internal
revenue tax, which has been assessed within the period agreed upon as
provided
in paragraph (b) hereinabove, may be collected by distraint or levy or
by a proceeding in court within the period agreed upon in writing
before
the expiration of the five (5) -year period.
The period so agreed upon
may be extended by subsequent written agreements made before the
expiration
of the period previously agreed upon.
(e) Provided,
however, That nothing in the immediately preceding and paragraph
(a)
hereof shall be construed to authorize the examination and
investigation
or inquiry into any tax return filed in accordance with the provisions
of any tax amnesty law or decree.
SEC. 223. Suspension of Running of Statute of Limitations. -
The running of the Statute of Limitations provided in Sections 203 and
222 on the making of assessment and the beginning of distraint or levy
a proceeding in court for collection, in respect of any deficiency,
shall
be suspended for the period during which the Commissioner is prohibited
from making the assessment or beginning distraint or levy or a
proceeding
in court and for sixty (60) days thereafter; when the taxpayer requests
for a reinvestigation which is granted by the Commissioner; when the
taxpayer
cannot be located in the address given by him in the return filed upon
which a tax is being assessed or collected: Provided, that, if
the
taxpayer informs the Commissioner of any change in address, the running
of the Statute of Limitations will not be suspended; when the warrant
of
distraint or levy is duly served upon the taxpayer, his authorized
representative,
or a member of his household with sufficient discretion, and no
property
could be located; and when the taxpayer is out of the Philippines.
SEC. 224. Remedy for Enforcement of Forfeitures. - The
forfeiture of chattels and removable fixtures of any sort shall be
enforced
by the seizure and sale, or destruction, of the specific forfeited
property.
The forfeiture of real property shall be enforced by a judgment of
condemnation
and sale in a legal action or proceeding, civil or criminal, as the
case
may require.
SEC. 225. When Property to be Sold or Destroyed. - Sales
of forfeited chattels and removable fixtures shall be effected, so far
as practicable, in the same manner and under the same conditions as the
public notice and the time and manner of sale as are prescribed for
sales
of personal property distrained for the non-payment of taxes.
Distilled spirits, liquors,
cigars, cigarettes, other manufactured products of tobacco, and all
apparatus
used I or about the illicit production of such articles may, upon
forfeiture,
be destroyed by order of the Commissioner, when the sale of the same
for
consumption or use would be injurious to public health or prejudicial
to
the enforcement of the law. cralaw:red
All other articles subject
to excise tax, which have been manufactured or removed in violation of
this Code, as well as dies for the printing or making of internal
revenue
stamps and labels which are in imitation of or purport to be lawful
stamps,
or labels may, upon forfeiture, be sold or destroyed in the discretion
of the Commissioner. cralaw:red
Forfeited property shall
not be destroyed until at least twenty (20) days after seizure.
SEC. 226. Disposition of funds Recovered in Legal Proceedings or
Obtained
from Forfeitures. - all
judgments and monies recovered and received for taxes, costs,
forfeitures,
fines and penalties shall be paid to the Commissioner or his authorized
deputies as the taxes themselves are required to be paid, and except as
specially provided, shall be accounted for and dealt with the same way.
SEC. 227. Satisfaction of Judgment Recovered Against any Internal
Revenue
Officer. -
When an action is brought against any Internal Revenue officer to
recover
damages by reason of any act done in the performance of official duty,
and the Commissioner is notified of such action in time to make defense
against the same, through the Solicitor General, any judgment, damages
or costs recovered in such action shall be satisfied by the
Commissioner,
upon approval of the Secretary of Finance, or if the same be paid by
the
person used shall be repaid or reimbursed to him.
No such judgment, damages,
or costs shall be paid or reimbursed in behalf of a person who has
acted
negligently or in bad faith, or with willful oppression.
CHAPTER
III
PROTESTING
AN ASSESSMENT, REFUND, ETC.
chanrobles virtual law library
SEC. 228. Protesting of Assessment. - When
the Commissioner or his duly authorized representative finds that
proper
taxes should be assessed, he shall first notify the taxpayer of his
findings:
Provided, however, That a preassessment notice shall not be
required
in the following cases:
(a) When the finding
for any deficiency tax is the result of mathematical error in the
computation of the tax as appearing on the face of the return; or(b) When a
discrepancy
has been determined between the tax withheld and the amount
actually remitted by the withholding agent; or(c) When a taxpayer
who opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was determined to have carried
over
and
automatically applied the same amount claimed against the estimated tax
liabilities
for the taxable quarter or quarters of the succeeding taxable year; or(d) When the excise
tax due on exciseable articles has not been paid; or(e) When the article
locally purchased or imported by an exempt person, such as, but
not limited to, vehicles, capital equipment, machineries and spare
parts,
has been sold,
traded or transferred to non-exempt persons.
The taxpayers shall be
informed in writing of the law and the facts on which the assessment is
made; otherwise, the assessment shall be void.
Within a period to be
prescribed by implementing rules and regulations, the taxpayer shall be
required to respond to said notice.
If the taxpayer fails to respond,
the
Commissioner or his duly authorized representative shall issue an
assessment
based on his findings. cralaw:red
Such assessment may
be protested administratively by filing a request for reconsideration
or
reinvestigation within thirty (30) days from receipt of the assessment
in such form and manner as may be prescribed by implementing rules and
regulations. cralaw:red
Within sixty (60) days
from filing of the protest, all relevant supporting documents shall
have
been submitted; otherwise, the assessment shall become final. cralaw:red
If the protest is denied
in whole or in part, or is not acted upon within one hundred eighty
(180)
days from submission of documents, the taxpayer adversely affected by
the
decision or inaction may appeal to the Court of Tax Appeals within
thirty
(30) days from receipt of the said decision, or from the lapse of one
hundred
eighty (180)-day period; otherwise, the decision shall become final,
executory
and demandable.
SEC. 229. Recovery of Tax Erroneously or Illegally Collected. -
no suit or proceeding shall be maintained in any court for the recovery
of any national internal revenue tax hereafter alleged to have been
erroneously
or illegally assessed or collected, or of any penalty claimed to have
been
collected without authority, of any sum alleged to have been
excessively
or in any manner wrongfully collected without authority, or of any sum
alleged to have been excessively or in any manner wrongfully collected,
until a claim for refund or credit has been duly filed with the
Commissioner;
but such suit or proceeding may be maintained, whether or not such tax,
penalty, or sum has been paid under protest or duress. cralaw:red
In any case, no such
suit or proceeding shall be filed after the expiration of two (2) years
from the date of payment of the tax or penalty regardless of any
supervening
cause that may arise after payment: Provided, however, That the
Commissioner may, even without a written claim therefor, refund or
credit
any tax, where on the face of the return upon which payment was made,
such
payment appears clearly to have been erroneously paid.
SEC. 230. Forfeiture of Cash Refund and of Tax Credit. -
(A) Forfeiture
of Refund.- A refund check or warrant issued in accordance with the pertinent
provisions of this Code, which shall remain unclaimed or uncashed
within
five (5) years from the date the said warrant or check was mailed or
delivered,
shall be forfeited in favor of the Government and the amount thereof
shall
revert to the general fund. cralaw:red
(B) Forfeiture
of Tax Credit.
- A tax credit certificate issued in accordance with the pertinent
provisions
of this Code, which shall remain unutilized after five (5) years from
the
date of issue, shall, unless revalidated, be considered invalid, and
shall
not be allowed as payment for internal revenue tax liabilities of the
taxpayer,
and the amount covered by the certificate shall revert to the general
fund.
(C) Transitory
Provision. - For purposes of the preceding Subsection, a tax
credit
certificate issued by the Commissioner or his duly authorized
representative
prior to January 1, 1998, which remains unutilized or has a creditable
balance as of said date, shall be presented for revalidation with the
Commissioner
or his duly authorized representative or on before June 30, 1998.
SEC. 231. Action to Contest Forfeiture of Chattel. -
In case of the seizure of personal property under claim of forfeiture,
the owner desiring to contest the validity of the forfeiture may, at
any
time before sale or destruction of the property, bring an action
against
the person seizing the property or having possession thereof to recover
the same, and upon giving proper bond, may enjoin the sale; or after
the
sale and within six (6) months, he may bring an action to recover the
net
proceeds realized at the sale.
TITLE IXCOMPLIANCE
REQUIREMENTSCHAPTER IKEEPING
OF
BOOKS OF ACCOUNTS AND RECORDS
SEC. 232. Keeping of Books of Accounts. -
(A) Corporations,
Companies, Partnerships or Persons Required to Keep Books of Accounts. -
All corporations, companies, partnerships or persons required by law to
pay internal revenue taxes shall keep a journal and a ledger or their
equivalents:
Provided, however, That those whose quarterly sales, earnings,
receipts,
or output do not exceed Fifty thousand pesos (P50,000) shall keep and
use
simplified set of bookkeeping records duly authorized by the Secretary
of Finance where in all transactions and results of operations are
shown
and from which all taxes due the Government may readily and accurately
be ascertained and determined any time of the year: Provided,
further,
That corporations, companies, partnerships or persons whose gross
quarterly
sales, earnings, receipts or output exceed One hundred fifty thousand
pesos
(P150,000) shall have their books of accounts audited and examined
yearly
by independent Certified Public Accountants and their income tax
returns
accompanied with a duly accomplished Account Information Form (AIF)
which
shall contain, among others, information lifted from certified balance
sheets, profit and loss statements, schedules listing income-producing
properties and the corresponding income therefrom and other relevant
statements. cralaw:red
(B) Independent
Certified Public Accountant Defined. -
The term "Independent Certified Public Accountant", as
used
in the preceding paragraph, means an accountant who possesses the
independence
as defined in the rules and regulations of the Board of Accountancy
promulgated
pursuant to Presidential Decree No. 692, otherwise known as the Revised
Accountancy Law.
SEC. 233. Subsidiary Books. -
All corporations, companies, partnerships or persons keeping the books
of accounts mentioned in the preceding Section may, at their option,
keep
subsidiary books as the needs of their business may require: Provided,
That were such subsidiaries are kept, they shall form part of the
accounting
system of the taxpayer and shall be subject to the same rules and
regulations
as to their keeping, translation, production and inspection as are
applicable
to the journal and the ledger.
SEC. 234. Language in which Books are to be Kept; Translation. -
All suchcorporations, companies, partnerships or persons shall
keep the books or records mentioned in Section 232 hereof in native
language,
English or Spanish: Provided, however, That if in addition to
said
books or records the taxpayer keeps other books or records in a
language
other than a native language, English or Spanish, he shall make a true
and complete translation of all the entries in suck other books or
records
into a native language; English or Spanish, and the said translation
must
be made by the bookkeeper, or such taxpayer, or in his absence, by his
manager and must be certified under oath as to its correctness by the
said
bookkeeper or manager, and shall form an integral part of the aforesaid
books of accounts.
The keeping of such books or records in any language
other than a native language, English or Spanish, is hereby prohibited.
SEC. 235. Preservation of Books and Accounts and Other Accounting
Records. -
All the books of accounts, including the subsidiary books and other
accounting
records of corporations, partnerships, or persons, shall be preserved
by
them for a period beginning from the last entry in each book until the
last day prescribed by Section 203 within which the Commissioner is
authorized
to make an assessment.
The said books and records shall be subject to
examination
and inspection by internal revenue officers: Provided, That for
income tax purposes, such examination and inspection shall be made only
once in a taxable year, except in the following cases:
(a) Fraud,
irregularity
or mistakes, as determined by the Commissioner;(b) The taxpayer
requests
reinvestigation;(c) Verification of
compliance with withholding tax laws and regulations;(d) Verification of
capital gains tax liabilities; and(e) In the exercise
of the Commissioner's power under Section 5(B) to obtain information
from other persons in which case, another or separate examination and
inspection
may be made.
Examination and inspection of books of accounts and other
accounting
records shall be done in the taxpayer's office or place of business or
in the office of
the Bureau of Internal Revenue.
All corporations, partnerships or
persons
that retire
from business shall, within ten (10) days from the date of retirement
or
within such
period of time as may be allowed by the Commissioner in special cases,
submit their
books of accounts, including the subsidiary books and other accounting
records to the
Commissioner or any of his deputies for examination, after which they
shall
be
returned.
Corporations and partnerships contemplating dissolution must
notify
the Commissioner and shall not be dissolved until cleared of any tax
liability.
Any provision of existing
general or special law to the contrary notwithstanding, the books of
accounts
and other pertinent records of tax-exempt organizations or grantees of
tax incentives shall be subject to examination by the Bureau of
Internal
Revenue for purposes of ascertaining compliance with the conditions
under
which they have been granted tax exemptions or tax incentives, and
their
tax liability, if any.
CHAPTER IIADMINISTRATIVE
PROVISIONS
SEC. 236. Registration Requirements. -
(A) Requirements. -
Every person subject to any internal revenue tax shall register once
with
the appropriate Revenue District Officer:
(1) Within ten (10)
days from date of employment, or
(2) On or before the
commencement of business,or
(3) Before payment
of any tax due, or
(4) Upon filing of
a return, statement or declaration as required in this Code.
The registration shall
contain the taxpayer's name, style, place of residence, business and
such
other information as may be required by the Commissioner in the form
prescribed
therefor.
A person maintaining
a head office, branch or facility shall register with the Revenue
District
Officer having jurisdiction over the head office, brand or facility.
For
purposes of this Section, the term "facility" may include but
not
be limited to sales outlets, places of production, warehouses or
storage
places. cralaw:red
(B) Annual Registration
Fee. -
An annual registration fee in the amount of Five hundred pesos (P500)
for
every separate or distinct establishment or place of business,
including
facility types where sales transactions occur, shall be paid upon
registration
and every year thereafter on or before the last day of January: Provided,
however, That cooperatives, individuals earning purely
compensation
income, whether locally or abroad, and overseas workers are not liable
to the registration fee herein imposed. cralaw:red
The registration fee
shall be paid to an authorized agent bank located within the revenue
district,
or to the Revenue Collection Officer, or duly authorized Treasurer of
the
city of municipality where each place of business or branch is
registered. cralaw:red
(C) Registration
of Each Type of Internal Revenue Tax. -
Every person who is required to register with the Bureau of Internal
Revenue
under Subsection (A) hereof, shall register each type of internal
revenue
tax for which he is obligated, shall file a return and shall pay such
taxes,
and shall updates such registration of any changes in accordance with
Subsection
(E) hereof. cralaw:red
(D) Transfer of
Registration. -
In case a registered person decides to transfer his place of business
or
his head office or branches, it shall be his duty to update his
registration
status by filing an application for registration information update in
the form prescribed therefor. cralaw:red
(E) Other Updates. - Any
person registered in accordance with this Section shall, whenever
applicable,
update his registration information with the Revenue District Office
where
he is registered, specifying therein any change in type and other
taxpayer
details. cralaw:red
(F) Cancellation
of Registration. - The
registration of any person who ceases to be liable to a tax type shall
be cancelled upon filing with the Revenue District Office where he is
registered
an application for registration information update in a form prescribed
therefor. cralaw:red
(G) Persons Commencing
Business. -
Any person, who expects to realize gross sales or receipts subject to
value-added
tax in excess of the amount prescribed under Section 109(z) of this
Code
for the next 12-month period from the commencement of the business,
shall
register with the Revenue District Office which has jurisdiction over
the
head office or branch and shall pay the annual registration fee
prescribed
in Subsection (B) hereof. cralaw:red
(H) Persons Becoming
Liable to the Value-added Tax. -
Any person, whose gross sales or receipts in any 12-month period
exceeds
the amount prescribed under Subsection 109(z) of this Code for
exemption
from the value-added tax shall register in accordance with Subsection
(A)
hereof, and shall pay the annual registration fee prescribed within ten
(10) days after the end of the last month of that period, and shall be
liable to the value-added tax commencing from the first day of the
month
following his registration. cralaw:red
(I) Optional Registration
of Exempt Person. -
Any person whose transactions are exempt from value-added tax under
Section
109(z) of this Code; or any person whose transactions are exempt from
the
value-added tax under Section 109(a), (b), (c), and (d) of this Code,
who
opts to register as a VAT taxpayer with respect to his export sales
only,
may update his registration information in accordance with Subsection
(E)
hereof, not later than ten (10) days before the beginning of the
taxable
quarter and shall pay the annual registration fee prescribed in
Subsection
(B) hereof. cralaw:red
In any case, the Commissioner
may, for administrative reasons, deny any application for registration
including updates prescribed under Subsection (E) hereof. cralaw:red
For purposes of Title
IV of this Code, any person who has registered value-added tax as a tax
type in accordance with the provisions of Subsection (C) hereof shall
be
referred to as VAT-registered person who shall be assigned only one
Taxpayer
Identification Number. cralaw:red
(J) Supplying
of Taxpayer Identification Number (TIN). -
Any person required under the authority of this Code to make, render or
file a return, statement or other document shall be supplied with or
assigned
a Taxpayer Identification Number (TIN) which he shall indicate in such
return, statement or document filed with the Bureau of Internal Revenue
for his proper identification for tax purposes, and which he shall
indicate
in certain documents, such as, but not limited to the following:
(1) Sugar quedans,
refined sugar release order or similar instruments;(2) Domestic bills
of lading;(3) Documents to be
registered with the Register of Deeds of Assessor's Office;(4) Registration
certificate
of transportation equipment by land, sea or air;(5) Documents to be
registered with the Securities and Exchange Commission;(6) Building
construction
permits;(7) Application for
loan with banks, financial institutions, or other financial
intermediaries;(8) Application for
mayor's permit;(9) Application for
business license with the Department of Trade & Industry; and(10) Such other
documents
which may hereafter be required under rules and regulations
to be promulgated by the Secretary of Finance, upon recommendation of
the
Commissioner.
In cases where a registered
taxpayer dies, the administrator or executor shall register the estate
of the decedent in accordance with Subsection (A) hereof and a new
Taxpayer
Identification Number (TIN) shall be supplied in accordance with the
provisions
of this Section.
In the case of a nonresident
decedent, the executor or administrator of the estate shall register
the
estate with the Revenue District Office where he is registered: Provided,
however, That in case such executor or administrator is not
registered,
registration of the estate shall be made with the Taxpayer
Identification
Number (TIN) supplied by the Revenue District Office having
jurisdiction
over his legal residence. cralaw:red
Only one Taxpayer identification
Number (TIN) shall be assigned to a taxpayer.
Any person who shall
secure
more than one Taxpayer Identification Number shall be criminally liable
under the provision of Section 275 on 'Violation of Other Provisions of
this Code or Regulations in General'.
SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. -All
persons
subject to an internal revenue tax shall, for each sale or transfer of
merchandise or for services rendered valued at Twenty-five pesos
(P25.00)
or more, issue duly registered receipts or sales or commercial
invoices,
prepared at least in duplicate, showing the date of transaction,
quantity,
unit cost and description of merchandise or nature of service: Provided,
however, That in the case of sales, receipts or transfers in the
amount
of One hundred pesos (P100.00) or more, or regardless of the amount,
where
the sale or transfer is made by a person liable to value-added tax to
another
person also liable to value-added tax; or where the receipt is issued
to
cover payment made as rentals, commissions, compensations or fees,
receipts
or invoices shall be issued which shall show the name, business style,
if any, and address of the purchaser, customer or client: Provided,
further, That where the purchaser is a VAT-registered person, in
addition
to the information herein required, the invoice or receipt shall
further
show the Taxpayer Identification Number (TIN) of the purchaser. cralaw:red
The original of each
receipt or invoice shall be issued to the purchaser, customer or client
at the time the transaction is effected, who, if engaged in business or
in the exercise of profession, shall keep and preserve the same in his
place of business for a period of three (3) years from the close of the
taxable year in which such invoice or receipt was issued, while the
duplicate
shall be kept and preserved by the issuer, also in his place of
business,
for a like period. cralaw:red
The Commissioner may,
in meritorious cases, exempt any person subject to internal revenue tax
from compliance with the provisions of this Section.
SEC. 238. Printing of Receipts or Sales or Commercial Invoices. - All
persons who are engaged in business shall secure from the Bureau of
Internal
Revenue an authority to print receipts or sales or commercial invoices
before a printer can print the same. cralaw:red
No authority to print
receipts or sales or commercial invoices shall be granted unless the
receipts
or invoices to be printed are serially numbered and shall show, among
other
things, the name, business style, Taxpayer Identification Number (TIN)
and business address of the person or entity to use the same, and such
other information that may be required by rules and regulations to be
promulgated
by the Secretary of Finance, upon recommendation of the Commissioner. cralaw:red
All persons who print
receipt or sales or commercial invoices shall maintain a
logbook/register
of taxpayers who availed of their printing services.
The
logbook/register
shall contain the following information:
(1) Names, Taxpayer
Identification Numbers of the persons or entities for whom the receipts
or sales or commercial invoices were printed; and
(2) Number of
booklets,
number of sets per booklet, number of copies per set and the
serial numbers of the receipts or invoices in each booklet.
SEC. 239. Sign to be Exhibited by Distiller, Rectifier, Compounder,
Repacker
and Wholesale Liquor Dealer. -
Every person engaged in distilling or rectifying spirits, compounding
liquors,
repacking wines or distilled spirits, and every wholesale liquor dealer
shall keep conspicuously on the outside of his place of business a sign
exhibiting, in letters not less than six centimeters (6 cms.) high, his
name or firm style, with the words "Registered Distiller",
"Rectifier
of Spirits", "Compounder of Liquors", "Repacker of Wines or
Distilled
Spirits", or "Wholesale Liquor Dealer", as the case may be,
and his assessment number.
SEC. 240. Sign to be Exhibited by Manufacturer of Products of Tobacco. -
Everymanufacturer of cigars, cigarettes or tobacco, and every wholesale
dealer in leaf tobacco or manufactured products of tobacco shall place
and keep on outside of the building wherein his business is carried on,
so that it can be distinctly seen, a sign stating his full name and
business
in letters not less than six centimeters (6 cms.) high and also giving
his assessment number.
SEC. 241. Exhibition of Certificate of Payment at Place of Business. -
The
certificate
or receipts showing payment of taxes issued to a person engaged in a
business
subject to an annual registration fee shall be kept conspicuously
exhibited
in plain view in or at the place where the business is conducted; and
in
case of a peddler or other persons not having a fixed place of
business,
shall be kept in the possession of the holder thereof, subject to
production
upon demand of any internal revenue officer.
SEC. 242. Continuation of Business of Deceased Person. -
When any individual who has paid the annual registration fee dies, and
the same business is continued by the person or persons interested in
his
estate, no additional payment shall be required for the residue of the
term which the tax was paid: Provided, however, That the person
or persons interested in the estate should, within thirty (30) days
from
the death of the decedent, submit to the Bureau of Internal Revenue or
the regional or revenue District Office inventories of goods or stocks
had at the time of such death.
The requirement under
this Section shall also be applicable in the case of transfer of
ownership
or change of name of the business establishment.
SEC. 243. Removal of Business to Other Location. -
Any business for which the annual registration fee has been paid may,
subject
to the rules and regulations prescribed by the Secretary of Finance,
upon
recommendation of the Commissioner, be removed and continued in any
other
place without the payment of additional tax during the term for which
the
payment was made.
CHAPTER
IIIRULES AND
REGULATIONS
SEC. 244. Authority of Secretary of Finance to Promulgate Rules and
Regulations. - The
Secretary of Finance, upon recommendation of the Commissioner, shall
promulgate
all needful rules and regulations for the effective enforcement of the
provisions of this Code.
SEC. 245. Specific Provisions to be Contained in Rules and Regulations. -
The rules and regulations of the Bureau of Internal Revenue shall,
among
other thins, contain provisions specifying, prescribing or defining:
(a) The time and
manner
in which Revenue Regional Director shall canvass their respective
Revenue Regions for the purpose of discovering persons and property
liable
to national
internal revenue taxes, and the manner in which their lists and records
of taxable persons
and taxable objects shall be made and kept;(b) The forms of
labels,
brands or marks to be required on goods subject to an excise tax,
and the manner in which the labelling, branding or marking shall be
effected;(c) The conditions
under which and the manner in which goods intended for export, which
if not exported would be subject to an excise tax, shall be labelled,
branded
or marked;(d) The conditions
to be observed by revenue officers respecting the institutions and
conduct
of legal actions and proceedings;(e) The conditions
under which goods intended for storage in bonded warehouses shall be
conveyed thither, their manner of storage and the method of keeping the
entries and
records in connection therewith, also the books to be kept by Revenue
Inspectors
and
the reports to be made by them in connection with their supervision of
such houses;(f) The conditions
under which denatured alcohol may be removed and dealt in, the character
and quantity of the denaturing material to be used, the manner in which
the process of
denaturing shall be effected, so as to render the alcohol suitably
denatured
and unfit for
oral intake, the bonds to be given, the books and records to be kept,
the
entries to be
made therein, the reports to be made to the Commissioner, and the signs
to be displayed
in the business or by the person for whom such denaturing is done or by
whom, such
alcohol is dealt in;(g) The manner in
which
revenue shall be collected and paid, the instrument, document or
object to which revenue stamps shall be affixed, the mode of
cancellation
of the same,
the manner in which the proper books, records, invoices and other
papers
shall be kept
and entries therein made by the person subject to the tax, as well as
the
manner in
which licenses and stamps shall be gathered up and returned after
serving
their purposes;(h) The conditions
to be observed by revenue officers respecting the enforcement of Title
III imposing a tax on estate of a decedent, and other transfers mortis
causa, as well
as on gifts and such other rules and regulations which the Commissioner
may consider
suitable for the enforcement of the said Title III;(i) The manner in
which
tax returns, information and reports shall be prepared and reported
and the tax collected and paid, as well as the conditions under which
evidence
of payment shall be furnished the taxpayer, and the preparation and publication of
tax statistics;(j) The manner in
which
internal revenue taxes, such as income tax, including withholding tax, estate and donor's taxes, value-added tax, other percentage taxes,
excise taxes
and documentary stamp taxes shall be paid through the collection
officers
of the Bureau
of Internal Revenue or through duly authorized agent banks which are
hereby
deputized
to receive payments of such taxes and the returns, papers and
statements
that may be
filed by the taxpayers in connection with the payment of the tax: Provided,
however,
That notwithstanding the other provisions of this Code prescribing the
place of filing of
returns and payment of taxes, the Commissioner may, by rules and
regulations,
require
that the tax returns, papers and statements that may be filed by the
taxpayers
in
connection with the payment of the tax. Provided, however, That
notwithstanding
the other provisions of this Code prescribing the place of filing of
returns
and payment
of taxes, the Commissioner may, by rules and regulations require that
the
tax returns,
papers and statements and taxes of large taxpayers be filed and paid,
respectively,
through collection officers or through duly authorized agent banks: Provided,
further,
That the Commissioner can exercise this power within six (6) years from
the approval
of Republic Act No. 7646 or the completion of its comprehensive
computerization
program, whichever comes earlier: Provided, finally, That
separate
venues for the
Luzon, Visayas and Mindanao areas may be designated for the filing of
tax
returns and payment of taxes by said large taxpayers.
For the purpose of this
Section, "large taxpayer" means a taxpayer who satisfies any of
the following criteria;
(1) Value-Added
Tax (VAT). - Business
establishment with VAT paid or payable of at least One hundred thousand
pesos (P100,000) for any quarter of the preceding taxable year;
(2) Excise Tax. - Business
establishment with excise tax paid or payable of at least One million
pesos
(P1,000,000) for the preceding taxable year;
(3) Corporate
Income Tax. - Business
establishment with annual income tax paid or payable of at least One
million
pesos (P1,000,000) for the preceding taxable year; and
(4) Withholding
Tax. - Business
establishment with withholding tax payment or remittance of at least
One
million pesos (P1,000,000) for the preceding taxable year.
cralaw:redProvided, however,
That the Secretary of Finance, upon recommendation of the
Commissioner,
may modify or add to the above criteria for determining a large
taxpayer
after considering such factors as inflation, volume of business, wage
and
employment levels, and similar economic factors. cralaw:red
The penalties prescribed
under Section 248 of this Code shall be imposed on any violation of the
rules and regulations issued by the Secretary of Finance, upon
recommendation
of the Commissioner, prescribing the place of filing of returns and
payments
of taxes by large taxpayers.
SEC. 246. Non-Retroactivity of Rulings. -
Any revocation, modification or reversal of any of the rules and
regulations
promulgated in accordance with the preceding Sections or any of the
rulings
or circulars promulgated by the Commissioner shall not be given
retroactive
application if the revocation, modification or reversal will be
prejudicial
to the taxpayers, except in the following cases:
(a) Where the
taxpayer
deliberately misstates or omits material facts from his return or
any document required of him by the Bureau of Internal Revenue;(b) Where the facts
subsequently gathered by the Bureau of Internal Revenue are
materially different from the facts on which the ruling is based; or(c) Where the
taxpayer
acted in bad faith.
TITLE XSTATUTORY
OFFENSES AND PENALTIES
CHAPTER IADDITIONS
TO TAX
SEC. 247. General Provisions. -
(a) The additions to
the tax or deficiency tax prescribed in this Chapter shall apply to all
taxes,
fees and charges imposed in this Code.
The Amount so added to the tax
shall
be collected
at the same time, in the same manner and as part of the tax.
(b) If the
withholding
agent is the Government or any of its agencies, political subdivisions
or instrumentalities, or a government-owned or controlled corporation,
the employee
thereof responsible for the withholding and remittance of the tax shall
be personally liable
for the additions to the tax prescribed herein.
(c) the term "person",
as used in this Chapter, includes an officer or employee of a
corporation who as such officer, employee or member is under a duty to perform the
act in respect of
which the violation occurs.
SEC. 248. Civil Penalties. -
(A) There shall be
imposed, in addition to the tax required to be paid, a penalty
equivalent
to twenty-five percent (25%) of the amount due, in the following cases:
(1) Failure to file
any return and pay the tax due thereon as required under the
provisions of this Code or rules and regulations on the date
prescribed;
or
(2) Unless
otherwise
authorized by the Commissioner, filing a return with an
internal revenue officer other than those with whom the return is
required
to be filed; or
(3) Failure to pay
the deficiency tax within the time prescribed for its payment in the
notice of assessment; or
(4) Failure to pay
the full or part of the amount of tax shown on any return required
to be filed under the provisions of this Code or rules and regulations,
or the full
amount of tax due for which no return is required to be filed, on or
before
the
date prescribed for its payment.
(B) In case of
willful
neglect to file the return within the period prescribed by this Code or
by
rules and regulations, or in case a false or fraudulent return is
willfully
made, the penalty
to be imposed shall be fifty percent (50%) of the tax or of the
deficiency
tax, in case,
any payment has been made on the basis of such return before the
discovery
of the falsity or fraud: Provided, That a substantial underdeclaration
of taxable sales, receipts
or income, or a substantial overstatement of deductions, as determined
by the
Commissioner pursuant to the rules and regulations to be promulgated by
the Secretary
of Finance, shall constitute prima facie evidence of a false or
fraudulent
return: Provided,
further, That failure to report sales, receipts or income in an
amount
exceeding thirty
percent (30%) of that declared per return, and a claim of deductions in
an amount
exceeding (30%) of actual deductions, shall render the taxpayer liable
for substantial
underdeclaration of sales, receipts or income or for overstatement of
deductions,
as
mentioned herein.
SEC. 249. Interest. -
(A) In General. -
There shall be assessed and collected on any unpaid amount of tax,
interest
at the rate of twenty percent (20%) per annum, or such higher rate as
may
be prescribed by rules and regulations, from the date prescribed for
payment
until the amount is fully paid. cralaw:red
(B) Deficiency
Interest. -
Any deficiency in the tax due, as the term is defined in this Code,
shall
be subject to the interest prescribed in Subsection (A) hereof, which
interest
shall be assessed and collected from the date prescribed for its
payment
until the full payment thereof. cralaw:red
(C) Delinquency
Interest. -
In case of failure to pay:
(1) The amount of the
tax due on any return to be filed, or
(2) The amount of the
tax due for which no return is required, or
(3) A deficiency tax,
or any surcharge or interest thereon on the due date appearing in the
notice and demand of the Commissioner, there shall be assessed and
collected
on the
unpaid amount, interest at the rate prescribed in Subsection (A) hereof
until the amount
is fully paid, which interest shall form part of the tax.
(D) Interest on Extended
Payment. -
If any person required to pay the tax is qualified and elects to pay
the
tax on installment under the provisions of this Code, but fails to pay
the tax or any installment hereof, or any part of such amount or
installment
on or before the date prescribed for its payment, or where the
Commissioner
has authorized an extension of time within which to pay a tax or a
deficiency
tax or any part thereof, there shall be assessed and collected interest
at the rate hereinabove prescribed on the tax or deficiency tax or any
part thereof unpaid from the date of notice and demand until it is paid.
SEC. 250. Failure to File Certain Information Returns. - In the case of each failure to file an information return,
statement
or list, or keep any record, or supply any information required by this
Code or by the Commissioner on the date prescribed therefor, unless it
is shown that such failure is due to reasonable cause and not to
willful
neglect, there shall, upon notice and demand by the Commissioner, be
paid
by the person failing to file, keep or supply the same, One thousand
pesos
(1,000) for each failure: Provided, however, That the aggregate
amount to be imposed for all such failures during a calendar year shall
not exceed Twenty-five thousand pesos (P25,000).
SEC. 251. Failure of a Withholding Agent to Collect and Remit Tax. - Any
person
required to withhold, account for, and remit any tax imposed by this
Code
or who willfully fails to withhold such tax, or account for and remit
such
tax, or aids or abets in any manner to evade any such tax or the
payment
thereof, shall, in addition to other penalties provided for under this
Chapter, be liable upon conviction to a penalty equal to the total
amount
of the tax not withheld, or not accounted for and remitted.
SEC. 252. Failure of a Withholding Agent to refund Excess Withholding
Tax. - Any
employer/withholding agent who fails or refuses to refund excess
withholding
tax shall, in addition to the penalties provided in this Title, be
liable
to a penalty to the total amount of refunds which was not refunded to
the
employee resulting from any excess of the amount withheld over the tax
actually due on their return.
CHAPTER IICRIMES,
OTHER
OFFENSES AND FORFEITURES
SEC. 253. General Provisions. -
(a) Any person
convicted
of a crime penalized by this Code shall, in addition to being liable for
the payment of the tax, be subject to the penalties imposed herein: Provided,
That payment
of the tax due after apprehension shall not constitute a valid defense
in any prosecution
for violation of any provision of this Code or in any action for the
forfeiture
of untaxed articles.
(b) Any person who
willfully aids or abets in the commission of a crime penalized herein or
who causes the commission of any such offense by another shall be
liable
in the same
manner as the principal.
(c) If the offender
is not a citizen of the Philippines, he shall be deported immediately
after
serving the sentence without further proceedings for deportation.
If he
is a public officer
or employee, the maximum penalty prescribed for the offense shall be
imposed
and,
in addition, he shall be dismissed from the public service and
perpetually
disqualified
from holding any public office, to vote and to participate in any
election.
If the offender
is a Certified Public Accountant, his certificate as a Certified Public
Accountant shall,
upon conviction, be automatically revoked or cancelled.
(d) In the case of
associations, partnerships or corporations, the penalty shall be imposed
on the partner, president, general manager, branch manager, treasurer,
officer-in-charge,
and the employees responsible for the violation.
(e) The fines to be
imposed for any violation of the provisions of this Code shall not be
lower
than the fines imposed herein or twice the amount of taxes, interest
and
surcharges due
from the taxpayer, whichever is higher.
SEC. 254. Attempt to Evade or Defeat Tax. -
Any person who willfully attempts in any manner to evade or defeat any
tax imposed under this Code or the payment thereof shall, in addition
to
other penalties provided by law, upon conviction thereof, be punished
by
a fine not less than Thirty thousand (P30,000) but not more than One
hunderd
thousand pesos (P100,000) and suffer imprisonment of not less than two
(2) years but not more than four (4) years: Provided, That the
conviction
or acquittal obtained under this Section shall not be a bar to the
filing
of a civil suit for the collection of taxes.
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
the accurate information, who willfully fails to pay such tax, make
such
return, keep such record, or supply 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 (P10,000) 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 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 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 (P10,000) but not more than Twenty
thousand
pesos (P20,000) and suffer imprisonment of not less than one (1) year
but
not more than three (3) years.
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 (P50,000) but not more than One
hundred
thousand pesos (P100,000).
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:
(1) Willfully
falsifies
any report or statement bearing on any examination or audit, or renders
a report, including exhibits, statements, schedules or other forms of
accountancy
work
which has not been verified by him personally or under his supervision
or by a member
of his firm or by a member of his staff in accordance with sound
auditing
practices; or
(2) Certifies
financial
statements of a business enterprise containing an essential misstatement
of facts or omission in respect of the transactions, taxable income,
deduction
and exemption
of his client; or
(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
(2) Offers to sign
and certify financial statements without audit; or
(3) Offers any
taxpayer
the use of accounting bookkeeping records for internal revenue
purposes not in conformity with the requirements prescribed in this
Code
or rules and
regulations promulgated thereunder; or
(4) Knowingly
makes
any false entry or enters any false or fictitious name in the books of
accounts or record mentioned in the preceding paragraphs; or
(5) Keeps two (2)
or
more sets of such records or books of accounts; or
(6) In any way
commits
an act or omission, in violation of the provisions of this Section; or
(7) Fails to keep
the
books of accounts or records mentioned in Section 232 in a native
language, English or Spanish, or to make a true and complete
translation
as required in
Section 234 of this Code, or whose books of accounts or records kept in
a native language,
English or Spanish, and found to be at material variance with books or
records kept by him
in another language; or
(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
not less than Fifty thousand pesos (P50,000) but not more than One
hundred
pesos
(P100,000) 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 certificate as a Certified Public Accountant
shall
be automatically revoked or cancelled upon conviction.
In the case of foreigners,
conviction under this Code shall result in his immediate deportation
after
serving sentence, without further proceedings for deportation.
SEC. 258. Unlawful Pursuit of Business. -
Any person who carries on any business for which an annual registration
fee is imposed without paying the tax as required by law shall, upon
conviction
for each act or omission, be punished by a fine of not less than Five
thousand
pesos (P5,000) but not more than Twenty thousand pesos (P20,000) and
suffer
imprisonment of not less than six (6) months but not more than two (2)
years: Provided, That in the case of a person engaged in the
business
of distilling, rectifying, repacking, compounding or manufacturing any
article subject to excise tax, he shall, upon conviction for each act
or
omission, be punished by a fine of not less than Thirty thousand pesos
(P30,000) but not more than Fifty thousand pesos (P50,000) and suffer
imprisonment
of not less than two (2) years but not more than four (4) years.
SEC. 259. Illegal Collection of Foreign Payments. -
Any person who knowingly undertakes the collection of foreign payments
as provided under Section 67 of this Code without having obtained a
license
therefor, or without complying with its implementing rules and
regulations,
shall, upon conviction for each act or omission, be punished by a fine
of not less than Twenty thousand pesos (P20,000) but not more than
Fifty
thousand pesos (P50,000) and suffer imprisonment of not less than one
(1)
year but not more than two (2) years.
SEC. 260. Unlawful Possession of Cigarette Paper in Bobbins or Rolls,
Etc. - It
shall be unlawful for any person to have in his possession cigarette
paper
in bobbins or rolls, cigarette tipping paper or cigarette filter tips,
without the corresponding authority therefor issued by the
Commissioner.
Any person, importer, manufacturer of cigar and cigarettes, who has
been
found guilty under this Section, shall, upon conviction for each act or
omission, be punished by a fine of not less than Twenty thousand pesos
(P20,000) but not more than One hundred thousand pesos (P1000,000) and
suffer imprisonment for a term of not less than six (6) years and one
(1)
day but not more than twelve (12) years.
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 (P20,000) but not more than One hundred thousand pesos (P100,000)
and suffer imprisonment for a term of not less than six (6) years and
one
(1) day but not more than twelve (12) years. cralaw:red
Any person who shall
unlawfully recover or attempt to recover by distillation or other
process
any denatured alcohol or who knowingly sells or offers for sale,
conceals
or otherwise disposes of alcohol so recovered or redistilled shall be
subject
to the same penalties imposed under this Section.
SEC. 262. Shipment or Removal of Liquor or Tobacco Products under False
Name
or Brand or as an Imitation of any Existing or Otherwise Known Product
Name or Brand. -
Any person who ships, transports or removes spirituous, compounded or
fermented
liquors, wines or any manufactured products of tobacco under any other
than the proper name or brand known to the trade as designating the
kind
and quality of the contents of the cask, bottle or package containing
the
same or as an imitation of any existing or otherwise known product name
or brand or causes such act to be done, shall, upon conviction for each
act or omission, be punished by a fine of not less than Twenty thousand
pesos (P20,000) but not more than One hundred thousand pesos
(P1000,000)
and suffer imprisonment of not less than six (6) years and one (1) day
but not more than twelve (12) years.
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 thousand pesos (P1,000) nor more than Two thousand pesos
(P2,000)
and suffer 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 the Tariff and Customs Code, including duties and
taxes, of the articles does not exceed One thousand pesos (P1,000).
(b) A fine of not
less
than Ten thousand pesos (P10,000) but not more than Twenty thousand
pesos
(P20,000) and suffer 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 the Tariff and Customs Code, including duties and
taxes, of the articles exceeds One thousand pesos (P1,000) but does not
exceed Fifty thousand pesos (P50,000);(c) A fine of not
less
than Thirty thousand pesos (P30,000) but not more than Sixty thousand
pesos
(P60,000) and suffer 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 the Tariff and Customs Code, including duties and
taxes of the articles is more than Fifty thousand pesos (P50,000) but
does
not exceed One hundred fifty thousand pesos (P150,000); or(d) A fine of not
less
than Fifty thousand pesos (P50,000) but not more than One hundred
thousand
pesos (P100,000) and suffer 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 the Tariff and Customs Code, including
duties
and taxes, of the articles exceeds One hundred fifty thousand pesos
(P150,000).
Any person who is found
in possession of locally manufactured articles subject to excise tax,
the
tax on which has not been paid in accordance with law, or any person
who
is found in possession of such articles which are exempt from excise
tax
other than those to whom the same is lawfully issued shall be punished
with a fine of not less than (10) times the amount of excise tax due on
the articles found but not less than Five hundred pesos (P500) and
suffer
imprisonment of not less than two (2) years but not more than four (4)
years.
Any manufacturer, owner
or person in charge of any article subject to excise tax who removes or
allows or causes the unlawful removal of any such articles from the
place
of production or bonded warehouse, upon which the excise tax has not
been
paid at the time and in the manner required, and any person who
knowingly
aids or abets in the removal of such articles as aforesaid, or conceals
the same after illegal removal shall, for the first offense, be
punished
with a fine of not less than ten (10) times the amount of excise tax
due
on the articles but not less than One thousand pesos (P1,000) and
suffer
imprisonment of not less than one (1) year but not more than two (2)
years. cralaw:red
The mere unexplained
possession of articles subject to excise tax, the tax on which has not
been paid in accordance with law, shall be punishable under this
Section.
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 of 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 (P1,000) but not more than Fifty
thousand
pesos (P50,000) and suffer imprisonment of not less than two (2) years
but not more than four (4) years. cralaw:red
(b) Any person who commits
any of the acts enumerated hereunder shall be penalized in the same
manner
and to the same extent as provided for in this Section:
(1) Printing of
receipts
or sales or commercial invoices without authority from the Bureau
of Internal Revenue; or
(2) Printing of
double
or multiple sets of invoices or receipts; or
(3) Printing of
unnumbered
receipts or sales or commercial invoices, not bearing the
name, business style, Taxpayer Identification Number, and business
address
of the
person or entity.
SEC. 265. Offenses Relating to Stamps. -
Any person who commits any of the acts enumerated hereunder shall, upon
conviction thereof, be punished by a fine of not less than Twenty
thousand
pesos (P20,000) but not more than Fifty thousand pesos (P50,000) and
suffer
imprisonment of not less than four (4) years but not more than eight
(8)
years:
(a) making,
importing,
selling, using or possessing without express authority from the
Commissioner, any die for printing or making stamps, labels, tags or
playing
cards;(b) Erasing the
cancellation
marks of any stamp previously used, or altering the written
figures or letters or cancellation marks on internal revenue stamps;(c) Possessing false,
counterfeit, restored or altered stamps, labels or tags or causing
the commission of any such offense by another;(d) Selling or
offering
for sale any box or package containing articles subject to excise tax with false, spurious or counterfeit stamps or labels or selling from
any
such fraudulent
box, package or container as aforementioned; or(e) Giving away or
accepting from another, or selling, buying or using containers on which
the stamps are not completely destroyed.
Sec. 266. Failure to Obey Summons. - Any
person who, 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 (P5,000) but not more
than
ten thousand pesos (P10,000) and suffer imprisonment of not less than
one
(1) year but not more than two (2) years.
SEC. 267. Declaration under Penalties of Perjury. -
Any declaration, return and other statement required under this Code,
shall,
in lieu of an oath, contain a written statement that they are made
under
the penalties of perjury.
Any person who willfully files a declaration,
return or statement containing information which is not true and
correct
as to every material matter shall, upon conviction, be subject to the
penalties
prescribed for perjury under the Revised Penal Code.
SEC. 268. Other Crimes and Offenses. -
(A) Misdeclaration
or Misrepresentation of Manufacturers Subject to Excise Tax.- Any manufacturer who, in violation of the provisions of
Title
VI of this Code, misdeclares in the sworn statement required therein or
in the sales invoice, any pertinent data or information shall be
punished
by a summary cancellation or withdrawal of the permit to engage in
business
as a manufacturer of articles subject to excise tax. cralaw:red
(B) Forfeiture
of Property Used in Unlicensed Business or Dies Used for Printing False
Stamps, Etc.- All chattels, machinery, and removable fixtures of any sort
used
in the unlicensed production of articles subject to excise tax shall be
forfeited.
Dies and other equipment used for the printing or making of
any internal revenue stamp, label or tag which is in imitation of or
purports
to be a lawful stamp, label or tag shall also be forfeited. cralaw:red
(C) Forfeiture
of Goods Illegally Stored or Removed. -
Unless otherwise specifically authorized by the Commissioner, all
articles
subject to excise tax should not be stored or allowed to remain in the
distillery warehouse, bonded warehouse or other place where made, after
the tax thereon has been paid; otherwise, all such articles shall be
forfeited.
Articles withdrawn from any such place or from customs custody or
imported
into the country without the payment of the required tax shall likewise
be forfeited.
CHAPTER
IIIPENALTIES
IMPOSED ON PUBLIC OFFICERS
SEC. 269. Violations Committed by Government Enforcement Officers. - Every
official, agent, or employee of the Bureau of Internal Revenue or any
other
agency of the Government charged with the enforcement of the provisions
of this Code, who is guilty of any of the offenses herein below
specified
shall, upon conviction for each act or omission, be punished by a fine
of not less than Fifty thousand pesos (P50,000) but not more than One
hundred
thousand pesos (P100,000) and suffer imprisonment of not less than ten
(10) years but not more than fifteen (15) years and shall likewise
suffer
an additional penalty of perpetual disqualification to hold public
office,
to vote, and to participate in any public election:
(a) Extortion or
willful
oppression through the use of his office or willful oppression and
harassment of a taxpayer who refused, declined, turned down or rejected
any of his
offers specified in paragraph (d) hereof;(b) Knowingly
demanding
or receiving any fee, other or greater sums that are authorized by
law or receiving any fee, compensation or reward, except as by law
prescribed,
for the
performance of any duty;(c) Willfully
neglecting
to give receipts, as by law required, for any sum collected in the
performance of duty or willfully neglecting to perform any other duties
enjoined by law;(d) Offering or
undertaking
to accomplish, file or submit a report or assessment on a
taxpayer without the appropriate examination of the books of accounts
or
tax liability, or
offering or undertaking to submit a report or assessment less than the
amount due the
Government for any consideration or compensation, or conspiring or
colluding
with another
or others to defraud the revenues or otherwise violate the provisions
of
this Code;(e) Neglecting or by
design permitting the violation of the law by any other person;(f) Making or signing
any false entry or entries in any book, or making or signing any false
certificate or return;
(g) Allowing or
conspiring
or colluding with another to allow the unauthorized retrieval,
withdrawal or recall of any return, statement or declaration after the
same has been
officially received by the Bureau of Internal Revenue;
(h) Having
knowledge
or information of any violation of this Code or of any fraud committed
on the revenues collectible by the Bureau of Internal Revenue, failure
to report such
knowledge or information to their superior officer, or failure to
report
as otherwise
required by law; and.
(i) Without the
authority
of law, demanding or accepting or attempting to collect, directly
or indirectly, as payment or otherwise any sum of money or other thing
of value for
the compromise, adjustment or settlement of any charge or complaint for
any violation
or alleged violation of this Code. Provided, That the
provisions of the foregoing paragraph notwithstanding, any internal
revenue
officer for which a prima facie case of grave misconduct has been
established
shall, after due notice and hearing of the administrative case and
subject
to Civil Service Laws, be dismissed from the revenue service: Provided,
further, That the term "grave misconduct", as defined in
Civil
Service Law, shall include the issuance of fake letters of authority
and
receipts, forgery of signature, usurpation of authority and habitual
issuance
of unreasonable assessments.
SEC. 270. Unlawful Divulgence of Trade Secrets. -
Except as provided in Section 71 of this Code and Section 26 of
Republic
Act No. 6388, any officer or employee of the Bureau of Internal Revenue
who divulges to any person or makes known in any other manner than may
be provided by law information regarding the business, income or estate
of any taxpayer, the secrets, operation, style or work, or apparatus of
any manufacturer or producer, or confidential information regarding the
business of any taxpayer, knowledge of which was acquired by him in the
discharge of his official duties, shall upon conviction for each act or
omission, be punished by a fine of not less than Fifty thousand pesos
(P50,000)
but not more than One hundred thousand pesos (P100,000), or suffer
imprisonment
of not less than two (2) years but not more than five (5) years, or
both.
SEC. 271. Unlawful Interest of Revenue Law Enforcers in Business. -
Any internal revenue officer who is or shall become interested,
directly
or indirectly, in the manufacture, sale or importation of any article
subject
to excise tax under Title VI of this Code or in the manufacture or
repair
or sale, of any die for printing, or making of stamps, or labels shall
upon conviction for each act or omission, be punished by a fine of not
less than Five thousand pesos (P5,000) but not more than Ten thousand
pesos
(P10,000), or suffer imprisonment of not less than two (2) years and
one
(1) day but not more than four (4) years, or both.
SEC. 272. Violation of Withholding Tax Provision. -
Every officer or employee of the Government of the Republic of the
Philippines
or any of its agencies and instrumentalities, its political
subdivisions,
as well as government-owned or controlled corporations, including the
Bangko
Sentral ng Pilipinas (BSP), who, under the provisions of this Code or
rules
and regulations promulgated thereunder, is charged with the duty to
deduct
and withhold any internal revenue tax and to remit the same in
accordance
with the provisions of this Code and other laws is guilty of any
offense
herein below specified shall, upon conviction for each act or omission
be punished by a fine of not less than Five thousand pesos (P5,000) but
not more than Fifty thousand pesos (P50,000) or suffer imprisonment of
not less than six (6) months and one (1) day but not more than two (2)
years, or both:
(a) Failing or
causing
the failure to deduct and withhold any internal revenue tax under any
of the withholding tax laws and implementing rules and regulations;(b) Failing or
causing
the failure to remit taxes deducted and withheld within the time
prescribed by law, and implementing rules and regulations; and(c) Failing or
causing
the failure to file return or statement within the time prescribed, or
rendering or furnishing a false or fraudulent return or statement
required
under the
withholding tax laws and rules and regulations.
SEC. 273. Penalty for Failure to Issue and Execute Warrant. -
Any official who fails to issue or execute the warrant of distraint or
levy within thirty (30) days after the expiration of the time
prescribed
in Section 207 or who is found guilty of abusing the exercise thereof
by
competent authority shall be automatically dismissed from the service
after
due notice and hearing.
CHAPTER IVOTHER
PENAL
PROVISIONS
SEC. 274. Penalty for Second and Subsequent Offenses. -
In the case of reincidence, the maximum of the penalty prescribed for
the
offense shall be imposed.
SEC. 275. Violation of Other Provisions of this Code or Rules and
Regulations
in General. -
Any person who 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 (P1,000) or
suffer
imprisonment of not more than six (6) months, or both.
SEC. 276. Penalty for Selling, Transferring, Encumbering or in Any Way
Disposing
of Property Placed Under Constructive Distraint. -
Any taxpayer, whose property has been placed under constructive
distraint,
who sells, transfers, encumbers or in any way disposes of said
property,
or any part thereof, without the knowledge and consent of the
Commissioner,
shall, upon conviction for each act or omission, be punished by a fine
of not less than twice the value of the property so sold, encumbered or
disposed of but not less than Five Thousand pesos (P5,000), or suffer
imprisonment
of not less than two (2) years and one (1) day but not more than four
(4)
years, of both.
SEC. 277. Failure to Surrender Property Placed Under Distraint and Levy. -
Any person having in his possession or under his control any property
or
rights to property, upon which a warrant of constructive distraint, or
actual distraint and levy has been issued shall, upon demand by the
Commissioner
or any of his deputies executing such warrant, surrender such property
or right to property to the Commissioner or any of his deputies, unless
such property or right is, at the time of such demand, subject to an
attachment
or execution under any judicial process.
Any person who fails or
refuses
to surrender any of such property or right shall be liable in his own
person
and estate to the Government in a sum equal to the value of the
property
or rights not so surrendered but not exceeding the amount of the taxes
(including penalties and interest) for the collection of which such
warrant
had been issued, together with cost and interest if any, from the date
of such warrant.
In addition, such person shall, upon conviction for
each
act or omission, be punished by a fine of not less than Five thousand
pesos
(P5,000), or suffer imprisonment of not less than six (6) months and
one
(1) day but not more than two (2) years, or both.
SEC. 278. Procuring Unlawful Divulgence of Trade Secrets. - Any
person who causes or procures an officer or employee of the Bureau of
Internal
Revenue to divulge any confidential information regarding the business,
income or inheritance of any taxpayer, knowledge of which was acquired
by him in the discharge of his official duties, and which it is
unlawful
for him to reveal, and any person who publishes or prints in any manner
whatever, not provided by law, any income, profit, loss or expenditure
appearing in any income tax return, shall be punished by a fine of not
more than Two thousand pesos (P2,000), or suffer imprisonment of not
less
than six (6) months nor more than five (5) years, or both.
SEC. 279. Confiscation and Forfeiture of the Proceeds or Instruments of
Crime. - In
addition to the penalty Imposed for the violation of the provisions of
Title X of this Code, the same shall carry with it the confiscation and
forfeiture in favor of the government of the proceeds of the crime or
value
of the goods, and the instruments or tools with which the crime was
committed:
Provided, however, That if in the course of the proceedings, it
is established that the instruments or tools used in the illicit act
belong
to a third person, the same shall be confiscated and forfeited after
due
notice and hearing in a separate proceeding in favor of the Government
if such third person leased, let, chartered or otherwise entrusted the
same to the offender: Provided, further, That in case the
lessee
subleased, or the borrower, charterer, or trustee allowed the use of
the
instruments or tools to the offender, such instruments or tools shall,
likewise, be confiscated and forfeited: Provided, finally, That
property of common carriers shall not be subject to forfeiture when
used
in the transaction of their business as such common carrier, unless the
owner or operator of said common carrier was, at the time of the
illegal
act, a consenting party or privy thereto, without prejudice to the
owner's
right of recovery against the offender in a civil or criminal action.
Articles
which are not subject of lawful commerce shall be destroyed.
SEC. 280. Subsidiary Penalty. -
If the person convicted for violation of any of the provisions of this
Code has no property with which to meet the fine imposed upon him by
the
court, or is unable to pay such fine, he shall be subject to a
subsidiary
personal liability at the rate of one (1) day for each Eight pesos and
fifty centavos (P8.50) subject to the rules established in Article 39
of
the Revised Penal Code.
SEC. 281. Prescription for Violations of any Provision of this Code. - All
violations of any provision of this Code shall prescribe after Five (5)
years. cralaw:red
Prescription shall begin
to run from the day of the commission of the violation of the law, and
if the same be not known at the time, from the discovery thereof and
the
institution of judicial proceedings for its investigation and
punishment. cralaw:red
The prescription shall
be interrupted when proceedings are instituted against the guilty
persons
and shall begin to run again if the proceedings are dismissed for
reasons
not constituting jeopardy. cralaw:red
The term of prescription
shall not run when the offender is absent from the Philippines.
SEC. 282. Informer's Reward to Persons Instrumental in the Discovery of
Violations
of the National Internal Revenue Code and in the Discovery and Seizure
of Smuggled Goods. -
(A) For Violations
of the National Internal Revenue Code. - Any person, except an internal revenue official or employee, or
other
public official or employee, or his relative within the sixth degree of
consanguinity, who voluntarily gives definite and sworn information,
not
yet in the possession of the Bureau of Internal Revenue, leading to the
discovery of frauds upon the internal revenue laws or violations of any
of the provisions thereof, thereby resulting in the recovery of
revenues,
surcharges and fees and/or the conviction of the guilty party and/or
the
imposition of any of the fine or penalty, shall be rewarded in a sum
equivalent
to ten percent (10%) of the revenues, surcharges or fees recovered
and/or
fine or penalty imposed and collected or One Million Pesos (P1,000,000)
per case, whichever is lower.
The same amount of reward shall also be
given
to an informer where the offender has offered to compromise the
violation
of law committed by him and his offer has been accepted by the
Commissioner
and collected from the offender: Provided, That should no
revenue,
surcharges or fees be actually recovered or collected, such person
shall
not be entitled to a reward: Provided, further, That the
information
mentioned herein shall not refer to a case already pending or
previously
investigated or examined by the Commissioner or any of his deputies,
agents
or examiners, or the Secretary of Finance or any of his deputies or
agents:
Provided, finally, That the reward provided herein shall be paid
under rules and regulations issued by the Secretary of Finance, upon
recommendation
of the Commissioner. cralaw:red
(B) For Discovery
and Seizure of Smuggled Goods. - To encourage the public to extend full cooperation in eradicating
smuggling,
a cash reward equivalent to ten percent (10%) of the fair market value
of the smuggled and confiscated goods or One Million Pesos (P1,000,000)
per case, whichever is lower, shall be given to persons instrumental in
the discovery and seizure of such smuggled goods. cralaw:red
The cash rewards of
informers shall be subject to income tax, collected as a final
withholding
tax, at a rate of ten percent (10%).
The provisions of the
foregoing Subsections notwithstanding, all public officials, whether
incumbent
or retired, who acquired the information in the course of the
performance
of their duties during their incumbency, are prohibited from claiming
informer's
reward.
TITLE XIALLOTMENT
OF INTERNAL REVENUECHAPTER IDISPOSITION
AND ALLOTMENT OF NATIONAL INTERNAL REVENUE IN GENERAL
SEC. 283. Disposition of National Internal Revenue. - National
Internal revenue collected and not applied as herein above provided or
otherwise specially disposed of by law shall accrue to the National
Treasury
and shall be available for the general purposes of the Government, with
the exception of the amounts set apart by way of allotment as provided
for under Republic Act No. 7160, otherwise known as the Local
Government
Code of 1991. cralaw:red
In addition to the internal
revenue allotment as provided for in the preceding paragraph, fifty
percent
(50%) of the national taxes collected under Sections 106, 108 and 116
of
this Code in excess of the increase in collections for the immediately
preceding year shall be distributed as follows:
(a) Twenty percent
(20%) shall accrue to the city or municipality where such taxes are
collected and shall be allocated in accordance with Section 150 of
Republic
Act No. 7160, otherwise known as the Local Government Code of 1991; and(b) Eighty percent
(80%) shall accrue to the National Government.
SEC. 284. Allotment for the Commission on Audit. -
One-half of one percent (1/2 of 1%) of the collections from the
national
internal revenue taxes not otherwise accruing to special accounts in
the
general fund of the national government shall accrue to the Commission
on Audit as a fee for auditing services rendered to local government
units,
excluding maintenance, equipment, and other operating expenses as
provided
for in Section 21 of Presidential Decree No. 898.
The Secretary of Finance
is hereby authorized to deduct from the monthly internal revenue tax
collections
an amount equivalent to the percentage as herein fixed, and to remit
the
same directly to the Commission on Audit under such rules and
regulations
as may be promulgated by the Secretary of Finance and the Chairman of
the
Commission on Audit.
SEC. 285. Allotment for the Bureau of Internal Revenue. - An
amount equivalent to five percent (5%) of the excess of actual
collections
of national internal revenue taxes over the collection goal shall
accrue
to the special fund of the Bureau of Internal Revenue and shall be
treated
as receipts automatically appropriated.
Said amount shall be utilized
as
incentive bonus for revenue personnel, purchase of necessary equipment
and facilities for the improvement of tax administration, as approved
by
the Commissioner: Provided, That the President may, upon
recommendation
of the Commissioner, direct that the excess be credited to a Special
Account
in the National Treasury to be held in the reserve available for
distribution
as incentive bonus in the subsequent years.
The Secretary of Finance
is hereby authorized to transfer from the Treasury an amount equivalent
to the percentage as herein fixed and to remit the same directly to the
Bureau of Internal Revenue under such rules and regulations as may be
promulgated
by the Secretary of Finance.
CHAPTER IISPECIAL
DISPOSITION
OF CERTAIN NATIONAL INTERNAL REVENUE TAXES
SEC. 286. Disposition of Proceeds of insurance Premium Tax. - Twenty-five percent (25%) of the premium tax collected under
Section
123 of this Code shall accrue to the Insurance Fund as contemplated in
Section 418 of Presidential Decree No. 612 which shall be used for the
purpose of defraying the expenses of the Insurance Commission.
The
Commissioner
shall turn over and deliver the said Insurance Fund to the Insurance
Commissioner
as soon as the collection is made.
SEC. 287. Shares of Local Government Units in the Proceeds from the
Development
and Utilization of the National Wealth. -
Local Government units shall have an equitable share in the proceeds
derived
from the utilization and development of the national wealth, within
their
respective areas, including sharing the same with the inhabitants by
way
of direct benefits. cralaw:red
(A) Amount of
Share of Local Government Units. -
Local government units shall, in addition to the internal revenue
allotment,
have a share of forty percent (40%) of the gross collection derived by
the national government from the preceding fiscal year from excise
taxes
on mineral products, royalties, and such other taxes, fees or charges,
including related surcharges, interests or fines, and from its share in
any co-production, joint venture or production sharing agreement in the
utilization and development of the national wealth within their
territorial
jurisdiction. cralaw:red
(B) Share of the
Local Governments from Any Government Agency or Government-Owned
or
Controlled Corporation. - Local
Government Units shall have a share, based on the preceding fiscal
year,
from the proceeds derived by any government agency or government-owned
or controlled corporation engaged in the utilization and development of
the national wealth based on the following formula, whichever will
produce
a higher share for the local government unit:
(1) One percent (1%)
of the gross sales or receipts of the preceding calendar year, or(2) Forty percent
(40%)
of the excise taxes on mineral products, royalties, and such other
taxes, fees or charges, including related surcharges, interests or
fines
the government
agency or government-owned or -controlled corporations would have paid
if it were
not otherwise exempt.
(C) Allocation of
Shares. -
The share in the preceding Section shall be distributed in the
following
manner:
(1) Where the natural
resources are located in the province:
(a) Province -
twenty
percent (20%)
(b) Component
city/municipality
- forty-five percent (45%); and
(c) Barangay -
thirty-five
percent (35%)
Provided, however,
That where the natural resources are located in two (2) or more cities,
the allocation of shares shall be based on the formula on population
and
land area as specified in subsection (C)(1) hereof.
(2) Where the natural
resources are located in a highly urbanized or independent component
city:
(a) City - sixty -
five percent (65%); and
(b) Barangay -
thirty
- five percent (35%)
Provided, however, That
where the natural resources are located in two (2) or more cities, the
allocation of shares shall be based on the formula on population and
land
area as specified in subsection (c)(1) hereof.
SEC. 288. Disposition of Incremental Revenues. - (A) Incremental
Revenues from Republic Act No. 7660. -
The incremental revenues from the increase in the documentary stamp
taxes
under R.A. No. 7660 shall be set aside for the following purposes:
(1) In 1994 and 1995,
twenty five percent (25%) thereof respectively, shall accrue to the
Unified Home-Lending Program under Executive Order No. 90 particularly
for mass
socialized housing program to be allocated as follows: fifty percent
(50%)
for mass-socialized housing; thirty percent (30%) for the community
mortgage
program;
and twenty percent (20%) for land banking and development to be
administered
by
the National Housing Authority: Provided, That no more than one percent
(1%) of
the respective allocations hereof shall be used for administrative
expenses;(2) In 1996, twenty
five percent (25%) thereof to be utilized for the National Health
Insurance Program that hereafter may be mandated by law;(3) In 1994 and every
year thereafter, twenty five percent (25%) thereof shall accrue to
a Special Education Fund to be Administered by the Department of
Education,
Culture
and Sports for the construction and repair of school facilities,
training
or teachers,
and procurement or production of instructional materials and teaching
aids;
and(4) In 1994 and every
year thereafter, fifty percent (50%) thereof shall accrue to a
Special Infrastructure Fund for the Construction and repair of roads,
bridges,
dams and irrigation, seaports and hydroelectric and other indigenous power
projects:
however, That for the years 1994 and 1995, thirty
percent
(30%), and for
the years 1996, 1997 and 1998, twenty percent (20%), of this fund shall
be allocated
for depressed provinces as declared by the President as of the time of
the effectivity
of R. A. No. 7660: Provided, further, That availments under
this
fund shall be
determined by the President on the basis of equityProvided, finally,
That in paragraphs (2), (3), and (4) of this Section, not more one
percent
(1%) of the allocated funds thereof shall be used for administrative
expenses
by the implementing agencies.
(B) Incremental
Revenues from Republic Act No. 8240. -
Fifteen percent (15%) of the incremental revenue collected from the
excise
tax on tobacco products under R. A. No. 8240 shall be allocated and
divided
among the provinces producing burley and native tobacco in accordance
with
the volume of tobacco leaf production.
The fund shall be exclusively
utilized
for programs in pursuit of the following objectives:
(1) Cooperative
projects
that will enhance better quality of agricultural products and
increase income and productivity of farmers;(2) Livelihood
projects,
particularly the development of alternative farming system to
enhance farmer's income; and(3) Agro-industrial
projects that will enable tobacco farmers to be involved in the
management
and subsequent ownership of projects, such as post-harvest and
secondary
processing
like cigarette manufacturing and by-product utilization.
The Department of Budget
and Management, in consultation with the Oversight Committee created
under
said R.A. No. 8240, shall issue the corresponding rules and regulations
governing the allocation and disbursement of this fund.
SEC. 289. Special Financial Support to Beneficiary Provinces Producing
Virginia
Tobacco. -
The financial support given by the National Government for the
beneficiary
provinces shall be constituted and collected from the proceeds of
fifteen
percent (15%) of the excise taxes on locally manufactured Virginia-type
of cigarettes.
The funds allotted shall
be divided among the beneficiary provinces pro-rata according
to
the volume of Virginia tobacco production. cralaw:red
Production producing
Virginia tobacco shall be the beneficiary provinces under Republic Act
No. 7171. Provided, however, that to qualify as beneficiary
under
R. A. No. 7171, a province must have an average annual production of
Virginia
leaf tobacco in an amount not less than one million kilos: Provided,
further, that the Department of Budget and Management (DBM) shall
each
year determine the beneficiary provinces and their computed share of
the
funds under R. A. No. 7171, referring to the National Tobacco
Administration
(NTA) records of tobacco acceptances, at the tobacco trading centers
for
the immediate past year. cralaw:red
The Secretary of Budget
and Management is hereby directed to retain annually the said funds
equivalent
to fifteen percent (15%) of excise taxes on locally manufactured
Virginia
type cigarettes to be remitted to the beneficiary provinces qualified
under
R. A. No. 7171. cralaw:red
The provision of existing
laws to the contrary notwithstanding, the fifteen percent (15%) share
from
government revenues mentioned in R. A. No. 7171 and due to the Virginia
tobacco-producing provinces shall be directly remitted to the provinces
concerned.
cralaw:redProvided, That
this Section shall be implemented in accordance with the guidelines of
Memorandum Circular No. 61-A dated November 28, 1993, which amended
Memorandum
Circular No. 61, entitled "Prescribing Guidelines for Implementing
Republic
Act No. 7171", dated January 1, 1992.
Provided, further,
That in addition to the local government units mentioned in the above
circular,
the concerned officials in the province shall be consulted as regards
the
identification of projects to be financed.
TITLE XIIOVERSIGHT
COMMITTEE
SEC. 290. Congressional Oversight Committee. -
A Congressional Oversight
Committee, hereinafter referred to as the Committee, is hereby
constituted
in accordance with the provisions of this Code.
The Committee shall be
composed of the Chairmen of the Committee on Ways and Means of the
Senate
and House Representatives and four (4) additional members from each
house,
to be designated by the Speaker of the House of Representatives and the
Senate President, respectively. cralaw:red
The Committee shall,
among others, in aid of legislation:
(1) Monitor and
ensure
the proper implementation of Republic Act No. 8240;(2) Determine that
the power of the Commissioner to compromise and abate is
reasonably exercised;(3) Review the
collection
performance of the Bureau of Internal Revenue; and(4) Review the
implementation
of the programs of the Bureau of Internal Revenue.
In furtherance of the hereinabove
cited objectives, the Committee is empowered to require of the Bureau
of
Internal Revenue, submission of all pertinent information, including
but
not limited to: industry audits; collection performance data; status
report
on criminal actions initiated against persons; and submission of
taxpayer
returns: Provided, however, That any return or return
information
which can be associated with, or otherwise identify, directly or
indirectly,
a particular taxpayer shall be furnished the Committee only when
sitting
in Executive Session unless such taxpayer otherwise consents in writing
to such disclosure.
TITLE XIIIREPEALING
PROVISIONS
SEC. 291. In General. -
All laws, decrees, executive orders, rules and regulations or parts
thereof
which are contrary to or inconsistent with this Code are hereby
repealed,
amended or modified accordingly.
TITLE XIVFINAL
PROVISIONS
SEC. 292. Separability Clause. -
If any clause, sentence, paragraph or part of this Code shall be
adjudged
by any Court of competent jurisdiction to be invalid, such judgment
shall
not affect, impair or invalidate the remainder of said Code, but shall
be confined in its operation to the clause, sentence, paragraph or part
thereof directly involved in the controversy.
SEC. 4. The
Secretary
of Finance shall, upon recommendation of the Commissioner of Internal
Revenue,
promulgate and publish the necessary rules and regulations for the
effective
implementation of this Act.
SEC. 5. Transitory
Provisions. - Deferment of the Effectivity of the Imposition of
VAT on Certain Services. - The effectivity of the imposition of the
value-added
tax on services as prescribed in Section 17(a) and (b) of Republic Act
No. 7616, as amended by Republic Act 8241, is hereby further deferred
until December 31, 1999, unless Congress deems otherwise: Provided,
That the said services shall continue to pay the applicable tax
prescribed
under the present provisions of the National Internal Revenue Code, as
amended.
SEC. 6. Separability
Clause. -
If any provision of this Act is subsequently declared unconstitutional,
the validity of the remaining provisions hereof shall remain in full
force
and effect.
SEC. 7. Repealing
Clauses. -
(A) The provision of
Section 17 of Republic Act No. 7906, otherwise known as the "Thrift
Banks Act of 1995" shall continue to be in force and effect only
until
December 31, 1999. cralaw:red
Effective January 1,
2000, all thrift banks, whether in operation as of that date or
thereafter,
shall no longer enjoy tax exemption as provided under Section 17 of R. A. No. 7906, thereby subjecting all thrift banks to taxes, fees and
charges
in the same manner and at the same rate as banks and other financial
intermediaries.
(B) The provisions
of the National Internal Revenue Code, as amended, and all other laws,
including charters of government-owned or controlled corporations,
decrees,
orders, or regulations or parts thereof, that are inconsistent with
this
Act are hereby repealed or amended accordingly.
SEC. 8. Effectivity. -
This Act shall take effect on January 1, 1998.
Annexes:
ANNEX A-1LOCAL
DISTILLED
SPIRITS BRANDS PRODUCED FROM SAPOF NIPA,
COCONUT, ETC. COVERED BY SECTION 141 [b]
BRAND/TYPE
OF SPIRITS[All in
750 ml. Bottle] |
SIZE |
APROOF |
BPROOFLITER PER
BOTTLE |
CRETAIL
PRICE |
DVAT [10%] |
EEXCISE
TAXPER
BOTTLE
[bx8.00] |
FPERCENTAGE
EXCISE
TAX IN RELATION TO RETAIL PRICE [e/c] |
GNET
RETAIL PRICE
[EXCLUDING VAT AND EXCISE TAX] |
Ginebra
San Miguel (bilog) |
250 ml |
80 |
0.200 |
P10.00 |
P 1.00 |
1.600 |
16.00% |
P7.40 |
Ginebra
San Miguel (bilog) |
350 ml |
|
0.280 |
13.00 |
1.30 |
2.240 |
17.23% |
9.46 |
Ginebra
San Miguel (quatro cantos) |
350 ml |
|
0.280 |
14.00 |
1.40 |
2.240 |
16.00% |
10.36 |
Ginebra
San Miguel (quatro cantos |
700 ml |
|
0.560 |
28.00 |
2.80 |
4.480 |
16.00% |
20.72 |
Anejo
lRum 65 Flat 5 Years |
375 ml |
80 |
0.300 |
16.50 |
1.65 |
2.400 |
14.55% |
12.45 |
Anejo
Rum 65 |
375 ml |
65 |
0.240 |
11.50 |
1.15 |
1.920 |
16.70% |
8.43 |
White
Castle 5 Years |
375 ml |
80 |
0.300 |
21.00 |
2.10 |
2.400 |
11.43% |
16.50 |
White
Castle Whisky |
750 ml |
80 |
0.600 |
42.00 |
4.20 |
4.800 |
11.43% |
33.00 |
Cherry
Brandy |
750 ml |
65 |
0.488 |
34.50 |
3.45 |
3.900 |
11.30% |
27.15 |
Tanduay
Rhum 5 Years |
375 ml750 ml |
80 |
0.3000.600 |
11.7534.25 |
1.183.43 |
2.4004.800 |
20.43%14.01% |
8.1826.03 |
Tondena
Manila Rum Silver LN |
750 ml |
80 |
0.600 |
44.50 |
4.45 |
4.800 |
10.79% |
35.25 |
Cooler |
300 ml |
20 |
0.060 |
18.50 |
1.85 |
0.480 |
2.59% |
16.17 |
ANNEX A-2LOCAL
DISTILLED
SPIRITS BRANDS PRODUCED FROM SAPOF NIPA,
COCONUT, ETC. COVERED BY SECTION 141 [b]
BRAND/TYPE
OF SPIRITS[All in
750 ml.
/Bottle] |
SIZE |
APROOF |
BPROOFLITER PER
BOTTLE |
CRETAIL
PRICE |
DVAT [10%] |
EEXCISE
TAXPER
BOTTLE
[bx8.00] |
FPERCENTAGE
EXCISE
TAX IN RELATION TO RETAIL PRICE [e/c] |
GNET
RETAIL PRICE
[EXCLUDING VAT AND EXCISE TAX] |
Emperador Brandy |
187ml375 ml750 ml |
808080 |
P 0.1500.3000.600 |
P12.5019.5038.50 |
P 1.251.953.85 |
1.2002.4004.800 |
9.60%12.31%12.47% |
P
10.0515.1529.85 |
Napoleon VSOP |
375 ml750 ml |
8484 |
0.3150.630 |
71.00145.00 |
P 7.1014.50 |
2.5205.040 |
3.55%3.48% |
61.38125.46 |
Napoleon 5 years |
375 ml |
84 |
0.315 |
18.50 |
1.85 |
2.520 |
13.62% |
14.13 |
VOS Brandy 5
years |
375 ml |
80 |
0.300 |
19.00 |
1.90 |
2.400 |
12.63% |
14.70 |
VOS Brandy
Special Edition |
375 ml |
00 |
0.300 |
17.50 |
1.75 |
2.400 |
13.71 |
13.35 |
White Castle
Whiskey |
187 ml375 ml750 ml |
808080 |
0.1490.3000.600 |
12.2521.0042.00 |
1.232.104.20 |
1.1922.4004.800 |
9.73%11.43%11.43% |
9.8316.5033.00 |
Manila Tondena
Rhum |
750 ml |
80 |
0.600 |
44.50 |
4.45 |
4.800 |
10.79% |
35.25 |
Manila Tondena
Gold |
750 ml |
80 |
0.600 |
44.50 |
4.45 |
4.800 |
10.79% |
35.25 |
Gilbey's Gin |
1 liter750 ml |
90 |
0.9000.675 |
114.5089.50 |
11.458.95 |
7.2005.400 |
6.29%6.03% |
95.8575.15 |
Tanduay ESQ |
375 ml750 ml |
65 |
0.2430.467 |
11.5023.00 |
1.152.30 |
1.9443.736 |
16.90%16.24% |
8.4116.96 |
Tanduay White |
375 ml750 ml |
80 |
0.3000.600 |
11.5023.00 |
1.152.30 |
2.4004.800 |
20.87%20.87% |
7.9515.90 |
Tanduay Rhum 65 |
375 ml750 ml |
65 |
0.2400.487 |
11.5023.00 |
1.152.30 |
1.9203.896 |
16.70%16.94% |
8.4316.80 |
ANNEX A-3DISTILLED
SPIRITS BRANDS PRODUCED FROM GRAINS,CEREALS
AND
GRAINS COVERED BY SECTION 141 [b]
BRAND/TYPE
OF SPIRITS[All in
750 ml. /Bottle] |
TYPE |
APROOF |
BPROOFLITER PER
BOTTLE
[ax.75] |
CRETAIL
PRICE[PhP] |
DVAT [10%][PhP] |
EEXCISE
TAXPER BOTTLE |
FPERCENTAGE
EXCISE
TAX IN RELATION TO RETAIL PRICE [e/c] |
GNET
RETAIL PRICE
[EXCLUDING VAT AND EXCISE TAX][PhP] |
I.
Premium [High-Priced] |
|
|
|
|
|
(b x
P300) |
|
|
Martell
XO
Johnny Walker Blue
Label
Carlos I
Old Parr
Swing
Glenlivet
Johhny Walker |
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky |
80
86
80
86
86
86
86 |
0.600
0.645
0.600
0.645
0.645
0.645
0.645 |
3,500.00
3,500.00
948.25
850.00
850.00
817.65
800.00 |
350.00
350.00
94.83
85.00
85.00
81.77
80.00 |
180.00
193.50
180.00
193.50
193.50
193.50
193.50 |
5.143%
5.529%
18.982%
22.765%
22.765%
23.665%
24.188% |
2,970.00
2,956.50
673.43
571.50
571.50
542.39
526.50 |
II. De-Luxe [Medium Priced] |
|
|
|
|
|
(b
x P150) |
|
|
Cardhu
St. George
Teachers
Canadian Club
Chivas Regal
Cutty Sark
Black Label
Asbach Urali
Something Special
Famous Gruise
Balantines
Bush Mills
J&B
Red Label
Jim Beam
Black and White
White Rose |
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky
Brandy
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky
Whisky |
80
80
86
80
86
86
86
70
86
86
86
86
86
86
86
86
86 |
0.600
0.600
0.645
0.600
0.645
0.645
0.645
0.525
0.645
0.645
0.645
0.645
0.645
0.645
0.645
0.645
0.645 |
772.75
750.00
701.60
668.20
635.00
632.50
620.00
480.00
450.00
426.00
423.50
416.50
405.50
370.00
360.00
340.00
330.00 |
77.28
75.00
70.16
66.82
63.50
63.25
62.00
48.00
45.00
42.60
42.35
41.65
40.55
37.00
36.00
34.00
33.00 |
90.00
90.00
96.75
90.00
96.75
96.75
96.75
78.75
96.75
96.75
96.75
96.75
96.75
96.75
96.75
96.75
96.75 |
11.647%
12.000%
13.790%
13.469%
15.236%
15.296%
15.605%
16.406%
21.500%
22.711%
22.845%
23.229%
23.859%
26.149%
26.875%
28.456%
29.318% |
605.48
585.00
534.69
511.38
474.75
472.50
461.25
353.25
308.25
286.65
284.40
278.10
268.20
236.25
227.25
209.25
200.25 |
ANNEX A-4DISTILLED
SPIRITS BRANDS PRODUCED FROM GRAINS,CEREALS
AND
GRAINS COVERED BY SECTION 141 [b]
BRAND/TYPE
OF SPIRITS[All in
750 ml. /Bottle] |
TYPE |
APROOF |
BPROOFLITER PER
BOTTLE
[ax.75] |
CRETAIL
PRICE[PhP] |
DVAT [10%][PhP] |
EEXCISE
TAXPER BOTTLE(bx75.00) |
FPERCENTAGE
EXCISE
TAX IN RELATION TO RETAIL PRICE [e/c] |
GNET
RETAIL PRICE
[EXCLUDING VAT AND EXCISE TAX][PhP] |
III. Standard [Low-Priced] |
|
|
|
|
|
|
|
|
Vat
69
White Mackay
Napoleon
Passport Scotch
Fundador
Scottish Leader
Smirnoff
Veterano Osborne
Cossack
Borzoi
Vonnie Clyde
John Lint
Loyal Lodge
Wolfschmt
Rossia
Gordon Gin
|
Whisky
Whisky
Brandy
Whisky
Brandy
Whisky
Vodka
Brandy
Vodka
Vodka
Whisky
Whisky
Whisky
Vodka
Vodka
Gin |
86
86
84
86
72
80
80
72
86
80
80
80
80
80
80
90 |
0.645
0.645
0.630
0.645
0.540
0.600
0.600
0.540
0.645
0.600
0.600
0.600
0.600
0.600
0.600
0.675 |
300.00
290.00
276.50
275.00
269.50
267.00
264.00
235.00
225.00
220.00
180.00
178.00
161.00
155.00
142.00 86.60 |
30.00
29.00
27.65
27.50
26.95
26.70
26.40
23.50
22.50
22.00
18.00
17.80
16.10
15.50
14.20
8.66 |
48.38
48.38
47.25
48.38
40.50
45.00
45.00
40.50
48.38
45.00
45.00
45.00
45.00
45.00
45.00
50.63 |
16.125%
16.681%
17.089%
17.591%
15.028%
16.854%
17.045%
17.234%
21.500%
20.455%
25.000%
25.281%
27.950%
29.032%
31.690%
58.458% |
221.63
212.63
201.60
199.13
202.05
195.30
192.60
171.00
154.13
153.00
117.00
115.20
99.90
94.50
82.80
27.32 |
ANNEX C-1
MFTR |
BRAND |
VOLUME IN
1995REMOVALS
LITERS |
VALUE |
BNP |
RETAIL
PRICE |
CURRENTAVT/liter |
RETAIL PRICENet of VAT |
PRESENT
SYSTEMCOMPUTED
REVENUE WITHAVT at 60% |
|
TOTAL |
1,396,261,167 |
33,575,374,605 |
|
|
|
|
10,212,549,435 |
|
High
Priced Brands |
5,282,317
4,452,245 |
226,449,791
192,603,181 |
|
|
|
|
67,018,843
56,657,798 |
San Miguel CorpSan Miguel CorpSan Miguel Corp |
RPT
in cans 330 ml. (24)
Premium Bottles 355ml
(24)
Premium Can 330ml (24) |
4,313,779
82,218
56,248 |
183,723,856
5,034,223
3,845,102 |
20.8730.8333.18 |
42.5961.2368.36 |
12.5218.5019.91 |
38.7255.6662.15 |
54,017,143
1,520,873
1,119,782 |
|
|
830,071 |
33,846,609 |
|
|
|
|
10,361,046 |
Asia Brewery,
IncAsia Brewery,
IncAsia Brewery,
Inc |
Carlsberg
Beer Can 320ml (24)
Stag Beer in Cans 330
ml (24)
Beer In cans 330 ml (24) |
327,302
244,807
257,962 |
14,231,087
9,887,763
9,727,759 |
22.3820.6718.93 |
43.4840.3937.71 |
13.4312.4011.36 |
39.5336.7234.28 |
4,395,010
3,036,099
2,929,936 |
|
Medium
Priced Brands |
827,707,258 |
21,927,005,768 |
|
|
|
|
6,712,345,854 |
|
|
825,223,084 |
21,855,616,400 |
|
|
|
|
6,690,812,931 |
San Miguel CorpSan Miguel CorpSan Miguel CorpSan Miguel CorpSan Miguel CorpSan Miguel CorpSan Miguel Corp |
Super
Dry 355 ml (24)
Keg 30 liters
Keg 50 liters
Pale Pilsen 320 ml
(24)
Grande 1000 ml (6)
Cerveza Negra 320 ml
(24)
Blue Ice |
3,267,086
3,661,966
12,687,200
590,684,383
211,551,120
203,136
3,168,193 |
106,801,054
101,857,731
352,894,975
16,007,546,772
5,195,695,507
5,500,923
85,319,437 |
15.6013.1713.1713.8312.6313.9213.00 |
32.6927.8227.8227.1024.5627.0826.93 |
9.367.907.908.307.588.357.80 |
29.7225.2925.2924.6422.3324.6224.48 |
30,579,929
28,936,855
100,254,254
4,901,499,008
1,603,134,387
1,696,592
24,711,905 |
|
|
2,484,174 |
71,389,368 |
|
|
|
|
21,532,923 |
Asia Brewery,
IncAsia Brewery,
IncAsia Brewery,
IncAsia Brewery,
Inc |
Carlsberg
Beer 330 ml (24)
Carlsberg Draft Keg
30L
Carlsberg Draft Keg
15L
Labatt Ice Beer 330 ml |
1,126,097
415,200
2,820
940,056 |
29,706,446
11,550,864
78,452
30,053,606 |
13.2812.6812.6816.63 |
26.3827.8227.8231.97 |
7.977.617.619.98 |
23.9825.2925.2929.06 |
8,972,743
3,158,842
21,455
9,379,884 |
|
Low
Priced Brands |
563,271,593 |
11,421,919,046 |
|
|
|
|
3,433,184,738 |
|
|
307,416,589 |
6,618,046,421 |
|
|
|
|
1,941,124,041 |
San Miguel Corp.San Miguel Corp.San Miguel Corp.San Miguel Corp.San Miguel Corp. |
Gold
Eagle 320 ml. (24)
Mucho 750 ml. (6)
Red Horse 500 ml
(12)
RH Stallion 330 ml. (24)
Texas |
79,947,787
98,879,013
122,840,772
4,975,407
773,610 |
1,525,403,776
2,124,909,989
2,840,078,649
112,344,698
15,309,309 |
9.929.4211.7811.339.37 |
19.0821.4923.1222.5819.79 |
5.955.657.076.805.62 |
17.3519.5421.0220.5317.99 |
475,849,228
558,864,181
868,238,576
33,822,819
4,349,235 |
|
|
255,855,003 |
4,803,872,625 |
|
|
|
|
1,492,060,697 |
Asia Brewery,
Inc.Asia Brewery,
Inc.Asia Brewery,
Inc.Asia Brewery,
IncAsia Brewery,
IncAsia Brewery,
IncAsia Brewery,
IncAsia Brewery,
IncAsia Brewery,
IncAsia Brewery,
IncAsia Brewery,
Inc |
Beer
Pale Pilsen 320ml (24)
Stag Beer 320 ml
(24)
Manila Beer Litro
1000ml (6)
Beer Macho 1000 ml
(6)
Super Max 1000 ml
(6)
Admiral Beer 500 ml
(6)
Stag Beer 330 ml
(24)
Colt 45 500 ml
Colt 45 1000 ml
Stag Jumbo
Beer 750 |
84,548,154
2,921,472
6,243,666
144,457,494
773,712
192
9,330,722
4,682,658
241,614
1,525,248
1,130,072 |
1,583,586,923
59,451,955
124,873,320
2,646,461,290
15,474,240
3,763
204,156,196
109,199,585
5,436,315
32,030,208
23,198,831 |
9.6210.139.289.709.289.2810.1311.4811.3710.139.72 |
18.7320.3520.0018.3220.0019.6021.8823.3222.5021.0020.53 |
5.776.085.575.825.575.576.086.896.826.085.83 |
17.0318.5018.1816.6518.1817.8219.8921.2020.4519.0918.66 |
48,011,944
17,756,707
34,764,732
840,742,615
4,308,028
1,069
56,712,128
32,254,148
1,648,291
9,270,457
6,590,577 |
|
San
Miguel Corp.
|
1,137,091,919 |
28,666,266,002 |
|
|
|
|
|
|
% to
Total |
81.44% |
85.38% |
|
|
|
|
|
|
Asia
Brewery, Inc.
|
259,169,249 |
4,909,108,603 |
|
|
|
|
|
|
% to
Total |
18.56% |
14.62% |
|
|
|
|
|
ANNEX C-2
MFTR |
BRAND |
RETAIL
PRICENET OF VATAND AVT |
ST |
MAX |
%INCREASE |
FIRST YEARREVENUECOLLECTION |
INCREMENTREVENUE |
|
TOTAL |
|
|
|
|
11,414,082,751 |
1,201,533,316 |
|
High Priced
Brands |
|
|
|
|
67,261,844 |
243,001 |
|
|
|
|
|
|
56,657,798 |
0 |
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
|
RPT
in cans 330ml (24)
Premium Bottles 355ml
(24)
Premium Can 330ml (24) |
26.20
37.17
42.24 |
12.30
12.30
12.30 |
12.52
18.50
19.91 |
0.00%
0.00%
0.00% |
54,017,143
1,520,873
1,119,762 |
0
0
0 |
|
|
|
|
|
|
10,604,046 |
243,001 |
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc |
Carlsberg
Beer Can 320ml (24)
Stag Beer in Cans 330ml
(24)
Beer In Cans 330ml (24) |
26.10
24.32
22.92 |
12.30
12.30
12.30 |
13.43
12.40
12.30 |
0.00%
0.00%
8.29% |
4,395,010
3,036,099
3,172,937 |
0
0
243,001 |
|
Medium
Priced Brands |
|
|
|
|
7,698,510,882 |
986,165,028 |
|
|
|
|
|
|
7,674,770,708 |
983,957,777 |
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
|
Super
Dry 355 ml. (24)
Keg 30 liters
Keg 50 liters
Grande 1000 ml. (6)
Pale Pilsen 320 ml. (24)
Cerveza Negra 320 ml. (24)
Blue Ice |
20.36
17.38
17.38
16.34
14.75
16.27
16.68 |
9.30
9.30
9.30
9.30
9.30
9.30
9.30 |
9.36
9.30
9.30
9.30
9.30
9.30
9.30 |
0.00%
17.69%
17.69%
12.08%
22.72%
11.35%
19.23% |
30,579,929
34,056,284
117,990,960
5,493,364,759
1,967,425,416
1,889,165
29,464,195 |
0
5,119,428
17,736,706
591,865,751
364,291,029
192,573
4,752,290 |
|
|
|
|
|
|
23,740,174 |
2,207,251 |
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
|
Carlsberg
Beer 330 ml. (24)
Carlsberg Draft Keg 30
liters
Carlsberg Draft Keg 15
liters
Labatt Ice Beer 330 ml.
|
16.01
17.68
17.68
19.09 |
9.30
9.30
9.30
9.30 |
9.30
9.30
9.30
9.98 |
16.72%
22.24%
22.24%
0.00% |
10,472,705
3,861,360
26,226
9,379,884 |
1,499962
702,518
4,771
0 |
|
Low
Priced Brands |
|
|
|
|
3,648,310,025 |
215,125,287 |
|
|
|
|
|
|
2,033,543,979 |
92,419,938 |
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
San
Miguel Corp.
|
Gold
Eagle 320 ml. (24)
Mucho 750 ml. (6)
Red Horse 500 ml. (12)
RH Stallion 320 ml. (24)
Texas |
11.39
13.88
13.95
13.73
12.37 |
6.30
6.30
6.30
6.30
6.30 |
6.30
6.30
7.07
6.80
6.30 |
5.85%
11.46%
0.00%
0.00%
12.06% |
503,671,058
622,937,782
868,238,576
33,822,819
4,873,743 |
27,821,830
64,073,600
0
0
524,508 |
|
|
|
|
|
|
1,614,766,046 |
122,705,349 |
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
Asia
Brewery,
Inc.
|
Beer
Pale Pilsen 320ml (24)
Stag Beer 320ml
(24)
Manila Beer Litro
1000ml (6)
Beer Macho 1000ml
(6)
Super Max 1000ml
(6)
Admiral Beer 500ml
(6)
Stag Beer 330ml
(24)
Colt 45 500ml
Colt 45 1000ml
Stag Jumbo
Beer 750 |
11.26
12.42
12.61
10.83
12.61
12.25
13.81
14.31
13.63
13.01
12.83 |
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30 |
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30
6.30 |
9.15%
3.65%
13.15%
8.25%
13.15%
13.15%
3.65%
0.00%
0.00%
3.65%
8.02% |
532,653,370
18,405,274
39,335,096
910,082,212
4,874,386
1,210
58,783,548
32,254,148
1,648,291
9,609,062
7,119,450 |
44,641,425
648,567
4,570,364
69,339,597
566,357
141
2,071,420
0
0
338,605
528,873 |
|
San
Miguel Corp.
% to Total
Asia Brewery, Inc.
% to Total |
|
|
|
|
9,764,972,484
85.55%
1,649,110,266
14.45% |
1,076,377,715
89.58%
125,155,601
10.42% |
ANNEX D
1997
Cigarette
Year 1
MANUFACTURER |
BRANDS |
CURRENT AVT/Pack(Php) |
NET RETAIL
OF VAT &
EXTper pack(Php) |
Grand Total |
50 |
|
1.00 |
|
55% |
|
|
Fortune
Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
La Suerte
La Suerte
La Suerte
La Suerte
La Suerte |
Camel
KS
Salem M 100
Salem M King
Winston Lts.
KS
Winston Red KS
Marlboro Lts.
KS
Marlboro Lts.
M KS
Marboro Red KS
Phillip Morris KS
Phillip Morris M 100's |
5.346.965.345.855.856.516.516.516.267.45 |
4.714.674.825.445.556.826.846.787.397.48 |
No. of Brands |
10 |
|
|
|
Subtotal |
6.24 |
6.05 |
|
45% |
|
|
Fortune
Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Sterling Tobacco |
Champion
Int'l.
Champion M 100
Hope Lux.
M 100's
Hope Lux.
M KS
Mark M 100's
Mark M King
More Premium
Int'l.
More Premium M
100's
Montreal F King
Bowling Green M 100's |
3.493.254.853.693.493.213.253.253.252.54 |
5.514.567.375.865.666.335.375.296.297.00 |
No. of Brands |
10 |
|
|
|
Subtotal |
3.40 |
5.92 |
|
20% |
|
|
Fortune
Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
Fortune Tobacco
La Suerte
La Suerte
La Suerte
Sterling Tobacco
Sterling Tobacco
Sterling Tobacco
Sterling Tobacco
Sterling Tobacco
Sterling Tobacco
Anglo American
Anglo American
Anglo American
Anglo American
Anglo American
Anglo American
Mighty Corp
Mighty Corp
Mighty Corp
Mighty Corp
Mighty Corp
Mighty Corp |
Boss
KS
Champion Lts.
KS
Champion MK
Evergreen M 100's
Fortune Int'l.
M
KS
Jackpot M 100's
Liberty M 100's
Peak M 100's
Plaza M 100's
Westpoint KS
Winter M 100's
Cannon M 100's
Cannon M KS
Forbes KS
Miller Int'l.
M
100's
Morgan Int'l.
M
100's
Stork Int'l.
M
100's
Stork Special Lts.
M
100's
Union American
Blend
Union KS
Asia Boston KS
Canadian Club M
100's
Navy Club KS
Rambo M 100's
Spotlight M 100's
Triple A Freedom M
100's
Blue Seal M 100's
Gallo KS
L.A.
Special M
100's
Marvel M 100's
Marvel Red KS
Right M 100's |
0.900.900.950.840.760.780.780.900.840.840.780.930.900.900.640.890.720.641.090.920.410.410.410.630.460.510.460.440.450.460.500.47 |
4.104.454.773.934.463.994.474.034.894.893.996.155.015.144.587.434.284.614.644.803.803.914.253.462.893.283.412.602.813.023.113.39 |
No. of Brands |
32 |
|
|
|
Subtotal |
0.69 |
4.20 |
ANNEX B
BRAND/TYPE/SIZE |
ARETAIL
PRICE |
BVAT
(10%) |
CEXCISE
TAX
PER BOTTLE |
DPERCENTAGE
OF EXCISE
TAX IN RELATION TO RETAIL PRICE(e/a) |
ENET
RETAIL PRICE
[excluding VAT and Excise Tax] |
Sparkling
Wines/Champagnes
[Regardless of
Proof] |
|
|
|
|
|
Mumm
Cordon Rouge Vintage
[All in
750 ml. /Bottle]
(700
ml)
Mumm Cordon Rouge R.
(375
ml)
Perrier Jouet (700
ml)
Perrier Jouet (375
ml) |
1,760.00
1,070.00
574.00
1070.00
580.00 |
176.00
107.00
57.40
107.00
58.00 |
300.00
300.00
100.00
300.00
100.00 |
17.05%
28.04%
17.42%
28.04%
17.24% |
1,284.00
663.00
416.60
663.00
422.00 |
Still
Wines |
|
|
|
|
|
14%
or less proof |
|
|
|
|
|
B&G
Partager Blanc (750 ml)
B&G Partager
(750 ml) |
170.00
170.00 |
17.00
17.00 |
12.00
12.00 |
7.06%
7.06% |
141.00
141.00 |
More
than 14% proof |
|
|
|
|
|
B&G
Chardonnay (750 ml)
B&G Cabernet
(750 ml)
B&G Partager St.
Emillion
(750 ml)
B&G Partager
Medoc (750
ml)
B&G Partager
Beaujolais
(750 ml)
B&G Partager
Chablis
(750 ml)
B&G Partager
Poeirlly
Fuisse (750 ml)
B&G Chateau Neuf
du
Pape (750 ml) |
385.00
385.00
495.00
310.00
275.00
616.00
655.00
500.00 |
38.50
38.50
49.50
31.00
27.50
61.60
65.50
50.00 |
24.00
24.00
24.00
24.00
24.00
24.00
24.00
24.00 |
6.23%
6.23%
4.85%
7.74%
8.73%
3.90%
3.66%
4.80% |
322.50
322.50
421.50
255.00
223.50
530.40
565.50
426.00 |
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