Comparative Matrix PDF

Topic National Internal Revenue Code
National Internal Revenue Code

of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(as amended by R.A. No. 10963)
Title of the Code SEC. 1. This Code shall be known as SEC. 1. This Code shall be known
the National Internal Revenue Code of the National Internal Revenue Code
1997. 1997.
TITLE I — ORGANIZATION AND TITLE I — ORGANIZATION AND

FUNCTION OF THE BUREAU OF FUNCTION OF THE BUREAU OF
INTERNAL REVENUE INTERNAL REVENUE
Powers and Duties of the SEC. 2. The Bureau of Internal SEC. 2. The Bureau of Interna
Bureau of Internal Revenue shall be under the Revenue shall be under th
Revenue supervision and control of the supervision and control of th
Department of Finance and its Department of Finance and it
powers and duties shall powers and duties sha
comprehend the assessment and comprehend the assessment an
collection of all national internal collection of all national interna
revenue taxes, fees, and charges, revenue taxes, fees, and charges
and the enforcement of all and the enforcement of a
forfeitures, penalties, and fines forfeitures, penalties, and fine
connected therewith, including the connected therewith, including th
execution of judgments in all cases execution of judgments in all case
decided in its favor by the Court of decided in its favor by the Court o
Tax Appeals and the ordinary Tax Appeals and the ordinar
courts. The Bureau shall give effect courts. The Bureau shall give effec
to and administer the supervisory to and administer the superv
and police powers conferred to it by and police powers conferred to it b
this Code or other laws. this Code or other laws.
Chief Officials of the SEC. 3. The Bureau of Internal SEC. 3. The Bureau of Inter
Bureau of Internal Revenue shall have a chief to be Revenue shall have a chief to
Revenue known as Commissioner of Internal known as Commissioner of Inter
Revenue, hereinafter referred to as Revenue, hereinafter referred to
the Commissioner and four (4) the Commissioner and four
assistant chiefs to be known as assistant chiefs to be
Deputy Commissioners. Deputy Commissioners.
Power of the
SEC. 4. The power to interpret the SEC. 4. The power to interpret
Commissioner to Interpret
provisions of this Code and other tax provisions of this Code and other
Tax Laws and to Decide
laws shall be under the exclusive laws shall be under the exclus
Tax Cases
and original jurisdiction of the and original jurisdic
Commissioner, subject to review by Commissioner, subject to review
the Secretary of Finance. the Secretary of Finance.
Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2019 1
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The power to decide dispu
The power to decide disputed
assessments, refunds of inter
assessments, refunds of internal
revenue taxes, fees or ot
revenue taxes, fees or other
charges, penalties imposed
charges, penalties imposed in
relation thereto, or other matt
relation thereto, or other matters
arising under this Code or
arising under this Code or other
or portions thereof administered
laws or portions thereof
the Bureau of Internal Revenue
administered by the Bureau of
vested in the Commissioner, subj
Internal Revenue is vested in the
to the exclusive appellate jurisdict
Commissioner, subject to the
of the Court of Tax Appeals.
exclusive appellate jurisdiction of the
Court of Tax Appeals.
Power of the
SEC. 5. In ascertaining the SEC. 5. In ascertaining
Commissioner to Obtain
correctness of any return, or in correctness of any return, or
Information, and to
making a return when none has making a return when none h
Summon, Examine, and
been made, or in determining the been made, or in determining
Take Testimony of Persons
liability of any person for any internal liability of any person for any inter
revenue tax, or in collecting any revenue tax, or in collecting a
such liability, or in evaluating tax such liability, or in evaluating
compliance, the Commissioner is compliance, the Commissioner
authorized: authorized:
(A) To examine any book, paper, (A) To examine any book, pap
record, or other data which may be record, or other data which may
relevant or material to such inquiry; relevant or material to such inquiry
(B) To obtain on a regular basis from (B) To obtain on a regular basis fr

any person other than the person any person other than the pers
whose internal revenue tax liability is whose internal revenue tax liabilit
subject to audit or investigation, or subject to audit or investigation,
from any office or officer of the from any office or officer of
national and local governments, national and local governmen
government agencies and government agencies a
instrumentalities, including the instrumentalities, including
Bangko Sentral ng Pilipinas and Bangko Sentral ng Pilipinas a
government-owned or -controlled government-owned or -contro
corporations, any information such corporations, any information su
as, but not limited to, costs and as, but not limited to, costs a
volume of production, receipts or volume of production, receipts
sales and gross incomes of sales and gross incomes
taxpayers, and the names, taxpayers, and the nam
addresses, and financial statements addresses, and financial stateme
of corporations, mutual fund of corporations, mutual fu
companies, insurance companies, companies, insurance compani
regional operating headquarters of regional operating headquarters
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
multinational companies, joint multinational companies, jo
accounts, associations, joint accounts, associations, jo
ventures or consortia and registered ventures or consortia and registe
partnerships, and their members: partnerships, and their members;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Provided, That the Cooperative
Development Authority shall submit
to the Bureau a tax incentive report,
which shall include information on
the income tax, value-added tax,
and other tax incentives availed of
by cooperatives registered and
enjoying incentives under Republic
Act No. 6938, as amended:
Provided, further, That the
information submitted by the
Cooperative Development Authority
to the Bureau shall be submitted to
the Department of Finance and shall
be included in the database created
under Republic Act No. 10708,
otherwise known as 'The Tax
Incentives Management and
Transparency Act (TIMTA)'.
(as amended by Sec. 3, R.A. No.
10963, December 19, 2017)
(C) To summon the person liable for (C) To summon the person liable
tax or required to file a return, or any tax or required to file a return, or a
officer or employee of such person, officer or employee of such pers
or any person having possession, or any person having possessi
custody, or care of the books of custody, or care of the books
accounts and other accounting accounts and other account
records containing entries relating to records containing entries relating
the business of the person liable for the business of the person liable
tax, or any other person, to appear tax, or any other person, to app
before the Commissioner or his duly before the Commissioner or his d
authorized representative at a time authorized representative at a ti
and place specified in the summons and place specified in the summo
and to produce such books, papers, and to produce such books, pape
records, or other data, and to give records, or other data, and to g
testimony; testimony;
(D) To take such testimony of the (D) To take such testimony of

person concerned, under oath, as person concerned, under oath,
may be relevant or material to such may be relevant or material to su
inquiry; and inquiry; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(E) To cause revenue officers and (E) To cause revenue officers a

employees to make a canvass from employees to make a canvass fr
time to time of any revenue district time to time of any revenue dist
or region and inquire after and or region and inquire after a
concerning all persons therein who concerning all persons therein w
may be liable to pay any internal may be liable to pay any inter
revenue tax, and all persons owning revenue tax, and all persons own
or having the care, management or or having the care, management
possession of any object with possession of any obje
respect to which a tax is imposed. respect to which a tax is imposed.
The provisions of the forego

The provisions of the foregoing paragraphs notwithstanding, noth
paragraphs notwithstanding, nothing in this Section shall be construed
in this Section shall be construed as granting the Commissioner
granting the Commissioner the authority to inquire into ba
authority to inquire into bank deposits other than as provided
deposits other than as provided for in Section 6(F) of this Code.
in Section 6(F) of this Code.
Power of the
SEC. 6. (A) Examination of Returns SEC. 6. (A) Examination of Retu
Commissioner to Make
and Determination of Tax Due. — and Determination of Tax Due
Assessments and
After a return has been filed as After a return has been filed
Prescribe Additional
required under the provisions of this required under the provisions of t
Requirements for Tax
Code, the Commissioner or his duly Code, the Commissioner or his d
Administration and
authorized representative may authorized representative m
Enforcement
authorize the examination of any authorize the examination of a
taxpayer and the assessment of the taxpayer and the assessment of
correct amount of tax, correct amount of tax: Provid
notwithstanding any law requiring however, That failure to file a ret
the prior authorization of any shall not prevent the Commissio
government agency or from authorizing the examination
instrumentality: Provided, however, any taxpayer.
That failure to file a return shall not
prevent the Commissioner from
authorizing the examination of any
taxpayer.
The tax or any deficiency tax so The tax or any deficiency tax
assessed shall be paid upon notice assessed shall be paid upon not
and demand from the Commissioner and demand from the Commissio
or from his duly authorized or from his duly authoriz
representative. representative.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Any return, statement or declaration Any return, statement or declarat

filed in any office authorized to filed in any office authorized
receive the same shall not be receive the same shall not
withdrawn: Provided, That within withdrawn: Provided, That wit
three (3) years from the date of such three (3) years from the date of su
filing, the same may be modified, filing, the same may be modifi
changed, or amended: Provided, changed, or amended: Provid
further, That no notice for audit or further, That no notice for audit
investigation of such return, investigation of such retu
statement or declaration has, in the statement or declaration has, in
meantime, been actually served meantime, been actually serv
upon the taxpayer. upon the taxpayer.
(B) Failure to Submit Required (B) Failure to Submit Requi

Returns, Statements, Reports and Returns, Statements, Reports a
other Documents. — When a report other Documents. — When a rep
required by law as a basis for the required by law as a basis for
assessment of any national internal assessment of any national inter
revenue tax shall not be forthcoming revenue tax shall not be forthcom
within the time fixed by laws or rules within the time fixed by laws or ru
and regulations or when there is and regulations or when
reason to believe that any such reason to believe that any su
report is false, incomplete or report is false, incomplete
erroneous, the Commissioner shall erroneous, the Commissioner s
assess the proper tax on the best assess the proper tax on the b
evidence obtainable. evidence obtainable.
In case a person fails to file a In case a person fails to file

required return or other document at required return or other documen
the time prescribed by law, or the time prescribed by la
willfully or otherwise files a false or willfully or otherwise files a false
fraudulent return or other document, fraudulent return or other docume
the Commissioner shall make or the Commissioner shall make
amend the return from his own amend the return from his o
knowledge and from such knowledge and from su
information as he can obtain information as he can obtain throu
through testimony or otherwise, testimony or otherwise, which s
which shall be prima facie correct be prima facie correct and suffici
and sufficient for all legal purposes. for all legal purposes.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Authority to Conduct (C) Authority to Cond

Inventory-taking, Surveillance and to Inventory-taking, Surveillance and
Prescribe Presumptive Gross Sales Prescribe Presumptive Gross Sa
and Receipts. — The Commissioner and Receipts. — The Commissio
may, at any time during the taxable may, at any time during the taxa
year, order inventory-taking of year, order inventory-taking of goo
goods of any taxpayer as a basis for of any taxpayer as a basis
determining his internal revenue tax determining his internal revenue
liabilities, or may place the business liabilities, or may place the busine
operations of any person, natural or operations of any person, natura
juridical, under observation or juridical, under observation
surveillance if there is reason to surveillance if there is reason
believe that such person is not believe that such person is
declaring his correct income, sales declaring his correct income, sa
or receipts for internal revenue tax or receipts for internal revenue
purposes. The findings may be used purposes. The findings may be us
as the basis for assessing the taxes as the basis for assessing the ta
for the other months or quarters of for the other months or quarters
the same or different taxable years the same or different taxable ye
and such assessment shall be and such assessment shall
deemed prima facie correct. deemed prima facie correct.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
When it is found that a person has When it is found that a person h

failed to issue receipts and invoices failed to issue receipts and invoic
in violation of the requirements of in violation of the requirements
Sections 113 and 237 of this Code, Sections 113 and 237 of this Co
or when there is reason to believe or when there is reason to belie
that the books of accounts or other that the books of accounts or ot
records do not correctly reflect the records do not correctly reflect
declarations made or to be made in declarations made or to be made
a return required to be filed under a return required to be filed un
the provisions of this Code, the the provisions of this Code,
Commissioner, after taking into Commissioner, after taking i
account the sales, receipts, income account the sales, receipts, inco
or other taxable base of other or other taxable base of ot
persons engaged in similar persons engaged in sim
businesses under similar situations businesses under similar sit
or circumstances or after or circumstances or a
considering other relevant considering other relev
information, may prescribe a information, may prescribe
minimum amount of such gross minimum amount of such gro
receipts, sales and taxable base, receipts, sales and taxable ba
and such amount so prescribed and such amount so prescribed s
shall be prima facie correct for be prima facie correct for purpos
purposes of determining the internal of determining the internal rev
revenue tax liabilities of such tax liabilities of such person.
person.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Authority to Terminate Taxable (D) Authority to Terminate Taxa

Period. — When it shall come to the Period. — When it shall come to
knowledge of the Commissioner that knowledge of the Commissioner t
a taxpayer is retiring from business a taxpayer is retiring from busine
subject to tax, or is intending to subject to tax, or is intending
leave the Philippines or to remove leave the Philippines or to remo
his property therefrom or to hide or his property therefrom or to hide
conceal his property, or is conceal his property, or
performing any act tending to performing any act tending
obstruct the proceedings for the obstruct the proceedings for
collection of the tax for the past or collection of the tax for the past
current quarter or year or to render current quarter or year or to ren
the same totally or partly ineffective the same totally or partly ineffec
unless such proceedings are begun unless such proceedings are beg
immediately, the Commissioner immediately, the Commissioner s
shall declare the tax period of such declare the tax period of su
taxpayer terminated at any time and taxpayer terminated at any time a
shall send the taxpayer a notice of shall send the taxpayer a notice
such decision, together with a such decision, together with
request for the immediate payment request for the immediate paym
of the tax for the period so declared of the tax for the period so decla
terminated and the tax for the terminated and the tax for
preceding year or quarter, or such preceding year or quarter, or su
portion thereof as may be unpaid, portion thereof as may be unpa
and said taxes shall be due and and said taxes shall be due a
payable immediately and shall be payable immediately and shall
subject to all the penalties hereafter subject to all the penalties herea
prescribed, unless paid within the prescribed, unless paid within
time fixed in the demand made by time fixed in the demand made
the Commissioner. the Commissioner.
(E) Authority of the Commissioner to (E) Authority of the Commissione

Prescribe Real Property Values. — Prescribe Real Property Values
The Commissioner is hereby The Commissioner is here
authorized to divide the Philippines authorized to divide the Philippin
into different zones or areas and into different zones or areas a
shall, upon mandatory consultation shall, upon consultation w
with competent appraisers both from competent appraisers b
the private and public sectors, and private and public sectors, determ
with prior notice to affected the fair market value of r
taxpayers, determine the fair market properties located in each zone
value of real properties located in area. For purposes of computing a
each zone or area, subject to internal revenue tax, the value of
automatic adjustment once every property shall be, whichever is
three (3) years through rules and higher of:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
regulations issued by the Secretary
of Finance based on the current
Philippine valuation standards:
Provided, That no adjustment in
zonal valuation shall be valid unless
published in a newspaper of general
circulation in the province, city or
municipality concerned, or in the
absence thereof, shall be posted in
the provincial capitol, city or
municipal hall and in two (2) other
conspicuous public places therein:
Provided, further, That the basis of
any valuation, including the records
of consultations done, shall be
public records open to the inquiry of
any taxpayer. For purposes of
computing any internal revenue tax,
the value of the property shall be,
whichever is the higher of:
(1) the fair market value as (1) the fair market value
determined by the Commissioner; or determined by the Commissioner;
(2) the fair market value as shown in (2) the fair market value as shown
the schedule of values of the the schedule of values of
Provincial and City Assessors. Provincial and City Assessors.
10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(F) Authority of the Commissione
(F) Authority of the Commissioner to
Inquire into Bank Deposit Accou
Inquire into Bank Deposit Accounts
and Other Related Informati
and Other Related Information Held
by Financial Institutions.
by Financial Institutions. —
Notwithstanding any contr
Notwithstanding any contrary
provision of Republic Act No. 14
provision of Republic Act No. 1405,
Republic Act No. 6426, otherw
Republic Act No. 6426, otherwise
known as the Foreign Curre
known as the Foreign Currency
Deposit Act of the Philippines,
Deposit Act of the Philippines, and
other general and special laws,
other general and special laws, the
Commissioner is hereby authorized
Commissioner is hereby authorized
inquire into the bank deposits
to inquire into the bank deposits and
other related information held
other related information held by
financial institutions of:
financial institutions of:
1) A decedent to determine his gro
1) A decedent to determine his
estate.
gross estate.
(2) Any taxpayer who has filed
(2) Any taxpayer who has filed an
application for compromise of his
application for compromise of his tax
liability under Sec. 204
liability under Sec. 204(A)(2) of this
Code by reason of finan
Code by reason of financial
incapacity to pay his tax liability.
incapacity to pay his tax liability.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
In case a taxpayer files
In case a taxpayer files an
application to compromise
application to compromise the
payment of his tax liabilities on
payment of his tax liabilities on his
claim that his financial posit
claim that his financial position
demonstrates a clear inability to p
demonstrates a clear inability to pay
the tax assessed, his application s
the tax assessed, his application
not be considered unless and until
shall not be considered unless and
waives in writing his privilege un
until he waives in writing his privilege
Republic Act No. 1405, Republic
No. 6426, otherwise known as
Foreign Currency Deposit Act of
known as the Foreign Currency
Philippines, or under other genera
Deposit Act of the Philippines, or
special laws, and such waiver s
under other general or special laws,
constitute the authority of
and such waiver shall constitute the
Commissioner to inquire into
authority of the Commissioner to
bank deposits of the taxpayer.
inquire into the bank deposits of the
taxpayer.
(3) A specific taxpayer or taxpay
(3) A specific taxpayer or taxpayers
subject of a request for the supply
subject of a request for the supply of
tax information from a foreign
tax information from a foreign tax
authority pursuant to an internatio
authority pursuant to an international
convention or agreement on
convention or agreement on tax
matters to which the Philippines i
matters to which the Philippines is a
signatory or a party of: Provided,
signatory or a party of: Provided,
the information obtained from
That the information obtained from
banks and other financial institutio
the banks and other financial
may be used by the Bureau
institutions may be used by the
Internal Revenue for tax assessme
Bureau of Internal Revenue for tax
verification, audit and enforcem
assessment, verification, audit and
purposes.
enforcement purposes.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
In case of a request from a fore
In case of a request from a foreign
tax authority for tax information h
tax authority for tax information held
by banks and financial institutio
by banks and financial institutions,
the exchange of information shall
the exchange of information shall be
done in a secure manner to ens
done in a secure manner to ensure
confidentiality thereof under su
confidentiality thereof under such
rules and regulations as may
rules and regulations as may be
promulgated by the Secretary
promulgated by the Secretary of
Finance, upon recommendation
Finance, upon recommendation of
the Commissioner.
the Commissioner.
The Commissioner shall provide
The Commissioner shall provide the
tax information obtained from ban
tax information obtained from banks
and financial institutions pursuant t
and financial institutions pursuant to
convention or agreement up
a convention or agreement upon
request of the foreign tax autho
request of the foreign tax authority
when such requesting foreign
when such requesting foreign tax
authority has provided the follow
authority has provided the following
information to demonstrate
information to demonstrate the
foreseeable relevance of
foreseeable relevance of the
information to the request:
information to the request:
(a) The identity of the person un
(a) The identity of the person
examination or investigation;
under examination or investigation;
(b) A statement of the informat
(b) A statement of the information
being sought including its nature a
being sought including its nature and
the form in which the said foreign
the form in which the said foreign tax
authority prefers to receive
authority prefers to receive the
information from the Commissione
information from the Commissioner;
(c) The tax purpose for which
(c) The tax purpose for which the
information is being sought;
information is being sought;
(d) Grounds for believing that
(d) Grounds for believing that the
information requested is held in
information requested is held in the
Philippines or is in the possession
Philippines or is in the possession or
control of a person within
control of a person within the
jurisdiction of the Philippines;
jurisdiction of the Philippines;
(e) To the extent known, the na
(e) To the extent known, the name
and address of any person believ
and address of any person believed
to be in possession of the reques
to be in possession of the requested
information;
information;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(f) A statement that the reques

(f) A statement that the request is
in conformity with the law a
in conformity with the law and
administrative practices of the s
administrative practices of the said
foreign tax authority, such that if
foreign tax authority, such that if the
requested information was within
requested information was within the
jurisdiction of the said foreign
jurisdiction of the said foreign tax
authority then it would be able
authority then it would be able to
obtain the information under its la
obtain the information under its laws
or in the normal course
or in the normal course of
administrative practice and that it is
administrative practice and that it is
conformity with a convention
in conformity with a convention or
international agreement; and
international agreement; and
(g) A statement that the request
(g) A statement that the requesting
foreign tax authority has exhaus
foreign tax authority has exhausted
all means available in its own territ
all means available in its own territory
to obtain the information, exc
to obtain the information, except
those that would give rise
those that would give rise to
disproportionate difficulties.
disproportionate difficulties.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The Commissioner shall forward
The Commissioner shall forward the
information as promptly as poss
information as promptly as possible
to the requesting foreign
to the requesting foreign tax
authority. To ensure a prom
authority. To ensure a prompt
response, the Commissioner s
response, the Commissioner shall
confirm receipt of a request in writ
confirm receipt of a request in writing
to the requesting tax authority a
to the requesting tax authority and
shall notify the latter of deficiencies
shall notify the latter of deficiencies in
the request, if any, within sixty (
the request, if any, within sixty (60)
days from receipt of the request.
days from receipt of the request.
If the Commissioner is unable
If the Commissioner is unable to
obtain and provide the informat
obtain and provide the information
within ninety (90) days from receip
within ninety (90) days from receipt of
the request, due to obstac
the request, due to obstacles
encountered in furnishing
encountered in furnishing the
information or when the bank
information or when the bank or
financial institution refuses to furn
financial institution refuses to furnish
the information, he shall immedia
the information, he shall immediately
inform the requesting tax authority
inform the requesting tax authority of
the same, explaining the nature of
the same, explaining the nature of
obstacles encountered or the reaso
the obstacles encountered or the
for refusal.
reasons for refusal.
The term 'foreign tax authority',
The term 'foreign tax authority', as
used herein, shall refer to the
used herein, shall refer to the tax
authority or tax administration of
authority or tax administration of the
requesting State under the tax tre
requesting State under the tax treaty
or convention to which the Philippin
or convention to which the
is a signatory or a party of."
Philippines is a signatory or a party
of."
(G) Authority to Accredit a
(G) Authority to Accredit and
Register Tax Agents.
Register Tax Agents. — The
Commissioner shall accredit a
Commissioner shall accredit and
register, based on their professio
register, based on their professional
competence, integrity, and mo
competence, integrity, and moral
fitness, individuals and gene
fitness, individuals and general
professional partnerships and th
professional partnerships and their
representatives who prepare and
representatives who prepare and file
tax returns, statements, repo
tax returns, statements, reports,
protests, and other papers with,
protests, and other papers with, or
who appear before, the Bureau
who appear before, the Bureau for
taxpayers. Within one hund
taxpayers. Within one hundred
twenty (120) days from January
twenty (120) days from January 1,
1998, the Commissioner shall cre
1998, the Commissioner shall create
national and regional accreditat
national and regional accreditation
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
national and regional accreditat
national and regional accreditation
boards, the members of which s
boards, the members of which shall
serve for three (3) years, and s
serve for three (3) years, and shall
designate from among the sen
designate from among the senior
officials of the Bureau, one
officials of the Bureau, one (1)
chairman and two (2) members
chairman and two (2) members for
each board, subject to such ru
each board, subject to such rules
and regulations as the Secretary
and regulations as the Secretary of
Finance shall promulgate, upon
Finance shall promulgate, upon the
recommendation of
recommendation of the
Commissioner.
Commissioner.
Individuals and general professio
Individuals and general professional
partnerships and th
partnerships and their
representatives who are den
representatives who are denied
accreditation by the Commissio
accreditation by the Commissioner
and/or the national and regio
and/or the national and regional
accreditation boards may app
accreditation boards may appeal
such denial to the Secretary
such denial to the Secretary of
Finance, who shall rule on
Finance, who shall rule on the
appeal within sixty (60) days fr
appeal within sixty (60) days from
receipt of such appeal. Failure of
receipt of such appeal. Failure of the
Secretary of Finance to rule on
Secretary of Finance to rule on the
appeal within the prescribed per
appeal within the prescribed period
shall be deemed as approval of
shall be deemed as approval of the
application for accreditation of
application for accreditation of the
appellant.
appellant.
(H) Authority of the Commissioner to (H) Authority of the Commissione

Prescribe Additional Procedural or Prescribe Additional Procedural
Documentary Requirements. — The Documentary Requirements
Commissioner may prescribe the Commissioner may prescribe
manner of compliance with any manner of compliance with a
documentary or procedural documentary or procedu
requirement in connection with the requirement in connection with
submission or preparation of submission or preparation
financial statements accompanying financial statements accompany
the tax returns. the tax returns.
Authority of the
SEC. 7. The Commissioner may SEC. 7. The Commissioner ma
Commissioner to Delegate
delegate the powers vested in him delegate the powers vested in him
Power
under the pertinent provisions of under the pertinent provisions o
this Code to any or such this Code to any
subordinate officials with the rank subordinate officials with the ran
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
equivalent to a division chief or equivalent to a division chief o
higher, subject to such limitations higher, subject to such limitation
and restrictions as may be and restrictions as may b
imposed under rules and imposed under rules an
regulations to be promulgated by regulations to be promulgated b
the Secretary of Finance, upon the Secretary of Finance, upo
recommendation of the recommendation of th
Commissioner: Provided, Commissioner: Provided, howeve
however, That the following That the following powers of th
powers of the Commissioner shall Commissioner shall not b
not be delegated: delegated:
(a) The power to recommend the (a) The power to recommend th

promulgation of rules and promulgation of rules an
regulations by the Secretary of regulations by the Secretary o
Finance; Finance;
(b) The power to issue rulings of (b) The power to issue rulings o
first impression or to reverse, first impression or to rev
revoke or modify any existing revoke or modify any existin
ruling of the Bureau; ruling of the Bureau;
(c) The power to compromise or (c) The power to compromise o

abate, under Sec. 204(A) and (B) abate, under Sec. 204(A) and (B
of this Code, any tax liability: of this Code, any tax liability
Provided, however, That Provided, however, Tha
assessments issued by the assessments issued by th
regional offices involving basic regional offices involving bas
deficiency taxes of Five hundred deficiency taxes of Five hundre
thousand pesos (P500,000) or thousand pesos (P500,000) o
less, and minor criminal violations, less, and minor criminal violations
as may be determined by rules as may be determined by rule
and regulations to be promulgated and regulations to be promulgate
by the Secretary of Finance, upon by the Secretary of Finance, upo
Commissioner, discovered by Commissioner, discovered b
regional and district officials, may regional and district offic
be compromised by a regional be compromised by a regiona
evaluation board which shall be evaluation board which shall b
composed of the Regional Director composed of the Regional Directo
as Chairman, the Assistant as Chairman, the Assistan
Regional Director, the heads of Regional Director, the heads of th
the Legal, Assessment and Legal, Assessment and Collectio
Collection Divisions and the Divisions and the Revenue Distric
Revenue District Officer having Officer having jurisdiction over th
jurisdiction over the taxpayer, as taxpayer, as members; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
members; and
(d) The power to assign o
(d) The power to assign or
reassign internal revenue officer
reassign internal revenue officers
to establishments where article
to establishments where articles
subject to excise tax are produce
subject to excise tax are produced
or kept.
or kept.
Duty of the Commissioner SEC. 8. (A) Provision and SEC. 8. (A) Provision an
to Ensure the Provision Distribution to Proper Officials. — Distribution to Proper Officials.
and Distribution of Forms, Any law to the contrary Any law to the contrar
Receipts, Certificates, and notwithstanding, it shall be the notwithstanding, it shall be the dut
Appliances, and the duty of the Commissioner, among of the Commissioner, among othe
Acknowledgment of other things, to prescribe, provide, things, to prescribe, provide, an
Payment of Taxes and distribute to the proper distribute to the proper officials th
officials the requisite licenses; requisite licenses; internal reven
internal revenue stamps; unique, stamps; unique, secure an
secure and nonremovable nonremovable identificatio
identification markings (hereafter markings (hereafter called uniqu
called unique identification identification markings), such a
markings), such as codes or codes or stamps, be affixed to o
stamps, be affixed to or form part form part of all unit packets an
of all unit packets and packages packages and any outsid
and any outside packaging of packaging of cigarettes and bottle
cigarettes and bottles of distilled of distilled spirits; labels and othe
spirits; labels and other forms; forms; certificates; bonds; records
certificates; bonds; records; invoices; books; receipts
invoices; books; receipts; instruments; appliances an
instruments; appliances and apparatus used in administerin
apparatus used in administering the laws falling within th
the laws falling within the jurisdiction of the Bureau. For th
jurisdiction of the Bureau. For this purpose, internal revenue sta
purpose, internal revenue stamps, or other markings and labels sha
or other markings and labels shall be caused by the Commissioner t
be caused by the Commissioner be printed with adequate securit
to be printed with adequate features. CEHcSI
security features. CEHcSI
Internal revenue stamps, whethe
Internal revenue stamps, whether of a bar code or fuson design, o
of a bar code or fuson design, or other markings shall be firmly an
other markings shall be firmly and conspicuously affixed or pr
conspicuously affixed or printed each pack of cigars and cigarette
on each pack of cigars and and bottles of distilled spirit
cigarettes and bottles of distilled subject to excise tax in the manne
spirits subject to excise tax in the and form as prescribed by th
manner and form as prescribed Commissioner, upon approval o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
by the Commissioner, upon the Secretary of Finance.
approval of the Secretary of
Finance.
To further improve
administration, cigarette and al
To further improve tax
manufacturers shall be required
administration, cigarette and
install automated volume-counters
alcohol manufacturers shall be
packs and bottles to de
required to install automated
over-removals and misdeclaration
volume-counters of packs and
removals. (as amended by Sec.
bottles to deter over-removals
R.A. No. 10351, Dec. 17, 2012.
and misdeclaration of removals.
Internal Revenue Districts SEC. 9. With the approval of the SEC. 9. With the approval of th
Secretary of Finance, the Secretary of Finance, th
Commissioner shall divide the Commissioner shall divide th
Philippines into such number of Philippines into such number o
revenue districts as may from time revenue districts as may from tim
to time be required for to time be required fo
administrative purposes. Each of administrative purposes. Each o
these districts shall be under the these districts shall be under th
supervision of a Revenue District supervision of a Revenue Distric
Officer. Officer.
Revenue Regional Director

SEC. 10. Under rules and SEC. 10. Under rules an
regulations, policies and standards regulations, policies and standard
formulated by the Commissioner, formulated by the Commissione
with the approval of the Secretary with the approval of the
of Finance, the Revenue Regional of Finance, the Revenue Regiona
Director shall, within the region Director shall, within the regio
and district offices under his and district offices under h
jurisdiction, among others: jurisdiction, among others:
(a) Implement laws, policies, (a) Implement laws, policies, plans

plans, programs, rules and programs, rules and regulations o
regulations of the department or the department or agencies in th
agencies in the regional area; regional area;
(b) Administer and enforce internal (b) Administer and enforce interna
revenue laws, and rules and revenue laws, and rules an
regulations, including the regulations, including th
assessment and collection of all assessment and collection of a
internal revenue taxes, charges internal revenue taxes, charge
and fees; and fees;
(c) Issue Letters of Authority for (c) Issue Letters of Authority fo
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the examination of taxpayers the examination of taxpayer
within the region; within the region;
(d) Provide economical, efficient (d) Provide economical, efficien

and effective service to the people and effective service to the peopl
in the area; in the area;
(e) Coordinate with regional (e) Coordinate with regional office

offices or other departments, or other departments, bureaus an
bureaus and agencies in the area; agencies in the area;
(f) Coordinate with local government (f) Coordinate with local governm
units in the area; units in the area;
(g) Exercise control and (g) Exercise control an

supervision over the officers and supervision over the officers an
employees within the region; and employees within the region; and
(h) Perform such other function
(h) Perform such other functions
as may be provided by law and a
as may be provided by law and as
may be delegated by th
may be delegated by the
Commissioner.
Commissioner.
Duties of Revenue District

SEC. 11. It shall be the duty of SEC. 11. It shall be the duty o
Officers and Other Internal
every Revenue District Officer or every Revenue District Officer
Revenue Officers
other internal revenue officers and other internal revenue officers an
employees to ensure that all laws, employees to ensure that all laws
and rules and regulations affecting and rules and regulations affectin
national internal revenue are national internal revenue ar
faithfully executed and complied faithfully executed and complie
with, and to aid in the prevention, with, and to aid in the prevention
detection and punishment of detection and punishment o
frauds or delinquencies in frauds or delinquen
connection therewith. connection therewith.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
It shall be the duty of ever
It shall be the duty of every
Revenue District Officer t
Revenue District Officer to
examine the efficiency of a
examine the efficiency of all
officers and employees of th
officers and employees of the
Bureau of Internal Revenue unde
Bureau of Internal Revenue under
his supervision, and to report i
his supervision, and to report in
writing to the Commissione
writing to the Commissioner,
through the Regional Director, an
through the Regional Director,
neglect of duty, incompetency
any neglect of duty,
delinquency, or malfeasance i
incompetency, delinquency, or
office of any internal revenu
malfeasance in office of any
officer of which he may obtai
internal revenue officer of which
knowledge, with a statement of a
he may obtain knowledge, with a
the facts and any evidenc
statement of all the facts and any
sustaining each case.
evidence sustaining each case.
Agents and Deputies for

SEC. 12. The following are hereby SEC. 12. The following are hereb
Collection of National
constituted agents of the constituted agents of th
Internal Revenue Taxes
Commissioner: Commissioner:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) The Commissioner of Customs (a) The Commissioner of Custom
and his subordinates with respect and his subordinates with respec
to the collection of national internal to the collection of national
revenue taxes on imported goods; revenue taxes on imported goods
(b) The head of the appropriate

government office and his (b) The head of the appropriat
subordinates with respect to the government office and h
collection of energy tax; and subordinates with respect to th
collection of energy tax; and
(c) Banks duly accredited by the
Commissioner with respect to (c) Banks duly accredited by th
receipt of payments of internal Commissioner with respect t
revenue taxes authorized to be receipt of payments of interna
made thru banks. revenue taxes authorized to b
made thru banks.
Any officer or employee of an
Any officer or employee of a
authorized agent bank assigned to
authorized agent bank assigned t
receive internal revenue tax
receive internal revenue ta
payments and transmit tax returns
payments and transmit tax return
or documents to the Bureau of
or documents to the Bureau o
Internal Revenue shall be subject to
Internal Revenue shall be subjec
the same sanctions and penalties
to the same san
prescribed in Sections 269 and 270
penalties prescribed in Section
of this Code.
269 and 270 of this Code.
Authority of a Revenue SEC. 13. Subject to the rules and SEC. 13. Subject to the rules an
Officer regulations to be prescribed by the regulations to be prescribed by th
Secretary of Finance, upon Secretary of Finance, upo
Commissioner, a Revenue Officer Commissioner, a Revenue Office
assigned to perform assessment assigned to perform assessmen
functions in any district may, functions in any district may
pursuant to a Letter of Authority pursuant to a Letter of Authorit
issued by the Revenue Regional issued by the Revenue Regiona
Director, examine taxpayers within Director, examine taxpayers wit
the jurisdiction of the district in the jurisdiction of the district i
order to collect the correct amount order to collect the correct amoun
of tax, or to recommend the of tax, or to recommend th
assessment of any deficiency tax assessment of any deficiency ta
due in the same manner that the due in the same manner that th
said acts could have been said acts could have bee
performed by the Revenue performed by the Revenu
Regional Director himself. Regional Director himself.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Authority of Officers to SEC. 14. The Commissioner, SEC. 14. The Commissione
Administer Oaths and Take Deputy Commissioners, Service Deputy Commissioners, Servic
Testimony Chiefs, Assistant Service Chiefs, Chiefs, Assistant Service Chiefs
Revenue Regional Directors, Revenue Regional Dir
Assistant Revenue Regional Assistant Revenue Regiona
Directors, Chiefs and Assistant Directors, Chiefs and Assistan
Chiefs of Divisions, Revenue Chiefs of Divisions, Revenu
District Officers, special deputies District Officers, special deputie
of the Commissioner of Internal of the Commissioner of Interna
Revenue officers and any other Revenue officers and any othe
employee of the Bureau thereunto employee of the Bureau thereunt
especially deputized by the especially deputized by th
Commissioner shall have the Commissioner shall have th
power to administer oaths and to power to administer oaths and t
take testimony in any official take testimony in any officia
matter or investigation conducted matter or investigation conducte
by them regarding matters within by them regarding matters withi
the jurisdiction of the Bureau. the jurisdiction of the Bureau.
Authority of Internal SEC. 15. The Commissioner, the SEC. 15. The Commissioner, th
Revenue Officers to Make Deputy Commissioners, the Deputy Commissioners, th
Arrests and Seizures Revenue Regional Directors, the Revenue Regional Directors, th
Revenue District Officers and Revenue District Officers an
other internal revenue officers other internal revenue officer
shall have authority to make shall have authority to mak
arrests and seizures for the arrests and seizures for th
violation of any penal law, rule or violation of any penal law, rule o
regulation administered by the regulation administered by th
Bureau of Internal Revenue. Any Bureau of Internal Revenue. An
person so arrested shall be person so arrested shall b
forthwith brought before a court, forthwith brought before a cour
there to be dealt with according to there to be dealt with according t
law. law.
Assignment of Internal SEC. 16. The Commissioner shall SEC. 16. The Commissioner sh
Revenue Officers Involved employ, assign, or reassign employ, assign, or reassig
in Excise Tax Functions to internal revenue officers involved internal revenue officers involve
Establishments Where in excise tax functions, as often as in excise tax functions, as often a
Articles Subject to Excise the exigencies of the revenue the exigencies of the revenu
Tax are Produced or Kept service may require, to service may require, t
establishments or places where establishments or places wher
articles subject to excise tax are articles subject to excise tax ar
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
produced or kept: Provided, That produced or kept: Provided, Tha
an internal revenue officer an internal revenue office
assigned to any such assigned to any suc
establishment shall in no case stay establishment shall in no case sta
in his assignment for more than in his assignment for more tha
two (2) years, subject to rules and two (2) years, subject to rules an
regulations to be prescribed by the regulations to be prescribed by th
Commissioner. Commissioner.
Assignment of Internal SEC. 17. The Commissioner may, SEC. 17. The Commissioner may
Revenue Officers and subject to the provisions of Section subject to the provisions of Sectio
Other Employees to Other 16 and the laws on civil service, as 16 and the laws on civil service, a
Duties well as the rules and regulations to well as the rules and regulat
be prescribed by the Secretary of be prescribed by the Secretary o
Finance, upon the Finance, upon th
Commissioner, assign or reassign Commissioner, assign or reassig
internal revenue officers and internal revenue officers an
employees of the Bureau of employees of the Bureau o
Internal Revenue, without change Internal Revenue, without chang
in their official rank and salary, to in their official rank and salary, t
other or special duties connected other or special duties connecte
with the enforcement or with the enforcement o
administration of the revenue laws administration of the revenue law
as the exigencies of the service as the exigencies of the servic
may require: Provided, That may require: Provided, Tha
internal revenue officers assigned internal revenue officers assigne
to perform assessment or to perform assessment o
collection functions shall not collection functions shall no
remain in the same assignment for remain in the same assig
more than three (3) years: more than three (3) years
Provided, further, That assignment Provided, further, That assignmen
of internal revenue officers and of internal revenue officers an
employees of the Bureau to employees of the Bureau t
special duties shall not exceed one special duties shall not exceed on
(1) year. (1) year.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Reports of Violation of SEC. 18. When an internal SEC. 18. When an interna
Laws revenue officer discovers evidence revenue officer discovers evidenc
of a violation of this Code or of any of a violation of this Code or of an
law, rule or regulation administered law, rule or regulation administere
by the Bureau of Internal Revenue, by the Bureau of Internal Revenue
of such character as to warrant the of such character as to warrant th
institution of criminal proceedings, institution of criminal proceedings
he shall immediately report the he shall immediately report th
facts to the Commissioner, through facts to the Commissioner, throug
his immediate superior, giving the his immediate superior, giving th
name and address of the offender name and address of the offende
and the names of the witnesses, if and the names of the witnesses,
possible: Provided, That in urgent possible: Provided, That in urgen
cases, the Revenue Regional cases, the Revenue Regiona
Director or Revenue District Director or Revenue Distric
Officer, as the case may be, may Officer, as the case may be, ma
send the report to the send the report to th
corresponding prosecuting officer. corresponding prosecuting office
In the latter case, a copy of his In the latter case, a copy of h
report shall be sent to the report shall be sent to th
Contents of
SEC. 19. The Annual Report of SEC. 19. The Annual Report of th
Commissioner's Annual
the Commissioner shall contain Commissioner shall contai
Report
detailed statements of the detailed statements of th
collections of the Bureau with collections of the Bureau wit
specifications of the sources of specifications of the sources o
revenue by type of tax, by manner revenue by type of tax, by manne
of payment, by revenue region of payment, by revenue region an
and by industry group and its by industry group and it
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
disbursements by classes of disbursements by classes o
expenditures. expenditures.
In case the actual collectio
In case the actual collection
exceeds or falls short of target a
exceeds or falls short of target as
set in the annual nati
set in the annual national budget
by fifteen percent (15%) or more
by fifteen percent (15%) or more,
the Commissioner shall explain th
the Commissioner shall explain
reasons for such excess o
the reasons for such excess or
shortfall.
shortfall.
Submission of Report and

SEC. 20. (A) Submission of SEC. 20. (A) Submission o
Pertinent Information by
Pertinent Information to Congress. Pertinent Information to Congress
the Commissioner
— The provision of Section 270 of — The provision of Section 270 o
this Code to the contrary this Code to the contrar
notwithstanding, the notwithstanding, the Commissione
Commissioner shall, upon request shall, upon request of Congres
of Congress and in aid of and in aid of legislation, furnish it
legislation, furnish its appropriate appropriate Committee pertinen
Committee pertinent information information including but no
including but not limited to: limited to: industry audits
industry audits, collection collection performance data, statu
performance data, status reports reports in criminal actions initiate
in criminal actions initiated against against persons and taxpayer
persons and taxpayer's returns: returns: Provided, however, Tha
Provided, however, That any any return or return informatio
return or return information which which can be associated with, o
can be associated with, or otherwise identify, directly o
otherwise identify, directly or indirectly, a particular taxpaye
indirectly, a particular taxpayer shall be furnished the appropriat
shall be furnished the appropriate Committee of Congress only whe
Committee of Congress only when sitting in Executive Session unles
sitting in Executive Session unless such taxpayer otherwise consent
such taxpayer otherwise consents in writing to such disclosure.
in writing to such disclosure.
(B) Report to Oversigh
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Committee. — The Commissione
(B) Report to Oversight
shall, with reference to Sectio
Committee. — The Commissioner
204 of this Code, submit to th
shall, with reference to Section
Oversight Committee referred to i
204 of this Code, submit to the
Section 290 hereof, through th
Oversight Committee referred to in
Chairmen of the Committee o
Section 290 hereof, through the
Ways and Means of the Senat
Chairmen of the Committee on
and House of Representatives,
Ways and Means of the Senate
report on the exercise of h
and House of Representatives, a
powers pursuant to the sai
report on the exercise of his
Section, every six (6) months o
powers pursuant to the said
each calendar year.
Section, every six (6) months of
each calendar year.
Sources of Revenue
SEC. 21. The following taxes, fees SEC. 21. The following taxes, fee
and charges are deemed to be and charges are deemed to b
national internal revenue taxes: national internal revenue taxes:
(a) Income tax; (a) Income tax;
(b) Estate and donor's taxes; (b) Estate and donor's taxes;
(c) Value-added tax; (c) Value-added tax;
(d) Other percentage taxes; (d) Other percentage taxes
(e) Excise taxes; (e) Excise taxes;
(f) Documentary stamp taxes; and (f) Documentary stamp taxes; and
(g) Such other taxes as are o
(g) Such other taxes as are or
hereafter may be imposed an
hereafter may be imposed and
collected by the Bureau of Interna
collected by the Bureau of
Revenue.
Internal Revenue.
TITLE II — TAX ON INCOME TITLE II — TAX ON INCOME
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
CHAPTER I — DEFINITIONS CHAPTER I — DEFINITIONS
Definitions
SEC. 22. When used in this Title: SEC. 22. When used in this
(A) The term 'person' means an (A) The term 'person' means a
individual, a trust, estate, or individual, a trust, estate, o
corporation. corporation.
(B) The term 'corporation' shall (B) The term 'corporation

include partnerships, no matter include partnerships, no matte
how created or organized, how created or organized
joint-stock companies, joint joint-stock companies, join
accounts (cuentas en accounts (cuentas e
participacion), associations, or participacion), associations,
insurance companies, but does insurance companies, but does no
not include general professional include general professiona
partnerships and a joint venture or partnerships and a joint venture o
consortium formed for the purpose consortium formed for the purpos
of undertaking construction of undertaking constructio
projects or engaging in petroleum, projects or engaging in petroleum
coal, geothermal and other energy coal, geothermal and other energ
operations pursuant to an operations pursuant to
operating or consortium operating or consortium
agreement under a service agreement under a servic
contract with the Government. contract with the Governmen
'General professional partnerships' 'General professional partnership
are partnerships formed by are partnerships formed b
persons for the sole purpose of persons for the sole purpose o
exercising their common exercising their commo
profession, no part of the income profession, no part of the incom
of which is derived from engaging of which is derived from engagin
in any trade or business. in any trade or business.
(C) The term 'domestic,' when (C) The term 'domestic,' whe
applied to a corporation, means applied to a corporation, mean
created or organized in the created or organized in th
Philippines or under its laws. Philippines or under its laws.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) The term 'foreign,' when (D) The term 'foreign,' whe
applied to a corporation, means a applied to a corporation, means
corporation which is not domestic. corporation which is not dome
(E) The term 'nonresident citizen' (E) The term 'nonresident citizen
means: means:
(1) A citizen of the Philippines who (1) A citizen of the Philippines wh

establishes to the satisfaction of establishes to the satisfaction o
the Commissioner the fact of his the Commissioner the fact of h
physical presence abroad with a physical presence abroad with
definite intention to reside therein. definite intention to reside therein.
(2) A citizen of the Philippines who (2) A citizen of the Philippine

leaves the Philippines during the leaves the Philippines during th
taxable year to reside abroad, taxable year to reside abroad
either as an immigrant or for either as an immigrant or fo
employment on a permanent employment on a permanen
basis. basis.
(3) A citizen of the Philippines who (3) A citizen of the Philippines wh

works and derives income from works and derives income from
abroad and whose employment abroad and whose employmen
thereat requires him to be thereat requires him to b
physically present abroad most of physically present abroad most o
the time during the taxable year. the time during the taxable year.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(4) A citizen who has been (4) A citizen who has bee
previously considered as previously considered a
nonresident citizen and who nonresident citizen and wh
arrives in the Philippines at any arrives in the Philippines at an
time during the taxable year to time during the taxable year t
reside permanently in the reside permanently in th
Philippines shall likewise be Philippines shall likewise b
treated as a nonresident citizen for treated as a nonresident citizen fo
the taxable year in which he the taxable year in which h
arrives in the Philippines with arrives in the Philippines wit
respect to his income derived from respect to his income derived from
sources abroad until the date of sources abroad until the date o
his arrival in the Philippines. his arrival in the Philippines.
(5) The taxpayer shall submit (5) The taxpayer shall submit proo
proof to the Commissioner to to the Commissioner to show h
show his intention of leaving the intention of leaving the Philippine
Philippines to reside permanently to reside permanently abroad or t
abroad or to return to and reside in return to and reside in th
the Philippines as the case may Philippines as the case may be fo
be for purposes of this Section. purposes of this Section.
(F) The term 'resident alien' (F) The term 'resident alien' mean
means an individual whose an individual whose residence
residence is within the Philippines within the Philippines and who
and who is not a citizen thereof. not a citizen thereof.
(G) The term 'nonresident alien' (G) The term 'nonresident alien
means an individual whose means an individual whos
residence is not within the residence is not within th
Philippines and who is not a Philippines and who is not a citize
citizen thereof. thereof.
(H) The term 'resident foreign (H) The term 'resident foreig
corporation' applies to a foreign corporation' applies to a forei
corporation engaged in trade or corporation engaged in trade o
business within the Philippines. business within the Philippines.
(I) The term 'nonresident foreign (I) The term 'nonresident foreig
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
corporation' applies to a foreign corporation' applies to a foreig
corporation not engaged in trade corporation not engaged in trad
or business within the Philippines. or business within the Philippines.
(J) The term 'fiduciary' means a (J) The term 'fiduciary' means
guardian, trustee, executor, guardian, trustee, executo
administrator, receiver, administrator, receive
conservator or any person acting conservator or any person actin
in any fiduciary capacity for any in any fiduciary capacity for an
person. person.
(K) The term 'withholding agent' (K) The term 'withholding agen
means any person required to means any person required t
deduct and withhold any tax under deduct and withhold any tax unde
the provisions of Section 57. the provisions of Section 57.
(L) The term 'shares of stock' shall (L) The term 'shares of stock' sha
include shares of stock of a include shares of stock of
corporation, warrants and/or corporation, warrants and/o
options to purchase shares of options to purchase shares o
stock, as well as units of stock, as well as units o
participation in a partnership participation in a partnershi
(except general professional (except general professiona
partnerships), joint stock partnerships), joint stoc
companies, joint accounts, joint companies, joint accounts, join
ventures taxable as corporations, ventures taxable as corporations
associations, and recreation or associations, and recreation o
amusement clubs (such as golf, amusement clubs (such as gol
polo or similar clubs), and mutual polo or similar clubs), and mutua
fund certificates. fund certificates.
(M) The term 'shareholder' shall (M) The term 'shareholder' sha
include holders of a share/s of include holders of a share/s o
stock, warrant/s and/or option/s to stock, warrant/s and/or option/s t
purchase shares of stock of a purchase shares of stock of
corporation, as well as a holder of corporation, as well as a holder o
a unit of participation in a a unit of participation in
partnership (except general partnership (except genera
professional partnerships) in a professional partnerships) in a join
joint stock company, a joint stock company, a joint account,
account, a taxable joint venture, a taxable joint venture, a member o
member of an association, an association, recreation o
recreation or amusement club amusement club (such as gol
(such as golf, polo, or similar polo, or similar clubs) and a holde
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
clubs) and a holder of a mutual of a mutual fund certificate,
fund certificate, a member in an member in an association
association, joint-stock company, joint-stock company, or insuranc
or insurance company. company.
(N) The term 'taxpayer' means any (N) The term 'taxpayer' means an
person subject to tax imposed by person subject to tax imposed b
this Title. this Title.
(O) The terms 'including' and (O) The terms 'including' an

'includes', when used in a 'includes', when used in
definition contained in this Title, definition contained in this Title
shall not be deemed to exclude shall not be deemed to exclud
other things otherwise within the other things otherwise within th
meaning of the term defined. meaning of the term defined.
(P) The term 'taxable year' means (P) The term 'taxable year' mean
the calendar year, or the fiscal the calendar year, or the fisca
year ending during such calendar year ending during such calenda
year, upon the basis of which the year, upon the basis of which th
net income is computed under this net income is computed under th
Title. 'Taxable year' includes, in Title. 'Taxable year' includes, in th
the case of a return made for a case of a return made for
fractional part of a year under the fractional part of a year under th
provisions of this Title or under provisions of this Title or unde
rules and regulations prescribed rules and regulations prescri
by the Secretary of Finance, upon the Secretary of Finance, upo
Commissioner, the period for Commissioner, the period fo
which such return is made. which such return is made.
(Q) The term 'fiscal year' means (Q) The term 'fiscal year' mean
an accounting period of twelve an accounting period of twelv
(12) months ending on the last day (12) months ending on the last da
of any month other than of any month other tha
December. December.
(R) The terms 'paid or incurred' (R) The terms 'paid or incurred
and 'paid or accrued' shall be and 'paid or accrued' shall b
construed according to the method construed according to the metho
of accounting upon the basis of of accounting upon the basis o
which the net income is computed which the net income is compute
under this Title. under this Title.
(S) The term 'trade or business' (S) The term 'trade or busines
includes the performance of the includes the performance of th
functions of a public office. functions of a public office.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(T) The term 'securities' means (T) The term 'securities'

shares of stock in a corporation shares of stock in a corporatio
and rights to subscribe for or to and rights to subscribe for or t
receive such shares. The term receive such shares. The term
includes bonds, debentures, notes includes bonds, debentures, note
or certificates, or other evidence of or certificates, or other evidence o
indebtedness, issued by any indebtedness, issued by an
corporation, including those issued corporation, including those issue
by a government or political by a government or politica
subdivision thereof, with interest subdivision thereof, with interes
coupons or in registered form. coupons or in registered form.
(U) The term 'dealer in securities' (U) The term 'dealer in securitie
means a merchant of stocks or means a merchant of stocks o
securities, whether an individual, securities, whether an individua
partnership or corporation, with an partnership or corporation, with a
established place of business, established place of business
regularly engaged in the purchase regularly engaged in the purchas
of securities and the resale thereof of securities and the resale thereo
to customers; that is, one who, as to customers; that is, one who, a
a merchant, buys securities and a merchant, buys securities an
re-sells them to customers with a re-sells them to customers with
view to the gains and profits that view to the gains and profits tha
may be derived therefrom. may be derived therefrom.
(V) The term 'bank' means every (V) The term 'bank' means ever
banking institution, as defined in banking institution, as defined i
Section 2 of Republic Act No. 337, Section 2 of Republic Act No. 337
as amended, otherwise known as as amended, otherwise known a
the General Banking Act. A bank the General Banking Act. A ban
may either be a commercial bank, may either be a commercial bank
a thrift bank, a development bank, a thrift bank, a development bank
a rural bank or a specialized a rural bank or a specialize
government bank. government bank.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(W) The term 'non-bank financial (W) The term 'non-bank financia
intermediary' means a financial intermediary' means a financia
intermediary, as defined in Section intermediary, as defined in Sectio
2(D)(c) of Republic Act No. 337, 2(D)(c) of Republic Act No. 337, a
as amended, otherwise known as amended, otherwise known as th
the General Banking Act, General Banking Act, authorize
authorized by the Bangko Sentral by the Bangko Sentral
ng Pilipinas (BSP) to perform (BSP) to perform quasi-bankin
quasi-banking activities. activities.
(X) The term 'quasi-banking (X) The term 'quasi-bankin

activities' means borrowing funds activities' means borrowing fund
from twenty (20) or more personal from twenty (20) or more persona
or corporate lenders at any one or corporate lenders at any on
time, through the issuance, time, through the issuance
endorsement, or acceptance of endorsement, or acceptance o
debt instruments of any kind other debt instruments of any kind othe
than deposits for the borrower's than deposits for the borrower
own account, or through the own account, or through th
issuance of certificates of issuance of certificates o
assignment or similar instruments, assignment or similar instruments
with recourse, or of repurchase with recourse, or of repurchas
agreements for purposes of agreements for purposes o
relending or purchasing relending or purchasin
receivables and other similar receivables and other simil
obligations: Provided, however, obligations: Provided, howeve
That commercial, industrial and That commercial, industrial an
other non-financial companies, other non-financial companies
which borrow funds through any of which borrow funds through any o
these means for the limited these means for the limite
purpose of financing their own purpose of financing their ow
needs or the needs of their agents needs or the needs of their agent
or dealers, shall not be considered or dealers, shall not be consi
as performing quasi-banking as performing quasi-bankin
functions. functions.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(Y) The term 'deposit substitutes' (Y) The term 'deposit substitute
shall mean an alternative form of shall mean an alternative form o
obtaining funds from the public obtaining funds from the publ
(the term 'public' means borrowing (the term 'public' means borrowin
from twenty (20) or more individual from twenty (20) or more individua
or corporate lenders at any one or corporate lenders at any on
time), other than deposits, through time), other than deposits, throug
the issuance, endorsement, or the issuance, endorsement, o
acceptance of debt instruments for acceptance of debt instruments fo
the borrower's own account, for the borrower's own account, fo
the purpose of relending or the purpose of relending o
purchasing of receivables and purchasing of receivables an
other obligations, or financing their other obligations, or financing the
own needs or the needs of their own needs or the needs of the
agent or dealer. These agent or dealer. These instrument
instruments may include, but need may include, but need not b
not be limited to, bankers' limited to, bankers' acceptances
acceptances, promissory notes, promissory notes, repurchas
repurchase agreements, including agreements, including revers
reverse repurchase agreements repurchase agreements entere
entered into by and between the into by and between the Bangk
Bangko Sentral ng Pilipinas (BSP) Sentral ng Pilipinas (BSP) and an
and any authorized agent bank, authorized agent bank, certificate
certificates of assignment or of assignment or participation an
participation and similar similar instruments with recourse
instruments with recourse: Provided, however, That deb
Provided, however, That debt instruments issued for inter-ban
instruments issued for inter-bank call loans with maturity of not mor
call loans with maturity of not more than five (5) days to cove
than five (5) days to cover deficiency in reserves ag
deficiency in reserves against deposit liabilities, including thos
deposit liabilities, including those between or among banks an
between or among banks and quasi-banks, shall not b
quasi-banks, shall not be considered as deposit substitut
considered as deposit substitute debt instruments.
debt instruments.
(Z) The term 'ordinary income' (Z) The term 'ordinary income
includes any gain from the sale or includes any gain from the sale o
exchange of property which is not exchange of property which is no
a capital asset or property a capital asset or propert
described in Section 39(A)(1). Any described in Section 39(A)(1). An
gain from the sale or exchange of gain from the sale or exchange o
property which is treated or property which is treated o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
property which is treated or
considered, under other provisions considered, under other provision
of this Title, as 'ordinary income' of this Title, as 'ordinary income
shall be treated as gain from the shall be treated as gain from th
sale or exchange of property sale or exchange of property whi
which is not a capital asset as is not a capital asset as defined i
defined in Section 39(A)(1). The Section 39(A)(1). The term
term 'ordinary loss' includes any 'ordinary loss' includes any los
loss from the sale or exchange of from the sale or exchange o
property which is not a capital property which is not a capita
asset. Any loss from the sale or asset. Any loss from the sale o
exchange of property which is exchange of property which
treated or considered, under other treated or considered, under ot
provisions of this Title, as 'ordinary provisions of this Title, as 'ordinar
loss' shall be treated as loss from loss' shall be treated as loss from
the sale or exchange of property the sale or exchange of propert
which is not a capital asset. which is not a capital asset.
(AA) The term 'rank and file (AA) The term 'rank and fil
employees' shall mean all employees' shall mean a
employees who are holding employees who are holding neithe
neither managerial nor supervisory managerial nor supervis
position as defined under existing position as defined under existin
provisions of the Labor Code of provisions of the Labor Code o
the Philippines, as amended. the Philippines, as amended.
(BB) The term 'mutual fund (BB) The term 'mutual fun
company' shall mean an open-end company' shall mean an open-en
and close-end investment and close-end investmen
company as defined under the company as defined under th
Investment Company Act. Investment Company Act.
(CC) The term 'trade, business or (CC) The term 'trade, business o
profession' shall not include profession' shall not includ
performance of services by the performance of services by th
taxpayer as an employee. taxpayer as an employee.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(DD) The term 'regional or area (DD) The term 'regional or are
headquarters' shall mean a branch headquarters' shall mean a branc
established in the Philippines by established in the Philippines b
multinational companies and multinational companies and whic
which headquarters do not earn or headquarters do not earn or deriv
derive income from the Philippines income from the Philippines an
and which act as supervisory, which act as supervisory
communications and coordinating communications and coordinatin
center for their affiliates, center for their affiliates
subsidiaries, or branches in the subsidiaries, or branches in th
Asia-Pacific Region and other Asia-Pacific Region and othe
foreign markets. foreign markets.
(EE) The term 'regional operating (EE) The term 'regional operatin
headquarters' shall mean a branch headquarters' shall mean a branc
multinational companies which are multinational companies which ar
engaged in any of the following engaged in any of the followin
services: general administration services: general administratio
and planning; business planning and planning; business plannin
and coordination; sourcing and and coordination; sourcing an
procurement of raw materials and procurement of raw materials an
components; corporate finance components; corporate financ
advisory services; marketing advisory services; marketin
control and sales promotion; control and sales promotion
training and personnel training and personne
management; logistic services; management; logistic services
research and development research and developmen
services and product services and product developmen
development; technical support technical support an
and maintenance; data processing maintenance; data processing an
and communication; and business communication; and busines
development. development.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(FF) The term 'long-term deposit (FF) The term 'long-term depos
or investment certificate' shall or investment certificate'
refer to certificate of time deposit to certificate of time deposit o
or investment in the form of investment in the form of savings
savings, common or individual common or individual trust funds
trust funds, deposit substitutes, deposit substitutes, investmen
investment management accounts management accounts and othe
and other investments with a investments with a maturity perio
maturity period of not less than of not less than five (5) years, th
five (5) years, the form of which form of which shall be prescribe
shall be prescribed by the Bangko by the Bangko Sentral ng Pilipina
Sentral ng Pilipinas (BSP) and (BSP) and issued by banks on
issued by banks only (not by (not by nonbank financia
nonbank financial intermediaries intermediaries and financ
and finance companies) to companies) to individuals i
individuals in denominations of denominations of Ten thousan
Ten thousand pesos (P10,000) pesos (P10,000) and othe
and other denominations as may denominations as may b
be prescribed by the BSP. prescribed by the BSP.
(GG) The term 'statutory minimum (GG) The term 'statutory minimum
wage' shall refer to the rate fixed wage' shall refer to the rate fixe
by the Regional Tripartite Wage by the Regional Tripartite Wag
and Productivity Board, as defined and Productivity Board, as define
by the Bureau of Labor and by the Bureau of Labor an
Employment Statistics (BLES) of Employment Statistics (BLES) o
the Department of Labor and the Department of Labor an
Employment (DOLE). Employment (DOLE).
(HH) The term 'minimum wag

(HH) The term 'minimum wage
earner' shall refer to a worker i
earner' shall refer to a worker in
the private sector paid th
the private sector paid the
statutory minimum wage, or to a
statutory minimum wage, or to an
employee in the public se
employee in the public sector with
compensation income of not mor
compensation income of not more
than the statutory minimum wag
than the statutory minimum wage
in the non-agricultural secto
in the non-agricultural sector
where he/she is assigned.
where he/she is assigned.
CHAPTER II — GENERAL CHAPTER II — GENERAL

PRINCIPLES PRINCIPLES
General Principles of
SEC. 23. Except when otherwise SEC. 23. Except when otherwis
Income Taxation in the
provided in this Code: provided in this Code:
Philippines
(A) A citizen of the Philippines (A) A citizen of the Philippine
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
residing therein is taxable on all residing therein is taxable on a
income derived from sources income derived from source
within and without the Philippines; within and without the Philippines;
(B) A nonresident citizen is taxable (B) A nonresident citizen is t

only on income derived from only on income derived from
sources within the Philippines; sources within the Philippines;
(C) An individual citizen of the (C) An individual citizen of th

Philippines who is working and Philippines who is working an
deriving income from abroad as an deriving income from abroad as a
overseas contract worker is overseas contract worker
taxable only on income from taxable only on income from
sources within the Philippines: sources within the Philippines
Provided, That a seaman who is a Provided, That a seaman who is
citizen of the Philippines and who citizen of the Philippines and wh
receives compensation for receives compensation fo
services rendered abroad as a services rendered abroad as
member of the complement of a member of the complement of
vessel engaged exclusively in vessel engaged exclusively i
international trade shall be treated international trade shall be treate
as an overseas contract worker; as an overseas contract worker;
(D) An alien individual, whether a (D) An alien individual, whether

resident or not of the Philippines, resident or not of the Philippines
is taxable only on income derived is taxable only on income derive
from sources within the from sources within th
Philippines; Philippines;
(E) A domestic corporation is (E) A domestic corporation

taxable on all income derived from taxable on all income derived from
sources within and without the sources within and without th
Philippines; and Philippines; and
(F) A foreign corporation, whethe
(F) A foreign corporation, whether
engaged or not in trade o
engaged or not in trade or
business in the Philippines,
business in the Philippines, is
taxable only on income derive
taxable only on income derived
from sources within th
from sources within the
Philippines.
Philippines.
CHAPTER III — TAX ON CHAPTER III — TAX ON

INDIVIDUALS INDIVIDUALS
Income Tax Rates

SEC. 24. SEC. 24.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) Rates of Income Tax on (A) Rates of Income Tax o
Individual Citizen and Individual Individual Citizen and Individua
Resident Alien of the Philippines. Resident Alien of the Philippines
— —
(1) An income tax is hereby (1) An income tax is hereb

imposed: imposed:
(a) On the taxable income defined (a) On the taxable income define
in Section 31 of this Code, other in Section 31 of this Code, othe
than income subject to tax under than income subject to tax unde
Subsections (B), (C), and (D) of Subsections (B), (C) and (D) o
this Section, derived for each this Section, derived for eac
taxable year from all sources taxable year from all source
within and without the Philippines within and without the Philippine
by every individual citizen of the by every individual citizen of th
Philippines residing therein; Philippines residing therein;
(b) On the taxable income defined

in Section 31 of this Code, other (b) On the taxable income define
than income subject to tax under in Section 31 of this Code, othe
Subsections (B), (C), and (D) of than income subject to tax unde
this Section, derived for each Subsections (B), (C) and (D) o
taxable year from all sources this Section, derived for eac
within the Philippines by an taxable year from all source
individual citizen of the Philippines within the Philippines by a
who is residing outside of the individual citizen of the Philippine
Philippines including overseas who is residing outside of th
contract workers referred to in Philippines including oversea
Subsection (C) of Section 23 contract workers referred to i
hereof; and Subsection (C) of Section 2
hereof; and
(c) On the taxable income defined in (c) On the taxable income define
Section 31 of this Code, other than in Section 31 of this Code, othe
income subject to tax under than income subject to tax unde
Subsections (B), (C), and (D) of this Subsections (B), (C) and (D) o
Section, derived for each taxable this Section, derived for eac
year from all sources within the taxable year from all source
Philippines by an individual alien within the Philippines by a
who is a resident of the Philippines. individual alien who is a resident o
the Philippines.
(2) Rates of Tax on Taxable Income
of Individuals. — The tax shall be (2) Rates of Tax on Taxabl
computed in accordance with and at Income of Individuals. — The ta
the rates established in the following shall be computed in accordanc
schedule: with and at the rates established i
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the following schedule:
(a) Tax Schedule Effective January
1, 2018 until December 31, 2022:
Not over P250,000 0% Not over P10,000
Over P250,000 but 20% of the excess Over P10,000 but not P500 + 10% o
not over P400,000 over P250,000 over P30,000 the excess ov
P10,000
Over P400,000 but P30,000 + 25%
not over P800,000 of the excess Over P30,000 but not P2,500 + 15%
over P400,000 over P70,000 the excess ov
P30,000
Over P800,000 but P130,000 + 30%
not over P2,000,000 of the excess Over P70,000 but not P8,500 + 20%
over P800,000 over P140,000 the excess ov
P70,000
Over P2,000,000 P490,000 + 32%
but not over of the excess Over P140,000 but P22,500 + 25%
P8,000,000 over P2,000,000 not over P250,000 of the excess
over P140,00
Over P8,000,000 P2,410,000 + 35%
of the excess over Over P250,000 but P50,000 + 30%
P8,000,000 not over P500,000 the excess ove
P250,000
Tax Schedule Effective January 1,
2023 and onwards: Over P500,000 P125,000 + 32
of the excess
Not over P250,000 0% over P500,0
Over P250,000 but 15% of the excess
not over P400,000 over P250,000
Over P400,000 but P22,500 + 20% of

not over P800,000 the excess over
P400,000
Over P800,000 but P102,500 + 25%

not over P2,000,000 of the excess over
P800,000
Over P2,000,000 P402,500 + 30%

but not over of the excess over
P8,000,000 P2,000,000
Over P8,000,000 P2,202,500 + 35%

of the excess over
P8,000,000
10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
For married individuals, the husband

For married individuals, the husba
and wife, subject to the provision of and wife, subject to the provision
Section 51(D) hereof, shall compute Section 51(D) hereof, shall comp
separately their individual income separately their individual income
tax based on their respective total
based on their respective to
taxable income: Provided, That if taxable income: Provided,
any income cannot be definitely any income cannot be defi
attributed to or identified as income attributed to or identified as inco
exclusively earned or realized by exclusively earned or realized
either of the spouses, the same either of the spouses, the same s
shall be divided equally between the be divided equally between
spouses for the purpose of
spouses for the purpose
determining their respective taxable
determining their respective taxa
income. income.
Provided, That minimum wage Provided, That minimum wa
earners as defined in Section
earners as defined in Sect
22(HH) of this Code shall be exempt
22(HH) of this Code shall be exem
from the payment of income tax on from the payment of income tax
their taxable income: Provided, their taxable income:
further, That the holiday pay, further, That the holiday p
overtime pay, night shift differential overtime pay, night shift differen
pay and hazard pay received by pay and hazard pay received
such minimum wage earners shall such minimum wage earners s
likewise be exempt from income tax. likewise be exempt from income ta
(B) Rate of Tax on Income of Purely
Self-employed Individuals and/or
Professionals Whose Gross Sales
or Gross Receipts and Other
Non-operating Income Does Not
Exceed the Value-added Tax (VAT)
Threshold as Provided in Section
109(BB). — Self-employed
individuals and/or professionals
shall have the option to avail of an
eight percent (8%) tax on gross
sales or gross receipts and other
non-operating income in excess of
Two hundred fifty thousand pesos
(P250,000) in lieu of the graduated
income tax rates under Subsection
(a)(2)(a) of this Section and the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
percentage tax under Section 116 of
this Code.
(c) Rate of Tax for Mixed Income

Earners. — Taxpayers earning both
compensation income and income
from business or practice of
profession shall be subject to the
following taxes:
(1) All Income from Compensation

— The rates prescribed under
Subsection (A)(2)(A) of this Section.
(2) All Income from Business or

Practice of Profession —
(a) If Total Gross Sales and/or Gross

Receipts and Other Non-operating
Income Do Not Exceed the VAT
Threshold as Provided in Section
109(BB) of this Code. — The rates
prescribed under Subsection
(A)(2)(a) of this Section on taxable
income, or eight percent (8%)
income tax based on gross sales or
gross receipts and other
non-operating income in lieu of the
graduated income tax rates under
Subsection (A)(2)(a) of this Section
and the percentage tax under
Section 116 of this Code.
(b) If Total Gross Sales and/or Gross

Receipts and Other Non-operating
Income Exceeds the VAT Threshold
as Provided in Section 109(BB) of
this Code. — The rates prescribed
under Subsection (A)(2)(a) of this
Section.
(added by Sec. 5, R.A. No. 10963,
December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Rate of Tax on Certain Pass

(B) Rate of Tax on Certain Passive
Income: —
Income: —
(1) Interests, Royalties, Prizes, a
(1) Interests, Royalties, Prizes, and
Other Winnings. — A final tax at
Other Winnings. — A final tax at the
rate of twenty percent (20%)
rate of twenty percent (20%) is
hereby imposed upon the
hereby imposed upon the amount of
interest from any currency ba
interest from any currency bank
deposit and yield or any ot
deposit and yield or any other
monetary benefit from depo
monetary benefit from deposit
substitutes and from trust funds a
substitutes and from trust funds and
similar arrangements; royalti
similar arrangements; royalties,
except on books, as well as ot
except on books, as well as other
literary works and mus
literary works and musical
compositions, which sh
compositions, which shall be
imposed a final tax of ten perc
imposed a final tax of ten percent
(10%); prizes (except pri
(10%); prizes (except prizes
amounting to Ten thousand pes
amounting to Ten thousand pesos
(P10,000) or less which shall
(P10,000) or less which shall be
subject to tax under Subsection
subject to tax under Subsection (A)
of Section 24; and other winnin
of Section 24; and other winnings
(except Philippine Cha
(except winnings amounting to Ten
Sweepstakes and Lotto w
thousand pesos (P10,000) or less
derived from sources within
from Philippine Charity
Philippines: Provided, however, T
Sweepstakes and Lotto which shall
interest income received by
be exempt), derived from sources
individual taxpayer (except
within the Philippines: Provided,
nonresident individual) from
however, That interest income
depository bank under the expand
received by an individual taxpayer
foreign currency deposit syst
(except a nonresident individual)
shall be subject to a final income
from a depository bank under the
at the rate of seven and one-h
expanded foreign currency deposit
percent (7 1/2%) of such inter
system shall be subject to a final
income: Provided, further, T
income tax at the rate of fifteen
interest income from long-te
percent (15%) of such interest
deposit or investment in the form
income: Provided, further, That
savings, common or individual tr
interest income from long-term
funds, deposit substitut
deposit or investment in the form of
investment management accou
savings, common or individual trust
and other investments evidenced
funds, deposit substitutes,
certificates in such form prescrib
investment management accounts
by the Bangko Sentral ng Pilipin
and other investments evidenced by
(BSP) shall be exempt from the
Copyright 2019
certificatesPhilippine
CD Technologies Asia, Inc. and Accesslaw, Inc.
in such form prescribed
Taxation Encyclopedia Third Release 2019 45
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(BSP) shall be exempt from the
certificates in such form prescribed
imposed under this Subsecti
by the Bangko Sentral ng Pilipinas
Provided, finally, That should
(BSP) shall be exempt from the tax
holder of the certif
imposed under this Subsection:
pre-terminate the deposit
Provided, finally, That should the
investment before the fifth (5
holder of the certificate
year, a final tax shall be imposed
pre-terminate the deposit or
the entire income and shall
investment before the fifth (5th)
deducted and withheld by
year, a final tax shall be imposed on
depository bank from the procee
the entire income and shall be
of the long-term deposit
deducted and withheld by the
investment certificate base
depository bank from the proceeds
remaining maturity thereof:
of the long-term deposit or
investment certificate based on the
remaining maturity thereof:
Four (4) years to less than five (5) Four (4) years to less than five
years — 5%; years — 5%;
Three (3) years to less than four (4) Three (3) years to less than four
years — 12%; and years — 12%; and
Less than three (3) years — 20%. Less than three (3) years — 20%.
(2) Cash and/or Property Dividends. (2) Cash and/or Property Dividen
— A final tax at the rate of ten — A final tax at the following ra
percent (10%) shall be imposed shall be imposed upon the ca
upon the cash and/or property and/or property dividends actually
dividends actually or constructively constructively received by
received by an individual from a individual from a dome
domestic corporation or from a joint corporation or from a joint sto
stock company, insurance or mutual company, insurance or mutual fu
fund companies and regional companies and regional operat
operating headquarters of headquarters of multinatio
multinational companies, or on the companies, or on the share of
share of an individual in the individual in the distributable
distributable net income after tax of income after tax of a partners
a partnership (except a general (except a general professio
professional partnership) of which partnership) of which he is a partn
he is a partner, or on the share of an or on the share of an individua
individual in the net income after tax the net income after tax of
of an association, a joint account, or association, a joint a
a joint venture or consortium taxable joint venture or consortium taxa
as a corporation of which he is a as a corporation of which he is
member or co-venturer. member or co-venturer:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Six percent (6%) beginning Janu

1, 1998;
Eight percent (8%) beginn

January 1, 1999;
Ten percent (10%) beginn

January 1, 2000.
Provided, however, That the tax

dividends shall apply only on inco
earned on or after January 1, 19
Income forming part of retain
earnings as of December 31, 19
shall not, even if declared
distributed on or after January
1998, be subject to this tax.
(C) Capital Gains from Sale of
Shares of Stock not Traded in the
Stock Exchange. — The provisions
of Section 39(B) notwithstanding, a (C) Capital Gains from Sale
final tax at the rate of fifteen percent Shares of Stock not Traded in
(15%) is hereby imposed upon the Stock Exchange. — The provisio
net capital gains realized during the of Section 39(B) notwithstanding
taxable year from the sale, barter, final tax at the rates prescrib
exchange or other disposition of below is hereby imposed upon
shares of stock in a domestic net capital gains realized during
corporation, except shares sold, or taxable year from the sale, bar
disposed of through the stock exchange or other disposition
exchange. shares of stock in a dome
corporation, except shares sold,
disposed of through the sto
exchange.
Not over P100,000
On any amount
(D) Capital Gains from Sale of Real in excess of P100,000
Property. —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) In General. — The provisions of (D) Capital Gains from Sale of R

Section 39(B) notwithstanding, a Property. —
final tax of six percent (6%) based
on the gross selling price or current (1) In General. — The provisions
fair market value as determined in Section 39(B) notwithstanding,
accordance with Section 6(E) of this final tax of six percent (6%) bas
Code, whichever is higher, is hereby on the gross selling price or curr
imposed upon capital gains fair market value as determined
presumed to have been realized accordance with Section 6(E) of t
from the sale, exchange, or other Code, whichever is higher, is
disposition of real property located imposed upon capital ga
in the Philippines, classified as presumed to have been realiz
capital assets, including pacto de from the sale, exchange, or ot
retro sales and other forms of disposition of real property located
conditional sales, by individuals, the Philippines, classified as cap
including estates and trusts: assets, including pacto de re
Provided, That the tax liability, if sales and other forms of conditio
any, on gains from sales or other sales, by individuals, includ
dispositions of real property to the estates and trusts: Provided, T
government or any of its political the tax liability, if any, on gains fr
subdivisions or agencies or to sales or other dispositions of r
government-owned or -controlled property to the government or any
corporations shall be determined its political subdivisions or agenc
either under Section 24(A) or under or to government-owned
this Subsection, at the option of the -controlled corporations shall
taxpayer; determined either under Sect
24(A) or under this Subsection,
(2) Exception. — The provisions of the option of the taxpayer;
paragraph (1) of this Subsection to
the contrary notwithstanding, capital
(2) Exception. — The provisions
gains presumed to have been
paragraph (1) of this Subsection
realized from the sale or disposition
the contrary notwithstanding, cap
of their principal residence by
gains presumed to have be
natural persons, the proceeds of
realized from the sale or disposit
which is fully utilized in acquiring or
of their principal residence by natu
constructing a new principal
persons, the proceeds of which
residence within eighteen (18)
fully utilized in acquiring
calendar months from the date of
constructing a new princ
sale or disposition, shall be exempt
residence within eighteen (
from the capital gains tax imposed
calendar months from the date
under this Subsection: Provided,
sale or disposition, shall
That the historical cost or adjusted
from the capital gains tax impos
basis of the real property sold or
under this Subsection: Provid
disposed shall be carried over to the
That the historical cost or adjus
new principal residence built or
basis of the real property sold
acquired: Provided, further, That the
disposed shall be carried over to
Commissioner shall have been duly
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
disposed shall be carried over to
Commissioner shall have been duly
new principal residence built
notified by the taxpayer within thirty
acquired: Provided, further, That
(30) days from the date of sale or
Commissioner shall have been d
disposition through a prescribed
notified by the taxpayer within th
return of his intention to avail of the
(30) days from the date of sale
tax exemption herein mentioned:
disposition through a prescrib
Provided, still further, That the said
return of his intention to avail of
tax exemption can only be availed of
tax exemption herein mention
once every ten (10) years: Provided,
Provided, still further, That the s
finally, That if there is no full
tax exemption can only be availed
utilization of the proceeds of sale or
once every ten (10) years: Provid
disposition, the portion of the gain
finally, That if there is no
presumed to have been realized
utilization of the proceeds of sale
from the sale or disposition shall be
disposition, the portion of the g
subject to capital gains tax. For this
presumed to have been realiz
purpose, the gross selling price or
from the sale or disposition shall
fair market value at the time of sale,
subject to capital gains tax. For t
whichever is higher, shall be
purpose, the gross selling price
multiplied by a fraction which the
fair market value at the time of sa
unutilized amount bears to the gross
whichever is higher, shall
selling price in order to determine
multiplied by a fraction which
the taxable portion and the tax
unutilized amount bears to the gro
prescribed under paragraph (1) of
selling price in order to determ
this Subsection shall be imposed
the taxable portion and the
thereon.
prescribed under paragraph (1)
this Subsection shall be impos
thereon.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Tax on Nonresident Alien

SEC. 25. (A) Nonresident SEC. 25. (A) Nonresident
Individuals
Alien Engaged in Trade or Alien Engaged in Trade o
Business Within the Philippines. Business Within the Philippines
—
(1) In General. — A nonresid
(1) In General. — A nonresident alien individual engaged in trade o
alien individual engaged in trade business in the Philippines shall b
or business in the Philippines subject to an income tax in th
shall be subject to an income tax same manner as an individua
in the same manner as an citizen and a resident alie
individual citizen and a resident individual, on taxable incom
alien individual, on taxable received from all sources withi
income received from all sources the Philippines. A nonres
within the Philippines. A alien individual who shall come t
nonresident alien individual who the Philippines and stay therein fo
shall come to the Philippines and an aggregate period of more tha
stay therein for an aggregate one hundred eighty (180) day
period of more than one hundred during any calendar year shall b
eighty (180) days during any deemed a 'nonresident alien doin
calendar year shall be deemed a business in the Philippines
'nonresident alien doing business Section 22(G) of
in the Philippines', Section 22(G) notwithstanding.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of this Code notwithstanding.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Cash and/or Property (2) Cash and/or Propert

Dividends from a Domestic Dividends from a Domest
Corporation or Joint Stock Corporation or Joint Stoc
Company, or Insurance or Mutual Company, or Insurance or Mutua
Fund Company or Regional Fund Company or Regiona
Operating Headquarter of Operating Headquarter o
Multinational Company, or Share Multinational Company, or Shar
in the Distributable Net Income of in the Distributable Net Income o
a Partnership (Except a General a Partnership (Except a Genera
Professional Partnership), Joint Professional Partnership), Join
Account, Joint Venture Taxable Account, Joint Venture Taxable a
as a Corporation or Association, a Corporation or Association
Interests, Royalties, Prizes, and Interests, Royalties, Prizes, an
Other Winnings. — Cash and/or Other Winnings. — Cash and/o
property dividends from a property dividends from
domestic corporation, or from a domestic corporation, or from
joint stock company, or from an joint stock company, or from a
insurance or mutual fund insurance or mutual fund compan
company or from a regional or from a regional operatin
operating headquarter of headquarter of multinationa
multinational company, or the company, or the share of
share of a nonresident alien nonresident alien individual in th
individual in the distributable net distributable net income after ta
income after tax of a partnership of a partnership (except a genera
(except a general professional professional partnership) of whic
partnership) of which he is a he is a partner, or the share of
partner, or the share of a nonresident alien individual in th
nonresident alien individual in the net income after tax of a
net income after tax of an association, a joint account, or
association, a joint account, or a joint venture taxable as
joint venture taxable as a corporation of which he is
corporation of which he is a member or a co-venture
member or a co-venturer; interests; royalties (in any form
interests; royalties (in any form); and prizes (except prize
and prizes (except prizes amounting to Ten thousand peso
amounting to Ten thousand pesos (P10,000) or less which shall b
(P10,000) or less which shall be subject to tax under Subsectio
subject to tax under Subsection (B)(1) of Section 24); and othe
(B)(1) of Section 24); and other winnings (except Philippine Charit
winnings (except Philippine Sweepstakes and Lotto winnings
Charity Sweepstakes and Lotto shall be subject to an income ta
winnings), shall be subject to an of twenty percent (20%) on th
income tax of twenty percent total amount thereof: Provided
(20%) on the total amount however, That royalties on book
thereof: Provided, however, That as well as other literary works, an
royalties on books as well as royalties on musical composition
Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2019
shall be subject to52a final tax of te
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
other literary works, and royalties shall be subject to a final tax of te
on musical compositions shall be percent (10%) on the t
subject to a final tax of ten thereof: Provided, further, Tha
percent (10%) on the total amount cinematographic films and simila
thereof: Provided, further, That works shall be subject to the ta
cinematographic films and similar provided under Section 28 of th
works shall be subject to the tax Code: Provided, furthermore, Tha
provided under Section 28 of this interest income from long-term
Code: Provided, furthermore, deposit or investment in the form
That interest income from of savings, common or individua
long-term deposit or investment in trust funds, deposit substitutes
the form of savings, common or investment management account
individual trust funds, deposit and other investments evidence
substitutes, investment by certificates in such form
management accounts and other prescribed by the Bangko Sentra
investments evidenced by ng Pilipinas (BSP) shall be exemp
certificates in such form from the tax imposed under th
prescribed by the Bangko Sentral Subsection: Provided, finally, Tha
ng Pilipinas (BSP) shall be should the holder of the certificat
exempt from the tax imposed pre-terminate the deposit o
under this Subsection: Provided, investment before the fifth (5th
finally, That should the holder of year, a final tax shall be impose
the certificate pre-terminate the on the entire income and shall b
deposit or investment before the deducted and withheld by th
fifth (5th) year, a final tax shall be depository bank from the proc
imposed on the entire income and of the long-term deposit o
shall be deducted and withheld by investment certificate based on th
the depository bank from the remaining maturity thereof:
proceeds of the long-term deposit
or investment certificate based on
the remaining maturity thereof:
Four (4) years to less than five (5) Four (4) years to less than five
years — 5%; years — 5%;
Three (3) years to less than four (4) Three (3) years to less than four
years — 12%; and years — 12%; and
Less than three (3) years — 20%. Less than three (3) years — 20%.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Capital Gains. — Capital gains (3) Capital Gains. — Capital gain
realized from sale, barter or realized from sale, barter o
exchange of shares of stock in exchange of shares of stock i
domestic corporations not traded domestic corporations not trade
through the local stock exchange, through the local stock exchange
and real properties shall be and real properties shall be subjec
subject to the tax prescribed to the tax prescribed unde
under Subsections (C) and (D) of Subsections (C) and (D) of Sectio
Section 24. 24.
(B) Nonresident Alien Individual (B) Nonresident Alien Individua

Not Engaged in Trade or Not Engaged in Trade or Busines
Business Within the Philippines. Within the Philippines.
— There shall be levied, collected shall be levied, collected and pai
and paid for each taxable year for each taxable year upon th
upon the entire income received entire income received from a
from all sources within the sources within the Philippines b
Philippines by every nonresident every nonresident alien individua
alien individual not engaged in not engaged in trade or busines
trade or business within the within the Philippines as interes
Philippines as interest, cash cash and/or property dividends
and/or property dividends, rents, rents, salaries, wages, premiums
salaries, wages, premiums, annuities, compensation
annuities, compensation, remuneration, emoluments, o
remuneration, emoluments, or other fixed or determinable annua
other fixed or determinable or periodic or casual gains, pr
annual or periodic or casual and income, and capital gains,
gains, profits, and income, and tax equal to twenty-five percen
capital gains, a tax equal to (25%) of such income. Capita
twenty-five percent (25%) of such gains realized by a nonresiden
income. Capital gains realized by alien individual not engaged i
a nonresident alien individual not trade or business in the Philippine
engaged in trade or business in from the sale of shares of stock i
the Philippines from the sale of any domestic corporation and rea
shares of stock in any domestic property shall be subject to th
corporation and real property income tax prescribed unde
shall be subject to the income tax Subsections (C) and (D) of Sectio
prescribed under Subsections (C) 24.
and (D) of Section 24.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Alien Individual Employed by (C) Alien Individual Employed b

Regional or Area Headquarters Regional or Area Headquarter
and Regional Operating and Regional Operatin
Headquarters of Multinational Headquarters of Multinationa
Companies. — There shall be Companies. — There
levied, collected and paid for each levied, collected and paid for eac
taxable year upon the gross taxable year upon the gros
income received by every alien income received by every alie
individual employed by regional or individual employed by regional o
area headquarters and regional area headquarters and regiona
operating headquarters operating headquarter
multinational companies as multinational companies a
salaries, wages, annuities, salaries, wages, annuities
compensation, remuneration and compensation, remuneration an
other emoluments, such as other emoluments, such a
honoraria and allowances, from honoraria and allowances, from
such regional or area such regional or are
headquarters and regional headquarters and regiona
operating headquarters, a tax operating headquarters, a ta
equal to fifteen percent (15%) of equal to fifteen percent (15%) o
such gross income: Provided, such gross income: Provided
however, That the same tax however, That the same ta
treatment shall apply to Filipinos treatment shall apply to Filipino
employed and occupying the employed and occupying the sam
same position as those of aliens position as those of alien
employed by these multinational employed by these multinationa
companies. For purposes of this companies. For purposes of th
Chapter, the term 'multinational Chapter, the term 'multinationa
company' means a foreign firm or company' means a foreign firm o
entity engaged in international entity engaged in internationa
trade with affiliates or subsidiaries trade with affiliates or subsidiarie
or branch offices in the or branch offices in th
Asia-Pacific Region and other Asia-Pacific Region and othe
foreign markets. foreign markets.
(D) Alien Individual Employed by (D) Alien Individual Employed b

Offshore Banking Units. — There Offshore Banking Units
shall be levied, collected and paid shall be levied, collected and pai
for each taxable year upon the for each taxable year upon th
gross income received by every gross income received by ever
alien individual employed by alien individual employed b
offshore banking units established offshore banking units establishe
in the Philippines as salaries, in the Philippines as salaries
wages, annuities,55 compensation
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
in the Philippines as salaries,
wages, annuities, compensation, wages, annuities, compensation
remuneration and other remuneration and othe
emoluments, such as honoraria emoluments, such as honorari
and allowances, from such and allowances, from suc
offshore banking units, a tax offshore banking units, a tax equa
equal to fifteen percent (15%) of to fifteen percent (15%) of suc
such gross income: Provided, gross income: Provided, howeve
however, That the same tax That the same tax treatment sha
treatment shall apply to Filipinos apply to Filipinos employed an
employed and occupying the occupying the same position a
same position as those of aliens those of aliens employed by thes
employed by these offshore offshore banking units.
banking units.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(E) Alien Individual Employed by

Petroleum Service Contractor and
Subcontractor. — An alien
individual who is a permanent
(E) Alien Individual Employed b
resident of a foreign country but
Petroleum Service Contractor an
who is employed and assigned in
Subcontractor. — An alie
the Philippines by a foreign service
individual who is a permanen
contractor or by a foreign service
resident of a foreign country bu
subcontractor engaged in
who is employed and assigned i
petroleum operations in the
the Philippines by a foreign servic
Philippines shall be liable to a tax
contractor or by a foreign servi
of fifteen percent (15%) of the
subcontractor engaged i
salaries, wages, annuities,
petroleum operations in th
compensation, remuneration and
Philippines shall be liable to a ta
other emoluments, such as
of fifteen percent (15%) of th
honoraria and allowances,
salaries, wages, annuities
received from such contractor or
compensation, remuneration an
subcontractor: Provided, however,
other emoluments, such a
That the same tax treatment shall
honoraria and allowances
apply to a Filipino employed and
received from such c
occupying the same position as an
subcontractor: Provided, howeve
alien employed by petroleum
That the same tax treatment sha
service contractor and
apply to a Filipino employed an
subcontractor.
occupying the same position as a
Any income earned from all other alien employed by petroleum
sources within the Philippines by service contractor an
the alien employees referred to subcontractor.
under Subsections (C), (D), and Any income earned from all othe
(E) hereof shall be subject to the sources within the Philippines b
pertinent income tax, as the case the alien employees referred t
may be, imposed under this Code. under Subsections (C), (D) and (E
hereof shall be subject to th
(F) The preferential tax treatment pertinent income tax, as the cas
provided in Subsections (C), (D), may be, imposed under this Code
and (E) of this Section shall not be
applicable to regional
headquarters (RHQs), regional
operating headquarters (ROHQs),
offshore banking units (OBUs) or
petroleum service contractors and
subcontractors registering with the
Securities and Exchange
Commission (SEC) after January
1, 2018: Provided, however, That
existing RHQs/ROHQs, OBUs or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
petroleum service contractors and
subcontractors presently availing
of preferential tax rates for
qualified employees shall continue
to be entitled to avail of the
preferential tax rate for present
and future qualified employees.
(added by Sec. 6, R.A. No. 10963,
December 19, 2017)
Tax Liability of Members of

SEC. 26. A general professional SEC. 26. A general professiona
General Professional
partnership as such shall not be partnership as such shall not b
Partnerships
subject to the income tax imposed subject to the income tax impose
under this Chapter. Persons under this Chapter. Person
engaging in business as partners engaging in business as partner
in a general professional in a general professiona
partnership shall be liable for partnership shall be liable fo
income tax only in their separate income tax only in their separat
and individual capacities. and individual capacities.
For purposes of computing the For purposes of computing th

distributive share of the partners, distributive share of the partners
the net income of the partnership the net income of the partnershi
shall be computed in the same shall be computed in the sam
manner as a corporation. manner as a corporation.
Each partner shall report as gros
Each partner shall report as gross
income his distributive share
income his distributive share,
actually or constructively received
actually or constructively
in the net income of th
received, in the net income of the
partnership.
partnership.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
CHAPTER IV CHAPTER IV
TAX ON CORPORATIONS TAX ON CORPORATIONS
Rates of Income Tax on

SEC. 27. (A) In General. — Except SEC. 27. (A) In General.
Domestic Corporations
as otherwise provided in this Code, as otherwise provided in this Code
an income tax of thirty-five percent an income tax of thirty-five percen
(35%) is hereby imposed upon the (35%) is hereby imposed upon th
taxable income derived during each taxable income derived durin
taxable year from all sources within each taxable year from all source
and without the Philippines by every within and without the Philippine
corporation, as defined in Section by every corporation, as defined i
22(B) of this Code and taxable Section 22(B) of this Code an
under this Title as a corporation, taxable under this Title as
organized in, or existing under the corporation, organized in, o
laws of the Philippines: Provided, existing under the laws of th
That effective January 1, 2009, the Philippines: Provided, Tha
rate of income tax shall be thirty effective January 1, 2009, the rat
percent (30%). of income tax shall be thirt
percent (30%).
In the case of corporations adopting In the case of corporation

the fiscal-year accounting period, adopting the fiscal-year accountin
the taxable income shall be period, the taxable income shall b
computed without regard to the computed without regard to th
specific date when specific sales, specific date when specific sa
purchases and other transactions purchases and other transaction
occur. Their income and expenses occur. Their income and expense
for the fiscal year shall be deemed for the fiscal year shall be deeme
to have been earned and spent to have been earned and spen
equally for each month of the equally for each month of th
period. period.
The corporate income tax rate shall The corporate income tax rat
be applied on the amount computed shall be applied on the amoun
by multiplying the number of computed by multipl
months covered by the new rate number of months covered by th
within the fiscal year by the taxable new rate within the fiscal year b
income of the corporation for the the taxable income of th
period, divided by twelve. corporation for the period, divide
by twelve.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
President, upon the Provided, further, That th
recommendation of the Secretary of President, upon th
Finance, may, effective January 1, recommendation of the Secretar
2000, allow corporations the option of Finance, may, effective
to be taxed at fifteen percent (15%) 1, 2000, allow corporations th
of gross income as defined herein, option to be taxed at fiftee
after the following conditions have percent (15%) of gross income a
been satisfied: defined herein, after the followin
conditions have been satisfied:
(1) A tax effort ratio of twenty
percent (20%) of Gross National (1) A tax effort ratio of twent
Product (GNP); percent (20%) of Gross Nationa
Product (GNP);
(2) A ratio of forty percent (40%) of
income tax collection to total tax (2) A ratio of forty percent (40%) o
revenues; income tax collection to total ta
revenues;
(3) A VAT tax effort of four percent
(4%) of GNP; and (3) A VAT tax effort of four percen
(4%) of GNP; and
(4) A 0.9 percent (0.9%) ratio of the
Consolidated Public Sector (4) A 0.9 percent (0.9%) ratio o
Financial Position (CPSFP) to GNP. the Consolidated Public Secto
Financial Position (CPSFP) t
GNP.
The option to be taxed based on
gross income shall be available The option to be taxed
only to firms whose ratio of cost of gross income shall be availabl
sales to gross sales or receipts only to firms whose ratio of cost o
from all sources does not exceed sales to gross sales or receipt
fifty-five percent (55%). from all sources does not excee
fifty-five percent (55%).
The election of the gross income
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
tax option by the corporation shall The election of the gross incom
be irrevocable for three (3) tax option by the corporation sha
consecutive taxable years during be irrevocable for three (3
which the corporation is qualified consecutive taxable years durin
under the scheme. which the corporation is qualifie
under the scheme.
For purposes of this Section, the
term 'gross income' derived from For purposes of this Section, th
business shall be equivalent to term 'gross income' derived from
gross sales less sales returns, business shall be equivalent t
discounts and allowances and cost gross sales less sales returns
of goods sold. 'Cost of goods sold' discounts and allowances a
shall include all business expenses of goods sold. 'Cost of goods sold
directly incurred to produce the shall include all business expense
merchandise to bring them to their directly incurred to produce th
present location and use. merchandise to bring them to the
present location and use.
For a trading or merchandising For a trading or merchandisin

concern, 'cost of goods sold' shall concern, 'cost of goods sold' sha
include the invoice cost of the include the invoice cost of th
goods sold, plus import duties, goods sold, plus import duties
freight in transporting the goods to freight in transporting the goods t
the place where the goods are the place where the goods ar
actually sold, including insurance actually sold, including insuranc
while the goods are in transit. while the goods are in transit.
For a manufacturing concern, 'cost For a manufacturing concern, 'cos

of goods manufactured and sold' of goods manufactured and sold
shall include all costs of production shall include all costs of productio
of finished goods, such as raw of finished goods, such as ra
materials used, direct labor and materials used, direct labor an
manufacturing overhead, freight manufacturing overhead, freigh
cost, insurance premiums and other cost, insurance premiums an
costs incurred to bring the raw other costs incurred to bring th
materials to the factory or raw materials to the factory o
warehouse. warehouse.
In the case of taxpayers engaged in In the case of taxpaye

the sale of service, 'gross income' in the sale of service, 'gros
means gross receipts less sales income' means gross receipts les
returns, allowances and discounts. sales returns, allowances an
discounts.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Proprietary Educational (B) Proprietary Educationa
Institutions and Hospitals. — Institutions and Hospitals
Proprietary educational institutions Proprietary educational institution
and hospitals which are nonprofit and hospitals which are nonprof
shall pay a tax of ten percent (10%) shall pay a tax of ten percen
on their taxable income except (10%) on their taxable incom
those covered by Subsection (D) except those covered b
hereof: Provided, That if the gross Subsection (D) hereof: Provided
income from unrelated trade, That if the gross income from
business or other activity exceeds unrelated trade, business or othe
fifty percent (50%) of the total gross activity exceeds fifty percent (50%
income derived by such educational of the total gross income derive
institutions or hospitals from all by such educational institutions o
sources, the tax prescribed in hospitals from all sources, the ta
Subsection (A) hereof shall be prescribed in Subsection (A
imposed on the entire taxable hereof shall be imposed on th
income. For purposes of this entire taxable income. Fo
Subsection, the term 'unrelated purposes of this Subsection, th
trade, business or other activity' term 'unrelated trade, business o
means any trade, business or other other activity' means any trade
activity, the conduct of which is not business or other activity, th
substantially related to the exercise conduct of which is no
or performance by such educational substantially related to th
institution or hospital of its primary exercise or performance by suc
purpose or function. A 'proprietary educational institution or hospita
educational institution' is any private of its primary purpose or function
school maintained and A 'proprietary educationa
administered by private individuals institution' is any private schoo
or groups with an issued permit to maintained and administered b
operate from the Department of private individuals or groups wit
Education, Culture and Sports an issued permit to operate from
(DECS), or the Commission on the Department of Education
Higher Education (CHED), or the Culture and Sports (DECS), or th
Technical Education and Skills Commission on Higher Educatio
Development Authority (TESDA), (CHED), or the Technica
as the case may be, in accordance Education and Skills Developmen
with existing laws and regulations. Authority (TESDA), as the cas
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
may be, in accordance wit
existing laws and regulations.
(C) Government-owned or
-Controlled Corporations, Agencies
or Instrumentalities. — The (C) Government-owned
provisions of existing special or -Controlled Corporations, Agenc
general laws to the contrary or Instrumentalities.
notwithstanding, all corporations, provisions of existing special
agencies, or instrumentalities owned general laws to the contr
or controlled by the Government, notwithstanding, all corporatio
except the Government Service agencies, or instrumentalities own
Insurance System (GSIS), the or controlled by the Governme
Social Security System (SSS), the except the Government Service a
Philippine Health Insurance Insurance System (GSIS), the So
Corporation (PHIC), and the local Security System (SSS),
water districts shall pay such rate of Philippine Health Insuran
tax upon their taxable income as are Corporation (PHIC), the local wa
imposed by this Section upon districts (LWD) and the
corporations or associations Charity Sweepstakes Office (PCS
engaged in a similar business, shall pay such rate of tax upon th
industry, or activity. (as amended by taxable income as are imposed
Sec. 7, R.A. No. 10963, December this Section upon corporations
19, 2017) associations engaged in a sim
business, industry, or activity.
amended by Sec. 1, R.A. No. 100
dated March 11, 2010)
(D) Rates of Tax on Certain Passive

Incomes. — (D) Rates of Tax on Certain Pass
Incomes. —
(1) Interest from Deposits and Yield
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
or any other Monetary Benefit from (1) Interest from Deposits and Y
Deposit Substitutes and from Trust or Any Other Monetary Benefit fr
Funds and Similar Arrangements, Deposit Substitutes and from Tr
and Royalties. — A final tax at the Funds and Similar Arrangemen
rate of twenty percent (20%) is and Royalties. — A final tax at
hereby imposed upon the amount of rate of twenty percent (20%)
interest on currency bank deposit hereby imposed upon the amoun
and yield or any other monetary interest on currency bank depo
benefit from deposit substitutes and and yield or any other monet
from trust funds and similar benefit from deposit substitutes a
arrangements received by domestic from trust funds and sim
corporations, and royalties, derived arrangements received by dome
from sources within the Philippines: corporations, and royalties,
Provided, however, That interest from sources within the Philippin
income derived by a domestic Provided, however, That inter
corporation from a depository bank income derived by a dome
under the expanded foreign corporation from a depository ba
currency deposit system shall be under the expanded foreign curre
subject to a final income tax at the deposit system shall be subject t
rate of fifteen percent (15%) of such final income tax at the rate of sev
interest income. (as amended by and one-half percent (7 1/2%)
Sec. 7, R.A. No. 10963, December such interest income.
19, 2017)
(2) Capital Gains from the Sale of

Shares of Stock Not Traded in the (2) Capital Gains from the Sale
Stock Exchange. — A final tax at Shares of Stock Not Traded in
the rate of fifteen percent (15%) Stock Exchange. — A final tax at
shall be imposed on net capital rates prescribed below shall
gains realized during the taxable imposed on net capital ga
year from the sale, exchange or realized during the taxable year
other disposition of shares of stock the sale, exchange or ot
in a domestic corporation except disposition of shares of stock in
shares sold or disposed of through domestic corporation except sha
the stock exchange. (as amended sold or disposed of through
by Sec. 7, R.A. No. 10963, stock exchange:
December 19, 2017)
Not over P100,000
Amount in excess of P100,000
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Tax on Income Derived under the

Expanded Foreign Currency Deposit (3) Tax on Income Derived under
System. — Income derived by a Expanded Foreign Currency Depo
depository bank under the expanded System. — Income derived by
foreign currency deposit system depository bank under the expand
from foreign currency transactions foreign currency deposit syst
with nonresidents, offshore banking from foreign currency transactio
units in the Philippines, local with nonresidents, offshore bank
commercial banks including units in the Philippines, lo
branches of foreign banks that may commercial banks includ
be authorized by the Bangko Sentral branches of foreign banks that m
ng Pilipinas (BSP) to transact be authorized by the Bangko Sen
business with foreign currency ng Pilipinas (BSP) to trans
deposit system units and other business with foreign curre
depository banks under the deposit system units and ot
expanded foreign currency deposit depository banks under
system shall be exempt from all expanded foreign currency depo
taxes, except net income from such system shall be exempt from
transactions as may be specified by taxes, except net income from su
the Secretary of Finance, upon transactions as may be specified
recommendation by the Monetary the Secretary of Finance, up
Board to be subject to the regular recommendation by the Monet
income tax payable by banks: Board to be subject to the regu
Provided, however, That interest income tax payable by ban
income from foreign currency loans Provided, however, That inter
granted by such depository banks income from foreign currency
under said expanded system to granted by such depository ban
residents other than offshore under said expanded system
banking units in the Philippines or residents other than offsh
other depository banks under the banking units in the Philippines
expanded system shall be subject to other depository banks under
a final tax at the rate of ten percent expanded system shall be subjec
(10%). a final tax at the rate of ten perc
(10%).
Any income of nonresidents,
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
whether individuals or corporations, Any income of nonresidents, whet
from transactions with depository individuals or corporations, fr
banks under the expanded system transactions with depository ban
shall be exempt from income tax. under the expanded system shall
exempt from income tax.
(4) Intercorporate Dividends. —
Dividends received by a domestic (4) Intercorporate Dividends
corporation from another domestic Dividends received by a dome
corporation shall not be subject to corporation from another dome
tax. corporation shall not be subject
tax.
(5) Capital Gains Realized from the
Sale, Exchange or Disposition of (5) Capital Gains Realized from
Lands and/or Buildings. — A final Sale, Exchange or Disposition
tax of six percent (6%) is hereby Lands and/or Buildings
imposed on the gain presumed to tax of six percent (6%) is here
have been realized on the sale, imposed on the gain presumed
exchange or disposition of lands have been realized on the sa
and/or buildings which are not exchange or disposition of lan
actually used in the business of a and/or buildings which are
corporation and are treated as actually used in the business o
capital assets, based on the gross corporation and are treated
selling price or fair market value as capital assets, based on the gro
determined in accordance with selling price or fair market value
Section 6(E) of this Code, whichever determined in accordance w
is higher, of such lands and/or Section 6(E) of this Code, whiche
buildings. is higher, of such lands and
buildings.
(E) Minimum Corporate Income Tax
on Domestic Corporations. — (E) Minimum Corporate Income T
on Domestic Corporations
(1) Imposition of Tax. — A minimum
corporate income tax of two percent (1) Imposition of Tax. — A minim
(2%) of the gross income as of the corporate income tax of two perc
end of the taxable year, as defined (2%) of the gross income as of
herein, is hereby imposed on a end of the taxable year, as defin
corporation taxable under this Title, herein, is hereby imposed on
beginning on the fourth taxable year corporation taxable under this Ti
immediately following the year in beginning on the fourth taxable y
which such corporation commenced immediately following the year
its business operations, when the which such corporation commenc
minimum income tax is greater than its business operations, when
the tax computed under Subsection minimum income tax is greater th
(A) of this Section for the taxable the tax computed under
year. (A) of this Section for the taxa
year.
(2) Carry Forward of Excess
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Minimum Tax. — Any excess of the (2) Carry Forward of Exce
minimum corporate income tax over Minimum Tax. — Any excess of
the normal income tax as computed minimum corporate income tax o
under Subsection (A) of this Section the normal income tax as compu
shall be carried forward and credited under Subsection (A) of this Sect
against the normal income tax for shall be carried forward and credi
the three (3) immediately against the normal income tax
succeeding taxable years. the three (3) immedia
succeeding taxable years.
(3) Relief from the Minimum
Corporate Income Tax Under (3) Relief from the Minim
Certain Conditions. — The Corporate Income Tax Un
Secretary of Finance is hereby Certain Conditions. — The Secret
authorized to suspend the of Finance is hereby authorized
imposition of the minimum corporate suspend the imposition of
income tax on any corporation which minimum corporate income tax
suffers losses on account of any corporation which suffers loss
prolonged labor dispute, or because on account of prolonged la
of force majeure, or because of dispute, or because of
legitimate business reverses. majeure, or because of legitim
business reverses.
The Secretary of Finance is hereby
authorized to promulgate, upon The Secretary of Finance is here
recommendation of the authorized to promulgate, up
Commissioner, the necessary rules recommendation of
and regulations that shall define the Commissioner, the necessary ru
terms and conditions under which and regulations that shall define
he may suspend the imposition of terms and conditions under which
the minimum corporate income tax may suspend the imposition of
in a meritorious case. minimum corporate income tax i
meritorious case.
(4) Gross Income Defined. — For
purposes of applying the minimum (4) Gross Income Defined
corporate income tax provided purposes of applying the min
under Subsection (E) hereof, the corporate income tax provided un
term 'gross income' shall mean Subsection (E) hereof, the te
gross sales less sales returns, 'gross income' shall mean gro
discounts and allowances and cost sales less sales returns, discou
of goods sold. 'Cost of goods sold' and allowances and cost of goo
shall include all business expenses sold. 'Cost of goods sold' s
directly incurred to produce the include all business expens
merchandise to bring them to their directly incurred to produce
present location and use. merchandise to bring them to th
present location and use.
For a trading or merchandising
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
concern, 'cost of goods sold' shall For a trading or merchandis
include the invoice cost of the goods concern, 'cost of goods sold' s
sold, plus import duties, freight in include the invoice cost of the goo
transporting the goods to the place sold, plus import duties, freight
where the goods are actually sold transporting the goods to the pla
including insurance while the goods where the goods are actually s
are in transit. including insurance while the goo
are in transit.
For a manufacturing concern, 'cost
of goods manufactured and sold' For a manufacturing concern, 'c
shall include all costs of production of goods manufactured and s
of finished goods, such as raw shall include all costs of product
materials used, direct labor and of finished goods, such as r
manufacturing overhead, freight materials used, direct labor a
cost, insurance premiums and other manufacturing overhead, frei
costs incurred to bring the raw cost, insurance premiums and ot
materials to the factory or costs incurred to bring the r
warehouse. materials to the factory
warehouse.
In the case of taxpayers engaged in
the sale of service, 'gross income' In the case of taxpayers engaged
means gross receipts less sales the sale of service, 'gross incom
returns, allowances, discounts and means gross receipts less sa
cost of services. 'Cost of services' returns, allowances, discounts a
shall mean all direct .costs and cost of services. 'Cost of servic
expenses necessarily incurred to shall mean all direct .costs a
provide the services required by the expenses necessarily incurred
customers and clients including (A) provide the services required by
salaries and employee benefits of customers and clients including
personnel, consultants and salaries and employee benefits
specialists directly rendering the personnel, consultants a
service and (B) cost of facilities specialists directly rendering
directly utilized in providing the service and (B) cost of facilit
service such as depreciation or directly utilized in providing
rental of equipment used and cost of service such as depreciation
supplies: Provided, however, That in rental of equipment used and cos
the case of banks, 'cost of services' supplies: Provided, however, Tha
shall include interest expense. the case of banks, 'cost of servic
shall include interest expense.
amended by Sec. 1, R.A. No. 93
May 24, 2005)
Rates of Income Tax on

SEC. 28. (A) Tax on Resident SEC. 28. (A) Tax on Residen
Foreign Corporations
Foreign Corporations. — Foreign Corporations. —
(1) In General. — Except as (1) In General. — Except a
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
otherwise provided in this Code, a otherwise provided in this Code,
corporation organized, corporation organized, authorized
authorized, or existing under the or existing under the laws of an
laws of any foreign country, foreign country, engaged in trad
engaged in trade or business or business within the Philippines
within the Philippines, shall be shall be subject to an income ta
subject to an income tax equivalent to thirty-five percen
equivalent to thirty-five percent (35%) of the taxable incom
(35%) of the taxable income derived in the preceding
derived in the preceding taxable year from all sources within. th
year from all sources within. the Philippines: Provided, Tha
Philippines: Provided, That effective January 1, 2009, the rat
effective January 1, 2009, the rate of income tax shall be thirt
of income tax shall be thirty percent (30%).
percent (30%).
In the case of corporation
In the case of corporations adopting the fiscal-year accountin
adopting the fiscal-year period, the taxable income shall b
accounting period, the taxable computed without regard to th
income shall be computed without specific date when sales
regard to the specific date when purchases and other transaction
sales, purchases and other occur. Their income and expense
transactions occur. Their income for the fiscal year shall be deeme
and expenses for the fiscal year to have been earned and spen
shall be deemed to have been equally for each month of th
earned and spent equally for each period.
month of the period.
The corporate income tax rat
The corporate income tax rate shall be applied on the amoun
shall be applied on the amount computed by multiplying th
computed by multiplying the number of months covered by th
number of months covered by the new rate within the fiscal year b
new rate within the fiscal year by the taxable income of th
the taxable income of the corporation for the period, divide
corporation for the period, divided by twelve.
by twelve.
Provided, however, That a residen
Provided, however, That a foreign corporation shall
resident foreign corporation shall granted the option to be taxed a
be granted the option to be taxed fifteen percent (15%) on gros
at fifteen percent (15%) on gross income under the same conditions
income under the same as provided in Section 27, (A).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
conditions, as provided in Section
27, (A).
(2) Minimum Corporate Incom
(2) Minimum Corporate Income Tax on Resident Foreig
Tax on Resident Foreign Corporations. — A minimum
Corporations. — A minimum corporate income tax of tw
corporate income tax of two percent (2%) of gross income, a
percent (2%) of gross income, as prescribed. under Section 27(E) o
prescribed. under Section 27(E) this Code, shall be imposed, unde
of this Code, shall be imposed, the same conditions, on a residen
under the same conditions, on a foreign corporation taxable unde
resident foreign corporation paragraph (1) of this Subsection.
taxable under paragraph (1) of
this Subsection. (3) International Carrier
international carrier doing bus
(3) International Carrier. — An in the Philippines shall pay a tax o
international carrier doing two and one-half percent (2½%
business in the Philippines shall on its 'Gross Philippine Billings' a
pay a tax of two and one-half defined hereunder:
percent (2½%) on its 'Gross
Philippine Billings' as defined
hereunder: (a) International Air Carrier
'Gross Philippine Billings' refers t
(a) International Air Carrier. — the amount of gross revenu
'Gross Philippine Billings' refers to derived from carriage of
the amount of gross revenue excess baggage, cargo and ma
derived from carriage of persons, originating from the Philippines i
excess baggage, cargo and mail a continuous and uninterrupte
originating from the Philippines in flight, irrespective of the place o
a continuous and uninterrupted sale or issue and the place o
flight, irrespective of the place of payment of the ticket or passag
sale or issue and the place of document: Provided, That ticket
payment of the ticket or passage revalidated, exchanged and/o
document: Provided, That tickets indorsed to another internationa
revalidated, exchanged and/or airline form part of the Gros
indorsed to another international Philippine Billings if the passenge
airline form part of the Gross boards a plane in a port or point i
Philippine Billings if the the Philippines: Provided, furthe
passenger boards a plane in a That for a flight which originate
port or point in the Philippines: from the Philippines, bu
Provided, further, That for a flight transshipment of passenger take
which originates from the place at any port outside th
Philippines, but transshipment of Philippines on another airline, on
passenger takes place at any port the aliquot portion of the cost o
outside the Philippines on another the ticket corresponding to the le
airline, only the aliquot portion of flown from the Philippines to th
the cost of the ticket point of transshipment shall form
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the cost of the ticket
corresponding to the leg flown part of Gross Philippine Billings.
from the Philippines to the point of
transshipment shall form part of
Gross Philippine Billings.
(b) International Shipping

''Gross Philippine Billings' mean
gross revenue whether fo
(b) International Shipping. — passenger, cargo or ma
''Gross Philippine Billings' means originating from the Philippines u
gross revenue whether for to final destination, regardless o
passenger, cargo or mail the place of sale or payments o
originating from the Philippines up the passage or freight documents
to final destination, regardless of
the place of sale or payments of Provided, That internationa
the passage or freight carriers doing business in th
documents. Philippines may avail of
preferential rate or exemption from
Provided, That international the tax herein imposed on the
carriers doing business in the gross revenue derived from th
Philippines may avail of a carriage of persons and the
preferential rate or exemption excess baggage on the ba
from the tax herein imposed on applicable tax treaty o
their gross revenue derived from international agreement to whic
the carriage of persons and their the Philippines is a signatory or o
excess baggage on the basis of the basis of reciprocity such tha
an applicable tax treaty or an international carrier, whos
international agreement to which home country grants income ta
the Philippines is a signatory or exemption to Philippine carriers
on the basis of reciprocity such shall likewise be exempt from th
that an international carrier, tax imposed under this provision
whose home country grants (as amended by Sec. 1, R.A. No
income tax exemption to 10378, March 7, 2013)
Philippine carriers, shall likewise
be exempt from the tax imposed
under this provision. (as amended
by Sec. 1, R.A. No. 10378, March
7, 2013)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(4) Offshore Banking Units

provisions of any law to th
contrary notwithstanding, incom
derived by offshore banking unit
authorized by the Bangko Sentra
(4) Offshore Banking Units. — ng Pilipinas (BSP), from foreig
The provisions of any law to the currency transactions wit
contrary notwithstanding, income nonresidents, other offshor
derived by offshore banking units banking units, local commercia
authorized by the Bangko Sentral banks, including branches o
ng Pilipinas (BSP), from foreign foreign banks that may b
currency transactions with authorized by the Bangko Sentra
nonresidents, other offshore ng Pilipinas (BSP) to transac
banking units, local commercial business with offshore bankin
banks, including branches of units shall be exempt from a
foreign banks that may be taxes except net income from suc
authorized by the Bangko Sentral transactions as may be specifie
ng Pilipinas (BSP) to transact by the Secretary of Finance, upo
business with offshore banking recommendation of the Monetar
units shall be exempt from all Board which shall be subject to th
taxes except net income from regular income tax payable
such transactions as may be banks: Provided, however, Tha
specified by the Secretary of any interest income derived from
Finance, upon recommendation foreign currency loans granted t
of the Monetary Board which shall residents other than offshor
be subject to the regular income banking units or local commercia
tax payable by banks: Provided, banks, including local branches o
however, That any interest foreign banks that may b
income derived from foreign authorized by the BSP to trans
currency loans granted to business with offshore bankin
residents other than offshore units, shall be subject only to
banking units or local commercial final tax at the rate of ten percen
banks, including local branches of (10%).
foreign banks that may be
authorized by the BSP to transact Any income of nonresidents
business with offshore banking whether individuals o
units, shall be subject only to a corporations, from transaction
final tax at the rate of ten percent with said offshore banking unit
(10%). shall be exempt from incom
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Any income of nonresidents, (5) Tax on Branch Profit

whether individuals or Remittances. — Any profit remitte
corporations, from transactions by a branch to its head office sha
with said offshore banking units be subject to a tax of fiftee
shall be exempt from income tax. percent (15%) which shall b
based on the total profits applie
(5) Tax on Branch Profits or earmarked for remittanc
Remittances. — Any profit without any deduction for th
remitted by a branch to its head component thereof (except thos
office shall be subject to a tax of activities which are registered wit
fifteen percent (15%) which shall the Philippine Economic Zon
be based on the total profits Authority). The tax shall b
applied or earmarked for collected and paid in the sam
remittance without any deduction manner as provided in Sections 5
for the tax component thereof and 58 of this Code: Provided
(except those activities which are That interests, dividends,
registered with the Philippine royalties, including remuneratio
Economic Zone Authority). The for technical services, salaries
tax shall be collected and paid in wages, premiums, annuities
the same manner as provided in emoluments or other fixed o
Sections 57 and 58 of this Code: determinable annual, periodic o
Provided, That interests, casual gains, profits, income an
dividends, rents, royalties, capital gains received by a foreig
including remuneration for corporation during ea
technical services, salaries, year from all sources within th
wages, premiums, annuities, Philippines shall not be treated a
emoluments or other fixed or branch profits unless the same ar
determinable annual, periodic or effectively connected with th
casual gains, profits, income and conduct of its trade or business i
capital gains received by a foreign the Philippines.
corporation during each taxable
year from all sources within the
Philippines shall not be treated as (6) Regional or Area Headquarter
branch profits unless the same and Regional Operatin
are effectively connected with the Headquarters of Multinationa
conduct of its trade or business in Companies. —
the Philippines.
(6) Regional or Area (a) Regional or area headquarter

Headquarters and Regional as defined in Section 22(DD) sha
Operating Headquarters of not be subject to income tax.
Multinational Companies. —
(b) Regional operatin
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Regional or area headquarters headquarters as defined in Sectio

as defined in Section 22(DD) shall 22(EE) shall pay a tax of te
not be subject to income tax. percent (10%) of their t
income.
(b) Regional operating
headquarters as defined in (7) Tax on Certain Income
Section 22(EE) shall pay a tax of Received by a Resident Foreig
ten percent (10%) of their taxable Corporation. —
income.
(a) Interest from Deposits an
(7) Tax on Certain Incomes Yield or any other Monetar
Received by a Resident Foreign Benefit from Deposit Substitutes
Corporation. — Trust Funds and Simila
Arrangements and Royalties
Interest from any cur
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Interest from Deposits and deposit and yield or any othe
Yield or any other Monetary monetary benefit from depos
Benefit from Deposit Substitutes, substitutes and from trust fund
Trust Funds and Similar and similar arrangements an
Arrangements and Royalties. — royalties derived from source
Interest from any currency bank within the Philippines shall b
deposit and yield or any other subject to a final income tax at th
monetary benefit from deposit rate of twenty percent
substitutes and from trust funds such interest: Provided, howeve
and similar arrangements and That interest income derived by
royalties derived from sources resident foreign corporation from
within the Philippines shall be depository bank under th
subject to a final income tax at the expanded foreign currency depos
rate of twenty percent (20%) of system shall be subject to a fina
such interest: Provided, however, income tax at the rate of seve
That interest income derived by a and one-half percent (7%%) o
resident foreign corporation from such interest income.
a depository bank under the
expanded foreign currency (b) Income Derived under th
deposit system shall be subject to Expanded Foreign Currenc
a final income tax at the rate of Deposit System. — Incom
seven and one-half percent derived by a depository ban
(7%%) of such interest income. under the expanded foreig
currency deposit system from
(b) Income Derived under the foreign currency transactions wit
Expanded Foreign Currency nonresidents, offshore bankin
Deposit System. — Income units in the Philippines, loca
derived by a depository bank commercial banks includin
under the expanded foreign branches of foreign banks tha
currency deposit system from may be authorized by the Bangk
foreign currency transactions with Sentral ng Pilipinas (BSP) t
nonresidents, offshore banking transact business with foreig
units in the Philippines, local currency deposit system units an
commercial banks including other depository banks unde
branches of foreign banks that expanded foreign currency depos
may be authorized by the Bangko system shall be exempt from a
Sentral ng Pilipinas (BSP) to taxes, except net income from
transact business with foreign such transactions as may b
currency deposit system units and specified by the Secretary o
other depository banks under the Finance, upon recommendation b
expanded foreign currency the Monetary Board to be subjec
deposit system shall be exempt to the regular income tax payab
from all taxes, except net income by banks: Provided, however, Tha
from such transactions as may be interest income from foreig
specified by the Secretary of currency loans granted by suc
Finance, upon recommendation depository banks under sai
by the Monetary Board to be expanded system to resident
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
by the Monetary Board to be expanded system to resident
subject to the regular income tax other than offshore banking unit
payable by banks: Provided, in the Philippines or othe
however, That interest income depository banks under th
from foreign currency loans expanded system shall be subjec
granted by such depository banks to a final tax at the rate of te
under said expanded system to percent (10%).
residents other than offshore
banking units in the Philippines or Any income of nonresidents
other depository banks under the whether individuals o
expanded system shall be subject corporations, from transaction
to a final tax at the rate of ten with depository banks under th
percent (10%). expanded system shall be exemp
from income tax.
Any income of nonresidents,
whether individuals or (c) A final tax at the
corporations, from transactions prescribed below is hereb
with depository banks under the imposed upon the net capital gain
expanded system shall be exempt realized during the taxable yea
from income tax. from the sale, barter, exchange o
other disposition of shares of stoc
(c) A final tax at the rates in a domestic corporation excep
prescribed below is hereby shares sold or disposed of throug
imposed upon the net capital the stock exchange:
gains realized during the taxable
year from the sale, barter,
exchange or other disposition of Not over P100,000
shares of stock in a domestic
corporation except shares sold or On any amount
disposed of through the stock in excess of P100,000
exchange:
(d) Intercorporate Dividends
Not over P100,000 5% Dividends received by a residen
foreign corporation from
On any amount domestic corporation liable to ta
in excess of P100,000 10% under this Code shall not b
subject to tax under this Title.
(d) Intercorporate Dividends. —
Dividends received by a resident (B) Tax on Nonresident Fore
foreign corporation from a Corporation. —
domestic corporation liable to tax
under this Code shall not be (1) In General. — Except
subject to tax under this Title. otherwise provided in this Code
foreign corporation not engaged
(B) Tax on Nonresident Foreign trade or business in the Philippin
Corporation. — shall pay a tax equal to thirty-f
percent (35%) of the gross inco
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) In General. — Except as received during each taxable y

otherwise provided in this Code, a from all sources within
foreign corporation not engaged Philippines, such as interes
in trade or business in the dividends, rents, royalties, salari
Philippines shall pay a tax equal premiums (except reinsuran
to thirty-five percent (35%) of the premiums), annuities, emolume
gross income received during or other fixed or determina
each taxable year from all annual, periodic or casual gai
sources within the Philippines, profits and income, and cap
such as interests, dividends, gains, except capital gains subjec
rents, royalties, salaries, tax under subparagraph 5
premiums (except reinsurance Provided, That effective January
premiums), annuities, 2009, the rate of income tax shall
emoluments or other fixed or thirty percent (30%).
determinable annual, periodic or
casual gains, profits and income, (2) Nonresident Cinematograp
and capital gains, except capital Film Owner, Lessor or Distri
gains subject to tax under A cinematographic film own
subparagraph 5(c): Provided, lessor, or distributor shall pay a
That effective January 1, 2009, of twenty-five percent (25%) of
the rate of income tax shall be gross income from all sources wit
thirty percent (30%). the Philippines.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Nonresident Cinematographic (3) Nonresident Owner or Lessor

Film Owner, Lessor or Distributor. Vessels Chartered by Philipp
— A cinematographic film owner, Nationals. — A nonres
lessor, or distributor shall pay a lessor of vessels shall be subjec
tax of twenty-five percent (25%) a tax of four and one-half percen
of its gross income from all 1/2%) of gross rentals, lease
sources within the Philippines. charter fees from leases or chart
to Filipino citizens or corporatio
(3) Nonresident Owner or Lessor as approved by the Mariti
of Vessels Chartered by Industry Authority.
Philippine Nationals. — A
nonresident owner or lessor of (4) Nonresident Owner or Lessor
vessels shall be subject to a tax Aircraft, Machineries and Ot
of four and one-half percent (4 Equipment. — Rentals, charters a
1/2%) of gross rentals, lease or other fees derived by a nonresid
charter fees from leases or lessor of aircraft, machineries a
charters to Filipino citizens or other equipment shall be subject t
corporations, as approved by the tax of seven and one-half percen
Maritime Industry Authority. 1/2%) of gross rentals or fees.
(4) Nonresident Owner or Lessor (5) Tax on Certain Incom

of Aircraft, Machineries and Other Received by a Nonresident Fore
Equipment. — Rentals, charters Corporation. —
and other fees derived by a
nonresident lessor of aircraft, (a) Interest on Foreign Loans
machineries and other equipment final withholding tax at the rate
shall be subject to a tax of seven twenty percent (20%) is here
and one-half percent (7 1/2%) of imposed on the amount of inter
gross rentals or fees. on foreign loans contracted
after August 1, 1986;
(5) Tax on Certain Incomes
Received by a Nonresident (b) Intercorporate Dividends
Foreign Corporation. — final withholding tax at the rate o
fifteen percent (15%) is hereb
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Interest on Foreign Loans. — imposed on the amount of cas

A final withholding tax at the rate and/or property dividends receive
of twenty percent (20%) is hereby from a domestic corporation, whic
imposed on the amount of interest shall be collected and p
on foreign loans contracted on or provided in Section 57(A) of th
after August 1, 1986; Code, subject to the condition tha
the country in which th
(b) Intercorporate Dividends. — A nonresident foreign corporation
final withholding tax at the rate of domiciled, shall allow a cred
fifteen percent (15%) is hereby against the tax due from th
imposed on the amount of cash nonresident foreign corporatio
and/or property dividends taxes deemed to have been
received from a domestic the Philippines equivalent t
corporation, which shall be twenty percent (20%), whic
collected and paid as provided in represents the difference betwee
Section 57(A) of this Code, the regular income tax of thirty-fiv
subject to the condition that the percent (35°%) and the fiftee
country in which the nonresident percent (15%) tax on dividends a
foreign corporation is domiciled, provided in this subparagraph
shall allow a credit against the tax Provided, That effective January 1
due from the nonresident foreign 2009, the credit against the ta
corporation taxes deemed to have due shall be equivalent to fiftee
been paid in the Philippines percent (15%), which represent
equivalent to twenty percent the difference between the regula
(20%), which represents the income tax of thirty percent (30%
difference between the regular and the fifteen percent (15%) ta
income tax of thirty-five percent on dividends;
(35°%) and the fifteen percent
(15%) tax on dividends as
provided in this subparagraph: (c) Capital Gains from
Provided, That effective January Shares of Stock not Traded in th
1. 2009, the credit against the tax Stock Exchange. — A final tax a
due shall be equivalent to fifteen the rates prescribed below
percent (15%), which represents hereby imposed upon the ne
the difference between the capital gains realized during th
regular income tax of thirty taxable year from the sale, barte
percent (30%) and the fifteen exchange or other disposition o
percent (15%) tax on dividends; shares of stock in a
corporation, except shares sold, o
(c) Capital Gains from Sale of disposed of through the stoc
Shares of Stock not Traded in the exchange:
Stock Exchange. — A final tax at
the rates prescribed below is
hereby imposed upon the net Not over P100,000
capital gains realized during the
taxable year from the sale, barter, On any amount
exchange or other disposition of in excess of P100,000
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
exchange or other disposition of
shares of stock in a domestic (as amended by Sec. 2 of R.A. N
corporation, except shares sold, 9337, May 24, 2005)
or disposed of through the stock
exchange:
Not over P100,000 5%
On any amount
in excess of P100,000 10%
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Imposition of Improperly
SEC. 29. SEC. 29.
Accumulated Earnings Tax
(A) In General. — In addition to (A) In General. — In addition t
other taxes imposed by this Title, other taxes imposed by this Title
there is hereby imposed for each there is hereby imposed for eac
taxable year on the improperly taxable year on the improper
accumulated taxable income of accumulated taxable income o
each corporation described in each corporation de
Subsection B hereof, an Subsection B hereof, a
improperly accumulated earnings improperly accumulated earning
tax equal to ten percent (10%) of tax equal to ten percent (10%) o
the improperly accumulated the improperly accumulate
taxable income. taxable income.
(B) Tax on Corporations Subject to (B) Tax on Corporations Subject t

Improperly Accumulated Earnings Improperly Accumulated Earning
Tax. — Tax. —
(1) In General. — The improperly (1) In General. — The improper

accumulated earnings tax accumulated earnings tax impose
imposed in the preceding Section in the preceding Section sha
shall apply to every corporation apply to every corporation forme
formed or availed for the purpose or availed for the purpose o
of avoiding the income tax with avoiding the income tax wit
respect to its shareholders or the respect to its shareholders or th
shareholders of any other shareholders of any othe
corporation, by permitting earnings corporation, by permitting earning
and profits to accumulate instead and profits to accumulate instea
of being divided or distributed. of being divided or distributed.
(2) Exceptions. — The improperly (2) Exceptions. — The improper

accumulated earnings tax as accumulated earnings tax a
provided for under this Section provided for under this Sectio
shall not apply to: shall not apply to:
(a) Publicly-held corporations; (a) Publicly-held corporations;
(b) Banks and other nonbank (b) Banks and other nonban
financial intermediaries; and financial intermediaries; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(c) Insurance companies. (c) Insurance companies.
(C) Evidence of Purpose to Avoid (C) Evidence of Purpose to Avoi

Income Tax. — Income Tax. —
(1) Prima Facie Evidence. — The (1) Prima Facie Evidence

fact that any corporation is a mere fact that any corporation is a mer
holding company or investment holding company or investmen
company shall be prima facie company shall be prima faci
evidence of a purpose to avoid the evidence of a purpose to avoid th
tax upon its shareholders or tax upon its shareholders o
members. members.
(2) Evidence Determinative of (2) Evidence Determinative o

Purpose. — The fact that the Purpose. — The fact that th
earnings or profits of a corporation earnings or profits of a corporatio
are permitted to accumulate are permitted to accumulat
beyond the reasonable needs of beyond the reasonable needs o
the business shall be the business shall b
determinative of the purpose to determinative of the purpose t
avoid the tax upon its avoid the tax upon its s
shareholders or members unless or members unless th
the corporation, by the clear corporation, by the clea
preponderance of evidence, shall preponderance of evidence, sha
prove to the contrary. prove to the contrary.
(D) Improperly Accumulated (D) Improperly Accumulate

Taxable Income. — For purposes Taxable Income. — For purpose
of this Section, the term of this Section, the term
'improperly accumulated taxable 'improperly accumulated taxabl
income' means taxable income income' means taxable in
adjusted by: adjusted by:
(1) Income exempt from tax; (1) Income exempt from tax;
(2) Income excluded from gross (2) Income excluded from gros
income; income;
(3) Income subject to final tax; and (3) Income subject to final tax; and
(4) The amount of net operating (4) The amount of net operatin
loss carry-over deducted; loss carry-over deducted;
And reduced by the sum of: And reduced by the sum of:
(1) Dividends actually or (1) Dividends actually o

constructively paid; and constructively paid; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Income tax paid for the taxable (2) Income tax paid for the taxabl
year. year.
Provided, however, That for Provided, however, That fo

corporations using the calendar corporations using the calenda
year basis, the accumulated year basis, the accumulate
earnings tax shall not apply on earnings tax shall not apply o
improperly accumulated income improperly accumulated income a
as of December 31, 1997. In the of December 31, 1997. In the cas
case of corporations adopting the of corporations adopting
fiscal year accounting period, the year accounting period, th
improperly accumulated income improperly accumulated incom
not subject to this tax, shall be not subject to this tax, shall b
reckoned, as of the end of the reckoned, as of the end of th
month comprising the twelve month comprising the twelv
(12)-month period of fiscal year (12)-month period of fiscal yea
1997-1998. 1997-1998.
(E) Reasonable Needs of th
(E) Reasonable Needs of the
Business. — For purpos
Business. — For purposes of this
Section, the term 'reasonabl
Section, the term 'reasonable
needs of the business' includes th
needs of the business' includes
reasonably anticipated needs o
the reasonably anticipated needs
the business.
of the business.
Exemptions from Tax on

SEC. 30. The following SEC. 30. The followin
Corporations
organizations shall not be taxed organizations shall not be taxe
under this Title in respect to under this Title in respect t
income received by them as such: income received by them as such
(A) Labor, agricultural or (A) Labor, agricultural o

horticultural organization not horticultural organization no
organized principally for profit; organized principally for profit;
(B) Mutual savings bank not (B) Mutual savings bank no

having a capital stock represented having a capital stock represente
by shares, and cooperative bank by shares, and cooperative ban
without capital stock organized without capital stock organized an
and operated for mutual purposes operated for mutual purposes an
and without profit; without profit;
(C) A beneficiary society, order or (C) A beneficiary society, order o

association, operating for the association, operating for th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
exclusive benefit of the members exclusive benefit of the member
such as a fraternal organization such as a fraternal organizatio
operating under the lodge system, operating under the lodge system
or a mutual aid association or a or a mutual aid associat
non-stock corporation organized non-stock corporation organize
by employees providing for the by employees providing for th
payment of life, sickness, payment of life, sickness, acciden
accident, or other benefits or other benefits exclusively to th
exclusively to the members of members of such society, order, o
such society, order, or association, association, or non-stoc
or non-stock corporation or their corporation or their dependents;
dependents;
(D) Cemetery company owned an
(D) Cemetery company owned operated exclusively for the benef
and operated exclusively for the of its members;
benefit of its members;
(E) Non-stock corporation o
(E) Non-stock corporation or association organized an
association organized and operated exclusively for religious
operated exclusively for religious, charitable, scientific, athletic, o
charitable, scientific, athletic, or cultural purposes, or for th
cultural purposes, or for the rehabilitation of veterans, no
rehabilitation of veterans, no part of its net income or asset sha
of its net income or asset shall belong to or inure to the benefit o
belong to or inure to the benefit of any member, organizer, officer o
any member, organizer, officer or any specific person;
any specific person;
(F) Business league, chamber o
(F) Business league, chamber of commerce, or board of trade, no
commerce, or board of trade, not organized for profit and no part o
organized for profit and no part of the net income of which
the net income of which inures to the benefit of any privat
the benefit of any private stockholder or individual;
stockholder or individual;
(G) Civic league or organizatio
(G) Civic league or organization not organized for profit bu
not organized for profit but operated exclusively for th
operated exclusively for the promotion of social welfare;
promotion of social welfare;
(H) A non-stock and nonprof
(H) A non-stock and nonprofit educational institution;
educational institution;
(I) Government ed
(I) Government educational institution;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
institution;
(J) Farmers' or other mutua
(J) Farmers' or other mutual typhoon or fire insuranc
typhoon or fire insurance company, mutual ditch or irrigatio
company, mutual ditch or irrigation company, mutual or cooperativ
company, mutual or cooperative telephone company, or lik
telephone company, or like organization of a purely loca
organization of a purely local character, the income of whic
character, the income of which consists solely of ass
consists solely of assessments, dues, and fees collected from
dues, and fees collected from members for the sole purpose o
members for the sole purpose of meeting its expenses; and
meeting its expenses; and
(K) Farmers', fruit growers', or lik
(K) Farmers', fruit growers', or like association organized an
association organized and operated as a sales agent for th
operated as a sales agent for the purpose of marketing the product
purpose of marketing the products of its members and turning
of its members and turning back to them the proceeds of sales, les
them the proceeds of sales, less the necessary selling expenses o
the necessary selling expenses on the basis of the quantity o
the basis of the quantity of produce finished by them
produce finished by them;
"Notwithstanding the provisions i
the preceding paragraphs, th
"Notwithstanding the provisions in
income of whatever kind an
the preceding paragraphs, the
character of the foregoin
income of whatever kind and
organizations from any of the
character of the foregoing
properties, real or personal, o
organizations from any of their
from any of their activitie
properties, real or personal, or
conducted for profit regardless o
from any of their activities
the disposition made of suc
conducted for profit regardless of
income, shall be subject to ta
the disposition made of such
imposed under this Code.
income, shall be subject to tax
imposed under this Code.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
CHAPTER V — COMPUTATION CHAPTER V — COMPUTATION

OF TAXABLE INCOME OF TAXABLE INCOME
Taxable Income Defined SEC. 31. The term 'taxable SEC. 31. The term 'taxabl
income' means the pertinent income' means the pertinent item
items of gross income specified in of gross income specified in th
this Code, less deductions, if any, Code, less the deductions and/o
authorized for such types of personal and additiona
income by this Code or other exemptions, if any, authorized fo
special laws. (as amended by such types of income by this Cod
Sec. 8, R.A. No. 10963, or other special laws.
December 19, 2017)
CHAPTER VI — COMPUTATION CHAPTER VI — COMPUTATION

OF GROSS INCOME OF GROSS INCOME
Gross Income
SEC. 32. SEC. 32.
(A) General Definition. — Except (A) General Definition

when otherwise provided in this when otherwise provided in th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Title, gross income means all Title, gross income means a
income derived from whatever income derived from
source, including (but not limited source, including (but not limite
to) the following items: to) the following items:
(1) Compensation for services in (1) Compensation for services i

whatever form paid, including, but whatever form paid, including, bu
not limited to fees, salaries, not limited to fees, salaries
wages, commissions, and similar wages, commissions, and simila
items; items;
(2) Gross income derived from (2) Gross income derived from th
the conduct of trade or business conduct of trade or business or th
or the exercise of a profession; exercise of a profession;
(3) Gains derived from dealings in (3) Gains derived from dealings i
property; property;
(4) Interests; (4) Interests;
(5) Rents; (5) Rents;
(6) Royalties; (6) Royalties;
(7) Dividends; (7) Dividends;
(8) Annuities; (8) Annuities;
(9) Prizes and winnings; (9) Prizes and winnings;
(10) Pensions; and (10) Pensions; and
(11) Partner's distributive share (11) Partner's distributive shar

from the net income of the from the net income of the genera
general professional partnership. professional partnership
(B) Exclusions from Gross (B) Exclusions from Gross Income

Income. — The following items — The following items shall not b
shall not be included in gross included in gross income and sha
income and shall be exempt from be exempt from taxation under th
taxation under this Title: Title:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Life Insurance. — The (1) Life Insurance. — Th

proceeds of life insurance policies proceeds of life insurance policie
paid to the heirs or beneficiaries paid to the heirs or beneficiarie
upon the death of the insured, upon the death of the insured
whether in a single sum or whether in a single sum o
otherwise, but if such amounts otherwise, but if such amounts ar
are held by the insurer under an held by the insurer under a
agreement to pay interest agreement to pay interest thereon
thereon, the interest payments the interest payments shall b
shall be included in gross income. included in gross income.
(2) Amount Received by Insured (2) Amount Received by Insure

as Return of Premium. — The as Return of Premium
amount received by the insured, amount received by the insured, a
as a return of premiums paid by a return of premiums paid by him
him under life insurance, under life insurance, endowmen
endowment, or annuity contracts, or annuity contracts, either durin
either during the term or at the the term or at the maturity of th
maturity of the term mentioned in term mentioned in the contract o
the contract or upon surrender of upon surrender of the contract.
the contract.
(3) Gifts, Bequests, and Devises
(3) Gifts, Bequests, and Devises. — The value of property acquire
— The value of property acquired by gift, bequest, devise, o
by gift, bequest, devise, or descent: Provided, however, Tha
descent: Provided, however, That income from such property, as we
income from such property, as as gift, bequest, devise, or descen
well as gift, bequest, devise, or of income from any prop
descent of income from any cases of transfers of divide
property, in cases of transfers of interest, shall be included in gros
divided interest, shall be included income.
in gross income.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(4) Compensation for Injuries o
(4) Compensation for Injuries or Sickness. — Amounts received
Sickness. — Amounts received, through Accident or Healt
through Accident or Health Insurance or under Workmen
Insurance or under Workmen's Compensation Acts, a
Compensation Acts, as compensation for personal
compensation for personal or sickness, plus the amounts o
injuries or sickness, plus the any damages received, whether b
amounts of any damages suit or agreement, on account o
received, whether by suit or such injuries or sickness.
agreement, on account of such
injuries or sickness.
(5) Income Exempt under Treaty

(5) Income Exempt under Treaty. — Income of any kind, to th
— Income of any kind, to the extent required by any treat
extent required by any treaty obligation binding upon th
obligation binding upon the Government of the Philippines.
Government of the Philippines.
(6) Retirement Benefits, Pensions
(6) Retirement Benefits, Gratuities, etc. —
Pensions, Gratuities, etc. —
(a) Retirement benefits receive
(a) Retirement benefits received under Republic Act No. 7641 an
under Republic Act No. 7641 and those received by officials an
those received by officials and employees of private firms
employees of private firms, whether individual or corporate, i
whether individual or corporate, in accordance with a reasonabl
accordance with a reasonable private benefit plan maintained b
private benefit plan maintained by the employer: Provided, That th
the employer: Provided, That the retiring official or employee ha
retiring official or employee has been in the service of the sam
been in the service of the same employer for at least ten (10) year
employer for at least ten (10) and is not less than fifty (50) year
years and is not less than fifty of age at the time of his re
(50) years of age at the time of Provided, further, That the benefit
his retirement: Provided, further, granted under this subparagrap
That the benefits granted under shall be availed of by an official o
this subparagraph shall be availed employee only once. For purpose
of by an official or employee only of this Subsection, the term
once. For purposes of this 'reasonable private benefit plan
Subsection, the term 'reasonable means a pension, gratuity, stoc
private benefit plan' means a bonus or profit-sharing pla
pension, gratuity, stock bonus or maintained by an employer for th
profit-sharing plan maintained by benefit of some or all of h
an employer for the benefit of officials or employees, wherei
some or all of his officials or contributions are made by suc
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
some or all of his officials or
employees, wherein contributions employer for the officials o
are made by such employer for employees, or both, for th
the officials or employees, or purpose of distributing to suc
both, for the purpose of officials and employ
distributing to such officials and earnings and principal of the fun
employees the earnings and thus accumulated, and wherein
principal of the fund thus is provided in said plan that at n
accumulated, and wherein it is time shall any part of the corpus o
provided in said plan that at no income of the fund be used for, o
time shall any part of the corpus be diverted to, any purpose othe
or income of the fund be used for, than for the exclusive benefit of th
or be diverted to, any purpose said officials and employees.
other than for the exclusive
benefit of the said officials and
employees.
(b) Any amount received by a
(b) Any amount received by an official or employee or by his heir
official or employee or by his heirs from the employer as
from the employer as a consequence of separation of suc
consequence of separation of official or employee from th
such official or employee from the service of the employer because o
service of the employer because death, sickness or other physica
of death, sickness or other disability or for any cause beyon
physical disability or for any cause the control of the said official o
beyond the control of the said employee.
official or employee.
(c) The provisions of any existin
(c) The provisions of any existing law to the contrar
law to the contrary notwithstanding, social securit
notwithstanding, social security benefits, retirement gratuities
benefits, retirement gratuities, pensions and other similar benefit
pensions and other similar received by resident
benefits received by resident or nonresident citizens of th
nonresident citizens of the Philippines or aliens who come t
Philippines or aliens who come to reside permanently in th
reside permanently in the Philippines from foreig
Philippines from foreign government agencies and othe
government agencies and other institutions, private or public.
institutions, private or public.
(d) Payments of benefits due or t
(d) Payments of benefits due or to become due to any perso
become due to any person residing in the Philippines unde
residing in the Philippines under the laws of the United State
the laws of the United States administered by the United State
administered by the United States Veterans Administration.
Veterans Administration.
(e) Benefits received from o
enjoyed under the
92
Social Securit
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(e) Benefits received from or enjoyed under the Social Securit
enjoyed under the Social Security System in accordance with th
System in accordance with the provisions of Republic Act No
provisions of Republic Act No. 8282.
8282.
(f) Benefits received from th
(f) Benefits received from the GSIS under Republic Act No
GSIS under Republic Act No. 8291, including retirement gratuit
8291, including retirement gratuity received by government officia
received by government officials and employees.
and employees.
(7) Miscellaneous Items
(7) Miscellaneous Items. —
(a) Income Derived by Foreig
(a) Income Derived by Foreign Government. — Income derive
Government. — Income derived from investments in the Philippine
from investments in the in loans, stocks, bonds or othe
Philippines in loans, stocks, domestic securities, or from
bonds or other domestic interest on deposits in banks in th
securities, or from interest on Philippines by (i) foreig
deposits in banks in the governments, (ii) financin
Philippines by (i) foreign institutions owned, controlled, o
governments, (ii) financing enjoying refinancing from foreig
institutions owned, controlled, or governments, and (iii) internationa
enjoying refinancing from foreign or regional financial institution
governments, and (iii) established by foreig
international or regional financial governments.
institutions established by foreign
governments. (b) Income Derived by th
Government or its Politica
(b) Income Derived by the Subdivisions. — Income derive
Government or its Political from any public utility or from th
Subdivisions. — Income derived exercise of any essentia
from any public utility or from the governmental function accruing t
exercise of any essential the Government of the Philippine
governmental function accruing to or to any political subdivisio
the Government of the Philippines thereof.
or to any political subdivision
thereof.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(c) Prizes and Awards

(c) Prizes and Awards. — Prizes and awards made primarily i
and awards made primarily in recognition of religious, charitable
recognition of religious, scientific, educational, artistic
charitable, scientific, educational, literary, or civic achievement bu
artistic, literary, or civic only if:
achievement but only if:
(i) The recipient was selecte
(i) The recipient was selected without any action on his part t
without any action on his part to enter the contest or proceeding
enter the contest or proceeding; and
and
(ii) The recipient is not required t
(ii) The recipient is not required to render substantial future service
render substantial future services as a condition to receiving th
as a condition to receiving the prize or award.
prize or award.
(d) Prizes and Awards in Sports (d) Prizes and Awards in Sport
Competition. — All prizes and Competition. — All prizes an
awards granted to athletes in awards granted to athletes in loca
local and international sports and international sport
competitions and tournaments competitions and tournament
whether held in the Philippines or whether held in the Philippines o
abroad and sanctioned by their abroad and sanctioned by the
national sports associations. national sports associations.
(e) 13th Month Pay and Other (e) 13th Month Pay and Othe
Benefits. — Gross benefits Benefits. — Gross b
received by officials and received by officials an
employees of public and private employees of public and privat
entities: Provided, however, That entities: Provided, however, Tha
the total exclusion under this the total exclusion under th
subparagraph shall not exceed subparagraph shall not excee
Ninety thousand pesos (P90,000) Thirty thousand pesos (P30,000
which shall cover: which shall cover:
(i) Benefits received by officials (i) Benefits received by officia

and employees of the national and employees of the national an
and local government pursuant to local government pursuant t
Republic Act No. 6686; Republic Act No. 6686;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(ii) Benefits received by (ii) Benefits received by employee

employees pursuant to pursuant to Presidential Decre
Presidential Decree No. 851, as No. 851, as amended b
amended by Memorandum Order Memorandum Order No. 28, date
No. 28, dated August 13, 1986; August 13, 1986;
(iii) Benefits received by officials (iii) Benefits received by officia

and employees not covered by and employees not covered b
Presidential Decree No. 851, as Presidential Decree No. 851, a
amended by Memorandum Order amended by Memorandum Orde
No. 28, dated August 13, 1986; No. 28, dated August 13, 1986
and and
(iv) Other benefits such as (iv) Other benefits such a

productivity incentives and productivity incentives an
Christmas bonus. Christmas bonus: Provided
further, That the ceiling of Thirt
(as amended by Sec. 9, R.A. No. thousand pesos (P30,000) may b
10963, December 19, 2017) increased through rules an
regulations issued by th
Secretary of Finance, upo
recommendation of th
Commissioner, after considering
among others, the effect on th
same of the inflation rate at th
end of the taxable year.
(f) GSIS, SSS, Medicare an

Other Contributions. — GSIS
SSS, Medicare and Pag-Ibi
contributions, and union dues o
individuals.
(g) Gains from the Sale of Bonds

Debentures or Other Certificate o
Indebtedness. — Gains realize
from the sale or exchange o
retirement of bonds, debentures o
other certificate of indebtednes
with a maturity of more than fiv
(5) years.
(h) Gains from Redemption o
Shares in Mutual Fund
of 1997
of 1997
R.A. 8424
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(as amended)
realized by the investor upo
redemption of shares of stock in
mutual fund company as def
Section 22(BB) of this Code.
Special Treatment of
SEC. 33. SEC. 33.
Fringe Benefit
(A) Imposition of Tax. — Effective (A) Imposition of Tax. — A final ta
January 1, 2018 and onwards, a of thirty-four percent (34%
final tax of thirty-five percent effective January 1, 1998
(35%) is hereby imposed on the thirty-three percent (33%) effecti
grossed-up monetary value of January 1, 1999; and thirty-tw
fringe benefit furnished or granted percent (32%) effective January 1
to the employee (except rank and 2000 and thereafter, is hereb
file employees as defined herein) imposed on the grossed-u
by the employer, whether an monetary value of fringe benef
individual or a corporation (unless furnished or granted to th
the fringe benefit is required by employee (except rank and fil
the nature of, or necessary to the employees as defined herein) b
trade, business or profession of the employer, whether a
the employer, or when the fringe individual or a corporation (unles
benefit is for the convenience or the fringe benefit is required by th
advantage of the employer). The nature of, or necessary to th
tax herein imposed is payable by trade, business or profession o
the employer which tax shall be the employer, or when the fring
paid in the same manner as benefit is for the convenience o
provided for under Section 57(A) advantage of the employer). Th
of this Code. The grossed-up tax herein imposed is payable b
monetary value of the fringe the employer which tax shall b
benefit shall be determined by paid in the same manner a
dividing the actual monetary value provided for under Section 57(A
of the fringe benefit by sixty-five of this Code. The grossed-u
percent (65%) effective January monetary value of the fring
1, 2018 and onwards: Provided, benefit shall be determined b
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
however, That fringe benefit dividing the actual monetary valu
furnished to employees and of the fringe benefit by sixty-s
taxable under Subsections (B), percent (66%) effective January 1
(C), (D), and (E) of Section 25 1998; sixty-seven percent (67%
shall be taxed at the applicable effective January 1, 1999; an
rates imposed thereat: Provided, sixty-eight percent (68%) effectiv
further, That the grossed-up value January 1, 2000 and thereafte
of the fringe benefit shall be Provided, however, That fring
determined by dividing the actual benefit furnished to employee
monetary value of the fringe and taxable under Subsection
benefit by the difference between (B), (C), (D) and (E) of Section 2
one hundred percent (100%) and shall be taxed at the applicabl
the applicable rates of income tax rates imposed thereat: Provided
under Subsections (B), (C), (D), further, That the grossed-up valu
and (E) of Section 25. (as of the fringe benefit shall b
amended by Sec. 10, R.A. No. determined by dividing the actua
10963, December 19, 2017) monetary value of the f
benefit by the difference betwee
one hundred percent (100%) an
the applicable rates of income ta
under Subsections (B), (C), (D
and (E) of Section 25.
(B) Fringe Benefit Defined. — For (B) Fringe Benefit Defined.
purposes of this Section, the term purposes of this Section, the term
'fringe benefit' means any good, 'fringe benefit' means any
service or other benefit furnished service or other benefit furnishe
or granted in cash or in kind by an or granted in cash or in kind by a
employer to an individual employer to an individua
employee (except rank and file employee (except rank and fil
employees as defined herein) employees as defined herein) suc
such as, but not limited to, the as, but not limited to, the following
following:
(1) Housing;
(1) Housing;
(2) Expense account;
(2) Expense account;
(3) Vehicle of any kind;
(3) Vehicle of any kind;
(4) Household personnel, such a
(4) Household personnel, such as maid, driver and others;
maid, driver and others;
(5) Interest on loan at less than (5) Interest on loan at less tha
market rate to the extent of the market rate to the extent of th
difference between the market difference between the market rat
rate and actual rate granted; and actual rate granted;
of 1997
of 1997
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(as amended)
(6) Membership fees, dues and (6) Membership fees, dues an

other expenses borne by the other expenses borne by th
employer for the employee in employer for the employee i
social and athletic clubs or other social and athletic clubs or othe
similar organizations; similar organizations;
(7) Expenses for foreign travel; (7) Expenses for foreign travel;
(8) Holiday and vacation (8) Holiday and vacatio

expenses; expenses;
(9) Educational assistance to the (9) Educational assistance to th

employee or his dependents; and employee or his dependents; and
(10) Life or health insurance and (10) Life or health insurance an

other non-life insurance premiums other non-life insurance premium
or similar amounts in excess of or similar amounts in excess o
what the law allows. what the law allows.
(C) Fringe Benefits Not Taxable. (C) Fringe Benefits Not Taxable
— The following fringe benefits — The following fringe benefits ar
are not taxable under this not taxable under this Section:
Section:
(1) Fringe benefits which are (1) Fringe benefits which ar

authorized and exempted from authorized and exempted from ta
tax under special laws; under special laws;
(2) Contributions of the employer (2) Contributions of the employe

for the benefit of the employee to for the benefit of the employee t
retirement, insurance and retirement, insurance an
hospitalization benefit plans; hospitalization benefit plans;
(3) Benefits given to the rank and (3) Benefits given to the rank an
file employees, whether granted file employees, whether grante
under a collective bargaining under a collective bargainin
agreement or not; and agreement or not; and
(4) De minimis benefits as defined (4) De minimis benefits

in the rules and regulations to be in the rules and regulations to b
promulgated by the Secretary of promulgated by the Secretary o
Finance, upon recommendation Finance, upon recommendation o
of the Commissioner. the Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The Secretary of Finance is The Secretary of Finance

hereby authorized to promulgate, hereby authorized to promulgate
upon recommendation of the upon recommendation of th
Commissioner, such rules and Commissioner, such rules an
regulations as are necessary to regulations as are necessary t
carry out efficiently and fairly the carry out efficiently and fairly th
provisions of this Section, taking provisions of this Section, takin
into account the peculiar nature into account the peculiar natur
and special need of the trade, and special need of the trade
business or profession of the business or profession of th
employer. employer.
CHAPTER VII — ALLOWABLE CHAPTER VII — ALLOWABLE

DEDUCTIONS DEDUCTIONS
Deductions from Gross

SEC. 34. Except for taxpayers SEC. 34. Except for taxpayer
Income
earning compensation income earning compensation incom
arising from personal services arising from personal service
rendered under an rendered under a
employer-employee relationship employer-employee relationshi
where no deductions shall be where no deductions shall b
allowed under this Section, in allowed under this Sec
computing taxable income subject than under Subsection (M) hereo
to income tax under Sections in computing taxable incom
24(A); 25(A); 26; 27(A), (B), and subject to income tax unde
(C); and 28(A)(1), there shall be Sections 24(A); 25(A); 26; 27(A
allowed the following deductions (B) and (C); and 28(A)(1), ther
from gross income: shall be allowed the followin
deductions from gross income:
of 1997
of 1997
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R.A. 8424
(as amended)
of 1997
of 1997
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R.A. 8424
(as amended)
(A) Expenses. — (A) Expenses. —
(1) Ordinary and Necessary (1) Ordinary and Necessary Trade

Trade, Business or Professional Business or Professiona
Expenses. — Expenses. —
(a) In General — There shall be (a) In General — There shall b

allowed as deduction from gross allowed as deduction from gros
income all the ordinary and income all the ordinary an
necessary expenses paid or necessary expenses paid o
incurred during the taxable year in incurred during the taxable year i
carrying on or which are directly carrying on or which are direct
attributable to, the development, attributable to, the developmen
management, operation and/or management, operation and/o
conduct of the trade, business or conduct of the trade, business o
exercise of a profession, exercise of a profession, including
including:
(i) A reasonable allowance fo
(i) A reasonable allowance for salaries, wages, and other form
salaries, wages, and other forms of compensation for persona
of compensation for personal services actually rendered
services actually rendered, including the grossed-up monetar
including the grossed-up value of fringe benefit furnished o
monetary value of fringe benefit granted by the employer to th
furnished or granted by the employee: Provided, That the fina
employer to the employee: tax imposed under Section 3
Provided, That the final tax hereof has been paid;
imposed under Section 33 hereof
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
has been paid; (ii) A reasonable allowance fo
travel expenses, here and abroad
(ii) A reasonable allowance for while away from home in th
travel expenses, here and pursuit of trade, business o
abroad, while away from home in profession;
the pursuit of trade, business or
profession; (iii) A reasonable allowance fo
rentals and/or other payment
(iii) A reasonable allowance for which are required as a conditio
rentals and/or other payments for the continued use o
which are required as a condition possession, for purposes of th
for the continued use or trade, business or profession, o
possession, for purposes of the property to which the taxpayer ha
trade, business or profession, of not taken or is not taking title or i
property to which the taxpayer which he has no equity other tha
has not taken or is not taking title that of a lessee, user o
or in which he has no equity other possessor;
than that of a lessee, user or
possessor; (iv) A reasonable allowance fo
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
entertainment, amusement an
(iv) A reasonable allowance for recreation expenses duri
entertainment, amusement and taxable year, that are direct
recreation expenses during the connected to the developmen
taxable year, that are directly management and operation of th
connected to the development, trade, business or profession o
management and operation of the the taxpayer, or that are direct
trade, business or profession of related to or in furtherance of th
the taxpayer, or that are directly conduct of his or its trade
related to or in furtherance of the business or exercise o
conduct of his or its trade, profession not to exceed suc
business or exercise of a ceilings as the Secretary o
profession not to exceed such Finance may, by rules an
ceilings as the Secretary of regulations prescribe, upo
Finance may, by rules and recommendation of th
regulations prescribe, upon Commissioner, taking into accoun
recommendation of the the needs as well as the specia
Commissioner, taking into circumstances, nature an
account the needs as well as the character of the industr
special circumstances, nature and business, or profession of th
character of the industry, trade, taxpayer: Provided, That an
business, or profession of the expense incurred fo
taxpayer: Provided, That any entertainment, amusement o
expense incurred for recreation that is contrary to law
entertainment, amusement or morals, public policy or publ
recreation that is contrary to law, order shall in no case be allowe
morals, public policy or public as a deduction.
order shall in no case be allowed
as a deduction. (b) Substantiation Requirements
— No deduction from gros
(b) Substantiation Requirements. income shall be allowed unde
— No deduction from gross Subsection (A) hereof unless th
income shall be allowed under taxpayer shall substantiate wit
Subsection (A) hereof unless the sufficient evidence, such as officia
taxpayer shall substantiate with receipts or other adequat
sufficient evidence, such as records: (i) the amount of th
official receipts or other adequate expense being deducted,
records: (i) the amount of the the direct connection or relation o
expense being deducted, and (ii) the expense being deducted to th
the direct connection or relation of development, managemen
the expense being deducted to operation and/or conduct of th
the development, management, trade, business or profession o
operation and/or conduct of the the taxpayer.
trade, business or profession of
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the taxpayer. (c) Bribes, Kickbacks and Othe
Similar Payments. — No deductio
(c) Bribes, Kickbacks and Other from gross income shall b
Similar Payments. — No allowed under Subsection (A
deduction from gross income hereof for any payment made
shall be allowed under Subsection directly or indirectly, to an officia
(A) hereof for any payment made, or employee of the nationa
directly or indirectly, to an official government, or to an official o
or employee of the national employee of any local governmen
government, or to an official or unit, or to an official or employe
employee of any local of a government-owned o
government unit, or to an official -controlled corporation, or to a
or employee of a official or employee o
government-owned or -controlled representative of a foreig
corporation, or to an official or government, or to a privat
employee or representative of a corporation, general professiona
foreign government, or to a partnership, or a similar entity,
private corporation, general the payment constitutes a bribe o
professional partnership, or a kickback.
similar entity, if the payment
constitutes a bribe or kickback.
(2) Expenses Allowable to Private

Educational Institutions. — In (2) Expenses Allowable to Privat
addition to the expenses Educational Institutions
allowable as deductions under addition to the expenses allowabl
this Chapter, a private as deductions under this Chapte
educational institution, referred to a private educational institution
under Section 27(B) of this Code, referred to under Section 27(B) o
may at its option elect either: (a) this Code, may at its option elec
to deduct expenditures otherwise either: (a) to deduct ex
considered as capital outlays of otherwise considered as capita
depreciable assets incurred outlays of depreciable asset
during the taxable year for the incurred during the taxable year fo
expansion of school facilities, or the expansion of school facilities
(b) to deduct allowance for or (b) to deduct allowance fo
depreciation thereof under depreciation thereof unde
Subsection (F) hereof. Subsection (F) hereof.
(B) Interest. —
(B) Interest. —
(1) In General. — The amount of
interest paid or incurred within a (1) In General. — The amount o
taxable year on indebtedness in interest paid or incurred within
connection with the taxpayer's taxable year on indebtedness i
profession, trade or business connection with the taxpayer
profession, trade 104
or business sha
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
shall be allowed as deduction profession, trade or business sha
from gross income: Provided, be allowed as deduction from
however, That the taxpayer's gross income: Provided, howeve
otherwise allowable deduction for That the taxpayer's otherwis
interest expense shall be reduced allowable deduction for interes
by forty-two percent (42%) of the expense shall be reduced b
interest income subjected to final forty-two percent (42%) of th
tax: Provided, That effective interest income subjected to fina
January 1, 2009, the percentage tax: Provided, That effectiv
shall be thirty-three percent January 1, 2009, the percentag
(33%)." shall be thirty-three percen
(33%)."
(2) Exceptions. — No deduction
shall be allowed in respect of (2) Exceptions. — No deductio
interest under the succeeding shall be allowed in respect o
subparagraphs: interest under the succeedin
subparagraphs:
(a) If within the taxable year an
individual taxpayer reporting (a) If within the taxable year a
income on the cash basis incurs individual taxpayer reportin
an indebtedness on which an income on the cash basis incur
interest is paid in advance an indebtedness on which a
through discount or otherwise: interest is paid in advance throug
Provided, That such interest shall discount or otherwise: Pro
be allowed as a deduction in the That such interest shall be allowe
year the indebtedness is paid: as a deduction in the year th
Provided, further, That if the indebtedness is paid: Provided
indebtedness is payable in further, That if the indebtedness
periodic amortizations, the payable in periodic amortizations
amount of interest which the amount of interest whic
corresponds to the amount of the corresponds to the amount of th
principal amortized or paid during principal amortized or paid durin
the year shall be allowed as the year shall be allowed a
deduction in such taxable year; deduction in such taxable year;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) If both the taxpayer and the

person to whom the payment has (b) If both the taxpayer and th
been made or is to be made are person to whom the payment ha
persons specified under Section been made or is to be made ar
36(B); or persons specified under Sectio
36(B); or
(c) If the indebtedness is incurred

to finance petroleum exploration. (c) If the indebtedness is incurre
to finance petroleum exploration.
(3) Optional Treatment of Interest
Expense. — At the option of the (3) Optional Treatment of Interes
taxpayer, interest incurred to Expense. — At the option of th
acquire property used in trade, taxpayer, interest incurred t
business or exercise of a acquire property used in trade
profession may be allowed as a business or exercise of
deduction or treated as a capital profession may be allowed as
expenditure. deduction or treated as a capita
expenditure.
(C) Taxes. —
(C) Taxes. —
(1) In General. — Taxes paid or
incurred within the taxable year in (1) In General. — Taxes paid o
connection with the taxpayer's incurred within the taxable year i
profession, trade or business, connection with the taxpayer
shall be allowed as deduction, profession, trade or business, sha
except: be allowed as deduction, except:
(a) The income tax provided for

under this Title; (a) The income tax provided fo
under this Title;
(b) Income taxes imposed by
authority of any foreign country; (b) Income taxes imposed b
but this deduction shall be authority of any foreign country
allowed in the case of a taxpayer but this deduction shall be allowe
who does not signify in his return in the case of a taxpayer who doe
his desire to have to any extent not signify in his return his desir
the benefits of paragraph (3) of to have to any extent the benefit
this Subsection (relating to credits of paragraph (3) of this Subsectio
for taxes of foreign countries); (relating to credits for t
foreign countries);
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(c) Estate and donor's taxes; and
(c) Estate and donor's taxes; and
(d) Taxes assessed against local
benefits of a kind tending to (d) Taxes assessed against loca
increase the value of the property benefits of a kind tending t
assessed. increase the value of the propert
assessed.
Provided, That taxes allowed
under this Subsection, when Provided, That taxes allowe
refunded or credited, shall be under this Subsection, whe
included as part of gross income refunded or credited, shall
in the year of receipt to the extent included as part of gross income i
of the income tax benefit of said the year of receipt to the extent o
deduction. the income tax benefit of sai
deduction.
(2) Limitations on Deductions. —

In the case of a nonresident alien (2) Limitations on Deductions
individual engaged in trade or In the case of a nonresident alie
business in the Philippines and a individual engaged in trade o
resident foreign corporation, the business in the Philippines and
deductions for taxes provided in resident foreign corporation, th
paragraph (1) of this Subsection deductions for taxes provided i
(C) shall be allowed only if and to paragraph (1) of this Subsectio
the extent that they are connected (C) shall be allowed only if and t
with income from sources within the extent that they are connecte
the Philippines. with income from sources withi
the Philippines.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Credit Against Tax for Taxes

of Foreign Countries. — If the (3) Credit Against Tax for Taxes
taxpayer signifies in his return his Foreign Countries. — If th
desire to have the benefits of this taxpayer signifies in his return h
paragraph, the tax imposed by desire to have the benefits of th
this Title shall be credited with: paragraph, the tax imposed by th
Title shall be credited with:
(a) Citizen and Domestic

Corporation. — In the case of a (a) Citizen and Domest
citizen of the Philippines and of a Corporation. — In the case of
domestic corporation, the amount citizen of the Philippines an
of income taxes paid or incurred domestic corporation, the amoun
during the taxable year to any of income taxes paid or incurre
foreign country; and during the taxable year to an
foreign country; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) Partnerships and Estates. —

In the case of any such individual (b) Partnerships and Estates
who is a member of a general the case of any such individua
professional partnership or a who is a member of a genera
beneficiary of an estate or trust, professional partnership or
his proportionate share of such beneficiary of an estate or trus
taxes of the general professional his proportionate share of suc
partnership or the estate or trust taxes of the general professiona
paid or incurred during the partnership or the estate or trus
taxable year to a foreign country, paid or incurred during the taxabl
if his distributive share of the year to a foreign country, if h
income of such partnership or distributive share of the income o
trust is reported for taxation under such partnership or trust
this Title. reported for taxation under th
Title.
An alien individual and a foreign
corporation shall not be allowed An alien individual and a foreig
the credits against the tax for the corporation shall not be allowe
taxes of foreign countries allowed the credits against the tax for th
under this paragraph. taxes of foreign countries allowe
under this paragraph.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(4) Limitations on Credit. — The

amount of the credit taken under (4) Limitations on Credit
this Section shall be subject to amount of the credit taken unde
each of the following limitations: this Section shall be subject t
each of the following limitations:
(a) The amount of the credit in
respect to the tax paid or incurred (a) The amount of the credit i
to any country shall not exceed respect to the tax paid or incurre
the same proportion of the tax to any country shall not exceed th
against which such credit is same proportion of the tax agains
taken, which the taxpayer's which such credit is taken, whic
taxable income from sources the taxpayer's taxable income from
within such country under this sources within such country unde
Title bears to his entire taxable this Title bears to his entire taxabl
income for the same taxable year; income for the same taxable yea
and and
(b) The total amount of the credit (b) The total amount of the cred
shall not exceed the same shall not exceed the sam
proportion of the tax against proportion of the tax against whic
which such credit is taken, which such credit is taken, which th
the taxpayer's taxable income taxpayer's taxable income from
from sources without the sources without the Philippine
Philippines taxable under this Title taxable under this Title bears to h
bears to his entire taxable income entire taxable income for the sam
for the same taxable year. taxable year.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(5) Adjustments on Payment of

Incurred Taxes. — If accrued (5) Adjustments on Payment o
taxes when paid differ from the Incurred Taxes. — If accrue
amounts claimed as credits by the taxes when paid differ from th
taxpayer, or if any tax paid is amounts claimed as credits by th
refunded in whole or in part, the taxpayer, or if any tax paid
taxpayer shall notify the refunded in whole or in part, th
Commissioner, who shall taxpayer shall notify th
redetermine the amount of the tax Commissioner, who sha
for the year or years affected, and redetermine the amount of the ta
the amount of tax due upon such for the year or years affected, an
redetermination, if any, shall be the amount of tax due upon suc
paid by the taxpayer upon notice redetermination, if any, shall b
and demand by the paid by the taxpayer upon notic
Commissioner, or the amount of and demand by the Commissione
tax overpaid, if any, shall be or the amount of tax overpaid,
credited or refunded to the any, shall be credited or refunde
taxpayer. In the case of such a to the taxpayer. In the case o
tax incurred but not paid, the such a tax incurred but not paid
Commissioner as a condition the Commissioner as a conditio
precedent to the allowance of this precedent to the allowance of th
credit may require the taxpayer to credit may require the taxpayer t
give a bond with sureties give a bond with suretie
satisfactory to and to be approved satisfactory to and to be approve
by the Commissioner in such sum by the Commissioner in such sum
as he may require, conditioned as he may require, conditione
upon the payment by the taxpayer upon the payment by the taxpaye
of any amount of tax found due of any amount of tax found du
upon any such redetermination. upon any such redetermination
The bond herein prescribed shall The bond herein prescribed sha
contain such further conditions as contain such further conditions a
the Commissioner may require. the Commissioner may require.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(6) Year in Which Credit Taken.

— The credits provided for in
Subsection (C)(3) of this Section (6) Year in Which Credit Taken
may, at the option of the taxpayer The credits provided for i
and irrespective of the method of Subsection (C)(3) of this Sectio
accounting employed in keeping may, at the option of the taxpaye
his books, be taken in the year in and irrespective of the method o
which the taxes of the foreign accounting employed in keepin
country were incurred, subject, his books, be taken in the year i
however, to the conditions which the taxes of the foreig
prescribed in Subsection (C)(5) of country were incurred, subjec
this Section. If the taxpayer elects however, to the condition
to take such credits in the year in prescribed in Subsection (C)(5) o
which the taxes of the foreign this Section. If the taxpayer elect
country accrued, the credits for all to take such credits in the year i
subsequent years shall be taken which the taxes of the foreig
upon the same basis, and no country accrued, the credits for a
portion of any such taxes shall be subsequent years shall be take
allowed as a deduction in the upon the same basis, and n
same or any succeeding year. portion of any such taxes shall b
allowed as a deduc
same or any succeeding year.
(7) Proof of Credits. — The

credits provided in Subsection
(C)(3) hereof shall be allowed (7) Proof of Credits. — The credit
only if the taxpayer establishes to provided in Subsection (C)(3
the satisfaction of the hereof shall be allowed only if th
Commissioner the following: taxpayer establishes to th
satisfaction of the Commissione
(a) The total amount of income the following:
derived from sources without the
Philippines; (a) The total amount of incom
derived from sources without th
(b) The amount of income derived Philippines;
from each country, the tax paid or
incurred to which is claimed as a (b) The amount of income derive
credit under said paragraph, such from each country, the tax paid o
amount to be determined under incurred to which is claimed as
rules and regulations prescribed credit under said paragraph, suc
by the Secretary of Finance; and amount to be determined unde
rules and regulations prescribed b
(c) All other information the Secretary of Finance; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
necessary for the verification and
computation of such credits. (c) All other information necessar
for the verification an
computation of such credits.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Losses. —
(1) In General. — Losses actually (D) Losses. —

sustained during the taxable year
and not compensated for by (1) In General. — Losses actual
insurance or other forms of sustained during the taxable yea
indemnity shall be allowed as and not compensated for b
deductions: insurance or other forms o
indemnity shall be allowed a
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) If incurred in trade, profession deductions:

or business;
(a) If incurred in trade, professio
or business;
(b) Of property connected with the

trade, business or profession, if
the loss arises from fires, storms, (b) Of property connected with th
shipwreck, or other casualties, or trade, business or profession,
from robbery, theft or the loss arises from fires, storms
embezzlement. shipwreck, or other casual
from robbery, theft o
The Secretary of Finance, upon embezzlement.
Commissioner, is hereby The Secretary of Finance, upo
authorized to promulgate rules recommendation of th
and regulations prescribing, Commissioner, is hereb
among other things, the time and authorized to promulgate rules an
manner by which the taxpayer regulations prescribing, amon
shall submit a declaration of loss other things, the time and manne
sustained from casualty or from by which the taxpayer shall subm
robbery, theft or embezzlement a declaration of loss sustaine
during the taxable year: Provided, from casualty or from robbery
however, That the time limit to be theft or embezzlement during th
so prescribed in the rules and taxable year: Provided, howeve
regulations shall not be less than That the time limit to be s
thirty (30) days nor more than prescribed in the rules an
ninety (90) days from the date of regulations shall not be less tha
discovery of the casualty or thirty (30) days nor more tha
robbery, theft or embezzlement ninety (90) days from the date o
giving rise to the loss. discovery of the casualty o
robbery, theft or embezzlemen
giving rise to the loss.
(c) No loss shall be allowed as a
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
deduction under this Subsection if
at the time of the filing of the (c) No loss shall be allowed as
return, such loss has been deduction under this Subsection
claimed as a deduction for estate at the time of the filing of th
tax purposes in the estate tax return, such loss has been claime
return. as a deduction for estate ta
purposes in the estate tax return.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Proof of Loss. — In the case

of a nonresident alien individual or
foreign corporation, the losses (2) Proof of Loss. — In the case o
deductible shall be those actually a nonresident alien individual o
sustained during the year incurred foreign corporation, the losse
in business, trade or exercise of a deductible shall be those actual
profession conducted within the sustained during the year incurre
Philippines, when such losses are in business, trade or exercise of
not compensated for by insurance profession conducted within th
or other forms of indemnity. The Philippines, when such losses ar
Secretary of Finance, upon not compensated for by insuranc
recommendation of the or other forms of indemnity. Th
Commissioner, is hereby Secretary of Finance, upo
authorized to promulgate rules recommendation of th
and regulations prescribing, Commissioner, is hereb
among other things, the time and authorized to promulgate rules
manner by which the taxpayer regulations prescribing, amon
shall submit a declaration of loss other things, the time and manne
sustained from casualty or from by which the taxpayer shall subm
robbery, theft or embezzlement a declaration of loss sustaine
during the taxable year: Provided, from casualty or from robbery
That the time to be so prescribed theft or embezzlement during th
in the rules and regulations shall taxable year: Provided, That th
not be less than thirty (30) days time to be so prescrib
nor more than ninety (90) days rules and regulations shall not b
from the date of discovery of the less than thirty (30) days nor mor
casualty or robbery, theft or than ninety (90) days from the dat
embezzlement giving rise to the of discovery of the casualty o
loss; and robbery, theft or embezzlemen
giving rise to the loss; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Net Operating Loss

Carry-over. — The net operating
(3) Net Operating Loss Carry-ove
loss of the business or enterprise
— The net operating loss of th
for any taxable year immediately
business or enterprise for an
preceding the current taxable
taxable year immediate
year, which had not been
preceding the current taxable yea
previously offset as deduction
which had not been previous
from gross income shall be
offset as deduction from gros
carried over as a deduction from
income shall be carried over as
gross income for the next three
deduction from gross income fo
(3) consecutive taxable years
the next three (3) consecutiv
immediately following the year of
taxable years immediate
such loss: Provided, however,
following the year of such loss
That any net loss incurred in a
Provided, however, That any ne
taxable year during which the
loss incurred in a taxable yea
taxpayer was exempt from
during which the taxpayer wa
income tax shall not be allowed
exempt from income tax shall no
as a deduction under this
be allowed as a deduction unde
Subsection: Provided, further,
this Subsection: Provided, furthe
That a net operating loss
That a net operating los
carry-over shall be allowed only if
carry-over shall be allowed only
there has been no substantial
there has been no substantia
change in the ownership of the
change in the ownership of th
business or enterprise in that —
business or enterprise in that —
(i) Not less than seventy-five
(i) Not less than seventy-fiv
percent (75%) in nominal value of
percent (75%) in nominal value o
outstanding issued shares, if the
outstanding issued shares, if th
business is in the name of a
business is in the name of
corporation, is held by or on
corporation, is held by or on beha
behalf of the same persons; or
of the same persons; or
(ii) Not less than seventy-five
(ii) Not less than seventy-fiv
percent (75%) of the paid up
percent (75%) of the paid u
capital of the corporation, if the
capital of the corporation, if th
business is in the name of a
business is in the name of
corporation, is held by or on
corporation, is held by or
behalf of the same persons.
of the same persons.
For purposes of this Subsection,
For purposes of this Subsection
the term 'net operating loss' shall
the term 'net operating loss
mean the excess of allowable
mean the excess of allowabl
deduction over gross income of
deduction over gross income o
the business in a taxable year:
the business in a taxable year:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Provided, That for mines other
Provided, That for mines othe
than oil and gas wells, a net
than oil and gas wells, a ne
operating loss without the benefit
operating loss without the benef
of incentives provided for under
of incentives provided for unde
Executive Order No. 226, as
Executive Order No. 226, a
amended, otherwise known as
amended, otherwise known as th
the Omnibus Investments Code of
Omnibus Investments Code o
1987, incurred in any of the first
1987, incurred in any of the firs
ten (10) years of operation may
ten (10) years of operation may b
be carried over as a deduction
carried over as a deduction from
from taxable income for the next
taxable income for the next five (5
five (5) years immediately
years immediately following th
following the year of such loss.
year of such loss. The entir
The entire amount of the loss
amount of the loss shall be carrie
shall be carried over to the first of
over to the first of the five (5
the five (5) taxable years following
taxable years following the loss
the loss, and any portion of such
and any portion of such loss whic
loss which exceeds the taxable
exceeds the taxable income o
income of such first year shall be
such first year shall be deducted i
deducted in like manner from the
like manner from the taxabl
taxable income of the next
income of the next remaining fou
remaining four (4) years.
(4) years.
(4) Capital Losses. —
(4) Capital Losses. —
(a) Limitation. — Losses from
(a) Limitation. — Losses from
sales or exchanges of capital
sales or exchanges of capita
assets shall be allowed only to the
assets shall be allowed only to th
extent provided in Section 39.
extent provided in Section 39.
(b) Securities Becoming
Worthless. — If securities as
(b) Securities Becomin
defined in Section 22(T) become
Worthless. — If securities a
worthless during the taxable year
defined in Section 22(T) becom
and are capital assets, the loss
worthless during the taxable yea
resulting therefrom shall, for
and are capital assets, the los
purposes of this Title, be
resulting therefrom shall, fo
considered as a loss from the
purposes of this Title, b
sale or exchange, on the last day
considered as a loss from th
of such taxable year, of capital
or exchange, on the last day o
assets.
such taxable year, of capita
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(5) Losses From Wash Sales of assets.

Stock or Securities. — Losses
(5) Losses From Wash Sales o
from 'wash sales' of stock or
Stock or Securities. — Losse
securities as provided in Section
from 'wash sales' of stock o
38.
securities as provided in Sectio
(6) Wagering Losses. — Losses 38.
from wagering transactions shall
(6) Wagering Losses. — Losse
be allowed only to the extent of
from wagering transac
the gains from such transactions.
be allowed only to the extent of th
gains from such transactions.
(7) Abandonment Losses. —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) In the event a contract area (7) Abandonment Losses

where petroleum operations are
(a) In the event a contract are
undertaken is partially or wholly
where petroleum operations ar
abandoned, all accumulated
undertaken is partially or whol
exploration and development
abandoned, all accumulate
expenditures pertaining thereto
exploration and developme
shall be allowed as a deduction:
expenditures pertaining theret
Provided, That accumulated
shall be allowed as a deduction
expenditures incurred in that area
Provided, That accumulate
prior to January 1, 1979 shall be
expenditures incurred in that are
allowed as a deduction only from
prior to January 1, 1979 shall b
any income derived from the
allowed as a deduction only from
same contract area. In all cases,
any income derived from the sam
notices of abandonment shall be
contract area. In all case
filed with the Commissioner.
of abandonment shall be filed wit
the Commissioner.
(b) In case a producing well is
subsequently abandoned, the
unamortized costs thereof, as well
(b) In case a producing well
as the undepreciated costs of
subsequently abandoned, th
equipment directly used therein,
unamortized costs thereof, as we
shall be allowed as a deduction in
as the undepreciated costs o
the year such well, equipment or
equipment directly used therein
facility is abandoned by the
shall be allowed as a deduction
contractor: Provided, That if such
the year such well, equipment o
abandoned well is reentered and
facility is abandoned by th
production is resumed, or if such
contractor: Provided, That if suc
equipment or facility is restored
abandoned well is reentered an
into service, the said costs shall
production is resumed, or if suc
be included as part of gross
equipment or facility is restore
income in the year of resumption
into service, the said costs shall b
or restoration and shall be
included as part of gross income i
amortized or depreciated, as the
the year of resumption o
case may be.
restoration and shall be amortize
or depreciated, as the case ma
be.
(E) Bad Debts. —
(1) In General. — Debts due to

the taxpayer actually ascertained (E) Bad Debts. —
to be worthless and charged off
(1) In General. — Debts due to th
within the taxable year except
taxpayer actually ascertained to b
those not connected with
worthless and charged off withi
profession, trade or business and
the taxable year except those no
those sustained in a transaction
connected with profession,
121
trad
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
those sustained in a transaction
connected with profession, trad
entered into between parties
or business and those sustained i
mentioned under Section 36(B) of
a transaction entered into betwee
this Code: Provided, That
parties mentioned under Sectio
recovery of bad debts previously
36(B) of this Code: Provided, Tha
allowed as deduction in the
recovery of bad debts previous
preceding years shall be included
allowed as deduction in th
as part of the gross income in the
preceding years shall be include
year of recovery to the extent of
as part of the gross income in th
the income tax benefit of said
year of recovery to the extent o
deduction.
the income tax benefit of sai
(2) Securities Becoming deduction.
Worthless. — If securities, as
(2) Securities Becomin
defined in Section 22(T), are
Worthless. — If securities, a
ascertained to be worthless and
defined in Section 22(T), ar
charged off within the taxable
ascertained to be worthless an
year and are capital assets, the
charged off within the taxable yea
loss resulting therefrom shall, in
and are capital assets, the los
the case of a taxpayer other than
resulting therefrom shall, in th
a bank or trust company
case of a taxpayer other than
incorporated under the laws of the
bank or trust compan
Philippines a substantial part of
incorporated under the laws of th
whose business is the receipt of
Philippines a substantial part o
deposits, for the purpose of this
whose business is the receipt o
Title, be considered as a loss
deposits, for the purpose of th
from the sale or exchange, on the
Title, be considered as a loss from
last day of such taxable year, of
the sale or exchange, on the las
capital assets.
day of such taxable year, of capita
(F) Depreciation. — assets.
(1) General Rule. — There shall (F) Depreciation. —

be allowed as a depreciation
(1) General Rule. — There sha
deduction a reasonable allowance
be allowed as a depreciatio
for the exhaustion, wear and tear
deduction a reasonable allo
(including reasonable allowance
for the exhaustion, wear and tea
for obsolescence) of property
(including reasonable allowanc
used in the trade or business. In
for obsolescence) of property use
the case of property held by one
in the trade or business. In th
person for life with remainder to
case of property held by on
another person, the deduction
person for life with remainder t
shall be computed as if the life
another person, the deductio
tenant were the absolute owner of
shall be computed as if
the property and shall be allowed
tenant were the absolute owner o
to the life tenant. In the case of
the property and shall be allowe
property held in trust, the
to the life tenant. In the case o
allowable deduction shall be
property held in trust,
122
the allowabl
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
allowable deduction shall be
property held in trust, the allowabl
apportioned between the income
deduction shall be apportione
beneficiaries and the trustees in
between the income beneficiarie
accordance with the pertinent
and the trustees in accordanc
provisions of the instrument
with the pertinent provisions of th
creating the trust, or in the
instrument creating the trust, or i
absence of such provisions, on
the absence of such provisions, o
the basis of the trust income
the basis of the trust incom
allowable to each.
allowable to each.
(2) Use of Certain Methods and
Rates. — The term 'reasonable
allowance' as used in the (2) Use of Certain Methods an
preceding paragraph shall Rates. — The term 'reasonabl
include, but not limited to, an allowance' as used in th
allowance computed in preceding paragraph shall include
accordance with rules and but not limited to, an allowanc
regulations prescribed by the computed in accordance with rule
Secretary of Finance, upon and regulations prescribed by th
recommendation of the Secretary of Finance, upo
Commissioner, under any of the recommendation of th
following methods: Commissioner, under any of th
following methods:
(a) The straight-line method;
(a) The straight-line method;
(b) Declining-balance method,
using a rate not exceeding twice (b) Declining-balance method
the rate which would have been using a rate not exceeding twic
used had the annual allowance the rate which would have bee
been computed under the method used had the annual allowanc
described in Subsection (F)(1); been computed under the metho
described in Subsection (F)(1);
(c) The sum-of-the-years-digit

method; and (c) The sum-of-the-years-dig
method; and
(d) Any other method which may
be prescribed by the Secretary of (d) Any other method which ma
Finance upon recommendation of be prescribed by the Secretary o
the Commissioner. Finance upon recommendation o
the Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Agreement as to Useful Life

on Which Depreciation Rate is (3) Agreement as to Useful Life o
Based. — Where under rules and Which Depreciation Rate is Based
regulations prescribed by the — Where under rules an
Secretary of Finance, upon regulations prescribed by th
Commissioner, the taxpayer and recommendation of th
the Commissioner have entered Commissioner, the taxpayer an
into an agreement in writing the Commissioner have entere
specifically dealing with the useful into an agreement in writin
life and rate of depreciation of any specifically dealing with the usefu
property, the rate so agreed upon life and rate of depreciation of an
shall be binding on both the property, the rate so agreed upo
taxpayer and the National shall be binding on both th
Government in the absence of taxpayer and the Nationa
facts and circumstances not Government in the absence o
taken into consideration during facts and circumstances not take
the adoption of such agreement. into consideration during th
The responsibility of establishing adoption of such agreement. Th
the existence of such facts and responsibility of establishing th
circumstances shall rest with the existence of such facts an
party initiating the modification. circumstances shall rest with th
Any change in the agreed rate party initiating the modification
and useful life of the depreciable Any change in the agreed rate an
property as specified in the useful life of the depreciabl
agreement shall not be effective property as specified in th
for taxable years prior to the agreement shall not be effectiv
taxable year in which notice in for taxable years prior to th
writing by certified mail or taxable year in which notice i
registered mail is served by the writing by certified mail o
party initiating such change to the registered mail is served by th
other party to the agreement: party initiating such change to th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
other party to the agreement:
Provided, however, That where
the taxpayer has adopted such
useful life and depreciation rate Provided, however, That where th
for any depreciable asset and taxpayer has adopted such usefu
claimed the depreciation life and depreciation rate for an
expenses as deduction from his depreciable asset and claimed th
gross income, without any written depreciation expenses a
objection on the part of the deduction from his gross income
Commissioner or his duly without any written objection o
authorized representative, the the part of the Commissioner o
aforesaid useful life and his duly authorized representative
depreciation rate so adopted by the aforesaid useful life an
the taxpayer for the aforesaid depreciation rate so adopted b
depreciable asset shall be the taxpayer for the aforesai
considered binding for purposes depreciable asset shall b
of this Subsection. considered binding for purposes o
this Subsection.
(4) Depreciation of Properties
Used in Petroleum Operations. — (4) Depreciation of Propertie
An allowance for depreciation in Used in Petroleum Operations
respect of all properties directly An allowance for depreciation i
related to production of petroleum respect of all properties direct
initially placed in service in a related to production of petroleum
taxable year shall be allowed initially placed in service in
under the straight-line or taxable year shall be allowe
declining-balance method of under the straig
depreciation at the option of the declining-balance method o
service contractor. depreciation at the option of th
service contractor.
However, if the service contractor
initially elects the However, if the service contracto
declining-balance method, it may initially elects th
at any subsequent date, shift to declining-balance method, it ma
the straight-line method. at any subsequent date, shift t
the straight-line method.
The useful life of properties used
in or related to production of The useful life of properties use
petroleum shall be ten (10) years in or related to production o
or such shorter life as may be petroleum shall be ten (10) year
permitted by the Commissioner. or such shorter life as may b
permitted by the Commissioner.
Properties not used directly in the
production of petroleum shall be Properties not used directly in th
depreciated under the production of petroleum shall b
straight-line method on the basis depreciated under the straight-lin
of an estimated useful life of five method on the basis of a
(5) years. estimated useful 125life of five (5
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(5) years. estimated useful life of five (5
years.
(5) Depreciation of Properties
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Used in Mining Operations. — An (5) Depreciation of Propertie
allowance for depreciation in Used in Mining Operations
respect of all properties used in allowance for depreciation i
mining operations other than respect of all properties used i
petroleum operations, shall be mining operations other tha
computed as follows: petroleum operations, shall b
computed as follows:
(a) At the normal rate of
depreciation if the expected life is (a) At the normal rate o
ten (10) years or less; or depreciation if the expected life
ten (10) years or less; or
(b) Depreciated over any number
of years between five (5) years (b) Depreciated over any numbe
and the expected life if the latter of years between five (5) year
is more than ten (10) years, and and the expected life if the latter
the depreciation thereon allowed more than ten (10) years, and th
as deduction from taxable depreciation thereon allowed a
income: Provided, That the deduction from taxable income
contractor notifies the Provided, That the contracto
Commissioner at the beginning of notifies the Commissioner at th
the depreciation period which beginning of the depreciatio
depreciation rate allowed by this period which depreciation rat
Section will be used. allowed by this Section will b
used.
(6) Depreciation Deductible by
Nonresident Aliens Engaged in
Trade or Business or Resident (6) Depreciation Deductible b
Foreign Corporations. — In the Nonresident Aliens Engaged i
case of a nonresident alien Trade or Business or Residen
individual engaged in trade or Foreign Corporations. — In th
business or resident foreign case of a nonresident alie
corporation, a reasonable individual engaged in trade o
allowance for the deterioration of business or resident foreig
property arising out of its use or corporation, a reasonabl
employment or its non-use in the allowance for the deterioration o
business, trade or profession property arising out of its u
shall be permitted only when such employment or its non-use in th
property is located in the business, trade or profession sha
Philippines. be permitted only when suc
property is located in th
(G) Depletion of Oil and Gas Philippines.
Wells and Mines. —
(G) Depletion of Oil and Gas Wel
(1) In General. — In the case of and Mines. —
oil and gas wells or mines, a
reasonable allowance for (1) In General. — In the case of o
depletion or amortization and gas wells or mines,
Copyright 2019
computed Philippine
in accordance with the
Taxation Encyclopedia Third Release 2019 127
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
and gas wells or mines,
computed in accordance with the reasonable allowance for depletio
cost-depletion method shall be or amortization computed i
granted under rules and accordance with the cost-depletio
regulations to be prescribed by method shall be granted unde
the Secretary of Finance, upon rules and regulations to b
recommendation of the prescribed by the Secretary o
Commissioner: Provided, That Finance, upon recommendation o
when the allowance for depletion the Commissioner: Provided, Tha
shall equal the capital invested no when the allowance for depletio
further allowance shall be shall equal the capital invested n
granted: Provided, further, That further allowance shall be granted
after production in commercial Provided, further, That afte
quantities has commenced, production in commercia
certain intangible exploration and quantities has commenced, certai
development drilling costs: (a) intangible exploration an
shall be deductible in the year development drilling costs: (a
incurred if such expenditures are shall be deductible in the yea
incurred for non-producing wells incurred if such expenditures ar
and/or mines, or (b) shall be incurred for non-producing wel
deductible in full in the year paid and/or mines, or (b) shall b
or incurred or, at the election of deductible in full in the year paid o
the taxpayer, may be capitalized incurred or, at the election of th
and amortized if such taxpayer, may be capitalized an
expenditures incurred are for amortized if such expenditur
producing wells and/or mines in incurred are for producing wel
the same contract area. and/or mines in the same contrac
area.
'Intangible costs in petroleum
operations' refers to any cost 'Intangible costs in petroleum
incurred in petroleum operations operations' refers to any cos
which in itself has no salvage incurred in petroleum operation
value and which is incidental to which in itself has no salvag
and necessary for the drilling of value and which is incidental t
wells and preparation of wells for and necessary for the
the production of petroleum: wells and preparation of wells fo
Provided, That said costs shall the production of petroleum
not pertain to the acquisition or Provided, That said costs shall no
improvement of property of a pertain to the acquisition o
character subject to the allowance improvement of property of
for depreciation except that the character subject to the allowanc
allowances for depreciation on for depreciation except that th
such property shall be deductible allowances for depreciation o
under this Subsection. such property shall be deductibl
under this Subsection.
Any intangible exploration, drilling
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
and development expenses Any intangible exploration, drillin
allowed as a deduction in and development expense
computing taxable income during allowed as a deduction i
the year shall not be taken into computing taxable income durin
consideration in computing the the year shall not be taken int
adjusted cost basis for the consideration in computing th
purpose of computing allowable adjusted cost basis for the purpos
cost depletion. of computing allowable cos
depletion.
(2) Election to Deduct Exploration
and Development Expenditures.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
— In computing taxable income (2) Election to Deduct Exploratio
from mining operations, the and Development Expenditures
taxpayer may, at his option, In computing taxable income from
deduct exploration and mining operations, the taxpaye
development expenditures may, at his option, deduc
accumulated as cost or adjusted exploration and deve
basis for cost depletion as of date expenditures accumulated as cos
of prospecting, as well as or adjusted basis for cost depletio
exploration and development as of date of prospecting, as we
expenditures paid or incurred as exploration and developmen
during the taxable year: Provided, expenditures paid or incurre
That the total amount deductible during the taxable year: Provided
for exploration and development That the total amount deductibl
expenditures shall not exceed for exploration and developmen
twenty-five percent (25%) of the expenditures shall not excee
net income from mining twenty-five percent (25%) of th
operations computed without the net income from mining operation
benefit of any tax incentives computed without the benefit o
under existing laws. The actual any tax incentives under existin
exploration and development laws. The actual exploration an
expenditures minus twenty-five development expenditures minu
percent (25%) of the net income twenty-five percent (25%) of th
from mining shall be carried net income from mining shall b
forward to the succeeding years carried forward to the succeedin
until fully deducted. years until fully deducted.
The election by the taxpayer to

deduct the exploration and
development expenditures is The election by the taxpayer t
irrevocable and shall be binding in deduct the exploration an
succeeding taxable years. development expenditures
irrevocable and shall be binding i
'Net income from mining succeeding taxable years.
operations', as used in this
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Subsection, shall mean gross 'Net income from minin
income from operations less operations', as used in th
'allowable deductions' which are Subsection, shall mean gros
necessary or related to mining income from operations les
operations. 'Allowable deductions' 'allowable deductions' which ar
shall include mining, milling and necessary or related to minin
marketing expenses, and operations. 'Allowable deduction
depreciation of properties directly shall include mining, milling an
used in the mining operations. marketing expenses, an
This paragraph shall not apply to depreciation of properties direct
expenditures for the acquisition or used in the mining operations. Th
improvement of property of a paragraph shall not apply t
character which is subject to the expenditures for the acquisition o
allowance for depreciation. improvement of property of
character which is subject to th
In no case shall this paragraph allowance for depreciation.
apply with respect to amounts
paid or incurred for the In no case shall this paragrap
exploration and development of apply with respect to amounts pai
oil and gas. or incurred for the exploration an
development of oil and gas.
The term 'exploration
expenditures' means The term 'exploration expenditure
expenditures paid or incurred for means expenditures paid o
the purpose of ascertaining the incurred for the purpose o
existence, location, extent, or ascertaining the existence
quality of any deposit of ore or location, extent, or quality of an
other mineral, and paid or deposit of ore or other minera
incurred before the beginning of and paid or incurred before th
the development stage of the beginning of the developmen
mine or deposit. stage of the mine or deposit.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The term 'development The term 'developmen

expenditures' means expenditures' means expenditure
expenditures paid or incurred paid or incurred during th
during the development stage of development stage of the
the mine or other natural other natural deposits. Th
deposits. The development stage development stage of a mine o
of a mine or other natural deposit other natural deposit shall begin a
shall begin at the time when the time when deposits of ore o
deposits of ore or other minerals other minerals are shown to exis
are shown to exist in sufficient in sufficient commercial quantit
commercial quantity and quality and quality and shall end upo
and shall end upon commencement of act
commencement of actual commercial extraction.
commercial extraction.
(3) Depletion of Oil and Gas Wells

and Mines Deductible by a (3) Depletion of Oil and Gas Wel
Nonresident Alien Individual or and Mines Deductible by
Foreign Corporation. — In the Nonresident Alien Individual o
case of a nonresident alien Foreign Corporation. — In th
individual engaged in trade or case of a nonresident alie
business in the Philippines or a individual engaged in trade o
resident foreign corporation, business in the Philippines or
allowance for depletion of oil and resident foreign corporation
gas wells or mines under allowance for depletion of oil an
paragraph (1) of this Subsection gas wells or mines unde
shall be authorized only in respect paragraph (1) of this Subsectio
to oil and gas wells or mines shall be authorized only in respec
located within the Philippines. to oil and gas wells or mine
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
located within the Philippines.
(H) Charitable and Other
Contributions. — (H) Charitable and Othe
Contributions. —
(1) In General. — Contributions or
gifts actually paid or made within (1) In General. — Contributions o
the taxable year to, or for the use gifts actually paid or made withi
of the Government of the the taxable year to, or for the us
Philippines or any of its agencies of the Government of th
or any political subdivision thereof Philippines or any of its agencie
exclusively for public purposes, or or any political subdivision thereo
to accredited domestic exclusively for public purposes, o
corporations or associations to accredited domest
organized and operated corporations or association
exclusively for religious, organized and operate
charitable, scientific, youth and exclusively for religious, charitable
sports development, cultural or scientific, youth and sport
educational purposes or for the development, cultural o
rehabilitation of veterans, or to educational purposes or for th
social welfare institutions, or to rehabilitation of veterans, or t
nongovernment organizations, in social welfare institutions, or t
accordance with rules and nongovernment organizations, i
regulations promulgated by the accordance with rules an
Secretary of Finance, upon regulations promulgated by th
Commissioner, no part of the net recommendation of th
income of which inures to the Commissioner, no part of the ne
benefit of any private stockholder income of which inures to th
or individual in an amount not in benefit of any private stockholde
excess of ten percent (10%) in or individual in an amount not
the case of an individual, and five excess of ten percent (10%) in th
percent (5%) in the case of a case of an individual, and fiv
corporation, of the taxpayer's percent (5%) in the case of
taxable income derived from corporation, of the taxpayer
trade, business or profession as taxable income derived from trade
computed without the benefit of business or profession a
this and the following computed without the benefit o
subparagraphs. this and the followin
subparagraphs.
(2) Contributions Deductible in

Full. — Notwithstanding the (2) Contributions Deductible i
provisions of the preceding Full. — Notwithstanding th
subparagraph, donations to the provisions of the precedin
following institutions or entities subparagraph, donations to th
shall be deductible in full: following institutions or entitie
shall be deductible in full:
Copyright 2019
(a) Donations
to the Government.
Philippine Taxation Encyclopedia Third Release 2019 133
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
shall be deductible in full:
(a) Donations to the Government.
— Donations to the Government (a) Donations to the Governmen
of the Philippines or to any of its — Donations to the Government o
agencies or political subdivisions, the Philippines or to any of it
including fully-owned government agencies or political subdivisions
corporations, exclusively to including fully-owned governmen
finance, to provide for, or to be corporations, exclusively t
used in undertaking priority finance, to provide for, or to b
activities in education, health, used in undertaking priorit
youth and sports development, activities in education, health
human settlements, science and youth and sports developmen
culture, and in economic human settlements, science an
development according to a culture, and in econom
National Priority Plan determined development according to
by the National Economic and National Priority Plan determine
Development Authority (NEDA), in by the National Economic an
consultation with appropriate Development Authority (NEDA), i
government agencies, including consultation with appropriat
its regional development councils government agencies, including it
and private philanthropic persons regional development councils an
and institutions: Provided, That private philanthropic persons an
any donation which is made to the institutions: Provided, That an
Government or to any of its donation which is made to th
agencies or political subdivisions Government or to any of it
not in accordance with the said agencies or political subdivision
annual priority plan shall be not in accordance with the sai
subject to the limitations annual priority plan shall b
prescribed in paragraph (1) of this subject to the limitation
Subsection; prescribed in paragraph (1) of th
Subsection;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) Donations to Certain Foreign

Institutions or International (b) Donations to Certain Foreig
Organizations. — Donations to Institutions or Internationa
foreign institutions or international Organizations. — Donations t
organizations which are fully foreign institutions or internationa
deductible in pursuance of or in organizations which are ful
compliance with agreements, deductible in pursuance of or
treaties, or commitments entered compliance with agreements
by the Government of the treaties, or commitments entere
Philippines and the foreign by the Government of th
institutions or international Philippines and the foreig
organizations or in pursuance of institutions or internationa
special laws; organizations or in pursuance o
special laws;
(c) Donations to Accredited

Nongovernment Organizations. — (c) Donations to Accredite
The term 'nongovernment Nongovernment Organizations
organization' means a nonprofit The term 'nongovernmen
domestic corporation: organization' means a nonprof
domestic corporation:
(1) Organized and operated
exclusively for scientific, research, (1) Organized and operate
educational, character-building exclusively for scientific, research
and youth and sports educational, character-building an
development, health, social youth and sports developmen
welfare, cultural or charitable health, social welfare, cultural o
purposes, or a combination charitable purposes, or
thereof, no part of the net income combination thereof, no part of th
of which inures to the benefit of net income of which inures to th
any private individual; benefit of any private individual;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Which, not later than the 15th (2) Which, not later than the 15t
day of the third month after the day of the third month after th
close of the accredited close of the accredite
nongovernment organizations nongovernment organization
taxable year in which taxable year in which contribution
contributions are received, makes are received, makes utilizatio
utilization directly for the active directly for the active conduct o
conduct of the activities the activities constituting th
constituting the purpose or purpose or function for which it
function for which it is organized organized and operated, unless a
and operated, unless an extended extended period is granted by th
period is granted by the Secretary Secretary of Finance i
of Finance in accordance with the accordance with the rules an
rules and regulations to be regulations to be promulgated
promulgated, upon upon recommendation of th
recommendation of the Commissioner;
Commissioner;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) The level of administrative (3) The level of administrativ

expense of which shall, on an expense of which shall, on a
annual basis, conform with the annual basis, conform with th
rules and regulations to be rules and regulations to b
prescribed by the Secretary of prescribed by the Secretary o
of the Commissioner, but in no the Commissioner, but in no cas
case to exceed thirty percent to exceed thirty percent (30%) o
(30%) of the total expenses; and the total expenses; and
(4) The assets of which, in the (4) The assets of which, in th

event of dissolution, would be event of dissolution, would b
distributed to another nonprofit distributed to another nonprof
domestic corporation organized domestic corporation organized fo
for similar purpose or purposes, similar purpose or purposes, or t
or to the state for public purpose, the state for public purpose, o
or would be distributed by a court would be distributed by a court t
to another organization to be another organization to be used i
used in such manner as in the such manner as in the judgment o
judgment of said court shall best said court shall best accomplis
accomplish the general purpose the general purpose for which th
for which the dissolved dissolved organization wa
organization was organized. organized.
Subject to such terms and Subject to such terms an

conditions as may be prescribed conditions as may be prescribe
by the Secretary of Finance, the by the Secretary of Finance, th
term 'utilization' means: term 'utilization' means:
(i) Any amount in cash or in kind (i) Any amount in cash or in kin
(including administrative (including administrativ
expenses) paid or utilized to expenses) paid or utilized t
accomplish one or more purposes accomplish one or more purpose
for which the accredited for which the accredite
nongovernment organization was nongovernment organization wa
created or organized. created or organized.
(ii) Any amount paid to acquire an (ii) Any amount paid to acquire a
asset used (or held for use) asset used (or held for use
directly in carrying out one or directly in carrying out one or mor
more purposes for which the purposes for which the accredite
accredited nongovernment nongovernment organization wa
organization was created or created or organized.
organized.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
An amount set aside for a specific An amount set aside for a specif
project which comes within one or project which comes within one o
more purposes of the accredited more purposes of the accredite
nongovernment organization may nongovernment organization ma
be treated as a utilization, but be treated as a utilization, but on
only if at the time such amount is if at the time such amount is se
set aside, the accredited aside, the accredite
nongovernment organization has nongovernment organizatio
established to the satisfaction of established to the satisfaction o
the Commissioner that the the Commissioner that the amoun
amount will be paid for the will be paid for the specific projec
specific project within a period to within a period to be prescribed i
be prescribed in rules and rules and regulations to b
regulations to be promulgated by promulgated by the Secretary o
the Secretary of Finance, upon Finance, upon recommendation o
recommendation of the the Commissioner, but not t
Commissioner, but not to exceed exceed five (5) years, and th
five (5) years, and the project is project is one which can be bette
one which can be better accomplished by setting asid
accomplished by setting aside such amount than by immediat
such amount than by immediate payment of funds.
payment of funds.
(3) Valuation. — The amount of (3) Valuation. — The amount o

any charitable contribution of any charitable contribution o
property other than money shall property other than money shall b
be based on the acquisition cost based on the acquisition cost o
of said property. said property.
(4) Proof of Deductions. —

Contributions or gifts shall be (4) Proof of Deductions
allowable as deduction only if Contributions or gifts shall b
verified under the rules and allowable as deduction only
regulations prescribed by the verified under the rules an
Commissioner. recommendation of th
Commissioner.
(I) Research and Development.
— (I) Research and Development
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) In General. — A taxpayer may (1) In General. — A taxpayer ma

treat research or development treat research or developmen
expenditures which are paid or expenditures which are paid o
incurred by him during the taxable incurred by him during the taxabl
year in connection with his trade, year in connection with his trade
business or profession as business or profession as ordinar
ordinary and necessary expenses and necessary expens
which are not chargeable to are not chargeable to capita
capital account. The expenditures account. The expenditures s
so treated shall be allowed as treated shall be allowed a
deduction during the taxable year deduction during the taxable yea
when paid or incurred. when paid or incurred.
(2) Amortization of Certain (2) Amortization of Certai

Research and Development Research and Developmen
Expenditures. — At the election of Expenditures. — At the election o
the taxpayer and in accordance the taxpayer and in accordanc
with the rules and regulations to with the rules and regulations to b
be prescribed by the Secretary of prescribed by the Secretary o
of the Commissioner, the the Commissioner, the followin
following research and research and developmen
development expenditures may expenditures may be treated a
be treated as deferred expenses: deferred expenses:
(a) Paid or incurred by the (a) Paid or incurred by th

taxpayer in connection with his taxpayer in connection with h
trade, business or profession; trade, business or profession;
(b) Not treated as expenses (b) Not treated as expenses unde

under paragraph (1) hereof; and paragraph (1) hereof; and
(c) Chargeable to capital account (c) Chargeable to capital accoun

but not chargeable to property of but not chargeable to property of
a character which is subject to character which is subject t
depreciation or depletion. depreciation or depletion.
In computing taxable income, In computing taxable income, suc

such deferred expenses shall be deferred expenses shall b
allowed as deduction ratably allowed as deduction ratab
distributed over a period of not distributed over a period of no
less than sixty (60) months as less than sixty (60) months as ma
may be elected by the taxpayer be elected by the taxpaye
(beginning with the month in (beginning with the month in whic
which the taxpayer first realizes the taxpayer first realizes benefit
benefits from such expenditures). from such expenditures).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The election provided by The election provided b

paragraph (2) hereof may be paragraph (2) hereof may be mad
made for any taxable year for any taxable year beginnin
beginning after the effectivity of after the effectivity of this Code
this Code, but only if made not but only if made not later than th
later than the time prescribed by time prescribed by law for filing th
law for filing the return for such return for such taxable year. Th
taxable year. The method so method so elected, and the perio
elected, and the period selected selected by the taxpayer, shall b
by the taxpayer, shall be adhered adhered to in computing taxabl
to in computing taxable income income for the taxable year fo
for the taxable year for which the which the election is made and fo
election is made and for all all subsequent taxable year
subsequent taxable years unless, unless, with the approval of th
with the approval of the Commissioner, a change to
Commissioner, a change to a different method is authorized wit
different method is authorized respect to a part or all of suc
with respect to a part or all of expenditures. The election sha
such expenditures. The election not apply to any expenditure pai
shall not apply to any expenditure or incurred during any taxable yea
paid or incurred during any prior to the taxable year for whic
taxable year prior to the taxable the taxpayer makes the election.
year for which the taxpayer
makes the election. (3) Limitations on De
This Subsection shall not apply to
(3) Limitations on Deduction. —
This Subsection shall not apply (a) Any expenditure for th
to: acquisition or improvement of land
or for the improvement of propert
(a) Any expenditure for the to be used in connection wit
acquisition or improvement of research and development of
land, or for the improvement of character which is subject t
property to be used in connection depreciation and depletion; and
with research and development of
a character which is subject to (b) Any expenditure paid o
depreciation and depletion; and incurred for the purpose o
ascertaining the existence
(b) Any expenditure paid or location, extent, or quality of an
incurred for the purpose of deposit of ore or other minera
ascertaining the existence, including oil or gas.
location, extent, or quality of any
deposit of ore or other mineral,
including oil or gas.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(J) Pension Trusts. — An (J) Pension Trusts

employer establishing or employer establishing o
maintaining a pension trust to maintaining a pension trust t
provide for the payment of provide for the payment o
reasonable pensions to his reasonable pensions to h
employees shall be allowed as a employees shall be allowed as
deduction (in addition to the deduction (in addition to th
contributions to such trust during contributions to such trust durin
the taxable year to cover the the taxable year to cover th
pension liability accruing during pension liability accruing during th
the year, allowed as a deduction year, allowed as a dedu
under Subsection (A)(1) of this Subsection (A)(1) of this Section)
Section) a reasonable amount reasonable amount transferred o
transferred or paid into such trust paid into such trust during th
during the taxable year in excess taxable year in excess of suc
of such contributions, but only if contributions, but only if suc
such amount: (1) has not amount: (1) has not theretofor
theretofore been allowed as a been allowed as a deduction, an
deduction, and (2) is apportioned (2) is apportioned in equal part
in equal parts over a period of ten over a period of ten (10
(10) consecutive years beginning consecutive years beginning wit
with the year in which the transfer the year in which the transfer o
or payment is made. payment is made.
(K) Additional Requirements for (K) Additional Requirements fo

Deductibility of Certain Payments. Deductibility of Certain Payments
— Any amount paid or payable — Any amount paid or payabl
which is otherwise deductible which is otherwise deductible
from, or taken into account in or taken into account in computin
computing gross income or for gross income or for whic
which depreciation or amortization depreciation or amortization ma
may be allowed under this be allowed under this Section
Section, shall be allowed as a shall be allowed as a deductio
deduction only if it is shown that only if it is shown that the ta
the tax required to be deducted required to be deducted an
and withheld therefrom has been withheld therefrom has been pai
paid to the Bureau of Internal to the Bureau of Internal Revenu
Revenue in accordance with this in accordance with this Section
Section, Sections 58 and 81 of Sections 58 and 81 of this Code.
this Code.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(L) Optional Standard Deduction (L) Optional Standard Deduction

(OSD). — In lieu of the — In lieu of the deductions allowe
deductions allowed under the under the preceding Subsections
preceding Subsections, an an individual subject to tax unde
individual subject to tax under Section 24, other
Section 24, other than a nonresident alien, may elect
nonresident alien, may elect a standard deduction in an amoun
standard deduction in an amount not exceeding forty percent (40%
not exceeding forty percent (40%) of his gross sales or gros
of his gross sales or gross receipts, as the case may be. I
receipts, as the case may be. In the case of a corporation subjec
the case of a corporation subject to tax under Sections 27(A) an
to tax under Sections 27(A) and 28(A)(1), it may elect a
28(A)(1), it may elect a standard deduction in an amount no
deduction in an amount not exceeding forty percent (40%) o
exceeding forty percent (40%) of its gross income as defined i
its gross income as defined in Section 32 of this Code. Unles
Section 32 of this Code. Unless the taxpayer signifies in his retur
the taxpayer signifies in his return his intention to elect the optiona
his intention to elect the optional standard deduction, he shall b
standard deduction, he shall be considered as havi
considered as having availed himself of the deductions allowe
himself of the deductions allowed in the preceding Subsections
in the preceding Subsections. Such election when made in th
Such election when made in the return shall be irrevocable for th
return shall be irrevocable for the taxable year for which the return
taxable year for which the return made: Provided, That an individua
is made: Provided, That an who is entitled to and claimed fo
individual who is entitled to and the optional standard deductio
claimed for the optional standard shall not be required to submit wit
deduction shall not be required to his tax return such financia
submit with his tax return such statements otherwise require
financial statements otherwise under this Code: Provided, furthe
required under this Code: That except when th
Provided, further, That a general Commissioner otherwise permits
professional partnership and the the said individual shall keep suc
partners comprising such records pertaining to his gros
partnership may avail of the sales or gross receipts, or the sai
optional standard deduction only corporation shall keep suc
once, either by the general records pertaining to his gros
professional partnership or the income as defined in Section 32 o
partners comprising the this Code during the taxable yea
partnership: Provided, finally, that as may be required by the rule
except when the Commissioner and regulations promulgated b
otherwise permits, the said the Secretary of Finance, upo
individual shall keep such records recommendation of th
pertaining to his gross sales or Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
pertaining to his gross sales or Commissioner.
gross receipts, or the said
corporation shall keep such
records pertaining to his gross
income as defined in Section 32
of this Code during the taxable
year, as may be required by the
rules and regulations promulgated
by the Secretary of Finance, upon
Commissioner. (as amended by
Sec. 11, R.A. No. 10963, (M) Premium Payments on Healt
December 19, 2017) and/or Hospitalization Insurance o
an Individual Taxpayer
amount of premiums not to excee
Two thousand four hundred peso
(P2,400) per family or Tw
hundred pesos (P200) a mont
paid during the taxable year fo
health and/or hospitalizatio
insurance taken by the taxpaye
for himself, including his family
shall be allowed as a deductio
from his gross income: Provided
That said family has a gros
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
income of not more than Tw
hundred fifty thousand peso
(P250,000) for the taxable yea
Provided, finally, That in the cas
of married taxpayers, only th
spouse claiming the additiona
exemption for dependents shall b
entitled to this deduction.
Notwithstanding the provisions of
the preceding Subsections, the Notwithstanding the provisions o
Secretary of Finance, upon the preceding Subsections, th
Commissioner, after a public recommendation of th
hearing shall have been held for Commissioner, after a publ
this purpose, may prescribe by hearing shall have been held fo
rules and regulations, limitations this purpose, may prescribe b
or ceilings for any of the itemized rules and regulations, limitations o
deductions under Subsections (A) ceilings for any of the itemize
to (J) of this Section: Provided, deductions under Subsections (A
That for purposes of determining to (J) of this Section: Provided
such ceilings or limitations, the That for purposes of determinin
Secretary of Finance shall such ceilings or limitations, th
consider the following factors: (1) Secretary of Finance sha
adequacy of the prescribed limits consider the following factors: (1
on the actual expenditure adequacy of the prescribed limit
requirements of each particular on the actual expenditur
industry; and (2) effects of requirements of each particula
inflation on expenditure levels: industry; and (2) effects of inflatio
Provided, further, That no ceilings on expenditure levels: Provided
shall further be imposed on items further, That no ceilings sha
of expense already subject to further be imposed on items o
ceilings under present law. expense already subject to ceiling
under present law. (as amende
by Sec. 3 of R.A. No. 9337, Ma
24, 2005)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Allowance of Personal
SEC. 35. SEC. 35.
Exemption for Individual
Taxpayer (Repealed by Sec. 12, R.A. No. (A) In General. — F
10963, December 19, 2017) of determining the tax provided i
Section 24(A) of this Title, ther
shall be allowed a basic persona
exemption amounting to Fift
thousand pesos (P50,000) fo
each individual taxpayer.
In the case of married individua

where only one of the spouses
deriving gross income, only suc
spouse shall be allowed th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
personal exemption.
(B) Additional Exemption fo

Dependents. — There shall b
allowed an additional exemption o
Twenty-five thousand peso
(P25,000) for each dependent no
exceeding four (4).
The additional exemption fo

dependents shall be claimed b
only one of the spouses in th
case of married individ
In the case of legally separate

spouses, additional exemption
may be claimed only by th
spouse who has custody of th
child or children: Provided,
the total amount of additiona
exemptions that may be claime
by both shall not exceed th
maximum additional exemption
herein allowed.
For purposes of this Subsection,

'dependent' means a legitimate
illegitimate or legally adopted chil
chiefly dependent upon and livin
with the taxpayer if suc
dependent is not more tha
twenty-one (21) years
unmarried and not gainful
employed or if such dependen
regardless of age, is incapable o
self-support because of mental o
physical defect.
(C) Change of Status

taxpayer marries or should hav
additional dependent(s) as define
above during the taxable year, th
taxpayer may claim th
corresponding additiona
exemption, as the case may be, i
full for such year.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
If the taxpayer dies during th
taxable year, his estate may st
claim the personal and additiona
exemptions for himself
dependent(s) as if he died at th
close of such year.
If the spouse or any of th

dependents dies or if any of suc
dependents marries, become
twenty-one (21) years old o
becomes gainfully employe
during the taxable year, th
taxpayer may still claim the sam
exemptions as if the spouse or an
of the dependents died, or as
such dependents married, becam
twenty-one (21) years old o
became gainfully employed at th
close of such year.
(D) Personal Exemption Allowabl
to Nonresident Alien Indiv
A nonresident alien individua
engaged in trade, business or i
the exercise of a profession in th
Philippines shall be entitled to
personal exemption in the amoun
equal to the exemptions allowed i
the income tax law in the countr
of which he is a subject or citizen
to citizens of the Philippines no
residing in such country, not t
exceed the amount fixed in th
Section as exemption for citizen
or residents of the Philippines
Provided, That said nonresiden
alien should file a true an
accurate return of the total incom
received by him from all sources i
the Philippines, as required by th
Title.
Items not Deductible

SEC. 36. SEC. 36.
(A) General Rule. — In computing (A) General Rule. — In computin
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
net income, no deduction shall in net income, no deduction shall i
any case be allowed in respect to any case be allowed in respect t
— —
(1) Personal, living or family (1) Personal, living or fami

expenses; expenses;
(2) Any amount paid out for new (2) Any amount paid out for ne
buildings or for permanent buildings or for permanen
improvements, or betterments improvements, or betterment
made to increase the value of any made to increase the value of an
property or estate; property or estate;
This Subsection shall not apply to This Subsection shall not apply t
intangible drilling and development intangible drilling and developmen
costs incurred in petroleum costs incurred in
operations which are deductible operations which are deductibl
under Subsection (G)(1) of under Subsection (G)(1) of Sectio
Section 34 of this Code. 34 of this Code.
(3) Any amount expended in (3) Any amount expended i

restoring property or in making restoring property or in makin
good the exhaustion thereof for good the exhaustion thereof fo
which an allowance is or has been which an allowance is or has bee
made; or made; or
(4) Premiums paid on any life (4) Premiums paid on any li

insurance policy covering the life insurance policy covering the lif
of any officer or employee, or of of any officer or employee, or o
any person financially interested in any person financially interested i
any trade or business carried on any trade or business carried o
by the taxpayer, individual or by the taxpayer, individual o
corporate, when the taxpayer is corporate, when the taxpayer
directly or indirectly a beneficiary directly or indirectly a beneficiar
under such policy. under such policy.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Losses from Sales or (B) Losses from Sales o
Exchanges of Property. — In Exchanges of Property
computing net income, no computing net income, n
deduction shall in any case be deduction shall in any case b
allowed in respect of losses from allowed in respect of losses from
sales or exchanges of property sales or exchanges of propert
directly or indirectly — directly or indirectly —
(1) Between members of a family. (1) Between members of a family

For purposes of this paragraph, For purposes of this paragraph
the family of an individual shall the family of an individual sha
include only his brothers and include only his brothers an
sisters (whether by the whole or sisters (whether by the whole o
half-blood), spouse, ancestors, half-blood), spouse, ancestors
and lineal descendants; or and lineal descendants; or
(2) Except in the case of (2) Except in the case o

distributions in liquidation, distributions in liquidation, betwee
between an individual and a an individual and a co
corporation more than fifty percent more than fifty percent (50%) i
(50%) in value of the outstanding value of the outstanding stock o
stock of which is owned, directly or which is owned, directly o
indirectly, by or for such individual; indirectly, by or for such individua
or or
(3) Except in the case of (3) Except in the case o

distributions in liquidation, distributions in liquidation, betwee
between two corporations more two corporations more than fift
than fifty percent (50%) in value of percent (50%) in value of th
the outstanding stock of each of outstanding stock of each of whic
which is owned, directly or is owned, directly or indirectly, b
indirectly, by or for the same or for the same individual, if eithe
individual, if either one of such one of such corporations, wit
corporations, with respect to the respect to the taxable year of th
taxable year of the corporation corporation preceding the date o
preceding the date of the sale or the sale or exchange was, u
exchange was, under the law the law applicable to such taxabl
applicable to such taxable year, a year, a personal holding compan
personal holding company or a or a foreign personal holdin
foreign personal holding company; company;
(4) Between the grantor and a (4) Between the grantor and
fiduciary of any trust; or fiduciary of any trust; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(5) Between the fiduciary of a trust (5) Between the fiduciary of a trus
and the fiduciary of another trust if and the fiduciary of another trust
the same person is a grantor with the same person is a grantor wit
respect to each trust; or respect to each trust; or
(6) Between a fiduciary of a trus
(6) Between a fiduciary of a trust
and a beneficiary of such trust.
and a beneficiary of such trust.
Special Provisions
SEC. 37. SEC. 37.
Regarding Income and
Deductions of Insurance (A) Special Deductions Allowed to (A) Special Deductions Allowed t
Companies, Whether Insurance Companies. — In the Insurance Companies.
Domestic or Foreign case of insurance companies, case of insurance companies
whether domestic or foreign doing whether domestic or foreign doin
business in the Philippines, the net business in the Philippines, the ne
additions, if any, required by law to additions, if any, required by law t
be made within the year to reserve be made within the year to reserv
funds and the sums other than funds and the sums other tha
dividends paid within the year on dividends paid within the year o
policy and annuity contracts may policy and annuity contracts ma
be deducted from their gross be deducted from their gros
income: Provided, however, That income: Provided, however, Tha
the released reserve be treated as the released reserve be treated a
income for the year of release. income for the year of rel
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Mutual Insurance Companies. (B) Mutual Insurance Companies
— In the case of mutual fire and — In the case of mutual fire an
mutual employers' liability and mutual employers' liability an
mutual workmen's compensation mutual workmen's compensatio
and mutual casualty insurance and mutual casualty insuranc
companies requiring their companies requiring the
members to make premium members to make premium
deposits to provide for losses and deposits to provide for losses an
expenses, said companies shall expenses, said companies sha
not return as income any portion not return as income any portion o
of the premium deposits returned the premium deposits returned t
to their policyholders, but shall their policyholders, but shall retur
return as taxable income all as taxable income all incom
income received by them from all received by them from all othe
other sources plus such portion of sources plus such portion of th
the premium deposits as are premium deposits as are retaine
retained by the companies for by the companies for purpose
purposes other than the payment other than the payment of losse
of losses and expenses and and expenses and reinsuranc
reinsurance reserves. reserves.
(C) Mutual Marine Insurance (C) Mutual Marine Insuranc

Companies. — Mutual marine Companies. — Mutual marin
insurance companies shall include insurance companies shall includ
in their return of gross income, in their return of gross income
gross premiums collected and gross premiums collected an
received by them less amounts received by them less amount
paid for reinsurance, but shall be paid for reinsurance, but shall b
entitled to include in the entitled to include in th
deductions from gross income deductions from gross incom
amounts repaid to policyholders amounts repaid to policyholders o
on account of premiums account of premiums previous
previously paid by them and paid by them and interest pai
interest paid upon those amounts upon those amounts between th
between the ascertainment and ascertainment and paymen
payment thereof. thereof.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Assessment Insuranc

(D) Assessment Insurance
Companies. — Assessmen
Companies. — Assessment
insurance companies, whethe
insurance companies, whether
domestic or foreign, may deduc
domestic or foreign, may deduct
from their gross income the actua
from their gross income the actual
deposit of sums with the officers o
deposit of sums with the officers
the Government of the Philippine
of the Government of the
pursuant to law, as additions t
Philippines pursuant to law, as
guarantee or reserve funds.
additions to guarantee or reserve
funds.
Losses from Wash Sales

SEC. 38. SEC. 38.
of Stock or Securities
(A) In the case of any loss claimed (A) In the case of any loss claime
to have been sustained from any to have been sustained from an
sale or other disposition of shares sale or other disposition of share
of stock or securities where it of stock or securities where
appears that within a period appears that within a perio
beginning thirty (30) days before beginning thirty (30) days befor
the date of such sale or disposition the date of such sale or dispositio
and ending thirty (30) days after and ending thirty (30) days afte
such date, the taxpayer has such date, the taxpayer ha
acquired (by purchase or by acquired (by purchase or b
exchange upon which the entire exchange upon which the entir
amount of gain or loss was amount of gain or loss wa
recognized by law), or has entered recognized by law), or has entere
into a contract or option so to into a contract or option so t
acquire, substantially identical acquire, substantially identica
stock or securities, then no stock or securities, then n
deduction for the loss shall be deduction for the loss shall b
allowed under Section 34 unless allowed under Section 34 unles
the claim is made by a dealer in the claim is made by a dealer i
stock or securities and with stock or securities and wit
respect to a transaction made in respect to a transaction made i
the ordinary course of the the ordinary course of th
business of such dealer. business of such dealer.
(B) If the amount of stock or (B) If the amount of stock o

securities acquired (or covered by securities acquired (or covered b
the contract or option to acquire) the contract or option to acquire)
is less than the amount of stock or less than the amount of stock o
securities sold or otherwise securities sold or otherwis
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
disposed of, then the particular disposed of, then the particula
shares of stock or securities, the shares of stock or securities, th
loss from the sale or other loss from the sale or othe
disposition of which is not disposition of which is n
deductible, shall be determined deductible, shall be determine
under rules and regulations under rules and regulation
Finance, upon recommendation of Finance, upon recommendation o
(C) If the amount of stock o
(C) If the amount of stock or
securities acquired (or covered b
securities acquired (or covered by
the contract or option to acquire)
the contract or option to acquire)
not less than the amount of stoc
is not less than the amount of
or securities sold or otherwis
stock or securities sold or
disposed of, then the particula
otherwise disposed of, then the
shares of stock or securities, th
particular shares of stock or
acquisition of which (or th
securities, the acquisition of which
contract or option to acquir
(or the contract or option to
which) resulted in th
acquire which) resulted in the
non-deductibility of the loss, sha
non-deductibility of the loss, shall
be determined under rules an
be determined under rules and
regulations prescribed by th
regulations prescribed by the
Secretary of Finance, upon
Commissioner.
Commissioner.
Capital Gains and Losses

SEC. 39. SEC. 39.
(A) Definitions. — As used in this (A) Definitions. — As used in th

Title — Title —
(1) Capital Assets. — The term (1) Capital Assets. — The term
'capital assets' means property 'capital assets' means propert
held by the taxpayer (whether or held by the taxpayer (whether o
not connected with his trade or not connected with his trade o
business), but does not include business), but does not includ
stock in trade of the taxpayer or stock in trade of the taxpayer o
other property of a kind which other property of a kind
would properly be included in the would properly be included in th
inventory of the taxpayer if on inventory of the taxpayer if o
hand at the close of the taxable hand at the close of the taxabl
year, or property held by the year, or property held by th
taxpayer primarily for sale to taxpayer primarily for sale t
customers in the ordinary course customers in the ordinary cours
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of his trade or business, or of his trade or business, o
property used in the trade or property used in the trade o
business, of a character which is business, of a character which
subject to the allowance for subject to the allowance fo
depreciation provided in depreciation provided i
Subsection (F) of Section 34; or Subsection (F) of Section 34; o
real property used in trade or real property used in trade o
business of the taxpayer. business of the taxpayer.
(2) Net Capital Gain. — The term (2) Net Capital Gain. — The term
'net capital gain' means the 'net capital gain' means the exces
excess of the gains from sales or of the gains from sales o
exchanges of capital assets over exchanges of capital assets ove
the losses from such sales or the losses from such sales o
exchanges. exchanges.
(3) Net Capital Loss. — The term (3) Net Capital Loss. — The term
'net capital loss' means the excess 'net capital loss' means the exces
of the losses from sales or of the losses from sales o
exchanges of capital assets over exchanges of capital assets ove
the gains from such sales or the gains from such sales o
(B) Percentage Taken into (B) Percentage Taken int

Account. — In the case of a Account. — In the case of
taxpayer, other than a corporation, taxpayer, other than a corporation
only the following percentages of only the following percentages o
the gain or loss recognized upon the gain or loss recognized upo
the sale or exchange of a capital the sale or exchange of a capita
asset shall be taken into account asset shall be taken into accoun
in computing net capital gain, net in computing net capit
capital loss, and net income: capital loss, and net income:
(1) One hundred percent (100%) if (1) One hundred percent (100%)
the capital asset has been held for the capital asset has been held fo
not more than twelve (12) months; not more than twelve (12) months
and and
(2) Fifty percent (50%) if the (2) Fifty percent (50%) if th

capital asset has been held for capital asset has been held fo
more than twelve (12) months; more than twelve (12) months;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Limitation on Capital Losses. (C) Limitation on Capital Losses
— Losses from sales or — Losses from sales o
exchanges of capital assets shall exchanges of capital assets sha
be allowed only to the extent of be allowed only to the extent of th
the gains from such sales or gains from such sales o
exchanges. If a bank or trust exchanges. If a bank or trus
company incorporated under the company incorporated under th
laws of the Philippines, a laws of the Philippines,
substantial part of whose business substantial part of whose
is the receipt of deposits, sells any is the receipt of deposits, sells an
bond, debenture, note, or bond, debenture, note, o
certificate or other evidence of certificate or other evidence o
indebtedness issued by any indebtedness issued by an
corporation (including one issued corporation (including one issue
by a government or political by a government or politica
subdivision thereof), with interest subdivision thereof), with interes
coupons or in registered form, any coupons or in registered
loss resulting from such sale shall loss resulting from such sale sha
not be subject to the foregoing not be subject to the foregoin
limitation and shall not be included limitation and shall not be include
in determining the applicability of in determining the applicability o
such limitation to other losses. such limitation to other losses.
(D) Net Capital Loss Carry-over. (D) Net Capital Loss Carry-ove
— If any taxpayer, other than a — If any taxpayer, other than
corporation, sustains in any corporation, sustains in an
taxable year a net capital loss, taxable year a net capital loss
such loss (in an amount not in such loss (in an amount not i
excess of the net income for such excess of the net income for suc
year) shall be treated in the year) shall be treated in th
succeeding taxable year as a loss succeeding taxable year as a los
from the sale or exchange of a from the sale or exchange of
capital asset held for not more capital asset held for not mor
than twelve (12) months. than twelve (12) months.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(E) Retirement of Bonds, Etc. — (E) Retirement of Bonds, Etc
For purposes of this Title, For purposes of this Title, amount
amounts received by the holder received by the holder upon th
upon the retirement of bonds, retirement of bonds, debentures
debentures, notes or certificates notes or certificates or othe
or other evidences of evidences of indebtedness issue
indebtedness issued by any by any corporation (including thos
corporation (including those issued by a government or politica
issued by a government or political subdivision thereof) with interes
subdivision thereof) with interest coupons or in registered form
coupons or in registered form, shall be considered as amount
shall be considered as amounts received in exchange therefor.
received in exchange therefor.
(F) Gains and Losses from Short (F) Gains and Losses from Sho
Sales, Etc. — For purposes of this Sales, Etc. — For purposes of th
Title — Title —
(1) Gains or losses from short (1) Gains or losses

sales of property shall be sales of property shall b
considered as gains or losses considered as gains or losses from
from sales or exchanges of capital sales or exchanges of capita
assets; and assets; and
(2) Gains or losses attributable t
(2) Gains or losses attributable to
the failure to exercise privileges o
the failure to exercise privileges
options to buy or sell property sha
or options to buy or sell property
be considered as capital gain
shall be considered as capital
losses.
gains or losses.
Determination of Amount
SEC. 40. SEC. 40.
and Recognition of Gain or
Loss (A) Computation of Gain or Loss. (A) Computation of Gain or Loss
— The gain from the sale or other — The gain from the sale or othe
disposition of property shall be the disposition of property shall be th
excess of the amount realized excess of the amount realize
therefrom over the basis or therefrom over the basis o
adjusted basis for determining adjusted basis for determinin
gain, and the loss shall be the gain, and the loss shall be th
excess of the basis or adjusted excess of the basis or adjuste
basis for determining loss over the basis for determining loss over th
amount realized. The amount amount realized. The amoun
realized from the sale or other realized from the sale or othe
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
disposition of property shall be the disposition of property shall be th
sum of money received plus the sum of money received plus th
fair market value of the property fair market value of the propert
(other than money) received; (other than money) received;
(B) Basis for Determining Gain or (B) Basis for Determining Gain o
Loss from Sale or Disposition of Loss from Sale or Disposition o
Property. — The basis of property Property. — The basis of pro
shall be — shall be —
(1) The cost thereof in the case of (1) The cost thereof in the case o
property acquired on or after property acquired on or afte
March 1, 1913, if such property March 1, 1913, if such propert
was acquired by purchase; or was acquired by purchase; or
(2) The fair market price or value (2) The fair market price or valu
as of the date of acquisition, if the as of the date of acquisition, if th
same was acquired by inheritance; same was acquired by inheritance
or or
(3) If the property was acquired by (3) If the property was acquired b
gift, the basis shall be the same as gift, the basis shall be the same a
if it would be in the hands of the if it would be in the hands of th
donor or the last preceding owner donor or the last preceding owne
by whom it was not acquired by by whom it was not acquired b
gift, except that if such basis is gift, except that if such basis
greater than the fair market value greater than the fair market valu
of the property at the time of the of the property at the time of th
gift then, for the purpose of gift then, for the purpose o
determining loss, the basis shall determining loss, the basis sha
be such fair market value; or be such fair market value; or
(4) If the property was acquired for (4) If the property was acquired fo
less than an adequate less than an adequat
consideration in money or money's consideration in money or money
worth, the basis of such property worth, the basis of such property
is the amount paid by the the amount paid by the transfere
transferee for the property; or for the property; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(5) The basis as defined in (5) The basis as defined i

paragraph (C)(5) of this Section, if paragraph (C)(5) of this Section,
the property was acquired in a the property was acquired in
transaction where gain or loss is transaction where gain or loss
not recognized under not recognized unde
paragraph(C)(2) of this Section. paragraph(C)(2) of this Section.
(C) Exchange of Property. — (C) Exchange of Property
(1) General Rule. — Except as (1) General Rule. — Except a

herein provided, upon the sale or herein provided, upon the sale o
exchange of property, the entire exchange of property, the entir
amount of the gain or loss, as the amount of the gain or loss, as th
case may be, shall be recognized. case may be, shall be recognized
(2) Exception. — No gain or loss (2) Exception. — No gain or los

shall be recognized if in pursuance shall be recognized if in pursuanc
of a plan of merger or of a plan of m
consolidation — consolidation —
(a) A corporation, which is a party (a) A corporation, which is a part

to a merger or consolidation, to a merger or consolidation
exchanges property solely for exchanges property solely fo
stock in a corporation, which is a stock in a corporation, which is
party to the merger or party to the merger o
consolidation; or consolidation; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) A shareholder exchanges (b) A shareholder exchanges stoc

stock in a corporation, which is a in a corporation, which i
party to the merger or the merger or consolidation, sole
consolidation, solely for the stock for the stock of anothe
of another corporation also a party corporation also a party to th
to the merger or consolidation; or merger or consolidation
(c) A security holder of a (c) A security holder of

corporation, which is a party to the corporation, which is a party to th
merger or consolidation, merger or consolidation
exchanges his securities in such exchanges his securities in suc
corporation, solely for stock or corporation, solely for stock o
securities in another corporation, a securities in another corporation,
party to the merger or party to the merger o
consolidation. consolidation.
No gain or loss shall also be No gain or loss shall also b

recognized if property is recognized if property
transferred to a corporation by a transferred to a corporation by
person in exchange for stock or person in exchange for stock o
unit of participation in such a unit of participation in s
corporation of which as a result of corporation of which as a result o
such exchange said person, alone such exchange said person, alon
or together with others, not or together with others, no
exceeding four (4) persons, gains exceeding four (4) persons, gain
control of said corporation: control of said corporation
Provided, That stocks issued for Provided, That stocks issued
services shall not be considered services shall not be considered a
as issued in return for property. issued in return for property.
(3) Exchange not Solely in Kind. (3) Exchange not Solely in Kind.
—
(a) If, in connection with a
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) If, in connection with an exchange described in the abov
exchange described in the above exceptions, an individual,
exceptions, an individual, a shareholder, a security holder or
shareholder, a security holder or a corporation receives not only stoc
corporation receives not only stock or securities permitted to b
or securities permitted to be received without the recognition o
received without the recognition of gain or loss, but also mone
gain or loss, but also money and/or property, the gain, if any
and/or property, the gain, if any, but not the loss, shall b
but not the loss, shall be recognized but in an amount not i
recognized but in an amount not in excess of the sum of the mone
excess of the sum of the money and the fair market value of suc
and the fair market value of such other property received: Provided
other property received: Provided, That as to the shareholder, if th
That as to the shareholder, if the money and/or other propert
money and/or other property received has the effect of
received has the effect of a distribution of a taxable dividend
distribution of a taxable dividend, there shall be taxed as dividend t
there shall be taxed as dividend to the shareholder an amount of th
the shareholder an amount of the gain recognized not in excess o
gain recognized not in excess of his proportionate share of th
his proportionate share of the undistributed earnings and profit
undistributed earnings and profits of the corporation; the remainde
of the corporation; the remainder, if any, of the gain recognized sha
if any, of the gain recognized shall be treated as a capital gain.
be treated as a capital gain.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) If, in connection with the (b) If, in connection with th

exchange described in the above exchange described in the abov
exceptions, the transferor exceptions, the transfero
corporation receives not only stock corporation receives not only stoc
permitted to be received without permitted to be received withou
the recognition of gain or loss but the recognition of gain or loss bu
also money and/or other property, also money and/or other property
then (i) if the corporation receiving then (i) if the corporation receivin
such money and/or other property such money and/or other propert
distributes it in pursuance of the distributes it in pursuance of th
plan of merger or consolidation, no plan of merger or consolidation, n
gain to the corporation shall be gain to the corporation shall b
recognized from the exchange, but recognized from the exchange, bu
(ii) if the corporation receiving (ii) if the corporation receiving suc
such other property and/or money other property and/or money doe
does not distribute it in pursuance not distribute it in pursuance of th
of the plan of merger or plan of merger or consolidation
consolidation, the gain, if any, but the gain, if any, but not the loss t
not the loss to the corporation the corporation shall be recognize
shall be recognized but in an but in an amount not in excess o
amount not in excess of the sum the sum of such money and th
of such money and the fair market fair market value of such othe
value of such other property so property so received, which is no
received, which is not distributed. distributed.
(4) Assumption of Liability. — (4) Assumption of Liability
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) If the taxpayer, in connection (a) If the taxpayer, in connectio
with the exchanges described in with the exchanges descr
the foregoing exceptions, receives the foregoing exceptions, receive
stock or securities which would be stock or securities which would b
permitted to be received without permitted to be received withou
the recognition of the gain if it the recognition of the gain if it wer
were the sole consideration, and the sole consideration, and as
as a part of the consideration, part of the consideration, anothe
another party to the exchange party to the exchange assumes
assumes a liability of the taxpayer, liability of the taxpayer, or acquire
or acquires from the taxpayer from the taxpayer property, subjec
property, subject to a liability, then to a liability, then such assumptio
such assumption or acquisition or acquisition shall not be treate
shall not be treated as money as money and/or other property
and/or other property, and shall and shall not prevent the exchang
not prevent the exchange from from being within the exceptions.
being within the exceptions.
(b) If the amount of the liabilitie

(b) If the amount of the liabilities assumed plus the amount of th
assumed plus the amount of the liabilities to which the property
liabilities to which the property is subject exceed the total of th
subject exceed the total of the adjusted basis of the propert
adjusted basis of the property transferred pursuant to suc
transferred pursuant to such exchange, then such excess sha
exchange, then such excess shall be considered as a gain from th
be considered as a gain from the sale or exchange of a capital asse
sale or exchange of a capital asset or of property which is not a capita
or of property which is not a asset, as the case may be.
capital asset, as the case may be.
(5) Basis. —
(5) Basis. —
(a) The basis of the stock o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) The basis of the stock or securities received by th
securities received by the transferor upon the exchang
transferor upon the exchange specified in the above exceptio
specified in the above exception shall be the same as the ba
shall be the same as the basis of the property, stock or securitie
the property, stock or securities exchanged, decreased by (1) th
exchanged, decreased by (1) the money received, and (2) the fa
money received, and (2) the fair market value of the other propert
market value of the other property received, and increased by (a) th
received, and increased by (a) the amount treated as dividend of th
amount treated as dividend of the shareholder and (b) the amount o
shareholder and (b) the amount of any gain that was recognized o
any gain that was recognized on the exchange: Provided, That th
the exchange: Provided, That the property received as 'boot' sha
property received as 'boot' shall have as basis its fair market value
have as basis its fair market value: Provided, further, That if as part o
Provided, further, That if as part of the consideration to the transfero
the consideration to the transferor, the transferee of property assume
the transferee of property a liability of the tra
assumes a liability of the acquires from the latter propert
transferor or acquires from the subject to a liability, suc
latter property subject to a liability, assumption or acquisition (in th
such assumption or acquisition (in amount of the liability) shall, fo
the amount of the liability) shall, purposes of this paragraph, b
for purposes of this paragraph, be treated as money received by th
treated as money received by the transferor on the exchange
transferor on the exchange: Provided, finally, T
Provided, finally, That if the transferor receives several kinds o
transferor receives several kinds stock or securities, th
of stock or securities, the Commissioner is hereb
Commissioner is hereby authorized to allocate the bas
authorized to allocate the basis among the several classes o
among the several classes of stocks or securities.
stocks or securities.
(b) The basis of the propert

(b) The basis of the property transferred in the hands of th
transferred in the hands of the transferee shall be the same as
transferee shall be the same as it would be in the hands of th
would be in the hands of the transferor increased by the amoun
transferor increased by the of the gain recognized to th
amount of the gain recognized to transferor on the transfer.
the transferor on the transfer.
(6) Definitions. —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(6) Definitions. —
(a) The term 'securities' mean
(a) The term 'securities' means bonds and debentures but no
bonds and debentures but not 'notes' of whatever class o
'notes' of whatever class or duration.
duration.
(b) The term ''merger' o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) The term ''merger' or 'consolidation', when used in th
'consolidation', when used in this Section, shall be understood t
Section, shall be understood to mean: (i) the ordinary merger o
mean: (i) the ordinary merger or consolidation, or (ii) the acquisitio
consolidation, or (ii) the acquisition by one corporation of all o
by one corporation of all or substantially all the properties o
substantially all the properties of another corporation solely fo
another corporation solely for stock: Provided, That for
stock: Provided, That for a transaction to be regarded as
transaction to be regarded as a merger or consolidation within th
merger or consolidation within the purview of this Section, it must b
purview of this Section, it must be undertaken for a bona fid
undertaken for a bona fide business purpose and not sole
business purpose and not solely for the purpose of escaping th
for the purpose of escaping the burden of taxation: P
burden of taxation: Provided, further, That in determinin
further, That in determining whether a bona fide busines
whether a bona fide business purpose exists, each and ever
purpose exists, each and every step of the transaction shall b
step of the transaction shall be considered and the whol
considered and the whole transaction or series o
transaction or series of transactions shall be treated as
transactions shall be treated as a single unit: Provided, finally, Tha
single unit: Provided, finally, That in determining whether th
in determining whether the property transferred constitutes
property transferred constitutes a substantial portion of the propert
substantial portion of the property of the transferor, the term
of the transferor, the term 'property' shall be taken to includ
'property' shall be taken to include the cash assets of the transferor.
the cash assets of the transferor.
(c) The term 'control', when use

(c) The term 'control', when used in this Section, shall mea
in this Section, shall mean ownership of stocks in
ownership of stocks in a corporation possessing at leas
corporation possessing at least fifty-one percent (51%) of the tota
fifty-one percent (51%) of the total voting power of all classes o
voting power of all classes of stocks entitled to vote.
stocks entitled to vote.
(d) The Secretary of Finance, upo
(d) The Secretary of Finance, recommendation of th
upon recommendation of the Commissioner, is hereb
Commissioner, is hereby authorized to issue rul
authorized to issue rules and regulations for the purpose o
regulations for the purpose of determining the proper amount o
determining the proper amount of transferred assets which meet th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
determining the proper amount of transferred assets which meet th
transferred assets which meet the standard of the phras
standard of the phrase 'substantially all' and for the prope
'substantially all' and for the proper implementation of this Section.
implementation of this Section.
Inventories
SEC. 41. Whenever in the SEC. 41. Whenever in th
judgment of the Commissioner, judgment of the Commissioner, th
the use of inventories is necessary use of inventories is necessary i
in order to determine clearly the order to determine clearly th
income of any taxpayer, income of any taxpaye
inventories shall be taken by such inventories shall be taken by suc
taxpayer upon such basis as the taxpayer upon such basis as th
Commissioner, may, by rules and Commissioner, may, by rules an
regulations, prescribe as regulations, prescribe a
conforming as nearly as may be to conforming as nearly as may be t
the best accounting practice in the the best accounting practice in th
trade or business and as most trade or business and as mos
clearly reflecting the income. clearly reflecting the income.
If a taxpayer, after having If a taxpayer, after havin

complied with the terms and complied with the terms an
conditions prescribed by the conditions prescribed by th
Commissioner, uses a particular Commissioner, uses a particula
method of valuing its inventory for method of valuing its inventory fo
any taxable year, then such any taxable year, then suc
method shall be used in all method shall be used in a
subsequent taxable years unless: subsequent taxable years unless:
(i) with the approval of the (i) with the approval of th

Commissioner, a change to a Commissioner, a change to
different method is authorized; or different method is authorized; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(ii) the Commissioner finds that th
(ii) the Commissioner finds that
nature of the stock on hand (e.g
the nature of the stock on hand
its scarcity, liquidity, marketabilit
(e.g., its scarcity, liquidity,
and price movements) is such tha
marketability and price
inventory gains should b
movements) is such that
considered realized for ta
inventory gains should be
purposes and, therefore, it
considered realized for tax
necessary to modify the valuatio
purposes and, therefore, it is
method for purposes o
necessary to modify the valuation
ascertaining the income, profits, o
method for purposes of
loss in a more realistic manne
ascertaining the income, profits,
Provided, however, That th
or loss in a more realistic manner:
Commissioner shall not exercis
Provided, however, That the
his authority to require a change i
Commissioner shall not exercise
inventory method more often tha
his authority to require a change
once every three (3) years
in inventory method more often
Provided, further, That any chang
than once every three (3) years:
in an inventory valuation metho
Provided, further, That any
must be subject to approval by th
change in an inventory valuation
Secretary of Finance.
method must be subject to
approval by the Secretary of
Finance.
Income from Sources

SEC. 42. SEC. 42.
Within the Philippines
(A) Gross Income From Sources (A) Gross Income From Source
Within the Philippines. — The Within the Philippines
following items of gross income following items of gross incom
shall be treated as gross income shall be treated as gross incom
Philippines: Philippines:
(1) Interests. — Interests derived (1) Interests. — Interests derive

Philippines, and interests on Philippines, and interests o
bonds, notes or other bonds, notes or othe
interest-bearing obligations of interest-bearing obligations o
residents, corporate or otherwise; residents, corporate or otherwise;
(2) Dividends. — The amount (2) Dividends. — The amoun

received as dividends: received as dividends:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) From a domestic corporation; (a) From a domestic corporation

and and
(b) From a foreign corporation, (b) From a foreign corporation

unless less than fifty percent unless less than fifty percen
(50%) of the gross income of such (50%) of the gross income of suc
foreign corporation for the foreign corporation for th
three-year period ending with the three-year period ending with th
close of its taxable year preceding close of its taxable year precedin
the declaration of such dividends the declaration of such dividend
(or for such part of such period as (or for such part of such period a
the corporation has been in the corporation has been i
existence) was derived from existence) was derived from
sources within the Philippines as sources within the Philippines a
determined under the provisions of determined under the provisions o
this Section; but only in an amount this Section; but only in an amoun
which bears the same ratio to which bears the same ratio to suc
such dividends as the gross dividends as the gross income o
income of the corporation for such the corporation for such perio
period derived from sources within derived from sources within th
the Philippines bears to its gross Philippines bears to its gros
income from all sources. income from all sources.
(3) Services. — Compensation for (3) Services. — Compensation fo

labor or personal services labor or personal service
performed in the Philippines; performed in the Philippines;
(4) Rentals and Royalties. — (4) Rentals and Royalties

Rentals and royalties from Rentals and royalties from
property located in the Philippines property located in the Philippine
or from any interest in such or from any interest in suc
property, including rentals or property, including rentals o
royalties for — royalties for —
(a) The use of or the right or (a) The use of or the right o
privilege to use in the Philippines privilege to use in the Philippine
any copyright, patent, design or any copyright, patent, design o
model, plan, secret formula or model, plan, secret formula o
process, goodwill, trademark, process, goodwill, trademark
trade brand or other like property trade brand or other like propert
or right; or right;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) The use of, or the right to use (b) The use of, or the
in the Philippines any industrial, in the Philippines any industria
commercial or scientific commercial or scientif
equipment; equipment;
(c) The supply of scientific, (c) The supply of scientific

technical, industrial or commercial technical, industrial or commercia
knowledge or information; knowledge or information;
(d) The supply of any assistance (d) The supply of any assistanc
that is ancillary and subsidiary to, that is ancillary and subsidiary to
and is furnished as a means of and is furnished as a means o
enabling the application or enabling the application o
enjoyment of, any such property or enjoyment of, any such property o
right as is mentioned in paragraph right as is mentioned in paragrap
(a), any such equipment as is (a), any such equipment as
mentioned in paragraph (b) or any mentioned in paragraph (b) or an
such knowledge or information as such knowledge or information a
is mentioned in paragraph (c); is mentioned in paragraph (c);
(e) The supply of services by a (e) The supply of services by

nonresident person or his nonresident person or h
employee in connection with the employee in connection with th
use of property or rights belonging use of property or rights belongin
to, or the installation or operation to, or the installation or operatio
of any brand, machinery or other of any brand, machinery or othe
apparatus purchased from such apparatus purchased from suc
nonresident person; nonresident person;
(f) Technical advice, assistance (f) Technical advice, assistanc

or services rendered in connection or services rendered in connectio
with technical management or with technical management o
administration of any scientific, administration of any scientific
industrial or commercial industrial or commercia
undertaking, venture, project or undertaking, venture, project o
scheme; and scheme; and
(g) The use of or the right to use: (g) The use of or the right to use
(i) Motion picture films; (i) Motion picture films;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(ii) Films or video tapes for use in (ii) Films or video tapes for use i
connection with television; and connection with television; and
(iii) Tapes for use in connection (iii) Tapes for use in connectio
with radio broadcasting. with radio broadcasting.
(5) Sale of Real Property. — (5) Sale of Real Property

Gains, profits and income from the Gains, profits and income from th
sale of real property located in the sale of real property located in th
(6) Sale of Personal Property. — (6) Sale of Personal Property

Gains, profits and income from the Gains, profits and income from th
sale of personal property, as sale of personal property, a
determined in Subsection (E) of determined in Subsection (E) o
this Section. this Section.
(B) Taxable Income From (B) Taxable Income From

Sources Within the Philippines. — Sources Within the Philippines
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) General Rule. — From the (1) General Rule. — From th

items of gross income specified in items of gross income specified i
Subsection (A) of this Section, Subsection (A) of this Section
there shall be deducted the there shall be deducted th
expenses, losses and other expenses, losses and othe
deductions properly allocated deductions properly allocate
thereto and a ratable part of thereto and a ratable part o
expenses, interests, losses and expenses, interests, losses an
other deductions effectively other deductions effective
connected with the business or connected with the business o
trade conducted exclusively within trade conducted exclusively withi
the Philippines which cannot the Philippines which canno
definitely be allocated to some definitely be allocated to som
items or class of gross income: items or class of gross income
Provided, That such items of Provided, That such items o
deductions shall be allowed only if deductions shall be allowed only
fully substantiated by all the fully substantiated by all th
information necessary for its information necessary for it
calculation. The remainder, if any, calculation. The remainder, if any
shall be treated in full as taxable shall be treated in full as taxabl
income from sources within the income from sources within th
Philippines. Philippines.
(2) Exception. — No deductions (2) Exception. — No deduction

for interest paid or incurred abroad for interest paid or incurred abroa
shall be allowed from the item of shall be allowed from the item o
gross income specified in gross income specified i
Subsection (A) unless Subsection (A) unles
indebtedness was actually indebtedness was actually incurre
incurred to provide funds for use in to provide funds for use i
connection with the conduct or connection with the conduct o
operation of trade or business in operation of trade or business i
the Philippines. the Philippines.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Gross Income From Sources (C) Gross Income From Source
Without the Philippines. — The Without the Philippines
following items of gross income following items of gross incom
shall be treated as income from shall be treated as inco
sources without the Philippines: sources without the Philippines:
(1) Interests other than those (1) Interests other than thos
derived from sources within the derived from sources within th
Philippines as provided in Philippines as provided i
paragraph (1) of Subsection (A) of paragraph (1) of Subsection (A) o
this Section; this Section;
(2) Dividends other than those (2) Dividends other than thos
Philippines as provided in Philippines as provided i
paragraph (2) of Subsection (A) of paragraph (2) of Subsection (A) o
this Section; this Section;
(3) Compensation for labor or (3) Compensation for labor o

personal services performed personal services performe
without the Philippines; without the Philippines;
(4) Rentals or royalties from (4) Rentals or royalties from

property located without the property located without th
Philippines or from any interest in Philippines or from any interest i
such property including rentals or such property including rentals o
royalties for the use of or for the royalties for the use of or for th
privilege of using without the privilege of using without th
Philippines, patents, copyrights, Philippines, patents, copyrights
secret processes and formulas, secret processes and formulas
goodwill, trademarks, trade goodwill, trademarks, trad
brands, franchises and other like brands, franchises and other lik
properties; and properties; and
(5) Gains, profits and income from (5) Gains, profits and inc
the sale of real property located the sale of real property locate
without the Philippines. without the Philippines.
(D) Taxable Income From Sources (D) Taxable Income From Source
Without the Philippines. — From Without the Philippines
the items of gross income the items of gross incom
specified in Subsection (C) of this specified in Subsection (C) of th
Section there shall be deducted Section there shall be deducte
the expenses, losses, and other the expenses, losses, and othe
deductions properly apportioned deductions properly apportioned o
Copyright 2019
or allocated
thereto and a ratable
Philippine Taxation Encyclopedia Third Release 2019
allocated thereto and
176
a ratable pa
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
or allocated thereto and a ratable allocated thereto and a ratable pa
part of any expense, loss or other of any expense, loss or othe
deduction which cannot definitely deduction which cannot definite
be allocated to some items or be allocated to some items o
classes of gross income. The classes of gross income. Th
remainder, if any, shall be treated remainder, if any, shall be treate
in full as taxable income from in full as taxable inco
sources without the Philippines. sources without the Philippines.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(E) Income From Sources Partly
Within and Partly Without the (E) Income From Sources Part
Philippines. — Items of gross Within and Partly Without th
income, expenses, losses and Philippines. — Items of gros
deductions, other than those income, expenses, losses an
specified in Subsections (A) and deductions, other than thos
(C) of this Section, shall be specified in Subsections (A) an
allocated or apportioned to (C) of this Section, shall b
sources within or without the allocated or apportioned t
Philippines, under the rules and sources within or without th
regulations prescribed by the Philippines, under the rules an
Commissioner. Where items of recommendation of th
gross income are separately Commissioner. Where items o
allocated to sources within the gross income are separate
Philippines, there shall be allocated to sources within th
deducted (for the purpose of Philippines, there shall b
computing the taxable income deducted (for the purpose o
therefrom) the expenses, losses computing the taxable incom
and other deductions properly therefrom) the expenses, losse
apportioned or allocated thereto and other deductions proper
and a ratable part of other apportioned or allocated theret
expenses, losses or other and a ratable part of othe
deductions which cannot definitely expenses, losses or othe
be allocated to some items or deductions which cannot definite
classes of gross income. The be allocated to some items o
remainder, if any, shall be classes of gross income. Th
included in full as taxable income remainder, if any, shall be include
from sources within the in full as taxable income from
Philippines. In the case of gross sources within the Philippines. I
income derived from sources the case of gross income derive
partly within and partly without the from sources partly within an
Philippines, the taxable income partly without the Philippines, th
may first be computed by taxable income may first b
deducting the expenses, losses or computed by deducting th
other deductions apportioned or expenses, losses or othe
allocated thereto and a ratable deductions apportioned o
part of any expense, loss or other allocated thereto and a ratable pa
deduction which cannot definitely of any expense, loss or othe
be allocated to some items or deduction which cannot definite
classes of gross income; and the be allocated to some items o
portion of such taxable income classes of gross income; and th
attributable to sources within the portion of such taxable incom
Philippines may be determined by attributable to sources within th
processes or formulas of general Philippines may be determined b
apportionment prescribed by the processes or formulas of genera
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
apportionment prescribed by the processes or formulas of genera
Secretary of Finance. Gains, apportionment prescribed by th
profits and income from the sale of Secretary of Finance. Gains
personal property produced (in profits and income from the
whole or in part) by the taxpayer personal property produced (i
within and sold without the whole or in part) by the taxpaye
Philippines, or produced (in whole within and sold without th
or in part) by the taxpayer without Philippines, or produced (in whol
and sold within the Philippines, or in part) by the taxpayer withou
shall be treated as derived partly and sold within the Philippines
from sources within and partly shall be treated as derived part
from sources without the from sources within and part
Philippines. from sources without th
Philippines.
Gains, profits and income derived
from the purchase of personal Gains, profits and income derive
property within and its sale without from the purchase of persona
the Philippines, or from the property within and its sale withou
purchase of personal property the Philippines, or from th
without and its sale within the purchase of personal propert
Philippines shall be treated as without and its sale within th
derived entirely from sources Philippines shall be treated a
within the country in which sold: derived entirely from source
Provided, however, That gain from within the country in which sold
the sale of shares of stock in a Provided, however, That gain from
domestic corporation shall be the sale of shares of stock in
treated as derived entirely from domestic corporation shall b
sources within the Philippines treated as derived entirely from
regardless of where the said sources within the Philippine
shares are sold. The transfer by a regardless of where the sai
nonresident alien or a foreign shares are sold. The transfer by
corporation to anyone of any nonresident alien or a foreig
share of stock issued by a corporation to anyone of any shar
domestic corporation shall not be of stock issued by a domest
effected or made in its book corporation shall not be effected o
unless: (1) the transferor has filed made in its book unless: (1) th
with the Commissioner a bond transferor has filed with th
conditioned upon the future Commissioner a bond conditione
payment by him of any income tax upon the future payment by him o
that may be due on the gains any income tax that may be due o
derived from such transfer, or (2) the gains derived from suc
the Commissioner has certified transfer, or (2) the Commissione
that the taxes, if any, imposed in has certified that the taxes, if any
this Title and due on the gain imposed in this Title and due o
realized from such sale or transfer the gain realized from such s
have been paid. It shall be the transfer have been paid. It shall b
duty of the transferor and the the duty of the transferor and th
corporation the shares of which corporation the shares of whic
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
corporation the shares of which corporation the shares of whic
are sold or transferred, to advise are sold or transferred, to advis
the transferee of this requirement. the transferee of this requirement.
(F) Definitions. — As used in this

Section the words 'sale' or 'sold' (F) Definitions. — As used in th
include 'exchange' or Section the words 'sale' or 's
'exchanged'; and the word include 'exchange' or 'exchanged
'produced' includes 'created,' and the word 'produced' include
'fabricated, 'manufactured,' 'created,' 'fabricated
'extracted,' 'processed,' 'cured' or 'manufactured,' 'extracted
'aged'. 'processed,' 'cured' or 'aged'.
CHAPTER VIII — ACCOUNTING CHAPTER VIII — ACCOUNTING

PERIODS AND METHODS OF PERIODS AND METHODS OF
ACCOUNTING ACCOUNTING
General Rule SEC. 43. The taxable income SEC. 43. The taxable income sha
shall be computed upon the basis be computed upon the basis of th
of the taxpayer's annual taxpayer's annual accountin
accounting period (fiscal year or period (fiscal year or calenda
calendar year, as the case may year, as the case may be) i
be) in accordance with the accordance with the method o
method of accounting regularly accounting regularly employed i
employed in keeping the books of keeping the books of suc
such taxpayer; but if no such taxpayer; but if no such method o
method of accounting has been accounting has been so employed
so employed, or if the method or if the method employed doe
employed does not clearly reflect not clearly reflect the income, th
the income, the computation shall computation shall be made i
be made in accordance with such accordance with such method a
method as in the opinion of the in the opinion of the Commissione
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Commissioner clearly reflects the clearly reflects the income. If th
income. If the taxpayer's annual taxpayer's annual accountin
accounting period is other than a period is other than a fiscal yea
fiscal year, as defined in Section as defined in Section 22(Q), or
22(Q), or if the taxpayer has no the taxpayer has no annua
annual accounting period, or does accounting period, or does no
not keep books, or if the taxpayer keep books, or if the taxpayer is a
is an individual, the taxable individual, the taxable
income shall be computed on the be computed on the basis of th
basis of the calendar year. calendar year.
Period in which Items of SEC. 44. The amount of all items SEC. 44. The amount of all item
Gross Income Included of gross income shall be included of gross income shall be include
in the gross income for the in the gross income for the taxabl
taxable year in which received by year in which received by th
the taxpayer, unless, under taxpayer, unless, under method
methods of accounting permitted of accounting permitted unde
under Section 43, any such Section 43, any such amounts ar
amounts are to be properly to be properly accounted for
accounted for as of a different a different period. In the case o
period. In the case of the death of the death of a taxpayer, there sha
a taxpayer, there shall be be included in computing taxabl
included in computing taxable income for the taxable period i
income for the taxable period in which falls the date of his death
which falls the date of his death, amounts accrued up to the date o
amounts accrued up to the date his death if not otherwise proper
of his death if not otherwise includible in respect of such perio
properly includible in respect of or a prior period.
such period or a prior period.
Period for which SEC. 45. The deductions SEC. 45. The deductions provide
Deductions and Credits provided for in this Title shall be for in this Title shall be taken fo
Taken taken for the taxable year in the taxable year in which 'paid o
which 'paid or accrued' or 'paid or accrued' or 'paid or incurred
incurred', dependent upon the dependent upon the method o
method of accounting upon the accounting upon the basis o
basis of which the net income is which the net income is c
computed, unless in order to unless in order to clearly reflect th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
clearly reflect the income, the income, the deductions should b
deductions should be taken as of taken as of a different period. I
a different period. In the case of the case of the death of
the death of a taxpayer, there taxpayer, there shall be allowed a
shall be allowed as deductions for deductions for the taxable perio
the taxable period in which falls in which falls the date of his death
the date of his death, amounts amounts accrued up to the date o
accrued up to the date of his his death if not otherwise proper
death if not otherwise properly allowable in respect of such perio
allowable in respect of such or a prior period.
period or a prior period.
Change of Accounting SEC. 46. If a taxpayer, other than SEC. 46. If a taxpayer, other tha
Period an individual, changes his an individual, changes h
accounting period from fiscal year accounting period from fiscal yea
to calendar year, from calendar to calendar year, from calenda
year to fiscal year, or from one year to fiscal year, or from on
fiscal year to another, the net fiscal year to another, the ne
income shall, with the approval of income shall, with the approval o
the Commissioner, be computed the Commissioner, be compute
on the basis of such new on the basis of such ne
accounting period, subject to the accounting period, subject to th
provisions of Section 47. provisions of Section 47.
Final or Adjustment
SEC. 47. SEC. 47.
Returns for a Period of
Less than Twelve (12) (A) Returns for Short Period (A) Returns for Short Perio
Months Resulting from Change of Resulting from Change o
Accounting Period. — If a Accounting Period. — If
taxpayer, other than an individual, taxpayer, other than an individua
with the approval of the with the approval of th
Commissioner, changes the basis Commissioner, changes the bas
of computing net income from of computing net income from
fiscal year to calendar year, a fiscal year to calendar year,
separate final or adjustment return separate final or adjustment retur
shall be made for the period shall be made for the perio
between the close of the last fiscal between the close of the last fisca
year for which return was made year for which return was mad
and the following December 31. If and the following December 31.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the change is from calendar year the change is from calend
to fiscal year, a separate final or to fiscal year, a separate final o
adjustment return shall be made adjustment return shall be mad
for the period between the close of for the period between the close o
the last calendar year for which the last calendar year for whic
return was made and the date return was made and the dat
designated as the close of the designated as the close of th
fiscal year. If the change is from fiscal year. If the change is from
one fiscal year to another fiscal one fiscal year to another fisca
year, a separate final or year, a separate final o
adjustment return shall be made adjustment return shall be mad
for the period between the close of for the period between the close o
the former fiscal year and the date the former fiscal year and the dat
designated as the close of the new designated as the close of the ne
fiscal year. fiscal year.
(B) Income Computed on Basis o

(B) Income Computed on Basis of
Short Period. — Where a sep
Short Period. — Where a
final or adjustment return is mad
separate final or adjustment
under Subsection (A) on accoun
return is made under Subsection
of a change in the accountin
(A) on account of a change in the
period, and in all other case
accounting period, and in all other
where a separate final o
cases where a separate final or
adjustment return is required o
adjustment return is required or
permitted by rules and regulation
permitted by rules and regulations
prescribed by the Secretary
prescribed by the Secretary of
Finance, upon recommendation o
the Commissioner, to be made fo
of the Commissioner, to be made
a fractional part of a year, then th
for a fractional part of a year, then
income shall be computed on th
the income shall be computed on
basis of the period for whic
the basis of the period for which
separate final or adjustment retur
separate final or adjustment
is made.
return is made.
Accounting for Long-term SEC. 48. Income from long-term SEC. 48. Income from long-term
Contracts contracts shall be reported for tax contracts shall be reported for ta
purposes in the manner as purposes in the manner a
provided in this Section. As used provided in this Section. As use
herein, the term 'long-term herein, the term 'long-term
contracts' means building, contracts' means building
installation or construction installation or constructio
contracts covering a period in contracts covering a period i
excess of one (1) year. Persons excess of one (1) year. Pe
whose gross income is derived in whose gross income is derived i
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
whole or in part from such whole or in part from suc
contracts shall report such contracts shall report such incom
income upon the basis of upon the basis of percentage o
percentage of completion. The completion. The return should b
return should be accompanied by accompanied by a retur
a return certificate of architects or certificate of architects o
engineers showing the engineers showing the percentag
percentage of completion during of completion during the taxabl
the taxable year of the entire work year of the entire work performe
performed under contract. There under contract. There should b
should be deducted from such deducted from such gross incom
gross income all expenditures all expenditures made during th
made during the taxable year on taxable year on account of th
account of the contract, account contract, account being taken o
being taken of the material and the material and supplies on han
supplies on hand at the beginning at the beginning and end of th
and end of the taxable period for taxable period for use i
use in connection with the work connection with the work under th
under the contract but not yet so contract but not yet so applied.
applied. If upon completion of a upon completion of a contract, it
contract, it is found that the found that the taxable net incom
taxable net income arising arising thereunder has not bee
thereunder has not been clearly clearly reflected for any year o
reflected for any year or years, years, the Commissioner ma
the Commissioner may permit or permit or require an amende
require an amended return. return.
Installment Basis
SEC. 49. SEC. 49.
(A) Sales of Dealers in Personal (A) Sales of Dealers in Persona

Property. — Under rules and Property. — Under rules an
regulations prescribed by the regulations prescribed by th
Commissioner, a person who Commissioner, a person wh
regularly sells or otherwise regularly sells or otherwis
disposes of personal property on disposes of personal property o
the installment plan may return as the installment plan may return a
income therefrom in any taxable income therefrom in any taxabl
year that proportion of the year that proportion of th
installment payments actually installment payments actual
received in that year, which the received in that year, which th
gross profit realized or to be gross profit realized or to b
realized when payment is realized when payment
completed, bears to the total completed, bears to the tota
contract price. contract price.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Sales of Realty and Casual (B) Sales of Realty and Casua
Sales of Personalty. — In the case Sales of Personalty. — In the cas
(1) of a casual sale or other casual (1) of a casual sale or other casua
disposition of personal property disposition of personal propert
(other than property of a kind (other than property of a kin
which would properly be included which would properly be include
in the inventory of the taxpayer if in the inventory of the taxpayer
on hand at the close of the taxable on hand at the close of the taxabl
year), for a price exceeding One year), for a price exceeding On
thousand pesos (P1,000), or (2) of thousand pesos (P1,000), or (2) o
a sale or other disposition of real a sale or other disposition of rea
property, if in either case the initial property, if in either case the initia
payments do not exceed payments do not excee
twenty-five percent (25%) of the twenty-five percent (25%) of th
selling price, the income may, selling price, the income may
under rules and regulations under rules and regulation
the Commissioner, be returned on the Commissioner, be returned o
the basis and in the manner above the basis and in the manner abov
prescribed in this Section. As used prescribed in this Section. As use
in this Section, the term 'initial in this Section, the term 'initia
payments' means the payments payments' means the payment
received in cash or property other received in cash or property othe
than evidences of indebtedness of than evidences of indebtedness o
the purchaser during the taxable the purchaser during the taxabl
period in which the sale or other period in which the sale or othe
disposition is made. disposition is made.
(C) Sales of Real Property (C) Sales of Real Propert

Considered as Capital Asset by Considered as Capital Asset b
Individuals. — An individual who Individuals. — An individual wh
sells or disposes of real property, sells or disposes of real property
considered as capital asset, and is considered as capital asset, and
otherwise qualified to report the otherwise qualified to report th
gain therefrom under Subsection gain therefrom under Subsectio
(B) may pay the capital gains tax (B) may pay the capital gains tax i
in installments under rules and installments under rules an
regulations to be promulgated by regulations to be promulgated b
the Secretary of Finance, upon the Secretary of Finance, upo
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Change from Accrual t

(D) Change from Accrual to
Installment Basis. — If a taxpaye
Installment Basis. — If a taxpayer
entitled to the benefits o
entitled to the benefits of
Subsection (A) elects for an
Subsection (A) elects for any
taxable year to report his taxabl
taxable year to report his taxable
income on the installment basis
income on the installment basis,
then in computing his income fo
then in computing his income for
the year of change or an
the year of change or any
subsequent year, amounts actual
subsequent year, amounts
received during any such year o
actually received during any such
account of sales or othe
year on account of sales or other
dispositions of property made i
dispositions of property made in
any prior year shall not b
any prior year shall not be
excluded.
excluded.
Allocation of Income and SEC. 50. In the case of two or SEC. 50. In the case of two o
Deductions more organizations, trades or more organizations, trades o
businesses (whether or not businesses (whether or no
incorporated and whether or not incorporated and whether or no
organized in the Philippines) organized in the Philippines
owned or controlled directly or owned or controlled directly o
indirectly by the same interests, indirectly by the same interests
the Commissioner is authorized to the Commissioner is authorized t
distribute, apportion or allocate distribute, apportion or allocat
gross income or deductions gross income or deduction
between or among such between or among suc
organization, trade or business, if organization, trade or business,
he determines that such he determines that suc
distribution, apportionment or distribution, apportionment o
allocation is necessary in order to allocation is necessary in order t
prevent evasion of taxes or clearly prevent evasion of taxes or clear
to reflect the income of any such to reflect the income of any suc
organization, trade or business. organization, trade or business.
CHAPTER IX — RETURNS AND CHAPTER IX — RETURNS AND

PAYMENT OF TAX PAYMENT OF TAX
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Individual Returns
SEC. 51. SEC. 51.
(A) Requirements. — (A) Requirements. —
(1) Except as provided in (1) Except as provided i

paragraph (2) of this Subsection, paragraph (2) of this Subsection
the following individuals are the following individuals ar
required to file an income tax required to file an income ta
return: return:
(a) Every Filipino citizen residing (a) Every Filipino citizen residing i
in the Philippines; the Philippines;
(b) Every Filipino citizen residing (b) Every Filipino citizen residin
outside the Philippines, on his outside the Philippines, on h
income from sources within the income from sources within th
Philippines; Philippines;
(c) Every alien residing in the (c) Every alien residing in th

Philippines, on income derived Philippines, on income derive
(d) Every nonresident alien (d) Every nonresident alie

engaged in trade or business or in engaged in trade or business or i
the exercise of profession in the the exercise of profession in th
Philippines. Philippines.
(2) The following individuals shall (2) The following individuals

not be required to file an income not be required to file an incom
tax return: tax return:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) An individual whose taxable (a) An individual whose gros

income does not exceed two income does not exceed his tota
hundred fifty thousand pesos personal and additiona
(P250,000) under Section exemptions for dependents unde
24(A)(2)(a): Provided, That a Section 35: Provided, That
citizen of the Philippines and any citizen of the Philippines and an
alien individual engaged in alien individual eng
business or practice of profession business or practice of professio
within the Philippines shall file an within the Philippines shall file a
income tax return, regardless of income tax return, regardless o
the amount of gross income; (as the amount of gross income;
amended by Sec. 13, R.A. No.
10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) An individual with respect to (b) An individual with respect t

pure compensation income, as pure compensation income, a
defined in Section 32(A)(1), defined in Section 32(A)(1
Philippines, the income tax on Philippines, the income tax o
which has been correctly withheld which has been correctly withhel
under the provisions of Section 79 under the provisions of Section 7
of this Code: Provided, That an of this Code: Provided,
individual deriving compensation individual deriving compensatio
concurrently from two or more concurrently from two or mor
employers at any time during the employers at any time during th
taxable year shall file an income taxable year shall file an incom
tax return; tax return;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(c) An individual whose sole (c) An individual whose sol

income has been subjected to income has been subjected to fina
final withholding tax pursuant to withholding tax pursuant to Sectio
Section 57(A) of this Code; and 57(A) of this Code; and
(d) A minimum wage earner as (d) A minimum wage earner a

defined in Section 22(HH) of this defined in Section 22(HH) of th
Code or an individual who is Code or an individual who
exempt from income tax pursuant exempt from income tax pursuan
to the provisions of this Code and to the provisions of this Code an
other laws, general or special. other laws, general or special.
(3) The foregoing (3) The foregoing notwithstanding

notwithstanding, any individual any individual not required to fil
not required to file an income tax an income tax return ma
return may nevertheless be nevertheless be required to file a
required to file an information information return pursuant t
return pursuant to rules and rules and regulations prescribed b
regulations prescribed by the the Secretary of Finance, upo
Secretary of Finance, upon recommendation of th
recommendation of the Commissioner.
Commissioner.
(4) The income tax return shall be (4) The income tax return shall b
filed in duplicate by the following filed in duplicate by the followin
persons: persons:
(a) A resident citizen — on his (a) A resident citizen — on h

income from all sources; income from all sources;
(b) A nonresident citizen — on his (b) A nonresident citizen — on h

within the Philippines; within the Philippines;
(c) A resident alien — on his (c) A resident alien — on h

within the Philippines; and within the Philippines; and
(d) A nonresident alien engaged (d) A nonresident alien engaged i

in trade or business in the trade or business in the Philippine
Philippines — on his income — on his income derived from
derived from sources within the sources within the Philippines.
Philippines.
(5) The income tax return (ITR)

shall consist of a maximum of
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
four (4) pages in paper form or
electronic form, and shall only
contain the following information:
(A) Personal profile and

information;
(B) Total gross sales, receipts or

income from compensation for
services rendered, conduct of
trade or business or the exercise
of a profession, except income
subject to final tax as provided
under this Code;
(C) Allowable deductions under

this Code;
(D) Taxable income as defined in

Section 31 of this Code; and
(E) Income tax due and payable

(as amended by Sec. 13, R.A.
No. 10963, December 19, 2017)
(B) Where to File. — Except i
(B) Where to File. — Except in cases where the Commissione
cases where the Commissioner otherwise permits, the return sha
otherwise permits, the return shall be filed with an authorized agen
be filed with an authorized agent bank, Revenue District Office
bank, Revenue District Officer, Collection Agent or duly authorize
Collection Agent or duly Treasurer of the city o
authorized Treasurer of the city or municipality in which such perso
municipality in which such person has his legal residence or principa
has his legal residence or place of business in th
principal place of business in the Philippines, or if there be no lega
Philippines, or if there be no legal residence or place of business i
residence or place of business in the Philippines, with the Office o
the Philippines, with the Office of the Commissioner.
the Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) When to File. —

(C) When to File. —
(1) The return of any individua
(1) The return of any individual specified above shall be filed on o
specified above shall be filed on before the fifteenth (15th) day o
or before the fifteenth (15th) day April of each year covering incom
of April of each year covering for the preceding taxable year.
income for the preceding taxable
year. (2) Individuals subject to tax o
capital gains:
(2) Individuals subject to tax on
capital gains: (a) From the sale or exchange o
shares of stock not traded thru
(a) From the sale or exchange of local stock exchange a
shares of stock not traded thru a prescribed under Section 24(C
local stock exchange as shall file a return within thirty (30
prescribed under Section 24(C) days after each transaction and
shall file a return within thirty (30) final consolidated return on o
days after each transaction and a before April 15 of each yea
final consolidated return on or covering all stock transactions o
before April 15 of each year the preceding taxable year; and
covering all stock transactions of
the preceding taxable year; and (b) From the sale or disposition o
real property under Section 24(D
(b) From the sale or disposition of shall file a return within thirty (30
real property under Section 24(D) days following each sale or othe
shall file a return within thirty (30) disposition.
days following each sale or other
disposition.
(D) Husband and Wife
(D) Husband and Wife. — Married individuals, whether citizens
individuals, whether citizens, resident or nonresident aliens, wh
resident or nonresident aliens, do not derive income purely from
who do not derive income purely compensation, shall file a retur
from compensation, shall file a for the taxable year to include th
return for the taxable year to income of both spouses, but wher
include the income of both it is impracticable for the spouse
spouses, but where it is to file one return, e
impracticable for the spouses to may file a separate return o
file one return, each spouse may income but the returns so file
file a separate return of income shall be consolidated by th
but the returns so filed shall be Bureau for purposes of verificatio
consolidated by the Bureau for for the taxable year.
purposes of verification for the
taxable year.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(E) Return of Parent to Includ

(E) Return of Parent to Include Income of Children. — The incom
Income of Children. — The of unmarried minors derived f
income of unmarried minors property received from a livin
derived from property received parent shall be included in th
from a living parent shall be return of the parent, except (1
included in the return of the when the donor's tax has bee
parent, except (1) when the paid on such property, or (2) whe
donor's tax has been paid on the transfer of such property
such property, or (2) when the exempt from donor's tax.
transfer of such property is
exempt from donor's tax.
(F) Persons Under Disability
(F) Persons Under Disability. — If the taxpayer is unable to make h
the taxpayer is unable to make own return, the return may b
his own return, the return may be made by his duly authorized agen
made by his duly authorized or representative or by th
agent or representative or by the guardian or other person charge
guardian or other person charged with the care of his person o
with the care of his person or property, the principal and h
property, the principal and his representative or guardia
representative or guardian assuming the responsibility o
assuming the responsibility of making the return and incurrin
making the return and incurring penalties provided for erroneous
penalties provided for erroneous, false or fraudulent returns.
false or fraudulent returns. (G) Signature Presumed Correc
— The fact that an individual
(G) Signature Presumed Correct. name is signed to a filed retur
— The fact that an individual's shall be prima facie evidence fo
name is signed to a filed return all purposes that the return wa
shall be prima facie evidence for actually signed by him.
all purposes that the return was
actually signed by him.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Substituted Filing of SEC. 51-A.

Income Tax Returns by
Employees Receiving Individual taxpayers receiving
Purely Compensation purely compensation income,
Income regardless of amount, from only
one employer in the Philippines
for the calendar year, the income
tax of which has been withheld
correctly by the said employer
(tax due equals tax withheld) shall
not be required to file an annual
income tax return. The certificate
of withholding filed by the
respective employers, duly
stamped 'received' by the BIR,
shall be tantamount to the
substituted filing of income tax
returns by said employees.
(added by Sec. 14, R.A. No.
10963, December 19, 2017)
Corporation Returns
SEC. 52. SEC. 52.
(A) Requirements. — Every (A) Requirements. — Ever

corporation subject to the tax corporation subject to the ta
herein imposed, except foreign herein imposed, except foreig
corporations not engaged in trade corporations not engaged in trad
or business in the Philippines, or business in the Philippines, sha
shall render, in duplicate, a true render, in duplicate, a true an
and accurate quarterly income tax accurate quarterly income ta
return and final or adjustment return and final or adjustmen
return in accordance with the return in accordance with th
provisions of Chapter XII of this provisions of Chapter XII of th
Title. The income tax return shall Title. The return shall be filed b
consist of a maximum of four (4) the president, vice-president o
pages in paper form or electronic other principal officer, and shall b
form, be filed by the president, sworn to by such officer and by th
vice-president or other principal treasurer or assistant treasurer.
officer, shall be sworn to by such
officer and by the treasurer or
assistant treasurer, and shall only
contain the following information:
(1) Corporate profile and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
information;
(2) Gross sales, receipts or

income from services rendered,
or conduct of trade or business,
except income subject to final tax
as provided under this Code;
(3) Allowable deductions under

this Code;
(4) Taxable income as defined in

Section 31 of this Code; and
(5) Income tax due and payable.
Provided, That the foregoing

provisions shall not affect the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
implementation of Republic Act
No. 10708 or TIMTA.
No. 10963, December 19, 2017)
(B) Taxable Year of Corporation
(B) Taxable Year of Corporation. — A corporation may emplo
— A corporation may employ either calendar year or fiscal yea
either calendar year or fiscal year as a basis for filing its annua
as a basis for filing its annual income tax return: Provided, Tha
income tax return: Provided, That the corporation shall not chang
the corporation shall not change the accounting period employe
the accounting period employed without prior approval from th
without prior approval from the Commissioner in accordance wit
Commissioner in accordance with the provisions of Section 47 of th
the provisions of Section 47 of Code.
this Code.
(C) Return of Corporatio

(C) Return of Corporation Contemplating Dissolution o
Contemplating Dissolution or Reorganization. — Ever
Reorganization. — Every corporation shall, within thirty (30
corporation shall, within thirty (30) days after the adoption by th
days after the adoption by the corporation of a resolution or pla
corporation of a resolution or plan for its dissolution, or for th
for its dissolution, or for the liquidation of the whole or any pa
liquidation of the whole or any of its capital stock, including
part of its capital stock, including corporation which has bee
a corporation which has been notified of possible involuntar
notified of possible involuntary dissolution by the Securities an
dissolution by the Securities and Exchange Commission, or for it
Exchange Commission, or for its reorganization, render a correc
reorganization, render a correct return to the Commissione
return to the Commissioner, verified under oath, setting fort
verified under oath, setting forth the terms of such resolution o
the terms of such resolution or plan and such other information a
plan and such other information the Secretary of Finance, upo
as the Secretary of Finance, upon recommendation of th
recommendation of the Commissioner, shall, by rules an
Commissioner, shall, by rules and regulations, prescribe.
regulations, prescribe.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The dissolving or reorganizing The dissolving or reorganizin

corporation shall, prior to the corporation shall, prior to th
issuance by the Securities and issuance by the Securities an
Exchange Commission of the Exchange Commission of th
Certificate of Dissolution or Certificate of Dissolution o
Reorganization, as may be Reorganization, as may be define
defined by rules and regulations by rules and regulations prescribe
prescribed by the Secretary of by the Secretary of Finance, upo
Finance, upon recommendation recommendation of th
of the Commissioner, secure a Commissioner, secure a certificat
certificate of tax clearance from of tax clearance from
the Bureau of Internal Revenue of Internal Revenue whic
which certificate shall be certificate shall be submitted to th
submitted to the Securities and Securities and Exchang
Exchange Commission. Commission.
(D) Return on Capital Gains

(D) Return on Capital Gain
Realized from Sale of Shares of
Realized from Sale of Shares o
Stock not Traded in the Local
Stock not Traded in the Loca
Stock Exchange. — Every
Stock Exchange. — Ever
corporation deriving capital gains
corporation deriving capital
from the sale or exchange of
from the sale or exchange o
shares of stock not traded thru a
shares of stock not traded thru
local stock exchange as
local stock exchange a
prescribed under Sections 24(C),
prescribed under Sections 24(C
25(A)(3), 27(E)(2), 28(A)(8)(c)
25(A)(3), 27(E)(2), 28(A)(8)(c) an
and 28(B)(5)(c), shall file a return
28(B)(5)(c), shall file a retur
within thirty (30) days after each
within thirty (30) days after eac
transaction and a final
transaction and a fina
consolidated return of all
consolidated return of a
transactions during the taxable
transactions during the taxabl
year on or before the fifteenth
year on or before the fifteent
(15th) day of the fourth (4th)
(15th) day of the fourth (4th
month following the close of the
month following the close of th
taxable year.
taxable year.
Extension of Time to File SEC. 53. The Commissioner may, SEC. 53. The Commissioner may
Returns in meritorious cases, grant a in meritorious cases, grant
reasonable extension of time for reasonable extension of time fo
filing returns of income (or final filing returns of income (or fina
and adjustment returns in case of and adjustment returns in case o
corporations), subject to the corporations), subject to th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
provisions of Section 56 of this provisions of Section 56 of th
Code. Code.
Returns of Receivers, SEC. 54. In cases wherein SEC. 54. In cases wherei
Trustees in Bankruptcy or receivers, trustees in bankruptcy receivers, trustees in bankruptc
Assignees or assignees are operating the or assignees are operating th
property or business of a property or business of
corporation, subject to the tax corporation, subject to the ta
imposed by this Title, such imposed by this Title, suc
receivers, trustees or assignees receivers, trustees or assignee
shall make returns of net income shall make returns of net incom
as and for such corporation, in the as and for such corporation, in th
same manner and form as such same manner and form as suc
organization is hereinbefore organization is hereinbefor
required to make returns, and any required to make returns, and an
tax due on the income as tax due on the income as returne
returned by receivers, trustees or by receivers, trustees or assignee
assignees shall be assessed and shall be assessed and collected i
collected in the same manner as the same manner as if assesse
if assessed directly against the directly against the organization
organizations of whose of whose businesses or propertie
businesses or properties they they have custody or control.
have custody or control.
Returns of General SEC. 55. Every general SEC. 55. Every genera
Professional Partnerships professional partnership shall file, professional partnership shall file
in duplicate, a return of its in duplicate, a return of its income
income, except income exempt except income exempt unde
under Section 32(B) of this Title, Section 32(B) of this Title, settin
setting forth the items of gross forth the items of gross incom
income and of deductions allowed and of deductions allowed by th
by this Title, and the names, Title, and the names, Taxpaye
Taxpayer Identification Numbers Identification Numbers (TIN
(TIN), addresses and shares of addresses and shares of each o
each of the partners. the partners.
Payment and Assessment

SEC. 56. SEC. 56.
of Income Tax for
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Individuals and (A) Payment of Tax. — (A) Payment of Tax. —
Corporations
(1) In General. — The total (1) In General. — The total amoun
amount of tax imposed by this of tax imposed by this Title sha
Title shall be paid by the person be paid by the person subjec
subject thereto at the time the thereto at the time the return
return is filed. In the case of filed. In the case of tramp vessels
tramp vessels, the shipping the shipping agents and/or th
agents and/or the husbanding husbanding agents, and in the
agents, and in their absence, the absence, the captains thereof ar
captains thereof are required to required to file the return herei
file the return herein provided and provided and pay the tax du
pay the tax due thereon before thereon before their departure
their departure. Upon failure of Upon failure of the said agents o
the said agents or captains to file captains to file the return and pa
the return and pay the tax, the the tax, the Bureau of Customs
Bureau of Customs is hereby hereby authorized to hold th
authorized to hold the vessel and vessel and prevent its departur
prevent its departure until proof of until proof of payment of the tax
payment of the tax is presented or presented or a sufficient bond
a sufficient bond is filed to answer filed to answer for the tax due.
for the tax due.
(2) Installment of Payment. — (2) Installment Payment

When a tax due is in excess of the tax due is in excess of Tw
Two thousand pesos (P2,000), thousand pesos (P2,000
the taxpayer other than a taxpayer other than a corporatio
corporation, may elect to pay the may elect to pay the tax in two (2
tax in two (2) equal installments, equal installments in which case
in which case, the first installment the first installment shall be paid a
shall be paid at the time the return the time the return is filed and th
is filed and the second installment second installment, on or befor
on or before October 15 following July 15 following the close of th
the close of the calendar year, if calendar year. If any installment
any installment is not paid on or not paid on or before the date fixe
before the date fixed for its for its payment, the whole amoun
payment, the whole amount of the of the tax unpaid becomes du
tax unpaid becomes due and and payable, together with th
payable together with the delinquency penalties.
delinquency penalties. (as
10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Payment of Capital Gains Tax. (3) Payment of Capital Gains Tax
— The total amount of tax — The total amount o
imposed and prescribed under imposed and prescribed unde
Sections 24(C), 24(D), 27(E)(2), Sections 24(C), 24(D), 27(E)(2
28(A)(8)(c) and 28(B)(5)(c) shall 28(A)(8)(c) and 28(B)(5)(c) sha
be paid on the date the return be paid on the date the retur
prescribed therefor is filed by the prescribed therefor is filed by th
person liable thereto: Provided, person liable thereto: Provided
That if the seller submits proof of That if the seller submits proof o
his intention to avail himself of the his intention to avail himself of th
benefit of exemption of capital benefit of exemption of capita
gains under existing special laws, gains under existing special laws
no such payments shall be no such payments shall b
required: Provided, further, That required: Provided, further, That i
in case of failure to qualify for case of failure to qualify fo
exemption under such special exemption under such special law
laws and implementing rules and and implementing rules an
regulations, the tax due on the regulations, the tax due on th
gains realized from the original gains realized from the origina
transaction shall immediately transaction shall immediate
become due and payable, and become due and payable, an
subject to the penalties subject to the penalties prescribe
prescribed under applicable under applicable provisions of th
provisions of this Code: Provided, Code: Provided, finally, That if th
finally, That if the seller, having seller, having paid the tax, submit
paid the tax, submits such proof such proof of intent within six (6
of intent within six (6) months months from the registration of th
from the registration of the document transferring the rea
document transferring the real property, he shall be entitled to
property, he shall be entitled to a refund of such tax upon verificatio
refund of such tax upon of his compliance with th
verification of his compliance with requirements for such exemption.
the requirements for such
exemption.
In case the taxpayer elects and is In case the taxpayer elects and
qualified to report the gain by qualified to report the gain b
installments under Section 49 of installments under Section 49 o
this Code, the tax due from each this Code, the tax due from eac
installment payment shall be paid installment payment shall be pai
within thirty (30) days from the within thirty (30) days from th
receipt of such payments. receipt of such payments.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
No registration of any document No registration of any documen

transferring real property shall be transferring real property shall b
effected by the Register of Deeds effected by the Register of Deed
unless the Commissioner or his unless the Commissioner or h
duly authorized representative duly authorized representative ha
has certified that such transfer certified that such transfer ha
has been reported, and the tax been reported, and the tax herei
herein imposed, if any, has been imposed, if any, has been paid.
paid.
(B) Assessment and Payment o

(B) Assessment and Payment of
Deficiency Tax. — After the retur
Deficiency Tax. — After the return
is filed, the Commissioner sha
is filed, the Commissioner shall
examine it and assess the correc
examine it and assess the correct
amount of the tax. The tax o
amount of the tax. The tax or
deficiency income tax s
deficiency income tax so
discovered shall be paid upo
discovered shall be paid upon
notice and demand from th
notice and demand from the
Commissioner.
Commissioner.
As used in this Chapter, in res

As used in this Chapter, in
of a tax imposed by this Title, th
respect of a tax imposed by this
term 'deficiency' means:
Title, the term 'deficiency' means:
(1) The amount by which the ta
(1) The amount by which the tax
imposed by this Title exceeds th
imposed by this Title exceeds the
amount shown as the tax by th
amount shown as the tax by the
taxpayer upon his return; but th
taxpayer upon his return; but the
amount so shown on the retur
amount so shown on the return
shall be increased by the amo
shall be increased by the
previously assessed (or collecte
amounts previously assessed (or
without assessment) as
collected without assessment) as
deficiency, and decreased by th
a deficiency, and decreased by
amount previously abated
the amount previously abated,
credited, returned or otherwis
credited, returned or otherwise
repaid in respect of such tax; or
repaid in respect of such tax; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) If no amount is shown as th

(2) If no amount is shown as the tax by the taxpayer upon h
tax by the taxpayer upon his return, or if no return is made b
return, or if no return is made by the taxpayer, then the amount b
the taxpayer, then the amount by which the tax exceeds th
which the tax exceeds the amounts previously assessed (o
amounts previously assessed (or collected without assessment) as
collected without assessment) as deficiency; but such amount
a deficiency; but such amounts previously assessed or collecte
previously assessed or collected without assessment shall first b
without assessment shall first be decreased by the amount
decreased by the amounts previously abated, credited
previously abated, credited, returned or otherwise repaid i
returned or otherwise repaid in respect of such tax.
respect of such tax.
Withholding of Tax at
SEC. 57. SEC. 57.
Source
(A) Withholding of Final Tax on (A) Withholding of Final Tax o
Certain Incomes. — Subject to Certain Incomes. — Subject t
rules and regulations the rules and regulations the Secretar
Secretary of Finance may of Finance may promulgate, upo
promulgate, upon the the recommendation of th
recommendation of the Commissioner, requiring the filin
Commissioner, requiring the filing of income tax return by certai
of income tax return by certain income payees, the tax imposed o
income payees, the tax imposed prescribed by Sections 24(B)(1
or prescribed by Sections 24(B)(2), 24(C), 24(D)(1); 25(A)(2
24(B)(1), 24(B)(2), 24(C), 25(A)(3), 25(B), 25(C), 25(D
24(D)(1); 25(A)(2), 25(A)(3), 25(E); 27(D)(1), 27(D)(2
25(B), 25(C), 25(D), 25(E); 27(D)(3), 27(D)(5); 28(A)(4
27(D)(1), 27(D)(2), 27(D)(3), 28(A)(5), 28(A)(7)(a), 28(A)(7)(b
27(D)(5); 28(A)(4), 28(A)(5), 28(A)(7)(c), 28(B)(1), 28(B)(2
28(A)(7)(a), 28(A)(7)(b), 28(B)(3), 28(B)(4), 28(B)(5)(a
28(A)(7)(c), 28(B)(1), 28(B)(2), 28(B)(5)(b), 28(B)(5)(c); 33; an
28(B)(3), 28(B)(4), 28(B)(5)(a), 282 of this Code on specifie
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
28(B)(5)(b), 28(B)(5)(c); 33; and items of income shall be withhel
282 of this Code on specified by payor-corporation and/o
items of income shall be withheld person and paid in the sam
by payor-corporation and/or manner and subject to the sam
person and paid in the same conditions as provided in Sectio
manner and subject to the same 58 of this Code.
conditions as provided in Section
58 of this Code.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Withholding of Creditable Tax (B) Withholding of Creditable Ta

at Source. — The Secretary of at Source. — The Secretary o
Finance may, upon the Finance may, upon th
Commissioner, require the Commissioner, require th
withholding of a tax on the items withholding of a tax on the items o
of income payable to natural or income payable to natural o
juridical persons, residing in the juridical persons, residing in th
Philippines, by Philippines, b
payor-corporation/persons as payor-corporation/persons a
provided for by law, at the rate of provided for by law, at the rate o
not less than one percent (1%) not less than one percent (
but not more than thirty-two not more than thirty-two percen
percent (32%) thereof, which shall (32%) thereof, which shall b
be credited against the income credited against the income ta
tax liability of the taxpayer for the liability of the taxpayer for th
taxable year: Provided, That, taxable year.
beginning January 1, 2019, the
rate of withholding shall not be
less than one percent (1%) but
not more than fifteen percent
(15%) of the income payment. (as
10963, December 19, 2017)
(C) Tax-free Covenant Bonds
(C) Tax-free Covenant Bonds. — In any case where bonds
In any case where bonds, mortgages, deeds of trust or othe
mortgages, deeds of trust or other similar obligations of domestic o
similar obligations of domestic or resident foreign corporations
resident foreign corporations, contain a contract or provision b
contain a contract or provision by which the obligor agrees to pa
which the obligor agrees to pay any portion of the tax imposed i
any portion of the tax imposed in this Title upon the obligee or t
this Title upon the obligee or to reimburse the obligee for an
reimburse the obligee for any portion of the tax or to pay th
portion of the tax or to pay the interest without deduction for an
interest without deduction for any tax which the obligor may b
tax which the obligor may be required or permitted to pa
required or permitted to pay thereon or to retain therefrom
thereon or to retain therefrom under any law of the Philippines, o
under any law of the Philippines, any state or country, the obligo
or any state or country, the shall deduct and withhold a ta
obligor shall deduct and withhold equal to thirty percent (30%) o
a tax equal to thirty percent (30%) interest or other payments upo
of the interest or other payments those bonds, mortgages, deeds o
upon those bonds, mortgages, trust or other obligations, whethe
deeds of trust or other the interest or other payments ar
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
deeds of trust or other the interest or other payments ar
obligations, whether the interest payable annually or at shorter o
or other payments are payable longer periods, and whether th
annually or at shorter or longer bonds, securities or obligation
periods, and whether the bonds, had been or will be issued o
securities or obligations had been marketed, and the interest or othe
or will be issued or marketed, and payment thereon paid, within o
the interest or other payment without the Philippines, if th
thereon paid, within or without the interest or other payment
Philippines, if the interest or other payable to a nonresident alien o
payment is payable to a to a citizen or resident of th
nonresident alien or to a citizen or Philippines.
resident of the Philippines.
Returns and Payment of

SEC. 58. SEC. 58.
Taxes Withheld at Source
(A) Quarterly Returns and (A) Quarterly Returns an
Payments of Taxes Withheld. — Payments of Taxes Withheld
Taxes deducted and withheld Taxes deducted and withhel
under Section 57 by withholding under Section 57 by wi
agents shall be covered by a agents shall be covered by
return and paid to, except in return and paid to, except in case
cases where the Commissioner where the Commissione
otherwise permits, an authorized otherwise permits, an authorize
agent bank, Revenue District agent bank, Revenue Distric
Officer, Collection Agent, or duly Officer, Collection Agent, or du
authorized Treasurer of the city or authorized Treasurer of the city o
municipality where the withholding municipality where the wi
agent has his legal residence or agent has his legal residence o
principal place of business, or principal place of business, o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
where the withholding agent is a where the withholding agent is
corporation, where the principal corporation, where the principa
office is located. office is located.
The taxes deducted and withheld

by the withholding agent shall be The taxes deducted and withhel
held as a special fund in trust for by the withholding agent shall b
the government until paid to the held as a special fund in tru
collecting officers. the government until paid to th
collecting officers.
The return for final withholding tax
shall be filed and the payment The return for final withholding ta
made within twenty-five (5) days shall be filed and the paymen
from the close of each calendar made within twenty-five (5) day
quarter, while the return for from the close of each calenda
creditable withholding taxes shall quarter, while the return fo
be filed and the payment made creditable withholding taxes sha
not later than the last day of the be filed and the payment made no
month following the close of the later than the last day of the mont
quarter during which withholding following the close of the quarte
was made: Provided, That the during which withholding wa
Commissioner, with the approval made: Provided, That th
of the Secretary of Finance, may Commissioner, with the approva
require these withholding agents of the Secretary of Finance, ma
to pay or deposit the taxes require these withholding ag
deducted or withheld at more pay or deposit the taxes deducte
frequent intervals when or withheld at more frequen
necessary to protect the interest intervals when necessary t
of the government. protect the interest of th
government.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Statement of Income

Payments Made and Taxes (B) Statement of Incom
Withheld. — Every withholding Payments Made and Taxe
agent required to deduct and Withheld. — Every withholdin
withhold taxes under Section 57 agent required to d
shall furnish each recipient, in withhold taxes under Section 5
respect to his or its receipts shall furnish each recipient, i
during the calendar quarter or respect to his or its receipts durin
year, a written statement showing the calendar quarter or year,
the income or other payments written statement showing th
made by the withholding agent income or other payments mad
during such quarter or year, and by the withholding agent durin
the amount of the tax deducted such quarter or yea
and withheld therefrom, amount of the tax deducted an
simultaneously upon payment at withheld therefrom, simultaneous
the request of the payee, but not upon payment at the request of th
later than the twentieth (20th) day payee, but not later than th
following the close of the quarter twentieth (20th) day following th
in the case of corporate payee, or close of the quarter in the case o
not later than March 1 of the corporate payee, or not later tha
following year in the case of March 1 of the following year in th
individual payee for creditable case of individual payee fo
withholding taxes. For final creditable withholding taxes. Fo
withholding taxes, the statement final withholding taxes, th
should be given to the payee on statement should be given to th
or before January 31 of the payee on or before January 31 o
succeeding year. the succeeding year.
(C) Annual Information Return. —

Every withholding agent required (C) Annual Information Return
to deduct and withhold taxes Every withholding agent require
under Section 57 shall submit to to deduct and withhold taxes unde
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
under Section 57 shall submit to to deduct and withhold taxes unde
the Commissioner an annual Section 57 shall submit to th
information return containing the Commissioner an annua
list of payees and income information return containing th
payments, amount of taxes list of payees and incom
withheld from each payee and payments, amount of taxe
such other pertinent information withheld from each payee an
as may be required by the such other pertinent information
Commissioner. In the case of final may be required by th
withholding taxes, the return shall Commissioner. In the case of fina
be filed on or before January 31 withholding taxes, the return sha
of the succeeding year, and for be filed on or before January 31 o
creditable withholding taxes, not the succeeding year, and fo
later than March 1 of the year creditable withholding taxes, no
following the year for which the later than March 1 of the yea
annual report is being submitted. following the year for which
This return, if made and filed in annual report is being submitted
accordance with the rules and This return, if made and filed i
regulations approved by the accordance with the rules an
Secretary of Finance, upon regulations approved by th
Commissioner, shall be sufficient recommendation of th
compliance with the requirements Commissioner, shall be sufficien
of Section 68 of this Title in compliance with the requirement
respect to the income payments. of Section 68 of this Title i
respect to the income payments.
The Commissioner may, by rules
and regulations, grant to any The Commissioner may, by rule
withholding agent a reasonable and regulations, grant to an
extension of time to furnish and withholding agent a reasonabl
submit the return required in this extension of time to furnish an
Subsection. submit the return required in th
Subsection.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Income of Recipient. —

Income upon which any creditable (D) Income of Reci
tax is required to be withheld at Income upon which any creditabl
source under Section 57 shall be tax is required to be withheld a
included in the return of its source under Section 57 shall b
recipient but the excess of the included in the return of it
amount of tax so withheld over recipient but the excess of th
the tax due on his return shall be amount of tax so withheld over th
refunded to him subject to the tax due on his return shall b
provisions of Section 204; if the refunded to him sub
income tax collected at source is provisions of Section 204; if th
less than the tax due on his income tax collected at source
return, the difference shall be paid less than the tax due on his return
in accordance with the provisions the difference shall be paid i
of Section 56. accordance with the provisions o
Section 56.
All taxes withheld pursuant to the

provisions of this Code and its All taxes withheld pursuant to th
implementing rules and provisions of this Code a
regulations are hereby considered implementing rules and regulation
trust funds and shall be are hereby considered trust fund
maintained in a separate account and shall be maintained in
and not commingled with any separate account and no
other funds of the withholding commingled with any other fund
agent. of the withholding agent.
(E) Registration with Register of
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Deeds. — No registration of any (E) Registration with Register o
document transferring real Deeds. — No registration of an
property shall be effected by the document transferring rea
Register of Deeds unless the property shall be effected by th
Commissioner or his duly Register of Deeds unless th
authorized representative has Commissioner or his du
certified that such transfer has authorized representative ha
been reported, and the capital certified that such transfer ha
gains or creditable withholding been reported, and the capita
tax, if any, has been paid: gains or creditable withholding tax
Provided, however, That the if any, has been paid: Provided
information as may be required by however, That the information a
rules and regulations to be may be required by rules an
prescribed by the Secretary of regulations to be prescribed by th
Finance, upon recommendation Secretary of Finance, upo
of the Commissioner, shall be recommendation of th
annotated by the Register of Commissioner, shall be annotate
Deeds in the Transfer Certificate by the Register of Deeds in th
of Title or Condominium Transfer Certificate o
Certificate of Title: Provided, Condominium Certificate of Title
further, That in cases of transfer Provided, further, That in cases o
of property to a corporation, transfer of property to
pursuant to a merger, corporation, pursuant to a merge
consolidation or reorganization, consolidation or reorganization
and where the law allows deferred and where the law allows deferre
recognition of income in recognition of income i
accordance with Section 40, the accordance with Sectio
information as may be required by information as may be required b
of the Commissioner, shall be the Commissioner, shall b
annotated by the Register of annotated by the Register o
Deeds at the back of the Transfer Deeds at the back of the Transfe
Certificate of Title or Certificate of Title or Condomi
Condominium Certificate of Title Certificate of Title of the rea
of the real property involved: property involved: Provided, finally
Provided, finally, That any That any violation of this provisio
violation of this provision by the by the Register of Deeds shall b
Register of Deeds shall be subject to the penalties impose
subject to the penalties imposed under Section 269 of this Code.
under Section 269 of this Code.
The return for final and creditable

withholding taxes shall be filed
and the payment made not later
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
than the last day of the month
following the close of the quarter
during which the withholding was
made. (as amended by Sec. 18,
R.A. No. 10963, December 19,
2017)
Tax on Profits Collectible SEC. 59. The tax imposed under SEC. 59. The tax imposed unde
from Owner or Other this Title upon gains, profits, and this Title upon gains, profits, an
Persons income not falling under the income not falling under th
foregoing and not returned and foregoing and not returned an
paid by virtue of the foregoing or paid by virtue of the foregoing o
as otherwise provided by law shall as otherwise provided by law sha
be assessed by personal return be assessed by personal retur
under rules and regulations to be under rules and regulations to b
of the Commissioner. The intent the Commissioner. The intent an
and purpose of the Title is that all purpose of the Title is that a
gains, profits and income of a gains, profits and income of
taxable class, as defined in this taxable class, as defined in th
Title, shall be charged and Title, shall be charged an
assessed with the corresponding assessed with the correspondin
tax prescribed by this Title, and tax prescribed by this Title, an
said tax shall be paid by the said tax shall be paid by th
owners of such gains, profits and owners of such gains, profits an
income, or the proper person income, or the proper perso
having the receipt, custody, having the receipt, custody, contro
control or disposal of the same. or disposal of the same. Fo
For purposes of this Title, purposes of this Title, ownership o
ownership of such gains, profits such gains, profits and income o
and income or liability to pay the liability to pay the tax shall b
tax shall be determined as of the determined as of the year fo
year for which a return is required which a return is required to b
to be rendered. rendered.
CHAPTER X — ESTATES AND CHAPTER X — ESTATES AND

TRUSTS TRUSTS
Imposition of Tax
SEC. 60. SEC. 60.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) Application of Tax. — The tax (A) Application of Tax
imposed by this Title upon imposed by this Title upo
individuals shall apply to the individuals shall apply to th
income of estates or of any kind of income of estates or of any kind o
property held in trust, including: property held in trust, including:
(1) Income accumulated in trust (1) Income accumulated in trust fo

for the benefit of unborn or the benefit of unborn o
unascertained person or persons unascertained person or person
with contingent interests, and with contingent interests, an
income accumulated or held for income accumulated or held fo
future distribution under the terms future distribution under the term
of the will or trust; of the will or trust;
(2) Income which is to be (2) Income which is to b

distributed currently by the distributed currently by th
fiduciary to the beneficiaries, and fiduciary to the beneficiaries, an
income collected by a guardian of income collected by a guardian o
an infant which is to be held or an infant which is to be held o
distributed as the court may direct; distributed as the court may direct
(3) Income received by estates (3) Income received by estates o

of deceased persons during the deceased persons during th
period of administration or period of administration
settlement of the estate; and settlement of the estate; and
(4) Income which, in the discretion (4) Income which, in the discretio
of the fiduciary, may be either of the fiduciary, may be eithe
distributed to the beneficiaries or distributed to the beneficiaries o
accumulated. accumulated.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Exception. — The tax imposed (B) Exception. — The tax impose
by this Title shall not apply to by this Title shall not apply t
employee's trust which forms part employee's trust which forms pa
of a pension, stock bonus or of a pension, stock bonus o
profit-sharing plan of an employer profit-sharing plan of an employe
for the benefit of some or all of his for the benefit of some or all of h
employees (1) if contributions are employees (1) if contributions ar
made to the trust by such made to the trust by suc
employer, or employees, or both employer, or employees, or bot
for the purpose of distributing to for the purpose of distributing t
such employees the earnings and such employees the earnings an
principal of the fund accumulated principal of the fund accumulate
by the trust in accordance with by the trust in accordance wit
such plan, and (2) if under the such plan, and (2) if under the trus
trust instrument it is impossible, at instrument it is impossible, at an
any time prior to the satisfaction of time prior to the satisfaction of a
all liabilities with respect to liabilities with respect t
employees under the trust, for any employees under the trust, for an
part of the corpus or income to be part of the corpus or income to b
(within the taxable year or (within the taxable year o
thereafter) used for, or diverted to, thereafter) used for, or diverted to
purposes other than for the purposes other than for th
exclusive benefit of his exclusive benefit of his employees
employees: Provided, That any Provided, That any amoun
amount actually distributed to any actually distributed to an
employee or distributee shall be employee or distributee shall b
taxable to him in the year in which taxable to him in the year in whic
so distributed to the extent that it so distributed to the extent that
exceeds the amount contributed exceeds the amount contributed b
by such employee or distributee. such employee or distributee.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Computation and Payment. —

(C) Computation and Payment
(1) In General. — The tax shall be
computed upon the taxable (1) In General. — The tax shall b
income of the estate or trust and computed upon the taxable incom
shall be paid by the fiduciary, of the estate or trust and shall b
except as provided in Section 63 paid by the fiduciary, except a
(relating to revocable trusts) and provided in Section 63 (relating t
Section 64 (relating to income for revocable trusts) and Section 6
the benefit of the grantor). (relating to income for the benef
of the grantor).
(2) Consolidation of Income of

(2) Consolidation of Income of Tw
Two or More Trusts. — Where, in
or More Trusts. — Where, in th
the case of two or more trusts,
case of two or more trusts, th
the creator of the trust in each
creator of the trust in eac
instance is the same person, and
instance is the same person, an
the beneficiary in each instance is
the beneficiary in each instance
the same, the taxable income of
the same, the taxable income of a
all the trusts shall be consolidated
the trusts shall be consolidate
and the tax provided in this
and the tax provided in this Sectio
Section computed on such
computed on such consolidate
consolidated income, and such
income, and such propo
proportion of said tax shall be
said tax shall be assessed an
assessed and collected from each
collected from each trustee whic
trustee which the taxable income
the taxable income of the trus
of the trust administered by him
administered by him bears to th
bears to the consolidated income
consolidated income of the severa
of the several trusts.
trusts.
Taxable Income
SEC. 61. The taxable income of SEC. 61. The taxable income o
the estate or trust shall be the estate or trust shall b
computed in the same manner computed in the same manner an
and on the same basis as in the on the same basis as in the
case of an individual, except that: of an individual, except that:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) There shall be allowed as a (A) There shall be allowed as
deduction in computing the deduction in computing the taxabl
taxable income of the estate or income of the estate or trust th
trust the amount of the income of amount of the income of the estat
the estate or trust for the taxable or trust for the taxable year whic
year which is to be distributed is to be distributed currently by th
currently by the fiduciary to the fiduciary to the beneficiaries, an
beneficiaries, and the amount of the amount of the income collecte
the income collected by a by a guardian of an infant which
guardian of an infant which is to to be held or distributed as th
be held or distributed as the court court may direct, but the amoun
may direct, but the amount so so allowed as a deduction shall b
allowed as a deduction shall be included in computing the taxabl
included in computing the taxable income of the benefici
income of the beneficiaries, whether distributed to them or no
whether distributed to them or not. Any amount allowed as
Any amount allowed as a deduction under this Subsectio
deduction under this Subsection shall not be allowed as a deductio
shall not be allowed as a under Subsection (B) of th
deduction under Subsection (B) of Section in the same or an
this Section in the same or any succeeding taxable year.
succeeding taxable year.
(B) In the case of income (B) In the case of incom

received by estates of deceased received by estates of decease
persons during the period of persons during the period o
administration or settlement of the administration or settlement of th
estate, and in the case of income estate, and in the case of incom
which, in the discretion of the which, in the discretion of th
fiduciary, may be either distributed fiduciary, may be either distribute
to the beneficiary or accumulated, to the beneficiary or accumulated
there shall be allowed as an there shall be allowed as a
additional deduction in computing additional deduction in computin
the taxable income of the estate or the taxable income of the estate o
trust the amount of the income of trust the amount of the income o
the estate or trust for its taxable the estate or trust for its taxabl
year, which is properly paid or year, which is properly paid o
credited during such year to any credited during such year to an
legatee, heir or beneficiary but the legatee, heir or beneficiary but th
amount so allowed as a deduction amount so allowed as a deductio
shall be included in computing the shall be included in computing th
taxable income of the legatee, heir taxable income of the legatee, he
or beneficiary. or beneficiary.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) In the case of a trus

(C) In the case of a trust
administered in a foreign country
administered in a foreign country,
the deductions mentioned i
the deductions mentioned in
Subsections (A) and (B) of th
Subsections (A) and (B) of this
Section shall not be allowed
Section shall not be allowed:
Provided, That the amount of an
Provided, That the amount of any
income included in the return o
income included in the return of
said trust shall not be included i
said trust shall not be included in
computing the income of th
computing the income of the
beneficiaries.
beneficiaries.
Exemption Allowed to SEC. 62. SEC. 62. For the purpose of th

Estates and Trusts tax provided for in this Title, ther
(Repealed by Sec. 19, R.A. No. shall be allowed an exemption o
10963, December 19, 2017) Twenty thousand pesos (P20,000
from the income of the estate o
trust.
Revocable Trusts SEC. 63. Where at any time the SEC. 63. Where at any time th
power to revest in the grantor title power to revest in the grantor titl
to any part of the corpus of the to any part of the corpus of th
trust is vested (1) in the grantor trust is vested (1) in the granto
either alone or in conjunction with either alone or in conjunction wit
any person not having a any person not having
substantial adverse interest in the substantial adverse interest in th
disposition of such part of the disposition of such part of th
corpus or the income therefrom, corpus or the income therefrom, o
or (2) in any person not having a (2) in any person not having
corpus or the income therefrom, corpus or the income therefrom
the income of such part of the the income of such part of the trus
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
trust shall be included in shall be included in computing th
computing the taxable income of taxable income of the grantor.
the grantor.
Income for Benefit of

SEC. 64. SEC. 64.
Grantor
(A) Where any part of the income (A) Where any part of the incom
of a trust (1) is, or in the discretion of a trust (1) is, or in the discretio
of the grantor or of any person not of the grantor or of any person no
having a substantial adverse having a substantial advers
interest in the disposition of such interest in the disposition of suc
part of the income may be held or part of the income may be held o
accumulated for future distribution accumulated for future distributio
to the grantor; or (2) may, or in the to the grantor; or (2) may, or in th
discretion of the grantor or of any discretion of the grantor or of an
person not having a substantial person not having a substantia
adverse interest in the disposition adverse interest in the dispositio
of such part of the income, be of such part of the income, b
distributed to the grantor; or (3) is, distributed to the grantor; or (3) is
or in the discretion of the grantor or in the discretion of the granto
or of any person not having a or of any person not having
income may be applied to the income may be applied to th
payment of premiums upon payment of premiums upo
policies of insurance on the life of policies of insurance on the life o
the grantor, such part of the the grantor, such part of th
income of the trust shall be income of the trust shall b
included in computing the taxable included in computing the taxabl
income of the grantor. income of the grantor.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) As used in this Section, th
(B) As used in this Section, the
term 'in the discretion of th
term 'in the discretion of the
grantor' means in the discretion o
grantor' means in the discretion of
the grantor, either alone or i
the grantor, either alone or in
conjunction with any person no
conjunction with any person not
having a substantial advers
having a substantial adverse
interest in the disposition of th
interest in the disposition of the
part of the income in question.
part of the income in question.
Fiduciary Returns SEC. 65. Guardians, trustees, SEC. 65. Guardians, trustees
executors, administrators, executors, administrators
receivers, conservators and all receivers, conservators and a
persons or corporations, acting in persons or corporations, acting i
any fiduciary capacity, shall any fiduciary capacity, sha
render, in duplicate, a return of render, in duplicate, a return of th
the income of the person, trust or income of the person, trust o
estate for whom or which they estate for whom or which they ac
act, and be subject to all the and be subject to all the provision
provisions of this Title, which of this Title, which apply t
apply to individuals in case such individuals in case such person
person, estate or trust has a estate or trust has a gross incom
gross income of Twenty thousand of Twenty thousand peso
pesos (P20,000) or over during (P20,000) or over during th
the taxable year. Such fiduciary or taxable year. Such fiduciary o
person filing the return for him or person filing the return for him o
it, shall take oath that he has it, shall take oath that he ha
sufficient knowledge of the affairs sufficient knowledge of the affair
of such person, trust or estate to of such person, trust or estate t
enable him to make such return enable him to make such retur
and that the same is, to the best and that the same is, to the best o
of his knowledge and belief, true his knowledge and belief, true an
and correct, and be subject to all correct, and be subject to all th
the provisions of this Title which provisions of this Title which app
apply to individuals: Provided, to individuals: Provided, That
That a return made by or for one return made by or for one or two o
or two or more joint fiduciaries more joint fiduciaries filed in th
filed in the province where such province where such fiduciarie
fiduciaries reside; under such reside; under such rules an
rules and regulations as the regulations as the Secretary o
Secretary of Finance, upon Finance, upon recommendation o
recommendation of the the Commissioner, shall prescribe
Commissioner, shall prescribe, shall be a sufficient complianc
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
shall be a sufficient compliance with the requirements of th
with the requirements of this Section.
Section.
Fiduciaries Indemnified SEC. 66. Trustees, executors, SEC. 66. Trustees, executors
Against Claims for Taxes administrators and other administrators and othe
Paid fiduciaries are indemnified against fiduciaries are indemnified agains
the claims or demands of every the claims or demands of ever
beneficiary for all payments of beneficiary for all payments o
taxes which they shall be required taxes which they shall be require
to make under the provisions of to make under the provisions o
this Title, and they shall have this Title, and they shall hav
credit for the amount of such credit for the amount of suc
payments against the beneficiary payments against the beneficiar
or principal in any accounting or principal in any accountin
which they make as such trustees which they make as such trustee
or other fiduciaries. or other fiduciaries.
CHAPTER XI — OTHER CHAPTER XI — OTHER INCOME

INCOME TAX REQUIREMENTS TAX REQUIREMENTS
Collection of Foreign SEC. 67. All persons, SEC. 67. All persons
Payments corporations, duly registered corporations, duly registere
general co-partnerships general co-partnership
(companias colectivas) (companias colectivas
undertaking for profit or otherwise undertaking for profit or otherwis
the collection of foreign payments the collection of foreign payment
of interests or dividends by of interests or dividends by mean
means of coupons, checks or bills of coupons, checks or bills o
of exchange shall obtain a license exchange shall obtain a licens
from the Commissioner, and shall from the Commissioner, and s
be subject to such rules and be subject to such rules an
regulations enabling the regulations enabling th
government to obtain the government to obtain th
information required under this information required under th
Title, as the Secretary of Finance, Title, as the Secretary of Finance
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
upon recommendation of the upon recommendation of th
Commissioner, shall prescribe. Commissioner, shall prescribe.
Information at Source as to SEC. 68. All persons, SEC. 68. All persons, corporation
Income Payments corporations or duly registered or duly registered co-partnership
co-partnerships (companias (companias colectivas
colectivas), in whatever capacity whatever capacity acting, includin
acting, including lessees or lessees or mortgagors of real o
mortgagors of real or personal personal property, trustees, actin
property, trustees, acting in any in any trust capacity, executors
trust capacity, executors, administrators, receivers
administrators, receivers, conservators and employee
conservators and employees making payment to anothe
making payment to another person, corporation or du
person, corporation or duly registered general co-partnershi
registered general co-partnership (compania colectiva), of interests
(compania colectiva), of interests, rents, salaries, wages, premiums
rents, salaries, wages, premiums, annuities, compensatio
annuities, compensations, remunerations, emoluments o
remunerations, emoluments or other fixed or determinable gains
other fixed or determinable gains, profits and income, other tha
profits and income, other than payment described in Section 69
payment described in Section 69, in any taxable year, or in the cas
in any taxable year, or in the case of such payments made by th
of such payments made by the Government of the Philippines, th
Government of the Philippines, officers or employees of
the officers or employees of the Government having information a
Government having information to such payments and required t
as to such payments and required make returns in regard thereto, ar
to make returns in regard thereto, authorized and required to rende
are authorized and required to a true and accurate return to th
render a true and accurate return Commissioner, under such rule
to the Commissioner, under such and regulations, and in such form
rules and regulations, and in such and manner as may be prescribe
form and manner as may be by the Secretary of Finance, upo
prescribed by the Secretary of recommendation of th
Finance, upon recommendation Commissioner, setting forth th
of the Commissioner, setting forth amount of such gains, profits an
the amount of such gains, profits income and the name and addres
and income and the name and of the recipient of such payments
address of the recipient of such Provided, That such returns sha
payments: Provided, That such be required, in the case o
returns shall be required, in the payments of interest upon bond
case of payments of interest upon and mortgages or deeds of trust o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
bonds and mortgages or deeds of other similar obligations o
trust or other similar obligations of corporations, and in the case o
corporations, and in the case of collections of items, not payable i
collections of items, not payable the Philippines, of interest upo
in the Philippines, of interest upon the bonds of foreign countries an
the bonds of foreign countries interest from the bonds an
and interest from the bonds and dividends from the stock of foreig
dividends from the stock of corporations by persons
foreign corporations by persons, corporations or duly registere
corporations or duly registered general co-partnership
general co-partnerships (companias colectivas
(companias colectivas), undertaking as a matter o
undertaking as a matter of business or for profit or otherwis
business or for profit or otherwise the collection of foreign payment
the collection of foreign payments of such interests or dividends b
of such interests or dividends by means of coupons or bills o
means of coupons or bills of exchange.
exchange.
Return of Information of SEC. 69. Every person, SEC. 69. Every person
Brokers corporation or duly registered corporation or duly registere
general co-partnership (compania general co-partnership (
colectiva), doing business as a colectiva), doing business as
broker in any exchange or board broker in any exchange or boar
or other similar place of business, or other similar place of business
shall, when required by the shall, when required by th
Commissioner, render a correct Commissioner, render a correc
return duly verified under oath, return duly verified under oath
under such rules and regulations under such rules and regulation
as the Secretary of Finance, upon as the Secretary of Finance, upo
Commissioner, may prescribe, Commissioner, may prescribe
showing the names of customers showing the names of customer
for whom such person, for whom such person, corporatio
corporation or duly registered or duly registered genera
general co-partnership (compania co-partnership (
colectiva) has transacted any colectiva) has transacted an
business, with such details as to business, with such details as t
the profits, losses or other the profits, losses or othe
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
information which the information which th
Commissioner, may require as to Commissioner, may require as t
each of such customers as will each of such customers as w
enable the Commissioner to enable the Commissioner t
determine whether all income tax determine whether all income ta
due on profits or gains of such due on profits or gains
customers has been paid. customers has been paid.
Returns of Foreign
SEC. 70. SEC. 70.
Corporations
(A) Requirements. — Under rules (A) Requirements. — Under rule
and regulations prescribed by the and regulations prescribed by th
Secretary of Finance, upon the Secretary of Finance, upon th
Commissioner, any attorney, Commissioner, any attorney
accountant, fiduciary, bank, trust accountant, fiduciary, bank, trus
company, financial institution or company, financial institution o
other person, who aids, assists, other person, who aids, assists
counsels or advises in, or with counsels or advises in, or wit
respect to, the formation, respect to, the formation
organization or reorganization of organization or reorganization o
any foreign corporation, shall, any foreign corporation, sha
within thirty (30) days thereafter, within thirty (30) days thereafte
file with the Commissioner a file with the Commissioner
return. return.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Form and Contents of Return
(B) Form and Contents of Return.
— Such return shall be in suc
— Such return shall be in such
form and shall set forth, unde
form and shall set forth, under
oath, in respect of each suc
oath, in respect of each such
corporation, to the full extent of th
corporation, to the full extent of
information within the posse
the information within the
or knowledge or under the contro
possession or knowledge or
of the person required to file th
under the control of the person
return, such information as th
required to file the return, such
information as the Secretary of
Commissioner, shall prescribe b
of the Commissioner, shall
rules and regulations as necessar
prescribe by rules and regulations
for carrying out the provisions
as necessary for carrying out the
this Title. Nothing in this Sectio
provisions of this Title. Nothing in
shall be construed to require th
this Section shall be construed to
divulging of privilege
require the divulging of privileged
communications between attorne
communications between attorney
and client.
and client.
Disposition of Income Tax

SEC. 71. After the assessment SEC. 71. After the assessmen
Returns, Publication of
shall have been made, as shall have been made, as provide
Lists of Taxpayers and
provided in this Title, the returns, in this Title, the returns, togethe
Filers
together with any corrections with any corrections thereof whic
thereof which may have been may have been made by th
made by the Commissioner, shall Commissioner, shall be filed in th
be filed in the Office of the Office of the Commissioner an
Commissioner and shall constitute shall constitute public re
public records and be open to be open to inspection as suc
inspection as such upon the order upon the order of the President o
of the President of the Philippines, the Philippines, under rules an
under rules and regulations to be regulations to be prescribed by th
prescribed by the Secretary of Secretary of Finance, upo
Finance, upon recommendation of recommendation of th
the Commissioner. Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The Commissioner may, in each The Commissioner may, in eac

year, cause to be prepared and year, cause to be prepared an
published in any newspaper the published in any newspaper th
lists containing the names and lists containing the names an
addresses of persons who have addresses of persons who hav
filed income tax returns. filed income tax returns.
Income tax returns of specif
Income tax returns of specific
taxpayers subject of a request fo
taxpayers subject of a request for
exchange of information by
exchange of information by a
foreign tax authority pursuant
foreign tax authority pursuant to
international convention o
an international convention or
agreement on tax matters to whic
agreement on tax matters to
the Philippines is a signatory or
which the Philippines is a
party of, shall be open t
signatory or a party of, shall be
inspection upon the order of th
open to inspection upon the order
President of the Philippines, unde
of the President of the
rules and regulations as may b
Philippines, under rules and
prescribed by the Secre
regulations as may be prescribed
by the Secretary of Finance, upon
the Commissioner.
Commissioner.
Suit to Recover Tax Based SEC. 72. When an assessment is SEC. 72. When an assessment
on False or Fraudulent made in case of any list, made in case of any list, statemen
Returns statement or return, which in the or return, which in the opinion o
opinion of the Commissioner was the Commissioner was false o
false or fraudulent or contained fraudulent or contained an
any understatement or understatement or undervaluation
undervaluation, no tax collected no tax collected under suc
under such assessment shall be assessment shall be recovered b
recovered by any suit, unless it is any suit, unless it is proved tha
proved that the said list, the said list, statement or retur
statement or return was not false was not false nor fraudulent an
nor fraudulent and did not contain did not contain an
any understatement or understatement or undervaluation
undervaluation; but this provision but this provision shall not apply t
shall not apply to statements or statements or returns made or t
returns made or to be made in be made in good faith regardin
good faith regarding annual annual depreciation of oil or ga
depreciation of oil or gas wells wells and mines.
and mines.
Distribution of Dividends or
SEC. 73. SEC. 73.
Assets by Corporations
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) Definition of Dividends. — The (A) Definition of Dividends
term 'dividends' when used in this term 'dividends' when used in th
Title means any distribution made Title means any distribution mad
by a corporation to its by a corporation to it
shareholders out of its earnings or shareholders out of its earnings o
profits and payable to its profits and payable to it
shareholders, whether in money or shareholders, whether in money o
in other property. in other property.
Where a corporation distributes all Where a corporation distributes a

of its assets in complete of its assets in complete liquidatio
liquidation or dissolution, the gain or dissolution, the gain realized o
realized or loss sustained by the loss sustained by the stockholde
stockholder, whether individual or whether individual or corporate,
corporate, is a taxable income or a a taxable income or a deductibl
deductible loss, as the case may loss, as the case may be.
be.
(B) Stock Dividend. — A stock (B) Stock Dividend. — A stoc

dividend representing the transfer dividend representing the t
of surplus to capital account shall of surplus to capital account sha
not be subject to tax. However, if a not be subject to tax. However, if
corporation cancels or redeems corporation cancels or redeem
stock issued as a dividend at such stock issued as a dividend at suc
time and in such manner as to time and in such manner as t
make the distribution and make the distribution an
cancellation or redemption, in cancellation or redemption, i
whole or in part, essentially whole or in part, esse
equivalent to the distribution of a equivalent to the distribution of
taxable dividend, the amount so taxable dividend, the amount s
distributed in redemption or distributed in redemption o
cancellation of the stock shall be cancellation of the stock shall b
considered as taxable income to considered as taxable income t
the extent that it represents a the extent that it represents
distribution of earnings or profits. distribution of earnings or profits.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Dividends Distributed are (C) Dividends Distributed ar
Deemed Made from Most Deemed Made from Most Recent
Recently Accumulated Profits. — Accumulated Profits
Any distribution made to the distribution made to th
shareholders or members of a shareholders or members of
corporation shall be deemed to corporation shall be deemed t
have been made from the most have been made from the mos
recently accumulated profits or recently accumulated profits o
surplus, and shall constitute a part surplus, and shall constitute a pa
of the annual income of the of the annual income of th
distributee for the year in which distributee for the year in whic
received. received.
(D) Net Income of a Partnershi

(D) Net Income of a Partnership
Deemed Constructively Receive
Deemed Constructively Received
by Partners. — The taxabl
by Partners. — The taxable
income declared by a partnershi
income declared by a partnership
for a taxable year which is subjec
for a taxable year which is subject
to tax under Section 27(A) of th
to tax under Section 27(A) of this
Code, after deducting th
Code, after deducting the
corporate income tax impose
corporate income tax imposed
therein, shall be deemed to hav
therein, shall be deemed to have
been actually or constructive
been actually or constructively
received by the partners in th
received by the partners in the
same taxable year and shall b
same taxable year and shall be
taxed to them in their individua
taxed to them in their individual
capacity, whether ac
capacity, whether actually
distributed or not.
distributed or not.
CHAPTER XII — QUARTERLY CHAPTER XII — QUARTERLY

CORPORATE INCOME TAX CORPORATE INCOME TAX
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
ANNUAL DECLARATION AND

ANNUAL DECLARATION AND
QUARTERLY PAYMENTS OF
QUARTERLY PAYMENTS OF
INCOME TAXES
INCOME TAXES
Declaration of Income Tax

SEC. 74. SEC. 74.
for Individuals
(A) In General. — Except as (A) In General. — Except a
otherwise provided in this Section, otherwise provided in this Section
every individual subject to income every individual subject to incom
tax under Sections 24 and 25(A) tax under Sections 24 and 25(A) o
of this Title, who is receiving this Title, who is receivin
self-employment income, whether self-employment income, whethe
it constitutes the sole source of it constitutes the sole source of h
his income or in combination with income or in combination wit
salaries, wages and other fixed or salaries, wages and other fixed o
determinable income, shall make determinable income, shall mak
and file a declaration of his and file a declaration of h
estimated income for the current estimated income for the curren
taxable year on or before May 15 taxable year on or before April 1
of the same taxable year. In of the same taxable year. I
general, self-employment income general, self-employment incom
consists of the earnings derived consists of the earnings derived b
by the individual from the practice the individual from the practice o
of profession or conduct of trade profession or conduct of trade o
or business carried on by him as business carried on by him as
a sole proprietor or by a sole proprietor or by a
partnership of which he is a of which he is a membe
member. Nonresident Filipino Nonresident Filipino citizens, wit
citizens, with respect to income respect to income from without th
from without the Philippines, and Philippines, and nonresident alien
nonresident aliens not engaged in not engaged in trade or busines
trade or business in the in the Philippines, are not require
Philippines, are not required to to render a declaration o
render a declaration of estimated estimated income tax. Th
income tax. The declaration shall declaration shall contain suc
contain such pertinent information pertinent information as th
as the Secretary of Finance, upon Secretary of Finance, upo
regulations prescribe. An regulations prescribe. An individua
individual may make amendments may make amendments of
of a declaration filed during the declaration filed during the taxabl
taxable year under the rules and year under the rules an
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Commissioner. (as amended by Commissioner.
Sec. 20, R.A. No. 10963,
December 19, 2017)
(B) Return and Payment of

Estimated Income Tax by (B) Return and Payment o
Individuals. — The amount of Estimated Income Tax b
estimated income as defined in Individuals. — The amount o
Subsection (C) with respect to estimated income as defined i
which a declaration is required Subsection (C) with respect t
under Subsection (A) shall be which a declaration is require
paid in four (4) installments. The under Subsection (A) shall be pai
first installment shall be paid at in four (4) installments. The firs
the time of declaration and the installment shall be paid at th
second and third shall be paid on time of the declaration and th
August 15 and November 15 of second and third shall be paid o
the current year, respectively. The August 15 and November 15 of th
fourth installment shall be paid on current year, respect
or before May 15 of the following fourth installment shall be paid o
calendar year when the final or before April 15 of the followin
adjusted income tax return is due calendar year when the fina
to be filed. (as amended by Sec. adjusted income tax return is du
20, R.A. No. 10963, December to be filed.
19, 2017)
(C) Definition of Estimated Tax. (C) Definition of Estimated Tax

— In the case of an individual, the In the case of an individual, th
term 'estimated tax' means the term 'estimated tax' means
amount which the individual amount which the individua
declared as income tax in his final declared as income tax in his fina
adjusted and annual income tax adjusted and annual income ta
return for the preceding taxable return for the preceding taxabl
year minus the sum of the credits year minus the sum of the credit
allowed under this Title against allowed under this Title against th
the said tax. If, during the current said tax. If, during the curren
taxable year, the taxpayer taxable year, the t
reasonably expects to pay a reasonably expects to pay a bigge
bigger income tax, he shall file an income tax, he shall file a
amended declaration during any amended declaration during an
interval of installment payment interval of installment paymen
dates. dates.
Declaration of Quarterly SEC. 75. Every corporation shall SEC. 75. Every corporation sha
Corporate Income Tax file in duplicate a quarterly file in duplicate a quarte
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
summary declaration of its gross summary declaration of its gros
income and deductions on a income and deductions on
cumulative basis for the cumulative basis for the precedin
preceding quarter or quarters quarter or quarters upon which th
upon which the income tax, as income tax, as provided in Title
provided in Title II of this Code, of this Code, shall be levied
shall be levied, collected and collected and paid. The tax s
paid. The tax so computed shall computed shall be decrea
be decreased by the amount of the amount of tax previously pai
tax previously paid or assessed or assessed during the precedin
during the preceding quarters and quarters and shall be paid not late
shall be paid not later than sixty than sixty (60) days from the clos
(60) days from the close of each of each of the first three (3
of the first three (3) quarters of quarters of the taxable yea
the taxable year, whether whether calendar or fiscal year.
calendar or fiscal year.
Final Adjustment Return

SEC. 76. Every corporation liable SEC. 76. Every corporation liabl
to tax under Section 27 shall file a to tax under Section 27 shall file
final adjustment return covering final adjustment return coverin
the total taxable income for the the total taxable income for th
preceding calendar or fiscal year. preceding calendar or fiscal yea
If the sum of the quarterly tax If the sum of the quarterly ta
payments made during the said payments made during the sai
taxable year is not equal to the taxable year is not equal to th
total tax due on the entire taxable total tax due on the entire taxabl
income of that year, the income of that year, th
corporation shall either: corporation shall either:
(A) Pay the balance of tax still (A) Pay the balance of tax still due
due; or or
(B) Carry-over the excess credit; (B) Carry-over the excess credi
or or
(C) Be credited or refunded with (C) Be credited or refunded wit

the excess amount paid, as the the excess amount paid, as th
case may be. case may be.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
In case the corporation is entitle
In case the corporation is entitled
to a tax credit or refund of th
to a tax credit or refund of the
excess estimated quarterly incom
excess estimated quarterly
taxes paid, the excess amoun
income taxes paid, the excess
shown on its final adjustmen
amount shown on its final
return may be carried over an
adjustment return may be carried
credited against the estimate
over and credited against the
quarterly income tax liabilities fo
estimated quarterly income tax
the taxable quarters of th
liabilities for the taxable quarters
succeeding taxable years. Onc
of the succeeding taxable years.
the option to carry-over and app
Once the option to carry-over and
the excess quarterly income ta
apply the excess quarterly income
against income tax due for th
tax against income tax due for the
taxable quarters of the succeedin
taxable quarters of the
taxable years has been made
succeeding taxable years has
such option shall be considere
been made, such option shall be
irrevocable for that taxable perio
considered irrevocable for that
and no application for cash refun
taxable period and no application
or issuance of a tax cred
for cash refund or issuance of a
certificate shall be allowe
tax credit certificate shall be
therefor.
allowed therefor.
Place and Time of Filing

SEC. 77. SEC. 77.
and Payment of Quarterly
Corporate Income Tax (A) Place of Filing. — Except as (A) Place of Filing. — Except a
the Commissioner otherwise the Commissioner otherwis
permits, the quarterly income tax permits, the quarterly income ta
declaration required in Section 75 declaration required in Section 7
and the final adjustment return and the final adjustment retur
required in Section 76 shall be required in Section 76 shall b
filed with the authorized agent filed with the authorized agen
banks or Revenue District Officer banks or Revenue District Office
or Collection Agent or duly or Collection Agent or du
municipality having jurisdiction municipality having jurisdictio
over the location of the principal over the location of the principa
office of the corporation filing the office of the corporation filing th
return or place where its main return or place where its mai
books of accounts and other data books of accounts and other dat
from which the return is prepared from which the return is prepare
are kept. are kept.
(B) Time of Filing the Income Tax (B) Time of Filing the I
Return. — The corporate quarterly Return. — The corporate quarter
declaration shall be filed within declaration shall be filed withi
sixty (60) days following the close sixty (60) days following the clos
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of each of the first three (3) of each of the first three (3
quarters of the taxable year. The quarters of the taxable year. Th
final adjustment return shall be final adjustment return shall b
filed on or before the fifteenth filed on or before the fifteent
(15th) day of April, or on or before (15th) day of April, or on or befor
the fifteenth (15th) day of the the fifteenth (15th) day of th
fourth (4th) month following the fourth (4th) month following th
close of the fiscal year, as the close of the fiscal year, as th
case may be. case may be.
(C) Time of Payment of th
(C) Time of Payment of the
Income Tax. — The income ta
Income Tax. — The income tax
due on the corporate quarter
due on the corporate quarterly
returns and the final adjustmen
returns and the final adjustment
income tax returns computed i
income tax returns computed in
accordance with Sections 75 an
accordance with Sections 75 and
76 shall be paid at the time th
76 shall be paid at the time the
declaration or return is filed in
declaration or return is filed in a
manner prescribed by th
manner prescribed by the
Commissioner.
Commissioner.
CHAPTER XIII — CHAPTER XIII — WITHHOLDING

WITHHOLDING ON WAGES ON WAGES
Definitions
SEC. 78. As used in this Chapter: SEC. 78. As used in this Chapter:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) Wages. — The term 'wages' (A) Wages. — The term 'wage
means all remuneration (other means all remuneration (othe
than fees paid to a public official) than fees paid to a public officia
for services performed by an for services performed by a
employee for his employer, employee for his employe
including the cash value of all including the cash value of a
remuneration paid in any medium remuneration paid in any medium
other than cash, except that such other than cash, except that suc
term shall not include term shall not includ
remuneration paid: remuneration paid:
(1) For agricultural labor paid (1) For agricultural labor pai
entirely in products of the farm entirely in products of the farm
where the labor is performed, or where the labor is performed, or
(2) For domestic service in a (2) For domestic service in

private home, or private home, or
(3) For casual labor not in the (3) For casual labor not in th
course of the employer's trade or course of the employer's trade o
business, or business, or
(4) For services by a citizen or (4) For services by a citizen o

resident of the Philippines for a resident of the Philippines for
foreign government or an foreign government or a
international organization. international organization.
If the remuneration paid by an If the remuneration paid by a

employer to an employee for employer to an employee fo
services performed during services performed during one-ha
one-half (1/2) or more of any (1/2) or more of any payroll perio
payroll period of not more than of not more than thirty-one (31
thirty-one (31) consecutive days consecutive days constitute
constitutes wages, all the wages, all the remuneration pai
remuneration paid by such by such employer to suc
employer to such employee for employee for such period shall b
such period shall be deemed to be deemed to be wages; but if th
wages; but if the remuneration remuneration paid by an employe
paid by an employer to an to an employee for service
employee for services performed performed during more tha
during more than one-half (1/2) of one-half (1/2) of any such payro
any such payroll period does not period does not constitute wages
constitute wages, then none of the then none of the remuneratio
remuneration paid by such paid by such employer to suc
employer to such employee for employee for such period shall b
such period shall be deemed to be deemed to be wages.
Copyright 2019
wages.
CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2019 234
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
wages.
(B) Payroll Period. — The term (B) Payroll Period. — The term
'payroll period' means a period for 'payroll period' means a period fo
which payment of wages is which payment of wages
ordinarily made to the employee ordinarily made to the employee b
by his employer, and the term his employer, and the term
'miscellaneous payroll period' 'miscellaneous payroll period
means a payroll period other than, means a payroll period other than
a daily, weekly, biweekly, a daily, weekly, biweekly
semi-monthly, monthly, quarterly, semi-monthly, monthly, quart
semi-annual, or annual period. semi-annual, or annual period.
(C) Employee. — The term (C) Employee. — The term

'employee' refers to any individual 'employee' refers to any individua
who is the recipient of wages and who is the recipient of wages an
includes an officer, employee or includes an officer, employee o
elected official of the Government elected official of the Governmen
of the Philippines or any political of the Philippines or any politica
subdivision, agency or subdivision, agency
instrumentality thereof. The term instrumentality thereof. The term
'employee' also includes an officer 'employee' also includes an office
of a corporation. of a corporation.
(D) Employer. — The term (D) Employer. — The term

'employer' means the person for 'employer' means the person fo
whom an individual performs or whom an individual performs o
performed any service, of performed any service, o
whatever nature, as the employee whatever nature, as the employe
of such person, except that: of such person, except that:
(1) If the person for whom the (1) If the person for whom th
individual performs or performed individual performs or performe
any service does not have control any service does not have contro
of the payment of the wages for of the payment of the wages fo
such services, the term 'employer' such services, the term 'employe
(except for the purpose of (except for the purpose o
Subsection A) means the person Subsection A) means the perso
having control of the payment of having control of the payment o
such wages; and such wages; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) In the case of a person payin
(2) In the case of a person paying
wages on behalf of a nonresiden
wages on behalf of a nonresident
alien individual, foreign partnershi
alien individual, foreign
or foreign corporation not engage
partnership or foreign corporation
in trade or business within th
not engaged in trade or business
Philippines, the term 'employe
within the Philippines, the term
(except for the purp
'employer' (except for the purpose
Subsection A) means such person
of Subsection A) means such
person.
Income Tax Collected at

SEC. 79. SEC. 79.
Source
(A) Requirement of Withholding. (A) Requirement of Withholding
— Except in the case of a Except in the case of a minimum
minimum wage earner as defined wage earner as defined in Sectio
in Section 22(HH) of this Code, 22(HH) of this Code, ever
every employer making payment employer making payment o
of wages shall deduct and wages shall deduct and withhol
withhold upon such wages a tax upon such wages a tax determine
determined in accordance with in accordance with the rules an
the rules and regulations to be regulations to be prescribed by th
prescribed by the Secretary of Secretary of Finance, upo
of the Commissioner. Commissioner.
(B) Tax Paid by Recipient. — If (B) Tax Paid by Recipient

the employer, in violation of the employer, in violation of th
provisions of this Chapter, fails to provisions of this Chapter, fails t
deduct and withhold the tax as deduct and withhold the tax a
required under this Chapter, and required under this Chapter, an
thereafter the tax against which thereafter the tax against whic
such tax may be credited is paid, such tax may be credited is paid
the tax so required to be the tax so required to be deducte
deducted and withheld shall not and withheld shall not be collec
be collected from the employer; from the employer; but th
but this Subsection shall in no Subsection shall in no case reliev
case relieve the employer from the employer from liability for an
liability for any penalty or addition penalty or addition to the ta
to the tax otherwise applicable in otherwise applicable in respect o
respect of such failure to deduct such failure to deduct an
and withhold. withhold.
(C) Refunds or Credits. — (C) Refunds or Credits

of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Employer. — When there has (1) Employer. — When th

been an overpayment of tax been an overpayment of tax unde
under this Section, refund or this Section, refund or credit sha
credit shall be made to the be made to the employer only t
employer only to the extent that the extent that the amount of suc
the amount of such overpayment overpayment was not deducte
was not deducted and withheld and withheld hereunder by th
hereunder by the employer. employer.
(2) Employees. — The amount (2) Employees. — The amoun

deducted and withheld under this deducted and withheld under th
Chapter during any calendar year Chapter during any calendar yea
shall be allowed as a credit to the shall be allowed as a credit to th
recipient of such income against recipient of such income agains
the tax imposed under Section the tax imposed under Sectio
24(A) of this Title. Refunds and 24(A) of this Title. Refunds an
credits in cases of excessive credits in cases of excessiv
withholding shall be granted withholding shall be granted unde
under rules and regulations rules and regulations promulgate
promulgated by the Secretary of by the Secretary of Finance, upo
Any excess of the taxes withheld Any excess of the taxes withhel
over the tax due from the over the tax due from the taxpaye
taxpayer shall be returned or shall be returned or credited withi
credited within three (3) months three (3) months from the fifteent
from the fifteenth (15th) day of (15th) day of April. Refunds o
April. Refunds or credits made credits made after such time sha
after such time shall earn interest earn interest at the rate of s
at the rate of six percent (6%) per percent (6%) per annum, startin
annum, starting after the lapse of after the lapse of the three-mont
the three-month period to the date period to the date the refund o
the refund of credit is made. credit is made.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Refunds shall be made upon Refunds shall be made upo
warrants drawn by the warrants drawn by th
Commissioner or by his duly Commissioner or by his du
authorized representative without authorized representative withou
the necessity of counter-signature the necessity of counter-signatur
by the Chairman, Commission on by the Chairman, Commission o
Audit or the latter's duly Audit or the latter's duly authorize
authorized representative as an representative as an exception t
exception to the requirement the requirement prescribed b
prescribed by Section 49, Chapter Section 49, Chapter 8, Subtitle B
8, Subtitle B, Title I of Book V of Title I of Book V of Executiv
Executive Order No. 292, Order No. 292, otherwise know
otherwise known as the as the Administrative Code o
Administrative Code of 1987. 1987.
(D) Personal Exemptions
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) In General. — Unles

otherwise provided by th
Chapter, the personal an
additional exemptions applicabl
under this Chapter
determined in accordance with th
main provisions of this Title.
(2) Exemption Certificates
(a) When to File. — On or befor

the date of commencement o
employment with an employer, th
employee shall furnish th
employer with a signed withho
exemption certificate relating to th
personal and additiona
exemptions to which he is entitled
(b) Change of Status. — In case o

change of status of an employe
as a result of which he would b
entitled to a lesser or greate
amount of exempti
employee shall, within ten (10
days from such change, file wit
the employer a new withholdin
exemption certificate reflecting th
change.
(c) Use of Certificates

certificates filed hereunder shall b
used by the employer in th
determination of the amount o
taxes to be withheld.
(d) Failure to Furnish Certificate

— Where an employee, in violatio
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
— Where an employee, in violatio
of this Chapter, either fails o
refuses to file a withholdin
exemption certificate, the employe
shall withhold the taxes prescribe
under the schedule for zer
exemption of the withholding ta
table determined pursuant t
Subsection (A) hereof.
(D) Withholding on Basis of
Average Wages. — The (E) Withholding on Basis o
Commissioner may, under rules Average Wages. — Th
and regulations promulgated by Commissioner may, under rule
the Secretary of Finance, and regulations promulgated b
authorize employers to: the Secretary of Finance
authorize employers to:
(1) estimate the wages which will
be paid to an employee in any (1) estimate the wages which w
quarter of the calendar year; be paid to an employee in an
quarter of the calendar year;
(2) determine the amount to be
deducted and withheld upon each (2) determine the amount to b
payment of wages to such deducted and withheld upon eac
employee during such quarter as payment of wages to suc
if the appropriate average of the employee during such quarter as
wages so estimated constituted the appropriate average of th
the actual wages paid; and wages so estimated constitute
the actual wages paid; and
(3) deduct and withhold upon any
payment of wages to such (3) deduct and withhold upon an
employee during such quarter payment of wages to suc
such amount as may be required employee during such quarte
to be deducted and withheld such amount as may be require
during such quarter without to be deducted and withheld durin
regard to this Subsection. such quarter without regard to th
Subsection.
(F) Husband and Wife

husband and wife each ar
recipients of wages, whether from
the same or from differen
employers, taxes to be withhel
shall be determined on th
following bases:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) The husband shall be deeme

the head of the family a
claimant of the additiona
exemption in respect to an
dependent children, unless h
explicitly waives his right in favor o
his wife in the withholdin
exemption certificate.
(2) Taxes shall be withheld from

the wages of the wife i
accordance with the schedule fo
zero exemption of the withholdin
tax table prescribed in Subsectio
(E) Nonresident Aliens. — Wages (D)(2)(d) hereof.
paid to nonresident alien
individuals engaged in trade or (G) Nonresident Aliens
business in the Philippines shall paid to nonresident alie
be subject to the provisions of this individuals engaged in trade o
Chapter. business in the Philippines shall b
subject to the provisions of th
Chapter.
(F) Year-end Adjustment. — On
or before the end of the calendar
year but prior to the payment of (H) Year-end Adjustment
the compensation for the last before the end of the calenda
payroll period, the employer shall year but prior to the payment o
determine the tax due from each the compensation for the las
employee on taxable payroll period, the employer sha
compensation income for the determine the tax due from eac
entire taxable year in accordance employee on taxabl
with Section 24(A). The difference compensation income for th
between the tax due from the entire taxable year in accordanc
employee for the entire year and with Section 24(A). The differenc
the sum of taxes withheld from between the tax due from th
January to November shall either employee for the entire year an
be withheld from his salary in the sum of taxes withheld from
December of the current calendar January to November shall eithe
year or refunded to the employee be withheld from his salary i
not later than January 25 of the December of the current calenda
succeeding year. year or refunded to the employe
not later than January 25 of th
(as amended by Sec. 21, R.A. succeeding year.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(as amended by Sec. 21, R.A. succeeding year.
No. 10963, December 19, 2017)
Liability for Tax

SEC. 80. SEC. 80.
(A) Employer. — The employer (A) Employer. — The employe

shall be liable for the withholding shall be liable for the withholdin
and remittance of the correct and remittance of the correc
amount of tax required to be amount of tax required to b
deducted and withheld under this deducted and withheld under th
Chapter. If the employer fails to Chapter. If the employer fails t
withhold and remit the correct withhold and remit the correc
amount of tax as required to be amount of tax as required to b
withheld under the provision of this withheld under the provision of th
Chapter, such tax shall be Chapter, such tax shall b
collected from the employer collected from the employe
together with the penalties or together with the penalties o
additions to the tax otherwise additions to the tax otherwis
applicable in respect to such applicable in respect to suc
failure to withhold and remit. failure to withhold and remit.
(B) Employee. — Where an (B) Employee. — Where a

employee fails or refuses to file employee fails or refuses to file th
the withholding exemption withholding exemption certificat
certificate or willfully supplies false or willfully supplies false o
or inaccurate information inaccurate information thereunde
thereunder, the tax otherwise the tax otherwise required to b
required to be withheld by the withheld by the employer shall b
employer shall be collected from collected from him includin
him including penalties or penalties or additions to the ta
additions to the tax from the due from the due date of remittanc
date of remittance until the date of until the date of payment. On th
payment. On the other hand, other hand, excess taxes withhel
excess taxes withheld made by made by the employer due to:
the employer due to:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) failure or refusal to file the (1) failure or refusal to file th

withholding exemption certificate; withholding exemption certificate
or or
(2) false and inaccurat
(2) false and inaccurate
information shall not be refunde
information shall not be refunded
to the employee but shall b
to the employee but shall be
forfeited in favor of th
forfeited in favor of the
Government.
Government.
Filing of Return and

SEC. 81. Except as the SEC. 81. Except as th
Payment of Taxes
Commissioner otherwise permits, Commissioner otherwise permits
Withheld
taxes deducted and withheld by taxes deducted and withheld b
the employer on wages of the employer on wages o
employees shall be covered by a employees shall be covered by
return and paid to an authorized return and paid to an authorize
agent bank, Collection Agent, or agent bank, Collection Agent, o
the duly authorized Treasurer of the duly authorized Treasurer o
the city or municipality where the the city or municipality where th
employer has his legal residence employer has his legal residenc
or principal place of business, or in or principal place of business, or i
case the employer is a case the employer is
corporation, where the principal corporation, where the principa
office is located. office is located.
The return shall be filed and the The return shall be filed and th
payment made within twenty-five payment made within twenty-fiv
(25) days from the close of each (25) days from the close of eac
calendar quarter: Provided, calendar quarter: Provided
however, That the Commissioner however, That the Commissione
may, with the approval of the may, with the approval of th
Secretary of Finance, require the Secretary of Finance, require th
employers to pay or deposit the employers to pay or deposit th
taxes deducted and withheld at taxes deducted and wit
more frequent intervals, in cases more frequent intervals, in case
where such requirement is where such requirement
deemed necessary to protect the deemed necessary to protect th
interest of the Government. interest of the Government.
The taxes deducted and withhel
The taxes deducted and withheld
by employers shall be held in
by employers shall be held in a
special fund in trust for th
special fund in trust for the
Government until the same ar
Government until the same are
paid to the said collecting officers.
paid to the said collecting officers.
Return and Payment in SEC. 82. If the employer is the SEC. 82. If the employer is th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Case of Government Government of the Philippines or Government of the Philippines o
Employees any political subdivision, agency any political subdivision, agency o
or instrumentality thereof, the instrumentality thereof, the retur
return of the amount deducted of the amount deducted an
and withheld upon any wage shall withheld upon any wage shall b
be made by the officer or made by the officer or empl
employee having control of the having control of the payment o
payment of such wage, or by any such wage, or by any officer o
officer or employee duly employee duly designated for th
designated for the purpose. purpose.
Statements and Returns

SEC. 83. (A) Requirements. — SEC. 83. (A) Requirements
Every employer required to deduct Every employer required to deduc
and withhold a tax shall furnish to and withhold a tax shall furnish t
each such employee in respect of each such employee in respect o
his employment during the his employment during th
calendar year, on or before calendar year, on or befor
January thirty-first (31st) of the January thirty-first (31st) of th
succeeding year, or if his succeeding year, or if h
employment is terminated before employment is terminated befor
the close of such calendar year, the close of such calendar year, o
on the same day of which the last the same day of which the las
payment of wages is made, a payment of wages is made,
written statement confirming the written statement confirming th
wages paid by the employer to wages paid by the employer t
such employee during the such employee during the calenda
calendar year, and the amount of year, and the amount of ta
tax deducted and withheld under deducted and withheld under th
this Chapter in respect of such Chapter in respect of such wages
wages. The statement required to The statement required to b
be furnished by this Section in furnished by this Section in respec
respect of any wage shall contain of any wage shall contain suc
such other information, and shall other information, and shall b
be furnished at such other time furnished at such other time and i
and in such form as the Secretary such form as the Secretary o
of Finance, upon the Finance, upon th
regulations, prescribe. regulations, prescribe.
(B) Annual Information Returns. — (B) Annual Information Returns

Every employer required to deduct Every employer required to deduc
and withhold the taxes in respect and withhold the taxes in respec
of the wages of his employees of the wages of his employee
shall, on or before January shall, on or before Januar
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
thirty-first (31st) of the succeeding thirty-first (31st) of the succeedin
year, submit to the Commissioner year, submit to the Commissione
an annual information return an annual information retur
containing a list of employees, the containing a list of employees, th
total amount of compensation total amount of compensatio
income of each employee, the income of each employee, the tota
total amount of taxes withheld amount of taxes withhel
therefrom during the year, therefrom during the yea
accompanied by copies of the accompanied by copies of th
statement referred to in the statement referred to in th
preceding paragraph, and such preceding paragraph, and suc
other information as may be other information as may b
deemed necessary. This return, if deemed necessary. This return,
made and filed in accordance with made and filed in accordance wit
rules and regulations promulgated rules and regulations promulgate
Commissioner, shall be sufficient Commissioner, shall be sufficien
compliance with the requirements compliance with the requirement
of Section 68 of this Title in of Section 68 of this Title i
respect of such wages. respect of such wages.
(C) Extension of Time
(C) Extension of Time. — The
Commissioner, under such rule
Commissioner, under such rules
and regulations as may b
and regulations as may be
promulgated by the Secretary o
Finance, may grant to an
Finance, may grant to any
employer a reasonable extensio
employer a reasonable extension
of time to furnish and submit th
of time to furnish and submit the
statements and returns require
statements and returns required
under this Section.
under this Section.
TITLE III — ESTATE AND TITLE III — ESTATE AND

DONOR'S TAXES DONOR'S TAXES
CHAPTER I — ESTATE TAX CHAPTER I — ESTATE TAX
Rates of Estate Tax

SEC. 84. There shall be levied, SEC. 84. There shall be levied
assessed, collected and paid assessed, collected and paid upo
upon the transfer of the net estate the transfer of the net estate a
as determined in accordance with determined in accordance wit
Sections 85 and 86 of every Sections 85 and 86 of ever
decedent, whether resident or decedent, whether resident o
nonresident of the Philippines, a nonresident of the Philippines,
tax at the rate of six percent (6%) tax based on the value of such ne
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
based on the value of such net estate, as computed in accordanc
estate. with the following schedule:
No. 10963, December 19, 2017)
If the net estate is:
Over But Not Over The Tax Shall Be Plus
Over
P200,000 Exempt
P200,000 500,000 0 5%
500,000 2,000,000 P15,000 8%
2,000,000 5,000,000 135,000 11%
5,000,000 10,000,000 465,000

5,000,000
10,000,000 And Over 1,215,000

10,000,000
Gross Estate
SEC. 85. The value of the gross SEC. 85. The value of the gros
estate of the decedent shall be estate of the decedent shall b
determined by including the value determined by including the valu
at the time of his death of all at the time of his death of a
property, real or personal, tangible property, real or personal, tangibl
or intangible, wherever situated: or intangible, wherever situated
Provided, however, That in the Provided, however, That in th
case of a nonresident decedent case of a nonresident deceden
who at the time of his death was who at the time of his death wa
not a citizen of the Philippines, not a citizen of the Philippines
only that part of the entire gross only that part of the entire gros
estate which is situated in the estate which is situat
Philippines shall be included in his Philippines shall be included in h
taxable estate. taxable estate.
(A) Decedent's Interest. — To the (A) Decedent's Interest

extent of the interest therein of the extent of the interest therein of th
decedent at the time of his death; decedent at the time of his death;
(B) Transfer in Contemplation of (B) Transfer in Contemplation o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Death. — To the extent of any Death. — To the extent of an
interest therein of which the interest therein of wh
decedent has at any time made a decedent has at any time made
transfer, by trust or otherwise, in transfer, by trust or otherwise, i
contemplation of or intended to contemplation of or intended t
take effect in possession or take effect in possession o
enjoyment at or after death, or of enjoyment at or after death, or o
which he has at any time made a which he has at any time made
transfer, by trust or otherwise, transfer, by trust or otherwise
under which he has retained for under which he has
his life or for any period which his life or for any period whic
does not in fact end before his does not in fact end before h
death (1) the possession or death (1) the possession o
enjoyment of, or the right to the enjoyment of, or the right to th
income from the property, or (2) income from the property, or (2
the right, either alone or in the right, either alone or i
conjunction with any person, to conjunction with any person, t
designate the person who shall designate the person
possess or enjoy the property or possess or enjoy the property o
the income therefrom; except in the income therefrom; except i
case of a bona fide sale for an case of a bona fide sale for a
adequate and full consideration in adequate and full consideration i
money or money's worth. money or money's worth.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Revocable Transfer. — (1) To (C) Revocable Transfer
the extent of any interest therein, the extent of any interest therein
of which the decedent has at any of which the decedent has at an
time made a transfer (except in time made a transfer (except i
case of bona fide sale for an case of bona fide sale for a
money or money's worth) by trust money or money's worth) by trus
or otherwise, where the enjoyment or otherwise, where the enjoymen
thereof was subject at the date of thereof was subject at the date o
his death to any change through his death to any change throug
the exercise of a power (in the exercise of a power (i
whatever capacity exercisable) by whatever capacity exercisable) b
the decedent alone or by the the decedent alone or by th
decedent in conjunction with any decedent in conjunction with an
other person (without regard to other person (without regard t
when or from what source the when or from what source th
decedent acquired such power), to decedent acquired such power), t
alter, amend, revoke or terminate, alter, amend, revoke or terminate
or where any such power is or where any such power
relinquished in contemplation of relinquished in contemplation o
the decedent's death. the decedent's death.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) For the purpose of this (2) For the purpose of th
Subsection, the power to alter, Subsection, the power to alte
amend or revoke shall be amend or revoke shall b
considered to exist on the date of considered to exist on the date o
the decedent's death even though the decedent's death even thoug
the exercise of the power is the exercise of the power
subject to a precedent giving of subject to a precedent giving o
notice or even though the notice or even though th
alteration, amendment or alteration, amendment o
revocation takes effect only on the revocation takes effect only on th
expiration of a stated period after expiration of a stated period afte
the exercise of the power, whether the exercise of the power, whethe
or not on or before the date of the or not on or before the date of th
decedent's death notice has been decedent's death notice has bee
given or the power has been given or the power has bee
exercised. In such cases, proper exercised. In such cases, prope
adjustment shall be made adjustment shall be mad
representing the interests which representing the interests whic
would have been excluded from would have been excluded from
the power if the decedent had the power if the decedent ha
lived, and for such purpose if the lived, and for such purpose if th
notice has not been given or the notice has not been given or th
power has not been exercised on power has not been exercised o
or before the date of his death, or before the date of his death
such notice shall be considered to such notice shall be considered t
have been given, or the power have been given, or the powe
exercised, on the date of his exercised, on the date of h
death. death.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Property Passing Under (D) Property Passing Unde

General Power of Appointment. — General Power of Appointment
To the extent of any property To the extent of any prop
passing under a general power of passing under a general power o
appointment exercised by the appointment exercised by th
decedent: (1) by will, or (2) by decedent: (1) by will, or (2) b
deed executed in contemplation deed executed in contemplation o
of, or intended to take effect in or intended to take effect i
possession or enjoyment at, or possession or enjoyment at, o
after his death, or (3) by deed after his death, or (3) by dee
under which he has retained for under which he has retained
his life or any period not his life or any period no
ascertainable without reference to ascertainable without reference t
his death or for any period which his death or for any period whic
does not in fact end before his does not in fact end before h
death (a) the possession or death (a) the possession o
enjoyment of, or the right to the enjoyment of, or the right to th
income from, the property, or (b) income from, the property, or (b
the right, either alone or in the right, either alone or i
conjunction with any person, to conjunction with any person, t
designate the persons who shall designate the persons who sha
possess or enjoy the property or possess or enjoy the property o
the income therefrom; except in the income therefrom; except i
case of a bona fide sale for an case of a bona fide sale for a
money or money's worth. money or money's worth.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(E) Proceeds of Life Insurance. — (E) Proceeds of Life Insurance
To the extent of the amount To the extent of the amoun
receivable by the estate of the receivable by the estate of th
deceased, his executor, or deceased, his executor, o
administrator, as insurance under administrator, as insurance unde
policies taken out by the decedent policies taken out by the deceden
upon his own life, irrespective of upon his own life, irrespective o
whether or not the insured whether or not the insured retaine
retained the power of revocation, the power of revocation, or
or to the extent of the amount extent of the amount receivable b
receivable by any beneficiary any beneficiary designated in th
designated in the policy of policy of insurance, except when
insurance, except when it is is expressly stipulated that th
expressly stipulated that the designation of the beneficiary
designation of the beneficiary is irrevocable.
irrevocable.
(F) Prior Interests. — Except as (F) Prior Interests. — Except a

otherwise specifically provided otherwise specifically provide
therein, Subsections (B), (C) and therein, Subsections (B), (C) an
(E) of this Section shall apply to (E) of this Section shall apply t
the transfers, trusts, estates, the transfers, trusts, estates
interests, rights, powers and interests, rights, powers an
relinquishment of powers, as relinquishment of powers, a
severally enumerated and severally enumerated an
described therein, whether made, described therein, whether made
created, arising, existing, created, arising, existing
exercised or relinquished before or exercised or relinquished before o
after the effectivity of this Code. after the effectivity of this Code.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(G) Transfers for Insufficient (G) Transfers for Insufficien
Consideration. — If any one of the Consideration. — If any one of th
transfers, trusts, interests, rights transfers, trusts, interests, rights o
or powers enumerated and powers enumerated and describe
described in Subsections (B), (C) in Subsections (B), (C) and (D) o
and (D) of this Section is made, this Section is made, created
created, exercised or relinquished exercised or relinquished for
for a consideration in money or consideration in money or money
money's worth, but is not a bona worth, but is not a bona fide sal
fide sale for an adequate and full for an adequate and fu
consideration in money or money's consideration in money or money
worth, there shall be included in worth, there shall be included i
the gross estate only the excess of the gross estate only the excess o
the fair market value, at the time the fair market value, at the time o
of death, of the property otherwise death, of the property otherwise t
to be included on account of such be included on account of suc
transaction, over the value of the transaction, over the value of th
consideration received therefor by consideration received therefor b
the decedent. the decedent.
(H) Capital of the Survivin

(H) Capital of the Surviving
Spouse. — The capital of th
Spouse. — The capital of the
surviving spouse of a
surviving spouse of a decedent
shall not, for the purpose of th
shall not, for the purpose of this
Chapter, be deemed a part of h
Chapter, be deemed a part of his
or her gross estate.
or her gross estate.
Computation of Net Estate

SEC. 86. For the purpose of the SEC. 86. For the purpose of th
tax imposed in this Chapter, the tax imposed in this Chapter, th
value of the net estate shall be value of the net estate shall b
determined: determined:
(A) Deductions Allowed to the (A) Deductions Allowed to th

Estate of a Citizen or a Resident. Estate of a Citizen or a Residen
— In the case of a citizen or — In the case of a citizen o
resident of the Philippines, by resident of the Philippines, b
deducting from the value of the deducting from the value of th
gross estate — gross estate —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Standard Deduction. — An

amount equivalent to Five million
pesos (P5,000,000).
No. 10963, December 19, 2017)
(1) Expenses, Losses
Indebtedness, and Taxes. —
amounts —
(a) For actual funeral expenses

in an amount equal to five percen
(5%) of the gross estate
whichever is lower, but in no cas
to exceed Two hundred thousan
pesos (P200,000);
(b) For judicial expenses of th

testamentary or intestat
proceedings;
(2) For claims against the estate: (c) For claims against the estate
Provided, That at the time the Provided, That at the time th
indebtedness was incurred the indebtedness was incurred th
debt instrument was duly debt instrument was duly notarize
notarized and, if the loan was and, if the loan was contracte
contracted within three (3) years within three (3) years before th
before the death of the decedent, death of the decedent, th
the administrator or executor shall administrator or executor sha
submit a statement showing the submit a statement showing th
disposition of the proceeds of the disposition of the proceeds of th
loan. loan;
(3) For claims of the deceased (d) For claims of the decease
against insolvent persons where against insolvent persons
the value of decedent's interest the value of decedent's interes
therein is included in the value of therein is included in the value o
the gross estate. the gross estate; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(4) For unpaid mortgages upon, (e) For unpaid mortgages upon, o
or any indebtedness in respect to, any indebtedness in respect to
property where the value of property where the value o
decedent's interest therein, decedent's interest therein
undiminished by such mortgage undiminished by such mortgage o
or indebtedness, is included in the indebtedness, is included in th
value of the gross estate, but not value of the gross estate
including any income tax upon including any income tax upo
income received after the death of income received after the death o
the decedent, or property taxes the decedent, or property taxes no
not accrued before his death, or accrued before his death, or an
any estate tax. The deduction estate tax. The deduction herei
herein allowed in the case of allowed in the case of claim
claims against the estate, unpaid against the estate, unpai
mortgages or any indebtedness mortgages or any indebtednes
shall, when founded upon a shall, when founded upon
promise or agreement, be limited promise or agreement, be limite
to the extent that they were to the extent that t
contracted bona fide and for an contracted bona fide and for a
money or money's worth. There money or money's worth. Ther
shall also be deducted losses shall also be deducted losse
incurred during the settlement of incurred during the settlement o
the estate arising from fires, the estate arising from fires
storms, shipwreck, or other storms, shipwreck, or othe
casualties, or from robbery, theft casualties, or from robbery
or embezzlement, when such or embezzlement, when suc
losses are not compensated for losses are not compensated for b
by insurance or otherwise, and if insurance or otherwise, and if a
at the time of the filing of the the time of the filing of the retur
return such losses have not been such losses have not been claime
claimed as a deduction for the as a deduction for income ta
income tax purposes in an purposes in an income tax return
income tax return, and provided and provided that such losse
that such losses were incurred were incurred not later than th
not later than the last day for the last day for the payment of th
payment of the estate tax as estate tax as prescribed i
prescribed in Subsection (A) of Subsection (A) of Section 91.
Section 91.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Property Previously Taxed
(5) Property Previously Taxed. — An amount equal to the valu
An amount equal to the value specified below of any propert
specified below of any property forming a part of the gro
forming part of the gross estate situated in the Philippines of an
situated in the Philippines of any person who died within five (5
person who died within five (5) years prior to the death of th
years prior to the death of the decedent, or transferred to th
decedent, or transferred to the decedent by gift within five (5
decedent by gift within five (5) years prior to his death, wher
years prior to his death, where such property can be identified a
such property can be identified as having been received by th
having been received by the decedent from the donor by gift, o
decedent from the donor by gift, from such prior decedent by gif
or from such prior decedent by bequest, devise or inheritance, o
gift, bequest, devise or which can be identified as havin
inheritance, or which can be been acquired in exchange fo
identified as having been property so received:
acquired in exchange for property
so received:
One hundred percent (100%) o
One hundred percent (100%) of the value, if the prior deceden
the value, if the prior decedent died within one (1) year prior to th
died within one (1) year prior to death of the decedent, or if th
the death of the decedent, or if property was transferred to him b
the property was transferred to gift within the same period prior t
him by gift, within the same period his death;
prior to his death;
Eighty percent (80%) of the value
Eighty percent (80%) of the value, if the prior decedent died mor
if the prior decedent died more than one (1) year but n
than one (1) year but not more than two (2) years prior to th
than two (2) years prior to the death of the decedent, or if th
death of the decedent, or if the property was transferred to him b
property was transferred to him gift within the same period prior t
by gift within the same period his death;
prior to his death;
Sixty percent (60%) of the value,
Sixty percent (60%) of the value, the prior decedent died more tha
if the prior decedent died more two (2) years but not more th
than two (2) years but not more three (3) years prior to the death o
than three (3) years prior to the the decedent, or if the propert
death of the decedent, or if the was transferred to him by gi
property was transferred to him within the same period prior to h
by gift within the same period death;
prior to his death;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Forty percent (40%) of the value,
Forty percent (40%) of the value, the prior decedent died more tha
if the prior decedent died more three (3) years but not more tha
than three (3) years but not more four (4) years prior to the death o
than four (4) years prior to the the decedent, or if the propert
death of the decedent, or if the was transferred to him by gi
property was transferred to him within the same period prior to h
by gift within the same period death; and
prior to his death; and
Twenty percent (20%) of the value
Twenty percent (20%) of the if the prior decedent died mor
value, if the prior decedent died than four (4) years but not mor
more than four (4) years but not than five (5) years prior to th
more than five (5) years prior to death of the decedent, or if th
the death of the decedent, or if property was transferred to him b
the property was transferred to gift within the same period prior t
him by gift within the same period his death.
prior to his death.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
These deductions shall be allowe
These deductions shall be only where a donor's tax or estat
allowed only where a donor's tax, tax imposed under this Title wa
or estate tax imposed under this finally determined and paid by o
Title was finally determined and on behalf of such donor, or th
paid by or on behalf of such estate of such prior decedent, a
donor, or the estate of such prior the case may be, and only in th
decedent, as the case may be, amount finally determined as th
and only in the amount finally value of such property i
determined as the value of such determining the value of the gift, o
property in determining the value the gross estate of such prio
of the gift, or the gross estate of decedent, and only to the exten
such prior decedent, and only to that the value of such property
the extent that the value of such included in the decedent's gros
property is included in the estate, and only if in determinin
decedent's gross estate, and only the value of the estate of the prio
if in determining the value of the decedent, no deduction wa
estate of the prior decedent, no allowable under paragraph (2) i
deduction was allowable under respect of the property o
paragraph (5) in respect of the properties given in exchang
property or properties given in therefor. Where a deduction wa
exchange therefor. Where a allowed of any mortgage or othe
deduction was allowed of any lien in determining the donor's tax
mortgage or other lien in or the estate tax of the prio
determining the donor's tax, or decedent, which was paid in whol
the estate tax of the prior or in part prior to the decedent
decedent, which was paid in death, then the deductio
whole or in part prior to the allowable under said Subsectio
decedent's death, then the shall be reduced by the amount s
deduction allowable under said paid. Such deduction allowabl
Subsection shall be reduced by shall be reduced by an amoun
the amount so paid. Such which bears the same ratio to th
deduction allowable shall be amounts allowed as deduction
reduced by an amount which under paragraphs (1) and (3) o
bears the same ratio to the this Subsection as the amoun
amounts allowed as deductions otherwise deductible under sai
under paragraphs (2), (3), (4), paragraph (2) bears to the value o
and (6) of this Subsection as the the decedent's estate. Where th
amount otherwise deductible property referred to consists of tw
under said paragraph (5) bears to or more items, the aggregate valu
the value of the decedent's of such items shall be used for th
estate. Where the property purpose of computing th
referred to consists of two or deduction.
more items, the aggregate value
of such items shall be used for
the purpose of computing the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
deduction.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(6) Transfers for Public Use. — (3) Transfers for Public Use
The amount of all bequests, The amount of all bequests
legacies, devises or transfers to legacies, devises or transfers to o
or for the use of the Government for the use of the Government o
of the Republic of the Philippines the Republic of the Philippines, o
or any political subdivision any political subdivision thereof, fo
thereof, for exclusively public exclusively public purposes.
purposes.
(4) The Family Home
(7) The Family Home. — An amount equivalent to the curren
amount equivalent to the current fair market value of the decedent
fair market value of the family home: Provided, howeve
decedent's family home: That if the said current fair marke
Provided, however, That if the value exceeds One million peso
said current fair market value (P1,000,000), the excess shall b
exceeds Ten million pesos subject to estate tax. As a sine qu
(P10,000,000), the excess shall non condition for the exempti
be subject to estate tax. deduction, said family home mus
(as amended by Sec. 23, R.A. have been the decedent's fami
No. 10963, December 19, 2017) home as certified by the baranga
captain of the locality.
(5) Standard Deduction

amount equivalent to One millio
pesos (P1,000,000).
(6) Medical Expenses

expenses incurred by the deceden
within one (1) year prior to h
death which shall be du
substantiated with receipts
Provided, That in no case shall th
deductible medical expense
exceed Five hundred thousan
pesos (P500,000).
(8) Amount Received by Heirs
under Republic Act No. 4917. — (7) Amount Received by Heir
Any amount received by the heirs Under Republic Act No. 4917
from the decedent's employee as Any amount received by the heir
a consequence of the death of from the decedent's employer as
the decedent-employee in consequence of the death of th
decedent-employee
259
in accordanc
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the decedent-employee in
accordance with Republic Act No. decedent-employee in accordanc
4917: Provided, That such with Republic Act No. 4917
amount is included in the gross Provided, That such amount
estate of the decedent. included in the gross estate of th
decedent.
(B) Deductions Allowed to
Nonresident Estates. — In the (B) Deductions Allowed t
case of a nonresident not a Nonresident Estates. — In th
citizen of the Philippines, by case of a nonresident not a citize
deducting from the value of that of the Philippines, by deductin
part of his gross estate which at from the value of that part of h
the time of his death is situated in gross estate which at the time o
the Philippines: his death is situated in th
Philippines:
(1) Expenses, Losses

Indebtedness and Taxes
proportion of the deduction
specified in paragraph (1) o
Subsection (A) of this Sectio
which the value of such part bear
to the value of his entire gros
(1) Standard Deduction. — An estate wherever situated;
amount equivalent to Five
hundred thousand pesos
(P500,000);
No. 10963, December 19, 2017)
(2) That proportion of the

deductions specified in
paragraphs (2), (3), and (4) of
Subsection (A) of this Section
which the value of such part
bears to the value of his entire
gross estate wherever situated;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Property Previously Taxed. —
(2) Property Previously T
An amount equal to the value
An amount equal to the valu
specified below of any property
specified below of any propert
forming part of the gross estate
forming part of the gross estat
situated in the Philippines of any
situated in the Philippines of an
person who died within five (5)
person who died within five (5
years prior to the death of the
years prior to the death of th
decedent, or transferred to the
decedent, or transferred to th
decedent by gift within five (5)
decedent by gift within
years prior to his death, where
years prior to his death, wher
such property can be identified as
such property can be identified a
having been received by the
having been received by th
decedent from the donor by gift,
decedent from the donor by gift, o
or from such prior decedent by
from such prior decedent by gif
gift, bequest, devise or
bequest, devise or inheritance, o
inheritance, or which can be
which can be identified as havin
identified as having been
been acquired in exchange fo
acquired in exchange for property
property so received:
so received:
One hundred percent (100%) of

One hundred percent (100%) o
the value, if the prior decedent
the value, if the prior deceden
died within one (1) year prior to
died within one (1) year prior to th
the death of the decedent, or if
death of the decedent, or if th
the property was transferred to
property was transferred to him b
him by gift, within the same period
gift, within the same period prior t
prior to his death;
his death;
Eighty percent (80%) of the value,
Eighty percent (80%) of the value
if the prior decedent died more
if the prior decedent died mor
than one (1) year but not more
than one (1) year but not mor
than two (2) years prior to the
than two (2) years prior to th
death of the decedent, or if the
property was transferred to him
by gift within the same period
gift within the same period prior t
prior to his death;
his death;
the prior decedent died more tha
than two (2) years but not more
two (2) years but not more tha
than three (3) years prior to the
three (3) years prior to the death o
the decedent, or if the propert
was transferred to him by gi
within the same period prior to h
prior to his death:
death:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the prior decedent died more tha
than three (3) years but not more
three (3) years but not more tha
than four (4) years prior to the
four (4) years prior to the death o
the decedent, or if the propert
was transferred to him by gi
within the same period prior to h
prior to his death; and
death; and
Twenty percent (20%) of the
Twenty percent (20%) of the value
value, if the prior decedent died
if the prior decedent died mor
more than four (4) years but not
than four (4) years but not mor
more than five (5) years prior to
than five (5) years prior to th
the death of the decedent, or if
the property was transferred to
him by gift within the same period
gift within the same period prior t
prior to his death.
his death.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
These deductions shall be
These deductions shall be
allowed only where a donor's tax,
only where a donor's tax, or estat
or estate tax imposed under this
tax imposed under this Title
Title is finally determined and paid
finally determined and paid by o
by or on behalf of such donor, or
on behalf of such donor, or th
the estate of such prior decedent,
estate of such prior decedent, a
as the case may be, and only in
the case may be, and only in th
the amount finally determined as
amount finally determined as th
the value of such property in
value of such property i
determining the value of the gift,
determining the value of the gift, o
or the gross estate of such prior
the gross estate of such prio
decedent, and only to the extent
decedent, and only to the exten
that the value of such property is
that the value of such property
included in that part of the
included in that part of th
decedent's gross estate which at
decedent's gross estate which a
the time of his death is situated in
the time of his death is situated i
the Philippines; and only if, in
the Philippines; and only if, i
determining the value of the net
determining the value of the ne
estate of the prior decedent, no
estate of the prior decedent, n
deduction is allowable under
deduction is allowable unde
paragraph (2) of Subsection (B)
paragraph (2) of Subsection (B) o
of this Section, in respect of the
this Section, in respect of th
property or properties given in
property or properties given i
exchange therefor. Where a
exchange therefor. Where
deduction was allowed of any
deduction was allowed of an
mortgage or other lien in
mortgage or other lien i
determining the donor's tax, or
determining the donor's tax, or th
the estate tax of the prior
estate tax of the prior deceden
decedent, which was paid in
which was paid in whole or in pa
whole or in part prior to the
prior to the decedent's death, the
decedent's death, then the
the deduction allowable under sai
deduction allowable under said
paragraph shall be reduced by th
paragraph shall be reduced by
amount so paid. Such deductio
the amount so paid. Such
allowable shall be reduced by a
deduction allowable shall be
amount which bears the sam
reduced by an amount which
ratio to the amounts allowed a
bears the same ratio to the
deductions under paragraphs (1
amounts allowed as deductions
and (3) of this Subsection as th
under paragraphs (1) and (3) of
amount otherwise deductible unde
this Subsection as the amount
paragraph (2) bears to the value
otherwise deductible under
that part of the decedent's gros
paragraph (2) bears to the value
estate which at the time of h
of that part of the decedent's
death is situated in the Philippines
gross estate which at the time of
Where the property referred t
his death is situated in the
consists of two (2) or more items
Philippines. Where the property
the aggregate value of such item
referred to consists of two (2) or
shall be used for263the purpose o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
referred to consists of two (2) or
shall be used for the purpose o
more items, the aggregate value
computing the deduction.
of such items shall be used for
the purpose of computing the
deduction.
(3) Transfers for Public Use

(4) Transfers for Public Use. — The amount of all bequests
The amount of all bequests, legacies, devises or transfers to o
legacies, devises or transfers to for the use of the Government o
or for the use of the Government the Republic of the Philippines o
of the Republic of the Philippines any political subdivision thereof, fo
or any political subdivision exclusively public purposes.
thereof, for exclusively public
purposes. (C) Share in the Conjuga
Property. — The net share of th
(C) Share in the Conjugal surviving spouse in the conjuga
Property. — The net share of the partnership property as diminishe
surviving spouse in the conjugal by the obligations proper
partnership property as chargeable to such property sha
diminished by the obligations for the purpose of this Section, b
properly chargeable to such deducted from the net estate o
property shall, for the purpose of the decedent.
this Section, be deducted from
the net estate of the decedent.
(D) Miscellaneous Provisions
No deduction shall be allowed i
the case of a nonresident not
citizen of the Philippines, unles
the executor, administrator, o
anyone of the heirs, as the cas
may be, includes in the retur
required to be filed under Sectio
90 the value at the time of h
death of that part of the gros
estate of the nonresident no
situated in the Philippines.
(D) Tax Credit for Estate Taxes (E) Tax Credit for Estate Taxe
Paid to a Foreign Country. — Paid to a Foreign Country
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) In General. — The tax (1) In General. — The tax impose
imposed by this Title shall be by this Title shall be c
credited with the amounts of any the amounts of any estate ta
estate tax imposed by the imposed by the authority of
authority of a foreign country. foreign country.
(2) Limitations on Credit. — The (2) Limitations on Credit

amount of the credit taken under amount of the credit taken unde
this Section shall be subject to this Section shall be subject t
each of the following limitations: each of the following limitations:
(a) The amount of the credit in (a) The amount of the credit i
respect to the tax paid to any respect to the tax paid to an
country shall not exceed the country shall not exceed the sam
same proportion of the tax against proportion of the tax against whic
the decedent's net estate situated decedent's net estate situate
within such country taxable under within such country taxable unde
this Title bears to his entire net this Title bears to his entire ne
estate; and estate; and
(b) The total amount of the cred
(b) The total amount of the credit
shall not exceed the sam
shall not exceed the same
proportion of the tax against whic
proportion of the tax against
such credit is taken, which th
which such credit is taken, which
decedent's net estate situate
the decedent's net estate situated
outside the Philippines taxabl
outside the Philippines taxable
under this Title bears to his entir
under this Title bears to his entire
net estate.
net estate.

No. 10963, December 19, 2017)
Exemption of Certain
SEC. 87. The following shall not SEC. 87. The following shall no
Acquisitions and
be taxed: be taxed:
Transmissions
(A) The merger of usufruct in the (A) The merger of usufruct in th
owner of the naked title; owner of the naked title;
(B) The transmission or delivery of (B) The transmission or delivery o

the inheritance or legacy by the the inheritance or legacy by th
fiduciary heir or legatee to the fiduciary heir or legatee to th
fideicommissary; fideicommissary;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) The transmission from the first (C) The transmission from
heir, legatee or donee in favor of heir, legatee or donee in favor o
another beneficiary, in accordance another beneficiary, in accordanc
with the desire of the predecessor; with the desire of the predecesso
and and
(D) All bequests, devises, legacie
(D) All bequests, devises,
or transfers to social welfare
legacies or transfers to social
cultural and charitable institutions
welfare, cultural and charitable
no part of the net income of w
institutions, no part of the net
inures to the benefit of an
income of which inures to the
individual: Provided, however, Tha
benefit of any individual:
not more than thirty percent (30%
Provided, however, That not more
of the said bequests, devises
than thirty percent (30%) of the
legacies or transfers shall be use
said bequests, devises, legacies
by such institutions fo
or transfers shall be used by such
administration purposes.
institutions for administration
purposes.
Determination of the Value

SEC. 88. SEC. 88.
of the Estate
(A) Usufruct. — To determine the (A) Usufruct. — To determine th
value of the right of usufruct, use value of the right of usufruct, us
or habitation, as well as that of or habitation, as well as that o
annuity, there shall be taken into annuity, there shall be taken int
account the probable life of the account the probable life of th
beneficiary in accordance with the beneficiary in accordance with th
latest Basic Standard Mortality latest Basic Standard Mortalit
Table, to be approved by the Table, to be approved by th
recommendation of the Insurance recommendation of the Insuranc
(B) Properties. — The estate shall (B) Properties. — The estate sha
be appraised at its fair market be appraised at its fair marke
value as of the time of death. value as of the time of death
However, the appraised value of However, the appraised value o
real property as of the time of real property as of the time o
death shall be, whichever is the death shall be, whichever is th
higher of — higher of —
(1) The fair market value as (1) The fair market value a
determined by the Commissioner, determined by the Comm
or or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) The fair market value as show
(2) The fair market value as
in the schedule of values fixed b
shown in the schedule of values
the Provincial and City Assessors.
fixed by the Provincial and City
Assessors.
Notice of Death to be Filed SEC. 89. SEC. 89. In all cases of transfer
subject to tax, or where, thoug
(Repealed by Sec. 24, R.A. No. exempt from tax, the gross valu
10963, December 19, 2017) of the estate exceeds Twent
thousand pesos (P20,000), th
executor, administrator or any o
the legal heirs, as the case ma
be, within two (2) months after th
decedent's death, or within a lik
period after qualifying as suc
executor or administrator, sha
give a written notice th
Commissioner.
Estate Tax Returns

SEC. 90. SEC. 90.
(A) Requirements. — In all cases (A) Requirements. — In all case

of transfers subject to the tax of transfers subject to the ta
imposed herein, or regardless of imposed herein, or where, thoug
the gross value of the estate, exempt from tax, the gross valu
where the said estate consists of of the estate exceeds Tw
registered or registrable property hundred thousand peso
such as real property, motor (P200,000), or regardless of th
vehicle, shares of stock or other gross value of the estate, wher
similar property for which a the said estate consists o
clearance from the Bureau of registered or registrable propert
Internal Revenue is required as a such as real property, moto
condition precedent for the vehicle, shares of stock or othe
transfer of ownership thereof in similar property for which
the name of the transferee, the clearance from the Bureau o
executor, or the administrator, or Internal Revenue is required as
any of the legal heirs, as the case condition precedent for the transfe
may be, shall file a return under of ownership thereof in the n
oath in duplicate, setting forth: (as of the transferee, the executor, o
amended by Sec. 25, R.A. No. the administrator, or any of th
10963, December 19, 2017) legal heirs, as the case may be
shall file a return under oath i
duplicate, setting forth:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) The value of the gross estate (1) The value of the gross estat
of the decedent at the time of his of the decedent at the time of h
death, or in case of a nonresident, death, or in case of a nonresiden
not a citizen of the Philippines, of not a citizen of the Philippines, o
that part of his gross estate that part of his gross estat
situated in the Philippines; situated in the Philippines;
(2) The deductions allowed from (2) The deductions allowed from
gross estate in determining the gross estate in determining th
estate as defined in Section 86; estate as defined in Section 86
and and
(3) Such part of such information (3) Such part of such informatio
as may at the time be as may at the time b
ascertainable and such ascertainable and suc
supplemental data as may be supplemental data as may b
necessary to establish the correct necessary to establish the correc
taxes. taxes.
Provided, however, That estate Provided, however, That estate ta

tax returns showing a gross value returns showing a gross valu
exceeding Five million pesos exceeding Two million peso
(P5,000,000) shall be supported (P2,000,000) shall be supporte
with a statement duly certified to with a statement duly cert
by a Certified Public Accountant by a Certified Public Accountan
containing the following: (as containing the following:
10963, December 19, 2017)
(a) Itemized assets of th
(a) Itemized assets of the decedent with their correspondin
decedent with their corresponding gross value at the time of h
gross value at the time of his death, or in the case of
death, or in the case of a nonresident, not a citizen of th
nonresident, not a citizen of the Philippines, of that part of h
Philippines, of that part of his gross estate situated in th
gross estate situated in the Philippines;
Philippines;
(b) Itemized deductions from gros
(b) Itemized deductions from estate allowed in Section 86; and
gross estate allowed in Section
86; and (c) The amount of tax due whethe
paid or still due and outstanding.
(c) The amount of tax due
whether paid or still due and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
outstanding.
(B) Time for Filing. — For th
(B) Time for Filing. — For the purpose of determining the estat
purpose of determining the estate tax provided for in Section 84 o
tax provided for in Section 84 of this Code, the estate tax retur
this Code, the estate tax return required under the precedin
required under the preceding Subsection (A) shall be filed withi
Subsection (A) shall be filed six (6) months from the decedent
within one (1) year from the death.
decedent's death. (as amended
by Sec. 26, R.A. No. 10963,
December 19, 2017)
A certified copy of the schedule o
A certified copy of the schedule of partition and the order of the cou
partition and the order of the court approving the same
approving the same shall be furnished the Commissioner withi
furnished the Commissioner thirty (30) days after th
within thirty (30) days after the promulgation of such order.
promulgation of such order.
(C) Extension of Time. — The (C) Extension of Time

Commissioner shall have Commissioner shall have authorit
authority to grant, in meritorious to grant, in meritorious cases,
cases, a reasonable extension reasonable extension no
not exceeding thirty (30) days for exceeding thirty (30) days for fil
filing the return. the return.
(D) Place of Filing. — Except in (D) Place of Filing. — Except i

cases where the Commissioner cases where the Commissione
otherwise permits, the return otherwise permits, the retur
required under Subsection (A) required under Subsection (A
shall be filed with an authorized shall be filed with an authorize
agent bank, or Revenue District agent bank, or Revenue Distric
Officer, Collection Officer, or duly Officer, Collection Officer, or du
municipality in which the decedent municipality in which the deceden
was domiciled at the time of his was domiciled at the time of h
death or if there be no legal death or if there be no lega
residence in the Philippines, with residence in the Philippines, wit
the Office of the Commissioner. the Office of the Commissioner.
Payment of Tax
SEC. 91. SEC. 91.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) Time of Payment. — The (A) Time of Payment
estate tax imposed by Section 84 estate tax imposed by Section 8
shall be paid at the time the return shall be paid at the time the retur
is filed by the executor, is filed by the executo
administrator or the heirs. administrator or the heirs.
(B) Extension of Time. — When (B) Extension of Time

the Commissioner finds that the the Commissioner finds that th
payment on the due date of the payment on the due date of th
estate tax or of any part thereof estate tax or of any part thereo
would impose undue hardship would impose undu
upon the estate or any of the upon the estate or any of the heirs
heirs, he may extend the time for he may extend the time fo
payment of such tax or any part payment of such tax or any pa
thereof not to exceed five (5) thereof not to exceed five (5
years, in case the estate is settled years, in case the estate is settle
through the courts, or two (2) through the courts, or two (2
years in case the estate is settled years in case the estate is settle
extrajudicially. In such case, the extrajudicially. In such case, th
amount in respect of which the amount in respect of which th
extension is granted shall be paid extension is granted shall be pai
on or before the date of the on or before the date of th
expiration of the period of the expiration of the period of th
extension, and the running of the extension, and the running of th
Statute of Limitations for Statute of Limitations fo
assessment as provided in assessment as provided in Sectio
Section 203 of this Code shall be 203 of this Code shall b
suspended for the period of any suspended for the period of an
such extension. such extension.
Where the taxes are assessed by Where the taxes are assessed b
reason of negligence, intentional reason of negligence, intentiona
disregard of rules and regulations, disregard of rules and regulations
or fraud on the part of the or fraud on the part of th
taxpayer, no extension will be taxpayer, no extension will b
granted by the Commissioner. granted by the Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
If an extension is granted, the If an extension is granted, th
Commissioner may require the Commissioner may require th
executor, or administrator, or executor, or administrator, o
beneficiary, as the case may be, beneficiary, as the case may be, t
to furnish a bond in such amount, furnish a bond in such amount, no
not exceeding double the amount exceeding double the amount o
of the tax and with such sureties the tax and with such sureties a
as the Commissioner deems the Commissioner deem
necessary, conditioned upon the necessary, conditioned upon th
payment of the said tax in payment of the said tax i
accordance with the terms of the accordance with the terms of th
extension. extension.
(C) Payment by Installment. — In

case the available cash of the
estate is insufficient to pay the
total estate tax due, payment by
installment shall be allowed within
two (2) years from the statutory
date for its payment without civil
penalty and interest. (as amended
by Sec. 26, R.A. No. 10963,
December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Liability for Payment
(D) Liability for Payment. — The
estate tax imposed by Section 8
estate tax imposed by Section 84
shall be paid by the executor o
shall be paid by the executor or
administrator before delivery t
administrator before delivery to
any beneficiary of his
any beneficiary of his distributive
share of the estate. Suc
share of the estate. Such
beneficiary shall, to the extent o
beneficiary shall, to the extent of
his distributive share of the estate
his distributive share of the
be subsidiarily liable for th
estate, be subsidiarily liable for
payment of such portion of th
the payment of such portion of
estate tax as his distributive shar
the estate tax as his distributive
bears to the value of the total ne
share bears to the value of the
estate.
total net estate.
For the purpose of this Chapte

For the purpose of this Chapter, the term 'executor' o
the term 'executor' or 'administrator' means the executo
'administrator' means the or administrator of the deceden
executor or administrator of the or if there is no executor o
decedent, or if there is no administrator appointed, qualified
executor or administrator and acting within the Philippines
appointed, qualified, and acting then any person in actual o
within the Philippines, then any constructive possession of an
person in actual or constructive property of the decedent.
possession of any property of the
decedent.
Discharge of Executor or SEC. 92. If the executor or SEC. 92. If the executor o
Administrator from administrator makes a written administrator makes a writte
Personal Liability application to the Commissioner application to the Commissione
for determination of the amount of for determination of the amount o
the estate tax and discharge from the estate tax and discharge from
personal liability therefor, the personal liability therefo
Commissioner (as soon as Commissioner (as soon a
possible, and in any event within possible, and in any event withi
one (1) year after the making of one (1) year after the making o
such application, or if the such application, or if th
application is made before the application is made before th
return is filed, then within one (1) return is filed, then within one (1
year after the return is filed, but year after the return is filed, bu
not after the expiration of the not after the expiration
period prescribed for the period prescribed for th
assessment of the tax in Section assessment of the tax in Sectio
203 shall notify the executor or 203 shall notify the executor o
administrator of the amount of the administrator of the amount of th
tax. The executor or tax. The executor or administrato
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
administrator, upon payment of upon payment of the amount o
the amount of which he is notified, which he is notified, shall b
shall be discharged from personal discharged from personal
liability for any deficiency in the for any deficiency in the ta
tax thereafter found to be due and thereafter found to be due an
shall be entitled to a receipt or shall be entitled to a receipt o
writing showing such discharge. writing showing such discharge.
Definition of Deficiency
SEC. 93. As used in this Chapter, SEC. 93. As used in this Chapte
the term 'deficiency' means: the term 'deficiency' means:
(a) The amount by which the tax (a) The amount by which the ta
imposed by this Chapter exceeds imposed by this Chapter exceed
the amount shown as the tax by the amount shown as the tax b
the executor, administrator or any the executor, administrator or an
of the heirs upon his return; but of the heirs upon his return; but th
the amount so shown on the amount so shown on the retur
return shall first be increased by shall first be increased by th
the amounts previously assessed amounts previously assessed
(or collected without assessment) collected without assessment) as
as a deficiency and decreased by deficiency and decreased by th
the amounts previously abated, amounts previously abated
refunded or otherwise repaid in refunded or otherwise repaid i
respect of such tax; or respect of such tax; or
(b) If no amount is shown as th
(b) If no amount is shown as the
tax by the executor, administrato
tax by the executor, administrator
or any of the heirs upon his retu
or any of the heirs upon his
or if no return is made by th
return, or if no return is made by
executor, administrator, or an
the executor, administrator, or
heir, then the amount by which th
any heir, then the amount by
tax exceeds the amount
which the tax exceeds the
previously assessed (or collecte
amounts previously assessed (or
deficiency; but such amount
a deficiency; but such amounts
previously assessed or collecte
previously assessed or collected
without assessment shall first b
without assessment shall first be
decreased by the amount
decreased by the amounts
previously abated, refunded o
previously abated, refunded or
otherwise repaid in respect of suc
otherwise repaid in respect of
tax.
such tax.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Payment Before Delivery SEC. 94. No judge shall authorize SEC. 94. No judge shall authoriz
by Executor or the executor or judicial the executor or judicia
Administrator administrator to deliver a administrator to deliver
distributive share to any party distributive share to any part
interested in the estate unless a interested in the estate unless
certification from the certification from th
Commissioner that the estate tax Commissioner that the estate ta
has been paid is shown. has been paid is shown.
Duties of Certain Officers SEC. 95. Registers of Deeds shall SEC. 95. Registers of Deeds sha
and Debtors not register in the Registry of not register in the Registry o
Property any document Property any documen
transferring real property or real transferring real property or rea
rights therein or any chattel rights therein or any chatte
mortgage, by way of gifts inter mortgage, by way of gifts int
vivos or mortis causa, legacy or vivos or mortis causa, legacy o
inheritance, unless a certification inheritance, unless a certificatio
from the Commissioner that the from the Commissioner that th
tax fixed in this Title and actually tax fixed in this Title and actual
due thereon had been paid is due thereon had been paid
shown, and they shall shown, and they shall immediate
immediately notify the notify the Commissioner, Regiona
Commissioner, Regional Director, Director, Revenue District Office
Revenue District Officer or or Revenue Collection Officer o
Revenue Collection Officer or Treasurer of the city o
Treasurer of the city or municipality where their offices ar
municipality where their offices located, of the nonpayment of th
are located, of the nonpayment of tax discovered by them. An
the tax discovered by them. Any lawyer, notary public, or an
lawyer, notary public, or any government officer who, by reaso
government officer who, by of his official duties, intervenes i
reason of his official duties, the preparation o
intervenes in the preparation or acknowledgment of document
acknowledgment of documents regarding partition or disposal o
regarding partition or disposal of donation inter vivos or mort
donation inter vivos or mortis causa, legacy or inheritance, sha
causa, legacy or inheritance, shall have the duty of furnishing th
have the duty of furnishing the Commissioner, Regional Directo
Commissioner, Regional Director, Revenue District Office
Revenue District Officer or Revenue Collection Officer of th
Revenue Collection Officer of the place where he may have h
place where he may have his principal office, with copies of suc
principal office, with copies of documents and any informatio
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
such documents and any whatsoever which may facilitat
information whatsoever which the collection of th
may facilitate the collection of the aforementioned tax. Neither shall
aforementioned tax. Neither shall debtor of the deceased pay h
a debtor of the deceased pay his debts to the heirs, legatee
debts to the heirs, legatee, executor or administrator of h
executor or administrator of his creditor, unless the certification o
creditor, unless the certification of the Commissioner that the ta
the Commissioner that the tax fixed in this Chapter had been pai
fixed in this Chapter had been is shown; but he may pay th
paid is shown; but he may pay the executor or judicial administrato
executor or judicial administrator without said certification
without said certification if the credit is included in the inventor
credit is included in the inventory of the estate of the deceased.
of the estate of the deceased.
Restitution of Tax Upon SEC. 96. If, after the payment of SEC. 96. If, after the payment o
Satisfaction of Outstanding the estate tax, new obligations of the estate tax, new obligations o
Obligations the decedent shall appear, and the decedent shall appear, and th
the persons interested shall have persons interested shall hav
satisfied them by order of the satisfied them by order of th
court, they shall have a right to court, they shall have a right to th
the restitution of the proportional restitution of the proportional pa
part of the tax paid. of the tax paid.
Payment of Tax
SEC. 97. There shall not be SEC. 97. There shall not b
Antecedent to the Transfer
transferred to any new owner in transferred to any new owner i
of Shares, Bonds or Rights
the books of any corporation, the books of any corporation
sociedad anonima, partnership, sociedad anonima, partnership
business, or industry organized or business, or industry organized o
established in the Philippines any established in the Philippines an
share, obligation, bond or right by share, obligation, bond or right b
way of gift inter vivos or mortis way of gift inter vivos
causa, legacy or inheritance, causa, legacy or inheritance
unless a certification from the unless a certification from th
Commissioner that the taxes fixed Commissioner that the taxes fixe
in this Title and due thereon have in this Title and due thereon hav
been paid is shown. been paid is shown.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
If a bank has knowledge of th
If a bank has knowledge of the
death of a person, who maintaine
death of a person, who
a bank deposit account alone, o
maintained a bank deposit
jointly with another, it shall no
account alone, or jointly with
allow any withdrawal from the sai
another, it shall allow any
deposit account, unless th
withdrawal from the said deposit
Commissioner has certified tha
account, subject to a final
the taxes imposed thereon by th
withholding tax of six percent
Title have been paid; Provided
(6%). For this purpose, all
however, That the administrator o
withdrawal slips shall contain a
the estate or any one (1) of th
statement to the effect that all of
heirs of the decedent may, upo
the joint depositors are still living
authorization by th
at the time of withdrawal by any
Commissioner, withdraw a
one of the joint depositors and
amount not exceeding Twent
such statement shall be under
thousand pesos (P20,
oath by the said depositors. (as
the said certification. For th
purpose, all withdrawal slips sha
10963, December 19, 2017)
contain a statement to the effec
that all of the joint depositors ar
still living at the time of withdrawa
by any one of the joint depositor
and such statement shall be u
oath by the said depositors.
CHAPTER II — DONOR'S TAX CHAPTER II — DONOR'S TAX
Imposition of Tax
SEC. 98. SEC. 98.
(A) There shall be levied, (A) There shall be levied

assessed, collected and paid upon assessed, collected and paid upo
the transfer by any person, the transfer by any perso
resident or nonresident, of the resident or nonresident, of th
property by gift, a tax, computed property by gift, a tax, compute
as provided in Section 99. as provided in Section 99.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) The tax shall apply whether th

(B) The tax shall apply whether
transfer is in trust or otherwise
the transfer is in trust or
whether the gift is direct or indirec
otherwise, whether the gift is
and whether the property is real o
direct or indirect, and whether the
personal, tangible or intangible
property is real or personal,
tangible or intangible.
Rates of Tax Payable by

SEC. 99. SEC. 99.
Donor
(A) In General. — The tax for (A) In General. — The tax for eac
each calendar year shall be six calendar year shall be compute
percent (6%) computed on the on the basis of the total net gift
basis of the total gifts in excess of made during the calendar year i
Two hundred fifty thousand pesos accordance with the followin
(P250,000) exempt gift made schedule:
during the calendar year. (as
10963, December 19, 2017)
If the net gift is:

Over But Not Over The Tax Shall Be
Excess
P100,000 Exempt
P100,000 200,000 0 2%
200,000 500,000 2,000 4%
500,000 1,000,000 14,000 6%
1,000,000 3,000,000 44,000 8%
3,000,000 5,000,000 204,000 10%
5,000,000 10,000,000 404,000

5,000,000
10,000,000 1,004,000
10,000,000
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Tax Payable by Donor

is a Stranger. — When the done
or beneficiary is a stranger, the ta
payable by the donor shall be thirt
percent (30%) of the net gifts. Fo
the purpose of this tax, a 'strange
is a person who is not a:
(1) Brother, sister (whether b

whole or half-blood), spouse
ancestor and lineal descendant; o
(2) Relative by consanguinity in th

collateral line within the fourt
degree of relationship.
(B) Any contribution in cash or in

(C) Any contribution in cash or i
kind to any candidate, political
kind to any candidate, politica
party or coalition of parties for
party or coalition of parties fo
campaign purposes shall be
campaign purposes shall b
governed by the Election Code,
governed by the Election Code, a
as amended. (as amended by
amended.
Sec. 28, R.A. No. 10963,
December 19, 2017)
Transfer for Less Than SEC. 100. Where property, other SEC. 100. Where property, othe
Adequate and Full than real property referred to in than real property referred to i
Consideration Section 24(D), is transferred for Section 24(D), is transferred fo
less than an adequate and full less than an adequate and fu
consideration in money or consideration in money or money
money's worth, then the amount worth, then the amount by whic
by which the fair market value of the fair market value of th
the property exceeded the value property exceeded the value of th
of the consideration shall, for the consideration shall, for th
purpose of the tax imposed by purpose of the tax imposed by th
this Chapter, be deemed a gift, Chapter, be deemed a gift, an
and shall be included in shall be included in computing th
computing the amount of gifts amount of gifts made during th
made during the calendar year: calendar year.
Provided, however, That a sale,
exchange, or other transfer of
property made in the ordinary
course of business (a transaction
which is a bona fide, at arm's
length, and free from any
donative intent), will be
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
considered as made for an
adequate and full consideration in
money or money's worth. (as
10963, December 19, 2017)
Exemption of Certain Gifts

SEC. 101. The following gifts or SEC. 101. The following gifts o
donations shall be exempt from donations shall be exempt from
the tax provided for in this the tax provided for in th
Chapter: Chapter:
(A) In the Case of Gifts Made by a (A) In the Case of Gifts Made by
Resident. — Resident. —
(1) Dowries or gifts made o

account of marriage and before it
celebration or within one yea
thereafter by parents to each o
their legitimate, recognize
natural, or adopted children to th
extent of the first Ten thousan
pesos (P10,000);
(1) Gifts made to or for the use of (2) Gifts made to or for the use o
the National Government or any the National Government or an
entity created by any of its entity created by any of it
agencies which is not conducted agencies which is not conducte
for profit, or to any political for profit, or to any politica
subdivision of the said subdivision of the sai
Government; and Government; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Gifts in favor of an educational (3) Gifts in favor of an educationa
and/or charitable, religious, and/or charitable, religious, cultura
cultural or social welfare or social welfare corporation
corporation, institution, accredited institution, accredite
nongovernment organization, nongovernment organization, trus
trust or philanthropic organization or philanthropic organization o
or research institution or research institution o
organization: Provided, however, organization: Provided, howeve
That not more than thirty percent That not more than thirty percen
(30%) of said gifts shall be used (30%) of said gifts shall be used b
by such donee for administration such donee for administratio
purposes. For the purpose of this purposes. For the purpose of th
exemption, a 'non-profit exemption, a 'non-prof
educational and/or charitable educational and/or chari
corporation, institution, accredited corporation, institution, accredite
nongovernment organization, nongovernment organization, trus
trust or philanthropic organization or philanthropic organizatio
and/or research institution or and/or research institution o
organization' is a school, college organization' is a school, college o
or university and/or charitable university and/or charitabl
corporation, accredited corporation, accredite
nongovernment organization, nongovernment organization,
trust or philanthropic organization or philanthropic organizatio
and/or research institution or and/or research institution o
organization, incorporated as a organization, incorporated as
nonstock entity, paying no non-stock entity, paying n
dividends, governed by trustees dividends, governed by trustee
who receive no compensation, who receive no compensation, an
and devoting all its income, devoting all its income, whethe
whether students' fees or gifts, students' fees or gifts, donat
donation, subsidies or other forms subsidies or other forms o
of philanthropy, to the philanthropy, to th
accomplishment and promotion of accomplishment and promotion o
the purposes enumerated in its the purposes enumerated in it
Articles of Incorporation. (as Articles of Incorporation.
10963, December 19, 2017)
(B) In the Case of Gifts Made by a (B) In the Case of Gifts Made by
Nonresident not a Citizen of the Nonresident not a Citizen of th
Philippines. — Philippines. —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Gifts made to or for the use of (1) Gifts made to or for th
the National Government or any the National Government or an
entity created by any of its entity created by any of it
agencies which is not conducted agencies which is not conducte
for profit, or to any political for profit, or to any politica
subdivision of the said subdivision of the sai
Government. Government.
(2) Gifts in favor of an educational (2) Gifts in favor of an educationa
and/or charitable, religious, and/or charitable, religious, cultura
cultural or social welfare or social welfare corporation
corporation, institution, institution, foundation, trust o
foundation, trust or philanthropic philanthropic organization o
organization or research research institution o
institution or organization: organization: Provided, howeve
Provided, however, That not more That not more than thirty percen
than thirty percent (30%) of said (30%) of said gifts shall be used b
gifts shall be used by such donee such donee for administratio
for administration purposes. purposes.
(C) Tax Credit for Donor's Taxes

Paid to a Foreign Country. — (C) Tax Credit for Donor's Taxe
Paid to a Foreign Country
(1) In General. — The tax
imposed by this Title upon a (1) In General. — The tax impose
donor who was a citizen or a by this Title upon a donor who wa
resident at the time of donation a citizen or a resident at the tim
shall be credited with the amount of donation shall be credited wit
of any donor's tax of any the amount of any donor's tax o
character and description any character and descr
imposed by the authority of a imposed by the authority of
foreign country. foreign country.
(2) Limitations on Credit. — The (2) Limitations on Credit
amount of the credit taken under amount of the credit taken unde
this Section shall be subject to this Section shall be subject t
each of the following limitations: each of the following limitations:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) The amount of the credit in (a) The amount of the credit i
respect to the tax paid to any respect to the tax paid to an
country shall not exceed the country shall not exceed the sam
same proportion of the tax against proportion of the tax against whic
which such credit is taken, which such credit is taken, which the ne
the net gifts situated within such gifts situated within such countr
country taxable under this Title taxable under this Title bears to h
bears to his entire net gifts; and entire net gifts; and
(b) The total amount of the credit (b) The total amount of the cred
shall not exceed the same shall not exceed the sam
proportion of the tax against proportion of the tax against whic
the donor's net gifts situated donor's net gifts situated outsid
outside the Philippines taxable the Philippines taxable under th
under this Title bears to his entire Title bears to his entire net gifts.
net gifts.
Valuation of Gifts Made in SEC. 102. If the gift is made in SEC. 102. If the gift is made i
Property property, the fair market value property, the fair market valu
thereof at the time of the gift shall thereof at the time of the gift sha
be considered the amount of the be considered the amount of th
gift. In case of real property, the gift. In case of real property, th
provisions of Section 88(B) shall provisions of Section 88(B) sha
apply to the valuation thereof. apply to the valuation thereof.

SEC. 103. (A) Requirements. — SEC. 103. (A) Requirements
Payment of Tax
Any individual who makes any Any individual who ma
transfer by gift (except those transfer by gift (except thos
which, under Section 101, are which, under Section 101, ar
exempt from the tax provided for exempt from the tax provided for i
in this Chapter) shall, for the this Chapter) shall, for the purpos
purpose of the said tax, make a of the said tax, make a retur
return under oath in duplicate. The under oath in duplicate. The retur
return shall set forth: shall set forth:
(1) Each gift made during the (1) Each gift made during th
calendar year which is to be calendar year which is to b
included in computing net gifts; included in computing net gifts;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) The deductions claimed and (2) The deductions claimed an

allowable; allowable;
(3) Any previous net gifts made (3) Any previous net gifts mad
during the same calendar year; during the same calendar year;
(4) The name of the donee; and (4) The name of the donee; and
(5) Such further information as (5) Such further information a

may be required by rules and may be required by rules a
regulations made pursuant to law. regulations made pursuant to law.
(B) Time and Place of Filing an
(B) Time and Place of Filing and
Payment. — The return of th
Payment. — The return of the
donor required in this Section sha
donor required in this Section
be filed within thirty (30) days afte
shall be filed within thirty (30)
the date the gift is made and th
days after the date the gift is
tax due thereon shall be paid a
made and the tax due thereon
the time of filing. Except in case
shall be paid at the time of filing.
where the Commissione
Except in cases where the
otherwise permits, the return sha
Commissioner otherwise permits,
be filed and the tax paid to a
the return shall be filed and the
authorized agent bank, th
tax paid to an authorized agent
Revenue District Officer, Revenu
bank, the Revenue District
Collection Officer or du
Officer, Revenue Collection
authorized Treasurer of the city o
Officer or duly authorized
municipality where the donor wa
Treasurer of the city or
domiciled at the time of th
municipality where the donor was
transfer, or if there be no lega
domiciled at the time of the
residence in the Philippines, wit
transfer, or if there be no legal
the Office of the Commissioner. I
residence in the Philippines, with
the case of gifts made by
the Office of the Commissioner.
nonresident, the return may b
In the case of gifts made by a
filed with the Philippine Embass
nonresident, the return may be
or Consulate in the country wher
filed with the Philippine Embassy
he is domiciled at the time of th
or Consulate in the country where
transfer, or directly with the Offic
he is domiciled at the time of the
of the Commissioner.
transfer, or directly with the Office
of the Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Definitions
SEC. 104. For purposes of this SEC. 104. For purposes of th
Title, the terms "gross estate" and Title, the terms "gross estate"
"gifts" include real and personal "gifts" include real and persona
property, whether tangible or property, whether tangible o
intangible, or mixed, wherever intangible, or mixed, whereve
situated: Provided, however, That situated: Provided, however
where the decedent or donor was where the decedent or donor wa
a nonresident alien at the time of a nonresident alien at the time o
his death or donation, as the case his death or donation, as the cas
may be, his real and personal may be, his real and persona
property so transferred but which property so transferred but whic
are situated outside the are situated outside the Philippine
Philippines shall not be included shall not be included as part of h
as part of his "gross estate" or "gross estate" or "gross gift
"gross gift": Provided, further, That Provided, further, That franchis
franchise which must be exercised which must be exercised in th
in the Philippines; shares, Philippines; shares, obligations o
obligations or bonds issued by any bonds issued by any corporation o
corporation or sociedad anonima sociedad anonima organ
organized or constituted in the constituted in the Philippines i
Philippines in accordance with its accordance with its laws; shares
laws; shares, obligations or bonds obligations or bonds by any foreig
by any foreign corporation corporation eighty-five percen
eighty-five percent (85%) of the (85%) of the business of which
business of which is located in the located in the Philippines; shares
Philippines; shares, obligations or obligations or bonds issued by an
bonds issued by any foreign foreign corporation if such shares
corporation if such shares, obligations or bonds have acquire
obligations or bonds have a business situs in the Philippines
acquired a business situs in the shares or rights in any partnership
Philippines; shares or rights in any business or industry established i
partnership, business or industry the Philippines, shall b
established in the Philippines, considered as situated in th
shall be considered as situated in Philippines: Provided, sti
the Philippines: Provided, still that no tax shall be collected unde
further, that no tax shall be this Title in respect of intangibl
collected under this Title in respect personal property: (a) if th
of intangible personal property: (a) decedent at the time of his deat
if the decedent at the time of his or the donor at the time of th
death or the donor at the time of donation was a citizen an
the donation was a citizen and resident of a foreign country whic
resident of a foreign country which at the time of his death or donatio
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
at the time of his death or did not impose a transfer tax o
donation did not impose a transfer any character, in respect o
tax of any character, in respect of intangible personal property o
intangible personal property of citizens of the Philippines no
citizens of the Philippines not residing in that foreign country, o
residing in that foreign country, or (b) if the laws of the foreig
(b) if the laws of the foreign country of which the decedent o
country of which the decedent or donor was a citizen and resident a
donor was a citizen and resident the time of his death or donatio
at the time of his death or allows a similar exemption from
donation allows a similar transfer or death taxes of ever
exemption from transfer or death character or description in respec
taxes of every character or of intangible personal propert
description in respect of intangible owned by citizens of th
personal property owned by Philippines not residing in tha
citizens of the Philippines not foreign country.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
residing in that foreign country.
The term "deficiency" means: (a)

The term "deficiency"
the amount by which tax imposed
the amount by which tax impose
by this Chapter exceeds the
by this Chapter exceeds th
amount shown as the tax by the
amount shown as the tax by th
donor upon his return; but the
donor upon his return; but th
amount so shown on the return
amount so shown on the retur
shall first be increased by the
shall first be increased by th
amount previously assessed (or
amount previously assessed (o
a deficiency, and decreased by
deficiency, and decreased by th
the amounts previously abated,
amounts previously abated
refunded or otherwise repaid in
refunded or otherwise repaid i
respect of such tax, or (b) if no
respect of such tax, or (b) if n
amount is shown as the tax by the
amount is shown as the tax by th
donor, then the amount by which
donor, then the amount by whic
the tax exceeds the amounts
the tax exceeds the amount
previously assessed, (or collected
previously assessed, (or collecte
without assessment) as a
deficiency, but such amounts
deficiency, but such amount
previously assessed, or collected
previously assessed, or collecte
without assessment, shall first be
without assessment, shall first b
decreased by the amount
decreased by the amoun
previously abated, refunded or
previously abated, refunded o
such tax.
tax.
TITLE IV – VALUE-ADDED TAX TITLE IV – VALUE-ADDED TAX
CHAPTER I – IMPOSITION OF CHAPTER I – IMPOSITION OF

TAX TAX
Persons Liable
SEC. 105. Any person who, in the SEC. 105. Any person who, in th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
course of trade or business, sells, course of trade or business, sells
barters, exchanges, leases goods barters, exchanges, leases good
or properties, renders services, or properties, renders services
and any person who imports and any person who imports goo
goods shall be subject to the shall be subject to the value-adde
value-added tax (VAT) imposed in tax (VAT) imposed in Sections 10
Sections 106 to 108 of this Code. to 108 of this Code.
The value-added tax is an indirect The value-added tax is an indirec

tax and the amount of tax may be tax and the amount of tax may b
shifted or passed on to the buyer, shifted or passed on to the buye
transferee or lessee of the goods, transferee or lessee of the goods
properties or services. This rule properties or services.
shall likewise apply to existing shall likewise apply to existin
contracts of sale or lease of contracts of sale or lease o
goods, properties or services at goods, properties or services a
the time of the effectivity of the time of the effectivity o
Republic Act No. 7716. Republic Act No. 7716.
The phrase 'in the course of trade The phrase 'in the course of trad
or business' means the regular or business' means the regula
conduct or pursuit of a commercial conduct or pursuit of a comme
or an economic activity, including or an economic activity, includin
transactions incidental thereto, by transactions incidental thereto, b
any person regardless of whether any person regardless of whethe
or not the person engaged therein or not the person engaged therei
is a non-stock, nonprofit private is a non-stock, nonprofit privat
organization (irrespective of the organization (irrespective of th
disposition of its net income and disposition of its net income an
whether or not it sells exclusively whether or not it sells exclusive
to members or their guests), or to members or their guests), o
government entity. government entity.
The rule of regularity, to th

The rule of regularity, to the
contrary notwithstanding, service
contrary notwithstanding, services
as defined in this Code rendered i
as defined in this Code rendered
the Philippines by nonresiden
in the Philippines by nonresident
foreign persons shall b
foreign persons shall be
considered as being
considered as being rendered in
the course of trade or business.
the course of trade or business.
Value-added Tax on Sale

SEC. 106. SEC. 106.
of Goods or Properties
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) Rate and Base of Tax. — (A) Rate and Base of Tax
There shall be levied, assessed There shall be levied, assesse
and collected on every sale, and collected on every sale, barte
barter or exchange of goods or or exchange of goods o
properties, a value-added tax properties, a value-added ta
equivalent to twelve percent equivalent to ten percent (10%) o
(12%) of the gross selling price or the gross selling price or gros
gross value in money of the value in money of the goods o
goods or properties sold, bartered properties sold, bartered o
or exchanged, such tax to be paid exchanged, such tax to be paid b
by the seller or transferor. (as the seller or transferor: Provided
amended by Sec. 31, R.A. No. That the President, upon th
10963, December 19, 2017) recommendation of the Secretar
of Finance, shall, effective Januar
1, 2006, raise the rate o
value-added tax to twelve percen
(12%), after any of the followin
conditions has been satisfied:
(i) Value-added tax collection as

percentage of Gross Domest
Product (GDP) of the previou
year exceeds two and four-fift
percent (2 4/5%); or
(ii) National government deficit a

a percentage of GDP of th
previous year exceeds one an
one-half percent (1 1/2%).
(1) The term 'goods or properties'
shall mean all tangible and (1) The term 'goods or propertie
intangible objects which are shall mean all tangible an
capable of pecuniary estimation intangible objects which ar
and shall include: capable of pecuniary estimatio
and shall include:
(a) Real properties held primarily

for sale to customers or held for (a) Real properties held primari
lease in the ordinary course of for sale to customers or held fo
trade or business; lease in the ordinary course o
trade or business;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) The right or the privilege to
use patent, copyright, design or (b) The right or the privilege to us
model, plan, secret formula or patent, copyright, design or mode
process, goodwill, trademark, plan, secret formula or process
trade brand or other like property goodwill, trademark, trade brand o
or right; other like property or right;
(c) The right or the privilege to (c) The right or the privilege to us
use in the Philippines of any in the Philippines of any industria
industrial, commercial or scientific commercial or scientif
equipment; equipment;
(d) The right or the privilege to (d) The right or the privilege to us
use motion picture films, films, motion picture films, films, tape
tapes and discs; and and discs; and
(e) Radio, television, satellite (e) Radio, television, satellit

transmission and cable television transmission and cable t
time. time.
The term 'gross selling price' The term 'gross selling price
means the total amount of money means the total amount of mone
or its equivalent which the or its equivalent which th
purchaser pays or is obligated to purchaser pays or is obligated t
pay to the seller in consideration pay to the seller in consideration o
of the sale, barter or exchange of the sale, barter or exchange of th
the goods or properties, excluding goods or properties, excluding th
the value-added tax. The excise value-added tax. The excise tax,
tax, if any, on such goods or any, on such goods or propertie
properties shall form part of the shall form part of the gross sellin
gross selling price. price.
(2) The following sales by

VAT-registered persons shall be (2) The following sales b
subject to zero percent (0%) rate: VAT-registered persons shall b
subject to zero percent (0%) rate:
(a) Export Sales. — The term
'export sales' means: (a) Export Sales. — The term
'export sales' means:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) The sale and actual shipment
of goods from the Philippines to a (1) The sale and actual shipmen
foreign country, irrespective of of goods from the Philippines to
any shipping arrangement that foreign country, irrespective of an
may be agreed upon which may shipping arrangement that may b
influence or determine the agreed upon which may influenc
transfer of ownership of the or determine the transfer o
goods so exported and paid for in ownership of the goods s
acceptable foreign currency or its exported and paid for i
equivalent in goods or services, acceptable foreign currency or it
and accounted for in accordance equivalent in goods or services
with the rules and regulations of and accounted for in accordanc
the Bangko Sentral ng Pilipinas with the rules and regulations o
(BSP); the Bangko Sentral ng Pilipina
(BSP);
(2) Sale and delivery of goods to:
(i) Registered enterprises within a

separate customs territory as
provided under special laws; and
(ii) Registered enterprises within

tourism enterprise zones as
declared by the Tourism
Infrastructure and Enterprise
Zone Authority (TIEZA) subject to
the provisions under Republic Act
No. 9593 or The Tourism Act of
2009. (added by Sec. 31, R.A.
No. 10963, December 19, 2017)
(3) Sale of raw materials or (2) Sale of raw materials o

packaging materials to a packaging materials to
nonresident buyer for delivery to a nonresident buyer for delive
resident local export-oriented resident local export-oriente
enterprise to be used in enterprise to be used i
manufacturing, processing, manufacturing, processing
packing or repacking in the packing or repacking in th
Philippines of the said buyer's Philippines of the said buyer
goods and paid for in acceptable goods and paid for in acceptabl
foreign currency and accounted foreign currency and accounted fo
for in accordance with the rules in accordance with the rules an
and regulations of the Bangko regulations of the Bangko Sentra
Sentral ng Pilipinas (BSP); ng Pilipinas (BSP):
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(4) Sale of raw materials or (3) Sale of raw materials o

packaging materials to packaging materials t
export-oriented enterprise whose export-oriented enterprise whos
export sales exceed seventy export sales exceed sevent
percent (70%) of total annual percent (70%) of total annua
production; production;
(4) Sale of gold to the Bangk

Sentral ng Pilipinas (BSP);
(5) Those considered export sale

(5) Those considered export sales under Executive Order No. 226
under Executive Order No. 226, otherwise known as the Omnibu
otherwise known as the Omnibus Investment Code of 1987, an
Investment Code of 1987, and other special laws; and
other special laws; and
(6) The sale of goods, supplies
(6) The sale of goods, supplies, equipment and fuel to person
equipment and fuel to persons engaged in international shippin
engaged in international shipping or international air transpo
or international air transport operations.
operations: Provided, That the
goods, supplies, equipment and
fuel shall be used for international
shipping or air transport
operations. (as amended by Sec.
31, R.A. No. 10963, December
19, 2017) (b) Foreign Currency Denominate
Sale. — The phrase 'foreig
currency denominated sale' mean
sale to a nonresident of goods
except those mentioned i
Sections 149 and 150, assemble
or manufactured in the P
for delivery to a resident in th
Philippines, paid for in acceptabl
foreign currency and accounted fo
in accordance with the rules an
regulations of the Bangko Sentra
ng Pilipinas (BSP).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Provided, That subparagraphs

(3), (4), and (5) hereof shall be
subject to the twelve percent
(12%) value-added tax and no
longer be considered export sales
subject to zero percent (0%) VAT
rate upon satisfaction of the
following conditions:
(1) The successful establishment

and implementation of an
enhanced VAT refund system that
grants refunds of creditable input
tax within ninety (90) days from
the filing of the VAT refund
application with the Bureau:
Provided, That, to determine the
effectivity of item no. 1, all
applications filed from January 1,
2018 shall be processed and
must be decided within ninety (90)
days from the filing of the VAT
refund application; and
(2) All pending VAT refund claims

as of December 31, 2017 shall be
fully paid in cash by December
31, 2019.
Provided, That the Department of

Finance shall establish a VAT
refund center in the Bureau of
Internal Revenue (BIR) and in the
Bureau of Customs (BOC) that
will handle the processing and
granting of cash refunds of
creditable input tax.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
An amount equivalent to five
percent (5%) of the total VAT
collection of the BIR and the BOC
from the immediately preceding
year shall be automatically
appropriated annually and shall
be treated as a special account in
the General Fund or as trust
receipts for the purpose of
funding claims for VAT refund:
Provided, That any unused fund,
at the end of the year shall revert
to the General Fund.
Provided, further, That the BIR

and BOC shall be required to
submit to the Congressional
Oversight Committee on the
Comprehensive Tax Reform
Program (COCCTRP) a quarterly
report of all pending claims for
refund and any unused fund. (as
10963, December 19, 2017)
(c) Sales to persons
whose exemption under specia
(b) Sales to persons or entities
laws or international agreement
whose exemption under special
to which the Philippines is
laws or international agreements
signatory effectively subjects suc
to which the Philippines is a
sales to zero rate.
signatory effectively subjects such
sales to zero rate.
(B) Transactions Deemed Sale
The following transactions shall b
(B) Transactions Deemed Sale.
deemed sale:
— The following transactions
shall be deemed sale:
(1) Transfer, use or consumptio
not in the course of business o
(1) Transfer, use or consumption
goods or properties original
not in the course of business of
intended for sale or for use in th
goods or properties originally
course of business;
intended for sale or for use in the
course of business;
(2) Distribution or transfer to:
(2) Distribution or transfer to:
(a) Shareholders or investors a
share in the profits of th
(a) Shareholders or investors as
VAT-registered person
share in the profits of the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
VAT-registered persons; or
(b) Creditors in payment of debt;
(b) Creditors in payment of debt;
(3) Consignment of goods if actua
sale is not made within sixty (60
(3) Consignment of goods if
days following the date suc
actual sale is not made within
goods were consigned; and
sixty (60) days following the date
such goods were consigned; and
(4) Retirement from or cessation o
business with respect t
(4) Retirement from or cessation
inventories of taxable good
of business with respect to
existing as of such retirement o
inventories of taxable goods
cessation.
existing as of such retirement or
cessation.
(C) Changes in or Cessation o
Status of a VAT registered Person
(C) Changes in or Cessation of
— The tax imposed in Subsectio
Status of a VAT registered
(A) of this Section shall also app
Person. — The tax imposed in
to goods disposed of or existing a
Subsection (A) of this Section
of a certain date if unde
shall also apply to goods
circumstances to be prescribed i
disposed of or existing as of a
rules and regulations to b
certain date if under
circumstances to be prescribed in
rules and regulations to be
the Commissioner, the status of
person as a VAT-registere
person changes or is terminated.
of the Commissioner, the status
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of a person as a VAT-registered
person changes or is terminated.
(D) Sales Returns, Allowances an

Sales Discounts. — The value o
(D) Sales Returns, Allowances
goods or properties sold an
and Sales Discounts. — The
subsequently returned or for whic
value of goods or properties sold
allowances were granted by
and subsequently returned or for
VAT-registered person may b
which allowances were granted
deducted from the gross sales o
by a VAT-registered person may
receipts for the quarter in which
be deducted from the gross sales
refund is made or a cred
or receipts for the quarter in which
memorandum or refund is issued
a refund is made or a credit
Sales discount granted an
memorandum or refund is issued.
indicated in the invoice at the tim
Sales discount granted and
of sale and the grant of which doe
indicated in the invoice at the time
not depend upon the happening o
of sale and the grant of which
a future event may be exclude
does not depend upon the
from the gross sales within th
happening of a future event may
same quarter it was given.
be excluded from the gross sales
within the same quarter it was
given.
(E) Authority of the Commissione
(E) Authority of the Commissioner to Determine the Appropriate Ta
to Determine the Appropriate Tax Base. — The Commissioner sha
Base. — The Commissioner shall, by rules and regulations prescribe
by rules and regulations by the Secretary of Finance
prescribed by the Secretary of determine the appropriate tax bas
Finance, determine the in cases where a transaction
appropriate tax base in cases deemed a sale, barter or exchang
where a transaction is deemed a of goods or properties unde
sale, barter or exchange of goods Subsection (B) hereof, or wher
or properties under Subsection the gross selling price
(B) hereof, or where the gross unreasonably lower than the actua
selling price is unreasonably market value. (as amended b
lower than the actual market Sec. 4 of R.A. No. 9337, May 24
value. 2005)
Value-added Tax on
SEC. 107. SEC. 107.
Importation of Goods
(A) In General. — There shall be (A) In General. — There shall b
levied, assessed and collected on levied, assessed and collected o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
every importation of goods a every importation of goods
value-added tax equivalent to value-added tax equivalent to te
twelve percent (12%) based on percent (10%) based on the tota
the total value used by the value used by the Bureau o
Bureau of Customs in determining Customs in determining tariff an
tariff and customs duties, plus customs duties, plus custom
customs duties, excise taxes, if duties, excise taxes, if any, an
any, and other charges, such tax other charges, such tax to be pai
to be paid by the importer prior to by the importer prior to the releas
the release of such goods from of such goods from custom
customs custody: Provided, That custody: Provided, That where th
where the customs duties are customs duties are determined o
determined on the basis of the the basis of the quantity or volum
quantity or volume of the goods, of the goods, the value-added ta
the value-added tax shall be shall be based on the l
based on the landed cost plus plus excise taxes, if any: Provided
excise taxes, if any. (as amended further, That the President, upo
by Sec. 32, R.A. No. 10963, the recommendation of th
December 19, 2017) Secretary of Finance, sha
effective January 1, 2006, rais
the rate of value-added tax t
twelve percent (12%), after any o
the following conditions has bee
satisfied:


of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
previous year exceed
one-half percent (1 1/2%).
(B) Transfer of Goods by (B) Transfer of Goods b
Tax-exempt Persons. — In the Tax-exempt Persons. — In th
case of tax-free importation of case of tax-free importation o
goods into the Philippines by goods into the Philippines b
persons, entities or agencies persons, entities or agencie
exempt from tax where such exempt from tax where suc
goods are subsequently sold, goods are subsequently sold
transferred or exchanged in the transferred or exchanged in th
Philippines to non-exempt Philippines to non-exempt person
persons or entities, the or entities, the purchasers
purchasers, transferees or transferees or recipients shall b
recipients shall be considered the considered the importers thereo
importers thereof, who shall be who shall be liable for any interna
liable for any internal revenue tax revenue tax on such importation
on such importation. The tax due The tax due on such importatio
on such importation shall shall constitute a lien on the good
constitute a lien on the goods superior to all charges or liens o
superior to all charges or liens on the goods, irrespective of th
the goods, irrespective of the possessor thereof. (as amende
possessor thereof. by Sec. 5 of R.A. No. 9337, Ma
24, 2005)
Value-added Tax on Sale

SEC. 108. SEC. 108.
of Services and Use or
Lease of Properties (A) Rate and Base of Tax. — (A) Rate and Base of Tax
and collected, a value-added tax and collected, a value-add
equivalent to twelve percent equivalent to ten percent (10%) o
(12%) of gross receipts derived gross receipts derived from th
from the sale or exchange of sale or exchange of services
services, including the use or including the use or lease o
lease of properties. (added by properties: Provided, That th
Sec. 33, R.A. No. 10963, President, upon th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
December 19, 2017) recommendation of the Secretar
of Finance, shall, effective Januar
1, 2006, raise the rate o
value-added tax to twelve percen
(12%), after any of the followin
conditions has been satisfied:


previous year exceeds one an
one-half percent (1 1/2%)
The phrase 'sale or exchange of
services' means the performance The phrase 'sale or exchange o
of all kinds of services in the services' means the performanc
Philippines for others for a fee, of all kinds of services in th
remuneration or consideration, Philippines for others f
including those performed or remuneration or consideration
rendered by construction and including those performed o
service contractors; rendered by construction an
service contractors;
stock, real estate, commercial,
customs and immigration brokers; stock, real estate, commercia
customs and immigration brokers;
lessors of property, whether

personal or real; lessors of property, whethe
personal or real;
warehousing services;
warehousing services;
lessors or distributors of
cinematographic films; lessors or distributors o
cinematographic films;
persons engaged in milling,
processing, manufacturing or persons engaged in milling
repacking goods for others; processing, manufacturing o
repacking goods for others;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
proprietors, operators or keepers
of hotels, motels, resthouses, proprietors, operators or keeper
pension houses, inns, resorts; of hotels, motels, resthouses
pension houses, inns, resorts;
proprietors or operators of
restaurants, refreshment parlors, proprietors or operators o
cafes and other eating places, restaurants, refreshment parlors
including clubs and caterers; cafes and other eating places
including clubs and caterers;
dealers in securities;
dealers in securities;
lending investors;
lending investors;
transportation contractors on their
transport of goods or cargoes, transportation contractors on the
including persons who transport transport of goods or cargoes
goods or cargoes for hire and including persons who transpo
other domestic common carriers goods or cargoes for hire an
by land relative to their transport other domestic common carrier
of goods or cargoes; by land relative to their transport o
goods or cargoes;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
common carriers by air and sea
relative to their transport of common carriers by air and se
passengers, goods or cargoes relative to their transport o
from one place in the Philippines passengers, goods or cargoe
to another place in the from one place in the Philippine
Philippines; to another place in the Philip
sales of electricity by generation

companies, transmission by any sales of electricity by generatio
entity, and distribution companies, companies, transmission, an
including electric cooperatives; distribution companies;
services of franchise grantees of services of franchise grantees o

electric utilities, telephone and electric utilities, telephone an
telegraph, radio and television telegraph, radio and televisio
broadcasting and all other broadcasting and all othe
franchise grantees except those franchise grantees except thos
under Section 119 of this Code under Section 119 of this Cod
and non-life insurance companies and non-life insurance companie
(except their crop insurances), (except their crop insurances
including surety, fidelity, indemnity including surety, fidelity, indemnit
and bonding companies; and bonding companies;
and similar services regardless of

whether or not the performance
thereof calls for the exercise or and similar services regardless o
use of the physical or mental whether or not the performanc
faculties. The phrase 'sale or thereof calls for the exercise o
exchange of services' shall use of the physical or menta
likewise include: faculties. The phrase 'sale o
exchange of services' sha
(1) The lease or the use of or the likewise include:
right or privilege to use any
(1) The lease or the use of or th
copyright, patent, design or
model, plan, secret formula or right or privilege to use an
process, goodwill, trademark, copyright, patent, design or mode
trade brand or other like property plan, secret formula or process
or right; goodwill, trademark, trade brand o
other like property or right;
(2) The lease or the use of, or the
right to use of any industrial, (2) The lease or the use of, or th
commercial or scientific right to use of any industria
equipment; commercial or scientif
equipment;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) The supply of scientific,
technical, industrial or commercial (3) The supply of scientific
technical, industrial or commercia
knowledge or information;
knowledge or information;
(4) The supply of any assistance

(4) The supply of any assistanc
that is ancillary and subsidiary to
and is furnished as a means of that is ancillary and subsidiary t
enabling the application or and is furnished as a means o
enjoyment of any such property, enabling the application o
enjoyment of any such property, o
or right as is mentioned in
subparagraph (2) or any such right as is mentioned i
knowledge or information as is subparagraph (2) or any suc
knowledge or information as
mentioned in subparagraph (3);
mentioned in subparagraph (3);
(5) The supply of services by a
(5) The supply of services by
nonresident person or his
employee in connection with the nonresident person or h
use of property or rights employee in connection with th
belonging to, or the installation or use of property or rights belongin
operation of any brand, to, or the installation or operatio
machinery or other apparatus of any brand, machinery or othe
apparatus purchased from suc
purchased from such nonresident
nonresident person;
person;
(6) The supply of technical

advice, assistance or services
(6) The supply of technical advice
rendered in connection with
assistance or services rendered i
technical management or
connection with technica
administration of any scientific,
management or administration o
industrial or commercial
any scientific, industrial o
undertaking, venture, project or
commercial undertaking, venture
scheme;
project or scheme;
(7) The lease of motion picture
(7) The lease of motion pictur
films, films, tapes and discs; and
films, films, tapes and discs; and
(8) The lease or the use of or the

(8) The lease or the use of or th
right to use radio, television,
right to use radio, television
satellite transmission and cable
satellite transmission and cabl
television time.
television time.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Lease of properties shall be
Lease of properties shall b
subject to the tax herein imposed
subject to the tax herein impose
irrespective of the place where
irrespective of the place where th
the contract of lease or licensing
contract of lease or licensin
agreement was executed if the
agreement was executed if th
property is leased or used in the
property is leased or used in th
Philippines.
Philippines.
The term 'gross receipts' means
The term 'gross receipts' mean
the total amount of money or its
the total amount of money or it
equivalent representing the
equivalent representing th
contract price, compensation,
contract price, compensation
service fee, rental or royalty,
service fee, rental or royalty
including the amount charged for
including the amount charged fo
materials supplied with the
materials supplied with th
services and deposits and
services and deposits an
advanced payments actually or
advanced payments actually o
constructively received during the
constructively received during th
taxable quarter for the services
taxable quarter for the service
performed or to be performed for
performed or to be performed fo
another person, excluding
another person, excludin
value-added tax.
value-added tax.
(B) Transactions Subject to Zero

(B) Transactions Subject to Zer
Percent (0%) Rate. — The
Percent (0%) Rate
following services performed in
following services performed in th
the Philippines by VAT-registered
Philippines by VAT-registere
persons shall be subject to zero
persons shall be subject to zer
percent (0%) rate:
percent (0%) rate:
(1) Processing, manufacturing or
(1) Processing, manufacturing o
repacking goods for other
repacking goods for other person
persons doing business outside
doing business outside th
the Philippines which goods are
Philippines which goods ar
subsequently exported, where the
subsequently exported, where th
services are paid for in
services are paid for in acceptabl
acceptable foreign currency and
accounted for in accordance with
the rules and regulations of the
Bangko Sentral ng Pilipinas
ng Pilipinas (BSP);
(BSP);
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Services other t

(2) Services other than those
mentioned in the precedin
mentioned in the preceding
paragraph rendered to a perso
paragraph, rendered to a person
engaged in business conducte
engaged in business conducted
outside the Philippines or to
outside the Philippines or to a
nonresident person not engaged i
nonresident person not engaged
business who is outside th
in business who is outside the
Philippines when the services ar
Philippines when the services are
performed, the consideration f
performed, the consideration for
which is paid for in acceptabl
which is paid for in acceptable
foreign currency and accounted
for in accordance with the rules
and regulations of the Bangko
ng Pilipinas (BSP);
(3) Services rendered to persons

or entities whose exemption (3) Services rendered to person
under special laws or international or entities whose exemption unde
agreements to which the special laws or internationa
Philippines is a signatory agreements to which th
effectively subjects the supply of Philippines is a signator
such services to zero percent effectively subjects the supply o
(0%) rate; such services to zero percent (0%
rate;
(4) Services rendered to persons
engaged in international shipping (4) Services rendered to person
or international air transport engaged. in international shippin
operations, including leases of or international air transpo
property for use thereof: operations, including leases o
Provided, That these services property for use thereof;
shall be exclusively for
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
international shipping or air
transport operations;
(5) Services performed by

subcontractors and/or contractors (5) Services performed b
in processing, converting, or subcontractors and/or contractor
manufacturing goods for an in processing, converting, o
enterprise whose export sales manufacturing goods for a
exceed seventy percent (70%) of enterprise whose export sale
total annual production; exceed seventy percent (70%) o
total annual production;
(6) Transport of passengers and
cargo by domestic air or sea (6) Transport of passen
vessels from the Philippines to a cargo by air or sea vessels from
foreign country; and the Philippines to a foreig
country; and
(7) Sale of power or fuel
generated through renewable (7) Sale of power or fuel generate
sources of energy such as, but through renewable sources o
not limited to, biomass, solar, energy such as, but not limited to
wind, hydropower, geothermal, biomass, solar, wind, hydropowe
ocean energy, and other geothermal, ocean energy, an
emerging energy sources using other emerging energy source
technologies such as fuel cells using technologies such as fue
and hydrogen fuels. cells and hydrogen fuels. (
amended by R.A. No. 9238, Feb
(8) Services rendered to: 5, 2004 and Sec. 6 of R.A. No
9337, May 24, 2005)
(i) Registered enterprises within a
separate customs territory as
provided under special law; and
(ii) Registered enterprises within

tourism enterprise zones as
declared by the TIEZA subject to
the provisions under Republic Act
No. 9593 or The Tourism Act of
2009.
Provided, That subparagraphs

(B)(1) and (B)(5) hereof shall be
subject to the twelve percent
(12%) value-added tax and no
longer be subject to zero percent
(0%) VAT rate upon satisfaction
of the following conditions:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) The successful establishment
and implementation of an
enhanced VAT refund system that
grants refunds of creditable input
tax within ninety (90) days from
the filing of the VAT refund
application with the Bureau:
Provided, That, to determine the
effectivity of item no. 1, all
applications filed from January 1,
2018 shall be processed and
must be decided within ninety (90)
days from the filing of the VAT
refund application; and
(2) All pending VAT refund claims

as of December 31, 2017 shall be
fully paid in cash by December
31, 2019.

Finance shall establish a VAT
refund center in the Bureau of
Internal Revenue (BIR) and in the
Bureau of Customs (BOC) that
will handle the processing and
granting of cash refunds of
creditable input tax.
An amount equivalent to five

percent (5%) of the total
value-added tax collection of the
BIR and the BOC from the
immediately preceding year shall
be automatically appropriated
annually and shall be treated as a
special account in the General
Fund or as trust receipts for the
purpose of funding claims for VAT
Refund: Provided, That any
unused fund, at the end of the
year shall revert to the General
Fund.
Provided, further, That the BIR

and the BOC shall be required to
submit to the COCCTRP a
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
quarterly report of all pending
claims for refund and any unused
fund. (as amended by Sec. 33,
2017)
Exempt Transactions
SEC. 109. SEC. 109.
(1) Subject to the provisions o
(1) Subject to the provisions of
Subsection (2) hereof, th
Subsection (2) hereof, the
following transactions shall b
following transactions shall be
exempt from the value-added tax:
exempt from the value-added tax:
(A) Sale or importation o

(A) Sale or importation of agricultural and marine foo
agricultural and marine food products in their original state
products in their original state, livestock and poultry of a
livestock and poultry of a kind generally used as, or yielding o
generally used as, or yielding or producing foods for huma
producing foods for human consumption; and breeding stoc
consumption; and breeding stock and genetic materials therefor.
and genetic materials therefor.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Products classified under this Products classified under th
paragraph shall be considered in paragraph shall be considered i
their original state even if they their original state even if the
have undergone the simple have undergone the simpl
processes of preparation or processes of preparation o
preservation for the market, such preservation for the market, suc
as freezing, drying, salting, as freezing, drying, salting
broiling, roasting, smoking or broiling, roasting, smoking o
stripping. Polished and/or husked stripping. Polished and/or huske
rice, corn grits, raw cane sugar rice, corn grits, raw cane suga
and molasses, ordinary salt, and and molasses, ordinary salt, an
copra shall be considered in their copra shall be considered in the
original state; original state;
(B) Sale or importation of (B) Sale or importation o

fertilizers; seeds, seedlings and fertilizers; seeds, seedlings an
fingerlings; fish, prawn, livestock fingerlings; fish, prawn, livestoc
and poultry feeds, including and poultry feeds, includin
ingredients, whether locally ingredients, whether local
produced or imported, used in the produced or imported, used in th
manufacture of finished feeds manufacture of finished feed
(except specialty feeds for race (except specialty feeds for rac
horses, fighting cocks, aquarium horses, fighting cocks, aquarium
fish, zoo animals and other fish, zoo animals and othe
animals generally considered as animals generally considered a
pets); pets);
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Importation of personal and (C) Importation of personal an

household effects belonging to household effects belonging to th
the residents of the Philippines residents of the Philippine
returning from abroad and returning from abroad an
nonresident citizens coming to nonresident citizens coming t
resettle in the Philippines: resettle in the Philippines
Provided, That such goods are Provided, That such goods ar
exempt from customs duties exempt from customs duties unde
under the Tariff and Customs the Tariff and Customs Code o
Code of the Philippines; the Philippines;
(D) Importation of professional (D) Importation of professiona

instruments and implements, instruments and implements
tools of trade, occupation or wearing apparel, domest
employment, wearing apparel, animals, and personal househol
domestic animals, and personal effects (except any vehicle, vesse
and household effects belonging aircraft, machinery, other good
to persons coming to settle in the for use in the manufacture an
Philippines or Filipinos or their merchandise of any kind i
families and descendants who are commercial quantity) belonging t
now residents or citizens of other persons coming to settle in th
countries, such parties hereinafter Philippines, for their own use an
referred to as overseas Filipinos, not for sale, barter or exchange
in quantities and of the class accompanying such persons, o
suitable to the profession, rank or arriving within ninety (90) day
position of the persons importing before or after their arrival, upo
said items, for their own use and the production of evidenc
not for barter or sale, satisfactory to the Commissione
accompanying such persons, or that such persons are actual
arriving within a reasonable time: coming to settle in the Phili
Provided, That the Bureau of and that the change of residenc
Customs may, upon the is bona fide;
production of satisfactory
evidence that such persons are
actually coming to settle in the
Philippines and that the goods are
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
brought from their former place of
abode, exempt such goods from
payment of duties and taxes:
Provided, further, That vehicles,
vessels, aircrafts, machineries
and other similar goods for use in
manufacture, shall not fall within
this classification and shall
therefore be subject to duties,
taxes and other charges; (as
10963, December 19, 2017)
(E) Services subject to percentag
(E) Services subject to tax under Title V;
percentage tax under Title V;
(F) Services by agricultura
(F) Services by agricultural contract growers and milling fo
contract growers and milling for others of palay into rice, corn int
others of palay into rice, corn into grits and sugar cane into ra
grits and sugar cane into raw sugar;
sugar;
(G) Medical, dental, hospital an
(G) Medical, dental, hospital and veterinary services except thos
veterinary services except those rendered by professionals;
rendered by professionals;
(H) Educational services rendere
(H) Educational services rendered by private educational institutions
by private educational institutions, duly accredited by the Departmen
duly accredited by the of Education (DepEd), th
Department of Education Commission on Higher Educatio
(DepEd), the Commission on (CHED), the Technical Educatio
Higher Education (CHED), the and Skills Development Authorit
Technical Education and Skills (TESDA) and those rendered b
Development Authority (TESDA) government educationa
and those rendered by institutions;
government educational
institutions;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(I) Services rendered b

individuals pursuant to a
(I) Services rendered by employer-employee relationship;
individuals pursuant to an
employer-employee relationship;
(J) Services rendered by regiona
(J) Services rendered by regional or area headquarters establishe
or area headquarters established in the Philippines by multinationa
in the Philippines by multinational corporations which act a
corporations which act as supervisory, communications an
supervisory, communications and coordinating centers for the
coordinating centers for their affiliates, subsidiaries or branche
affiliates, subsidiaries or branches in the Asia-Pacific Region and d
in the Asia-Pacific Region and do not earn or derive income from t
not earn or derive income from Philippines;
the Philippines;
(K) Transactions which are exemp

(K) Transactions which are under international agreements t
exempt under international which the Philippines is a signator
agreements to which the or under special laws, excep
Philippines is a signatory or under those under Presidential Decre
special laws, except those under No. 529;
Presidential Decree No. 529;
(L) Sales by agricultura

(L) Sales by agricultural cooperatives duly registered wit
cooperatives duly registered with the Cooperative Developmen
the Cooperative Development Authority to their members as we
Authority to their members as well as sale of their produce, whethe
as sale of their produce, whether in its original state or processe
in its original state or processed form, to non-members; the
form, to non-members; their importation of direct farm inputs
importation of direct farm inputs, machineries and equipmen
machineries and equipment, including spare parts thereof, to
including spare parts thereof, to used directly and exclusively in th
be used directly and exclusively in production and/or processing o
the production and/or processing their produce;
of their produce; (M) Gross receipts from lendin
activities by credit or multi-purpos
(M) Gross receipts from lending
cooperatives duly registered wit
activities by credit or
the Cooperative Developmen
multi-purpose cooperatives duly
Authority;
registered with the Cooperative
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Development Authority; (N) Sales by non-agricultu
non-electric and non-cred
(N) Sales by non-agricultural, cooperatives duly registered wit
non-electric and non-credit the Cooperative Developmen
cooperatives duly registered with Authority: Provided, That the shar
the Cooperative Development capital contribution of eac
Authority: Provided, That the member does not exceed Fiftee
share capital contribution of each thousand pesos (P15,000) an
member does not exceed Fifteen regardless of the aggregate capita
thousand pesos (P15,000) and and net surplus ratably distribute
regardless of the aggregate among the members:
capital and net surplus ratably
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
distributed among the members; (O) Export sales by persons wh
are not VAT-registered;
(O) Export sales by persons who
are not VAT-registered; (P) Sale of real properties no
primarily held for sale to customer
(P) Sale of real properties not or held for lease in the ordinar
primarily held for sale to course of trade or business, or rea
customers or held for lease in the property utilized for low-cost an
ordinary course of trade or socialized housing as defined b
business or real property utilized Republic Act No. 7279, otherwis
for low-cost and socialized known as the Urban Developmen
housing as defined by Republic and Housing Act of 1992, an
Act No. 7279, otherwise known as other related laws, residential lo
the Urban Development and valued at One million five hundre
Housing Act of 1992, and other thousand pesos (P1,500,000)
related laws, residential lot valued below, house and lot, and othe
at One million five hundred residential dwellings valued at Tw
thousand pesos (P1,500,000) and million five hundred thousan
below, house and lot, and other pesos (P2,500,000) and below
residential dwellings valued at Provided, That not later tha
Two million five hundred thousand January 31, 2009 and every thre
pesos (P2,500,000) and below: (3) years thereafter, the amount
Provided, That beginning January herein stated shall be adju
1, 2021, the VAT exemption shall their present values using th
only apply to sale of real Consumer Price Index, a
properties not primarily held for published by the National Statistic
sale to customers or held for Office (NSO);
lease in the ordinary course of
trade or business, sale of real
property utilized for socialized
housing as defined by Republic
Act No. 7279, sale of house and
lot, and other residential dwellings
with selling price of not more than
Two million pesos (P2,000,000):
Provided, further, That every
three (3) years thereafter, the
amount herein stated shall be
adjusted to its present value using
the Consumer Price Index, as
published by the Philippine
Statistics Authority (PSA); (as
10963, December 19, 2017) (Q) Lease of a residential unit wit
a monthly rental not exceedin
(Q) Lease of a residential unit Ten thousand pesos (P10,000
with a monthly rental not Provided, That not later tha
January 31, 2009313and every thre
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
with a monthly rental not
exceeding Fifteen thousand January 31, 2009 and every thre
pesos (P15,000); (as amended by (3) years thereafter, the amoun
Sec. 34, R.A. No. 10963, herein stated shall be adjusted t
December 19, 2017) its present value using th
Consumer Price Index, a
published by the National Statistic
Office (NSO);
(R) Sale, importation, printing o

publication of books and an
(R) Sale, importation, printing or newspaper, magazine, review o
publication of books and any bulletin which appears at regula
newspaper, magazine, review or intervals with fixed prices fo
bulletin which appears at regular subscription and sale and which
intervals with fixed prices for not devoted principally to th
subscription and sale and which is publication of paid advertisements
not devoted principally to the
publication of paid (S) Transport of passengers b
advertisements; international carriers;
(T) Sale, importation or lease o

(S) Transport of passengers by
passenger or cargo vessels an
international carriers;
aircraft, including engine
(T) Sale, importation or lease of equipment and spare parts thereo
passenger or cargo vessels and for domestic or internationa
aircraft, including engine, transport operations;
equipment and spare parts
thereof for domestic or
international transport operations; (U) Importation of fuel, goods an
supplies by persons engaged i
(U) Importation of fuel, goods and international shipping or a
supplies by persons engaged in transport operations;
international shipping or air
transport operations: Provided,
That the fuel, goods, and supplies
shall be used for international
shipping or air transport
operations; (as amended by Sec.
34, R.A. No. 10963, December (V) Services of bank, non-ban
19, 2017) financial intermediaries performin
quasi-banking functions, and othe
(V) Services of bank, non-bank non-bank financial intermediaries
financial intermediaries and
performing quasi-banking
functions, and other non-bank (W) Sale or lease of goods o
financial intermediaries; properties or the performance
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
services other than th
(W) Sale or lease of goods and transactions mentioned in th
services to senior citizens and preceding paragraphs, the gros
persons with disability, as annual sales and/or receipts d
provided under Republic Act Nos. not exceed the amount of On
9994 (Expanded Senior Citizens million five hundred thousan
Act of 2010) and 10754 (An Act pesos (P1,500,000): Provided
Expanding the Benefits and That not later than January 31
Privileges of Persons with 2009 and every three (3) year
Disability), respectively; (as thereafter, the amount herei
amended by Sec. 34, R.A. No. stated shall be adjusted to it
10963, December 19, 2017) present value using the Consume
Price Index, as published by th
National Statistics Office (NSO);
(X) Transfer of property pursuant

to Section 40(C)(2) of the
NIRC,as amended; (added by
Sec. 34, R.A. No. 10963,
December 19, 2017)
(Y) Association dues,

membership fees, and other
assessments and charges
collected by homeowners
associations and condominium
corporations; (added by Sec. 34,
2017)
(Z) Sale of gold to the Bangko

10963, December 19, 2017)
(AA) Sale of drugs and medicines

prescribed for diabetes, high
cholesterol, and hypertension
beginning January 1, 2019; and
10963, December 19, 2017)
(BB) Sale or lease of goods or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
properties or the performance of
services other than the
transactions mentioned in the
preceding paragraphs, the gross
annual sales and/or receipts do
not exceed the amount of Three
(2) A VAT-registered person ma
million pesos (P3,000,000).
elect that Subsection (1
to its sale of goods or properties o
10963, December 19, 2017)
services: Provided, That a
election made under th
Subsection shall be irrevocable fo
a period of three (3) years from th
quarter the election was made.
amended by Sec. 2 of R.A. No
10378, March 7, 2013; Sec. 2 o
R.A. No. 9238, Feb. 5, 2004; an
Sec. 7 of R.A. No. 9337, May 24
2005)
Tax Credits
SEC. 110. SEC. 110.
(A) Creditable Input Tax. — (A) Creditable Input Tax
(1) Any input tax evidenced by a (1) Any input tax evidenced by
VAT invoice or official receipt VAT invoice or official receip
issued in accordance with Section issued in accordance with Sectio
113 hereof on the following 113 hereof on the followin
transactions shall be creditable transactions shall be creditabl
against the output tax: against the output tax:
(a) Purchase or importation of (a) Purchase or importation o

goods: goods:
(i) For sale; or (i) For sale; or
(ii) For conversion into or (ii) For conversion into or intende

intended to form part of a finished to form part of a finished produc
product for sale including for sale including packagin
packaging materials; or materials; or
(iii) For use as supplies in the (iii) For use as supplies in th

course of business; or course of business; or
(iv) For use as materials supplied (iv) For use as materials supplie
in the sale of service; or in the sale of service; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(v) For use in trade or business (v) For use in trade or busin
for which deduction for which deduction for depreciation o
depreciation or amortization is amortization is allowed under th
allowed under this Code. Code.
(b) Purchase of services on which (b) Purchase of services on whic

a value-added tax has actually a value-added tax has actual
been paid. been paid.
(2) The input tax on domestic (2) The input tax on domest
purchase or importation of goods purchase or importation of good
or properties by a VAT-registered or properties by a VAT-registere
person shall be creditable: person shall be creditable:
(a) To the purchaser upon (a) To the purchaser upo

consummation of sale and on consummation of sale and o
importation of goods or importation of goods or properties
properties; and and
(b) To the importer upon payment (b) To the importer upon paymen
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of the value-added tax prior to the of the value-added tax prior to th
release of the goods from the release of the goods from th
custody of the Bureau of custody of the Bureau of Customs
Customs.
Provided, That the input tax on Provided, That the input tax o
goods purchased or imported in a goods purchased or imported in
calendar month for use in trade or calendar month for use in trade o
business for which deduction for business for which deduction fo
depreciation is allowed under this depreciation is allowed under th
Code shall be spread evenly over Code, shall be spread evenly ove
the month of acquisition and the the month of acquisition and th
fifty-nine (59) succeeding months fifty-nine (59) succeeding months
if the aggregate acquisition cost the aggregate acquisition cost fo
for such goods, excluding the such goods, excluding the VA
VAT component thereof, exceeds component thereof, exceeds On
One million pesos (P1,000,000): million pesos (P1,000,000
Provided, however, That if the Provided, however, That if th
estimated useful life of the capital estimated useful life of the capita
good is less than five (5) years, good is less than five (5) years, a
as used for depreciation used for depreciation purposes
purposes, then the input VAT then the input VAT shall be sprea
shall be spread over such a over such a shorter period
shorter period: Provided, further, Provided, finally, That in the cas
That the amortization of the input of purchase of services, lease o
VAT shall only be allowed until use of properties, the input ta
December 31, 2021 after which shall be creditable to th
taxpayers with unutilized input purchaser, lessee or licensee upo
VAT on capital goods purchased payment of the compensation
or imported shall be allowed to rental, royalty or fee.
apply the same as scheduled until
fully utilized: Provided, finally,
That in the case of purchase of
services, lease or use of
properties, the input tax shall be
creditable to the purchaser,
lessee or licensee upon payment
of the compensation, rental,
royalty or fee. (as amended by
Sec. 35, R.A. No. 10963,
December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) A VAT-registered person who (3) A VAT-registered person wh

is also engaged in transactions is also engaged in transactions no
not subject to the value-added tax subject to the value-added ta
shall be allowed tax credit as shall be allowed tax credit a
follows: follows:
(a) Total input tax which can be (a) Total input tax which can b
directly attributed to transactions directly attributed to transa
subject to value-added tax; and subject to value-added tax; and
(b) A ratable portion of any input (b) A ratable portion of any inpu
tax which cannot be directly tax which cannot be direct
attributed to either activity. attributed to either activity.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The term 'input tax' means the The term 'input tax' means th
value-added tax due from or paid value-added tax due from or pai
by a VAT-registered person in the by a VAT-registered person in th
course of his trade or business on course of his trade or business o
importation of goods or local importation of goods or loca
purchase of goods or services, purchase of goods or services
including lease or use of property, including lease or use of property
from a VAT-registered person. It from a VAT-registered person.
shall also include the transitional shall also include the transitiona
input tax determined in input tax determined in accordanc
accordance with Section 111 of with Section 111 of this Code.
this Code.
The term 'output tax' means th

The term 'output tax' means the value-added tax due on the sale o
value-added tax due on the sale lease of taxable goods o
or lease of taxable goods or properties or services by an
properties or services by any person registered or required t
person registered or required to register under Section 236 of th
register under Section 236 of this Code.
Code.
(B) Excess Output or Input Tax
(B) Excess Output or Input Tax. If at the end of any taxable quart
— If at the end of any taxable the output tax exceeds the inpu
quarter the output tax exceeds tax, the excess shall be paid by th
the input tax, the excess shall be VAT-registered person. If the inpu
paid by the VAT-registered tax exceeds the output tax, th
person. If the input tax exceeds excess shall be carried over to th
the output tax, the excess shall be succeeding quarter or quarters
carried over to the succeeding Provided, however, That any inpu
quarter or quarters: Provided, tax attributable to zero-rated sale
however, That any input tax by a VAT-registered person may a
attributable to zero-rated sales by his option be refunded or credite
a VAT-registered person may at against other internal revenu
his option be refunded or credited taxes, subject to the provisions o
against other internal revenue Section 112.
taxes, subject to the provisions of
Section 112. (C) Determination of Creditabl
Input Tax. — The sum of th
(C) Determination of Creditable excess input tax carrie
Input Tax. — The sum of the the preceding month or quarte
excess input tax carried over from and the input tax creditable to
the preceding month or quarter VAT-registered person during th
and the input tax creditable to a taxable month or quarter shall b
VAT-registered person during the reduced by the amount of claim fo
taxable month or quarter shall be refund or tax credit fo
reduced by the amount of claim value-added tax and othe
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
reduced by the amount of claim value-added tax and othe
for refund or tax credit for adjustments, such as purch
value-added tax and other returns or allowances and input ta
adjustments, such as purchase attributable to exempt sale.
returns or allowances and input
tax attributable to exempt sale.
The claim for tax credit referred t
in the foregoing paragraph sha
The claim for tax credit referred to include not only those filed with th
in the foregoing paragraph shall Bureau of Internal Revenue bu
include not only those filed with also those filed with othe
the Bureau of Internal Revenue government agencies, such as th
but also those filed with other Board of Investments and th
government agencies, such as Bureau of Customs. (as amende
the Board of Investments and the by Sec. 8 of R.A. No. 9337, Ma
Bureau of Customs. 24, 2005 and Sec. 1 of R.A. No
9361, Sec. 1, November 20, 2006
Transitional/Presumptive
SEC. 111. SEC. 111.
Input Tax Credits
(A) Transitional Input Tax Credits. (A) Transitional Input Tax Credits
— A person who becomes liable — A person who becomes liable t
to value-added tax or any person value-added tax or any perso
who elects to be a VAT-registered who elects to be a VAT-registere
person shall, subject to the filing of person shall, subject to the filing o
an inventory according to rules an inventory according to rules an
and regulations prescribed by the regulations prescribed by th
Commissioner, be allowed input Commissioner, be allowed inpu
tax on his beginning inventory of tax on his beginning inventory o
goods, materials and supplies goods, materials and supplie
equivalent to two percent (2%) of equivalent to two percent (2%) o
the value of such inventory or the the value of such inventory o
actual value-added tax paid on actual value-added tax paid o
such goods, materials and such goods, materials an
supplies, whichever is higher, supplies, whichever is highe
which shall be creditable against which shall be creditable agains
the output tax. the output tax.
(B) Presumptive Input Tax Credits. (B) Presumptive Input Tax Credits
— —
Persons or firms engaged in the Persons or firms engaged in th

processing of sardines, mackerel processing of sardines, mackere
and milk, and in manufacturing and milk, and in manufacturin
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
refined sugar, cooking oil and refined sugar, cooking oil an
packed noodle-based instant packed noodle-based instan
meals, shall be allowed a meals, shall be allowed
presumptive input tax, creditable presumptive input tax, creditabl
against the output tax, equivalent against the output tax, equivalen
to four percent (4%) of the gross to four percent (4%) of the gros
value in money of their purchases value in money of their purchase
of primary agricultural products of primary agricultural product
which are used as inputs to their which are used as inputs to the
production. production.
As used in this Subsection, th
As used in this Subsection, the
term 'processing' shall mea
term 'processing' shall mean
pasteurization, canning an
pasteurization, canning and
activities which through physical o
activities which through physical
chemical process alter the exterio
or chemical process alter the
texture or form or inner su
exterior texture or form or inner
of a product in such manner as t
substance of a product in such
prepare it for special use to whic
manner as to prepare it for
it could not have been put in it
special use to which it could not
original form or condition. (
have been put in its original form
or condition.
9337, May 24, 2005)
Refunds or Tax Credits of

SEC. 112. SEC. 112.
Input Tax
(A) Zero-Rated or Effectively (A) Zero-Rated or Effective
Zero-Rated Sales. — Any Zero-Rated Sales. — An
VAT-registered person, whose VAT-registered person, whos
sales are zero-rated or effectively sales are zero-rated or effective
zero-rated may, within two (2) zero-rated may, within two (2
years after the close of the years after the close of the taxabl
taxable quarter when the sales quarter when the sales wer
were made, apply for the made, apply for the issuance of
issuance of a tax credit certificate tax credit certificate or refund o
or refund of creditable input tax creditable input tax due or pai
due or paid attributable to such attributable to such sales, excep
sales, except transitional input transitional input tax, to the exten
tax, to the extent that such input that such input tax has not bee
tax has not been applied against applied against output tax
output tax: Provided, however, Provided, however, That in th
That in the case of zero-rated case of zero-rated sales unde
sales under Section Section 106(A)(2)(a)(1), (2) and (b
106(A)(2)(a)(1), (2) and (b) and and Section 108(B)(1) and (2), th
Section 108(B)(1) and (2), the acceptable foreign currenc
acceptable foreign currency exchange proceeds thereof ha
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
exchange proceeds thereof had been duly accounted for i
been duly accounted for in accordance with the rules an
accordance with the rules and regulations of the Bangko Sentra
regulations of the Bangko Sentral ng Pilipinas (BSP): Provided
ng Pilipinas (BSP): Provided, further, That where the taxpayer
further, That where the taxpayer engaged in zero-rated o
is engaged in zero-rated or effectively zero-rated sale and als
effectively zero-rated sale and in taxable or exempt sale of good
also in taxable or exempt sale of or properties or services, and th
goods or properties or services, amount of creditable input tax du
and the amount of creditable input or paid cannot be directly an
tax due or paid cannot be directly entirely attributed to any one o
and entirely attributed to any one transactions, it shall be allocate
of the transactions, it shall be proportionately on the basis of th
allocated proportionately on the volume of sales: Provided, finally
basis of the volume of sales: That for a person making sale
Provided, finally, That for a that are zero-rated under Sectio
person making sales that are 108(B)(6), the input taxes shall b
zero-rated under Section allocated ratably between h
108(B)(6), the input taxes shall be zero-rated and non-zero-rate
allocated ratably between his sales.
zero-rated and non-zero-rated
sales.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Cancellation of VAT (B) Cancellation of VA

Registration. — A person whose Registration. — A person whos
registration has been cancelled registration has been cancelle
due to retirement from or due to retirement from or cessatio
cessation of business, or due to of business, or due to changes i
changes in or cessation of status or cessation of status unde
under Section 106(C) of this Code Section 106(C) of this Code may
may, within two (2) years from the within two (2) years from the dat
date of cancellation, apply for the of cancellation, apply for th
issuance of a tax credit certificate issuance of a tax credit certificat
for any unused input tax which for any unused input tax whic
may be used in payment of his may be used in payment of h
other internal revenue taxes. other internal revenue taxes.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Period within which Refund of (C) Period within which Refund o
Input Taxes shall be Made. — In Tax Credit of Input Taxes shall
proper cases, the Commissioner Made. — In proper cases, th
shall grant a refund for creditable Commissioner shall grant a refun
input taxes within ninety (90) days or issue the tax credit certificate fo
from the date of submission of the creditable input taxes within on
official receipts or invoices and hundred twenty (120) days from
other documents in support of the the date of submission of complet
application filed in accordance documents in support of th
with Subsections (A) and (B) application filed in accordance wit
hereof: Provided, That should the Subsection (A) hereof.
Commissioner find that the grant
of refund is not proper, the
Commissioner must state in
writing the legal and factual basis
for the denial.
In case of full or partial denial of

In case of full or partial denial o
the claim for tax refund, the
the claim for tax refund or ta
taxpayer affected may, within
credit, or the failure on the part o
thirty (30) days from the receipt of
the Commissioner to act on th
the decision denying the claim,
application within the perio
appeal the decision with the Court
prescribed above, the taxpaye
of Tax Appeals: Provided,
affected may, within thirty (30
however, That failure on the part
days from the receipt of th
of any official, agent, or employee
decision denying the claim or afte
of the BIR to act on the
the expiration of the one hundre
application within the ninety
twenty day-period, appeal th
(90)-day period shall be
decision or the unacted claim wit
punishable under Section 269 of
the Court of Tax Appeals.
this Code. (as amended by Sec.
19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Manner of Giving Refund. — (D) Manner of Giving Refund

Refunds shall be made upon Refunds shall be made upo
warrants drawn by the warrants drawn by th
Commissioner or by his duly Commissioner or by his du
authorized representative without authorized representative withou
the necessity of being the necessity of bein
countersigned by the Chairman, countersigned by the Chairman
Commission on Audit, the Commission on Audit, th
provisions of the Administrative provisions of the Administrativ
Code of 1987 to the contrary Code of 1987 to the contrar
notwithstanding: Provided, That notwithstanding: Provided, Tha
refunds under this paragraph refunds under this paragraph sha
shall be subject to post audit by be subject to post audit by th
the Commission on Audit. Commission on Audit. (
9337, May 24, 2005)
CHAPTER II — COMPLIANCE CHAPTER II — COMPLIANCE

REQUIREMENTS REQUIREMENTS
Registration of
Value-added Taxpayers
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Invoicing and Accounting
SEC. 113. SEC. 113.
Requirements for
VAT-Registered Persons (A) Invoicing Requirements. — A (A) Invoicing Requirements
VAT-registered person shall issue: VAT-registered person shall issue
(1) A VAT invoice for every sale, (1) A VAT invoice for every sale
barter or exchange of goods or barter or exchange of goods o
properties; and properties; and
(2) A VAT official receipt for every (2) A VAT official receipt
lease of goods or properties, and lease of goods or properties, an
for every sale, barter or exchange for every sale, barter or exchang
of services. of services.
(B) Information Contained in the (B) Information Contained in th

VAT Invoice or VAT Official VAT Invoice or VAT Officia
Receipt. — The following Receipt. — The followin
information shall be indicated in information shall be indicated i
the VAT invoice or VAT official the VAT invoice or VAT officia
receipt: receipt:
(1) A statement that the seller is a (1) A statement that the seller is
VAT-registered person, followed VAT-registered person, followe
by his Taxpayer's Identification by his Taxpayer's Identificatio
Number (TIN); Number (TIN);
(2) The total amount which the (2) The total amount which th
purchaser pays or is obligated to purchaser pays or is obligated t
pay to the seller with the indication pay to the seller with the indicatio
that such amount includes the that such amount includes th
value-added tax: Provided, That: value-added tax: Provided, That:
(a) The amount of the tax shall be (a) The amount of the tax shall b
shown as a separate item in the shown as a separate item in th
invoice or receipt; invoice or receipt;
(b) If the sale is exempt from (b) If the sale is exempt from
value-added tax, the term value-added tax, the term
'VAT-exempt sale' shall be written 'VAT-exempt sale' shall be writte
or printed prominently on the or printed prominently on th
invoice or receipt; invoice or receipt;
(c) If the sale is subject to zero (c) If the sale is subject to zer
percent (0%) value-added tax, the percent (0%) value-added tax, th
term 'zero-rated sale' shall be term 'zero-rated sale' shall b
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
written or printed prominently on written or printed prominently o
the invoice or receipt; the invoice or receipt;
(d) If the sale involves goods,. (d) If the sale involves goods
properties or services some of properties or services some o
which are subject to and some of which are subject to and some o
which are VAT zero-rated or which are VAT zero-rated o
VAT-exempt, the invoice or receipt VAT-exempt, the invoice or receip
shall clearly indicate the shall clearly indicate th
break-down of the sale price break-down of the sale pric
between its taxable, exempt and between its taxable, exempt an
zero-rated components, and the zero-rated components, and th
calculation of the value-added tax calculation of the value-added ta
on each portion of the sale shall on each portion of the sale shall b
be shown on the invoice or shown on the invoice or receip
receipt: Provided, That the seller Provided, That the seller ma
may issue separate invoices or issue separate invoices or receipt
receipts for the taxable, exempt, for the taxable, exempt, an
and zero-rated components of the zero-rated components of the sale
sale.
(3) The date of transaction
(3) The date of transaction, quantity, unit cost and descriptio
quantity, unit cost and description of the goods or properties o
of the goods or properties or nature of the service; and
nature of the service; and
(4) In the case of sales in th
(4) In the case of sales in the amount of One thousand peso
amount of One thousand pesos (P1,000) or more where the sale o
(P1,000) or more where the sale transfer is made to
or transfer is made to a VAT-registered person, the name
VAT-registered person, the name, business style, if any, address an
business style, if any, address and Taxpayer Identification Numbe
Taxpayer Identification Number (TIN) of the purchaser, custome
(TIN) of the purchaser, customer or client.
or client.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Accounting Requirements. — (C) Accounting Requirements
Notwithstanding the provisions of Notwithstanding the provisions o
Section 233, all persons subject to Section 233, all persons subject t
the value-added tax under the value-added tax unde
Sections 106 and 108 shall, in Sections 106 and 108 shall, i
addition to the regular accounting addition to the regular accountin
records required, maintain a records required, maintain
subsidiary sales journal and subsidiary sales journal an
subsidiary purchase journal on subsidiary purchase journal o
which the daily sales and which the daily sales an
purchases are recorded. The purchases are recorded. Th
subsidiary journals shall contain subsidiary journals shall contai
such information as may be such information as may b
required by the Secretary of required by the Secretary o
Finance. Finance.
(D) Consequence of Issuing (D) Consequence of Issuin

Erroneous VAT Invoice or VAT Erroneous VAT Invo
Official Receipt. — Official Receipt. —
(1) If a person who is not a (1) If a person who is not

VAT-registered person issues an VAT-registered person issues a
invoice or receipt showing his invoice or receipt showing h
Taxpayer Identification Number Taxpayer Identification Numbe
(TIN), followed by the word 'VAT': (TIN), followed by the word 'VAT':
(a) The issuer shall, in addition to (a) The issuer shall, in addition t
any liability to other percentage any liability to other percent
taxes, be liable to: taxes, be liable to:
(i) The tax imposed in Section 106 (i) The tax imposed in Section 10
or 108 without the benefit of any or 108 without the benefit of an
input tax credit; and input tax credit; and
(ii) A fifty percent (50%) surcharge (ii) A fifty percent (50%) surcharg
under Section 248 (B) of this under Section 248 (B) of th
Code; Code;
(b) The VAT shall, if the other (b) The VAT shall, if the othe
requisite information required requisite information require
under Subsection (B) hereof is under Subsection (B) hereof
shown on the invoice or receipt, shown on the invoice or receipt, b
be recognized as an input tax recognized as an input tax credit t
credit to the purchaser under the purchaser under Section 11
Section 110 of this Code. of this Code.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) If a VAT-registered person (2) If a VAT-registered perso
issues a VAT invoice or VAT issues a VAT invoice or VA
official receipt for a VAT-exempt official receipt for a VAT-exemp
transaction, but fails to display transaction, but fails to displa
prominently on the invoice or prominently on the invoice o
receipt the term 'VAT-exempt receipt the term 'VAT-exemp
sale', the issuer shall be liable to sale', the issuer shall be liable t
account for the tax imposed in account for the tax imposed i
Section 106 or 108 as if Section Section 106 or 108 as if Sectio
109 did not apply. 109 did not apply.
(E) Transitional Period
(E) Transitional Period. —
Notwithstanding Subsection (B
Notwithstanding Subsection (B)
hereof, taxpayers may continue t
hereof, taxpayers may continue to
issue VAT invoices and VA
issue VAT invoices and VAT
official receipts for the period Ju
official receipts for the period July
1, 2005 to December 31, 2005, i
1, 2005 to December 31, 2005, in
accordance with Bureau of Interna
accordance with Bureau of
Revenue administrative practice
Internal Revenue administrative
that existed as of December 31
practices that existed as of
2004. (as amended by Sec.
December 31, 2004.
R.A. No. 9337, May 24, 2005
Notification Requirements
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Return and Payment of
SEC. 114. SEC. 114.
Value-added Tax
(A) In General. — Every person (A) In General. — Every perso
liable to pay the value-added tax liable to pay the value-added ta
imposed under this Title shall file imposed under this Title shall file
a quarterly return of the amount quarterly return of the amount o
of his gross sales or receipts his gross sales or receipts withi
within twenty-five (25) days twenty-five (25) days following th
following the close of each close of each taxable quarte
taxable quarter prescribed for prescribed for each taxpaye
each taxpayer: Provided, Provided, however, Tha
however, That VAT-registered VAT-registered persons shall pa
persons shall pay the the value-added tax on a month
value-added tax on a monthly basis.
basis: Provided, finally, That
filing and payment required under
this Subsection shall be done
within twenty-five (25) days
following the close of each
taxable quarter. (as amended by
Sec. 37, R.A. No. 10963,
December 19, 2017)
Any person, whose registratio
has been cancelled in accordanc
Any person, whose registration
with Section 236, shall file a retur
has been cancelled in accordance
and pay the tax due thereon withi
with Section 236, shall file a
twenty-five (25) days from the dat
return and pay the tax due
of cancellation of registration
thereon within twenty-five (25)
Provided, That only on
days from the date of cancellation
consolidated return shall be file
of registration: Provided, That
by the taxpayer for his principa
only one consolidated return shall
place of business or head offic
be filed by the taxpayer for his
and all branches.
principal place of business or
head office and all branches.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Where to File the Return an

Pay the Tax. — Except as th
(B) Where to File the Return and
Commissioner otherwise permits
Pay the Tax. — Except as the
the return shall be filed with an
Commissioner otherwise permits,
the tax paid to an authorized agen
the return shall be filed with and
bank, Revenue Collection Office
the tax paid to an authorized
or duly authorized city or municipa
agent bank, Revenue Collection
Treasurer in the Philippine
Officer or duly authorized city or
located within the revenue distric
municipal Treasurer in the
where the taxpayer is registered o
Philippines located within the
required to register.
revenue district where the
taxpayer is registered or required
to register.
(C) Withholding of Value-adde

Tax. — The Government or any o
(C) Withholding of Value-added
its political subdivisions
Tax. — The Government or any
instrumentalities or agencies
of its political subdivisions,
including government-owned o
instrumentalities or agencies,
-controlled corporations (GOCCs
including government-owned or
shall, before making payment o
-controlled corporations (GOCCs)
account of each purchase o
shall, before making payment on
goods and services which ar
account of each purchase of
subject to the value-added ta
goods and services which are
imposed in Sections 106 and 10
subject to the value-added tax
of this Code, deduct and withhol
imposed in Sections 106 and 108
a final value-added tax at the rat
of this Code, deduct and withhold
of five percent (5%) of the gros
a final value-added tax at the rate
payment thereof: Provided, Tha
of five percent (5%) of the gross
the payment for lease or use o
payment thereof: Provided, That
properties or property rights t
nonresident owners shall b
VAT withholding system under
subject to ten percent (10%
this Subsection shall shift from
withholding tax at the time o
final to a creditable system:
payment. For purposes of th
Section, the payor or person i
payment for lease or use of
control of the payme
properties or property rights to
considered as the withholdin
nonresident owners shall be
agent.
subject to twelve percent (12%)
withholding tax at the time of
payment: Provided, finally, That
payments for purchases of goods
and services arising from projects
funded by Official Development
Assistance (ODA) as defined
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
otherwise known as the 'Official
Development Assistance Act of
1996,' as amended, shall not be
subject to the final withholding tax
system as imposed in this
Subsection. For purposes of this
Section, the payor or person in
control of the payment shall be
considered as the withholding
agent. (as amended by Sec. 37, The value-added tax withhel
R.A. No. 10963, December 19, under this Section shall b
2017) remitted within ten (10) day
following the end of the month th
withholding was made." (
9337, May 24, 2005)
Power of the
SEC. 115. The Commissioner or SEC. 115. The Commissioner o
Commissioner to Suspend
his authorized representative is his authorized representative
the Business Operations of
hereby empowered to suspend the hereby empowered to suspend th
a Taxpayer
business operations and business operations an
temporarily close the business temporarily close the busines
establishment of any person for establishment of any person fo
any of the following violations: any of the following violations:
(a) In the Case of a (a) In the Case of

VAT-registered Person. — VAT-registered Person
(1) Failure to issue receipts or (1) Failure to issue receipts o

invoices; invoices;
(2) Failure to file a value-added (2) Failure to file a value-added ta

tax return as required under return as required under Sectio
Section 114; or 114; or
(3) Understatement of taxable (3) Understatement of taxabl

sales or receipts by thirty percent sales or receipts by thirty percen
(30%) or more of his correct (30%) or more of his corr
taxable sales or receipts for the taxable sales or receipts for th
taxable quarter. taxable quarter.
(b) Failure of any Person to (b) Failure of any Person t
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Register as Required under Register as Required unde
Section 236. — Section 236. —
The temporary closure of th
The temporary closure of the
establishment shall be for th
establishment shall be for the
duration of not less than five (5
duration of not less than five (5)
days and shall be lifted only upo
days and shall be lifted only upon
compliance with whateve
compliance with whatever
requirements prescribed by th
requirements prescribed by the
Commissioner in the closure orde
Commissioner in the closure
order.
TITLE V — OTHER TITLE V — OTHER

PERCENTAGE TAXES PERCENTAGE TAXES
Tax on Persons Exempt SEC. 116. Any person whose SEC. 116. Any person whos
from Value-added Tax sales or receipts are exempt sales or receipts are exempt unde
(VAT) under Section 109 (BB) of this Section 109(V) of this Code from
Code from the payment of the payment of value-added ta
value-added tax and who is not a and who is not a VAT-registere
VAT-registered person shall pay a person shall pay a tax equivalen
tax equivalent to three percent to three percent (3%) of his gros
(3%) of his gross quarterly sales quarterly sales or receipts
or receipts: Provided, That Provided, That cooperatives sha
cooperatives, and beginning be exempt from the three percen
January 1, 2019, self-employed (3%) gross receipts tax herei
and professionals with total imposed. (as amended by Sec. 1
annual gross sales and/or gross of R.A. No. 9337, May 24, 20
receipts not exceeding Five
hundred thousand pesos
(P500,000) shall be exempt from
the three percent (3%) gross
receipts tax herein imposed. (as
10963, December 19, 2017)
Hotels, Motels and Others
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Caterer's Tax
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Percentage Tax on
SEC. 117. Cars for rent or hire SEC. 117. Cars for rent or hir
Domestic Carriers and
driven by the lessee; driven by the lessee; transportatio
Keepers of Garages
transportation contractors, contractors, including persons wh
including persons who transport transport passengers for hire, an
passengers for hire, and other other domestic carriers by land fo
domestic carriers by land for the the transport of passenger
transport of passengers (except (except owners of bancas an
owners of bancas and owners of owners of animal-drawn tw
animal-drawn two wheeled wheeled vehicle), and keepers o
vehicle), and keepers of garages garages shall pay a tax equivalen
shall pay a tax equivalent to three to three percent (3%) of the
percent (3%) of their quarterly quarterly gross receipts.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
gross receipts.
The gross receipts of commo
The gross receipts of common carriers derived from the
carriers derived from their incoming and outgoing freight sha
incoming and outgoing freight not be subjected to the local taxe
shall not be subjected to the local imposed under Republic Act No
taxes imposed under Republic Act 7160, otherwise known as th
No. 7160, otherwise known as the Local Government Code of
Local Government Code of 1991.
In computing the percentage ta
In computing the percentage tax provided in this Section, th
provided in this Section, the following shall be considered th
following shall be considered the minimum quarterly gross receipt
minimum quarterly gross receipts in each particular case:
in each particular case:
Jeepney for hire —
Jeepney for hire —
1. Manila and other cities
P2,400 2. Provincial
1,200
2. Provincial
1,200 Public utility bus —
Public utility bus — Not exceeding 30

passengers
Not exceeding 30
passengers Exceeding 30 but
P3,600 not exceeding 50
passengers
Exceeding 30 but 6,000
not exceeding 50
passengers Exceeding 50
6,000 passengers
7,200
Exceeding 50
passengers Taxis —
7,200
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Taxis —
2. Provincial
1. Manila and other cities 2,400
P3,600
Car for hire (with chauffeur)
2. Provincial 3,000
2,400
Car for hire (without chauffeur)
Car for hire (with chauffeur) 1,800
3,000 (as amended by Sec. 14 of R.A
No. 9337, May 24, 2005
Car for hire (without chauffeur)
1,800
Percentage Tax on
SEC. 118. SEC. 118.
International Carriers
(A) International air carriers doing (A) International air carriers d
business in the Philippines on their business in the Philippines on the
gross receipts derived from gross receipts derived from
transport of cargo from the transport of cargo from th
Philippines to another country Philippines to another country sha
shall pay a tax of three percent pay a tax of three percent (3%) o
(3%) of their quarterly gross their quarterly gross receipts.
receipts.
(B) International shipping carrier
doing business in the Philippine
(B) International shipping carriers
on their gross receipts derive
doing business in the Philippines
from transport of cargo from th
on their gross receipts derived
Philippines to another country sha
from transport of cargo from the
pay a tax equivalent to thre
Philippines to another country
percent (3%) of their quarter
shall pay a tax equivalent to three
gross receipts. (as amended b
percent (3%) of their quarterly
Sec. 3, R.A. No. 10378, March 7
gross receipts.
2013)
Percentage Tax on Dealers

in Securities; Lending
Investors
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Tax on Franchises
SEC. 119. Any provision of SEC. 119. Any provision of genera
general or special law to the or special law to the contrar
contrary notwithstanding, there notwithstanding, there shall b
shall be levied, assessed and levied, assessed and collected i
collected in respect to all respect to all franchis
franchises on radio and/or and/or television broadcastin
television broadcasting companies companies whose annual gros
whose annual gross receipts of receipts of the preceding year d
the preceding year do not exceed not exceed Ten million peso
Ten million pesos (P10,000,000), (P10,000,000), subject to Sectio
subject to Section 236 of this 236 of this Code, a tax of thre
Code, a tax of three percent (3%) percent (3%) and on gas an
and on gas and water utilities, a water utilities, a tax of
tax of two percent (2%) on the (2%) on the gross receipts derive
gross receipts derived from the from the business covered by th
business covered by the law law granting the franchise
granting the franchise: Provided, Provided, however, That radio an
however, That radio and television television broadcasting companie
broadcasting companies referred referred to in this Section sha
to in this Section shall have an have an option to be registered a
option to be registered as a a value-added taxpayer and pa
value-added taxpayer and pay the the tax due thereon: Provided
tax due thereon: Provided, further, further, That once the option
That once the option is exercised, exercised, said option shall b
said option shall be irrevocable. irrevocable.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The grantee shall file the retur
The grantee shall file the return
with, and pay the tax due thereo
with, and pay the tax due thereon
to the Commissioner or his du
to the Commissioner or his duly
authorized representative,
authorized representative, in
accordance with the provisions o
accordance with the provisions of
Section 128 of this Code, and th
Section 128 of this Code, and the
return shall be subject to audit b
return shall be subject to audit by
the Bureau of Internal Revenue
the Bureau of Internal Revenue,
any provision of any existing law t
any provision of any existing law
the contrary notwithstanding. (
to the contrary notwithstanding.
(as amended by Sec. 15 of R.A.
9337, May 24, 2005)
No. 9337, May 24, 2005)
Tax on Overseas Dispatch,

SEC. 120. SEC. 120.
Message or Conversation
Originating from the (A) Persons Liable. — There shall (A) Persons Liable. — There sha
Philippines be collected upon every overseas be collected upon every oversea
dispatch, message or dispatch, message or conversatio
conversation transmitted from the transmitted from the Philippines b
Philippines by telephone, telephone, telegraph, telewrite
telegraph, telewriter exchange, exchange, wireless and othe
wireless and other communication communication equipmen
equipment services, a tax of ten services, a tax of ten percen
percent (10%) on the amount paid (10%) on the amount paid for suc
for such services. The tax services. The tax imposed in th
imposed in this Section shall be Section shall be payable by th
payable by the person paying for person paying for the service
the services rendered and shall be rendered and shall be paid to th
paid to the person rendering the person rendering the services wh
services who is required to collect is required to collect and pay th
and pay the tax within twenty (20) tax within twenty (20) days afte
days after the end of each quarter. the end of each quarter.
(B) Exemptions. — The tax (B) Exemptions. — The ta

imposed by this Section shall not imposed by this Section shall no
apply to: apply to:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Government. — Amounts paid (1) Government. — Amounts pai
for messages transmitted by the for messages transmitted by th
Government of the Republic of the Government of the Republic of th
Philippines or any of its political Philippines or any of its politica
subdivisions or instrumentalities; subdivisions or instrumentalities;
(2) Diplomatic Services. — (2) Diplomatic Services

Amounts paid for messages Amounts paid for message
transmitted by any embassy and transmitted by any embassy an
consular offices of a foreign consular offices of a foreig
government; government;
(3) International Organizations. — (3) International Organizations

Amounts paid for messages Amounts paid for message
transmitted by a public transmitted by a publ
international organization or any of international organization or any o
its agencies based in the its agencies based in th
Philippines enjoying privileges, Philippines enjoying privileges
exemptions and immunities which exemptions and immunities whic
the Government of the Philippines the Government of the Philippine
is committed to recognize is committed to recognize pursuan
pursuant to an international to an international agreement; and
agreement; and
(4) News Services. — Amount
paid for messages from an
(4) News Services. — Amounts
newspaper, press association
paid for messages from any
radio or television newspape
newspaper, press association,
broadcasting agency, o
radio or television newspaper,
newstickers services, to any othe
broadcasting agency, or
newspaper, press association
newstickers services, to any other
radio or television newspape
newspaper, press association,
broadcasting agency, o
radio or television newspaper
newsticker service or to a bon
broadcasting agency, or
fide correspondent, whic
newsticker service or to a bona
messages deal exclusively with th
fide correspondent, which
collection of news items for, or th
messages deal exclusively with
dissemination of news item
the collection of news items for, or
through, public press, rad
the dissemination of news item
television broadcasting or
through, public press, radio or
newsticker service furnishing
television broadcasting or a
general news service similar t
newsticker service furnishing a
that of the public press.
general news service similar to
that of the public press.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Tax on Banks and

SEC. 121. There shall be collected SEC. 121. There shall be collecte
Non-bank Financial
a tax on gross receipts derived a tax on gross receipts derive
Intermediaries Performing
from sources within the Philippines from sources within the Philippine
Quasi-banking Functions
by all banks and non-bank by all banks and non-ban
financial intermediaries in financial intermediaries i
accordance with the following accordance with the followin
schedule: schedule:
(a) On interest, commissions and (a) On interest, commissions an

discounts from lending activities discounts from lending
as well as income from financial well as income from financia
leasing, on the basis of remaining leasing, on the basis of remainin
maturities of instruments from maturities of instruments from
which such receipts are derived: which such receipts are derived:
Maturity period is five Maturity period is five

years or less 5% years or less
Maturity period is more Maturity period is more

than five years 1% than five years
(b) On dividends and equity (b) On dividends and e

shares and net income of and net income of subsidiaries —
subsidiaries — 0% 0%
(c) On royalties, rentals of (c) On royalties, rentals o

property, real or personal, profits, property, real or personal, profits
from exchange and all other items from exchange and all other item
treated as gross income under treated as gross income unde
Section 32 of this Code — 7% Section 32 of this Code — 7%
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(d) On net trading gains within the (d) On net trading gains within th
taxable year on foreign currency, taxable year on foreign currency
debt securities, derivatives, and debt securities, derivatives, an
other similar financial instruments other similar financial instrument
— 7% — 7%
Provided, however, That in case Provided, however, That in cas

the maturity period referred to in the maturity period referred to i
paragraph (a) is shortened thru paragraph (a) is shortened thr
pretermination, then the maturity pretermination, then the maturit
period shall be reckoned to end as period shall be reckoned t
of the date of pretermination for of the date of pretermination fo
purposes of classifying the purposes of classifying th
transaction and the correct rate of transaction and the correct rate o
tax shall be applied accordingly. tax shall be applied accordingly.
Provided, finally, That the Provided, finally, That th

generally accepted accounting generally accepted accountin
principles as may be prescribed by principles as may be prescribed b
the Bangko Sentral ng Pilipinas for the Bangko Sentral ng
the bank or nonbank financial the bank or nonbank financia
intermediary performing intermediary performin
quasi-banking functions shall quasi-banking functions sha
likewise be the basis for the likewise be the basis for th
calculation of gross receipts. calculation of gross receipts.
Nothing in this Code shall preclud
Nothing in this Code shall
the Commissioner from imposin
preclude the Commissioner from
the same tax herein provided o
imposing the same tax herein
persons performing simila
provided on persons performing
banking activities. (as amended b
similar banking activities. (as
R.A. No. 9238, Feb. 5, 2004 an
amended by R.A. No. 9238, Feb.
Sec. 16 of R.A. No. 9337, May 24
5, 2004 and Sec. 16 of R.A. No.
2005)
9337, May 24, 2005)
Tax on Other Non-Bank

Financial Intermediaries
a tax of five percent (5%) on the a tax of five percent (5%) on th
gross receipts derived by other gross receipts derived by othe
non-bank financial intermediaries non-bank financial intermediarie
doing business in the Philippines, doing business in the Philippines
from interest, commissions, from interest, commissions
discounts and all other items discounts and all other item
treated as gross income under this treated as gross income under th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Code: Provided, That interests, Code: Provided, That interests
commissions and discounts from commissions and discounts from
lending activities, as well as lending activities, as well a
income from financial leasing, income from financial leasing, sha
shall be taxed on the basis of be taxed on the basis of remainin
remaining maturities of the maturities of the instruments from
instruments from which such which such receipts are derived, i
receipts are derived, in accordance with the followin
accordance with the following schedule:
schedule:
Maturity period is five (5)

Maturity period is five (5) years or less
years or less 5%
Maturity period is more than
Maturity period is more than five (5) years
five (5) years 1%

the maturity period is shortened the maturity period is shortene
thru pretermination, then the thru pretermination, then th
maturity period shall be reckoned maturity period shall be reckone
to end as of the date of to end as of the date o
pretermination for purposes of pretermination for purposes o
classifying the transaction and the classifying the transaction and th
correct rate shall be applied correct rate shall be applie
accordingly. accordingly.
Provided, finally, That the Provided, finally, That th

generally accepted accounting generally accepted accountin
principles as may be prescribed by principles as may be prescribed b
the Securities and Exchange the Securities and Exchang
Commission for other non-bank Commission for other non-ban
financial intermediaries shall financial intermediaries sha
likewise be the basis for the likewise be the basis for th
calculation of gross receipts. calculation of gross receipts.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Nothing in this Code shall prelud

Nothing in this Code shall prelude
the Commissioner from imposin
the Commissioner from imposing
the same tax herein provided o
the same tax herein provided on
persons performing simila
persons performing similar
financing activities. (as amende
financing activities.
by Sec. 4, R.A. No. 9238, Feb. 5
2004)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Tax on Life Insurance
Premiums
from every person, company or from every person, company o
corporation (except purely corporation (except pure
cooperative companies or cooperative companies o
associations) doing life insurance associations) doing life insuranc
business of any sort in the business of any sort in th
Philippines a tax of two percent Philippines a tax of
(2%) of the total premium (2%) of the total premium
collected, whether such premiums collected, whether such premium
are paid in money, notes, credits are paid in money, notes, credit
or any substitute for money; but or any substitute for mon
premiums refunded within six (6) premiums refunded within six (6
months after payment on account months after payment on accoun
of rejection of risk or returned for of rejection of risk or returned fo
other reason to a person insured other reason to a person insure
shall not be included in the taxable shall not be included in the taxabl
receipts; nor shall any tax be paid receipts; nor shall any tax be pai
upon reinsurance by a company upon reinsurance by a compan
that has already paid the tax; nor that has already paid the tax; no
upon premiums collected or upon premiums collected o
received by any branch of a received by any branch of
domestic corporation, firm or domestic corporation, firm o
association doing business association doing business outsid
outside the Philippines on account the Philippines on account of an
of any life insurance of the insured life insurance of the insured who
who is a nonresident, if any tax on a nonresident, if any tax on suc
such premium is imposed by the premium is imposed by the foreig
foreign country where the branch country where the branch
is established nor upon premiums established nor upon premium
collected or received on account collected or received on account o
of any reinsurance, if the insured, any reinsurance, if the insured, i
in case of personal insurance, case of personal insurance
resides outside the Philippines, if resides outside the Philippines,
any tax on such premiums is any tax on such premiums
imposed by the foreign country imposed by the foreign countr
where the original insurance has where the original insurance ha
been issued or perfected; nor been issued or perfected; nor upo
upon that portion of the premiums that portion of the premium
collected or received by the collected or received by th
insurance companies on variable insurance companies on variabl
contracts, in excess of the contracts, in excess of th
amounts necessary to insure the amounts necessary to insure th
lives of the variable contract lives of the variable contrac
owners. owners.
Cooperative companies o
Cooperative companies or
associations are such as ar
associations are such as are
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
associations are such as ar
associations are such as are
conducted by the members thereo
conducted by the members
with the money collected from
thereof with the money collected
among themselves and solely fo
from among themselves and
their own protection and not fo
solely for their own protection and
profit.
not for profit.
Tax on Agents of Foreign SEC. 124. Every fire, marine or SEC. 124. Every fire, marine o
Insurance Companies miscellaneous insurance agent miscellaneous insurance agen
authorized under the Insurance authorized under the Insuranc
Code to procure policies of Code to procure
insurance as he may have insurance as he may hav
previously been legally authorized previously been legally authorize
to transact on risks located in the to transact on risks located in th
Philippines for companies not Philippines for companies no
authorized to transact business in authorized to transact business i
the Philippines shall pay a tax the Philippines shall pay a ta
equal to twice the tax imposed in equal to twice the tax imposed i
Section 123: Provided, That the Section 123: Provided, That th
provisions of this Section shall not provisions of this Section shall no
apply to reinsurance: Provided, apply to reinsurance: Provided
however, That the provisions of however, That the provisions o
this Section shall not affect the this Section shall not affect th
right of an owner of property to right of an owner of property t
apply for and obtain for himself apply for and obtain for himse
policies in foreign companies in policies in foreign companies i
cases where said owner does not cases where said owner does no
make use of the services of any make use of the services of an
agent, company or corporation agent, company or corporatio
residing or doing business in the residing or doing business in th
Philippines. In all cases where Philippines. In all cases wher
owners of property obtain owners of property obtai
insurance directly with foreign insurance directly with foreig
companies, it shall be the duty of companies, it shall be the duty o
said owners to report to the said owners to report to th
Insurance Commissioner and to Insurance Commissioner and t
the Commissioner each case the Commissioner each cas
where insurance has been so where insurance has been s
effected, and shall pay the tax of effected, and shall pay the tax o
five percent (5%) on premiums five percent (5%) on premium
paid, in the manner required by paid, in the manner required b
Section 123. Section 123.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Amusement Taxes
from the proprietor, lessee or from the proprietor, lessee o
operator of cockpits, cabarets, operator of cockpits, cabarets
night or day clubs, boxing night or day clubs, boxin
exhibitions, professional exhibitions, professional basketba
basketball games, Jai-Alai and games, Jai-Alai and racetracks,
racetracks, a tax equivalent to: tax equivalent to:
(a) Eighteen percent (18%) in the (a) Eighteen percent (18%) in th

case of cockpits; case of cockpits;
(b) Eighteen percent (18%) in the (b) Eighteen percent (18%) in th

case of cabarets, night or day case of cabarets, night or da
clubs; clubs;
(c) Ten percent (10%) in the case (c) Ten percent (10%) in the cas
of boxing exhibitions: Provided, of boxing exhibitions: Provided
however, That boxing exhibitions however, That boxing exhibition
wherein World or Oriental wherein World or Orienta
Championships in any division is Championships in any division is a
at stake shall be exempt from stake shall be exempt from
amusement tax: Provided, further, amusement tax: Provided, furthe
That at least one of the That at least one of the contender
contenders for World or Oriental for World or Orienta
Championship is a citizen of the Championship is a citizen of th
Philippines and said exhibitions Philippines and said exhibition
are promoted by a citizen/s of the are promoted by a citizen/s of th
Philippines or by a corporation or Philippines or by a corporation o
association at least sixty percent association at least sixty percen
(60%) of the capital of which is (60%) of the capital of which
owned by such citizens; owned by such citizens;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(d) Fifteen percent (15%) in the (d) Fifteen percent (15%) in th
case of professional basketball case of professional basketba
games as envisioned in games as envisioned i
Presidential Decree No. 871: Presidential Decree No. 871
Provided, however, That the tax Provided, however, That the ta
herein shall be in lieu of all other herein shall be in lieu of all othe
percentage taxes of whatever percentage taxes of whateve
nature and description; and nature and description; and
(e) Thirty percent (30%) in the (e) Thirty percent (30%) in th

case of Jai-Alai and racetracks of case of Jai-Alai and racetracks o
their gross receipts, irrespective of their gross receipts, irrespective o
whether or not any amount is whether or not any amount
charged for admission. charged for admission.
For the purpose of the amusement For the purpose of the amusemen
tax, the term 'gross receipts' tax, the term 'gross receipt
embraces all the receipts of the embraces all the receipts of th
proprietor, lessee or operator of proprietor, lessee or operator o
the amusement place. Said gross the amusement place. Said gros
receipts also include income from receipts also include income from
television, radio and motion television, radio and motion pictur
picture rights, if any. A person or rights, if any. A person or entity o
entity or association conducting association conducting any activit
any activity subject to the tax subject to the tax herein impose
herein imposed shall be similarly shall be similarly liable fo
liable for said tax with respect to with respect to such portion of th
such portion of the receipts receipts derived by him or it.
derived by him or it.
The taxes imposed herein shall b
The taxes imposed herein shall
payable at the end of each quarte
be payable at the end of each
and it shall be the duty of th
quarter and it shall be the duty of
proprietor, lessee or operato
the proprietor, lessee or operator
concerned, as well as any part
concerned, as well as any party
liable, within twenty (20) days afte
liable, within twenty (20) days
the end of each quarter, to make
after the end of each quarter, to
true and complete return of th
make a true and complete return
amount of the gross receipt
of the amount of the gross
derived during the precedin
receipts derived during the
quarter and pay the tax du
preceding quarter and pay the tax
thereon.
due thereon.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Tax on Winnings
SEC. 126. Every person who wins SEC. 126. Every person who wi
in horse races shall pay a tax in horse races shall pay a ta
equivalent to ten percent (10%) of equivalent to ten percent (10%) o
his winnings or 'dividends', the tax his winnings or 'dividends', the ta
to be based on the actual amount to be based on the actual amoun
paid to him for every winning ticket paid to him for every winning ticke
after deducting the cost of the after deducting the cost of th
ticket: Provided, That in the case ticket: Provided, That in the cas
of winnings from double, of winnings from double
forecast/quinella and trifecta bets, forecast/quinella and trifecta bets
the tax shall be four percent (4%). the tax shall be four percent (4%
In the case of owners of winning In the case of owners of winnin
race horses, the tax shall be ten race horses, the tax shall be te
percent (10%) of the prizes. percent (10%) of the prizes.
The tax herein prescribed shall be The tax herein prescribed shall b
deducted from the 'dividends' deducted from the 'dividend
corresponding to each winning corresponding to each winnin
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
ticket or the 'prize' of each winning ticket or the 'prize' of each winnin
race horse owner and withheld by race horse owner and withheld b
the operator, manager or person the operator, manager or person i
in charge of the horse races charge of the horse races befor
before paying the dividends or paying the dividends or prizes t
prizes to the persons entitled the persons entitled thereto.
thereto.
The operator, manager or perso
in charge of horse races sha
The operator, manager or person
within twenty (20) days from th
in charge of horse races shall,
date the tax was deducted an
within twenty (20) days from the
withheld in accordance with th
date the tax was deducted and
second paragraph hereof, file
withheld in accordance with the
true and correct return with th
second paragraph hereof, file a
Commissioner in the manner o
true and correct return with the
form to be prescribed by th
Commissioner in the manner or
Secretary of Finance, and pa
form to be prescribed by the
within the same period the tota
Secretary of Finance, and pay
amount of tax so deducted an
within the same period the total
withheld.
amount of tax so deducted and
withheld.
Tax on Sale, Barter or

SEC. 127. SEC. 127.
Exchange of Shares of
Stock Listed and Traded (A) Tax on Sale, Barter or (A) Tax on Sale, Barter o
through the Local Stock Exchange of Shares of Stock Exchange of Shares of Stoc
Exchange or through Initial Listed and Traded through the Listed and Traded through th
Public Offering Local Stock Exchange. — There Local Stock Exchange
shall be levied, assessed and shall be levied, assessed an
collected on every sale, barter, collected on every sale, barte
exchange, or other disposition of exchange or other disposition o
shares of stock listed and traded shares of stock listed and trade
through the local stock exchange through the local stock exchang
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
other than the sale by a dealer in other than the sale by a dealer i
securities, a tax at the rate of securities, a tax at the rate o
six-tenths of one percent (6/10 of one-half of one percent (1/2 of 1%
1%) of the gross selling price or of the gross selling price or gros
gross value in money of the value in money of the shares o
shares of stock sold, bartered, stock sold, bartered, exchanged o
exchanged or otherwise disposed otherwise disposed which shall b
which shall be paid by the seller paid by the seller or tran
or transferor. (as amended by
Sec. 39, R.A. No. 10963,
December 19, 2017)
(B) Tax on Shares of Stock Sold (B) Tax on Shares of Stock Sold o
or Exchanged through Initial Exchanged through Initial Publ
Public Offering. — There shall be Offering. — There shall be levied
levied, assessed and collected on assessed and collected on ever
every sale, barter, exchange or sale, barter, exchange or othe
other disposition through initial disposition through initial publ
public offering of shares of stock offering of shares of stock i
in closely held corporations, as closely held corporations, a
defined herein, a tax at the rates defined herein, a tax at the rate
provided hereunder based on the provided hereunder based on th
gross selling price or gross value gross selling price or gross valu
in money of the shares of stock in money of the shares of stoc
sold, bartered, exchanged or sold, bartered, exchanged o
otherwise disposed in accordance otherwise disposed in accordanc
with the proportion of shares of with the proportion of shares o
stock sold, bartered, exchanged stock sold, bartered, exchanged o
or otherwise disposed to the total otherwise disposed to the tota
outstanding shares of stock after outstanding shares of stock afte
the listing in the local stock the listing in the local stoc
exchange: exchange:
Up to twenty-five percent 4% Up to twenty-five percent

(25%) (25%)
Over twenty-five percent Over twenty-five percent

(25%) but not over (25%) but not over
thirty-three and one third thirty-three and one third
percent (33 1/3%) 2% percent (33 1/3%)
Over thirty-three and Over thirty-three and

one third percent (33 1/3%) 1% one third percent (33 1/3%)
1%
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The tax herein imposed shall be The tax herein imposed shall b
paid by the issuing corporation in paid by the issuing corporation i
primary offering or by the seller in primary offering or by the seller i
secondary offering. secondary offering.
For purposes of this Section, the For purposes of this Section, th

term 'closely held corporation' term 'closely held corporation
means any corporation at least means any corporation at least fift
fifty percent (50%) in value of the percent (50%) in value of th
outstanding capital stock or at outstanding capital stock or a
least fifty percent (50%) of the least fifty percent (50%) of the tota
total combined voting power of all combined voting power of a
classes of stock entitled to vote is classes of stock entitled to vote
owned directly or indirectly by or owned directly or indirectly by o
for not more than twenty (20) for not more than twenty (2
individuals. individuals.
For purposes of determining For purposes of determinin

whether the corporation is a whether the corporation is
closely held corporation, insofar closely held corporation, insofar a
as such determination is based such determination is based o
on stock ownership, the following stock ownership, the followin
rules shall be applied: rules shall be applied:
(1) Stock Not Owned by (1) Stock Not Owned b

Individuals. — Stock owned Individuals. — Stock owne
directly or indirectly by or for a directly or indirectly by or for
corporation, partnership, estate or corporation, partnership, estate o
trust shall be considered as being trust shall be considered as bein
owned proportionately by its owned proportionately by it
shareholders, partners or shareholders, partners o
beneficiaries. beneficiaries.
(2) Family and Partnership (2) Family and Partnershi

Ownership. — An individual shall Ownership. — An individual sha
be considered as owning the be considered as owning the st
stock owned, directly or indirectly, owned, directly or indirectly, by o
by or for his family, or by or for his for his family, or by or for h
partner. For purposes of this partner. For purposes of th
paragraph, the ''family of an paragraph, the ''family of a
individual' includes only his individual' includes only h
brothers and sisters (whether by brothers and sisters (whether b
whole or half-blood), spouse, whole or half-blood), spouse
ancestors and lineal descendants. ancestors and lineal descenda
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Option. — If any person has (3) Option. — If any person has a
an option to acquire stock, such option to acquire stock, such stoc
stock shall be considered as shall be considered as owned b
owned by such person. For such person. For purposes of th
purposes of this paragraph, an paragraph, an option to acquir
option to acquire such an option such an option and each one of
and each one of a series of series of options shall b
options shall be considered as an considered as an optio
option to acquire such stock. such stock.
(4) Constructive Ownership as (4) Constructive Ownership a

Actual Ownership. — Stock Actual Ownership. — Stoc
constructively owned by reason of constructively owned by reason o
the application of paragraph (1) or the application of paragraph (1) o
(3) hereof shall, for purposes of (3) hereof shall, for purposes o
applying paragraph (1) or (2), be applying paragraph (1) or (2), b
treated as actually owned by such treated as actually owned by suc
person; but stock constructively person; but stock constructive
owned by the individual by reason owned by the individual by reaso
of the application of paragraph (2) of the application of paragraph (2
hereof shall not be treated as hereof shall not be treated a
owned by him for purposes of owned by him for purposes o
again applying such paragraph in again applying such paragraph i
order to make another the order to make another th
constructive owner of such stock. constructive owner of such stock.
(C) Return on Capital Gains (C) Return on Capital Gain

Realized from Sale of Shares of Realized from Sale of Shares o
Stocks. — Stocks. —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Return on Capital Gains (1) Return on Capital Gain

Realized from Sale of Shares of Realized from Sale of Shares o
Stock Listed and Traded in the Stock Listed and Traded in th
Local Stock Exchange. — It shall Local Stock Exchange
be the duty of every stock broker be the duty of every stock broke
who effected the sale subject to who effected the sale subject t
the tax imposed herein to collect the tax imposed herein to collec
the tax and remit the same to the the tax and remit the same to th
Bureau of Internal Revenue within Bureau of Internal Revenue withi
five (5) banking days from the five (5) banking days from the dat
date of collection thereof and to of collection thereof and to subm
submit on Mondays of each week on Mondays of each week to th
to the secretary of the stock secretary of the stock exchange
exchange, of which he is a of which he is a member, a tru
member, a true and complete and complete return which sha
return which shall contain a contain a declaration of all th
declaration of all the transactions transactions effected through him
effected through him during the during the preceding week and o
preceding week and of taxes taxes collected by him and turne
collected by him and turned over over to the Bureau of Interna
to the Bureau of Internal Revenue.
Revenue.
(2) Return on Public Offerings o
(2) Return on Public Offerings of Shares of Stock. — In case o
Shares of Stock. — In case of primary offering, the corporat
primary offering, the corporate issuer shall file the return and pa
issuer shall file the return and pay the corresponding tax within thirt
the corresponding tax within thirty (30) days from the date of listing o
(30) days from the date of listing the shares of stock in the loca
of the shares of stock in the local stock exchange. In the case o
stock exchange. In the case of secondary offering, the provisio
secondary offering, the provision of Subsection (C)(1) of this Sectio
of Subsection (C)(1) of this shall apply as to the time an
Section shall apply as to the time manner of the payment of the tax.
and manner of the payment of the
tax.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(D) Common Provisions
(D) Common Provisions. — Any gain derived from the sale, barte
gain derived from the sale, barter, exchange or other disposition o
exchange or other disposition of shares of stock under this Sectio
shares of stock under this Section shall be exempt from the ta
shall be exempt from the tax imposed in Sections 24(C
imposed in Sections 24(C), 27(D)(2), 28(A)(8)(c), an
27(D)(2), 28(A)(8)(c), and 28(B)(5)(c) of this Code and from
28(B)(5)(c) of this Code and from the regular individual or corporat
the regular individual or corporate income tax. Tax paid under th
income tax. Tax paid under this Section shall not be deductible fo
Section shall not be deductible for income tax purposes.
income tax purposes.
Returns and Payment of

SEC. 128. SEC. 128.
Percentage Taxes
(A) Returns of Gross Sales, (A) Returns of Gross Sa
Receipts or Earnings and Receipts or Earnings and Paymen
Payment of Tax. — of Tax. —
(1) Persons Liable to Pay (1) Persons Liable to Pa

Percentage Taxes. — Every Percentage Taxes. — Ever
person subject to the percentage person subject to the percentag
taxes imposed under this Title taxes imposed under this Titl
shall file a quarterly return of the shall file a quarterly return of th
amount of his gross sales, amount of his gross sales, receipt
receipts or earnings and pay the or earnings and pay the tax du
tax due thereon within twenty-five thereon within twenty-five (25
(25) days after the end of each days after the end of each taxabl
taxable quarter: Provided, That in quarter: Provided, That in the cas
the case of a person whose VAT of a person whose VA
registration is cancelled and who registration is cancelled and wh
becomes liable to the tax imposed becomes liable to the tax impose
in Section 116 of this Code, the in Section 116 of this Code, the ta
tax shall accrue from the date of shall accrue from the date o
cancellation and shall be paid in cancellation and shall be paid i
accordance with the provisions of accordance with the provisions o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Person Retiring from (2) Person Retiring from Business

Business. — Any person retiring — Any person retiring from
from a business subject to business subject to percentage ta
percentage tax shall notify the shall notify the nearest interna
nearest internal revenue officer, revenue officer, file his return an
file his return and pay the tax due pay the tax due thereon withi
thereon within twenty (20) days twenty (20) days after closing h
after closing his business. business.
(3) Exceptions. — Th
Commissioner may, by rules an
regulations, prescribe:
(a) The time for filing the return a

intervals other than the tim
prescribed in the pre
paragraphs for a particular class o
classes of taxpayers afte
considering such factors a
volume of sales, financia
condition, adequate measures o
security, and such other relevan
information required to b
submitted under the pertinen
provisions of this Code; and
(b) The manner and time o

payment of percentage taxes othe
than as hereinabove prescribed
including a scheme of ta
prepayment.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Determination of Correct (4) Determination of Correct Sale
Sales or Receipts. — When it is or Receipts. — When it is foun
found that a person has failed to that a person has failed to issu
issue receipts or invoices, or receipts or invoices, or when n
when no return is filed, or when return is filed, or when there
there is reason to believe that the reason to believe that the books o
books of accounts or other accounts or other records do no
records do not correctly reflect the correctly reflect the declaration
declarations made or to be made made or to be made in a retur
in a return required to be filed required to be filed under th
under the provisions of this Code, provisions of this Code,
the Commissioner, after taking Commissioner, after taking int
into account the sales, receipts or account the sales, receipts o
other taxable base of other other taxable base of othe
persons engaged in similar persons engaged in simila
businesses under similar businesses under similar situation
situations or circumstances, or or circumstances, or afte
after considering other relevant considering other relevan
information may prescribe a information may prescribe
minimum amount of such gross minimum amount of such gros
receipts, sales and taxable base receipts, sales and taxable bas
and such amount so prescribed and such amount so prescribe
shall be prima facie correct for shall be prima facie correct fo
purposes of determining the purposes of determining th
internal revenue tax liabilities of internal revenue tax liabilities o
such person. such person.
(B) Where to File. — Except as

the Commissioner otherwise (B) Where to File. — Except as th
permits, every person liable to the Commissioner otherwise permits
percentage tax under this Title every person liable to th
may, at his option, file a separate percentage tax under this Titl
return for each branch or place of may, at his option, file a separat
business, or a consolidated return return for each branch or place o
for all branches or places of business, or a consolidated retur
business with the authorized for all branches or places o
agent bank, Revenue District business with the authorized agen
Officer, Collection Agent or duly bank, Revenue District Offic
authorized Treasurer of the city or Collection Agent or duly authorize
municipality where said business Treasurer of the city o
or principal place of business is municipality where said busines
located, as the case may be. or principal place of business
located, as the case may be.
No. 10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
TITLE VI — EXCISE TAXES ON TITLE VI — EXCISE TAXES ON

CERTAIN GOODS AND CERTAIN GOODS
SERVICES
CHAPTER I — GENERAL CHAPTER I — GENERAL

PROVISIONS PROVISIONS
Goods and Services

SEC. 129. Excise taxes apply to SEC. 129. Excise taxes apply t
Subject to Excise Taxes
goods manufactured or produced goods manufactured or produce
in the Philippines for domestic in the Philippines for do
sales or consumption or for any or consumption or for any othe
other disposition and to things disposition and to things imported
imported as well as services The excise tax imposed herei
performed in the Philippines. The shall be in addition to th
excise tax imposed herein shall value-added tax imposed unde
be in addition to the value-added Title IV.
tax imposed under Title IV.
For purposes of this Title, excise

For purposes of this Title, excis
taxes herein imposed and based
taxes herein imposed and base
on weight or volume capacity or
on weight or volume capacity o
any other physical unit of
any other physical unit o
measurement shall be referred to
measurement shall be referred t
as 'specific tax' and an excise tax
as 'specific tax' and an excise ta
herein imposed and based on
herein imposed and based o
selling price or other specified
selling price or other specifie
value of the good or service
value of the good shall be referre
performed shall be referred to as
to as 'ad valorem tax.'
'ad valorem tax'.

No. 10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
SEC. 130. SEC. 130.
Payment of Excise Tax on
Domestic Products (A) Persons Liable to File a (A) Persons Liable to File
Return, Filing of Return on Return, Filing of Return o
Removal and Payment of Tax. — Removal and Payment of Tax
(1) Persons Liable to File a (1) Persons Liable to File

Return. — Every person liable to Return. — Every person liable t
pay excise tax imposed under this pay excise tax imposed under th
Title shall file a separate return for Title shall file a separate
each place of production setting each place of production settin
forth, among others, the forth, among others, th
description and quantity or volume description and quantity or volum
of products to be removed, the of products to be removed, th
applicable tax base and the applicable tax base and th
amount of tax due thereon: amount of tax due thereon
Provided, however, That in the Provided, however, That in th
case of indigenous petroleum, case of indigenous petroleum
natural gas or liquefied natural natural gas or liquefied natura
gas, the excise tax shall be paid gas, the excise tax shall be paid b
by the first buyer, purchaser or the first buyer, purchaser o
transferee for local sale, barter or transferee for local sale, barter o
transfer, while the excise tax on transfer, while the excise tax o
exported products shall be paid by exported products shall be paid b
the owner, lessee, concessionaire the owner, lessee, concessionair
or operator of the mining claim. or operator of the mining claim.
Should domestic products be Should domestic products b

removed from the place of removed from the place o
production without the payment of production without the payment o
the tax, the owner or person the tax, the owner or perso
having possession thereof shall be having possession thereof shall b
liable for the tax due thereon. liable for the tax due thereon.
(2) Time for Filing of Return and (2) Time for Filing of Return an
Payment of the Tax. — Unless Payment of the Tax. — Unl
otherwise specifically allowed, the otherwise specifically allowed, th
return shall be filed and the excise return shall be filed and the excis
tax paid by the manufacturer or tax paid by the manufacturer o
producer before removal of producer before removal o
domestic products from place of domestic products from place o
production: Provided, That the production: Provided, That th
excise tax on locally manufactured excise tax on locally manufacture
petroleum products and petroleum products an
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
indigenous petroleum levied under indigenous petroleum levied unde
Sections 148 and 151(A)(4), Sections 148 and 151(A)(4
respectively, of this Title shall be respectively, of this Title shall b
paid within ten (10) days from the paid within ten (10) days from th
date of removal of such products date of removal of such product
for the period from January 1, for the period from January 1
1998 to June 30, 1998; within five 1998 to June 30, 1998; within fiv
(5) days from the date of removal (5) days from the date
of such products for the period of such products for the perio
from July 1, 1998 to December 31, from July 1, 1998 to December 31
1998; and, before removal from 1998; and, before removal from
the place of production of such the place of production of suc
products from January 1, 1999 products from January 1, 1999 an
and thereafter: Provided, further, thereafter: Provided, further, Tha
That the excise tax on nonmetallic the excise tax on nonmetall
mineral or mineral products, or mineral or mineral products, o
quarry resources shall be due and quarry resources shall be due an
payable upon removal of such payable upon removal of suc
products from the locality where products from the locality wher
mined or extracted, but with mined or extracted, but wit
respect to the excise tax on locally respect to the excise tax on local
produced or extracted metallic produced or extracted metall
mineral or mineral products, the mineral or mineral products, th
person liable shall file a return and person liable shall file a return an
pay the tax within fifteen (15) days pay the tax within fifteen (15) day
after the end of the calendar after the end of the calenda
quarter when such products were quarter when such products wer
removed subject to such removed subject to suc
conditions as may be prescribed conditions as may be prescribe
by rules and regulations to be by rules and regulations to b
the Commissioner. For this the Commissioner. For th
purpose, the taxpayer shall file a purpose, the taxpayer shall file
bond in an amount which bond in an amount whic
approximates the amount of approximates the amount of excis
excise tax due on the removals for tax due on the removals for th
the said quarter. The foregoing said quarter. The foregoing rule
rules notwithstanding, for imported notwithstanding, for importe
mineral or mineral products, mineral or mineral pr
whether metallic or nonmetallic, whether metallic or nonmetallic
the excise tax due thereon shall the excise tax due thereon shall b
be paid before their removal from paid before their removal from
customs custody. customs custody.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Place for Filing of the Return (3) Place for Filing of the Retur
and Payment of the Tax. — and Payment of the Ta
Except as the Commissioner as the Commissioner otherwis
otherwise permits, the return shall permits, the return shall be file
be filed with and the tax paid to with and the tax paid to an
any authorized agent bank or authorized agent bank or Revenu
Revenue Collection Officer, or Collection Officer, or du
duly authorized City or Municipal authorized City or Municipa
Treasurer in the Philippines. Treasurer in the Philippines.
(4) Exceptions. — The Secretary (4) Exceptions. — The Secretar

of Finance, upon recommendation of Finance, upon recommendatio
of the Commissioner, may, by of the Commissioner, may, b
rules and regulations, prescribe: rules and regulations, prescribe:
(a) The time for filing the return (a) The time for filing the retur
at intervals other than the time at intervals other than the tim
prescribed in the preceding prescribed in the precedin
paragraphs for a particular class paragraphs for a particular class o
or classes of taxpayers after classes of taxpayers afte
considering factors such as considering factors such a
volume of removals, adequate volume of removals, adequat
measures of security and such measures of security and suc
other relevant information required other relevant information require
to be submitted under the to be submitted under the pertinen
pertinent provisions of this Code; provisions of this Code; and
and
(b) The manner and time o
(b) The manner and time of payment of excise taxes other tha
payment of excise taxes other as herein prescribed, under a ta
than as herein prescribed, under a prepayment, advance deposit o
tax prepayment, advance deposit similar schemes. In the case o
or similar schemes. In the case of locally produced or extracte
locally produced or extracted minerals and mineral products o
minerals and mineral products or quarry resources where the min
quarry resources where the mine site or place of extraction is not th
site or place of extraction is not same as the place of processing o
the same as the place of production, the return shall be file
processing or production, the with and the tax paid to th
return shall be filed with and the Revenue District Office havin
tax paid to the Revenue District jurisdiction over the locality wher
Office having jurisdiction over the the same are mined, extracted o
locality where the same are quarried: Provided, however, Tha
mined, extracted or quarried: for metallic minerals processe
Provided, however, That for abroad, the return shall be file
metallic minerals processed and the tax due thereon paid to th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
abroad, the return shall be filed Revenue District Offic
and the tax due thereon paid to jurisdiction over the locality wher
the Revenue District Office having the same are mined, extracted o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
jurisdiction over the locality where quarried.
the same are mined, extracted or
quarried.
(B) Determination of Gross (B) Determination of Gros

Selling Price of Goods Subject to Selling Price of Goods Subject t
Ad Valorem Tax. — Unless Ad Valorem Tax. — Unles
otherwise provided, the price, otherwise provided, the price
excluding the value-added tax, at excluding the value-added tax, a
which the goods are sold at which the goods are sold a
wholesale in the place of wholesale in the place o
production or through their sales production or through their sale
agents to the public shall agents to the public sha
constitute the gross selling price. If constitute the gross selling price.
the manufacturer also sells or the manufacturer also sells o
allows such goods to be sold at allows such goods to be sold a
wholesale in another wholesale in anothe
establishment of which he is the establishment of which he is th
owner or in the profits of which he owner or in the profits of which h
has an interest, the wholesale has an interest, the wholesal
price in such establishment shall price in such establishment sha
constitute the gross selling price. constitute the gross selling price
Should such price be less than the Should such price be less than th
cost of manufacture plus cost of manufacture plus expense
expenses incurred until the goods incurred until the goods are final
are finally sold, then a sold, then a proportionate margi
proportionate margin of profit, not of profit, not less than ten percen
less than ten percent (10%) of (10%) of such manufacturing cos
such manufacturing cost and and expenses, shall be added t
expenses, shall be added to constitute the gross selling price.
constitute the gross selling price.
(C) Manufacturer's or Producer's (C) Manufacturer's or Producer

Sworn Statement. — Every Sworn Statement. — Ever
manufacturer or producer of manufacturer or producer of good
goods or products subject to or products subject to excise taxe
excise taxes shall file with the shall file with the Commissioner o
Commissioner on the date or the date or dates designated b
dates designated by the latter, and the latter, and as often as may b
as often as may be required, a required, a sworn statemen
sworn statement showing, among showing, among other information
other information, the different the different goods or product
goods or products manufactured manufactured or produced an
or produced and their their corresponding gross sellin
corresponding gross selling price price or market value, togethe
or market value, together with the with the cost of manufacture o
Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2019 production plus expenses
366 incurre
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
or market value, together with the
cost of manufacture or production production plus expenses incurre
plus expenses incurred or to be or to be incurred until the goods o
incurred until the goods or products are finally sold.
products are finally sold.
(D) Credit for Excise Tax o

(D) Credit for Excise Tax on Goods Actually Exported.
Goods Actually Exported. — goods locally produced o
When goods locally produced or manufactured are removed an
manufactured are removed and actually exported without returnin
actually exported without to the Philippines, whether s
returning to the Philippines, exported in their original state o
whether so exported in their as ingredients or parts of an
original state or as ingredients or manufactured goods or products
parts of any manufactured goods any excise tax paid thereon sh
or products, any excise tax paid be credited or refunded upo
thereon shall be credited or submission of the proof of actua
refunded upon submission of the exportation and upon receipt of th
proof of actual exportation and corresponding foreign exchang
upon receipt of the corresponding payment: Provided, That th
foreign exchange payment: excise tax on mineral products
Provided, That the excise tax on except coal and coke, impose
mineral products, except coal and under Section 151 shall not b
coke, imposed under Section 151 creditable or refundable even if th
shall not be creditable or mineral products are actual
refundable even if the mineral exported.
products are actually exported.
Payment of Excise Taxes

SEC. 131. SEC. 131.
on Imported Articles
(A) Persons Liable. — Excise (A) Persons Liable. — Excis
taxes on imported articles shall be taxes on imported articles shall b
paid by the owner or importer to paid by the owner or importer t
the Customs Officers, conformably the Customs Officers, conformab
with the regulations of the with the regulations of th
Department of Finance and before Department of Finance and befor
the release of such articles from the release of such articles from
the customshouse, or by the the customshouse, or by th
person who is found in possession person who is found in possessio
of articles which are exempt from of articles which are exempt from
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
excise taxes other than those excise taxes other than thos
legally entitled to exemption. legally entitled to exemption.
In the case of tax-free articles In the case of tax-free article

brought or imported into the brought or imported into th
Philippines by persons, entities, or Philippines by persons, entities, o
agencies exempt from tax which agencies exempt from tax whic
are subsequently sold, transferred are subsequently sold, transferre
or exchanged in the Philippines to or exchanged in the Philippines t
non-exempt persons or entities, non-exempt persons or entities
the purchasers or recipients shall the purchasers or recipients sha
be considered the importers be considered the importer
thereof, and shall be liable for the thereof, and shall be liable for th
duty and internal revenue tax due duty and internal revenue tax du
on such importation. on such importation.
The provision of any special or The provision of any special o

general law to the contrary general law to the contrar
notwithstanding, the importation of notwithstanding, the importation o
cigars and cigarettes, distilled cigars and cigarettes, distille
spirits, fermented liquors and spirits, fermented liquors an
wines into the Philippines, even if wines into the Philippines, even
destined for tax and duty-free destined for tax and duty-fre
shops, shall be subject to all shops, shall be subject to a
applicable taxes, duties, charges, applicable taxes, duties, charges
including excise taxes due including excise taxes du
thereon. This shall apply to cigars thereon. This shall apply to cigar
and cigarettes, distilled spirits, and cigarettes, distilled spirits
fermented liquors and wines fermented liquors and wine
brought directly into the duly brought directly into the du
chartered or legislated freeports of chartered or legislated freeports o
the Subic Special Economic and the Subic Special Economic an
Freeport Zone, created under Freeport Zone, created unde
Republic Act No. 7227; the Republic Act No. 7227; th
Cagayan Special Economic Zone Cagayan Special Economic Zon
and Freeport, created under and Freeport, created unde
Republic Act No. 7922; and the Republic Act No. 7922; and th
Zamboanga City Special Zamboanga City Special Econom
Economic Zone, created under Zone, created under Republic Ac
Republic Act No. 7903, and such No. 7903, and such other freeport
other freeports as may hereafter as may hereafter be established o
be established or created by law: created by law: Provided, furthe
Provided, further, That That notwithstanding th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
notwithstanding the provisions of provisions of Republic Act Nos
Republic Act Nos. 9400 and 9593, 9400 and 9593, importations o
importations of cigars and cigars and cigarettes, distille
cigarettes, distilled spirits, spirits, fermented liquors an
fermented liquors and wines made wines made directly by
directly by a government-owned government-owned and operate
and operated duty-free shop, like duty-free shop, like the Duty-Fre
the Duty-Free Philippines (DFP), Philippines (DFP), shall b
shall be exempted from all exempted from all applicabl
applicable duties only: duties only: (as amended by Sec
7, R.A. No. 10351, Dec. 19, 2012.
Cigars and cigarettes, distille

Cigars and cigarettes, distilled spirits and wines within th
spirits and wines within the premises of all duty-free shop
premises of all duty-free shops which are not labelled a
which are not labelled as hereinabove required, as well a
hereinabove required, as well as tax and duty-free articles obtaine
tax and duty-free articles obtained from a duty-free shop an
from a duty-free shop and subsequently found in
subsequently found in a non-duty-free shop to be offere
non-duty-free shop to be offered for resale shall be confiscated, an
for resale shall be confiscated, the perpetrator of suc
and the perpetrator of such non-labelling or re-selling shall b
non-labelling or re-selling shall be punishable under the applicabl
punishable under the applicable provisions of this Code.
provisions of this Code.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Articles confiscated shall b
Articles confiscated shall be destroyed using the mos
destroyed using the most environmentally friendly metho
environmentally friendly method available in accordance with th
available in accordance with the rules and regulations to b
rules and regulations to be promulgated by the Secretary o
promulgated by the Secretary of Finance, upon recommendation o
Finance, upon recommendation of the Commissioners of Custom
the Commissioners of Customs and Internal Revenue.
and Internal Revenue. amended by Sec. 7, R.A. No
10351, Dec. 19, 2012.)
The tax due on any such goods

The tax due on any such goods, products, machinery, equipment o
products, machinery, equipment or other similar articles sha
other similar articles shall constitute a lien on th
constitute a lien on the article itself, and such lien shall b
itself, and such lien shall be superior to all other charges o
superior to all other charges or liens, irrespective of the possesso
liens, irrespective of the possessor thereof.
thereof.
(B) Rate and Basis of the Excis
(B) Rate and Basis of the Excise Tax on Imported Articles
Tax on Imported Articles. — Unless otherwise specified
Unless otherwise specified, imported articles shall be subjec
imported articles shall be subject to the same rates and basis o
to the same rates and basis of excise taxes applicable to local
excise taxes applicable to locally manufactured articles. (
manufactured articles. amended by Sec. 6, R.A. No
9334, Dec. 21, 2004)
Mode of Computing SEC. 132. Every fractional part of SEC. 132. Every fractional part o
Contents of Cask or a proof liter equal to or greater a proof liter equal to or greate
Package than a half liter in a cask or than a half liter in a cask o
package containing more than package containing more than on
one liter shall be taxed as a liter, liter shall be taxed as a liter, an
and any smaller fractional part any smaller fractional part shall
shall be exempt; but any package exempt; but any package of spirits
of spirits, the total contents of the total contents of which are les
which are less than a proof liter, than a proof liter, shall be taxed a
shall be taxed as one liter. one liter.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
CHAPTER II — EXEMPTION OR CHAPTER II — EXEMPTION O

CONDITIONAL TAX-FREE CONDITIONAL TAX-FRE
REMOVAL OF CERTAIN REMOVAL OF CERTAI
ARTICLES ARTICLES
Removal of Wines and SEC. 133. Upon issuance of a SEC. 133. Upon issuance of
Distilled Spirits for permit from the Commissioner permit from the Commissioner an
Treatment of Tobacco Leaf and subject to the rules and subject to the rules and regulation
regulations prescribed by the prescribed by the Secretary o
Secretary of Finance, Finance, manufacturers of cigar
manufacturers of cigars and and cigarettes may withdraw from
cigarettes may withdraw from bond, free of excise ta
bond, free of excise tax, local and imported wines and distilled spirit
imported wines and distilled spirits in specific quantities and grade
in specific quantities and grades for use in the treatment of tobacc
for use in the treatment of leaf to be used in the manufactur
tobacco leaf to be used in the of cigars and cigarettes, but suc
manufacture of cigars and wines and distilled spirits must firs
cigarettes, but such wines and be suitably denatured.
distilled spirits must first be
suitably denatured.
Domestic Denatured SEC. 134. Domestic alcohol of SEC. 134. Domestic alcohol of no
Alcohol not less than one hundred eighty less than one hundred eight
degrees (180º) proof (ninety degrees (180º) proof (ninet
percent (90%) absolute alcohol) percent (90%) absolute alcoho
shall, when suitably denatured shall, when suitably denatured an
and rendered unfit for oral intake, rendered unfit for oral intake, b
be exempt from the excise tax exempt from the excise ta
prescribed in Section 141: prescribed in Section 141
Provided, however, That such Provided, however, That suc
denatured alcohol shall be subject denatured alcohol shall be subjec
to tax under Section 106(A) of this to tax under Section 106(A) of th
Code: Provided, further, That if Code: Provided, further, That
such alcohol is to be used for such alcohol is to be used fo
motive power, it shall be taxed motive power, it shall be taxe
under Section 148(d) of this under Section 148(d) of this Code
Code: Provided, finally, That any Provided, finally, That any alcoho
alcohol, previously rendered unfit previously rendered unfit for ora
for oral intake after denaturing but intake after denaturing bu
subsequently rendered fit for oral subsequently rendered fit for ora
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
intake after undergoing intake after undergoin
fermentation, dilution, purification, fermentation, dilution, purification
mixture or any other similar mixture or any other simila
process shall be taxed under process shall be taxed unde
Section 141 of this Code and Section 141 of this Code and suc
such tax shall be paid by the tax shall be paid by the person i
person in possession of such possession of such reprocesse
reprocessed spirits. spirits.
Petroleum Products Sold to

SEC. 135. Petroleum products SEC. 135. Petroleum product
International Carriers and
sold to the following are exempt sold to the following are exemp
Exempt Entities or
from excise tax: from excise tax:
Agencies
(a) International carriers of (a) International carriers o
Philippine or foreign registry on Philippine or foreign registry o
their use or consumption outside their use or consumption outsid
the Philippines: Provided, That the the Philippines: Provided, That th
petroleum products sold to these petroleum products sold to thes
international carriers shall be international carriers shall b
stored in a bonded storage tank stored in a bonded storage tan
and may be disposed of only in and may be disposed of only i
accordance with the rules and accordance with the rules an
Commissioner; Commissioner;
(b) Exempt entities or agencies (b) Exempt entities or agencie

covered by tax treaties, covered by tax treaties
conventions and other conventions and other internationa
international agreements for their agreements for thei
use or consumption: Provided, consumption: Provided, howeve
however, That the country of said That the country of said foreig
foreign international carrier or international carrier or exemp
exempt entities or agencies entities or agencies exempts from
exempts from similar taxes similar taxes petroleum product
petroleum products sold to sold to Philippine carriers, entitie
Philippine carriers, entities or or agencies; and
agencies; and
(c) Entities which are by la
exempt from direct and indirec
(c) Entities which are by law
taxes.
exempt from direct and indirect
taxes.
Denaturation, Withdrawal SEC. 136. Any person who SEC. 136. Any person wh
and Use of Denatured produces, withdraws, sells, produces, withdraws, sells
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Alcohol transports or knowingly uses, or is transports or knowingly uses, or
in possession of denatured in possession of denature
alcohol, or articles containing alcohol, or articles containin
denatured alcohol in violation of denatured alcohol in violation o
laws or regulations now or laws or regulations now o
hereafter in force pertaining hereafter in force pertainin
thereto shall be required to pay thereto shall be required to pay th
the corresponding tax, in addition corresponding tax, in addition t
to the penalties provided for the penalties provided for unde
under Title X of this Code. Title X of this Code.
Removal of Spirits Under SEC. 137. Spirits requiring SEC. 137. Spirits requirin
Bond for Rectification rectification may be removed from rectification may be removed from
the place of production to another the place of production to anothe
establishment for the purpose of establishment for the purpose o
rectification without the rectification without th
prepayment of the excise tax: prepayment of the excise tax
Provided, That the distiller Provided, That the distille
removing such spirits and the removing such spirits and th
rectifier receiving them shall file rectifier receiving them shall fil
with the Commissioner their joint with the Commissioner their join
bond conditioned upon the bond conditioned upon th
payment by the rectifier of the payment by the rectifier of th
excise tax due on the rectified excise tax due on the rectifie
alcohol: Provided, further, That in alcohol: Provided, further, That i
cases where alcohol has already cases where alcohol has alread
been rectified either by original been rectified either by ori
and continuous distillation or by and continuous distillation or b
redistillation, no loss for redistillation, no loss fo
rectification and handling shall be rectification and handling shall b
allowed and the rectifier thereof allowed and the rectifier thereo
shall pay the excise tax due on shall pay the excise tax due o
such losses: Provided, finally, such losses: Provided, finally, Tha
That where a rectifier makes use where a rectifier makes use o
of spirits upon which the excise spirits upon which the excise ta
tax has not been paid, he shall be has not been paid, he shall b
liable for the payment of the tax liable for the payment of the ta
otherwise due thereon. otherwise due thereon.
Removal of Fermented SEC. 138. Any brewer may SEC. 138. Any brewer ma
Liquors to Bonded remove or transport from his remove or transport from h
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Warehouse brewery or other place of brewery or other place o
manufacture to a bonded manufacture to a bonde
warehouse used by him warehouse used by him
exclusively for the storage or sale exclusively for the storage or sal
in bulk of fermented liquors of his in bulk of fermented liquors of h
own manufacture, any quantity of own manufacture, any quantity o
such fermented liquors, not less such fermented liquors, not les
than one thousand (1,000) liters than one thousand (1,000) liters a
at one removal, without one removal, without prepaymen
prepayment of the tax thereon of the tax thereon under a perm
under a permit which shall be which shall be granted by th
granted by the Commissioner. Commissioner. Such permit sha
Such permit shall be affixed to be affixed to every package s
every package so removed and removed and shall be cancelled o
shall be cancelled or destroyed in destroyed in such manner as th
such manner as the Commissioner may prescribe
Commissioner may prescribe. Thereafter, the manufacturer o
Thereafter, the manufacturer of such fermented liquors shall pa
such fermented liquors shall pay the tax in the same manner an
the tax in the same manner and under the same penalty an
under the same penalty and liability as when paid at th
liability as when paid at the brewery.
brewery.
Removal of Damaged SEC. 139. When any fermented SEC. 139. When any fermente
Liquors Free of Tax liquor has become sour or liquor has become sour o
otherwise damaged so as to be otherwise damaged so as to b
unfit for use as such, brewers unfit for use as such, brewers ma
may sell and after securing a sell and after securing a specia
special permit from the permit from the Commissione
Commissioner, under such under such conditions as may b
conditions as may be prescribed prescribed in the rules an
in the rules and regulations regulations prescribed by th
prescribed by the Secretary of Secretary of Finance, remove th
Finance, remove the same same without the payment of ta
without the payment of tax thereon, in cask or othe
thereon, in cask or other packages, distinct from thos
packages, distinct from those ordinarily used for fermente
ordinarily used for fermented liquors, each containing not les
liquors, each containing not less than one hundred seventy-fiv
than one hundred seventy-five (175) liters with a note of th
(175) liters with a note of their contents permanently affixe
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
contents permanently affixed thereon.
thereon.
Removal of Tobacco
SEC. 140. Products of tobacco SEC. 140. Products of tobacc
Products Without
entirely unfit for chewing or entirely unfit for chewing o
Prepayment of Tax
smoking may be removed free of smoking may be removed free o
tax for agricultural or industrial tax for agricultural or industria
use, under such conditions as may use, under such conditions as ma
be prescribed in the rules and be prescribed in the rules an
Secretary of Finance. Stemmed Secretary of Finance. Stemme
leaf tobacco, fine-cut shorts, the leaf tobacco, fine-cut shorts, th
refuse of fine-cut chewing refuse of fine-cut chewing tobacco
tobacco, scraps, cuttings, scraps, cuttings, clippings, stem
clippings, stems or midribs, and or midribs, and sweepings o
sweepings of tobacco may be sold tobacco may be sold in bulk as ra
in bulk as raw material by one material by one manufacture
manufacturer directly to another directly to another without paymen
without payment of the tax, under of the tax, under such condition
such conditions as may be as may be prescribed in the rule
prescribed in the rules and and regulations prescribed by th
regulations prescribed by the Secretary of Finance.
'Stemmed leaf tobacco,' as herein

'Stemmed leaf tobacco,' as herei
used, means leaf tobacco which
used, means leaf tobacco whic
has had the stem or midrib
has had the stem or midri
removed. The term does not
removed. The term does no
include broken leaf tobacco
include broken leaf tobacco
CHAPTER III — EXCISE TAX ON CHAPTER III — EXCISE TAX ON

ALCOHOL PRODUCTS ALCOHOL PRODUCTS
Distilled Spirits
SEC. 141. On distilled spirits, SEC. 141. On distilled spirits
subject to the provisions of subject to the provisions of Sectio
Section 133 of this Code, an 133 of this Code, an excise ta
excise tax shall be levied, shall be levied, assessed an
assessed and collected based on collected based on the followin
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the following schedules: schedules:
(a) Effective on January 1, 2013 (a) Effective on January 1, 2013
(1) An ad valorem tax equivalent (1) An ad valorem tax equivalent t

to fifteen percent (15%) of the net fifteen percent (15%) of the ne
retail price (excluding the excise retail price (excluding the excis
tax and the value-added tax) per tax and the value-added tax) pe
proof; and proof; and
(2) In addition to the ad valorem (2) In addition to the

tax herein imposed, a specific tax tax herein imposed, a specific ta
of Twenty pesos (P20.00) per of Twenty pesos (P20.00) pe
proof liter. proof liter.
(b) Effective on January 1, 2015 (b) Effective on January 1, 2015
(1) An ad valorem tax equivalent (1) An ad valorem tax equivalent t

to twenty percent (20%) of the net twenty percent (20%) of the ne
proof; and proof; and

of Twenty pesos (P20.00) per of Twenty pesos (P20.00) pe
proof liter. proof liter.
(c) In addition to the ad valorem (c) In addition to the

tax herein imposed, the specific tax herein imposed, the specif
tax rate of Twenty pesos (P20.00) tax rate of Twenty pesos (P20.00
imposed under this Section shall imposed under this Section sha
be increased by four percent (4%) be increased by four percent (4%
every year thereafter effective on every year thereafter effective o
January 1, 2016, through revenue January 1, 2016, through revenu
regulations issued by the regulations issued by th
Secretary of Finance. Secretary of Finance.
Medicinal preparations, flavoring Medicinal preparations,

extracts, and all other extracts, and all othe
preparations, except toilet preparations, except toile
preparations, of which, excluding preparations, of which, excludin
water, distilled spirits from the water, distilled spirits from th
chief ingredient, shall be subject to chief ingredient, shall be subject t
the same tax as such chief the same tax as such chie
ingredient. ingredient.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
This tax shall be proportionally This tax shall be proportional

increased for any strength of the increased for any strength of th
spirits taxed over proof spirits, and spirits taxed over proof spirits, an
the tax shall attach to this the tax shall attach to th
substance as soon as it is in substance as soon as it is i
existence as such, whether it be existence as such, whether it b
subsequently separated as pure or subsequently separated as pure o
impure spirits, or transformed into impure spirits, or transformed int
any other substance either in the any other substance either in th
process of original production or process of original production o
by any subsequent process. by any subsequent process.
'Spirits or distilled spirits' is the 'Spirits or distilled spirits' is th

substance known as ethyl alcohol, substance known as ethyl alcoho
ethanol or spirits of wine, including ethanol or spirits of wine, includin
all dilutions, purifications and all dilutions, purifications an
mixtures thereof, from whatever mixtures thereof, from whateve
source, by whatever process source, by whatever proces
produced, and shall include produced, and shall includ
whisky, brandy, rum, gin and whisky, brandy, rum, gin an
vodka, and other similar products vodka, and other similar product
or mixtures. or mixtures.
'Proof spirits' is liquor containing 'Proof spirits' is liquor containin

one-half (1/2) of its volume of one-half (1/2) of its volume o
alcohol of a specific gravity of alcohol of a specific gravity o
seven thousand nine hundred and seven thousand nine hundred a
thirty-nine ten thousandths thirty-nine ten thousandth
(0.7939) at fifteen degrees (0.7939) at fifteen degree
centigrade (15ºC). A 'proof liter' centigrade (15ºC). A 'proof lite
means a liter of proof spirits. means a liter of proof spirits.
'Net retail price' shall mean the 'Net retail price' shall mean th
price at which the distilled spirits is price at which the distilled spirits
sold on retail in at least five (5) sold on retail in at least five (5
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
major supermarkets in Metro major supermarkets i
Manila, excluding the amount Manila, excluding the amoun
intended to cover the applicable intended to cover the applicabl
excise tax and the value-added excise tax and the value-adde
tax. For distilled spirits which are tax. For distilled spirits which ar
marketed outside Metro Manila, marketed outside Metro Manila
the 'net retail price' shall mean the the 'net retail price' shall mean th
price at which the distilled spirits is price at which the distilled spirits
sold in at least five (5) major sold in at least five (5) majo
supermarkets in the region supermarkets in the regio
excluding the amount intended to excluding the amount intended t
cover the applicable excise tax cover the applicable excise tax an
and the value-added tax. the value-added tax.
Major supermarkets, as Major supermarkets, a

contemplated under this Act, shall contemplated under this Act, sha
be those with the highest annual be those with the highest annua
gross sales in Metro Manila or the gross sales in Metro Mani
region, as the case may be, as region, as the case may be, a
determined by the National determined by the Nationa
Statistics Office, and shall exclude Statistics Office, and shall exclud
retail outlets or kiosks, retail outlets or kiosks
convenience or sari-sari stores, convenience or sari-sari stores
and others of a similar nature: and others of a similar nature
Provided, That no two (2) Provided, That no two (2
supermarkets in the list to be supermarkets in the list to b
surveyed are affiliated and/or surveyed are affiliated and/o
branches of each other: Provided, branches of each other:
finally, That in case a particular finally, That in case a particula
distilled spirit is not sold in major distilled spirit is not sold in majo
supermarkets, the price survey supermarkets, the price surve
can be conducted in retail outlets can be conducted in retail outlet
where said distilled spirit is sold in where said distilled spirit is sold i
Metro Manila or the region, as the Metro Manila or the region, as th
case may be, upon the case may be, upon th
determination of the determination of the Commissione
Commissioner of Internal of Internal Revenue.
Revenue.
The net retail price shall be The net retail price shall b
determined by the Bureau of determined by the Bureau o
Internal Revenue (BIR) through a Internal Revenue (BIR) through
price survey under oath. price survey under oath.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The methodology and all pertinent The methodology and all pertinen
documents used in the conduct of documents used in the conduct o
the latest price survey shall be the latest price survey shall b
submitted to the Congressional submitted to the Congressiona
Oversight Committee on the Oversight Committee on th
Comprehensive Tax Reform Comprehensive Tax Reform
Program created under Republic Program created under Republ
Act No. 8240. HIESTA Act No. 8240. HIESTA
Understatement of the suggested Understatement of the suggeste

net retail price by as much as net retail price by as much a
fifteen percent (15%) of the actual fifteen percent (15%) of the actua
net retail price shall render the net retail price shall render th
manufacturer or importer liable for manufacturer or importer liable fo
additional excise tax equivalent to additional excise tax equivalent t
the tax due and difference the tax due and differenc
between the understated between the understate
suggested net retail price and the suggested net retail price and th
actual net retail price. actual net retail price.
Distilled spirits introduced in the Distilled spirits introduced in th

domestic market after the domestic market after th
effectivity of this Act shall be effectivity of this Act shall b
initially taxed according to their initially taxed according to the
suggested net retail prices. suggested net retail prices.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
'Suggested net retail price' shall 'Suggested net retail price' sha
mean the net retail price at which mean the net retail price at whic
locally manufactured or imported locally manufactured or impo
distilled spirits are intended by the distilled spirits are intended by th
manufacturer or importer to be manufacturer or importer to b
sold on retail in major sold on retail in majo
supermarkets or retail outlets in supermarkets or retail outlets i
Metro Manila for those marketed Metro Manila for those markete
nationwide, and in other regions, nationwide, and in other regions
for those with regional markets. At for those with regional markets. A
the end of three (3) months from the end of three (3) m
the product launch, the Bureau of the product launch, the Bureau o
Internal Revenue shall validate the Internal Revenue shall validate th
suggested net retail price of the suggested net retail price of th
new brand against the net retail new brand against the net reta
price as defined herein and initially price as defined herein and initial
determine the correct tax on a determine the correct tax on
newly introduced distilled spirits. newly introduced distilled spirits
After the end of nine (9) months After the end of nine (9) month
from such validation, the Bureau from such validation, the Bureau o
of Internal Revenue shall Internal Revenue shall revalidat
revalidate the initially validated net the initially validated net retail pric
retail price against the net retail against the net retail price as o
price as of the time of revalidation the time of revalidation in order t
in order to finally determine the finally determine the correct tax o
correct tax on a newly introduced a newly introduced distilled spirits.
distilled spirits.
All distilled spirits existing in the All distilled spirits existing in th

market at the time of the effectivity market at the time of the effectivit
of this Act shall be taxed of this Act shall be taxed accordin
according to the tax rates provided to the tax rates provided abov
above based on the latest price based on the latest price survey o
survey of the distilled spirits the distilled spirits conducted b
conducted by the Bureau of the Bureau of Internal Revenue.
Internal Revenue.
Act No. 8240. Act No. 8240.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Manufacturers and importers of Manufacturers and importers o
distilled spirits shall, within thirty distilled spirits shall, within thirt
(30) days from the effectivity of (30) days from the effectivity o
this Act, and within the first five (5) this Act, and within the first five (5
days of every third month days of every third mont
thereafter, submit to the thereafter, submit to th
Commissioner a sworn statement Commissioner a sworn statemen
of the volume of sales for each of the volume of sales for eac
particular brand of distilled spirits particular brand of distilled spirit
sold at his establishment for the sold at his establishment for th
three-month period immediately three-month period immediate
preceding. preceding.
Any manufacturer or importer who, Any manufacturer or importer who

in violation of this Section, in violation of this Section
misdeclares or misrepresents in misdeclares or misrepresents i
his or its sworn statement herein his or its sworn statement herei
required any pertinent data or required any pertinent data o
information shall, upon final information shall, upon fina
findings by the Commissioner that findings by the Commissioner tha
the violation was committed, be the violation was committed, b
penalized by a summary penalized by a summar
cancellation or withdrawal of his or cancellation or withdrawal of his o
its permit to engage in business as its permit to engage in business a
manufacturer or importer of manufacturer or importer o
distilled spirits. distilled spirits.
Any corporation, association or Any corporation, association o

partnership liable for any of the partnership liable for any of th
acts or omissions in violation of acts or omissions in violation o
this Section shall be fined treble this Section shall be fined trebl
the amount of deficiency taxes, the amount of deficiency taxes
surcharges and interest which surcharges and interest which ma
may be assessed pursuant to this be assessed pursuant to th
Section. Section.
Any person liable for any of the Any person liable for any of th
acts or omissions prohibited under acts or omissions prohibited unde
this Section shall be criminally this Section shall be criminal
liable and penalized under Section liable and penalized under Sectio
254 of this Code. Any person who 254 of this Code. Any person wh
willfully aids or abets in the willfully aids or abets in th
commission of any such act or commission of any such act o
omission shall be criminally liable omission shall be criminally l
in the same manner as the in the same manner as th
principal. principal.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
If the offender is not a citizen o
If the offender is not a citizen of
the Philippines, he shall b
the Philippines, he shall be
deported immediately after servin
deported immediately after
the sentence, without furthe
serving the sentence, without
proceedings for deportation.
further proceedings for
amended by Sec. 1, R.A. No
deportation. (as amended by Sec.
10351; previously amen
1, R.A. No. 10351; previously
Sec. 1, R.A. No. 9334.
9334.)
Wines
SEC. 142. On wines, there shall SEC. 142. On wines, there shall b
be collected per liter of volume collected per liter of volum
capacity effective on January 1, capacity effective on January
2013, the following excise taxes: 2013, the following excise taxes:
(a) Sparkling wines/champagnes (a) Sparkling wines/champagne

regardless of proof, if the net retail regardless of proof, if the net reta
price per bottle of seven hundred price per bottle of seven hundre
fifty milliliter (750 ml.) volume fifty milliliter (750 ml.) volum
capacity (excluding the excise tax capacity (excluding the excise ta
and the value-added tax) is: and the value-added tax) is:
(1) Five hundred pesos (P500.00) (1) Five hundred pesos (P500.00
or less — Two hundred fifty pesos or less — Two hundred fifty peso
(P250.00); and (P250.00); and
(2) More than Five hundred pesos (2) More than Five hundred peso
(P500.00) — Seven hundred (P500.00) — Seven hundre
pesos (P700.00). aDSHIC pesos (P700.00). aDSHIC
(b) Still wines and carbonated (b) Still wines and carbonate
wines containing fourteen percent wines containing fourteen percen
(14%) of alcohol by volume or (14%) of alcohol by volume o
less, Thirty pesos (P30.00); and less, Thirty pesos (P30.00); and
(c) Still wines and carbonated (c) Still wines and carbonate
wines containing more than wines containing more tha
fourteen percent (14%) but not fourteen percent (14%) but no
more than twenty-five percent more than twenty-five percen
(25%) of alcohol by volume, Sixty (25%) of alcohol by volume, Sixt
pesos (P60.00). pesos (P60.00).
The rates of tax imposed under The rates of tax imposed unde
this Section shall be increased by this Section shall be increased
four percent (4%) every year four percent (4%) every yea
thereafter effective on January 1, thereafter effective on January 1
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
2014, through revenue regulations 2014, through revenue regulation
issued by the Secretary of issued by the Secretary o
Finance. Finance.
Fortified wines containing more Fortified wines containing mor

than twenty-five percent (25%) of than twenty-five percent (25%) o
alcohol by volume shall be taxed alcohol by volume shall be taxe
as distilled spirits. 'Fortified wines' as distilled spirits. 'Fortified wine
shall mean natural wines to which shall mean natural wines to whic
distilled spirits are added to distilled spirits are added t
increase their alcohol strength. increase their alcohol strength.
price at which sparkling price at which sparklin
wine/champagne is sold on retail wine/champagne is sold on retail i
in at least five (5) major at least five (5) majo
supermarkets in Metro Manila, supermarkets in Met
and the value-added tax. For the value-added tax. For sparklin
sparkling wines/champagnes wines/champagnes which ar
which are marketed outside Metro marketed outside Metro Manila
Manila, the 'net retail price' shall the 'net retail price' shall mean th
mean the price at which the wine price at which the wine is sold in a
is sold in at least five (5) major least five (5) major supermarket
supermarkets in the region in the region excluding the amoun
excluding the amount intended to intended to cover the applicabl
cover the applicable excise tax excise tax and the value-adde
and the value-added tax. tax.

be those with the highest annual be those with the highest annua
gross sales in Metro Manila or the gross sales in Metro Manila or th
sparkling wine/champagne is not sparkling wine/champagne is no
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
sold in major supermarkets, the sold in major supermarkets, th
price survey can be conducted in price survey can be conducted i
retail outlets where said sparkling retail outlets where said sparklin
wine/champagne is sold in Metro wine/champagne is sold in Metr
Manila or the region, as the case Manila or the region, as the cas
may be, upon the determination of may be, upon the determination o
the Commissioner of Internal the Commissioner of Interna
Revenue. Revenue.
Internal Revenue through a price Internal Revenue through a pric
survey under oath. survey under oath.
Act No. 8240. Act No. 8240.

Sparkling wines/champagnes Sparkling wines/champagne

introduced in the domestic market introduced in the domestic marke
after the effectivity of this Act shall after the effectivity of this Act sha
be initially tax classified according be initially tax classified accordin
to their suggested net retail prices. to their suggested net retail prices
locally manufactured or imported locally manufactured or importe
sparkling wines/champagnes are sparkling wines/champagnes ar
intended by the manufacturer or intended by the manufacturer o
importer to be sold on retail in importer to be sold on retail i
major supermarkets or retail major supermarkets or reta
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
outlets in Metro Manila for those outlets in Metro Manila for thos
marketed nationwide, and in other marketed nationwide, and in othe
regions, for those with regional regions, for those with regiona
markets. At the end of three (3) markets. At the end of three (3
months from the product launch, months from the product launch
the Bureau of Internal Revenue the Bureau of Internal Revenu
shall validate the suggested net shall validate the suggested ne
retail price of the sparkling retail price of the sparklin
wine/champagne against the net wine/champagne against the ne
retail price as defined herein and retail price as defined herein an
initially determine the correct tax initially determine the correct ta
bracket to which a newly bracket to which a new
introduced sparkling introduced sparklin
wine/champagne shall be wine/champagne shall b
classified. After the end of nine (9) classified. After the end of nine (9
months from such validation, the months from such validation, th
Bureau of Internal Revenue shall Bureau of Internal Revenue sha
revalidate the initially validated net revalidate the initially validated ne
retail price against the net retail retail price against the net reta
price as of the time of revalidation price as of the time of revalidatio
in order to finally determine the in order to finally determine th
correct tax bracket to which a correct tax bracket to which
newly introduced sparkling newly introduced sparklin
wine/champagne shall be wine/champagne shall b
classified. classified.
The proper tax classification of The proper tax classification o

sparkling wines/champagnes, sparkling wines/champagnes
whether registered before or after whether registered before or afte
the effectivity of this Act, shall be the effectivity of this Act, shall b
determined every two (2) years determined every two (2) year
from the date of effectivity of this from the date of effectivity of th
Act. Act.
All sparkling wines/champagnes All sparkling wines/champagne

existing in the market at the time existing in the market at the tim
of the effectivity of this Act shall be of the effectivity of this Act shall b
classified according to the net classified according to the ne
retail prices and the tax rates retail prices and the tax rate
provided above based on the provided above based on the lates
latest price survey of the sparkling price survey of the sparklin
wines/champagnes conducted by wines/champagnes conducted b
the Bureau of Internal Revenue. the Bureau of Internal Revenue
CaHAcT CaHAcT
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Act No. 8240. Act No. 8240.

wines shall, within thirty (30) days wines shall, within thirty (30) day
from the effectivity of this Act, and from the effectivity of this Act, an
within the first five (5) days of within the first five (5)
every month thereafter, submit to every month thereafter, submit t
the Commissioner a sworn the Commissioner a swor
statement of the volume of sales statement of the volume of sale
for each particular brand of wines for each particular brand of wine
sold at his establishment for the sold at his establishment for th

the violation was committed be the violation was committed b
manufacturer or importer of wines. manufacturer or importer of wines

Section. Section.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
omission shall be criminally liable omission shall be criminally liabl
"If the offender is not a citizen of "If the offender is not a citizen o
the Philippines, he shall be the Philippines, he shall b
deported immediately after serving deported immediately after servin
the sentence, without further the sentence, without furthe
proceedings for deportation. proceedings for deportation.
(as amended by Sec. 2. R.A. No
(as amended by Sec. 2. R.A. No.
10351; previously amended b
10351; previously amended by
Sec. 2, R.A. No. 9334.
Sec. 2, R.A. No. 9334.)
Fermented Liquors
SEC. 143. Fermented Liquors. — SEC. 143. Fermented Liquors.
and collected an excise tax on and collected an excise tax o
beer, lager beer, ale, porter and beer, lager beer, ale, porter an
other fermented liquors except other fermented liquors excep
tuba, basi, tapuy and similar tuba, basi, tapuy
fermented liquors in accordance fermented liquors in accordanc
with the following schedule: with the following schedule:
Effective on January 1, 2013 Effective on January 1, 2013
(a) If the net retail price (excluding (a) If the net retail price (excludin
the excise tax and the the excise tax and the value-adde
value-added tax) per liter of tax) per liter of volume capacity
volume capacity is Fifty pesos and Fifty pesos and sixty centavo
sixty centavos (P50.60) or less, (P50.60) or less, the tax shall b
the tax shall be Fifteen pesos Fifteen pesos (P15.00) per lite
(P15.00) per liter; and and
(b) If the net retail price (excluding (b) If the net retail price (excludin
volume capacity is more than Fifty more than Fifty pesos and sixt
pesos and sixty centavos centavos (P50.60), the tax shall b
(P50.60), the tax shall be Twenty Twenty pesos (P20.00) per liter.
pesos (P20.00) per liter.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the tax shall be Seventeen pesos Seventeen pesos (P17.00) pe
(P17.00) per liter; and liter; and
(P50.60), the tax shall be Twenty-one pesos (P21.00) pe
Twenty-one pesos (P21.00) per liter.
liter.
the tax shall be Nineteen pesos Nineteen pesos (P19.00) per lite
(P19.00) per liter; and and
(P50.60), the tax shall be Twenty-two pesos (P22.00) pe
Twenty-two pesos (P22.00) per liter.
liter.
volume capacity is Fifty pesos and Fifty pesos and sixty centa
the tax shall be Twenty-one pesos Twenty-one pesos (P21.00) pe
(P21.00) per liter; and liter; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
pesos and sixty centavos centavos (P50.60), the tax shall
(P50.60), the tax shall be Twenty-three pesos (P23.00) pe
Twenty-three pesos (P23.00) per liter.
liter.
Effective on January 1, 2017, the Effective on January 1, 2017, th

tax on all fermented liquors shall tax on all fermented liquors sha
be Twenty-three pesos and fifty be Twenty-three pesos and fift
centavos (P23.50) per liter. centavos (P23.50) per liter.
this Section shall be increased by this Section shall be increased b
Finance. However, in case of Finance. However, in case o
fermented liquors affected by the fermented liquors affected by th
'no downward reclassification' 'no downward reclassification
provision prescribed under this provision prescribed under th
Section, the four percent (4%) Section, the four perc
increase shall apply to their increase shall apply to the
respective applicable tax rates. respective applicable tax rates.
Fermented liquors which are Fermented liquors which ar

brewed and sold at brewed and sold a
micro-breweries or small micro-breweries or sma
establishments such as pubs and establishments such as pubs an
restaurants shall be subject to the restaurants shall be subject to th
rate of Twenty-eight pesos rate of Twenty-eight peso
(P28.00) per liter effective on (P28.00) per liter effective o
January 1, 2013: Provided, That January 1, 2013: Provided,
this rate shall be increased by four this rate shall be increased by fou
percent (4%) every year thereafter percent (4%) every year thereafte
effective on January 1, 2014, effective on January 1, 2014
through revenue regulations through revenue regulation
Finance. Finance.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Fermented liquors introduced in Fermented liquors introduced i

the domestic market after the the domestic market after th
effectivity of this Act shall be effectivity of this Act shall b
initially tax classified according to initially tax classified according t
their suggested net retail prices. their suggested net retail prices.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
locally manufactured or imported locally manufactured or importe
fermented liquor are intended by fermented liquor are intended b
the manufacturer or importer to be the manufacturer or importer to b
sold on retail in major sold on retail in majo
supermarkets or retail outlets in supermarkets or retail outlets i
Metro Manila for those marketed Metro Manila for those markete
nationwide, and in other regions, nationwide, and in other regions
for those with regional markets. At for those with regional markets. A
the end of three (3) months from the end of three (3) months from
the product launch, the Bureau of the product launch, the Bureau o
Internal Revenue shall validate the Internal Revenue shall validate th
suggested net retail price of the suggested net retail price of th
newly introduced fermented liquor newly introduced fermented liquo
against the net retail price as against the net retail price a
defined herein and initially defined herein and initial
determine the correct tax bracket determine the correct tax bracke
to which a newly introduced to which a newly introduce
fermented liquor, as defined fermented liquor, as define
above, shall be classified. After above, shall be classified. After th
the end of nine (9) months from end of nine (9) months from suc
such validation, the Bureau of validation, the Bureau of Interna
Internal Revenue shall revalidate Revenue shall revalidate th
the initially validated net retail initially validated net retail pric
price against the net retail price as against the net retail price as o
of the time of revalidation in order the time of revalidation in
to finally determine the correct tax finally determine the correct ta
bracket which a newly introduced bracket which a newly introduce
fermented liquor shall be fermented liquor shall b
classified. classified.
price at which the fermented liquor price at which the fermented liquo
is sold on retail in at least five (5) is sold on retail in at least five (5
major supermarkets in Metro major supermarkets in Metr
Manila (for brands of fermented Manila (for brands of fermente
liquor marketed nationally), liquor marketed nationally
and the value-added tax. For the value-added tax. For brand
brands which are marketed which are marketed outside Metr
outside Metro Manila, the 'net Manila, the 'net retail price' sha
retail price' shall mean the price at mean the price at which th
which the fermented liquor is sold fermented liquor is sold in at leas
in at least five (5) major five (5) major supermarkets in th
supermarkets in the region region excluding the amoun
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
supermarkets in the region region excluding the amoun
excluding the amount intended to intended to cover the applicabl
cover the applicable excise tax excise tax and the value-adde
and the value-added tax. tax.

be those with the highest annual be those with the highest annu
gross sales in Metro Manila or the gross sales in Metro Manila or th
fermented liquor is not sold in fermented liquor is not sold i
major supermarkets, the price major supermarkets, the pric
survey can be conducted in retail survey can be conducted in reta
outlets where said fermented outlets where said fermente
liquor is sold in Metro Manila or liquor is sold in Metro Manila or th
the region, as the case may be, region, as the case may be, upo
upon the determination of the the determination of th
Commissioner of Internal Commissioner of Interna
Revenue. HEScID Revenue. HEScID
Internal Revenue (BIR) through a Internal Revenue (BIR) through
price survey under oath. price survey under oath.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Act No. 8240. Act No. 8240.

Any downward reclassification of Any downward reclassification o

present categories, for tax present categories, for ta
purposes, of fermented liquors purposes, of fermented liquor
duly registered at the time of the duly registered at the time of th
effectivity of this Act which will effectivity of this Act which w
reduce the tax imposed herein, or reduce the tax imposed herein, o
the payment thereof, shall be the payment thereof, shall b
prohibited. prohibited.
The proper tax classification of The proper tax classification o

fermented liquors, whether fermented liquors, whethe
registered before or after the registered before or after th
effectivity of this Act, shall be effectivity of this Act, shall b
determined every two (2) years determined every two (2) year
from the date of effectivity of this from the date of effectivity of th
Act. Act.
All fermented liquors existing in All fermented liquors existing in th

the market at the time of the market at the time of the effectivit
effectivity of this Act shall be of this Act shall be classifie
classified according to the net according to the net retail price
retail prices and the tax rates and the tax rates provided abov
provided above based on the based on the latest price survey o
latest price survey of the the fermented liquors conducte
fermented liquors conducted by by the Bureau of Internal Revenue
the Bureau of Internal Revenue.
The methodology and all per
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The methodology and all pertinent documents used in the conduct o

documents used in the conduct of the latest price survey shall b
the latest price survey shall be submitted to the Congressiona
submitted to the Congressional Oversight Committee on th
Oversight Committee on the Comprehensive Tax Reform
Comprehensive Tax Reform Program created under Republ
Program created under Republic Act No. 8240.
Act No. 8240.
Every brewer or importer of Every brewer or importer o

fermented liquor shall, within thirty fermented liquor shall, wi
(30) days from the effectivity of (30) days from the effectivity o
this Act, and within the first five (5) this Act, and within the first five (5
days of every month thereafter, days of every month thereafte
submit to the Commissioner a submit to the Commissioner
sworn statement of the volume of sworn statement of the volume o
sales for each particular brand of sales for each particular brand o
fermented liquor sold at his fermented liquor sold at h
establishment for the three-month establishment for the three-mont
period immediately preceding. period immediately preceding.
Any brewer or importer who, in Any brewer or importer who, i

violation of this Section, violation of this Section
brewer or importer of fermented brewer or importer of fermente
liquor. liquor.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)

Section. Section.
If the offender is not a citizen of If the offender is not a citizen o

(as amended by Sec. 3, R.A. No
(as amended by Sec. 3, R.A. No. 10351, Dec. 19, 2012; previous
10351, Dec. 19, 2012; previously amended by Sec. 3, R.A. No
amended by Sec. 3, R.A. No. 9334, Dec. 21, 2004)
9334, Dec. 21, 2004)
CHAPTER IV — EXCISE TAX CHAPTER IV — EXCISE TAX ON

ON TOBACCO PRODUCTS TOBACCO PRODUCTS
Tobacco Products
SEC. 144. Tobacco Products. — SEC. 144. Tobacco P
There shall be collected an excise There shall be collected an excis
tax of One peso and seventy-five tax of One peso and seventy-fiv
centavos (P1.75) effective on centavos (P1.75) effective o
January 1, 2013 on each kilogram January 1, 2013 on each kilogram
of the following products of of the following products o
tobacco: tobacco:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Tobacco twisted by hand or (a) Tobacco twisted by hand o

reduced into a condition to be reduced into a condition to b
consumed in any manner other consumed in any manner othe
than the ordinary mode of drying than the ordinary mode of dryin
and curing; and curing;
(b) Tobacco prepared or partially (b) Tobacco prepared or partial

prepared with or without the use of prepared with or without the use o
any machine or instruments or any machine or instruments o
without being pressed or without being pressed o
sweetened except as otherwise sweetened except as otherwis
provided hereunder; and provided hereunder; and
(c) Fine-cut shorts and refuse, (c) Fine-cut shorts and refuse
scraps, clippings, cuttings, stems scraps, clippings, cuttings, stem
and sweepings of tobacco except and sweepings of tobacco excep
as otherwise provided hereunder. as otherwise provided hereunder.
Stemmed leaf tobacco, tobacco Stemmed leaf tobacco, tobacc

prepared or partially prepared with prepared or partially prepared wit
or without the use of any machine or without the use of any machin
or instrument or without being or instrument or without bein
pressed or sweetened, fine-cut pressed or sweetened, fine-cu
shorts and refuse, scraps, shorts and refuse, scraps
clippings, cuttings, stems, midribs, clippings, cuttings, stems, midribs
and sweepings of tobacco and sweepings of tobacc
resulting from the handling or resulting from the handling o
stripping of whole leaf tobacco stripping of whole leaf tobacc
shall be transferred, disposed of, shall be transferred, disposed o
or otherwise sold, without any or otherwise sold, without an
prepayment of the excise tax prepayment of the excise ta
herein provided for, if the same herein provided for, if the same ar
are to be exported or to be used in to be exported or to be used in th
the manufacture of cigars, manufacture of cigars, cigarettes
cigarettes, or other tobacco or other tobacco products o
products on which the excise tax which the excise tax will eventual
will eventually be paid on the be paid on the finished produc
finished product, under such under such conditions as ma
conditions as may be prescribed in prescribed in the rules an
the rules and regulations regulations promulgated by th
promulgated by the Secretary of Secretary of Finance, upo
Finance, upon recommendation of recommendation of th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
On tobacco specially prepared for On tobacco specially prepared fo

chewing so as to be unsuitable for chewing so as to be unsuitable fo
use in any other manner, on each use in any other manner, on eac
kilogram, One peso and fifty kilogram, One peso and fift
centavos (P1.50) effective on centavos (P1.50) effective o
January 1, 2013. January 1, 2013.
this Section shall be increased by this Section shall be increased b
Finance. Finance.
No tobacco products No tobacco product

manufactured in the Philippines manufactured in the Philippine
and produced for export shall be and produced for export shall b
removed from their place of removed from their place o
manufacture or exported without manufacture or exported withou
posting of an export bond posting of an export bon
equivalent to the amount of the equivalent to the amount of th
excise tax due thereon if sold excise tax due thereon if sol
domestically: Provided, however, domestically: Provided, howev
That tobacco products for export That tobacco products for expo
may be transferred from the place may be transferred from the plac
of manufacture to a bonded of manufacture to a bonde
facility, upon posting of a transfer facility, upon posting of a transfe
bond, prior to export. bond, prior to export.
Tobacco products imported into Tobacco products imported int

the Philippines and destined for the Philippines and destined fo
foreign countries shall not be foreign countries shall not b
allowed entry without posting a allowed entry without posting
bond equivalent to the amount of bond equivalent to the amount o
customs duty, excise and customs duty, excise an
value-added taxes due thereon if value-added taxes due thereon
sold domestically. sold domestically.

tobacco products shall, within tobacco products shall, within thirt
thirty (30) days from the effectivity (30) days from the effectivity o
of this Act, and within the first five this Act, and within the first five (5
(5) days of every month thereafter, days of every month thereafte
submit to the Commissioner a submit to the Commissioner
sworn statement of the volume of sworn statement of the volume o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
sales for each particular brand of sales for each particular brand o
tobacco products sold for the tobacco products sold for th

penalized by a summary penalized by a sum
manufacturer or importer of cigars manufacturer or importer of cigar
or cigarettes. or cigarettes.

this Section shall be fined treble this Section shall be fined
Section. Section.
If the offender is not a citizen of If the offender is not a citizen o

10351, Dec. 19, 2012; previous
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
9334, Dec. 21, 2004)
Cigars and Cigarettes

SEC. 145. SEC. 145.
(A) Cigars. — There shall be (A) Cigars. — There shall b

levied, assessed and collected on levied, assessed and collected o
cigars an excise tax in cigars an excise tax in accordanc
accordance with the following with the following schedule:
schedule:
(1) Effective on January 1, 2013 (1) Effective on January 1, 2013
(a) An ad valorem tax equivalent (a) An ad valorem tax equivalent t

to twenty percent (20%) of the net twenty percent (20%) of the ne
cigar; and cigar; and
(b) In addition to the ad valorem (b) In addition to the

of Five pesos (P5.00) per cigar. of Five pesos (P5.00) per cigar.

tax herein imposed, the specific tax herein imposed, the specif
tax rate of Five pesos (P5.00) tax rate of Five pesos (P5.00
imposed under this subsection imposed under this subsectio
shall be increased by four percent shall be increased by four percen
(4%) effective on January 1, 2014 (4%) effective on January 1, 201
Finance. Finance.
(B) Cigarettes Packed by Hand. (B) Cigarettes Packed by Hand.

— There shall be levied, There shall be levied, assesse
assessed and collected on and collected on cigarettes packe
cigarettes packed by hand an by hand an excise tax based o
excise tax based on the following the following schedules:
schedules:
Effective on January 1, 2018 until Effective on January 1, 2013

June 30, 2018, Thirty-two pesos Twelve pesos (P12.00) per pack;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
and fifty centavos (P32.50) per
pack; Effective on January 1, 2014
Fifteen pesos (P15.00) per pack;
Effective on July 1, 2018 until
December 31, 2019, Thirty-five Effective on January 1, 2015
pesos (P35.00) per pack; Eighteen pesos (P18.00) per pack

December 31, 2021, Thirty-seven Twenty-one pesos (P21.00) pe
pesos and fifty centavos (P37.50) pack; and
per pack; and
Effective on January 1, 2017
Effective on January 1, 2022 until Thirty pesos (P30.00) per pack.
December 31, 2023, Forty pesos
(P40.00) per pack.
this subsection shall be increased this subsection shall be increase
by four percent (4%) every year by four percent (4%) every yea
effective on January 1, 2024, effective on January 1, 2018
Finance. Finance.
Duly registered cigarettes packed Duly registered cigarettes packe

by hand shall only be packed in by hand shall only be packed i
twenties and other packaging twenties and other packagin
combinations of not more than combinations of not more tha
twenty. twenty.
'Cigarettes packed by hand' shall 'Cigarettes packed by hand' sha

refer to the manner of packaging refer to the manner of packagin
of cigarette sticks using an of cigarette sticks using a
individual person's hands and not individual person's han
through any other means such as through any other means such a
a mechanical device, machine or a mechanical device, machine o
equipment. equipment.
(C) Cigarettes Packed by (C) Cigarettes Packed by Machine

Machine. — There shall be levied, — There shall be levied, assesse
assessed and collected on and collected on cigarettes packe
cigarettes packed by machine a by machine a tax at the rate
tax at the rates prescribed below: prescribed below:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)

June 30, 2018, the tax on all
cigarettes packed by machine (1) If the net retail price (excludin
shall be Thirty-two pesos and fifty the excise tax and the value-adde
centavos (P32.50) per pack; tax) is Eleven pesos and fift
centavos (P11.50) and below pe
Effective on July 1, 2018 until pack, the tax shall be Twelv
December 31, 2019, the tax on all pesos (P12.00) per pack; and
cigarettes packed by machine
shall be Thirty-five pesos (2) If the net retail price (excludin
(P35.00) per pack; the excise tax and the value-adde
tax) is more than Eleven peso
Effective on January 1, 2020 until and fifty centavos (P11.50) pe
December 31, 2021, the tax on all pack, the tax shall be Twenty-fiv
cigarettes packed by machine pesos (P25.00) per pack.
shall be Thirty-seven pesos and
fifty centavos (P37.50) per pack; Effective on January 1, 2014
and
(1) If the net retail pric
Effective on January 1, 2022 until (excluding the excise tax and th
December 31, 2023, the tax on all value-added tax) is Eleven peso
cigarettes packed by machine and fifty centavos (P11.50) an
shall be Forty pesos (P40.00) per below per pack, the tax shall b
pack. Seventeen pesos (P17.00) pe
pack; and
The rates of tax imposed under
this Subsection shall be increased (2) If the net retail pric
by four percent (4%) every year (excluding the excise tax and th
thereafter effective on January 1, value-added tax) is more tha
2024, through revenue Eleven pesos and fifty centavo
regulations issued by the (P11.50) per pack, the tax shall b
Secretary of Finance. (as Twenty-seven pesos (P27.00) pe
amended by Sec. 42, R.A. No. pack.
10963, December 19, 2017)
(1) If the net retail price (excludin

the excise tax and the value-adde
tax) is Eleven pesos and fift
pack, the tax shall be Twenty
pesos (P21.00) per pack; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
and fifty centavos (P11.50) pe
pack, the tax shall be Twenty-eigh
pesos (P28.00) per pack
DEIHAa

tax) is Eleven pesos and fift
pack, the tax shall be Twenty-fiv
pesos (P25.00) per pack; and

and fifty centavos (P11.50) pe
pack, the tax shall be Twenty-nin
pesos (P29.00) per pack.
Effective on January 1, 2017, th

tax on all cigarettes packed b
machine shall be Thirty peso
(P30.00) per pack.
The rates of tax imposed unde

this subsection shall be increase
by four percent (4%) every yea
thereafter effective on January 1
2018, through revenue regulation
issued by the Secretary o
Finance.
Duly registered cigarettes packe

by machine shall only be packed i
twenties and other packagin
combinations of not more tha
twenty.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Understatement of the suggeste

net retail price by as much a
fifteen percent (15%) of the actua
net retail price shall render th
manufacturer or importer
additional excise tax equivalent t
the tax due and differenc
between the understate
suggested net retail price and th
actual net retail price.
Cigarettes introduced in th
domestic market after th
effectivity of this Act shall b
initially tax classified according t
their suggested net retail prices.
'Suggested net retail price' sha

mean the net retail price at whic
locally manufactured or importe
cigarettes are intended by th
manufacturer or importer to b
sold on retail in
supermarkets or retail outlets i
Metro Manila for those markete
nationwide, and in other regions
for those with regional markets. A
the end of three (3) months from
the product launch, the Bureau o
Internal Revenue shall validate th
suggested net retail price of th
newly introduced cigarette agains
the net retail price as define
herein and initially determine th
correct tax bracket under which
newly introduced cigarette shall b
classified. After the end of nine (9
months from such valid
Bureau of Internal Revenue sha
revalidate the initially validated ne
retail price against the net reta
price as of the time of revalidatio
in order to finally determine th
correct tax bracket under which
newly introduced cigarette shall
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
classified.
'Net retail price' shall mean th

price at which the cigarette is sol
on retail in at least five (5) majo
supermarkets in Metro Manila (fo
brands of cigarettes markete
nationally), excluding the amoun
intended to cover the applicabl
excise tax and the value-adde
tax. For cigarettes which ar
marketed only outside Metr
Manila, the 'net retail price' sha
mean the price at which th
cigarette is sold in at least five (5
major supermarkets in the regio
excluding the amount intended t
cover the applicable excise tax an
the value-added tax.
Major supermarkets, a
contemplated under this Act, sha
be those with the highest annua
gross sales in Metro Manila or th
region, as the case may be, a
determined by the Nationa
Statistics Office, and shall exclud
retail outlets or kiosks
convenience or sari-sari stores
and others of a similar nature
Provided, That no two (2
supermarkets in the list to b
surveyed are affiliated and/o
branches of each other:
finally, That in case a particula
cigarette is not sold in majo
supermarkets, the price surve
can be conducted in retail outlet
where said cigarette is sold i
Metro Manila or the region, as th
case may be, upon th
determination of the Commissione
of Internal Revenue.
The net retail price shall b
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
determined by the Bureau o
Internal Revenue through a pric
survey under oath.
The methodology and all pertinen

documents used in the conduct o
the latest price survey shall b
submitted to the Congressiona
Oversight Committee on th
Program created under Republ
Act No. 8240.
The proper tax classification o

cigarettes, whether registere
before or after the effectivity of th
Act, shall be determined every tw
(2) years from the date o
effectivity of this Act.
All cigarettes existing in the marke

at the time of the effectivity of th
Act shall be classified according t
the net retail prices and the ta
rates provided above based on th
latest price survey of cigarette
conducted by the B
Internal Revenue.
The methodology and all pertinen

documents used in the conduct o
the latest price survey shall b
submitted to the Congressiona
Oversight Committee on th
Program created under Republ
Act No. 8240.
No tobacco product
manufactured in the Philippine
and produced for export shall b
removed from their place o
manufacture or exported withou
posting of an export bon
equivalent to the amount of th
excise tax due thereon if sol
domestically: Provided,
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
That tobacco products for expo
may be transferred from the plac
of manufacture to a bonde
facility, upon posting of a transfe
bond, prior to export.
Tobacco products imported int

the Philippines and destined fo
foreign countries shall not
allowed entry without posting
bond equivalent to the amount o
customs duty, excise an
value-added taxes due thereon
sold domestically.
Of the total volume of cigarette

sold in the country, an
manufacturer and/or seller o
tobacco products must
least fifteen percent (15%) of it
tobacco leaf raw materia
requirements from locally grow
sources, subject to adjustment
based on international treat
commitments.
Manufacturers and importers o

cigars and cigarettes shall, withi
thirty (30) days from the effectivit
of this Act and within the first fiv
(5) days of every month thereafte
submit to the Commissioner
sworn statement of the volume o
sales for cigars and/or cigarette
sold for the three-month perio
immediately preceding.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Any manufacturer or importer who

in violation of this Section
misdeclares or misrepresents i
his or its sworn statement herei
required any pertinent data o
information shall, upon fina
findings by the Commissioner tha
the violation was com
penalized by a summar
cancellation or withdrawal of his o
its permit to engage in business a
manufacturer or importer of cigar
or cigarettes.
Any corporation, association o

partnership liable for any of th
acts or omissions in violation o
this Section shall be fined trebl
the aggregate amount o
deficiency taxes, surcharges an
interest which may be assesse
pursuant to this Section.
Any person liable for any of th

acts or omissions prohibited unde
this Section shall be criminal
liable and penalized under Sectio
254 of this Code. Any person wh
willfully aids or abets in th
commission of any such act o
omission shall be criminally liabl
in the same manner as th
principal.
If the offender is not a citizen o

the Philippines, he sha
deported immediately after servin
the sentence, without furthe
proceedings for deportation."
10351, Dec. 19, 2012; previous
9334, Dec. 21, 2004)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Inspection Fee
SEC. 146. For inspection made in SEC. 146. For inspection made i
accordance with this Chapter, accordance with this Chapte
there shall be collected a fee of there shall be collected a
Fifty centavos (P0.50) for each Fifty centavos (P0.50) for eac
thousand cigars or fraction thousand cigars or fraction thereo
thereof; Ten centavos (P0.10) for Ten centavos (P0.10) for eac
each thousand cigarettes or thousand cigarettes or fractio
fraction thereof; Two centavos thereof; Two centavos (P0.02) fo
(P0.02) for each kilogram of leaf each kilogram of leaf tobacco o
tobacco or fraction thereof; and fraction thereof; and Thre
Three centavos (P0.03) for each centavos (P0.03) for each kilogram
kilogram or fraction thereof, of or fraction thereof, of scrap an
scrap and other manufactured other manufactured tobacco.
tobacco.
The inspection fee on leaf tobacco
The inspection fee on leaf scrap, cigars, cigarettes and othe
tobacco, scrap, cigars, cigarettes tobacco products as defined i
and other tobacco products as Section 147 of this Code shall b
defined in Section 147 of this paid by the wholesale
Code shall be paid by the manufacturer, producer, owner o
wholesaler, manufacturer, operator of redrying plant, as th
producer, owner or operator of case may be, immediately befor
redrying plant, as the case may removal thereof from th
be, immediately before removal establishment of the wholesale
thereof from the establishment of manufacturer, owner or operator o
the wholesaler, manufacturer, the redrying plant. In case o
owner or operator of the redrying imported leaf tobacco an
plant. In case of imported leaf products thereof, the insp
tobacco and products thereof, the fee shall be paid by the importe
inspection fee shall be paid by the before removal from custom
importer before removal from custody.
customs' custody.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Fifty percent (50%) of the tobacco

Fifty percent (50%) of the tobacc
inspection fee shall accrue to the
inspection fee shall accrue to th
Tobacco Inspection Fund created
Tobacco Inspection Fund create
by Section 12 of Act No. 2613, as
by Section 12 of Act No. 2613, a
amended by Act No. 3179, and
amended by Act No. 3179, an
fifty percent (50%) shall accrue to
fifty percent (50%) shall accrue t
the Cultural Center of the
the Cultural Center of th
Philippines.
Philippines.
Definition of Terms
SEC. 147. When used herein and SEC. 147. When used herein an
in statements or official forms in statements or official form
prescribed hereunder, the prescribed hereunder, th
following terms shall have the following terms shall have th
meaning indicated: meaning indicated:
(a) 'Cigars' mean all rolls of (a) 'Cigars' mean al

tobacco or any substitute thereof, tobacco or any substitute thereo
wrapped in leaf tobacco. wrapped in leaf tobacco.
(b) 'Cigarettes' mean all rolls of (b) 'Cigarettes' mean all rolls o
finely-cut leaf tobacco, or any finely-cut leaf tobacco, or an
substitute therefor, wrapped in substitute therefor, wrapped i
paper or in any other material. paper or in any other material.
(c) 'Wholesale price' shall mean (c) 'Wholesale price' shall mea
the amount of money or price paid the amount of money
for cigars or cigarettes purchased for cigars or cigarettes purchase
for the purpose of resale, for the purpose of resale
regardless of quantity. regardless of quantity.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(d) 'Retail price' shall mean th
(d) 'Retail price' shall mean the
amount of money or price whic
amount of money or price which
an ultimate consumer or end-use
an ultimate consumer or end-user
pays for cigars or cigarette
pays for cigars or cigarettes
purchased.
purchased.
CHAPTER V — EXCISE TAX ON CHAPTER V — EXCISE TAX ON

PETROLEUM PRODUCTS PETROLEUM PRODUCTS
Manufactured Oils and

SEC. 148. There shall be SEC. 148. There shall be collecte
Other Fuels
collected on refined and on refined and manufacture
manufactured mineral oils and mineral oils and motor fuels, th
motor fuels, the following excise following excise taxes which sha
taxes which shall attach to the attach to the goods hereunde
goods hereunder enumerated as enumerated as soon as they are i
soon as they are in existence as existence as such:
such:
Effective January 1, 2018
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Lubricating oils and greases, (a) Lubricating oils and greases
including but not limited to, including but not limited to
basestock for lube oils and basestock for lube oils an
greases, high vacuum distillates, greases, high vacuum distillates
aromatic extracts and other aromatic extracts and other simila
similar preparations, and additives preparations, and additives fo
for lubricating oils and greases, lubricating oils and greases
whether such additives are whether such additives ar
petroleum based or not, per liter petroleum based or not, per lite
and kilogram, respectively, of and kilogram, respectively, o
volume capacity or weight, Eight volume capacity or weight, Fou
pesos (P8.00): Provided, That pesos and fifty centavos (P4.50
lubricating oils and greases Provided, however, That th
produced from basestocks and excise taxes paid on th
additives on which the excise tax purchased feedstock (bunke
has already been paid shall no used in the manufacture o
longer be subject to excise tax: excisable articles and forming pa
Provided, further, That locally thereof shall be credited agains
produced or imported oils the excise tax due therefrom
previously taxed as such but are Provided, further, That lubricatin
subsequently reprocessed, oils and greases produced from
refined or recycled shall likewise basestocks and additives on whic
be subject to the tax imposed the excise tax has already bee
under this Subsection; paid shall no longer be subject t
excise tax: Provided, f
locally produced or imported oi
previously taxed as such but ar
subsequently reprocessed
rerefined or recycled shall likewis
be subject to the tax impose
under this Section.
(b) Processed gas, per liter of (b) Processed-gas, per liter o
volume capacity, Eight pesos volume capacity, Five centavo
(P8.00); (P0.05);
(c) Waxes and petrolatum, per (c) Waxes and petrolatum, pe
kilogram, Eight pesos (P8.00); kilogram, Three pesos and fift
centavos (P3.50);
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(d) On denatured alcohol to be (d) On denatured alcohol to b
used for motive power, per liter of used for motive power, per liter o
volume capacity, Eight pesos volume capacity, Five centavo
(P8.00): Provided, That unless (P0.05): Provided, That unles
otherwise provided by special otherwise provided by specia
laws, if the denatured alcohol is laws, if the denatured alcohol
mixed with gasoline, the excise mixed with gasoline, the excise ta
tax on which has already been on which has already been paid
paid, only the alcohol content only the alcohol content shall b
shall be subject to the tax herein subject to the tax herei
prescribed. For purposes of this prescribed. For purposes of th
Subsection, the removal of Subsection, the removal o
denatured alcohol of not less than denatured alcohol of not less tha
one hundred eighty degrees one hundred eighty degrees (180°
(180º) proof (ninety percent (90%) proof (ninety percent (90%
absolute alcohol) shall be deemed absolute alcohol) shall be deeme
to have been removed for motive to have been removed for motiv
power, unless shown otherwise; power, unless shown otherwise;
(e) Naphtha, regular gasoline,
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
pyrolysis gasoline and other (e) Naphtha, regular gasoline an
similar products of distillation, per other similar products o
liter of volume capacity, Seven distillation, per liter of volum
pesos (P7.00): Provided, capacity, Four pesos and thirty-fiv
however, That naphtha and centavos (P4.35): Provided
pyrolysis gasoline, when used as however, That naphtha, whe
a raw material in the production of used as a raw material in th
petrochemical products, or in the production of petrochemica
refining of petroleum products, or products or as replacement fuel fo
as replacement fuel for natural-gas-fired-combined cycl
natural-gas-fired-combined cycle power plant, in lieu o
power plant in lieu of locally-extracted natural gas durin
locally-extracted natural gas the non-availability thereof, subjec
during the non-availability thereof, to the rules and regulations to b
subject to the rules and promulgated by the Secretary o
regulations to be promulgated by Energy, in consultation with th
the Secretary of Finance, per liter Secretary of Finance, per liter o
of volume capacity, zero (P0.00): volume capacity, zero (P0.00
Provided, further, That the Provided, further, That th
production of petroleum products, by-product including fuel oil, diese
whether or not they are classified fuel, kerosene, pyrolysis gasoline
as products of distillation and for liquefied petroleum gases an
use solely for the production of similar oils having more or less th
gasoline shall be exempt from same generating power, which ar
excise tax: Provided, finally, That produced in the processing o
the by-product including fuel oil, naphtha into petrochemica
diesel fuel, kerosene, pyrolysis products shall be subject to th
gasoline, liquefied petroleum applicable excise tax specified i
gases, and similar oils having this Section, except when suc
more or less the same generating by-products are transferred to an
power, which are produced in the of the local oil refineries throug
processing of naphtha into sale, barter or exchange, for th
petrochemical products shall be purpose of further processing o
subject to the applicable excise blending into finished product
tax specified in this Section, which are subject to
except when such by-products under this Section;
are transferred to any of the local
oil refineries through sale, barter
or exchange, for the purpose of
further processing or blending into
finished products which are
subject to excise tax under this
Section;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(f) Unleaded premium gasoline,
per liter of volume capacity, (f) Leaded premium gasoline, pe
Seven pesos (P7.00); liter of volume capacity, Five peso
and thirty-five centavos (P5.35
unleaded premium gasoline, pe
liter of volume capacity, Fou
pesos and thirty-five centavo
(P4.35);
(g) Aviation turbo jet fuel, aviation
gas, per liter of volume capacity, (g) Aviation turbo jet fuel, per lite
Four Pesos (P4.00); of volume capacity, Three peso
and sixty-seven centavos (P3.67);
(h) Kerosene, per liter of volume

capacity, Three pesos (P3.00): (h) Kerosene, per liter of volum
Provided, That kerosene, when capacity, zero (P0.00): Provided
used as aviation fuel, shall be That kerosene, when used a
subject to the same tax on aviation fuel, shall be subject t
aviation turbo jet fuel under the the same tax on aviation turbo j
preceding paragraph (g), such tax fuel under the precedin
to be assessed on the user paragraph (g), such tax to b
thereof; assessed on the user thereof;
(i) Diesel fuel oil, and on similar

fuel oils having more or less the (i) Diesel fuel oil, and on simila
same generating power, per liter fuel oils having more or less th
of volume capacity, Two pesos same generating power, per liter o
and fifty centavos (P2.50); volume capacity, zero (P0.00);
(j) Liquefied petroleum gas, per

kilogram, One peso (P1.00): (j) Liquefied petroleum gas,
Provided, That liquefied liter, zero (P0.00): Provided, Tha
petroleum gas when used as raw liquefied petroleum gas used fo
material in the production of motive power shall be taxed at th
petrochemical products, subject equivalent rate as the excise ta
to the rules and regulations to be on diesel fuel oil;
Finance, shall be taxed zero
(P0.00) per kilogram:
Provided, finally, That liquefied

petroleum gas used for motive
power shall be taxed at the
equivalent rate as the excise tax
on diesel fuel oil;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(k) Asphalts, per kilogram, Eight

(k) Asphalts, per kilogram, Fifty-s
Pesos (P8.00);
centavos (P0.56); and
(l) Bunker fuel oil, and on similar
fuel oils having more or less the (l) Bunker fuel oil, and on
same generating power, per liter fuel oils having more or less th
of volume capacity, Two pesos same generating power, per liter o
and fifty centavos (P2.50): volume capacity, zero (P0.00).
Provided, however, That the amended by Sec. 17 of R.A. No
excise taxes paid on the 9337, May 24, 2005 and Sec. 1
purchased basestock (bunker) of R.A. No. 9367, January 12
used in the manufacture of 2007)
excisable articles and forming
part thereof shall be credited
against the excise tax due
therefrom; and
(m) Petroleum coke, per metric

ton, Two pesos and fifty centavos
(P2.50): Provided, however, That,
petroleum coke, when used as
feedstock to any power
generating facility, per metric ton,
zero (P0.00).
(a) Lubricating oils and greases,

including but not limited to,
basestock for lube oils and
greases, high vacuum distillates,
aromatic extracts and other
similar preparations, and additives
for lubricating oils and greases,
whether such additives are
petroleum based or not, per liter
and kilogram, respectively, of
volume capacity or weight, Nine
pesos (P9.00): Provided, That
lubricating oils and greases
produced from basestocks and
additives on which the excise tax
has already been paid shall no
longer be subject to excise tax:
Provided, further, That locally
produced or imported oils
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
previously taxed as such but are
subsequently reprocessed,
rerefined or recycled shall
likewise be subject to the tax
imposed under this Subsection.
(b) Processed gas, per liter of

volume capacity, Nine pesos
(P9.00);
(c) Waxes and petrolatum, per

kilogram, Nine pesos (P9.00);
(d) On denatured alcohol to be

used for motive power, per liter of
volume capacity, Nine pesos
(P9.00): Provided, That unless
otherwise provided by special
laws, if the denatured alcohol is
mixed with gasoline, the excise
tax on which has already been
paid, only the alcohol content
shall be subject to the tax herein
prescribed. For purposes of this
Subsection, the removal of
denatured alcohol of not less than
one hundred eighty degrees
(180º) proof (ninety percent (90%)
absolute alcohol) shall be deemed
to have been removed for motive
power, unless shown otherwise;

pyrolysis gasoline, and other
similar products of distillation, per
liter of volume capacity, Nine
pesos (P9.00): Provided,
however, That naphtha and
pyrolysis gasoline, when used as
a raw material in the production of
petrochemical products, or in the
refining of petroleum products, or
as replacement fuel for
natural-gas-fired-combined cycle
power plant in lieu of
locally-extracted natural gas
during the non-availability thereof,
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
subject to the rules and
regulations to be promulgated by
the Secretary of Finance, per liter
of volume capacity, zero (P0.00):
production of petroleum products,
whether or not they are classified
as products of distillation and for
use solely for the production of
gasoline shall be exempt from
excise tax: Provided, finally, That
the by-product including fuel oil,
diesel fuel, kerosene, pyrolysis
gasoline, liquefied petroleum
gases and similar oils having
more or less the same generating
power, which are produced in the
processing of naphtha into
petrochemical products shall be
subject to the applicable excise
tax specified in this Section,
except when such by-products
Section;

per liter of volume capacity, Nine
pesos (P9.00);

gas, per liter of volume capacity,
Four pesos (P4.00);

capacity, Four pesos (P4.00):
Provided, That kerosene, when
used as aviation fuel, shall be
subject to the same tax on
aviation turbo jet fuel under the
preceding paragraph (g), such tax
to be assessed on the user
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
thereof;

fuel oils having more or less the
same generating power, per liter
of volume capacity, Four pesos
and fifty centavos (P4.50);

kilogram, Two pesos (P2.00):
Provided, That liquefied
petroleum gas when used as raw
material in the production of
petrochemical products, subject
to the rules and regulations to be
Finance, per kilogram, zero
(P0.00): Provided, finally, That
liquefied petroleum gas used for
motive power shall be taxed at the
on diesel fuel oil;
(k) Asphalts, per kilogram, Nine

pesos (P9.00);

of volume capacity, Four pesos
and fifty centavos (P4.50):
Provided, however, That the
excise taxes paid on the
purchased basestock (bunker)
used in the manufacture of
therefrom; and

ton, Four pesos and fifty centavos
(P4.50): Provided, however, That,
petroleum coke, when used as
feedstock to any power
generating facility, per metric ton,
zero (P0.00).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Lubricating oils and greases,

including but not limited to,
basestock for lube oils and
greases, high vacuum distillates,
aromatic extracts and other
similar preparations, and additives
for lubricating oils and greases,
whether such additives are
petroleum based or not, per liter
and kilogram, respectively, of
volume capacity or weight, Ten
pesos (P10.00): Provided, That
lubricating oils and greases
produced from basestocks and
additives on which the excise tax
has already been paid shall no
longer be subject to excise tax:
Provided, further, That locally
produced or imported oils
previously taxed as such but are
subsequently reprocessed,
rerefined or recycled shall
likewise be subject to the tax
imposed under this subsection.
(b) Processed gas, per liter of

volume capacity, Ten pesos
(P10.00);
(c) Waxes and petrolatum, per

kilogram, Ten pesos (P10.00);
(d) On denatured alcohol to be

used for motive power, per liter of
volume capacity, Ten pesos
(P10.00): Provided, That unless
otherwise provided by special
laws, if the denatured alcohol is
mixed with gasoline, the excise
tax on which has already been
paid, only the alcohol content
shall be subject to the tax herein
prescribed. For purposes of this
Subsection, the removal of
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
denatured alcohol of not less than
one hundred eighty degrees
(180º) proof (ninety percent (90%)
absolute alcohol) shall be deemed
to have been removed for motive
power, unless shown otherwise;

pyrolysis gasoline and other
similar products of distillation, per
liter of volume capacity, Ten
pesos (P10.00): Provided,
however, That naphtha and
pyrolysis gasoline, when used as
a raw material in the production of
refining of petroleum products or
of volume capacity, zero (P0.00):
production of petroleum products,
whether or not they are classified
as products of distillation and for
use solely for the production of
gasoline shall be exempt from
excise tax: Provided, finally, That
the by-product including fuel oil,
diesel fuel, kerosene, pyrolysis
gasoline, liquefied petroleum
gases and similar oils having
more or less the same generating
power, which are produced in the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Section;

per liter of volume capacity, Ten
pesos (P10.00);

gas, per liter of volume capacity,
Four pesos (P4.00);

capacity, Five pesos (P5.00):
Provided, That kerosene, when
used as aviation fuel, shall be
subject to the same tax on
aviation turbo jet fuel under the
preceding paragraph (g), such tax
to be assessed on the user
thereof;

of volume capacity, Six pesos
(P6.00);

kilogram, Three pesos (P3.00):
Provided, That liquefied
petroleum gas when used as raw
material in the production of
petrochemical products, subject
to the rules and regulations to be
Finance, per kilogram, zero
(P0.00): Provided, finally, That
liquefied petroleum gas used for
motive power shall be taxed at the
on diesel fuel oil;
(k) Asphalts, per kilogram, Ten

pesos (P10.00);
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)

of volume capacity, Six pesos
(P6.00): Provided, however, That
the excise taxes paid on the
purchased basestock (bunker)
used in the manufacture of
therefrom; and

ton, Six pesos (P6.00): Provided,
however, That, petroleum coke,
when used as feedstock to any
power generating facility, per
metric ton, zero (P0.00).
Petroleum products, including

naphtha, LPG, petroleum coke,
refinery fuel and other products of
distillation, when used as input,
feedstock or as raw material in
the manufacturing of
refining of petroleum products, or
of volume capacity, zero (P0.00);
Provided, That the by-product
including fuel oil, diesel fuel,
kerosene, pyrolysis gasoline,
liquefied petroleum gases, and
similar oils having more or less
the same generating power,
which are produced in the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Section.
For the period covering 2018 to

2020, the scheduled increase in
the excise tax on fuel as imposed
in this Section shall be suspended
when the average Dubai crude oil
price based on Mean of Platts
Singapore (MOPS) for three (3)
months prior to the scheduled
increase of the month reaches or
exceeds Eighty dollars (USD80)
per barrel.

Finance shall perform an annual
review of the implementation of
the excise tax on fuel and shall,
based on projections provided
and recommendations of the
Development Budget
Coordination Committee, as
reconciled from the conditions as
provided above, recommend the
implementation or suspension of
the excise tax on fuel: Provided,
further, That the recommendation
shall be given on a yearly basis:
Provided, finally, That any
suspension of the increase in
excise tax shall not result in any
reduction of the excise tax being
imposed at the time of the
suspension. (as amended by Sec.
19, 2017)
Mandatory Marking of All SEC. 148-A. In accordance with

of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Petroleum Products rules and regulations to be issued
by the Secretary of Finance, in
consultation with the
Commissioner of Internal
Revenue and Commissioner of
Customs and in coordination with
the Secretary of Energy, the
Secretary of Finance shall require
the use of an official fuel marking
or similar technology on
petroleum products that are
refined, manufactured, or
imported into the Philippines, and
that are subject to the payment of
taxes and duties, such as but not
limited to, unleaded premium
gasoline, kerosene, and diesel
fuel oil after the taxes and duties
thereon have been paid. The
mandatory marking of all
petroleum products shall be in
accordance with the following:
(a) Official Markers. — There

shall be a list of chemical
additives and corresponding
quantitative ratio as identified by
the Secretary of Finance as
official fuel markers. The official
fuel markers shall be distinct and,
to the greatest degree possible,
impossible to imitate or replicate;
Provided, That the official fuel
marker must be unique to the
Philippines and that its chemical
composition and quantitative ratio
must persist for at least three (3)
years from their application or
administration to the unmarked
fuel;
(b) The person, entity, or taxpayer

who owns or enters the petroleum
products into the country, or the
person to whom the petroleum
products are consigned shall
cause and accommodate the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
marking of the petroleum
products with the official marking
agent;
(c) Internal revenue or customs

officers shall be on site to
administer the declaration of the
tax and duties imposed on the
petroleum products and to
oversee the application of the fuel
marking;
(d) Absence of Official or Dilution

of the Official Marker;
Presumptions. — In the event that
the petroleum products which do
not contain the official marker or
which contain the official marker
but are diluted beyond the
acceptable percentage approved
by the Secretary of Finance are
found in the domestic market or in
the possession of anyone, or
under any situation where said
petroleum products are subject to
duties and taxes, it shall be
presumed that the same were
withdrawn with the intention to
evade the payment of the taxes
and duties due thereon;
(e) The use of fraudulent marker

on the petroleum products shall
be considered prima facie
evidence that the same have
been withdrawn or imported
without the payment of taxes and
duties due thereon;
(f) Engagement of Fuel Marking

Provider. — The government
shall engage only one fuel
marking provider who shall, under
the supervision and direction of
the Commissioners of Internal
Revenue and Customs, be
responsible for providing,
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
monitoring, and administering the
fuel markers, provide equipment
and devices, conduct field and
confirmatory tests, and perform
such other acts incidental or
necessary to the proper
implementation of the provisions
of this Act: Provided, That the fuel
marking provider shall provide an
end-to-end solution to the
Government, including the
establishment and operation of
testing facilities that are certified
to ISO 17025;
(g) All costs pertaining to the

procurement of the official fuel
markers shall be borne by the
refiner, manufacturer or importer,
of petroleum products, as the
case may be: Provided, That the
government may subsidize the
cost of official fuel markers in the
first year of implementation;
(h) Fuel Marking Program Funds.

— In addition to any appropriation
to implement this Section and the
last paragraph of Section 171 of
this Act, fees or charges collected
in relation to the fuel marking
program may be recorded as trust
receipts of the implementing
agencies, and shall be exclusively
disbursed to defray the cost of
services or equipment required to
fully implement the said program,
subject to rules and regulations to
be issued by the DOF-DBM-COA
permanent committee;
(i) The marking of petroleum

products shall be mandatory
within five (5) years from the
effectivity of this Act; and
(j) The term 'random field test'
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
shall refer to periodic random
inspections and tests performed
to establish qualitative and
quantitative positive result of fuel
trafficking, which are conducted
on fuels found in the warehouses,
storage tanks, gas stations and
other retail outlets, and in such
other properties or equipment,
including mechanisms of
transportation, of persons
engaged in the sale, delivery,
trading, transportation,
distribution, or importation of fuel
intended for domestic market.
The term 'confirmatory tests' shall

refer to the accurate and precise
analytical test of the tested
unmarked, adulterated, or diluted
fuel using a device, tool or
equipment which will validate and
confirm the result of the field test,
that is immediately conducted in
an accredited testing facility that
is certified to ISO 17025. (added
by Sec. 44, R.A. No. 10963,
December 19, 2017)
CHAPTER VI — EXCISE TAX CHAPTER VI — EXCISE TAX ON

ON MISCELLANEOUS MISCELLANEOUS ARTICLES
ARTICLES
Fireworks
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Cinematographic Films
Saccharine
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Automobiles
SEC. 149. There shall be levied, SEC. 149. There shall be levied
assessed and collected an ad assessed and collected an
valorem tax on automobiles valorem tax on automobiles base
based on the manufacturer's or on the manufacturer's or importer
importer's selling price, net of selling price, net of excise an
excise and value-added tax, in value-added taxes, in accordanc
accordance with the following with the following schedule:
schedule:
Net manufacturer's price/
importer's selling price
up to P600 Thousand
Net manufacturer's price/ Rate
importer's selling price Over P600 Thousand to P12.000+ 20%
P1.1 Million of value
Up to Six hundred Four excess
percent of P600
thousand pesos (4%) Thousand
(P600,000)
Over P1.1 Million to P112,000
Over Six hundred Ten percent 40%
thousand pesos (10%) P2.1 Million of value
excess
(P600,000) to
of P1.1 Million
One million pesos
(P1,000,000) Over P2.1 Million P512,000
60%
Over One million Twenty of value
percent excess of P2.1 Million
pesos (P1,000,000) (20%)
to Four million pesos
(P4,000,000)
Over Four million Fifty

percent
pesos (P4,000,000) (50%)
Provided, That, hybrid vehicles

shall be subject to fifty percent
(50%) of the applicable excise tax
rates on automobiles under this
Section: Provided, further, That
purely electric vehicles and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
pick-ups shall be exempt from
excise tax on automobiles. Provided, That the bracket
reflecting the manufacturer's pric
or importer's selling price, net o
excise and value-added taxes, w
be indexed by the Secretary o
Finance once every two (2) years
the change in the exchange rate o
the Philippine peso against th
United States (U.S.) dollar is mor
than ten percent (10%) from th
date of effectivity of this Act, in th
case of initial adjustment and from
the last revision date in the case o
subsequent adjustments.
The manufacturer's price o

importer's selling price
excise and value-added taxes
shall be indexed by the full rate o
the peso depreciation o
appreciation, as the case may be.
Provided, further, That in case th

change in the exchange rate of th
Philippine peso against the U.S
dollar is at least twenty percen
(20%) at anytime within th
two-year period referred to above
the Secretary of Finance sha
index the brackets reflecting th
manufacturer's price or importer
selling price, net of excise an
value-added taxes, by the full rat
of the peso depreciation o
appreciation, as the case may be.
As used in this Section —

As used in this Section —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Automobile shall mean any fou
(a) Automobile shall mean any
(4) or more wheeled motor vehicl
four (4) or more wheeled motor
regardless of seating capacity
vehicle regardless of seating
which is propelled by gasoline
capacity, which is propelled by
diesel, electricity or any othe
gasoline, diesel, electricity or any
motive power: Provided, That fo
other motive power: Provided,
purposes of this Act, buses
That for purposes of this Act,
trucks, cargo vans
buses, trucks, cargo vans,
jeeps/jeepneys/jeepney
jeepneys/jeepney substitutes,
substitutes, single cab chassis
single cab chassis, and
and special-purpose vehicles sha
special-purpose vehicles shall not
not be considered as automobiles
be considered as automobiles.
(b) Truck/cargo van shall mean
(b) Truck/cargo van shall mean a
motor vehicle of any conf
motor vehicle of any configuration
that is exclusively designed for th
that is exclusively designed for
carriage of goods and with an
the carriage of goods and with
number of wheels and axles
any number of wheels and axles:
Provided, That pick-ups shall no
Provided, That pick-ups shall be
be considered as trucks.
considered as trucks.
(c) Jeep/jeepney/jeepne
(c) Jeepney/jeepney substitutes
substitutes shall mean a
shall mean as 'Philippine jeep or
"Philippine jeep or jeepney" whic
jeepney' which are of the jitney
are of the jitney type local
type locally designed and
designed and manufacture
manufactured generally from
generally from surplus parts an
surplus parts and components. It
components. It shall also includ
shall also include jeepney
jeepney substitutes that ar
substitutes that are manufactured
manufactured from brand-ne
from brand-new single cab
single cab chassis or cowl chass
chassis or cowl chassis and
and locally customized rear bod
locally customized rear body that
that has continuous sideway ro
has continuous sideway row seats
seats with open rear door an
with open rear door and without
without retractable glass windows
retractable glass windows.
(d) Bus shall mean a motor

(d) Bus shall mean a motor vehicl
vehicle of any configuration with
of any configuration with gros
gross vehicle weight of 4.0 tons or
vehicle weight of 4.0 tons or mor
more with any number of wheels
with any number of wheels an
and axles, which is generally
axles, which is generally accepte
accepted and specially designed
and specially designed for mass o
for mass or public transportation.
public transportation.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(e) Single cab chassis shall mean
(e) Single cab chassis shall mea
a motor vehicle with complete
a motor vehicle with complet
engine power train and chassis
engine power train and chass
equipped with a cab that has a
equipped with a cab that has
maximum of two (2) doors and
maximum of two (2) doors an
only one (1) row of seats.
only one (1) row of seats.
(f) Special purpose vehicle shall
(f) Special purpose vehicle sha
mean a motor vehicle designed
mean a motor vehicle designed fo
for specific applications such as
specific applications such a
cement mixer, fire truck, boom
cement mixer, fire truck, boom
truck, ambulance and/or medical
truck, ambulance and/or medica
unit, and off-road vehicles for
unit, and off-road vehicles fo
heavy industries and not for
heavy industries and not fo
recreational activities.
recreational activities.
(g) Hybrid electric vehicle shall
mean a motor vehicle powered by
electric energy, with or without
provision for off-vehicle charging,
in combination with gasoline,
diesel or any other motive power:
Provided, That, for purposes of
this Act, a hybrid electric vehicle
must be able to propel itself from
a stationary condition using solely
electric motor.
Provided, That in the case of Provided, That in the

imported automobiles not for sale, imported automobiles not for sale
the tax imposed herein shall be the tax imposed herein shall b
based on the total landed value, based on the total landed value
including transaction value, including transaction value
customs duty and all other customs duty and all othe
charges. charges.
Automobiles used exclusively Automobiles used exclusive

within the freeport zone shall be within the freeport zone shall b
exempt from excise tax. (as exempt from excise tax. (
amended by Sec. 45, R.A. No. amended by Sec. 1, R.A. No
10963, December 19, 2017) 9224, Aug. 29, 2003)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Non-essential Goods
SEC. 150. There shall be levied, SEC. 150. There shal
assessed and collected a tax assessed and collected a ta
equivalent to twenty percent (20%) equivalent to twenty percent (20%
based on the wholesale price or based on the wholesale price o
the value of importation used by the value of importation used b
the Bureau of Customs in the Bureau of Customs i
determining tariff and customs determining tariff and custom
duties, net of excise tax and duties, net of excise tax an
value-added tax, of the following value-added tax, of the foll
goods: goods:
(a) All goods commonly or (a) All goods commonly o

commercially known as jewelry, commercially known as jewelry
whether real or imitation, pearls, whether real or imitation, pearls
precious and semi-precious precious and semi-precious stone
stones and imitations thereof; and imitations thereof; good
goods made of, or ornamented, made of, or ornamented, mounte
mounted or fitted with, precious or fitted with, precious metals o
metals or imitations thereof or imitations thereof or ivory (no
ivory (not including surgical and including surgical and denta
dental instruments, silver-plated instruments, silver-plated wares
wares, frames or mountings for frames or mountings fo
spectacles or eyeglasses, and spectacles or eyeglasses, an
dental gold or gold alloys and dental gold or gold alloys an
other precious metals used in other precious metals used i
filling, mounting or fitting of the filling, mounting or fitting of th
teeth); opera glasses and teeth); opera glasses an
lorgnettes. The term 'precious lorgnettes. The term 'preciou
metals' shall include platinum, metals' shall include platinum
gold, silver and other metals of gold, silver and other metals o
similar or greater value. The term similar or greater value. The term
'imitations thereof ' shall include 'imitations thereof ' shall includ
platings and alloys of such metals; platings and alloys of such metals
(b) Perfumes and toilet waters; (b) Perfumes and toilet waters;
(c) Yachts and other v
(c) Yachts and other vessels
intended for pleasure or sports.
intended for pleasure or sports.
Non-essential Services SEC. 150-A. There shall be
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
levied, assessed, and collected a
tax equivalent to five percent (5%)
based on the gross receipts
derived from the performance of
services, net of excise tax and
value-added tax, on invasive
cosmetic procedures, surgeries,
and body enhancements directed
solely towards improving, altering,
or enhancing the patient's
appearance and do not
meaningfully promote the proper
function of the body or prevent or
treat illness or disease: Provided,
That this tax shall not apply to
procedures necessary to
ameliorate a deformity arising
from, or directly related to, a
congenital or developmental
defect or abnormality, a personal
injury resulting from an accident
or trauma, or disfiguring disease,
tumor, virus or infection:
Provided, finally, That cases or
treatments covered by the
National Health Insurance
Program shall not be subject to
this tax. (added by Sec. 46, R.A.
No. 10963, December 19, 2017)
Sweetened Beverages SEC. 150-B.
(A) Rate and Base of Tax. —

Effective January 1, 2018:
(1) A tax of Six pesos (P6.00) per

liter of volume capacity shall be
levied, assessed, and collected
on sweetened beverages using
purely caloric sweeteners, and
purely non-caloric sweeteners, or
a mix of caloric and non-caloric
sweeteners: Provided, That this
tax rate shall not apply to
sweetened beverages using high
fructose corn syrup: Provided
further, That sweetened
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
beverages using purely coconut
sap sugar and purely steviol
glycosides shall be exempt from
this tax; and
(2) A tax of Twelve pesos

(P12.00) per liter of volume
capacity shall be levied,
assessed, and collected on
sweetened beverages using
purely high fructose corn syrup or
in combination with any caloric or
non-caloric sweetener.
(B) Definition of Terms. — As

used in this Act:
(1) Sweetened beverages (SBs)

refer to non-alcoholic beverages
of any constitution (liquid, powder,
or concentrates) that are
pre-packaged and sealed in
accordance with the Food and
Drug Administration (FDA)
standards, that contain caloric
and/or non-caloric sweeteners
added by the manufacturers, and
shall include, but not be limited to
the following, as described in the
Food Category System from
Codex Alimentarius Food
Category Descriptors (Codex
Stan 192-1995, Rev. 2017 or the
latest) as adopted by the FDA:
(a) Sweetened juice drinks;
(b) Sweetened tea;
(c) All carbonated beverages;
(d) Flavored water;
(e) Energy and sports drinks;
(f) Other powdered drinks not

classified as milk, juice, tea, and
coffee;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(g) Cereal and grain beverages;
and
(h) Other non-alcoholic beverages

that contain added sugar.
(2) Caloric sweetener refers to a

substance that is sweet and
includes sucrose, fructose, and
glucose that produces a certain
sweetness;
(3) High fructose corn syrup

refers to a sweet saccharide
mixture containing fructose and
glucose which is derived from
corn and added to provide
sweetness to beverages, and
which includes other similar
fructose syrup preparations; and
(4) Non-caloric sweetener refers

to a substance that are artificially
or chemically processed that
produces a certain sweetness.
These are substances which can
be directly added to beverages,
such as aspartame, sucralose,
saccharin, acesulfame potassium,
neotame, cyclamates and other
non-nutritive sweeteners
approved by the Codex
Alimentarius and adopted by the
FDA.
(C) Exclusions. — The following

products, as described in the food
category system from Codex
Alimentarius Food Category
Descriptors (Codex Stan
192-1995, Rev. 2017 or the
latest) as adopted by the FDA,
are excluded from the scope of
this Act:
(1) All milk products, including

plain milk, infant formula milk,
follow-on milk, growing up milk,
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
powdered milk, ready-to-drink
milk and flavored milk, fermented
milk, soymilk, and flavored
soymilk;
(2) One Hundred Percent (100%)

Natural Fruit Juices — Original
liquid resulting from the pressing
of fruit, the liquid resulting from
the reconstitution of natural fruit
juice concentrate, or the liquid
resulting from the restoration of
water to dehydrated natural fruit
juice that do not have added
sugar or caloric sweetener;
(3) One Hundred Percent (100%)

Natural Vegetable Juices —
Original liquid resulting from the
pressing of vegetables, the liquid
resulting from the reconstitution of
natural vegetable juice
concentrate, or the liquid resulting
from the restoration of water to
dehydrated natural vegetable
juice that do not have added
sugar or caloric sweetener;
(4) Meal Replacement and

Medically Indicated Beverages —
Any liquid or powder drink/product
for oral nutritional therapy for
persons who cannot absorb or
metabolize dietary nutrients from
food or beverages, or as a source
of necessary nutrition used due to
a medical condition and an oral
electrolyte solution for infants and
children formulated to prevent
dehydration due to illness; and
(5) Ground coffee, instant soluble

coffee, and pre-packaged
powdered coffee products.
(D) Filing of Return and Payment

of Excise Tax and Penalty. —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Filing of Return and Payment
of Excise Tax on Domestic and
Imported Sweetened Beverages.
— The provision of Sections 130
and 131 of the NIRC, as
appropriate, shall apply to
sweetened beverages.
(2) Penalty. — Upon final findings

by the Commissioner of Internal
Revenue and/or Customs that
any manufacturer or importer, in
violation of this Section,
misdeclares or misrepresents in
the sworn statement provided in
Section 130(c) of the NIRC, as
amended, any pertinent data or
information, the penalty of
summary cancellation or
withdrawal of the permit to
engage in business as
manufacturer or importer of
sweetened beverages as
provided under Section 268 of the
NIRC, as amended, shall be
imposed.
Any corporation, association or

partnership liable for any of the
acts or omissions in violation of
this Section shall be fined treble
the amount of deficiency taxes,
surcharges, and interest which
may be assessed pursuant to this
Section.
Any person liable for any of the

acts or omissions prohibited
under this Section shall be
criminally liable and penalized
under Section 254 of the NIRC,
as amended. Any person who
willfully aids or abets in the
commission of any such act or
omission shall be criminally liable
in the same manner as the
principal.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
If not a citizen of the Philippines,

the offender shall be deported
immediately after serving the
sentence without further
(E) Specific Responsibility of the

Food and Drug Administration
(FDA). — Starting June 1, 2018,
the FDA shall require all
manufacturers and importers of
sweetened beverages covered by
this Act to indicate on the label
the type of sweetener used, and
on sweetened beverages in
powder form to indicate on the
label the equivalent of each
serving per liter of volume
capacity.
The FDA shall also conduct

post-marketing surveillance of the
sweetened beverages on display
in supermarkets, groceries or
retail stores and/or inspection of
manufacturing sites to determine
compliance with the requirements
of this Section. Violations of the
provisions of this Act, including
but not limited to, mislabeling or
misbranding, shall, to the extent
applicable, be punishable under
existing laws.
(F) Duty of the Commissioner to

Ensure Payment of Taxes. — It
shall be the duty of the
Commissioner, among other
things, to prescribe a materially
unique, secure and nonremovable
identification, such as codes,
stamps or other markings, to be
firmly and conspicuously affixed
on and form part of the label of all
excisable sweetened beverages.
For this purpose, the

of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
abovementioned control measure
shall be caused by the
Commissioner to be printed with
adequate security features to
ensure the payment of excise tax
on sweetened beverages.
(G) Review of Implementation of

the Sweetened Beverage Tax. —
At the start of the implementation
of the sugar sweetened beverage
tax and every year thereafter, the
Department of Health,
Department of Science and
Technology, and Department of
Finance shall review the impact of
these provisions on its health
objectives with the view to making
recommendations on the tax rate
on these beverages. (added by
Sec. 47, R.A. No. 10963,
December 19, 2017)
CHAPTER VII — EXCISE TAX CHAPTER VII — EXCISE TAX ON

ON MINERAL PRODUCTS MINERAL PRODUCTS
Mineral Products
SEC. 151. SEC. 151.
(A) Rates of Tax. — There shall (A) Rates of Tax. — There shall b
be levied, assessed and collected levied, assessed and collected o
on minerals, mineral products and minerals, mineral products
quarry resources, excise tax as quarry resources, excise tax a
follows: follows:
(1) On domestic or imported coal (1) On coal and coke, a tax of Te

and coke, notwithstanding any pesos (P10.00) per metric ton;
incentives granted in any law or
special law:
Effective January 1, 2018, Fifty

pesos (P50.00) per metric ton;
Effective January 1, 2019, One

hundred pesos (P100.00) per
metric ton; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Effective January 1, 2020, One

hundred fifty pesos (P150.00) per
metric ton. (as amended by Sec.
19, 2017)
(2) On all nonmetallic minerals an
(2) On all nonmetallic minerals
quarry resources, a tax of tw
and quarry resources, a tax of
percent (2%) based on the actua
four percent (4%) based on the
market value of the gross outpu
actual market value of the gross
thereof at the time of removal, i
output thereof at the time of
the case of those locally extracte
removal, in the case of those
or produced; or the value used b
locally extracted or produced; or
the Bureau of Customs i
the value used by the Bureau of
determining tariff and custom
Customs in determining tariff and
duties, net of excise tax an
customs duties, net of excise tax
value-added tax, in the case o
and value-added tax in the case
importation.
of importation. (as amended by
Sec. 48, R.A. No. 10963,
December 19, 2017)
Notwithstanding the pro
Notwithstanding the provision of paragraph (4) of Subsection (A) o
paragraph (4) of Subsection (A) this Section, locally extracte
of this Section, locally extracted natural gas and liquefied natura
natural gas and liquefied natural gas shall not be subject to th
gas shall not be subject to the excise tax imposed herein.
excise tax imposed herein.
(3) On all metallic minerals, a ta
(3) On all metallic minerals, a tax based on the actual market valu
based on the actual market value of the gross output thereof at th
of the gross output thereof at the time of removal, in the case o
time of removal, in the case of those locally extracted o
those locally extracted or produced; or the value used by th
produced; or the value used by Bureau of Customs in determinin
the Bureau of Customs in tariff and customs duties, net o
determining tariff and customs excise tax and value-added tax, i
duties, net of excise tax and the case of importation, i
value-added tax, in the case of accordance with the followin
importation, in accordance with schedule:
the following schedule:
(a) Copper and other metall
(a) Copper and other metallic minerals;
minerals, four percent (4%); and
(as amended by Sec. 48, R.A. (i) On the first three (3) years upo
No. 10963, December 19, 2017) the effectivity of Republic Act No
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
7729, one percent (1%);
(ii) On the fourth and the fift

years, one and a half percent (
1/2%); and
(iii) On the sixth year an

thereafter, two percent (2%);
(b) Gold and chromite, tw

(b) Gold and chromite, four
percent. (2%).
percent (4%). (as amended by
Sec. 48, R.A. No. 10963,
December 19, 2017)
(4) On indigenous petroleum, a ta
(4) On indigenous petroleum, a
of three percent (3%) of the fa
tax of six percent (6%) of the fair
international market price thereo
international market price thereof,
on the first taxable sale, barte
on the first taxable sale, barter,
exchange or such simila
exchange or such similar
transaction, such tax to be paid b
transaction, such tax to be paid
the buyer or purchaser befor
by the buyer or purchaser before
removal from the place o
removal from the place of
production. The phrase 'firs
production. The phrase 'first
taxable sale, barter, exchange o
taxable sale, barter, exchange or
similar transaction' means th
similar transaction' means the
transfer of indigenous petroleum i
transfer of indigenous petroleum
its original state to a first taxabl
in its original state to a first
transferee. The fair internationa
taxable transferee. The fair
market price shall be determine
international market price shall be
in consultation with an appropriat
determined in consultation with an
government agency.
appropriate government agency.
No. 10963, December 19, 2017)
For the purpose of this Subsection

For the purpose of this 'indigenous petroleum' sha
Subsection, 'indigenous include locally-extracted minera
petroleum' shall include oil, hydrocarbon gas, bitumen
locally-extracted mineral oil, crude asphalt, mineral gas and a
hydrocarbon gas, bitumen, crude other similar or natural
asphalt, mineral gas and all other associated substances with th
similar or naturally associated exception of coal, peat, bituminou
substances with the exception of shale and/or stratified minera
coal, peat, bituminous shale deposits.
and/or stratified mineral deposits.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) For purposes of this Section
(B) For purposes of this Section, the term —
the term —
(1) 'Gross output' shall b

(1) 'Gross output' shall be interpreted as the actual marke
interpreted as the actual market value of minerals or minera
value of minerals or mineral products, or of bullion from eac
products, or of bullion from each mine or mineral land operated as
mine or mineral land operated as separate entity, without an
a separate entity, without any deduction from mining, milling
deduction from mining, milling, refining (including all expense
refining (including all expenses incurred to prepare the sai
incurred to prepare the said minerals or mineral products in
minerals or mineral products in a marketable state), as well a
marketable state), as well as transporting, handling, marketin
transporting, handling, marketing or any other expenses: Provided
or any other expenses: Provided, That if the minerals or minera
That if the minerals or mineral products are sold or consigne
products are sold or consigned abroad by the lessee or owner o
abroad by the lessee or owner of the mine under C.I.F. terms, th
the mine under C.I.F. terms, the actual cost of ocean freight an
actual cost of ocean freight and insurance shall be deducted
insurance shall be deducted: Provided, however, That in th
Provided, however, That in the case of mineral concentrate no
case of mineral concentrate not traded in commodity exchanges i
traded in commodity exchanges the Philippines or abroad, such a
in the Philippines or abroad, such copper concentrate, the actua
as copper concentrate, the actual market value shall be the worl
market value shall be the world price quotations of the refine
price quotations of the refined mineral products content thereo
mineral products content thereof prevailing in the said commodit
prevailing in the said commodity exchanges, after deducting th
exchanges, after deducting the smelting, refining and othe
smelting, refining and other charges incurred in the process o
charges incurred in the process of converting the minera
converting the mineral concentrates into refined meta
concentrates into refined metal traded in those co
traded in those commodity exchanges.
exchanges.
(2) 'Minerals' shall mean a

(2) 'Minerals' shall mean all naturally occurring inorgan
naturally occurring inorganic substances (found in nature
substances (found in nature) whether in solid, liquid, gaseous o
whether in solid, liquid, gaseous any intermediate state.
or any intermediate state.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) 'Mineral products' shall mea
(3) 'Mineral products' shall mean things produced and prepared in
things produced and prepared in marketable state b
a marketable state by simple treatment processes such a
treatment processes such as washing or drying, but withou
washing or drying, but without undergoing any chemical chang
undergoing any chemical change or process or manufacturing by th
or process or manufacturing by lessee, concessionaire or owner o
the lessee, concessionaire or mineral lands.
owner of mineral lands.
(4) 'Quarry resources' shall mean (4) 'Quarry resources' shall mea
any common stone or other any common stone or othe
common mineral substances as common mineral substances a
the Director of the Bureau of the Director of the Bureau of Mine
Mines and GeoSciences may and GeoSciences may declare t
declare to be quarry resources be quarry resources such as, bu
such as, but not restricted to marl, not restricted to marl, marble
marble. granite, volcanic cinders, granite, volcanic cinders, basal
basalt, tuff and rock phosphate: tuff and rock phosphate: Provided
Provided, That they contain no That they contain no metal o
metal or metals or other valuable metals or other valuable minera
minerals in economically workable in economically workabl
quantities. quantities. (as amended by Sec
18 of R.A. No. 9337, May 24
2005)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
CHAPTER VIII — CHAPTER VIII —

ADMINISTRATIVE PROVISIONS ADMINISTRATIVE PROVISIONS
REGULATING BUSINESS OF REGULATING BUSINESS OF
PERSONS DEALING IN PERSONS DEALING IN
ARTICLES SUBJECT TO ARTICLES SUBJECT TO EXCISE
EXCISE TAX TAX
Extent of Supervision Over SEC. 152. The Bureau of Internal SEC. 152. The Bureau of In
Establishments Producing Revenue has authority to Revenue has authority t
Taxable Output supervise establishments where supervise establishments wher
articles subject to excise tax are articles subject to excise tax ar
made or kept. The Secretary of made or kept. The Secretary o
Finance shall prescribe rules and Finance shall prescribe rules an
regulations as to the mode in regulations as to the mode i
which the process of production which the process of productio
shall be conducted insofar as may shall be conducted insofar as m
be necessary to secure a sanitary be necessary to secure a sanitar
output and to safeguard the output and to safeguard th
revenue. revenue.
Records to be Kept by
SEC. 153. Manufacturers of SEC. 153. Manufacturers o
Manufacturers;
articles subject to excise shall articles subject to excise sha
Assessment Based
keep such records as required by keep such records as required b
Thereon
rules and regulations rules and regulation
recommended by the recommended by th
Commissioner and approved by Commissioner and approved b
the Secretary of Finance, and the Secretary of Finance, and suc
such records, whether of raw records, whether of raw materia
materials received into the factory received into the factory or o
or of articles produced therein, articles produced therein, shall b
shall be deemed public and official deemed public and officia
documents for all purposes. documents for all purposes.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The records of raw materials kept The records of raw materials kep
by such manufacturers may be by such manufacturers may b
used as evidence by which to used as evidence by which t
determine the amount of excise determine the amount of excis
taxes due from them, and taxes due from them, an
whenever the amounts of raw whenever the amounts of ra
materials received into any factory materials received into any factor
exceeds the amount of exceeds the amount o
manufactured or partially manufactured or partial
manufactured products on hand manufactured products on han
and lawfully removed from the and lawfully removed from th
factory, plus waste removed or factory, plus waste removed o
destroyed, and a reasonable destroyed, and a reasonabl
allowance for unavoidable loss in allowance for unavoidable loss i
manufacture, the Commissioner manufacture, the Commissione
may assess and collect the tax may assess and collect the tax du
due on the products which should on the products which should hav
have been produced from the been produced from the excess.
excess.
The excise tax due on th
products as determined an
The excise tax due on the
assessed in accordance with th
products as determined and
Section shall be payable upo
assessed in accordance with this
demand or within the perio
Section shall be payable upon
specified therein.
demand or within the period
specified therein.
Premises Subject to SEC. 154. No person shall SEC. 154. No person shall engag
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Approval by Commissioner engage in business as a in business as a manufacturer o
manufacturer of or dealer in or dealer in articles subject t
articles subject to excise tax excise tax unless the premise
unless the premises upon which upon which the business is to b
the business is to be conducted conducted shall have bee
shall have been approved by the approved by the Commissioner.
Commissioner.
Manufacturers and/or
SEC. 155. Manufacturers of SEC. 155. Manufacturers o
Importers to Provide
cigarettes, alcoholic products, oil cigarettes, alcoholic products, o
Themselves with Counting
products, and other articles products and other articles subjec
or Metering Devices to
subject to excise tax that can be to excise tax that can be similar
Determine Volume of
similarly measured shall provide measured shall provi
Production and Importation
themselves with such necessary themselves with such necessar
number of suitable counting or number of suitable counting o
metering devices to determine as metering devices to determine a
accurately as possible the accurately as possible the volume
volume, quantity or number of the quantity or number of the article
articles produced by them under produced by them under rules an
rules and regulations promulgated regulations promulgated by th
by the Secretary of Finance, upon Secretary of Finance, up
Commissioner: Provided, That the Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Department of Finance shall
maintain a registry of all
petroleum manufacturers and/or
importers and the articles being
manufactured and/or imported by
them: Provided, further, That the
Department of Finance shall
mandate the creation of a
real-time inventory of petroleum
articles being manufactured,
imported or found in storage
depots of such petroleum
manufacturers and/or importers:
Provided, finally, That importers
of finished petroleum products
shall also provide themselves with
Bureau-accredited metering
devices to determine as
accurately as possible the volume
of petroleum products imported
by them.
This requirement shall be complie
This requirement shall be with before commencement o
complied with before operations.
commencement of operations. (as
10963, December 19, 2017)
Labels and Form of SEC. 156. All articles of domestic SEC. 156. All articles of domest
Packages manufacture subject to excise tax manufacture subject to excise ta
and all leaf tobacco shall be put and all leaf tobacco shall be put u
up and prepared by the and prepared by the manufacture
manufacturer or producer, when or producer, when remov
removed for sale or consumption, sale or consumption, in suc
in such packages only and packages only and bearing suc
bearing such marks or brands as marks or brands as shall b
shall be prescribed in the rules prescribed in the rules an
and regulations promulgated by regulations promulgated by th
the Secretary of Finance; and Secretary of Finance; and good
goods of similar character of similar character imported int
imported into the Philippines shall the Philippines shall likewise b
likewise be packed and marked in packed and marked in such
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
such a manner as may be manner as may be required.
required.
Removal of Articles After SEC. 157. When the tax has SEC. 157. When the tax has bee
the Payment of Tax been paid on articles or products paid on articles or products subjec
subject to excise tax, the same to excise tax, the same shall no
shall not thereafter be stored or thereafter be stored or permitted t
permitted to remain in the remain in the distillery, distiller
distillery, distillery warehouse, warehouse, bonded warehouse, o
bonded warehouse, or other other factory or place wher
factory or place where produced. produced. However, upon prio
However, upon prior permit from permit from the Commissioner, o
the Commissioner, oil refineries refineries and/or companies ma
and/or companies may store or store or deposit tax-paid petroleum
deposit tax-paid petroleum products and commingle the sam
products and commingle the with its own manufacture
same with its own manufactured products not yet subjected t
products not yet subjected to excise tax. Imported petroleum
excise tax. Imported petroleum products may be allowed to b
products may be allowed to be withdrawn from customs custod
withdrawn from customs custody without the prepayment of excis
without the prepayment of excise tax, which products may b
tax, which products may be commingled with the tax-paid o
commingled with the tax-paid or bonded products of the importe
bonded products of the importer himself after securing a prio
himself after securing a prior permit from the Commissione
permit from the Commissioner: Provided, That withdrawals sha
Provided, That withdrawals shall be taxed and accounted for on
be taxed and accounted for on a 'first-in, first-out' basis.
'first-in, first-out' basis.
Storage of Goods in SEC. 158. An internal-revenue SEC. 158. An internal-revenu

Internal-revenue Bonded bonded warehouse may be bonded warehouse may b
Warehouses maintained in any port of entry for maintained in any port of entry fo
the storing of imported or the storing of imported o
manufactured goods which are manufactured goods which a
subject to excise tax. The taxes subject to excise tax. The taxes o
on such goods shall be payable such goods shall be payable on
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
only upon removal from such upon removal from suc
warehouse and a reasonable warehouse and a reasonabl
charge shall be made for their charge shall be made for the
storage therein. The storage therein. Th
Commissioner may, in his Commissioner may, in h
discretion, exact a bond to secure discretion, exact a bond to secur
the payment of the tax on any the payment of the tax
goods so stored. goods so stored.
Proof of Exportation; SEC. 159. Exporters of goods SEC. 159. Exporters of goods tha
Exporter's Bond that would be subject to excise would be subject to excise
tax, if sold or removed for sold or removed for consumptio
consumption in the Philippines, in the Philippines, shall subm
shall submit proof of exportation proof of exportation satisfactory t
satisfactory to the Commissioner, the Commissioner, and, when th
and, when the same is deemed same is deemed necessary, sha
necessary, shall be required to be required to give a bond prior t
give a bond prior to the removal the removal of the goods fo
of the goods for shipment, shipment, conditioned upon th
conditioned upon the exportation exportation of the same in goo
of the same in good faith. faith.
Manufacturers' and
SEC. 160. Manufacturers and SEC. 160. Manufacturers an
Importers' Bond
importers of articles subject to importers of articles subject t
excise tax shall post a bond excise tax shall post a bon
subject to the following conditions: subject to the following conditions
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(A) Initial Bond. — In case of (A) Initial Bond. — In case o

initial bond, the amount shall be initial bond, the amount shall b
equal to One hundred thousand equal to One hundred thousan
pesos (P100,000): Provided, That pesos (P100,000): Provided, Tha
if after six (6) months of operation, if after six (6) months of operation
the amount of initial bond is less the amount of initial bond is les
than the amount of the total excise than the amount of the total excis
tax paid during the period, the tax paid during the period, th
amount of the bond shall be amount of the bond shall b
adjusted to twice the tax actually adjusted to twice the tax actual
paid for the period. paid for the period.
(B) Bond for the Succeeding (B) Bond for the Succeedin
Years of Operation. — The bonds Years of Operation. — The bond
for the succeeding years of for the succeeding ye
operation shall be based on the operation shall be based on th
actual total excise tax paid during actual total excise tax paid durin
the year immediately preceding the year immediately preceding th
the year of operation. year of operation.
Such bond shall be conditione
Such bond shall be conditioned
upon faithful compliance, durin
upon faithful compliance, during
the time such business is followed
the time such business is
with laws and rules and reg
followed, with laws and rules and
relating to such business and fo
regulations relating to such
the satisfaction of all fines an
business and for the satisfaction
penalties imposed by this Code.
of all fines and penalties imposed
by this Code.
Records to be Kept by SEC. 161. Wholesale dealers SEC. 161. Wholesale dealers sha
Wholesale Dealers shall keep records of their keep records of their purchase
purchases and sales or deliveries and sales or deliveries o
of articles subject to excise tax, in subject to excise tax, in such form
such form as shall be prescribed as shall be prescribed in the rule
in the rules and regulations by the and regulations by the Secretary o
Secretary of Finance. These Finance. These records and th
records and the entire stock of entire stock of goods subject to ta
goods subject to tax shall be shall be subject at all times t
subject at all times to inspection inspection of internal revenu
of internal revenue officers. officers.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Records to be Kept by SEC. 162. Dealers in leaf tobacco SEC. 162. Dealers in leaf tobacc
Dealers in Leaf Tobacco shall keep records of the products shall keep records of the product
sold or delivered by them to other sold or delivered by them to othe
persons in such manner as may persons in such manner as ma
be prescribed in the rules and be prescribed in the rules an
regulations by the Secretary of regulations by the Secretary o
Finance, such records to be at all Finance, such records to be at a
times subject to inspection of times subject to inspection o
internal revenue officers. internal revenue officers.
Preservation of Invoices SEC. 163. All dealers whosoever SEC. 163. All dealers whosoeve
and Stamps shall preserve, for the period shall preserve, for the perio
prescribed in Section 235, all prescribed in Section 235, a
official invoices received by them official invoices received by them
from other dealers or from from other dealers or from
manufacturers, together with the manufacturers, together with th
fractional parts of stamps affixed fractional parts of stamps a
thereto, if any, and upon demand, thereto, if any, and upon demand
shall deliver or transmit the same shall deliver or transmit the sam
to any internal revenue officer. to any internal revenue officer.
Information to be Given by
SEC. 164. Manufacturers, SEC. 164. Manufacturers
Manufacturers, Importers,
indentors, wholesalers and indentors, wholesalers an
Indentors, and
importers of any apparatus or importers of any apparatus o
Wholesalers of any
mechanical contrivance specially mechanical contrivance special
Apparatus or Mechanical
for the manufacture of articles for the manufacture of article
Contrivance Specially for
subject to tax shall, before any subject to tax shall, before an
the Manufacture of Articles
such apparatus or mechanical such apparatus or mechanica
Subject to Excise Tax and
contrivance is removed from the contrivance is removed from th
Importers, Indentors,
place of manufacture or from the place of manufacture or from th
Manufacturers or Sellers of
customs house, give written customs house, give writte
Cigarette Paper in
information to the Commissioner information to the Commissione
Bobbins, Cigarette Tipping
as to the nature and capacity of as to the nature and capacity o
Paper or Cigarette Filter
the same, the time when it is to be the same, the time when it is to b
Tips
removed, and the place for which removed, and the place for which
it is destined, as well as the name is destined, as well as the name o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of the person by whom it is to be the person by whom it is to b
used; and such apparatus or used; and such apparatus o
mechanical contrivance shall not mechanical contrivance shall no
be set up nor dismantled or be set up nor dismantled o
transferred without a permit in transferred without a permit i
writing from the Commissioner. writing from the Commissioner.
A written permit from the

A written permit from th
Commissioner for importing,
Commissioner for importing
manufacturing or selling of
manufacturing or selling o
cigarette paper in bobbins or rolls,
cigarette paper in bobbins or rolls
cigarette tipping paper or
cigarette tipping paper or cigarett
cigarette filter tips is required
filter tips is required before an
before any person shall engage in
person shall engage in th
the importation, manufacture or
importation, manufacture or sale o
sale of the said articles. No permit
the said articles. No permit to se
to sell said articles shall be
said articles shall be grante
granted unless the name and
unless the name and address o
address of the prospective buyer
the prospective buyer is firs
is first submitted to the
submitted to the Commissione
Commissioner and approved by
and approved by him. Records
him. Records, showing the stock
showing the stock of the sai
of the said articles and the
articles and the disposal thereof b
disposal thereof by sale of
sale of persons with the
persons with their respective
respective addresses as approve
addresses as approved by the
by the Commissioner, shall b
Commissioner, shall be kept by
kept by the seller, and records
the seller, and records, showing
showing stock of said articles an
stock of said articles and
consumption thereof, shall be kep
consumption thereof, shall be
by the buyer, subject to inspectio
kept by the buyer, subject to
by internal revenue officers.
inspection by internal revenue
officers.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Establishment of Distillery SEC. 165. Every distiller, when so SEC. 165. Every distiller, when s
Warehouse required by the Commissioner, required by the Commissione
shall provide at his own expense shall provide at his own expense
a warehouse, and shall be warehouse, and shall be situate
situated in and constitute a part of in and constitute a part of h
his distillery premises and to be distillery premises and to be use
used only for the storage of only for the storage of distille
distilled spirits of his own spirits of his own manufacture un
manufacture until the tax thereon the tax thereon shall have bee
shall have been paid; but no paid; but no dwelling house sha
dwelling house shall be used for be used for such purpose. Suc
such purpose. Such warehouse, warehouse, when approved by th
when approved by the Commissioner, is declared to be
Commissioner, is declared to be a bonded warehouse, and shall b
bonded warehouse, and shall be known as a distillery warehouse.
known as a distillery warehouse.
Custody of Distillery or SEC. 166. Every distillery or SEC. 166. Every distillery o
Distillery Warehouse distillery warehouse shall be in distillery warehouse shal
the joint custody of the revenue joint custody of the revenu
inspector, if one is assigned inspector, if one is assigne
thereto, and of the proprietor thereto, and of the proprieto
thereof. It shall be kept securely thereof. It shall be kept secure
locked, and shall at no time be locked, and shall at no time b
unlocked or opened or remain unlocked or opened or remai
unlocked or opened unless in the unlocked or opened unless in th
presence of such revenue presence of such revenu
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
inspector or other person who inspector or other person who ma
may be designated to act for him be designated to act for him a
as provided by law. provided by law.
Limitation on Quantity of SEC. 167. No distilled spirits shall SEC. 167. No distilled spirits sha
Spirits Removed from be removed from any distillery, be removed from any distillery
Warehouse distillery warehouse, or bonded distillery warehouse, or bonde
warehouse in quantities of less warehouse in quantities of les
than fifteen (15) gauge liters at than fifteen (15) gauge liters at an
any one time, except bottled one time, except bottled goods
goods, which may be removed by which may be removed by th
the case of not less than twelve case of not less than twelve (12
(12) bottles. bottles.
Denaturing Within SEC. 168. For purposes of this SEC. 168. For purposes of th
Premises Title, the process of denaturing Title, the process of denaturin
alcohol shall be effected only alcohol shall be effected on
within the distillery premises within the distillery premises wher
where the alcohol to be denatured the alcohol to be denatured
is produced in accordance with produced in accordance wit
formulas duly approved by the formulas duly approved by th
Bureau of Internal Revenue and Bureau of Internal Revenue an
only in the presence of duly only in the presence of du
designated representatives of designated representatives of sai
said Bureau. Bureau.
Recovery of Alcohol for SEC. 169. Manufacturers SEC. 169. Manufacturer

Use in Arts and Industries employing processes in which employing processes in whic
denatured alcohol used in arts denatured alcohol used in arts an
and industries is expressed or industries is expressed o
evaporated from the articles evaporated from the article
manufactured may, under rules manufactured may, under rule
and regulations to be prescribed and regulations to be prescribe
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Commissioner, be permitted to Commissioner, be permitted t
recover the alcohol so used and recover the alcohol so used an
restore it again to a condition restore it again to a conditio
suitable solely for use in suitable solely for use i
manufacturing processes. manufacturing processes.
Requirements Governing SEC. 170. Persons engaged in SEC. 170. Persons engaged in th
Rectification and the rectification or compounding rectification or compounding o
Compounding of Liquors of liquors shall, as to the mode of liquors shall, as to the mode o
conducting their business and conducting their business an
supervision over the same, be supervision over the same, b
subject to all the requirements of subject to all the requirements o
law applicable to distilleries: law applicable to distilleri
Provided, That where a rectifier Provided, That where a rectifie
makes use of spirits upon which makes use of spirits upon whic
the excise tax has been paid, no the excise tax has been paid, n
further tax shall be collected on further tax shall be collected o
any rectified spirits produced any rectified spirits produce
exclusively therefrom. Provided, exclusively therefrom. Provided
further, That compounders in the further, That compounders in th
manufacture of any intoxicating manufacture of any into
beverage whatever, shall not be beverage whatever, shall not b
allowed to make use of spirits allowed to make use of spirit
upon which the excise tax has not upon which the excise tax has no
been previously paid. been previously paid.
Authority of Internal
SEC. 171. Any internal revenue SEC. 171. Any internal revenu
Revenue Officer in
officer may, in the discharge of officer may, in the discharge of h
Searching for and Testing
his official duties, enter any official duties, enter any house
Taxable Articles
house, building or place where building or place where article
articles subject to tax under this subject to tax under this Title ar
Title are produced or kept, or are produced or kept, or are believe
believed by him upon reasonable by him upon reasonable ground
grounds to be produced or kept, to be produced or kept, so far a
so far as may be necessary to may be necessary to examine
examine, test, discover or seize discover or seize the same.
the same.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
He may also stop and search an
He may also stop and search any
vehicle or other means o
vehicle or other means of
transportation when upo
transportation when upon
reasonable grounds he belie
reasonable grounds he believes
that the same carries any articl
that the same carries any article
on which the excise tax has no
on which the excise tax has not
been paid.
been paid.
Subject to rules and regulations to

be issued by the Secretary of
Finance, the Commissioner of
Internal Revenue or his
authorized representatives may
conduct periodic random field
tests and confirmatory tests on
fuel required to be marked under
Section 148-A found in
warehouses, storage tanks, gas
stations and other retail outlets,
and in such other properties of
persons engaged in the sale,
delivery, trading, transportation,
distribution, or importation of fuel
intended for the domestic market:
Provided, the following shall be
complied with:
(a) Random field testing shall be

conducted in the presence of
revenue or customs officers, fuel
marking provider, and the
authorized representative of the
owner of the fuel to be tested:
Provided, That an employee
assigned or working at the place
where the random field test is
conducted shall be deemed an
authorized representative of the
owner;
(b) All field tests shall be properly

filmed or video-taped, and
documented; and
(c) A sample of the randomly

tested fuel shall be immediately
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
obtained by the revenue or
customs officer upon discovering
that the same is unmarked,
adulterated, or diluted:
Provided, further, That

confirmatory fuel test certificates
issued by fuel testing facilities
shall be valid for any legal
purpose from the date of issue,
and shall constitute admissible
and conclusive evidence before
any court. (as amended by Sec.
19, 2017)
Detention of Package SEC. 172. Any revenue officer SEC. 172. Any revenue office
Containing Taxable Articles may detain any package may detain any packag
containing or supposed to contain containing or supposed to contai
articles subject to excise tax when articles subject to excise tax whe
he has good reason to believe he has good reason to believ
that the lawful tax has not been the lawful tax has not been paid o
paid or that the package has been that the package has been or
or is being removed in violation of being removed in violation of law
law, and every such package and every such package shall b
shall be held by such officer in a held by such officer in a safe plac
safe place until it shall be until it shall be determined whethe
determined whether the property the property so detained is liabl
so detained is liable by law to be by law to be proceeded against fo
proceeded against for forfeiture; forfeiture; but such summar
but such summary detention shall detention shall not continue in an
not continue in any case longer case longer than seven (7) day
than seven (7) days without due without due process of law o
process of law or intervention of intervention of the officer to whom
the officer to whom such such detention is to be reported.
detention is to be reported.
TITLE VII — DOCUMENTARY TITLE VII — DOCUMENTARY

STAMP TAX STAMP TAX
Stamp Taxes Upon SEC. 173. Upon documents, SEC. 173. Upon documents
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Documents, Loan instruments, loan agreements and instruments, loan agreements an
Agreements, Instruments papers, and upon acceptances, papers, and upon acceptances
and Papers assignments, sales and transfers assignments, sales and transfer
of the obligation, right or property of the obligation, right or propert
incident thereto, there shall be incident thereto, there shall b
levied, collected and paid for, and levied, collected and paid for, an
in respect of the transaction so in respect of the transaction s
had or accomplished, the had or accomplished, th
corresponding documentary corresponding documentary stam
stamp taxes prescribed in the taxes prescribed in the followin
following Sections of this Title, by Sections of this Title, by th
the person making, signing, person making, signing, issuing
issuing, accepting, or transferring accepting, or transferring the sam
the same wherever the document wherever the document is made
is made, signed, issued, accepted signed, issued, accepted o
or transferred when the obligation transferred when the obligation o
or right arises from Philippine right arises from Philippin
sources or the property is situated sources or the property is situate
in the Philippines, and at the in the Philippines, and at the sam
same time such act is done or time such act is done o
transaction had: Provided, That transaction had: Provided, Tha
whenever one party to the taxable whenever one party to the taxabl
document enjoys exemption from document enjoys exemption from
the tax herein imposed, the other the tax herein imposed, the othe
party thereto who is not exempt party thereto who is not exemp
shall be the one directly liable for shall be the one directly liable fo
the tax. the tax.
Stamp Tax on Debentures

and Certificates of
Indebtedness
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on Original SEC. 174. On every original SEC. 174. On every original issue
Issue of Shares of Stock issue, whether on organization, whether on organization
reorganization or for any lawful reorganization or for any lawfu
purpose, of shares of stock by purpose, of shares of stock by an
any association, company, or association, company o
corporation, there shall be corporation, there shall b
collected a documentary stamp collected a documentary stamp o
tax of Two pesos (P2.00) on each One peso (P1.00) on each Tw
Two hundred pesos (P200), or hundred pesos (P200), o
fractional part thereof, of the par fractional part thereof, of the pa
value, of such shares of stock: value, of such shares of
Provided, That in the case of the Provided, That in the case of th
original issue of shares of stock original issue of shares of stoc
without par value, the amount of without par value, the amount o
the documentary stamp tax herein the documentary stamp tax herei
prescribed shall be based upon prescribed shall be based upon th
the actual consideration for the actual consideration for th
issuance of such shares of stock: issuance of such shares of stock
Provided, further, That in the case Provided, further, That in the cas
of stock dividends, on the actual of stock dividends, on the actua
value represented by each share. value represented by each share
(as amended by Sec. 51, R.A. (as amended by Sec. 2, R.A. No
No. 10963, December 19, 2017) 9243, Feb. 17, 2004)
Stamp Tax on Sales, SEC. 175. On all sales, or SEC. 175. On all sales, o
Agreements to Sell, agreements to sell, or agreements to sell, or memorand
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Memoranda of Sales, memoranda of sales, or of sales, or deliveries, or transfe
Deliveries or Transfer of deliveries, or transfer of shares or of shares or certificates of stock i
Shares or Certificates of certificates of stock in any any association, company, o
Stock association, company, or corporation, or transfe
corporation, or transfer of such securities by assignment in blank
securities by assignment in blank, or by delivery, or by any paper o
or by delivery, or by any paper or agreement, or memorandum o
agreement, or memorandum or other evidences of transfer or sal
other evidences of transfer or sale whether entitling the holder in an
whether entitling the holder in any manner to the benefit of suc
manner to the benefit of such stock, or to secure the futur
stock, or to secure the future payment of money, or for th
payment of money, or for the future transfer of any stock, ther
future transfer of any stock, there shall be collected a documentar
shall be collected a documentary stamp tax of Seventy-five-centavo
stamp tax of One peso and fifty (P0.75) on each Two hundre
centavos (P1.50) on each Two pesos (P200), or fractional pa
hundred pesos (P200), or thereof, of the par value of suc
fractional part thereof, of the par stock: Provided, That only one ta
value of such stock: Provided, shall be collected on each sale o
That only one tax shall be transfer of stock from one perso
collected on each sale or transfer to another, regardless of whethe
of stock from one person to or not a certificate of stock
another, regardless of whether or issued, indorsed, or delivered i
not a certificate of stock is issued, pursuance of such sale or transfe
indorsed, or delivered in and Provided, further, That in th
pursuance of such sale or case of stock without p
transfer: and Provided, further, amount of the documentary stam
That in the case of stock without tax herein prescribed shall b
par value the amount of the equivalent to twenty-five percen
documentary stamp tax herein (25%) of the documentary stam
prescribed shall be equivalent to tax paid upon the original issue o
fifty percent (50%) of the said stock." (as amended an
documentary stamp tax paid upon renumbered by Sec. 3 of R.A. No
the original issue of said stock. 9243, February 17, 2004
No. 10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on Bonds, SEC. 176. On all bonds, SEC. 176. On all bonds
Debentures, Certificates of debentures, certificates of stock, debentures, certificates of stock
Stock or Indebtedness or certificates of indebtedness or certificates of indebtednes
Issued in Foreign issued in any foreign country, issued in any foreign country
Countries there shall be collected from the there shall be collected from th
person selling or transferring the person selling or transferring th
same in the Philippines, such tax same in the Philippines, such ta
as is required by law on similar as is required by law on simila
instruments when issued, sold or instruments when issued, sold o
transferred in the Philippines. transferred in the Philippines. (
renumbered by Sec. 4 of R.A. No
9243, February 17, 2004
Stamp Tax on Certificates SEC. 177. On all certificates of SEC. 177. On all certificates o
of Profits or Interest in profits, or any certificate or profits, or any certificate o
Property or Accumulations memorandum showing interest in memorandum showing interest i
the property or accumulations of the property or accumulations
any association, company or any association, company o
corporation, and on all transfers corporation, and on all transfers o
of such certificates or such certificates or memoranda
memoranda, there shall be there shall be collected
collected a documentary stamp documentary stamp tax of Fift
tax of One peso (P1.00) on each centavos (P0.50) on each Tw
fractional part thereof, of the face fractional part thereof, of the fac
value of such certificates or value of such certificate o
memorandum. (as amended by memorandum. (as renumbered b
Sec. 53, R.A. No. 10963, Sec. 4 of R.A. No. 9243, Februar
December 19, 2017) 17, 2004)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on Bank SEC. 178. On each bank check, SEC. 178. On each bank check
Checks, Drafts, Certificates draft, or certificate of deposit not draft, or certificate of dep
of Deposit not Bearing drawing interest, or order for the drawing interest, or order for th
Interest, and Other payment of any sum of money payment of any sum of mone
Instruments drawn upon or issued by any drawn upon or issued by any bank
bank, trust company, or any trust company, or any person o
person or persons, companies or persons, companies o
corporations, at sight or on corporations, at sight or o
demand, there shall be collected demand, there shall be collected
a documentary stamp tax of documentary stamp tax of On
Three pesos (P3.00). (as peso and fifty centavos (P1.50
amended by Sec. 54, R.A. No. (as renumbered by Sec. 4 of R.A
10963, December 19, 2017) No. 9243, February 17, 2004
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on All Debt
SEC. 179. On every original issue SEC. 179. On every original issu
Instruments
of debt instruments, there shall be of debt instruments, there shall b
collected a documentary stamp collected a documentary stamp ta
tax of One peso and fifty centavos on One peso (P1.00) on each Tw
(P1.50) on each Two hundred hundred pesos (P200), o
pesos (P200), or fractional part fractional part thereof, of the issu
thereof, of the issue price of any price of any such debt instruments
such debt instruments: Provided, Provided, That for such deb
That for such debt instruments instruments with terms of less tha
with terms of less than one (1) one (1) year, the documentar
year, the documentary stamp tax stamp tax to be collected shall b
to be collected shall be of a of a proportional amount i
proportional amount in accordance with the ratio of it
accordance with the ratio of its term in number of days to thre
term in number of days to three hundred sixty-five (365) days
hundred sixty-five (365) days: Provided, further, That only on
Provided, further, That only one documentary stamp tax shall b
documentary stamp tax shall be imposed on either loan agreemen
imposed on either loan or promissory notes issued t
agreement, or promissory notes secure such loan.
issued to secure such loan. (as
10963, December 19, 2017)
For purposes of this section, th
For purposes of this section, the term debt instrument shall mea
term debt instrument shall mean instruments representin
instruments representing borrowing and lending transaction
borrowing and lending including but not limited t
transactions including but not debentures, certificates o
limited to debentures, certificates indebtedness, due bills, bonds
of indebtedness, due bills, bonds, loan agreements, including thos
loan agreements, including those signed abroad wherein
signed abroad wherein the object of contract is located or used in th
of contract is located or used in Philippines, instruments an
the Philippines, instruments and securities issued by th
securities issued by the government of any of it
government of any of its instrumentalities, depos
instrumentalities, deposit substitute debt instruments
substitute debt instruments, certificates or other evidences o
certificates or other evidences of deposits that are either drawin
deposits that are either drawing interest significantly higher tha
interest significantly higher than the regular savings deposit takin
the regular savings deposit taking into consideration the size of th
into consideration the size of the deposit and the risks involved o
deposit and the risks involved or drawing interest and having
drawing interest and having a specific maturity date, orders fo
specific maturity date, orders for
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
specific maturity date, orders fo
specific maturity date, orders for payment of any sum of mone
payment of any sum of money otherwise than at sight or o
otherwise than at sight or on demand, promissory notes
demand, promissory notes, whether negotiable o
whether negotiable or non-negotiable, except bank note
non-negotiable, except bank issued for circulation. (
notes issued for circulation. amended and renumbered by Sec
5 of R.A. No. 9243, February 17
2004)
Stamp Tax on All Bills of SEC. 180. On all bills of SEC. 180. On all bills of exchang
Exchange or Drafts exchange (between points within (between points within th
the Philippines) or drafts, there Philippines) or drafts, there sha
shall be collected a documentary be collected a documen
stamp tax of Sixty centavos tax of Thirty centavos (P0.30) o
(P0.60) on each Two hundred each Two hundred pesos (P200
pesos (P200) or fractional part or fractional part thereof, of th
thereof, of the face value of any face value of any such bill o
such bill of exchange or draft. (as exchange or draft." (added by Sec
amended by Sec. 56, R.A. No. 6 of R.A. No. 9243, February 17
10963, December 19, 2017) 2004)
Stamp Tax Upon SEC. 181. Upon any acceptance SEC. 181. Upon any acceptanc
Acceptance of Bills of or payment of any bill of or payment of any bill of exchang
Exchange and Others exchange or order for the or order for the payment of mone
payment of money purporting to purporting to be drawn in a foreig
be drawn in a foreign country but country but payable in th
payable in the Philippines, there Philippines, there shall b
shall be collected a documentary collected a documentary stamp ta
stamp tax of Sixty centavos of Thirty centavos (P0.30) on eac
(P0.60) on each Two hundred Two hundred pesos (P200), o
pesos (P200), or fractional part fractional part thereof, of the fac
thereof, of the face value of any value of any such bill of exchange
such bill of exchange, or order, or or order, or the Philippin
the Philippine equivalent of such equivalent of such value,
value, if expressed in foreign expressed in foreign currency.
currency. (as amended by Sec.
19, 2017)
Stamp Tax on Foreign Bills SEC. 182. On all foreign bills of SEC. 182. On all foreign bills o
of Exchange and Letters of exchange and letter of credit exchange and letters of cred
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Credit (including orders, by telegraph or (including orders, by telegraph o
otherwise, for the payment of otherwise, for the payment o
money issued by express or money issued by express o
steamship companies or by any steamship companies or by an
person or persons) drawn in but person or persons) drawn in bu
payable out of the Philippines in a payable out of the Philippines in
set of three (3) or more according set of three (3) or more accordin
to the custom of merchants and to the custom of merchants an
bankers, there shall be collected bankers, there shall be collected
a documentary stamp tax of Sixty documentary stamp tax of Thirt
centavos (P0.60) on each Two centavos (P0.30) on each Tw
hundred pesos (P200), or hundred pesos (P200), o
fractional part thereof, of the face fractional part thereof, of the fac
value of any such bill of exchange value of any such bill of exchang
or letter of credit, or the Philippine or letter of credit, or the Philippin
equivalent of such face value, if equivalent of such face value,
expressed in foreign currency. (as expressed in foreign currency.
10963, December 19, 2017)
Stamp Tax on Life SEC. 183. On all policies of SEC. 183. Stamp Tax on Lif
Insurance Policies insurance or other instruments by Insurance Policies. — On a
whatever name the same may be policies of insurance or othe
called, whereby any insurance instruments by whatever name th
shall be made or renewed upon same may be called, whereby an
any life or lives, there shall be insurance shall be made o
collected a one-time documentary renewed upon any life or lives
stamp tax at the following rates: there shall be collected a
documentary stamp tax
following rates:
If the amount of If the amount of
insurance does not insurance does not
exceed P100,000 Exempt exceed Php100,000.00
insurance exceeds insurance exceeds
P100,000 but does Php100,000.00 but
not exceed P300,000 P20.00 does not exceed
Php300,000.00
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Php500,000.00
Php750,000.00
not exceed P1,000,000 P150.00 does not exceed
Php1,000,000.00
P1,000,000 P200.00 Php1,000,000.00 Php100.00
No. 10963, December 19, 2017)
Stamp Tax on Policies of SEC. 184. On all policies of SEC. 184. On all policies o
Insurance Upon Property insurance or other instruments by insurance or other instruments b
whatever name the same may be whatever name the same may b
called, by which insurance shall called, by which insurance shall b
be made or renewed upon made or renewed upon property o
property of any description, any description, including rents o
including rents or profits, against profits, against peril by sea or o
peril by sea or on inland waters, inland waters, or by fire o
or by fire or lightning, there shall lightning, there shall be collected
be collected a documentary documentary stamp tax of Fift
stamp tax of Fifty centavos centavos (P0.50) on each Fou
(P0.50) on each Four pesos pesos (P4.00), or fractional pa
(P4.00), or fractional part thereof, thereof, of the amount of premium
of the amount of premium charged: Provided , however, Tha
charged: Provided , however, no documentary stamp tax shall b
That no documentary stamp tax collected on reinsurance contract
shall be collected on reinsurance or on any instrument by whic
contracts or on any instrument by cession or acceptance o
which cession or acceptance of insurance risks u
insurance risks under any reinsurance agreement is effecte
reinsurance agreement is or recorded.
effected or recorded.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on Fidelity SEC. 185. On all policies of SEC. 185. On all policies o
Bonds and Other insurance or bonds or obligations insurance or bonds or obligation
Insurance Policies of the nature of indemnity for loss, of the nature of indemnity for loss
damage or liability made or damage or liability made o
renewed by any person, renewed by any person
association, company or association, company o
corporation transacting the corporation transacting th
business of accident, fidelity, business of accident, fidelity
employer's liability, plate, glass, employer's liability, plate, glass
steam boiler, burglar, elevator, steam boiler, burglar, elevato
automatic sprinkler, or other automatic sprinkler, or othe
branch of insurance (except life, branch of insurance (except life
marine, inland, and fire marine, inland, and fire insurance
insurance), and all bonds, and all bonds, undertakings, o
undertakings, or recognizances, recognizances, conditioned for th
conditioned for the performance performance of the duties of an
of the duties of any office or office or position, for the doing o
position, for the doing or not not doing of anything therei
doing of anything therein specified, and on all obligation
specified, and on all obligations guaranteeing the validity or legalit
guaranteeing the validity or of any bond or other obligation
legality of any bond or other issued by any province, city
obligations issued by any municipality, or other pu
province, city, municipality, or or organization, and on a
other public body or organization, obligations guaranteeing the title t
and on all obligations any real estate, or guaranteein
guaranteeing the title to any real any mercantile credits, which ma
estate, or guaranteeing any be made or renewed by any suc
mercantile credits, which may be person, company or corporation
made or renewed by any such there shall be collected
person, company or corporation, documentary stamp tax o
there shall be collected a centavos (P0.50) on each Fou
documentary stamp tax of Fifty pesos (P4.00), or fractional pa
centavos (P0.50) on each Four thereof, of the premium charged.
pesos (P4.00), or fractional part
thereof, of the premium charged.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on Policies of SEC. 186. On all policies of SEC. 186. On all policies o
Annuities and Pre-Need annuities, or other instruments by annuities, or other instruments b
Plans whatever name the same may be whatever name the same may b
called, whereby an annuity may called, whereby an annuity may b
be made, transferred or made, transferred or redeemed
redeemed, there shall be there shall be collected
collected a documentary stamp documentary stamp tax of Fift
tax of One peso (P1.00) on each centavos (P0.50) on each Tw
fractional part thereof, of the fractional part thereof, of th
premium or installment payment premium or installment payment o
on contract price collected. On contract price collected. O
pre-need plans, the documentary pre-need plans, the documentar
stamp tax shall be Forty centavos stamp tax shall be Twent
(P0.40) on each Two hundred centavos (P0.20) on teach Tw
pesos (P200), or fractional part hundred pesos (P200), o
thereof, of the premium or fractional part thereof, of th
contribution collected. (as premium or contribution collected
amended by Sec. 60, R.A. No. (as amended by Sec. 8, R.A. No
10963, December 19, 2017) 9243, Feb. 17, 2004)
Stamp Tax on Indemnity SEC. 187. On all bonds for SEC. 187. On all bonds fo
Bonds indemnifying any person, firm or indemnifying any person, firm o
corporation who shall become corporation who shall becom
bound or engaged as surety for bound or engaged as surety fo
the payment of any sum of money the payment of any sum of mone
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
or for the due execution or or for the due execution o
performance of the duties of any performance of the duties of an
office or position or to account for office or position or to account fo
money received by virtue thereof, money received by virtue thereo
and on all other bonds of any and on all other bonds of an
description, except such as may description, except such as ma
be required in legal proceedings, be required in legal proceedings
or are otherwise provided for or are otherwise provided fo
herein, there shall be collected a herein, there shall be collected
documentary stamp tax of Thirty documentary stamp tax of Thirt
centavos (P0.30) on each Four centavos (P0.30) on each Fou
pesos (P4.00), or fractional part pesos (P4.00), or fractional pa
thereof, of the premium charged. thereof, of the premium charged.
Stamp Tax on Certificates SEC. 188. On each certificate of SEC. 188. On each certificate o
damage or otherwise, and on damage or otherwise, and o
every other certificate or every other certificate or documen
document issued by any customs issued by any customs office
officer, marine surveyor, or other marine surveyor, or other perso
person acting as such, and on acting as such, and on eac
each certificate issued by a notary certificate issued by a notar
public, and on each certificate of public, and on each certificate o
any description required by law or any description required by law o
by rules or regulations of a public by rules or regulations of a publ
office, or which is issued for the office, or which is issued for th
purpose of giving information, or purpose of giving information, o
establishing proof of a fact, and establishing proof of a fact, an
not otherwise specified herein, not otherwise specified herein
there shall be collected a there shall be collected
documentary stamp tax of Thirty documentary stamp tax of Fiftee
pesos (P30.00). (as amended by pesos (P15.00).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Sec. 61, R.A. No. 10963,
December 19, 2017)
Stamp Tax on Warehouse SEC. 189. On each warehouse SEC. 189. On each warehous
Receipts receipt for property held in receipt for property held in storag
storage in a public or private in a public or private warehouse o
warehouse or yard for any person yard for any person other than th
other than the proprietor of such proprietor of such warehouse o
warehouse or yard, there shall be yard, there shall be coll
collected a documentary stamp documentary stamp tax of Fiftee
tax of Thirty pesos (P30.00): pesos (P15.00): Provided, That n
Provided, That no tax shall be tax shall be collected on eac
collected on each warehouse warehouse receipt issued to an
receipt issued to any one person one person in any one calenda
in any one calendar month month covering property the valu
covering property the value of of which does not exceed Tw
which does not exceed Two hundred pesos (P200).
hundred pesos (P200). (as
10963, December 19, 2017)
Stamp Tax on Jai-alai, SEC. 190. On each jai-alai, horse SEC. 190. On each jai-alai, hors
Horse Race Tickets, Lotto race ticket, lotto, or other race ticket, lotto, or othe
or Other Authorized authorized numbers games, there authorized numbers games, ther
Numbers Games shall be collected a documentary shall be collected a documentar
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
stamp tax of Twenty centavos stamp tax of Ten centavo
(P0.20): Provided, That if the cost (P0.10): Provided, That if the cos
of the ticket exceed One peso of the ticket exceeds One pes
(P1.00), an additional tax of (P1.00), an additional tax of Te
Twenty centavos (P0.20) on every centavos (P0.10) on every On
One peso (P1.00), or fractional peso (P1.00), or fractional pa
part thereof, shall be collected. thereof, shall be collected.
No. 10963, December 19, 2017)
Stamp Tax on Bills of SEC. 191. On each set of bills of SEC. 191. On each set of bills o
Lading or Receipts lading or receipts (except charter lading or receipts (except charte
party) for any goods, party) for any goods, merchandis
merchandise or effects shipped or effects shipped from one port o
from one port or place in the place in the Philippines to anothe
Philippines (except on ferries port or place in the Philippine
across rivers), or to any foreign (except on ferries across rivers), o
port, there shall be collected a to any foreign port, there shall b
documentary stamp tax of Two collected a documentary stamp ta
pesos (P2.00), if the value of such of One peso (P1.00), if the valu
goods exceeds One hundred of such goods exceeds On
pesos (P100) and does not hundred pesos (P100) and doe
exceed One thousand pesos not exceed One thousand peso
(P1,000); Twenty pesos (P20.00), (P1,000); Ten pesos (P10.00),
if the value exceeds One the value exceeds One thousan
thousand pesos (P1,000); pesos (P1,000): Provided
Provided, however, That freight however, That freight ticket
tickets covering goods, covering goods, merchandi
merchandise or effects carried as effects carried as accompanie
accompanied baggage of baggage of passengers on lan
passengers on land and water and water carriers primari
carriers primarily engaged in the engaged in the transportation o
transportation of passengers are passengers are hereby exempt.
hereby exempt. (as amended by
Sec. 64, R.A. No. 10963,
December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on Proxies SEC. 192. On each proxy for SEC. 192. On each proxy fo
voting at any election of officers voting at any election for officers o
of any company or association, or any company or association, or fo
for any other purpose, except any other purpose, except proxie
proxies issued affecting the issued affecting the affairs o
affairs of associations or associations or corporation
corporations organized for organized for religious, charitabl
religious, charitable or literary or literary purposes, there shall b
purposes, there shall be collected collected a documentary stamp ta
a documentary stamp tax of Thirty of Fifteen pesos (P15.00).
Pesos (P30.00). (as amended by
Sec. 65, R.A. No. 10963,
December 19, 2017)
Stamp Tax on Powers of SEC. 193. On each power of SEC. 193. On each power o
Attorney attorney to perform any act attorney to perform any ac
whatsoever, except acts whatsoever, except act
connected with the collection of connected with the collection o
claims due from or accruing to the claims due from or accruing to th
Government of the Republic of Government of the Republic of th
the Philippines, or the Philippines, or the government o
government of any province, city any province, city or municipality
or municipality, there shall be there shall be collected
collected a documentary stamp documentary stamp tax of Fiv
tax of Ten pesos (P10.00). (as pesos (P5.00).
10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on Leases and SEC. 194. On each lease, SEC. 194. On each lease
Other Hiring Agreements agreement, memorandum, or agreement, memorandum, o
contract for hire, use or rent of contract for hire, use or rent of an
any lands or tenements, or lands or tenements, or portion
portions thereof, there shall be thereof, there shall be collected
collected a documentary stamp documentary stamp tax of Thre
tax of Six pesos (P6.00) for the pesos (P3.00) for the first Tw
first Two thousand pesos thousand pesos (P2,000), o
(P2,000), or fractional part fractional part thereof, and a
thereof, and an additional Two additional One peso (P1.00) fo
pesos (P2.00) for every One every One thousand peso
thousand pesos (P1,000) or (P1,000) or fractional part thereo
fractional part thereof, in excess in excess of the first Two thousan
of the first Two thousand pesos pesos (P2,000) for each year o
(P2,000) for each year of the term the term of said contract o
of said contract or agreement. (as agreement.
10963, December 19, 2017)
Stamp Tax on Mortgages,

SECTION 195. On every SEC. 195. On every mortgage o
Pledges and Deeds of
mortgage or pledge of lands, pledge of lands, estate, o
Trust
estate, or property, real or property, real or persona
personal, heritable or movable, heritable or movable, whatsoeve
whatsoever, where the same shall where the same shall be made a
be made as a security for the a security for the payment of an
payment of any definite and definite and certain sum of mone
certain sum of money lent at the lent at the time or previously du
time or previously due and owing and owing or forborne to be paid
or forborne to be paid, being being payable, and on an
payable, and on any conveyance conveyance of land, estate, o
of land, estate, or property property whatsoever, in trust or t
whatsoever, in trust or to be sold, be sold, or otherwise converte
or otherwise converted into into money which shall be an
money which shall be and intended only as security, either b
intended only as security, either express stipulation or otherwise
by express stipulation or there shall be collected
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
otherwise, there shall collected a documentary stamp tax at th
documentary stamp tax at the following rates:
following rates:
(a) When the amount secured (a) When the amount secure
does not exceed Five thousand does not exceed Five thousan
pesos (P5,000), Forty pesos pesos (P5,000), Twent
(P40.00). (as amended by Sec. (P20.00).
19, 2017)
(b) On each Five thousand pesos (b) On each Five thousand peso
(P5,000), or fractional part thereof (P5,000), or fractional part thereo
in excess of Five thousand pesos in excess of Five thousand peso
(P5,000), an additional tax of (P5,000), an additional tax of Te
Twenty pesos (P20.00). (as pesos (P10.00).
10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
On any mortgage, pledge, or On any mortgage, pledge, or dee
deed of trust, where the same of trust, where the same shall b
shall be made as a security for made as a security for th
the payment of a fluctuating payment of a fluctuating accoun
account or future advances or future advances without fixe
without fixed limit, the limit, the documentary stamp ta
documentary stamp tax on such on such mortgage, pledge or dee
mortgage, pledge or deed or trust or trust shall be computed on th
shall be computed on the amount amount actually loaned or given a
actually loaned or given at the the time of the execution of th
time of the execution of the mortgage, pledge or deed of trus
mortgage, pledge or deed of trust. However, if subsequent advance
However, if subsequent advances are made on such mortgage
are made on such mortgage, pledge or deed of trust, additiona
pledge or deed of trust, additional documentary stamp tax shall b
documentary stamp tax shall be paid which shall be computed o
paid which shall be computed on the basis of the amount advance
the basis of the amount advanced or loaned at the rates specifie
or loaned at the rates specified above: Provided, however, That
above: Provided, however, That if the full amount of the loan o
the full amount of the loan or credit, granted under th
credit, granted under the mortgage, pledge or deed of trus
mortgage, pledge or deed of trust is specified in such mortgage
is specified in such mortgage, pledge or deed of trust, th
pledge or deed of trust, the documentary stamp tax prescribe
documentary stamp tax in this Section shall be paid an
prescribed in this Section shall be computed on the full amount of th
paid and computed on the full loan or credit granted.
amount of the loan or credit
granted.
Stamp Tax on Deeds of

SEC. 196. On all conveyances, SEC. 196. On all conveyances
Sale, Conveyances and
donations, deeds, instruments, or deeds, instruments, or writings
Donation of Real Property
writings, other than grants, other than grants, patents o
patents or original certificates of original certificates of adjudicatio
adjudication issued by the issued by the Governmen
Government, whereby any land, whereby any land, tenement o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
tenement, or other realty sold other realty sold shall be granted
shall be granted, assigned, assigned, transferred o
transferred, donated or otherwise conveyed to the purchaser, o
conveyed to the purchaser, or purchasers, or to any other perso
purchasers, or to any other or persons designated by suc
person or persons designated by purchaser or purchasers, ther
such purchaser or purchasers, or shall be collected a documentar
donee, there shall be collected a stamp tax, at the rates herei
documentary stamp tax, at the below prescribed, based on th
rates herein below prescribed, consideration contracte
based on the consideration paid for such realty or on its fa
contracted to be paid for such market value determined i
realty or on its fair market value accordance with Section 6(E) o
determined in accordance with this Code, whichever is highe
Section 6(E) of this Code, Provided, That when one of th
whichever is higher: Provided, contracting parties is th
That when one of the contracting Government, the tax herei
parties is the Government, the tax imposed shall be based on th
herein imposed shall be based on actual consideration:
the actual consideration:
(a) When the consideration, o
(a) When the consideration, or value received or contracted to b
value received or contracted to be paid for such realty, after makin
paid for such realty, after making proper allowance of an
proper allowance of any encumbrance, does not excee
encumbrance, does not exceed One thousand pesos (P1,000
One thousand pesos (P1,000), Fifteen pesos (P15.00).
Fifteen pesos (P15.00).
(b) For each additional On
(b) For each additional One thousand pesos (P1,000), o
thousand pesos (P1,000) or fractional part thereof in excess o
fractional part thereof in excess of One thousand pesos (P1,000) o
One thousand pesos (P1,000) of such consideration or value
such consideration or value, Fifteen pesos (P15.00).
Fifteen pesos (P15.00).
Transfers exempt from donor's

tax under Section 101(a) and (b)
of this Code shall be exempt from
the tax imposed under this
Section. (as amended by Sec. 69,
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
2017)
When it appears that the amoun
When it appears that the amount of the documentary stamp ta
of the documentary stamp tax payable hereunder has bee
payable hereunder has been reduced by an incorrect statemen
reduced by an incorrect statement of the consideration in an
of the consideration in any conveyance, deed, instrument o
conveyance, deed, instrument or writing subject to such tax th
writing subject to such tax the Commissioner, provincial or cit
Commissioner, provincial or city Treasurer, or other revenue office
Treasurer, or other revenue shall, from the assessment rolls o
officer shall, from the assessment other reliable source o
rolls or other reliable source of information, assess the property o
information, assess the property its true market value and collec
of its true market value and the proper tax thereon.
collect the proper tax thereon.
Stamp Tax on Charter

SEC. 197. On every charter party, SEC. 197. On every charter party
Parties and Similar
contract or agreement for the contract or agreement for th
Instruments
charter of any ship, vessel or charter of any ship, vessel o
streamer, or any letter or steamer, or any letter o
memorandum or other writing memorandum or other writin
between the captain, master or between the captain, master o
owner, or other person acting as owner, or other person acting a
agent of any ship, vessel or agent of any ship, vessel o
steamer, and any other person or steamer, and any other person o
persons for or relating to the persons for or relating to th
charter of any such ship, vessel charter of any such ship, vessel o
or streamer, and on any renewal steamer, and on any renewal o
or transfer of such charter, transfer of such charter, contrac
contract, agreement, letter or agreement, letter or memorandum
memorandum, there shall be there shall be collected
collected a documentary stamp documentary stamp tax at th
tax at the following rates: following rates:
(a) If the registered gross tonnage (a) If the registered gross tonnag
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of the ship, vessel or steamer of the ship, vessel or steamer doe
does not exceed one thousand not exceed one thousand (1,000
(1,000) tons, and the duration of tons, and the duration of th
the charter or contract does not charter or contract does no
exceed six (6) months, One exceed six (6) months, Fiv
thousand pesos (P1,000); and for hundred pesos (P500); and fo
each month or fraction of a month each month or fraction of a mon
in excess of six (6) months, an in excess of six (6) months, a
additional tax of One hundred additional tax of Fifty peso
pesos (P100) shall be paid. (as (P50.00) shall be paid.
10963, December 19, 2017)
(b) If the registered gross tonnage (b) If the registered gross tonnag
exceeds one thousand (1,000) exceeds one thousand (1,000
tons and does not exceed ten tons and does not exceed te
thousand (10,000) tons, and the thousand (10,000) tons, and th
duration of the charter or contract duration of the charter or contrac
does not exceed six (6) months, does not exceed six (6) months
Two thousand pesos (P2,000); One thousand pesos (P1,000
and for each month or fraction of and for each month or fraction of
a month in excess of six (6) month in excess of six (6) months
months, an additional tax of Two an additional tax of One hundre
hundred pesos (P200) shall be pesos (P100) shall be paid.
paid. (as amended by Sec. 70,
2017)
(c) If the registered gross tonnage (c) If the registered gross tonnag
exceeds ten thousand (10,000) exceeds ten thousand (10,000
tons and the duration of the tons and the duration of th
charter or contract does not charter or contract does no
exceed six (6) months, Three exceed six (6) months, On
thousand pesos (P3,000); and for thousand five hundred peso
each month or fraction of a month (P1,500); and for each month o
in excess of six (6) months, an fraction of a month in excess of s
additional tax of Three hundred (6) months, an additional tax o
pesos (P300) shall be paid. (as One hundred fifty pesos (P150
amended by Sec. 70, R.A. No. shall be paid.
10963, December 19, 2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Stamp Tax on SEC. 198. Upon each and every SEC. 198. Upon each and ever
Assignments and assignment or transfer of any assignment or transfer of an
Renewals of Certain mortgage, lease or policy of mortgage, lease or policy o
Instruments insurance, or the renewal or insurance, or the renewal o
continuance of any agreement, continuance of any agreemen
contract, charter, or any evidence contract, charter, or any evidenc
of obligation or indebtedness by of obligation or indebtedness b
altering or otherwise, there shall altering or otherwise, there sha
be levied, collected and paid a be levied, collected and paid
documentary stamp tax, at the documentary stamp tax, at th
same rate as that imposed on the same rate as that imposed on th
original instrument. original instrument.
Documents and Papers

SEC. 199. The provisions of SEC. 199. The provisions o
Not Subject to Stamp Tax
Section 173 to the contrary Section 173 to the contrar
notwithstanding, the following notwithstanding, the followin
instruments, documents and instruments, documents an
papers shall be exempt from the papers shall be exempt from th
documentary stamp tax: documentary stamp tax:
(a) Policies of insurance or (a) Policies of insurance o

annuities made or granted by a annuities made or granted by
fraternal or beneficiary society, fraternal or beneficiary society
order, association or cooperative order, association or coop
company, operated on the lodge company, operated on the lodg
system or local cooperation plan system or local cooperation pla
and organized and conducted and organized and conducte
solely by the members thereof for solely by the members thereof fo
the exclusive benefit of each the exclusive benefit of eac
member and not for profit. member and not for profit.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) Certificates of oaths (b) Certificates of oath

administered to any government administered to any governmen
official in his official capacity or of official in his official capacity or o
acknowledgment by any acknowledgment by an
government official in the government official in th
performance of his official duties, performance of his official duties
written appearance in any court by written appearance in any court b
any government official, in his any government official, in h
official capacity; certificates of the official capacity; certificates of th
administration of oaths to any administration of oaths to an
person as to the authenticity of person as to the authenticity of an
any paper required to be filed in paper required to be filed in cou
court by any person or party by any person or party thereto
thereto, whether the proceedings whether the proceedings be civil o
be civil or criminal; papers and criminal; papers and document
documents filed in courts by or for filed in courts by or for th
the national, provincial, city or national, provincial, city o
municipal governments; affidavits municipal governments; af
of poor persons for the purpose of of poor persons for the purpose o
proving poverty; statements and proving poverty; statements an
other compulsory information other compulsory informatio
required of persons or required of persons o
corporations by the rules and corporations by the rules an
regulations of the national, regulations of the nationa
provincial, city or municipal provincial, city or municipa
governments exclusively for governments exclusively fo
statistical purposes and which are statistical purposes and which ar
wholly for the use of the bureau or wholly for the use of the bureau o
office in which they are filed, and office in which they are filed, an
not at the instance or for the use not at the instance or for the us
or benefit of the person filing or benefit of the person filing them
them; certified copies and other certified copies and othe
certificates placed upon certificates placed upo
documents, instruments and documents, instruments an
papers for the national, provincial, papers for the national, provincia
city or municipal governments, city or municipal governments
made at the instance and for the made at the instance and for th
sole use of some other branch of sole use of some other branch o
the national, provincial, city or the national, provincial, city o
municipal governments; and municipal governments; an
certificates of the assessed value certificates of the assessed valu
of lands, not exceeding Two of lands, not exceeding Tw
hundred pesos (P200) in value hundred pesos (P200) in valu
assessed, furnished by the assessed, furnished by th
provincial, city or municipal provincial, city or municipa
Treasurer to applicants for Treasurer to applicants fo
Copyright 2019
registrationPhilippine
of title to land.
Taxation Encyclopedia Third Release 2019
registration of title482
to land.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
registration of title to land. registration of title to land.
(c) Borrowing and lending of (c) Borrowing and lending o

securities executed under the securities executed under th
Securities Borrowing and Lending Securities Borrowing and Lendin
Program of a registered Program of a registered
exchange, or in accordance with or in accordance with regulation
regulations prescribed by the prescribed by the appropriat
appropriate regulatory authority: regulatory authority: Provided
Provided, however, That any however, That any borrowing o
borrowing or lending of securities lending of securities agreement a
agreement as contemplated contemplated hereof shall be du
hereof shall be duly covered by a covered by a master securitie
master securities borrowing and borrowing and lending agreemen
lending agreement acceptable to acceptable to the appropriat
the appropriate regulatory regulatory authority, and whic
authority, and which agreement is agreement is duly registered an
duly registered and approved by approved by the Bureau of Interna
the Bureau of Internal Revenue Revenue (BIR).
(BIR).
(d) Loan agreements o
(d) Loan agreements or promissory notes, the aggregate o
promissory notes, the aggregate which does not exceed Tw
of which does not exceed Two hundred fifty thousand peso
hundred fifty thousand pesos (P250,000), or any such amoun
(P250,000), or any such amount as may be determined by th
as may be determined by the Secretary of Finance, executed b
Secretary of Finance, executed by an individual for his purchase o
an individual for his purchase on installment for his personal use o
installment for his personal use or that of his family and not fo
that of his family and not for business or resale, barter or hire o
business or resale, barter or hire a house, lot, motor vehicle
of a house, lot, motor vehicle, appliance or furniture: Provided
appliance or furniture: Provided, however, That the amount to b
however, That the amount to be set by the Secretary of Financ
set by the Secretary of Finance shall be in accordance with
shall be in accordance with a relevant price index but not t
relevant price index but not to exceed ten percent (10%) of th
exceed ten percent (10%) of the current amount and shall remain i
current amount and shall remain in force at least for three (3) years.
force at least for three (3) years.
(e) Sale, barter or exchange o
(e) Sale, barter or exchange of shares of stock listed and trade
shares of stock listed and traded through the local stock exchange.
through the local stock exchange.
(f) Assignment or transfer of an
(f) Assignment or transfer of any mortgage, lease or policy o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
mortgage, lease or policy of insurance, or the renewal o
insurance, or the renewal or continuance of any agreemen
continuance of any agreement, contract, charter, or any evidenc
contract, charter, or any evidence of obligation or indebtedness,
of obligation or indebtedness, if there is no change in the maturit
there is no change in the maturity date or remaining period o
date or remaining period of coverage from that of the origina
coverage from that of the original instrument.
instrument.
(g) Fixed income and othe
(g) Fixed income and other securities traded in the secondar
securities traded in the secondary market or through an e
market or through an exchange.
(h) Derivatives: Provided, That fo
(h) Derivatives: Provided, That for purposes of this exemption
purposes of this exemption, repurchase agreements an
repurchase agreements and reverse repurchase agreement
reverse repurchase agreements shall be treated similarly a
shall be treated similarly as derivatives.
derivatives.
(i) Interbranch or interdepartmenta
(i) Interbranch or advances within the same lega
interdepartmental advances within entity.
the same legal entity.
(j) All forbearance arising from
(j) All forbearance arising from sales or service contracts includin
sales or service contracts credit card and trade receivables
including credit card and trade Provided, That the exemption b
receivables: Provided, That the limited to those executed by th
exemption be limited to those seller or service provider itself.
executed by the seller or service
provider itself. (k) Bank deposit accounts withou
a fixed term or maturity.
(k) Bank deposit accounts without
a fixed term or maturity. (l) All contracts, deeds, document
and transactions related to th
(l) All contracts, deeds, documents conduct of business of the Bangk
and transactions related to the Sentral ng Pilipinas.
conduct of business of the Bangko
Sentral ng Pilipinas. (m) Transfer of property pursuan
to Section 40(c)(2) of the Nationa
(m) Transfer of property pursuant Internal Revenue Code of 1997, a
to Section 40(c)(2) of the National amended.
Internal Revenue Code of 1997,
(n) Interbank call loans wit
as amended.
maturity of not more than seve
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(7) days to cover deficiency i
(n) Interbank call loans with
reserves against deposit liabilities
maturity of not more than seven
including those between or amon
(7) days to cover deficiency in
banks and quasi-banks." (
reserves against deposit liabilities,
including those between or
9243, Feb. 17, 2004)
among banks and quasi-banks."
9243, Feb. 17, 2004)
Payment of Documentary
SEC. 200. SEC. 200.
Stamp Tax
(A) In General. — The provisions (A) In General. — The provision
of Presidential Decree No. 1045 of Presidential Decree No. 104
notwithstanding, any person liable notwithstanding, any person liabl
to pay documentary stamp tax to pay documentary stamp ta
upon any document subject to tax upon any document subject to ta
under Title VII of this Code shall under Title VII of this Code sha
file a tax return and pay the tax in file a tax return and pay the tax i
accordance with the rules and accordance with the rules an
(B) Time for Filing and Payment of (B) Time for Filing and Payment o
the Tax. — Except as provided by the Tax. — Except as provided b
Commissioner, the tax return Commissioner, the tax retur
prescribed in this Section shall be prescribed in this Section shall b
filed within ten (10) days after the filed within ten (10) days after th
close of the month when the close of the month when th
taxable document was made, taxable document was made
signed, issued, accepted, or signed, issued, accepted, o
transferred, and the tax thereon transferred, and the tax thereo
shall be paid at the same time the shall be paid at the same time th
aforesaid return is filed. aforesaid return is filed.
(C) Where to File. — Except in (C) Where to File. — Except i

cases where the Commissioner cases where the Commissione
otherwise permits, the aforesaid otherwise permits, the aforesai
tax return shall be filed with and tax return shall be filed with an
the tax due shall be paid through the tax due shall be paid throug
the authorized agent bank within the authorized agent bank withi
the territorial jurisdiction of the the territorial jurisdiction of th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Revenue District Office which has Revenue District Office which ha
jurisdiction over the residence or jurisdiction over the residence o
principal place of business of the principal place of business of th
taxpayer. In places where there is taxpayer. In places where there
no authorized agent bank, the no authorized agent bank, th
return shall be filed with the return shall be filed with th
Revenue District Officer collection Revenue District Officer collectio
agent, or duly authorized agent, or duly authorize
Treasurer of the city or Treasurer of the city o
municipality in which the taxpayer municipality in which the taxpaye
has his legal residence or principal has his legal residence or principa
place of business. place of business.
(D) Exception. — In lieu of th
(D) Exception. — In lieu of the
foregoing provisions of th
foregoing provisions of this
Section, the tax may be paid eithe
Section, the tax may be paid
through purchase and actua
either through purchase and
affixture; or by imprinting th
actual affixture; or by imprinting
stamps through a documentar
the stamps through a
stamp metering machine, on th
documentary stamp metering
taxable document, in the manne
machine, on the taxable
as may be prescribed by rules an
document, in the manner as may
regulations to be promulgated b
be prescribed by rules and
the Secretary of Finance, upo
the Secretary of Finance, upon
Commissioner.
Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Effect of Failure to Stamp

SEC. 201. An instrument, SEC. 201. An instrumen
Taxable Document
document or paper which is document or paper which
required by law to be stamped and required by law to be stamped an
which has been signed, issued, which has been signed, issued
accepted or transferred without accepted or transferred withou
being duly stamped, shall not be being duly stamped, shall not b
recorded, nor shall it or any copy recorded, nor shall it or any cop
thereof or any record of transfer of thereof or any record of transfer o
the same be admitted or used in the same be admitted or used i
evidence in any court until the evidence in any court until th
requisite stamp or stamps shall requisite stamp or stamps sha
have been affixed thereto and have been affixed thereto an
cancelled. cancelled.
No notary public or other officer

No notary public or other office
authorized to administer oaths
authorized to administer oath
shall add his jurat or
shall add his jurat o
acknowledgment to any
acknowledgment to any documen
document subject to documentary
subject to documentary stamp ta
stamp tax unless the proper
unless the proper documentar
documentary stamps are affixed
stamps are affixed thereto an
thereto and cancelled.
cancelled.
TITLE VIII — REMEDIES TITLE VIII — REMEDIES
CHAPTER I — REMEDIES IN CHAPTER I — REMEDIES IN

GENERAL GENERAL
Final Deed to Purchaser SEC. 202. In case the taxpayer SEC. 202. In case the taxpaye
shall not redeem the property as shall not redeem the property a
herein provided, the Revenue herein provided, the Revenu
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
District Officer shall, as grantor, District Officer shall, as grant
execute a deed conveying to the execute a deed conveying to th
purchaser so much of the purchaser so much of the propert
property as has been sold, free as has been sold, free from a
from all liens of any kind liens of any kind whatsoever, an
whatsoever, and the deed shall the deed shall succinctly recite a
succinctly recite all the the proceedings upon which th
proceedings upon which the validity of the sale depends.
validity of the sale depends.
Period of Limitation Upon SEC. 203. Except as provided in SEC. 203. Except as provided i
Assessment and Collection Section 222, internal revenue Section 222, internal revenu
taxes shall be assessed within taxes shall be assessed withi
three (3) years after the last day three (3) years after the last da
prescribed by law for the filing of prescribed by law for the filing o
the return, and no proceeding in the return, and no proceeding i
court without assessment for the court without assessment for th
collection of such taxes shall be collection of such taxes shall b
begun after the expiration of such begun after the expiration of suc
period: Provided, That in a case period: Provided, That in a cas
where a return is filed beyond the where a return is filed beyond th
period prescribed by law, the period prescribed by law, the thre
three (3)-year period shall be (3)-year period shall
counted from the day the return from the day the return was filed
was filed. For purposes of this For purposes of this Section,
Section, a return filed before the return filed before the last da
last day prescribed by law for the prescribed by law for the filin
filing thereof shall be considered thereof shall be considered as file
as filed on such last day. on such last day.
Authority of the
SEC. 204. The Commissioner may SEC. 204. The Commissioner ma
Commissioner to
— —
Compromise, Abate and
Refund or Credit Taxes (A) Compromise the payment of (A) Compromise the payment o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
any internal revenue tax, when: any internal revenue tax, when:
(1) A reasonable doubt as to the (1) A reasonable doubt as to th

validity of the claim against the validity of the claim against th
taxpayer exists; or taxpayer exists; or
(2) The financial position of the (2) The financial position of th

taxpayer demonstrates a clear taxpayer demonstrates a
inability to pay the assessed tax. inability to pay the assessed tax.
The compromise settlement of any The compromise settlement of an

tax liability shall be subject to the tax liability shall be subject to th
following minimum amounts: following minimum amounts:
For cases of financial incapacity, a For cases of financial incapacity,

minimum compromise rate minimum compromise rat
equivalent to ten percent (10%) of equivalent to ten percent (10%) o
the basic assessed tax; and the basic assessed tax; and
For other cases, a minimum For other cases, a minimum

compromise rate equivalent to compromise rate equivalent t
forty percent (40%) of the basic forty percent (40%) of the bas
assessed tax. assessed tax.
Where the basic tax involved Where the basic tax involve
exceeds One million pesos exceeds One million peso
(P1,000,000) or where the (P1,000,000) or where th
settlement offered is less than the settlement offered is less than th
prescribed minimum rates, the prescribed minimum rates, t
compromise shall be subject to the compromise shall be subject to th
approval of the Evaluation Board approval of the Evaluation Boar
which shall be composed of the which shall be composed of th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Commissioner and the four (4) Commissioner and the four (4
Deputy Commissioners. Deputy Commissioners.
(B) Abate or cancel a tax liability, (B) Abate or cancel a tax liability
when: when:
(1) The tax or any portion thereof (1) The tax or any portion thereo
appears to be unjustly or appears to be unjustly o
excessively assessed; or excessively assessed; or
(2) The administration and (2) The administration an

collection costs involved do not collection costs involved do no
justify the collection of the amount justify the collection of the amoun
due. due.
All criminal violations may be All criminal violations may b

compromised except: (a) those compromised except: (a) thos
already filed in court, or (b) those already filed in court, or (b) thos
involving fraud. involving fraud.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(C) Credit or refund taxes (C) Credit or refund taxe
erroneously or illegally received or erroneously or illegally received o
penalties imposed without penalties imposed withou
authority, refund the value of authority, refund the value o
internal revenue stamps when internal revenue stamps when the
they are returned in good are returned in good condition b
condition by the purchaser, and, in the purchaser, and, in h
his discretion, redeem or change discretion, redeem or chang
unused stamps that have been unused stamps that have bee
rendered unfit for use and refund rendered unfit for use and refun
their value upon proof of their value upon proof o
destruction. No credit or refund of destruction. No credit or refund o
taxes or penalties shall be allowed taxes or penalties shall be allowe
unless the taxpayer files in writing unless the taxpayer files in writin
with the Commissioner a claim for with the Commissioner a claim fo
credit or refund within two (2) credit or refund within two (2
years after the payment of the tax years after the payment of the ta
or penalty: Provided, however, or penalty: Provided, howeve
That a return filed showing an That a return filed showing a
overpayment shall be considered overpayment shall be considere
as a written claim for credit or as a written claim for credit o
refund. refund.
A Tax Credit Certificate validly A Tax Credit Certificate valid

issued under the provisions of this issued under the provisions of th
Code may be applied against any Code may be applied against
internal revenue tax, excluding internal revenue tax, excludin
withholding taxes, for which the withholding taxes, for which th
taxpayer is directly liable. Any taxpayer is directly liable. An
request for conversion into refund request for conversion into refun
of unutilized tax credits may be of unutilized tax credits may b
allowed, subject to the provisions allowed, subject to the provision
of Section 230 of this Code: of Section 230 of this Code
Provided, That the original copy of Provided, That the original copy o
the Tax Credit Certificate showing the Tax Credit Certificate showin
a creditable balance is a creditable balance
surrendered to the appropriate surrendered to the appropriat
revenue officer for verification and revenue officer for verification an
cancellation: Provided, further, cancellation: Provided, furthe
That in no case shall a tax refund That in no case shall a tax refun
be given resulting from availment be given resulting from availmen
of incentives granted pursuant to of incentives granted pursuant t
special laws for which no actual special laws for which no actua
payment was made. payment was made.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The Commissioner shall submit t
The Commissioner shall submit to
the Chairmen of the Committee o
the Chairmen of the Committee
Ways and Means of both th
on Ways and Means of both the
Senate and House o
Senate and House of
Representatives, every six (6
Representatives, every six (6)
months, a report on the exercise o
months, a report on the exercise
his powers under this Section
of his powers under this Section,
stating therein the following fact
stating therein the following facts
and information, among others
and information, among others:
names and addresses o
names and addresses of
taxpayers whose cases have bee
taxpayers whose cases have
the subject of abatement o
been the subject of abatement or
compromise; amount involved
compromise; amount involved;
amount compromised or abated
amount compromised or abated;
and reasons for the exercise o
and reasons for the exercise of
power: Provided, That the sai
power: Provided, That the said
report shall be presented to th
report shall be presented to the
Oversight Committee in Congres
Oversight Committee in Congress
that shall be constituted t
that shall be constituted to
determine that said powers ar
determine that said powers are
reasonably exercised and that th
reasonably exercised and that the
Government is not unduly deprive
Government is not unduly
of revenues.
deprived of revenues.
CHAPTER II — CIVIL REMEDIES CHAPTER II — CIVIL REMEDIES

FOR COLLECTION OF TAXES FOR COLLECTION OF TAXES
Remedies for the

SEC. 205. The civil remedies for SEC. 205. The civil remedies fo
Collection of Delinquent
the collection of internal revenue the collection of internal revenu
Taxes
taxes, fees, or charges, and any taxes, fees, or charges, and an
increment thereto resulting from increment thereto resulting from
delinquency shall be: delinquency shall be:
(a) By distraint of goods, chattels, (a) By distraint of goods, chattels

or effects, and other personal or effects, and other persona
property of whatever character, property of whatever characte
including stocks and other including stocks and othe
securities, debts, credits, bank securities, debts, credits, ban
accounts, and interest in and accounts, and interest in and right
rights to personal property, and by to personal property, and by lev
levy upon real property and upon real property and interest i
interest in or rights to real or rights to real property; and
property; and
(b) By civil or criminal action. (b) By civil or criminal action.

of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Either of these remedies or both Either of these remedies or bot

simultaneously may be pursued in simultaneously may be pursued i
the discretion of the authorities the discretion of the authoritie
charged with the collection of such charged with the collection of suc
taxes: Provided, however, that the taxes: Provided, however, that th
remedies of distraint and levy shall remedies of distraint and levy sha
not be availed of where the not be availed of where th
amount of tax involved is not more amount of tax involved is
than One hundred pesos (P100). than One hundred pesos (P100).
The judgment in the criminal case The judgment in the criminal cas
shall not only impose the penalty shall not only impose the penalt
but shall also order payment of the but shall also order payment of th
taxes subject of the criminal case taxes subject of the criminal cas
as finally decided by the as finally decided by th
The Bureau of Internal Revenu
The Bureau of Internal Revenue
shall advance the amounts neede
shall advance the amounts
to defray costs of collection b
needed to defray costs of
means of civil or criminal action
collection by means of civil or
including the preservation o
criminal action, including the
transportation of personal propert
preservation or transportation of
distrained and the advertisemen
personal property distrained and
and sale thereof, as well as of rea
the advertisement and sale
property and improvement
thereof, as well as of real property
thereon.
and improvements thereon.
Constructive Distraint of
SEC. 206. To safeguard the SEC. 206. To safeguard th
the Property of a Taxpayer
interest of the Government, the interest of the Government, th
Commissioner may place under Commissioner may place unde
constructive distraint the property constructive distraint the propert
of a delinquent taxpayer or any of a delinquent taxpayer or an
taxpayer who, in his opinion, is taxpayer who, in his opinion,
retiring from any business subject retiring from any business subjec
to tax, or is intending to leave the to tax, or is intending to leave th
Philippines or to remove his Philippines or to remove h
property therefrom or to hide or property therefrom or to hide o
conceal his property or to perform conceal his property or to perform
any act tending to obstruct the any act tending to obstruct th
proceedings for collecting the tax proceedings for collecting the ta
due or which may be due from due or which may be due from
him. him.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The constructive distraint of The constructive distraint o

personal property shall be effected personal property shall be effecte
by requiring the taxpayer or any by requiring the taxpayer o
person having possession or person having possession o
control of such property to sign a control of such property to sign
receipt covering the property receipt covering the propert
distrained and obligate himself to distrained and obligate himself t
preserve the same intact and preserve the same intact an
unaltered and not to dispose of the unaltered and not to dispose of th
same in any manner whatever, same in any manner whateve
without the express authority of without the express authorit
In case the taxpayer or the

In case the taxpayer or the perso
person having the possession
having the possession and contro
and control of the property sought
of the property sought to be place
to be placed under constructive
under constructive distraint refuse
distraint refuses or fails to sign
or fails to sign the receipt herei
the receipt herein referred to, the
referred to, the revenue office
revenue officer effecting the
effecting the constructive distrain
constructive distraint shall
shall proceed to prepare a list o
proceed to prepare a list of such
such property and, in the presenc
property and, in the presence of
of two (2) witnesses, leave a cop
two (2) witnesses, leave a copy
thereof in the premises where th
thereof in the premises where the
property distrained is located, afte
property distrained is located,
which the said property shall b
after which the said property shall
deemed to have been place
be deemed to have been placed
under constructive distraint.
under constructive distraint.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Summary Remedies –
SEC. 207. SEC. 207.
Distraint and Levy
(A) Distraint of Personal Property. (A) Distraint of Personal Prop
— Upon the failure of the person — Upon the failure of the perso
owing any delinquent tax or owing any delinquent tax o
delinquent revenue to pay the delinquent revenue to pay
same at the time required, the same at the time required, th
Commissioner or his duly Commissioner or his du
authorized representative, if the authorized representative, if th
amount involved is in excess of amount involved is in excess o
One million pesos (P1,000,000), One million pesos (P1,000,000), o
or the Revenue District Officer, if the Revenue District Officer, if th
the amount involved is One million amount involved is One millio
pesos (P1,000,000) or less, shall pesos (P1,000,000) or less,
seize and distraint any goods, seize and distraint any goods
chattels, or effects, and the chattels, or effects, and th
personal property, including stocks personal property, including stock
and other securities, debts, and other securities, debts, credits
credits, bank accounts, and bank accounts, and interests i
interests in and rights to personal and rights to personal property o
property of such persons in such persons in sufficient quantit
sufficient quantity to satisfy the to satisfy the tax, or charge
tax, or charge, together with any together with any incremen
increment thereto incident to thereto incident to delinquency
delinquency, and the expenses of and the expenses of the distrain
the distraint and the cost of the and the cost of the subsequen
subsequent sale. sale.
A report on the distraint shall, A report on the distraint sha

within ten (10) days from receipt of within ten (10) days from receipt o
the warrant, be submitted by the the warrant, be submitted by th
distraining officer to the Revenue distraining officer to the Revenu
District Officer, and to the District Officer, and to th
Revenue Regional Director: Revenue Regional Directo
Provided, That the Commissioner Provided, That the Commissione
or his duly authorized or his duly authorize
representative shall, subject to representative shall, subject t
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Commissioner, have the power to Commissioner, have the power t
lift such order of distraint: lift such order of distrain
Provided, further, That a Provided, further, That
consolidated report by the consolidated report by th
Revenue Regional Director may Revenue Regional Director may b
be required by the Commissioner required by the Commissioner a
as often as necessary. often as necessary.
(B) Levy on Real Property. — (B) Levy on Real Property

After the expiration of the time the expiration of the time require
required to pay the delinquent tax to pay the delinquent tax o
or delinquent revenue as delinquent revenue as prescribe
prescribed in this Section, real in this Section, real property ma
property may be levied upon, be levied upon, before
before, simultaneously or after the simultaneously or after the distrain
distraint of personal property of personal property belonging t
belonging to the delinquent. To the delinquent. To this end, an
this end, any internal revenue internal revenue officer designate
officer designated by the by the Commissioner or his du
Commissioner or his duly authorized representative sha
authorized representative shall prepare a duly authenticate
prepare a duly authenticated certificate showing the name of th
certificate showing the name of taxpayer and the amounts of th
the taxpayer and the amounts of tax and penalty due from him. Sai
the tax and penalty due from him. certificate shall operat
Said certificate shall operate with force of a legal executio
the force of a legal execution throughout the Philippines.
throughout the Philippines.
Levy shall be effected by writin
Levy shall be effected by writing upon said certificate a descriptio
upon said certificate a description of the property upon which levy
of the property upon which levy is made. At the same time, writte
made. At the same time, written notice of the levy shall be mailed t
notice of the levy shall be mailed or served upon the Register o
to or served upon the Register of Deeds of the province or cit
Deeds of the province or city where the property is located an
where the property is located and upon the delinquent taxpayer, or
upon the delinquent taxpayer, or if he be absent from the Philippines
he be absent from the Philippines, to his agent or the manager of th
to his agent or the manager of the business in respect to which th
business in respect to which the liability arose, or if there be none
liability arose, or if there be none, to the occupant of the property i
to the occupant of the property in question.
question.
In case the warrant of levy on rea
In case the warrant of levy on real property is not issued before o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
property is not issued before or simultaneously with the warrant o
simultaneously with the warrant of distraint on personal property, an
distraint on personal property, and the personal property of th
the personal property of the taxpayer is not sufficient to satisf
taxpayer is not sufficient to satisfy his tax delinquency, th
his tax delinquency, the Commissioner or his du
Commissioner or his duly authorized representative sha
authorized representative shall, within thirty (30) days afte
within thirty (30) days after execution of the distraint, procee
execution of the distraint, proceed with the levy on the taxpayer's rea
with the levy on the taxpayer's real property.
property.
Within ten (10) days after receip
Within ten (10) days after receipt
of the warrant, a report on
of the warrant, a report on any
shall be submitted by the levyin
levy shall be submitted by the
officer to the Commissioner or h
levying officer to the
duly authorized representative
Commissioner or his duly
Provided, however, That
authorized representative:
consolidated report by th
Provided, however, That a
Revenue Regional Director may b
consolidated report by the
required by the Commissioner a
Revenue Regional Director may
often as necessary: Provide
be required by the Commissioner
further, That the Commissioner o
as often as necessary: Provided,
his duly authorized representative
further, That the Commissioner or
subject to rules and regulation
his duly authorized
representative, subject to rules
and regulations promulgated by
the Commissioner, shall have th
authority to lift warrants of lev
issued in accordance with th
Commissioner, shall have the
provisions hereof.
authority to lift warrants of levy
issued in accordance with the
provisions hereof.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Procedure for Distraint and

SEC. 208. The officer serving the SEC. 208. The officer serving th
Garnishment
warrant of distraint shall make or warrant of distraint shall make
cause to be made an account of cause to be made an account o
the goods, chattels, effects or the goods, chattels, effects o
other personal property distrained, other personal property distrained
a copy of which, signed by a copy of which, signed by himsel
himself, shall be left either with the shall be left either with the owne
owner or person from whose or person from whose possessio
possession such goods, chattels, such goods, chattels, or effects o
or effects or other personal other personal property wer
property were taken, or at the taken, or at the dwelling or place o
dwelling or place of business of business of such person and wit
such person and with someone of someone of suitable age an
suitable age and discretion, to discretion, to which list shall b
which list shall be added a added a statement of the sum
statement of the sum demanded demanded and note of the tim
and note of the time and place of and place of sale.
sale.
Stocks and other securities shall Stocks and other securities

be distrained by serving a copy of be distrained by serving a copy o
the warrant of distraint upon the the warrant of distraint upon th
taxpayer and upon the president, taxpayer and upon the presiden
manager, treasurer or other manager, treasurer or othe
responsible officer of the responsible officer of th
corporation, company or corporation, company o
association, which issued the said association, which issued the sai
stocks or securities. stocks or securities.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Debts and credits shall be Debts and credits shall b
distrained by leaving with the distrained by leaving with th
person owing the debts or having person owing the debts or havin
in his possession or under his in his possession or under h
control such credits, or with his control such credits, or with h
agent, a copy of the warrant of agent, a copy of the warrant o
distraint. The warrant of distraint distraint. The warrant of distrain
shall be sufficient authority to the shall be sufficient authority to th
person owning the debts or having person owning the debts or havin
in his possession or under his in his possession or under h
control any credits belonging to control any credits belonging to th
the taxpayer to pay to the taxpayer to pay to th
Commissioner the amount of such Commissioner the amount of suc
debts or credits. debts or credits.
Bank accounts shall be garnished

Bank accounts shall be garnishe
by serving a warrant of
by serving a warrant o
garnishment upon the taxpayer
garnishment upon the taxpaye
and upon the president, manager,
and upon the president, manage
treasurer or other responsible
treasurer or other responsibl
officer of the bank. Upon receipt
officer of the bank. Upon receipt o
of the warrant of garnishment, the
the warrant of garnishment, th
bank shall turn over to the
bank shall turn over to th
Commissioner so much of the
Commissioner so much of th
bank accounts as may be
bank accounts as may b
sufficient to satisfy the claim of
sufficient to satisfy the claim of th
the Government.
Government.
Sale of Property Distrained

SEC. 209. The Revenue District SEC. 209. The Revenue Distric
and Disposition of
Officer or his duly authorized Officer or his duly authorize
Proceeds
representative, other than the representative, other than th
officer referred to in Section 208 of officer referred to in Section 208 o
this Code shall, according to rules this Code shall, according to rule
and regulations prescribed by the and regulations prescribed by th
recommendation of the recommendation of
Commissioner, forthwith cause a Commissioner, forthwith cause
notification to be exhibited in not notification to be exhibited in no
less than two (2) public places in less than two (2) public places i
the municipality or city where the the municipality or city where th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
distraint is made, specifying the distraint is made, specifying th
time and place of sale and the time and place of sale and th
articles distrained. The time of articles distrained. The time of sal
sale shall not be less than twenty shall not be less than twenty (20
(20) days after notice to the owner days after notice to the owner o
or possessor of the property as possessor of the property a
above specified and the above specified and th
publication or posting of such publication or posting of suc
notice. One place for the posting notice. One place for the postin
of such notice shall be at the of such notice shall be at th
Office of the Mayor of the city or Office of the Mayor of the city o
municipality in which the property municipality in which the propert
is distrained. is distrained.
At the time and place fixed in such At the time and place fixed in suc
notice, the said revenue officer notice, the said revenue office
shall sell the goods, chattels, or shall sell the goods, chattels, o
effects, or other personal property, effects, or other personal property
including stocks and other including stocks and othe
securities so distrained, at public securities so distrained, at publ
auction, to the highest bidder for auction, to the highest bidder fo
cash, or with the approval of the cash, or with the approval of th
Commissioner, through duly Commissioner, through du
licensed commodity or stock licensed commodity or stoc
In the case of stocks and other In the case of stocks and othe
securities, the officer making the securities, the officer making th
sale shall execute a bill of sale sale shall execute a bill of sal
which he shall deliver to the buyer, which he shall deliver to the buye
and a copy thereof furnished the and a copy thereof furnished th
corporation, company or corporation, company o
association which issued the association which issued th
stocks or other securities. Upon stocks or other securities. Upo
receipt of the copy of the bill of receipt of the copy of the bill o
sale, the corporation, company or sale, the corporation, company o
association shall make the association shall make th
corresponding entry in its books, corresponding entry in its books
transfer the stocks or other transfer the stocks or othe
securities sold in the name of the securities sold in the name of th
buyer, and issue, if required to do buyer, and issue, if required to d
so, the corresponding certificates so, the corresponding certificate
of stock or other securities. of stock or other securities.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Any residue over and above what Any residue over and above wha
is required to pay the entire claim, is required to pay the entire claim
including expenses, shall be including expenses, shall b
returned to the owner of the returned to the owner of th
property sold. The expenses property sold. The expense
chargeable upon each seizure and chargeable upon each seizure an
sale shall embrace only the actual sale shall embrace only the actua
expenses of seizure and expenses of seizure an
preservation of the property preservation of the propert
pending the sale, and no charge pending the sale, and no charg
shall be imposed for the services shall be imposed for the service
of the local internal revenue officer of the local internal revenue office
or his deputy. or his deputy.
Property so purchased may b
Property so purchased may be
resold by the Commissioner or h
resold by the Commissioner or his
deputy, subject to the rules an
deputy, subject to the rules and
regulations prescribed by th
regulations prescribed by the
Secretary of Finance, the ne
Secretary of Finance, the net
proceeds therefrom shall b
proceeds therefrom shall be
remitted to the National Trea
remitted to the National Treasury
and accounted for as interna
and accounted for as internal
revenue.
revenue.
Release of Distrained SEC. 210. If at any time prior to SEC. 210. If at any time prior t
Property Upon Payment the consummation of the sale all the consummation of the
Prior to Sale proper charges are paid to the proper charges are paid to th
officer conducting the sale, the officer conducting the sale, th
goods or effects distrained shall goods or effects distrained shall b
be restored to the owner. restored to the owner.
Report of Sale to Bureau of SEC. 211. Within two (2) days SEC. 211. Within two (2) day
Internal Revenue after the sale, the officer making after the sale, the officer makin
the same shall make a report of the same shall make a report o
his proceedings in writing to the his proceedings in writing to th
Commissioner and shall himself Commissioner and shall himse
preserve a copy of such report as preserve a copy of such report a
an official record. an official record.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Purchase by Government SEC. 212. When the amount bid SEC. 212. When the amount bi
at Sale Upon Distraint for the property under distraint is for the property under distraint
not equal to the amount of the tax not equal to the amount of the ta
or is very much less than the or is very much less than th
actual market value of the articles actual market value of the article
offered for sale, the offered for sale, the Commissione
Commissioner or his deputy may or his deputy may purchase th
purchase the same in behalf of same in behalf of the Nationa
the National Government for the Government for the amount o
amount of taxes, penalties and taxes, penalties and cost du
cost due thereon. thereon.
Advertisement and Sale

SEC. 213. Within twenty (20) days SEC. 213. Within twenty (20) day
after levy, the officer conducting after levy, the officer conductin
the proceedings shall proceed to the proceedings shall proceed t
advertise the property or a usable advertise the property or a usabl
portion thereof as may be portion thereof as may b
necessary to satisfy the claim and necessary to satisfy the claim an
cost of sale; and such cost of sale; and suc
advertisement shall cover a period advertisement shall cover a
of at least thirty (30) days. It shall of at least thirty (30) days. It sha
be effectuated by posting a notice be effectuated by posting a notic
at the main entrance of the at the main entrance of th
municipal building or city hall and municipal building or city hall an
in a public and conspicuous place in a public and conspicuous plac
in the barrio or district in which the in the barrio or district in which th
real estate lies and by publication real estate lies and by publicatio
once a week for three (3) weeks in once a week for three (3) weeks i
a newspaper of general circulation a newspaper of general circulatio
in the municipality or city where in the municipality or city where th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the property is located. The property is located. Th
advertisement shall contain a advertisement shall contain
statement of the amount of taxes statement of the amount of taxe
and penalties so due and the time and penalties so due and the tim
and place of sale, the name of the and place of sale, the name
taxpayer against whom taxes are taxpayer against whom taxes ar
levied, and a short description of levied, and a short description o
the property to be sold. At any the property to be sold. At any tim
time before the day fixed for the before the day fixed for the sale
sale, the taxpayer may discontinue the taxpayer may discontinue a
all proceedings by paying the proceedings by paying the taxes
taxes, penalties and interest. If he penalties and interest. If he doe
does not do so, the sale shall not do so, the sale shall procee
proceed and shall be held either at and shall be held either at th
the main entrance of the municipal main entrance of the municipa
building or city hall, or on the building or city hall, or on th
premises to be sold, as the officer premises to be sold, as the office
conducting the proceedings shall conducting the proceedings sha
determine and as the notice of determine and as the notice o
sale shall specify. sale shall specify.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Within five (5) days after the sale, Within five (5) days after the sale
a return by the distraining or a return by the distraining o
levying officer of the proceedings levying officer of the proceeding
shall be entered upon the records shall be entered upon the record
of the Revenue Collection Officer, of the Revenue Collection Office
the Revenue District Officer and the Revenue District Officer an
the Revenue Regional Director. the Revenue Regional Directo
The Revenue Collection Officer, in The Revenue Collection Officer, i
consultation with the Revenue consultation with the Revenu
District Officer, shall then make District Officer, shall then mak
out and deliver to the purchaser a out and deliver to the purchaser
certificate from his records, certificate from his records
showing the proceedings of the showing the proceedings of th
sale, describing the property sold, sale, describing the property sold
stating the name of the purchaser stating the name of the purchase
and setting out the exact amount and setting out the exac
of all taxes, penalties and interest: of all taxes, penalties and interes
the proceeds of the sale exceeds the proceeds of the sale exceed
the claim and cost of sale, the the claim and cost of sale, th
excess shall be turned over to the excess shall be turned over to th
owner of the property. owner of the property.
The Revenue Collection Office

The Revenue Collection Officer,
upon approval by the
upon approval by the Revenue
District Officer may, out of h
District Officer may, out of his
collection, advance an amoun
collection, advance an amount
sufficient to defray the costs o
sufficient to defray the costs of
collection by means of th
collection by means of the
summary remedies provided for i
summary remedies provided for in
this Code, including th
this Code, including the
preservation or transportation i
preservation or transportation in
case of personal property, and
case of personal property, and
advertisement and subsequen
the advertisement and
sale, both in cases of personal an
subsequent sale, both in cases of
real property includin
personal and real property
improvements found on the latte
including improvements found on
In his monthly collection reports
the latter. In his monthly collection
such advances shall be reflecte
reports, such advances shall be
and supported by receipts.
reflected and supported by
receipts.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Redemption of Property
SEC. 214. Within one (1) year SEC. 214. Within one (1) yea
Sold
from the date of sale, the from the date of sale, th
delinquent taxpayer, or any one delinquent taxpayer, or any one fo
for him, shall have the right of him, shall have the right of payin
paying to the Revenue District to the Revenue District Officer th
Officer the amount of the public amount of the public taxes
taxes, penalties, and interest penalties, and interest t
thereon from the date of from the date of delinquency to th
delinquency to the date of sale, date of sale, together with interes
together with interest on said on said purchase price at the rat
purchase price at the rate of of fifteen percent (15%) per annum
fifteen percent (15%) per annum from the date of purchase to th
from the date of purchase to the date of redemption, and suc
date of redemption, and such payment shall entitle the perso
payment shall entitle the person paying to the delivery of th
paying to the delivery of the certificate issued to the purchase
certificate issued to the purchaser and a certificate from the sai
and a certificate from the said Revenue District Officer that h
Revenue District Officer that he has thus redeemed the property
has thus redeemed the property, and the Revenue District Office
and the Revenue District Officer shall forthwith pay over to th
shall forthwith pay over to the purchaser the amount by whic
purchaser the amount by which such property has thus bee
such property has thus been redeemed, and said propert
redeemed, and said property thereafter shall be free from th
thereafter shall be free from the lien of such taxes and penalties.
lien of such taxes and penalties.
The owner shall not, however, be

The owner shall not, however, b
deprived of the possession of the
deprived of the possession of th
said property and shall be entitled
said property and shall be entitle
to the rents and other income
to the rents and other incom
thereof until the expiration of the
thereof until the expiration of th
time for its redemption.
time for its redemption.
Forfeiture to Government
SEC. 215. In case there is no SEC. 215. In case there is n
for Want of Bidder
bidder for real property exposed bidder for real property expose
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
for sale as hereinabove provided for sale as hereinabove provide
or if the highest bid is for an or if the highest bid is for a
amount insufficient to pay the amount insufficient to pay th
taxes, penalties and costs, the taxes, penalties and costs, th
Internal Revenue Officer Internal Revenue Office
conducting the sale shall declare conducting the sale shall declar
the property forfeited to the the property forfeited to th
Government in satisfaction of the Government in satisfaction of th
claim in question and within two claim in question and within two (2
(2) days thereafter, shall make a days thereafter, shall make
return of his proceedings and the return of his proceedings and th
forfeiture which shall be spread forfeiture which shall be sprea
upon the records of his office. It upon the records of his offi
shall be the duty of the Register of shall be the duty of the Register o
Deeds concerned, upon Deeds concerned, upo
registration with his office of any registration with his office of an
such declaration of forfeiture, to such declaration of forfeiture, t
transfer the title of the property transfer the title of the propert
forfeited to the Government forfeited to the Governmen
without the necessity of an order without the necessity of an orde
from a competent court. from a competent court
Within one (1) year from the date

Within one (1) year from the dat
of such forfeiture, the taxpayer, or
of such forfeiture, the taxpayer, o
any one for him, may redeem said
any one for him, may redeem sai
property by paying to the
property by paying to th
Commissioner or the latter's
Commissioner or the latter
Revenue Collection Officer the full
Revenue Collection Officer the fu
amount of the taxes and
amount of the taxes and penalties
penalties, together with interest
together with interest
thereon and the costs of sale, but
the costs of sale, but if th
if the property be not thus
property be not thus redeemed
redeemed, the forfeiture shall
the forfeiture shall becom
become absolute.
absolute.
Resale of Real Estate SEC. 216. The Commissioner SEC. 216. The Commissioner sha
Taken for Taxes shall have charge of any real have charge of any real estat
estate obtained by the obtained by the Government of th
Government of the Philippines in Philippines in payment o
payment or satisfaction of taxes, satisfaction of taxes, penalties o
penalties or costs arising under costs arising under this Code or i
this Code or in compromise or compromise or adjustment of an
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
adjustment of any claim therefor; claim therefor; and sai
and said Commissioner may, Commissioner may, upon th
upon the giving of not less than giving of not less than twenty (20
twenty (20) days notice, sell and days notice, sell and dispose o
dispose of the same at public the same at public auction, or wit
auction, or with the prior approval the prior approval of the Secretar
of the Secretary of Finance, of Finance, dispose of the same a
dispose of the same at private private sale. In either case, th
sale. In either case, the proceeds proceeds of the sale shall b
of the sale shall be deposited with deposited with the Nationa
the National Treasury, and an Treasury, and an accounting of th
accounting of the same shall be same shall be rendered to th
rendered to the Chairman of the Chairman of the Commission o
Commission on Audit. Audit.
Further Distraint or Levy SEC. 217. The remedy by SEC. 217. The remedy by dist
distraint of personal property and of personal property and levy o
levy on realty may be repeated if realty may be repeated
necessary until the full amount necessary until the full amoun
due, including all expenses, is due, including all expenses,
collected. collected.
Injunction not Available to SEC. 218. No court shall have the SEC. 218. No court shall have th
Restrain Collection of Tax authority to grant an injunction to authority to grant an injunction t
restrain the collection of any restrain the collection of an
national internal revenue tax, fee national internal revenue tax, fe
or charge imposed by this Code. or charge imposed by this Code.
Nature and Extent of Tax SEC. 219. If any person, SEC. 219. If any person
Lien corporation, partnership, corporation, partnership
joint-account (cuentas en joint-account (cuentas e
participacion), association or participacion), association o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
insurance company liable to pay insurance company liable to pa
an internal revenue tax, neglects an internal revenue t
or refuses to pay the same after or refuses to pay the same afte
demand, the amount shall be a demand, the amount shall be
lien in favor of the Government of lien in favor of the Government o
the Philippines from the time the Philippines from the time whe
when the assessment was made the assessment was made by th
by the Commissioner until paid, Commissioner until paid, wit
with interests, penalties, and interests, penalties, and costs tha
costs that may accrue in addition may accrue in addition theret
thereto upon all property and upon all property and rights t
rights to property belonging to the property belonging to the taxpaye
taxpayer: Provided, That this lien Provided, That this lien shall not b
shall not be valid against any valid against any mortgagee
mortgagee, purchaser or purchaser or judgment credito
judgment creditor until notice of until notice of such lien shall b
such lien shall be filed by the filed by the Commissioner in th
Commissioner in the office of the office of the Register of Deeds o
Register of Deeds of the province the province or city where th
or city where the property of the property of the taxpayer is situate
taxpayer is situated or located. or located.
Form and Mode of SEC. 220. Civil and criminal SEC. 220. Civil and crimina
Proceeding in Actions actions and proceedings instituted actions and proceedings institute
Arising under this Code in behalf of the Government in behalf of the Government unde
under the authority of this Code or the authority of this Code or othe
other law enforced by the Bureau law enforced by the Bureau o
of Internal Revenue shall be Internal Revenue shall be brough
brought in the name of the in the name of the Government o
Government of the Philippines the Philippines and shall b
and shall be conducted by legal conducted by legal officers of th
officers of the Bureau of Internal Bureau of Internal Revenue but n
Revenue but no civil or criminal civil or criminal action for th
action for the recovery of taxes or recovery of taxes or th
the enforcement of any fine, enforcement of any fine, penalty o
penalty or forfeiture under this forfeiture under this Code shall b
Code shall be filed in court filed in court without the approva
without the approval of the of the Commissioner.
Commissioner.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Remedy for Enforcement SEC. 221. The remedy for SEC. 221. The remedy fo
of Statutory Penal enforcement of statutory penalties enforcement of statutory penaltie
Provisions of all sorts shall be by criminal or of all sorts shall be by criminal o
civil action, as the particular civil action, as the particula
situation may require, subject to situation may require, subject t
the approval of the the approval of the Commissioner
Commissioner.
Exceptions as to Period of
SEC. 222. SEC. 222.
Limitation of Assessment
and Collection of Taxes (a) In the case of a false or (a) In the case of a false o
fraudulent return with intent to fraudulent return with intent t
evade tax or of failure to file a evade tax or of failure to file
return, the tax may be assessed, return, the tax may be assessed
or a proceeding in court for the or a proceeding in court for th
collection of such tax may be filed collection of such tax may be file
without assessment, at any time without assessment, at any tim
within ten (10) years after the within ten (10) years after th
discovery of the falsity, fraud or discovery of the falsity, fraud o
omission: Provided, That in a omission: Provided, That in a frau
fraud assessment which has assessment which has becom
become final and executory, the final and executory, the fact o
fact of fraud shall be judicially fraud shall be judicially take
taken cognizance of in the civil or cognizance of in the civil o
criminal action for the collection criminal action for the collectio
thereof. thereof.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) If before the expiration of the (b) If before the expiration of th
time prescribed in Section 203 for time prescribed in Section 203 fo
the assessment of the tax, both the assessment of the tax, bot
the Commissioner and the the Commissioner and th
taxpayer have agreed in writing to taxpayer have agreed in wri
its assessment after such time, its assessment after such time, th
the tax may be assessed within tax may be assessed within th
the period agreed upon. The period agreed upon. The period s
period so agreed upon may be agreed upon may be extended b
extended by subsequent written subsequent written agreemen
agreement made before the made before the expiration of th
expiration of the period previously period previously agreed upon.
agreed upon.
(c) Any internal revenue tax whic

(c) Any internal revenue tax which has been assessed within th
has been assessed within the period of limitation as prescribed i
period of limitation as prescribed paragraph (a) hereof may b
in paragraph (a) hereof may be collected by distraint or levy or b
collected by distraint or levy or by a proceeding in court within five (5
a proceeding in court within five years following the assessment o
(5) years following the assessment the tax.
of the tax.
(d) Any internal revenue tax,
(d) Any internal revenue tax, which has been assessed within th
has been assessed within the period agreed upon as provided i
period agreed upon as provided in paragraph (b) hereinabove, ma
paragraph (b) hereinabove, may be collected by distraint or levy o
be collected by distraint or levy or by a proceeding in court within th
by a proceeding in court within the period agreed upon in writin
period agreed upon in writing before the expiration of the fiv
before the expiration of the five (5)-year period. The period s
(5)-year period. The period so agreed upon may be extended b
agreed upon may be extended by subsequent written agreement
subsequent written agreements made before the expiration of th
made before the expiration of the period previously agreed upon.
period previously agreed upon.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(e) Provided, however, Tha

(e) Provided, however, That
nothing in the immediate
nothing in the immediately
preceding Section and paragrap
preceding Section and paragraph
(a) hereof shall be construed
(a) hereof shall be construed to
authorize the examination an
authorize the examination and
investigation or inquiry into any ta
investigation or inquiry into any
return filed in accordance with th
tax return filed in accordance with
provisions of any tax amnesty la
the provisions of any tax amnesty
or decree.
law or decree.
Suspension of Running of SEC. 223. The running of the SEC. 223. The running of th
Statute of Limitations Statute of Limitations provided in Statute of Limitations provided i
Sections 203 and 222 on the Sections 203 and 222 on th
making of assessment and the making of assessment and
beginning of distraint or levy or a beginning of distraint or levy or
proceeding in court for collection, proceeding in court for collection
in respect of any deficiency, shall in respect of any deficiency, sha
be suspended for the period be suspended for the period durin
during which the Commissioner is which the Commissioner
prohibited from making the prohibited from making th
assessment or beginning distraint assessment or beginning distrain
or levy or a proceeding in court or levy or a proceedin
and for sixty (60) days thereafter; and for sixty (60) days thereafte
when the taxpayer requests for a when the taxpayer requests for
reinvestigation which is granted reinvestigation which is granted b
by the Commissioner; when the the Commissioner; when th
taxpayer cannot be located in the taxpayer cannot be located in th
address given by him in the return address given by him in the retur
filed upon which a tax is being filed upon which a tax is bein
assessed or collected: Provided, assessed or collected: Provided
That, if the taxpayer informs the That, if the taxpayer informs th
Commissioner of any change in Commissioner of any change i
address, the running of the address, the running of the Statut
Statute of Limitations will not be of Limitations will not b
suspended; when the warrant of suspended; when the warrant o
distraint or levy is duly served distraint or levy is duly serve
upon the taxpayer, his authorized upon the taxpayer, his authorize
representative, or a member of representative, or a member of h
his household with sufficient household with sufficien
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
discretion, and no property could discretion, and no property coul
be located; and when the be located; and when the taxpaye
taxpayer is out of the Philippines. is out of the Philippines.
Remedy for Enforcement SEC. 224. The forfeiture of SEC. 224. The forfeiture o
of Forfeitures chattels and removable fixtures of chattels and removable fixtures o
any sort shall be enforced by the any sort shall be enforced by th
seizure and sale, or destruction, seizure and sale, or destruction, o
of the specific forfeited property. the specific forfeited property. Th
The forfeiture of real property forfeiture of real property shall b
shall be enforced by a judgment enforced by a judgment o
of condemnation and sale in a condemnation and sale in a lega
legal action or proceeding, civil or action or proceeding, civil o
criminal, as the case may require. criminal, as the case may require.
When Property to be Sold

SEC. 225. Sales of forfeited SEC. 225. Sales of forfeite
or Destroyed
chattels and removable fixtures chattels and removable fixture
shall be effected, so far as shall be effected, so far a
practicable, in the same manner practicable, in the same manne
and under the same conditions as and under the same conditions a
the public notice and the time and the public notice and the time an
manner of sale as are prescribed manner of sale as are prescribe
for sales of personal property for sales of personal propert
distrained for the non-payment of distrained for the non-payment o
taxes. taxes.
Distilled spirits, liquors, cigars, Distilled spirits, liquors, cigars

cigarettes, other manufactured cigarettes, other manufacture
products of tobacco, and all products of tobacco, and a
apparatus used in or about the apparatus used in or about th
illicit production of such articles illicit production of such article
may, upon forfeiture, destroyed by may, upon forfeiture, destroyed b
order of the Commissioner, when order of the Commissioner, whe
the sale of the same for the sale of the same fo
consumption or use would be consumption or use woul
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
injurious to public health or injurious to public health o
prejudicial to the enforcement of prejudicial to the enforcement o
the law. the law.
All other articles subject to excise All other articles subject to excis
tax, which have been tax, which have bee
manufactured or removed in manufactured or removed i
violation of this Code, as well as violation of this Code, as well a
dies for the printing or making of dies for the printing or making o
internal revenue stamps and internal revenue stamps
labels which are in imitation of or which are in imitation of or purpo
purport to be lawful stamps, or to be lawful stamps, or labels may
labels may, upon forfeiture, be upon forfeiture, be sold o
sold or destroyed in the discretion destroyed in the discretion of th
Forfeited property shall not b
Forfeited property shall not be
destroyed until at least twenty (20
destroyed until at least twenty
days after seizure.
(20) days after seizure.
Disposition of Funds SEC. 226. All judgments and SEC. 226. All judgments an
Recovered in Legal monies recovered and received monies recovered and received fo
Proceedings or Obtained for taxes, costs, forfeitures, fines taxes, costs, forfeitures, fines an
from Forfeitures and penalties shall be paid to the penalties shall be paid to th
Commissioner or his authorized Commissioner or his authorize
deputies as the taxes themselves deputies as the taxes themselve
are required to be paid, and are required to be paid, and e
except as specially provided, shall as specially provided, shall b
be accounted for and dealt within accounted for and dealt within th
the same way. same way.
Satisfaction of Judgment
SEC. 227. When an action is SEC. 227. When an action
Recovered Against any
brought against any Internal brought against any Interna
Internal Revenue Officer
Revenue Officer to recover Revenue Officer to recove
damages by reason of any act damages by reason of any ac
done in the performance of official done in the performance of officia
duty, and the Commissioner is duty, and the Commissioner
notified of such action in time to notified of such action in time t
make defense against the same, make defense against the same
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
through the Solicitor General, any through the Solicitor General, an
judgment, damages or costs judgment, damages or cost
recovered in such action shall be recovered in such action shall b
satisfied by the Commissioner, satisfied by the Commissione
upon approval of the Secretary of upon approval of the Secretary o
Finance, or if the same be paid by Finance, or if the same be paid b
the person sued shall be repaid or the person sued shall be repaid o
reimbursed to him. reimbursed to him.
No such judgment, damages, or

No such judgment, damages, o
costs shall be paid or reimbursed
costs shall be paid or reimburse
in behalf of a person who has
in behalf of a person w
acted negligently or in bad faith,
acted negligently or in bad faith, o
or with willful oppression.
with willful oppression.
CHAPTER III — PROTESTING CHAPTER III — PROTESTING

AN ASSESSMENT, REFUND, AN ASSESSMENT, REFUND,
ETC. ETC.
Protesting of Assessment
SEC. 228. When the SEC. 228. When th
authorized representative finds authorized representative find
that proper taxes should be that proper taxes should b
assessed, he shall first notify the assessed, he shall first notify th
taxpayer of his findings: Provided, taxpayer of his findings: Provided
however, That a preassessment however, That a preassessmen
notice shall not be required in the notice shall not be required in th
following cases: following cases:
(a) When the finding for any (a) When the finding for an
deficiency tax is the result of deficiency tax is the result o
mathematical error in the mathematical error in th
computation of the tax as computation of the tax a
appearing on the face of the appearing on the face of th
return; or return; or
(b) When a discrepancy has been (b) When a discrepancy has bee
determined between the tax determined between
withheld and the amount actually withheld and the amount actual
remitted by the withholding agent; remitted by the withholding agen
or or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(c) When a taxpayer who opted to (c) When a taxpayer who opted t
claim a refund or tax credit of claim a refund or tax credit o
excess creditable withholding tax excess creditable withholding ta
for a taxable period was for a taxable period wa
determined to have carried over determined to have carried ove
and automatically applied the and automatically app
same amount claimed against the same amount claimed against th
estimated tax liabilities for the estimated tax liabilities for th
taxable quarter or quarters of the taxable quarter or quarters of th
succeeding taxable year; or succeeding taxable year; or
(d) When the excise tax due on (d) When the excise tax due o
excisable articles has not been excisable articles has not bee
paid; or paid; or
(e) When an article locally (e) When an article local

purchased or imported by an purchased or impor
exempt person, such as, but not exempt person, such as, but no
limited to, vehicles, capital limited to, vehicles, capita
equipment, machineries and spare equipment, machineries and spar
parts, has been sold, traded or parts, has been sold, traded o
transferred to non-exempt transferred to non-exemp
persons. persons.
The taxpayers shall be informed in The taxpayers shall be informed i

writing of the law and the facts on writing of the law and the facts o
which the assessment is made; which the assessment is made
otherwise, the assessment shall otherwise, the assessment shall b
be void. void.
Within a period to be prescribed Within a period to be prescribed b

by implementing rules and implementing rules an
regulations, the taxpayer shall be regulations, the taxpayer shall b
required to respond to said notice. required to respond to said notice
If the taxpayer fails to respond, the If the taxpayer fails to respond, th
authorized representative shall authorized representative sha
issue an assessment based on his issue an assessment based on h
findings. findings.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Such assessment may be Such assessment may b

protested administratively by filing protested administratively by filin
a request for reconsideration or a request for reconsideration o
reinvestigation within thirty (30) reinvestigation within thirty (30
days from receipt of the days from receipt of th
assessment in such form and assessment in such form an
manner as may be prescribed by manner as may be prescribed b
implementing rules and implementing rules an
regulations. Within sixty (60) days regulations. Within sixty (60) day
from filing of the protest, all from filing of the protest, a
relevant supporting documents relevant supporting document
shall have been submitted; shall have been submitted
otherwise, the assessment shall otherwise, the assessment sha
become final. become final.
If the protest is denied in whole o

If the protest is denied in whole or
in part, or is not acted upon withi
in part, or is not acted upon within
one hundred eighty (180) day
one hundred eighty (180) days
from submission of documents, th
from submission of documents,
taxpayer adversely affected by th
the taxpayer adversely affected
decision or inaction may appeal t
by the decision or inaction may
the Court of Tax Appeals withi
appeal to the Court of Tax
thirty (30) days from receipt of th
Appeals within thirty (30) days
said decision, or from the lapse o
from receipt of the said decision,
the one hundred eighty (180)-da
or from the lapse of the one
period; otherwise, the decisio
hundred eighty (180)-day period;
shall become final, executory an
otherwise, the decision shall
demandable.
become final, executory and
demandable.
Recovery of Tax
SEC. 229. No suit or proceeding SEC. 229. No suit or proceedin
Erroneously or Illegally
shall be maintained in any court shall be maintained in any court fo
Collected
for the recovery of any national the recovery of any nationa
internal revenue tax hereafter internal revenue tax hereafte
alleged to have been erroneously alleged to have been erroneous
or illegally assessed or collected, or illegally assessed or collected
or of any penalty claimed to have or of any penalty claimed to hav
been collected without authority, been collected without authority, o
or of any sum alleged to have of any sum alleged to have bee
been excessively or in any manner excessively or in any manne
wrongfully collected, until a claim wrongfully collected, until a claim
for refund or credit has been duly for refund or credit has been du
filed with the Commissioner; but filed with the Commissioner; bu
such suit or proceeding may be such suit or proceeding may b
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
maintained, whether or not such maintained, whether or not suc
tax, penalty, or sum has been paid tax, penalty, or sum has been pai
under protest or duress. under protest or duress.
In any case, no such suit or

In any case, no such suit o
proceeding shall be filed after the
proceeding shall be filed after th
expiration of two (2) years from
expiration of two (2) years from th
the date of payment of the tax or
date of payment of the tax o
penalty regardless of any
penalty regardless of an
supervening cause that may arise
supervening cause that may aris
after payment: Provided,
after payment: Provided, howeve
however, That the Commissioner
That the Commissioner may, eve
may, even without a written claim
without a written claim therefo
therefor, refund or credit any tax,
refund or credit any tax, where o
where on the face of the return
the face of the return upon whic
upon which payment was made,
payment was made, such paymen
such payment appears clearly to
appears clearly to have bee
have been erroneously paid.
erroneously paid.
Forfeiture of Cash Refund

SEC. 230 SEC. 230
and of Tax Credit
(A) Forfeiture of Refund. — A (A) Forfeiture of Refund
refund check or warrant issued in refund check or warrant issued i
accordance with the pertinent accordance with the pertinen
provisions of this Code, which provisions of this Code, which sha
shall remain unclaimed or remain unclaimed or uncashe
uncashed within five (5) years within five (5) years from the dat
from the date the said warrant or the said warrant or check wa
check was mailed or delivered, mailed or delivered, shall b
shall be forfeited in favor of the forfeited in favor of th
Government and the amount Government and the amoun
thereof shall revert to the general thereof shall revert to the genera
fund. fund.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) Forfeiture of Tax Credit. — A (B) Forfeiture of Tax Credit.

tax credit certificate issued in tax credit certificate issued i
accordance with the pertinent accordance with the pertinen
provisions of this Code, which provisions of this Code, which sha
shall remain unutilized after five remain unutilized after five (5
(5) years from the date of issue, years from the date of issue, sha
shall, unless revalidated, be unless revalidated, be considere
considered invalid, and shall not invalid, and shall not be allowed a
be allowed as payment for internal payment for internal revenue ta
revenue tax liabilities of the liabilities of the taxpayer, and th
taxpayer, and the amount covered amount covered by the certificat
by the certificate shall revert to the shall revert to the general fund.
general fund.
(C) Transitory Provision
(C) Transitory Provision. — For
purposes of the precedin
purposes of the preceding
Subsection, a tax credit certificat
Subsection, a tax credit certificate
issued by the Commissioner or h
issued by the Commissioner or
duly authorized representativ
his duly authorized representative
prior to January 1, 1998, whic
prior to January 1, 1998, which
remains unutilized or has
remains unutilized or has a
creditable balance as of said date
creditable balance as of said
shall be presented for revalidatio
date, shall be presented for
with the Commissioner or his du
revalidation with the
authorized representative or o
Commissioner or his duly
before June 30, 1998.
authorized representative or on
before June 30, 1998.
Action to Contest Forfeiture SEC. 231. In case of the seizure SEC. 231. In case of the seizure o
of Chattel of personal property under claim personal property under claim o
of forfeiture, the owner desiring to forfeiture, the owner desiring t
contest the validity of the contest the validity of the forfeitur
forfeiture may, at any time before may, at any time before sale o
sale or destruction of the destruction of the property, brin
property, bring an action against an action against the perso
the person seizing the property or seizing the property or havin
having possession thereof to possession thereof to recover th
recover the same, and upon same, and upon giving prope
giving proper bond, may enjoin bond, may enjoin the sale; or afte
the sale; or after the sale and the sale and within six (6) months
within six (6) months, he may he may bring an action to recove
bring an action to recover the net the net proceeds realized at th
proceeds realized at the sale. sale.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
TITLE IX — COMPLIANCE TITLE IX — COMPLIANCE

REQUIREMENTS REQUIREMENTS
CHAPTER I — KEEPING OF CHAPTER I — KEEPING OF

BOOKS OF ACCOUNTS AND BOOKS OF ACCOUNTS AND
RECORDS RECORDS
Keeping of Books of
SEC. 232. SEC. 232.
Accounts
(A) Corporations, Companies, (A) Corporations, Companies
Partnerships or Persons Required Partnerships or Persons Require
to Keep Books of Accounts. — All to Keep Books of Accounts
corporations, companies, corporations, companies
partnerships or persons required partnerships or persons require
by law to pay internal revenue by law to pay internal revenu
taxes shall keep and use relevant taxes shall keep a journal and
and appropriate set of ledger or their equival
bookkeeping records duly Provided, however, That thos
authorized by the Secretary of whose quarterly sales, earnings
Finance wherein all transactions receipts, or output do not excee
and results of operations are Fifty thousand pesos (P50,000
shown and from which all taxes shall keep and use simplified set o
due the Government may readily bookkeeping records du
and accurately be ascertained authorized by the Secretary o
and determined any time of the Finance wherein all transacti
year: Provided, That corporations, and results of operations ar
companies, partnerships or shown and from which all taxe
persons whose gross annual due the Government may readi
sales, earnings, receipts or output and accurately be ascertained an
exceed Three million pesos determined any time of the yea
(P3,000,000), shall have their Provided, further, Tha
books of accounts audited and corporations, companies
examined yearly by independent partnerships or persons whos
Certified Public Accountants and gross quarterly sales, earnings
their income tax returns receipts or output exceed On
accompanied with a duly hundred fifty thousand peso
accomplished Account (P150,000), shall have their book
Information Form (AIF) which of accounts audited and examine
shall contain, among others, yearly by independent Certifie
information lifted from certified Public Accountants and the
balance sheets, profit and loss income tax returns accompanie
statements, schedules listing with a duly accomplished Accoun
income-producing properties and Information Form (AIF) which sha
the corresponding income contain, among others, informatio
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
therefrom and other relevant lifted from certified balance sheets
statements. (as amended by Sec. profit and loss statements
71, R.A. No. 10963, December schedules listing income-producin
19, 2017) properties and the correspondin
income therefrom and othe
relevant statements.
(B) Independent Certified Publ
(B) Independent Certified Public Accountant Defined. — The term
Accountant Defined. — The term 'Independent Certified Publ
'Independent Certified Public Accountant,' as used in th
Accountant,' as used in the preceding paragraph, means a
preceding paragraph, means an accountant who possesses th
accountant who possesses the independence as defined in th
independence as defined in the rules and regulations of the Boar
rules and regulations of the Board of Accountancy promulgate
of Accountancy promulgated pursuant to Presidential Decre
pursuant to Presidential Decree No. 692, otherwise known as th
No. 692, otherwise known as the Revised Accountancy Law.
Revised Accountancy Law.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Subsidiary Books SEC. 233. All corporations, SEC. 233. All corporations
companies, partnerships or companies, partnerships o
persons keeping the books of persons keeping the books o
accounts mentioned in the accounts mentioned in th
preceding Section may, at their preceding Section may, at the
option, keep subsidiary books as option, keep subsidiary books a
the needs of their business may the needs of their business ma
require: Provided, That where require: Provided, That wher
such subsidiaries are kept, they such subsidiaries are kept, the
shall form part of the accounting shall form part of the accountin
system of the taxpayer and shall system of the taxpayer and sha
be subject to the same rules and be subject to the same rules
regulations as to their keeping, regulations as to their keeping
translation, production and translation, production an
inspection as are applicable to the inspection as are applicable to th
journal and the ledger. journal and the ledger.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Language in which Books SEC. 234. All such corporations, SEC. 234. All such corporations
are to be Kept; Translation companies, partnerships or companies, partnerships o
persons shall keep the books or persons shall keep the books o
records mentioned in Section 232 records mentioned in Section 23
hereof in a native language, hereof in a native la
English or Spanish: Provided, English or Spanish: Provided
however, That if in addition to however, That if in addition to sai
said books or records the books or records the taxpaye
taxpayer keeps other books or keeps other books or records in
records in a language other than language other than a nativ
a native language, English or language, English or Spanish, h
Spanish, he shall make a true and shall make a true and complet
complete translation of all the translation of all the entries in suc
entries in such other books or other books or records into
records into a native language, native language, English o
English or Spanish, and the said Spanish, and the said translatio
translation must be made by the must be made by the bookkeepe
bookkeeper, or such taxpayer, or or such taxpayer, or in h
in his absence, by his manager absence, by his manager an
and must be certified under oath must be certified under oath as t
as to its correctness by the said its correctness by the sai
bookkeeper or manager, and bookkeeper or manager, and sha
shall form an integral part of the form an integral part of th
aforesaid books of accounts. The aforesaid books of accounts. Th
keeping of such books or records keeping of such books or record
in any language other than a in any language other than
native language, English or native language, English o
Spanish, is hereby prohibited. Spanish, is hereby prohibited.
Preservation of Books of
SEC. 235. All the books of SEC. 235. All the books o
Accounts and Other
accounts, including the subsidiary accounts, including the subsidiar
Accounting Records
books and other accounting books and other accountin
records of corporations, records of corporations
partnerships, or persons, shall be partnerships, or persons, shall b
preserved by them for a period preserved by them for a perio
beginning from the last entry in beginning from the last entry i
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
each book until the last day each book until the last da
prescribed by Section 203 within prescribed by Section 203 withi
which the Commissioner is which the Commissioner
authorized to make an authorized to make a
assessment. The said books and assessment. The said books an
records shall be subject to records shall be subject t
examination and inspection by examination and inspection b
internal revenue officers: internal revenue officers: Provided
Provided, That for income tax That for income tax purposes
purposes, such examination and such examination and inspectio
inspection shall be made only shall be made only once in
once in a taxable year, except in taxable year, except in th
the following cases: following cases:
(a) Fraud, irregularity or mistakes, (a) Fraud, irregularity or mistakes

as determined by the as determined by th
Commissioner; Commissioner;
(b) The taxpayer requests (b) The taxpayer request

reinvestigation; reinvestigation;
(c) Verification of compliance with (c) Verification of compliance wit

withholding tax laws and withholding tax laws an
regulations; regulations;
(d) Verification of capital gains tax (d) Verification of capital gains ta

liabilities; and liabilities; and
(e) In the exercise of the (e) In the exercise of th

Commissioner's power under Commissioner's power unde
Section 5(B) to obtain information Section 5(B) to obtain informatio
from other persons in which case, from other persons in which case
another or separate examination another or separate examinatio
and inspection may be made. and inspection may be made
Examination and inspection of Examination and inspection o
books of accounts and other books of accounts and othe
accounting records shall be done accounting records shall be don
in the taxpayer's office or place of in the taxpayer's office or place o
business or in the office of the business or in the office of th
Bureau of Internal Revenue. All Bureau of Internal Revenue. A
corporations, partnerships or corporations, partnerships o
persons that retire from business persons that retire from busines
shall, within ten (10) days from the shall, within ten (10) days from th
date of retirement or within such date of retirement or within suc
period of time as may be allowed period of time as may be allowe
by the Commissioner in special by the Commissioner in specia
cases, submit their books of cases, submit their books o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
accounts, including the subsidiary accounts, including the subsidiar
books and other accounting books and other accountin
records to the Commissioner or records to the Commissioner o
any of his deputies for any of his deputies fo
examination, after which they shall examination, after which they sha
be returned. Corporations and be returned. Corporations an
partnerships contemplating partnerships contemplatin
dissolution must notify the dissolution must notify th
Commissioner and shall not be Commissioner and shall n
dissolved until cleared of any tax dissolved until cleared of any ta
liability. liability.
Any provision of existing general o
Any provision of existing general
special law to the contrar
or special law to the contrary
notwithstanding, the books o
notwithstanding, the books of
accounts and other pertinen
accounts and other pertinent
records of tax-exemp
records of tax-exempt
organizations or grantees of ta
organizations or grantees of tax
incentives shall be subje
incentives shall be subject to
examination by the Bureau o
examination by the Bureau of
Internal Revenue for purposes o
Internal Revenue for purposes of
ascertaining compliance with th
ascertaining compliance with the
conditions under which they hav
conditions under which they have
been granted tax exemptions o
been granted tax exemptions or
tax incentives, and their ta
tax incentives, and their tax
liability, if any.
liability, if any.
Indication of Taxpayer
Identification Number (TIN)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
CHAPTER II — CHAPTER II — ADMINISTRATIV

ADMINISTRATIVE PROVISIONS PROVISIONS
Registration Requirements
SEC. 236. SEC. 236.
(A) Requirements. — Every (A) Requirements. — Every perso

person subject to any internal subject to any internal revenue ta
revenue tax shall register once shall register once with th
with the appropriate Revenue appropriate Revenue Distric
District Officer: Officer:
(1) Within ten (10) days from date (1) Within ten (10) days from dat
of employment, or of employment, or
(2) On or before the (2) On or before th

commencement of business, or commencement of business, or
(3) Before payment of any tax (3) Before payment of any tax due
due, or or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(4) Upon filing of a return, (4) Upon filing of a return
statement or declaration as statement or declaration a
required in this Code. required in this Code.
The registration shall contain the The registration shall contain th

taxpayer's name, style, place of taxpayer's name, style, place o
residence, business and such residence, business, and suc
other information as may be other information as may b
required by the Commissioner in required by the Commissioner i
the form prescribed therefor: the form prescribed therefor.
Provided, That the Commissioner
shall simplify the business
registration and tax compliance
requirements of self-employed
individuals and/or professionals.
No. 10963, December 19, 2017)
A person maintaining a head A person maintaining a hea

office, branch or facility shall office, branch or facility sha
register with the Revenue District register with the Revenue Distric
Officer having jurisdiction over the Officer having jurisdiction over th
head office, branch or facility. For head office, branch or facility. Fo
purposes of this Section, the term purposes of this Section, the term
'facility' may include but not be 'facility' may include but not b
limited to sales outlets, places of limited to sales outlets, places o
production, warehouses or production, warehouses or storag
storage places. places.
(B) Annual Registration Fee. — (B) Annual Registration Fee

An annual registration fee in the annual registration fee in th
amount of Five hundred pesos amount of Five hundre
(P500) for every separate or (P500) for every separate o
distinct establishment or place of distinct establishment or place o
business, including facility types business, including facility type
where sales transactions occur, where sales transactions occu
shall be paid upon registration shall be paid upon registration an
and every year thereafter on or every year thereafter on or befor
before the last day of January: the last day of January: Provided
Provided, however, That however, That cooperatives
cooperatives, individuals earning individuals earning pure
purely compensation income, compensation income, whethe
whether locally or abroad, and locally or abroad, and oversea
overseas workers are not liable to workers are not liable to th
the registration fee herein registration fee herein imposed.
imposed.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The registration fee shall be paid The registration fee shall be pai
to an authorized agent bank to an authorized agent ban
located within the revenue district, located within the reven
or to the Revenue Collection or to the Revenue Collectio
Officer, or duly authorized Officer, or duly authorize
Treasurer of the city or Treasurer of the city o
municipality where each place of municipality where each place o
business or branch is registered. business or branch is registered.
(C) Registration of Each Type of (C) Registration of Each Type o

Internal Revenue Tax. — Every Internal Revenue Tax
person who is required to register person who is required to regi
with the Bureau of Internal with the Bureau of Interna
Revenue under Subsection (A) Revenue under Subsection (A
hereof, shall register each type of hereof, shall register each type o
internal revenue tax for which he internal revenue tax for which he
is obligated, shall file a return and obligated, shall file a return an
shall pay such taxes, and shall shall pay such taxes, and sha
update such registration of any update such registration of an
changes in accordance with changes in accordance
Subsection (E) hereof. Subsection (E) hereof.
(D) Transfer of Registration. — In (D) Transfer of Registration

case a registered person decides case a registered person decide
to transfer his place of business to transfer his place of business o
or his head office or branches, it his head office or branches, it sha
shall be his duty to update his be his duty to update h
registration status by filing an registration status by filing a
application for registration application for registrati
information update in the form information update in the form
prescribed therefor. prescribed therefor.
(E) Other Updates. — Any person (E) Other Updates. — Any perso
registered in accordance with this registered in accordance with th
Section shall, whenever Section shall, wheneve
applicable, update his registration applicable, update his registratio
information with the Revenue information with the Revenu
District Office where he is District Office where he
registered, specifying therein any registered, specifying therein an
change in tax type and other change in tax type and othe
taxpayer details. taxpayer details.
(F) Cancellation of Registration. (F) Cancellation of Registration

—
(1) General Rule. — Th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) General Rule. — The registration of any person wh

registration of any person who ceases to be liable to a tax typ
ceases to be liable to a tax type shall be cancelled upon filing wit
shall be cancelled upon filing with the Revenue District Office wh
the Revenue District Office where he is registered, an application fo
he is registered, an application for registration information update in
registration information update in form prescribed therefor;
a form prescribed therefor;
(2) Cancellation of Value-added (2) Cancellation of Value-adde

Tax Registration. — A Tax Registration. —
VAT-registered person may VAT-registered person may cance
cancel his registration for VAT if: his registration for VAT if:
(a) He makes written application (a) He makes written applicatio

and can demonstrate to the and can demonstrate to th
Commissioner's satisfaction that Commissioner's satisfaction tha
his gross sales or receipts for the his gross sales or receipts for th
following twelve (12) months, following twelve (12) months, othe
other than those that are exempt than those that are exempt unde
under Section 109(A) to (U), will Section 109(A) to (U), will no
not exceed One million five exceed One million five hundre
hundred thousand pesos thousand pesos (P1,500,000),
(P1,500,000), or
(b) He has ceased to carry on h
(b) He has ceased to carry on his
trade or business, and does no
trade or business, and does not
expect to recommence any trad
expect to recommence any trade
or business within the next twelv
or business within the next twelve
(12) months.
(12) months.
The cancellation of registration w
The cancellation of registration
be effective from the first day o
will be effective from the first day
the following month.
of the following month.
(G) Persons Required to Registe
(G) Persons Required to
for Value-added Tax. —
Register for Value-added Tax. —
(1) Any person who, in th
(1) Any person who, in the
course of trade or business, sells
course of trade or business, sells,
barters or exchanges goods o
barters or exchanges goods or
properties, or engages in the sal
properties, or engages in the sale
or exchange of services, shall b
or exchange of services, shall be
liable to register for value-adde
liable to register for value-added
tax if:
tax if:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) His gross sales or receipts fo
(a) His gross sales or receipts for
the past twelve (12) months, othe
the past twelve (12) months, other
than those that are exempt unde
than those that are exempt under
Section 109(A) to (V), hav
Section 109(A) to (BB), have
exceeded One million five hundre
exceeded Three million pesos
thousand pesos (P1,500,000); or
(P3,000,000); or (as amended by
Sec. 72, R.A. No. 10963,
December 19, 2017)
(b) There are reasonable ground
(b) There are reasonable grounds
to believe that his gross sales
to believe that his gross sales or
receipts for the next twelve (12
receipts for the next twelve (12)
months, other than those that ar
months, other than those that are
exempt under Section 109(A) t
exempt under Section 109(A) to
(V), will exceed One million fiv
(BB), will exceed Three million
hundred thousand peso
pesos (P3,000,000). (as amended
(P1,500,000). (as amended b
by Sec. 72, R.A. No. 10963,
Sec. 4, R.A. No. 10378, March 7
December 19, 2017)
2013)
(2) Every person who become

(2) Every person who becomes
liable to be registered unde
liable to be registered under
paragraph (1) of this Subsectio
paragraph (1) of this Subsection
shall register with the Revenu
shall register with the Revenue
District Office which ha
District Office which has
jurisdiction over the head office o
jurisdiction over the head office or
branch of that person, and sha
branch of that person, and shall
pay the annual registration fe
pay the annual registration fee
prescribed in Subsection (B
prescribed in Subsection (B)
hereof. If he fails to register, h
hereof. If he fails to register, he
shall be liable to pay the tax unde
shall be liable to pay the tax under
Title IV as if he were
Title IV as if he were a
VAT-registered person, but withou
VAT-registered person, but
the benefit of input tax credits fo
without the benefit of input tax
the period in which he was no
credits for the period in which he
properly registered.
was not properly registered.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(H) Optional Registration fo
(H) Optional Registration for
Value-added Tax of Exemp
Value-Added Tax of Exempt
Person. — (1) Any person who
Person. — (1) Any person who is
not required to register fo
not required to register for
value-added tax under Subsectio
value-added tax under Subsection
(G) hereof may elect to register fo
(G) hereof may elect to register
value-added tax by registering wit
for value-added tax by registering
the Revenue District Office tha
with the Revenue District Office
has jurisdiction over the hea
that has jurisdiction over the head
office of that person, and payin
office of that person, and paying
the annual registration fee i
the annual registration fee in
Subsection (B) hereof.
Subsection (B) hereof.
(2) Any person who elects to

(2) Any person who elects t
register under this Subsection
register under this Subsectio
shall not be entitled to cancel his
shall not be entitled to cancel h
registration under Subsection
registration under Subsectio
(F)(2) for the next three (3) years.
(F)(2) for the next three (3) years.
Provided, That any person taxed
under Section 24(A)(2)(b) and
24(A)(2)(c)(2)(a) of the NIRC who
elected to pay the eight percent
(8%) tax on gross sales or
receipts shall not be allowed to
avail of this option. (as amended
by Sec. 72, R.A. No. 10963,
December 19, 2017)
For purposes of Title IV of this For purposes of Title IV of th

Code, any person who has Code, any person who ha
registered value-added tax as a registered value-added tax as
tax type in accordance with the tax type in accordance with th
provisions of Subsection (C) provisions of Subsection (C
hereof shall be referred to as a hereof shall be referred to as
'VAT-registered person' who shall 'VAT-registered person' who sha
be assigned only one Taxpayer be assigned only one Taxpaye
Identification Number (TIN). Identification Number (TIN).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(I) Supplying of Taxpayer (I) Supplying of Taxpaye
Identification Number (TIN). — Identification Number (TIN)
Any person required under the Any person required under th
authority of this Code to make, authority of this Code to make
render or file a return, statement render or file a return, statement o
or other document shall be other document shall be supplie
supplied with or assigned a with or assigned a Taxpaye
Taxpayer Identification Number Identification Number
(TIN) which he shall indicate in he shall indicate in such return
such return, statement or statement or document filed wit
document filed with the Bureau of the Bureau of Internal Revenue fo
Internal Revenue for his proper his proper identification for ta
identification for tax purposes, purposes, and which he sha
and which he shall indicate in indicate in certain documents
certain documents, such as, but such as, but not limited to, th
not limited to, the following: following:
(1) Sugar quedans, refined sugar (1) Sugar quedans, refined suga
release order or similar release order or simila
instruments; instruments;
(2) Domestic bills of lading; (2) Domestic bills of lading;
(3) Documents to be registered (3) Documents to be registere

with the Register of Deeds or with the Register of Deeds o
Assessor's Office; Assessor's Office;
(4) Registration certificate of (4) Registration certificate o

transportation equipment by land, transportation equipment by land
sea or air; sea or air;
(5) Documents to be registered (5) Documents to be registere

with the Securities and Exchange with the Securities and Exchang
Commission; Commission;
(6) Building construction permits; (6) Building construction permits;
(7) Application for loan with (7) Application for loan with banks
banks, financial institutions, or financial institutions, or othe
other financial intermediaries; financial intermediaries;
(8) Application for mayor's permit; (8) Application for mayor's permit;
(9) Application for business (9) Application for business licens

license with the Department of with the Department of Trade an
Trade and Industry; and Industry; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(10) Such other documents which (10) Such other documents whic
may hereafter be required under may hereafter be required unde
of the Commissioner. the Commissioner.
In cases where a registered In cases where a registere

taxpayer dies, the administrator or taxpayer dies, the administrator o
executor shall register the estate executor shall register the estat
of the decedent in accordance of the decedent in accordance wit
with Subsection (A) hereof and a Subsection (A) hereof and a ne
new Taxpayer Identification Taxpayer Identification Numbe
Number (TIN) shall be supplied in (TIN) shall be supplied i
In the case of a nonresident In the case of a nonresiden

decedent, the executor or decedent, the executor o
administrator of the estate shall administrator of the estate sha
register the estate with the register the estate with th
Revenue District Office where he Revenue District Office where h
is registered: Provided, however, is registered: Provided, howeve
That in case such executor or That in case such executor o
administrator is not registered, administrator is not registered
registration of the estate shall be registration of the estate shall b
made with and the Taxpayer made with and the Taxpaye
Identification Number (TIN) Identification Number (TIN
supplied by the Revenue District supplied by the Revenue Distric
Office having jurisdiction over his Office having jurisdiction over h
legal residence. legal residence.
Only one Taxpayer Identificatio
Only one Taxpayer Identification
Number (TIN) shall be assigned t
Number (TIN) shall be assigned
a taxpayer. Any person who sha
to a taxpayer. Any person who
secure more than one Taxpaye
shall secure more than one
Identification Number shall b
Taxpayer Identification Number
criminally liable under th
shall be criminally liable under the
provisions of Section 275 o
provisions of Section 275 on
'Violation of Other Provisions o
'Violation of Other Provisions of
this Code or Regulations i
this Code or Regulations in
General.' (as amended by Sec. 1
General'.
of R.A. No. 9337, May 24
Issuance of Receipts or
SEC. 237. SEC. 237.
Sales or Commercial
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Invoices (A) Issuance. — All persons All persons subject to an interna
subject to an internal revenue tax revenue tax shall, for each sal
shall, at the point of each sale and transfer of merchandise or fo
and transfer of merchandise or for services rendered valued a
services rendered valued at One Twenty-five pesos (P25.00) o
hundred pesos (P100) or more, more, issue duly registere
issue duly registered receipts or receipts or sale or commercia
sale or commercial invoices, invoices, prepared at least i
showing the date of transaction, duplicate, showing the date o
quantity, unit cost and description transaction, quantity, unit cost an
of merchandise or nature of description of merchandise o
service: Provided, however, That nature of service: Provided
where the receipt is issued to however, That where the receipt
cover payment made as rentals, issued to cover payment made a
commissions, compensation or rentals, commissions
fees, receipts or invoices shall be compensation or fees, receipts o
issued which shall show the invoices shall be issued whic
name, business style, if any, and shall show the name, busines
address of the purchaser, style, if any, and address of th
customer or client: Provided, purchaser, customer or client.
further, That where the purchaser
is a VAT-registered person, in
addition to the information herein
required, the invoice or receipt
shall further show the Taxpayer
Identification Number (TIN) of the
purchaser.
Within five (5) years from the

effectivity of this Act and upon the
establishment of a system
capable of storing and processing
the required data, the Bureau
shall require taxpayers engaged
in the export of goods and
services, taxpayers engaged in
e-commerce, and taxpayers
under the jurisdiction of the Large
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Taxpayers Service to issue
electronic receipts or sales or
commercial invoices in lieu of
manual receipts or sales or
commercial invoices, subject to
rules and regulations to be issued
by the Secretary of Finance upon
Commissioner and after a public
hearing shall have been held for
this purpose: Provided, That
taxpayers not covered by the
mandate of this provision may
issue electronic receipts or, sales
or commercial invoices, in lieu of
manual receipts, and sales and
commercial invoices.
The original of each receipt o
The original of each receipt or invoice shall be issued to th
invoice shall be issued to the purchaser, customer or client a
purchaser, customer or client at the time the transaction
the time the transaction is effected, who, if engaged i
effected, who, if engaged in business or in the exercise o
business or in the exercise of profession, shall keep an
profession, shall keep and preserve the same in his place o
preserve the same in his place of business for a period of three (3
business for a period of three (3) years from the close of the taxabl
years from the close of the year in which such invoice o
taxable year in which such invoice receipt was issued, while th
or receipt was issued, while the duplicate shall be kept an
duplicate shall be kept and preserved by the issuer, also in h
preserved by the issuer, also in place of business, for a like period
his place of business, for a like
period: Provided, That in case of
electronic receipts or sales or
commercial invoices, the digital
records of the same shall be kept
by the purchaser, customer or
client and the issuer for the same
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
period above stated.
The Commissioner may, i
The Commissioner may, in meritorious cases, exempt an
meritorious cases, exempt any person subject to an interna
person subject to internal revenue revenue tax from compliance wit
tax from compliance with the the provisions of this Section. (
provisions of this Section. (as amended by Sec. 20 of R.A. No
amended by Sec. 73, R.A. No. 9337, May 24, 2005)
10963, December 19, 2017)
Electronic Sales Reporting SEC. 237-A.

System
Within five (5) years from the
effectivity of this Act and upon the
establishment of a system
capable of storing and processing
the required data, the Bureau
shall require taxpayers engaged
in the export of goods and
services, and taxpayers under the
jurisdiction of the Large
Taxpayers Service to
electronically report their sales
data to the Bureau through the
use of electronic point of sales
systems, subject to rules and
regulations to be issued by the
Secretary of Finance as
recommended by the
Commissioner of Internal
Revenue: Provided, That the
machines, fiscal devices, and
fiscal memory devices shall be at
the expense of the taxpayers.
The data processing of sales and

purchase data shall comply with
the provisions of Republic Act No.
10173, otherwise known as the
"Data Privacy Act" and Section
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
270 of the NIRC, as amended, on
unlawful divulgence of taxpayer
information and such other laws
relating to the confidentiality of
information.
The Bureau shall also establish

policies, risk management
approaches, actions, trainings,
and technologies to protect the
cyber environment, organization,
and data in compliance with
Republic Act No. 10175 or the
"Cybercrime Prevention Act of
2012." (added by Sec. 74, R.A.
No. 10963, December 19, 2017)
Printing of Receipts or
SEC. 238. All persons who are SEC. 238. All persons who ar
Sales or Commercial
engaged in business shall secure engaged in business shall secur
Invoices
from the Bureau of Internal from the Bureau of Interna
Revenue an authority to print Revenue an authority to prin
receipts or sales or commercial receipts or sales or commercia
invoices before a printer can print invoices before a printer can prin
the same. the same.
No authority to print receipts or No authority to print receipt

sales or commercial invoices shall sales or commercial invoices sha
be granted unless the receipts or be granted unless the receipts o
invoices to be printed are serially invoices to be printed are serial
numbered and shall show, among numbered and shall show, amon
other things, the name, business other things, the name, busines
style, Taxpayer Identification style, Taxpayer Identificatio
Number (TIN) and business Number (TIN) and busines
address of the person or entity to address of the person or
use the same, and such other use the same, and such othe
information that may be required information that may be require
by rules and regulations to be by rules and regulations to b
All persons who print receipt or All persons who print receipt o
sales or commercial invoices shall sales or commercial invoices sha
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
maintain a logbook/register of maintain a logbook/register o
taxpayers who availed of their taxpayers who availed of the
printing services. The printing services. Th
logbook/register shall contain the logbook/register shall contain th
following information: following information:
(1) Names, Taxpayer Identification (1) Names, Taxpayer Identificatio

Numbers of the persons or entities Numbers of the persons or entitie
for whom the receipts or sales or for whom the receipts or sales o
commercial invoices were printed; commercial invoices were printed
and and
(2) Number of booklets, number o
(2) Number of booklets, number
sets per booklet, number of copie
of sets per booklet, number of
per set and the serial numbers o
copies per set and the serial
the receipts or invoices in eac
numbers of the receipts or
booklet.
invoices in each booklet.
Sign to be Exhibited by SEC. 239. Every person engaged SEC. 239. Every person engage
Distiller, Rectifier, in distilling or rectifying spirits, in distilling or rectifying spirits
Compounder, Repacker compounding liquors, repacking compounding liquors, repackin
and Wholesale Liquor wines or distilled spirits, and every wines or distilled spirit
Dealer wholesale liquor dealer shall keep wholesale liquor dealer shall kee
conspicuously on the outside of conspicuously on the outside of h
his place of business a sign place of business a sign exhibiting
exhibiting, in letters not less than in letters not less than s
six centimeters (6 cms.) high, his centimeters (6 cms.) high, h
name or firm style, with the words name or firm style, with the word
'Registered Distiller,' 'Rectifier of 'Registered Distiller,' 'Rectifier o
Spirits,' 'Compounder of Liquors,' Spirits,' 'Compounder of Liquors
'Repacker of Wines or Distilled 'Repacker of Wines or Distille
Spirits,' or 'Wholesale Liquor Spirits,' or 'Wholesale Liquo
Dealer,' as the case may be, and Dealer,' as the case may be, an
his assessment number. his assessment number.
Sign to be Exhibited by SEC. 240. Every manufacturer of SEC. 240. Every manufacturer o
Manufacturer of Products cigars, cigarettes or tobacco, and cigars, cigarettes or tobacco, an
of Tobacco every wholesale dealer in leaf every wholesale dealer in lea
tobacco or manufactured tobacco or manufactured product
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
products of tobacco shall place of tobacco shall place and keep o
and keep on outside of the outside of the building wherein h
building wherein his business is business is carried on, so that
carried on, so that it can be can be distinctly seen, a sig
distinctly seen, a sign stating his stating his full name and busines
full name and business in letters in letters not less than s
not less than six centimeters (6 centimeters (6 cms.) high and als
cms.) high and also giving his giving his assessment number.
assessment number.
Exhibition of Certificate of SEC. 241. The certificate or SEC. 241. The certificate o
Payment at Place of receipts showing payment of receipts showing payment of taxe
Business taxes issued to a person engaged issued to a person engaged in
in a business subject to an annual business subject to an annua
registration fee shall be kept registration fee shall be kep
conspicuously exhibited in plain conspicuously exhibited in plai
view in or at the place where the view in or at the place where th
business is conducted; and in business is conducted; and in cas
case of a peddler or other of a peddler or other persons no
persons not having a fixed place having a fixed place of business
of business, shall be kept in the shall be kept in the possession o
possession of the holder thereof, the holder thereof, subject t
subject to production upon production upon demand of an
demand of any internal revenue internal revenue officer.
officer.
Continuation of Business of
SEC. 242. When any individual SEC. 242. When any individua
Deceased Person
who has paid the annual who has paid the annua
registration fee dies, and the same registration fee dies, and the sam
business is continued by the business is continued by th
person or persons interested in his person or persons interested in h
estate, no additional payment shall estate, no additional payment sha
be required for the residue of the be required for the residue of th
term of which the tax was paid: term of which the tax was paid
Provided, however, That the Provided, however, That th
person or persons interested in person or persons interested in th
the estate should, within thirty (30) estate should, within thirty (30
days from the death of the days from the death of th
decedent, submit to the Bureau of decedent, submit to the Bureau o
Internal Revenue or the Regional Internal Revenue or the Regiona
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
or Revenue District Office or Revenue District Offic
inventories of goods or stocks had inventories of goods or stocks ha
at the time of such death. at the time of such death.
The requirement under th

The requirement under this
Section shall also be applicable i
Section shall also be applicable in
the case of transfer of ownershi
the case of transfer of ownership
or change of name of the busines
or change of name of the
establishment.
business establishment.
Removal of Business to SEC. 243. Any business for which SEC. 243. Any business for whic
Other Location the annual registration fee has the annual registration fee ha
been paid may, subject to the been paid may, subject to the rule
rules and regulations prescribed and regulations prescribed by th
by the Secretary of Finance, upon Secretary of Finance, upo
Commissioner, be removed and Commissioner, be removed an
continued in any other place continued in any other plac
without the payment of additional without the payment of additiona
tax during the term for which the tax during the term for which th
payment was made. payment was made.
CHAPTER III — RULES AND CHAPTER III — RULES AND

REGULATIONS REGULATIONS
Authority of Secretary of SEC. 244. The Secretary of SEC. 244. The Secretary o
Finance to Promulgate Finance, upon recommendation Finance, upon recommendation o
Rules and Regulations of the Commissioner, shall the Commissioner, sha
promulgate all needful rules and promulgate all needful rules an
regulations for the effective regulations for the effectiv
enforcement of the provisions of enforcement of the provisions o
this Code. this Code.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Specific Provisions to be
SEC. 245. The rules and SEC. 245. The rules an
Contained in Rules and
regulations of the Bureau of regulations of the Bureau o
Regulations
Internal Revenue shall, among Internal Revenue shall, amon
other things, contain provisions other things, contain provision
specifying, prescribing or defining: specifying, prescribing or defining
(a) The time and manner in which (a) The time and manner in whic
Revenue Regional Directors shall Revenue Regional Directors sha
canvass their respective Revenue canvass their respective Revenu
Regions for the purpose of Regions for the purpose o
discovering persons and property discovering persons and propert
liable to national internal revenue liable to national internal revenu
taxes, and the manner in which taxes, and the manner in whic
their lists and records of taxable their lists and records of taxabl
persons and taxable objects shall persons and taxable objects sha
be made and kept; be made and kept;
(b) The forms of labels, brands or (b) The forms of labels, brands o
marks to be required on goods marks to be required on good
subject to an excise tax, and the subject to an excise tax, and th
manner in which the labeling, manner in which the labeling
branding or marking shall be branding or marking shall b
effected; effected;
(c) The conditions under which (c) The conditions under which an
and the manner in which goods the manner in which good
intended for export, which if not intended for export, which if no
exported would be subject to an exported would be subject to a
excise tax, shall be labelled, excise tax, shall be labelled
branded or marked; branded or marked;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(d) The conditions to be observed (d) The conditions to be observe

by revenue officers respecting the by revenue officers respecting th
institutions and conduct of legal institutions and conduct of lega
actions and proceedings; actions and proceedings;
(e) The conditions under which (e) The conditions under whic
goods intended for storage in goods intended for storage i
bonded warehouses shall be bonded warehouses shall b
conveyed thither, their manner of conveyed thither, their manner o
storage and the method of storage and the method of keepin
keeping the entries and records in the entries and recor
connection therewith, also the connection therewith, also th
books to be kept by Revenue books to be kept by Revenu
Inspectors and the reports to be Inspectors and the reports to b
made by them in connection with made by them in connection wit
their supervision of such houses; their supervision of such houses;
(f) The conditions under which (f) The conditions under whic
denatured alcohol may be denatured alcohol may b
removed and dealt in, the removed and dealt in, th
character and quantity of the character and quantity of th
denaturing material to be used, denaturing material to be used, th
the manner in which the process manner in which the process o
of denaturing shall be effected, so denaturing shall be effected, so a
as to render the alcohol suitably to render the alcohol suitab
denatured and unfit for oral intake, denatured and unfit for oral intake
the bonds to be given, the books the bonds to be given, the book
and records to be kept, the entries and records to be kept, the ent
to be made therein, the reports to to be made therein, the reports t
be made to the Commissioner, be made to the Commissione
and the signs to be displayed in and the signs to be displayed i
the business or by the person for the business or by the person fo
whom such denaturing is done or whom such denaturing is done o
by whom, such alcohol is dealt in; by whom, such alcohol is dealt in;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(g) The manner in which revenue (g) The manner in which revenu
shall be collected and paid, the shall be collected and paid, th
instrument, document or object to instrument, document or object t
which revenue stamps shall be which revenue stamps shall b
affixed, the mode of cancellation affixed, the mode of cancellation o
of the same, the manner in which the same, the manner in which th
the proper books, records, proper books, records, invoice
invoices and other papers shall be and other papers shall be kept an
kept and entries therein made by entries therein made by the perso
the person subject to the tax, as subject to the tax, as well as th
well as the manner in which manner in which licenses an
licenses and stamps shall be stamps shall be gathered up an
gathered up and returned after returned after serving the
serving their purposes; purposes;
(h) The conditions to be observed (h) The conditions to be observe

by revenue officers respecting the by revenue officers respecting th
enforcement of Title III imposing a enforcement of Title III imposing
tax on estate of a decedent, and tax on estate of a decedent, an
other transfers mortis causa, as other transfers mortis causa, a
well as on gifts and such other well as on gifts and such othe
rules and regulations which the rules and regulations which th
Commissioner may consider Commissioner may conside
suitable for the enforcement of the suitable for the enforcement of th
said Title III; said Title III;
(i) The manner in which tax (i) The manner in which ta

returns, information and reports returns, information and report
shall be prepared and reported shall be prepared and reporte
and the tax collected and paid, as and the tax collected and paid, a
well as the conditions under which well as the conditions under whic
evidence of payment shall be evidence of payment shall b
furnished the taxpayer, and the furnished the taxpayer, and th
preparation and publication of tax preparation and publication of ta
statistics; statistics;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(j) The manner in which internal (j) The manner in which interna
revenue taxes, such as income revenue taxes, such as incom
tax, including withholding tax, tax, including withholding tax
estate and donor's taxes, estate and donor's taxes
value-added tax, other percentage value-added tax, other percentag
taxes, excise taxes and taxes, excise taxes an
documentary stamp taxes shall be documentary stamp taxes shall b
paid through the collection officers paid through the collection officer
of the Bureau of Internal Revenue of the Bureau of Internal Revenu
or through duly authorized agent or through duly authorize
banks which are hereby deputized banks which are hereby deputize
to receive payments of such taxes to receive payments of such taxe
and the returns, papers and and the returns, papers an
statements that may be filed by statements that may be filed by th
the taxpayers in connection with taxpayers in connection with th
the payment of the tax: Provided, payment of the tax: Provided
however, That notwithstanding the however, That notwithstanding th
other provisions of this Code other provisions of
prescribing the place of filing of prescribing the place of filing o
returns and payment of taxes, the returns and payment of taxes, th
Commissioner may, by rules and Commissioner may, by rules an
regulations, require that the tax regulations, require that the ta
returns, papers and statements returns, papers and statement
and taxes of large taxpayers be and taxes of large taxpayers b
filed and paid, respectively, filed and paid, respectively
through collection officers or through collection
through duly authorized agent through duly authorized agen
banks: Provided, further, That the banks: Provided, further, That th
Commissioner can exercise this Commissioner can exercise th
power within six (6) years from the power within six (6) years from th
approval of Republic Act No. 7646 approval of Republic Act No. 764
or the completion of its or the completion of it
comprehensive computerization comprehensive computerizatio
program, whichever comes earlier: program, whichever come
Provided, finally, That separate Provided, finally, That separat
venues for the Luzon, Visayas and venues for the Luzon, Visayas an
Mindanao areas may be Mindanao areas may b
designated for the filing of tax designated for the filing of ta
returns and payment of taxes by returns and payment of taxes b
said large taxpayers. said large taxpayers.
For purposes of this Section, For purposes of this Section, 'larg

'large taxpayer' means a taxpayer taxpayer' means a taxpayer wh
who satisfies any of the following satisfies any of the followin
criteria; criteria;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Value-Added Tax (VAT). — (1) Value-Added Tax (VAT).
Business establishment with VAT Business establishment with VA
paid or payable of at least One paid or payable of at least On
hundred thousand pesos hundred thousand peso
(P100,000) for any quarter of the (P100,000) for any quarter of th
preceding taxable year; preceding taxable year;
(2) Excise Tax — Business (2) Excise Tax — Busines

establishment with excise tax paid establishment with excise tax pai
or payable of at least One million or payable of at least One millio
pesos (P1,000,000) for the pesos (P1,000,000) for th
preceding taxable year; preceding taxable year;
(3) Corporate Income Tax — (3) Corporate Income Tax

Business establishment with Business establishment wit
annual income tax paid or payable annual income tax paid or payabl
of at least One million pesos of at least One million peso
(P1,000,000) for the preceding (P1,000,000) for the precedin
taxable year; and taxable year; and
(4) Withholding Tax — Business (4) Withholding Tax — Busines

establishment with withholding tax establishment with withholding ta
payment or remittance of at least payment or remittance of at leas
One million pesos (P1,000,000) One million pesos (P1,000,000) fo
for the preceding taxable year. the preceding taxable year.
Provided, however, That the Provided, however, That th

Commissioner, may modify or add Commissioner, may modify or ad
to the above criteria for to the above criteria fo
determining a large taxpayer after determining a large taxpayer afte
considering such factors as considering such factors a
inflation, volume of business, inflation, volume of business, wag
wage and employment levels, and and employment levels, an
similar economic factors. similar economic factors.
The penalties prescribed unde
The penalties prescribed under
Section 248 of this Code shall b
Section 248 of this Code shall be
imposed on any violation of th
imposed on any violation of the
rules and regulations issued by th
rules and regulations issued by
Commissioner, prescribing th
Commissioner, prescribing the
place of filing of returns an
place of filing of returns and
payments of taxes by larg
payments of taxes by large
taxpayers.
taxpayers.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Non-Retroactivity of
SEC. 246. Any revocation, SEC. 246. Any revocation
Rulings
modification or reversal of any of modification or reversal of any o
the rules and regulations the rules and regulation
promulgated in accordance with promulgated in accordance wit
the preceding Sections or any of the preceding Sections or any o
the rulings or circulars the rulings or circular
promulgated by the Commissioner promulgated by the Commissione
shall not be given retroactive shall not be given retroactiv
application if the revocation, application if the revocation
modification or reversal will be modification or reversal will b
prejudicial to the taxpayers, except prejudicial to the taxpayers, excep
in the following cases: in the following cases:
(a) Where the taxpayer (a) Where the taxpaye

deliberately misstates or omits deliberately misstates or omit
material facts from his return or material facts from his return o
any document required of him by any document required of him b
the Bureau of Internal Revenue; the Bureau of Internal Revenue;
(b) Where the facts subsequently (b) Where the facts subsequent
gathered by the Bureau of Internal gathered by the Bureau of Interna
Revenue are materially different Revenue are materially differen
from the facts on which the ruling from the facts on which the rulin
is based; or is based; or
(c) Where the taxpayer acted i
(c) Where the taxpayer acted in
bad faith.
bad faith.
TITLE X — STATUTORY TITLE X — STATUTORY

OFFENSES AND PENALTIES OFFENSES AND PENALTIES
CHAPTER I — ADDITIONS TO CHAPTER I — ADDITIONS TO

THE TAX THE TAX
General Provisions
SEC. 247. (a) The additions to the SEC. 247. (a) The additions to th
tax or deficiency tax prescribed in tax or deficiency tax prescribed i
this Chapter shall apply to all this Chapter shall apply to a
taxes, fees and charges imposed taxes, fees and charges impose
in this Code. The amount so in this Code. The amount s
added to the tax shall be collected added to the tax shall be collecte
at the same time, in the same at the same time, in the sam
manner and as part of the tax. manner and as part of the tax.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) If the withholding agent is the (b) If the withholding agent is th
Government or any of its Government or any of its agencies
agencies, political subdivisions or political subdivisions o
instrumentalities, or a instrumentalities, or
government-owned or -controlled government-owned or -controlle
corporation, the employee thereof corporation, the employee thereo
responsible for the withholding responsible for the withholding an
and remittance of the tax shall be remittance of the tax shall b
personally liable for the additions personally liable for the addition
to the tax prescribed herein. to the tax prescribed herein.
(c) The term 'person', as used in

(c) The term 'person', as used i
this Chapter, includes an officer
this Chapter, includes an officer o
or employee of a corporation who
employee of a corporation who a
as such officer, employee or
such officer, employee or me
member is under a duty to
is under a duty to perform the ac
perform the act in respect of
in respect of which the violatio
which the violation occurs.
occurs.
Civil Penalties
SEC. 248. (A) There shall be SEC. 248. (A) There shall b
imposed, in addition to the tax imposed, in addition to the ta
required to be paid, a penalty required to be paid, a pen
equivalent to twenty-five percent equivalent to twenty-five percen
(25%) of the amount due, in the (25%) of the amount due, in th
following cases: following cases:
(1) Failure to file any return and (1) Failure to file any return an
pay the tax due thereon as pay the tax due thereon a
required under the provisions of required under the provisions o
this Code or rules and regulations this Code or rules and regulation
on the date prescribed; or on the date prescribed; or
(2) Unless otherwise authorized by (2) Unless otherwise authorized b

the Commissioner, filing a return the Commissioner, filing a retur
with an internal revenue officer with an internal revenue office
other than those with whom the other than those with whom th
return is required to be filed; or return is required to be filed; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Failure to pay the deficiency (3) Failure to pay the deficiency ta
tax within the time prescribed for within the time prescribed for it
its payment in the notice of payment in the notice o
assessment; or assessment; or
(4) Failure to pay the full or part of (4) Failure to pay the full or part o
the amount of tax shown on any the amount of tax shown on an
return required to be filed under return required to be filed unde
the provisions of this Code or rules the provisions of this Code or rule
and regulations, or the full amount and regulations, or the full amoun
of tax due for which no return is of tax due for which no return
required to be filed, on or before required to be filed, on or bef
the date prescribed for its the date prescribed for it
payment. payment.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(B) In case of willful neglect to fil
(B) In case of willful neglect to file
the return within the perio
the return within the period
prescribed by this Code or by rule
prescribed by this Code or by
and regulations, or in case a fals
rules and regulations, or in case a
or fraudulent return is willful
false or fraudulent return is
made, the penalty to be impose
willfully made, the penalty to be
shall be fifty percent (50%) of th
imposed shall be fifty percent
tax or of the deficiency tax, in cas
(50%) of the tax or of the
any payment has been made o
deficiency tax, in case any
the basis of such return before th
payment has been made on the
discovery of the falsity or fraud
basis of such return before the
Provided, That a substantial unde
discovery of the falsity or fraud:
declaration of taxable sales
Provided, That a substantial
receipts or income, or a s
under declaration of taxable
overstatement of deductions, a
sales, receipts or income, or a
determined by the Commissione
substantial overstatement of
pursuant to the rules an
deductions, as determined by the
regulations to be promulgated b
Commissioner pursuant to the
the Secretary of Finance, sha
rules and regulations to be
constitute prima facie evidence o
a false or fraudulent return
Finance, shall constitute prima
Provided, further, That fa
facie evidence of a false or
report sales, receipts or income i
fraudulent return: Provided,
an amount exceeding thirt
further, That failure to report
percent (30%) of that declared pe
sales, receipts or income in an
return, and a claim of deduction
amount exceeding thirty percent
in an amount exceeding thirt
(30%) of that declared per return,
percent (30%) of actua
and a claim of deductions in an
deductions, shall render th
amount exceeding thirty percent
taxpayer liable for substantia
(30%) of actual deductions, shall
underdeclaration of sales, receipt
render the taxpayer liable for
or income or for overstatement o
substantial underdeclaration of
deductions, as mentioned herein.
sales, receipts or income or for
overstatement of deductions, as
mentioned herein.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Interest
SEC. 249. SEC. 249.
(A) In General. — There shall be (A) In General. — There shall b

assessed and collected on any assessed and collected on an
unpaid amount of tax, interest at unpaid amount of tax, in
the rate of double the legal the rate of twenty percent (20%
interest rate for loans or per annum, or such higher rate a
forbearance of any money in the may be prescribed by rules an
absence of an express stipulation regulations, from the dat
as set by the Bangko Sentral ng prescribed for payment until th
Pilipinas from the date prescribed amount is fully paid.
for payment until the amount is
fully paid: Provided, That in no
case shall the deficiency and the
delinquency interest prescribed
under Subsections (B) and (C)
hereof, be imposed
simultaneously. (as amended by
Sec. 75, R.A. No. 10963,
December 19, 2017)
(B) Deficiency Interest. — Any

(B) Deficiency Interest
deficiency in the tax due, as the
deficiency in the tax due, as
term is defined in this Code, shall
term is defined in this Code, sha
be subject to the interest
be subject to the interes
prescribed in Subsection (A)
prescribed in Subsection (A
hereof, which interest shall be
hereof, which interest shall b
assessed and collected from the
assessed and collected from th
date prescribed for its payment
date prescribed for its paymen
until the full payment thereof, or
until the full payment thereof.
upon issuance of a notice and
demand by the Commissioner of
Internal Revenue, whichever
comes earlier.
(C) Delinquency Interes
(C) Delinquency Interest. — In case of failure to pay:
case of failure to pay:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) The amount of the tax due o
(1) The amount of the tax due on any return required to be filed, or
any return required to be filed, or
(2) The amount of the tax due fo
(2) The amount of the tax due for which no return is required, or
which no return is required, or
(3) A deficiency tax, or an

(3) A deficiency tax, or any surcharge or interest thereon o
surcharge or interest thereon on the due date appearing in th
the due date appearing in the notice and demand of th
notice and demand of the Commissioner, there shall b
Commissioner, there shall be assessed and collected on th
assessed and collected on the unpaid amount, interest at the rat
unpaid amount, interest at the prescribed in Subsection (A
rate prescribed in Subsection (A) hereof until the amount is ful
hereof until the amount is fully paid, which interest shall form pa
paid, which interest shall form of the tax.
part of the tax.
(D) Interest on Extended (D) Interest on Extended Pa

Payment. — If any person — If any person required to pa
required to pay the tax is qualified the tax is qualified and elects t
and elects to pay the tax on pay the tax on installment unde
installment under the provisions the provisions of this Code, bu
of this Code, but fails to pay the fails to pay the tax or an
tax or any installment hereof, or installment hereof, or any part o
any part of such amount or such amount or installment on o
installment on or before the date before the date prescribed for it
prescribed for its payment, or payment, or where th
where the Commissioner has Commissioner has authorized a
authorized an extension of time extension of time within which t
within which to pay a tax or a pay a tax or a deficiency tax or an
deficiency tax or any part thereof, part thereof, there shall b
there shall be assessed and assessed and collected interest a
collected interest at the rate the rate hereinabove prescribed o
hereinabove prescribed on the tax the tax or deficiency tax or an
or deficiency tax or any part part thereof unpaid from the dat
thereof unpaid from the date of of notice and demand until it
notice and demand until it is paid. paid.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Failure to File Certain SEC. 250. In the case of each SEC. 250. In the case of eac
Information Returns failure to file an information failure to file an information return
return, statement or list, or keep statement or list, or keep an
any record, or supply any record, or supply any informatio
information required by this Code required by this Code or by th
or by the Commissioner on the Commissioner on the dat
date prescribed therefor, unless it prescribed therefor, unless it
is shown that such failure is due shown that such failure is due t
to reasonable cause and not to reasonable cause and not to willfu
willful neglect, there shall, upon neglect, there shall, upon notic
notice and demand by the and demand by the Commissione
Commissioner, be paid by the be paid by the person failing to file
person failing to file, keep or keep or supply the same, On
supply the same, One thousand thousand pesos (P1,000) for eac
pesos (P1,000) for each such such failure: Provided, howeve
failure: Provided, however, That That the aggregate amount to b
the aggregate amount to be imposed for all such failures durin
imposed for all such failures a calendar year shall not excee
during a calendar year shall not Twenty-five thousand peso
exceed Twenty-five thousand (P25,000).
pesos (P25,000).
Failure of a Withholding SEC. 251. Any person required to SEC. 251. Any person required t
Agent to Collect and Remit withhold, account for, and remit withhold, account for, and rem
Tax any tax imposed by this Code or any tax imposed by this Code o
who willfully fails to withhold such who willfully fails to withhold suc
tax, or account for and remit such tax, or account for and remit suc
tax, or aids or abets in any tax, or aids or abets in any manne
manner to evade any such tax or to evade any such tax or th
the payment thereof, shall, in payment thereof, shall, in additio
addition to other penalties to other penalties provided fo
provided for under this Chapter, under this Chapter, be liable upo
be liable upon conviction to a conviction to a penalty equal to th
penalty equal to the total amount total amount of the tax no
of the tax not withheld, or not withheld, or not accounted for an
accounted for and remitted. remitted.
Failure of a Withholding SEC. 252. Any SEC. 252. An

Agent to Refund Excess employer/withholding agent who employer/withholding a
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Withholding Tax fails or refuses to refund excess fails or refuses to refund exces
withholding tax shall, in addition to withholding tax shall, in addition t
the penalties provided in this Title, the penalties provided in this Title
be liable to a penalty equal to the be liable to a penalty equal to th
total amount of refunds which was total amount of refunds which wa
not refunded to the employee not refunded to the employe
resulting from any excess of the resulting from any excess of th
amount withheld over the tax amount withheld over the ta
actually due on their return. actually due on their return.
CHAPTER II — CRIMES, OTHER CHAPTER II — CRIMES, OTHER

OFFENSES AND FORFEITURES OFFENSES AND FORFEITURES
General Provisions
SEC. 253. (a) Any person SEC. 253. (a) Any perso
convicted of a crime penalized by convicted of a crime penalized b
this Code shall, in addition to this Code shall, in addition to bein
being liable for the payment of the liable for the payment of the tax
tax, be subject to the penalties be subject to the penaltie
imposed herein: Provided, That imposed herein: Provided, Tha
payment of the tax due after payment of the tax due afte
apprehension shall not constitute apprehension shall not constitute
a valid defense in any prosecution valid defense in any prosecutio
for violation of any provision of this for violation of any provision of th
Code or in any action for the Code or in any action for th
forfeiture of untaxed articles. forfeiture of untaxed articles.
(b) Any person who willfully aids or (b) Any person who willfully aids o
abets in the commission of a crime abets in the commission of a crim
penalized herein or who causes penalized herein or who cause
the commission of any such the commission of any suc
offense by another shall be liable offense by another shall
(c) If the offender is not a citizen of (c) If the offender is not a citizen o
the sentence without further the sentence without furthe
proceedings for deportation. If he proceedings for deportation. If h
is a public officer or employee, the is a public officer or employee, th
maximum penalty prescribed for maximum penalty prescribed fo
the offense shall be imposed and, the offense shall be imposed and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
in addition, he shall be dismissed in addition, he shall be dismisse
from the public service and from the public service an
perpetually disqualified from perpetually disqualified from
holding any public office, to vote holding any public office, to vot
and to participate in any election. and to participate in any election.
If the offender is a Certified Public the offender is a Certified
Accountant, his certificate as a Accountant, his certificate as
Certified Public Accountant shall, Certified Public Accountant sha
upon conviction, be automatically upon conviction, be automatical
revoked or cancelled. revoked or cancelled.
(d) In the case of associations, (d) In the case of associations

partnerships or corporations, the partnerships or corporations, th
penalty shall be imposed on the penalty shall be imposed on th
partner, president, general partner, president, gener
manager, branch manager, manager, branch manage
treasurer, officer-in-charge, and treasurer, officer-in-charge, an
employees responsible for the employees responsible for th
violation. violation.
(e) The fines to be imposed for an
(e) The fines to be imposed for
violation of the provisions of th
any violation of the provisions of
Code shall not be lower than th
this Code shall not be lower than
fines imposed herein or twice th
the fines imposed herein or twice
amount of taxes, interests an
the amount of taxes, interests and
surcharges due from the taxpaye
surcharges due from the
whichever is higher.
taxpayer, whichever is higher.
Attempt to Evade or Defeat SEC. 254. Any person who SEC. 254. Any person who willful
Tax willfully attempts in any manner to attempts in any manner to evad
evade or defeat any tax imposed or defeat any tax imposed unde
under this Code or the payment this Code or the payment thereo
thereof shall, in addition to other shall, in addition to other penaltie
penalties provided by law, upon provided by law, upon convictio
conviction thereof, be punished thereof, be punished by a fine o
with a fine of not less than Five not less than Thirty thousan
hundred thousand pesos pesos (P30,000) but not more tha
(P500,000) but not more than Ten One hundred thousand peso
million pesos (P10,000,000), and (P100,000) and suffe
imprisonment of not less than six imprisonment of not less than tw
(6) years but not more than ten (2) years but not more than fou
(10) years: Provided, That the (4) years: Provided, That th
conviction or acquittal obtained conviction or acquittal obtaine
under this Section shall not be a under this Section shall no
bar to the filing of a civil suit for bar to the filing of a civil suit for th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
the collection of taxes. (as collection of taxes.
10963, December 19, 2017)
Failure to File Return,

SEC. 255. Any person required SEC. 255. Any person require
Supply Correct and
under this Code or by rules and under this Code or by rules an
Accurate Information, Pay
regulations promulgated regulations promulgate
Tax, Withhold and Remit
thereunder to pay any tax, make a thereunder to pay any tax, make
Tax and Refund Excess
return, keep any record, or supply return, keep any record, or supp
Taxes Withheld on
correct and accurate information, correct and accurate information
Compensation
who willfully fails to pay such tax, who willfully fails to pay such tax
make such return, keep such make such return, keep suc
record, or supply such correct and record, or supply such correct an
accurate information, or withhold accurate information, or withhol
or remit taxes withheld, or refund or remit taxes withheld, or refun
excess taxes withheld on excess taxes withheld o
compensation, at the time or times compensation, at the time or time
required by law or rules and required by law or rules an
regulations shall, in addition to regulations shall, in addition t
other penalties provided by law, other penalties provided by law
upon conviction thereof, be upon conviction thereof, b
punished by a fine of not less than punished by a fine of not less tha
Ten thousand pesos (P10,000) Ten thousand pesos (P10,000
and suffer imprisonment of not and suffer imprisonment of no
less than one (1) year but not less than one (1) year but no
more than ten (10) years. more than ten (10) years.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Any person who attempts to mak
Any person who attempts to make
it appear for any reason that he o
it appear for any reason that he or
another has in fact filed a return o
another has in fact filed a return
statement, or actually files a retur
or statement, or actually files a
or statement and subsequent
return or statement and
withdraws the same return o
subsequently withdraws the same
statement after securing th
return or statement after securing
official receiving seal or stamp o
the official receiving seal or stamp
receipt of an internal revenu
of receipt of an internal revenue
office wherein the same wa
office wherein the same was
actually filed shall, upon convictio
actually filed shall, upon
therefor, be punished by a fine o
conviction therefor, be punished
not less than Ten thousand peso
by a fine of not less than Ten
(P10,000) but not more tha
thousand pesos (P10,000) but not
Twenty thousand pesos (P20,000
more than Twenty thousand
and suffer imprisonment of no
pesos (P20,000) and suffer
less than one (1) year but no
imprisonment of not less than one
more than three (3) years.
(1) year but not more than three
(3) years.
Penal Liability of SEC. 256. Any corporation, SEC. 256. Any corporation
Corporations association or general association or genera
co-partnership liable for any of the co-partnership liable for any of th
acts or omissions penalized under acts or omissions penalized unde
this Code, in addition to the this Code, in addition to th
penalties imposed herein upon penalties imposed herein upon th
the responsible corporate officers, responsible corporate offi
partners, or employees, shall, partners, or employees, sha
upon conviction for each act or upon conviction for each act o
omission, be punished by a fine of omission, be punished by a fine o
not less than Fifty thousand not less than Fifty thousand peso
pesos (P50,000) but not more (P50,000) but not more than On
than One hundred thousand hundred thousand peso
pesos (P100,000). (P100,000).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Penal Liability for Making
SEC. 257. SEC. 257.
False Entries, Records or
Reports, or Using Falsified (A) Any financial officer or (A) Any financial officer o
or Fake Accountable independent Certified Public independent Certified Publ
Forms Accountant engaged to examine Accountant engaged to examin
and audit books of accounts of and audit books of accounts o
taxpayers under Section 232 (A) taxpayers under Section 232 (A
and any person under his direction and any person under h
who: who:
(1) Willfully falsifies any report or (1) Willfully falsifies any report o
statement bearing on any statement bearing on an
examination or audit, or renders a examination or audit, or renders
report, including exhibits, report, including exhibits
statements, schedules or other statements, schedules or othe
forms of accountancy work which forms of accountancy work whic
has not been verified by him has not been verified by him
personally or under his supervision personally or under his supervisio
or by a member of his firm or by a or by a member of his firm or by
member of his staff in accordance member of his staff in accordanc
with sound auditing practices; or with sound auditing practices; or
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(2) Certifies financial statements

of a business enterprise (2) Certifies financial statements o
containing an essential a business enterprise containin
misstatement of facts or omission an essential misstatement of fact
in respect of the transactions, or omission in respect of th
taxable income, deduction and transactions, taxable income
exemption of his client; or deduction and exemption of h
client; or
(B) Any person who:

(B) Any person who:
(1) Not being an independent
Certified Public Accountant (1) Not being an independen
according to Section 232(B) or a Certified Public Accountan
financial officer, examines and according to Section 232(B) or
audits books of accounts of financial officer, examines an
taxpayers; or audits books of accounts o
taxpayers; or
(2) Offers to sign and certify
financial statements without audit; (2) Offers to sign and certif
or financial statements without audi
or
(3) Offers any taxpayer the use of
accounting bookkeeping records (3) Offers any taxpayer the use o
for internal revenue purposes not accounting bookkeeping record
in conformity with the for internal revenue purposes no
requirements prescribed in this in conformity with the requirement
Code or rules and regulations prescribed in this Code or rule
promulgated thereunder; or and regulations
thereunder; or
(4) Knowingly makes any false
entry or enters any false or (4) Knowingly makes any fals
fictitious name in the books of entry or enters any false o
accounts or records mentioned in fictitious name in the books o
the preceding paragraphs; or accounts or records mentioned i
the preceding paragraphs; or
(5) Keeps two (2) or more sets of
such records or books of (5) Keeps two (2) or more sets o
accounts; or such records or books of accounts
or
(6) In any way commits an act or
omission, in violation of the (6) In any way commits an act o
provisions of this Section; or omission, in violation of th
provisions of this Section; or
(7) Fails to keep the books of
accounts or records mentioned in (7) Fails to keep the books o
Section 232 in a native language, accounts or records mentioned i
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Section 232 in a native language, accounts or records mentioned i
English or Spanish, or to make a Section 232 in a native language
true and complete translation as English or Spanish, or to make
required in Section 234 of this true and complete translation a
Code, or whose books of accounts required in Section 234 of th
or records kept in a native Code, or whose books of account
language, English or Spanish, and or records kept in a nativ
found to be at material variance language, English or Spanish, an
with books or records kept by him found to be at material varianc
in another language; or with books or records kept by him
in another language; or
(8) Willfully attempts in any
manner to evade or defeat any tax (8) Willfully attempts in an
imposed under this Code, or manner to evade or defeat any ta
knowingly uses fake or falsified imposed under this Code, o
revenue official receipts, Letters of knowingly uses fake or falsifie
Authority, certificates authorizing revenue official receipts, Letters o
registration, Tax Credit Authority, certificates authorizin
Certificates, Tax Debit registration, Tax Cred
Memoranda and other Certificates, Tax Debit Memorand
accountable forms shall, upon and other accountable forms sha
conviction for each act or upon conviction for each act o
not less than Fifty thousand not less than Fifty thousand peso
pesos (P50,000) but not more (P50,000) but not more than On
than One hundred thousand pesos hundred thousand peso
(P100,000) and suffer (P100,000) and suffe
imprisonment of not less than two imprisonment of not less than tw
(2) years but not more than six (6) (2) years but not more than six (6
years. years.
If the offender is a Certified Public

Accountant, his certificate as a If the offender is a Certified Publ
Certified Public Accountant shall Accountant, his certificate as
be automatically revoked or Certified Public Accountant sha
cancelled upon conviction. be automatically revoked o
cancelled upon conviction.
In the case of foreigners,
In the case of foreigners
conviction under this Code shall
conviction under this Code sha
result in his immediate
result in his immediate deportatio
deportation after serving
after serving sentence, withou
sentence, without further
further proceedings fo
deportation.
Unlawful Pursuit of SEC. 258. Any person who SEC. 258. Any person who carrie
Business carries on any business for which on any business for which a
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
an annual registration fee is annual registration fee is impose
imposed without paying the tax as without paying the tax as require
required by law shall, upon by law shall, upon conviction fo
conviction for each act or each act or omission, be punishe
omission, be punished by a fine of by a fine of not less than Fiv
not less than Five thousand thousand pesos (P5,000) but no
pesos (P5,000) but not more than more than Twenty thousand peso
Twenty thousand pesos (P20,000) and suffer imprisonmen
(P20,000) and suffer of not less than six (6) months b
imprisonment of not less than six not more than two (2) years
(6) months but not more than two Provided, That in the case of
(2) years: Provided, That in the person engaged in the business o
case of a person engaged in the distilling, rectifying, repacking
business of distilling, rectifying, compounding or manufacturin
repacking, compounding or any article subject to excise tax, h
manufacturing any article subject shall, upon conviction for each ac
to excise tax, he shall, upon or omission, be punished by a fin
conviction for each act or of not less than Thirty thousan
omission, be punished by a fine of pesos (P30,000) but not more tha
not less than Thirty thousand Fifty thousand pesos (P50,000
pesos (P30,000) but not more and suffer imprisonment of no
than Fifty thousand pesos less than two (2) years but no
(P50,000) and suffer more than four (4) years.
imprisonment of not less than two
(2) years but not more than four
(4) years.
Illegal Collection of Foreign SEC. 259. Any person who SEC. 259. Any person wh
Payments knowingly undertakes the knowingly undertakes th
collection of foreign payments as collection of foreign payments a
provided under Section 67 of this provided under Section 67 of th
Code without having obtained a Code without having obtained
license therefor, or without license therefor, or withou
complying with its implementing complying with its implementin
rules and regulations, shall, upon rules and regulations, shall, upo
conviction for each act or conviction for each act o
not less than Twenty thousand not less than Twenty thousan
pesos (P20,000) but not more pesos (P20,000) but not more tha
than Fifty thousand pesos Fifty thousand pesos (P50,000
(P50,000) and suffer and suffer imprisonment of no
imprisonment of not less than one less than one (1) year but no
(1) year but not more than two (2) more than two (2) years.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
years.
Unlawful Possession of SEC. 260. It shall be unlawful for SEC. 260. It shall be unlawful fo
Cigarette Paper in Bobbins any person to have in his any person to have in h
or Rolls, Etc possession cigarette paper in possession cigarette paper i
bobbins or rolls, cigarette tipping bobbins or rolls, cigarette tippin
paper or cigarette filter tips, paper or cigarette filter tips
without the corresponding without the corresponding authorit
authority therefor issued by the therefor issued by th
Commissioner. Any person, Commissioner. Any person
importer, manufacturer of cigar importer, manufacturer of ciga
and cigarettes, who has been and cigarettes, who has bee
found guilty under this Section, found guilty under this Section
shall, upon conviction for each act shall, upon conviction for each ac
or omission, be punished by a or omission, be punished by a fin
fine of not less than Twenty of not less than Twenty thousan
thousand pesos (P20,000) but not pesos (P20,000) but not more tha
more than One hundred thousand One hundred thousand peso
pesos (P100,000) and suffer (P100,000) and suffe
imprisonment for a term of not imprisonment for a term of not les
less than six (6) years and one (1) than six (6) years and one (1) da
day but not more than twelve (12) but not more than twelve (12
years. years.
Unlawful Use of Denatured

SEC. 261. Any person who for the SEC. 261. Any person who for th
Alcohol
purpose of manufacturing any purpose of manufacturing an
beverage, uses denatured alcohol beverage, uses denatured alcoho
or alcohol specially denatured to or alcohol specially denatured t
be used for motive power or be used for motive power o
withdrawn under bond for withdrawn under bond for industria
industrial uses or alcohol uses or alcohol knowing
knowingly misrepresented to be misrepresented to be denat
denatured to be unfit for oral be unfit for oral intake or wh
intake or who knowingly sells or knowingly sells or offers for sal
offers for sale any beverage made any beverage made in whole or i
in whole or in part from such part from such alcohol or who use
alcohol or who uses such alcohol such alcohol for the manufactur
for the manufacture of liquid of liquid medicinal preparation
medicinal preparations taken taken internally, or knowingly sel
internally, or knowingly sells or or offers for sale such preparation
offers for sale such preparations containing as an ingredient suc
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
containing as an ingredient such alcohol, shall, upon conviction fo
alcohol, shall, upon conviction for each act or omission be punishe
each act or omission be punished by a fine of not less than Twent
by a fine of not less than Twenty thousand pesos (P20,000) but no
thousand pesos (P20,000) but not more than One hundred thousan
more than One hundred thousand pesos (P100,000) and suffe
pesos (P100,000) and suffer imprisonment for a term of not les
imprisonment for a term of not than six (6) years and one (1) da
less than six (6) years and one (1) but not more than twelve (12
day but not more than twelve (12) years.
years.
Any person who shall unlawful
recover or attempt to recover b
Any person who shall unlawfully
distillation or other process an
recover or attempt to recover by
denatured alcohol or wh
distillation or other process any
knowingly sells or offers
denatured alcohol or who
conceals or otherwise disposes o
knowingly sells or offers for sale,
alcohol so recovered or redistille
conceals or otherwise disposes of
shall be subject to the sam
alcohol so recovered or redistilled
penalties imposed under th
shall be subject to the same
Section.
penalties imposed under this
Section.
Shipment or Removal of SEC. 262. Any person who ships, SEC. 262. Any person who ships
Liquor or Tobacco transports or removes spirituous, transports or removes spirituous
Products under False compounded or fermented compounded or fermented liquors
Name or Brand or as an liquors, wines or any wines or any manufacture
Imitation of any Existing or manufactured products of products of tobacco under an
Otherwise Known Product tobacco under any other than the other than the proper name o
Name or Brand proper name or brand known to brand known to the trade a
the trade as designating the kind designating the kind and quality o
and quality of the contents of the the contents of the cas
cask, bottle or package package containing the same or a
containing the same or as an an imitation of any existing o
imitation of any existing or otherwise known product name o
otherwise known product name or brand or causes such act to b
brand or causes such act to be done, shall, upon conviction fo
done, shall, upon conviction for each act or omission, be punishe
each act or omission, be by a fine of not less than Twent
punished by a fine of not less thousand pesos (P20,000) but no
than Twenty thousand pesos more than One hundred thousan
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(P20,000) but not more than One pesos (P100,000) and suffe
hundred thousand pesos imprisonment of not less than s
(P100,000) and suffer (6) years and one (1) day but no
imprisonment of not less than six more than twelve (12) years.
(6) years and one (1) day but not
more than twelve (12) years.
Unlawful Possession or
SEC. 263. Any person who owns SEC. 263. Any person who own
Removal of Articles
and/or is found in possession of and/or is found in possession o
Subject to Excise Tax
imported articles subject to excise imported articles subject to excis
without Payment of the Tax
tax, the tax on which has not been tax, the tax on which has not bee
paid in accordance with law, or paid in accordance with law, or an
any person who owns and/or is person who owns and/or is foun
found in possession of imported in possession of importe
tax-exempt articles other than tax-exempt articles other tha
those to whom they are legally those to whom they are legal
issued shall be punished by: issued shall be punished by:
(a) A fine of not less than One (a) A fine of not less than On
thousand pesos (P1,000) nor thousand pesos (P1,000) nor mor
more than Two thousand pesos than Two thousand peso
(P2,000) and suffer imprisonment (P2,000) and suffer imprisonmen
of not less than sixty (60) days but of not less than sixty (60) days bu
not more than one hundred (100) not more than one hundred (100
days, if the appraised value, to be days, if the appraised value, to b
determined in the manner determined in the manne
prescribed in the tariff and prescribed in the tariff an
Customs Code, including duties Customs Code, including dutie
and taxes, of the articles does not and taxes, of the articles does no
exceed One thousand pesos exceed One thousand peso
(P1,000); (P1,000);
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(b) A fine of not less than Ten (b) A fine of not less than Te
thousand pesos (P10,000) but not thousand pesos (P10,000) but no
more than Twenty thousand pesos more than Twenty thousand peso
(P20,000) and suffer (P20,000) and suffer imprisonmen
imprisonment of not less than two of not less than two (2) years bu
(2) years but not more than four not more than four (4) years, if th
(4) years, if the appraised value, to appraised value, to be determine
be determined in the manner in the manner prescribed in th
prescribed in the Tariff and Tariff and Customs Code
Customs Code, including duties including duties and taxes, of th
and taxes, of the articles exceeds articles exceeds One thousan
One thousand pesos (P1,000) but pesos (P1,000) but does no
does not exceed Fifty thousand exceed Fifty thousand peso
pesos (P50,000); (P50,000);
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(c) A fine of not less than Thirty (c) A fine of not less than Thirt
thousand pesos (P30,000) but not thousand pesos (P30,000) but n
more than Sixty thousand pesos more than Sixty thousand peso
imprisonment of not less than four of not less than four (4) years bu
(4) years but not more than six (6) not more than six (6) years, if th
years, if the appraised value, to be appraised value, to be determine
determined in the manner in the manner prescribed in th
prescribed in the Tariff and Tariff and Customs Code
Customs Code, including duties including duties and taxe
and taxes, of the articles is more articles is more than Fifty thousan
than Fifty thousand pesos pesos (P50,000) but does no
(P50,000) but does not exceed exceed One hundred fift
One hundred fifty thousand pesos thousand pesos (P150,000); or
(P150,000); or
(d) A fine of not less than Fift
(d) A fine of not less than Fifty thousand pesos (P50,000) but no
thousand pesos (P50,000) but not more than One hundred thousan
more than One hundred thousand pesos (P100,000) and suffe
pesos (P100,000) and suffer imprisonment of not less than te
imprisonment of not less than ten (10) years but not more tha
(10) years but not more than twelve (12) years, if the appraise
twelve (12) years, if the appraised value, to be determined in th
value, to be determined in the manner prescribed in the Tari
manner prescribed in the Tariff and Customs Code, includin
and Customs Code, including duties and taxes, of the article
duties and taxes, of the articles exceeds One hundred fift
exceeds One hundred fifty thousand pesos (P150,000).
thousand pesos (P150,000).
Any person who is found i
Any person who is found in possession of local
possession of locally manufactured articles subject t
manufactured articles subject to excise tax, the tax on which hav
excise tax, the tax on which have not been paid in accordance wit
not been paid in accordance with law, or any person who is found i
law, or any person who is found in possession of such articles whic
possession of such articles which are exempt from excise tax othe
are exempt from excise tax other than those to whom the same
than those to whom the same is lawfully issued shall be punishe
lawfully issued shall be punished with a fine of not less than ten (10
with a fine of not less than ten (10) times the amount of excise tax du
times the amount of excise tax on the articles found but not les
due on the articles found but not than Five hundred pesos (P500
less than Five hundred pesos and suffer imprisonment of no
(P500) and suffer imprisonment of less than two (2) years but no
not less than two (2) years but not more than four (4) years.
more than four (4) years.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
more than four (4) years.
Any manufacturer, owner o

Any manufacturer, owner or person in charge of any articl
person in charge of any article subject to excise tax who remove
subject to excise tax who or allows or causes the unlawfu
removes or allows or causes the removal of any such articles from
unlawful removal of any such the place of production or bonde
articles from the place of warehouse, upon which the excis
production or bonded warehouse, tax has not been paid at the tim
upon which the excise tax has not and in the manner required, an
been paid at the time and in the any person who knowingly aids o
manner required, and any person abets in the removal of suc
who knowingly aids or abets in articles as aforesaid, or concea
the removal of such articles as the same after illegal remova
aforesaid, or conceals the same shall, for the first offense, b
after illegal removal shall, for the punished with a fine of not les
first offense, be punished with a than ten (10) times the amount o
fine of not less than ten (10) times excise tax due on the articles bu
the amount of excise tax due on not less than One thousand peso
the articles but not less than One (P1,000) and suffer imprisonmen
thousand pesos (P1,000) and of not less than one (1) year bu
suffer imprisonment of not less not more than two (2) years.
than one (1) year but not more
than two (2) years.
The mere unexplained posses
of articles subject to excise tax, th
The mere unexplained
tax on which has not been paid i
possession of articles subject to
accordance with law, shall b
excise tax, the tax on which has
punishable under this Section.
not been paid in accordance with
law, shall be punishable under
this Section.
Failure or Refusal to Issue

SEC. 264. SEC. 264.
Receipts or Sales or
Commercial Invoices, (a) Any person who, being (a) Any person who, bein
Violations Related to the required under Section 237 to required under Section 237 t
Printing of such Receipts issue receipts or sales or issue receipts or sales o
or Invoices and Other commercial invoices, fails or commercial invoices, fails o
Violations refuses to issue such receipts or refuses to issue such receipts o
invoices, issues receipts or invoices, issues receipts o
invoices that do not truly reflect invoices that do not truly reflec
and/or contain all the information and/or contain all the informatio
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
required to be shown therein, or required to be shown therein, o
uses multiple or double receipts uses multiple or double receipts o
or invoices, shall, upon conviction invoices, shall, upon conviction fo
for each act or omission, be each act or omission, be punishe
punished by a fine of not less by a fine of not less than On
than One thousand pesos thousand pesos (P1,000) but no
(P1,000) but not more than Fifty more than Fifty thousand peso
thousand pesos (P50,000) and (P50,000) and suffer imprisonmen
suffer imprisonment of not less of not less than two (2) years bu
than two (2) years but not more not more than four (4) years.
than four (4) years.
(b) Any person who commits any (b) Any person who commits an
of the acts enumerated hereunder of the acts enumerated hereunde
shall be penalized with a fine of shall be penalized in the sam
not less than Five hundred manner and to the same extent a
thousand pesos (P500,000) but provided for in this Section:
not more than Ten million pesos
(P10,000,000), and imprisonment
of not less than six (6) years but
not more than ten (10) years: (as
amended by Sec. 77 of R.A. No.
10963, December 19, 2017)
(1) Printing of receipts or sales or (1) Printing of receipts or sales o

commercial invoices without commercial invoices withou
authority from the Bureau of authority from the Bureau o
Internal Revenue; or Internal Revenue; or
(2) Printing of double or multiple (2) Printing of double o

sets of invoices or receipts; sets of invoices or receipts; or
(3) Printing of unnumbere

(3) Printing of unnumbered receipts or sales or commercia
receipts or sales or commercial invoices, not bearing the name
invoices, not bearing the name, business style, Taxpaye
business style, Taxpayer Identification Number, an
Identification Number, and business address of the person o
business address of the person or entity
entity; or
(4) Printing of other fraudulent

receipts or sales or commercial
invoices. (added by Sec. 77 of
2017)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Failure to Transmit Sales SEC. 264-A.

Data Entered on Cash
Register Machine Any taxpayer required to transmit
(CRM)/Point of Sales sales data to the Bureau's
System (POS) Machines to electronic sales reporting system
the BIR's Electronic Sales but fails to do so, shall pay, for
Reporting System each day of violation, a penalty
amounting to one-tenth of one
percent (1/10 of 1%) of the
annual net income as reflected in
the taxpayer's audited financial
statement for the second year
preceding the current taxable
year for each day of violation or
Ten thousand pesos (P10,000),
whichever is higher; Provided,
That should the aggregate
number of days of violation
exceed one hundred eighty (180)
days within a taxable year, an
additional penalty of permanent
closure of the taxpayer shall be
imposed: Provided, further, That if
the failure to transmit is due to
force majeure or any causes
beyond the control of the taxpayer
the penalty shall not apply.
(Added by Sec. 78 of R.A. No.
10963, December 19, 2017)
Purchase, Use, SEC. 264-B.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Possession, Sale or Offer
to Sell, Installment, Any person who shall purchase,
Transfer, Update, use, possess, sell or offer to sell,
Upgrade, Keeping or install, transfer, update, upgrade,
Maintaining of Sales keep, or maintain any software or
Suppression Devices device designed for, or is capable
of: (a) suppressing the creation of
electronic records of sale
transactions that a taxpayer is
required to keep under existing
tax laws and/or regulations; or (b)
modifying, hiding, or deleting
electronic records of sales
transactions and providing a
ready means of access to them,
shall be punished by a fine of not
less than Five hundred thousand
pesos (P500,000) but not more
than Ten million pesos
(P10,000,000), and suffer
imprisonment of not less than two
(2) years but not more than four
(4) years: Provided, That a
cumulative suppression of
electronic sales record in excess
of the amount of Fifty million
pesos (P50,000,000) shall be
considered as economic
sabotage and shall be punished
in the maximum penalty provided
for under this provision. (Added
by Sec. 79 of R.A. No. 10963,
December 19, 2017)
Offenses Relating to
SEC. 265. Any person who SEC. 265. Any person wh
Stamps
commits any of the acts commits any of the act
enumerated hereunder shall, upon enumerated hereunder shall, upo
conviction thereof, be punished by conviction thereof, be punished b
a fine of not less than Twenty a fine of not less than Twent
more than Fifty thousand pesos more than Fifty thousand peso
imprisonment of not less than four of not less than four (4) years bu
(4) years but not more than eight not more than eight (8) years:
(8) years:
(a) Making, importing, selling
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Making, importing, selling, using or possessing withou
using or possessing without express authority from th
express authority from the Commissioner, any die for printin
Commissioner, any die for printing or making stamps, labels, tags
or making stamps, labels, tags or playing cards;
playing cards;
(b) Erasing the cancellation mark
(b) Erasing the cancellation marks of any stamp previously used, o
of any stamp previously used, or altering the written figures o
altering the written figures or letters or cancellation marks o
letters or cancellation marks on internal revenue stamps;
internal revenue stamps;
(c) Possessing false, counterfei
(c) Possessing false, counterfeit, restored or altered stamps, labe
restored or altered stamps, labels or tags or causing the commissio
or tags or causing the commission of any such offense by another;
of any such offense by another;
(d) Selling or offering for sale an

(d) Selling or offering for sale any box or package containing article
box or package containing articles subject to excise tax with false
subject to excise tax with false, spurious or counterfeit stamps o
spurious or counterfeit stamps or labels or selling from any suc
labels or selling from any such fraudulent box, package o
fraudulent box, package or container as aforementioned; or
container as aforementioned; or
(e) Giving away or accepting from
(e) Giving away or accepting from
another, or selling, buying or usin
another, or selling, buying or
containers on which the stamp
using containers on which the
are not completely destroyed.
stamps are not completely
destroyed.
Offenses Relating to Fuel SEC. 265-A. All offenses relating

Marking to fuel marking shall, in addition to
the penalties imposed under Title
X of the NIRC, as amended,
Section 1401 of Republic Act No.
10863, otherwise known as the
'Customs Modernization and
Tariff Act (CMTA),' and other
relevant laws, be punishable as
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
follows:
(a) Any person who is found to

be engaged in the sale, trade,
delivery, distribution or
transportation of unmarked fuel in
commercial quantity held for
domestic use or merchandise
shall, upon conviction, suffer the
penalties of:
(1) For the first offense, a fine of

Two million five hundred thousand
pesos (P2,500,000);
(2) For the second offense, a

fine of Five million pesos
(P5,000,000); and
(3) For the third offense, a fine

of Ten million pesos
(P10,000,000) and revocation of
license to engage in any trade or
business.
(b) Any person who causes the

removal of the official fuel
marking agent from marked fuel,
and the adulteration or dilution of
fuel intended for sale to the
domestic market, or the knowing
possession, storage, transfer or
offer for sale of fuel obtained as a
result of such removal,
adulteration or dilution shall be
penalized in the same manner
and extent as provided for in the
preceding Subsection.
(c) Any person who commits

any of the acts enumerated
hereunder shall, upon conviction,
be punished by a fine of not less
than One million pesos
(P1,000,000) but not more than
Five million pesos (P5,000,000),
and suffer imprisonment of not
less than four (4) years but not
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
more than eight (8) years:
(1) Making, importing, selling,

using or possessing fuel markers
without express authority;
(2) Making, importing, selling,

using or possessing counterfeit
fuel markers;
(3) Causing another person or

entity to commit any of the two (2)
preceding acts; or
(4) Causing the sale,

distribution, supply or transport of
legitimately imported, in-transit,
manufactured or procured
controlled precursors and
essential chemicals, in diluted,
mixtures or in concentrated form,
to any person or entity penalized
in Subsections (a), (b), or (c)
hereof, including but not limited
to, packaging, repackaging,
labeling, relabeling or
concealment of such transaction
through fraud, destruction of
documents, fraudulent use of
permits, misdeclaration, use of
front companies or mail fraud.
(d) Any person who willfully

inserts, places, adds or attaches
directly or indirectly, through any
overt or covert act, whatever
quantity of any unmarked fuel,
counterfeit additive or chemical in
the person, house, effects,
inventory, or in the immediate
vicinity of an innocent individual
for the purpose of implicating,
incriminating or imputing the
commission of any violation of
this Act shall, upon conviction, be
punished by a fine of not less
than Five million pesos
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(P5,000,000) but not more than
Ten million pesos (P10,000,000),
and suffer imprisonment of not
less than four (4) years but not
more than eight (8) years.
(e) Any person who is

authorized, licensed or accredited
under this Act and its
implementing rules to conduct
fuel tests, who issues false or
fraudulent fuel test results
knowingly, willfully or through
gross negligence, shall suffer the
additional penalty of
imprisonment ranging from one
(1) year and one (1) day to two
(2) years and six (6) months.
The additional penalties of

revocation of the license to
practice his profession in case of
a practitioner, and the closure of
the fuel testing facility, may also
be imposed at the instance of the
court. (Added by Sec. 80 of R.A.
No. 10963, December 19, 2017)
Failure to Obey Summons SEC. 266. Any person who, being SEC. 266. Any person who, bein
duly summoned to appear to duly summoned to appea
testify, or to appear and produce testify, or to appear and produc
books of accounts, records, books of accounts, records
memoranda or other papers, or to memoranda or other papers, or t
furnish information as required furnish information as require
under the pertinent provisions of under the pertinent provisions o
this Code, neglects to appear or this Code, neglects to appear or t
to produce such books of produce such books of accounts
accounts, records, memoranda or records, memoranda or
other papers, or to furnish such papers, or to furnish suc
information, shall, upon information, shall, upon conviction
conviction, be punished by a fine be punished by a fine of not les
of not less than Five thousand than Five thousand pesos (P5,000
pesos (P5,000) but not more than but not more than Ten thousan
Ten thousand pesos (P10,000) pesos (P10,000) and suffe
and suffer imprisonment of not imprisonment of not less than on
less than one (1) year but not (1) year but not more than
more than two (2) years. years.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Declaration under SEC. 267. Any declaration, return SEC. 267. Any declaration, retur
Penalties of Perjury and other statements required and other statements require
under this Code, shall, in lieu of under this Code, shall, in lie
an oath, contain a written oath, contain a written statemen
statement that they are made that they are made under th
under the penalties of perjury. penalties of perjury. Any perso
Any person who willfully files a who willfully files a declaration
declaration, return or statement return or statement containin
containing information which is information which is not true an
not true and correct as to every correct as to every material matte
material matter shall, upon shall, upon conviction, be subjec
conviction, be subject to the to the penalties prescribed fo
penalties prescribed for perjury perjury under the Revised Pena
under the Revised Penal Code. Code.
Other Crimes and

SEC. 268. SEC. 268.
Offenses
(A) Misdeclaration or (A) Misdeclaration o
Misrepresentation of Misrepresentation o
Manufacturers Subject to Excise Manufacturers Subject to Excis
Tax. — Any manufacturer who, in Tax. — Any manufacturer who, i
violation of the provisions of Title violation of the provisions of Titl
VI of this Code, misdeclares in the VI of this Code, misdeclares in th
sworn statement required therein sworn statement requir
or in the sales invoice, any or in the sales invoice, an
pertinent data or information shall pertinent data or information sha
be punished by a summary be punished by a summar
cancellation or withdrawal of the cancellation or withdrawal of th
permit to engage in business as a permit to engage in business as
manufacturer of articles subject to manufacturer of articles subject t
excise tax. excise tax.
(B) Forfeiture of Property Used in (B) Forfeiture of Property Used i

Unlicensed Business or Dies Used Unlicensed Business or Dies Use
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
for Printing False Stamps, Etc. — for Printing False Stamps, Et
All chattels, machinery, and All chattels, machinery, an
removable fixtures of any sort removable fixtures of any so
used in the unlicensed production used in the unlicensed productio
of articles subject to excise tax of articles subject to excise ta
shall be forfeited. Dies and other shall be forfeited. Dies and othe
equipment used for the printing or equipment used for the printin
making of any internal revenue making of any internal revenu
stamp, label or tag which is in stamp, label or tag which is i
imitation of or purports to be a imitation of or purports to be
lawful stamp, label or tag shall lawful stamp, label or tag shall als
also be forfeited. be forfeited.
(C) Forfeiture of Goods Illegal
(C) Forfeiture of Goods Illegally
Stored or Removed. — Unles
Stored or Removed. — Unless
otherwise specifically authorize
otherwise specifically authorized
by the Commissioner, all article
by the Commissioner, all articles
subject to excise tax should not b
subject to excise tax should not
stored or allowed to remain in th
be stored or allowed to remain in
distillery, distillery warehouse
the distillery, distillery warehouse,
bonded warehouse or other plac
bonded warehouse or other place
where made, after the tax thereo
where made, after the tax thereon
has been paid; otherwise, all suc
has been paid; otherwise, all such
articles shall be forfeited. Article
articles shall be forfeited. Articles
withdrawn from any such place o
withdrawn from any such place or
from customs custody or importe
from customs custody or imported
into the country without th
into the country without the
payment of the required tax sha
payment of the required tax shall
likewise be forfeited.
likewise be forfeited.
CHAPTER III — PENALTIES CHAPTER III — PENALTIES

IMPOSED ON PUBLIC IMPOSED ON PUBLIC
OFFICERS OFFICERS
Violations Committed by
SEC. 269. Every official, agent, or SEC. 269. Every official, agent, o
Government Enforcement
employee of the Bureau of employee of the Bureau of Interna
Officers
Internal Revenue or any other Revenue or any other agency o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
agency of the Government the Government charged with th
charged with the enforcement of enforcement of the provisions o
the provisions of this Code, who this Code, who is guilty of any o
is guilty of any of the offenses the offenses hereinbelow specifie
hereinbelow specified shall, upon shall, upon conviction for eac
conviction for each act or or omission, be punished by a fin
omission, be punished by a fine of of not less than Fifty thousan
not less than Fifty thousand pesos (P50,000) but not more tha
pesos (P50,000) but not more One hundred thousand peso
than One hundred thousand (P100,000) and suffe
pesos (P100,000) and suffer imprisonment of not less than te
imprisonment of not less than ten (10) years but not more tha
(10) years but not more than fifteen (15) years and sha
fifteen (15) years and shall likewise suffer an additiona
likewise suffer an additional penalty of perpetua
penalty of perpetual disqualification to hold publ
disqualification to hold public office, to vote, and to participate i
office, to vote, and to participate any public election:
in any public election:
(a) Extortion or willful oppression (a) Extortion or willful oppressio

through the use of his office or through the use of his office o
willful oppression and harassment willful oppression and harassmen
of a taxpayer who refused, of a taxpayer who
declined, turned down or rejected declined, turned down or rejecte
any of his offers specified in any of his offers specified i
paragraph (d) hereof; paragraph (d) hereof;
(b) Knowingly demanding or (b) Knowingly demanding o

receiving any fee, other or greater receiving any fee, other or greate
sums than are authorized by law sums than are authorized by law o
or receiving any fee, receiving any fee, compensation o
compensation or reward, except reward, except as by la
as by law prescribed, for the prescribed, for the performance o
performance of any duty; any duty;
(c) Willfully neglecting to give (c) Willfully neglecting to giv

receipts, as by law required, for receipts, as by law required, fo
any sum collected in the any sum collected in th
performance of duty or willfully performance of duty or willful
neglecting to perform any other neglecting to perform any othe
duties enjoined by law; duties enjoined by law;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(d) Offering or undertaking to (d) Offering or undertaking t

accomplish, file or submit a report accomplish, file or submit a repo
or assessment on a taxpayer or assessment on a taxpaye
without the appropriate without the appropriat
examination of the books of examination of the books o
accounts or tax liability, or offering accounts or tax liability, or offerin
or undertaking to submit a report or undertaking to submit a repo
or assessment less than the or assessment less than th
amount due the Government for amount due the Government fo
any consideration or any consideration o
compensation, or conspiring or compensation, or conspiring o
colluding with another or others to colluding with another or others t
defraud the revenues or defraud the revenues or otherwis
otherwise violate the provisions of violate the provisions of this Code
this Code;
(e) Neglecting or by design (e) Neglecting or by desig

permitting the violation of the law permitting the violation of the la
by any other person; by any other person;
(f) Making or signing any false (f) Making or signing any fals
entry or entries in any book, or entry or entries in any book, o
making or signing any false making or signing any fals
certificate or return; certificate or return;
(g) Allowing or conspiring or (g) Allowing or conspiring o

colluding with another to allow the colluding with another to allow th
unauthorized retrieval, withdrawal unauthorized retrieval, withdrawa
or recall of any return, statement or recall of any return, statemen
or declaration after the same has or declaration after th
been officially received by the been officially received by th
Bureau of Internal Revenue; Bureau of Internal Revenue;
(h) Having knowledge or (h) Having knowledge o

information of any violation of this information of any violation of th
Code or of any fraud committed Code or of any fraud committed o
on the revenues collectible by the the revenues collectible by th
Bureau of Internal Revenue, Bureau of Internal Revenue, failur
failure to report such knowledge to report such knowle
or information to their superior information to their superior office
officer, or failure to report as or failure to report as otherwis
otherwise required by law; required by law; and
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(i) Without the authority of law, (i) Without the authority of law
demanding or accepting or demanding or accepting o
attempting to collect, directly or attempting to collect, directly o
indirectly, as payment or indirectly, as payment or otherwis
otherwise any sum of money or any sum of money or othe
other thing of value for the value for the compromise
compromise, adjustment or adjustment or settlement of an
settlement of any charge or charge or complaint for an
complaint for any violation or violation or alleged violation of th
alleged violation of this Code; and Code.
(j) Deliberate failure to act on the

application for refunds within the
prescribed period provided under
Section 112 of this Act. (added by
Sec. 81 of R.A. No. 10963,
December 19, 2017)
Provided, That the provisions of Provided, That the provisions o

the foregoing paragraph the foregoing paragrap
notwithstanding, any internal notwithstanding, any interna
revenue officer for which a prima revenue officer for whi
facie case of grave misconduct facie case of grave misconduc
has been established shall, after has been established shall, afte
due notice and hearing of the due notice and hearing of th
administrative case and subject to administrative case and subject t
Civil Service Laws, be dismissed Civil Service Laws, be dismisse
from the revenue service: from the revenue service
Provided, further, That the term Provided, further, That the term
'grave misconduct', as defined in 'grave misconduct', as
the Civil Service Law, shall the Civil Service Law, shall includ
include the issuance of fake the issuance of fake letters o
letters of authority and receipts, authority and receipts, forgery o
forgery of signature, usurpation of signature, usurpation of authorit
authority and habitual issuance of and habitual issuance o
unreasonable assessments. unreasonable assessments.
Unlawful Divulgence of Except as provided in Sections Except as provided in

Trade Secrets 6(F) and 71 of this Code and 6(F) and 71 of this Cod
Section 26 of Republic Act No. Section 26 of Republic Act No
6388, any officer or employee of 6388, any officer or employee o
the Bureau of Internal Revenue the Bureau of Internal Revenu
who divulges to any person or who divulges to any person o
makes known in any other manner makes known in any other manne
than may be provided by law than may be provided by la
information regarding the information regarding th
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
business, income, or estate of any business, income, or estate of an
taxpayer, the secrets, operation, taxpayer, the secrets, operation
style or work, or apparatus of any style or work, or apparatus of an
manufacturer or producer, or manufacturer or producer, o
confidential information regarding confidential information regardin
the business of any taxpayer, the business of any taxpaye
knowledge of which was acquired knowledge of which was acquire
by him in the discharge of his by him in the discharge of h
official duties, shall, upon official duties, shall, upo
not less than Fifty thousand pesos not less than Fifty thousand peso
(P50,000) but not more than One (P50,000) but not more than On
hundred thousand pesos hundred thousand peso
(P100,000), or suffer (P100,000), or suffer imprisonmen
(2) years but not more than five not more than five (5) years, o
(5) years, or both. both.
Any officer or employee of the Any officer or employee of th

Bureau of Internal Revenue who Bureau of Internal Revenue wh
divulges or makes known in any divulges or makes known in an
other manner to any person other other manner to any person othe
than the requesting foreign tax than the requesting foreign ta
authority information obtained authority information obtained from
from banks and financial banks and financial institution
institutions pursuant to Section pursuant to Section 6(F
6(F), knowledge or information knowledge or information acquire
acquired by him in the discharge by him in the discharge of h
of his official duties, shall, upon official duties, shall, upo
conviction, be punished by a fine conviction, be punished by a fin
of not less than Fifty thousand of not less than Fifty thousan
pesos (P50,000) but not more pesos (P50,000) but not more tha
than One hundred thousand One hundred thousand peso
pesos (P100,000), or suffer (P100,000), or suffer imprisonmen
(2) years but not more than five not more than five (5) years, o
(5) years, or both. both.
Unlawful Interest of SEC. 271. Any internal revenue SEC. 271. Any internal revenu
Revenue Law Enforcers in officer who is or shall become officer who is or shall becom
Business interested, directly or indirectly, in interested, directly or indirectly, i
the manufacture, sale or the manufacture, sale o
importation of any article subject importation of any article subject t
to excise tax under Title VI of this excise tax under Title VI of th
Code or in the manufacture or Code or in the manufacture o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
repair or sale, of any die for repair or sale, of any die fo
printing, or making of stamps, or printing, or making of stamps, o
labels shall, upon conviction for labels shall, upon conviction fo
each act or omission, be each act or omission, be punishe
punished by a fine of not less by a fine of not less than Fiv
than Five thousand pesos thousand pesos (P5,000) but no
(P5,000) but not more than Ten more than Ten thousand peso
thousand pesos (P10,000), or (P10,000), or suffer imprisonmen
suffer imprisonment of not less of not less than two (2) years an
than two (2) years and one (1) one (1) day but not more than fou
day but not more than four (4) (4) years, or both.
years, or both.
Violation of Withholding
SEC. 272. Every officer or SEC. 272. Every officer o
Tax Provision
employee of the Government of employee of the Government o
the Republic of the Philippines or the Republic of the Phili
any of its agencies and any of its agencies an
instrumentalities, its political instrumentalities, its politica
subdivisions, as well as subdivisions, as well a
corporations, including the Bangko corporations, including the Bangk
Sentral ng Pilipinas (BSP), who, Sentral ng Pilipinas (BSP), who
under the provisions of this Code under the provisions of this Cod
or rules and regulations or rules and regulation
promulgated thereunder, is promulgated thereunder,
charged with the duty to deduct charged with the duty to deduc
and withhold any internal revenue and withhold any internal revenu
tax and to remit the same in tax and to remit the same i
this Code and other laws is guilty this Code and other laws is guilt
of any offense hereinbelow of any offense hereinbelo
specified shall, upon conviction for specified shall, upon conviction fo
each act or omission be punished each act or omission be punishe
by a fine of not less than Five by a fine of not less than Fiv
more than Fifty thousand pesos more than Fifty thousand peso
(P50,000) or suffer imprisonment (P50,000) or suffer imprisonmen
of not less than six (6) months and of not less than six (6) months an
one (1) day but not more than two one (1) day but not more than tw
(2) years, or both: (2) years, or both:
(a) Failing or causing the failure to (a) Failing or causing the failure t
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
deduct and withhold any internal deduct and withhold any interna
revenue tax under any of the revenue tax under any of th
withholding tax laws and withholding tax laws an
implementing rules and implementing rules an
regulations; regulations;
(b) Failing or causing the failure to (b) Failing or causing the failure t
remit taxes deducted and withheld remit taxes deducted and withhel
within the time prescribed by law, within the time prescribed by law
and implementing rules and and implementing rules an
regulations; and regulations; and
(c) Failing or causing the failure t
(c) Failing or causing the failure to
file return or statement within th
file return or statement within the
time prescribed, or rendering o
time prescribed, or rendering or
furnishing a false or fraudulen
furnishing a false or fraudulent
return or statement required unde
return or statement required
the withholding tax laws and rule
under the withholding tax laws
and regulations.
and rules and regulations.
Penalty for Failure to Issue SEC. 273. Any official who fails to SEC. 273. Any official who fails t
and Execute Warrant issue or execute the warrant of issue or execute the warrant o
distraint or levy within thirty (30) distraint or levy within thirty (30
days after the expiration of the days after the expiration of th
time prescribed in Section 207 or time prescribed in Section 207 o
who is found guilty of abusing the who is found guilty of abusing th
exercise thereof by competent exercise thereof by competen
authority shall be automatically authority shall be automatical
dismissed from the service after dismissed from the service afte
due notice and hearing. due notice and hearing.
CHAPTER IV — OTHER PENAL CHAPTER IV — OTHER PENAL

Penalty for Second and SEC. 274. In the case of SEC. 274. In the case o
Subsequent Offenses reincidence, the maximum of the reincidence, the maximum of th
penalty prescribed for the offense penalty prescribed for the offens
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
shall be imposed. shall be imposed.
Violation of Other SEC. 275. Any person who SEC. 275. Any person wh
Provisions of this Code or violates any provision of this Code violates any provision of this Cod
Rules and Regulations in or any rule or regulation or any rule or regulatio
General promulgated by the Department promulgated by the Department o
of Finance, for which no specific Finance, for which no specif
penalty is provided by law, shall, penalty is provided by law, sha
upon conviction for each act or upon conviction for each act o
omission, be punished by a fine of omission, be punished b
not more than One thousand not more than One thousan
pesos (P1,000) or suffer pesos (P1,000) or suffe
imprisonment of not more than six imprisonment of not more than s
(6) months, or both. (6) months, or both.
Penalty for Selling, SEC. 276. Any taxpayer, whose SEC. 276. Any taxpayer, whos
Transferring, Encumbering property has been placed under property has been placed unde
or in any way Disposing of constructive distraint, who sells, constructive distraint, who sells
Property Placed under transfers, encumbers or in any transfers, encumbers or in an
Constructive Distraint way disposes of said property, or way disposes of said property, o
any part thereof, without the any part thereof, without th
knowledge and consent of the knowledge and consent of th
Commissioner, shall, upon Commissioner, shall, upo
not less than twice the value of not less than twice the value of th
the property so sold, encumbered property so sold, encumbered o
or disposed of but not less than disposed of but not less than Fiv
Five thousand pesos (P5,000), or thousand pesos (P5,000), or suffe
suffer imprisonment of not less imprisonment of not less than tw
than two (2) years and one (1) (2) years and one (1) day but no
day but not more than four (4) more than four (4) years, or bot
years, or both.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Failure to Surrender SEC. 277. Any person having in SEC. 277. Any person having i
Property Placed under his possession or under his his possession or under his contro
Distraint and Levy control any property or rights to any property or rights to property
property, upon which a warrant of upon which a warrant o
constructive distraint or actual constructive distraint or actua
distraint and levy has been issued distraint and levy has been issue
shall, upon demand by the shall, upon demand by th
Commissioner or any of his Commissioner or any of h
deputies executing such warrant, deputies executing such warran
surrender such property or right to surrender such property or right t
property to the Commissioner or property to the Commissioner o
any of his deputies, unless such any of his deputies, unless suc
property or right is, at the time of property or right is, at the time o
such demand, subject to an such demand, subject to a
attachment or execution under attachment or execution under an
any judicial process. Any person judicial process. Any person wh
who fails or refuses to surrender fails or refuses to surrender any o
any of such property or right shall such property or right shall b
be liable in his own person and liable in his own person and estat
estate to the Government in a to the Government in a sum equa
sum equal to the value of the to the value of the property o
property or rights not so rights not so surrendered but no
surrendered but not exceeding exceeding the amount of the taxe
the amount of the taxes (including (including penalties and interes
penalties and interest) for the for the collection of which suc
collection of which such warrant warrant had been issued, togethe
had been issued, together with with costs and interest if any, from
costs and interest if any, from the the date of such warrant. I
date of such warrant. In addition, addition, such person
such person shall, upon conviction for each act o
conviction for each act or omission, be punished by a fine o
omission, be punished by a fine of not less than Five thousand peso
not less than Five thousand (P5,000), or suffer imprisonment o
pesos (P5,000), or suffer not less than six (6) months an
imprisonment of not less than six one (1) day but not more than tw
(6) months and one (1) day but (2) years, or both.
not more than two (2) years, or
both.
Procuring Unlawful SEC. 278. Any person who SEC. 278. Any person who cause
Divulgence of Trade causes or procures an officer or or procures an officer or employe
Secrets employee of the Bureau of of the Bureau of Internal Revenu
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Internal Revenue to divulge any to divulge any confidentia
confidential information regarding information regarding th
the business, income or business, income or inheritance o
inheritance of any taxpayer, any taxpayer, knowledge of whic
knowledge of which was acquired was acquired by him in th
by him in the discharge of his discharge of his official duties, an
official duties, and which it is which it is unlawful for him t
unlawful for him to reveal, and reveal, and any person wh
any person who publishes or publishes or prints in any manne
prints in any manner whatever, whatever, not provided by law, an
not provided by law, any income, income, profit, loss or expenditur
profit, loss or expenditure appearing in any income ta
appearing in any income tax return, shall be punished by a fin
return, shall be punished by a fine of not more than two thousan
of not more than two thousand pesos (P2,000), or suffe
pesos (P2,000), or suffer imprisonment of not less than s
imprisonment of not less than six (6) months nor more than five (5
(6) months nor more than five (5) years, or both.
years, or both.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Confiscation and Forfeiture SEC. 279. In addition to the SEC. 279. In addition to th
of the Proceeds or penalty imposed for the violations penalty imposed for the violation
Instruments of Crime of the provisions of Title X of this of the provisions of Title X of th
Code, the same shall carry with it Code, the same shall carry with
the confiscation and forfeiture in the confiscation and forfeiture i
favor of the Government of the favor of the Government of th
proceeds of the crime or value of proceeds of the crime or value o
the goods, and the instruments or the goods, and the instruments o
tools with which the crime was tools with which the crime wa
committed: Provided, however, committed: Provided, how
That if in the course of the That if in the course of th
proceedings, it is established that proceedings, it is established tha
the instruments or tools used in the instruments or tools used i
the illicit act belong to a third the illicit act belong to a thir
person, the same shall be person, the same shall b
confiscated and forfeited after confiscated and forfeited after du
due notice and hearing in a notice and hearing in a separat
separate proceeding in favor of proceeding in favor of
the Government if such third Government if such third perso
person leased, let, chartered or leased, let, chartered or otherwis
otherwise entrusted the same to entrusted the same to th
the offender. Provided, further, offender. Provided, further, That i
That in case the lessee case the lessee subleased, or th
subleased, or the borrower, borrower, charterer, or truste
charterer, or trustee allowed the allowed the use of the instrument
use of the instruments or tools to or tools to the offe
the offender, such instruments or instruments or tools shall, likewise
tools shall, likewise, be be confiscated and forfeited
confiscated and forfeited: Provided, finally, That property o
Provided, finally, That property of common carriers shall not b
common carriers shall not be subject to forfeiture when used i
subject to forfeiture when used in the transaction of their business a
the transaction of their business such common carrier, unless th
as such common carrier, unless owner or operator of said commo
the owner or operator of said carrier was, at the time of th
common carrier was, at the time illegal act, a consenting party o
of the illegal act, a consenting privy thereto, without prejudice t
party or privy thereto, without the owner's right of recover
prejudice to the owner's right of against the offender in a civil o
recovery against the offender in a criminal action. Articles which ar
civil or criminal action. Articles not subject of lawful comme
which are not subject of lawful shall be destroyed.
commerce shall be destroyed.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Subsidiary Penalty SEC. 280. If the person convicted SEC. 280. If the person convicte
for violation of any of the for violation of any of th
provisions of this Code has no provisions of this Code has n
property with which to meet the property with which to meet th
fine imposed upon him by the fine imposed upon him by th
court, or is unable to pay such court, or is unable to pay such fine
fine, he shall be subject to a he shall be subject to a subsidiar
subsidiary personal liability at the personal liability at the rate of on
rate of one (1) day for each Eight (1) day for each Eight pesos a
pesos and fifty centavos (P8.50) fifty centavos (P8.50) subject t
subject to the rules established in the rules established in Article 3
Article 39 of the Revised Penal of the Revised Penal Code.
Code.
Prescription for Violations

SEC. 281. All violations of any SEC. 281. All violations of an
of any Provision of this
provision of this Code shall provision of this Code sha
Code
prescribe after Five (5) years. prescribe after Five (5) years.
Prescription shall begin to run Prescription shall begin to run from

from the day of the commission of the day of the commission of th
the violation of the law, and if the violation of the law, and if th
same be not known at the time, same be not known at the time
from the discovery thereof and the from the discovery thereof and th
institution of judicial proceedings institution of judicial proceeding
for its investigation and for its investigation an
punishment. punishment.
The prescription shall be The prescription shall b

interrupted when proceedings are interrupted when proceedings ar
instituted against the guilty instituted against the guilt
persons and shall begin to run persons and shall begin to ru
again if the proceedings are again if the proceedings ar
dismissed for reasons not dismissed for reasons no
constituting jeopardy. constituting jeopardy.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The term of prescription shall no

The term of prescription shall not
run when the offender is absen
run when the offender is absent
from the Philippines
from the Philippines
Informer's Reward to
SEC. 282. SEC. 282.
Persons Instrumental in the
Discovery of Violations of (A) For Violations of the National (A) For Violations of the Nationa
the National Internal Internal Revenue Code. — Any Internal Revenue Code
Revenue Code and in the person, except an internal revenue person, except an internal revenu
Discovery and Seizure of official or employee, or other official or employee, or other publ
Smuggled Goods public official or employee, or his official or employee, or his
relative within the sixth degree of within the sixth degree o
consanguinity, who voluntarily consanguinity, who voluntari
gives definite and sworn gives definite and swor
information, not yet in the information, not yet in th
possession of the Bureau of possession of the Bureau o
Internal Revenue, leading to the Internal Revenue, leading to th
discovery of frauds upon the discovery of frauds upon th
internal revenue laws or violations internal revenue laws or violation
of any of the provisions thereof, of any of the provisions thereo
thereby resulting in the recovery of thereby resulting in the recovery o
revenues, surcharges and fees revenues, surcharges and fee
and/or the conviction of the guilty and/or the conviction of the guilt
party and/or the imposition of any party and/or the imposition of an
of the fine or penalty, shall be of the fine or penalty, shall b
rewarded in a sum equivalent to rewarded in a sum equivalent t
ten percent (10%) of the ten percent (10%) of the reve
revenues, surcharges or fees surcharges or fees recovere
recovered and/or fine or penalty and/or fine or penalty imposed an
imposed and collected or One collected or One million peso
million pesos (P1,000,000) per (P1,000,000) per case, whicheve
case, whichever is lower. The is lower. The same amount o
same amount of reward shall also reward shall also be given to a
be given to an informer where the informer where the offender ha
offender has offered to offered to compromise th
compromise the violation of law violation of law committed by him
committed by him and his offer and his offer has been accepte
has been accepted by the by the Commissioner and collecte
Commissioner and collected from from the offender: Provided, Tha
the offender: Provided, That should no revenue, surcharges o
should no revenue, surcharges or fees be actually recovered o
fees be actually recovered or collected, such person shall not b
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
collected, such person shall not be entitled to a reward: Pro
entitled to a reward: Provided, further, That the informatio
further, That the information mentioned herein shall not refer t
mentioned herein shall not refer to a case already pending o
a case already pending or previously investigated o
previously investigated or examined by the Commissioner o
examined by the Commissioner or any of his deputies, agents o
any of his deputies, agents or examiners, or the Secretary o
examiners, or the Secretary of Finance or any of his deputies o
Finance or any of his deputies or agents: Provided, finally, That th
agents: Provided, finally, That the reward provided herein shall b
reward provided herein shall be paid under rules and regulation
paid under rules and regulations issued by the Secretary o
issued by the Secretary of Finance, upon recommendation o
Finance, upon recommendation of the Commissioner.
the Commissioner.
(B) For Discovery and Seizure o

(B) For Discovery and Seizure of Smuggled Goods. — T
Smuggled Goods. — To encourage the public t
encourage the public to extend full cooperation in eradicatin
cooperation in eradicating smuggling, a cash rewar
smuggling, a cash reward equivalent to ten percent (10%) o
equivalent to ten percent (10%) of the fair market value of th
the fair market value of the smuggled and confiscated good
smuggled and confiscated goods or One million pesos (P1,000,000
or One million pesos (P1,000,000) per case, whichever is lower, sha
per case, whichever is lower, shall be given to persons instr
be given to persons instrumental the discovery and seizure of suc
in the discovery and seizure of smuggled goods.
such smuggled goods.
The cash rewards of informer
The cash rewards of informers shall be subject to income tax
shall be subject to income tax, collected as a final withholding tax
collected as a final withholding tax, at the rate of ten percent (10%).
at the rate of ten percent (10%).
The provisions of the foregoin
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Subsections notwithstanding,
The provisions of the foregoing
public officials, whether incumben
Subsections notwithstanding, all
or retired, who acquired th
public officials, whether
information in the course of th
incumbent or retired, who
performance of their duties durin
acquired the information in the
their incumbency, are prohibite
course of the performance of their
from claiming informer's reward.
duties during their incumbency,
are prohibited from claiming
informer's reward.
TITLE XI — ALLOTMENT OF TITLE XI — ALLOTMENT O

INTERNAL REVENUE INTERNAL REVENUE
CHAPTER I — DISPOSITION CHAPTER I — DISPOSITIO

AND ALLOTMENT OF AND ALLOTMENT OF NATIONA
NATIONAL INTERNAL INTERNAL REVENUE I
REVENUE IN GENERAL GENERAL
Disposition of National
SEC. 283. National internal SEC. 283. National interna
Internal Revenue
revenue collected and not applied revenue collected and not applie
as hereinabove provided or as hereinabove provided o
otherwise specially disposed of by otherwise specially disposed of b
law shall accrue to the National law shall accrue to the Nationa
Treasury and shall be available for Treasury and shall be available fo
the general purposes of the the general purposes of th
Government, with the exception of Government, with the exception o
the amounts set apart by way of the amounts set apart by way o
allotment as provided for under allotment as provided for unde
Republic Act No. 7160, otherwise Republic Act No. 7160, otherwis
known as the Local Government known as the Local Governmen
Code of 1991. Code of 1991.
In addition to the internal revenue In addition to the internal revenu

allotment as provided for in the allotment as provided for in th
preceding paragraph, fifty percent preceding paragraph, fifty percen
(50%) of the national taxes (50%) of the national taxe
collected under Sections 106, 108 collected under Sections
and 116 of this Code in excess of and 116 of this Code in excess o
the increase in collections for the the increase in collections for th
immediately preceding year shall immediately preceding year sha
be distributed as follows: be distributed as follows:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(a) Twenty percent (20%) shall (a) Twenty percent (20%) sha
accrue to the city or municipality accrue to the city or municipalit
where such taxes are collected where such taxes are collecte
and shall be allocated in and shall be alloca
accordance with Section 150 of accordance with Section 150 o
Republic Act No. 7160, otherwise Republic Act No. 7160, otherwis
known as the Local Government known as the Local Governmen
Code of 1991; and Code of 1991; and
(b) Eighty percent (80%) sha
(b) Eighty percent (80%) shall
accrue to the Nationa
accrue to the National
Government.
Government.
Allotment for the

SEC. 284. One-half of one percent SEC. 284. One-half of one percen
Commission on Audit
(1/2 of 1%) of the collections from (1/2 of 1%) of the collections from
national internal revenue taxes not national internal revenue taxes no
otherwise accruing to special otherwise accruing to specia
accounts in the general fund of the accounts in the general fund of th
national government shall accrue national government shall accru
to the Commission on Audit as a to the Commission on Audit as
fee for auditing services rendered fee for auditing services rendere
to local government units, to local government units
excluding maintenance, excluding maintenance
equipment, and other operating equipment, and other operatin
expenses as provided for in expenses as provided for
Section 21 of Presidential Decree Section 21 of Presidential Decre
No. 898. No. 898.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The Secretary of Finance
The Secretary of Finance is
hereby authorized to deduct from
hereby authorized to deduct from
the monthly internal revenue ta
the monthly internal revenue tax
collections an amount equivalen
collections an amount equivalent
to the percentage as herein fixed
to the percentage as herein fixed,
and to remit the same directly t
and to remit the same directly to
the Commission on Audit unde
the Commission on Audit under
such rules and regulations as ma
such rules and regulations as
be promulgated by the Secretar
may be promulgated by the
of Finance and the Chairman o
Secretary of Finance and the
the Commission on Audit.
Chairman of the Commission on
Audit.
Allotment for the Bureau of

SEC. 285. An amount equivalent SEC. 285. An amount equivalen
Internal Revenue
to five percent (5%) of the excess to five percent (5%) of the exces
of actual collections of national of actual collections of nationa
internal revenue taxes over the internal revenue taxes over th
collection goal shall accrue to the collection goal shall accrue to th
special fund of the Bureau of special fund of the Bureau o
Internal Revenue and shall be Internal Revenue and shall b
treated as receipts automatically treated as receipts automatical
appropriated. Said amount shall appropriated. Said amount shall b
be utilized as incentive bonus for utilized as incentive bonus fo
revenue personnel, purchase of revenue personnel, purcha
necessary equipment and facilities necessary equipment and facilitie
for the improvement of tax for the improvement of ta
administration, as approved by the administration, as approved by th
Commissioner: Provided, That the Commissioner: Provided, That th
President may, upon President may, upo
Commissioner, direct that the Commissioner, direct that th
excess be credited to a Special excess be credited to a Specia
Account in the National Treasury Account in the National Treasur
to be held in reserve available for to be held in reserve available fo
distribution as incentive bonus in distribution as incentive bonus i
the subsequent years. the subsequent years.
The Secretary of Finance
The Secretary of Finance is
hereby authorized to transfer from
hereby authorized to transfer from
the Treasury an amount equivalen
the Treasury an amount
to the percentage as herein fixe
equivalent to the percentage as
and to remit the same directly t
herein fixed and to remit the same
the Bureau of Internal Revenu
directly to the Bureau of Internal
under such rules and regulation
Revenue under such rules and
as may be promulgated by th
regulations as may be
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Finance.
CHAPTER II — SPECIAL CHAPTER II — SPECIA

DISPOSITION OF CERTAIN DISPOSITION OF CERTAI
NATIONAL INTERNAL NATIONAL INTERNAL REVENU
REVENUE TAXES TAXES
Disposition of Proceeds of SEC. 286. Twenty-five percent SEC. 286. Twenty-five percen
Insurance Premium Tax (25%) of the premium tax (25%) of the premium tax collecte
collected under Section 123 of under Section 123 of this Cod
this Code shall accrue to the shall accrue to the Insurance Fun
Insurance Fund as contemplated as contemplated in Section 418 o
in Section 418 of Presidential Presidential Decree No. 612
Decree No. 612 which shall be shall be used for the purpose o
used for the purpose of defraying defraying the expenses of th
the expenses of the Insurance Insurance Commission. Th
Commission. The Commissioner Commissioner shall turn over an
shall turn over and deliver the deliver the said Insurance Fund t
said Insurance Fund to the the Insurance Commissioner a
Insurance Commissioner as soon soon as the collection is made.
as the collection is made.
Granting Provinces, Cities

and Municipalities Shares
in the Specific Tax on
Certain Petroleum
Products
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Shares of Local
SEC. 287. Local government units SEC. 287. Local government unit
Government Units in the
shall have an equitable share in shall have an equitable share i
Proceeds from the
the proceeds derived from the the proceeds derived from th
Development and
utilization and development of the utilization and development of th
Utilization of the National
national wealth, within their national wealth, within the
Wealth
respective areas, including sharing respective areas, including sharin
the same with the inhabitants by the same with the inhabitants b
way of direct benefits. way of direct benefits.
(A) Amount of Share of Local (A) Amount of Share of Loca

Government Units. — Local Government Units. — Loca
government units shall, in addition government units shall, in additio
to the internal revenue allotment, to the internal revenue allotmen
have a share of forty percent have a share of forty percen
(40%) of the gross collection (40%) of the gross collectio
derived by the national derived by the nationa
government from the preceding government from the precedin
fiscal year from excise taxes on fiscal year from excise taxes o
mineral products, royalties, and mineral products, royalties, an
such other taxes, fees or charges, such other taxes, fees or charges
including related surcharges, including related surcharges
interests or fines, and from its interests or fines, and from it
share in any co-production, joint share in any co-production, join
venture or production sharing venture or production sharin
agreement in the utilization and agreement in the utilization an
development of the national development of the national wealt
wealth within their territorial within their territorial jurisdiction.
jurisdiction.
(B) Share of the Loca
(B) Share of the Local Governments from An
Governments from Any Government Agency o
Government Agency or Government-owned or -Controlle
Government-owned or -Controlled Corporation. — Local governmen
Corporation. — Local government units shall have a share, based o
units shall have a share, based on the preceding fiscal ye
the preceding fiscal year, from the proceeds derived by an
proceeds derived by any government agency o
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
government agency or government-owned or -controlle
government-owned or -controlled corporation engaged in th
corporation engaged in the utilization and development of th
utilization and development of the national wealth based on th
national wealth based on the following formula, whichever w
following formula, whichever will produce a higher share for th
produce a higher share for the local government unit:
local government unit:
(1) One Percent (1%) of the gross (1) One Percent (1%) of the gros
sales or receipts of the preceding sales or receipts of the precedin
calendar year; or calendar year; or
(2) Forty percent (40%) of the (2) Forty percent (40%) of th

excise taxes on mineral products, excise taxes on mineral products
royalties, and such other taxes, royalties, and such other taxes
fees or charges, including related fees or charges, including relate
surcharges, interests or fines the surcharges, interests
government agency or government agency o
corporation would have paid if it corporation would have paid if
were not otherwise exempt. were not otherwise exempt.
(C) Allocation of Shares. — The (C) Allocation of Shares

share in the preceding Section share in the preceding Sectio
shall be distributed in the following shall be distributed in the followin
manner: manner:
(1) Where the natural resources (1) Where the natura

are located in the province: are located in the province:
(a) Province — twenty percent (a) Province — twenty percen

(20%); (20%);
(b) Component city/municipality (b) Component city/municipalit

— forty-five percent (45%); and — forty-five percent (45%); and
(c) Barangay — thirty-five percent (c) Barangay — thirty-five percen

(35%). (35%).
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Provided, however, That where Provided, however, That where th
the natural resources are located natural resources are located i
in two (2) or more provinces, or in two (2) or more provinces, or i
two (2) or more component cities two (2) or more component citie
or municipalities or in two (2) or or municipalities or in two (2) o
more barangays, their respective more barangays, their respectiv
shares shall be computed on the shares shall be computed on th
basis of: (1) Population — seventy basis of: (1) Population — sevent
percent (70%); and (2) Land area percent (70%); and (2) Land are
— thirty percent (30%). — thirty percent (30%).
(2) Where the natural resources (2) Where the natural resource
are located in a highly urbanized are located in a highly urbanized o
or independent component city: independent component city:
(a) City — sixty-five percent (a) City — sixty-five percent (65%

(65%); and and
(b) Barangay — thirty-five percent (b) Barangay — thirty-five percen

(35%). (35%).
Provided, however, That where th
Provided, however, That where
natural resources are located i
the natural resources are located
two (2) or more cities, th
in two (2) or more cities, the
allocation of shares shall be base
allocation of shares shall be
on the formula on population an
based on the formula on
land area as specified i
population and land area as
subsection (C)(1) hereof.
specified in subsection (C)(1)
hereof.
Disposition of Incremental
SEC. 288. SEC. 288.
Revenue
(A) Incremental Revenues from (A) Incremental Revenues from
Republic Act No. 7660. — The Republic Act No. 7660
incremental revenues from the incremental revenues from th
increase in the documentary increase in the documentar
stamp taxes under R.A. No. 7660 stamp taxes under R.A. No. 766
shall be set aside for the following shall be set aside for the followin
purposes: purposes:
(1) In 1994 and 1995, twenty-five (1) In 1994 and 1995, twenty-fiv
percent (25%) thereof percent (25%) thereof respectively
respectively, shall accrue to the shall accrue to the Unifie
Unified Home-Lending Program Home-Lending Program unde
under Executive Order No. 90 Executive Order No. 90 particular
particularly for mass-socialized for mass-socialized housin
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
housing program to be allocated program to be allocated as follows
as follows: fifty percent (50%) for fifty percent (50%) fo
mass-socialized housing; thirty mass-socialized housing; thirt
percent (30%) for the community percent (30%) for the communit
mortgage program; and twenty mortgage program; and twent
percent (20%) for land banking percent (20%) for land bankin
and development to be and development to b
administered by the National administered by the Nationa
Housing Authority: Provided, That Housing Authority: Provided, Tha
not more than one percent (1%) not more than one percent (1%) o
of the respective allocations the respective allocations hereo
hereof shall be used for shall be used for administrativ
administrative expenses; expenses;
(2) In 1996, twenty-five percent (2) In 1996, twenty-five percen

(25%) thereof to be utilized for the (25%) thereof to be utilized for th
National Health Insurance National Health Insuranc
Program that hereafter may be Program that hereafter
mandated by law; mandated by law;
(3) In 1994 and every year (3) In 1994 and every yea
thereafter, twenty-five percent thereafter, twenty-five percen
(25%) thereof shall accrue to a (25%) thereof shall accrue to
Social Education Fund to be Social Education Fund to b
administered by the Department administered by the Department o
of Education, Culture and Sports Education, Culture and Sports fo
for the construction and repair of the construction and repair o
school facilities, training of school facilities, training o
teachers, and procurement or teachers, and procurement o
production of instructional production of instructiona
materials and teaching aids; and materials and teaching aids; and
(4) In 1994 and every year (4) In 1994 and every yea
thereafter, fifty percent (50%) thereafter, fifty percent (50%
thereof shall accrue to a Special thereof shall accrue to a Specia
Infrastructure Fund for the Infrastructure Fund for th
construction and repair of roads, construction and repair of r
bridges, dams and irrigation, bridges, dams and irrigation
seaports and hydroelectric and seaports and hydroelectric an
other indigenous power projects: other indigenous power projects
Provided, however, That for the Provided, however, That for th
years 1994 and 1995, thirty years 1994 and 1995, thirt
percent (30%), and for the years percent (30%), and for the year
1996, 1997 and 1998, twenty 1996, 1997 and 1998, twent
percent (20%), of this fund shall percent (20%), of this fund shall b
be allocated for depressed allocated for depressed province
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
provinces as declared by the as declared by the President as o
President as of the time of the the time of the effectivity of R.A
effectivity of R.A. No. 7660: No. 7660: Provided, further, Tha
Provided, further, That availments availments under this fund shall b
under this fund shall be determined by the President o
determined by the President on the basis of equity.
the basis of equity.
Provided, finally, That in Provided, finally, That i

paragraphs (2), (3) and (4) of this paragraphs (2), (3) and (4) of th
Section, not more than one Section, not more than on
percent (1%) of the allocated percent (1%) of the allocated fund
funds thereof shall be used for thereof shall be used fo
administrative expenses by the administrative expenses by th
implementing agencies. implementing agencies.
(B) Incremental Revenues from (B) Incremental Revenues from

Republic Act No. 8240. — Fifteen Republic Act No. 8240.
percent (15%) of the incremental percent (15%) of the incrementa
revenue collected from the excise revenue collected from the excis
tax on tobacco products under tax on tobacco products unde
R.A. No. 8240 shall be allocated R.A. No. 8240 shall be allocate
and divided among the provinces and divided among the province
producing burley and native producing burley and nativ
tobacco in accordance with the tobacco in accordance with th
volume of tobacco leaf volume of tobacco leaf production
production. The fund shall be The fund shall be exclusive
exclusively utilized for programs utilized for programs to promot
to promote economically viable economically viable alternatives fo
alternatives for tobacco farmers tobacco farmers and workers suc
and workers such as: as:
(1) Programs that will provide (1) Programs that will provid
inputs, training, and other support inputs, training, and other suppo
for tobacco farmers who shift to for tobacco farmers who shift t
production of agricultural products production of agricultural prod
other than tobacco including, but other than tobacco including, bu
not limited to, high-value crops, not limited to, high-value crops
spices, rice, corn, sugarcane, spices, rice, corn, sugarcane
coconut, livestock and fisheries; coconut, livestock and fisheries;
(2) Programs that will provide (2) Programs that will provid
financial support for tobacco financial support for tobacc
farmers who are displaced or who farmers who are displaced or wh
cease to produce tobacco; cease to produce tobacco
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Cooperative programs to (3) Cooperative programs to assis
assist tobacco farmers in planting tobacco farmers in plantin
alternative crops or implementing alternative crops or implementin
other livelihood projects; other livelihood projects;
(4) Livelihood programs and (4) Livelihood programs an

projects that will promote, projects that will promote
enhance, and develop the tourism enhance, and develop the tourism
potential of tobacco-growing potential of tobacco-growin
provinces; provinces;
(5) Infrastructure projects such as (5) Infrastructure projects such a

farm to market roads, schools, farm to market roads, schools
hospitals, and rural health hospitals, and rural healt
facilities; and facilities; and
(6) Agro-industrial projects that (6) Agro-industrial projects that w

will enable tobacco farmers to be enable tobacco farmers to b
involved in the management and involved in the management an
subsequent ownership of subsequent ownership of projects
projects, such as post-harvest such as post-harvest an
and secondary processing like secondary processing lik
cigarette manufacturing and cigarette manufacturing an
by-product utilization. by-product utilization.
The Department of Budget and The Department of Budget an

Management, in consultation with Management, in consultation wit
the Department of Agriculture, the Department of Agriculture
shall issue rules and regulations shall issue rules and regulation
governing the allocation and governing the allocation an
disbursement of this fund, not disbursement of this fund, not late
later than one hundred eighty than one hundred eighty (180
(180) days from the effectivity of days from the effectivity of this Ac
this Act. (as amended by Sec. 8, (as amended by Sec. 8, R.A. No
R.A. No. 10351, Dec. 19, 2012.) 10351, Dec. 19, 2012.)
(C) Incremental Revenues from (C) Incremental Revenues from

the Excise Tax on Alcohol and the Excise Tax on Alcohol an
Tobacco Products. — Tobacco Products. —
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
After deducting the allocations After deducting the allocation
under Republic Act Nos. 7171 under Republic Act Nos. 7171 an
and 8240, eighty percent (80%) of 8240, eighty percent (80%) of th
the remaining balance of the remaining balance of th
incremental revenue derived from incremental revenue derived from
this Act shall be allocated for the this Act shall be allocated for th
universal health care under the universal health care under th
National Health Insurance National Health Insuranc
Program, the attainment of the Program, the attainm
millennium development goals millennium development goals an
and health awareness programs; health awareness programs; an
and twenty percent (20%) shall be twenty percent (20%) shall b
allocated nationwide, based on allocated nationwide, based o
political and district subdivisions, political and district subdivisions
for medical assistance and health for medical assistance and healt
enhancement facilities program, enhancement facilities program
the annual requirements of which the annual requirements of whic
shall be determined by the shall be determined by th
Department of Health (DOH). (as Department of Health (DOH).
amended by Sec. 8, R.A. No. amended by Sec. 8, R.A. No
10351, Dec. 19, 2012.) 10351, Dec. 19, 2012.)
(D) Incremental Revenue from the (D) Incremental Revenue from th

Value-added Tax. — Fifty percent Value-added Tax. — Fifty percen
(50%) of the local government (50%) of the local governmen
unit's share from the incremental unit's share from the incrementa
revenue from the value-added tax revenue from the value-added ta
shall be allocated and used shall be allocated and use
exclusively for the following exclusively for the followin
purposes: purposes:
(1) Fifteen percent (15%) for (1) Fifteen percent (15%) for publ
public elementary and secondary elementary and secondar
education, to finance the education, to finance th
construction of buildings, construction of buildings
purchases of school furniture and purchases of school furniture an
in-service teacher trainings; in-service teacher trainings;
(2) Ten percent (10%) for health (2) Ten percent (10%) for healt
insurance premiums of enrolled insurance premiums of enrolle
indigents as a counterpart indigents as a counterpa
contribution of the local contribution of the loca
government to sustain the government to sustain th
universal coverage of the national universal coverage of the nationa
health insurance program; health insurance program;
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(3) Fifteen percent (15%) for (3) Fifteen percent (15%) fo
environmental conservation to environmental conservation to ful
fully implement a comprehensive implement a comprehensiv
national reforestation program; national reforestation program
and and
(4) Ten percent (10%) for (4) Ten percent (10%) fo

agricultural modernization to agricultural modernization t
finance the construction of finance the construction o
farm-to-market roads and farm-to-market roads and irrigatio
irrigation facilities. facilities.
Such allocations shall be Such allocations shall b

segregated as separate trust segregated as separate trust fund
funds by the national treasury and by the national treasury and sha
shall be over and above the be over and above the annua
annual appropriation for similar appropriation for similar purposes
purposes.
(E) The amount of Fifteen millio
(E) The amount of Fifteen million
pesos (P15,000,000) shall b
pesos (P15,000,000) shall be
allocated for a Public Informatio
allocated for a Public Information
and Education Progra
and Education Program to be
administered by the Bureau o
administered by the Bureau of
Internal Revenue, explainin
Internal Revenue, explaining
clearly to businesses the
clearly to businesses their
registration, invoicing an
registration, invoicing and
reporting requirements under th
reporting requirements under the
value-added tax rules. Suc
value-added tax rules. Such
program should include seminar
program should include seminars
and visits to taxpayers t
and visits to taxpayers to
familiarize them with the tax, an
familiarize them with the tax, and
the development and publication o
the development and publication
easy-to-read guides on th
of easy-to-read guides on the
value-added tax. (as amended b
value-added tax. (as amended by
Sec. 21 of R.A. No. 9337, May 24
Sec. 21 of R.A. No. 9337, May
2005)
24, 2005)
(F) Incremental Revenues from

the Tax Reform for Acceleration
and Inclusion (TRAIN). — For five
(5) years from the effectivity of
this Act, the yearly incremental
revenues generated shall be
automatically appropriated as
follows:
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
(1) Not more than seventy
percent (70%) to fund
infrastructure projects such as,
but not limited to, the Build, Build,
Build Program and provide
infrastructure programs to
address congestion through mass
transport and new road networks,
military infrastructure, sports
facilities for public schools, and
potable drinking water supply in
all public places; and
(2) Not more than thirty percent

(30%) to fund:
(a) Programs under Republic

Act No. 10659, otherwise known
as 'Sugarcane Industry
Development Act of 2015,' to
advance the self-reliance of sugar
farmers that will increase
productivity, provide livelihood
opportunities, develop alternative
farming systems and ultimately
enhance farmers' income;
(b) Social mitigating measures

and investments in: (i) education,
(ii) health, targeted nutrition, and
anti-hunger programs for
mothers, infants, and young
children, (iii) social protection, (iv)
employment, and (v) housing that
prioritize and directly benefit both
the poor and near-poor
households;
(c) A social welfare and benefits

program where qualified
beneficiaries shall be provided
with a social benefits card to avail
of the following social benefits:
(i) Unconditional cash transfer

to households in the first to
seventh income deciles of the
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
National Household Targeting
System for Poverty Reduction
(NHTS-PR), Pantawid Pamilyang
Pilipino Program, and the social
pension program for a period of
three (3) years from the effectivity
of this Act: Provided, That the
unconditional cash transfer shall
be Two hundred pesos (P200.00)
per month for the first year and
Three hundred pesos (P300.00)
per month for the second year
and third year, to be implemented
by the Department of Social
Welfare and Development
(DSWD);
(ii) Fuel vouchers to qualified

franchise holders of Public Utility
Jeepneys (PUJs);
(iii) For minimum wage earners,

unemployed, and the poorest fifty
percent (50%) of the population:
(1) Fare discount from all public

utility vehicles (except trucks for
hire and school transport service)
in the amount equivalent to ten
percent (10%) of the authorized
fare;
(2) Discounted purchase of

National Food Authority (NFA)
rice from accredited retail stores
in the amount equivalent to ten
percent (10%) of the net retail
prices, up to a maximum of
twenty (20) kilos per month; and
(3) Free skills training under a

program implemented by the
Technical Education and Skills
Development Authority (TESDA).
Provided, That benefits or grants

contained in this Subsection shall
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
not be availed in addition to any
other discounts.
(iv) Other social benefits

programs to be developed and
implemented by the government.
Notwithstanding any provisions

herein to the contrary, the
incremental revenues from the
tobacco taxes under this Act shall
be subject to Section 3 of
known as 'An Act to Promote the
Development of the Farmers in
the Virginia Tobacco Producing
Provinces,' and Section 8 of
known as 'An Act Amending
Sections 138, 139, 140 and 142
of the National Internal Revenue
Code, as Amended, and for Other
Purposes.'
An interagency committee,
chaired by the Department of
Budget and Management (DBM)
and co-chaired by DOF and
DSWD, and comprised of
National Economic and
Development Authority (NEDA),
Department of Transportation
(DOTr), Department of Education
(DepEd), Department of Health
(DOH), Department of Labor and
Employment (DOLE), National
Housing Authority (NHA), Sugar
Regulatory Administration (SRA),
Department of the Interior and
Local Government (DILG),
Department of Energy (DOE),
NFA, and TESDA, is hereby
created to oversee the
identification of qualified
beneficiaries and the
implementation of these projects
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
and programs: Provided, That
qualified beneficiaries under
Subsection (c) hereof shall be
identified using the National ID
System which may be enacted by
Congress.
Within sixty (60) days from the

end of the three (3)-year period
from the effectivity of this Act, the
interagency committee and
respective implementing agencies
for the above programs shall
submit corresponding program
assessments to the COCCTRP.
The National Expenditure
Program from 2019 onwards shall
provide line items that correspond
to the allocations mandated in the
provisions above.
At the end of five (5) years from

the effectivity of this Act, all
earmarking provisions under
Subsection (F), shall cease to
exist and all incremental revenues
derived under this Act shall
accrue to the General Fund of the
government. (as amended by
Sec. 82 of R.A. No. 10963,
December 19, 2017)
Special Financial Support

SEC. 289. The financial support SEC. 289. The financial suppo
to Beneficiary Provinces
given by the National Government given by the National Governmen
Producing Virginia
for the beneficiary provinces shall for the beneficiary provinces sha
Tobacco
be constituted and collected from be constituted and collected from
the proceeds of fifteen percent the proceeds of fifteen percen
(15%) of the excise taxes on (15%) of the excise taxes o
locally manufactured Virginia-type locally manufactured Virginia-typ
of cigarettes. of cigarettes.
The funds allotted shall be divided The funds allotted shall be divide
among the beneficiary provinces among the beneficiary prov
pro-rata according to the volume pro-rata according to the volume o
of Virginia tobacco production. Virginia tobacco production.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Provinces producing Virginia Provinces producing Virgini
tobacco shall be the beneficiary tobacco shall be the beneficiar
provinces under Republic Act No. provinces under Republic Act No
7171: Provided, however, That to 7171: Provided, however, That t
qualify as beneficiary under R.A. qualify as beneficiary under R.A
No. 7171, a province must have No. 7171, a province mu
an average annual production of average annual production o
Virginia leaf tobacco in an amount Virginia leaf tobacco in an amoun
not less than one million kilos: not less than one million kilos
Provided, further, That the Provided, further, That th
Department of Budget and Department of Budget an
Management (DBM) shall each Management (DBM) shall eac
year determine the beneficiary year determine the beneficiar
provinces and their computed provinces and their compute
share of the funds under R.A. No. share of the funds under R.A. No
7171, referring to the National 7171, referring to the Nationa
Tobacco Administration (NTA) Tobacco Administration (NTA
records of tobacco acceptances, records of tobacco acceptances, a
at the tobacco trading centers for the tobacco trading centers for th
the immediate past year. immediate past year.
The Secretary of Budget and The Secretary of Budget an

Management is hereby directed to Management is hereby directed t
retain annually the said funds retain annually the said fund
equivalent to fifteen percent equivalent to fifteen percent (15%
(15%) of excise taxes on locally of excise taxes on local
manufactured Virginia-type manufactured Virginia-typ
cigarettes to be remitted to the cigarettes to be remitted to th
beneficiary provinces qualified beneficiary provinces qualifie
under R.A. No. 7171. under R.A. No. 7171.
The provisions of existing laws to The provisions of existing laws t

the contrary notwithstanding, the the contrary notwithstanding,
fifteen percent (15%) share from fifteen percent (15%) share from
government revenues mentioned government revenues mentione
in R.A. No. 7171 and due to the in R.A. No. 7171 and due to th
Virginia tobacco-producing Virginia tobacco-producin
provinces shall be directly provinces shall be directly remitte
remitted to the provinces to the provinces concerned.
concerned.
Provided, That this Section sha
Provided, That this Section shall be implemented in accordanc
be implemented in accordance with the guidelines o
with the guidelines of Memorandum Circular No. 61-A
Memorandum Circular No. 61-A, dated November 28, 1993, whic
dated November 28, 1993, which amended Memorandum Circula
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
amended Memorandum Circular No. 61, entitled Presidin
No. 61, entitled Presiding Guidelines for Implementin
Guidelines for Implementing Republic Act No. 7171', date
Republic Act No. 7171', dated January 1, 1992.
January 1, 1992.
Provided, further, That in additio
to the local government unit
Provided, further, That in addition
mentioned in the above circula
to the local government units
the concerned officials in th
mentioned in the above circular,
province shall be consulted a
the concerned officials in the
regards the identification o
province shall be consulted as
projects to be financed.
regards the identification of
projects to be financed.
SEC. 289-A. Support for SEC. 289-A. Support fo

Local Water Districts. — The Local Water Districts.
amount that would have been amount that would have been pai
paid as income tax and saved by as income tax and saved by th
the local water district by virtue of local water district by virtue of it
its exemption to the income taxes exemption to the income taxe
shall be used by the local water shall be used by the local wate
district concerned for capital district concerned for capita
equipment expenditure in order to equipment expenditure in order t
expand water services coverage expand water services coverag
and improve water quality in order and improve water quality in orde
to provide safe and clean water in to provide safe and clean water i
the provinces, cities, and the provinces, cities, an
municipalities: Provided, That, the municipalities: Provided,
water district shall adopt internal water district shall adopt interna
control reforms that would bring control reforms that would brin
about their economic and about their economic and financia
financial viability: Provided, viability: Provided, further,
further, That the water district water district shall not increase b
shall not increase by more than more than twenty percent (20%)
twenty percent (20%) a year its year its appropriation for persona
appropriation for personal services, as well as for trave
services, as well as for travel, transportation or representatio
transportation or representation expenses and purchase of moto
expenses and purchase of motor vehicles.
vehicles.
All unpaid taxes or any port
All unpaid taxes or any portion thereof due from a local wate
thereof due from a local water district for the period startin
district for the period starting August 13, 1996 until the effectivit
August 13, 1996 until the date of this Act are hereb
effectivity date of this Act are condoned by the Governmen
hereby condoned by the subject to the following conditions
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Government subject to the (1) that the Bureau of Interna
following conditions: (1) that the Revenue, after careful rev
Bureau of Internal Revenue, after the financial statements of a wate
careful review of the financial district applying for condonation o
statements of a water district taxes due, establishes its financia
applying for condonation of taxes incapacity, after providing for it
due, establishes its financial maintenance and operatin
incapacity, after providing for its expenses, debt servicing an
maintenance and operating reserve fund, to meet suc
expenses, debt servicing and obligations for the p
reserve fund, to meet such herein; and (2) that the wate
obligations for the period stated district availing of suc
herein; and (2) that the water condonation shall submit t
district availing of such Congress of the Philippines
condonation shall submit to program of internal reforms, du
Congress of the Philippines a certified by the local water utilitie
program of internal reforms, duly administration, that would brin
certified by the local water utilities about its economic and
administration, that would bring viability.
about its economic and financial
viability.
All water districts, through th
All water districts, through the Local Water Utilitie
Local Water Utilities Administration, shall furnish th
Administration, shall furnish the Committee on Ways and Means o
Committee on Ways and Means the Senate and House o
of the Senate and House of Representatives, respectively, o
Representatives, respectively, on an annual basis, with statistica
an annual basis, with statistical data and financial st
data and financial statements regarding their operations an
regarding their operations and other information as may b
other information as may be required, for purposes o
required, for purposes of monitoring compliance with th
monitoring compliance with the provisions of this Act an
provisions of this Act and reviewing the rationalization for ta
reviewing the rationalization for exemption privileges. (As added b
tax exemption privileges. RA 10026)
TITLE XII — OVERSIGHT TITLE XII — OVERSIGH

COMMITTEE COMMITTEE
Congressional Oversight
SEC. 290. A Congressional SEC. 290. A Congressiona
Committee
Oversight Committee, hereinafter Oversight Committee, hereinafte
referred to as the Committee, is referred to as the Committee,
hereby constituted in accordance hereby constituted in accordanc
with the provisions of this Code. with the provisions of this Code
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
The Committee shall be The Committee shall be compose
composed of the Chairmen of the of the Chairmen of the Committe
Committee on Ways and Means on Ways and Means o
of the Senate and House of and House of Representatives an
Representatives and four (4) four (4) additional members from
additional members from each each house, to be designated b
house, to be designated by the the Speaker of the House o
Speaker of the House of Representatives and the Senat
Representatives and the Senate President, respectively.
President, respectively.
The Committee shall, among The Committee shall, amon

others, in aid of legislation: others, in aid of legislation:
(1) Monitor and ensure the proper (1) Monitor and ensure the prope
implementation of Republic Act implementation of Republic Ac
No. 8240; No. 8240;
(2) Determine that the power of (2) Determine that the power of th
the Commissioner to compromise Commissioner to compromise an
and abate is reasonably abate is reasonably exercised;
exercised;
(3) Review the collection (3) Review the collectio

performance of the Bureau of performance of the Bureau o
Internal Revenue; and Internal Revenue; and
(4) Review the implementation of (4) Review the implementation o

the programs of the Bureau of the programs of the Bureau o
Internal Revenue. Internal Revenue.
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
In furtherance of the hereinabov
In furtherance of the hereinabove
cited objectives, the Committee
cited objectives, the Committee is
empowered to require of th
empowered to require of the
Bureau of Internal Revenue
Bureau of Internal Revenue,
submission of all pertinen
submission of all pertinent
information, including but no
information, including but not
limited to: industry audits
limited to: industry audits;
collection performance data; statu
collection performance data;
report on criminal actions initiate
status report on criminal actions
against persons; and th
initiated against persons; and the
submission of taxpayer returns
submission of taxpayer returns:
Provided, however, That an
Provided, however, That any
return or return information whic
return or return information which
can be associated with, o
can be associated with, or
otherwise identify, directly o
otherwise identify, directly or
indirectly, a particular taxpaye
indirectly, a particular taxpayer
shall be furnished the Committe
shall be furnished the Committee
only when sitting in Executiv
only when sitting in Executive
Session unless such taxpaye
Session unless such taxpayer
otherwise consents in writing t
otherwise consents in writing to
such disclosure.
such disclosure.
TITLE XIII — REPEALING TITLE XIII — REP

In General SEC. 291. All laws, decrees, SEC. 291. All laws, decrees
executive orders, rules and executive orders, rules an
regulations or parts thereof which regulations or parts thereof whic
are contrary to or inconsistent are contrary to or inconsistent wit
with this Code are hereby this Code are hereby repealed
repealed, amended or modified amended or modified accordingly.
accordingly.
TITLE XIV — FINAL TITLE XIV — FINAL PROVISION

PROVISIONS
Separability Clause SEC. 292. If any clause, SEC. 292. If any clause, sentence
sentence, paragraph or part of paragraph or part of this Cod
this Code shall be adjudged by shall be adjudged by any Court o
any Court of competent competent jurisdiction to be invalid
jurisdiction to be invalid, such such judgment shall not affec
judgment shall not affect, impair impair or invalidate the remainde
or invalidate the remainder of said of said Code, but shall be confine
of 1997
of 1997
R.A. 8424
R.A. 8424
(as amended)
Code, but shall be confined in its in its operation to the clause
operation to the clause, sentence, sentence, paragraph or pa
paragraph or part thereof directly thereof directly involved in th
involved in the controversy. controversy.

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Topic National Internal Revenue Code

National Internal Revenue Code

TITLE I — ORGANIZATION AND TITLE I — ORGANIZATION AND

(B) To obtain on a regular basis from (B) To obtain on a regular basis fr

(D) To take such testimony of the (D) To take such testimony of

(E) To cause revenue officers and (E) To cause revenue officers a

The provisions of the forego

Any return, statement or declaration Any return, statement or declarat

(B) Failure to Submit Required (B) Failure to Submit Requi

In case a person fails to file a In case a person fails to file

(C) Authority to Conduct (C) Authority to Cond

When it is found that a person has When it is found that a person h

(D) Authority to Terminate Taxable (D) Authority to Terminate Taxa

(E) Authority of the Commissioner to (E) Authority of the Commissione

(f) A statement that the reques

(H) Authority of the Commissioner to (H) Authority of the Commissione

(a) The power to recommend the (a) The power to recommend th

(c) The power to compromise or (c) The power to compromise o

Revenue Regional Director

(a) Implement laws, policies, (a) Implement laws, policies, plans

(c) Issue Letters of Authority for (c) Issue Letters of Authority fo

(d) Provide economical, efficient (d) Provide economical, efficien

(e) Coordinate with regional (e) Coordinate with regional office

(g) Exercise control and (g) Exercise control an

Duties of Revenue District

Agents and Deputies for

(b) The head of the appropriate

Submission of Report and

(a) Income tax; (a) Income tax;

(c) Value-added tax; (c) Value-added tax;

(d) Other percentage taxes; (d) Other percentage taxes

(e) Excise taxes; (e) Excise taxes;

TITLE II — TAX ON INCOME TITLE II — TAX ON INCOME

(B) The term 'corporation' shall (B) The term 'corporation

(1) A citizen of the Philippines who (1) A citizen of the Philippines wh

(2) A citizen of the Philippines who (2) A citizen of the Philippine

(3) A citizen of the Philippines who (3) A citizen of the Philippines wh

(O) The terms 'including' and (O) The terms 'including' an

(T) The term 'securities' means (T) The term 'securities'

(X) The term 'quasi-banking (X) The term 'quasi-bankin

(HH) The term 'minimum wag

CHAPTER II — GENERAL CHAPTER II — GENERAL

(B) A nonresident citizen is taxable (B) A nonresident citizen is t

(C) An individual citizen of the (C) An individual citizen of th

(D) An alien individual, whether a (D) An alien individual, whether

(E) A domestic corporation is (E) A domestic corporation

CHAPTER III — TAX ON CHAPTER III — TAX ON

Income Tax Rates

(1) An income tax is hereby (1) An income tax is hereb

(b) On the taxable income defined

Not over P250,000 0% Not over P10,000

Over P400,000 but P22,500 + 20% of

Over P800,000 but P102,500 + 25%

Over P2,000,000 P402,500 + 30%

Over P8,000,000 P2,202,500 + 35%

For married individuals, the husband

(c) Rate of Tax for Mixed Income

(1) All Income from Compensation

(2) All Income from Business or

(a) If Total Gross Sales and/or Gross

(b) If Total Gross Sales and/or Gross

(B) Rate of Tax on Certain Pass

Six percent (6%) beginning Janu