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PRESIDENTIAL DECREE NO. 1156
PRESIDENTIAL DECREE NO. 1156 -
AMENDING Section 30 AND 53 OF THE NATIONAL INTERNAL REVENUE CODE
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WHEREAS,
interest on bank deposit is one of the items includible in gross income;chanroblesvirtualawlibrary
WHEREAS, many bank depositors fail to declare interest income in their
income tax returns;chanroblesvirtualawlibrary
WHEREAS, in order to maximize the collection of the income tax on
interest on bank deposits, it is necessary to apply the withholding
system on this type of fixed or determinable income;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
order and decree the following:cralaw:red
Section 1. Section 30 (b) of the National Internal
Revenue Code is hereby amended to read as follows:
"(b) Interest:cralaw:red
"(1) In general. — The amount of interest paid within
the taxable year on indebtedness, except on indebtedness incurred or
continued to purchase or carry obligations the interest upon which is
exempt from taxation as income under this Title: Provided, however,
that interest on deposits paid by authorized agent banks of the Central
Bank of the Philippines to depositors shall be allowed as a deduction
only if it is shown that the tax on such interest was withheld and paid
in accordance with the provisions of Section 53 and 54 of this Code.
Section 2. Section 53 of the National Internal
Revenue Code is hereby amended to read as follows:cralaw:red
"Sec. 53. Withholding tax at source. — chanroblesvirtualawlibrary
"(a) .
"(b) .
"(c) Withholding tax on interest on bank deposits. —
(1) Rate of withholding tax. — Every bank or banking institution shall
deduct and withhold from the interest on bank deposits (except interest
paid or credited to non-resident alien individuals and foreign
corporations, a tax equal to fifteen per cent of the said interest:
Provided, however, That no withholding of tax shall be made if the
aggregate amount of the interest on all deposit accounts maintained by
a depositor alone or together with another in any one bank at any time
during the taxable period does not exceed three hundred fifty pesos a
year or eighty-seven pesos and fifty centavos per quarter. For this
purpose, interest on a deposit account maintained by two persons shall
be deemed to be equally owned by them.
"(2) Treatment of bank deposit interest. — The
interest income shall be included in the gross income in computing the
depositor's income tax liability in accordance with existing law.
"(3) Depositors enjoying tax exemption privileges or
preferential tax treatment. — In all cases where the depositor is
tax-exempt or is enjoying preferential income tax treatment under
existing laws, the withholding tax imposed in this paragraph shall be
refunded or credited as the case may be upon submission to the
Commissioner of Internal Revenue of proof that the said depositor is a
tax-exempt entity or enjoys a preferential income tax treatment.
"(4) Manner of withholding. — Without divulging the
names of the depositors, the tax shall be withheld by the bank and paid
in the same manner and subject to the same conditions provided in
section 54 of this code. chanroblesvirtualawlibrary
"(d) .."
Section 3. Effectivity. — This Decree shall take
effect and shall be applicable to interest on bank deposits accruing on
or after the approval of this Decree.
Done in the City of Manila,
this 3rd day of June in the year of Our Lord, nineteen hundred and
seventy-seven.
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