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collection of Philippine laws, statutes and codes
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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 1959
PRESIDENTIAL DECREE NO. 1959 -
AMENDING CERTAIN SectionS OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED
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chanroblesvirtualawlibrary
WHEREAS,
the current economic crisis amounts to a grave emergency which affects
the stability of the nation and requires immediate action;chanroblesvirtualawlibrary
WHEREAS, the issuance of this decree is an essential and necessary
component of the national economic recovery program formulated to meet
and overcome the emergency.
NOW, THEREFORE, I, FERDINAND, E. MARCOS, President of the Republic of
the Philippines, by virtue of the powers vested in me by the
Constitution do hereby decree and order:cralaw:red
Section 1. A new Subsection (y) is inserted in
Section 20 of the National Internal Revenue Code to read as follows:cralaw:red
"(y) "Deposit substitutes" shall mean an alternative
form of obtaining funds from the public, other than deposits, through
the issuance, endorsement, or acceptance of debt instruments for the
borrower's 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 promissory notes, repurchase
agreements, certificates of assignment or participation and similar
instrument with recourse as may be authorized by the Central Bank of
the Philippines, for banks and non-bank financial intermediaries or by
the Securities and Exchange Commission of the Philippines for
commercial, industrial, finance companies and other non-financial
companies: Provided, however, that only debt instruments issued for
inter-bank call loans 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."
Section 2. Section 21(d) of the this Code, as
amended, is hereby further amended to read as follows:cralaw:red
"(d) On interest from bank deposits and yield or any
other monetary benefit from deposit substitutes and from trust fund and
similar arrangements. — Interest from Philippine Currency Bank deposits
and yield or any other monetary benefit from deposit substitutes and
from trust fund and similar arrangements whether received by citizens
of the Philippines or by resident alien individuals, shall be subject
to a 15% final tax to be collected and paid as provided in Sections 53
and 54 of this Code."
Section 3. Section 24(cc) of this Code, as amended,
is hereby further amended to read as follows:cralaw:red
"(cc) Rates of tax on interest from deposits and
yield or any other monetary benefit from deposit substitutes and from
trust fund and similar arrangements. — Interest on Philippine Currency
Bank deposits and yield or any other monetary benefit from deposit
substitutes and from trust fund and similar arrangements received by
domestic or resident foreign corporations shall be subject to a 15%
final tax to be collected and paid as provided in Section 53 and 54 of
this Code."
Section 4. Section 53(d)(1) of this Code is hereby
amended to read as follows:cralaw:red
"Sec. 53(d)(1). Withholding of final Tax. — Every
bank or non-bank financial intermediary or commercial, industrial,
finance companies, and other non-financial companies authorized by the
Securities and Exchange Commission to issue deposit substitutes shall
deduct and withhold from the interest on bank deposits or yield or any
other monetary benefit from deposit substitutes a final tax equal to
fifteen per centum (15%) of the interest on deposits or yield or any
other monetary benefit from deposit substitutes and from trust fund and
similar arrangements."
Section 5. A new subsection (g) is hereby added to
Section 54 of this Code, as amended to read as follows:cralaw:red
"(g) All taxes withheld pursuant to the provisions of
this Code and its implementing regulations are hereby considered trust
funds and shall be maintained in a separate account and not comingled
with any other funds of the withholding agent. chanroblesvirtualawlibrary
"Any violation of this provision shall be subject to the surcharges and
penalties prescribed in paragraph (b) of this Section:cralaw:red
Section 6. Section 145 of this Code, as amended, is
further amended to read as follows:cralaw:red
"Sec. 145. Specific tax on distilled spirits. — On
distilled spirits there shall be collected, subject to the provisions
of Sec. 139 of this Code, except as hereinafter provided, specific
taxes as follows:cralaw:red
"(a) If produced from the sap of nipa, coconut,
cassava, camote or buri palm or from the juice, syrup or sugar of the
cane, per proof liter, five pesos; Provided, that such materials is
produced commercially in the country where they are processed into
distilled spirits; Provided, further, that if produced in a pot still
or other similar primary distilling apparatus by a distiller producing
not more than one hundred liters a day, containing not more than fifty
per centum of alcohol by volume, per proof liter, one peso and fifty
six centavos."
"(b) If produced from raw materials other than (a)
hereof, per proof liter, thirty-five pesos."
"This tax shall be proportionally increased for any strength of the
spirits taxed over proof spirits, and the tax shall attach to the
substance as soon as it is in existence as such, whether it be
subsequently separated as pure or impure spirits immediately or at any
subsequent time transformed into any other substance either in the
process or original, production or by the subsequent process.
"Spirits or distilled spirits" is the substance known as ethyl alcohol,
ethanol or spirits of wine, including all dilutions and mixture
thereof, from whatever source by whatever process produced, and shall
include whisky brandy, rum, gin and vodka, and other similar products
or mixture including compounded liquors and all other preparations,
except toilet preparations, of which excluding water distilled spirits
is the chief ingredient.
"Proof spirits" is liquor containing one-half of its volume of alcohol
of a specific gravity of seven thousand nine hundred and thirty-nine
ten thousandths at fifteen degrees centigrade. A proof liter means a
liter of proof spirits."
Section 7. Section 147 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
Sec. 147. Specific and Ad Valorem Tax on Fermented
Liquors. (A) Specific Tax. — On beer, lager beer, ale, porter and other
fermented liquors (except tuba, tapuy, and similar domestic fermented
liquors), there shall be collected on each liter of volume capacity,
two pesos ten centavos.
(B) Ad Valorem Tax. — In addition to the specific tax
herein imposed, there shall be levied, assessed and collected an ad
valorem tax equivalent to twenty percent (20%) of the brewer's or
importer's gross selling price, net of specific tax, of the products
enumerated under sub-section (a) hereof, to be removed from the brewery
or other place of manufacture or to be released from customs custody
which shall be paid by the brewer or importer, as the case may be, at
the same time as the specific tax."
"The provisions of Section 186-A hereof governing the determination of
the gross selling price should likewise apply in the determination of
the gross selling price of fermented liquor together with all the
administrative requirements prescribed therein and subject to the same
penalties therein imposed:cralaw:red
Section 8. Section 151 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 151. Specific ad valorem tax on matches. —
There shall be levied, assessed and collected an ad valorem tax
equivalent to ten per cent (10%) of the manufacturer's or importer's
gross selling price of matches to be removed from the place of
manufacture or to be released from customs custody, which shall be paid
by the manufacturer or importer, as the case may be, before such
removal."
"The provisions of Section 186-A hereof governing the determination of
the gross selling price should likewise apply in the determination of
the gross selling price of matches together with all the administrative
requirements prescribed therein and subject to the penalties therein
imposed.:cralaw:red
Section 9. Section 157 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 157. Specific tax on cinematographic films. —
There shall be collected, once only, on cinematographic films,
including television films, regardless of width, the provisions of
existing laws to the contrary notwithstanding, a tax amounting to
seventy centavos per linear meter.
"Educational films, cinematographic films used for visual education,
whether manufactured in the Philippines or imported shall be exempt
from the tax prescribed in this section."
"This tax shall not be collected on any tax-paid cinematographic film
subsequently returned to the Philippines or on any negative film or
uprinted positive film, and on any reversal film used in amateur
photography of sixteen millimeter or less, and any tax heretofore paid
on cinematographic film so returned, or on any negative film or
uprinted positive film, or on any reversal film shall be refunded
subject to the provisions of Section two hundred ninety-five of the Tax
Code."
Section 10. Section 158 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 158. Specific tax on saccharine. — On
saccharine, sodium saccharinate and all its derivatives or salts of
saccharine and other artificial sweetening agents, there shall be
collected a tax of one hundred twenty five pesos per kilogram."
Section 11. Section 193 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 193. Payment of percentage taxes. —chanroblesvirtualawlibrary
"(a) In general. — (1) Declaration and payment of
quarterly gross sales, receipts, etc. — Unless otherwise specifically
provided, it shall be the duty of every person conducting a business on
which a percentage tax is imposed under this Title, to render a
quarterly declaration of the amount of his, her or its gross sales,
receipts or earnings or gross value of output actually removed from the
factory or mill warehouse and to compute the tax due thereon.
"For each quarter of the taxable year, the tax so computed shall be
decreased by the sum of the tax credits allowed under this Title. The
tax due shall be paid not later than twenty days following the close of
each quarter: Provided, That any person retiring from a business
subject to the percentage tax shall notify the nearest internal revenue
officer, file his return or declaration and pay the tax due thereon
within twenty days after closing his business.
"For purposes of this Section, sales on consignment shall be considered
actually sold on the day of sale or sixty days after the date
consigned, whichever is earlier. chanroblesvirtualawlibrary
"(2) Where to file. — Except in cases where the
Commissioner otherwise permits, the percentage tax returns required to
be filed in the preceding paragraph shall be filed with the Revenue
District Officer, Collection Agent, or duly authorized Treasurer of the
municipality in which such person has his legal residence or principal
place of business in the Philippines.
"(3) Ad valorem penalties. —chanroblesvirtualawlibrary
"(i) Failure to file and pay the tax. — If the
percentage tax return is filed with a person, other than that mentioned
in the preceding subparagraph or if the percentage tax on any business
is not paid within the time specified above, the amount of the tax
shall be increased by twenty-five per centum, the increment to be a
part of the tax and the entire unpaid amount shall be subject to
interest at the rate of twenty per centum per annum.
(ii) Willful neglect to file, or filing false or
fraudulent return. — In case of willful neglect to file the return
within the period prescribed herein, or in case a false or fraudulent
return is willfully made, there shall be added to the tax or the
deficiency tax in case any payment has been made on the basis of such
return before the discovery of the falsity or fraud, a surcharge of
fifty per centum of its amount and the entire unpaid amount shall be
subject to interest at the rate of twenty per centum per annum. The
amount so added to any tax shall be collected at the same time and in
the same manner and as part of the tax unless the tax has been paid
before the discovery of the falsity or fraud, in which case the amount
so added shall be collected in the same manner as the tax.
"(b) Sales tax on imported articles. — When the
articles are imported, the percentage taxes established in Sections
194, 195, 916, 197, 198, 199 and 201 of this Code shall be paid in
advance by the importer, in accordance with the regulations promulgated
by the Minister of Finance and prior to the release of such articles
from Bureau of Customs' custody, based on the home consumption value or
price (excluding internal revenue excise taxes) thereof, plus ten (10%)
per cent of such home consumption value or price, including postage,
commission, customs duty and all similar charged, except freight and
insurance to be declared in an importer's return, plus twenty-five per
centum of the total value of such articles. The tax imposed in this
section shall not apply to articles to be used by the importer himself
in the manufacture or preparation of articles subject to specific tax:
Provided, however, That where the National Economic and Development
Authority certifies to the availability of local raw materials of
sufficient quantity, comparable quantity and price to meet the needs of
manufacturers subject to specific tax the importation of such raw
materials shall be subject to the tax herein imposed.
"(c) Value-added Tax. — The provisions of this Title
to the contrary notwithstanding, when the public interest so requires,
the President upon recommendation of the Minister of Finance, may
subject the second sale of any article taxable under this Title to a
value-added tax at the rates not exceeding fifty per cent (50%) based
on the gross selling price or gross value of any of the article sold,
bartered, exchanges or transferred, less the cost of the article."
Section 12. Section 203 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 203. Percentage tax upon proprietors or
operators of rope factories, sugar centrals and mills, coconut oil
mills, cassava mills, and desiccated coconut factories. — Proprietors
or operators of rope factories, sugar centrals and mills, coconut oil
mills, cassava mills, and desiccated coconut factories, shall pay a tax
equivalent to three (3%) per centum of the gross value in money of all
the rope, sugar, coconut oil, cassava flour or starch, desiccated
coconut, manufactured, processed or milled by them, including the
by-product of the raw materials from which said articles are produced,
processed, or manufactured, such tax to be based on the actual selling
price or market value of these articles at the time they leave the
factory or mill warehouse: Provided, however, That this tax shall not
apply to rope coconut oil, and the by-product of copra from which it is
produced or manufactured, and desiccated coconuts, if such rope,
coconut oil, copra by-products and desiccated coconuts, shall be
removed for exportation and are actually exported without returning to
the Philippines, whether so exported in their original state, or as an
ingredient or part of any manufactured article or product. chanroblesvirtualawlibrary
In case the raw materials are processed, manufactured or milled in
pursuance of a contract where the factory, central, or mill receives a
share of the finished products, the tax on the share pertaining to the
planter or owner of the raw materials shall be charged to the planter
or owner and withheld by the proprietor or operator of the factory,
central, or mill and paid by him to the Commissioner.
A proprietor or operator of a refined sugar factory shall be subject to
the tax imposed by this section but any percentage tax paid under this
section on the raw sugar shall be credited against the tax due on the
refined sugar.
Where articles are manufactured out of materials subject to tax under
this section, the percentage tax paid herein shall be credited against
the sales tax due on the finished product.
Section 13. Section 205 of this Code, as amended, is
hereby further to read as follows:cralaw:red
"Sec. 205. Contractors, proprietors or operators of
dockyards, and others. — A contractor's tax of four (4%) per centum of
the gross receipts is hereby imposed on the following:cralaw:red
(1) General engineering, general building, and
specialty contractors as defined in Republic Act Number 4566;chanroblesvirtualawlibrary
(2) Filling, demolition and salvage work contractors,
and proprietors or operators of mine drilling apparatus;chanroblesvirtualawlibrary
(3) Proprietors or operators of dockyards;chanroblesvirtualawlibrary
(4) Persons engaged in the installation of water
systems and gas or electric light, heat, power;chanroblesvirtualawlibrary
(5) Proprietors or operators of smelting plants,
engraving plants, plating establishments, and plastic lamination
establishments;chanroblesvirtualawlibrary
(6) Proprietors or operators of establishments for
upholstering, washing or greasing of motor vehicles, vulcanizing,
recapping, and battery charging;chanroblesvirtualawlibrary
(7) Proprietors or operators of establishments for
planning or surfacing and recutting of lumber, and sawmills under
contract to saw or cut logs belonging to others;chanroblesvirtualawlibrary
(8) Proprietors or operators of dry-cleaning or
dyeing establishments, steam laundries, and laundries using washing
machines;chanroblesvirtualawlibrary
(9) Proprietors or owners of shops for the repair of
any kind of bicycles, mechanical and electrical devices, instruments,
apparatus or furniture and shoe repairing by machine or any mechanical
contrivance;chanroblesvirtualawlibrary
(10) Proprietors or operators of establishments or
lots for parking purposes;chanroblesvirtualawlibrary
(11) Proprietors or operators of tailor shops, dress
shops, milliners and hatters, beauty parlors, barbershops, massage
clinics, sauna turkish, and swedish baths, slendering and body building
saloons and similar establishments, photographic studio, and funeral
parlors; chanroblesvirtualawlibrary
(12) Proprietors or operators of hotels, motels and
lodging houses;chanroblesvirtualawlibrary
(13) Proprietors or operators of arrastre and
stevedoring, warehousing, for forwarding establishments;chanroblesvirtualawlibrary
(14) Registered master plumbers, smiths, and house or
sign painters;chanroblesvirtualawlibrary
(15) Printers, bookbinders, lithographers and
publishers except those engaged in the publication or printing and
publication of 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
advertisements;chanroblesvirtualawlibrary
(16) Business agents and other independent
contractors, including private detective or watchman agencies, except
gross receipts of a pioneer enterprise registered with the Board of
Investments under PD 1789, as amended by BP 391;chanroblesvirtualawlibrary
(17) Lessors of personal property, except
non-resident owners of property subject to the final tax under Section
24(b)(vii) of this Code.
The term "independent contractors" includes persons (juridical or
natural) not enumerated above (but not including individuals subject to
the occupation tax under Section 12 of the Local Tax Code) whose
activity consists essentially of the sale of all kinds of services for
a free regardless of whether or not the performance of the service
calls for the exercise or use of the physical or mental faculties of
such contractors or their employees.
The term "independent contractor" shall not include regional or area
headquarters established in the Philippines by multinational
corporations, including their alien executives, and which headquarters
do not earn or derive income from the Philippines and which act as
supervisory, communications and coordinating centers for their
affiliates, subsidiaries or branches in the Asia-Pacific Region.
The term "gross receipts" means all amounts received by the prime or
principal contractor as the total contract price, undiminished by any
amount paid to the sub-contractor under a sub-contract arrangement. Any
portion of the total contract price which is paid to the subcontractor,
shall be excluded from the taxable gross receipts of the sub-contractor.
Section 14. Section 205-A of this Code, as amended,
is hereby further amended to read as follows:cralaw:red
"Sec. 205-A. Percentage tax on hotels, motels and
others. — There is hereby imposed on proprietors, operators or keepers
of hotels, motels resthouses, pension houses, lodging houses and
resorts, a tax equivalent to twelve (12%) percent of their gross
receipts derived from room occupancy: Provided, That the foregoing tax
shall be in lieu of the contractor's and the documentary stamp tax
under Sections 205(12) and 238(b) of the National Internal Revenue Code
of 1977, respectively."
Section 15. Section 206 of this Code as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 206. Caterers. — A caterer's tax is hereby
imposed as follows:cralaw:red
(1) On proprietors or operators of restaurants,
refreshment parlors, and other eating places, including clubs and
caterers, four (4%) per centum of their gross receipts;chanroblesvirtualawlibrary
(2) On proprietors or operators of restaurants, bars
cafes and other eating places, including clubs were distilled spirits,
fermented liquors in wines are served, four (4%) per centum of their
gross receipts from the sale of food or refreshments and eight (8%) per
centum of their gross receipts from sale of distilled spirits,
fermented liquors or wines. Two sets of commercial invoices or receipts
serially numbered in duplicate shall be separately prepared and issued,
one for each sale of food or refreshment served and another for each
sale of distilled spirits, fermented liquors or wines served, the
originals of the invoices or receipts to be issued to the purchasers or
customers; chanroblesvirtualawlibrary
(3) On proprietors or operators of restaurants,
refreshment parlors, bars, cafes, and other eating places which are
maintained within the premises or compound of a cockpit, cabaret, night
or day club, Jai-Alai, race track, or which are accessible to patrons
of such cockpit, cabaret, night or day club, Jai-Alai, race track by
means of a connecting door or passage, twelve (12%) per centum in the
case of night or day club, and twenty-five (25%) per centum in the case
of Jai-Alai and race track, of their gross receipts.
Where the establishments enumerated above are operated or maintained by
clubs of any kind or nature irrespective of the disposition of their
net income and whether or not they cater exclusively to members of
their guests, the keepers of the establishments shall pay the
corresponding tax at the rates fixed above.
Section 16. Section 207 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 207. Percentage tax on carriers and keepers of
garages. — Keepers of garages, cars for rent or hire driven by the
lessee, transportation contractors, persons who transport passenger or
freight for hire, and common carriers by land,r or water, except owners
of bancas and owners of animal-drawn two wheeled vehicles, shall pay a
tax equivalent to three (3%) per centum of their quarterly gross
receipts.
In computing the percentage tax provided in this section, the following
shall be considered the minimum quarterly gross receipts in each
particular case:cralaw:red
Autocalesa —
1. Manila and other cities P1,200.00
2. Provincial 600.00
Jeepney for hire —
1. Manila and other cities 2,400.00
2. Provincial 1,200.00
Public Utility bus —
Not exceeding 30 passengers 3,600.00
Exceeding 30 but not exceeding
50 passengers 6,000.00
Exceeding 50 passengers 7,200.00
Taxis —
1. Manila and other cities 3,600.00
2. Provincial 2,400.00
Car for hire (with chauffeur) 3,000.00
Car for hire (without chauffeur) 1,800.00
Section 17. Section 208 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 208. Percentage tax on stock real estate,
commercial, customs and immigration brokers and cinematographic film
owners, lessors, or distributors. — Stock, real estate, commercial,
customs, and immigration brokers shall pay a percentage tax equivalent
to seven (7%) per centum of the gross compensation received by them.
Cinematographic film owners, lessors, or distributors shall pay a
percentage tax of three (3%) per centum of their gross receipts.
The records kept by sale brokers and cinematographic film owners,
lessors or distributors may be used as evidence to determine the amount
of percentage tax due from them, and the Commissioner may assess and
collect the tax due on the compensation or gross receipts earned in
accordance with said records.
In any case the amount of the compensation or gross monthly receipts of
said brokers and cinematographic film owners, lessors, or distributors
shall be declared for taxation within the time established for the
monthly sales or receipts.
Section 18. Section 209 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 209. Percentage tax on dealers in securities
and lending investors. — Dealers in securities and lending investors
shall pay a tax equivalent to six (6%) per centum of their gross income.
Section 19. Section 223 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 223. Stamp tax on bonds, debentures, and
certificates of indebtedness. — On all bonds, debentures, and
certificates of indebtedness issued by any association, company, or
corporation, there shall be collected a documentary stamp tax of one
peso on each two hundred pesos, or fractional part thereof of the face
value of such documents."
Section 20. Section 224 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 224. Stamps tax on original issue of
certificates of stock. — On every original issue, whether on
organization, reorganization or for any lawful purpose, of certificates
of stock by any association, company, or corporation, there shall be
collected a documentary stamp tax of one peso and seventy centavos on
each two hundred pesos, or fractional part thereof, of the par value of
such certificates: Provides, That in the case of the original issue of
stock without par value the amount of the documentary stamp tax herein
prescribed shall be based upon the actual consideration received by the
association, company, or corporation for the issuance of such stock,
and in the case of stock of dividends, on the actual value represented
by each share."
Section 21. Section 225 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 225. Stamp tax on sales, agreements to sell,
memoranda of sales, deliveries or transfer of bonds, due-bills,
certificates of obligation, or shares or certificates of stock. — On
all sales, or agreements to sell, or memoranda of sales, or deliveries,
or transfer of bonds, due-bills, certificates of obligation, or shares
or certificates of stock in any association, company, or corporation,
or transfer of such securities by assignment in bank, 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 bonds, due-bills, certificates of obligation or stock,
or to secure the future payment of money, or for the future transfer of
any bond, due-bill, certificates of obligation or stock, there shall be
collected a documentary stamp tax of fifty centavos on each two
hundred pesos, or fractional part thereof, of the par value of such
bond, due-bill, certificates 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 the documentary stamp tax
herein prescribed shall be equivalent to twenty-five per centum of the
documentary stamp tax paid upon the original issue of said stock."
Section 22. Section 227 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 227. 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 transfer of such certificates or memoranda, there shall be
collected a documentary stamp tax of twenty centavos on each two
hundred pesos, or fractional part thereof, of the face value of such
certificate or memorandum."
Section 23. Section 228 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 228. Stamp tax on bank checks, drafts, and
other instruments. — On each bank check, draft, 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 corporation, at sight
or on demand, there shall be collected a documentary stamp tax of
twenty centavos."
Section 24. Section 229 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 229. Stamp tax on promissory notes, bills of
exchange, drafts, certificates of deposit, debt instruments used for
deposit substitutes and others not payable on sight or demand. — On all
bills of exchange (between points within the Philippines), drafts, or
certificates of deposits, debt instruments used for deposit substitutes
or 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 notes, there shall be collected a documentary stamp
tax of twenty centavos on each two hundred pesos, or fractional part
thereof, of the face value of any such bill of exchange, draft,
certificate of deposit, debt instrument, or note."
Section 25. Section 230 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 230. 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 on each two
hundred pesos, or fractional part thereof, of the face value of any
such bill of exchange, or order, or the Philippine equivalent of such
value, if expressed in foreign currency."
Section 26. Section 231 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 231. Stamp tax on foreign bills of exchange and
letters of credit. — On all foreign bills of exchange and letters of
credit (including orders, by telegraphic 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
or more according to the custom of merchants and bankers, there shall
be collected a documentary stamp tax of thirty centavos on each two
hundred pesos, or fractional part thereof, of the face value of any
such bill of exchange or letter of credit, of the Philippine equivalent
of such face value, if expressed in foreign currency.
Section 27. Section 232 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 232. 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 on each two hundred pesos or fractional part thereof, of
the amount insured by any such policy."
Section 28. Section 233 of this Code, as amended, is
hereby further amended to read as follows: chanroblesvirtualawlibrary
"Sec. 233. 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 thirty centavos on
each four pesos, 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."
Section 29. Section 234 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 234. 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 officer or position, for the
doing, or not doing of anything therein specified, and on all
obligations guaranteeing the validity or legality of any bonds 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 thirty centavos on each
four pesos, or fractional part thereof, of the premium charged."
Section 30. Section 235 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 235. Stamp tax on policies of annuities. — 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
on each two hundred pesos, or fractional part thereof, of the capital
of the annuity, or should this be unknown, them on each two hundred
pesos, or fractional part thereof, of thirty-three and one-third times
the annual income."
Section 31. Section 236 of this Code, as amended, is
hereby further amended to read as follows: chanroblesvirtualawlibrary
"Sec. 236. 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 three pesos and fifty centavos."
Section 32. Section 237 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 237. Stamp tax on certificates. — On each
certificates of damage or otherwise, and on every other certificate or
document issued by any customs officer, marine surveyor, or other
person acting as such, and on each certificate issued by a notary
public, and on each certificate of any description required by law or
by rules or regulations of a public office, or which is issued for the
purpose of giving information, or establishing proof of a fact, and not
otherwise specified herein, there shall be collected a documentary
stamp tax of three pesos."
Section 33. Section 238 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 238. Stamp tax on warehouse, motel, and hotel
receipts; and others. — (a) On each warehouse receipt for property held
in storage in a public or private warehouse or yard for any other
person than the proprietor of such warehouse or yard himself, there
shall be collected a documentary stamp tax of one peso and fifty
centavos: 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.
(b) On each hotel receipt issued by keepers of
hotels, motels, rest-houses, lodging houses, or resorts to a guest for
lodging, there shall be collected a documentary stamp tax of three
pesos: Provided, however, That if the amount of the receipt exceeds
twenty pesos an additional tax of three pesos on each twenty pesos or
fractional part thereof shall be collected."
Section 34. Section 239 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 239. Stamp tax on Jai-Alai or horse race
tickets. — On each Jai-Alai or horse race ticket, there shall be
collected a documentary stamp tax of twenty-centavos: Provided, That if
the cost of the ticket exceeds one peso, an additional tax of twenty
centavos on every one peso or fractional part thereof shall be
collected."
Section 35. Section 240 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 240. 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 a documentary stamp tax in accordance with the following
schedule:cralaw:red
If the value of goods:
Exceeds P100 but does not
exceed P1,000 -P.50
Exceeds P1,000 but does not
exceed P10,000 -P1.00
Exceeds P10,000 -3.00
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."
Section 36. Section 241 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 241. 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 stamps tax of
two pesos and fifty centavos."
Section 37. Section 242 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 242. 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 two pesos: Provided, however, That on each power of attorney which
authorizes another to administer, sell, lease, or otherwise dispose of
the property of a principal, there shall be collected a documentary
stamp tax of three pesos.
Section 38. Section 243 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 243. 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 of three pesos for each year of
the term of said contracts or agreement."
Section 39. Section 244 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 244. Stamp tax on mortgages, pledges, and deeds
of trust. — On every mortgage or pledge of lands, estate, or property,
real or personal, heritable or movable, whatsoever, where the same
shall be made as a security for the payment of any definite and certain
sum of money lent at the time or previously due and owing or forborne
to be paid being payable, and on any conveyance of land, estate, or
property whatsoever, in trust or to be sold, or otherwise converted
into money which shall be and intended only as security, either by
express stipulation or otherwise, there shall be collected a
documentary stamp at the following rates:cralaw:red
(a) When the amount secured does not exceed five
thousand pesos, ten pesos.
(b) On each five thousand pesos, or fractional part
thereof in excess of five thousand pesos, an additional tax of five
pesos. chanroblesvirtualawlibrary
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. 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 therein, the documentary
stamp tax described in this section shall be paid and computed on the
said amount of the loan of credit granted.
Section 40. Section 245 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 245. Stamp tax on deed of sale and conveyance
of real property. — On all conveyance, deeds Instruments, or writings,
other than grants, patents, or original certificates of adjudication
issued by the Government, whereby any lands, tenements 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 following rates:cralaw:red
(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, ten pesos.
(b) For each additional one thousand pesos, or
fractional part thereof in excess of one thousand pesos of such
consideration of value, ten pesos.
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."
Section 41. Section 246 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 246. 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:cralaw:red
(a) If the registered gross tonnage of the ship,
vessel or steamer does not exceed three hundred tons, and the duration
of the charter or contract does not exceed six months, one hundred
pesos; and for each month or fraction of a month in excess of six
months, an additional tax of twenty pesos shall be paid. chanroblesvirtualawlibrary
(b) If the registered gross tonnage exceeds three
hundreds tons and does not exceed six hundred tons, and the duration of
the charter or contract does not exceed six months, two hundred pesos,
and for each month or fraction of a month in excess of six months, an
additional tax of forty pesos shall be paid.
(c) If the registered gross tonnage exceeds six
hundred tons and the duration of the charter or contract does not
exceed six months, three hundred pesos; and for each month or fraction
of a month in excess of six months, an additional tax of
fifty-four pesos."
Section 42. A new Subsection A is hereby added to
Sec. 260 of this Code, as amended, to read as follows:cralaw:red
"Sec. 260-A. Additional Tax on banks, non-bank
financial intermediaries and authorized foreign-exchange dealers. —
There shall be collected, in addition to the tax on gross receipts
imposed under Section 260 hereof, a tax of one per centum (1%) based on
the gross value of every sale or purchase of foreign exchange by all
banks, non-bank financial intermediaries, and all authorities
foreign-exchange dealers.
"The tax imposed hereunder, for foreign exchange, transacted within one
week, shall be payable on the first banking day of the succeeding week
and it shall be the duty of every bank and non-financial intermediary
to make a true and complete return of the value of foreign exchange
sold or purchased during the week and pay the tax due thereon and if
the tax is not paid on the date prescribed herein, the amount of the
tax shall be increased by twenty-five per centum, the increment to be
part of the tax. chanroblesvirtualawlibrary
"In case of willful neglect to file the return on the date prescribed
herein, or in case a false or fraudulent return is willfully made,
there shall be added to the tax or to the deficiency tax in case any
payment has been made on the basis of such return before the discovery
of the falsity or fraud, a surcharge of fifty per centum of the amount.
The amount so added to the tax shall be collected at the same time and
in the same manner and as part of the tax unless the tax has been paid
before the discovery of the falsity or fraud, in which case the amount
so added shall be collected in the same manner as the tax.
Section 43. Section 263 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 263. Tax on insurance premium. — There shall be
collected from every person, company, or corporation (except purely
cooperative companies or associations) doing insurance business of any
sort in the Philippines a tax of six per centum of the total premium
collected, whether such premiums are paid in money, notes, credits or
any substitute for money; but premiums refunded within six months after
payment on account of rejection or 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 premiums collected or received by any branch of
a domestic corporation, firm or association doing business outside the
Philippines on account of any life insurance of the insured who is a
non-resident, if any percentage tax on such premiums is imposed by the
foreign country where the branch is established nor upon; premiums
collected or received on account of any reinsurance, if the risk
insured against covers property located outside the Philippines, or the
insured, in case of personal insurance, resides outside the
Philippines, if any percentage 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 Sec.
232(2) of Presidential Decree No. 612), in excess of the amounts
necessary to insure the lives of the variable contract workers. chanroblesvirtualawlibrary
"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."
Section 44. Section 268 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 268. 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, race tracks and bowling alleys, a tax
equivalent to:cralaw:red
"1. Eighteen per centum in the case of cockpits;chanroblesvirtualawlibrary
"2. Eighteen per centum in the case of cabarets,
night or day clubs;chanroblesvirtualawlibrary
"3. Eighteen per centum in the case of boxing
exhibitions;chanroblesvirtualawlibrary
"4. Fifteen per centum 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;chanroblesvirtualawlibrary
"5. Thirty per centum in the case of Jai-Alai and
race tracks; and
"6. Thirty per centum in the case of bowling alleys
of their gross receipts, irrespective of whether or not any amount is
charged or paid 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
includes 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 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. If the tax is not paid within the time prescribed
above, the amount of the tax shall be increased by twenty-five per
centum, the increment to be part of the tax. chanroblesvirtualawlibrary
"In case of willful neglect to file the return within the period
prescribed herein, or in case a false or fraudulent return is willfully
made, there shall be added to the tax or to the deficiency tax, in case
any payment has been made on the basis of the return before the
discovery of the falsity or fraud, a surcharge of fifty per centum of
its amount. The amount so added to any tax shall be collected at the
same time and in the same manner and as part of the tax unless the tax
has been paid before the discovery of the falsity or fraud, in which
case, the amount so assessed shall be collected in the same manner as
the tax."
Section 45. Section 269 of this Code, as amended, is
hereby further amended to read as follows:cralaw:red
"Sec. 269. Tax on Winnings. — Every person who wins
in horse races or Jai-Alai shall pay a tax equivalent to fifteen per
cent of his winnings or "dividends", the tax to be based on the actual
amount paid to him for every winning ticket after deducting the costs
of the ticket. The tax herein prescribed shall be deducted from the
"dividends" corresponding to each winning ticket and withheld by the
operator, manager, or person in charge of the horse-races or Jai-Alai
before paying the "dividends" to the person entitling thereto. The same
tax shall be collected from owners of winning race horses at the same
time and in the same manner above.
"Operator, manager, or person in charge of horse races or Jai-Alai
shall, within twenty days from the date the tax was deducted and
withheld in accordance with the first paragraph hereof, file a true and
correct return with the Commissioner in the manner of form to be
prescribed by the Minister of Finance, and pay within the same period
the total amount of tax so deducted and withheld.
"If the tax herein provided is not paid within the time prescribed
above, or in case of willful neglect to file the return within the
period prescribed herein, or in case a false or fraudulent return is
willfully made, there shall be added to the tax or to the deficiency
tax, in case any payment has been made on the basis of the return
before the discovery of the falsity or fraud, the corresponding
surcharges provided in Section 268 of this Code."
Section 46. Section 324 of this Code is hereby
further amended to read as follows:cralaw:red
"Sec. 324. Preservation of books of 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 318 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 inspections shall be made
only once in a taxable year, except in the following cases:cralaw:red
(a) Fraud, irregularity or mistakes as determined by
the Commissioner;chanroblesvirtualawlibrary
(b) The taxpayer requests reinvestigation;chanroblesvirtualawlibrary
(c) Verification of compliance with withholding tax
laws and regulations;chanroblesvirtualawlibrary
(d) Verification of capital gains tax liabilities; and
(e) In the exercise of the Commissioner's power under
Section 7(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 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."
Section 47. The Minister of Finance, upon
recommendation of the Commissioner of Internal Revenue shall promulgate
the necessary rules and regulations for the implementation of this
Presidential Decree. chanroblesvirtualawlibrary
Section 48. All laws, decrees, executive orders,
rules and regulations and other issuances or parts thereof which are
inconsistent with this Decree are hereby repealed, amended or modified
accordingly.
Section 49. If for any reason any section or
provision of this Decree is declared unconstitutional or invalid, other
sections or provisions hereof which are not affected thereby shall
continue to be in full force and effect.
Section 50. This Decree shall take effect on October
15, 1984; Provided, however, That with respect to the 20% ad valorem
tax on fermented liquor under Section 7 of this Decree, 10% thereof
shall be imposed beginning October 15, 1984 and the remaining 10% ad
valorem shall apply beginning January 1, 1985; and Provided, further,
That the specific tax increases on distilled spirits and
cinematographic films under Sec. 6 & 9 of this Decree shall take
effect beginning January 1, 1965.
Done in the City of Manila, on
this 10th day of October, the year of Our Lord, nineteen hundred and
eighty-four.
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