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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 1158-A
PRESIDENTIAL DECREE NO. 1158-A -
AMENDING CERTAIN SectionS OF THE NATIONAL INTERNAL REVENUE CODE OF 1939
FOR INCORPORATION IN THE CONSOLIDATION AND CODIFICATION OF ALL EXISTING
REVENUE LAWS UNDER A PRESIDENTIAL DECREE NO. 1158
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chanroblesvirtualawlibrary
WHEREAS,
the national government is in due need of funds to finance its
socio-economic program designed to upgrade the living standards of our
people;chanroblesvirtualawlibrary
WHEREAS, it is necessary to amend further certain provisions of the
said Code to make it more responsive to current conditions;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of
the Philippines, by virtue of the powers in me vested by the
Constitution, do hereby order and decree:cralaw:red
Section 1. Section 24 of the National Internal
Revenue Code is hereby amended to read as follows:cralaw:red
"Sec. 24. Rates of tax on corporations. — (a) Tax on
domestic corporations. — A tax is hereby imposed upon the taxable net
income received during each taxable year from all sources by every
corporation organized in, or existing under the laws of the
Philippines, and partnerships, no matter how created or organized but
not including general professional partnerships in accordance with the
following:cralaw:red
"Twenty-five per cent upon the amount by which the taxable net income
does not exceed one hundred thousand pesos; and
"Thirty five per cent upon the amount by which the taxable net income
exceeds one hundred thousand pesos.
"Private educational institutions, whether stock or non-stock shall pay
a tax of ten per cent of their taxable net income from the operation of
the school, related school activities, and on their passive investment
income consisting of interest, dividends, royalties, and the like:
Provided, however, that dividends received by a private educational
institutions, whether stock or non-stock, from a domestic or resident
foreign corporation shall be subject to the inter-corporate dividends
tax under subsection (e) hereof.
"(b) Tax on foreign corporations. — (1) Non-resident
corporations. A foreign corporation not engaged in trade or business in
the Philippines shall pay a tax equal to thirty-five per cent of the
gross income received during each taxable year from all sources within
the Philippines, as interest, dividends, rents, royalties, salaries,
premiums, annuities, remunerations for technical services, emoluments
or other fixed or determinable annual, periodical or casual gains,
profits and income, and capital gains: Provided, however, That —chanroblesvirtualawlibrary
(i) Premiums shall not include reinsurance premiums;chanroblesvirtualawlibrary
(ii) Interest on foreign loans shall be subject to
fifteen per cent tax;chanroblesvirtualawlibrary
(iii) On dividends received from domestic corporation
liable to tax under this Chapter, the tax shall be 15% of the dividends
received, which shall be collected and paid as provided in Section 53
(d) of this Code, subject to the condition that the country in which
the non-resident foreign corporation is domiciled shall allow a credit
against the tax due from the non-resident foreign corporation taxes
deemed to have been paid in the Philippines equivalent to 20% which
represents the difference between the regular tax (35%) on corporations
and the tax (15%) on dividends as provided in this Section;chanroblesvirtualawlibrary
(iv) Cinematographic film owners, lessors, or
distributors shall pay a tax of twenty-five per cent of their gross
income from all sources within the Philippines. For purposes of this
paragraph, the gross income of cinematographic film owners, lessors, or
distributors shall include film rentals and all items of gross income
under Section 29 (a);chanroblesvirtualawlibrary
(v) Rentals, lease and charter fees payable to
non-resident owners of vessels chartered by Philippine nationals as the
term is defined under Section 3 (c) of Presidential Decree No. 474, and
which charter or lease has been duly approved by the Maritime Industry
Authority, shall be subject to 4.5% final tax, the return and payment
of which shall be in accordance with Sections 53 and 54 of this code;chanroblesvirtualawlibrary
(vi) Regional or area headquarters established in the
Philippines by multinational corporations and which headquarters do not
earn or derived income from the Philippines and which act as
supervisory, communications and coordinating centers for their
affiliates, subsidiaries, or branches in the Asia-Pacific Region shall
not be subject to tax.
"(2) Resident corporations. — A corporation
organized, authorized, or existing under the laws of any foreign
country, engaged in trade or business within the Philippines, shall be
taxable as provided in subsection (a) of this section upon the total
net income received in the preceding taxable year from all sources
within the Philippines: Provided, however, That international carriers
shall pay a tax of two and one half per cent on their gross Philippine
billings: Provided, further, That any profit remitted abroad by a
branch office to its mother company shall be subject to tax of fifteen
per cent (except those registered with the Export Processing Zone
Authority). chanroblesvirtualawlibrary
"(c) Rate of tax on certain dividends. — Dividends
received by a domestic or resident foreign corporation from a domestic
corporation liable to tax under this Code —chanroblesvirtualawlibrary
"(1) Shall be subject to a final tax at 10%, on the
total amount thereof, which shall be collected and paid as provided in
Section 53 and 54 of this Code; and
"(2) Shall not be included in the determination of
the gross income of the recipient corporation: Provided, however, That
interest paid or incurred on indebtedness abroad by a domestic or
resident foreign corporation, which indebtedness was incurred to
provide funds for investment in a domestic corporation shall be allowed
as a deduction from the intercorporate dividends before computing the
10% final tax. Any excess of the interest herein allowed as deduction
from intercorporate dividends may be deducted from the other gross
income of the recipient corporation, subject to the provisions of
Section 30(b) of this Code.
"The above deduction of interest from intercorporate dividends shall be
allowed only if the recipient domestic or resident foreign corporation
submits an authenticated copy of the foreign loan agreement stipulating
the end-use of the loan proceeds and such other information as may be
required for its determination.
"The Secretary of Finance, upon recommendation of the Commissioner of
Internal Revenue, shall promulgate rules and regulations to implement
the provisions of this paragraph.
"(d) Tax on mutual life insurance companies. — Mutual
life insurance companies organized in and existing under the laws of
the Philippines shall pay a tax of 10% of their gross investment income
consisting of interest, dividends, rents, net capital gains and income
from any other business than life insurance derived from all sources.
Foreign mutual life insurance companies authorized to carry business in
the Philippines shall pay the same rate of tax on the same items of
gross investment income derived from sources within the Philippines.
"(e) Corporate development tax. — In addition to the
tax imposed in subsection (a) of this Section, an additional tax in an
amount equivalent to 5% of the same taxable net income shall be paid by
a domestic or a resident foreign corporation: Provided, That this
additional tax shall be imposed only if the net income exceeds 10% of
the net worth, in case of a domestic corporation, or net assets in the
Philippines, in case of a resident foreign corporation: Provided,
however, That a closely-hold corporation as defined hereinbelow shall
be subject to the said additional income tax regardless of the rate of
return on its net worth. The term "closely-held corporation" means any
corporation, (a) at least 50% in value of the outstanding stocks or (b)
at least 50% of the total combined voting power of all classes of stock
entitled to vote, at any time during the taxable year, is owned
directly or indirectly by or for not more than five persons, natural or
juridical. For the purpose of determining whether an individual
indirectly owns shares of stock in a corporation, the attribution rules
prescribed by Section 66 of this Code shall be applied.
"The additional corporate income tax imposed in this subsection shall
be collected and paid at the same time and in the same manner as the
tax imposed in subsection (a) of this Section. chanroblesvirtualawlibrary
"(f) Tax on transactions by offshore banking units
and under the expanded foreign currency deposit system. — (1) Offshore
banking units. — The provisions of any law to the contrary
notwithstanding the transactions of offshore banking units authorized
by the Central Bank with non-residents and other offshore banking units
shall be subject to a five per cent (5%) tax on the net income from
such transactions which shall be in lieu of all taxes on the said
transactions: Provided, however, That transactions of offshore banking
units with local commercial banks, including branches of foreign banks
that may be authorized by the Central Bank to transact business with
offshore banking units, shall likewise be subject to the same tax,
except net income from such transactions as may be specified by the
Secretary of Finance, upon recommendation of the Monetary Board, to be
subject to the usual income tax payable by banks. Any income of
non-residents from transactions with said offshore banking units shall
be exempt from any tax.
"In case of transaction with residents (other than other offshore
banking units or local commercial banks including local branches of
foreign banks that may be authorized by the Central Bank of the
Philippines to transact business with offshore banking units), interest
income from loans granted to such residents shall be subject only to a
ten per cent (10%) withholding tax as final tax.
"(2) Expanded foreign currency deposit system. — The
net income derived by a depository bank from foreign currency
transactions with non-residents, offshore banking units in the
Philippines and other depository banks under the expanded foreign
currency deposit system under the rules and regulations of the Central
Bank shall be subject to a five per cent (5%) tax which shall be in
lieu of all taxes on said transactions, except net income from such
transactions as may be specified by the Secretary of Finance, upon
recommendation of the Monetary Board, to be subject to the usual income
tax payable by banks.
"Interest income from foreign currency loans granted by such depository
banks under said expanded system to residents (other than offshore
banking units in the Philippines or other depository banks under the
expanded system) shall be subject to a ten per cent (10%) withholding
tax as a final tax.
"Income of non-residents not engaged in trade or business in the
Philippines from foreign currency loans to depository banks under the
expanded system shall be exempt from income tax.
(g) The provisions of existing special or general
laws to the contrary notwithstanding, all corporate taxpayers not
specifically exempt under Section 27 of this Code shall pay the rates
provided in this Section. All corporations, agencies or
instrumentalities owned or controlled by the Government, including the
Government Service Insurance System and the Social Security System but
excluding educational institutions, shall pay such rate of tax upon
their taxable net income as are imposed by this section upon
associations or corporations engaged in a similar business or industry.
Section 2. Subparagraph (b) of Section 29 of the
National Internal Revenue Code is hereby amended to read as follows:cralaw:red
"(b) Exclusion from gross income. — The following
items shall not be included in gross income and shall be exempt from
taxation under this Title:cralaw:red
(1) Life insurance. — The proceeds of life insurance
policies paid to 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 premium or
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, bequests, devise, or descent; but the income
from such property shall be included in gross income.
"(4) Interest on Government securities. — Interest
upon the obligations of the Government of the Republic of the
Philippines or any political subdivision thereof, but in the case of
such obligations issued after the approval of this Code, only to the
extent provided in the act authorizing the issue thereof.
"(5) 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 amount of any damages received whether by suit or agreement on
account of such injuries or sickness.
"(6) Income exempt under treaty. — Income of any
kind, to the extent required by any treaty obligation binding upon the
Government of the Philippines.
"(7) Retirement benefits, pensions, gratuities, etc.
(A) Retirement benefits 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 years of age at the time of his retirement: Provided,
further, that the benefits granted under this Code 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 officials and employees, or
both, for the purpose of distributing to such officials and employees
the earnings and principal of the fund thus accumulated, and wherein it
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 and employee
or by his heirs form the employer as a consequence of separation of
such official or employee from the service of the employer due to
death, sickness or other physical disability or for any cause beyond
the control of the said official or employee. chanroblesvirtualawlibrary
"(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
non-resident 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) Payments of benefits made under the Social
Security System Act of 1954, as amended.
"(F) Benefits received from the GSIS and the
retirement gratuity received by government officials and employees.
"(8) Miscellaneous items. — (A) Income received from
their investments in the Philippines, in loans, stock, bonds, or other
domestic securities or from interest on their deposit in banks in the
Philippines by (1) foreign governments, (2) financing institutions
owned, controlled, or enjoying refinancing from them, and (3)
international or regional financing institutions established by
governments.
"(B) Income derived from any public utility or from
the exercises of any essential governmental function accruing to the
Government of the Philippines or to any political subdivision thereof.
"(C) Income derived as rewards under Republic Act
Numbered twenty-three hundred and thirty-eight, as amended by
Presidential Decree No. 707."
Section 3. Subparagraph (d) of Section 30 of the
National Internal Revenue Code is hereby amended to read as
follows: chanroblesvirtualawlibrary
"(d) Losses;chanroblesvirtualawlibrary
"(1) By individuals. — In the case of an individual,
losses actually sustained during the taxable year and not compensated
for by insurance or otherwise.
"(A) If incurred in trade or business; or
"(B) If incurred in any transaction entered into for
profit, though not connected with the trade or business; or
"(C) Of property not connected with the trade or
business, if the loss arises from fires, storms, or casualty, or from
robbery, theft, or embezzlement. No loss shall be allowed as a
deduction under this paragraph 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. The Secretary of Finance, upon
recommendation of the Commissioner of Internal Revenue, 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 regulations shall not be less than 30
days nor more than 90 days from the date of the occurrence of the
casualty or robbery, theft or embezzlement giving rise to the loss.
"(2) By corporations. — In the case of a corporation,
all losses actually sustained and charged off within the taxable year
and not compensated for by insurance or otherwise. chanroblesvirtualawlibrary
"(3) By non-resident aliens or foreign corporations.
— In the case of a non-resident alien individual or a foreign
corporation, the losses deductible are those actually sustained during
the year incurred in the business or trade conducted within the
Philippines, and losses of property within the Philippines arising from
fires, storms or other casualty, and from robbery, theft, or
embezzlement, and losses actually sustained during the year in
transactions entered into for profit in the Philippines although not
connected with their business or trade, when such losses are not
compensated for by insurance or otherwise. The Secretary of Finance,
upon recommendation of the Commissioner of Internal Revenue, is hereby
authorized to promulgate rules and regulations prescribing among other
things the item 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
to be so prescribed in the regulations, shall not be less than 30 days
nor more than 90 days from the date of the occurrence of the casualty
or robbery, theft or embezzlement giving rise to the loss.
Section 4. Section 45(a) of the National Internal
Revenue Code is hereby amended to read as follows:cralaw:red
"Sec. 45. Individual returns. — (a) Requirements. —
(1) The following individuals are required to file an income tax
return, if they have a gross income of at least P1,800 for the taxable
year:cralaw:red
"(A) Every Filipino citizen, whether residing in the
Philippines or abroad and,
"(B) Every alien residing in the Philippines,
regardless of whether the gross income was derived from sources within
or outside the Philippines. chanroblesvirtualawlibrary
"(2) Regardless of amount, every non-resident alien
engaged in trade or business in the Philippines shall file an income
tax return.
"The income tax return shall be filed in duplicate, and shall set forth
specifically the gross amount of income from all sources, except that
of
non-resident aliens engaged in trade or business in the Philippines
which shall contain only such income derived from sources within the
Philippines.
"(3) Notwithstanding the provisions of the preceding
paragraphs, an individual (except a non-resident alien engaged in trade
or business in the Philippines) whose gross income derived solely from
salaries, wages, remunerations and other similar compensation for
services rendered, does not exceed his personal exemption of P1,800 if
he/she is single or P3,000 if he/she is married or head of the family,
plus the optional standard deduction to which he/she is entitled to
claim under sub-paragraph (k) of Section 30, is not required to file an
income tax return."
Section 5. Section 53 of the National Internal
Revenue Code is hereby amended by adding a new paragraph as follows:cralaw:red
"(C) Resident individuals and corporations. —
Dividends received by individuals residing in the Philippines from a
domestic corporation, as well as royalties in any form received by such
individuals and domestic and/or resident foreign corporations from any
person whether natural or juridical shall be subject to withholding tax
at source at the rate of 10% thereof. The tax shall be withheld by the
payer-corporation and/or person and paid in the same manner and subject
to the same conditions as provided in section 54 of the National
Internal Revenue Code: Provided, however, That the tax withheld under
this sub-paragraph shall be credited against the income tax liability
of the recipient-taxpayer for the taxable year." chanroblesvirtualawlibrary
Section 6. Article 1 of H.B. No. 5480, enacted as an
integral part of Presidential Decree No. 30, as amended, is hereby
amended to read as follows:cralaw:red
"Art. 1. Requirements of declaration. — Every
individual subject to income tax under Section twenty-one or twenty-two
of this Title, receiving income other than that subject to withholding
under Supplement A of this Title, and every corporation subject to
income tax under Section twenty-four of this Title shall file a
declaration of its net taxable income for each quarter of its taxable
year: Provided, however, That individuals and corporations that have
paid the income tax herein required and have filed the adjustment
return prescribed in Article Three of this supplement shall be exempt
from filing the return required in Section forty-five and forty-six of
this Title."
Section 7. Article 2 of H.B. No. 5480, enacted as an
integral part of Presidential Decree No. 30, as amended, is hereby
amended to read as follows:cralaw:red
"Art. 2. Time for filing corporate quarterly income
tax return and manner of paying the 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." chanroblesvirtualawlibrary
Section 8. Article 4 of H.B. No. 5480 enacted as an
integral part of Presidential Decree No. 30, as amended, is hereby
amended to read as follows:cralaw:red
"Art. 4. Filing of adjustment returns and final
payment of income tax. — On or before the fifteenth day of April or on
or before the fifteenth day of the fourth month following the close of
the fiscal year, every taxpayer covered by this Supplement shall file
an adjustment return covering the total net taxable income of the
preceding calendar or fiscal year and if the sum of the quarterly tax
payments made during that year is not equal to the total tax due on the
entire net taxable income of that year, the corporation shall either
(a) pay the excess tax still due or (b) be refunded the excess amount
paid, as the case may be. In case the corporation is entitled to a
refund of excess quarterly income taxes paid, the refundable amount
shown in its final and adjustment return may be credited against the
quarterly income tax liabilities for the taxable quarters of the
succeeding taxable year."
Section 9. Subparagraph (e) of Section 88 of the
National Internal Revenue Code is hereby amended to read as follows:cralaw:red
"(c) 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."
Section 10. Subparagraph (b) of Section 137 (b) of
the National Internal Revenue Code is hereby amended to read as follows:cralaw:red
"(b) Cigarettes —chanroblesvirtualawlibrary
"(1) On cigarettes per packed in thirties, the retail
price of which per pack does not exceed eighty centavos, on each
thousand, three pesos;chanroblesvirtualawlibrary
"(2) On cigarettes packed in thirties, the retail
price of which per pack exceeds eighty centavos but does not exceed one
peso on each thousand five pesos;chanroblesvirtualawlibrary
"(3) On cigarettes packed in thirties, the retail
price of which per pack exceeds one peso but does not exceeds one peso
and ten centavos, on each thousand, eight pesos;chanroblesvirtualawlibrary
"(4) On cigarettes packed in twenties, the retail
price of which per pack does not exceed one peso and ten centavos, on
each thousand, ten pesos;chanroblesvirtualawlibrary
"(5) On cigarettes packed in twenties, the retail
price of which per pack exceeds one peso and ten centavos, but does not
exceed one peso and forty centavos, on each thousand, sixteen pesos;chanroblesvirtualawlibrary
"(6) On cigarettes packed in twenties, the retail
price of which per pack exceeds one peso and forty centavos, but does
not exceed one peso and seventy centavos, on each thousand, eighteen
pesos;chanroblesvirtualawlibrary
"(7) On cigarettes packed in twenties, the retail
price of which per pack exceeds one peso and seventy centavos, but does
not exceed two pesos, on each thousand, twenty pesos;chanroblesvirtualawlibrary
"(8) On cigarettes packed in twenties, the retail
price of which per pack exceeds two pesos, but does not exceed two
pesos and fifty centavos, on each thousand, thirty two pesos;chanroblesvirtualawlibrary
"(9) On cigarettes packed in twenties, the retail
price of which per pack exceeds two pesos and fifty centavos, but does
not exceed three pesos, on each thousand, forty pesos;chanroblesvirtualawlibrary
"(10) On cigarettes packed in twenties, the retail
price of which per pack exceeds three pesos on each thousand, fifty
pesos;chanroblesvirtualawlibrary
"(11) If the cigarettes of local manufacture are of
foreign brands or trade marks and being manufactured locally under
licensing agreements with the foreign brand or trade mark owners, the
tax shall be increased by fifty per centum per thousand: Provided,
That, any subsequent transfer or alienation of title or right over a
cigarette brand or trade mark by a foreign owner to a local
manufacturer in whatever manner, form or description shall not affect
the rates of tax then prevailing after the effectivity of this Code;chanroblesvirtualawlibrary
"(12) If the cigarettes of local manufacture are
mechanically wrapped or packed, the tax shall be increased by one
hundred twenty per centum per thousand. Cigarettes shall be considered
mechanically wrapped or packed when at any stage of the wrapping or
packing thereof, a machine or any mechanical contrivance shall have
been used;chanroblesvirtualawlibrary
"(13) If the cigarettes are of foreign manufacture,
regardless of the retail price per pack or the manner of wrapping or
packing thereof, on each thousand, eighty pesos.
Cigarettes subject to tax at lower rates before the effectivity of the
new tax rates herein prescribed shall be automatically be subject at
the corresponding higher rates and there is nothing under this
subsection (b) which allows any downward reclassification of tax rates
for existing brands of cigarettes duly registered at the time the
herein rates become effective.
"Duly registered and/or existing brands of cigarettes packed in 20's at
the time of the new rates herein prescribed shall not be allowed to be
packed in 30's."
xxx
xxx
xxx
Section 11. Subparagraphs (1) and (2) of Section 182
(A) of the National Internal Revenue Code are hereby amended to read as
follows: chanroblesvirtualawlibrary
"Sec. 182. Fixed taxes. (1) Persons subject to
percentage tax. — Unless otherwise provided, every person engaging in
business on which the percentage tax is imposed shall pay a fixed
annual tax of one hundred pesos.
"(2) Persons not subject to percentage tax. — Every
person who is not required to pay the percentage tax prescribed under
this Title shall pay for each calendar year in which the person shall
engage in business a fixed annual tax based upon his gross annual sales
during the preceding calendar year, as follows:cralaw:red
"Twenty pesos, if the amount of the gross annual sales does not exceed
two thousand four hundred pesos;chanroblesvirtualawlibrary
"Forty pesos, if the amount of the gross annual sales exceeds two
thousand four hundred pesos but does not exceed ten thousand pesos;chanroblesvirtualawlibrary
"Eighty pesos, if the amount of the gross annual sales exceeds ten
thousand pesos but does not exceed thirty thousand pesos;chanroblesvirtualawlibrary
"One hundred sixty pesos, if the amount of the gross annual sales
exceeds thirty pesos but does not exceed fifty thousand pesos;chanroblesvirtualawlibrary
"Two hundred fifty pesos, if the amount of the gross annual sales
exceeds fifty thousand pesos but does not exceed seventy-five thousand
pesos;chanroblesvirtualawlibrary
"Three hundred fifty pesos, if the amount of the gross annual sales
exceeds seventy-five thousand pesos but does not exceed one hundred
thousand pesos;chanroblesvirtualawlibrary
"Five hundred pesos, if the amount of the gross annual sales exceeds
one hundred thousand pesos but does not exceed one hundred fifty
thousand pesos;chanroblesvirtualawlibrary
"Nine hundred pesos if the amount of the gross annual sales exceeds one
hundred fifty thousand pesos but does not exceed three hundred thousand
pesos;chanroblesvirtualawlibrary
"One thousand six hundred pesos, if the amount of the gross annual
sales exceeds three hundred thousand pesos but does not exceed five
hundred thousand pesos;chanroblesvirtualawlibrary
"Three thousand pesos, if the amount of the gross annual sales exceeds
five hundred thousand pesos but does not exceed one million pesos;chanroblesvirtualawlibrary
"Five thousand pesos, if the amount of the gross annual sales exceeds
one million pesos but does not exceed one million five hundred thousand
pesos;chanroblesvirtualawlibrary
"Seven thousand pesos, if the amount of the gross annual sales exceeds
one million five hundred thousand pesos but does not exceed two million
pesos;chanroblesvirtualawlibrary
"Nine thousand pesos, if the amount of the gross annual sales exceeds
two million pesos but does not exceed two million five hundred thousand
pesos;chanroblesvirtualawlibrary
"Eleven thousand pesos, if the amount of the gross annual sales exceeds
two million five hundred thousand pesos but does not exceed three
million pesos; chanroblesvirtualawlibrary
"Fourteen thousand pesos, if the amount of the gross annual sales
exceeds three million pesos but does not exceed four million pesos;chanroblesvirtualawlibrary
"Eighteen thousand pesos, if the amount of the gross annual sales
exceeds four million pesos but does not exceed five million pesos;chanroblesvirtualawlibrary
"Twenty-two thousand pesos, if the amount of the gross annual sales
exceeds five million pesos but does not exceed six million pesos;chanroblesvirtualawlibrary
"Twenty-six thousand pesos, if the amount of the gross annual sales
exceeds six million pesos but does not exceed seven million pesos;chanroblesvirtualawlibrary
"Thirty thousand pesos, if the amount of the gross annual sales exceeds
seven million pesos but does not exceed eight million pesos;chanroblesvirtualawlibrary
"Thirty-four thousand pesos, if the amount of the gross annual sales
exceeds eight million pesos but does not exceed nine million pesos;chanroblesvirtualawlibrary
"Thirty-eight thousand pesos, if the amount of the gross annual sales
exceeds nine million pesos but does not exceed ten million pesos;chanroblesvirtualawlibrary
"If the amount of the gross annual sales exceeds ten million pesos, the
graduated fixed tax shall be thirty-eight thousand pesos plus one
thousand pesos for every one million pesos of gross sales or a
fractional part thereof in excess of ten million pesos.
"If a merchant is engaged in two or more businesses, one or more of
which is subject to, and the others exempt from, the percentage tax, he
shall pay the graduated fixed annual tax provided above, based on the
individual sales of his business not subject to the percentage tax
under this Title. The initial graduated fixed annual tax to be paid by
the person first engaging in business subject to the said tax shall be
twenty pesos." chanroblesvirtualawlibrary
Section 12. Section 183 of the National Internal
Revenue Code is hereby amended by adding a new paragraph (c) to read as
follows:cralaw:red
"(c) Flexibility clause. — In the interest of the
national economy and the general welfare, and subject to the
limitations herein prescribed, the President upon recommendation of the
Secretary of Finance and the National Economic Development Authority is
hereby empowered to revise the rates of percentage taxes, including any
necessary change in the classification of the articles enumerated in
sections 194, 195, 196, 197, 198, 199 and 201. The existing rates may
be increased by not more than 50% or decreased by not more than 10%.
"The above authority may be exercised by the President if any of the
following conditions exists:cralaw:red
"(1) Economic conditions render it necessary to
increase revenue, or to redirect expenditure or consumption patterns by
increasing or decreasing the rates of percentage tax on certain
commodities;chanroblesvirtualawlibrary
"(2) Where in the light of technological and social
changes, it is necessary to classify new products or to reclassify
certain articles subject to the sales tax on the basis of the changed
concepts of essentiality or the degree of manufacturing done; or
"(3) Where it is necessary to counter an adverse
action on the part of another country." chanroblesvirtualawlibrary
Section 13. Section 186-B of the National Internal
Revenue Code is hereby amended to read as follows:cralaw:red
"Sec. 186-B. Percentage tax on sales of processed
meat, milk and vegetable, fish and other sea foods, wheat flour and
feeds. There shall be levied, assessed and collected once only on every
original sale, barter, exchange and similar transaction either for
nominal or valuable consideration, intended to transfer ownership of,
or title to, the articles enumerated hereinbelow, a tax equivalent to
five per centum of the gross selling price or gross value in money of
the articles so sold, bartered, exchanged, or transferred, such tax to
be paid by the manufacturer or producer.
"(a) Processed meat, milk and vegetables; fish and
other sea foods;chanroblesvirtualawlibrary
"(b) Wheat flour; and
"(c) Poultry and animal feeds.
Provided, however, That the articles are manufactured out of materials
subject to tax under this section; Section 186, or Section 189, the
total cost of such materials as duly established, shall be deductible
from the gross selling price or gross value in money of the
manufactured articles.
"For purposes of this section, processed meat, milk and vegetables,
fish and other sea foods include such food products which have
undergone the process of curing, canning, bottling or similar processes
but exclude such food products which have undergone only simple
preserving processes such as freezing, drying, salting or smoking."
Section 14. The above sections as amended by this
Decree shall be incorporated in the consolidation and codification of
all existing internal revenue laws under a separate Presidential Decree.
Section 15. Effectivity date. — This Decree shall
take effect immediately.
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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