WHEREAS, prior to the promulgation of
Proclamation No. 1081 dated September 21, 1972, there were pending in
Congress certain priority measures vital to the national development
programs of the Government, one of which was the Omnibus Tax Bill for
1972; chanroblesvirtualawlibrary
WHEREAS, the Omnibus Tax Bill for 1972 is designed to institute basic
reforms in our antiquated tax system by simplifying tax incentive
policies, increasing the financial resources of the government, making
it a more effective tool for redistribution of income and wealth and
keeping it in step with modernization;chanroblesvirtualawlibrary
WHEREAS, there are provisions of the National Internal Revenue Code
which need to be revised but were not included in the said bill;chanroblesvirtualawlibrary
WHEREAS, it is imperative to adopt these proposed measures to make the
tax system more responsive to the requirements of a developing economy,
foremost of which is the speedy restructuring of the social, economic
and political institutions of the country.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers in me
vested by the Constitution as Commander-in-Chief of all the Armed
Forces of the Philippines and pursuant to Proclamation No. 1081, dated
September 21, 1972, and General Order No. 1, dated September 22, 1972,
in order to transform the tax system into an effective tool for the
implementation of the desired changes and reform in our society, do
hereby order and decree that the said amendments to the National
Internal Revenue Code be adopted, as it is hereby adopted, and made
part of the law of the land:cralaw:red
Section 1. Certain sections of Title I of the
National Internal Revenue Code, as amended, are hereby further amended,
and a new Section 8-A is hereby inserted, to read as follows:cralaw:red
"TITLE I — ORGANIZATION OF THE BUREAU
"Sec. 3. Powers and duties of Bureau. — The powers
and duties of the Bureau of Internal Revenue shall comprehend the
assessment and collection of all national internal revenue taxes, fees,
and charges, and the enforcement of all forfeitures, penalties, and
fines connected therewith, including the execution of judgments in all
cases decided in its favor by the Court of Tax Appeals and the ordinary
courts. Said Bureau shall also give effect to and administer the
supervisory and police power conferred to it by this Code or other laws.
"Sec. 4. Specific provisions to be contained in
regulations. — The regulations of the Bureau of Internal Revenue shall,
among other things, contain provisions specifying, prescribing, or
defining:cralaw:red
(a) The time and manner in which provincial
treasurers shall canvass their provinces for the purpose of discovering
persons and property liable to national internal revenue taxes, and the
manner in which their lists and records of taxable persons and taxable
objects shall be made and kept.
(b) The forms of labels, brands, or marks to be
required on goods subject to a specific tax, and the manner in which
the labeling, branding, or marking shall be effected.
(c) The conditions under which and the manner in
which goods intended for export, which if not exported would be subject
to a specific tax, shall be labelled, branded, or marked.
(d) The conditions to be observed by revenue
officers, provincial fiscals, and other officials respecting the
institution and conduct of legal actions and proceedings.
(e) The manner in which persons authorized to have
and keep prohibited drugs shall keep their records relating to the same.
(f) The conditions under which opium may be imported,
the manner of its storage and removal for use, as well as the manner in
which the same shall be marked or labelled prior to removal. chanroblesvirtualawlibrary
(g) The conditions under which prohibited drugs may
be transferred from the possession of persons authorized to have and
keep the same to the possession of other persons similarly authorized.
(h) The conditions under which goods intended for
storage in bonded warehouses shall be conveyed thither, their manner of
storage, and the method of keeping the entries and records in
connection therewith, also the books to be kept by the storekeepers and
the reports to be made by them in connection with their supervision of
such houses.
(i) The conditions under which alcohol intended for
use in the arts and industries may be removed and dealt in, the
character and quality of the denaturing material to be used, the manner
in which the process of denaturing shall be effected, the bonds to be
given, the books and records to be kept, the entries to be made
therein, the reports to be made to the Commissioner of Internal
Revenue, and the signs to be displayed in the business or by the person
for whom such denaturing is done or by whom such alcohol is dealt in.
(j) The manner in which revenue shall be collected
and paid, the instrument, document, or object to which revenue and
science stamps shall be affixed, any provision of Republic Act Numbered
5448 to the contrary notwithstanding, the mode of cancellation of the
same, the manner in which the proper books, records, invoices and other
papers shall be kept and entries therein made by the person subject to
the tax, as well as the manner in which licenses and stamps shall be
gathered up and returned after serving their purposes.
(k) The conditions to be observed by revenue
officers, provincial fiscals, and other officials respecting the
enforcement of Title III imposing a tax on estate, inheritances,
legacies, and other acquisitions mortis causa as well as on gifts and
such other rules and prohibition which the Commissioner of Internal
Revenue may consider suitable for the enforcement of the said Title III.
(l) The manner in which income tax returns,
information, and reports shall be prepared and reported and the tax
collected and paid, as well as the conditions under which evidence of
payment shall be furnished the taxpayer, and the preparation and
publication of income tax statistics.
(m) The manner in which internal revenue taxes such
as income tax, estate and gift taxes, specific taxes, percentage taxes,
mining taxes, taxes on banks, finance companies, insurance companies,
franchise taxes, taxes on amusements, charges on forest products and
such other taxes as maybe added thereto shall be paid through the
collection agents of the Bureau of Internal Revenue or through
authorized agent commercial banks who are hereby deputized to receive
payments of such taxes and the returns, papers and statements that may
be filed by the taxpayers in connection with the payment of the tax.
"Sec. 8. Internal revenue districts. — With the
approval of the Secretary of Finance, the Commissioner of Internal
Revenue shall divide the Philippines into such number of revenue
districts as may from time to time be required for administrative
purposes. Each of these districts shall be under the supervision of a
Revenue District Officer.
"Sec. 8-A. Revenue Regional Director. — Under rules
and regulations, policies and standards formulated by the Commissioner
of Internal Revenue, the Regional Director shall, within the region and
district offices under his jurisdiction, among others:cralaw:red
(1) Implement laws, policies, plans, programs, rules
and regulations of the department or agencies in the regional area;chanroblesvirtualawlibrary
(2) Administer and enforce internal revenue laws and
regulations, including the assessment and collection of all internal
revenue taxes, charges and fees;chanroblesvirtualawlibrary
(3) Provide economical, efficient and effective
service to the people in the area;chanroblesvirtualawlibrary
(4) Coordinate with regional offices or other
department, bureaus, and agencies in the area;chanroblesvirtualawlibrary
(5) Coordinate with local government units in the
area;chanroblesvirtualawlibrary
(6) Exercise control and supervision over the
officers and employees within the region; and
(7) Perform such other functions as may be provided
by law and as may be delegated by the Commissioner.
"Sec. 9. Duties of Revenue District Officers and
other internal revenue officers. — It shall be the duty of every
Revenue District Officer or other internal revenue officers and
employees to see that all laws and regulations affecting national
internal revenues are faithfully executed and complied with, and/or in
the prevention, detection and punishment of frauds or delinquencies in
connection therewith.
It shall also be the duty of every Revenue District Officer to examine
into the efficiency of all officers and employees of the Bureau of
Internal Revenue under his supervision, and to report in writing to the
Commissioner of Internal Revenue, through the Regional Director, any
neglect of duty, incompetence, delinquency, or malfeasance in office of
any internal revenue officer of which he may obtain knowledge, with a
statement of all the facts and any evidence sustaining each case. chanroblesvirtualawlibrary
"Sec. 11. Assignment of internal revenue officers. —
The Commissioner of Internal Revenue shall employ and assign internal
revenue officers to regional offices and the Regional Director shall
assign them to establishments or places where articles subject to
specific tax are produced or kept.
"Sec. 16. Authority of officers to administer oaths
and take testimony. — The Commissioner of Internal Revenue, the Deputy
Commissioners of Internal Revenue, chiefs and assistant chiefs of
divisions, special deputies of the Commissioner, internal revenue
officers and any other employee of the Bureau thereunto especially
deputized by the Commissioner shall have power to administer oaths and
to take testimony in any official matter or investigation conducted by
them touching any matter within the jurisdiction of the Bureau.
Section 2. Certain sections of Title II of the same
Code, as amended, are hereby further amended to read as follows:cralaw:red
"TITLE II — INCOME TAX
"Sec. 21. Rates of tax on citizens or residents. — A
tax is hereby imposed upon the taxable net income received during each
taxable year from all sources by every individual, whether a citizen of
the Philippines residing therein or an alien residing in the
Philippines, determined in accordance with the following schedule:
Provided, however, That non-resident citizens shall be subject to tax
under this schedule only on income derived by them from sources within
the Philippines.
Not over P2,000 3%
Over P2,000 but not over P4,000 P60 plus 6%
of excess over P2,000.
Over P4,000 but not over P6,000 P180 plus 9%
of excess over P4,000.
Over P6,000 but not over P8,000 P360 plus 12%
of excess over P6,000.
Over P8,000 but not over P10,000 P600 plus 14%
of excess over P8,000.
Over P10,000 but not over P12,000 P880 plus 16%
of excess over P10,000.
Over P12,000 but not over P14,000 P1,200 plus 18%
of excess over P12,000.
Over P14,000 but not over P16,000 P1,560 plus 20%
of excess over P14,000.
Over P16,000 but not over P18,000 P1,960 plus 22%
of excess over P16,000.
Over P18,000 but not over P20,000 P2,400 plus 24%
of excess over P18,000.
Over P20,000 but not over P24,000 P2,880 plus 27%
of excess of P20,000.
Over P24,000 but not over P28,000 P3,960 plus 30%
of excess over P24,000.
Over P28,000 but not over P32,000 P5,160 plus 33%
of excess over P28,000.
Over P32,000 but not over P36,000 P6,480 plus 36%
of excess over P32,000.
Over P36,000 but not over P40,000 P7,920 plus 39%
of excess over P36,000.
Over P40,000 but not over P46,000 P9,480 plus 42%
of excess over P40,000.
Over P46,000 but not over P52,000 P12,000 plus 44%
of excess over P46,000.
Over P52,000 but not over P58,000 P14,640 plus 46%
of excess over P52,000.
Over P58,000 but not over P64,000 P17,400 plus 48%
of excess over P58,000.
Over P64,000 but not over P70,000 P20,280 plus 50%
of excess over P64,000.
Over P70,000 but not over P78,000 P23,280 plus 52%
of excess over P70,000.
Over P78,000 but not over P86,000 P27,440 plus 54%
of excess over P78,000.
Over P86,000 but not over P94,000 P31,760 plus 56%
of excess over P86,000.
Over P94,000 but not over P102,000 P36,240 plus 57%
of excess over P94,000.
Over P102,000 but not over P110,000 P40,800 plus 58%
of excess over P102,000.
Over P110,000 but not over P120,000 P45,440 plus 59%
of excess over P110,000.
Over P120,000 but not over P130,000 P51,340 plus 60%
of excess over P120,000.
Over P130,000 but not over P140,000 P57,340 plus 61%
of excess over P130,000.
Over P140,000 but not over P150,000 P63,440 plus 62%
of excess over P140,000.
Over P150,000 but not over P160,000 P69,640 plus 63%
of excess over P150,000.
Over P160,000 but not over P180,000 P75,940 plus 64%
of excess over P160,000.
Over P180,000 but not over P200,000 P88,740 plus 65%
of excess over P180,000.
Over P200,000 but not over P250,000 P101,740 plus 66%
of excess over P200,000.
Over P250,000 but not over P300,000 P134,740 plus 67%
of excess over P250,000.
Over P300,000 but not over P400,000 P168,240 plus 68%
of excess over P300,000.
Over P400,000 but not over P500,000 P236,240 plus 69%
of excess over P400,000.
Over P500,000 P305,240 plus 70%
of excess over P500,000.
Provided, further, That on the income of non-resident citizens from all
sources without the Philippines, there is hereby imposed a tax on the
gross amount of such income determined as follows:cralaw:red
Not over $6,000 1%
Over $6,000 but not over $20,000 2%
Over $20,000 3%
Provided, still further, That for purposes of this section, a
non-resident citizen is one who establishes to the satisfaction of the
Commissioner the fact of his physical presence abroad for an
uninterrupted period which includes an entire taxable year.
"Sec. 22. Tax on non-resident alien individuals. —
(a) Non-resident alien engaged in trade or business within the
Philippines. — There shall be levied, collected, and paid for each
taxable year upon the entire net income received from all sources
within the Philippines by every non-resident alien individual engaged
in trade or business within the Philippines the tax imposed by Section
twenty-one; Provided, That for the purposes of this Title, a
non-resident alien individual who shall come to the Philippines and
stay therein for an aggregate period of more than one hundred eighty
days during any calendar year shall be deemed a non-resident alien
doing business in the Philippines, the provision of this Section
eighty-four (f)of this Code to the contrary notwithstanding.
(b) Non-resident alien not engaged in trade or
business in the Philippines. — There shall be levied, collected and
paid for each taxable year upon the entire income received from all
sources within the Philippines by every non-resident alien individual
not engaged in trade or business within the Philippines as interest,
dividends, rents, salaries, wages, premiums, annuities, compensations,
remuneration, emoluments, or other fixed or determinable annual or
periodical or casual gains, profits and income, and capital gains, a
tax equal to thirty per centum of such income.
"Sec. 23. Amount of personal exemptions allowable to
individuals. — For the purpose of the tax provided for in this Title,
there shall be allowed in the nature of a deduction from the amount of
net income the following personal exemptions:cralaw:red
(a) Personal exemptions of single individuals. — The
sum of one thousand eight hundred pesos, if the person making the
return is a single person or a married person legally separated from
his or her spouse.
(b) Personal exemption of married persons or heads of
family. — The sum of three thousand pesos, if the person making the
return is a married man or a married woman or the head of the family:
Provided, That only one exemption of three thousand pesos shall be made
from the aggregate income of both husband and wife when not legally
separated. For the purpose of this section, the term "head of family"
includes an unmarried man or woman with one or both parents, or one or
more brothers or sisters, or one or more legitimate, recognized
natural, or adopted children living with and dependent upon him or her
for their chief support where such brothers, sisters, or children are
not more than twenty-one years of age, unmarried, and not gainfully
employed, or when such children are incapable of self-support because
mentally or physically defective.
(c) Additional exemption for dependents. — The sum of
one thousand pesos of each legitimate, recognized natural, or adopted
child, wholly dependent upon and living with the taxpayer if such
dependents are not more than twenty-one years of age, unmarried, and
not gainfully employed or incapable of self-support because mentally or
physically defective. The additional exemption under this subsection
shall be allowed only if the person making the return is the head of
the family: Provided, however, That the total number of dependents for
which additional exemptions may be claimed shall not exceed four
dependents.
(d) Change of status. — If the taxpayer married or
should have additional dependents as defined in subsection (c) above
during the taxable year the taxpayer may claim the corresponding
personal exemptions in full for such year.
If the taxpayer should die during the taxable year, his estate may
still claim the personal and additional deductions for himself and his
dependents as if he died at the close of such year.
If the spouse or any of the dependents should die or become twenty-one
years old during the taxable year, the taxpayer year, the taxpayer may
still claim the same exemptions as if they died, or as if such
dependents became twenty-one years old at the close of such year.
(e) Personal exemptions allowable to a non-resident
alien individual. — A non-resident alien individual engaged in trade or
business in the Philippines shall be entitled to personal exemptions in
an amount equal to the exemptions allowed by the income tax law in the
country of which he is a subject or citizen to citizens of the
Philippines not residing in such country, but not to exceed the amount
fixed in this section as exemption for citizens or residents of the
Philippines: Provided, That said non-resident alien file a true and
accurate return of the total income received by him from all sources in
the Philippines, as required by this Title.
"Sec. 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, no matter how created or organized, but not including duly
registered general co-partnership (companias colectivas), general
professional partnerships, private educational institutions, and
building and loan associations, 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 chanroblesvirtualawlibrary
Thirty-five per cent upon the amount by which the taxable net income
exceeds one hundred thousand pesos.
Private educational institutions other than those exempt under Section
27 (e) of this Code shall pay a tax of ten per cent of their taxable
net income.
Building and loan associations operating in accordance with the General
Banking Act shall pay a tax of twelve per cent of their taxable net
income.
(b) Tax on foreign corporations. — (1) Non-resident
corporations. — A foreign corporation not engaged in trade or business
in the Philippines including a foreign life insurance company not
engaged in the life insurance 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, wages, premiums, annuities,
compensations, remunerations for technical services or otherwise,
emoluments, or other fixed or determinable annual, periodical or casual
gains, profits, and income, and capital gains: Provided, however, That
premiums shall not include reinsurance premiums: Provided, further,
That cinematographic film owners, lessors or distributors shall pay a
tax of fifteen per cent of their gross income
(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.
(c) Rates of tax on life insurance companies. — Life
insurance companies shall be taxable as provided in this subsection or
under subsections (a) or (b), as the case maybe, whichever will result
in a higher tax.
(1) Domestic life insurance companies. — A tax is
hereby imposed upon the net investment income received during each
taxable year from all sources, whether from within or outside the
Philippines, by every life insurance company organized in, or existing
under the laws of the Philippines, but not including a purely
cooperative company or association as defined in this Code, at the rate
of eight and three-fourths per cent upon that income. A domestic life
insurance company shall be exempt from income tax for a period of three
years from the date of issuance of its certificate of authority.
For purposes of this paragraph, the "net investment income" of a
domestic life insurance company is its gross investment income derived
from sources within and outside the Philippines, less its investment
expenses.
(2) Foreign life insurance companies. — A foreign
life insurance company engaged in the life insurance business in the
Philippines shall pay the rate of tax provided in paragraph (1) of this
subsection upon the net investment income received during each taxable
year from all sources within the Philippines.
For purposes of this paragraph, the "net investment income from all
sources within the Philippines" of a foreign life insurance company
engaged in the life insurance business in the Philippines is that
portion of its gross world investment income which bears the same ratio
to that income as their total Philippine reserve bears to their total
world reserve, less that portion of their total world investment
expenses which bears the same ratio to those expenses as their total
Philippine investment income bears to their total world investment
income.
For purposes of paragraphs (1) and (2) of this subsection, "gross
investment income" means income received during the taxable year from
rents, dividends, interest, and income from any other business than the
life insurance business conducted by the company, including net capital
gains as defined in Section 34 of this Code; "investment expenses"
means real estate expenses, depreciation (except to the extent that
property is used in or connected with its underwriting business),
interest paid or accrued within the taxable year on indebtedness
(except on indebtedness incurred to purchase in carry obligations the
interest upon which is wholly exempt from taxation under existing
laws), and such investment expenses paid or accrued during the taxable
year as are ordinary and necessary in the conduct of its investment or
in the conduct of its business other than the life insurance business.
(d) The provisions of existing special or general
laws to the contrary notwithstanding, all corporate taxpayers not
specifically exempt under Sections 24(c)(1) and 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 the
taxable net income as are imposed by this section upon associations or
corporations engaged in a similar business or industry.
"Sec. 29. Gross income. — (a) General definition. —
"Gross income" includes gains, profits, and income derived from
salaries, wages, or compensation for personal service of whatever kind
and in whatever form paid, or from professions, vocations, trades,
business, commerce, sales, or dealings in property, whether real or
personal, growing out of the ownership or use of or interest in such
property; also from interest, rents, dividends, securities, or the
transactions of any business carried on for gain or profit, and income
derived from any source whatever.
(b) Exclusions 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 devices. — The value of
property acquired by gift, bequests, devise, or descent; but the income
from such property shall be included in gross income. chanroblesvirtualawlibrary
(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) Miscellaneous items. — (A) Income received from
their investments in the Philippines in loans, stock, bonds, or other
domestic securities, or from interest on their deposits 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 exercise 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.
(c) Dividends received from domestic corporations. —
In the case of dividends received by a domestic or resident foreign
corporation from a domestic corporation liable to tax under this Code,
only twenty-five per cent of such dividends shall be returnable for
purposes of the tax imposed by Section twenty-four.
"Sec. 30. Deductions from gross income. — In
computing net income there shall be allowed as deductions —chanroblesvirtualawlibrary
(a) Expenses:cralaw:red
(1) In general. — All ordinary and necessary expenses
paid or incurred during the taxable year in carrying on any trade or
business, including a reasonable allowance for salaries or other
compensation for personal services actually rendered; travelling
expenses while away from home in the pursuit of a trade or business,
rentals or other payments required to be made as a condition to the
continued use or possession, for the purposes of the trade or business,
of property to which the taxpayer has not taken or is not taking title
or in which he has no equity.
In case of an individual, ordinary and necessary entertainment expenses
in an amount not in excess of one thousand pesos or five per centum of
gross income, whichever is lesser, shall be allowed as deduction.
Claims for such ordinary and necessary entertainment expenses in an
amount exceeding this allowance shall be duly supported by the
corresponding vouchers and/or receipts.
(2) Expenses allowable to citizens or resident
individuals. —chanroblesvirtualawlibrary
(A) Expenses incurred and paid in the Philippines
during the taxable year, not compensated for by insurance or otherwise,
for medical care of the taxpayer, his spouse, or his dependents as
defined in Section twenty-three(c).
1. Definition. — For purposes of this subsection, the
term "medical care expenses" means amounts paid for the diagnosis,
cure, mitigation, treatment, or prevention of diseases, or for the
purpose of affecting any structure or function of the body, but
excluding amounts paid for medicines.
2. Limitation. — The deduction allowed in this
sub-section shall not exceed five hundred pesos for the taxpayer and an
additional five hundred pesos for the spouse and each dependent as
defined in Section twenty-three (c), but not to exceed two thousand
pesos in the aggregate.
3. Proof of deductions. — In connection with claims
for medical care expense deduction, the taxpayer shall furnish the name
and address of each person to whom payment for medical care expenses
has been made during the taxable year, as well as the amount and the
date of the actual payment thereof in each case. Claims for deductions
must be substantiated by a receipt or a statement from the individual
to whom or entity to which payment for medical care was paid, showing
the nature of the service rendered, the name of the person for whom the
service is rendered, the amount paid therefor, and the date of actual
payment thereof, and such other information as the Commissioner may
deem necessary.
(B) Expenses incurred and paid in the Philippines
during the taxable year, for basic tuition fees of taxpayer's
dependents, as defined in Section twenty-three (c), who are studying in
high schools.
1. Definition. — For purposes of this subsection, the
term "basic tuition fees" means amounts paid for the privilege to
receive instruction in a high school but does not include matriculation
fee, and other miscellaneous fees as library and athletic fee,
laboratory fee, entrance fee, ROTC fee, student council fee, graduation
fee and similar fees.
2. Limitation. — The deduction allowed in this
subsection shall be two hundred fifty pesos for each of the taxpayer's
dependents, as defined in Section twenty-three (c), who are studying in
high schools but shall not exceed one thousand pesos in the aggregate.
3. Proof of deductions. — In connection with claims
for basic tuition fees deduction, the taxpayer shall furnish the name
and date of birth of each dependent child who incurred the expense
during the taxable year, as well as the amount and the date of the
actual payment thereof in each case. Claims for deductions must be
substantiated by a receipt or statement of the school to which payment
for basic tuition fees was made, showing the total school fees paid, as
well as a breakdown of such fees, and such other information as the
Commissioner may deem necessary.
(3) Expenses allowable to nonresident alien
individuals and foreign corporations. — In the case of a nonresident
alien individual or a foreign corporation, the expenses deductible are
the necessary expenses paid or incurred in carrying on any business or
trade conducted within the Philippines exclusively. chanroblesvirtualawlibrary
(b) Interest:cralaw:red
(1) In general. — The amount of interest paid within
the taxable year on indebtedness, except on indebtedness incurred or
continued to purchase or carry obligations the interest upon which is
exempt from taxation as income under this Title.
(2) Interest allowable to nonresident aliens. — In
the case of a nonresident alien individual or a foreign corporation,
the amount of interest allowable is the proportion of the amount of
interest paid within the year on indebtedness, except on indebtedness
incurred or continued to purchase or carry obligations, the interest
upon which is wholly exempt from taxation as income under this Title,
which the gross amount of income for the year derived from sources
within the Philippines bears to the gross amount of income derived from
all sources within and without the Philippines; but this deduction
shall be allowed only if such nonresident alien individual or foreign
corporation includes in the return required by this Title all the
information necessary for its calculation.
(c) Taxes:cralaw:red
(1) In general. — Taxes paid for accrued within the
taxable year, except -
(A) The income tax provided for under this Title;chanroblesvirtualawlibrary
(B) Income, war-profits, and excess-profits taxes
imposed by the authority of any foreign country; but this deduction
shall be allowed in the case of a taxpayer who does not signify in his
return his desire to have to any extent the benefits of paragraph (3)
of this subsection (relating to credit for taxes of foreign countries).
(C) Estate, inheritance and gift taxes; and
(D) Taxes assessed against local benefits of a kind
tending to increase the value of the property assessed.
(2) Limitations on deductions. -
(A) In the case of a nonresident alien individual and
a foreign corporation, the deduction for taxes provided in paragraph
(1) of this subsection (c) shall be allowed only if and to the extent
that they are connected with income from sources within the
Philippines; and
(B) In the case of a citizen of a foreign country
residing in the Philippines whose income from source within such
foreign country is not taxable under this Title, only that portion of
the taxes paid to such foreign country which corresponds to his net
income taxable under this Title shall be allowed as deduction.
(3) Credit against tax for taxes of foreign
countries. — If the taxpayer signifies in his return his desire to have
the benefits of this paragraph, the tax imposed by this Title shall be
credited with —chanroblesvirtualawlibrary
(A) Citizens and domestic corporation. — In the case
of a citizen of the Philippines and of a domestic corporation, the
amount of any income war-profits, and excess-profits taxes paid or
accrued during the taxable year of any foreign country;chanroblesvirtualawlibrary
(B) Alien resident of the Philippines. — In the case
of an alien resident of the Philippines, the amount of any such taxes
paid or accrued during the taxable year to any foreign country, if the
foreign country of which such alien resident is a citizen or subject,
in imposing such taxes, allows a similar credit to citizens of the
Philippines residing in such country; and
(C) Partnerships and estates. — In the case of any
such individual who is a member of a partnership or a beneficiary of an
estate or trust, his proportionate share of such taxes of the
partnership or the estate or trust paid or accrued during the taxable
year to a foreign country, if his distributive share of the income of
such partnership or trust is reported for taxation under this Title.
(D) Nonresident aliens and foreign corporations. —
Nonresident alien individuals and foreign corporations shall not be
allowed the credits against the tax for the taxes of foreign countries
allowed under this paragraph.
(4) Limitations on credit. — The amount of the credit
taken under this section shall be subject to each of the following
limitations:cralaw:red
(A) The amount of the credit in respect to the tax
paid or accrued to any country shall not exceed the same proportion of
the tax against which such credit is taken, which the taxpayer's net
income from sources within such country taxable under this Title bears
to his entire net income for the same taxable year; and
(B) The total amount of the credit shall not exceed
the same proportion of the tax against which such credit is taken,
which the taxpayer's net income from sources without the Philippines
taxable under this Title bears to his entire net income for the same
taxable year.
(5) Adjustments on payments of accrued taxes. — If
accrued taxes when paid differ from the amounts claimed as credits by
the taxpayer, or if any tax paid is refunded in whole or in part, the
taxpayer shall notify the Commissioner of Internal Revenue, who shall
redetermine the amount of the tax due upon such redetermination if any,
shall be paid by the taxpayer upon notice and demand by the
Commissioner, or the amount of tax overpaid, if any, shall be credited
or refunded to the taxpayer. In the case of such a tax accrued out not
paid, the Commissioner as a condition precedent to the allowance of
this credit may require the taxpayer to give a bond with sureties
satisfactory to and to be approved by the Commissioner in such sum as
he may require, conditioned upon the payment by the taxpayer of any
amount of tax found due upon any such redetermination. The bond herein
prescribed shall contain such further conditions as the Commissioner
may require.
(6) Year in which credit taken. — The credits
provided for in paragraph (3) of this subsection may, at the option of
the taxpayer and irrespective of the method of accounting employed in
keeping his books, be taken in the year in which the taxes of the
foreign country accrued, subject, however, to the conditions prescribed
in paragraph five of this subsection. If the taxpayer elects to take
such credits in the year in which the taxes of the foreign country
accrued, the credits for all subsequent years shall be taken upon the
same basis, and no portion of any such taxes shall be allowed as a
deduction in the same or any succeeding year.
(7) Proof of credits. — The credits provided in
paragraph (3) of this subsection shall be allowed only if the taxpayer
establishes to the satisfaction of the Commissioner (1) the total
amount of income derived from sources without the Philippines, (2) the
amount of income derived from each country, the tax paid or accrued to
which is claimed as a credit under said paragraph, such amount to be
determined under rules and regulations prescribed by the Secretary of
Finance, and (3) all other information necessary for the verification
and computation of such credits.
(8) Taxes of foreign subsidiary. — For the purposes
of this subsection a domestic corporation which owns a majority of the
voting stock of a foreign corporation from which it receives dividends
any taxable year shall be deemed to have paid the same proportion of
any income, war-profits, or excess-profits taxes paid by such foreign
corporation to any foreign country, upon or with respect to the
accumulated profits of such foreign corporation from which such
dividends were paid, which the amount of such dividends bears to the
amount of such accumulated profits: Provided, That the amount of tax
deemed to have been paid under this subsection shall in no case exceed
the same proportion of the tax against which credit is taken which the
amount of such dividends bears to the amount of the entire net income
of the domestic corporation in which such dividends are included. The
term "accumulated profits" when used in this subsection is referred to
a foreign corporation, means the amount of its gains, profits, or
income in excess of the income, war-profits, and excess-profits taxes
imposed upon or with respect to such profits or income; and the
Commissioner of Internal Revenue shall had full power to determine from
the accumulated profits of what year or years such dividends were paid;
treating dividends paid in the first sixty days of any year as having
been paid from the accumulated profits of the preceding year or years
(unless to his satisfaction shown otherwise), and in other respects
treating dividends as having been paid from the most recently
accumulated gains, profits, or earnings. In the case of a foreign
corporation, the income, war-profits, and excess-profits taxes of which
are determined on the basis of an accounting period of less than one
year, the word "year" as used in this subsection shall be construed to
mean such accounting period.
(9) Taxes of shareholder paid by corporation. — The
deduction for taxes allowed by subsection (c) shall be allowed to a
corporation in the case of taxes imposed upon a shareholder of the
corporation upon his interest as shareholder which are paid by the
corporation without reimbursement from the shareholder, but in such
cases no deduction shall be allowed the shareholder for the amount of
such taxes. chanroblesvirtualawlibrary
(d) Losses:cralaw:red
(1) By individuals. — In case of an individual,
losses actually sustained during the taxable year and not compensated
for by insurance or otherwise —chanroblesvirtualawlibrary
(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, shipwreck, or other
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 or inheritance tax purposes in the estate or inheritance tax
return.
(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 the insurance or otherwise.
(3) By nonresident aliens of foreign corporations. —
In the case of a nonresident alien individual or a foreign corporation,
the losses deductible are those actually sustained during the year
incurred in business or trade conducted within the Philippines, and
losses of property within the Philippines arising from fires, storms,
shipwrecks, 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.
(4) Capital losses. —chanroblesvirtualawlibrary
(A) Limitation. — Losses from sales or exchanges of
capital assets shall be allowed only to the extent provided in section
34.
(B) Securities becoming worthless. — If any
securities as defined in section 84 becoming worthless during the
taxable year and are capital assets, the loss resulting therefrom
shall, for the purposes of this Title, be considered as a loss from the
sale or exchange, on the last day of such taxable year, of capital
assets.
(5) Losses on wash sales of stock or securities. —
Losses on "wash sales" of stock or securities as provided in section 33.
(6) Wagering losses. — Losses from wagering
transactions shall be allowed only to the extent of gains from such
transactions.
(e) Bad debts:cralaw:red
(1) In general. — Debts due to the taxpayer actually
ascertained to be worthless and charged off within the taxable year.
(2) Bad debts deductible by nonresident aliens or
foreign corporations. — In the case of a nonresident alien individual
or a foreign corporation, bad debts are deductible if they have arisen
in the course of business or trade conducted within the Philippines and
actually ascertained to be worthless and charged off within one year.
(3) Securities becoming worthless. — If any
securities as defined in section eighty-four are ascertained to be
worthless and charged off within the taxable year and are capital
assets, the loss resulting therefrom shall, in the case of a taxpayer
other than a bank or trust company incorporated under the laws of the
Philippines a substantial part of whose business is the receipt of
deposits, for the purposes of this Title, be considered as a loss from
the sale or exchange, on the last day of such taxable year, of capital
assets.
(f) Depreciation:cralaw:red
(1) In general. — A reasonable allowance for
deterioration of property arising out of its use or employment in the
business or trade, or out of its not being used: Provided, That when
the allowance authorized under this subsection shall equal the capital
invested by the taxpayer or, in case of purchase made prior to March
first, nineteen hundred and thirteen, the fair market value as of that
date, no further allowance shall be made. In the case of property held
by one person for life with remainder to another person, the deduction
shall be computed as if the life tenant were the absolute owner of the
property and shall be allowed to the life tenant. In the case of
property held in trust, the allowable deduction shall be apportioned
between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the instrument creating the trust, or, in the
absence of such provisions, on the basis of the trust income allocable
to each.
(2) Depreciation deductible by nonresident aliens or
foreign corporations. — In the case of a nonresident alien individual
or a foreign corporation, a reasonable allowance for the deterioration
of property arising out of its use or employment or its non-use in the
business or trade shall be permitted only when such property is located
within the Philippines.
(g) Depletion of oil and gas wells and mines:cralaw:red
(1) In general. — Based on the following percentages,
there shall be a depletion allowance based on the gross income but in
no case to exceed thirty-five per centum of the net income or of the
net profit, whichever is lower for the calendar year 1973 and fiscal
year beginning July 1, 1973 and twenty-five per centum for the calendar
year 1974 and fiscal year beginning July 1, 1974: Provided, however,
That the percentage depletion allowance based on gross income shall be
the percentage of the gross income after am amount equal to any rents
or royalties paid or incurred by the taxpayer in respect to the
property has been deducted therefrom:cralaw:red
(A) Twenty-seven and one-half per cent for oil and
gas wells;chanroblesvirtualawlibrary
(B) Twenty-three per cent for mines of
(1) Chromite, copper, gold, iron, manganese, mercury,
nickel, and silver; and
(2) Anorthosite (to the extent that alumina and
aluminum compounds are extracted therefrom), antimony, asbestos,
bauxite, beryl, bismuth, brucite, cadmium, celestite, coal, cobalt,
columbium, corundum, flourspar, germanium, graphite, ilmenite,
kynanite, lead, lignite, lithium, marble, mercury, mica, molybdenum,
olivine, platinum and platinum group metals, quartz crystal (radio
grade), rutile, talc, tantalum, thorium, tin, titanium, tungsten,
uranium, vanadium, zinc, and zircon; and
(C) Fifteen per cent for mines of
(1) Ball, brick, china, saggor, and tile clay,
bentonite, mollusks shells (including clam shells and oysters shells),
peat, perlite, pumice, scoria, shale, sodium chloride, and
wallastonite. chanroblesvirtualawlibrary
(2) If from brine wells-bromine, calcium chloride and
magnesium chloride.
(3) All other minerals including, but not limited to,
aplite, barite, borax, calcium carbonates, refractory and fire clay,
diatomaceous earth, dolomite, feldspar, fullers, earth, garnet,
gilsonite, lepidolite, limestone, magnesite, magnesium carbonates,
phosphate rock, potash pyrophyllite, quartzite, slate, soapstone,
spodumene stone (used or sold for use by the mine owner or operator as
dimension stone or ornamental stone), thernardite, tripoli, trona, and
for purposes of this paragraph, the term "all other minerals" does not
include —chanroblesvirtualawlibrary
(a) Gravel, sand and stone in loose formation used in
construction purposes, soil, sod, dirt, turf, water, or mosses; and
(b) Minerals from a sea water, there, or similar
inexhaustible sources.
Beginning calendar year 1975 and fiscal year beginning July 1, 1975,
depletion allowance shall be in accordance with the following:cralaw:red
(1) In general. — (A) In the case of oil and gas
wells, a reasonable allowance for actual reduction in flow and
production to be ascertained not by the flush flow, but by the settled
production or regular flow; (B) In the case of mines, a reasonable
allowance for the depletion thereof not to exceed the market value in
the product thereof, which has been mined and sold during the year for
which the return and computation are made. The allowances shall be made
under rules and regulations to be prescribed by the Secretary of
Finance: Provided, That when the allowances shall equal the capital
invested, no further allowance shall be made.
(2) Depletion of oil and gas wells and mines
deductible by a nonresident alien individual or foreign corporation. —
In the case of a nonresident alien individual or a foreign corporation,
allowance for depletion of oil and gas wells or mines under paragraph
(1) shall be authorized only in respect to oil and gas wells or mines
located within the Philippines.
(h) Charitable and other contributions. —
Contributions or gifts actually paid or made within the taxable year to
or for the use of the Government of the Philippines or any political
subdivision thereof for exclusively public purposes, or to domestic
corporations or associations organized and operated exclusively for
religious, charitable, scientific, athletic, cultural, or educational
purposes or for the rehabilitation of veterans, or to societies for the
prevention of cruelty to children or animals, no part of the net income
of which inures to the benefit of any private stockholder or individual
to an amount not in excess of six per centum in the case of an
individual, and three per centum in the case of a corporation, of the
taxpayer's taxable net income as computed without the benefit of this
paragraph.
Notwithstanding the foregoing, the following donations shall be
deductible in full and shall not be included for purposes of computing
the maximum amount deductible under the preceding paragraph:cralaw:red
(1) Any donation made to any school, college or
university recognized by the Government either for general or special
purposes: Provided, That said donation is not for payment or granting
of a salary increase, bonus, or personal benefits to any or all of the
school officials, faculty, and personnel in case of a public school or
to any of its stockholders, school officials, faculty, and personnel in
case of private schools.
(2) Donations to the Artesian Well Fund as provided
in Republic Act numbered Nine hundred seventy-seven.
(3) Donations to the International Rice Research
Institute as provided in Republic Act Numbered Two thousand seven
hundred seven.
(4) Donations to the National Science Development
Board and its agencies and to public or recognized private educational
institutions, and scientific and research foundations, as provided in
Republic Act Numbered Three thousand five hundred eighty-nine.
(5) Donations to the Ramon Magsaysay Award
Foundation, as provided in Republic Act Numbered Three thousand six
hundred seventy-six.
(6) Donations to the University of the Philippines
and other state colleges and universities subject to the same
limitations in paragraph one above.
(7) Donations to the Philippine Rural Reconstruction
Movement.
(8) Donations to the Catholic Relief Services — NCWC,
and the Tools for Freedom Foundation as provided in Republic Act
Numbered Four thousand four hundred eighty-one. chanroblesvirtualawlibrary
(9) Donations to the Cultural Center of the
Philippines.
(10) Donations to the Philippine Amateur Athletic
Federation.
(11) Donations to the Trustees of the Press
Foundation of Asia, Inc.
(12) Donations to the National Commission on Culture.
(13) Donations to Humanitarian Science Foundation.
(14) Donations to Roxas Education and Welfare
Committee, Inc.
The provisions of existing special laws to the contrary
notwithstanding, all other contributions or donations shall be subject
to the limitations provided in the first paragraph of this subsection.
Such contributions or gifts shall be allowable as deductions only if
verified under rules and regulations prescribed by the Secretary of
Finance.
(i) Conditions under which a nonresident alien
individual may receive benefit of deduction. — A nonresident alien
individual shall receive the benefit of the deductions provided for in
this section only by filing or causing to be filed with the
Commissioner of Internal Revenue a true and accurate return of his
total income, received from all sources, corporate or otherwise, in the
Philippines, in the manner prescribed by this Code; and in case of his
failure to file such return the Commissioner of Internal Revenue shall
collect the tax on such income.
(j) Pension trust — General rule. — An employer
establishing or maintaining a pension trust to provide for the payment
of reasonable pensions to his employees shall be allowed as a deduction
(in addition to the contributions to such trusts during the taxable
year to cover the pension liability accruing during the year, allowed
as a deduction under subsection (a) of this section) a reasonable
amount transferred or paid into such trust during the taxable year in
excess of such contributions, but only if such amount (1) has not
theretofore been allowable as a deduction, and (2) is apportioned in
equal parts over a period of ten consecutive years beginning with the
year in which the transfer or payment is made.
(k) Optional standard deduction. — In lieu of the
deductions allowed under this section an individual, other than a
nonresident alien, may elect a standard deduction. Such optional
standard deduction shall be in the amount of five thousand pesos or in
an amount equal to ten per centum of his gross income, whichever is the
lesser. Unless the taxpayer signifies in his return his intention to
elect the optional standard deduction, he shall be considered having
availed himself of the deductions allowed in the preceding subsection.
The Secretary of Finance shall prescribe the manner of the election.
Such election when made in the return shall be irrevocable for the
taxable year for which the return is made.
(l) Standard deduction for working wife. — If the
gross income reported in the return filed by the taxpayer includes that
received by his wife, a standard deduction of ten per cent of the gross
income received by his wife but not exceeding P500 shall be allowed as
deduction from their combined gross income, regardless of whatever the
taxpayer uses the itemized deductions under subsection (a) to (j), or
the optional standard deduction under subsection (k), of this section.
"Sec. 45. Individual return. — (a) Requirements. —
(1) The following individuals are required to file an income tax
return, if they have a gross income of at least one thousand eight
hundred pesos 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.
(2) Regardless of amount, every nonresident alien
engaged in trade or business in the Philippines shall file an income
tax return.
(3) Notwithstanding the provisions of the preceding
paragraph, a Filipino citizen, whether residing in the Philippines or
abroad, or a resident alien, or a nonresident alien engaged in trade or
business in the Philippines, shall file an income tax return if he
falls under any of the following categories, regardless of whether he
derives any income or not for the taxable year if, during that taxable
year, he —chanroblesvirtualawlibrary
(A) Is an official or employee of the government or
has a contract with the Government of the Republic of the Philippines,
or any of its agencies or instrumentalities, including government-owned
or controlled corporations, regardless of the nature of his appointment
or duration of his employment;chanroblesvirtualawlibrary
(B) Is a professional as defined hereinbelow;chanroblesvirtualawlibrary
(C) Is a registered or beneficial owner, or mortgagee
of any real property;chanroblesvirtualawlibrary
(D) Is a registered or beneficial owner, or mortgagee
of any motor vehicle;chanroblesvirtualawlibrary
(E) Is a registered or beneficial owner, or mortgagee
of any share of stock or security of a corporation, or any interest in
a firm or partnership;chanroblesvirtualawlibrary
(F) Has traveled abroad, except children below
eighteen years of age;chanroblesvirtualawlibrary
(G) Has filed a certificate of candidacy for any
public office except barrio officials and municipal councilors; chanroblesvirtualawlibrary
(H) Is engaged in trade or commerce.
For purposes of this section, an individual is deemed a professional
if, during a taxable year, he passes any government examination for the
practice of a profession given by a board of examiners or by the
Supreme Court, or remains a registered member of any profession covered
by such examination, regardless of whether or not, during that taxable
year he actually practices his profession.
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 nonresident aliens engaged in trade or business in the Philippines
which shall contain only such incomes derived from sources within the
Philippines.
(b) Where to file. — The return shall be filed with
the Commissioner, Regional Director, Revenue District Officer,
Collection Agent, duly authorized treasurer of the municipality, or
authorized agent banks in which such person has his legal residence or
place of business in the Philippines, or if there is no legal residence
or place of business in the Philippines, then with the Commissioner in
Manila.
(c) When to file. — The return shall be filed on or
before the fifteenth day of April of each year, covering income of the
preceding calendar year, or within the extension which may be granted
by the Commissioner of Internal Revenue as herein set forth.
(d) Husband and wife. — In the case of married
persons whether citizens, resident or nonresident aliens, only one
consolidated return for the taxable year shall be filed by either
spouse to cover the income of both spouses; but where it is
impracticable for the spouses to file one consolidated return, each
spouse may file his separate return of income, but the returns so filed
shall be consolidated for the purpose of the tax prescribed under this
Title.
(e) Return of parent to include income of children. —
The income of unmarried minors derived from property received from a
living parent shall be included in the return of the parent, except (1)
when the gift tax has been paid on such property, or (2) when the
transfer of such property is exempt from the gift tax.
(f) Persons under disability. — If the taxpayer is
unable to make his own return, the return may be made by his duly
authorized agent or representative or by the guardian or other person
charged with the care of his person or property, the principal and his
representative or guardian assuming the responsibility of making the
return and incurring penalties provided for erroneous, false, or
fraudulent returns.
(g) Signature presumed correct. — The fact that an
individual's name is signed to a filed return shall be prima facie
evidence for all purposes that the return was actually signed by him.
"Sec. 46. Corporation returns. — (a) Requirements. —
Every corporation, subject to the tax herein imposed, except foreign
corporations not engaged in trade or business in the Philippines shall
render, in duplicate, a true and accurate return of its annual net
income in the manner and form prescribed by the Commissioner with the
approval of the Secretary of Finance, and containing such facts, data,
and information as are appropriate and in the opinion of the
Commissioner necessary to determine the correctness of the net income
returned and to carry out the provisions of this Title. The return
shall be filed by the president, vice-president, or other principal
officer, and shall be sworn to by such officer and by the treasurer or
assistance treasurer.
(b) When to file. — The return shall be filed on or
before the fifteenth day of April of each year for the preceding
calendar year, or if the corporation has designated a fiscal year, on
or before the fifteenth of the fourth month following the close of such
fiscal year.
(c) Where to file. — The return shall be filed with
the Commissioner, Regional Director, Revenue District Officer,
Collection Agent, duly authorized treasurer of the municipality, or
authorized agent banks in which is located the principal office of the
corporation where its books of accounts and other data from which the
return is prepared are kept, or in the case of foreign corporation
which has no office of any kind or agency in the Philippines, then to
the Commissioner in Manila. All such return shall as received be
transmitted forthwith by the officer receiving them to the Commissioner.
(d) Fiscal year of corporations. — Every corporation
subject to tax, including duly registered general co partnerships, may
designate the last day of any month in the year as the day of the
closing of its fiscal year, and shall be entitled to have the tax
payable by it computed upon the basis of the net income ascertained as
herein provided for the year ending on the day so designated in the
year preceding the date of assessment instead of upon the basis of the
net income for the calendar year preceding the date of assessment; and
it shall give notice of the day it has thus designated a the closing of
its fiscal year to the Commissioner of Internal Revenue at any time not
less than thirty days prior to the fifteenth day of April of the year
in which its return would be filed if made upon the basis of the
calendar year. chanroblesvirtualawlibrary
"Sec. 51. Payment and assessment of income tax. — (a)
Payment of tax. — (1) In general. — The total amount of tax imposed by
this Title shall be paid at the time the return is filed. Such tax
shall be paid by the person subject thereto, and in the case of a
corporation by the President, vice-president or other responsible
officer thereof.
If the return is filed after the time prescribed by law (including
cases in which an extension of time for filing the return has been
granted under section forty-seven of this Code), there shall be paid at
the time of such filing the tax or installment which would have been
payable on or before such time if the return had been filed within the
time prescribed by law, and the remaining installment shall be paid at
the time at which, and in the amount in which, it would have been
payable if the return had been so filed, subject to the payment of
interest at fourteen per centum per annum from the original due date.
(2) Installment payments. — When the tax due is in
excess of one thousand pesos, the taxpayer may elect to pay the tax in
two equal installments, in which case, the first installment shall be
paid at the time the return is filed and the second installment, on or
before the fifteenth day of July following the close of the calendar
year, or on or before the fifteenth day of the seventh month following
the close of the fiscal year, as the case may be. If any installment is
noted on or before the date fixed for its payment, the whole amount of
the tax unpaid becomes due and payable together with the delinquency
penalties.
(b) Assessment and payment of deficiency tax. — After
the return is filed, the Commissioner of Internal Revenue shall examine
it and assess the correct amount of the tax. The tax or deficiency in
tax so discovered shall be paid upon notice and demand from the
Commissioner of Internal Revenue.
In case a person fails to make and file a return or list at the time
prescribed by law, or makes, wilfully or otherwise a false or
fraudulent return or list, the Commissioner of Internal Revenue shall
make the return from his own knowledge and from such information as he
can obtain through testimony or otherwise. In any such case, the
Commissioner of Internal Revenue may make a return or amend any return
and any return so made are amended shall be prima facie good and
sufficient for all legal purposes, unless the taxpayer can prove the
contrary under proper proceedings to be determined by the Commissioner
of Internal Revenue.
(c) Definition of deficiency. — As used in this
Chapter in respect of a tax imposed by this Title, the term
"deficiency" means:cralaw:red
(1) The amount by which the tax imposed by this Title
exceeds the amount shown as the tax by the taxpayer upon his return;
but the amount so shown on the return shall first be increased by the
amounts previously assessed (or collected without assessment) as a
deficiency, and decreased by the amount previously abated, credited,
returned, or otherwise repaid in respect of such tax; or
(2) If no amount is shown as the tax by the taxpayer
upon his return, or if no return is made by the taxpayer, then the
amount by which the tax exceeds the amount previously assessed (or
collected without assessment) as deficiency; but such amounts
previously assessed or collected without assessment, shall first be
decreased by the amounts previously abated, credited, returned, or
otherwise repaid in respect of such tax.
(d) Interest on deficiency. — Interest upon the
amount determined as a deficiency shall be assessed at the same time as
the deficiency and shall be paid upon notice and demand from the
Commissioner and shall be collected as a part of the tax, at the rate
of fourteen per centum per annum from the date prescribed for the
payment of the tax (or, if the tax is paid in installments, from the
date prescribed for the payment of the first installment) to the date
the deficiency is assessed: Provided, That the maximum amount that may
be collected as interest on deficiency shall in no case exceed the
amount corresponding to a period for three years, the present
provisions regarding prescription to the contrary
notwithstanding. chanroblesvirtualawlibrary
(e) Additions to the tax in case of nonpayment. — (1)
Tax shown on the return. — Where the amount determined by the taxpayer
as the tax imposed by this Title or any installment thereof, or any
part of such amount or installment, is not paid on or before the date
prescribed for its payment, there shall be collected as a part of the
tax, interest upon such unpaid amount at the rate of fourteen per
centum per annum from the date prescribed for its payment until it is
paid: Provided, That the maximum amount that may be collected as
interest on delinquency shall in no case exceed the amount
corresponding to a period of three years, the present provisions
regarding prescription to the contrary notwithstanding.
(2) Deficiency. — Where a deficiency, or any interest
assessed in connection therewith under paragraph (d) of this section,
or any addition to the taxes provided for in section seventy-two of
this Code is not paid in full within thirty days from the date of
notice and demand from the Commissioner, there shall be collected upon
the unpaid amount as part of the tax, interest at the rate of fourteen
per centum per annum from the date of such notice and demand until it
is paid; Provided, That the maximum amount that may be collected as
interest on deficiency shall in no case exceed the amount corresponding
to a period of three years, the present provisions regarding
prescription to the contrary notwithstanding.
(3) Surcharge. — If any amount of tax included in the
notice and demand from the Commissioner of Internal Revenue is not paid
in full within thirty days after such notice and demand, there shall be
collected in addition to the interest prescribed herein and in
paragraph (d) above and as part of the tax a surcharge of five per
centum of the amount of tax unpaid.
"Sec. 53. Withholding tax at source. — (a) Tax-free
covenant bonds. — (1) Requirement of withholding. — In any case where
bonds, mortgages, deeds of trust, or other similar obligations of
domestic or resident foreign corporations, contain a contract or
proviso by which the obligor agrees to pay any portion of the tax
imposed in this Title upon the obligee or to reimburse the obligee for
any portion of the tax or to pay the interest without deduction of any
tax which the obligor may be required or permitted to pay thereon or to
retain therefrom under any law of the Philippines, or of any state or
country, the obligor shall deduct and withhold a tax equal to 30 per
cent of the interest or other payments upon those bonds, mortgages,
deeds of trust, or other obligations, whether the interest or other
payments are payable annually or at shorter or longer periods, and
whether the bonds, securities, or obligations had been or will be
issued or marketed, and the interest or other payment thereon paid,
within or outside the Philippines, if the interest or other payment is
payable to a nonresident alien or to a citizen or resident of the
Philippines.
(2) Benefit of exemption against net income. — The
deductions and withholding required in subsection (a) (1) of this
section shall not be required in the case of a citizen, resident alien,
or nonresident alien engaged in trade or business in the Philippines,
entitled to receive the interest or other payment, if that individual
shall file with the withholding agent, on or before February first, a
signed notice in writing claiming the benefit of the exemption provided
in Section 23 of this Title.
(b) Nonresident aliens and foreign corporations. —
(1) Nonresident aliens. — Every individual, corporation, partnership,
or association, in whatever capacity acting, including a lessee or
mortgagor of real or personal property, trustee acting in any trust
capacity, executor, administrator, receiver, conservator, fiduciary,
employer, and every officer or employee of the Government of the
Republic of the Philippines having the control, receipt, custody,
disposal, or payment of interest, dividends, rents, royalties,
salaries, wages, premiums, annuities, compensation, remunerations,
emoluments, or other fixed or determinable annual, periodical, or
casual gains, profits, and income, and capital gains, of any
nonresident alien not engaged in trade or business within the
Philippines, shall (except in the case provided in sub-section (a) (1)
of this section) deduct and withhold from the annual, periodical, or
casual gains, profits, and income, and capital gains, a tax equal to 30
per cent thereof. This deduction and withholding shall not be required
in the case of dividends paid by a foreign corporation unless (1) the
corporation is engaged in trade or business within the Philippines, and
(2) more than 85 per cent of the gross income of the corporation for
the three-year period ending with the close of its taxable year
preceding the declaration of the dividends (or for such part of the
period as the corporation has been in existence) was derived from
sources within the Philippines as determined under the provisions of
Section 37. The Commissioner may authorize the tax to be deducted and
withheld from the interest or other income upon any security or
obligation the owners of which are not known to the withholding agent.
(2) Nonresident foreign corporations. — In the case
of foreign corporations subject to tax under this Title, not engaged in
trade or business within the Philippines, there shall be deducted and
withheld at the source in the same manner and upon the same items as is
provided in subsection (b) (1) of this section, as well as on
remunerations for technical services or otherwise, a tax equal to 35
per cent thereof. This tax shall be returned and paid in the same
manner and subject to the same conditions as provided in Section 54.
This deduction and withholding shall not be required in the case of
reinsurance premiums ceded to foreign insurance corporations not
engaged in trade or business in the Philippines.
(c) Other cases of withholding tax at source. — The
President of the Republic of the Philippines may upon the
recommendation of the Secretary of Finance require also the withholding
of a tax on the same items of income payable to persons (natural or
juridical) residing in the Philippines by the same persons mentioned in
paragraph (b)(1) of this section at the rate of ten percent thereof
which shall be credited against the income tax liability of the
taxpayer for the taxable year.
"Sec. 72. Surcharges for failure to render returns
and for rendering false and fraudulent returns. — In case of willful
neglect to file the return or list required under this Title within the
time prescribed by law, or in case a false or fraudulent return or list
is wilfully made, the Commissioner of Internal Revenue shall add 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 of such tax or deficiency
tax. In case of any failure to make and file a return or list within
the time prescribed by law or by the Commissioner or other internal
revenue officer, not due to willful neglect, the Commissioner of
Internal Revenue shall add to the tax twenty-five per centum of its
amount except that, when a return is voluntarily and without notice
from the Commissioner or other officer filed after such time, and it is
shown that the failure to file it was due to a reasonable cause, no
such addition shall be made to the tax. The amount so added to any tax
shall be collected at the same time in the same manner and as part of
the tax unless the tax has been paid before the discovery of the
neglect, falsity, or fraud, in which case the amount so added shall be
collected in the same manner as the tax.
Section 3. Articles 2 and 8 of Supplement A of Title
II of the same Code, are hereby amended to read as follows:cralaw:red
"SUPPLEMENT A — WITHHOLDING ON WAGES
"Art. 2. Income tax collected at source. — (a)
Requirement of withholding. — Every employer making payment of wages
shall deduct and withhold upon such wages a tax determined in
accordance with a withholding table to be prepared by the Secretary of
Finance.
(b) Tax paid by recipient. — If the employer, in
violation of the provisions of this supplement, fails to deduct and
withhold the tax as required under this supplement, and thereafter the
tax against which such tax may be credited is paid, the tax so required
to be deducted and withheld shall not be collected from the employer;
but this sub article shall in no case relieve the employer from
liability for any penalties or additions to the tax otherwise
applicable in respect of such failure to deduct and withhold.
(c) Nondeductibility of tax in computing net income.
— The tax deducted and withheld under this article shall not be allowed
as a deduction either to the employer or to the recipient of the income
in computing net income under this Title.
(d) Refunds or credits. — (1) Employer. — When there
has been an overpayment of tax under this article, refund or credit
shall be made to the employer only to the extent that the amount of
such overpayment was not deducted and withheld hereunder by the
employer.
(2) Employees. — The amount deducted and withheld
under this supplement during any calendar year shall be allowed as a
credit to the recipient of such income against the tax imposed under
the main provisions of this Title. Refunds and credits in cases of
excessive withholding shall be granted under rules and regulations
promulgated by the Secretary of Finance.
Any excess of taxes withheld over the tax due from the taxpayer shall
be refunded or credited within three months from the date of filing of
the income tax return of the taxpayer or from the fifteenth day of
April, whichever is later. Refunds or credits made after such time
shall earn interest at the rate of six per centum per annum starting
after the lapse of the three-month period to the date the refund or
credit is made.
Refunds shall be made upon warrants drawn by the Commissioner or by his
duly authorized representative without the necessity of
countersignature by the Auditor General or the latter's duly authorized
representative as an exception to the requirement prescribed by Section
621 of the Revised Administrative Code.
(e) Personal exemptions. — (1) In general. — Unless
otherwise provided in this supplement, the personal and additional
exemptions applicable under this supplement shall be determined in
accordance with the main provisions of this Title.
(2) Exemption certificates. — (A) When to be filed. —
On or before the date of the commencement of employment with an
employer, or within ten days, from the effectivity of this Act in the
case of persons already employed, the employee shall furnish the
employer with a signed withholding exemption certificate relating to
the personal and additional exemptions to which he is entitled.
(B) Change of status. — In case of change of status
of an employee as a result of which he would be entitled to a lesser
amount of exemption, the employee shall, within ten days from such
change, file with the employer a new withholding exemption certificate
reflecting the change. If the change would entitle the employee to a
greater amount of exemption, he may furnish the employer with a new
withholding exemption certificate reflecting such change.
(C) Use of certificates. — The certificates filed
hereunder shall be used by the employer in the determination of the
amount of taxes to be withheld.
(D) Failure to furnish certificate. — Where an
employee, in violation of this supplement, either fails or refuses to
file a withholding exemption certificate, the employer shall withhold
the taxes prescribed under schedule for zero exemption of the
withholding tax table in sub article (a).
(f) Withholding on basis of average wages. — The
Commissioner of Internal Revenue may, under regulations promulgated by
the Secretary of Finance, authorize employers (1) to estimate the wages
which will be paid to an employee in any quarter of the calendar year,
(2) to determine the amount to be deducted and withheld upon each
payment of wages to such employee during such quarter as if the
appropriate average of the wages so estimated constituted the actual
wages paid, and (3) to deduct and withhold upon any payment of wages to
such employee during such quarter such amount as may be required to be
deducted and withheld during such quarter without regard to this sub
article.
(g) Husband and wife. — When a husband and wife each
are recipients of wages, whether from the same or from different
employer, taxes to be withheld shall be determined on the following
bases:cralaw:red
(1) The husband shall be deemed the head of the
family and proper claimant of the additional exemption in respect to
any dependent children;chanroblesvirtualawlibrary
(2) Taxes shall be withheld from the wages of the
wife in accordance with the schedule for zero exemption of the
withholding tax table in sub article (a).
(h) Nonresident aliens. — Wages paid to nonresident
alien individuals shall not be subject to the provisions of this
supplement and shall be governed by the provisions of section
fifty-three of this Title.
Art. 8. Penalties — (a) Penalties for failure to
file, and for filing fraudulent returns or statements. — Any person who
wilfully renders or furnishes a false or fraudulent return or statement
required under the provisions of articles four, five and six or under
regulations promulgated by the Secretary of Finance, or who wilfully
fails to render or furnish a statement as required in this supplement,
or fails to remit to the Commissioner the amount withheld by such
agent, shall upon conviction, for each such act or commission, be fined
not less than one thousand pesos nor more than two thousand pesos and
imprisoned for not more than one year.
(b) Penalties in respect of withholding exemption
certificates. — Any individual required to supply information who
wilfully supplies false or fraudulent information, or who wilfully
fails to supply information thereunder which would require an increase
in the tax to be withheld under article two, shall, in lieu of any
penalty otherwise provided upon conviction be fined not more than one
thousand pesos or imprisoned for not more than one year, or both.
The same penalty shall apply to an employer who wilfully accepts as a
fact or as true information which would reduce the tax to be withheld
under article two hereof.
(c) Penalties on corporate officers. — The penalties
prescribed in this article shall, in the case of an employer which is a
corporation, partnership, or association, be imposed on the president,
manager, treasurer, or other persons responsible for the particular act
or commission.
Section 4. Certain sections of Title III of the same
Code, are hereby amended to read as follows:cralaw:red
"TITLE III. — ESTATE AND DONOR'S TAXES
"CHAPTER I. — Estate Tax
"Sec. 85. Rates of estate tax. — There shall be
levied, assessed collected, and paid upon the transfer of the net
estate as determined in accordance with sections 88 and 89, of every
decedent, whether resident or nonresident of the Philippines, a tax
based on the value of such net estate, as computed in accordance with
the following schedule:cralaw:red
IF THE NET ESTATE IS THE TAX SHALL BE
Over But Not
Over Plus Of
Excess
Over
P10,000 Exempt
P10,000 50,000
3% P10,000
50,000 75,000
1,200 4% 50,000
75,000 100,000
2,200 5% 75,000
100,000 150,000
3,450 10% 100,000
150,000 200,000
8,450 15% 150,000
200,000 300,000
15,950 20% 200,000
300,000 400,000
35,950 25% 300,000
400,000 500,000
60,950 30% 400,000
500,000 625,000
90,950 35% 500,000
625,000 750,000
134,700 40% 625,000
750,000 875,000
184,700 45% 750,000
875,000
1,000,000 240,950
50% 875,000
1,000,000
2,000,000 303,450
53% 1,000,000
2,000,000
3,000,000 833,450
56% 2,000,000
3,000,000
1,393,450 60% 3,000,000
"Sec. 86. Rates of inheritance tax. — This section is
hereby repealed.
"Sec. 87. Rule of taxation when beneficiaries belong
to different classes. — This section is hereby repealed.
"Sec. 89. Net estate. — For purpose of the taxes
imposed in this Chapter, the value of the net estate shall be
determined:cralaw:red
(a) In the case of a citizen or resident of the
Philippines, by deducting from the value of the gross estate —chanroblesvirtualawlibrary
(1) Expenses, losses, indebtedness, and taxes. — Such
amounts —chanroblesvirtualawlibrary
(A) For funeral expenses in an amount equal to five
per centum of the gross estate but in no case to exceed P50,000.00;chanroblesvirtualawlibrary
(B) For judicial expenses of the testamentary or
intestate proceedings;chanroblesvirtualawlibrary
(C) For claims against the estate;chanroblesvirtualawlibrary
(D) For claims of the deceased against insolvent
persons where the value of decedent's interest therein is included in
the value of the gross estate; and
(E) For unpaid mortgages upon, or any indebtedness in
respect to, property where the value of decedent's interest therein,
undiminished by such mortgage or indebtedness, is included in the value
of the gross estate, but not including any income taxes upon income
received after the death of the decedent, or property taxes not accrued
before his death, or any estate or inheritance taxes. The deduction
herein allowed in the case of claims against the estate, unpaid
mortgages, or any indebtedness shall, when founded a promise or
agreement, be limited to the extent that they were contracted bona fide
and for an adequate and full consideration in money or money's worth.
There shall also be deducted losses incurred during the settlement of
the estate arising from fires, storms, shipwreck, or other casualties,
or from robbery, theft, or embezzlement, when such losses are not
compensated for by insurance or otherwise, and if at the time of the
filing of the return such losses have not been claimed as a deduction
for income tax purposes in an income tax return, and provided that such
losses were incurred not later than the last day for the payment of the
estate tax as prescribed in subsection (a) of section ninety-five.
(2) Property previously taxed. — An amount equal to
the value specified below of any property forming a part of the gross
estate situated in the Philippines of any person who died within five
years prior to the death of the decedent, or transferred to the
decedent by gift within five years prior to his death, where such
property can be identified as having been received by the decedent from
donor by gift, or from such prior decedent by gift, bequest, devise, or
inheritance, or which can be identified as having been acquired in
exchange for property so received.
One hundred per centum of the value if the prior decedent died within
one year prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;chanroblesvirtualawlibrary
Eighty per centum of the value if the prior decedent died more than one
year but not more than two years prior to the death of the decedent, or
if the property was transferred to him by gift within the same period
prior to his death;chanroblesvirtualawlibrary
Sixty per centum of the value if the prior decedent died more than two
years but not more than three years prior to the death of the decedent,
or if the property was transferred to him by gift within the same
period prior to his death;chanroblesvirtualawlibrary
Forty per centum of the value if the prior decedent died more than
three years but not more than four years prior to the death of the
decedent, or if the property was transferred to him by gift within the
same period to his death; and
Twenty per centum of the value if the prior decedent died more than
four years but not more than five years prior to the death of the
decedent, or if the property was transferred to him by gift within the
same period prior to his death.
The deduction shall be allowed only where a gift tax, or estate tax
imposed under this Title were finally determined and paid by or on
behalf of such donor, or the estate of such prior decedent, as the case
may be, and only in the amount finally determined as the value of such
property in determining the value of the gift, or, the gross estate of
such prior decedent, and only to the extent that the value of such
property is included in the decedent's gross estate, and only if in
determining the value of the net estate of the prior decedent no
deduction was allowable under paragraph (2) in respect of the property
or properties given in exchange therefor. Where a deduction was allowed
of any mortgage or other lien in determining the gift tax, or the
estate tax of the prior decedent, which were paid in whole or in part
prior to the decedent's death, then the deduction allowable under said
paragraph shall be reduced by the amount so paid. Such deduction
allowable shall be reduced by an amount which bears the same ratio to
the amounts allowed as deductions under paragraphs (1), (3), and (4) of
this subsection as the amount otherwise deductible under said paragraph
(2) bears to the value of the decedent's estate. Where the property
referred to consists of two or more items the aggregate value of such
items shall be used for the purpose of computing the deduction.
(3) Transfers for public purposes. — The amount of
all bequests, legacies, or transfers to or for the use of the
Government of the Republic of the Philippines, or any political
subdivision thereof, for exclusively public purposes.
(b) Deductions allowed to non-resident estates. — In
the case of a nonresident not a citizen of the Philippines, by
deducting from the value of that part of his gross estate which at the
time of his death is situated in the Philippines —chanroblesvirtualawlibrary
(1) Expenses, losses, indebtedness, and taxes. — That
proportion of the deductions specified in paragraph (1) of subsection
(a) of this section which the value of such part bears to the value of
his entire gross estate wherever situated;chanroblesvirtualawlibrary
(2) Property previously taxed. — An amount equal to
the value specified below of any property forming a part of the gross
estate situated in the Philippines of any person who died within five
years prior to the death of the decedent, or transferred to the
decedent by gift within five years prior to his death, where such
property can be identified as having been received by the decedent from
the donor by gift, or from such prior decedent by gift, bequest,
devise, or inheritance, or which can be identified as having been
acquired in exchange for property so received: chanroblesvirtualawlibrary
One hundred per centum of the value if the prior decedent died within
one year prior to the death of the decedent, or if the property was
transferred to him by gift with the same period prior to his death;chanroblesvirtualawlibrary
Eighty per centum of the value if the prior decedent died more than one
year but not more than two years prior to the death of the decedent, or
if the property was transferred to him by gift within the same period
prior to his death;chanroblesvirtualawlibrary
Sixty per centum of the value if the prior decedent died more than two
years but not more than three years prior to the death of the decedent,
or if the property was transferred to him by gift within the same
period prior to his death;chanroblesvirtualawlibrary
Forty per centum of the value if the prior decedent died more than
three years but not more than four years prior to the death of the
decedent, or if the property was transferred to him by gift within the
same period prior to his death; and
Twenty per centum of the value if the prior decedent died more than
four years but not more than five years prior to the death of the
decedent, or if the property was transferred to him by gift within the
same period prior to his death.
These deductions shall be allowed only where a gift tax, or estate tax
imposed under this Title were finally determined and paid by or on
behalf of such donor, or the estate of such prior decedent, as the case
may be, and only in the amount finally determined as the value of such
property in determining the value of the gift, or the gross estate of
such prior decedent, and only to the extent that the value of such
property is included in the part of the decedent's gross estate which
at the time of his death is situated in the Philippines, and only if in
determining the value of the net estate of the prior decedent no
deduction was allowable under paragraph (2) of subsection (b) of this
section in respect of the property or properties given in exchange
therefor. Where a deduction was allowed of any mortgage or other lien
in determining the gift tax, or the estate tax of the prior decedent,
which were paid in whole or in part prior to the decedent's death, than
the deduction allowable under said paragraph shall be reduced by the
amount so paid. Such deduction allowable shall be reduced by an amount
which bears the same ratio to the amounts allowed as deductions under
paragraphs (1) and (3) of this subsection as the amount otherwise
deducted under paragraph (2) bears to the value of that part of the
decedent's gross estate which at the time of his death is situated in
the Philippines. Where the property referred to consists of two or more
items the aggregate value of such items shall be used for the purpose
of computing the deduction.
(3) Transfers for public use. — The amount of all
bequests, legacies, devises, or transfers to or for the use of the
Government of the Republic of the Philippines, or any political
subdivision thereof, for exclusively public purposes.
(c) Share in the conjugal property. — The net share
of the surviving spouse in the conjugal partnership property as
diminished by the obligations properly chargeable to such property
shall, for the purpose of this section, be deducted from the net estate
of the decedent.
(d) Miscellaneous provisions. — (1) No deduction
shall be allowed in the case of a nonresident not a citizen of the
Philippines unless the executor, administrator, or anyone of the heirs,
as the case may be, includes in the return required to be filed under
section 93 of the value at the time of his death of that part of the
gross estate of the nonresident not situated in the Philippines.
(2) For the purpose of this Chapter, stock in a
domestic corporation owned and held by a nonresident not a citizen of
the Philippines shall be deemed property within the Philippines, and
any property of which the decedent has made a transfer by trust or
otherwise, within the meaning of subsection (b) or (c) of section 88 of
this Chapter; shall be deemed to be situated in the Philippines if so
situated either at the time of the transfer or at the time of the
decedent's death.
"Sec. 91. Determination of value of usufructs,
annuities, and other property. — To determine the value of the right of
usufruct, use of habitation, as well as that of annuity, there shall be
taken into account the probable life of the beneficiary in accordance
with the American Tropical Experience Table calculated at eight per
centum annual interest.
The estate shall be appraised at its fair market value as of the time
of death, or as of six months thereafter, at the election of the
executor or administrator. However, for the purpose of determining the
value of real property, the value as of the time of death, or, at the
election of the executor or administrator, as of six months after
death, as shown in the schedule of values fixed by the Department of
Finance, shall be considered as the fair market value, and unless the
contrary is shown by the taxpayer, the schedule shall be binding upon
all concerned for the purposes of computing any internal revenue tax
based on the value of real property.
For this purpose, a real property valuation committee shall be created
in the Department of Finance which shall submit to the Secretary of
Finance a schedule of percentage adjustment of the assessed value of
real property in each municipality and city after due notice and
hearing. This schedule shall be revised every three years.
The Real Property Valuation Committee shall be composed of a chairman
and four members, two of whom shall come from the private sector who
shall be appointed by the Secretary of Finance. The representatives
from the private sector shall hold office for six years. One
representative shall be recommended by the Board of Realtors of the
Philippines and the other representative shall be recommended by the
registered Homeowners Association of the Philippines, but in the
absence of either or both associations, the Secretary of Finance shall
appoint any qualified real property owner or owners.
The Secretary of Finance shall promulgate uniform rules and regulations
for the guidance of the real property valuation committee in the
discharge of their functions under this section. The presence of at
least three members of the committee shall constitute a quorum
sufficient to transact business. The members of the committee
representing the private sectors shall be entitled to a per diem of
thirty pesos for each day of session actually attended, plus actual and
ordinary traveling expenses from and to his usual place of residence,
to be paid from the appropriations of the Department of Finance. The
other members of the committee who are government officials shall serve
without additional compensation. chanroblesvirtualawlibrary
"Sec. 92. Notice of death to be filed. — In all cases
of transfers subject to tax, or where, though exempt from tax, the
gross value of the estate exceeds three thousand pesos, the executor,
administrator, or any of the legal heirs, as the case may be, within
two months after the decedent's death, or within a like period after
qualifying as such executor or administrator, shall give a written
notice thereof to the Commissioner of Internal Revenue.
"Sec. 93. Returns. — (a) Requirements. — In all cases
of transfers subject to tax, or where, though exempt from tax, the
gross value of the estate exceeds three thousand pesos, the executor,
or administrator, or any of the legal heirs, as the case may be, shall
file a return under oath in duplicate, setting forth (1) the value of
the gross estate of the decedent at the time of his death, or, in case
of a nonresident not a citizen of the Philippines, of that part of his
gross estate situated in the Philippines; (2) the deductions allowed
from gross estate in determining net estate as defined in section
eighty-nine; (3) such part of such information as may at the time be
ascertainable and such supplemental data as may be necessary to
establish the correct taxes: Provided, however, That estate returns
showing a gross value of fifty thousand pesos or more shall be
accompanied with a statement of: (1) itemized assets of the decedent
with their corresponding gross value at the time of his death, or, in
case of a nonresident not a citizen of the Philippines; (2) itemized
deductions from gross estate allowed in section eighty-nine; and (3)
the amount of tax due whether paid or still due and outstanding duly
certified to by certified public accountants.
(b) Time for filing. — For purposes of determining
the estate tax provided for in section eighty-five, the return required
under the preceding subsection (a) shall be filed within six months
after the decedent's death; but if judicial testamentary or intestate
proceedings shall be instituted for the settlement of the decedent's
estate prior to the expiration of said period, the return must be filed
within twelve months after the decedent's death.
A certified copy of the schedule of partition and the order of the
court approving the same shall be furnished the Commissioner of
Internal Revenue by the clerk of court within thirty days after the
promulgation of such order.
(c) Extension of time. — The Commissioner of Internal
Revenue shall have authority to grant, in meritorious cases, a
reasonable extension not exceeding thirty days for filing the return.
(d) Place for filing. — The return required under
subsection (a) shall be filed with the Commissioner of Internal
Revenue, or with the Regional Director, revenue district officer, or
collection agent of the city or municipality in which the decedent was
domiciled at the time of his death.
"Sec. 95. Payment of tax. —chanroblesvirtualawlibrary
(a) Time of payment. —chanroblesvirtualawlibrary
(1) General Rule. — The estate tax imposed by section
85 shall be due and payable within nine months after the decedent's
death, and shall be paid by the executor, administrator, or the heirs
to the Commissioner of Internal Revenue or to the regional director,
revenue district officer or collection agent of the city or
municipality in which the decedent was domiciled at the time of his
death.
(2) Exceptions. — In case judicial testamentary or
intestate proceedings shall be instituted for the settlement of the
decedent's estate prior to the expiration of six months after his
death, the estate tax shall be due and payable within twenty-one months
after the decedent death.
(b) Extension of time. — When the Commissioner of
Internal Revenue finds that the payment on the due date of the estate
tax or of any part thereof would impose undue hardships upon the estate
or any of the heirs, he may extend the time for payment of such tax or
any part thereof not to exceed five years in case the estate is settled
through the courts, or two years in case the estate is settled extra
judicially. In such case, the amount in respect of which the extension
is granted shall be paid on or before the date of the expiration of the
period of extension, and the running of the statute of limitation for
assessment as provided in section 331 of this Code shall be suspended
for the period of any such extension.
Where the taxes are assessed by reason of negligence, intentional
disregard of rules and regulations, or fraud on the part of the
taxpayer, no extension will be granted by the Commissioner.
If an extension is granted, the Commissioner of Internal Revenue may
require the executor, administrator, or beneficiary to furnish a bond
in such amount, not exceeding double the amount of the tax and with
such sureties, as the Commissioner deems necessary, conditioned upon
the payment of the said tax in accordance with the terms of the
extension.
(c) Liability for payment. — The estate tax imposed
by section 85 shall be paid by the executor or administrator before
delivery to any beneficiary of his distributive share of the estate.
Such beneficiary shall, to the extent of his distributive share of the
estate, be subsidiarily liable for the payment of such portion of the
estate tax as his distributive share bears to the value of the total
net estate.
For the purpose of this Chapter, the term "executor" or "administrator"
means the executor or administrator of the decedent, or, if there is no
executor or administrator appointed, qualified, and acting within the
Philippines, then any person in actual or constructive possession of
any property of the decedent.
"Sec. 99. Interest on extended payment. — (a) Tax
shown on the return. — If the time for the payment of the estate tax or
any part thereof is extended as provided in subsection (b) of Section
95, there shall be collected, as part of such amount, interest thereon
at the rate of fourteen per centum per annum, from the day following
the due date of the tax to the expiration of the period of the
extension. chanroblesvirtualawlibrary
(b) Deficiency. — In case an extension for the
payment of a deficiency is granted, there shall be collected, as a part
of the tax, interest on the part of the deficiency the time for the
payment of which is so extended, at the rate of fourteen per centum per
annum for the period of the extension.
"Sec. 100. Interest on deficiency. — Interest upon
the amount determined as a deficiency shall be assessed at the same
time as the deficiency, shall be paid upon notice and demand from the
Commissioner of Internal Revenue, and shall be collected as a part of
the tax, at the rate of fourteen per centum per annum from the due date
of the tax to the date of the deficiency is assessed: Provided, That
the maximum amount that may be collected as interest on deficiency
shall in no case exceed the amount corresponding to a period of three
years, the present provisions regarding prescription to the contrary
notwithstanding.
"Sec. 101. Additions to the tax in case of
nonpayment. —chanroblesvirtualawlibrary
(a) Tax shown on the return.
(1) Payment not extended. — Where the amount of the
tax imposed by this Chapter, or any part of such amount is not paid on
the due date of the tax, there shall be collected as a part of the tax,
interest upon such unpaid amount at the rate of fourteen per centum per
annum, from the due date until it is paid: Provided, That the maximum
amount that may be collected as interest on delinquency shall in no
case exceed the amount corresponding to a period of three years, the
present provisions regarding prescription to the contrary
notwithstanding.
(2) Payment extended. — Where an extension of time
for payment of the amount of the tax has been granted, and the amount
of the time for the payment of which has been extended, and the
interest thereon determined under subsection (a) of Section 99, is not
paid in full prior to the expiration of the period of the extension,
interest at the rate of fourteen per centum per annum, shall be
collected on such unpaid amount from the date the same was originally
due until it is paid.
"Sec. 103. Payment before delivery by executor or
administrator. — No judge shall authorize the executor or judicial
administrator to deliver a distributive share to any party interested
in the estate unless a certification from the Commissioner that the
estate tax has been paid is shown.
"Sec. 104. Duties of certain officers and debtors. —
Register of deeds shall not register in the registry of property any
document transferring real property or real rights therein or any
chattel mortgage, by way of gifts inter vivos or mortis causa, legacy
or inheritance, unless a certification from the Commissioner that the
tax fixed in this Title and actually due thereon had been paid is
shown. And they shall immediately notify the Commissioner, Regional
Director, Revenue District Officer or collection agent of the city or
municipality where their offices are located, of the nonpayment of the
tax discovered by them. Any lawyer, notary public, or any Government
officer who, by reason of his official duties, intervenes in the
preparation or acknowledgment of documents regarding partition or
disposal of donation inter vivos or mortis causa, legacy or
inheritance, shall have the duty of furnishing the Commissioner,
Regional Director, Revenue District Officer or Collection Agent of the
place where he may have his principal office, with copies of such
documents and any information whatsoever which may facilitate the
collection of the aforementioned tax. Neither shall a debtor of a
deceased pay his debts to the heirs, legatees, executor, or
administrator of his creditor, unless the certification of the
Commissioner that the tax fixed in this Chapter had been paid is shown;
but he may pay the executor of judicial administrator without said
certification if the credit is included in the inventory of the estate
of the deceased.
"Sec. 105. Restitution of tax upon satisfaction of
outstanding \obligations. — If, after the payment of the estate tax,
new obligations of the decedent shall appear, and the persons
interested shall have satisfied them by order of the court, they shall
have the right to the restitution of the proportional part of the tax
paid.
"Sec. 106. Payment of tax antecedent to the transfer
of shares, bonds, or rights. — There shall not be transferred to any
new owner in the books of any corporation, sociedad anonima,
partnership, business, or industry, organized or established in the
Philippines, any shares, obligations, bonds or rights by way of gift
inter vivos or mortis causa, legacy, or inheritance unless a
certification from the Commissioner that the taxes fixed in this Title
and due thereon have been paid is shown.
"Sec. 107. Specific penalties. — (a) Any person
required under this Chapter or regulations made under authority thereof
to pay the tax, make a return, keep any records, or supply any
information, for the purposes of the computation, assessment, or
collection of any tax imposed by this Chapter, who fails to pay such
tax, make such return, keep such records, or supply such information,
at the time or times required by this Chapter or regulations, shall, in
addition to other penalties provided herein, be fined not more than two
thousand pesos or imprisoned for not more than six months, or both.
(b) Any person required under this Chapter to make,
render, sign, or verify any return, or to supply any information, who
makes any false or fraudulent return or statement with intent to defeat
or evade the assessment required by this Chapter to be made, shall, in
addition to other penalties provided herein, be fined not more than
four thousand pesos or imprisoned for not more than one year, or both.
(c) Any executor or administrator who shall deliver
or distribute to an heir, legatee, devisee, donee, or beneficiary any
real or personal property, credit, right, or franchise, and any
officer, manager or employee of any corporation, firm or association,
sociedad anonima, partnership, business or industry who transfers in
its books to any new owner any share, obligation, bond, or right,
pertaining to an estate or inheritance or gift subject to the taxes
imposed in this Title without the certification from the Commissioner
that their payment being shown, shall be fined not more than five
thousand pesos or imprisoned for not more than one year, or both.
(d) Any administrator, executor, donee, legatee, or
heir who conceals any goods, rights, credits, or transfers subject to
the taxes imposed in this Title shall be punished by a fine of not less
than twenty-five per centum of the value of that which he may have
concealed, nor more than said value, or by imprisonment for not more
than one year, or both.
"Sec. 109. Rates of tax payable by donor. — The tax
for each calendar year shall be computed on the basis of the total net
gifts made during the calendar year, in accordance with the following
schedule: chanroblesvirtualawlibrary
IF THE NET GIFT IS THE TAX SHALL BE
Over But Not
Over Plus Of Excess
Over
P P1,000 Exempt
1,000 50,000
1.5% 1,000
50,000 75,000
735 2.5 50,000
75,000 100,000
1,360 3% 75,000
100,000 150,000
2,110 6% 100,000
150,000 200,000
5,110 9% 150,000
200,000 300,000
9,610 12% 200,000
300,000 400,000
21,610 15% 300,000
400,000 500,000
36,610 18% 400,000
500,000 625,000
54,610 21% 500,000
625,000 750,000
80,860 24% 625,000
750,000 875,000
110,860 28% 750,000
875,000
1,000,000 145,860
32% 875,000
1,000,000
2,000,000 185,860
36% 1,000,000
2,000,000
3,000,000 545,860
38% 2,000,000
3,000,000
925,860 40% 3,000,000
"Sec. 110. Rates of tax payable by donee. — This
section is hereby repealed.
"Sec. 112. Exemption of certain gifts. — The
following gifts or donations shall be exempt from the tax provided for
in this chapter:cralaw:red
(a) In the case of gifts made by a resident:cralaw:red
(1) Dowries or gifts made on account of marriage and
before its celebration or within one year thereafter by parents to each
of their legitimate, recognized natural or adopted children to the
extent of the first ten thousand pesos;chanroblesvirtualawlibrary
(2) Gifts made to or for the use of the National
Government or any entity created by any of its agencies which is not
conducted for profit, or to any political subdivision of the said
Government; and
(3) Gifts in favor of an educational and/or
charitable or religious corporation, institution, foundation, trust or
philanthropic organization or research institution or organization;
Provided, however, That not more than thirty per centum of said gifts
shall be used by such donee for administration purposes.
For the purpose of this exemption, a non-profit educational and/or
charitable corporation, institution, foundation, trust or philanthropic
organization and/or research institution or organization is a school,
college or university and/or charitable corporation, foundation, trust
or philanthropic organization and/or research institution, or
organization, incorporated as a non-stock entity, paying no dividends,
governed by trustees who receive no compensation, and devoting all its
income, whether students' fees, or gifts, donations, subsidies or other
forms of philanthropy, to the accomplishment and promotion of the
purposes enumerated in its articles of incorporation.
(b) In the case of gifts made by a nonresident not a
citizen of the Philippines:cralaw:red
(1) Gifts made to or for the use of the National
Government or any entity created by any of its agencies which is not
conducted for profit, or to any political subdivision of the said
Government, and
(2) Gifts in favor of an educational and/or
charitable or religious corporation, institution, foundation, trust or
philanthropic organization or research institution or organization:
Provided, however, That not more than thirty per centum of said gifts
shall be used by such donee for administration purposes.
"Sec. 114. Notice of donation to be filed. — This
section is hereby repealed.
"Sec. 115. Returns. — (a) Requirements. — Any
individual who makes any transfer by gift (except those which, under
section 112, are exempt from the tax provided for in this Chapter)
shall, for the purpose of the said tax, make a return under oath in
duplicate. The return shall set forth (1) each gift made during the
calendar year which is to be included in computing net gifts; (2) the
deductions claimed and allowable; (3) any previous net gifts made
during the same calendar year; (4) the name of the donee; and (5) such
further information as may be required by regulations made pursuant to
law.
(b) Time and place of filing. — The return of donor
required in this section shall be filed within thirty days after the
date the gift is made, with the Commissioner, Regional Director,
Revenue District Officer, or Collection Agent of the city or
municipality in which the donor was domiciled at the time of the
transfer.
(c) Extension of time for filing. — The Commissioner
shall have authority to grant, in meritorious cases, a reasonable
extension not exceeding thirty days for filing the return required
under this section.
"Sec. 116. Payment of tax. —chanroblesvirtualawlibrary
(a) Time of payment. — The donor's tax imposed by
section one hundred nine shall be paid at the time the return is filed.
The tax shall be paid by the donor to the Commissioner, Regional
Director, Revenue District Officer, or Collection Agent of the city or
municipality of which the donor is a resident.
(b) Extension of time. — When the Commissioner finds
that the payment on the due date of the tax or of any part of the said
amount would impose undue hardship upon the donor, the Commissioner may
extend the time for payment thereon not to exceed six months from the
date prescribed for the payment of the tax. In such case, the amount in
respect of which the extension is granted shall be paid on or before
the day of the expiration of the period of the extension.
Where the tax is assessed by reason of negligence, intentional
disregard of rules and regulations or fraud on the part of the
taxpayer, no extension shall be granted by the Commissioner.
If an extension is granted, the Commissioner may require the donor to
furnish a bond in such amount, not exceeding double the amount of the
tax, and with such sureties, as the Commissioner deems necessary,
conditioned upon the payment of the said tax in accordance with terms
of the extension.
"Sec. 117. Examination of return and determination of
tax. — As soon as practicable, after the return is filed, the
Commissioner shall examine it and shall determine the correct amount of
the tax.
"Sec. 118. Interest on extended payments. — (a) Tax
shown on the return. — If the time for the payment of the amount
determined as the tax by the donor is extended under the authority of
subsection (b) of section 116, there shall be collected, as a part of
such amount, interest thereon at the rate of fourteen per centum per
annum, from the date when such payment should have been made if no
extension has been granted, until the expiration of the period of the
extension.
(b) Deficiency. — In case an extension for the
payment of a deficiency is granted, there shall be collected, as a part
of the tax, interest on the part of the deficiency the time for payment
of which is so extended, at the rate of fourteen per centum per annum,
for the period of the extension.
"Sec. 118-A. Interest on deficiency. — Interest upon
the amount determined as deficiency, shall be paid upon notice and
demand from the Commissioner, and shall be collected as a part of the
tax, at the rate of fourteen per centum per annum, from the due date of
the tax to the date the deficiency is assessed: Provided, That the
maximum amount that may be collected as interest on deficiency shall in
no case exceed the amount corresponding to a period of three years, the
present provisions regarding prescription to the contrary
notwithstanding.
"Sec. 119. Additions to the tax in case of
nonpayment. —chanroblesvirtualawlibrary
(a) Tax shown on the return.
(1) Payment not extended. — Where the amount of the
tax determined by the donor as the tax or any part of such amount is
not paid on the due date of the tax, there shall be collected as a part
of the tax, interest upon such unpaid amount at the rate of fourteen
per centum per annum, from the due date until it is paid: Provided,
That the maximum amount that may be collected as interest on
delinquency shall in no case exceed the amount corresponding to a
period of three years, the present provisions regarding prescription to
the contrary notwithstanding.
(2) Payment extended. — Where an extension of time
for payment of the amount so determined as the tax by the donor has
been granted, and the amount, the time for the payment of which has
been extended and the interest thereon determined under subsection (a)
of section 118 is not paid in full prior to the expiration of the
period of the extension, interest at the rate of fourteen per centum
per annum, shall be collected on such unpaid amount from the date when
the same was originally due until it is paid.
(b) Deficiency.
(1) Payment not extended. — Where a deficiency, or
any interest assessed in connection therewith, or any addition to the
tax provided for in section 120 is not paid in full within thirty days
from the date of the notice and demand from the Commissioner, there
shall be collected as a part of the tax, interest upon the unpaid
amount at the rate of fourteen per centum per annum, from the date of
such notice and demand until it is paid: Provided, That the maximum
amount that may be collected as interest on delinquency shall in no
case exceed the amount corresponding to a period of three years, the
present provisions regarding prescription to the contrary
notwithstanding.
(2) Payment extended. — If any part of the deficiency
the time for payment of which is extended is not paid in accordance
with the terms of the extension, there shall be collected, as a part of
the tax, interest on such unpaid amount at the rate of fourteen per
centum, per annum, from the date the same was originally due until it
is paid.
(c) Surcharge. — If any amount of the tax included in
the notice and demand from the Commissioner is not paid in full within
thirty days after such notice and demand, there shall be collected in
addition to the interest prescribed above and as a part of the tax a
surcharge of five per centum of the unpaid amount.
"Sec. 122. Definitions. — For the purpose of this
Title the terms "gross estate" and "gift" include real estate and
tangible personal property, or mixed, physically located in the
Philippines; franchise which must be exercised in the Philippines;
shares, obligations, or bonds issued by any corporation or sociedad
anonima organized or constituted in the Philippines in accordance with
its laws; shares, obligations, or bonds issued by any foreign
corporation eighty-five per centum of the business of which is located
in the Philippines; shares, obligations, or bonds issued by any foreign
corporation if such shares, obligations, or bonds have acquired a
business situs in the Philippines; shares or rights in any partnership,
business or industry established in the Philippines; or any personal
property, whether tangible or intangible, located in the Philippines:
Provided, however, That in the case of a resident, the transmission or
transfer of any intangible personal property, regardless of its
location, is subject to the taxes prescribed in this Title: And
provided, further, That no tax shall be collected under this Title in
respect of intangible personal property (a) if the decedent at the time
of his death was a resident of a foreign country which at the time of
his death did not impose a transfer tax or death tax of any character
in respect of intangible personal property of citizens of the
Philippines not residing in that foreign country, or (b) if the laws of
the foreign country of which the decedent was a resident at the time of
his death allow a similar exemption from transfer taxes or death taxes
of every character in respect of intangible personal property owned by
citizens of the Philippines not residing in that foreign country.
The term "deficiency" means (1) the amount by which the tax imposed by
this Chapter exceeds the amount shown as the tax by the donor upon his
return; but the amount so shown on the return shall first be increased
by the amounts previously assessed (or collected without assessment) as
a deficiency, and decreased by the amounts previously abated, refunded,
or otherwise repaid in respect of such tax; or (2) if no amount is
shown as the tax by the donor upon his return, or if no return is made
by the donor, then the amount by which the tax exceeds the amounts
previously assessed (or collected without assessment) as a deficiency;
but such amounts previously assessed or collected without assessment,
shall first be decreased by the amounts previously abated, refunded, or
otherwise repaid in respect of such tax.
Section 5. Certain sections of Title IV of the same
Code, are hereby amended to read as follows:cralaw:red
"TITLE IV. — SPECIFIC TAXES
"Sec. 128. Exemption in favor of domestic denatured
alcohol. — Domestic alcohol of not less than one hundred eighty degrees
proof (ninety per centum absolute alcohol) shall when suitably
denatured and rendered unfit for oral intake, be exempt from the
specific tax prescribed in section one hundred thirty three: Provided,
however, That such denatured alcohol shall be subject to tax under Sec.
186: Provided, further, That if such alcohol is to be used for motive
power, it shall be taxed under section one hundred forty-two (d) of
this Code.
"Sec. 133. Specific tax on distilled spirits. — On
distilled spirits there shall be collected, subject to the provisions
of Section one hundred and twenty-eight of this Code, except as
hereinafter provided, specific taxes as follows:cralaw:red
(a) If produced domestically from locally produced
raw materials, per proof liter, eighty-five centavos: Provided, That if
produced in a pot still or other similar primary distilled 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, seventy-eight centavos; chanroblesvirtualawlibrary
(b) If imported or produced from imported raw
materials, per proof liter, twenty pesos.
This tax shall be proportionally increased for any strength of the
spirits taxed over proof spirits.
"Spirits" or "distilled spirits" is the substance known as ethyl
alcohol, ethanol, or spirits of wine, including all dilutions and
mixtures thereof, from whatever source or by whatever process produced,
and shall include whisky, brandy, rum, gin, and vodka, and other
similar products or mixtures.
"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.
"Sec. 134. Specific tax on wines. — On wines and
imitation wines there shall be collected, per liter of volume capacity,
the following taxes:cralaw:red
(a) Sparkling wines, regardless of proof, twelve
pesos; if imported fifteen pesos;chanroblesvirtualawlibrary
(b) Still wines containing fourteen per centum of
alcohol or less (except those manufactured from locally grown raw
materials); one peso; if imported, one peso and fifty centavos;chanroblesvirtualawlibrary
(c) Still wines containing more than fourteen per
centum of alcohol, two pesos; if imported, three pesos.
Imitation wines containing more than twenty-five per centum of alcohol
shall be taxed as distilled spirits.
"Sec. 135. Specific tax on fermented liquors. — On
beer, lager beer, ale, porter, and other fermented liquors (except
tuba, basi, tapuy, and similar domestic fermented liquors), there shall
be collected, on each liter of volume capacity, thirty-two and one-half
centavos; Provided, That if the fermented liquor is imported, the tax
shall be increased by one hundred per cent.
"Sec. 136. Specific tax on products of tobacco. — On
manufactured products of tobacco, except cigars, cigarettes, and
tobacco specially prepared for chewing so as to be unsuitable for
consumption in any other manner, but including all other tobacco
twisted by hand or reduced into a condition to be consumed in any
manner other than by the ordinary mode of drying and curing; and on all
tobacco prepared or partially prepared for sale or consumption, even if
prepared without the use of any machine or instrument and without being
pressed or sweetened; and on all fine-cut shorts and refuse, scraps,
clippings, cuttings, stems, and sweeping of tobacco, there shall be
collected on kilogram, seventy-five centavos; Provided, however, That
fine-cut shorts and refuse, scraps, clippings, cuttings, stems, and
sweepings of tobacco resulting from the handling or stripping of whole
leaf tobacco may be transferred, disposed of, or otherwise sold,
without prepayment of the specific tax herein provided for under such
conditions as may be prescribed in the regulations promulgated by the
Secretary of Finance upon recommendation of the Commissioner if the
same are to be exported or to be used in the manufacture of other
tobacco products on which the specific tax will eventually be paid on
the finished product.
On tobacco specially prepared for chewing so as to be unsuitable for
use in any other manner, on each kilogram, sixty centavos.
"Sec. 137. Specific tax on cigar and cigarettes. — On
cigars and cigarettes there shall be collected the following taxes:cralaw:red
(a) Cigars —chanroblesvirtualawlibrary
(1) When the manufacturer's or importer's wholesale
price, less the amount of the tax, does not exceed thirty pesos per
thousand, on each thousand, two pesos and thirty centavos.
(2) When the manufacturer's or importer's wholesale
price, less the amount of the tax, exceeds thirty pesos but does not
exceed sixty pesos per thousand, on each thousand, four pesos and sixty
centavos.
(3) When the manufacturer's or importer's wholesale
price, less the amount of the tax, exceeds sixty pesos per thousand, on
each thousand, seven pesos.
(b) Cigarettes —chanroblesvirtualawlibrary
(1) On cigarettes packed in thirties, the retail
price of which per pack does not exceed fifty centavos, on each
thousand, three pesos.
(2) On cigarettes packed in thirties, the retail
price of which per pack exceeds fifty centavos but does not exceed
sixty centavos, on each thousand, five pesos.
(3) On cigarettes packed in thirties, the retail
price of which per pack exceeds sixty centavos, on each thousand, eight
pesos.
(4) On cigarettes packed in twenties, the retail
price of which per pack does not exceed eighty centavos, on each
thousand, eight pesos.
(5) On cigarettes packed in twenties, the retail
price of which per pack exceeds eighty centavos but does not exceed one
peso, on each thousand, fourteen pesos.
(6) On cigarettes packed in twenties, the retail
price of which per pack exceeds one peso but does not exceed one peso
and thirty centavos, on each thousand, sixteen pesos.
(7) On cigarettes packed in twenties, the retail
price of which per pack exceeds one peso and thirty centavos, on each
thousand, twenty-five pesos.
(8) If the cigarettes of local manufacture are
mechanically wrapped or packed, the tax shall be increased by one
hundred and twenty per centum per thousand cigarettes.
Cigarettes shall be considered as mechanically wrapped or packed when
at any stage of the wrapping or packing a machine or any mechanical
contrivance shall have been used.
(9) If the cigarettes are of foreign manufacture, the
tax thereon shall be the same as that prescribed under sub-paragraph
(7), paragraph (b) of this section, plus one hundred twenty per centum.
Where the classification of cigarettes are duly established as
prescribed above, the downward reclassification thereof shall not
thereafter be allowed.
The maximum price which the various classes of cigars are sold at
wholesale in the factory or in the establishment of the importer to the
public shall determine the rate of the tax applicable to such cigars;
and if the manufacturer or importer also sells, or allows to be sold
his cigars at wholesale in another establishment of which he is the
owner or in the profits of which he has an interest, the maximum sale
price in such establishment shall determine the rate of the tax
applicable to the cigars therein sold: Provided, however, That when
such maximum wholesale price is less than the cost of manufacture or
importations plus all expenses incurred until the cigars are finally
sold by the manufacturer or importer, such cost plus expenses shall
determine the amount of tax to be applied.
Every manufacturer or importer of cigars shall file with the
Commissioner on the date or dates designated by the latter, a sworn
statement showing the maximum wholesale prices of cigars together with
the cost of manufacture or importation plus expenses incurred or to be
incurred until the cigars are finally sold and it shall be unlawful to
sell said cigars at wholesale at a price in excess of the one specified
in the statement required by this Title without previous written notice
to the Commissioner. In the case of imported cigars, the sworn
statement required herein shall be accompanied by verified sales
invoices of the manufacturers of the cigars as well as the consular
invoices issued by a Philippine Consul, should one be available at the
place of origin or shipment.
The prevailing maximum retail per pack containing twenty or thirty
cigarettes as of the date of the effectivity of the new rates herein
prescribed shall be the basis for the rate of the tax applicable. Duly
registered and/or existing brands of cigarettes packed in 20's at the
time of the effectivity of the new rates herein prescribed shall not be
allowed to be packed in 30's and neither shall any new brand of
cigarettes be registered nor allowed to be manufactured if the same
shall be packed in 30's.
Every manufacturer or importer of cigarettes shall file with the
Commissioner, on the date or dates designated by the latter and as
often as may be required, a sworn statement showing, among other
information, the brand or brands of cigarettes manufactured or
imported; the approved maximum retail prices per pack of said
cigarettes; and whether or not the cigarettes are mechanically wrapped
or packed. In the case of imported cigarettes, the sworn statement
required herein shall, in addition to the above information, be
accompanied by a verified commercial invoice of the manufacturer of the
cigarettes as well as the consular invoices issued by the Philippine
Consul, if any, containing the information that Philippine Internal
Revenue strip stamps have been affixed to each and every pack of
cigarettes and that such pack bears the inscription "For export to the
Philippines".
If the government of a foreign country permits the revenue stamps of
such country to be affixed in the Philippines to tobacco (including
cigars) or snuff manufactured in the Philippines and imported into such
foreign country, internal revenue stamps of the Philippines may be
affixed to tobacco (including cigars) or snuff manufactured in such
foreign country to be imported into the Philippines from such foreign
country, under such rules and regulations as the Commissioner of
Internal Revenue with the approval of the Secretary of Finance may
prescribe.
Except those used as samples, all packs of locally manufactured
cigarettes shall, upon the effectivity of the new rates of tax herein
prescribed, bear thereon in print the maximum retail prices which the
said cigarettes are sold. No cigarettes shall be allowed to be removed
from any factory unless this requirement has been complied with.
Any manufacturer who, in violation of this section, knowingly
misdeclares or misrepresents in his sworn statement herein required any
pertinent data or information, including the approved maximum retail
prices of his locally manufactured or imported cigarettes, and the
manner of packing or wrapping thereof shall upon discovery be penalized
by a summary cancellation or withdrawal of his permit to engage in
business as a manufacturer or importer of cigarettes. If the violator
is an alien, he shall be liable for deportation.
"Sec. 137-A. Definitions of terms. — When used herein
and in statements or official forms prescribed hereunder, the following
terms shall have been the meaning indicated.
(a) Cigars mean all rolls of tobacco or any
substitutes thereof, wrapped in leaf tobacco.
(b) Cigarettes mean all rolls of finely-cut leaf
tobacco, or any substitute thereof, wrapped in paper or any other
material.
(c) Wholesale price shall mean the amount of money or
price paid for cigars or cigarettes purchased for the purpose of
resale, regardless of quantity.
(d) Retail price shall means the amount of money or
price which an ultimate consumer or end-user pays for cigars or
cigarettes purchased.
"Sec. 140. Specific tax on fireworks. — On all
fireworks there shall be collected for each kilogram a tax of thirty
pesos.
"Fireworks" as herein used include firecrackers, sparklers, rockets and
similar devices which are exploded or burned to produce noises or
brilliant lighting effects.
"Sec. 146. Specific tax on cinematographic films. —
There shall be collected, once only, on cinematographic films,
including television films, the provisions of Republic Act Numbered
1919 to the contrary notwithstanding the following taxes:cralaw:red
(a) On films of not more than sixteen millimeters in
width, twenty-two and one-half centavos per linear meter; and
(b) On films of more than sixteen millimeters in
width, thirty centavos per linear meter; chanroblesvirtualawlibrary
If the films are imported, the tax be increased by fifty per centum.
Educational films or 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
unprinted positive film, and on any reversal film used in amateur
photography of sixteen millimeters or less, and any tax heretofore paid
on cinematographic films so returned, or on any negative film or
unprinted positive film, or on any reversal film shall be refunded
subject to the provisions of section three hundred and nine.
"Sec. 147. Specific Tax on Playing Cards. — This
section is hereby repealed.
"Sec. 150. Records to be kept by manufacturer —
Assessment based thereon. — Manufacturers of articles subject to
specific tax shall keep such records as are required by regulations
recommended by the Commissioner and approved by the Secretary of
Finance, and such records, whether of raw materials received into the
factory or of articles produced therein, shall be deemed public and
official documents for all purposes.
The records of raw materials kept by such manufacturers may be used as
a species of evidence by which to determine the amount of specific
taxes due from them, and whenever the amounts of raw materials received
into any factory exceeds the amount of manufactured or partially
manufactured products on hand and lawfully removed from the factory,
plus waste removed or destroyed, and a reasonable allowance for
unavoidable loss in manufacture, the Commissioner may assess and
collect the tax due on the products which should have been produced
from the excess.
"Sec. 151-A. Manufacturers to provide themselves with
counting or metering devices to determine production. — Manufacturers
of cigarettes, alcohol products, oil products, and other articles
subject to specific tax that can be similarly measured shall provide
themselves with such necessary number of suitable counting or metering
devices to determine as accurately as possible the volume, quantity or
number of the articles produced by them under regulations promulgated
by the Secretary of Finance upon the recommendation of the Commissioner.
This requirement shall be complied with within twelve months from the
date of promulgation of this decree in the case of existing firms and
before the commencement of operations in the case of new firms.
"Sec. 156. Manufacturers' and importers' bond. —
Manufacturers and importers of articles subject to a specific tax shall
give bond in an amount equal, as nearly as can be estimated, to twenty
per centum of the taxes payable by them during an average year. Such
bond shall be conditioned upon the faithful compliance, during the time
such business is followed, with the law and regulations relating to
such business and for the satisfaction of all fines and penalties
imposed by this Code. No such bond shall be required in an amount less
than ten thousand pesos.
Section 6. Certain sections of Title V of the same
Code, are hereby amended to read as follows:cralaw:red
"TITLE V. — PRIVILEGE TAXES ON BUSINESS AND OCCUPATION
"Sec. 180. Time for payment of fixed taxes. — All
fixed taxes shall be payable annually, on or before the thirty-first
day of January. Any person first beginning a business or occupation
must pay the tax before engaging therein.
If the privilege tax is not paid within the time specified, the amount
of the tax shall be increased by twenty-five per centum, the increment
to be part of the tax.
"Sec. 180-A. Interest on delinquency. — Where the
amount of the tax imposed under Section one hundred and eighty-two, or
any part of such amount, if not paid on the due date of the tax, there
shall be collected, as part of the tax, interest upon such unpaid
amount at the rate of fourteen per centum per annum from the due date
until it is paid.
"Sec. 181. Reckoning of tax for business first begun
or abandoned during year. — This section is hereby repealed.
"Sec. 182. Fixed taxes. — (A) On business, (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 fifty 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 year, as follows:cralaw:red
Ten pesos, if the amount of the gross annual sales does not exceed two
thousand four hundred pesos;chanroblesvirtualawlibrary
Twenty pesos, if the amount of the gross annual sales exceeds two
thousand four hundred pesos but does not exceed ten thousand pesos;chanroblesvirtualawlibrary
Forty pesos, if the amount of the gross annual sales exceeds ten
thousand pesos but does not exceed thirty thousand pesos;chanroblesvirtualawlibrary
Eighty pesos, if the amount of the gross annual sales exceeds thirty
thousand pesos but does not exceed fifty thousand pesos;chanroblesvirtualawlibrary
One hundred thirty pesos, if the amount of the gross annual sales
exceeds fifty thousand pesos but does not exceed seventy-five thousand
pesos;chanroblesvirtualawlibrary
One hundred seventy-five pesos, if the amount of the gross annual sales
exceeds seventy-five thousand pesos but does not exceed one hundred
thousand pesos;chanroblesvirtualawlibrary
Two hundred fifty pesos, if the amount of the gross annual sales
exceeds one hundred thousand pesos but does not exceed one hundred
fifty thousand pesos;chanroblesvirtualawlibrary
Four hundred fifty-pesos, if the amount of the gross annual sales
exceeds one hundred fifty thousand pesos but does not exceed three
hundred thousand pesos;chanroblesvirtualawlibrary
Eight hundred pesos, if the amount of the gross annual sales exceeds
three hundred thousand pesos but does not exceed five hundred thousand
pesos;chanroblesvirtualawlibrary
One thousand five hundred pesos, if the amount of the gross annual
sales exceeds five hundred thousand pesos but does not exceed one
million pesos;chanroblesvirtualawlibrary
Two thousand six hundred twenty-five pesos, if the amount of the gross
annual sales exceeds one million pesos but does not exceed one million
five hundred thousand pesos;chanroblesvirtualawlibrary
Three thousand six hundred seventy-five pesos, if the amount of the
gross annual sales exceeds one million five hundred thousand pesos but
does not exceed two million pesos;chanroblesvirtualawlibrary
Five thousand one hundred seventy-five pesos, if amount of the gross
annual sales exceeds two million pesos but does not exceed two million
five hundred thousand pesos;chanroblesvirtualawlibrary
Six thousand six hundred pesos, if the amount of the gross annual sales
exceeds two million five hundred thousand but does not exceed three
million pesos;chanroblesvirtualawlibrary
Eight thousand one hundred twenty-five pesos, if the amount of the
gross annual sales exceeds three million pesos.
If a merchant is engaged in two or more business, one or more of which
is subject to and the other 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
ten pesos.
(3) Other fixed taxes. — The following fixed taxes
shall be collected as follows, the amount stated being for the whole
year, when not otherwise specified:cralaw:red
(a) Brewers, five thousand pesos;chanroblesvirtualawlibrary
(b) Distillers of spirit, one thousand pesos, if the
annual production does not exceed one hundred thousand gauge liters;
two thousand pesos, if the annual production exceeds one hundred
thousand gauge liters but does not exceed two hundred thousand gauge
liters; three thousand pesos, if the annual production exceeds two
hundred thousand gauge liters but does not exceed three hundred
thousand gauge liters; four thousand pesos, if the annual production
exceeds three hundred thousand gauge liters but does not exceed five
hundred thousand gauge liters; and five thousand pesos, if the annual
production exceeds five hundred thousand gauge liters: Provided, That
if the annual production does not exceed ten thousand gauge liters only
one hundred pesos shall be collected.
(c) Rectifiers of distilled spirits, compounders, and
repackers of wines or distilled spirits, one thousand pesos; producers
of wines, one hundred pesos.
(d) Wholesale dealers of distilled spirits and wines
—chanroblesvirtualawlibrary
1. In the City of Manila, one thousand pesos;chanroblesvirtualawlibrary
2. In chartered cities other than Manila, six hundred
pesos.
3. In any other place, two hundred pesos.
(e) Wholesale dealers in fermented liquors, except
basi, tuba and tapuy, two hundred pesos.
(f) Wholesale peddlers of distilled spirits and
wines, two hundred pesos.
(g) Wholesale peddlers of fermented liquors, two
hundred pesos.
(h) Retail liquor dealers, two hundred pesos.
(i) Retail vino dealers, twenty-pesos.
(j) Retail dealers in fermented liquors, fifty pesos.
(k) Retail peddlers of distilled spirits, wine and
fermented liquors, fifty pesos.
(l) Wholesale leaf tobacco dealers, four hundred
pesos.
(m) Wholesale dealers of cigars, cigarettes and other
manufactured tobacco products, one hundred pesos.
(n) Wholesale peddlers of manufactured tobacco
products, one hundred pesos.
(o) Retail leaf tobacco dealers, thirty pesos.
(p) Retail peddlers of cigars, cigarettes and other
manufactured tobacco products, twenty pesos.
(q) Retail peddlers of cigars, cigarettes and other
manufactured tobacco products, twenty pesos.
(r) Manufacturers, importers or exporters of cigars,
cigarettes and other manufactured tobacco products —chanroblesvirtualawlibrary
1. In the cities of Manila, Quezon, Pasay and
Caloocan and in the Province of Rizal, one thousand pesos;chanroblesvirtualawlibrary
2. In any other place, five hundred pesos.
(s) Importers or exporters of leaf tobacco, scrap
tobacco and other partially manufactured tobacco products, one thousand
pesos.
(t) Manufacturers or importers of cigarettes paper in
bobbins or rolls, cigarette tipping papers or cigarette filter tips,
one thousand pesos.
(u) Manufacturers or importers of playing cards,
saccharine or sodium saccharine or any of its other derivatives and
salts and other artificial sweetening agents, lighter fluid in liquid
or gaseous form, matches, firecrackers, denatured alcohol for motive
power, five hundred pesos.
(v) Manufacturers, importers or exporters of
petroleum or other manufactured oils and fuels from petroleum, two
thousand pesos.
(w) Manufacturers, producers, or importers of soft
drinks or mineral waters, four hundred pesos.
(x) Wholesale dealers of soft drinks, or other
mineral waters, fifty pesos.
(y) Wholesale peddlers of soft drinks, or other
mineral waters, fifty pesos.
(z) Dealers in securities, one hundred and fifty
pesos.
(aa) Real estate dealers, one hundred and fifty
pesos, if the annual income from buying, selling, exchanging, leasing
or renting property (whether on their own accounts as principals or as
owners of rental property or properties) is over four thousand pesos
but not exceeding ten thousand pesos.
Three hundred pesos, if the annual income exceeds ten thousand pesos
but does not exceed thirty thousand pesos.
Five hundred pesos, if the annual income exceeds thirty thousand pesos
but does not exceed fifty thousand pesos; and
One thousand pesos, if the annual income exceeds fifty thousand pesos.
(bb) Stock brokers, real estate brokers, commercial
brokers, customs brokers and immigration brokers, three hundred pesos.
(cc) Owners of race tracks for each day on which
races are run on any track, one thousand pesos.
(dd) Lending investors. —chanroblesvirtualawlibrary
1. In chartered cities and first class
municipalities, five hundred pesos;chanroblesvirtualawlibrary
2. In second and third class municipalities, two
hundred and fifty pesos;chanroblesvirtualawlibrary
3. In fourth and fifth class municipalities and
municipal districts, one hundred and twenty-five pesos: Provided, That
lending investors who do business as such in more than one province
shall pay a tax of five hundred pesos.
(ee) Cinematographic film owners, lessors or
distributors, three hundred pesos.
(ff) Pawnshops, five hundred pesos.
(gg) Banks, insurance companies, finance and
investment companies doing business in the Philippines and franchise
grantees, five hundred pesos.
(hh) Operators, proprietors or lessees of theaters
and cinema houses: first run, five hundred pesos; second run, two
hundred pesos.
(ii) Operators, proprietors or lessees of boxing
arenas, swimming pools, resorts, skating rinks, golf links and other
places of amusements, one hundred pesos.
(jj) Night clubs and day clubs, one thousand pesos.
(kk) Cabarets, five hundred pesos.
(ll) Jai-Alai, for each day on which games are
played, two hundred and fifty pesos.
(mm) Operators or owners of rice or corn mills shall
be subject to an annual graduated fixed tax based upon total capacity
per machine in accordance with the following schedule:cralaw:red
Corn mill, not exceeding one hundred cavanes
per twelve hour capacity P
30.00
Corn mill, exceeding one hundred cavanes
per twelve hour capacity 45.00
"Kiskisan" type, not exceeding one hundred cavanes
of palay per twelve hour capacity
50.00
"Kiskisan" type, exceeding one hundred cavanes
of palay per twelve hour capacity
75.00
"Cono", of not exceeding one hundred cavanes
of palay per twelve hour capacity
200.00
"Cono", of not exceeding two hundred cavanes
of palay per twelve hour capacity
400.00
"Cono", of not exceeding three hundred cavanes
of palay per twelve hour capacity
600.00
"Cono", of not exceeding four hundred cavanes
of palay per twelve hour capacity
900.00
"Cono", of not exceeding five hundred cavanes
of palay per twelve hour capacity
1,300.00
"Cono", of not exceeding six hundred cavanes
of palay per twelve hour capacity
1,800.00
"Cono", of not exceeding seven hundred cavanes
of palay per twelve hour capacity
2,500.00
"Cono", of not exceeding eight hundred cavanes
of palay per twelve hour capacity
3,200.00
"Cono", of not exceeding nine hundred cavanes
of palay per twelve hour capacity
4,000.00
"Cono", of not exceeding one thousand cavanes
of palay per twelve hour capacity
4,800.00
"Cono", of over one thousand cavanes of palay
per twelve hour capacity 5,600.00
(nn) Proprietors, operators or lessees of cockpits —chanroblesvirtualawlibrary
1. In chartered cities and municipalities in the
Greater Manila Area P
1,500.00
2. In first and second class
municipalities 1,000.00
3. In third and fourth class
municipalities 500.00
4. In fifth, sixth and seventh class
municipalities 100.00
(B) On Occupation. — Annual taxes on occupation shall
be collected as follows:cralaw:red
(1) Seventy-five pesos:cralaw:red
(a) Lawyers, medical practitioners, architects,
interior decorators, certified public accountants, civil, electrical,
chemical, mechanical, mining or sanitary engineers, pharmacists,
insurance agents and sub-agents, customs brokers, marine surveyors,
actuaries, registered master plumbers, registered electricians,
veterinarians, dentists, optometrists, opticians, commercial aviators,
professional appraisers or connoisseurs of tobacco and other domestic
or foreign products, licensed ship masters and marine chief
engineers; chanroblesvirtualawlibrary
(b) Mechanical plant engineers, junior mechanical
engineers, and certified plant mechanics, unless he or she is a
professional mechanical engineer and has paid the corresponding fixed
tax for mechanical engineers.
The term "mechanical engineers", as used herein, means professional
mechanical engineers, as defined in Commonwealth Act Numbered two
hundred and ninety-four.
(2) Fifty pesos:cralaw:red
(a) Land surveyors, chief mates, marine second
engineers, registered nurses, chiropodists tattooers, masseurs,
pelotaris, jockeys, professional actors and actresses, stage
performers, hostesses, statisticians, dietitians, commercial stewards
and stewardesses, flight attendants, insurance adjusters and embalmers;chanroblesvirtualawlibrary
The Secretary of Finance may, upon recommendation of the Commissioner
of Internal Revenue, include within the purview of the occupation tax
other professionals not hereinabove enumerated which in the light of
prevailing circumstances should properly be indicated therein. The tax
imposed on such professions shall take effect six months after
publication in a newspaper of general circulation.
"Sec. 183. Payment of percentage taxes. — (a) In
general. — 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 make a true and complete return of the
amount of his, her or its gross quarterly sales, receipts or earnings
or gross value of output actually removed from the factory or mill
warehouse and within twenty days after the end of each year quarter pay
the tax due thereon: Provided, That any person retiring from a business
subject to the percentage tax shall notify the nearest internal revenue
officer thereof, 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.
If the percentage tax in 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
fourteen per cent per annum.
In case of willful neglect to file the return within the period
prescribed herein, or in case a false or fraudulent return is wilfully
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
its amount and the entire unpaid amount shall be subject to interest at
the rate of fourteen per cent per annum. The amount so added to any tax
shall be collected at the same time and in the manner and as part of
the tax unless 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 one
hundred eighty-four, one hundred eighty-four-A, one hundred
eighty-five, one hundred eighty-five-B, one hundred eighty-six and one
hundred eighty-six-B of this Code shall be paid in advance by the
importer, in accordance with the regulations promulgated by the
Secretary of Finance and prior to the release of such articles from
customs' custody, based on the import invoice value thereof, certified
to as correct under penalties or perjury by the Philippine Consul at
the port of origin if there is any, including freight, postage,
insurance, commission, customs duty and all similar charges, plus one
hundred per centum of such total value in the case of articles
enumerated in Section one hundred eighty-four; one hundred and
eighty-four-A; fifty per centum of such total value in the case of
articles enumerated in sections one hundred eighty-five, one hundred
eighty-five-A and one hundred eighty-five-B; and twenty-five per centum
in the case of articles enumerated in section one hundred eighty-six
and one hundred eighty-six-B. 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.
The tax herein imposed shall be collected in all cases where the
original importer sold, transferred, or negotiated the imported
articles to third persons before release thereof from the customs'
custody, regardless of the tax status of the original importer and the
indorsee or transferee, the same to be paid by the transferee and/or
indorsee.
The provisions of this Act shall not be construed as nullifying
whatever interpretation the government has given to the word "importer"
heretofore.
In the case of tax-free articles brought or imported into the
Philippines by persons, entities or agencies exempt from the tax which
are subsequently sold, transferred, or exchanged in the Philippines to
non-exempt private persons or entities, the purchasers shall be
considered the importers thereof. The tax due on such articles shall
constitute a lien on the article itself superior to all other charges
or liens, irrespective of the possessor thereof.
Any percentage tax paid under Sections 184, 184-A, 185, 185-A, 185-B,
186, 186-B on domestically manufactured or on imported raw materials
used in the manufacture of finished products exported shall be allowed
to be credited against other tax liabilities of the
manufacturer-exporter: Provided, however, That said percentage taxes
paid are indicated as a separate item in the invoices.
"Sec. 184. Percentage tax on sales of jewelry, toilet
preparation and others. — There shall be levied, assessed, and
collected once only on every original sale, barter, exchange, or
similar transaction for nominal or valuable consideration intended to
transfer ownership of, or title to, the articles hereinbelow enumerated
a tax equivalent to seventy per centum of the gross value in money of
the articles so sold, bartered, exchanged, transferred, such tax to be
paid by the manufacturer or producer; Provided, further, That, where
the articles enumerated hereinbelow are manufactured out of materials
subject to tax under this section, the total cost of such materials, as
duly established, shall be deducted from the gross selling price or
gross value in money of such manufactured articles:cralaw:red
(a) All articles commonly or commercially known as
jewelry, whether real or imitation, pearls, precious and semi-precious
stones, and imitations thereof; articles made of, or enumerated,
mounted or fitted with, precious metals or imitations thereof or ivory
(not including surgical instruments, silver-plated wares, frames or
mountings for spectacles or eyeglasses, and dental gold or gold alloys
and other precious metals used in filling, mounting or fitting of the
teeth); opera glasses, and lorgnettes. The term "precious metals" shall
include platinum, gold, silver, and other metals of similar or greater
value. The term "imitations thereof" shall include platings and alloys
of such metals.
(b) Perfumes, essences, extracts, toilet waters,
cosmetics, petroleum jellies, hair oils, pomades, hair dressings, hair
restoratives, hair dyes, aromatic cachous, toilet powders, and any
similar substance, article, or preparations, by whatsoever name known
or distinguished; and any of the above which are used or applied or
intended to be used or applied for toilet purposes; except tooth and
mouth washes, dentifrices, tooth paste; and talcum or medicated toilet
powders. chanroblesvirtualawlibrary
(c) Dice, mahjong sets and playing cards, except
those locally manufactured;chanroblesvirtualawlibrary
(d) Beauty parlor equipment and accessories; and
(e) Polo mallets and balls, gold bags, clubs and
balls, and chess and checker boards and pieces.
Any part or accessory of the above-mentioned articles shall be taxed at
the same rate as the finished articles.
"Sec. 184-A. Percentage tax on sales of automobiles.
— There shall be levied, assessed, and collected once only on every
original sale, barter, exchange, or similar transactions for nominal or
valuable consideration intended to transfer ownership of, or title to,
automobiles, a percentage tax, on the gross selling price or gross
value in money of the automobiles so sold, bartered, exchanged, or
transferred, the tax to be paid by the manufacturer or importer
determined in accordance with the following schedule:cralaw:red
(A) For locally manufactured automobiles — If the
gross
selling price does not exceed P 20,000, the tax
shall be
10% of such selling price; if it exceeds P 20,000
but
does not exceed P 25,000, the tax shall be P2,000
plus
15% of the excess over P 20,000;chanroblesvirtualawlibrary
If it exceeds P 25,000 but does not exceed P 30,000,
the tax shall be P 2,750 plus 25% of the excess over
P 25,000;chanroblesvirtualawlibrary
If it exceeds P 30,000 but does not exceed P 35,000,
the tax shall be P 4,000 plus 35% of the excess over
P 30,000;chanroblesvirtualawlibrary
If it exceeds P 35,000 but does not exceed P 40,000,
the tax shall be P 5,750 plus 50% of the excess over
P 35,000; and
If it exceeds P 40,000, the tax shall be P 8,250
plus 70%
of the excess over P 40,000.
(b) For imported automobiles — If the landed cost
plus
mark-up as established by section 183(b) of this
Code
does not exceed P 20,000, the tax shall be 100% of
such
landed cost plus mark-up;chanroblesvirtualawlibrary
If it exceeds P 20,000 but does not exceed P 25,000,
the tax
shall be P 20,000 plus 125% of the excess over P
20,000;chanroblesvirtualawlibrary
If it exceeds P 25,000 but does not exceed P 30,000,
the tax
shall be P 26,250 plus 150% of the excess over P
25,000;chanroblesvirtualawlibrary
If it exceeds P 30,000 but does not exceed P 35,000,
the tax
shall be P 33,750 plus 175% of the excess over P
30,000;chanroblesvirtualawlibrary
If it exceeds P 35,000, the tax shall be P 42,500
plus 200% of
the excess over P 35,000.
Any percentage tax paid under sections one hundred and eighty-four, one
hundred and eighty-four-A, one hundred and eighty-five, one hundred and
eighty-five-A, one hundred and eighty-five-B, one hundred and
eighty-six and one hundred and eighty-nine during the preceding taxable
quarter on domestically manufactured or produced, or imported raw
materials, parts, accessories of other articles forming parts of the
finished products or will form part thereof shall be credited against
the gross sales tax due on the finished product. In case the tax paid
on the raw materials, accessories or other articles exceeds the gross
sales tax due on the finished products, the excess shall be credited
against the gross sales tax due on the finished products for the
succeeding taxable quarter: Provided, however, That the amount of the
tax on these materials, parts, accessories or other articles are
indicated as a separate item in the invoices.
A sale of an automobile shall, for the purpose of this section, be
considered to be a sale of the chassis and of the body together with
parts and accessories with which the same are usually equipped:
Provided, however, That parts and accessories of automobiles imported
as completely knocked down parts by assemblers registered under the
progressive car manufacturing program of the Board of Investments, or
as replacement as well as locally manufactured parts and accessories
for the assembly of automobiles shall be subject to tax under Section
one hundred and eighty-six.
The term "automobiles" used herein shall not include motor vehicles
classified as trucks and jeeps.
"Sec. 185-A. Percentage tax on sales of
refrigerators, air conditioners, beverage coolers, ice cream cabinets,
and others. — There shall be levied, assessed and collected once only
on every original sale, barter, exchange, or similar transaction
intended to transfer ownership of, or title to, the articles
hereinbelow enumerated a tax equivalent to forty 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: Provided, however, That where the articles
hereinbelow enumerated are locally manufactured and come under the
classification of non-integrated manufactured products as hereinafter
defined, the tax shall be fifteen per centum: Provided, further, That
where the articles hereinbelow enumerated are locally manufactured
products and come under the classification of non-integrated
manufactured products as hereinafter defined, the tax shall be seven
per centum: Provided, still further, That where the articles enumerated
hereinbelow are manufactured out of materials subject to tax under this
section, the total cost of such materials, as duly established, shall
be deductible from the gross selling price or gross value in money of
such manufactured articles: chanroblesvirtualawlibrary
(a) Refrigerators of all types;chanroblesvirtualawlibrary
(b) Beverage coolers, ice cream cabinets, water
coolers, food and beverage storage cabinets, ice-making machine, and
mild cooler cabinets, each such articles having, or being primarily
designated for use with, mechanical refrigerating unit operated by
electricity, gas, kerosene, or other means; and
(c) Air-conditioning units.
Any part or accessory of the above-mentioned articles shall be taxed at
the same rate as finished articles.
The words "integrated manufactured products" mean articles manufactured
in a manufacturing enterprise which undertakes the operations of
processing and/or physically converting raw materials such as metal
sheets, plastic pellets, wires, rods, extrusion tubings, castings,
forgings, and chemical compounds into various intermediate components
and parts, and subsequently assembling of fitting them together into
completed and finished articles: Provided, however, That not less than
eighty per centum of the components and parts of each main assembly of
the products are manufactured domestically: Provided, further, That not
less than sixty per centum of the components and parts of each main
assembly of the products are manufactured by the said manufacturing
enterprise.
The words "non-integrated manufactured products" mean articles
manufactured in a manufacturing enterprise which undertakes the
operations of a manufacturing plants as defined in the preceding
paragraph: Provided, however, That not less than fifty per centum of
the components and parts of each main assembly of the products are
manufactured domestically; Provided, further, That not less than thirty
per centum of the components and parts of each main assembly of the
products are manufactured by the said manufacturing enterprise.
The number of main assemblies which shall comprise a product and the
intermediate components and parts of each said main assembly shall be
determined by the Board of Investments.
"Sec. 186. Percentage tax on sales of other articles.
— 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 not enumerated in sections one hundred and
eighty-four, one hundred and eighty-four-A, one hundred eighty-five,
one hundred and eighty-five-A, one hundred and eighty-five-B, and one
hundred eighty-six-B, a tax equivalent to seven 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: Provided, That where the articles subject to
tax under this section are manufactured out of materials likewise
subject to tax under this section and section one hundred eighty-nine,
the total cost of such materials, as duly established, shall be
deductible from the gross selling price or gross value in money of such
manufactured articles.
"Sec. 186-B. Percentage tax on sales of processed
meat, milk, fruits and vegetables, 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, fruits and vegetables; fish
and
other sea foods;chanroblesvirtualawlibrary
(b) Wheat flour; and
(c) Poultry and animals feeds.
Provided, however, That where 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. chanroblesvirtualawlibrary
For the purposes of this section, processed meat, milk, fruits 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.
"Sec. 188. Transactions and persons not subject to
percentage tax. — In computing the tax imposed in sections one hundred
eighty-four, one hundred eighty-four-A, one hundred eighty-five, one
hundred eighty-five-A, one hundred eighty-five-B, and one hundred
eighty-six and one hundred eighty-six-B, transactions in the following
commodities shall be excluded.
(a) Articles subject to tax under Title IV of this
Code.
(b) Agricultural food products, ordinary salt and all
kinds of fish and its by-products, whether in their original state or
not, except those enumerated under Section 186-B. Agricultural non-food
products, whether in their original state or not when sold, bartered or
exchanged by the producer or owner of the land where produced. The
phrase "whether in their original state or not" means the
transformation of said products by the application of simple processes
to preserve or otherwise to prepare said products for the market such
as freezing, drying, salting, smoking or stripping.
(c) Minerals and mineral products, whether in their
original state or not when sold, bartered, or exchanged by the lessee,
concessionaire or owner of the mineral land from which removed.
(d) Articles subject to tax under section one hundred
eighty-nine of this Code.
(e) Articles shipped or exported by the manufacturer
or producer, irrespective of any shipping arrangement that may be
agreed upon which may influence or determine the transfer of ownership
of the articles so exported: Provided, however, That sales to tourists,
which are paid for in the foreign currency and on which sales tax had
been previously paid, shall be considered export sales, if the articles
purchased are actually removed by them from the Philippines upon their
departure.
Provided, further, That if the seller is other than the manufacturer or
importer, he may credit the amount corresponding to the sales tax on
the articles sold, against his other tax liabilities.
The following shall be exempt from the percentage taxes imposed in
section one hundred eighty-four, one hundred eighty-five and one
hundred eighty-six.
(a) Persons whose gross monthly sales or receipts do
not exceed two hundred pesos.
(b) All Filipinos in public market places selling at
retail all forms or kinds of food products, meat, fruits, vegetables,
game, poultry, fish, and other raw and/or cooked food products.
(c) Peddlers and sellers at fixed stands and other
similar selling places engaged exclusively in the sale at retail of
domestic meat, fruits, vegetables, game, poultry, fish, and similar
domestic food products, whose total stock in trade in any one day does
not reach a retail value of one hundred pesos.
(d) Producers of commodities of all classes working
in their own homes, consisting of parents and children living as one
family, when the value of each day's production by each person capable
of working is not in excess of five pesos.
(e) Persons importing articles under contract for the
exclusive use of the Armed Forces of the Philippines.
"Sec. 189. Percentage tax upon proprietors or
operators of rope factories, sugar central 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 two 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-products 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 of Internal Revenue.
A proprietor or operator of a refined sugar factory shall be subject to
the tax imposed by this section but shall be permitted to deduct from
the actual selling price or market value of the refined sugar the total
cost, as duly established, of the raw sugar upon which the tax under
this section has been previously paid.
Where articles are manufactured out of materials subject to tax under
this section, the total cost, as duly established of the said materials
shall be deductible from the gross selling price or gross value in
money of the manufactured articles.
"Sec. 190. Compensation tax. — On the commodities,
goods, wares, or merchandise purchased or received by persons residing
or doing business in the Philippines, there shall be paid a
compensating tax on the total value thereof, including freight,
postage, insurance, commission and similar charges, equivalent to the
percentage taxes imposed under this Title on original transactions
effected by merchants, importers, or manufacturers, such tax to be paid
before the withdrawal or removal of said commodities, goods, wares or
merchandise from the customhouses of the post office, except as follows:cralaw:red
(a) Articles subject to the specific taxes under
Title IV of this Code and articles to be used by the importer himself
in the manufacture or preparation of articles subject to specific taxes;chanroblesvirtualawlibrary
(b) Commodities, goods, wares or merchandise
purchased or received by merchants, importers and manufacturers who are
subject to tax under Sections one hundred eighty-four, one hundred
eighty-four-A, one hundred eighty-five, one hundred eighty-five-A, one
hundred eighty-five-B, one hundred eighty-six, one hundred
eighty-six-B, or one hundred eighty-nine of this Title, where such
importations are to be sold, resold, bartered or exchanged or are to be
used in the manufacture or preparation of articles for sale, barter, or
exchange and are to form part thereof;chanroblesvirtualawlibrary
(c) Articles to be used by the importer himself in
the manufacture or preparation of articles for export;chanroblesvirtualawlibrary
(d) Articles to be used by the importer himself as
passenger and/or cargo vessel of more than ten thousand tons, whether
coastwise or ocean-going, including engines and spare parts of said
vessel;chanroblesvirtualawlibrary
Articles brought in by resident, including non-resident-citizens coming
to resettle in the Philippines, and accompanying them upon their return
or arriving within ninety days before or after their arrival.
(e) Professional instruments and implements, tools of
trade, occupation or employment, wearing apparel, domestic animals, and
personal and household effects belonging to persons coming to settle
for the first time in the Philippines, for their own use and not for
barter, sale or exchange, accompanying such persons, or arriving within
ninety days before or after their arrival, upon the production of
evidence satisfactory to the Commissioner that such persons are
actually coming to settle in the Philippines, that the articles were
brought from their former place of abode, that change of residence is
bona fide: Provided, That no vehicle, vessel, craft or merchandise of
any kind, machinery or other articles for use in manufacture shall be
classified under this subsection.
If any article withdrawn from the customhouse or the post office
without the payment of the compensating tax is subsequently used by the
importer for other purposes, corresponding entry should be made in the
books of accounts, if any are kept, or a written notice thereof sent to
the Commissioner of Internal Revenue and payment of the corresponding
compensating tax made within ten days from the date of such entry or
notice. If the tax is not paid within such period, the amount of tax
shall be increased by twenty-five per centum the increment to form part
of the tax.
In the case of tax free articles brought or imported into the
Philippines by persons, entities or agencies exempt from tax which are
subsequently sold, transferred or exchanged in the Philippines to
non-exempt private persons or entities, the purchasers or recipients
shall be considered the importers thereof. The tax due on each article
shall constitute a liens on the article itself superior to all other
charges or liens, irrespective of the possessor thereof.
The provisions of existing laws to the contrary notwithstanding,
exemptions from this tax shall be limited to the following: chanroblesvirtualawlibrary
1. Those enumerated in this section;chanroblesvirtualawlibrary
2. Those granted under Republic Act No. 5186, as
amended, Republic Act No. 6135, as amended, and Republic Act No. 5490;chanroblesvirtualawlibrary
3. Those granted in pursuance of or in compliance
with international treaties or commitments, such as ADB, RP Host
Agreement (1966), the 1947 Convention on Privileges and Immunities of
the United Nations and its Specialized Agencies; the United States
Agency for International Development-RP Agreement; the 1947 Military
Bases Agreement; and other similar treaties or commitments; and
4. Those that may be granted by the President upon
recommendation of the NEDA in the interest of economic development.
"Sec. 191. Contractors, proprietors or operators of
dockyards and others. — A contractor's tax of three 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 Numbered Four thousand
five hundred sixty-six;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
system, gas or electric light, heat, or power;chanroblesvirtualawlibrary
(5) Proprietors or operators of smelting plants,
engraving plants, planting 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 or vehicles, 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, slenderizing and
body building saloons and similar establishments, photographic studios,
and funeral parlors;chanroblesvirtualawlibrary
(12) Proprietors or operators of hotels, motels and
lodging houses;chanroblesvirtualawlibrary
(13) Proprietors or operators of arrastre and
stevedoring, warehousing, or 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 except persons, associations and corporations under
contract for embroidery and apparel for export, as well as their agents
and contractors and except gross receipts of or from a pioneer industry
registered with the Board of Investments under the provisions of
Republic Act Numbered Five thousand one hundred and eighty-six;chanroblesvirtualawlibrary
(17) Lessors or personal property.
The term independent contractors include persons (juridical or natural)
not enumerated above (but not including individuals subject to the
occupation tax under Section 182 (b) of this Code whose activity
consists essentially of the sale of all kinds of services for a fee
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.
"Sec. 204. Persons subject to tax, to issue sales
invoices or receipt. — All persons subject to an internal revenue tax
shall, for each sale or transfer of merchandise or for services
rendered valued at two pesos or more, prepare and issue sales or
commercial invoices or receipts serially numbered in duplicate showing,
among other things, their names, or styles, if any, and business
addresses: Provided, That in case of sales, receipts or transfers in
the amount of fifty pesos or more, or, regardless of amount, where the
sale is made for the purpose of resale, the invoices or receipts shall
further show the name, or style, if any, and business address of the
purchaser, customer or client. The original of each sales invoice or
receipts shall be issued to the purchaser, customer, or client who, if
engaged in any taxable business, shall keep and preserve the same in
his place of business for a period of five years from the date of the
invoice or receipt, the duplicate to be kept and preserved by the
persons subject to tax, also in his place of business for a like
period: Provided, That persons subject to tax whose gross sales,
earnings or receipts during the last preceding year exceed twenty
thousand pesos shall, for each sale or transaction, issue an invoice or
receipt, irrespective of the value of the article sold or service
rendered.
The Commissioner may, in meritorious cases, exempt any person subject
to an internal revenue tax, from compliance with the provisions of this
section. In any event, public market vendors selling exclusively
domestic meat, fruits, vegetables, game, poultry, fish and other
domestic food products are hereby exempted from the provisions of this
section.
Section 7. Certain sections of Title VI of the same
Code, are hereby amended to read as follows:cralaw:red
"TITLE VI — DOCUMENTARY STAMP TAX
"Sec. 219. Stamp Tax on foreign bills of exchange and
letters of credit. — On all foreign bills of exchange and letters of
credit (including orders, by telegraph or otherwise, for the payment of
money issued by express or steamship companies or by any person or
persons) drawn in but payable out of the Philippines in a set of three
or more according to the custom of merchants and bankers, there shall
be collected a documentary stamp tax of eight centavos on each two
hundred pesos, or fractional part thereof, of the face value of any
such bill of exchange or letter of credit, or the Philippine equivalent
of such face value, if expressed in foreign currency. chanroblesvirtualawlibrary
"Sec. 220. 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
sixteen centavos on each two hundred pesos or fractional part thereof,
of the amount insured by any such policy.
"Sec. 226. 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 thirty 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 one peso:
Provided, however, That if the amount of the receipt exceeds twenty
pesos an additional tax of one peso on each twenty pesos or fractional
part thereof shall be collected.
"Sec. 226-A. 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 five centavos: Provided, That if
the cost of the ticket exceeds one peso, an additional tax of five
centavos on every one peso or fractional part thereof shall be
collected.
Section 8. Certain sections of Title VII of the same
Code, are hereby amended to read as follows:cralaw:red
"TITLE VII — MINING TAXES
"Sec. 241. Occupational fee. — A locator, holder, or
occupant of a mining claim shall pay to the Commissioner in advance
from the date of the registration of the claim in the Office of the
Mining Recorder, and on the same date every year thereafter an annual
occupation fee of two pesos a hectare or fractional part thereof, until
the lease covering the mining claim shall have been granted. For this
purpose, the Office of the Mining Recorder shall submit to the
treasurers concerned, a list of the mining claims, including the areas
of such claims registered with it. Fifty per centum of all the fees
collected under this section shall accrue to the province, and fifty
per centum to the municipality in which the mining claims are located:
Provided, That in case the mining claims are located in a chartered
city, the full amount shall accrue to the city concerned. Failure to
pay the occupation fee herein required within thirty days after demand
shall cause the mining claims to be open for relocation and lease by
other persons qualified to locate and lease the same under the
provisions of the Mining Act, in the same manner as if no location of
the said mining claims had ever been made, unless the locator, holder,
occupant, his heirs, executors, administrators or legal
representatives, shall have paid the delinquent occupation fee plus a
surcharge of twenty-five per cent for every year of delinquency and
have resumed occupation of the claims before relocation by other
persons.
No lease shall be granted on any mining claim until the occupation fees
and surcharges required to be paid under this section shall have been
fully paid: Provided, however, That nothing herein contained shall be
construed to extend the period of four years within which application
for lease of mining claims shall be filed from the date of the
recording of the claim in the Office of the Mining Recorder, as
provided for in the Mining Act.
Section 9. Certain sections of Title VIII of the same
Code, are hereby amended to read as follows:cralaw:red
"TITLE VIII — MISCELLANEOUS TAXES
"Sec. 249. Tax on Banks. — There shall be collected a
tax of five per centum on the gross receipts derived by all banks doing
business in the Philippines from interests, discounts, dividends,
commissions, profits from exchange, royalties, rentals of property,
real and personal, and all other items treated as gross income under
section twenty-nine of this Code. This tax shall also be collected from
other financial intermediaries on their gross receipts derived from
quasi-banking activities as herein defined.
"Bank" as herein used, indicates every incorporated or other bank, and
every person, association, or company having a place of business where
credits are opened by the deposit or collection of money or currency
subject to be paid or remitted upon draft, check or order, or where
money is advanced or loaned on stocks, bonds, bullion, bills of
exchange or promissory notes, are received for discount or for sale.
Quasi-banking activities shall refer to borrowing funds from twenty or
more personal or corporate lenders at any one time, through the
issuance, endorsement or acceptance of debt instruments of any kind
other than deposits for the borrower's own accounts, or through the
issuance of certificates of assignment or similar instruments, with
recourse, or of repurchase agreements for purposes of relending or
purchasing receivables and other similar obligations.
"Sec. 249-A. Tax on Finance Companies. — There shall
be collected a tax of five per centum on the gross receipts derived by
all finance companies doing business in the Philippines from interests,
discounts, and all other items treated as gross income under this Code.
As used in this section "finance companies" refers to corporations or
partnerships other than a bank, or insurance company, primarily
organized for the purpose of extending credit facilities to consumers
and to industrial, commercial or agricultural enterprises whether by
granting direct loans or by discounting or factoring commercial papers
or accounts receivables for profit, buying and selling contracts,
leases, chattel mortgages and other evidences of indebtedness arising
out of one or more of the steps in the distribution and sale of
commodities.
"Sec. 250. Time for payment of tax. — Increase of tax
in case of delinquency. — The tax imposed in sections 249 and 249-A
shall be payable at the end of each calendar quarter and it shall be
the duty of every bank or finance company, within twenty days after the
end of each calendar quarter, to make a true and complete return of the
amount of gross income derived during the preceding calendar quarter
and pay the tax due thereon, and, if the tax is not paid within the
time prescribed herein, the amount of the tax shall be increased by
twenty-fine per centum, the increment to be a part of the tax.
In case of willful neglect to file the return within the period
prescribed herein, or in case a false or fraudulent return is wilfully
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 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 as the tax.
"Sec. 256. Time for payment of tax. — Increase of tax
in case of delinquency. — The tax on insurance companies shall be due
within twenty days after the end of each calendar quarter. It shall be
the duty of every insurance company to make a true and complete return
of the amount of gross premiums derived during the preceding calendar
quarter and pay the tax due thereon and if the tax is not paid within
the time prescribe herein the amount of the tax shall be increased by
twenty-five per centum, the increment to be part of the tax.
In case of willful neglect to file the return within the period
prescribed herein, or in case a false or fraudulent return is wilfully
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.
"Sec. 260. Amusement taxes. — There shall be
collected from the proprietor, lessee, or operator of theaters,
cinematographs, concert halls, circuses and other places of amusement
the following rates:cralaw:red
(a) When the amount paid for admission is one peso or
less, twenty per cent;chanroblesvirtualawlibrary
(b) When the amount paid for admission exceeds one
peso, thirty per cent.
In the case of theaters or cinematographs, the taxes herein prescribed
shall first be deducted and withheld by the proprietors, lessees, or
operators of the theaters or cinematographs and paid to the
Commissioner before the gross receipts are divided between the
proprietors, lessees, or operators of the theaters or cinematographs
and the distributors of the cinematographic films.
In the case of cabarets, day and night cubs, JAI-ALAI and race tracks,
there shall be collected from the proprietor, lessee or operator a tax
equivalent to twenty per centum and in the case of cockpits, ten per
centum of their gross receipts irrespective of whether or not any
amount is charged or paid for admission. For the purpose of amusement
tax, the term gross receipts embraces all the receipts of the
proprietor, lessee or operator of the amusement place.
The holding of operas, concerts, recitals, dramas, painting, and art
exhibitions, flower shows, musical programs, literary and oratorical
presentations, except fashion shows, film exhibitions and radio or
phonographic records thereof, shall be exempt from the payment of the
taxes imposed in this section.
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, within twenty days after the end of each quarter, to make a
true and complete return of the amount of 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.
In case of willful neglect to file the return within the period
prescribed herein, or in case a false or fraudulent return is wilfully
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.
As used in this section "other places of amusements" refers to those
places where one seeks admission to entertain himself by seeing or
viewing the show or performance, but does not include those places
where one seeks admission to entertain himself by direct participation.
"Sec. 261. Amusement tax payable by charitable
institutions. — This section is hereby repealed.
"Sec. 302. Inspection fees. — For inspection made in
accordance with this Chapter, there shall be collected a fee of fifty
centavos for each thousand cigars or fraction thereof; ten centavos for
each thousand cigarettes or fraction thereof; two centavos for each
kilogram of leaf tobacco or fraction thereof; and three centavos for
each kilogram or fraction thereof; of scrap and other manufactured
tobacco.
The inspection fee on cigars, cigarettes and other tobacco products
shall be paid by the manufacturer, producer or owner within ten days
after the end of each month while the inspection fee on leaf tobacco,
scrap and other manufactured tobacco shall be paid immediately before
removal from the establishment of the wholesaler, manufacturer, or
redrying plant. In case of imported leaf tobacco and products thereof,
the inspection fee shall be paid by the importer before removal from
customs' custody.
If the inspection fee is not paid within the time specified above, the
amount of the fee shall be increased by twenty-five per centum, the
increment to be a part of the fee.
Fifty per centum of the tobacco inspection fee shall accrue to the
Tobacco Inspection Fund created by Section 12 of Act No. 2613, as
amended by Act No. 3179 and fifty per centum shall accrue to the
Cultural Center of the Philippines.
Section 10. Certain sections of Title IX of the same
Code, are hereby amended to read as follows:cralaw:red
"TITLE IX. — GENERAL ADMINISTRATIVE PROVISIONS
"Sec. 306. Recovery of tax erroneously or illegally
collected. — No suit or proceeding shall be maintained in any court for
the recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of any
penalty claimed to have been collected without authority, or of any sum
alleged to have been excessive or in any manner wrongfully collected,
until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or
not such tax, penalty, or sum has been paid under protest or duress. In
any case, no such suit or proceeding shall be begun after the
expiration of two years from the date of payment of the tax or penalty
regardless of any supervening cause that may arise after payment:
Provided, however, That the Commissioner may even without a written
claim therefor, refund or credit any tax, where on the face of the
return upon which payment was made, such payment appears clearly to
have been erroneously paid.
"Sec. 308. Form and mode of proceeding in actions
arising under this Code. — Civil and criminal actions and proceedings
instituted in behalf of the Government under the authority of this Code
or other law enforced by the Bureau of Internal Revenue shall be
brought in the name of the Government of the Philippines and shall be
conducted by the provincial or city fiscal, or the Solicitor-General,
or by the legal officers of the Bureau of Legal Internal Revenue
deputized by the Secretary of Justice, but no civil and criminal
actions for the recovery of taxes or the enforcement of any fine,
penalty, or forfeiture under this Code shall be begun without the
approval of the Commissioner of Internal Revenue. chanroblesvirtualawlibrary
"Sec. 309. Authority of Commissioner to make
compromises and to refund taxes. — The Commissioner may:cralaw:red
"(1) Compromise any civil case arising under this
code or other laws or part of laws administered by the Bureau of
Internal Revenue when there is reasonable doubt as to the validity of
the claim against the taxpayer or where the financial position of the
taxpayer demonstrates a clear inability to pay the assessed tax; or any
criminal case other than one involving the commission of fraud by the
taxpayer before that case is filed in Court.
"(2) Abate the payment of any tax that appears to be
unjustly or excessively assessed or the unpaid portion of the assessed
tax or any liability in respect thereof, if under the rules and
regulations to be recommended by the Commissioner with the approval of
the Secretary of Finance, the administration and collection costs
involved do not warrant the collection of the amount due.
"(3) Credit or refund taxes erroneously or illegally
received, or penalties imposed without authority; refund the value of
internal revenue stamps when they are returned in good condition by the
purchaser, and, in his discretion, redeem or change unused stamps that
have been rendered unfit for use and refund their value upon proof of
destruction. No credit or refund of taxes or penalties shall be allowed
unless the taxpayer files in writing with the Commissioner a claim for
credit or refund within two years after the payment of the tax or
penalty."
"Sec. 311. Remedy for enforcement of statutory penal
provisions. — The remedy for enforcement of statutory penalties of all
sorts shall be by criminal or civil action, as the particular situation
may require, subject to approval of the Commissioner of Internal
Revenue.
"Sec. 315. Nature and extent of tax lien. — If any
person, corporation, partnership, joint-account (cuenta en
participacion) association, or insurance company liable to pay an
internal revenue tax, neglects or refuses to pay the same after demand,
the amount shall be a lien in favor of the Government of the
Philippines from the time when the assessment was made by the
Commissioner of Internal Revenue until paid, with interest, penalties,
and costs that may accrue in addition thereto upon all property and
rights to property belonging to the taxpayer: Provided, That this lien
shall not be valid against any mortgagee, purchaser, or judgment
creditor until notice of such lien shall be filed by the Commissioner
in the office of the register of deeds of the province or city where
the property of the taxpayer is situated or located.
"Sec. 316. Remedies for the collection of delinquent
taxes. — The civil remedies for the collection of internal revenue
taxes, fees, or charges, and any increment thereto resulting from
delinquency shall be (a) by distraint of goods, chattels, or effects,
and other personal property of whatever character, including stocks and
other securities, debts, credits, bank accounts, and interest in and
rights to personal property, and by levy upon real property and
interest in or rights to real property; and (b) by civil or criminal
action. Either of these remedies or both simultaneously may be pursued
in the discretion of the authorities charged with the collection of
such taxes; Provided, however, That the remedies of distraint and levy
shall not be availed of where the amount of tax involved is not more
than one hundred pesos.
The judgment in the criminal case shall not only impose the penalty but
shall also order payment of the taxes subject of the criminal case as
finally decided by the Commissioner of Internal Revenue. chanroblesvirtualawlibrary
The Bureau of Internal Revenue shall advance the amounts needed to
defray costs of collection by means of civil or criminal action,
including the preservation or transportation of personal property
distrained and the advertisement and sale thereof as well as of real
property and improvement thereon.
"Sec. 328. Forfeiture to Government for want of
bidder. — In case there is no bidder for real property exposed for sale
as hereinabove provided or if the highest bid is for an amount
insufficient to pay the taxes, penalties, and costs, the Internal
Revenue Officer conducting the sale shall declare the property
forfeited to the Government in satisfaction of the claim in question
and within two days thereafter shall make a return of his proceedings
and the forfeiture which shall be spread upon the records of his
office. It shall be the duty of the Register of Deeds concerned upon
registration with his office of any such declaration of forfeiture to
transfer the title of the property forfeited to the government without
the necessity of an order from a competent Court.
Within one year from the date of such forfeiture the taxpayer, or any
one for him, may redeem said property by paying to the Commissioner or
the latter's Collection Agent the full amount of the taxes and
penalties, together with interest thereon and the costs of sale; but if
the property be not thus redeemed, the forfeiture shall become absolute.
"Sec. 332. Exceptions as to period of limitation of
assessment and collection of taxes. — (a) In the case of a false or
fraudulent return with intent to evade tax or of a failure to file a
return, the tax may be assessed, or a proceeding in court for the
collection of such tax may be begun without assessment, at any time
within ten years after the discovery of the falsity, fraud, or
omission; Provided, That, in a fraud assessment which has become final
and executory, the fact of fraud shall be judicially taken cognizance
of in the civil or criminal action for the collection thereof.
(b) Where before the expiration of the time
prescribed in the preceding section for the assessment of the tax, both
the Commissioner of Internal Revenue and the taxpayer have consented in
writing to its assessment after such time, the tax may be assessed at
any time prior to the expiration of the period agreed upon. The period
so agreed upon may be extended by subsequent agreements in writing made
before the expiration of the period previously agreed upon.
(c) Where the assessment of any internal-revenue tax
has been made within the period of limitation above-prescribed, such
tax may be collected by distraint or levy or by a proceeding in court,
but only if begun (1) within five years after the assessment of the
tax, or (2) prior to the expiration of any period for collection agreed
upon in writing by the Commissioner of Internal Revenue and the
taxpayer before the expiration of such five-year period. The period so
agreed upon may be extended by subsequent agreements in writing made
before the expiration of the period previously agreed upon.
"Sec. 333. Suspension of running of statute. — The
running of the statute of limitations provided in Section 331 or 332 on
the making of assessment and the beginning of distraint or levy or a
proceeding in court for collection, in respect of any deficiency, shall
be suspended for the period during which the Commissioner of Internal
Revenue is prohibited from making the assessment or beginning distraint
or levy or a proceeding in court, and for sixty days thereafter; when
the taxpayer requests for a reinvestigation which is granted by the
Commissioner when the taxpayer cannot be located in the address given
by him in the return filed upon which a tax is being assessed or
collected: Provided, That, if the taxpayer informs the Commissioner of
Internal Revenue of any change in address, the statute will not be
suspended; when the warrant of distraint and levy is served upon the
taxpayer, his authorized representative, or a member of his household
with sufficient discretion, and no property could be located; and when
the taxpayer is out of the Philippines.
"Sec. 337. Preservation of books of accounts, and
other accounting records. — All the books of accounts, including the
subsidiary books, and other accounting records, including the
subsidiary books, and other accounting records, of corporations,
partnerships, or persons shall be preserved by them for a period of at
least five years from the last entry in each book and shall be subject
to examination and inspection only once in a taxable year during that
five-year period by internal revenue officers, except in cases of
fraud, irregularity or mistake as determined by the Commissioner, or
unless the taxpayer requests otherwise, in which case, another
examination and inspection may be made. Examination and inspection of
books of accounts and another accounting records shall be done only in
the taxpayers' 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 of Internal Revenue 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. Corporation and partnerships
contemplating dissolution must notify the Commissioner of Internal
Revenue and shall not be dissolved until cleared of any tax liability.
"Sec. 337-A. Supplying of taxpayer account number. —
Any person required under the authority of this Code to make, render,
or file a return, statement, or other document shall be supplied with
or assigned a taxpayer account number which he shall include in such
return, statement or document filed with the Commissioner for his
proper identification for tax purposes.
Only one account number shall be given a person required to have one,
and any person who shall secure more than one account number shall be
criminally liable under the provisions of Section 352 of this Code.
Section 11. Section 347 of Title X of the same Code
is hereby amended to read as follows:cralaw:red
"TITLE X. — MISCELLANEOUS ADMINISTRATIVE PROVISIONS
"Sec. 347. Unlawful divulgence of trade secrets. —
Except as provided in Section 81 of this Code and Section 26 of
Republic Act Numbered Six Thousand Three Hundred Eighty-Eight, any
officer or employee of the Bureau of Internal Revenue who divulges to
any person or makes known in any other manner than may be provided by
law information regarding the business, income, or inheritance of any
taxpayer, the secrets, operation, style of work, or apparatus of any
manufacturer or producer, or confidential information regarding the
business of any taxpayer, knowledge of which was acquired by him in the
discharge of his official duties, shall be fined in a sum of not more
than two thousand pesos or imprisoned for a term of not less than six
months nor more than five years, or both.
Section 12. Effective date. — Except as otherwise
provided specifically, and except the tax on the income of non-resident
citizens under the amendment to Section 21 which shall apply to income
beginning January one, nineteen hundred and seventy-two, the provisions
of this Decree take effect on January one, nineteen hundred and
seventy-three.
Done in the City of Manila,
this 24th day of November, in the year of Our Lord, nineteen hundred
and seventy-two.
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