1PL

nA1lCnAL ln1L8nAL 8LvLnuL CCuL
Cl 1PL ÞPlLlÞÞlnLS
ż1ax 8eform AcL of 1997Ž
8epubllc AcL noŦ 8424

An AC1 AMLnulnC 1PL nA1lCnAL ln1L8nAL 8LvLnuL CCuLţ AS AMLnuLuţ Anu lC8 C1PL8
Þu8ÞCSLS


SLC1lCn 1Ŧ ShorL 1lLle Ŵ 1hls AcL shall be clLed as Lhe ƍ1ax 8eform AcL of 1997ƍŦ
SLCŦ 2Ŧ SLaLe ÞollcyŦ Ŷ lL ls hereby declared Lhe pollcy of Lhe SLaLe Lo promoLe susLalnable economlc
growLh Lhrough Lhe raLlonallzaLlon of Lhe Þhlllpplne lnLernal revenue Lax sysLemţ lncludlng Lax
admlnlsLraLlonŤ Lo provldeţ as much as posslbleţ an equlLable rellef Lo a greaLer number of Laxpayers ln
order Lo lmprove levels of dlsposable lncome and lncrease economlc acLlvlLyŤ and Lo creaLe a robusL
envlronmenL for buslness Lo enable flrms Lo compeLe beLLer ln Lhe reglonal as well as Lhe global markeLţ
aL Lhe same Llme LhaL Lhe SLaLe ensures LhaL CovernmenL ls able Lo provlde for Lhe needs of Lhose under
lLs [urlsdlcLlon and careŦ
SLCŦ 3Ŧ ÞresldenLlal uecree noŦ 1138ţ as amended byţ among oLhersţ ÞresldenLlal uecree noŦ 1994 and
LxecuLlve Crder noŦ 273ţ oLherwlse known as Lhe naLlonal lnLernal 8evenue Codeţ ls hereby furLher
amendedŦ



1l1LL l
C8CAnlZA1lCn Anu lunC1lCn Cl
1PL 8u8LAu Cl ln1L8nAL 8LvLnuL

SLC1lCn 1Ŧ 1lLle of Lhe CodeŦ Ŵ 1hls Code shall be known as Lhe naLlonal lnLernal 8evenue Code of 1997Ŧ
SLCŦ 2Ŧ Þowers and uuLles of Lhe 8ureau of lnLernal 8evenueŦ Ŵ 1he 8ureau of lnLernal 8evenue shall be
under Lhe supervlslon and conLrol of Lhe ueparLmenL of llnance and lLs powers and duLles shall
comprehend Lhe assessmenL and collecLlon of all naLlonal lnLernal revenue Laxesţ feesţ and chargesţ and
Lhe enforcemenL of all forfelLuresţ penalLlesţ and flnes connecLed LherewlLhţ lncludlng Lhe execuLlon of
[udgmenLs ln all cases declded ln lLs favor by Lhe CourL of 1ax Appeals and Lhe ordlnary courLsŦ 1he
8ureau shall glve effecL Lo and admlnlsLer Lhe supervlsory and pollce powers conferred Lo lL by Lhls Code
or oLher lawsŦ
SLCŦ 3Ŧ Chlef Cfflclals of Lhe 8ureau of lnLernal 8evenueŦ Ŵ 1he 8ureau of lnLernal 8evenue shall have a
chlef Lo be known as Commlssloner of lnLernal 8evenueţ herelnafLer referred Lo as Lhe Commlssloner
and four (4) asslsLanL chlefs Lo be known as uepuLy CommlsslonersŦ
SLCŦ 4Ŧ Þower of Lhe Commlssloner Lo lnLerpreL 1ax Laws and Lo ueclde 1ax CasesŦ Ŵ 1he power Lo
lnLerpreL Lhe provlslons of Lhls Code and oLher Lax laws shall be under Lhe excluslve and orlglnal
[urlsdlcLlon of Lhe Commlsslonerţ sub[ecL Lo revlew by Lhe SecreLary of llnanceŦ
1he power Lo declde dlspuLed assessmenLsţ refunds of lnLernal revenue Laxesţ fees or oLher chargesţ
penalLles lmposed ln relaLlon LhereLoţ or oLher maLLers arlslng under Lhls Code or oLher laws or porLlons
Lhereof admlnlsLered by Lhe 8ureau of lnLernal 8evenue ls vesLed ln Lhe Commlsslonerţ sub[ecL Lo Lhe
excluslve appellaLe [urlsdlcLlon of Lhe CourL of 1ax AppealsŦ

SLCŦ 3Ŧ Þower of Lhe Commlssloner Lo CbLaln lnformaLlonţ and Lo Summonţ Lxamlneţ and 1ake
1esLlmony of ÞersonsŦ Ŵ ln ascerLalnlng Lhe correcLness of any reLurnţ or ln maklng a reLurn when none
has been madeţ or ln deLermlnlng Lhe llablllLy of any person for any lnLernal revenue Laxţ or ln collecLlng
any such llablllLyţ or ln evaluaLlng Lax compllanceţ Lhe Commlssloner ls auLhorlzedť
(A) 1o examlne any bookţ paperţ recordţ or oLher daLa whlch may be relevanL or maLerlal Lo such
lnqulryŤ
(8) 1o obLaln on a regular basls from any person oLher Lhan Lhe person whose lnLernal revenue Lax
llablllLy ls sub[ecL Lo audlL or lnvesLlgaLlonţ or from any offlce or offlcer of Lhe naLlonal and local
governmenLsţ governmenL agencles and lnsLrumenLallLlesţ lncludlng Lhe 8angko SenLral ng Þlllplnas and
governmenLŴowned or ŴconLrolled corporaLlonsţ any lnformaLlon such asţ buL noL llmlLed Loţ cosLs and
volume of producLlonţ recelpLs or sales and gross lncomes of Laxpayersţ and Lhe namesţ addressesţ and
flnanclal sLaLemenLs of corporaLlonsţ muLual fund companlesţ lnsurance companlesţ reglonal operaLlng
headquarLers of mulLlnaLlonal companlesţ [olnL accounLsţ assoclaLlonsţ [olnL venLures of consorLla and
reglsLered parLnershlpsţ and Lhelr membersŤ

(C) 1o summon Lhe person llable for Lax or requlred Lo flle a reLurnţ or any offlcer or employee of such
personţ or any person havlng possesslonţ cusLodyţ or care of Lhe books of accounLs and oLher accounLlng
records conLalnlng enLrles relaLlng Lo Lhe buslness of Lhe person llable for Laxţ or any oLher personţ Lo
appear before Lhe Commlssloner or hls duly auLhorlzed represenLaLlve aL a Llme and place speclfled ln
Lhe summons and Lo produce such booksţ papersţ recordsţ or oLher daLaţ and Lo glve LesLlmonyŤ


(u) 1o Lake such LesLlmony of Lhe person concernedţ under oaLhţ as may be relevanL or maLerlal Lo such
lnqulryŤ and

(L) 1o cause revenue offlcers and employees Lo make a canvass from Llme Lo Llme of any revenue dlsLrlcL
or reglon and lnqulre afLer and concernlng all persons Lhereln who may be llable Lo pay any lnLernal
revenue Laxţ and all persons ownlng or havlng Lhe careţ managemenL or possesslon of any ob[ecL wlLh
respecL Lo whlch a Lax ls lmposedŦ

1he provlslons of Lhe foregolng paragraphs noLwlLhsLandlngţ noLhlng ln Lhls SecLlon shall be consLrued
as granLlng Lhe Commlssloner Lhe auLhorlLy Lo lnqulre lnLo bank deposlLs oLher Lhan as provlded for ln
SecLlon 6(l) of Lhls CodeŦ

SLCŦ 6Ŧ Þower of Lhe Commlssloner Lo Make assessmenLs and Þrescrlbe addlLlonal 8equlremenLs for 1ax
AdmlnlsLraLlon and LnforcemenLŦ Ŵ
(A) LxamlnaLlon of 8eLurns and ueLermlnaLlon of 1ax uueŦ Ŵ AfLer a reLurn has been flled as requlred
under Lhe provlslons of Lhls Codeţ Lhe Commlssloner or hls duly auLhorlzed represenLaLlve may
auLhorlze Lhe examlnaLlon of any Laxpayer and Lhe assessmenL of Lhe correcL amounL of Laxť Þrovldedţ
howeverŤ 1haL fallure Lo flle a reLurn shall noL prevenL Lhe Commlssloner from auLhorlzlng Lhe
examlnaLlon of any LaxpayerŦ
Any reLurnţ sLaLemenL of declaraLlon flled ln any offlce auLhorlzed Lo recelve Lhe same shall noL be
wlLhdrawnť Þrovldedţ 1haL wlLhln Lhree (3) years from Lhe daLe of such flllngţ Lhe same may be modlfledţ
changedţ or amendedť Þrovldedţ furLherţ 1haL no noLlce for audlL or lnvesLlgaLlon of such reLurnţ
sLaLemenL or declaraLlon has ln Lhe meanLlme been acLually served upon Lhe LaxpayerŦ
(8) lallure Lo SubmlL 8equlred 8eLurnsţ SLaLemenLsţ 8eporLs and oLher uocumenLsŦ Ŵ When a reporL
requlred by law as a basls for Lhe assessmenL of any naLlonal lnLernal revenue Lax shall noL be
forLhcomlng wlLhln Lhe Llme flxed by laws or rules and regulaLlons or when Lhere ls reason Lo belleve
LhaL any such reporL ls falseţ lncompleLe or erroneousţ Lhe Commlssloner shall assess Lhe proper Lax on
Lhe besL evldence obLalnableŦ
ln case a person falls Lo flle a requlred reLurn or oLher documenL aL Lhe Llme prescrlbed by lawţ or
wlllfully or oLherwlse flles a false or fraudulenL reLurn or oLher documenLţ Lhe Commlssloner shall make
or amend Lhe reLurn from hls own knowledge and from such lnformaLlon as he can obLaln Lhrough
LesLlmony or oLherwlseţ whlch shall be prlma facle correcL and sufflclenL for all legal purposesŦ

(C) AuLhorlLy Lo ConducL lnvenLoryŴLaklngţ survelllance and Lo Þrescrlbe ÞresumpLlve Cross Sales and
8ecelpLsŦ Ŵ 1he Commlssloner mayţ aL any Llme durlng Lhe Laxable yearţ order lnvenLoryŴLaklng of goods
of any Laxpayer as a basls for deLermlnlng hls lnLernal revenue Lax llablllLlesţ or may place Lhe buslness
operaLlons of any personţ naLural or [urldlcalţ under observaLlon or survelllance lf Lhere ls reason Lo
belleve LhaL such person ls noL declarlng hls correcL lncomeţ sales or recelpLs for lnLernal revenue Lax
purposesŦ 1he flndlngs may be used as Lhe basls for assesslng Lhe Laxes for Lhe oLher monLhs or quarLers
of Lhe same or dlfferenL Laxable years and such assessmenL shall be deemed prlma facle correcLŦ
When lL ls found LhaL a person has falled Lo lssue recelpLs and lnvolces ln vlolaLlon of Lhe requlremenLs
of SecLlons 113 and 237 of Lhls Codeţ or when Lhere ls reason Lo belleve LhaL Lhe books of accounLs or
oLher records do noL correcLly reflecL Lhe declaraLlons made or Lo be made ln a reLurn requlred Lo be
flled under Lhe provlslons of Lhls Codeţ Lhe Commlsslonerţ afLer Laklng lnLo accounL Lhe salesţ recelpLsţ
lncome or oLher Laxable base of oLher persons engaged ln slmllar buslnesses under slmllar slLuaLlons or
clrcumsLances or afLer conslderlng oLher relevanL lnformaLlon may prescrlbe a mlnlmum amounL of such
gross recelpLsţ sales and Laxable baseţ and such amounL so prescrlbed shall be prlma facle correcL for
purposes of deLermlnlng Lhe lnLernal revenue Lax llablllLles of such personŦ

(u) AuLhorlLy Lo 1ermlnaLe 1axable ÞerlodŦ Ŵ When lL shall come Lo Lhe knowledge of Lhe Commlssloner
LhaL a Laxpayer ls reLlrlng from buslness sub[ecL Lo Laxţ or ls lnLendlng Lo leave Lhe Þhlllpplnes or Lo
remove hls properLy Lherefrom or Lo hlde or conceal hls properLyţ or ls performlng any acL Lendlng Lo
obsLrucL Lhe proceedlngs for Lhe collecLlon of Lhe Lax for Lhe pasL or currenL quarLer or year or Lo render
Lhe same LoLally or parLly lneffecLlve unless such proceedlngs are begun lmmedlaLelyţ Lhe Commlssloner
shall declare Lhe Lax perlod of such Laxpayer LermlnaLed aL any Llme and shall send Lhe Laxpayer a noLlce
of such declslonţ LogeLher wlLh a requesL for Lhe lmmedlaLe paymenL of Lhe Lax for Lhe perlod so
declared LermlnaLed and Lhe Lax for Lhe precedlng year or quarLerţ or such porLlon Lhereof as may be
unpaldţ and sald Laxes shall be due and payable lmmedlaLely and shall be sub[ecL Lo all Lhe penalLles
hereafLer prescrlbedţ unless pald wlLhln Lhe Llme flxed ln Lhe demand made by Lhe CommlsslonerŦ
(L) AuLhorlLy of Lhe Commlssloner Lo Þrescrlbe 8eal ÞroperLy valuesŦ Ŵ 1he Commlssloner ls hereby
auLhorlzed Lo dlvlde Lhe Þhlllpplnes lnLo dlfferenL zones or areas and shallţ upon consulLaLlon wlLh
compeLenL appralsers boLh from Lhe prlvaLe and publlc secLorsţ deLermlne Lhe falr markeL value of real
properLles locaLed ln each zone or areaŦ lor purposes of compuLlng any lnLernal revenue Laxţ Lhe value
of Lhe properLy shall beţ whlchever ls Lhe hlgher ofť

(1) Lhe falr markeL value as deLermlned by Lhe Commlsslonerţ or
(2) Lhe falr markeL value as shown ln Lhe schedule of values of Lhe Þrovlnclal and ClLy AssessorsŦ

(l) AuLhorlLy of Lhe Commlssloner Lo lnqulre lnLo 8ank ueposlL AccounLsŦ Ŵ noLwlLhsLandlng any conLrary
provlslon of 8epubllc AcL noŦ 1403 and oLher general or speclal lawsţ Lhe Commlssloner ls hereby
auLhorlzed Lo lnqulre lnLo Lhe bank deposlLs ofť

(1) a decedenL Lo deLermlne hls gross esLaLeŤ and
(2) any Laxpayer who has flled an appllcaLlon for compromlse of hls Lax llablllLy under SecŦ 204 (A) (2) of
Lhls Code by reason of flnanclal lncapaclLy Lo pay hls Lax llablllLyŦ
ln case a Laxpayer flles an appllcaLlon Lo compromlse Lhe paymenL of hls Lax llablllLles on hls clalm LhaL
hls flnanclal poslLlon demonsLraLes a clear lnablllLy Lo pay Lhe Lax assessedţ hls appllcaLlon shall noL be
consldered unless and unLll he walves ln wrlLlng hls prlvllege under 8epubllc AcL noŦ 1403 or under oLher
general or speclal lawsţ and such walver shall consLlLuLe Lhe auLhorlLy of Lhe Commlssloner Lo lnqulre
lnLo Lhe bank deposlLs of Lhe LaxpayerŦ
(C) AuLhorlLy Lo AccredlL and 8eglsLer 1ax AgenLsŦ Ŵ 1he Commlssloner shall accredlL and reglsLerţ based
on Lhelr professlonal compeLenceţ lnLegrlLy and moral flLnessţ lndlvlduals and general professlonal
parLnershlps and Lhelr represenLaLlves who prepare and flle Lax reLurnsţ sLaLemenLsţ reporLsţ proLesLsţ
and oLher papers wlLh or who appear beforeţ Lhe 8ureau for LaxpayersŦ WlLhln one hundred LwenLy
(120) days from !anuary 1ţ 1998ţ Lhe Commlssloner shall creaLe naLlonal and reglonal accredlLaLlon
boardsţ Lhe members of whlch shall serve for Lhree (3) yearsţ and shall deslgnaLe from among Lhe senlor
offlclals of Lhe 8ureauţ one (1) chalrman and Lwo (2) members for each boardţ sub[ecL Lo such rules and
regulaLlons as Lhe SecreLary of llnance shall promulgaLe upon Lhe recommendaLlon of Lhe
CommlsslonerŦ
lndlvlduals and general professlonal parLnershlps and Lhelr represenLaLlves who are denled
accredlLaLlon by Lhe Commlssloner and/or Lhe naLlonal and reglonal accredlLaLlon boards may appeal
such denlal Lo Lhe SecreLary of llnanceţ who shall rule on Lhe appeal wlLhln slxLy (60) days from recelpL
of such appealŦ lallure of Lhe SecreLary of llnance Lo rule on Lhe Appeal wlLhln Lhe prescrlbed perlod
shall be deemed as approval of Lhe appllcaLlon for accredlLaLlon of Lhe appellanLŦ

(P) AuLhorlLy of Lhe Commlssloner Lo Þrescrlbe AddlLlonal Þrocedural or uocumenLary 8equlremenLsŦ Ŵ
1he Commlssloner may prescrlbe Lhe manner of compllance wlLh any documenLary or procedural
requlremenL ln connecLlon wlLh Lhe submlsslon or preparaLlon of flnanclal sLaLemenLs accompanylng
Lhe Lax reLurnsŦ
SLCŦ 7Ŧ AuLhorlLy of Lhe Commlssloner Lo uelegaLe ÞowerŦ Ŵ 1he Commlssloner may delegaLe Lhe powers
vesLed ln hlm under Lhe perLlnenL provlslons of Lhls Code Lo any or such subordlnaLe offlclals wlLh Lhe
rank equlvalenL Lo a dlvlslon chlef or hlgherţ sub[ecL Lo such llmlLaLlons and resLrlcLlons as may be
lmposed under rules and regulaLlons Lo be promulgaLed by Lhe SecreLary of flnanceţ upon
recommendaLlon of Lhe Commlsslonerť Þrovldedţ howeverţ 1haL Lhe followlng powers of Lhe
Commlssloner shall noL be delegaLedť
(a) 1he power Lo recommend Lhe promulgaLlon of rules and regulaLlons by Lhe SecreLary of llnanceŤ
(b) 1he power Lo lssue rullngs of flrsL lmpresslon or Lo reverseţ revoke or modlfy any exlsLlng rullng of
Lhe 8ureauŤ
(c) 1he power Lo compromlse or abaLeţ under SecŦ 204 (A) and (8) of Lhls Codeţ any Lax llablllLyť
Þrovldedţ howeverţ 1haL assessmenLs lssued by Lhe reglonal offlces lnvolvlng baslc deflclency Laxes of
llve hundred Lhousand pesos (Þ300ţ000) or lessţ and mlnor crlmlnal vlolaLlonsţ as may be deLermlned by
rules and regulaLlons Lo be promulgaLed by Lhe SecreLary of flnanceţ upon recommendaLlon of Lhe
Commlsslonerţ dlscovered by reglonal and dlsLrlcL offlclalsţ may be compromlsed by a reglonal
evaluaLlon board whlch shall be composed of Lhe 8eglonal ulrecLor as Chalrmanţ Lhe AsslsLanL 8eglonal
ulrecLorţ Lhe heads of Lhe Legalţ AssessmenL and CollecLlon ulvlslons and Lhe 8evenue ulsLrlcL Cfflcer
havlng [urlsdlcLlon over Lhe Laxpayerţ as membersŤ and
(d) 1he power Lo asslgn or reasslgn lnLernal revenue offlcers Lo esLabllshmenLs where arLlcles sub[ecL Lo
exclse Lax are produced or kepLŦ
SLCŦ 8Ŧ uuLy of Lhe Commlssloner Lo Lnsure Lhe Þrovlslon and ulsLrlbuLlon of formsţ 8ecelpLsţ
CerLlflcaLesţ and Appllancesţ and Lhe AcknowledgmenL of ÞaymenL of 1axesŦŴ
(A) Þrovlslon and ulsLrlbuLlon Lo Þroper CfflclalsŦ Ŵ lL shall be Lhe duLy of Lhe Commlsslonerţ among oLher
Lhlngsţ Lo prescrlbeţ provldeţ and dlsLrlbuLe Lo Lhe proper offlclals Lhe requlslLe llcenses lnLernal revenue
sLampsţ labels all oLher formsţ cerLlflcaLesţ bondsţ recordsţ lnvolcesţ booksţ recelpLsţ lnsLrumenLsţ
appllances and apparaLus used ln admlnlsLerlng Lhe laws falllng wlLhln Lhe [urlsdlcLlon of Lhe 8ureauŦ lor
Lhls purposeţ lnLernal revenue sLampsţ sLrlp sLamps and labels shall be caused by Lhe Commlssloner Lo
be prlnLed wlLh adequaLe securlLy feaLuresŦ
lnLernal revenue sLampsţ wheLher of a bar code or fuslon deslgnţ shall be flrmly and consplcuously
afflxed on each pack of clgars and clgareLLes sub[ecL Lo exclse Lax ln Lhe manner and form as prescrlbed
by Lhe Commlsslonerţ upon approval of Lhe SecreLary of llnanceŦ

(8) 8ecelpLs for ÞaymenL MadeŦ Ŵ lL shall be Lhe duLy of Lhe Commlssloner or hls duly auLhorlzed
represenLaLlve or an auLhorlzed agenL bank Lo whom any paymenL of any Lax ls made under Lhe
provlslon of Lhls Code Lo acknowledge Lhe paymenL of such Laxţ expresslng Lhe amounL pald and Lhe
parLlcular accounL for whlch such paymenL was made ln a form and manner prescrlbed Lherefor by Lhe
CommlsslonerŦ
SLCŦ 9Ŧ lnLernal 8evenue ulsLrlcLsŦ Ŵ WlLh Lhe approval of Lhe SecreLary of llnanceţ Lhe Commlssloner
shall dlvlde Lhe Þhlllpplnes lnLo such number of revenue dlsLrlcLs as may form Llme Lo Llme be requlred
for admlnlsLraLlve purposesŦ Lach of Lhese dlsLrlcLs shall be under Lhe supervlslon of a 8evenue ulsLrlcL
CfflcerŦ
SLCŦ 10Ŧ 8evenue 8eglonal ulrecLorŦ Ŵ under rules and regulaLlonsţ pollcles and sLandards formulaLed by
Lhe Commlsslonerţ wlLh Lhe approval of Lhe SecreLary of llnanceţ Lhe 8evenue 8eglonal dlrecLor shallţ
wlLhln Lhe reglon and dlsLrlcL offlces under hls [urlsdlcLlonţ among oLhersť
(a) lmplemenL lawsţ pollclesţ plansţ programsţ rules and regulaLlons of Lhe deparLmenL or agencles ln Lhe
reglonal areaŤ
(b) AdmlnlsLer and enforce lnLernal revenue lawsţ and rules and regulaLlonsţ lncludlng Lhe assessmenL
and collecLlon of all lnLernal revenue Laxesţ charges and feesŦ
(c) lssue LeLLers of auLhorlLy for Lhe examlnaLlon of Laxpayers wlLhln Lhe reglonŤ
(d) Þrovlde economlcalţ efflclenL and effecLlve servlce Lo Lhe people ln Lhe areaŤ
(e) CoordlnaLe wlLh reglonal offlces or oLher deparLmenLsţ bureaus and agencles ln Lhe areaŤ
(f) CoordlnaLe wlLh local governmenL unlLs ln Lhe areaŤ
(g) Lxerclse conLrol and supervlslon over Lhe offlcers and employees wlLhln Lhe reglonŤ and
(h) Þerform such oLher funcLlons as may be provlded by law and as may be delegaLed by Lhe
CommlsslonerŦ
SLCŦ 11Ŧ uuLles of 8evenue ulsLrlcL Cfflcers and CLher lnLernal 8evenue CfflcersŦ Ŵ lL shall be Lhe duLy of
every 8evenue ulsLrlcL Cfflcer or oLher lnLernal revenue offlcers and employees Lo ensure LhaL all lawsţ
and rules and regulaLlons affecLlng naLlonal lnLernal revenue are falLhfully execuLed and complled wlLhţ
and Lo ald ln Lhe prevenLlonţ deLecLlon and punlshmenL of frauds of dellnquencles ln connecLlon
LherewlLhŦ
lL shall be Lhe duLy of every 8evenue ulsLrlcL Cfflcer Lo examlne Lhe efflclency of all offlcers and
employees of Lhe 8ureau of lnLernal 8evenue under hls supervlslonţ and Lo reporL ln wrlLlng Lo Lhe
Commlsslonerţ Lhrough Lhe 8eglonal ulrecLorţ any neglecL of duLyţ lncompeLencyţ dellnquencyţ or
malfeasance ln offlce of any lnLernal revenue offlcer of whlch he may obLaln knowledgeţ wlLh a
sLaLemenL of all Lhe facLs and any evldence susLalnlng each caseŦ

SLCŦ 12Ŧ AgenLs and uepuLles for CollecLlon of naLlonal lnLernal 8evenue 1axesŦ Ŵ 1he followlng are
hereby consLlLuLed agenLs of Lhe Commlsslonerť
(a) 1he Commlssloner of CusLoms and hls subordlnaLes wlLh respecL Lo Lhe collecLlon of naLlonal lnLernal
revenue Laxes on lmporLed goodsŤ
(b) 1he head of Lhe approprlaLe governmenL offlce and hls subordlnaLes wlLh respecL Lo Lhe collecLlon of
energy LaxŤ and
(c) 8anks duly accredlLed by Lhe Commlssloner wlLh respecL Lo recelpL of paymenLs lnLernal revenue
Laxes auLhorlzed Lo be made Lhru bankŦ
Any offlcer or employee of an auLhorlzed agenL bank asslgned Lo recelve lnLernal revenue Lax paymenLs
and LransmlL Lax reLurns or documenLs Lo Lhe 8ureau of lnLernal 8evenue shall be sub[ecL Lo Lhe same
sancLlons and penalLles prescrlbed ln SecLlons 269 and 270 of Lhls CodeŦ
SLCŦ 13Ŧ AuLhorlLy of a 8evenue CfflcesŦ Ŵ sub[ecL Lo Lhe rules and regulaLlons Lo be prescrlbed by Lhe
SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ a 8evenue Cfflcer asslgned Lo
perform assessmenL funcLlons ln any dlsLrlcL mayţ pursuanL Lo a LeLLer of AuLhorlLy lssued by Lhe
8evenue 8eglonal ulrecLorţ examlne Laxpayers wlLhln Lhe [urlsdlcLlon of Lhe dlsLrlcL ln order Lo collecL
Lhe correcL amounL of Laxţ or Lo recommend Lhe assessmenL of any deflclency Lax due ln Lhe same
manner LhaL Lhe sald acLs could have been performed by Lhe 8evenue 8eglonal ulrecLor hlmselfŦ
SLCŦ 14Ŧ AuLhorlLy of Cfflcers Lo AdmlnlsLer CaLhs and 1ake 1esLlmonyŦ Ŵ 1he Commlsslonerţ uepuLy
Commlsslonersţ Servlce Chlefsţ AsslsLanL Servlce Chlefsţ 8evenue 8eglonal ulrecLorsţ AsslsLanL 8evenue
8eglonal ulrecLorsţ Chlefs and AsslsLanL Chlefs of ulvlslonsţ 8evenue ulsLrlcL Cfflcersţ speclal depuLles of
Lhe Commlsslonerţ lnLernal revenue offlcers and any oLher employee of Lhe 8ureau LhereunLo especlally
depuLlzed by Lhe Commlssloner shall have Lhe power Lo admlnlsLer oaLhs and Lo Lake LesLlmony ln any
offlclal maLLer or lnvesLlgaLlon conducLed by Lhem regardlng maLLers wlLhln Lhe [urlsdlcLlon of Lhe
8ureauŦ
SLCŦ 13Ŧ AuLhorlLy of lnLernal 8evenue Cfflcers Lo Make ArresLs and SelzuresŦ Ŵ 1he Commlsslonerţ Lhe
uepuLy Commlsslonersţ Lhe 8evenue 8eglonal ulrecLorsţ Lhe 8evenue ulsLrlcL Cfflcers and oLher lnLernal
revenue offlcers shall have auLhorlLy Lo make arresLs and selzures for Lhe vlolaLlon of any penal lawţ rule
or regulaLlon admlnlsLered by Lhe 8ureau of lnLernal 8evenueŦ Any person so arresLed shall be forLhwlLh
broughL before a courLţ Lhere Lo be dealL wlLh accordlng Lo lawŦ
SLCŦ 16Ŧ AsslgnmenL of lnLernal 8evenue Cfflcers lnvolved ln Lxclse 1ax luncLlons Lo LsLabllshmenLs
Where ArLlcles sub[ecL Lo Lxclse 1ax are Þroduced or kepLŦ Ŵ 1he Commlssloner shall employţ asslgnţ or
reasslgn lnLernal revenue offlcers lnvolved ln exclse Lax funcLlonsţ as ofLen as Lhe exlgencles of Lhe
revenue servlce may requlreţ Lo esLabllshmenLs or places where arLlcles sub[ecL Lo exclse Lax are
produced or kepLť Þrovldedţ 1haL an lnLernal revenue offlcer asslgned Lo any such esLabllshmenL shall ln
no case sLay ln hls asslgnmenL for more Lhan Lwo (2) yearsţ sub[ecL Lo rules and regulaLlons Lo be
prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
SLCŦ 17Ŧ AsslgnmenL of lnLernal 8evenue Cfflcers and CLher Lmployees Lo CLher uuLlesŦ Ŵ 1he
Commlssloner mayţ sub[ecL Lo Lhe provlslons of SecLlon 16 and Lhe laws on clvll servlceţ as well as Lhe
rules and regulaLlons Lo be prescrlbed by Lhe SecreLary of llnance upon Lhe recommendaLlon of Lhe
Commlsslonerţ asslgn or reasslgn lnLernal revenue offlcers and employees of Lhe 8ureau of lnLernal
8evenueţ wlLhouL change ln Lhelr offlclal rank and salaryţ Lo oLher or speclal duLles connecLed wlLh Lhe
enforcemenL or admlnlsLraLlon of Lhe revenue laws as Lhe exlgencles of Lhe servlce may requlreť
Þrovldedţ 1haL lnLernal revenue offlcers asslgned Lo perform assessmenL or collecLlon funcLlon shall noL
remaln ln Lhe same asslgnmenL for more Lhan Lhree (3) yearsŤ Þrovldedţ furLherţ 1haL asslgnmenL of
lnLernal revenue offlcers and employees of Lhe 8ureau Lo speclal duLles shall noL exceed one (1) yearŦ
SLCŦ 18Ŧ 8eporLs of vlolaLlon of LawsŦ Ŵ When an lnLernal revenue offlcer dlscovers evldence of a
vlolaLlon of Lhls Code or of any lawţ rule or regulaLlons admlnlsLered by Lhe 8ureau of lnLernal 8evenue
of such characLer as Lo warranL Lhe lnsLlLuLlon of crlmlnal proceedlngsţ he shall lmmedlaLely reporL Lhe
facLs Lo Lhe Commlssloner Lhrough hls lmmedlaLe superlorţ glvlng Lhe name and address of Lhe offender
and Lhe names of Lhe wlLnesses lf posslbleť Þrovldedţ 1haL ln urgenL casesţ Lhe 8evenue 8eglonal
dlrecLor or 8evenue ulsLrlcL Cfflcerţ as Lhe case may beţ may send Lhe reporL Lo Lhe correspondlng
prosecuLlng offlcer ln Lhe laLLer caseţ a copy of hls reporL shall be senL Lo Lhe CommlsslonerŦ
SLCŦ 19Ŧ ConLenLs of Commlsslonerƌs Annual 8eporLŦ Ŵ 1he Annual 8eporL of Lhe Commlssloner shall
conLaln deLalled sLaLemenLs of Lhe collecLlons of Lhe 8ureau wlLh speclflcaLlons of Lhe sources of
revenue by Lype of Laxţ by manner of paymenLţ by revenue reglon and by lndusLry group and lLs
dlsbursemenLs by classes of expendlLuresŦ
ln case Lhe acLual collecLlon exceeds or falls shorL of LargeL as seL ln Lhe annual naLlonal budgeL by
flfLeen percenL (13Ʒ) or moreţ Lhe Commlssloner shall explaln Lhe reason for such excess or shorLfallŦ

SLCŦ 20Ŧ Submlsslon of 8eporL and ÞerLlnenL lnformaLlon by Lhe CommlsslonerŦ
(A) Submlsslon of ÞerLlnenL lnformaLlon Lo CongressŦ Ŵ 1he provlslon of SecLlon 270 of Lhls Code Lo Lhe
conLrary noLwlLhsLandlngţ Lhe Commlssloner shallţ upon requesL of Congress and ln ald of leglslaLlonţ
furnlsh lLs approprlaLe CommlLLee perLlnenL lnformaLlon lncludlng buL noL llmlLed Loť lndusLry audlLsţ
collecLlon performance daLaţ sLaLus reporLs ln crlmlnal acLlons lnlLlaLed agalnsL persons and Laxpayerƌs
reLurnsť Þrovldedţ howeverţ 1haL any reLurn or reLurn lnformaLlon whlch can be assoclaLed wlLhţ or
oLherwlse ldenLlfyţ dlrecLly or lndlrecLlyţ a parLlcular Laxpayer shall be furnlshed Lhe approprlaLe
CommlLLee of Congress only when slLLlng ln LxecuLlve Sesslon unless such Laxpayer oLherwlse consenLs
ln wrlLlng Lo such dlsclosureŦ
(8) 8eporL Lo CverslghL CommlLLeeŦ Ŵ 1he Commlssloner shallţ wlLh reference Lo SecLlon 204 of Lhls
Codeţ submlL Lo Lhe CverslghL CommlLLee referred Lo ln SecLlon 290 hereofţ Lhrough Lhe Chalrmen of
Lhe CommlLLee on Ways and Means of Lhe SenaLe and Pouse of 8epresenLaLlvesţ a reporL on Lhe
exerclse of hls powers pursuanL Lo Lhe sald secLlonţ every slx (6) monLhs of each calendar yearŦ

SLCŦ 21Ŧ Sources of 8evenueŦ Ŵ 1he followlng Laxesţ fees and charges are deemed Lo be naLlonal lnLernal
revenue Laxesť
(a) lncome LaxŤ
(b) LsLaLe and donorƌs LaxesŤ
(c) valueŴadded LaxŤ
(d) CLher percenLage LaxesŤ
(e) Lxclse LaxesŤ
(f) uocumenLary sLamp LaxesŤ and
(g) Such oLher Laxes as are or hereafLer may be lmposed and collecLed by Lhe 8ureau of lnLernal
8evenueŦ


1l1LL ll
1Ax Cn lnCCML


CPAÞ1L8 l
uLllnl1lCnS


SLCŦ 22Ŧ ueflnlLlons Ŵ When used ln Lhls 1lLleť
(A) 1he Lerm ƍpersonƍ means an lndlvldualţ a LrusLţ esLaLe or corporaLlonŦ

(8) 1he Lerm ƍcorporaLlonƍ shall lnclude parLnershlpsţ no maLLer how creaLed or organlzedţ [olnLŴsLock
companlesţ [olnL accounLs (cuenLas en parLlclpaclon)ţ assoclaLlonţ or lnsurance companlesţ buL does noL
lnclude general professlonal parLnershlps and a [olnL venLure or consorLlum formed for Lhe purpose of
underLaklng consLrucLlon pro[ecLs or engaglng ln peLroleumţ coalţ geoLhermal and oLher energy
operaLlons pursuanL Lo an operaLlng consorLlum agreemenL under a servlce conLracL wlLh Lhe
CovernmenLŦ ƍCeneral professlonal parLnershlpsƍ are parLnershlps formed by persons for Lhe sole
purpose of exerclslng Lhelr common professlonţ no parL of Lhe lncome of whlch ls derlved from engaglng
ln any Lrade or buslnessŦ

(C) 1he Lerm ƍdomesLlcƍţ when applled Lo a corporaLlonţ means creaLed or organlzed ln Lhe Þhlllpplnes
or under lLs lawsŦ

(u) 1he Lerm ƍforelgnƍţ when applled Lo a corporaLlonţ means a corporaLlon whlch ls noL domesLlcŦ

(L) 1he Lerm ƍnonresldenL clLlzenƍ meansť

(1) A clLlzen of Lhe Þhlllpplnes who esLabllshes Lo Lhe saLlsfacLlon of Lhe Commlssloner Lhe facL of hls
physlcal presence abroad wlLh a deflnlLe lnLenLlon Lo reslde LherelnŦ
(2) A clLlzen of Lhe Þhlllpplnes who leaves Lhe Þhlllpplnes durlng Lhe Laxable year Lo reslde abroadţ elLher
as an lmmlgranL or for employmenL on a permanenL baslsŦ
(3) A clLlzen of Lhe Þhlllpplnes who works and derlves lncome from abroad and whose employmenL
LhereaL requlres hlm Lo be physlcally presenL abroad mosL of Lhe Llme durlng Lhe Laxable yearŦ
(4) A clLlzen who has been prevlously consldered as nonresldenL clLlzen and who arrlves ln Lhe
Þhlllpplnes aL any Llme durlng Lhe Laxable year Lo reslde permanenLly ln Lhe Þhlllpplnes shall llkewlse be
LreaLed as a nonresldenL clLlzen for Lhe Laxable year ln whlch he arrlves ln Lhe Þhlllpplnes wlLh respecL Lo
hls lncome derlved from sources abroad unLll Lhe daLe of hls arrlval ln Lhe ÞhlllpplnesŦ
(3) 1he Laxpayer shall submlL proof Lo Lhe Commlssloner Lo show hls lnLenLlon of leavlng Lhe Þhlllpplnes
Lo reslde permanenLly abroad or Lo reLurn Lo and reslde ln Lhe Þhlllpplnes as Lhe case may be for
purpose of Lhls SecLlonŦ
(l) 1he Lerm ƍresldenL allenƍ means an lndlvldual whose resldence ls wlLhln Lhe Þhlllpplnes and who ls
noL a clLlzen LhereofŦ
(C) 1he Lerm ƍnonresldenL allenƍ means an lndlvldual whose resldence ls noL wlLhln Lhe Þhlllpplnes and
who ls noL a clLlzen LhereofŦ
(P) 1he Lerm ƍresldenL forelgn corporaLlonƍ applles Lo a forelgn corporaLlon engaged ln Lrade or
buslness wlLhln Lhe ÞhlllpplnesŦ
(l) 1he Lerm ƌnonresldenL forelgn corporaLlonƌ applles Lo a forelgn corporaLlon noL engaged ln Lrade or
buslness wlLhln Lhe ÞhlllpplnesŦ
(!) 1he Lerm ƍflduclaryƍ means a guardlanţ LrusLeeţ execuLorţ admlnlsLraLorţ recelverţ conservaLor or any
person acLlng ln any flduclary capaclLy for any personŦ
(k) 1he Lerm ƍwlLhholdlng agenLƍ means any person requlred Lo deducL and wlLhhold any Lax under Lhe
provlslons of SecLlon 37Ŧ
(L) 1he Lerm ƍshares of sLockƍ shall lnclude shares of sLock of a corporaLlonţ warranLs and/or opLlons Lo
purchase shares of sLockţ as well as unlLs of parLlclpaLlon ln a parLnershlp (excepL general professlonal
parLnershlps)ţ [olnL sLock companlesţ [olnL accounLsţ [olnL venLures Laxable as corporaLlonsţ assoclaLlons
and recreaLlon or amusemenL clubs (such as golfţ polo or slmllar clubs)ţ and muLual fund cerLlflcaLesŦ
(M) 1he Lerm ƍshareholderƍ shall lnclude holders of a share/s of sLockţ warranL/s and/or opLlon/s Lo
purchase shares of sLock of a corporaLlonţ as well as a holder of a unlL of parLlclpaLlon ln a parLnershlp
(excepL general professlonal parLnershlps) ln a [olnL sLock companyţ a [olnL accounLţ a Laxable [olnL
venLureţ a member of an assoclaLlonţ recreaLlon or amusemenL club (such as golfţ polo or slmllar clubs)
and a holder of a muLual fund cerLlflcaLeţ a member ln an assoclaLlonţ [olnLŴsLock companyţ or lnsurance
companyŦ
(n) 1he Lerm ƍLaxpayerƍ means any person sub[ecL Lo Lax lmposed by Lhls 1lLleŦ
(C) 1he Lerms ƍlncludlngƍ and ƍlncludesƍţ when used ln a deflnlLlon conLalned ln Lhls 1lLleţ shall noL be
deemed Lo exclude oLher Lhlngs oLherwlse wlLhln Lhe meanlng of Lhe Lerm deflnedŦ

(Þ) 1he Lerm ƍLaxable yearƍ means Lhe calendar yearţ or Lhe flscal year endlng durlng such calendar yearţ
upon Lhe basls of whlch Lhe neL lncome ls compuLed under Lhls 1lLleŦ ƌ1axable yearƌ lncludesţ ln Lhe case
of a reLurn made for a fracLlonal parL of a year under Lhe provlslons of Lhls 1lLle or under rules and
regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe commlsslonerţ Lhe
perlod for whlch such reLurn ls madeŦ
(C) 1he Lerm ƍflscal yearƍ means an accounLlng perlod of Lwelve (12) monLhs endlng on Lhe lasL day of
any monLh oLher Lhan uecemberŦ
(8) 1he Lerms ƍpald or lncurredƍ and ƌpald or accruedƌ shall be consLrued accordlng Lo Lhe meLhod of
accounLlng upon Lhe basls of whlch Lhe neL lncome ls compuLed under Lhls 1lLleŦ
(S) 1he Lerm ƍLrade or buslnessƍ lncludes Lhe performance of Lhe funcLlons of a publlc offlceŦ
(1) 1he Lerm ƍsecurlLlesƍ means shares of sLock ln a corporaLlon and rlghLs Lo subscrlbe for or Lo recelve
such sharesŦ 1he Lerm lncludes bondsţ debenLuresţ noLes or cerLlflcaLesţ or oLher evldence or
lndebLednessţ lssued by any corporaLlonţ lncludlng Lhose lssued by a governmenL or pollLlcal subdlvlslon
Lhereofţ wlLh lnLeresL coupons or ln reglsLered formŦ
(u) 1he Lerm ƍdealer ln securlLlesƍ means a merchanL of sLocks or securlLlesţ wheLher an lndlvldualţ
parLnershlp or corporaLlonţ wlLh an esLabllshed place of buslnessţ regularly engaged ln Lhe purchase of
securlLles and Lhe resale Lhereof Lo cusLomersŤ LhaL lsţ one whoţ as a merchanLţ buys securlLles and reŴ
sells Lhem Lo cusLomers wlLh a vlew Lo Lhe galns and proflLs LhaL may be derlved LherefromŦ
(v) 1he Lerm ƍbankƍ means every banklng lnsLlLuLlonţ as deflned ln SecLlon 2 of 8epubllc AcL noŦ 337ţ as
amendedţ oLherwlse known as Lhe Ceneral banklng AcLŦ A bank may elLher be a commerclal bankţ a
LhrlfL bankţ a developmenL bankţ a rural bank or speclallzed governmenL bankŦ
(W) 1he Lerm ƍnonŴbank flnanclal lnLermedlaryƍ means a flnanclal lnLermedlaryţ as deflned ln SecLlon
2(u)(C) of 8epubllc AcL noŦ 337ţ as amendedţ oLherwlse known as Lhe Ceneral 8anklng AcLţ auLhorlzed
by Lhe 8angko SenLral ng Þlllplnas (8SÞ) Lo perform quaslŴbanklng acLlvlLlesŦ
(x) 1he Lerm ƍquaslŴbanklng acLlvlLlesƍ means borrowlng funds from LwenLy (20) or more personal or
corporaLe lenders aL any one Llmeţ Lhrough Lhe lssuanceţ endorsemenLţ or accepLance of debL
lnsLrumenLs of any klnd oLher Lhan deposlLs for Lhe borrowerƌs own accounLţ or Lhrough Lhe lssuance of
cerLlflcaLes of asslgnmenL or slmllar lnsLrumenLsţ wlLh recourseţ or of repurchase agreemenLs for
purposes of relendlng or purchaslng recelvables and oLher slmllar obllgaLlonsť Þrovldedţ howeverţ 1haL
commerclalţ lndusLrlal and oLher nonŴflnanclal companlesţ whlch borrow funds Lhrough any of Lhese
means for Lhe llmlLed purpose of flnanclng Lhelr own needs or Lhe needs of Lhelr agenLs or dealersţ shall
noL be consldered as performlng quaslŴbanklng funcLlonsŦ
(?) 1he Lerm ƍdeposlL subsLlLuLesƍ shall mean an alLernaLlve from of obLalnlng funds from Lhe publlc (Lhe
Lerm ƌpubllcƌ means borrowlng from LwenLy (20) or more lndlvldual or corporaLe lenders aL any one
Llme) oLher Lhan deposlLsţ Lhrough Lhe lssuanceţ endorsemenLţ or accepLance of debL lnsLrumenLs for
Lhe borrowers own accounLţ for Lhe purpose of relendlng or purchaslng of recelvables and oLher
obllgaLlonsţ or flnanclng Lhelr own needs or Lhe needs of Lhelr agenL or dealerŦ 1hese lnsLrumenLs may
lncludeţ buL need noL be llmlLed Lo bankersƌ accepLancesţ promlssory noLesţ repurchase agreemenLsţ
lncludlng reverse repurchase agreemenLs enLered lnLo by and beLween Lhe 8angko SenLral ng Þlllplnas
(8SÞ) and any auLhorlzed agenL bankţ cerLlflcaLes of asslgnmenL or parLlclpaLlon and slmllar lnsLrumenLs
wlLh recourseť Þrovldedţ howeverţ 1haL debL lnsLrumenLs lssued for lnLerbank call loans wlLh maLurlLy of
noL more Lhan flve (3) days Lo cover deflclency ln reserves agalnsL deposlL llablllLlesţ lncludlng Lhose
beLween or among banks and quaslŴbanksţ shall noL be consldered as deposlL subsLlLuLe debL
lnsLrumenLsŦ
(Z) 1he Lerm ƍordlnary lncomeƍ lncludes any galn from Lhe sale or exchange of properLy whlch ls noL a
caplLal asseL or properLy descrlbed ln SecLlon 39(A)(1)Ŧ Any galn from Lhe sale or exchange of properLy
whlch ls LreaLed or conslderedţ under oLher provlslons of Lhls 1lLleţ as ƌordlnary lncomeƌ shall be LreaLed
as galn from Lhe sale or exchange of properLy whlch ls noL a caplLal asseL as deflned ln SecLlon 39(A)(1)Ŧ
1he Lerm ƌordlnary lossƌ lncludes any loss from Lhe sale or exchange of properLy whlch ls noL a caplLal
asseLŦ Any loss from Lhe sale or exchange of properLy whlch ls LreaLed or conslderedţ under oLher
provlslons of Lhls 1lLleţ as ƌordlnary lossƌ shall be LreaLed as loss from Lhe sale or exchange of properLy
whlch ls noL a caplLal asseLŦ
(AA) 1he Lerm ƍrank and flle employeesƍ shall mean all employees who are holdlng nelLher managerlal
nor supervlsory poslLlon as deflned under exlsLlng provlslons of Lhe Labor Code of Lhe Þhlllpplnesţ as
amendedŦ
(88) 1he Lerm ƍmuLual fund companyƍ shall mean an openŴend and closeŴend lnvesLmenL company as
deflned under Lhe lnvesLmenL Company AcLŦ
(CC) 1he Lerm ƍLradeţ buslness or professlonƍ shall noL lnclude performance of servlces by Lhe Laxpayer
as an employeeŦ
(uu) 1he Lerm ƍreglonal or area headquarLersƍ shall mean a branch esLabllshed ln Lhe Þhlllpplnes by
mulLlnaLlonal companles and whlch headquarLers do noL earn or derlve lncome from Lhe Þhlllpplnes and
whlch acL as supervlsoryţ communlcaLlons and coordlnaLlng cenLer for Lhelr afflllaLesţ subsldlarlesţ or
branches ln Lhe AslaŴÞaclflc 8eglon and oLher forelgn markeLsŦ
(LL) 1he Lerm ƍreglonal operaLlng headquarLersƍ shall mean a branch esLabllshed ln Lhe Þhlllpplnes by
mulLlnaLlonal companles whlch are engaged ln any of Lhe followlng servlcesť general admlnlsLraLlon and
plannlngŤ buslness plannlng and coordlnaLlonŤ sourclng and procuremenL of raw maLerlals and
componenLsŤ corporaLe flnance advlsory servlcesŤ markeLlng conLrol and sales promoLlonŤ Lralnlng and
personnel managemenLŤ loglsLlc servlcesŤ research and developmenL servlces and producL developmenLŤ
Lechnlcal supporL and malnLenanceŤ daLa processlng and communlcaLlonsŤ and buslness developmenLŦ

(ll) 1he Lerm ƍlongŴLerm deposlL or lnvesLmenL cerLlflcaLesƍ shall refer Lo cerLlflcaLe of Llme deposlL or
lnvesLmenL ln Lhe form of savlngsţ common or lndlvldual LrusL fundsţ deposlL subsLlLuLesţ lnvesLmenL
managemenL accounLs and oLher lnvesLmenLs wlLh a maLurlLy perlod of noL less Lhan flve (3) yearsţ Lhe
form of whlch shall be prescrlbed by Lhe 8angko SenLral ng Þlllplnas (8SÞ) and lssued by banks only (noL
by nonbank flnanclal lnLermedlarles and flnance companles) Lo lndlvlduals ln denomlnaLlons of 1en
Lhousand pesos (Þ10ţ000) and oLher denomlnaLlons as may be prescrlbed by Lhe 8SŦ

CPAÞ1L8 ll
CLnL8AL Þ8lnClÞLLS
SLCŦ 23Ŧ Ceneral Þrlnclples of lncome 1axaLlon ln Lhe ÞhlllpplnesŦ Ŵ LxcepL when oLherwlse provlded ln
Lhls Codeť
(A) A clLlzen of Lhe Þhlllpplnes resldlng Lhereln ls Laxable on all lncome derlved from sources wlLhln and
wlLhouL Lhe ÞhlllpplnesŤ
(8) A nonresldenL clLlzen ls Laxable only on lncome derlved from sources wlLhln Lhe ÞhlllpplnesŤ
(C) An lndlvldual clLlzen of Lhe Þhlllpplnes who ls worklng and derlvlng lncome from abroad as an
overseas conLracL worker ls Laxable only on lncome derlved from sources wlLhln Lhe Þhlllpplnesť
Þrovldedţ 1haL a seaman who ls a clLlzen of Lhe Þhlllpplnes and who recelves compensaLlon for servlces
rendered abroad as a member of Lhe complemenL of a vessel engaged excluslvely ln lnLernaLlonal Lrade
shall be LreaLed as an overseas conLracL workerŤ
(u) An allen lndlvldualţ wheLher a resldenL or noL of Lhe Þhlllpplnesţ ls Laxable only on lncome derlved
from sources wlLhln Lhe ÞhlllpplnesŤ
(L) A domesLlc corporaLlon ls Laxable on all lncome derlved from sources wlLhln and wlLhouL Lhe
ÞhlllpplnesŤ and
(l) A forelgn corporaLlonţ wheLher engaged or noL ln Lrade or buslness ln Lhe Þhlllpplnesţ ls Laxable only
on lncome derlved from sources wlLhln Lhe ÞhlllpplnesŦ

CPAÞ1L8 lll
1Ax Cn lnulvluuALS

SLCŦ 24Ŧ lncome 1ax 8aLesŦ Ŵ

(A) 8aLes of lncome 1ax on lndlvldual ClLlzen and lndlvldual 8esldenL Allen of Lhe ÞhlllpplnesŦ

(1) An lncome Lax ls hereby lmposedť
(a) Cn Lhe Laxable lncome deflned ln SecLlon 31 of Lhls Codeţ oLher Lhan lncome sub[ecL Lo Lax under
SubsecLlons (8)ţ (C) and (u) of Lhls SecLlonţ derlved for each Laxable year from all sources wlLhln and
wlLhouL Lhe Þhlllpplnes be every lndlvldual clLlzen of Lhe Þhlllpplnes resldlng LherelnŤ
(b) Cn Lhe Laxable lncome deflned ln SecLlon 31 of Lhls Codeţ oLher Lhan lncome sub[ecL Lo Lax under
SubsecLlons (8)ţ (C) and (u) of Lhls SecLlonţ derlved for each Laxable year from all sources wlLhln Lhe
Þhlllpplnes by an lndlvldual clLlzen of Lhe Þhlllpplnes who ls resldlng ouLslde of Lhe Þhlllpplnes lncludlng
overseas conLracL workers referred Lo ln SubsecLlon(C) of SecLlon 23 hereofŤ and
(c) Cn Lhe Laxable lncome deflned ln SecLlon 31 of Lhls Codeţ oLher Lhan lncome sub[ecL Lo Lax under
SubsecLlons (b)ţ (C) and (u) of Lhls SecLlonţ derlved for each Laxable year from all sources wlLhln Lhe
Þhlllpplnes by an lndlvldual allen who ls a resldenL of Lhe ÞhlllpplnesŦ
1he Lax shall be compuLed ln accordance wlLh and aL Lhe raLes esLabllshed ln Lhe followlng scheduleť
noL over Þ10ţ000ŧŧŧŧŧŧŧŧŧŧŧŧŧŦŦŦŦ3Ʒ
Cver Þ10ţ000 buL noL over Þ30ţ000ŧŧŧŧŧŧÞ300+10Ʒ of Lhe excess over Þ10ţ000
Cver Þ30ţ000 buL noL over Þ70ţ000ŧŧŧŧŧŧÞ2ţ300+13Ʒ of Lhe excess over Þ30ţ000
Cver Þ70ţ000 buL noL over Þ140ţ000ŧŧŦŦŧŧŧÞ8ţ300+20Ʒ of Lhe excess over Þ70ţ000
Cver Þ140ţ000 buL noL over Þ230ţ000ŧŧŧŧŧÞ22ţ300+23Ʒ of Lhe excess over Þ140ţ000
Cver Þ230ţ000 buL noL over Þ300ţ000ŧŧŧŧŧÞ30ţ000+30Ʒ of Lhe excess over Þ230ţ000
Cver Þ300ţ000 ŧŧŧŧŧŧŧŧŧŧŦŦŦŦŦ Þ123ţ000+34Ʒ of Lhe excess over Þ300ţ000 ln 1998Ŧ
Þrovldedţ 1haL effecLlve !anuary 1ţ 1999ţ Lhe Lop marglnal raLe shall be LhlrLyŴLhree percenL (33Ʒ) and
effecLlve !anuary 1ţ 2000ţ Lhe sald raLe shall be LhlrLyŴLwo percenL (32Ʒ)Ŧ
lor marrled lndlvldualsţ Lhe husband and wlfeţ sub[ecL Lo Lhe provlslon of SecLlon 31 (u) hereofţ shall
compuLe separaLely Lhelr lndlvldual lncome Lax based on Lhelr respecLlve LoLal Laxable lncomeť
Þrovldedţ 1haL lf any lncome cannoL be deflnlLely aLLrlbuLed Lo or ldenLlfled as lncome excluslvely
earned or reallzed by elLher of Lhe spousesţ Lhe same shall be dlvlded equally beLween Lhe spouses for
Lhe purpose of deLermlnlng Lhelr respecLlve Laxable lncomeŦ

(8) 8aLe of 1ax on CerLaln Þasslve lncomeŦ
(1) lnLeresLsţ 8oyalLlesţ Þrlzesţ and CLher WlnnlngsŦ Ŵ A flnal Lax aL Lhe raLe of LwenLy percenL (20Ʒ) ls
hereby lmposed upon Lhe amounL of lnLeresL from any currency bank deposlL and yleld or any oLher
moneLary beneflL from deposlL subsLlLuLes and from LrusL funds and slmllar arrangemenLsŤ royalLlesţ
excepL on booksţ as well as oLher llLerary works and muslcal composlLlonsţ whlch shall be lmposed a
flnal Lax of Len percenL (10Ʒ)Ť prlzes (excepL prlzes amounLlng Lo 1en Lhousand pesos (Þ10ţ000) or less
whlch shall be sub[ecL Lo Lax under SubsecLlon (A) of SecLlon 24Ť and oLher wlnnlngs (excepL Þhlllpplne
CharlLy SweepsLakes and LoLLo wlnnlngs)ţ derlved from sources wlLhln Lhe Þhlllpplnesť Þrovldedţ
howeverţ 1haL lnLeresL lncome recelved by an lndlvldual Laxpayer (excepL a nonresldenL lndlvldual) from
a deposlLory bank under Lhe expanded forelgn currency deposlL sysLem shall be sub[ecL Lo a flnal lncome
Lax aL Lhe raLe of seven and oneŴhalf percenL (7 1/2Ʒ) of such lnLeresL lncomeť Þrovldedţ furLherţ 1haL
lnLeresL lncome from longŴLerm deposlL or lnvesLmenL ln Lhe form of savlngsţ common or lndlvldual LrusL
fundsţ deposlL subsLlLuLesţ lnvesLmenL managemenL accounLs and oLher lnvesLmenLs evldenced by
cerLlflcaLes ln such form prescrlbed by Lhe 8angko SenLral ng Þlllplnas (8SÞ) shall be exempL from Lhe Lax
lmposed under Lhls SubsecLlonť Þrovldedţ flnallyţ 1haL should Lhe holder of Lhe cerLlflcaLe preŴLermlnaLe
Lhe deposlL or lnvesLmenL before Lhe flfLh (3Lh) yearţ a flnal Lax shall be lmposed on Lhe enLlre lncome
and shall be deducLed and wlLhheld by Lhe deposlLory bank from Lhe proceeds of Lhe longŴLerm deposlL
or lnvesLmenL cerLlflcaLe based on Lhe remalnlng maLurlLy Lhereofť

lour (4) years Lo less Lhan flve (3) years Ŵ 3ƷŤ
1hree (3) years Lo less Lhan (4) years Ŵ 12ƷŤ and
Less Lhan Lhree (3) years Ŵ 20Ʒ
(2) Cash and/or ÞroperLy ulvldends Ŵ A flnal Lax aL Lhe followlng raLes shall be lmposed upon Lhe cash
and/or properLy dlvldends acLually or consLrucLlvely recelved by an lndlvldual from a domesLlc
corporaLlon or from a [olnL sLock companyţ lnsurance or muLual fund companles and reglonal operaLlng
headquarLers of mulLlnaLlonal companlesţ or on Lhe share of an lndlvldual ln Lhe dlsLrlbuLable neL
lncome afLer Lax of a parLnershlp (excepL a general professlonal parLnershlp) of whlch he ls a parLnerţ or
on Lhe share of an lndlvldual ln Lhe neL lncome afLer Lax of an assoclaLlonţ a [olnL accounLţ or a [olnL
venLure or consorLlum Laxable as a corporaLlon of whlch he ls a member or coŴvenLurerť

Slx percenL (6Ʒ) beglnnlng !anuary 1ţ 1998Ť
LlghL percenL (8Ʒ) beglnnlng !anuary 1ţ 1999Ť and
1en percenL (10Ʒ beglnnlng !anuary 1ţ 2000Ŧ
Þrovldedţ howeverţ 1haL Lhe Lax on dlvldends shall apply only on lncome earned on or afLer !anuary 1ţ
1998Ŧ lncome formlng parL of reLalned earnlngs as of uecember 31ţ 1997 shall noLţ even lf declared or
dlsLrlbuLed on or afLer !anuary 1ţ 1998ţ be sub[ecL Lo Lhls LaxŦ

(C) CaplLal Calns from Sale of Shares of SLock noL 1raded ln Lhe SLock LxchangeŦ Ŵ 1he provlslons of
SecLlon 39(8) noLwlLhsLandlngţ a flnal Lax aL Lhe raLes prescrlbed below ls hereby lmposed upon Lhe neL
caplLal galns reallzed durlng Lhe Laxable year from Lhe saleţ barLerţ exchange or oLher dlsposlLlon of
shares of sLock ln a domesLlc corporaLlonţ excepL shares soldţ or dlsposed of Lhrough Lhe sLock
exchangeŦ
noL over Þ100ţ000ŧŧŧŧŧŧŧŧŧŧŧŦŦŦŦŦŦŦŦ 3Ʒ
Cn any amounL ln excess of Þ100ţ000ŧŧŧŧ 10Ʒ

(u) CaplLal Calns from Sale of 8eal ÞroperLyŦ Ŵ
(1) ln CeneralŦ Ŵ 1he provlslons of SecLlon 39(8) noLwlLhsLandlngţ a flnal Lax of slx percenL (6Ʒ) based on
Lhe gross selllng prlce or currenL falr markeL value as deLermlned ln accordance wlLh SecLlon 6(L) of Lhls
Codeţ whlchever ls hlgherţ ls hereby lmposed upon caplLal galns presumed Lo have been reallzed from
Lhe saleţ exchangeţ or oLher dlsposlLlon of real properLy locaLed ln Lhe Þhlllpplnesţ classlfled as caplLal
asseLsţ lncludlng pacLo de reLro sales and oLher forms of condlLlonal salesţ by lndlvldualsţ lncludlng
esLaLes and LrusLsť Þrovldedţ 1haL Lhe Lax llablllLyţ lf anyţ on galns from sales or oLher dlsposlLlons of real
properLy Lo Lhe governmenL or any of lLs pollLlcal subdlvlslons or agencles or Lo governmenLŴowned or
conLrolled corporaLlons shall be deLermlned elLher under SecLlon 24 (A) or under Lhls SubsecLlonţ aL Lhe
opLlon of Lhe LaxpayerŦ
(2) LxcepLlonŦ Ŵ 1he provlslons of paragraph (1) of Lhls SubsecLlon Lo Lhe conLrary noLwlLhsLandlngţ
caplLal galns presumed Lo have been reallzed from Lhe sale or dlsposlLlon of Lhelr prlnclpal resldence by
naLural personsţ Lhe proceeds of whlch ls fully uLlllzed ln acqulrlng or consLrucLlng a new prlnclpal
resldence wlLhln elghLeen (18) calendar monLhs from Lhe daLe of sale or dlsposlLlonţ shall be exempL
from Lhe caplLal galns Lax lmposed under Lhls SubsecLlonť Þrovldedţ 1haL Lhe hlsLorlcal cosL or ad[usLed
basls of Lhe real properLy sold or dlsposed shall be carrled over Lo Lhe new prlnclpal resldence bullL or
acqulredť Þrovldedţ furLherţ 1haL Lhe Commlssloner shall have been duly noLlfled by Lhe Laxpayer wlLhln
LhlrLy (30) days from Lhe daLe of sale or dlsposlLlon Lhrough a prescrlbed reLurn of hls lnLenLlon Lo avall
of Lhe Lax exempLlon hereln menLlonedť Þrovldedţ sLlll furLherţ 1haL Lhe sald Lax exempLlon can only be
avalled of once every Len (10) yearsť Þrovldedţ flnallyţ LhaL lf Lhere ls no full uLlllzaLlon of Lhe proceeds of
sale or dlsposlLlonţ Lhe porLlon of Lhe galn presumed Lo have been reallzed from Lhe sale or dlsposlLlon
shall be sub[ecL Lo caplLal galns LaxŦ lor Lhls purposeţ Lhe gross selllng prlce or falr markeL value aL Lhe
Llme of saleţ whlchever ls hlgherţ shall be mulLlplled by a fracLlon whlch Lhe unuLlllzed amounL bears Lo
Lhe gross selllng prlce ln order Lo deLermlne Lhe Laxable porLlon and Lhe Lax prescrlbed under paragraph
(1) of Lhls SubsecLlon shall be lmposed LhereonŦ

SLCŦ 23Ŧ 1ax on nonresldenL Allen lndlvldualŦ Ŵ
(A) nonresldenL Allen Lngaged ln Lrade or 8uslness WlLhln Lhe ÞhlllpplnesŦ Ŵ

(1) ln CeneralŦ Ŵ A nonresldenL allen lndlvldual engaged ln Lrade or buslness ln Lhe Þhlllpplnes shall be
sub[ecL Lo an lncome Lax ln Lhe same manner as an lndlvldual clLlzen and a resldenL allen lndlvldualţ on
Laxable lncome recelved from all sources wlLhln Lhe ÞhlllpplnesŦ A nonresldenL allen lndlvldual who shall
come Lo Lhe Þhlllpplnes and sLay Lhereln for an aggregaLe perlod of more Lhan one hundred elghLy (180)
days durlng any calendar year shall be deemed a ƌnonresldenL allen dolng buslness ln Lhe ÞhlllpplnesƌŦ
SecLlon 22 (C) of Lhls Code noLwlLhsLandlngŦ
(2) Cash and/or ÞroperLy ulvldends from a uomesLlc CorporaLlon or !olnL SLock Companyţ or lnsurance
or MuLual lund Company or 8eglonal CperaLlng PeadquarLers or MulLlnaLlonal Companyţ or Share ln
Lhe ulsLrlbuLable neL lncome of a ÞarLnershlp (LxcepL a Ceneral Þrofesslonal ÞarLnershlp)ţ !olnL
AccounLţ !olnL venLure 1axable as a CorporaLlon or AssoclaLlonŦţ lnLeresLsţ 8oyalLlesţ Þrlzesţ and CLher
WlnnlngsŦ Ŵ Cash and/or properLy dlvldends from a domesLlc corporaLlonţ or from a [olnL sLock companyţ
or from an lnsurance or muLual fund company or from a reglonal operaLlng headquarLers of
mulLlnaLlonal companyţ or Lhe share of a nonresldenL allen lndlvldual ln Lhe dlsLrlbuLable neL lncome
afLer Lax of a parLnershlp (excepL a general professlonal parLnershlp) of whlch he ls a parLnerţ or Lhe
share of a nonresldenL allen lndlvldual ln Lhe neL lncome afLer Lax of an assoclaLlonţ a [olnL accounLţ or a
[olnL venLure Laxable as a corporaLlon of whlch he ls a member or a coŴvenLurerŤ lnLeresLsŤ royalLles (ln
any form)Ť and prlzes (excepL prlzes amounLlng Lo 1en Lhousand pesos (Þ10ţ000) or less whlch shall be
sub[ecL Lo Lax under SubsecLlon (8)(1) of SecLlon 24) and oLher wlnnlngs (excepL Þhlllpplne CharlLy
SweepsLakes and LoLLo wlnnlngs)Ť shall be sub[ecL Lo an lncome Lax of LwenLy percenL (20Ʒ) on Lhe LoLal
amounL Lhereofť Þrovldedţ howeverţ LhaL royalLles on books as well as oLher llLerary worksţ and royalLles
on muslcal composlLlons shall be sub[ecL Lo a flnal Lax of Len percenL (10Ʒ) on Lhe LoLal amounL Lhereofť
Þrovldedţ furLherţ 1haL clnemaLographlc fllms and slmllar works shall be sub[ecL Lo Lhe Lax provlded
under SecLlon 28 of Lhls Codeť Þrovldedţ furLhermoreţ 1haL lnLeresL lncome from longŴLerm deposlL or
lnvesLmenL ln Lhe form of savlngsţ common or lndlvldual LrusL fundsţ deposlL subsLlLuLesţ lnvesLmenL
managemenL accounLs and oLher lnvesLmenLs evldenced by cerLlflcaLes ln such form prescrlbed by Lhe
8angko SenLral ng Þlllplnas (8SÞ) shall be exempL from Lhe Lax lmposed under Lhls SubsecLlonť Þrovldedţ
flnallyţ LhaL should Lhe holder of Lhe cerLlflcaLe preŴLermlnaLe Lhe deposlL or lnvesLmenL before Lhe flfLh
(3Lh) yearţ a flnal Lax shall be lmposed on Lhe enLlre lncome and shall be deducLed and wlLhheld by Lhe
deposlLory bank from Lhe proceeds of Lhe longŴLerm deposlL or lnvesLmenL cerLlflcaLe based on Lhe
remalnlng maLurlLy Lhereofť
lour (4) years Lo less Lhan flve (3) years Ŵ 3ƷŤ
1hree (3) years Lo less Lhan four (4) years Ŵ 12ƷŤ and
Less Lhan Lhree (3) years Ŵ 20ƷŦ
(3) CaplLal CalnsŦ Ŵ CaplLal galns reallzed from saleţ barLer or exchange of shares of sLock ln domesLlc
corporaLlons noL Lraded Lhrough Lhe local sLock exchangeţ and real properLles shall be sub[ecL Lo Lhe Lax
prescrlbed under SubsecLlons (C) and (u) of SecLlon 24Ŧ
(8) nonresldenL Allen lndlvldual noL Lngaged ln 1rade or 8uslness WlLhln Lhe ÞhlllpplnesŦ Ŵ 1here shall
be levledţ collecLed and pald for each Laxable year upon Lhe enLlre lncome recelved from all sources
wlLhln Lhe Þhlllpplnes by every nonresldenL allen lndlvldual noL engaged ln Lrade or buslness wlLhln Lhe
Þhlllpplnes as lnLeresLţ cash and/or properLy dlvldendsţ renLsţ salarlesţ wagesţ premlumsţ annulLlesţ
compensaLlonţ remuneraLlonţ emolumenLsţ or oLher flxed or deLermlnable annual or perlodlc or casual
galnsţ proflLsţ and lncomeţ and caplLal galnsţ a Lax equal Lo LwenLyŴflve percenL (23Ʒ) of such lncomeŦ
CaplLal galns reallzed by a nonresldenL allen lndlvldual noL engaged ln Lrade or buslness ln Lhe
Þhlllpplnes from Lhe sale of shares of sLock ln any domesLlc corporaLlon and real properLy shall be
sub[ecL Lo Lhe lncome Lax prescrlbed under SubsecLlons (C) and (u) of SecLlon 24Ŧ
(C) Allen lndlvldual Lmployed by 8eglonal or Area PeadquarLers and 8eglonal CperaLlng PeadquarLers of
MulLlnaLlonal CompanlesŦ Ŵ 1here shall be levledţ collecLed and pald for each Laxable year upon Lhe gross
lncome recelved by every allen lndlvldual employed by reglonal or area headquarLers and reglonal
operaLlng headquarLers esLabllshed ln Lhe Þhlllpplnes by mulLlnaLlonal companles as salarlesţ wagesţ
annulLlesţ compensaLlonţ remuneraLlon and oLher emolumenLsţ such as honorarla and allowancesţ from
such reglonal or area headquarLers and reglonal operaLlng headquarLersţ a Lax equal Lo flfLeen percenL
(13Ʒ) of such gross lncomeť Þrovldedţ howeverţ 1haL Lhe same Lax LreaLmenL shall apply Lo llllplnos
employed and occupylng Lhe same poslLlon as Lhose of allens employed by Lhese mulLlnaLlonal
companlesŦ lor purposes of Lhls ChapLerţ Lhe Lerm ƌmulLlnaLlonal companyƌ means a forelgn flrm or
enLlLy engaged ln lnLernaLlonal Lrade wlLh afflllaLes or subsldlarles or branch offlces ln Lhe AslaŴÞaclflc
8eglon and oLher forelgn markeLsŦ

(u) Allen lndlvldual Lmployed by Cffshore 8anklng unlLsŦ Ŵ 1here shall be levledţ collecLed and pald for
each Laxable year upon Lhe gross lncome recelved by every allen lndlvldual employed by offshore
banklng unlLs esLabllshed ln Lhe Þhlllpplnes as salarlesţ wagesţ annulLlesţ compensaLlonţ remuneraLlon
and oLher emolumenLsţ such as honorarla and allowancesţ from such offŴshore banklng unlLsţ a Lax
equal Lo flfLeen percenL (13Ʒ) of such gross lncomeť Þrovldedţ howeverţ 1haL Lhe same Lax LreaLmenL
shall apply Lo llllplnos employed and occupylng Lhe same poslLlons as Lhose of allens employed by Lhese
offshore banklng unlLsŦ

(L) Allen lndlvldual Lmployed by ÞeLroleum Servlce ConLracLor and SubconLracLorŦ Ŵ An Allen lndlvldual
who ls a permanenL resldenL of a forelgn counLry buL who ls employed and asslgned ln Lhe Þhlllpplnes
by a forelgn servlce conLracLor or by a forelgn servlce subconLracLor engaged ln peLroleum operaLlons ln
Lhe Þhlllpplnes shall be llable Lo a Lax of flfLeen percenL (13Ʒ) of Lhe salarlesţ wagesţ annulLlesţ
compensaLlonţ remuneraLlon and oLher emolumenLsţ such as honorarla and allowancesţ recelved from
such conLracLor or subconLracLorť Þrovldedţ howeverţ 1haL Lhe same Lax LreaLmenL shall apply Lo a
llllplno employed and occupylng Lhe same poslLlon as an allen employed by peLroleum servlce
conLracLor and subconLracLorŦ

Any lncome earned from all oLher sources wlLhln Lhe Þhlllpplnes by Lhe allen employees referred Lo
under SubsecLlons (C)ţ (u) and (L) hereof shall be sub[ecL Lo Lhe perLlnenL lncome Laxţ as Lhe case may
beţ lmposed under Lhls CodeŦ

SLCŦ 26Ŧ 1ax LlablllLy of Members of Ceneral Þrofesslonal ÞarLnershlpsŦ Ŵ A general professlonal
parLnershlp as such shall noL be sub[ecL Lo Lhe lncome Lax lmposed under Lhls ChapLerŦ Þersons engaglng
ln buslness as parLners ln a general professlonal parLnershlp shall be llable for lncome Lax only ln Lhelr
separaLe and lndlvldual capaclLlesŦ

lor purposes of compuLlng Lhe dlsLrlbuLlve share of Lhe parLnersţ Lhe neL lncome of Lhe parLnershlp shall
be compuLed ln Lhe same manner as a corporaLlonŦ
Lach parLner shall reporL as gross lncome hls dlsLrlbuLlve shareţ acLually or consLrucLlvely recelvedţ ln
Lhe neL lncome of Lhe parLnershlpŦ

CPAÞ1L8 lv
1Ax Cn CC8ÞC8A1lCnS

SLCŦ 27Ŧ 8aLes of lncome Lax on uomesLlc CorporaLlonsŦ Ŵ

(A) ln CeneralŦ Ŵ LxcepL as oLherwlse provlded ln Lhls Codeţ an lncome Lax of LhlrLyŴflve percenL (33Ʒ) ls
hereby lmposed upon Lhe Laxable lncome derlved durlng each Laxable year from all sources wlLhln and
wlLhouL Lhe Þhlllpplnes by every corporaLlonţ as deflned ln SecLlon 22(8) of Lhls Code and Laxable under
Lhls 1lLle as a corporaLlonţ organlzed lnţ or exlsLlng under Lhe laws of Lhe Þhlllpplnesť Þrovldedţ 1haL
effecLlve !anuary 1ţ 1998ţ Lhe raLe of lncome Lax shall be LhlrLyŴfour percenL (34Ʒ)Ť effecLlve !anuary 1ţ
1999ţ Lhe raLe shall be LhlrLyŴLhree percenL (33Ʒ)Ť and effecLlve !anuary 1ţ 2000 and LhereafLerţ Lhe raLe
shall be LhlrLyŴLwo percenL (32Ʒ)Ŧ

ln Lhe case of corporaLlons adopLlng Lhe flscalŴyear accounLlng perlodţ Lhe Laxable lncome shall be
compuLed wlLhouL regard Lo Lhe speclflc daLe when speclflc salesţ purchases and oLher LransacLlons
occurŦ 1helr lncome and expenses for Lhe flscal year shall be deemed Lo have been earned and spenL
equally for each monLh of Lhe perlodŦ

1he reduced corporaLe lncome Lax raLes shall be applled on Lhe amounL compuLed by mulLlplylng Lhe
number of monLhs covered by Lhe new raLes wlLhln Lhe flscal year by Lhe Laxable lncome of Lhe
corporaLlon for Lhe perlodţ dlvlded by LwelveŦ

Þrovldedţ furLherţ 1haL Lhe ÞresldenLţ upon Lhe recommendaLlon of Lhe SecreLary of llnanceţ may
effecLlve !anuary 1ţ 2000ţ allow corporaLlons Lhe opLlon Lo be Laxed aL flfLeen percenL (13Ʒ) of gross
lncome as deflned herelnţ afLer Lhe followlng condlLlons have been saLlsfledť

(1) A Lax efforL raLlo of LwenLy percenL (20Ʒ) of Cross naLlonal ÞroducL (CnÞ)Ť
(2) A raLlo of forLy percenL (40Ʒ) of lncome Lax collecLlon Lo LoLal Lax revenuesŤ
(3) A vA1 Lax efforL of four percenL (4Ʒ) of CnÞŤ and
(4) A 0Ŧ9 percenL (0Ŧ9Ʒ) raLlo of Lhe ConsolldaLed Þubllc SecLor llnanclal ÞoslLlon (CÞSlÞ) Lo CnÞŦ
1he opLlon Lo be Laxed based on gross lncome shall be avallable only Lo flrms whose raLlo of cosL of sales
Lo gross sales or recelpLs from all sources does noL exceed flfLyŴflve percenL (33Ʒ)Ŧ
1he elecLlon of Lhe gross lncome Lax opLlon by Lhe corporaLlon shall be lrrevocable for Lhree (3)
consecuLlve Laxable years durlng whlch Lhe corporaLlon ls quallfled under Lhe schemeŦ

lor purposes of Lhls SecLlonţ Lhe Lerm ƌgross lncomeƌ derlved from buslness shall be equlvalenL Lo gross
sales less sales reLurnsţ dlscounLs and allowances and cosL of goods soldŦ ƍCosL of goods soldƍ shall
lnclude all buslness expenses dlrecLly lncurred Lo produce Lhe merchandlse Lo brlng Lhem Lo Lhelr
presenL locaLlon and useŦ

lor a Lradlng or merchandlslng concernţ ƍcosL of goodsƍ sold shall lnclude Lhe lnvolce cosL of Lhe goods
soldţ plus lmporL duLlesţ frelghL ln LransporLlng Lhe goods Lo Lhe place where Lhe goods are acLually soldţ
lncludlng lnsurance whlle Lhe goods are ln LranslLŦ

lor a manufacLurlng concernţ ƍcosL of goods manufacLured and soldƍ shall lnclude all cosLs of
producLlon of flnlshed goodsţ such as raw maLerlals usedţ dlrecL labor and manufacLurlng overheadţ
frelghL cosLţ lnsurance premlums and oLher cosLs lncurred Lo brlng Lhe raw maLerlals Lo Lhe facLory or
warehouseŦ

ln Lhe case of Laxpayers engaged ln Lhe sale of servlceţ ƌgross lncomeƌ means gross recelpLs less sales
reLurnsţ allowances and dlscounLsŦ

(8) ÞroprleLary LducaLlonal lnsLlLuLlons and PosplLalsŦ Ŵ ÞroprleLary educaLlonal lnsLlLuLlons and
hosplLals whlch are nonproflL shall pay a Lax of Len percenL (10Ʒ) on Lhelr Laxable lncome excepL Lhose
covered by SubsecLlon (u) hereofť Þrovldedţ LhaL lf Lhe gross lncome from unrelaLed Lradeţ buslness or
oLher acLlvlLy exceeds flfLy percenL (30Ʒ) of Lhe LoLal gross lncome derlved by such educaLlonal
lnsLlLuLlons or hosplLals from all sourcesţ Lhe Lax prescrlbed ln SubsecLlon (A) hereof shall be lmposed on
Lhe enLlre Laxable lncomeŦ lor purposes of Lhls SubsecLlonţ Lhe Lerm ƌunrelaLed Lradeţ buslness or oLher
acLlvlLyƌ means any Lradeţ buslness or oLher acLlvlLyţ Lhe conducL of whlch ls noL subsLanLlally relaLed Lo
Lhe exerclse or performance by such educaLlonal lnsLlLuLlon or hosplLal of lLs prlmary purpose or
funcLlonŦ A ƍÞroprleLary educaLlonal lnsLlLuLlonƍ ls any prlvaLe school malnLalned and admlnlsLered by
prlvaLe lndlvlduals or groups wlLh an lssued permlL Lo operaLe from Lhe ueparLmenL of LducaLlonţ
CulLure and SporLs (uLCS)ţ or Lhe Commlsslon on Plgher LducaLlon (CPLu)ţ or Lhe 1echnlcal LducaLlon
and Skllls uevelopmenL AuLhorlLy (1LSuA)ţ as Lhe case may beţ ln accordance wlLh exlsLlng laws and
regulaLlonsŦ

(C) CovernmenLŴowned or ConLrolledŴCorporaLlonsţ Agencles or lnsLrumenLallLlesŦ Ŵ 1he provlslons of
exlsLlng speclal or general laws Lo Lhe conLrary noLwlLhsLandlngţ all corporaLlonsţ agenclesţ or
lnsLrumenLallLles owned or conLrolled by Lhe CovernmenLţ excepL Lhe CovernmenL Servlce lnsurance
SysLem (CSlS)ţ Lhe Soclal SecurlLy SysLem (SSS)ţ Lhe Þhlllpplne PealLh lnsurance CorporaLlon (ÞPlC)ţ Lhe
Þhlllpplne CharlLy SweepsLakes Cfflce (ÞCSC) and Lhe Þhlllpplne AmusemenL and Camlng CorporaLlon
(ÞACCC8)ţ shall pay such raLe of Lax upon Lhelr Laxable lncome as are lmposed by Lhls SecLlon upon
corporaLlons or assoclaLlons engaged ln s slmllar buslnessţ lndusLryţ or acLlvlLyŦ

(u) 8aLes of 1ax on CerLaln Þasslve lncomesŦ Ŵ

(1) lnLeresL from ueposlLs and ?leld or any oLher MoneLary 8eneflL from ueposlL SubsLlLuLes and from
1rusL lunds and Slmllar ArrangemenLsţ and 8oyalLlesŦ Ŵ A flnal Lax aL Lhe raLe of LwenLy percenL (20Ʒ) ls
hereby lmposed upon Lhe amounL of lnLeresL on currency bank deposlL and yleld or any oLher moneLary
beneflL from deposlL subsLlLuLes and from LrusL funds and slmllar arrangemenLs recelved by domesLlc
corporaLlonsţ and royalLlesţ derlved from sources wlLhln Lhe Þhlllpplnesť Þrovldedţ howeverţ 1haL
lnLeresL lncome derlved by a domesLlc corporaLlon from a deposlLory bank under Lhe expanded forelgn
currency deposlL sysLem shall be sub[ecL Lo a flnal lncome Lax aL Lhe raLe of seven and oneŴhalf percenL
(7 1/2Ʒ) of such lnLeresL lncomeŦ
(2) CaplLal Calns from Lhe Sale of Shares of SLock noL 1raded ln Lhe SLock LxchangeŦ Ŵ A flnal Lax aL Lhe
raLes prescrlbed below shall be lmposed on neL caplLal galns reallzed durlng Lhe Laxable year from Lhe
saleţ exchange or oLher dlsposlLlon of shares of sLock ln a domesLlc corporaLlon excepL shares sold or
dlsposed of Lhrough Lhe sLock exchangeť
noL over Þ100ţ000ŧŧŧŧŧŧŧŧŧŧŦŦŦŦŦ 3Ʒ
AmounL ln excess of Þ100ţ000ŧŧŧŧŧŦŦ 10Ʒ
(3) 1ax on lncome uerlved under Lhe Lxpanded lorelgn Currency ueposlL SysLemŦ Ŵ lncome derlved by a
deposlLory bank under Lhe expanded forelgn currency deposlL sysLem from forelgn currency
LransacLlons wlLh local commerclal banksţ lncludlng branches of forelgn banks LhaL may be auLhorlzed by
Lhe 8angko SenLral ng Þlllplnas (8SÞ) Lo LransacL buslness wlLh forelgn currency deposlLory sysLem unlLs
and oLher deposlLory banks under Lhe expanded forelgn currency deposlL sysLemţ lncludlng lnLeresL
lncome from forelgn currency loans granLed by such deposlLory banks under sald expanded forelgn
currency deposlL sysLem Lo resldenLsţ shall be sub[ecL Lo a flnal lncome Lax aL Lhe raLe of Len percenL
(10Ʒ) of such lncomeŦ
Any lncome of nonresldenLsţ wheLher lndlvlduals or corporaLlonsţ from LransacLlons wlLh deposlLory
banks under Lhe expanded sysLem shall be exempL from lncome LaxŦ
(4) lnLercorporaLe ulvldendsŦ Ŵ ulvldends recelved by a domesLlc corporaLlon from anoLher domesLlc
corporaLlon shall noL be sub[ecL Lo LaxŦ
(3) CaplLal Calns 8eallzed from Lhe Saleţ Lxchange or ulsposlLlon of Lands and/or 8ulldlngsŦ Ŵ A flnal Lax
of slx percenL (6Ʒ) ls hereby lmposed on Lhe galn presumed Lo have been reallzed on Lhe saleţ exchange
or dlsposlLlon of lands and/or bulldlngs whlch are noL acLually used ln Lhe buslness of a corporaLlon and
are LreaLed as caplLal asseLsţ based on Lhe gross selllng prlce of falr markeL value as deLermlned ln
accordance wlLh SecLlon 6(L) of Lhls Codeţ whlchever ls hlgherţ of such lands and/or bulldlngsŦ
(L) Mlnlmum CorporaLe lncome 1ax on uomesLlc CorporaLlonsŦ Ŵ
(1) lmposlLlon of 1axŦ Ŵ A mlnlmum corporaLe lncome Lax of Lwo percenL (2Ʒ0 of Lhe gross lncome as of
Lhe end of Lhe Laxable yearţ as deflned herelnţ ls hereby lmposed on a corporaLlon Laxable under Lhls
1lLleţ beglnnlng on Lhe fourLh Laxable year lmmedlaLely followlng Lhe year ln whlch such corporaLlon
commenced lLs buslness operaLlonsţ when Lhe mlnlmum lncome Lax ls greaLer Lhan Lhe Lax compuLed
under SubsecLlon (A) of Lhls SecLlon for Lhe Laxable yearŦ
(2) Carry lorward of Lxcess Mlnlmum 1axŦ Ŵ Any excess of Lhe mlnlmum corporaLe lncome Lax over Lhe
normal lncome Lax as compuLed under SubsecLlon (A) of Lhls SecLlon shall be carrled forward and
credlLed agalnsL Lhe normal lncome Lax for Lhe Lhree (3) lmmedlaLely succeedlng Laxable yearsŦ
(3) 8ellef from Lhe Mlnlmum CorporaLe lncome 1ax under CerLaln CondlLlonsŦ Ŵ 1he SecreLary of llnance
ls hereby auLhorlzed Lo suspend Lhe lmposlLlon of Lhe mlnlmum corporaLe lncome Lax on any
corporaLlon whlch suffers losses on accounL of prolonged labor dlspuLeţ or because of force ma[eureţ or
because of leglLlmaLe buslness reversesŦ
1he SecreLary of llnance ls hereby auLhorlzed Lo promulgaLeţ upon recommendaLlon of Lhe
Commlsslonerţ Lhe necessary rules and regulaLlon LhaL shall deflne Lhe Lerms and condlLlons under
whlch he may suspend Lhe lmposlLlon of Lhe mlnlmum corporaLe lncome Lax ln a merlLorlous caseŦ
(4) Cross lncome ueflnedŦ Ŵ lor purposes of applylng Lhe mlnlmum corporaLe lncome Lax provlded under
SubsecLlon (L) hereofţ Lhe Lerm ƌgross lncomeƌ shall mean gross sales less sales reLurnsţ dlscounLs and
allowances and cosL of goods soldŦ ƍCosL of goods soldƌ shall lnclude all buslness expenses dlrecLly
lncurred Lo produce Lhe merchandlse Lo brlng Lhem Lo Lhelr presenL locaLlon and useŦ
lor a Lradlng or merchandlslng concernţ ƍcosL of goods soldƌ shall lnclude Lhe lnvolce cosL of Lhe goods
soldţ plus lmporL duLlesţ frelghL ln LransporLlng Lhe goods Lo Lhe place where Lhe goods are acLually sold
lncludlng lnsurance whlle Lhe goods are ln LranslLŦ
lor a manufacLurlng concernţ cosL of ƍgoods manufacLured and soldƍ shall lnclude all cosLs of
producLlon of flnlshed goodsţ such as raw maLerlals usedţ dlrecL labor and manufacLurlng overheadţ
frelghL cosLţ lnsurance premlums and oLher cosLs lncurred Lo brlng Lhe raw maLerlals Lo Lhe facLory or
warehouseŦ
ln Lhe case of Laxpayers engaged ln Lhe sale of servlceţ ƌgross lncomeƌ means gross recelpLs less sales
reLurnsţ allowancesţ dlscounLs and cosL of servlcesŦ ƍCosL of servlcesƍ shall mean all dlrecL cosLs and
expenses necessarlly lncurred Lo provlde Lhe servlces requlred by Lhe cusLomers and cllenLs lncludlng (A)
salarles and employee beneflLs of personnelţ consulLanLs and speclallsLs dlrecLly renderlng Lhe servlce
and (8) cosL of faclllLles dlrecLly uLlllzed ln provldlng Lhe servlce such as depreclaLlon or renLal of
equlpmenL used and cosL of suppllesť Þrovldedţ howeverţ 1haL ln Lhe case of banksţ ƍcosL of servlcesƍ
shall lnclude lnLeresL expenseŦ
SLCŦ 28Ŧ 8aLes of lncome 1ax on lorelgn CorporaLlonsŦ Ŵ
(A) 1ax on 8esldenL lorelgn CorporaLlonsŦ Ŵ

(1) ln CeneralŦ Ŵ LxcepL as oLherwlse provlded ln Lhls Codeţ a corporaLlon organlzedţ auLhorlzedţ or
exlsLlng under Lhe laws of any forelgn counLryţ engaged ln Lrade or buslness wlLhln Lhe Þhlllpplnesţ shall
be sub[ecL Lo an lncome Lax equlvalenL Lo LhlrLyŴflve percenL (33Ʒ) of Lhe Laxable lncome derlved ln Lhe
precedlng Laxable year from all sources wlLhln Lhe Þhlllpplnesť Þrovldedţ 1haL effecLlve !anuary 1ţ 1998ţ
Lhe raLe of lncome Lax shall be LhlrLyŴfour percenL (34Ʒ)Ť effecLlve !anuary 1ţ 1999ţ Lhe raLe shall be
LhlrLyŴLhree percenL (33Ʒ)ţ and effecLlve !anuary 1ţ 2000 and LhereafLerţ Lhe raLe shall be LhlrLyŴLwo
percenL (32Ʒ)Ŧ
ln Lhe case of corporaLlons adopLlng Lhe flscalŴyear accounLlng perlodţ Lhe Laxable lncome shall be
compuLed wlLhouL regard Lo Lhe speclflc daLe when salesţ purchases and oLher LransacLlons occurŦ 1helr
lncome and expenses for Lhe flscal year shall be deemed Lo have been earned and spenL equally for each
monLh of Lhe perlodŦ
1he reduced corporaLe lncome Lax raLes shall be applled on Lhe amounL compuLed by mulLlplylng Lhe
number of monLhs covered by Lhe new raLes wlLhln Lhe flscal year by Lhe Laxable lncome of Lhe
corporaLlon for Lhe perlodţ dlvlded by LwelveŦ
Þrovldedţ howeverţ 1haL a resldenL forelgn corporaLlon shall be granLed Lhe opLlon Lo be Laxed aL flfLeen
percenL (13Ʒ) on gross lncome under Lhe same condlLlonsţ as provlded ln SecLlon 27 (A)Ŧ
(2) Mlnlmum CorporaLe lncome 1ax on 8esldenL lorelgn CorporaLlonsŦ Ŵ A mlnlmum corporaLe lncome
Lax of Lwo percenL (2Ʒ) of gross lncomeţ as prescrlbed under SecLlon 27 (L) of Lhls Codeţ shall be
lmposedţ under Lhe same condlLlonsţ on a resldenL forelgn corporaLlon Laxable under paragraph (1) of
Lhls SubsecLlonŦ
(3) lnLernaLlonal CarrlerŦ Ŵ An lnLernaLlonal carrler dolng buslness ln Lhe Þhlllpplnes shall pay a Lax of Lwo
and oneŴhalf percenL (2 1/2Ʒ) on lLs ƍCross Þhlllpplne 8llllngsƍ as deflned hereunderť
(a) lnLernaLlonal Alr CarrlerŦ Ŵ ƍCross Þhlllpplne 8llllngsƍ refers Lo Lhe amounL of gross revenue derlved
from carrlage of personsţ excess baggageţ cargo and mall orlglnaLlng from Lhe Þhlllpplnes ln a
conLlnuous and unlnLerrupLed fllghLţ lrrespecLlve of Lhe place of sale or lssue and Lhe place of paymenL
of Lhe LlckeL or passage documenLť Þrovldedţ 1haL LlckeLs revalldaLedţ exchanged and/or lndorsed Lo
anoLher lnLernaLlonal alrllne form parL of Lhe Cross Þhlllpplne 8llllngs lf Lhe passenger boards a plane ln
a porL or polnL ln Lhe Þhlllpplnesť Þrovldedţ furLherţ 1haL for a fllghL whlch orlglnaLes from Lhe
Þhlllpplnesţ buL LransshlpmenL of passenger Lakes place aL any porL ouLslde Lhe Þhlllpplnes on anoLher
alrllneţ only Lhe allquoL porLlon of Lhe cosL of Lhe LlckeL correspondlng Lo Lhe leg flown from Lhe
Þhlllpplnes Lo Lhe polnL of LransshlpmenL shall form parL of Cross Þhlllpplne 8llllngsŦ
(b) lnLernaLlonal ShlpplngŦ Ŵ ƍCross Þhlllpplne 8llllngsƍ means gross revenue wheLher for passengerţ
cargo or mall orlglnaLlng from Lhe Þhlllpplnes up Lo flnal desLlnaLlonţ regardless of Lhe place of sale or
paymenLs of Lhe passage or frelghL documenLsŦ
(4) Cffshore 8anklng unlLsŦ Ŵ 1he provlslons of any law Lo Lhe conLrary noLwlLhsLandlngţ lncome derlved
by offshore banklng unlLs auLhorlzed by Lhe 8angko SenLral ng Þlllplnas (8SÞ) Lo LransacL buslness wlLh
offshore banklng unlLsţ lncludlng any lnLeresL lncome derlved from forelgn currency loans granLed Lo
resldenLsţ shall be sub[ecL Lo a flnal lncome Lax aL Lhe raLe of Len percenL (10Ʒ) of such lncomeŦ
Any lncome of nonresldenLsţ wheLher lndlvlduals or corporaLlonsţ from LransacLlons wlLh sald offshore
banklng unlLs shall be exempL from lncome LaxŦ
(3) 1ax on 8ranch ÞroflLs 8emlLLancesŦ Ŵ Any proflL remlLLed by a branch Lo lLs head offlce shall be
sub[ecL Lo a Lax of flfLeen (13Ʒ) whlch shall be based on Lhe LoLal proflLs applled or earmarked for
remlLLance wlLhouL any deducLlon for Lhe Lax componenL Lhereof (excepL Lhose acLlvlLles whlch are
reglsLered wlLh Lhe Þhlllpplne Lconomlc Zone AuLhorlLy)Ŧ 1he Lax shall be collecLed and pald ln Lhe same
manner as provlded ln SecLlons 37 and 38 of Lhls Codeť provldedţ LhaL lnLeresLsţ dlvldendsţ renLsţ
royalLlesţ lncludlng remuneraLlon for Lechnlcal servlcesţ salarlesţ wages premlumsţ annulLlesţ
emolumenLs or oLher flxed or deLermlnable annualţ perlodlc or casual galnsţ proflLsţ lncome and caplLal
galns recelved by a forelgn corporaLlon durlng each Laxable year from all sources wlLhln Lhe Þhlllpplnes
shall noL be LreaLed as branch proflLs unless Lhe same are effecLlvely connecLed wlLh Lhe conducL of lLs
Lrade or buslness ln Lhe ÞhlllpplnesŦ
(6) 8eglonal or Area PeadquarLers and 8eglonal CperaLlng PeadquarLers of MulLlnaLlonal CompanlesŦ Ŵ
(a) 8eglonal or area headquarLers as deflned ln SecLlon 22(uu) shall noL be sub[ecL Lo lncome LaxŦ
(b) 8eglonal operaLlng headquarLers as deflned ln SecLlon 22(LL) shall pay a Lax of Len percenL (10Ʒ) of
Lhelr Laxable lncomeŦ
(7) 1ax on CerLaln lncomes 8ecelved by a 8esldenL lorelgn CorporaLlonŦ Ŵ
(a) lnLeresL from ueposlLs and ?leld or any oLher MoneLary 8eneflL from ueposlL SubsLlLuLesţ 1rusL
lunds and Slmllar ArrangemenLs and 8oyalLlesŦ Ŵ lnLeresL from any currency bank deposlL and yleld or
any oLher moneLary beneflL from deposlL subsLlLuLes and from LrusL funds and slmllar arrangemenLs and
royalLles derlved from sources wlLhln Lhe Þhlllpplnes shall be sub[ecL Lo a flnal lncome Lax aL Lhe raLe of
LwenLy percenL (20Ʒ) of such lnLeresLť Þrovldedţ howeverţ 1haL lnLeresL lncome derlved by a resldenL
forelgn corporaLlon from a deposlLory bank under Lhe expanded forelgn currency deposlL sysLem shall
be sub[ecL Lo a flnal lncome Lax aL Lhe raLe of seven and oneŴhalf percenL (7 1/2Ʒ) of such lnLeresL
lncomeŦ
(b) lncome uerlved under Lhe Lxpanded lorelgn Currency ueposlL SysLemŦ Ŵ lncome derlved by a
deposlLory bank under Lhe expanded forelgn currency deposlL sysLem from forelgn currency
LransacLlons wlLh local commerclal banks lncludlng branches of forelgn banks LhaL may be auLhorlzed by
Lhe 8angko SenLral ng Þlllplnas (8SÞ) Lo LransacL buslness wlLh forelgn currency deposlL sysLem unlLsţ
lncludlng lnLeresL lncome from forelgn currency loans granLed by such deposlLory banks under sald
expanded forelgn currency deposlL sysLem Lo resldenLsţ shall be sub[ecL Lo a flnal lncome Lax aL Lhe raLe
of Len percenL (10Ʒ) of such lncomeŦ
Any lncome of nonresldenLsţ wheLher lndlvlduals or corporaLlonsţ from LransacLlons wlLh deposlLory
banks under Lhe expanded sysLem shall be exempL from lncome LaxŦ
(c) CaplLal Calns from Sale of Shares of SLock noL 1raded ln Lhe SLock LxchangeŦ Ŵ A flnal Lax aL Lhe raLes
prescrlbed below ls hereby lmposed upon Lhe neL caplLal galns reallzed durlng Lhe Laxable year from Lhe
saleţ barLerţ exchange or oLher dlsposlLlon of shares of sLock ln a domesLlc corporaLlon excepL shares
sold or dlsposed of Lhrough Lhe sLock exchangeť
noL over Þ100ţ000ŧŧŧŧŧŧŧŧŧŦŦŦŦŦŦŧ 3Ʒ
Cn any amounL ln excess of Þ100ţ000ŧŧŦ 10Ʒ
(d) lnLercorporaLe ulvldendsŦ Ŵ ulvldends recelved by a resldenL forelgn corporaLlon from a domesLlc
corporaLlon llable Lo Lax under Lhls Code shall noL be sub[ecL Lo Lax under Lhls 1lLleŦ
(8) 1ax on nonresldenL lorelgn CorporaLlonŦ Ŵ
(1) ln CeneralŦ Ŵ LxcepL as oLherwlse provlded ln Lhls Codeţ a forelgn corporaLlon noL engaged ln Lrade or
buslness ln Lhe Þhlllpplnes shall pay a Lax equal Lo LhlrLyŴflve percenL (33Ʒ) of Lhe gross lncome recelved
durlng each Laxable year from all sources wlLhln Lhe Þhlllpplnesţ such as lnLeresLsţ dlvldendsţ renLsţ
royalLlesţ salarlesţ premlums (excepL relnsurance premlums)ţ annulLlesţ emolumenLs or oLher flxed or
deLermlnable annualţ perlodlc or casual galnsţ proflLs and lncomeţ and caplLal galnsţ excepL caplLal galns
sub[ecL Lo Lax under subparagraphs (C) and (d)ť Þrovldedţ 1haL effecLlve 1ţ 1998ţ Lhe raLe of lncome Lax
shall be LhlrLyŴfour percenL (34Ʒ)Ť effecLlve !anuary 1ţ 1999ţ Lhe raLe shall be LhlrLyŴLhree percenL (33Ʒ)Ť
andţ effecLlve !anuary 1ţ 2000 and LhereafLerţ Lhe raLe shall be LhlrLyŴLwo percenL (32Ʒ)Ŧ
(2) nonresldenL ClnemaLographlc lllm Cwnerţ Lessor or ulsLrlbuLorŦ Ŵ A clnemaLographlc fllm ownerţ
lessorţ or dlsLrlbuLor shall pay a Lax of LwenLyŴflve percenL (23Ʒ) of lLs gross lncome from all sources
wlLhln Lhe ÞhlllpplnesŦ
(3) nonresldenL Cwner or Lessor of vessels CharLered by Þhlllpplne naLlonalsŦ Ŵ A nonresldenL owner or
lessor of vessels shall be sub[ecL Lo a Lax of four and oneŴhalf percenL (4 1/2Ʒ) of gross renLalsţ lease or
charLer fees from leases or charLers Lo llllplno clLlzens or corporaLlonsţ as approved by Lhe MarlLlme
lndusLry AuLhorlLyŦ
(4) nonresldenL Cwner or Lessor of AlrcrafLţ Machlnerles and CLher LqulpmenLŦ Ŵ 8enLalsţ charLers and
oLher fees derlved by a nonresldenL lessor of alrcrafLţ machlnerles and oLher equlpmenL shall be sub[ecL
Lo a Lax of seven and oneŴhalf percenL (7 1/2Ʒ) of gross renLals or feesŦ
(3) 1ax on CerLaln lncomes 8ecelved by a nonresldenL lorelgn CorporaLlonŦ Ŵ
(a) lnLeresL on lorelgn LoansŦ Ŵ A flnal wlLhholdlng Lax aL Lhe raLe of LwenLy percenL (20Ʒ) ls hereby
lmposed on Lhe amounL of lnLeresL on forelgn loans conLracLed on or afLer AugusL 1ţ 1986Ť
(b) lnLercorporaLe ulvldendsŦ Ŵ A flnal wlLhholdlng Lax aL Lhe raLe of flfLeen percenL (13Ʒ) ls hereby
lmposed on Lhe amounL of cash and/or properLy dlvldends recelved from a domesLlc corporaLlonţ whlch
shall be collecLed and pald as provlded ln SecLlon 37 (A) of Lhls Codeţ sub[ecL Lo Lhe condlLlon LhaL Lhe
counLry ln whlch Lhe nonresldenL forelgn corporaLlon ls domlclledţ shall allow a credlL agalnsL Lhe Lax
due from Lhe nonresldenL forelgn corporaLlon Laxes deemed Lo have been pald ln Lhe Þhlllpplnes
equlvalenL Lo LwenLy percenL (20Ʒ) for 1997ţ nlneLeen percenL (19Ʒ) for 1998ţ elghLeen percenL (18Ʒ)
for 1999ţ and sevenLeen percenL (17Ʒ) LhereafLerţ whlch represenLs Lhe dlfference beLween Lhe regular
lncome Lax of LhlrLyŴflve percenL (33Ʒ) ln 1997ţ LhlrLyŴfour percenL (34Ʒ) ln 1998ţ and LhlrLyŴLhree
percenL (33Ʒ) ln 1999ţ and LhlrLyŴLwo percenL (32Ʒ) LhereafLer on corporaLlons and Lhe flfLeen percenL
(13Ʒ) Lax on dlvldends as provlded ln Lhls subparagraphŤ
(c) CaplLal Calns from Sale of Shares of SLock noL 1raded ln Lhe SLock LxchangeŦ Ŵ A flnal Lax aL Lhe raLes
prescrlbed below ls hereby lmposed upon Lhe neL caplLal galns reallzed durlng Lhe Laxable year from Lhe
saleţ barLerţ exchange or oLher dlsposlLlon of shares of sLock ln a domesLlc corporaLlonţ excepL shares
soldţ or dlsposed of Lhrough Lhe sLock exchangeť
noL over Þ100ţ000ŧŧŧŧŦŦŧŧŧŧŧŧŦŦŦŦŦŦŦŦŦŦ3Ʒ
Cn any amounL ln excess of Þ100ţ000ŧŧŧŧ 10Ʒ

SLCŦ 29Ŧ lmposlLlon of lmproperly AccumulaLed Larnlngs 1axŦ Ŵ
(A) ln CeneralŦ Ŵ ln addlLlon Lo oLher Laxes lmposed by Lhls 1lLleţ Lhere ls hereby lmposed for each
Laxable year on Lhe lmproperly accumulaLed Laxable lncome of each corporaLlon descrlbed ln SubsecLlon
8 hereofţ an lmproperly accumulaLed earnlngs Lax equal Lo Len percenL (10Ʒ) of Lhe lmproperly
accumulaLed Laxable lncomeŦ

(8) 1ax on CorporaLlons Sub[ecL Lo lmproperly AccumulaLed Larnlngs 1axŦ Ŵ

(1) ln CeneralŦ Ŵ 1he lmproperly accumulaLed earnlngs Lax lmposed ln Lhe precedlng SecLlon shall apply
Lo every corporaLlon formed or avalled for Lhe purpose of avoldlng Lhe lncome Lax wlLh respecL Lo lLs
shareholders or Lhe shareholders of any oLher corporaLlonţ by permlLLlng earnlngs and proflLs Lo
accumulaLe lnsLead of belng dlvlded or dlsLrlbuLedŦ
(2) LxcepLlonsŦ Ŵ 1he lmproperly accumulaLed earnlngs Lax as provlded for under Lhls SecLlon shall noL
apply Loť

(a) ÞubllclyŴheld corporaLlonsŤ
(b) 8anks and oLher nonbank flnanclal lnLermedlarlesŤ and
(c) lnsurance companlesŦ
(C) Lvldence of Þurpose Lo Avold lncome 1axŦ Ŵ
(1) Þrlma lacle LvldenceŦ Ŵ Lhe facL LhaL any corporaLlon ls a mere holdlng company or lnvesLmenL
company shall be prlma facle evldence of a purpose Lo avold Lhe Lax upon lLs shareholders or membersŦ
(2) Lvldence ueLermlnaLlve of ÞurposeŦ Ŵ 1he facL LhaL Lhe earnlngs or proflLs of a corporaLlon are
permlLLed Lo accumulaLe beyond Lhe reasonable needs of Lhe buslness shall be deLermlnaLlve of Lhe
purpose Lo avold Lhe Lax upon lLs shareholders or members unless Lhe corporaLlonţ by Lhe clear
preponderance of evldenceţ shall prove Lo Lhe conLraryŦ
(u) lmproperly AccumulaLed 1axable lncomeŦ Ŵ lor purposes of Lhls SecLlonţ Lhe Lerm ƌlmproperly
accumulaLed Laxable lncomeƌ means Laxable lncomeƌ ad[usLed byť
(1) lncome exempL from LaxŤ
(2) lncome excluded from gross lncomeŤ
(3) lncome sub[ecL Lo flnal LaxŤ and
(4) 1he amounL of neL operaLlng loss carryŴover deducLedŤ
And reduced by Lhe sum ofť
(1) ulvldends acLually or consLrucLlvely paldŤ and
(2) lncome Lax pald for Lhe Laxable yearŦ
Þrovldedţ howeverţ 1haL for corporaLlons uslng Lhe calendar year baslsţ Lhe accumulaLed earnlngs under
Lax shall noL apply on lmproperly accumulaLed lncome as of uecember 31ţ 1997Ŧ ln Lhe case of
corporaLlons adopLlng Lhe flscal year accounLlng perlodţ Lhe lmproperly accumulaLed lncome noL sub[ecL
Lo Lhls Laxţ shall be reckonedţ as of Lhe end of Lhe monLh comprlslng Lhe Lwelve (12)ŴmonLh perlod of
flscal year 1997Ŵ1998Ŧ
(L) 8easonable needs of Lhe 8uslnessŦ Ŵ lor purposes of Lhls SecLlonţ Lhe Lerm ƌreasonable needs of Lhe
buslnessƌ lncludes Lhe reasonably anLlclpaLed needs of Lhe buslnessŦ
SLCŦ 30Ŧ LxempLlons from 1ax on CorporaLlonsŦ Ŵ 1he followlng organlzaLlons shall noL be Laxed under
Lhls 1lLle ln respecL Lo lncome recelved by Lhem as suchť

(A) Laborţ agrlculLural or horLlculLural organlzaLlon noL organlzed prlnclpally for proflLŤ

(8) MuLual savlngs bank noL havlng a caplLal sLock represenLed by sharesţ and cooperaLlve bank wlLhouL
caplLal sLock organlzed and operaLed for muLual purposes and wlLhouL proflLŤ

(C) A beneflclary socleLyţ order or assoclaLlonţ operaLlng forL he excluslve beneflL of Lhe members such
as a fraLernal organlzaLlon operaLlng under Lhe lodge sysLemţ or muLual ald assoclaLlon or a nonsLock
corporaLlon organlzed by employees provldlng for Lhe paymenL of llfeţ slcknessţ accldenLţ or oLher
beneflLs excluslvely Lo Lhe members of such socleLyţ orderţ or assoclaLlonţ or nonsLock corporaLlon or
Lhelr dependenLsŤ

(u) CemeLery company owned and operaLed excluslvely for Lhe beneflL of lLs membersŤ

(L) nonsLock corporaLlon or assoclaLlon organlzed and operaLed excluslvely for rellglousţ charlLableţ
sclenLlflcţ aLhleLlcţ or culLural purposesţ or for Lhe rehablllLaLlon of veLeransţ no parL of lLs neL lncome or
asseL shall belong Lo or lnures Lo Lhe beneflL of any memberţ organlzerţ offlcer or any speclflc personŤ

(l) 8uslness league chamber of commerceţ or board of Lradeţ noL organlzed for proflL and no parL of Lhe
neL lncome of whlch lnures Lo Lhe beneflL of any prlvaLe sLockŴholderţ or lndlvldualŤ

(C) Clvlc league or organlzaLlon noL organlzed for proflL buL operaLed excluslvely for Lhe promoLlon of
soclal welfareŤ

(P) A nonsLock and nonproflL educaLlonal lnsLlLuLlonŤ

(l) CovernmenL educaLlonal lnsLlLuLlonŤ

(!) larmersƌ or oLher muLual Lyphoon or flre lnsurance companyţ muLual dlLch or lrrlgaLlon companyţ
muLual or cooperaLlve Lelephone companyţ or llke organlzaLlon of a purely local characLerţ Lhe lncome
of whlch conslsLs solely of assessmenLsţ duesţ and fees collecLed from members for Lhe sole purpose of
meeLlng lLs expensesŤ and

(k) larmersƌţ frulL growersƌţ or llke assoclaLlon organlzed and operaLed as a sales agenL for Lhe purpose
of markeLlng Lhe producLs of lLs members and Lurnlng back Lo Lhem Lhe proceeds of salesţ less Lhe
necessary selllng expenses on Lhe basls of Lhe quanLlLy of produce flnlshed by LhemŤ

noLwlLhsLandlng Lhe provlslons ln Lhe precedlng paragraphsţ Lhe lncome of whaLever klnd and characLer
of Lhe foregolng organlzaLlons from any of Lhelr properLlesţ real or personalţ or from any of Lhelr
acLlvlLles conducLed for proflL regardless of Lhe dlsposlLlon made of such lncomeţ shall be sub[ecL Lo Lax
lmposed under Lhls CodeŦ

CPAÞ1L8 v
CCMÞu1A1lCn Cl 1AxA8LL lnCCML

SLCŦ 31Ŧ 1axable lncome ueflnedŦ Ŵ 1he Lerm Laxable lncome means Lhe perLlnenL lLems of gross lncome
speclfled ln Lhls Codeţ less Lhe deducLlons and/or personal and addlLlonal exempLlonsţ lf anyţ auLhorlzed
for such Lypes of lncome by Lhls Code or oLher speclal lawsŦ

CPAÞ1L8 vl
CCMÞu1A1lCn Cl C8CSS lnCCML

SLCŦ 32Ŧ Cross lncomeŦ Ŵ
(A) Ceneral ueflnlLlonŦ Ŵ LxcepL when oLherwlse provlded ln Lhls 1lLleţ gross lncome means all lncome
derlved from whaLever sourceţ lncludlng (buL noL llmlLed Lo) Lhe followlng lLemsť

(1) CompensaLlon for servlces ln whaLever form paldţ lncludlngţ buL noL llmlLed Lo feesţ salarlesţ wagesţ
commlsslonsţ and slmllar lLemsŤ
(2) Cross lncome derlved from Lhe conducL of Lrade or buslness or Lhe exerclse of a professlonŤ
(3) Calns derlved from deallngs ln properLyŤ
(4) lnLeresLsŤ
(3) 8enLsŤ
(6) 8oyalLlesŤ
(7) ulvldendsŤ
(8) AnnulLlesŤ
(9) Þrlzes and wlnnlngsŤ
(10) ÞenslonsŤ and
(11) ÞarLnerƌs dlsLrlbuLlve share from Lhe neL lncome of Lhe general professlonal parLnershlpŦ
(8) Lxcluslons from Cross lncomeŦ Ŵ 1he followlng lLems shall noL be lncluded ln gross lncome and shall
be exempL from LaxaLlon under Lhls LlLleť
(1) Llfe lnsuranceŦ Ŵ 1he proceeds of llfe lnsurance pollcles pald Lo Lhe helrs or beneflclarles upon Lhe
deaLh of Lhe lnsuredţ wheLher ln a slngle sum or oLherwlseţ buL lf such amounLs are held by Lhe lnsurer
under an agreemenL Lo pay lnLeresL Lhereonţ Lhe lnLeresL paymenLs shall be lncluded ln gross lncomeŦ
(2) AmounL 8ecelved by lnsured as 8eLurn of ÞremlumŦ Ŵ 1he amounL recelved by Lhe lnsuredţ as a
reLurn of premlums pald by hlm under llfe lnsuranceţ endowmenLţ or annulLy conLracLsţ elLher durlng
Lhe Lerm or aL Lhe maLurlLy of Lhe Lerm menLloned ln Lhe conLracL or upon surrender of Lhe conLracLŦ
(3) ClfLsţ 8equesLsţ and uevlsesŦ Ŵ 1he value of properLy acqulred by glfLţ bequesLţ devlseţ or descenLť
Þrovldedţ howeverţ 1haL lncome from such properLyţ as well as glfLţ bequesLţ devlse or descenL of
lncome from any properLyţ ln cases of Lransfers of dlvlded lnLeresLţ shall be lncluded ln gross lncomeŦ
(4) CompensaLlon for ln[urles or SlcknessŦ Ŵ amounLs recelvedţ Lhrough AccldenL or PealLh lnsurance or
under Workmenƌs CompensaLlon AcLsţ as compensaLlon for personal ln[urles or slcknessţ plus Lhe
amounLs of any damages recelvedţ wheLher by sulL or agreemenLţ on accounL of such ln[urles or
slcknessŦ
(3) lncome LxempL under 1reaLyŦ Ŵ lncome of any klndţ Lo Lhe exLenL requlred by any LreaLy obllgaLlon
blndlng upon Lhe CovernmenL of Lhe ÞhlllpplnesŦ
(6) 8eLlremenL 8eneflLsţ Þenslonsţ CraLulLlesţ eLcŦŴ
(a) 8eLlremenL beneflLs recelved under 8epubllc AcL noŦ 7641 and Lhose recelved by offlclals and
employees of prlvaLe flrmsţ wheLher lndlvldual or corporaLeţ ln accordance wlLh a reasonable prlvaLe
beneflL plan malnLalned by Lhe employerť Þrovldedţ 1haL Lhe reLlrlng offlclal or employee has been ln
Lhe servlce of Lhe same employer for aL leasL Len (10) years and ls noL less Lhan flfLy (30) years of age aL
Lhe Llme of hls reLlremenLť Þrovldedţ furLherţ 1haL Lhe beneflLs granLed under Lhls subparagraph shall be
avalled of by an offlclal or employee only onceŦ lor purposes of Lhls SubsecLlonţ Lhe Lerm ƌreasonable
prlvaLe beneflL planƌ means a penslonţ graLulLyţ sLock bonus or proflLŴsharlng plan malnLalned by an
employer for Lhe beneflL of some or all of hls offlclals or employeesţ whereln conLrlbuLlons are made by
such employer for Lhe offlclals or employeesţ or boLhţ for Lhe purpose of dlsLrlbuLlng Lo such offlclals
and employees Lhe earnlngs and prlnclpal of Lhe fund Lhus accumulaLedţ and whereln lLs ls provlded ln
sald plan LhaL aL no Llme shall any parL of Lhe corpus or lncome of Lhe fund be used forţ or be dlverLed
Loţ any purpose oLher Lhan for Lhe excluslve beneflL of Lhe sald offlclals and employeesŦ
(b) Any amounL recelved by an offlclal or employee or by hls helrs from Lhe employer as a consequence
of separaLlon of such offlclal or employee from Lhe servlce of Lhe employer because of deaLh slckness or
oLher physlcal dlsablllLy or for any cause beyond Lhe conLrol of Lhe sald offlclal or employeeŦ
(c) 1he provlslons of any exlsLlng law Lo Lhe conLrary noLwlLhsLandlngţ soclal securlLy beneflLsţ
reLlremenL graLulLlesţ penslons and oLher slmllar beneflLs recelved by resldenL or nonresldenL clLlzens of
Lhe Þhlllpplnes or allens who come Lo reslde permanenLly ln Lhe Þhlllpplnes from forelgn governmenL
agencles and oLher lnsLlLuLlonsţ prlvaLe or publlcŦ
(d) ÞaymenLs of beneflLs due or Lo become due Lo any person resldlng ln Lhe Þhlllpplnes under Lhe laws
of Lhe unlLed SLaLes admlnlsLered by Lhe unlLed SLaLes veLerans AdmlnlsLraLlonŦ
(e) 8eneflLs recelved from or en[oyed under Lhe Soclal SecurlLy SysLem ln accordance wlLh Lhe
provlslons of 8epubllc AcL noŦ 8282Ŧ
(f) 8eneflLs recelved from Lhe CSlS under 8epubllc AcL noŦ 8291ţ lncludlng reLlremenL graLulLy recelved
by governmenL offlclals and employeesŦ
(7) Mlscellaneous lLemsŦ Ŵ
(a) lncome uerlved by lorelgn CovernmenLŦ Ŵ lncome derlved from lnvesLmenLs ln Lhe Þhlllpplnes ln
loansţ sLocksţ bonds or oLher domesLlc securlLlesţ or from lnLeresL on deposlLs ln banks ln Lhe Þhlllpplnes
by (l) forelgn governmenLsţ (ll) flnanclng lnsLlLuLlons ownedţ conLrolledţ or en[oylng reflnanclng from
forelgn governmenLsţ and (lll) lnLernaLlonal or reglonal flnanclal lnsLlLuLlons esLabllshed by forelgn
governmenLsŦ
(b) lncome uerlved by Lhe CovernmenL or lLs ÞollLlcal SubdlvlslonsŦ Ŵ lncome derlved from any publlc
uLlllLy or from Lhe exerclse of any essenLlal governmenLal funcLlon accrulng Lo Lhe CovernmenL of Lhe
Þhlllpplnes or Lo any pollLlcal subdlvlslon LhereofŦ
(c) Þrlzes and AwardsŦ Ŵ Þrlzes and awards made prlmarlly ln recognlLlon of rellglousţ charlLableţ
sclenLlflcţ educaLlonalţ arLlsLlcţ llLeraryţ or clvlc achlevemenL buL only lfť
(l) 1he reclplenL was selecLed wlLhouL any acLlon on hls parL Lo enLer Lhe conLesL or proceedlngŤ and
(ll) 1he reclplenL ls noL requlred Lo render subsLanLlal fuLure servlces as a condlLlon Lo recelvlng Lhe
prlze or awardŦ
(d) Þrlzes and Awards ln SporLs CompeLlLlonŦ Ŵ All prlzes and awards granLed Lo aLhleLes ln local and
lnLernaLlonal sporLs compeLlLlons and LournamenLs wheLher held ln Lhe Þhlllpplnes or abroad and
sancLloned by Lhelr naLlonal sporLs assoclaLlonsŦ
(e) 13Lh MonLh Þay and CLher 8eneflLsŦ Ŵ Cross beneflLs recelved by offlclals and employees of publlc
and prlvaLe enLlLlesť Þrovldedţ howeverţ 1haL Lhe LoLal excluslon under Lhls subparagraph shall noL
exceed 1hlrLy Lhousand pesos (Þ30ţ000) whlch shall coverť
(l) 8eneflLs recelved by offlclals and employees of Lhe naLlonal and local governmenL pursuanL Lo
8epubllc AcL noŦ 6686Ť
(ll) 8eneflLs recelved by employees pursuanL Lo ÞresldenLlal uecree noŦ 831ţ as amended by
Memorandum Crder noŦ 28ţ daLed AugusL 13ţ 1986Ť
(lll) 8eneflLs recelved by offlclals and employees noL covered by ÞresldenLlal decree noŦ 831ţ as
amended by Memorandum Crder noŦ 28ţ daLed AugusL 13ţ 1986Ť and
(lv) CLher beneflLs such as producLlvlLy lncenLlves and ChrlsLmas bonusť Þrovldedţ furLherţ 1haL Lhe
celllng of 1hlrLy Lhousand pesos (Þ30ţ000) may be lncreased Lhrough rules and regulaLlons lssued by Lhe
SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ afLer conslderlng among oLhersţ Lhe
effecL on Lhe same of Lhe lnflaLlon raLe aL Lhe end of Lhe Laxable yearŦ
(f) CSlSţ SSSţ Medlcare and CLher ConLrlbuLlonsŦ Ŵ CSlSţ SSSţ Medlcare and ÞagŴlblg conLrlbuLlonsţ and
unlon dues of lndlvldualsŦ
(g) Calns from Lhe Sale of 8ondsţ uebenLures or oLher CerLlflcaLe of lndebLednessŦ Ŵ Calns reallzed from
Lhe same or exchange or reLlremenL of bondsţ debenLures or oLher cerLlflcaLe of lndebLedness wlLh a
maLurlLy of more Lhan flve (3) yearsŦ
(h) Calns from 8edempLlon of Shares ln MuLual lundŦ Ŵ Calns reallzed by Lhe lnvesLor upon redempLlon
of shares of sLock ln a muLual fund company as deflned ln SecLlon 22 (88) of Lhls CodeŦ
SLCŦ 33Ŧ Speclal 1reaLmenL of lrlnge 8eneflLŦŴ
(A) lmposlLlon of 1axŦŴ A flnal Lax of LhlrLyŴfour percenL (34Ʒ) effecLlve !anuary 1ţ 1998Ť LhlrLyŴLhree
percenL (33Ʒ) effecLlve !anuary 1ţ 1999Ť and LhlrLyŴLwo percenL (32Ʒ) effecLlve !anuary 1ţ 2000 and
LhereafLerţ ls hereby lmposed on Lhe grossedŴup moneLary value of frlnge beneflL furnlshed or granLed
Lo Lhe employee (excepL rank and flle employees as deflned hereln) by Lhe employerţ wheLher an
lndlvldual or a corporaLlon (unless Lhe frlnge beneflL ls requlred by Lhe naLure ofţ or necessary Lo Lhe
Lradeţ buslness or professlon of Lhe employerţ or when Lhe frlnge beneflL ls for Lhe convenlence or
advanLage of Lhe employer)Ŧ 1he Lax hereln lmposed ls payable by Lhe employer whlch Lax shall be pald
ln Lhe same manner as provlded for under SecLlon 37 (A) of Lhls CodeŦ 1he grossedŴup moneLary value of
Lhe frlnge beneflL shall be deLermlned by dlvldlng Lhe acLual moneLary value of Lhe frlnge beneflL by
slxLyŴslx percenL (66Ʒ) effecLlve !anuary 1ţ 1998Ť slxLyŴseven percenL (67Ʒ) effecLlve !anuary 1ţ 1999Ť
and slxLyŴelghL percenL (68Ʒ) effecLlve !anuary 1ţ 2000 and LhereafLerť Þrovldedţ howeverţ 1haL frlnge
beneflL furnlshed Lo employees and Laxable under SubsecLlons (8)ţ (C)ţ (u) and (L) of SecLlon 23 shall be
Laxed aL Lhe appllcable raLes lmposed LhereaLť Þrovldedţ furLherţ 1haL Lhe grossed Ŵup value of Lhe
frlnge beneflL shall be deLermlned by dlvldlng Lhe acLual moneLary value of Lhe frlnge beneflL by Lhe
dlfference beLween one hundred percenL (100Ʒ) and Lhe appllcable raLes of lncome Lax under
SubsecLlons (8)ţ (C)ţ (u)ţ and (L) of SecLlon 23Ŧ

(8) lrlnge 8eneflL deflnedŦŴ lor purposes of Lhls SecLlonţ Lhe Lerm ƍfrlnge beneflLƍ means any goodţ
servlce or oLher beneflL furnlshed or granLed ln cash or ln klnd by an employer Lo an lndlvldual employee
(excepL rank and flle employees as deflned hereln) such asţ buL noL llmlLed Loţ Lhe followlngť

(1) PouslngŤ
(2) Lxpense accounLŤ
(3) vehlcle of any klndŤ
(4) Pousehold personnelţ such as maldţ drlver and oLhersŤ
(3) lnLeresL on loan aL less Lhan markeL raLe Lo Lhe exLenL of Lhe dlfference beLween Lhe markeL raLe
and acLual raLe granLedŤ
(6) Membershlp feesţ dues and oLher expenses borne by Lhe employer for Lhe employee ln soclal and
aLhleLlc clubs or oLher slmllar organlzaLlonsŤ
(7) Lxpenses for forelgn LravelŤ
(8) Pollday and vacaLlon expensesŤ
(9) LducaLlonal asslsLance Lo Lhe employee or hls dependenLsŤ and
(10) Llfe or healLh lnsurance and oLher nonŴllfe lnsurance premlums or slmllar amounLs ln excess of whaL
Lhe law allowsŦ
(C) lrlnge 8eneflLs noL 1axableŦ Ŵ 1he followlng frlnge beneflLs are noL Laxable under Lhls SecLlonť
(1) frlnge beneflLs whlch are auLhorlzed and exempLed from Lax under speclal lawsŤ
(2) ConLrlbuLlons of Lhe employer for Lhe beneflL of Lhe employee Lo reLlremenLţ lnsurance and
hosplLallzaLlon beneflL plansŤ
(3) 8eneflLs glven Lo Lhe rank and flle employeesţ wheLher granLed under a collecLlve bargalnlng
agreemenL or noLŤ and
(4) ue mlnlmls beneflLs as deflned ln Lhe rules and regulaLlons Lo be promulgaLed by Lhe SecreLary of
llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
1he SecreLary of llnance ls hereby auLhorlzed Lo promulgaLeţ upon recommendaLlon of Lhe
Commlsslonerţ such rules and regulaLlons as are necessary Lo carry ouL efflclenLly and falrly Lhe
provlslons of Lhls SecLlonţ Laklng lnLo accounL Lhe pecullar naLure and speclal need of Lhe Lradeţ buslness
or professlon of Lhe employerŦ

CPAÞ1L8 vll
ALLCWA8LL uLuuC1lCnS

SLCŦ 34Ŧ ueducLlons from Cross lncomeŦ Ŵ LxcepL for Laxpayers earnlng compensaLlon lncome arlslng
from personal servlces rendered under an employerŴemployee relaLlonshlp where no deducLlons shall
be allowed under Lhls SecLlon oLher Lhan under subsecLlon (M) hereofţ ln compuLlng Laxable lncome
sub[ecL Lo lncome Lax under SecLlons 24 (A)Ť 23 (A)Ť 26Ť 27 (A)ţ (8) and (C)Ť and 28 (A) (1)ţ Lhere shall be
allowed Lhe followlng deducLlons from gross lncomeŤ

(A) LxpensesŦ Ŵ

(1) Crdlnary and necessary 1radeţ 8uslness or Þrofesslonal LxpensesŦŴ
(a) ln CeneralŦ Ŵ 1here shall be allowed as deducLlon from gross lncome all Lhe ordlnary and necessary
expenses pald or lncurred durlng Lhe Laxable year ln carrylng on or whlch are dlrecLly aLLrlbuLable Loţ Lhe
developmenLţ managemenLţ operaLlon and/or conducL of Lhe Lradeţ buslness or exerclse of a professlonţ
lncludlngť
(l) A reasonable allowance for salarlesţ wagesţ and oLher forms of compensaLlon for personal servlces
acLually renderedţ lncludlng Lhe grossedŴup moneLary value of frlnge beneflL furnlshed or granLed by Lhe
employer Lo Lhe employeeť Þrovldedţ 1haL Lhe flnal Lax lmposed under SecLlon 33 hereof has been paldŤ
(ll) A reasonable allowance for Lravel expensesţ here and abroadţ whlle away from home ln Lhe pursulL
of Lradeţ buslness or professlonŤ
(lll) A reasonable allowance for renLals and/or oLher paymenLs whlch are requlred as a condlLlon for Lhe
conLlnued use or possesslonţ for purposes of Lhe Lradeţ buslness or professlonţ of properLy Lo whlch Lhe
Laxpayer has noL Laken or ls noL Laklng LlLle or ln whlch he has no equlLy oLher Lhan LhaL of a lesseeţ user
or possessorŤ
(lv) A reasonable allowance for enLerLalnmenLţ amusemenL and recreaLlon expenses durlng Lhe Laxable
yearţ LhaL are dlrecLly connecLed Lo Lhe developmenLţ managemenL and operaLlon of Lhe Lradeţ buslness
or professlon of Lhe Laxpayerţ or LhaL are dlrecLly relaLed Lo or ln furLherance of Lhe conducL of hls or lLs
Lradeţ buslness or exerclse of a professlon noL Lo exceed such celllngs as Lhe SecreLary of llnance mayţ
by rules and regulaLlons prescrlbeţ upon recommendaLlon of Lhe Commlsslonerţ Laklng lnLo accounL Lhe
needs as well as Lhe speclal clrcumsLancesţ naLure and characLer of Lhe lndusLryţ Lradeţ buslnessţ or
professlon of Lhe Laxpayerť Þrovldedţ 1haL any expense lncurred for enLerLalnmenLţ amusemenL or
recreaLlon LhaL ls conLrary Lo lawţ morals publlc pollcy or publlc order shall ln no case be allowed as a
deducLlonŦ
(b) SubsLanLlaLlon 8equlremenLsŦ Ŵ no deducLlon from gross lncome shall be allowed under SubsecLlon
(A) hereof unless Lhe Laxpayer shall subsLanLlaLe wlLh sufflclenL evldenceţ such as offlclal recelpLs or
oLher adequaLe recordsť (l) Lhe amounL of Lhe expense belng deducLedţ and (ll) Lhe dlrecL connecLlon or
relaLlon of Lhe expense belng deducLed Lo Lhe developmenLţ managemenLţ operaLlon and/or conducL of
Lhe Lradeţ buslness or professlon of Lhe LaxpayerŦ
(c) 8rlbesţ klckbacks and CLher Slmllar ÞaymenLsŦ Ŵ no deducLlon from gross lncome shall be allowed
under SubsecLlon (A) hereof for any paymenL madeţ dlrecLly or lndlrecLlyţ Lo an offlclal or employee of
Lhe naLlonal governmenLţ or Lo an offlclal or employee of any local governmenL unlLţ or Lo an offlclal or
employee of a governmenLŴowned or ŴconLrolled corporaLlonţ or Lo an offlclal or employee or
represenLaLlve of a forelgn governmenLţ or Lo a prlvaLe corporaLlonţ general professlonal parLnershlpţ or
a slmllar enLlLyţ lf Lhe paymenL consLlLuLes a brlbe or klckbackŦ
(2) Lxpenses Allowable Lo ÞrlvaLe LducaLlonal lnsLlLuLlonsŦ Ŵ ln addlLlon Lo Lhe expenses allowable as
deducLlons under Lhls ChapLerţ a prlvaLe educaLlonal lnsLlLuLlonţ referred Lo under SecLlon 27 (8) of Lhls
Codeţ may aL lLs opLlon elecL elLherť (a) Lo deducL expendlLures oLherwlse consldered as caplLal ouLlays
of depreclable asseLs lncurred durlng Lhe Laxable year for Lhe expanslon of school faclllLles or (b) Lo
deducL allowance for depreclaLlon Lhereof under SubsecLlon (l) hereofŦ
(8) lnLeresLŦŴ
(1) ln CeneralŦ Ŵ 1he amounL of lnLeresL pald or lncurred wlLhln a Laxable year on lndebLedness ln
connecLlon wlLh Lhe Laxpayerƌs professlonţ Lrade or buslness shall be allowed as deducLlon from gross
lncomeť Þrovldedţ howeverţ 1haL Lhe Laxpayerƌs oLherwlse allowable deducLlon for lnLeresL expense
shall be reduced by an amounL equal Lo Lhe followlng percenLages of Lhe lnLeresL lncome sub[ecLed Lo
flnal Laxť
lorLyŴone percenL (41Ʒ) beglnnlng !anuary 1ţ 1998Ť
1hlrLyŴnlne percenL (39Ʒ) beglnnlng !anuary 1ţ 1999Ť and
1hlrLyŴelghL percenL (38Ʒ) beglnnlng !anuary 1ţ 2000Ť
(2) LxcepLlonsŦ Ŵ no deducLlon shall be allowed ln respecL of lnLeresL under Lhe succeedlng
subparagraphsť
(a) lf wlLhln Lhe Laxable year an lndlvldual Laxpayer reporLlng lncome on Lhe cash basls lncurs an
lndebLedness on whlch an lnLeresL ls pald ln advance Lhrough dlscounL or oLherwlseť Þrovldedţ 1haL such
lnLeresL shall be allowed a a deducLlon ln Lhe year Lhe lndebLedness ls paldť Þrovldedţ furLherţ 1haL lf Lhe
lndebLedness ls payable ln perlodlc amorLlzaLlonsţ Lhe amounL of lnLeresL whlch corresponds Lo Lhe
amounL of Lhe prlnclpal amorLlzed or pald durlng Lhe year shall be allowed as deducLlon ln such Laxable
yearŤ
(b) lf boLh Lhe Laxpayer and Lhe person Lo whom Lhe paymenL has been made or ls Lo be made are
persons speclfled under SecLlon 36 (8)Ť or
(c)lf Lhe lndebLedness ls lncurred Lo flnance peLroleum exploraLlonŦ
(3) CpLlonal 1reaLmenL of lnLeresL LxpenseŦ Ŵ AL Lhe opLlon of Lhe Laxpayerţ lnLeresL lncurred Lo acqulre
properLy used ln Lrade buslness or exerclse of a professlon may be allowed as a deducLlon or LreaLed as
a caplLal expendlLureŦ
(C) 1axesŦŴ
(1) ln CeneralŦ Ŵ 1axes pald or lncurred wlLhln Lhe Laxable year ln connecLlon wlLh Lhe Laxpayerƌs
professlonţ Lrade or buslnessţ shall be allowed as deducLlonţ excepL
(a) 1he lncome Lax provlded for under Lhls 1lLleŤ
(b) lncome Laxes lmposed by auLhorlLy of any forelgn counLryŤ buL Lhls deducLlon shall be allowed ln Lhe
case of a Laxpayer who does noL slgnlfy ln hls reLurn hls deslre Lo have Lo any exLenL Lhe beneflLs of
paragraph (3) of Lhls subsecLlon (relaLlng Lo credlLs for Laxes of forelgn counLrles)Ť
(c) LsLaLe and donorƌs LaxesŤ and
(d) 1axes assessed agalnsL local beneflLs of a klnd Lendlng Lo lncrease Lhe value of Lhe properLy assessedŦ
Þrovldedţ 1haL Laxes allowed under Lhls SubsecLlonţ when refunded or credlLedţ shall be lncluded as parL
of gross lncome ln Lhe year of recelpL Lo Lhe exLenL of Lhe lncome Lax beneflL of sald deducLlonŦ
(2) LlmlLaLlons on ueducLlonsŦ Ŵ ln Lhe case of a nonresldenL allen lndlvldual engaged ln Lrade or buslness
ln Lhe Þhlllpplnes and a resldenL forelgn corporaLlonţ Lhe deducLlons for Laxes provlded ln paragraph (1)
of Lhls SubsecLlon (C) shall be allowed only lf and Lo Lhe exLenL LhaL Lhey are connecLed wlLh lncome
from sources wlLhln Lhe ÞhlllpplnesŦ
(3) CredlL AgalnsL 1ax for 1axes of lorelgn CounLrlesŦ Ŵ lf Lhe Laxpayer slgnlfles ln hls reLurn hls deslre Lo
have Lhe beneflLs of Lhls paragraphţ Lhe Lax lmposed by Lhls 1lLle shall be credlLed wlLhť
(a) ClLlzen and uomesLlc CorporaLlonŦ Ŵ ln Lhe case of a clLlzen of Lhe Þhlllpplnes and of a domesLlc
corporaLlonţ Lhe amounL of lncome Laxes pald or lncurred durlng Lhe Laxable year Lo any forelgn
counLryŤ and
(b) ÞarLnershlps and LsLaLesŦ Ŵ ln Lhe case of any such lndlvldual who ls a member of a general
professlonal parLnershlp or a beneflclary of an esLaLe or LrusLţ hls proporLlonaLe share of such Laxes of
Lhe general professlonal parLnershlp or Lhe esLaLe or LrusL pald or lncurred durlng Lhe Laxable year Lo a
forelgn counLryţ lf hls dlsLrlbuLlve share of Lhe lncome of such parLnershlp or LrusL ls reporLed for
LaxaLlon under Lhls 1lLleŦ
An allen lndlvldual and a forelgn corporaLlon shall noL be allowed Lhe credlLs agalnsL Lhe Lax for Lhe
Laxes of forelgn counLrles allowed under Lhls paragraphŦ
(4) LlmlLaLlons on CredlLŦ Ŵ 1he amounL of Lhe credlL Laken under Lhls SecLlon shall be sub[ecL Lo each of
Lhe followlng llmlLaLlonsť
(a) 1he amounL of Lhe credlL ln respecL Lo Lhe Lax pald or lncurred Lo any counLry shall noL exceed Lhe
same proporLlon of Lhe Lax agalnsL whlch such credlL ls Lakenţ whlch Lhe Laxpayerƌs Laxable lncome from
sources wlLhln such counLry under Lhls 1lLle bears Lo hls enLlre Laxable lncome for Lhe same Laxable
yearŤ and
(b) 1he LoLal amounL of Lhe credlL shall noL exceed Lhe same proporLlon of Lhe Lax agalnsL whlch such
credlL ls Lakenţ whlch Lhe Laxpayerƌs Laxable lncome from sources wlLhouL Lhe Þhlllpplnes Laxable under
Lhls 1lLle bears Lo hls enLlre Laxable lncome for Lhe same Laxable yearŦ
(3) Ad[usLmenLs on ÞaymenL of lncurred 1axesŦ Ŵ lf accrued Laxes when pald dlffer from Lhe amounLs
clalmed as credlLs by Lhe Laxpayerţ or lf any Lax pald ls refunded ln whole or ln parLţ Lhe Laxpayer shall
noLlfy Lhe CommlsslonerŤ who shall redeLermlne Lhe amounL of Lhe Lax for Lhe year or years affecLedţ
and Lhe amounL of Lax due upon such redeLermlnaLlonţ lf anyţ shall be pald by Lhe Laxpayer upon noLlce
and demand by Lhe Commlsslonerţ or Lhe amounL of Lax overpaldţ lf anyţ shall be credlLed or refunded
Lo Lhe LaxpayerŦ ln Lhe case of such a Lax lncurred buL noL paldţ Lhe Commlssloner as a condlLlon
precedenL Lo Lhe allowance of Lhls credlL may requlre Lhe Laxpayer Lo glve a bond wlLh sureLles
saLlsfacLory Lo and Lo be approved by Lhe Commlssloner ln such sum as he may requlreţ condlLloned
upon Lhe paymenL by Lhe Laxpayer of any amounL of Lax found due upon any such redeLermlnaLlonŦ 1he
bond hereln prescrlbed shall conLaln such furLher condlLlons as Lhe Commlssloner may requlreŦ
(6) ?ear ln Whlch CredlL 1akenŦ Ŵ 1he credlLs provlded for ln SubsecLlon (C)(3) of Lhls SecLlon mayţ aL Lhe
opLlon of Lhe Laxpayer and lrrespecLlve of Lhe meLhod of accounLlng employed ln keeplng hls booksţ be
Laken ln Lhe year whlch Lhe Laxes of Lhe forelgn counLry were lncurredţ sub[ecLţ howeverţ Lo Lhe
condlLlons prescrlbed ln SubsecLlon (C)(3) of Lhls SecLlonŦ lf Lhe Laxpayer elecLs Lo Lake such credlLs ln
Lhe year ln whlch Lhe Laxes of Lhe forelgn counLry accruedţ Lhe credlLs for all subsequenL years shall be
Laken upon Lhe same basls and no porLlon of any such Laxes shall be allowed as a deducLlon ln Lhe same
or any succeedlng yearŦ
(7) Þroof of CredlLsŦ Ŵ 1he credlLs provlded ln SubsecLlon (C)(3) hereof shall be allowed only lf Lhe
Laxpayer esLabllshes Lo Lhe saLlsfacLlon of Lhe Commlssloner Lhe followlngť
(a) 1he LoLal amounL of lncome derlved from sources wlLhouL Lhe ÞhlllpplnesŤ
(b) 1he amounL of lncome derlved from each counLryţ Lhe Lax pald or lncurred Lo whlch ls clalmed as a
credlL under sald paragraphţ such amounL Lo be deLermlned under rules and regulaLlons prescrlbed by
Lhe SecreLary of llnanceŤ and
(c) All oLher lnformaLlon necessary for Lhe verlflcaLlon and compuLaLlon of such credlLsŦ
(u) LossesŦ Ŵ
(1) ln CeneralŦŴ Losses acLually susLalned durlng Lhe Laxable year and noL compensaLed for by lnsurance
or oLher forms of lndemnlLy shall be allowed as deducLlonsť
(a) lf lncurred ln Lradeţ professlon or buslnessŤ
(b) Cf properLy connecLed wlLh Lhe Lradeţ buslness or professlonţ lf Lhe loss arlses from flresţ sLormsţ
shlpwreckţ or oLher casualLlesţ or from robberyţ LhefL or embezzlemenLŦ
1he SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ ls hereby auLhorlzed Lo
promulgaLe rules and regulaLlons prescrlblngţ among oLher Lhlngsţ Lhe Llme and manner by whlch Lhe
Laxpayer shall submlL a declaraLlon of loss susLalned from casualLy or from robberyţ LhefL or
embezzlemenL durlng Lhe Laxable yearť Þrovldedţ howeverţ 1haL Lhe Llme llmlL Lo be so prescrlbed ln Lhe
rules and regulaLlons shall noL be less Lhan LhlrLy (30) days nor more Lhan nlneLy (90) days from Lhe daLe
of dlscovery of Lhe casualLy or robberyţ LhefL or embezzlemenL glvlng rlse Lo Lhe lossŦ
(c) no loss shall be allowed as a deducLlon under Lhls SubsecLlon lf aL Lhe Llme of Lhe flllng of Lhe reLurnţ
such loss has been clalmed as a deducLlon for esLaLe Lax purposes ln Lhe esLaLe Lax reLurnŦ
(2) Þroof of LossŦ Ŵ ln Lhe case of a nonresldenL allen lndlvldual or forelgn corporaLlonţ Lhe losses
deducLlble shall be Lhose acLually susLalned durlng Lhe year lncurred ln buslnessţ Lrade or exerclse of a
professlon conducLed wlLhln Lhe Þhlllpplnesţ when such losses are noL compensaLed for by lnsurance or
oLher forms of lndemnlLyŦ 1he SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ ls
hereby auLhorlzed Lo promulgaLe rules and regulaLlons prescrlblngţ among oLher Lhlngsţ Lhe Llme and
manner by whlch Lhe Laxpayer shall submlL a declaraLlon of loss susLalned from casualLy or from
robberyţ LhefL or embezzlemenL durlng Lhe Laxable yearť Þrovldedţ 1haL Lhe Llme Lo be so prescrlbed ln
Lhe rules and regulaLlons shall noL be less Lhan LhlrLy (30) days nor more Lhan nlneLy (90) days from Lhe
daLe of dlscovery of Lhe casualLy or robberyţ LhefL or embezzlemenL glvlng rlse Lo Lhe lossŤ and
(3) neL CperaLlng Loss CarryŴCverŦ Ŵ 1he neL operaLlng loss of Lhe buslness or enLerprlse for any Laxable
year lmmedlaLely precedlng Lhe currenL Laxable yearţ whlch had noL been prevlously offseL as deducLlon
from gross lncome shall be carrled over as a deducLlon from gross lncome for Lhe nexL Lhree (3)
consecuLlve Laxable years lmmedlaLely followlng Lhe year of such lossť Þrovldedţ howeverţ 1haL any neL
loss lncurred ln a Laxable year durlng whlch Lhe Laxpayer was exempL from lncome Lax shall noL be
allowed as a deducLlon under Lhls SubsecLlonť Þrovldedţ furLherţ 1haL a neL operaLlng loss carryŴover
shall be allowed only lf Lhere has been no subsLanLlal change ln Lhe ownershlp of Lhe buslness or
enLerprlse ln LhaL Ŵ
(l) noL less Lhan sevenLyŴflve percenL (73Ʒ) ln nomlnal value of ouLsLandlng lssued sharesŦţ lf Lhe
buslness ls ln Lhe name of a corporaLlonţ ls held by or on behalf of Lhe same personsŤ or
(ll) noL less Lhan sevenLyŴflve percenL (73Ʒ) of Lhe pald up caplLal of Lhe corporaLlonţ lf Lhe buslness ls ln
Lhe name of a corporaLlonţ ls held by or on behalf of Lhe same personsŦ
lor purposes of Lhls subsecLlonţ Lhe Lerm ƍnoL operaLlng lossƍ shall mean Lhe excess of allowable
deducLlon over gross lncome of Lhe buslness ln a Laxable yearŦ
Þrovldedţ 1haL for mlnes oLher Lhan oll and gas wellsţ a neL operaLlng loss wlLhouL Lhe beneflL of
lncenLlves provlded for under LxecuLlve Crder noŦ 226ţ as amendedţ oLherwlse known as Lhe Cmnlbus
lnvesLmenLs Code of 1987ţ lncurred ln any of Lhe flrsL Len (10) years of operaLlon may be carrled over as
a deducLlon from Laxable lncome for Lhe nexL flve (3) years lmmedlaLely followlng Lhe year of such lossŦ
1he enLlre amounL of Lhe loss shall be carrled over Lo Lhe flrsL of Lhe flve (3) Laxable years followlng Lhe
lossţ and any porLlon of such loss whlch exceedsţ Lhe Laxable lncome of such flrsL year shall be deducLed
ln llke manner form Lhe Laxable lncome of Lhe nexL remalnlng four (4) yearsŦ
(4) CaplLal LossesŦ Ŵ
(a) LlmlLaLlonŦ Ŵ Loss from sales or Lxchanges of caplLal asseLs shall be allowed only Lo Lhe exLenL
provlded ln SecLlon 39Ŧ
(b) SecurlLles 8ecomlng WorLhlessŦ Ŵ lf securlLles as deflned ln SecLlon 22 (1) become worLhless durlng
Lhe Laxable year and are caplLal asseLsţ Lhe loss resulLlng Lherefrom shallţ for purposes of Lhls 1lLleţ be
consldered as a loss from Lhe sale or exchangeţ on Lhe lasL day of such Laxable yearţ of caplLal asseLsŦ
(3) Losses lrom Wash Sales of SLock or SecurlLlesŦ Ŵ Losses from ƍwash salesƍ of sLock or securlLles as
provlded ln SecLlon 38Ŧ
(6) Wagerlng LossesŦ Ŵ Losses from wagerlng LransacLlons shall b allowed only Lo Lhe exLenL of Lhe galns
from such LransacLlonsŦ
(7) AbandonmenL LossesŦ Ŵ
(a) ln Lhe evenL a conLracL area where peLroleum operaLlons are underLaken ls parLlally or wholly
abandonedţ all accumulaLed exploraLlon and developmenL expendlLures perLalnlng LhereLo shall be
allowed as a deducLlonť Þrovldedţ 1haL accumulaLed expendlLures lncurred ln LhaL area prlor Lo !anuary
1ţ 1979 shall be allowed as a deducLlon only from any lncome derlved from Lhe same conLracL areaŦ ln all
casesţ noLlces of abandonmenL shall be flled wlLh Lhe CommlsslonerŦ
(b) ln case a produclng well ls subsequenLly abandonedţ Lhe unamorLlzed cosLs Lhereofţ as well as Lhe
undepreclaLed cosLs of equlpmenL dlrecLly used Lherelnţ shall be allowed as a deducLlon ln Lhe year such
wellţ equlpmenL or faclllLy ls abandoned by Lhe conLracLorť Þrovldedţ 1haL lf such abandoned well ls
reenLered and producLlon ls resumedţ or lf such equlpmenL or faclllLy ls resLored lnLo servlceţ Lhe sald
cosLs shall be lncluded as parL of gross lncome ln Lhe year of resumpLlon or resLoraLlon and shall be
amorLlzed or depreclaLedţ as Lhe case may beŦ
(L) 8ad uebLsŦ Ŵ
(1) ln CeneralŦ Ŵ uebLs due Lo Lhe Laxpayer acLually ascerLalned Lo be worLhless and charged off wlLhln
Lhe Laxable year excepL Lhose noL connecLed wlLh professlonţ Lrade or buslness and Lhose susLalned ln a
LransacLlon enLered lnLo beLween parLles menLloned under SecLlon 36 (8) of Lhls Codeť Þrovldedţ 1haL
recovery of bad debLs prevlously allowed as deducLlon ln Lhe precedlng years shall be lncluded as parL of
Lhe gross lncome ln Lhe year of recovery Lo Lhe exLenL of Lhe lncome Lax beneflL of sald deducLlonŦ
(2) SecurlLles 8ecomlng WorLhlessŦ Ŵ lf securlLlesţ as deflned ln SecLlon 22 (1)ţ are ascerLalned Lo be
worLhless and charged off wlLhln Lhe Laxable year and are caplLal asseLsţ Lhe loss resulLlng Lherefrom
shallţ ln Lhe case of a Laxpayer oLher Lhan a bank or LrusL company lncorporaLed under Lhe laws of Lhe
Þhlllpplnes a subsLanLlal parL of whose buslness ls Lhe recelpL of deposlLsţ for Lhe purpose of Lhls 1lLleţ
be consldered as a loss from Lhe sale or exchangeţ on Lhe lasL day of such Laxable yearţ of caplLal asseLsŦ
(l) uepreclaLlonŦ Ŵ
(1) Ceneral 8uleŦ Ŵ 1here shall be allowed as a depreclaLlon deducLlon a reasonable allowance for Lhe
exhausLlonţ wear and Lear (lncludlng reasonable allowance for obsolescence) of properLy used ln Lhe
Lrade or buslnessŦ ln Lhe case of properLy held by one person for llfe wlLh remalnder Lo anoLher personţ
Lhe deducLlon shall be compuLed as lf Lhe llfe LenanL were Lhe absoluLe owner of Lhe properLy and shall
be allowed Lo Lhe llfe LenanLŦ ln Lhe case of properLy held ln LrusLţ Lhe allowable deducLlon shall be
apporLloned beLween Lhe lncome beneflclarles and Lhe LrusLees ln accordance wlLh Lhe perLlnenL
provlslons of Lhe lnsLrumenL creaLlng Lhe LrusLţ or ln Lhe absence of such provlslonsţ on Lhe basls of Lhe
LrusL lncome allowable Lo eachŦ
(2) use of CerLaln MeLhods and 8aLesŦ Ŵ 1he Lerm ƍreasonable allowanceƍ as used ln Lhe precedlng
paragraph shall lncludeţ buL noL llmlLed Loţ an allowance compuLed ln accordance wlLh rules and
regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ under
any of Lhe followlng meLhodsť
(a) 1he sLralghLŴllne meLhodŤ
(b) uecllnlngŴbalance meLhodţ uslng a raLe noL exceedlng Lwlce Lhe raLe whlch would have been used
had Lhe annual allowance been compuLed under Lhe meLhod descrlbed ln SubsecLlon (l) (1)Ť
(c) 1he sumŴofŴLheŴyearsŴdlglL meLhodŤ and
(d) any oLher meLhod whlch may be prescrlbed by Lhe SecreLary of llnance upon recommendaLlon of
Lhe CommlsslonerŦ
(3) AgreemenL as Lo useful Llfe on Whlch uepreclaLlon 8aLe ls 8asedŦ Ŵ Where under rules and
regulaLlons prescrlbed by Lhe SecreLary of llnance upon recommendaLlon of Lhe Commlsslonerţ Lhe
Laxpayer and Lhe Commlssloner have enLered lnLo an agreemenL ln wrlLlng speclflcally deallng wlLh Lhe
useful llfe and raLe of depreclaLlon of any properLyţ Lhe raLe so agreed upon shall be blndlng on boLh Lhe
Laxpayer and Lhe naLlonal CovernmenL ln Lhe absence of facLs and clrcumsLances noL Laken lnLo
conslderaLlon durlng Lhe adopLlon of such agreemenLŦ 1he responslblllLy of esLabllshlng Lhe exlsLence of
such facLs and clrcumsLances shall resL wlLh Lhe parLy lnlLlaLlng Lhe modlflcaLlonŦ Any change ln Lhe
agreed raLe and useful llfe of Lhe depreclable properLy as speclfled ln Lhe agreemenL shall noL be
effecLlve for Laxable years prlor Lo Lhe Laxable year ln whlch noLlce ln wrlLlng by cerLlfled mall or
reglsLered mall ls served by Lhe parLy lnlLlaLlng such change Lo Lhe oLher parLy Lo Lhe agreemenLť
Þrovldedţ howeverţ LhaL where Lhe Laxpayer has adopLed such useful llfe and depreclaLlon raLe for any
depreclable and clalmed Lhe depreclaLlon expenses as deducLlon from hls gross lncomeţ wlLhouL any
wrlLLen ob[ecLlon on Lhe parL of Lhe Commlssloner or hls duly auLhorlzed represenLaLlvesţ Lhe aforesald
useful llfe and depreclaLlon raLe so adopLed by Lhe Laxpayer for Lhe aforesald depreclable asseL shall be
consldered blndlng for purposes of Lhls SubsecLlonŦ
(4) uepreclaLlon of ÞroperLles used ln ÞeLroleum CperaLlonsŦ Ŵ An allowance for depreclaLlon ln respecL
of all properLles dlrecLly relaLed Lo producLlon of peLroleum lnlLlally placed ln servlce ln a Laxable year
shall be allowed under Lhe sLralghLŴllne or decllnlngŴbalance meLhod of depreclaLlon aL Lhe opLlon of Lhe
servlce conLracLorŦ
Poweverţ lf Lhe servlce conLracLor lnlLlally elecLs Lhe decllnlngŴbalance meLhodţ lL may aL any
subsequenL daLeţ shlfL Lo Lhe sLralghLŴllne meLhodŦ
1he useful llfe of properLles used ln or relaLed Lo producLlon of peLroleum shall be Len (10) years of such
shorLer llfe as may be permlLLed by Lhe CommlsslonerŦ
ÞroperLles noL used dlrecLly ln Lhe producLlon of peLroleum shall be depreclaLed under Lhe sLralghLŴllne
meLhod on Lhe basls of an esLlmaLed useful llfe of flve (3) yearsŦ
(3) uepreclaLlon of ÞroperLles used ln Mlnlng CperaLlonsŦ Ŵ an allowance for depreclaLlon ln respecL of
all properLles used ln mlnlng operaLlons oLher Lhan peLroleum operaLlonsţ shall be compuLed as followsť
(a) AL Lhe normal raLe of depreclaLlon lf Lhe expecLed llfe ls Len (10) years or lessŤ or
(b) uepreclaLed over any number of years beLween flve (3) years and Lhe expecLed llfe lf Lhe laLLer ls
more Lhan Len (10) yearsţ and Lhe depreclaLlon Lhereon allowed as deducLlon from Laxable lncomeť
Þrovldedţ 1haL Lhe conLracLor noLlfles Lhe Commlssloner aL Lhe beglnnlng of Lhe depreclaLlon perlod
whlch depreclaLlon raLe allowed by Lhls SecLlon wlll be usedŦ
(6) uepreclaLlon ueducLlble by nonresldenL Allens Lngaged ln 1rade or 8uslness or 8esldenL lorelgn
CorporaLlonsŦ Ŵ ln Lhe case of a nonresldenL allen lndlvldual engaged ln Lrade or buslness or resldenL
forelgn corporaLlonţ a reasonable allowance for Lhe deLerloraLlon of ÞroperLy arlslng ouL of lLs use or
employmenL or lLs nonŴuse ln Lhe buslness Lrade or professlon shall be permlLLed only when such
properLy ls locaLed ln Lhe ÞhlllpplnesŦ
(C) uepleLlon of Cll and Cas Wells and MlnesŦ Ŵ
(1) ln CeneralŦ Ŵ ln Lhe case of oll and gas wells or mlnesţ a reasonable allowance for depleLlon or
amorLlzaLlon compuLed ln accordance wlLh Lhe cosLŴdepleLlon meLhod shall be granLed under rules and
regulaLlons Lo be prescrlbed by Lhe SecreLary of flnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
Þrovldedţ 1haL when Lhe allowance for depleLlon shall equal Lhe caplLal lnvesLed no furLher allowance
shall be granLedť Þrovldedţ furLherţ 1haL afLer producLlon ln commerclal quanLlLles has commencedţ
cerLaln lnLanglble exploraLlon and developmenL drllllng cosLsť (a) shall be deducLlble ln Lhe year lncurred
lf such expendlLures are lncurred for nonŴproduclng wells and/or mlnesţ or (b) shall be deducLlble ln full
ln Lhe year pald or lncurred or aL Lhe elecLlon of Lhe Laxpayerţ may be caplLallzed and amorLlzed lf such
expendlLures lncurred are for produclng wells and/or mlnes ln Lhe same conLracL areaŦ
ƍlnLanglble cosLs ln peLroleum operaLlonsƍ refers Lo any cosL lncurred ln peLroleum operaLlons whlch ln
lLself has no salvage value and whlch ls lncldenLal Lo and necessary for Lhe drllllng of wells and
preparaLlon of wells for Lhe producLlon of peLroleumť Þrovldedţ 1haL sald cosLs shall noL perLaln Lo Lhe
acqulslLlon or lmprovemenL of properLy of a characLer sub[ecL Lo Lhe allowance for depreclaLlon excepL
LhaL Lhe allowances for depreclaLlon on such properLy shall be deducLlble under Lhls SubsecLlonŦ
Any lnLanglble exploraLlonţ drllllng and developmenL expenses allowed as a deducLlon ln compuLlng
Laxable lncome durlng Lhe year shall noL be Laken lnLo conslderaLlon ln compuLlng Lhe ad[usLed cosL
basls for Lhe purpose of compuLlng allowable cosL depleLlonŦ
(2) LlecLlon Lo ueducL LxploraLlon and uevelopmenL LxpendlLuresŦ Ŵ ln compuLlng Laxable lncome from
mlnlng operaLlonsţ Lhe Laxpayer may aL hls opLlonţ deducL exploraLlon and developmenL expendlLures
accumulaLed as cosL or ad[usLed basls for cosL depleLlon as of daLe of prospecLlngţ as well as exploraLlon
and developmenL expendlLures pald or lncurred durlng Lhe Laxable yearť Þrovldedţ 1haL Lhe amounL
deducLlble for exploraLlon and developmenL expendlLures shall noL exceed LwenLyŴflve percenL (23Ʒ) of
Lhe neL lncome from mlnlng operaLlons compuLed wlLhouL Lhe beneflL of any Lax lncenLlves under
exlsLlng lawsŦ 1he acLual exploraLlon and developmenL expendlLures mlnus LwenLyŴflve percenL (23Ʒ) of
Lhe neL lncome from mlnlng shall be carrled forward Lo Lhe succeedlng years unLll fully deducLedŦ
1he elecLlon by Lhe Laxpayer Lo deducL Lhe exploraLlon and developmenL expendlLures ls lrrevocable and
shall be blndlng ln succeedlng Laxable yearsŦ
ƍneL lncome from mlnlng operaLlonsƍţ as used ln Lhls SubsecLlonţ shall mean gross lncome from
operaLlons less ƍallowable deducLlonsƍ whlch are necessary or relaLed Lo mlnlng operaLlonsŦ ƍAllowable
deducLlonsƍ shall lnclude mlnlngţ mllllng and markeLlng expensesţ and depreclaLlon of properLles
dlrecLly used ln Lhe mlnlng operaLlonsŦ 1hls paragraph shall noL apply Lo expendlLures for Lhe acqulslLlon
or lmprovemenL of properLy of a characLer whlch ls sub[ecL Lo Lhe allowance for depreclaLlonŦ
ln no case shall Lhls paragraph apply wlLh respecL Lo amounLs pald or lncurred for Lhe exploraLlon and
developmenL of oll and gasŦ
1he Lerm ƍexploraLlon expendlLuresƍ means expendlLures pald or lncurred for Lhe purpose of
ascerLalnlng Lhe exlsLenceţ locaLlonţ exLenL or quallLy of any deposlL of ore or oLher mlneralţ and pald or
lncurred before Lhe beglnnlng of Lhe developmenL sLage of Lhe mlne or deposlLŦ
1he Lerm ƍdevelopmenL expendlLuresƍ means expendlLures pald or lncurred durlng Lhe developmenL
sLage of Lhe mlne or oLher naLural deposlLsŦ 1he developmenL sLage of a mlne or oLher naLural deposlL
shall begln aL Lhe Llme when deposlLs of ore or oLher mlnerals are shown Lo exlsL ln sufflclenL
commerclal quanLlLy and quallLy and shall end upon commencemenL of acLual commerclal exLracLlonŦ
(3) uepleLlon of Cll and Cas Wells and Mlnes ueducLlble by a nonresldenL Allen lndlvldual or lorelgn
CorporaLlonŦ Ŵ ln Lhe case of a nonresldenL allen lndlvldual engaged ln Lrade or buslness ln Lhe
Þhlllpplnes or a resldenL forelgn corporaLlonţ allowance for depleLlon of oll and gas wells or mlnes under
paragraph (1) of Lhls SubsecLlon shall be auLhorlzed only ln respecL Lo oll and gas wells or mlnes locaLed
wlLhln Lhe ÞhlllpplnesŦ
(P) CharlLable and CLher ConLrlbuLlonsŦ Ŵ
(1) ln CeneralŦ Ŵ ConLrlbuLlons or glfLs acLually pald or made wlLhln Lhe Laxable year Loţ or for Lhe use of
Lhe CovernmenL of Lhe Þhlllpplnes or any of lLs agencles or any pollLlcal subdlvlslon Lhereof excluslvely
for publlc purposesţ or Lo accredlLed domesLlc corporaLlon or assoclaLlons organlzed and operaLed
excluslvely for rellglousţ charlLableţ sclenLlflcţ youLh and sporLs developmenLţ culLural or educaLlonal
purposes or for Lhe rehablllLaLlon of veLeransţ or Lo soclal welfare lnsLlLuLlonsţ or Lo nonŴgovernmenL
organlzaLlonsţ ln accordance wlLh rules and regulaLlons promulgaLed by Lhe SecreLary of flnanceţ upon
recommendaLlon of Lhe Commlsslonerţ no parL of Lhe neL lncome of whlch lnures Lo Lhe beneflL of any
prlvaLe sLockholder or lndlvldual ln an amounL noL ln excess of Len percenL (10Ʒ) ln Lhe case of an
lndlvldualţ and flve percenL (Ʒ) ln Lhe case of a corporaLlonţ of Lhe Laxpayerƌs Laxable lncome derlved
from Lradeţ buslness or professlon as compuLed wlLhouL Lhe beneflL of Lhls and Lhe followlng
subparagraphsŦ
(2) ConLrlbuLlons ueducLlble ln lullŦ Ŵ noLwlLhsLandlng Lhe provlslons of Lhe precedlng subparagraphţ
donaLlons Lo Lhe followlng lnsLlLuLlons or enLlLles shall be deducLlble ln fullŤ
(a) uonaLlons Lo Lhe CovernmenLŦ Ŵ uonaLlons Lo Lhe CovernmenL of Lhe Þhlllpplnes or Lo any of lLs
agencles or pollLlcal subdlvlslonsţ lncludlng fullyŴowned governmenL corporaLlonsţ excluslvely Lo flnanceţ
Lo provlde forţ or Lo be used ln underLaklng prlorlLy acLlvlLles ln educaLlonţ healLhţ youLh and sporLs
developmenLţ human seLLlemenLsţ sclence and culLureţ and ln economlc developmenL accordlng Lo a
naLlonal ÞrlorlLy Þlan deLermlned by Lhe naLlonal Lconomlc and uevelopmenL AuLhorlLy (nLuA)ţ ln
consulLaLlon wlLh approprlaLe governmenL agenclesţ lncludlng lLs reglonal developmenL counclls and
prlvaLe phllanLrophlc persons and lnsLlLuLlonsť Þrovldedţ 1haL any donaLlon whlch ls made Lo Lhe
CovernmenL or Lo any of lLs agencles or pollLlcal subdlvlslons noL ln accordance wlLh Lhe sald annual
prlorlLy plan shall be sub[ecL Lo Lhe llmlLaLlons prescrlbed ln paragraph (1) of Lhls SubsecLlonŤ
(b) uonaLlons Lo CerLaln lorelgn lnsLlLuLlons or lnLernaLlonal CrganlzaLlonsŦ Ŵ uonaLlons Lo forelgn
lnsLlLuLlons or lnLernaLlonal organlzaLlons whlch are fully deducLlble ln pursuance of or ln compllance
wlLh agreemenLsţ LreaLlesţ or commlLmenLs enLered lnLo by Lhe CovernmenL of Lhe Þhlllpplnes and Lhe
forelgn lnsLlLuLlons or lnLernaLlonal organlzaLlons or ln pursuance of speclal lawsŤ
(c) uonaLlons Lo AccredlLed nongovernmenL CrganlzaLlonsŦ Ŵ 1he Lerm ƍnongovernmenL organlzaLlonƍ
means a non proflL domesLlc corporaLlonť
(1) Crganlzed and operaLed excluslvely for sclenLlflcţ researchţ educaLlonalţ characLerŴbulldlng and youLh
and sporLs developmenLţ healLhţ soclal welfareţ culLural or charlLable purposesţ or a comblnaLlon
Lhereofţ no parL of Lhe neL lncome of whlch lnures Lo Lhe beneflL of any prlvaLe lndlvldualŤ
(2) Whlchţ noL laLer Lhan Lhe 13Lh day of Lhe Lhlrd monLh afLer Lhe close of Lhe accredlLed
nongovernmenL organlzaLlons Laxable year ln whlch conLrlbuLlons are recelvedţ makes uLlllzaLlon
dlrecLly for Lhe acLlve conducL of Lhe acLlvlLles consLlLuLlng Lhe purpose or funcLlon for whlch lL ls
organlzed and operaLedţ unless an exLended perlod ls granLed by Lhe SecreLary of llnance ln accordance
wlLh Lhe rules and regulaLlons Lo be promulgaLedţ upon recommendaLlon of Lhe CommlsslonerŤ
(3) 1he level of admlnlsLraLlve expense of whlch shallţ on an annual baslsţ conform wlLh Lhe rules and
regulaLlons Lo be prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ
buL ln no case Lo exceed LhlrLy percenL (30Ʒ) of Lhe LoLal expensesŤ and
(4) 1he asseLs of whlchţ ln Lhe even of dlssoluLlonţ would be dlsLrlbuLed Lo anoLher nonproflL domesLlc
corporaLlon organlzed for slmllar purpose or purposesţ or Lo Lhe sLaLe for publlc purposeţ or would be
dlsLrlbuLed by a courL Lo anoLher organlzaLlon Lo be used ln such manner as ln Lhe [udgmenL of sald
courL shall besL accompllsh Lhe general purpose for whlch Lhe dlssolved organlzaLlon was organlzedŦ
Sub[ecL Lo such Lerms and condlLlons as may be prescrlbed by Lhe SecreLary of llnanceţ Lhe Lerm
ƍuLlllzaLlonƍ meansť
(l) Any amounL ln cash or ln klnd (lncludlng admlnlsLraLlve expenses) pald or uLlllzed Lo accompllsh one
or more purposes for whlch Lhe accredlLed nongovernmenL organlzaLlon was creaLed or organlzedŦ
(ll) Any amounL pald Lo acqulre an asseL used (or held for use) dlrecLly ln carrylng ouL one or more
purposes for whlch Lhe accredlLed nongovernmenL organlzaLlon was creaLed or organlzedŦ
An amounL seL aslde for a speclflc pro[ecL whlch comes wlLhln one or more purposes of Lhe accredlLed
nongovernmenL organlzaLlon may be LreaLed as a uLlllzaLlonţ buL only lf aL Lhe Llme such amounL ls seL
asldeţ Lhe accredlLed nongovernmenL organlzaLlon has esLabllshed Lo Lhe saLlsfacLlon of Lhe
Commlssloner LhaL Lhe amounL wlll be pald for Lhe speclflc pro[ecL wlLhln a perlod Lo be prescrlbed ln
rules and regulaLlons Lo be promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ buL noL Lo exceed flve (3) yearsţ and Lhe pro[ecL ls one whlch can be beLLer accompllshed
by seLLlng aslde such amounL Lhan by lmmedlaLe paymenL of fundsŦ
(3) valuaLlonŦ Ŵ 1he amounL of any charlLable conLrlbuLlon of properLy oLher Lhan money shall be based
on Lhe acqulslLlon cosL of sald properLyŦ
(4) Þroof of ueducLlonsŦ Ŵ ConLrlbuLlons or glfLs shall be allowable as deducLlons only lf verlfled under
Lhe rules and regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
CommlsslonerŦ
(l) 8esearch and uevelopmenLŦŴ
(1) ln CeneralŦ Ŵ a Laxpayer may LreaL research or developmenL expendlLures whlch are pald or lncurred
by hlm durlng Lhe Laxable year ln connecLlon wlLh hls Lradeţ buslness or professlon as ordlnary and
necessary expenses whlch are noL chargeable Lo caplLal accounLŦ 1he expendlLures so LreaLed shall be
allowed as deducLlon durlng Lhe Laxable year when pald or lncurredŦ
(2) AmorLlzaLlon of CerLaln 8esearch and uevelopmenL LxpendlLuresŦ Ŵ AL Lhe elecLlon of Lhe Laxpayer
and ln accordance wlLh Lhe rules and regulaLlons Lo be prescrlbed by Lhe SecreLary of llnanceţ upon
recommendaLlon of Lhe Commlsslonerţ Lhe followlng research and developmenL expendlLures may be
LreaLed as deferred expensesť
(a) Þald or lncurred by Lhe Laxpayer ln connecLlon wlLh hls Lradeţ buslness or professlonŤ
(b) noL LreaLed as expenses under paragraph 91) hereofŤ and
(c) Chargeable Lo caplLal accounL buL noL chargeable Lo properLy of a characLer whlch ls sub[ecL Lo
depreclaLlon or depleLlonŦ
ln compuLlng Laxable lncomeţ such deferred expenses shall be allowed as deducLlon raLably dlsLrlbuLed
over a perlod of noL less Lhan slxLy (60) monLhs as may be elecLed by Lhe Laxpayer (beglnnlng wlLh Lhe
monLh ln whlch Lhe Laxpayer flrsL reallzes beneflLs from such expendlLures)Ŧ
1he elecLlon provlded by paragraph (2) hereof may be made for any Laxable year beglnnlng afLer Lhe
effecLlvlLy of Lhls Codeţ buL only lf made noL laLer Lhan Lhe Llme prescrlbed by law for flllng Lhe reLurn
for such Laxable yearŦ 1he meLhod so elecLedţ and Lhe perlod selecLed by Lhe Laxpayerţ shall be adhered
Lo ln compuLlng Laxable lncome for Lhe Laxable year for whlch Lhe elecLlon ls made and for all
subsequenL Laxable years unless wlLh Lhe approval of Lhe Commlsslonerţ a change Lo a dlfferenL meLhod
ls auLhorlzed wlLh respecL Lo a parL or all of such expendlLuresŦ 1he elecLlon shall noL apply Lo any
expendlLure pald or lncurred durlng any Laxable year for whlch Lhe Laxpayer makes Lhe elecLlonŦ
(3) LlmlLaLlons on ueducLlonŦ Ŵ 1hls SubsecLlon shall noL apply Loť
(a) Any expendlLure for Lhe acqulslLlon or lmprovemenL of landţ or for Lhe lmprovemenL of properLy Lo
be used ln connecLlon wlLh research and developmenL of a characLer whlch ls sub[ecL Lo depreclaLlon
and depleLlonŤ and
(b) Any expendlLure pald or lncurred for Lhe purpose of ascerLalnlng Lhe exlsLenceţ locaLlonţ exLenLţ or
quallLy of any deposlL of ore or oLher mlneralţ lncludlng oll or gasŦ
(!) Þenslon 1rusLsŦ Ŵ An employer esLabllshlng or malnLalnlng a penslon LrusL Lo provlde for Lhe paymenL
of reasonable penslons Lo hls employees shall be allowed as a deducLlon (ln addlLlon Lo Lhe
conLrlbuLlons Lo such LrusL durlng Lhe Laxable year Lo cover Lhe penslon llablllLy accrulng durlng Lhe yearţ
allowed as a deducLlon under SubsecLlon (A) (1) of Lhls SecLlon ) a reasonable amounL Lransferred or
pald lnLo such LrusL durlng Lhe Laxable year ln excess of such conLrlbuLlonsţ buL only lf such amounL (1)
has noL LhereLofore been allowed as a deducLlonţ and (2) ls apporLloned ln equal parLs over a perlod of
Len (10) consecuLlve years beglnnlng wlLh Lhe year ln whlch Lhe Lransfer or paymenL ls madeŦ

(k) AddlLlonal 8equlremenLs for ueducLlblllLy of CerLaln ÞaymenLsŦ Ŵ Any amounL pald or payable whlch
ls oLherwlse deducLlble fromţ or Laken lnLo accounL ln compuLlng gross lncome or for whlch depreclaLlon
or amorLlzaLlon may be allowed under Lhls SecLlonţ shall be allowed as a deducLlon only lf lL ls shown
LhaL Lhe Lax requlred Lo be deducLed and wlLhheld Lherefrom has been pald Lo Lhe 8ureau of lnLernal
8evenue ln accordance wlLh Lhls SecLlon 38 and 81 of Lhls CodeŦ

(L) CpLlonal SLandard ueducLlonŦ Ŵ ln lleu of Lhe deducLlons allowed under Lhe precedlng SubsecLlonsţ an
lndlvldual sub[ecL Lo Lax under SecLlon 24ţ oLher Lhan a nonresldenL allenţ may elecL a sLandard
deducLlon ln an amounL noL exceedlng Len percenL (10Ʒ) of hls gross lncomeŦ unless Lhe Laxpayer
slgnlfles ln hls reLurn hls lnLenLlon Lo elecL Lhe opLlonal sLandard deducLlonţ he shall be consldered as
havlng avalled hlmself of Lhe deducLlons allowed ln Lhe precedlng SubsecLlonsŦ Such elecLlon when
made ln Lhe reLurn shall be lrrevocable for Lhe Laxable year for whlch Lhe reLurn ls madeť Þrovldedţ 1haL
an lndlvldual who ls enLlLled Lo and clalmed for Lhe opLlonal sLandard deducLlon shall noL be requlred Lo
submlL wlLh hls Lax reLurn such flnanclal sLaLemenLs oLherwlse requlred under Lhls Codeť Þrovldedţ
furLherţ 1haL excepL when Lhe Commlssloner oLherwlse permlLsţ Lhe sald lndlvldual shall keep such
records perLalnlng Lo hls gross lncome durlng Lhe Laxable yearţ as may be requlred by Lhe rules and
regulaLlons promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

(M) Þremlum ÞaymenLs on PealLh and/or PosplLallzaLlon lnsurance of an lndlvldual 1axpayerŦ Ŵ 1he
amounL of premlums noL Lo exceed 1wo Lhousand four hundred pesos (Þ2ţ400) per famlly or 1wo
hundred pesos (Þ200) a monLh pald durlng Lhe Laxable year for healLh and/or hosplLallzaLlon lnsurance
Laken by Lhe Laxpayer for hlmselfţ lncludlng hls famllyţ shall be allowed as a deducLlon from hls gross
lncomeť Þrovldedţ 1haL sald famlly has a gross lncome of noL more Lhan 1wo hundred flfLy Lhousand
pesos (Þ230ţ000) for Lhe Laxable yearť Þrovldedţ flnallyţ 1haL ln Lhe case of marrled Laxpayersţ only Lhe
spouse clalmlng Lhe addlLlonal exempLlon for dependenLs shall be enLlLled Lo Lhls deducLlonŦ
noLwlLhsLandlng Lhe provlslon of Lhe precedlng SubsecLlonsţ 1he SecreLary of llnanceţ upon
recommendaLlon of Lhe Commlsslonerţ afLer a publlc hearlng shall have been held for Lhls purposeţ may
prescrlbe by rules and regulaLlonsţ llmlLaLlons or celllngs for any of Lhe lLemlzed deducLlons under
SubsecLlons (A) Lo (!) of Lhls SecLlonť Þrovldedţ 1haL for purposes of deLermlnlng such celllngs or
llmlLaLlonsţ Lhe SecreLary of llnance shall conslder Lhe followlng facLorsť (1) adequacy of Lhe prescrlbed
llmlLs on Lhe acLual expendlLure requlremenLs of each parLlcular lndusLryŤ and (2) effecLs of lnflaLlon on
expendlLure levelsť Þrovldedţ furLherţ 1haL no celllngs shall furLher be lmposed on lLems of expense
already sub[ecL Lo celllngs under presenL lawŦ

SLCŦ 33Ŧ Allowance of Þersonal LxempLlon for lndlvldual 1axpayerŦ Ŵ

(A) ln CeneralŦ Ŵ lor purposes of deLermlnlng Lhe Lax provlded ln SecLlon 24 (A) of Lhls 1lLleţ Lhere shall
be allowed a baslc personal exempLlon as followsť

lor slngle lndlvldual or marrled lndlvldual [udlclally decreed as legally
separaLed wlLh no quallfled dependenLs Þ20ţ000
lor Pead of lamlly Þ23ţ000
lor each marrled lndlvldual Þ32ţ000
ln Lhe case of marrled lndlvlduals where only one of Lhe spouses ls derlvlng gross lncomeţ only such
spouse shall be allowed Lhe personal exempLlonŦ
lor purposes of Lhls paragraphţ Lhe Lerm ƍhead of famllyƍ means an unmarrled or legally separaLed man
or woman wlLh one or boLh parenLsţ or wlLh one or more broLhers or slsLersţ or wlLh one or more
leglLlmaLeţ recognlzed naLural or legally adopLed chlldren llvlng wlLh and dependenL upon hlm for Lhelr
chlef supporLţ where such broLhers or slsLers or chlldren are noL more Lhan LwenLyŴone (21) years of
ageţ unmarrled and noL galnfully employed or where such chlldrenţ broLhers or slsLersţ regardless of age
are lncapable of selfŴsupporL because of menLal or physlcal defecLŦ

(8) AddlLlonal LxempLlon for uependenLsŦ Ŵ 1here shall be allowed an addlLlonal exempLlon of LlghL
Lhousand pesos (Þ8ţ000) for each dependenL noL exceedlng four (4)Ŧ

1he addlLlonal exempLlon for dependenL shall be clalmed by only one of Lhe spouses ln Lhe case of
marrled lndlvldualsŦ

ln Lhe case of legally separaLed spousesţ addlLlonal exempLlons may be clalmed only by Lhe spouse who
has cusLody of Lhe chlld or chlldrenť Þrovldedţ 1haL Lhe LoLal amounL of addlLlonal exempLlons LhaL may
be clalmed by boLh shall noL exceed Lhe maxlmum addlLlonal exempLlons hereln allowedŦ

lor purposes of Lhls SubsecLlonţ a ƍdependenLƍ means a leglLlmaLeţ llleglLlmaLe or legally adopLed chlld
chlefly dependenL upon and llvlng wlLh Lhe Laxpayer lf such dependenL ls noL more Lhan LwenLyŴone (21)
years of ageţ unmarrled and noL galnfully employed or lf such dependenLţ regardless of ageţ ls lncapable
of selfŴsupporL because of menLal or physlcal defecLŦ

(C) Change of SLaLusŦ Ŵ lf Lhe Laxpayer marrles or should have addlLlonal dependenL(s) as deflned above
durlng Lhe Laxable yearţ Lhe Laxpayer may clalm Lhe correspondlng addlLlonal exempLlonţ as Lhe case
may beţ ln full for such yearŦ

lf Lhe Laxpayer dles durlng Lhe Laxable yearţ hls esLaLe may sLlll clalm Lhe personal and addlLlonal
exempLlons for hlmself and hls dependenL(s) as lf he dled aL Lhe close of such yearŦ

lf Lhe spouse or any of Lhe dependenLs dles or lf any of such dependenLs marrlesţ becomes LwenLyŴone
(21) years old or becomes galnfully employed durlng Lhe Laxable yearţ Lhe Laxpayer may sLlll clalm Lhe
same exempLlons as lf Lhe spouse or any of Lhe dependenLs dledţ or as lf such dependenLs marrledţ
became LwenLyŴone (21) years old or became galnfully employed aL Lhe close of such yearŦ

(u) Þersonal LxempLlon Allowable Lo nonresldenL Allen lndlvldualŦ Ŵ A nonresldenL allen lndlvldual
engaged ln Lradeţ buslness or ln Lhe exerclse of a professlon ln Lhe Þhlllpplnes shall be enLlLled Lo a
personal exempLlon ln Lhe amounL equal Lo Lhe exempLlons allowed ln Lhe lncome Lax law ln Lhe counLry
of whlch he ls a sub[ecL Ŵ or clLlzenţ Lo clLlzens of Lhe Þhlllpplnes noL resldlng ln such counLryţ noL Lo
exceed Lhe amounL flxed ln Lhls SecLlon as exempLlon for clLlzens or resldenL of Lhe Þhlllpplnesť
Þrovldedţ 1haL sald nonresldenL allen should flle a Lrue and accuraLe reLurn of Lhe LoLal lncome recelved
by hlm from all sources ln Lhe Þhlllpplnesţ as requlred by Lhls 1lLleŦ

SLCŦ 36Ŧ lLems noL ueducLlbleŦŴ

(A) Ceneral 8uleŦ Ŵ ln compuLlng neL lncomeţ no deducLlon shall ln any case be allowed ln respecL Lo Ŵ

(1) Þersonalţ llvlng or famlly expensesŤ
(2) Any amounL pald ouL for new bulldlngs or for permanenL lmprovemenLsţ or beLLermenLs made Lo
lncrease Lhe value of any properLy or esLaLeŤ
1hls SubsecLlon shall noL apply Lo lnLanglble drllllng and developmenL cosLs lncurred ln peLroleum
operaLlons whlch are deducLlble under SubsecLlon (C) (1) of SecLlon 34 of Lhls CodeŦ
(3) Any amounL expended ln resLorlng properLy or ln maklng good Lhe exhausLlon Lhereof for whlch an
allowance ls or has been madeŤ or
(4) Þremlums pald on any llfe lnsurance pollcy coverlng Lhe llfe of any offlcer or employeeţ or of any
person flnanclally lnLeresLed ln any Lrade or buslness carrled on by Lhe Laxpayerţ lndlvldual or corporaLeţ
when Lhe Laxpayer ls dlrecLly or lndlrecLly a beneflclary under such pollcyŦ
(8) Losses from Sales or Lxchanges of ÞroperLyŦ Ŵ ln compuLlng neL lncomeţ no deducLlons shall ln any
case be allowed ln respecL of losses from sales or exchanges of properLy dlrecLly or lndlrecLly Ŵ
(1) 8eLween members of a famllyŦ lor purposes of Lhls paragraphţ Lhe famlly of an lndlvldual shall
lnclude only hls broLhers and slsLers (wheLher by Lhe whole or halfŴblood)ţ spouseţ ancesLorsţ and llneal
descendanLsŤ or
(2) LxcepL ln Lhe case of dlsLrlbuLlons ln llquldaLlonţ beLween an lndlvldual and corporaLlon more Lhan
flfLy percenL (30Ʒ) ln value of Lhe ouLsLandlng sLock of whlch ls ownedţ dlrecLly or lndlrecLlyţ by or for
such lndlvldualŤ or
(3) LxcepL ln Lhe case of dlsLrlbuLlons ln llquldaLlonţ beLween Lwo corporaLlons more Lhan flfLy percenL
(30Ʒ) ln value of Lhe ouLsLandlng sLock of whlch ls ownedţ dlrecLly or lndlrecLlyţ by or for Lhe same
lndlvldual lf elLher one of such corporaLlonsţ wlLh respecL Lo Lhe Laxable year of Lhe corporaLlon
precedlng Lhe daLe of Lhe sale of exchange was under Lhe law appllcable Lo such Laxable yearţ a personal
holdlng company or a forelgn personal holdlng companyŤ
(4) 8eLween Lhe granLor and a flduclary of any LrusLŤ or
(3) 8eLween Lhe flduclary of and Lhe flduclary of a LrusL and Lhe flduclary of anoLher LrusL lf Lhe same
person ls a granLor wlLh respecL Lo each LrusLŤ or
(6) 8eLween a flduclary of a LrusL and beneflclary of such LrusLŦ
SLCŦ 37Ŧ Speclal Þrovlslons 8egardlng lncome and ueducLlons of lnsurance Companlesţ WheLher
uomesLlc or lorelgnŦ Ŵ
(A) Speclal ueducLlon Allowed Lo lnsurance CompanlesŦ Ŵ ln Lhe case of lnsurance companlesţ wheLher
domesLlc or forelgn dolng buslness ln Lhe Þhlllpplnesţ Lhe neL addlLlonsţ lf anyţ requlred by law Lo be
made wlLhln Lhe year Lo reserve funds and Lhe sums oLher Lhan dlvldends pald wlLhln Lhe year on pollcy
and annulLy conLracLs may be deducLed from Lhelr gross lncomeť Þrovldedţ howeverţ 1haL Lhe released
reserve be LreaLed as lncome for Lhe year of releaseŦ

(8) MuLual lnsurance CompanlesŦ Ŵ ln Lhe case of muLual flre and muLual employersƌ llablllLy and muLual
workmenƌs compensaLlon and muLual casualLy lnsurance companles requlrlng Lhelr members Lo make
premlum deposlLs Lo provlde for losses and expensesţ sald companles shall noL reLurn as lncome any
porLlon of Lhe premlum deposlLs reLurned Lo Lhelr pollcyholdersţ buL shall reLurn as Laxable lncome all
lncome recelved by Lhem from all oLher sources plus such porLlon of Lhe premlum deposlLs as are
reLalned by Lhe companles for purposes oLher Lhan Lhe paymenL of losses and expenses and relnsurance
reservesŦ

(C) MuLual Marlne lnsurance CompanlesŦ Ŵ MuLual marlne lnsurance companles shall lnclude ln Lhelr
reLurn of gross lncomeţ gross premlums collecLed and recelved by Lhem less amounLs pald Lo
pollcyholders on accounL of premlums prevlously pald by Lhem and lnLeresL pald upon Lhose amounLs
beLween Lhe ascerLalnmenL and paymenL LhereofŦ

(u) AssessmenL lnsurance CompanlesŦŴ AssessmenL lnsurance companlesţ wheLher domesLlc or forelgnţ
may deducL from Lhelr gross lncome Lhe acLual deposlL of sums wlLh Lhe offlcers of Lhe CovernmenL of
Lhe Þhlllpplnes pursuanL Lo lawţ as addlLlons Lo guaranLee or reserve fundsŦ

SLCŦ 38Ŧ Losses from Wash Sales of SLock or SecurlLlesŦ Ŵ

(A) ln Lhe case of any loss clalmed Lo have been susLalned from any sale or oLher dlsposlLlon of shares of
sLock or securlLles where lL appears LhaL wlLhln a perlod beglnnlng LhlrLy (30) days before Lhe daLe of
such sale or dlsposlLlon and endlng LhlrLy (30) days afLer such daLeţ Lhe Laxpayer has acqulred (by
purchase or by exchange upon whlch Lhe enLlre amounL of galn or loss was recognlzed by law)ţ or has
enLered lnLo a conLacL or opLlon so Lo acqulreţ subsLanLlally ldenLlcal sLock or securlLlesţ Lhen no
deducLlon for Lhe loss shall be allowed under SecLlon 34 unless Lhe clalm ls made by a dealer ln sLock or
securlLles and wlLh respecL Lo a LransacLlon made ln Lhe ordlnary course of Lhe buslness of such dealerŦ

(8) lf Lhe amounL of sLock or securlLles acqulred (or covered by Lhe conLracL or opLlon Lo acqulre) ls less
Lhan Lhe amounL of sLock or securlLles sold or oLherwlse dlsposed ofţ Lhen Lhe parLlcular shares of sLock
or securlLlesţ Lhe loss form Lhe sale or oLher dlsposlLlon of whlch ls noL deducLlbleţ shall be deLermlned
under rules and regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
CommlsslonerŦ

(C) lf Lhe amounL of sLock or securlLles acqulred (or covered by Lhe conLracL or opLlon Lo acqulre whlch)
resulLed ln Lhe nonŴdeducLlblllLy of Lhe lossţ shall be deLermlned under rules and regulaLlons prescrlbed
by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

SLCŦ 39Ŧ CaplLal Calns and LossesŦ Ŵ

(A) ueflnlLlonsŦ Ŵ As used ln Lhls 1lLle Ŵ

(1) CaplLal AsseLsŦ Ŵ 1he Lerm ƍcaplLal asseLsƍ means properLy held by Lhe Laxpayer (wheLher or noL
connecLed wlLh hls Lrade or buslness)ţ buL does noL lnclude sLock ln Lrade of Lhe Laxpayer or oLher
properLy of a klnd whlch would properly be lncluded ln Lhe lnvenLory of Lhe Laxpayer lf on hand aL Lhe
close of Lhe Laxable yearţ or properLy held by Lhe Laxpayer prlmarlly for sale Lo cusLomers ln Lhe ordlnary
course of hls Lrade or buslnessţ or properLy used ln Lhe Lrade or buslnessţ of a characLer whlch ls sub[ecL
Lo Lhe allowance for depreclaLlon provlded ln SubsecLlon (l) of SecLlon 34Ť or real properLy used ln Lrade
or buslness of Lhe LaxpayerŦ
(2) neL CaplLal CalnŦ Ŵ 1he Lerm ƍneL caplLal galnƍ means Lhe excess of Lhe galns from sales or exchanges
of caplLal asseLs over Lhe losses from such sales or exchangesŦ
(3) neL CaplLal LossŦ Ŵ 1he Lerm ƍneL caplLal lossƍ means Lhe excess of Lhe losses from sales or exchanges
of caplLal asseLs over Lhe galns from such sales or exchangesŦ
(8) ÞercenLage 1aken lnLo AccounLŦ Ŵ ln Lhe case of a Laxpayerţ oLher Lhan a corporaLlonţ only Lhe
followlng percenLages of Lhe galn or loss recognlzed upon Lhe sale or exchange of a caplLal asseL shall be
Laken lnLo accounL ln compuLlng neL caplLal galnţ neL caplLal lossţ and neL lncomeť
(1) Cne hundred percenL (100Ʒ) lf Lhe caplLal asseL has been held for noL more Lhan Lwelve (12)
monLhsŤ and
(2) llfLy percenL (30Ʒ) lf Lhe caplLal asseL has been held for more Lhan Lwelve (12) monLhsŤ
(C) LlmlLaLlon on CaplLal LossesŦ Ŵ Losses from sales or exchanges of caplLal asseLs shall be allowed only
Lo Lhe exLenL of Lhe galns from such sales or exchangesŦ lf a bank or LrusL company lncorporaLed under
Lhe laws of Lhe Þhlllpplnesţ a subsLanLlal parL of whose buslness ls Lhe recelpL of deposlLsţ sells any
bondţ debenLureţ noLeţ or cerLlflcaLe or oLher evldence of lndebLedness lssued by any corporaLlon
(lncludlng one lssued by a governmenL or pollLlcal subdlvlslon Lhereof)ţ wlLh lnLeresL coupons or ln
reglsLered formţ any loss resulLlng from such sale shall noL be sub[ecL Lo Lhe foregolng llmlLaLlon and
shall noL be lncluded ln deLermlnlng Lhe appllcablllLy of such llmlLaLlon Lo oLher lossesŦ
(u) neL CaplLal Loss CarryŴoverŦ Ŵ lf any Laxpayerţ oLher Lhan a corporaLlonţ susLalns ln any Laxable year a
neL caplLal lossţ such loss (ln an amounL noL ln excess of Lhe neL lncome for such year) shall be LreaLed ln
Lhe succeedlng Laxable year as a loss from Lhe sale or exchange of a caplLal asseL held for noL more Lhan
Lwelve (12) monLhsŦ

(L) 8eLlremenL of 8ondsţ LLcŦ Ŵ lor purposes of Lhls 1lLleţ amounLs recelved by Lhe holder upon Lhe
reLlremenL of bondsţ debenLuresţ noLes or cerLlflcaLes or oLher evldences of lndebLedness lssued by any
corporaLlon (lncludlng Lhose lssued by a governmenL or pollLlcal subdlvlslon Lhereof) wlLh lnLeresL
coupons or ln reglsLered formţ shall be consldered as amounLs recelved ln exchange LhereforŦ

(l) Calns or Losses lrom ShorL Salesţ LLcŦ Ŵ lor purposes of Lhls 1lLle Ŵ

(1) Calns or losses from shorL sales of properLy shall be consldered as galns or losses from sales or
exchanges of caplLal asseLsŤ and
(2) Calns or losses aLLrlbuLable Lo Lhe fallure Lo exerclse prlvlleges or opLlons Lo buy or sell properLy shall
be consldered as caplLal galns or lossesŦ
SLCŦ 40Ŧ ueLermlnaLlon of AmounL and 8ecognlLlon of Caln or LossŦ Ŵ
(A) CompuLaLlon of Caln or LossŦ Ŵ 1he galn from Lhe sale or oLher dlsposlLlon of properLy shall be Lhe
excess of Lhe amounL reallzed Lherefrom over Lhe basls or ad[usLed basls for deLermlnlng galnţ and Lhe
loss shall be Lhe excess of Lhe basls or ad[usLed basls for deLermlnlng loss over Lhe amounL reallzedŦ 1he
amounL reallzed from Lhe sale or oLher dlsposlLlon of properLy shall be Lhe sum of money recelved plus
Lhe falr markeL value of Lhe properLy (oLher Lhan money) recelvedŤ

(8) 8asls for ueLermlnlng Caln or Loss from Sale or ulsposlLlon of ÞroperLyŦ Ŵ 1he basls of properLy shall
be Ŵ

(1) 1he cosL Lhereof ln Lhe case of properLy acqulred on or afLer March 1ţ 1913ţ lf such properLy was
acqulred by purchaseŤ or
(2) 1he falr markeL prlce or value as of Lhe daLe of acqulslLlonţ lf Lhe same was acqulred by lnherlLanceŤ
or
(3) lf Lhe properLy was acqulred by glfLţ Lhe basls shall be Lhe same as lf lL would be ln Lhe hands of Lhe
donor or Lhe lasL precedlng owner by whom lL was noL acqulred by glfLţ excepL LhaL lf such basls ls
greaLer Lhan Lhe falr markeL value of Lhe properLy aL Lhe Llme of Lhe glfL Lhenţ for Lhe purpose of
deLermlnlng lossţ Lhe basls shall be such falr markeL valueŤ or
(4) lf Lhe properLy was acqulred for less Lhan an adequaLe conslderaLlon ln money or moneyƌs worLhţ Lhe
basls of such properLy ls Lhe amounL pald by Lhe Lransferee for Lhe properLyŤ or
(3) 1he basls as deflned ln paragraph (C)(3) of Lhls SecLlonţ lf Lhe properLy was acqulred ln a LransacLlon
where galn or loss ls noL recognlzed under paragraph (C)(2) of Lhls SecLlonŦ
(C) Lxchange of ÞroperLyŦ Ŵ
(1) Ceneral 8uleŦ Ŵ LxcepL as hereln provldedţ upon Lhe sale or exchange or properLyţ Lhe enLlre amounL
of Lhe galn or lossţ as Lhe case may beţ shall be recognlzedŦ
(2) LxcepLlonŦ Ŵ no galn or loss shall be recognlzed lf ln pursuance of a plan of merger or consolldaLlon Ŵ
(a) A corporaLlonţ whlch ls a parLy Lo a merger or consolldaLlonţ exchanges properLy solely for sLock ln a
corporaLlonţ whlch ls a parLy Lo Lhe merger or consolldaLlonŤ or
(b) A shareholder exchanges sLock ln a corporaLlonţ whlch ls a parLy Lo Lhe merger or consolldaLlonţ
solely for Lhe sLock of anoLher corporaLlon also a parLy Lo Lhe merger or consolldaLlonŤ or
(c) A securlLy holder of a corporaLlonţ whlch ls a parLy Lo Lhe merger or consolldaLlonţ exchanges hls
securlLles ln such corporaLlonţ solely for sLock or securlLles ln such corporaLlonţ a parLy Lo Lhe merger or
consolldaLlonŦ
no galn or loss shall also be recognlzed lf properLy ls Lransferred Lo a corporaLlon by a person ln
exchange for sLock or unlL of parLlclpaLlon ln such a corporaLlon of whlch as a resulL of such exchange
sald personţ alone or LogeLher wlLh oLhersţ noL exceedlng four (4) personsţ galns conLrol of sald
corporaLlonť Þrovldedţ 1haL sLocks lssued for servlces shall noL be consldered as lssued ln reLurn for
properLyŦ
(3) Lxchange noL Solely ln klndŦ Ŵ

(a) lfţ ln connecLlon wlLh an exchange descrlbed ln Lhe above excepLlonsţ an lndlvldualţ a shareholderţ a
securlLy holder or a corporaLlon recelves noL only sLock or securlLles permlLLed Lo be recelved wlLhouL
Lhe recognlLlon of galn or lossţ buL also money and/or properLyţ Lhe galnţ lf anyţ buL noL Lhe lossţ shall be
recognlzed buL ln an amounL noL ln excess of Lhe sum of Lhe money and falr markeL value of such oLher
properLy recelvedť Þrovldedţ 1haL as Lo Lhe shareholderţ lf Lhe money and/or oLher properLy recelved
has Lhe effecL of a dlsLrlbuLlon of a Laxable dlvldendţ Lhere shall be Laxed as dlvldend Lo Lhe shareholder
an amounL of Lhe galn recognlzed noL ln excess of hls proporLlonaLe share of Lhe undlsLrlbuLed earnlngs
and proflLs of Lhe corporaLlonŤ Lhe remalnderţ lf anyţ of Lhe galn recognlzed shall be LreaLed as a caplLal
galnŦ
(b) lfţ ln connecLlon wlLh Lhe exchange descrlbed ln Lhe above excepLlonsţ Lhe Lransferor corporaLlon
recelves noL only sLock permlLLed Lo be recelved wlLhouL Lhe recognlLlon of galn or loss buL also money
and/or oLher properLyţ Lhen (l) lf Lhe corporaLlon recelvlng such money and/or oLher properLy
dlsLrlbuLes lL ln pursuance of Lhe plan of merger or consolldaLlonţ no galn Lo Lhe corporaLlon shall be
recognlzed from Lhe exchangeţ buL (ll) lf Lhe corporaLlon recelvlng such oLher properLy and/or money
does noL dlsLrlbuLe lL ln pursuance of Lhe plan of merger or consolldaLlonţ Lhe galnţ lf anyţ buL noL Lhe
loss Lo Lhe corporaLlon shall be recognlzed buL ln an amounL noL ln excess of Lhe sum of such money and
Lhe falr markeL value of such oLher properLy so recelvedţ whlch ls noL dlsLrlbuLedŦ
(4) AssumpLlon of LlablllLyŦ Ŵ
(a) lf Lhe Laxpayerţ ln connecLlon wlLh Lhe exchanges descrlbed ln Lhe foregolng excepLlonsţ recelves
sLock or securlLles whlch would be permlLLed Lo be recelved wlLhouL Lhe recognlLlon of Lhe galn lf lL
were Lhe sole conslderaLlonţ and as parL of Lhe conslderaLlonţ anoLher parLy Lo Lhe exchange assumes a
llablllLy of Lhe Laxpayerţ or acqulres from Lhe Laxpayer properLyţ sub[ecL Lo a llablllLyţ Lhen such
assumpLlon or acqulslLlon shall noL be LreaLed as money and/or oLher properLyţ and shall noL prevenL
Lhe exchange from belng wlLhln Lhe excepLlonsŦ
(b) lf Lhe amounL of Lhe llablllLles assumed plus Lhe amounL of Lhe llablllLles Lo whlch Lhe properLy ls
sub[ecL exceed Lhe LoLal of Lhe ad[usLed basls of Lhe properLy Lransferred pursuanL Lo such exchangeţ
Lhen such excess shall be consldered as a galn from Lhe sale or exchange of a caplLal asseL or of properLy
whlch ls noL a caplLal asseLţ as Lhe case may beŦ
(3) 8asls Ŵ
(a) 1he basls of Lhe sLock or securlLles recelved by Lhe Lransferor upon Lhe exchange speclfled ln Lhe
above excepLlon shall be Lhe same as Lhe basls of Lhe properLyţ sLock or securlLles exchangedţ decreased
by (1) Lhe money recelvedţ and (2) Lhe falr markeL value of Lhe oLher properLy recelvedţ and lncreased
by (a) Lhe amounL LreaLed as dlvldend of Lhe shareholder and (b) Lhe amounL of any galn LhaL was
recognlzed on Lhe exchangeť Þrovldedţ 1haL Lhe properLy recelved as ƍbooLƍ shall have as basls lLs falr
markeL valueť Þrovldedţ furLherţ 1haL lf as parL of Lhe conslderaLlon Lo Lhe Lransferorţ Lhe Lransferee of
properLy assumes a llablllLy of Lhe Lransferor or acqulres form Lhe laLLer properLy sub[ecL Lo a llablllLyţ
such assumpLlon or acqulslLlon (ln Lhe amounL of Lhe llablllLy) shallţ for purposes of Lhls paragraphţ be
LreaLed as money recelved by Lhe Lransferor on Lhe exchangeť Þrovldedţ flnallyţ 1haL lf Lhe Lransferor
recelves several klnds of sLock or securlLlesţ Lhe Commlssloner ls hereby auLhorlzed Lo allocaLe Lhe basls
among Lhe several classes of sLocks or securlLlesŦ
(b) 1he basls of Lhe properLy Lransferred ln Lhe hands of Lhe Lransferee shall be Lhe same as lL would be
ln Lhe hands of Lhe Lransferor lncreased by Lhe amounL of Lhe galn recognlzed Lo Lhe Lransferor on Lhe
LransferŦ
(6) ueflnlLlonsŦ Ŵ

(a) 1he Lerm ƍsecurlLlesƍ means bonds and debenLures buL noL ƍnoLesƍ of whaLever class or duraLlonŦ
(b) 1he Lerm ƍmergerƍ or ƍconsolldaLlonƍţ when used ln Lhls SecLlonţ shall be undersLood Lo meanť (l)
Lhe ordlnary merger or consolldaLlonţ or (ll) Lhe acqulslLlon by one corporaLlon of all or subsLanLlally all
Lhe properLles of anoLher corporaLlon solely for sLockť Þrovldedţ 1haL for a LransacLlon Lo be regarded as
a merger or consolldaLlon wlLhln Lhe purvlew of Lhls SecLlonţ lL musL be underLaken for a bona flde
buslness purpose and noL solely for Lhe purpose of escaplng Lhe burden of LaxaLlonť Þrovldedţ furLherţ
1haL ln deLermlnlng wheLher a bona flde buslness purpose exlsLsţ each and every sLep of Lhe LransacLlon
shall be consldered and Lhe whole LransacLlon or serles of LransacLlon shall be LreaLed as a slngle unlLť
Þrovldedţ flnally ţ 1haL ln deLermlnlng wheLher Lhe properLy Lransferred consLlLuLes a subsLanLlal porLlon
of Lhe properLy of Lhe Lransferorţ Lhe Lerm ƌproperLyƌ shall be Laken Lo lnclude Lhe cash asseLs of Lhe
LransferorŦ
(c) 1he Lerm ƍconLrolƍţ when used ln Lhls SecLlonţ shall mean ownershlp of sLocks ln a corporaLlon
possesslng aL leasL flfLyŴone percenL (31Ʒ) of Lhe LoLal voLlng power of all classes of sLocks enLlLled Lo
voLeŦ
(d) 1he SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ ls hereby auLhorlzed Lo lssue
rules and regulaLlons for Lhe purpose ƍsubsLanLlally allƍ and for Lhe proper lmplemenLaLlon of Lhls
SecLlonŦ
SLCŦ 41Ŧ lnvenLorlesŦ Ŵ Whenever ln Lhe [udgmenL of Lhe Commlsslonerţ Lhe use of lnvenLorles ls
necessary ln order Lo deLermlne clearly Lhe lncome of any Laxpayerţ lnvenLorles shall be Laken by such
Laxpayer upon such basls as Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ mayţ
by rules and regulaLlonsţ prescrlbe as conformlng as nearly as may be Lo Lhe besL accounLlng pracLlce ln
Lhe Lrade or buslness and as mosL clearly reflecLlng Lhe lncomeŦ
lf a Laxpayerţ afLer havlng complled wlLh Lhe Lerms and a condlLlons prescrlbed by Lhe Commlsslonerţ
uses a parLlcular meLhod of valulng lLs lnvenLory for any Laxable yearţ Lhen such meLhod shall be used ln
all subsequenL Laxable years unlessť

(l) wlLh Lhe approval of Lhe Commlsslonerţ a change Lo a dlfferenL meLhod ls auLhorlzedŤ or
(ll) Lhe Commlssloner flnds LhaL Lhe naLure of Lhe sLock on hand (eŦgŦţ lLs scarclLyţ llquldlLyţ markeLablllLy
and prlce movemenLs) ls such LhaL lnvenLory galns should be consldered reallzed for Lax purposes andţ
Lhereforeţ lL ls necessary Lo modlfy Lhe valuaLlon meLhod for purposes of ascerLalnlng Lhe lncomeţ
proflLţ or loss ln a more reallsLlc mannerť Þrovldedţ howeverţ 1haL Lhe Commlssloner shall noL exerclse
hls auLhorlLy Lo requlre a change ln lnvenLory meLhod more ofLen Lhan once every Lhree (3) yearsť
Þrovldedţ furLherţ 1haL any change ln an lnvenLory valuaLlon meLhod musL be sub[ecL Lo approval by Lhe
SecreLary of llnanceŦ
SLCŦ 42Ŧ lncome from Sources WlLhln Lhe ÞhlllpplnesŦŴ
(A) Cross lncome lrom Sources WlLhln Lhe ÞhlllpplnesŦ Ŵ 1he followlng lLems of gross lncome shall be
LreaLed as gross lncome from sources wlLhln Lhe Þhlllpplnesť

(1) lnLeresLsŦ Ŵ lnLeresLs derlved from sources wlLhln Lhe Þhlllpplnesţ and lnLeresLs on bondsţ noLes or
oLher lnLeresLŴbearlng obllgaLlon of resldenLsţ corporaLe or oLherwlseŤ
(2) ulvldendsŦ Ŵ 1he amounL recelved as dlvldendsť

(a) from a domesLlc corporaLlonŤ and
(b) from a forelgn corporaLlonţ unless less Lhan flfLy percenL (30Ʒ) of Lhe gross lncome of such forelgn
corporaLlon for Lhe LhreeŴyear perlod endlng wlLh Lhe close of lLs Laxable year precedlng Lhe declaraLlon
of such dlvldends or for such parL of such perlod as Lhe corporaLlon has been ln exlsLence) was derlved
from sources wlLhln Lhe Þhlllpplnes as deLermlned under Lhe provlslons of Lhls SecLlonŤ buL only ln an
amounL whlch bears Lhe same raLlon Lo such dlvldends as Lhe gross lncome of Lhe corporaLlon for such
perlod derlved from sources wlLhln Lhe Þhlllpplnes bears Lo lLs gross lncome from all sourcesŦ
(3) ServlcesŦ Ŵ CompensaLlon for labor or personal servlces performed ln Lhe ÞhlllpplnesŤ
(4) 8enLals and 8oyalLlesŦ Ŵ 8enLals and royalLles from properLy locaLed ln Lhe Þhlllpplnes or from any
lnLeresL ln such properLyţ lncludlng renLals or royalLles for Ŵ
(a) 1he use of or Lhe rlghL or prlvllege Lo use ln Lhe Þhlllpplnes any copyrlghLţ paLenLţ deslgn or modelţ
planţ secreL formula or processţ goodwlllţ Lrademarkţ Lrade brand or oLher llke properLy or rlghLŤ
(b) 1he use ofţ or Lhe rlghL Lo use ln Lhe Þhlllpplnes any lndusLrlalţ commerclal or sclenLlflc equlpmenLŤ
(c) 1he supply of sclenLlflcţ Lechnlcalţ lndusLrlal or commerclal knowledge or lnformaLlonŤ
(d) 1he supply of any asslsLance LhaL ls anclllary and subsldlary Loţ and ls furnlshed as a means of
enabllng Lhe appllcaLlon or en[oymenL ofţ any such properLy or rlghL as ls menLloned ln paragraph (a)ţ
any such equlpmenL as ls menLloned ln paragraph (b) or any such knowledge or lnformaLlon as ls
menLloned ln paragraph (c)Ť
(e) 1he supply of servlces by a nonresldenL person or hls employee ln connecLlon wlLh Lhe use of
properLy or rlghLs belonglng Loţ or Lhe lnsLallaLlon or operaLlon of any brandţ machlnery or oLher
apparaLus purchased from such nonresldenL personŤ
(f) 1echnlcal advlceţ asslsLance or servlces rendered ln connecLlon wlLh Lechnlcal managemenL or
admlnlsLraLlon of any sclenLlflcţ lndusLrlal or commerclal underLaklngţ venLureţ pro[ecL or schemeŤ and
(g) 1he use of or Lhe rlghL Lo useť
(l) MoLlon plcLure fllmsŤ
(ll) lllms or vldeo Lapes for use ln connecLlon wlLh LelevlslonŤ and
(lll) 1apes for use ln connecLlon wlLh radlo broadcasLlngŦ
(3) Sale of 8eal ÞroperLyŦ Ŵ Calnsţ proflLs and lncome from Lhe sale of real properLy locaLed ln Lhe
ÞhlllpplnesŤ and
(6) Sale of Þersonal ÞroperLyŦ Ŵ CalnsŤ proflLs and lncome from Lhe sale of personal properLyţ as
deLermlned ln SubsecLlon (L) of Lhls SecLlonŦ
(8) 1axable lncome lrom Sources WlLhln Lhe ÞhlllpplnesŦ Ŵ
(1) Ceneral 8uleŦ Ŵ lrom Lhe lLems of gross lncome speclfled ln SubsecLlon (A) of Lhls SecLlonţ Lhere shall
be deducLed Lhe expensesţ losses and oLher deducLlons properly allocaLed LhereLo and a raLable parL of
expensesţ lnLeresLsţ losses and oLher deducLlons effecLlvely connecLed wlLh Lhe buslness or Lrade
conducLed excluslvely wlLhln Lhe Þhlllpplnes whlch cannoL deflnlLely be allocaLed Lo some lLems or class
of gross lncomeť Þrovldedţ 1haL such lLems of deducLlons shall be allowed only lf fully subsLanLlaLed by
all Lhe lnformaLlon necessary for lLs calculaLlonŦ 1he remalnderţ lf anyţ shall be LreaLed ln full as Laxable
lncome from sources wlLhln Lhe ÞhlllpplnesŦ
(2) LxcepLlonŦ Ŵ no deducLlons for lnLeresL pald or lncurred abroad shall be allowed from Lhe lLem of
gross lncome speclfled ln subsecLlon (A) unless lndebLedness was acLually lncurred Lo provlde funds for
use ln connecLlon wlLh Lhe conducL or operaLlon of Lrade or buslness ln Lhe ÞhlllpplnesŦ
(C) Cross lncome lrom Sources WlLhouL Lhe ÞhlllpplnesŦ Ŵ 1he followlng lLems of gross lncome shall be
LreaLed as lncome from sources wlLhouL Lhe Þhlllpplnesť
(1) lnLeresLs oLher Lhan Lhose derlved from sources wlLhln Lhe Þhlllpplnes as provlded ln
paragraph (1) of SubsecLlon (A) of Lhls SecLlonŤ
(2) ulvldends oLher Lhan Lhose derlved from sources wlLhln Lhe Þhlllpplnes as provlded ln
paragraph (2) of SubsecLlon (A) of Lhls SecLlonŤ
(3) CompensaLlon for labor or personal servlces performed wlLhouL Lhe ÞhlllpplnesŤ
(4) 8enLals or royalLles from properLy locaLed wlLhouL Lhe Þhlllpplnes or from any lnLeresL ln
such properLy lncludlng renLals or royalLles for Lhe use of or for Lhe prlvllege of uslng
wlLhouL Lhe Þhlllpplnesţ paLenLsţ copyrlghLsţ secreL processes and formulasţ goodwlllţ
Lrademarksţ Lrade brandsţ franchlses and oLher llke properLlesŤ and
(3) Calnsţ proflLs and lncome from Lhe sale of real properLy locaLed wlLhouL Lhe ÞhlllpplnesŦ
(u) 1axable lncome lrom Sources WlLhouL Lhe ÞhlllpplnesŦ Ŵ lrom Lhe lLems of gross lncome speclfled ln
SubsecLlon (C) of Lhls SecLlon Lhere shall be deducLed Lhe expensesţ lossesţ and oLher deducLlons
properly apporLloned or allocaLed LhereLo and a raLable parL of any expenseţ loss or oLher deducLlon
whlch cannoL deflnlLely be allocaLed Lo some lLems or classes of gross lncomeŦ 1he remalnderţ lf anyţ
shall be LreaLed ln full as Laxable lncome from sources wlLhouL Lhe ÞhlllpplnesŦ
(L) lncome lrom Sources ÞarLly WlLhln and ÞarLly WlLhouL Lhe ÞhlllpplnesŦŴ lLems of gross lncomeţ
expensesţ losses and deducLlonsţ oLher Lhan Lhose speclfled ln SubsecLlons (A) and (C) of Lhls SecLlonţ
shall be allocaLed or apporLloned Lo sources wlLhln or wlLhouL Lhe Þhlllpplnesţ under Lhe rules and
regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ Where
lLems of gross lncome are separaLely allocaLed Lo sources wlLhln Lhe Þhlllpplnesţ Lhere shall be deducLed
(for Lhe purpose of compuLlng Lhe Laxable lncome Lherefrom) Lhe expensesţ losses and oLher deducLlons
properly apporLloned or allocaLed LhereLo and a raLable parL of oLher expensesţ losses or oLher
deducLlons whlch cannoL deflnlLely be allocaLed Lo some lLems or classes of gross lncomeŦ 1he
remalnderţ lf anyţ shall be lncluded ln full as Laxable lncome from sources wlLhln Lhe ÞhlllpplnesŦ ln Lhe
case of gross lncome derlved from sources parLly wlLhln and parLly wlLhouL Lhe Þhlllpplnesţ Lhe Laxable
lncome may flrsL be compuLed by deducLlng Lhe expensesţ losses or oLher deducLlons apporLloned or
allocaLed LhereLo and a raLable parL of any expenseţ loss or oLher deducLlon whlch cannoL deflnlLely be
allocaLed Lo some lLems or classes of gross lncomeŤ and Lhe porLlon of such Laxable lncome aLLrlbuLable
Lo sources wlLhln Lhe Þhlllpplnes may be deLermlned by processes or formulas of general apporLlonmenL
prescrlbed by Lhe SecreLary of llnanceŦ Calnsţ proflLs and lncome from Lhe sale of personal properLy
produced (ln whole or ln parL) by Lhe Laxpayer wlLhln and sold wlLhouL Lhe Þhlllpplnesţ or produced (ln
whole or ln parL) by Lhe Laxpayer wlLhouL and sold wlLhln Lhe Þhlllpplnesţ shall be LreaLed as derlved
parLly from sources wlLhln and parLly from sources wlLhouL Lhe ÞhlllpplnesŦ

Calnsţ proflLs and lncome derlved from Lhe purchase of personal properLy wlLhln and lLs sale wlLhouL
Lhe Þhlllpplnesţ or from Lhe purchase of personal properLy wlLhouL and lLs sale wlLhln Lhe Þhlllpplnes
shall be LreaLed as derlved enLlrely form sources wlLhln Lhe counLry ln whlch soldť Þrovldedţ howeverţ
1haL galn from Lhe sale of shares of sLock ln a domesLlc corporaLlon shall be LreaLed as derlved enLlrely
form sources wlLhln Lhe Þhlllpplnes regardless of where Lhe sald shares are soldŦ 1he Lransfer by a
nonresldenL allen or a forelgn corporaLlon Lo anyone of any share of sLock lssued by a domesLlc
corporaLlon shall noL be effecLed or made ln lLs book unlessť (1) Lhe Lransferor has flled wlLh Lhe
Commlssloner a bond condlLloned upon Lhe fuLure paymenL by hlm of any lncome Lax LhaL may be due
on Lhe galns derlved from such Lransferţ or (2) Lhe Commlssloner has cerLlfled LhaL Lhe Laxesţ lf anyţ
lmposed ln Lhls 1lLle and due on Lhe galn reallzed from such sale or Lransfer have been paldŦ lL shall be
Lhe duLy of Lhe Lransferor and Lhe corporaLlon Lhe shares of whlch are sold or Lransferredţ Lo advlse Lhe
Lransferee of Lhls requlremenLŦ

(l) ueflnlLlonsŦ Ŵ As used ln Lhls SecLlon Lhe words ƍsaleƍ or ƍsoldƍ lnclude ƍexchangeƍ or ƍexchangedƍŤ
and Lhe word ƍproducedƍ lncludes ƍcreaLedƍţ ƍfabrlcaLedƍţ ƍmanufacLuredƍţ ƍexLracLedƍţ ƍprocessedƍţ
ƍcuredƍ or ƍagedƍŦ

CPAÞ1L8 vlll
ACCCun1lnC ÞL8lCuS
Anu ML1PCuS Cl ACCCun1lnC

SLCŦ 43Ŧ Ceneral 8uleŦ Ŵ 1he Laxable lncome shall be compuLed upon Lhe basls of Lhe Laxpayerƌs annual
accounLlng perlod (flscal year or calendar yearţ as Lhe case may be) ln accordance wlLh Lhe meLhod of
accounLlng regularly employed ln keeplng Lhe books of such Laxpayerţ buL lf no such meLhod of
accounLlng has been so employedţ or lf Lhe meLhod employed does noL clearly reflecL Lhe lncomeţ Lhe
compuLaLlon shall be made ln accordance wlLh such meLhod as ln Lhe oplnlon of Lhe Commlssloner
clearly reflecLs Lhe lncomeŦ lf Lhe Laxpayerƌs annual accounLlng perlod ls oLher Lhan a flscal yearţ as
deflned ln SecLlon 22(C)ţ or lf Lhe Laxpayer has no annual accounLlng perlodţ or does noL keep booksţ or
lf Lhe Laxpayer ls an lndlvldualţ Lhe Laxable lncome shall be compuLed on Lhe basls of Lhe calendar yearŦ

SLCŦ 44Ŧ Þerlod ln whlch lLems of Cross lncome lncludedŦ Ŵ 1he amounL of all lLems of gross lncome shall
be lncluded ln Lhe gross lncome for Lhe Laxable year ln whlch recelved by Lhe Laxpayerţ unlessţ under
meLhods of accounLlng permlLLed under SecLlon 43ţ any such amounLs are Lo be properly accounLed for
as of a dlfferenL perlodŦ ln Lhe case of Lhe deaLh of a Laxpayerţ Lhere shall be lncluded ln compuLlng
Laxable lncome for Lhe Laxable perlod ln whlch falls Lhe daLe of hls deaLhţ amounLs accrued up Lo Lhe
daLe of hls deaLh lf noL oLherwlse properly lncludlble ln respecL of such perlod or a prlor perlodŦ

SLCŦ 43Ŧ Þerlod for whlch ueducLlons and CredlLs 1akenŦ Ŵ 1he deducLlons provlded for ln Lhls 1lLle shall
be Laken for Lhe Laxable year ln whlch ƍpald or accruedƍ or ƍpald or lncurredƍţ dependenL upon Lhe
meLhod of accounLlng Lhe basls of whlch Lhe neL lncome ls compuLedţ unless ln order Lo clearly reflecL
Lhe lncomeţ Lhe deducLlons should be Laken as of a dlfferenL perlodŦ ln Lhe case of Lhe deaLh of a
Laxpayerţ Lhere shall be allowed as deducLlons for Lhe Laxable perlod ln whlch falls Lhe daLe of hls deaLhţ
amounLs accrued up Lo Lhe daLe of hls deaLh lf noL oLherwlse properly allowable ln respecL of such
perlod or a prlor perlodŦ

SLCŦ 46Ŧ Change of AccounLlng ÞerlodŦ lf a Laxpayerţ oLher Lhan an lndlvldualţ changes hls accounLlng
perlod from flscal year Lo calendar yearţ from calendar year Lo flscal yearţ or from one flscal year Lo
anoLherţ Lhe neL lncome shallţ wlLh Lhe approval of Lhe Commlsslonerţ be compuLed on Lhe basls of such
new accounLlng perlodţ sub[ecL Lo Lhe provlslons of SecLlon 47Ŧ

SLCŦ 47Ŧ llnal or Ad[usLmenL 8eLurns for a Þerlod of Less Lhan 1welve (12) MonLhsŦ Ŵ

(A) 8eLurns for ShorL Þerlod 8esulLlng from Change of AccounLlng ÞerlodŦ Ŵ lf a Laxpayerţ oLher Lhan an
lndlvldualţ wlLh Lhe approval of Lhe Commlsslonerţ changes Lhe basls of compuLlng neL lncome from
flscal year Lo calendar yearţ a separaLe flnal or ad[usLmenL reLurn shall be made for Lhe perlod beLween
Lhe close of Lhe lasL flscal year for whlch reLurn was made and Lhe followlng uecember 31Ŧ lf Lhe change
ls from calendar year Lo flscal yearţ a separaLe flnal or ad[usLmenL reLurn shall be made for Lhe perlod
beLween Lhe close of Lhe lasL calendar year for whlch reLurn was made and Lhe daLe deslgnaLed as Lhe
close of Lhe flscal yearŦ lf Lhe change ls from one flscal year Lo anoLher flscal yearţ a separaLe flnal or
ad[usLmenL reLurn shall be made for Lhe perlod beLween Lhe close of Lhe former flscal year and Lhe daLe
deslgnaLed as Lhe close of Lhe new flscal yearŦ

(8) lncome CompuLed on 8asls of ShorL ÞerlodŦ Ŵ Where a separaLe flnal or ad[usLmenL reLurn ls made
under SubsecLlon (A) on accounL of a change ln Lhe accounLlng perlodţ and ln all oLher cases where a
separaLe flnal or ad[usLmenL reLurn ls requlred or permlLLed by rules and regulaLlons prescrlbed by Lhe
SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ Lo be made for a fracLlonal parL of a
yearţ Lhen Lhe lncome shall be compuLed on Lhe basls of Lhe perlod for whlch separaLe flnal or
ad[usLmenL reLurn ls madeŦ

SLCŦ 48Ŧ AccounLlng for LongŴ1erm ConLracLsŦ Ŵ lncome from longŴLerm conLracLs shall be reporLed for
Lax purposes ln Lhe manner as provlded ln Lhls SecLlonŦ As used herelnţ Lhe Lerm ƌlongŴLerm conLracLsƌ
means bulldlngţ lnsLallaLlon or consLrucLlon conLracLs coverlng a perlod ln excess of one (1) yearŦ
Þersons whose gross lncome ls derlved ln whole or ln parL from such conLracLs shall reporL such lncome
upon Lhe basls of percenLage of compleLlonŦ 1he reLurn should be accompanled by a reLurn cerLlflcaLe of
archlLecLs or englneers showlng Lhe percenLage of compleLlon durlng Lhe Laxable year of Lhe enLlre work
performed under conLracLŦ 1here should be deducLed from such gross lncome all expendlLures made
durlng Lhe Laxable year on accounL of Lhe conLracLţ accounL belng Laken of Lhe maLerlal and supplles on
hand aL Lhe beglnnlng and end of Lhe Laxable perlod for use ln connecLlon wlLh Lhe work under Lhe
conLracL buL noL yeL so applledŦ lf upon compleLlon of a conLracLţ lL ls found LhaL Lhe Laxable neL lncome
arlslng Lhereunder has noL been clearly reflecLed for any year or yearsţ Lhe Commlssloner may permlL or
requlre an amended reLurnŦ

SLCŦ 49Ŧ lnsLallmenL 8aslsŦ Ŵ

(A) Sales of uealers ln Þersonal ÞroperLyŦ Ŵ under rules and regulaLlons prescrlbed by Lhe SecreLary of
llnanceţ upon recommendaLlon of Lhe Commlsslonerţ a person who regularly sells or oLherwlse dlsposes
of personal properLy on Lhe lnsLallmenL plan may reLurn as lncome Lherefrom ln any Laxable year LhaL
proporLlon of Lhe lnsLallmenL paymenLs acLually recelved ln LhaL yearţ whlch Lhe gross proflL reallzed or
Lo be reallzed when paymenL ls compleLedţ bears Lo Lhe LoLal conLracL prlceŦ

(8) Sales of 8ealLy and Casual Sales of ÞersonallLyŦ Ŵ ln Lhe case (1) of a casual sale or oLher casual
dlsposlLlon of personal properLy (oLher Lhan properLy of a klnd whlch would properly be lncluded ln Lhe
lnvenLory of Lhe Laxpayer lf on hand aL Lhe close of Lhe Laxable year)ţ for a prlce exceedlng Cne
Lhousand pesos (Þ1ţ000)ţ or (2) of a sale or oLher dlsposlLlon of real properLyţ lf ln elLher case Lhe lnlLlal
paymenLs do noL exceed LwenLyŴflve percenL (23Ʒ) of Lhe selllng prlceţ Lhe lncome mayţ under Lhe rules
and regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ be
reLurned on Lhe basls and ln Lhe manner above prescrlbed ln Lhls SecLlonŦ As used ln Lhls SecLlonţ Lhe
Lerm ƍlnlLlal paymenLsƍ means Lhe paymenLs recelved ln cash or properLy oLher Lhan evldences of
lndebLedness of Lhe purchaser durlng Lhe Laxable perlod ln whlch Lhe sale or oLher dlsposlLlon ls madeŦ

(C) Sales of 8eal ÞroperLy Consldered as CaplLal AsseL by lndlvldualsŦ Ŵ An lndlvldual who sells or dlsposes
of real properLyţ consldered as caplLal asseLţ and ls oLherwlse quallfled Lo reporL Lhe galn Lherefrom
under SubsecLlon (8) may pay Lhe caplLal galns Lax ln lnsLallmenLs under rules and regulaLlons Lo be
promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

(u) Change from Accrual Lo lnsLallmenL 8aslsŦ Ŵ lf a Laxpayer enLlLled Lo Lhe beneflLs of SubsecLlon (A)
elecLs for any Laxable year Lo reporL hls Laxable lncome on Lhe lnsLallmenL baslsţ Lhen ln compuLlng hls
lncome for Lhe year of change or any subsequenL yearţ amounLs acLually recelved durlng any such year
on accounL of sales or oLher dlsposlLlons of properLy made ln any prlor year shall noL be excludedŦ

SLCŦ 30Ŧ AllocaLlon of lncome and ueducLlonsŦ Ŵ ln Lhe case of Lwo or more organlzaLlonsţ Lrades or
buslnesses (wheLher or noL lncorporaLed and wheLher or noL organlzed ln Lhe Þhlllpplnes) owned or
conLrolled dlrecLly or lndlrecLly by Lhe same lnLeresLsţ Lhe Commlssloner ls auLhorlzed Lo dlsLrlbuLeţ
apporLlon or allocaLe gross lncome or deducLlons beLween or among such organlzaLlonţ Lrade or
buslnessţ lf he deLermlned LhaL such dlsLrlbuLlonţ apporLlonmenL or allocaLlon ls necessary ln order Lo
prevenL evaslon of Laxes or clearly Lo reflecL Lhe lncome of any such organlzaLlonţ Lrade or buslnessŦ


CPAÞ1L8 lx
8L1u8nS Anu ÞA?MLn1 Cl 1Ax

SLCŦ 31Ŧ lndlvldual 8eLurnŦ Ŵ

(A) 8equlremenLsŦ Ŵ

(1) LxcepL as provlded ln paragraph (2) of Lhls SubsecLlonţ Lhe followlng lndlvlduals are requlred Lo flle
an lncome Lax reLurnť
(a) Lvery llllplno clLlzen resldlng ln Lhe ÞhlllpplnesŤ
(b) Lvery llllplno clLlzen resldlng ouLslde Lhe Þhlllpplnesţ on hls lncome from sources wlLhln Lhe
ÞhlllpplnesŤ
(c) Lvery allen resldlng ln Lhe Þhlllpplnesţ on lncome derlved from sources wlLhln Lhe ÞhlllpplnesŤ and
(d) Lvery nonresldenL allen engaged ln Lrade or buslness or ln Lhe exerclse of professlon ln Lhe
ÞhlllpplnesŦ
(2) 1he followlng lndlvlduals shall noL be requlred Lo flle an lncome Lax reLurnŤ
(a) An lndlvldual whose gross lncome does noL exceed hls LoLal personal and addlLlonal exempLlons for
dependenLs under SecLlon 33ť Þrovldedţ 1haL a clLlzen of Lhe Þhlllpplnes and any allen lndlvldual
engaged ln buslness or pracLlce of professlon wlLhln Lhe Þhlllpplne shall flle an lncome Lax reLurnţ
regardless of Lhe amounL of gross lncomeŤ
(b) An lndlvldual wlLh respecL Lo pure compensaLlon lncomeţ as deflned ln SecLlon 32 (A)(1)ţ derlved
from sources wlLhln Lhe Þhlllpplnesţ Lhe lncome Lax on whlch has been correcLly wlLhheld under Lhe
provlslons of SecLlon 79 of Lhls Codeť Þrovldedţ 1haL an lndlvldual derlvlng compensaLlon concurrenLly
from Lwo or more employers aL any Llme durlng Lhe Laxable year shall flle an lncome Lax reLurnť
Þrovldedţ furLherţ 1haL an lndlvldual whose compensaLlon lncome derlved from sources wlLhln Lhe
Þhlllpplnes exceeds SlxLy Lhousand pesos (Þ60ţ000) shall also flle an lncome Lax reLurnŤ
(c) An lndlvldual whose sole lncome has been sub[ecLed Lo flnal wlLhholdlng Lax pursuanL Lo SecLlon
37(A) of Lhls CodeŤ and
(d) An lndlvldual who ls exempL from lncome Lax pursuanL Lo Lhe provlslons of Lhls Code and oLher lawsţ
general or speclalŦ
(3) 1he forgolng noLwlLhsLandlngţ any lndlvldual noL requlred Lo flle an lncome Lax reLurn may
neverLheless be requlred Lo flle an lnformaLlon reLurn pursuanL Lo rules and regulaLlons prescrlbed by
Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
(4) 1he lncome Lax reLurn shall be flled ln dupllcaLe by Lhe followlng personsť
(a) A resldenL clLlzen Ŵ on hls lncome from all sourcesŤ
(b) A nonresldenL clLlzen Ŵ on hls lncome derlved from sources wlLhln Lhe ÞhlllpplnesŤ
(c) A resldenL allen Ŵ on hls lncome derlved from sources wlLhln Lhe ÞhlllpplnesŤ and
(d) A nonresldenL allen engaged ln Lrade or buslness ln Lhe Þhlllpplnes Ŵ on hls lncome derlved from
sources wlLhln Lhe ÞhlllpplnesŦ
(8) Where Lo llleŦ Ŵ LxcepL ln cases where Lhe Commlssloner oLherwlse permlLsţ Lhe reLurn shall be flled
wlLh an auLhorlzed agenL bankţ 8evenue ulsLrlcL Cfflcerţ CollecLlon AgenL or duly auLhorlzed 1reasurer
of Lhe clLy or munlclpallLy ln whlch such person has hls legal resldence or prlnclpal place of buslness ln
Lhe Þhlllpplnesţ or lf Lhere be no legal resldence or place of buslness ln Lhe Þhlllpplnesţ wlLh Lhe Cfflce of
Lhe CommlsslonerŦ
(C) When Lo llleŦ Ŵ

(1) 1he reLurn of any lndlvldual speclfled above shall be flled on or before Lhe flfLeenLh (13Lh) day of
Aprll of each year coverlng lncome for Lhe precedlng Laxable yearŦ
(2) lndlvlduals sub[ecL Lo Lax on caplLal galnsŤ
(a) lrom Lhe sale or exchange of shares of sLock noL Lraded Lhru a local sLock exchange as prescrlbed
under SecLlon 24(c) shall flle a reLurn wlLhln LhlrLy (30) days afLer each LransacLlon and a flnal
consolldaLed reLurn on or before Aprll 13 of each year coverlng all sLock LransacLlons of Lhe precedlng
Laxable yearŤ and
(b) lrom Lhe sale or dlsposlLlon of real properLy under SecLlon 24(u) shall flle a reLurn wlLhln LhlrLy (30)
days followlng each sale or oLher dlsposlLlonŦ
(u) Pusband and WlfeŦ Ŵ Marrled lndlvldualsţ wheLher clLlzensţ resldenL or nonresldenL allensţ who do
noL derlve lncome purely from compensaLlonţ shall flle a reLurn for Lhe Laxable year Lo lnclude Lhe
lncome of boLh spousesţ buL where lL ls lmpracLlcable for Lhe spouses Lo flle one reLurnţ each spouse
may flle a separaLe reLurn of lncome buL Lhe reLurns so flled shall be consolldaLed by Lhe 8ureau for
purposes of verlflcaLlon for Lhe Laxable yearŦ
(L) 8eLurn of ÞarenL Lo lnclude lncome of ChlldrenŦ Ŵ 1he lncome of unmarrled mlnors derlved from
properly recelved from a llvlng parenL shall be lncluded ln Lhe reLurn of Lhe parenLţ excepL (1) when Lhe
donorƌs Lax has been pald on such properLyţ or (2) when Lhe Lransfer of such properLy ls exempL from
donorƌs LaxŦ

(l) Þersons under ulsablllLyŦ Ŵ lf Lhe Laxpayer ls unable Lo make hls own reLurnţ Lhe reLurn may be made
by hls duly auLhorlzed agenL or represenLaLlve or by Lhe guardlan or oLher person charged wlLh Lhe care
of hls person or properLyţ Lhe prlnclpal and hls represenLaLlve or guardlan assumlng Lhe responslblllLy of
maklng Lhe reLurn and lncurrlng penalLles provlded for erroneousţ false or fraudulenL reLurnsŦ

(C) SlgnaLure Þresumed CorrecLŦ Ŵ 1he facL LhaL an lndlvldualƌs name ls slgned Lo a flled reLurn shall be
prlma facle evldence for all purposes LhaL Lhe reLurn was acLually slgned by hlmŦ

SLCŦ 32Ŧ CorporaLlon 8eLurnsŦ Ŵ

(A) 8equlremenLsŦ Ŵ Lvery corporaLlon sub[ecL Lo Lhe Lax hereln lmposedţ excepL forelgn corporaLlons
noL engaged ln Lrade or buslness ln Lhe Þhlllpplnesţ shall renderţ ln dupllcaLeţ a Lrue and accuraLe
quarLerly lncome Lax reLurn and flnal or ad[usLmenL reLurn ln accordance wlLh Lhe provlslons of ChapLer
xll of Lhls 1lLleŦ 1he reLurn shall be flled by Lhe presldenLţ vlceŴpresldenL or oLher prlnclpal offlcerţ and
shall be sworn Lo by such offlcer and by Lhe Lreasurer or asslsLanL LreasurerŦ

(8) 1axable ?ear of CorporaLlonŦ Ŵ A corporaLlon may employ elLher calendar year or flscal year as a basls
for flllng lLs annual lncome Lax reLurnť Þrovldedţ 1haL Lhe corporaLlon shall noL change Lhe accounLlng
perlod employed wlLhouL prlor approval from Lhe Commlssloner ln accordance wlLh Lhe provlslons of
SecLlon 47 of Lhls CodeŦ

(C) 8eLurn of CorporaLlon ConLemplaLlng ulssoluLlon or 8eorganlzaLlonŦ Ŵ Lvery corporaLlon shallţ wlLhln
LhlrLy (30) days afLer Lhe adopLlon by Lhe corporaLlon of a resoluLlon or plan for lLs dlssoluLlonţ or for Lhe
llquldaLlon of Lhe whole or any parL of lLs caplLal sLockţ lncludlng a corporaLlon whlch has been noLlfled
of posslble lnvolunLary dlssoluLlon by Lhe SecurlLles and Lxchange Commlsslonţ or for lLs reorganlzaLlonţ
render a correcL reLurn Lo Lhe Commlsslonerţ verlfled under oaLhţ seLLlng forLh Lhe Lerms of such
resoluLlon or plan and such oLher lnformaLlon as Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
commlsslonerţ shallţ by rules and regulaLlonsţ prescrlbeŦ

1he dlssolvlng or reorganlzlng corporaLlon shallţ prlor Lo Lhe lssuance by Lhe SecurlLles and Lxchange
Commlsslon of Lhe CerLlflcaLe of ulssoluLlon or 8eorganlzaLlonţ as may be deflned by rules and
regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ secure
a cerLlflcaLe of Lax clearance from Lhe 8ureau of lnLernal 8evenue whlch cerLlflcaLe shall be submlLLed Lo
Lhe SecurlLles and Lxchange CommlsslonŦ

(u) 8eLurn on CaplLal Calns 8eallzed from Sale of Shares of SLock noL 1raded ln Lhe Local SLock LxchangeŦ
Ŵ Lvery corporaLlon derlvlng caplLal galns from Lhe sale or exchange of shares of sLock noL Lraded Lhru a
local sLock exchange as prescrlbed under SecLlons 24 (c)ţ 23 (A)(3)ţ 27 (L)(2)ţ 28(A)(8)(c) and 28 (8)(3)(c)ţ
shall flle a reLurn wlLhln LhlrLy (30) days afLer each LransacLlons and a flnal consolldaLed reLurn of all
LransacLlons durlng Lhe Laxable year on or before Lhe flfLeenLh (13Lh) day of Lhe fourLh (4Lh) monLh
followlng Lhe close of Lhe Laxable yearŦ

SLCŦ 33Ŧ LxLenslon of 1lme Lo llle 8eLurnsŦ Ŵ 1he Commlssloner mayţ ln merlLorlous casesţ granL a
reasonable exLenslon of Llme for flllng reLurns of lncome (or flnal and ad[usLmenL reLurns ln case of
corporaLlons)ţ sub[ecL Lo Lhe provlslons of SecLlon 36 of Lhls CodeŦ

SLCŦ 34Ŧ 8eLurns of 8ecelversţ 1rusLees ln 8ankrupLcy or AsslgneesŦ Ŵ ln cases whereln recelversţ LrusLees
ln bankrupLcy or asslgnees are operaLlng Lhe properLy or buslness of a corporaLlonţ sub[ecL Lo Lhe Lax
lmposed by Lhls 1lLleţ such recelversţ LrusLees or asslgnees shall make reLurns of neL lncome as and for
such corporaLlonţ ln Lhe same manner and form as such organlzaLlon ls herelnbefore requlred Lo make
reLurnsţ and any Lax due on Lhe lncome as reLurned by recelversţ LrusLees or asslgnees shall be assessed
and collecLed ln Lhe same manner as lf assessed dlrecLly agalnsL Lhe organlzaLlons of whose buslnesses
or properLles Lhey have cusLody or conLrolŦ

SLCŦ 33Ŧ 8eLurns of Ceneral Þrofesslonal ÞarLnershlpsŦ Ŵ Lvery general professlonal parLnershlp shall flleţ
ln dupllcaLeţ a reLurn of lLs lncomeţ excepL lncome exempL under SecLlon 32 (8) of Lhls 1lLleţ seLLlng forLh
Lhe lLems of gross lncome and of deducLlons allowed by Lhls 1lLleţ and Lhe namesţ 1axpayer
ldenLlflcaLlon numbers (1ln)ţ addresses and shares of each of Lhe parLnersŦ

SLCŦ 36Ŧ ÞaymenL and AssessmenL of lncome 1ax for lndlvlduals and CorporaLlonŦ Ŵ

(A) ÞaymenL of 1axŦ Ŵ

(1) ln CeneralŦ Ŵ 1he LoLal amounL of Lax lmposed by Lhls 1lLle shall be pald by Lhe person sub[ecL LhereLo
aL Lhe Llme Lhe reLurn ls flledŦ ln Lhe case of Lramp vesselsţ Lhe shlpplng agenLs and/or Lhe husbandlng
agenLsţ and ln Lhelr absenceţ Lhe capLalns Lhereof are requlred Lo flle Lhe reLurn hereln provlded and pay
Lhe Lax due Lhereon before Lhelr deparLureŦ upon fallure of Lhe sald agenLs or capLalns Lo flle Lhe reLurn
and pay Lhe Laxţ Lhe 8ureau of CusLoms ls hereby auLhorlzed Lo hold Lhe vessel and prevenL lLs
deparLure unLll proof of paymenL of Lhe Lax ls presenLed or a sufflclenL bond ls flled Lo answer for Lhe
Lax dueŦ
(2) lnsLallmenL of ÞaymenLŦ Ŵ When Lhe Lax due ls ln excess of 1wo Lhousand pesos (Þ2ţ000)ţ Lhe
Laxpayer oLher Lhan a corporaLlon may elecL Lo pay Lhe Lax ln Lwo (2) equal lnsLallmenLs ln whlch caseţ
Lhe flrsL lnsLallmenL shall be pald aL Lhe Llme Lhe reLurn ls flled and Lhe second lnsLallmenLţ on or before
!uly 13 followlng Lhe close of Lhe calendar yearŦ lf any lnsLallmenL ls noL pald on or before Lhe daLe flxed
for lLs paymenLţ Lhe whole amounL of Lhe Lax unpald becomes due and payableţ LogeLher wlLh Lhe
dellnquency penalLlesŦ
(3) ÞaymenL of CaplLal Calns 1axŦ Ŵ 1he LoLal amounL of Lax lmposed and prescrlbed under SecLlon 24 (c)ţ
24(u)ţ 27(L)(2)ţ 28(A)(8)(c) and 28(8)(3)(c) shall be pald on Lhe daLe Lhe reLurn prescrlbed Lherefor ls
flled by Lhe person llable LhereLoť Þrovldedţ 1haL lf Lhe seller submlLs proof of hls lnLenLlon Lo avall
hlmself of Lhe beneflL of exempLlon of caplLal galns under exlsLlng speclal lawsţ no such paymenLs shall
be requlred ť Þrovldedţ furLherţ 1haL ln case of fallure Lo quallfy for exempLlon under such speclal laws
and lmplemenLlng rules and regulaLlonsţ Lhe Lax due on Lhe galns reallzed from Lhe orlglnal LransacLlon
shall lmmedlaLely become due and payableţ sub[ecL Lo Lhe penalLles prescrlbed under appllcable
provlslons of Lhls Codeť Þrovldedţ flnallyţ 1haL lf Lhe sellerţ havlng pald Lhe Laxţ submlLs such proof of
lnLenL wlLhln slx (6) monLhs from Lhe reglsLraLlon of Lhe documenL Lransferrlng Lhe real properLyţ he
shall be enLlLled Lo a refund of such Lax upon verlflcaLlon of hls compllance wlLh Lhe requlremenLs for
such exempLlonŦ
ln case Lhe Laxpayer elecLs and ls quallfled Lo reporL Lhe galn by lnsLallmenLs under SecLlon 49 of Lhls
Codeţ Lhe Lax due from each lnsLallmenL paymenL shall be pald wlLhln (30) days from Lhe recelpL of such
paymenLsŦ
no reglsLraLlon of any documenL Lransferrlng real properLy shall be effecLed by Lhe 8eglsLer of ueeds
unless Lhe Commlssloner or hls duly auLhorlzed represenLaLlve has cerLlfled LhaL such Lransfer has been
reporLedţ and Lhe Lax hereln lmposedţ lf anyţ has been paldŦ

(8) AssessmenL and ÞaymenL of ueflclency 1axŦ Ŵ AfLer Lhe reLurn ls flledţ Lhe Commlssloner shall
examlne lL and assess Lhe correcL amounL of Lhe LaxŦ 1he Lax or deflclency lncome Lax so dlscovered shall
be pald upon noLlce and demand from Lhe CommlsslonerŦ

As used ln Lhls ChapLerţ ln respecL of a Lax lmposed by Lhls 1lLleţ Lhe Lerm ƍdeflclencyƍ meansť

(1) 1he amounL by whlch Lhe Lax lmposed by Lhls 1lLle exceeds Lhe amounL shown as Lhe Lax by Lhe
Laxpayer upon hls reLurnŤ buL Lhe amounL so shown on Lhe reLurn shall be lncreased by Lhe amounLs
prevlously assessed (or collecLed wlLhouL assessmenL) as a deflclencyţ and decreased by Lhe amounL
prevlously abaLedţ credlLedţ reLurned or oLherwlse repald ln respecL of such LaxŤ or
(2) lf no amounL ls shown as Lhe Lax by Lhe Laxpayer upon Lhls reLurnţ or lf no reLurn ls made by Lhe
Laxpayerţ Lhen Lhe amounL by whlch Lhe Lax exceeds Lhe amounLs prevlously assessed (or collecLed
wlLhouL assessmenL) as a deflclencyŤ buL such amounLs prevlously assessed or collecLed wlLhouL
assessmenL shall flrsL be decreased by Lhe amounLs prevlously abaLedţ credlLed reLurned or oLherwlse
repald ln respecL of such LaxŦ

SLCŦ 37Ŧ WlLhholdlng of 1ax aL SourceŦ Ŵ
(A) WlLhholdlng of llnal 1ax on CerLaln lncomesŦ Ŵ Sub[ecL Lo rules and regulaLlons Lhe SecreLary of
llnance may promulgaLeţ upon Lhe recommendaLlon of Lhe Commlsslonerţ requlrlng Lhe flllng of lncome
Lax reLurn by cerLaln lncome payeesţ Lhe Lax lmposed or prescrlbed by SecLlons 24(8)(1)ţ 24(8)(2)ţ 24(C)ţ
24(u)(1)Ť 23(A)(2)ţ 23(A)(3)ţ 23(8)ţ 23(C)ţ 23(u)ţ 23(L)ţ 27(u)(!)ţ 27(u)(2)ţ 27(u)(3)ţ 27(u)(3)ţ 28 (A)(4)ţ
28(A)(3)ţ 28(A)(7)(a)ţ 28(A)(7)(b)ţ 28(A)(7)(c)ţ 28(8)(1)ţ 28(8)(2)ţ 28(8)(3)ţ 28(8)(4)ţ 28(8)(3)(a)ţ
28(8)(3)(b)ţ 28(8)(3)(c)Ť 33Ť and 282 of Lhls Code on speclfled lLems of lncome shall be wlLhheld by
payorŴcorporaLlon and/or person and pald ln Lhe same manner and sub[ecL Lo Lhe same condlLlons as
provlded ln SecLlon 38 of Lhls CodeŦ

(8) WlLhholdlng of CredlLable 1ax aL SourceŦ Ŵ 1he SecreLary of llnance mayţ upon Lhe recommendaLlon
of Lhe Commlsslonerţ requlre Lhe wlLhholdlng of a Lax on Lhe lLems of lncome payable Lo naLural or
[urldlcal personsţ resldlng ln Lhe Þhlllpplnesţ by payorŴcorporaLlon/persons as provlded for by lawţ aL Lhe
raLe of noL less Lhan one percenL (1Ʒ) buL noL more Lhan LhlrLyŴLwo percenL (32Ʒ) Lhereofţ whlch shall
be credlLed agalnsL Lhe lncome Lax llablllLy of Lhe Laxpayer for Lhe Laxable yearŦ

(C) 1axŴfree CovenanL 8ondsŦ ln any case where bondsţ morLgagesţ deeds of LrusL or oLher slmllar
obllgaLlons of domesLlc or resldenL forelgn corporaLlonsţ conLaln a conLracL or provlslons by whlch Lhe
obllgor agrees Lo pay any porLlon of Lhe Lax lmposed ln Lhls 1lLle upon Lhe obllgee or Lo relmburse Lhe
obllgee for any porLlon of Lhe Lax or Lo pay Lhe lnLeresL wlLhouL deducLlon for any Lax whlch Lhe obllgor
may be requlred or permlLLed Lo pay Lhereon or Lo reLaln Lherefrom under any law of Lhe Þhlllpplnesţ or
any sLaLe or counLryţ Lhe obllgor shall deducL bondsţ morLgagesţ deeds of LrusL or oLher obllgaLlonsţ
wheLher Lhe lnLeresL or oLher paymenLs are payable annually or aL shorLer or longer perlodsţ and
wheLher Lhe bondsţ securlLles or obllgaLlons had been or wlll be lssued or markeLedţ and Lhe lnLeresL or
oLher paymenL Lhereon paldţ wlLhln or wlLhouL Lhe Þhlllpplnesţ lf Lhe lnLeresL or oLher paymenL ls
payable Lo a nonresldenL allen or Lo a clLlzen or resldenL of Lhe ÞhlllpplnesŦ

SLCŦ 38Ŧ 8eLurns and ÞaymenL of 1axes WlLhheld aL SourceŦ Ŵ

(A) CuarLerly 8eLurns and ÞaymenLs of 1axes WlLhheldŦ Ŵ 1axes deducLed and wlLhheld under SecLlon 37
by wlLhholdlng agenLs shall be covered by a reLurn and pald Loţ excepL ln cases where Lhe Commlssloner
oLherwlse permlLsţ an auLhorlzed 1reasurer of Lhe clLy or munlclpallLy where Lhe wlLhholdlng agenL has
hls legal resldence or prlnclpal place of buslnessţ or where Lhe wlLhholdlng agenL ls a corporaLlonţ where
Lhe prlnclpal offlce ls locaLedŦ

1he Laxes deducLed and wlLhheld by Lhe wlLhholdlng agenL shall be held as a speclal fund ln LrusL for Lhe
governmenL unLll pald Lo Lhe collecLlng offlcersŦ

1he reLurn for flnal wlLhholdlng Lax shall be flled and Lhe paymenL made wlLhln LwenLyŴflve (23) days
from Lhe close of each calendar quarLerţ whlle Lhe reLurn for credlLable wlLhholdlng Laxes shall be flled
and Lhe paymenL made noL laLer Lhan Lhe lasL day of Lhe monLh followlng Lhe close of Lhe quarLer durlng
whlch wlLhholdlng was madeť Þrovldedţ 1haL Lhe Commlsslonerţ wlLh Lhe approval of Lhe SecreLary of
llnanceţ may requlre Lhese wlLhholdlng agenLs Lo pay or deposlL Lhe Laxes deducLed or wlLhheld aL more
frequenL lnLervals when necessary Lo proLecL Lhe lnLeresL of Lhe governmenLŦ

(8) SLaLemenL of lncome ÞaymenLs Made and 1axes WlLhheldŦ Ŵ Lvery wlLhholdlng agenL requlred Lo
deducL and wlLhhold Laxes under SecLlon 37 shall furnlsh each reclplenLţ ln respecL Lo hls or lLs recelpLs
durlng Lhe calendar quarLer or yearţ a wrlLLen sLaLemenL showlng Lhe lncome or oLher paymenLs made
by Lhe wlLhholdlng agenL durlng such quarLer or yearţ and Lhe amounL of Lhe Lax deducLed and wlLhheld
Lherefromţ slmulLaneously upon paymenL aL Lhe requesL of Lhe payeeţ buL noL laLe Lhan Lhe LwenLleLh
(20Lh) day followlng Lhe close of Lhe quarLer ln Lhe case of corporaLe payeeţ or noL laLer Lhan March 1 of
Lhe followlng year ln Lhe case of lndlvldual payee for credlLable wlLhholdlng LaxesŦ lor flnal wlLhholdlng
Laxesţ Lhe sLaLemenL should be glven Lo Lhe payee on or before !anuary 31 of Lhe succeedlng yearŦ

(C) Annual lnformaLlon 8eLurnŦ Ŵ Lvery wlLhholdlng agenL requlred Lo deducL and wlLhhold Laxes under
SecLlon 37 shall submlL Lo Lhe Commlssloner an annual lnformaLlon reLurn conLalnlng Lhe llsL of payees
and lncome paymenLsţ amounL of Laxes wlLhheld from each payee and such oLher perLlnenL lnformaLlon
as may be requlred by Lhe CommlsslonerŦ ln Lhe case of flnal wlLhholdlng Laxesţ Lhe reLurn shall be flled
on or before !anuary 31 of Lhe succeedlng yearţ and for credlLable wlLhholdlng Laxesţ noL laLer Lhan
March 1 of Lhe year followlng Lhe year for whlch Lhe annual reporL ls belng submlLLedŦ 1hls reLurnţ lf
made and flled ln accordance wlLh Lhe rules and regulaLlons approved by Lhe SecreLary of llnanceţ upon
recommendaLlon of Lhe Commlsslonerţ shall be sufflclenL compllance wlLh Lhe requlremenLs of SecLlon
68 of Lhls 1lLle ln respecL Lo Lhe lncome paymenLsŦ

1he Commlssloner mayţ by rules and regulaLlonsţ granL Lo any wlLhholdlng agenL a reasonable exLenslon
of Llme Lo furnlsh and submlL Lhe reLurn requlred ln Lhls SubsecLlonŦ

(u) lncome of 8eclplenLŦ Ŵ lncome upon whlch any credlLable Lax ls requlred Lo be wlLhheld aL source
under SecLlon 37 shall be lncluded ln Lhe reLurn of lLs reclplenL buL Lhe excess of Lhe amounL of Lax so
wlLhheld over Lhe Lax due on hls reLurn shall be refunded Lo hlm sub[ecL Lo Lhe provlslons of SecLlon
204Ť lf Lhe lncome Lax collecLed aL source ls less Lhan Lhe Lax due on hls reLurnţ Lhe dlfference shall be
pald ln accordance wlLh Lhe provlslons of SecLlon 36Ŧ

All Laxes wlLhheld pursuanL Lo Lhe provlslons of Lhls Code and lLs lmplemenLlng rules and regulaLlons are
hereby consldered LrusL funds and shall be malnLalned ln a separaLe accounL and noL commlngled wlLh
any oLher funds of Lhe wlLhholdlng agenLŦ

(L) 8eglsLraLlon wlLh 8eglsLer of ueedsŦ Ŵ no reglsLraLlon of any documenL Lransferrlng real properLy shall
be effecLed by Lhe 8eglsLer of ueeds unless Lhe Commlssloner or hls duly auLhorlzed represenLaLlve has
cerLlfled LhaL such Lransfer has been reporLedţ and Lhe caplLal galns or credlLable wlLhholdlng Laxţ lf anyţ
has been paldť Þrovldedţ howeverţ 1haL Lhe lnformaLlon as may be requlred by rules and regulaLlons Lo
be prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ shall be
annoLaLed by Lhe 8eglsLer of ueeds ln Lhe 1ransfer CerLlflcaLe of 1lLle or Condomlnlum CerLlflcaLe of
1lLleť Þrovldedţ furLherţ 1haL ln cases of Lransfer of properLy Lo a corporaLlonţ pursuanL Lo a mergerţ
consolldaLlon or reorganlzaLlonţ and where Lhe law allows deferred recognlLlon of lncome ln accordance
wlLh SecLlon 40ţ Lhe lnformaLlon as may be requlred by rules and regulaLlons Lo be prescrlbed by Lhe
SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ shall be annoLaLed by Lhe 8eglsLer of
ueeds aL Lhe back of Lhe 1ransfer CerLlflcaLe of 1lLle or Condomlnlum CerLlflcaLe of 1lLle of Lhe real
properLy lnvolvedť Þrovldedţ flnallyţ 1haL any vlolaLlon of Lhls provlslon by Lhe 8eglsLer of ueeds shall be
sub[ecL Lo Lhe penalLles lmposed under SecLlon 269 of Lhls CodeŦ

SLCŦ 39Ŧ 1ax on ÞroflLs CollecLlble from Cwner or CLher ÞersonsŦ Ŵ 1he Lax lmposed under Lhls 1lLle upon
galnsţ proflLsţ and lncome noL falllng under Lhe foregolng and noL reLurned and pald by vlrLue of Lhe
foregolng or as oLherwlse provlded by law shall be assessed by personal reLurn under rules and
regulaLlons Lo be prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
1he lnLenL and purpose of Lhe 1lLle ls LhaL all galnsţ proflLs and lncome of a Laxable classţ as deflned ln
Lhls 1lLleţ shall be charged and assessed wlLh Lhe correspondlng Lax prescrlbed by Lhls 1lLleţ and sald Lax
shall be pald by Lhe owners of such galnsţ proflLs and lncomeţ or Lhe proper person havlng Lhe recelpLţ
cusLodyţ conLrol or dlsposal of Lhe sameŦ lor purposes of Lhls 1lLleţ ownershlp of such galnsţ proflLs and
lncome or llablllLy Lo pay Lhe Lax shall be deLermlned as of Lhe year for whlch a reLurn ls requlred Lo be
renderedŦ


CPAÞ1L8 x
LS1A1LS Anu 18uS1S

SLCŦ 60Ŧ lmposlLlon of 1axŦ Ŵ

(A) AppllcaLlon of 1axŦ Ŵ 1he Lax lmposed by Lhls 1lLle upon lndlvlduals shall apply Lo Lhe lncome of
esLaLes or of any klnd of properLy held ln LrusLţ lncludlngť

(1) lncome accumulaLed ln LrusL for Lhe beneflL of unborn or unascerLalned person or persons wlLh
conLlngenL lnLeresLsţ and lncome accumulaLed or held for fuLure dlsLrlbuLlon under Lhe Lerms of Lhe wlll
or LrusLŤ
(2) lncome whlch ls Lo be dlsLrlbuLed currenLly by Lhe flduclary Lo Lhe beneflclarlesţ and lncome
collecLed by a guardlan of an lnfanL whlch ls Lo be held or dlsLrlbuLed as Lhe courL may dlrecLŤ
(3) lncome recelved by esLaLes of deceased persons durlng Lhe perlod of admlnlsLraLlon or seLLlemenL of
Lhe esLaLeŤ and
(4) lncome whlchţ ln Lhe dlscreLlon of Lhe flduclaryţ may be elLher dlsLrlbuLed Lo Lhe beneflclarles or
accumulaLedŦ
(8) LxcepLlonŦ Ŵ 1he Lax lmposed by Lhls 1lLle shall noL apply Lo employeeƌs LrusL whlch forms parL of a
penslonţ sLock bonus or proflLŴsharlng plan of an employer for Lhe beneflL of some or all of hls
employees (1) lf conLrlbuLlons are made Lo Lhe LrusL by such employerţ or employeesţ or boLh for Lhe
purpose of dlsLrlbuLlng Lo such employees Lhe earnlngs and prlnclpal of Lhe fund accumulaLed by Lhe
LrusL ln accordance wlLh such planţ and (2) lf under Lhe LrusL lnsLrumenL lL ls lmposslbleţ aL any Llme
prlor Lo Lhe saLlsfacLlon of all llablllLles wlLh respecL Lo employees under Lhe LrusLţ for any parL of Lhe
corpus or lncome Lo be (wlLhln Lhe Laxable year or LhereafLer) used forţ or dlverLed Loţ purposes oLher
Lhan for Lhe excluslve beneflL of hls employeesť Þrovldedţ 1haL any amounL acLually dlsLrlbuLed Lo any
employee or dlsLrlbuLee shall be Laxable Lo hlm ln Lhe year ln whlch so dlsLrlbuLed Lo Lhe exLenL LhaL lL
exceeds Lhe amounL conLrlbuLed by such employee or dlsLrlbuLeeŦ

(C) CompuLaLlon and ÞaymenLŦ Ŵ
(1) ln CeneralŦ Ŵ 1he Lax shall be compuLed upon Lhe Laxable lncome of Lhe esLaLe or LrusL and shall be
pald by Lhe flduclaryţ excepL as provlded ln SecLlon 63 (relaLlng Lo revocable LrusLs) and SecLlon 64
(relaLlng Lo lncome for Lhe beneflL of Lhe granLor)Ŧ
(2) ConsolldaLlon of lncome of 1wo or More 1rusLsŦ Ŵ Whereţ ln Lhe case of Lwo or more LrusLsţ Lhe
creaLor of Lhe LrusL ln each lnsLance ls Lhe same personţ and Lhe beneflclary ln each lnsLance ls Lhe
sameţ Lhe Laxable lncome of all Lhe LrusLs shall be consolldaLed and Lhe Lax provlded ln Lhls SecLlon
compuLed on such consolldaLed lncomeţ and such proporLlon of sald Lax shall be assessed and collecLed
from each LrusLee whlch Lhe Laxable lncome of Lhe LrusL admlnlsLered by hlm bears Lo Lhe consolldaLed
lncome of Lhe several LrusLsŦ
SLCŦ 61Ŧ 1axable lncomeŦ Ŵ 1he Laxable lncome of Lhe esLaLe or LrusL shall be compuLed ln Lhe same
manner and on Lhe same basls as ln Lhe case of an lndlvldualţ excepL LhaLť
(A) 1here shall be allowed as a deducLlon ln compuLlng Lhe Laxable lncome of Lhe esLaLe or LrusL Lhe
amounL of Lhe lncome of Lhe esLaLe or LrusL for Lhe Laxable year whlch ls Lo be dlsLrlbuLed currenLly by
Lhe flduclary Lo Lhe beneflclarlesţ and Lhe amounL of Lhe lncome collecLed by a guardlan of an lnfanL
whlch ls Lo be held or dlsLrlbuLed as Lhe courL may dlrecLţ buL Lhe amounL so allowed as a deducLlon
shall be lncluded ln compuLlng Lhe Laxable lncome of Lhe beneflclarlesţ wheLher dlsLrlbuLed Lo Lhem or
noLŦ Any amounL allowed as a deducLlon under Lhls SubsecLlon shall noL be allowed as a deducLlon
under SubsecLlon (8) of Lhls SecLlon ln Lhe same or any succeedlng Laxable yearŦ

(8) ln Lhe case of lncome recelved by esLaLes of deceased persons durlng Lhe perlod of admlnlsLraLlon or
seLLlemenL of Lhe esLaLeţ and ln Lhe case of lncome whlchţ ln Lhe dlscreLlon of Lhe flduclaryţ may be
elLher dlsLrlbuLed Lo Lhe beneflclary or accumulaLedţ Lhere shall be allowed as an addlLlonal deducLlon ln
compuLlng Lhe Laxable lncome of Lhe esLaLe or LrusL Lhe amounL of Lhe lncome of Lhe esLaLe or LrusL for
lLs Laxable yearţ whlch ls properly pald or credlLed durlng such year Lo any legaLeeţ helr or beneflclary
buL Lhe amounL so allowed as a deducLlon shall be lncluded ln compuLlng Lhe Laxable lncome of Lhe
legaLeeţ helr or beneflclaryŦ

(C) ln Lhe case of a LrusL admlnlsLered ln a forelgn counLryţ Lhe deducLlons menLloned ln SubsecLlons (A)
and (8) of Lhls SecLlon shall noL be allowedť Þrovldedţ 1haL Lhe amounL of any lncome lncluded ln Lhe
reLurn of sald LrusL shall noL be lncluded ln compuLlng Lhe lncome of Lhe beneflclarlesŦ

SLCŦ 62Ŧ LxempLlon Allowed Lo LsLaLes and 1rusLsŦ Ŵ lor Lhe purpose of Lhe Lax provlded for ln Lhls 1lLleţ
Lhere shall be allowed an exempLlon of 1wenLy Lhousand pesos (Þ20ţ000) from Lhe lncome of Lhe esLaLe
or LrusLŦ

SLCŦ 63Ŧ 8evocable 1rusLsŦ Ŵ Where aL any Llme Lhe power Lo revesL ln Lhe granLor LlLle Lo any parL of Lhe
corpus of Lhe LrusL ls vesLed (1) ln Lhe granLor elLher alone or ln con[uncLlon wlLh any person noL havlng
a subsLanLlal adverse lnLeresL ln Lhe dlsposlLlon of such parL of Lhe corpus or Lhe lncome Lherefromţ or
(2) ln any person noL havlng a subsLanLlal adverse lnLeresL ln Lhe dlsposlLlon of such parL of Lhe corpus or
Lhe lncome Lherefromţ Lhe lncome of such parL of Lhe LrusL shall be lncluded ln compuLlng Lhe Laxable
lncome of Lhe granLorŦ

SLCŦ 64Ŧ lncome for 8eneflL of CranLorŦŴ

(A) Where any parL of Lhe lncome of a LrusL (1) lsţ or ln Lhe dlscreLlon of Lhe granLor or of any person noL
havlng a subsLanLlal adverse lnLeresL ln Lhe dlsposlLlon of such parL of Lhe lncome may be held or
accumulaLed for fuLure dlsLrlbuLlon Lo Lhe granLorţ or (2) mayţ or ln Lhe dlscreLlon of Lhe granLor or of
any person noL havlng a subsLanLlal adverse lnLeresL ln Lhe dlsposlLlon of such parL of Lhe lncomeţ be
dlsLrlbuLed Lo Lhe granLorţ or (3) lsţ or ln Lhe dlscreLlon of Lhe granLor or of any person noL havlng a
subsLanLlal adverse lnLeresL ln Lhe dlsposlLlon of such parL of Lhe lncome may be applled Lo Lhe paymenL
of premlums upon pollcles of lnsurance on Lhe llfe of Lhe granLorţ such parL of Lhe lncome of Lhe LrusL
shall be lncluded ln compuLlng Lhe Laxable lncome of Lhe granLorŦ

(8) As used ln Lhls SecLlonţ Lhe Lerm ƌln Lhe dlscreLlon of Lhe granLorƌ means ln Lhe dlscreLlon of Lhe
granLorţ elLher alone or ln con[uncLlon wlLh any person noL havlng a subsLanLlal adverse lnLeresL ln Lhe
dlsposlLlon of Lhe parL of Lhe lncome ln quesLlonŦ

SLCŦ 63Ŧ llduclary 8eLurnsŦ Ŵ Cuardlansţ LrusLeesţ execuLorsţ admlnlsLraLorsţ recelversţ conservaLors and
all persons or corporaLlonsţ acLlng ln any flduclary capaclLyţ shall renderţ ln dupllcaLeţ a reLurn of Lhe
lncome of Lhe personţ LrusL or esLaLe for whom or whlch Lhey acLţ and be sub[ecL Lo all Lhe provlslons of
Lhls 1lLleţ whlch apply Lo lndlvlduals ln case such personţ esLaLe or LrusL has a gross lncome of 1wenLy
Lhousand pesos (Þ20ţ000) or over durlng Lhe Laxable yearŦ Such flduclary or person flllng Lhe reLurn for
hlm or lLţ shall Lake oaLh LhaL he has sufflclenL knowledge of Lhe affalrs of such personţ LrusL or esLaLe Lo
enable hlm Lo make such reLurn and LhaL Lhe same lsţ Lo Lhe besL of hls knowledge and bellefţ Lrue and
correcLţ and be sub[ecL Lo all Lhe provlslons of Lhls 1lLle whlch apply Lo lndlvldualsť Þrovldedţ 1haL a
reLurn made by or for one or Lwo or more [olnL flduclarles flled ln Lhe provlnce where such flduclarles
resldeŤ under such rules and regulaLlons as Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ shall prescrlbeţ shall be a sufflclenL compllance wlLh Lhe requlremenLs of Lhls SecLlonŦ

SLCŦ 66Ŧ llduclarles lndemnlfled AgalnsL Clalms for 1axes ÞaldŦ Ŵ 1rusLeesţ execuLorsţ admlnlsLraLors and
oLher flduclarles are lndemnlfled agalnsL Lhe clalms or demands of every beneflclary for all paymenLs of
Laxes whlch Lhey shall be requlred Lo make under Lhe provlslons of Lhls 1lLleţ and Lhey shall have credlL
for Lhe amounL of such paymenLs agalnsL Lhe beneflclary or prlnclpal ln any accounLlng whlch Lhey make
as such LrusLees or oLher flduclarlesŦ

CPAÞ1L8 xl
C1PL8 lnCCML 1Ax 8LCul8LMLn1S


SLCŦ 67Ŧ CollecLlon of lorelgn ÞaymenLsŦ Ŵ All personsţ corporaLlonsţ duly reglsLered general coŴ
parLnershlps (companlas colecLlvas) underLaklng for proflL or oLherwlse Lhe collecLlon of forelgn
paymenLs of lnLeresLs or dlvldends by means of couponsţ checks or bllls of exchange shall obLaln a
llcense from Lhe Commlsslonerţ and shall be sub[ecL Lo such rules and regulaLlons enabllng Lhe
governmenL Lo obLaln Lhe lnformaLlon requlred under Lhls 1lLleţ as Lhe SecreLary of llnanceţ upon
recommendaLlon of Lhe Commlsslonerţ shall prescrlbeŦ

SLCŦ 68Ŧ lnformaLlon aL Source as Lo lncome ÞaymenLsŦ Ŵ all personsţ corporaLlons or duly reglsLered coŴ
parLnershlps (companlas colecLlvas)ţ ln whaLever capaclLy acLlngţ lncludlng lessees or morLgagors of real
or personal properLyţ LrusLeesţ acLlng ln any LrusL capaclLyţ execuLorsţ admlnlsLraLorsţ recelversţ
conservaLors and employees maklng paymenL Lo anoLher personţ corporaLlon or duly reglsLered general
coŴparLnershlp (companla colecLlva)ţ of lnLeresLsţ renLsţ salarlesţ wagesţ premlumsţ annulLlesţ
compensaLlonsţ remuneraLlonsţ emolumenLs or oLher flxed or deLermlnable galnsţ proflLs and lncomeţ
oLher Lhan paymenL descrlbed ln SecLlon 69ţ ln any Laxable yearţ or ln Lhe case of such paymenLs made
by Lhe CovernmenL of Lhe Þhlllpplnesţ Lhe offlcers or employees of Lhe CovernmenL havlng lnformaLlon
as Lo such paymenLs and requlred Lo make reLurns ln regard LhereLoţ are auLhorlzed and requlred Lo
render a Lrue and accuraLe reLurn Lo Lhe Commlsslonerţ under such rules and regulaLlonsţ and ln such
form and manner as may be prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ seLLlng forLh Lhe amounL of such galnsţ proflLs and lncome and Lhe name and address of
Lhe reclplenL of such paymenLsť Þrovldedţ 1haL such reLurns shall be requlredţ ln Lhe case of paymenLs of
lnLeresL upon bonds and morLgages or deeds of LrusL or oLher slmllar obllgaLlons of corporaLlonsţ and ln
Lhe case of collecLlons of lLemsţ noL payable ln Lhe Þhlllpplnesţ of lnLeresL upon Lhe bonds of forelgn
counLrles and lnLeresL from Lhe bonds and dlvldends from Lhe sLock of forelgn corporaLlons by personsţ
corporaLlons or duly reglsLered general coŴparLnershlps (companlas colecLlvas)ţ underLaklng as a maLLer
of buslness or for proflL or oLherwlse Lhe collecLlon of forelgn paymenLs of such lnLeresLs or dlvldends by
means of coupons or bllls of exchangeŦ

SLCŦ 69Ŧ 8eLurn of lnformaLlon of 8rokersŦ Ŵ Lvery personţ corporaLlon or duly reglsLered general coŴ
parLnershlp (companla colecLlva)ţ dolng buslness as a broker ln any exchange or board or oLher slmllar
place of buslnessţ shallţ when requlred by Lhe Commlsslonerţ render a correcL reLurn duly verlfled under
oaLh under such rules and regulaLlons as Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ may prescrlbeţ showlng Lhe names of cusLomers for whom such personţ corporaLlon or
duly reglsLered general coŴparLnershlp (companla colecLlva) has LransacLed any buslnessţ wlLh such
deLalls as Lo Lhe proflLsţ losses or oLher lnformaLlon whlch Lhe Commlsslonerţ may requlre as Lo each of
such cusLomers as wlll enable Lhe Commlssloner Lo deLermlne wheLher all lncome Lax due on proflLs or
galns of such cusLomers has been paldŦ
SLCŦ 70Ŧ 8eLurns of lorelgn CorporaLlonsŦ Ŵ

(A) 8equlremenLsŦ Ŵ under rules and regulaLlons prescrlbed by Lhe SecreLary of flnanceţ upon Lhe
recommendaLlon of Lhe Commlsslonerţ any aLLorneyţ accounLanLţ flduclaryţ bankţ LrusL companyţ
flnanclal lnsLlLuLlon or oLher personţ who aldsţ asslsLsţ counsels or advlses lnţ o wlLh respecL LoŤ Lhe
formaLlonţ organlzaLlon or reorganlzaLlon of any forelgn corporaLlonţ shallţ wlLhln LhlrLy (30) days
LhereafLerţ flle wlLh Lhe Commlssloner a reLurnŦ
(8) lorm and ConLenLs of 8eLurnŦ Ŵ Such reLurn shall be ln such form and shall seL forLhŤ under oaLhţ ln
respecL of each such corporaLlonţ Lo Lhe full exLenL of Lhe lnformaLlon wlLhln Lhe possesslon or
knowledge or under Lhe conLrol of Lhe person requlred Lo flle Lhe reLurnţ such lnformaLlon as Lhe
SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ shall prescrlbe by rules and
regulaLlons as necessary for carrylng ouL Lhe provlslons of Lhls 1lLleŦ noLhlng ln Lhls SecLlon shall be
consLrued Lo requlre Lhe dlvulglng of prlvlleged communlcaLlons beLween aLLorney and cllenLŦ
SLCŦ 71Ŧ ulsposlLlon of lncome 1ax 8eLurnsţ ÞubllcaLlon of LlsLs of 1axpayers and lllersŦ Ŵ AfLer Lhe
assessmenL shall have been madeţ as provlded ln Lhls 1lLleţ Lhe reLurnsţ LogeLher wlLh any correcLlons
Lhereof whlch may have been made by Lhe Commlsslonerţ shall be flled ln Lhe Cfflce of Lhe
Commlssloner and shall consLlLuLe publlc records and be open Lo lnspecLlon as such upon Lhe order of
Lhe ÞresldenL of Lhe Þhlllpplnesţ under rules and regulaLlons Lo be prescrlbed by Lhe SecreLary of
llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
1he Commlssloner mayţ ln each yearţ cause Lo be prepared and publlshed ln any newspaper Lhe llsLs
conLalnlng Lhe names and addresses of persons who have flled lncome Lax reLurnsŦ

SLCŦ 72Ŧ SulL Lo 8ecover 1ax 8ased on lalse or lraudulenL 8eLurnsŦ Ŵ When an assessmenL ls made ln
case of any llsLţ sLaLemenL or reLurnţ whlch ln Lhe oplnlon of Lhe Commlssloner was false or fraudulenL
or conLalned any undersLaLemenL or undervaluaLlonţ no Lax collecLed under such assessmenL shall be
recovered by any sulLţ unless lL ls proved LhaL Lhe sald llsLţ sLaLemenL or reLurn was noL false nor
fraudulenL and dld noL conLaln any undersLaLemenL or undervaluaLlonŤ buL Lhls provlslon shall noL apply
Lo sLaLemenLs or reLurns made or Lo be made ln good falLh regardlng annual depreclaLlon of oll or gas
wells and mlnesŦ

SLCŦ 73Ŧ ulsLrlbuLlon of dlvldends or AsseLs by CorporaLlonsŦ Ŵ

(A) ueflnlLlon of ulvldendsŦ Ŵ 1he Lerm ƍdlvldendsƍ when used ln Lhls 1lLle means any dlsLrlbuLlon made
by a corporaLlon Lo lLs shareholders ouL of lLs earnlngs or proflLs and payable Lo lLs shareholdersţ
wheLher ln money or ln oLher properLyŦ
Where a corporaLlon dlsLrlbuLes all of lLs asseLs ln compleLe llquldaLlon or dlssoluLlonţ Lhe galn reallzed
or loss susLalned by Lhe sLockholderţ wheLher lndlvldual or corporaLeţ ls a Laxable lncome or a
deducLlble lossţ as Lhe case may beŦ
(8) SLock ulvldendŦ Ŵ A sLock dlvldend represenLlng Lhe Lransfer of surplus Lo caplLal accounL shall noL be
sub[ecL Lo LaxŦ Poweverţ lf a corporaLlon cancels or redeems sLock lssued as a dlvldend aL such Llme and
ln such manner as Lo make Lhe dlsLrlbuLlon and cancellaLlon or redempLlonţ ln whole or ln parLţ
essenLlally equlvalenL Lo Lhe dlsLrlbuLlon of a Laxable dlvldendţ Lhe amounL so dlsLrlbuLed ln redempLlon
or cancellaLlon of Lhe sLock shall be consldered as Laxable lncome Lo Lhe exLenL LhaL lL represenLs a
dlsLrlbuLlon of earnlngs or proflLsŦ
(C) ulvldends ulsLrlbuLed are ueemed Made from MosL 8ecenLly AccumulaLed ÞroflLsŦ Ŵ Any dlsLrlbuLlon
made Lo Lhe shareholders or members of a corporaLlon shall be deemed Lo have been made form Lhe
mosL recenLly accumulaLed proflLs or surplusţ and shall consLlLuLe a parL of Lhe annual lncome of Lhe
dlsLrlbuLee for Lhe year ln whlch recelvedŦ
(u) neL lncome of a ÞarLnershlp ueemed ConsLrucLlvely 8ecelved by ÞarLnersŦ Ŵ 1he Laxable lncome
declared by a parLnershlp for a Laxable year whlch ls sub[ecL Lo Lax under SecLlon 27 (A) of Lhls Codeţ
afLer deducLlng Lhe corporaLe lncome Lax lmposed Lherelnţ shall be deemed Lo have been acLually or
consLrucLlvely recelved by Lhe parLners ln Lhe same Laxable year and shall be Laxed Lo Lhem ln Lhelr
lndlvldual capaclLyţ wheLher acLually dlsLrlbuLed or noLŦ

CPAÞ1L8 xll
CuA81L8L? CC8ÞC8A1L lnCCML 1Axţ AnnuAL uLCLA8A1lCn
Anu CuA81L8L? ÞA?MLn1S Cl lnCCML 1AxLS


SLCŦ 74Ŧ ueclaraLlon of lncome 1ax for lndlvldualsŦ Ŵ
(A) ln CeneralŦ Ŵ LxcepL as oLherwlse provlded ln Lhls SecLlonţ every lndlvldual sub[ecL Lo lncome Lax
under SecLlons 24 and 23(A) of Lhls 1lLleţ who ls recelvlng selfŴemploymenL lncomeţ wheLher lL
consLlLuLes Lhe sole source of hls lncome or ln comblnaLlon wlLh salarlesţ wages and oLher flxed or
deLermlnable lncomeţ shall make and flle a declaraLlon of hls esLlmaLed lncome for Lhe currenL Laxable
year on or before Aprll 13 of Lhe same Laxable yearŦ ln generalţ selfŴemploymenL lncome conslsLs of Lhe
earnlngs derlved by Lhe lndlvldual from Lhe pracLlce of professlon or conducL of Lrade or buslness carrled
on by hlm as a sole proprleLor or by a parLnershlp of whlch he ls a memberŦ nonresldenL llllplno clLlzensţ
wlLh respecL Lo lncome from wlLhouL Lhe Þhlllpplnesţ and nonresldenL allens noL engaged ln Lrade or
buslness ln Lhe Þhlllpplnesţ are noL requlred Lo render a declaraLlon of esLlmaLed lncome LaxŦ 1he
declaraLlon shall conLaln such perLlnenL lnformaLlon as Lhe SecreLary of llnanceţ upon recommendaLlon
of Lhe Commlsslonerţ mayţ by rules and regulaLlons prescrlbeŦ An lndlvldual may make amendmenLs of a
declaraLlon flled durlng Lhe Laxable year under Lhe rules and regulaLlons prescrlbed by Lhe SecreLary of
llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

(8) 8eLurn and ÞaymenL of LsLlmaLed lncome 1ax by lndlvldualsŦ Ŵ 1he amounL of esLlmaLed lncome as
deflned ln SubsecLlon (C) wlLh respecL Lo whlch a declaraLlon ls requlred under SubsecLlon (A) shall be
pald ln four (4) lnsLallmenLsŦ 1he flrsL lnsLallmenL shall be pald aL Lhe Llme of Lhe declaraLlon and Lhe
second and Lhlrd shall be pald on AugusL 13 and november 13 of Lhe currenL yearţ respecLlvelyŦ 1he
fourLh lnsLallmenL shall be pald on or before Aprll 13 of Lhe followlng calendar year when Lhe flnal
ad[usLed lncome Lax reLurn ls due Lo be flledŦ

(C) ueflnlLlon of LsLlmaLed 1axŦ Ŵ ln Lhe case of an lndlvldualţ Lhe Lerm ƍesLlmaLed Laxƍ means Lhe
amounL whlch Lhe lndlvldual declared as lncome Lax ln hls flnal ad[usLed and annual lncome Lax reLurn
for Lhe precedlng Laxable year mlnus Lhe sum of Lhe credlLs allowed under Lhls 1lLle agalnsL Lhe sald LaxŦ
lfţ durlng Lhe currenL Laxable yearţ Lhe Laxpayer reasonable expecLs Lo pay a blgger lncome Laxţ he shall
flle an amended declaraLlon durlng any lnLerval of lnsLallmenL paymenL daLesŦ

SLCŦ 73Ŧ ueclaraLlon of CuarLerly CorporaLe lncome 1axŦ Ŵ Lvery corporaLlon shall flle ln dupllcaLe a
quarLerly summary declaraLlon of lLs gross lncome and deducLlons on a cumulaLlve basls for Lhe
precedlng quarLer or quarLers upon whlch Lhe lncome Laxţ as provlded ln 1lLle ll of Lhls Codeţ shall be
levledţ collecLed and paldŦ 1he Lax so compuLed shall be decreased by Lhe amounL of Lax prevlously pald
or assessed durlng Lhe precedlng quarLers and shall be pald noL laLer Lhan slxLy (60) days from Lhe close
of each of Lhe flrsL Lhree (3) quarLers of Lhe Laxable yearţ wheLher calendar or flscal yearŦ

SLCŦ 76Ŧ llnal Ad[usLmenL 8eLurnŦ Ŵ Lvery corporaLlon llable Lo Lax under SecLlon 27 shall flle a flnal
ad[usLmenL reLurn coverlng Lhe LoLal Laxable lncome for Lhe precedlng calendar or flscal yearŦ lf Lhe sum
of Lhe quarLerly Lax paymenLs made durlng Lhe sald Laxable year ls noL equal Lo Lhe LoLal Lax due on Lhe
enLlre Laxable lncome of LhaL yearţ Lhe corporaLlon shall elLherť

(A) Þay Lhe balance of Lax sLlll dueŤ or
(8) CarryŴover Lhe excess credlLŤ or
(C) 8e credlLed or refunded wlLh Lhe excess amounL paldţ as Lhe case may beŦ
ln case Lhe corporaLlon ls enLlLled Lo a Lax credlL or refund of Lhe excess esLlmaLed quarLerly lncome
Laxes paldţ Lhe excess amounL shown on lLs flnal ad[usLmenL reLurn may be carrled over and credlLed
agalnsL Lhe esLlmaLed quarLerly lncome Lax llablllLles for Lhe Laxable quarLers of Lhe succeedlng Laxable
yearsŦ Cnce Lhe opLlon Lo carryŴover and apply Lhe excess quarLerly lncome Lax agalnsL lncome Lax due
for Lhe Laxable quarLers of Lhe succeedlng Laxable years has been madeţ such opLlon shall be consldered
lrrevocable for LhaL Laxable perlod and no appllcaLlon for cash refund or lssuance of a Lax credlL
cerLlflcaLe shall be allowed LhereforŦ
SLCŦ 77Ŧ Þlace and 1lme of llllng and ÞaymenL of CuarLerly CorporaLe lncome 1axŦ Ŵ

(A) Þlace of llllngŦ Ŵ LxcepL as Lhe Commlssloner oLher wlse permlLsţ Lhe quarLerly lncome Lax
declaraLlon requlred ln SecLlon 73 and Lhe flnal ad[usLmenL reLurn requlred ln SecLlon 76 shall be flled
wlLh Lhe auLhorlzed agenL banks or 8evenue ulsLrlcL Cfflcer or CollecLlon AgenL or duly auLhorlzed
1reasurer of Lhe clLy or munlclpallLy havlng [urlsdlcLlon over Lhe locaLlon of Lhe prlnclpal offlce of Lhe
corporaLlon flllng Lhe reLurn or place where lLs maln books of accounLs and oLher daLa from whlch Lhe
reLurn ls prepared are kepLŦ

(8) 1lme of llllng Lhe lncome 1ax 8eLurnŦ Ŵ 1he corporaLe quarLerly declaraLlon shall be flled wlLhln slxLy
(60) days followlng Lhe close of each of Lhe flrsL Lhree (3) quarLers of Lhe Laxable yearŦ 1he flnal
ad[usLmenL reLurn shall be flled on or before Lhe flfLeenLh (13Lh) day of Aprllţ or on or before Lhe
flfLeenLh (13Lh) day of Lhe fourLh (4Lh) monLh followlng Lhe close of Lhe flscal yearţ as Lhe case may beŦ

(C) 1lme of ÞaymenL of Lhe lncome 1axŦ Ŵ 1he lncome Lax due on Lhe corporaLe quarLerly reLurns and Lhe
flnal ad[usLmenL lncome Lax reLurns compuLed ln accordance wlLh SecLlons 73 and 76 shall be pald aL
Lhe Llme Lhe declaraLlon or reLurn ls flled ln a manner prescrlbed by Lhe CommlsslonerŦ

CPAÞ1L8 xlll
Wl1PPCLulnC Cn WACLS

SLCŦ 78Ŧ ueflnlLlonsŦ Ŵ As used ln Lhls ChapLerť

(A) WagesŦ Ŵ 1he Lerm ƌwagesƌ means all remuneraLlon (oLher Lhan fees pald Lo a publlc offlclal) for
servlces performed by an employee for hls employerţ lncludlng Lhe cash value of all remuneraLlon pald
ln any medlum oLher Lhan cashţ excepL LhaL such Lerm shall noL lnclude remuneraLlon paldť

(1) lor agrlculLural labor pald enLlrely ln producLs of Lhe farm where Lhe labor ls performedţ or
(2) lor domesLlc servlce ln a prlvaLe homeţ or
(3) lor casual labor noL ln Lhe course of Lhe employerƌs Lrade or buslnessţ or
(4) lor servlces by a clLlzen or resldenL of Lhe Þhlllpplnes for a forelgn governmenL or an lnLernaLlonal
organlzaLlonŦ
lf Lhe remuneraLlon pald by an employer Lo an employee for servlces performed durlng oneŴhalf (1/2) or
more of any payroll perlod of noL more Lhan LhlrLyŴone (31) consecuLlve days consLlLuLes wagesţ all Lhe
remuneraLlon pald by such employer Lo such employee for such perlod shall be deemed Lo be wagesŤ
buL lf Lhe remuneraLlon pald by an employer Lo an employee for servlces performed durlng more Lhan
one Ŵhalf (1/2) of any such payroll perlod does noL consLlLuLe wagesţ Lhen none of Lhe remuneraLlon
pald by such employer Lo such employee for such perlod shall be deemed Lo be wagesŦ

(8) Þayroll ÞerlodŦ Ŵ 1he Lerm ƌpayroll perlodƌ means a perlod for whlch paymenL of wages ls ordlnarlly
made Lo Lhe employee by hls employerţ and Lhe Lerm ƍmlscellaneous payroll perlodƍ means a payroll
perlod oLher Lhanţ a dallyţ weeklyţ blweeklyţ semlŴmonLhlyţ monLhlyţ quarLerlyţ semlŴannualţ or annual
perlodŦ

(C) LmployeeŦ Ŵ 1he Lerm ƌemployeeƌ refers Lo any lndlvldual who ls Lhe reclplenL of wages and lncludes
an offlcerţ employee or elecLed offlclal of Lhe CovernmenL of Lhe Þhlllpplnes or any pollLlcal subdlvlslonţ
agency or lnsLrumenLallLy LhereofŦ 1he Lerm ƍemployeeƍ also lncludes an offlcer of a corporaLlonŦ

(u) LmployerŦ Ŵ 1he Lerm ƍemployerƍ means Lhe person for whom an lndlvldual performs or performed
any servlceţ of whaLever naLureţ as Lhe employee of such personţ excepL LhaLť
(1) lf Lhe person for whom Lhe lndlvldual performs or performed any servlce does noL have conLrol of
Lhe paymenL of Lhe wages for such servlcesţ Lhe Lerm ƍemployerƍ (excepL for Lhe purpose of SubsecLlon
(A) means Lhe person havlng conLrol of Lhe paymenL of such wagesŤ and
(2) ln Lhe case of a person paylng wages on behalf of a nonresldenL allen lndlvldualţ forelgn parLnershlp
or forelgn corporaLlon noL engaged ln Lrade or buslness wlLhln Lhe Þhlllpplnesţ Lhe Lerm ƍemployerƍ
(excepL for Lhe purpose of SubsecLlon (A) means such personŦ
SLCŦ 79Ŧ lncome 1ax CollecLed aL SourceŦŴ
(A) 8equlremenL of WlLhholdlngŦ Ŵ Lvery employer maklng paymenL of wages shall deducL and wlLhhold
upon such wages a Lax deLermlned ln accordance wlLh Lhe rules and regulaLlons Lo be prescrlbed by Lhe
SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerť Þrovldedţ howeverţ 1haL no
wlLhholdlng of a Lax shall be requlred where Lhe LoLal compensaLlon lncome of an lndlvldual does noL
exceed Lhe sLaLuLory mlnlmum wageţ or flve Lhousand pesos (Þ3ţ000Ŧ00) per monLhţ whlchever ls
hlgherŦ

(8) 1ax Þald by 8eclplenLŦ Ŵ lf Lhe employerţ ln vlolaLlon of Lhe provlslons of Lhls ChapLerţ falls Lo deducL
and wlLhhold Lhe Lax as requlred under Lhls ChapLerţ and LhereafLer Lhe Lax agalnsL whlch such Lax may
be credlLed ls paldţ Lhe Lax so requlred Lo be deducLed and wlLhheld shall noL be collecLed from Lhe
employerŤ buL Lhls SubsecLlon shall ln no case relleve Lhe employer from llablllLy for any penalLy or
addlLlon Lo Lhe Lax oLherwlse appllcable ln respecL of such fallure Lo deducL and wlLhholdŦ

(C) 8efunds or CredlLsŦ Ŵ

(1) LmployerŦ Ŵ When Lhere has been an overpaymenL of Lax under Lhls SecLlonţ refund or credlL shall be
made Lo Lhe employer only Lo Lhe exLenL LhaL Lhe amounL of such overpaymenL was noL deducLed and
wlLhheld hereunder by Lhe employerŦ
(2) LmployeesŦ Ŵ1he amounL deducLed and wlLhheld under Lhls ChapLer durlng any calendar year shall
be allowed as a credlL Lo Lhe reclplenL of such lncome agalnsL Lhe Lax lmposed under SecLlon 24(A) of
Lhls 1lLleŦ 8efunds and credlLs ln cases of excesslve wlLhholdlng shall be granLed under rules and
regulaLlons promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
Any excess of Lhe Laxes wlLhheld over Lhe Lax due from Lhe Laxpayer shall be reLurned or credlLed wlLhln
Lhree (3) monLhs from Lhe flfLeenLh (13Lh) day of AprllŦ 8efunds or credlLs made afLer such Llme shall
earn lnLeresL aL Lhe raLe of slx percenL (6Ʒ) per annumţ sLarLlng afLer Lhe lapse of Lhe LhreeŴmonLh
perlod Lo Lhe daLe Lhe refund of credlL ls madeŦ
8efunds shall be made upon warranLs drawn by Lhe Commlssloner or by hls duly auLhorlzed
represenLaLlve wlLhouL Lhe necesslLy of counLerŴslgnaLure by Lhe Chalrmanţ Commlsslon on AudlL or Lhe
laLLerƌs duly auLhorlzed represenLaLlve as an excepLlon Lo Lhe requlremenL prescrlbed by SecLlon 49ţ
ChapLer 8ţ SubLlLle 8ţ 1lLle 1 of 8ook v of LxecuLlve Crder noŦ 292ţ oLherwlse known as Lhe
AdmlnlsLraLlve Code of 1987Ŧ

(u) Þersonal LxempLlonsŦ Ŵ

(1) ln CeneralŦ Ŵ unless oLherwlse provlded by Lhls ChapLerţ Lhe personal and addlLlonal exempLlons
appllcable under Lhls ChapLer shall be deLermlned ln accordance wlLh Lhe maln provlslons of Lhls 1lLleŦ
(2) LxempLlon CerLlflcaLeŦ Ŵ
(a) When Lo llleŦ Ŵ Cn or before Lhe daLe of commencemenL of employmenL wlLh an employerţ Lhe
employee shall furnlsh Lhe employer wlLh a slgned wlLhholdlng exempLlon cerLlflcaLe relaLlng Lo Lhe
personal and addlLlonal exempLlons Lo whlch he ls enLlLledŦ
(b) Change of SLaLusŦ Ŵ ln case of change of sLaLus of an employee as a resulL of whlch he would be
enLlLled Lo a lesser or greaLer amounL of exempLlonţ Lhe employee shallţ wlLhln Len (10) days from such
changeţ flle wlLh Lhe employer a new wlLhholdlng exempLlon cerLlflcaLe reflecLlng Lhe changeŦ
(c) use of CerLlflcaLesŦ Ŵ 1he cerLlflcaLes flled hereunder shall be used by Lhe employer ln Lhe
deLermlnaLlon of Lhe amounL of Laxes Lo be wlLhheldŦ
(d) lallure Lo lurnlsh CerLlflcaLeŦ Ŵ Where an employeeţ ln vlolaLlon of Lhls ChapLerţ elLher falls or
refuses Lo flle a wlLhholdlng exempLlon cerLlflcaLeţ Lhe employer shall wlLhhold Lhe Laxes prescrlbed
under Lhe schedule for zero exempLlon of Lhe wlLhholdlng Lax Lable deLermlned pursuanL Lo SubsecLlon
(A) hereofŦ
(L) WlLhholdlng on 8asls of Average WagesŦ Ŵ 1he Commlssloner mayţ under rules and regulaLlons
promulgaLed by Lhe SecreLary of llnanceţ auLhorlze employers Loť
(1) esLlmaLe Lhe wages whlch wlll be pald Lo an employee ln any quarLer of Lhe calendar yearŤ
(2) deLermlne Lhe amounL Lo be deducLed and wlLhheld upon each paymenL of wages Lo such employee
durlng such quarLer as lf Lhe approprlaLe average of Lhe wages so esLlmaLed consLlLuLed Lhe acLual
wages paldŤ and
(3) deducL and wlLhhold upon any paymenL of wages Lo such employee durlng Ťsuch quarLer such
amounL as may be requlred Lo be deducLed and wlLhheld durlng such quarLer wlLhouL regard Lo Lhls
SubsecLlonŦ
(l) Pusband and WlfeŦ Ŵ When a husband and wlfe each are reclplenLs of wagesţ wheLher from Lhe same
or from dlfferenL employersţ Laxes Lo be wlLhheld shall be deLermlned on Lhe followlng basesť
(1) 1he husband shall be deemed Lhe head of Lhe famlly and proper clalmanL of Lhe addlLlonal
exempLlon ln respecL Lo any dependenL chlldrenţ unless he expllclLly walves hls rlghL ln favor of hls wlfe
ln Lhe wlLhholdlng exempLlon cerLlflcaLeŦ
(2) 1axes shall be wlLhheld from Lhe wages of Lhe wlfe ln accordance wlLh Lhe schedule for zero
exempLlon of Lhe wlLhholdlng Lax Lable prescrlbed ln SubsecLlon (u)(2)(d) hereofŦ
(C) nonresldenL AllensŦ Ŵ Wages pald Lo nonresldenL allen lndlvlduals engaged ln Lrade or buslness ln
Lhe Þhlllpplnes shall be sub[ecL Lo Lhe provlslons of Lhls ChapLerŦ

(P) ?earŴLnd Ad[usLmenLŦ Ŵ Cn or before Lhe end of Lhe calendar year buL prlor Lo Lhe paymenL of Lhe
compensaLlon for Lhe lasL payroll perlodţ Lhe employer shall deLermlne Lhe Lax due from each employee
on Laxable compensaLlon lncome for Lhe enLlre Laxable year ln accordance wlLh SecLlon 24(A)Ŧ 1he
dlfference beLween Lhe Lax due from Lhe employee for Lhe enLlre year and Lhe sum of Laxes wlLhheld
from !anuary Lo november shall elLher be wlLhheld from hls salary ln uecember of Lhe currenL calendar
year or refunded Lo Lhe employee noL laLer Lhan !anuary 23 of Lhe succeedlng yearŦ
SLCŦ 80Ŧ LlablllLy for 1axŦ Ŵ

(A) LmployerŦ Ŵ 1he employer shall be llable for Lhe wlLhholdlng and remlLLance of Lhe correcL amounL
of Lax requlred Lo be deducLed and wlLhheld under Lhls ChapLerŦ lf Lhe employer falls Lo wlLhhold and
remlL Lhe correcL amounL of Lax as requlred Lo be wlLhheld under Lhe provlslon of Lhls ChapLerţ such Lax
shall be collecLed from Lhe employer LogeLher wlLh Lhe penalLles or addlLlons Lo Lhe Lax oLherwlse
appllcable ln respecL Lo such fallure Lo wlLhhold and remlLŦ

(8) LmployeeŦ Ŵ Where an employee falls or refuses Lo flle Lhe wlLhholdlng exempLlon cerLlflcaLe or
wlllfully supplles false or lnaccuraLe lnformaLlon Lhereunderţ Lhe Lax oLherwlse requlred Lo be wlLhheld
by Lhe employer shall be collecLed from hlm lncludlng penalLles or addlLlons Lo Lhe Lax from Lhe due
daLe of remlLLance unLll Lhe daLe of paymenLŦ Cn Lhe oLher handţ excess Laxes wlLhheld made by Lhe
employer due Loť

(1) fallure or refusal Lo flle Lhe wlLhholdlng exempLlon cerLlflcaLeŤ or
(2) false and lnaccuraLe lnformaLlon shall noL be refunded Lo Lhe employee buL shall be forfelLed ln
favor of Lhe CovernmenLŦ
SLCŦ 81Ŧ llllng of 8eLurn and ÞaymenL of 1axes WlLhheldŦ Ŵ LxcepL as Lhe Commlssloner oLherwlse
permlLsţ Laxes deducLed and wlLhheld by Lhe employer on wages of employees shall be covered by a
reLurn and pald Lo an auLhorlzed agenL bankŤ CollecLlon AgenLţ or Lhe duly auLhorlzed 1reasurer of Lhe
clLy or munlclpallLy where Lhe employer has hls legal resldence or prlnclpal place of buslnessţ or ln case
Lhe employer ls a corporaLlonţ where Lhe prlnclpal offlce ls locaLedŦ
1he reLurn shall be flled and Lhe paymenL made wlLhln LwenLyŴflve (23) days from Lhe close of each
calendar quarLerť Þrovldedţ howeverţ 1haL Lhe Commlssloner mayţ wlLh Lhe approval of Lhe SecreLary of
llnanceţ requlre Lhe employers Lo pay or deposlL Lhe Laxes deducLed and wlLhheld aL more frequenL
lnLervalsţ ln cases where such requlremenL ls deemed necessary Lo proLecL Lhe lnLeresL of Lhe
CovernmenLŦ

1he Laxes deducLed and wlLhheld by employers shall be held ln a speclal fund ln LrusL for Lhe
CovernmenL unLll Lhe same are pald Lo Lhe sald collecLlng offlcersŦ

SLCŦ 82Ŧ 8eLurn and ÞaymenL ln Case of CovernmenL LmployeesŦ Ŵ lf Lhe employer ls Lhe CovernmenL of
Lhe Þhlllpplnes or any pollLlcal subdlvlslonţ agency or lnsLrumenLallLy Lhereofţ Lhe reLurn of Lhe amounL
deducLed and wlLhheld upon any wage shall be made by Lhe offlcer or employee havlng conLrol of Lhe
paymenL of such wageţ or by any offlcer or employee duly deslgnaLed for Lhe purposeŦ

SLCŦ 83Ŧ SLaLemenLs and 8eLurnsŦ Ŵ

(A) 8equlremenLsŦ Ŵ Lvery employer requlred Lo deducL and wlLhhold a Lax shall furnlsh Lo each such
employee ln respecL of hls employmenL durlng Lhe calendar yearţ on or before !anuary LhlrLyŴflrsL (31sL)
of Lhe succeedlng yearţ or lf hls employmenL ls LermlnaLed before Lhe close of such calendar yearţ on Lhe
same day of whlch Lhe lasL paymenL of wages ls madeţ a wrlLLen sLaLemenL conflrmlng Lhe wages pald
by Lhe employer Lo such employee durlng Lhe calendar yearţ and Lhe amounL of Lax deducLed and
wlLhheld under Lhls ChapLer ln respecL of such wagesŦ 1he sLaLemenL requlred Lo be furnlshed by Lhls
SecLlon ln respecL of any wage shall conLaln such oLher lnformaLlonţ and shall be furnlshed aL such oLher
Llme and ln such form as Lhe SecreLary of llnanceţ upon Lhe recommendaLlon of Lhe Commlsslonerţ
mayţ by rules and regulaLlonţ prescrlbeŦ

(8) Annual lnformaLlon 8eLurnsŦ Ŵ Lvery employer requlred Lo deducL and wlLhhold Lhe Laxes ln respecL
of Lhe wages of hls employees shallţ on or before !anuary LhlrLyŴflrsL (31sL) of Lhe succeedlng yearţ
submlL Lo Lhe Commlssloner an annual lnformaLlon reLurn conLalnlng a llsL of employeesţ Lhe LoLal
amounL of compensaLlon lncome of each employeeţ Lhe LoLal amounL of Laxes wlLhheld Lherefrom
durlng Lhe yearţ accompanled by coples of Lhe sLaLemenL referred Lo ln Lhe precedlng paragraphţ and
such oLher lnformaLlon as may be deemed necessaryŦ 1hls reLurnţ lf made and flled ln accordance wlLh
rules and regulaLlons promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ shall be sufflclenL compllance wlLh Lhe requlremenLs of SecLlon 68 of Lhls 1lLle ln respecL
of such wagesŦ

(C) LxLenslon of LlmeŦ Ŵ 1he Commlsslonerţ under such rules and regulaLlons as may be promulgaLed by
Lhe SecreLary of llnanceţ may granL Lo any employer a reasonable exLenslon of Llme Lo furnlsh and
submlL Lhe sLaLemenLs and reLurns requlred under Lhls SecLlonŦ


1l1LL lll

CPAÞ1L8 l
LS1A1L 1Ax

SLCŦ 84Ŧ 8aLes of LsLaLe 1axŦ Ŵ 1here shall be levledţ assessedţ collecLed and pald upon Lhe Lransfer of Lhe
neL esLaLe as deLermlned ln accordance wlLh SecLlons 83 and 86 of every decedenLţ wheLher resldenL or
nonresldenL of Lhe Þhlllpplnesţ a Lax based on Lhe value of such neL esLaLeţ as compuLed ln accordance
wlLh Lhe followlng scheduleť
lf Lhe neL esLaLe lsť


CvL8
8u1 nC1 CvL8
1PL 1Ax SPALL 8L
ÞLuS
Cl 1PL LxCLSS CvL8
Þ 200ţ000 LxempL
Þ 200ţ000
330ţ000
0

Þ 200ţ000
300ţ000
2ţ000ţ000
Þ 13ţ000

300ţ000
2ţ000ţ000
3ţ000ţ000
133ţ000
11Ʒ
2ţ000ţ000
3ţ000ţ000
10ţ000ţ000
463ţ000
13Ʒ
3ţ000ţ000
10ţ000ţ000
And Cver
1ţ213ţ000
20Ʒ
10ţ000ţ000


SLCŦ 83Ŧ Cross LsLaLeŦ Ŵ Lhe value of Lhe gross esLaLe of Lhe decedenL shall be deLermlned by lncludlng
Lhe value aL Lhe Llme of hls deaLh of all properLyţ real or personalţ Langlble or lnLanglbleţ wherever
slLuaLedť Þrovldedţ howeverţ LhaL ln Lhe case of a nonresldenL decedenL who aL Lhe Llme of hls deaLh
was noL a clLlzen of Lhe Þhlllpplnesţ only LhaL parL of Lhe enLlre gross esLaLe whlch ls slLuaLed ln Lhe
Þhlllpplnes shall be lncluded ln hls Laxable esLaLeŦ

(A) uecedenLƌs lnLeresLŦ Ŵ 1o Lhe exLenL of Lhe lnLeresL Lhereln of Lhe decedenL aL Lhe Llme of hls deaLhŤ

(8) 1ransfer ln ConLemplaLlon of ueaLhŦ Ŵ 1o Lhe exLenL of any lnLeresL Lhereln of whlch Lhe decedenL has
aL any Llme made a Lransferţ by LrusL or oLherwlseţ ln conLemplaLlon of or lnLended Lo Lake effecL ln
possesslon or en[oymenL aL or afLer deaLhţ or of whlch he has aL any Llme made a Lransferţ by LrusL or
oLherwlseţ under whlch he has reLalned for hls llfe or for any perlod whlch does noL ln facL end before
hls deaLh (1) Lhe possesslon or en[oymenL ofţ or Lhe rlghL Lo Lhe lncome from Lhe properLyţ or (2) Lhe
rlghLţ elLher alone or ln con[uncLlon wlLh any personţ Lo deslgnaLe Lhe person who shall possess or en[oy
Lhe properLy or Lhe lncome LherefromŤ excepL ln case of a bonaflde sale for an adequaLe and full
conslderaLlon ln money or moneyƌs worLhŦ

(C) 8evocable 1ransferŦ Ŵ
(1) 1o Lhe exLenL of any lnLeresL Lherelnţ of whlch Lhe decedenL has aL any Llme made a Lransfer (excepL
ln case of a bona flde sale for an adequaLe and full conslderaLlon ln money or moneyƌs worLh) by LrusL or
oLherwlseţ where Lhe en[oymenL Lhereof was sub[ecL aL Lhe daLe of hls deaLh Lo any change Lhrough Lhe
exerclse of a power (ln whaLever capaclLy exerclseable) by Lhe decedenL alone or by Lhe decedenL ln
con[uncLlon wlLh any oLher person (wlLhouL regard Lo when or from whaL source Lhe decedenL acqulred
such power)ţ L o alLerţ amendţ revokeţ or LermlnaLeţ or where any such power ls rellnqulshed ln
conLemplaLlon of Lhe decedenLƌs deaLhŦ
(2) lor Lhe purpose of Lhls SubsecLlonţ Lhe power Lo alLerţ amend or revoke shall be consldered Lo exlsL
on Lhe daLe of Lhe decedenLƌs deaLh even Lhough Lhe exerclse of Lhe power ls sub[ecL Lo a precedenL
glvlng of noLlce or even Lhough Lhe alLeraLlonţ amendmenL or revocaLlon Lakes effecL only on Lhe
explraLlon of a sLaLed perlod afLer Lhe exerclse of Lhe powerţ wheLher or noL on or before Lhe daLe of
Lhe decedenLƌs deaLh noLlce has been glven or Lhe power has been exerclsedŦ ln such casesţ proper
ad[usLmenL shall be made represenLlng Lhe lnLeresLs whlch would have been excluded from Lhe power lf
Lhe decedenL had llvedţ and for such purpose lf Lhe noLlce has noL been glven or Lhe power has noL been
exerclsed on or before Lhe daLe of hls
deaLhţ such noLlce shall be consldered Lo have been glvenţ or Lhe power exerclsedţ on Lhe daLe of hls
deaLhŦ
(u) ÞroperLy Þasslng under Ceneral Þower of AppolnLmenLŦ Ŵ 1o Lhe exLenL of any properLy passlng
under a general power of appolnLmenL exerclsed by Lhe decedenLť (1) by wlllţ or (2) by deed execuLed ln
conLemplaLlon ofţ or lnLended Lo Lake effecL ln possesslon or en[oymenL aLţ or afLer hls deaLhţ or (3) by
deed under whlch he has reLalned for hls llfe or any perlod noL ascerLalnable wlLhouL reference Lo hls
deaLh or for any perlod whlch does noL ln facL end before hls deaLh (a) Lhe possesslon or en[oymenL ofţ
or Lhe rlghL Lo Lhe lncome fromţ Lhe properLyţ or (b) Lhe rlghLţ elLher alone or ln con[uncLlon wlLh any
personţ Lo deslgnaLe Lhe persons who shall possess or en[oy Lhe properLy or Lhe lncome LherefromŤ
excepL ln case of a bona flde sale for an adequaLe and full conslderaLlon ln money or moneyƌs worLhŦ

(L) Þroceeds of Llfe lnsuranceŦ Ŵ 1o Lhe exLenL of Lhe amounL recelvable by Lhe esLaLe of Lhe deceasedţ
hls execuLorţ or admlnlsLraLorţ as lnsurance under pollcles Laken ouL by Lhe decedenL upon hls own llfeţ
lrrespecLlve of wheLher or noL Lhe lnsured reLalned Lhe power of revocaLlonţ or Lo Lhe exLenL of Lhe
amounL recelvable by any beneflclary deslgnaLed ln Lhe pollcy of lnsuranceţ excepL when lL ls expressly
sLlpulaLed LhaL Lhe deslgnaLlon of Lhe beneflclary ls lrrevocableŦ

(l) Þrlor lnLeresLsŦ Ŵ LxcepL as oLherwlse speclflcally provlded Lherelnţ SubsecLlons (8)ţ (C) and (L) of Lhls
SecLlon shall apply Lo Lhe Lransfersţ LrusLsţ esLaLesţ lnLeresLsţ rlghLsţ powers and rellnqulshmenL of
powersţ as severally enumeraLed and descrlbed Lherelnţ wheLher madeţ creaLedţ arlslngţ exlsLlngţ
exerclsed or rellnqulshed before or afLer Lhe effecLlvlLy of Lhls CodeŦ

(C) 1ransfers of lnsufflclenL ConslderaLlonŦ Ŵ lf any one of Lhe Lransfersţ LrusLsţ lnLeresLsţ rlghLs or powers
enumeraLed and descrlbed ln SubsecLlons (8)ţ (C) and (u) of Lhls SecLlon ls madeţ creaLedţ exerclsed or
rellnqulshed for a conslderaLlon ln money or moneyƌs worLhţ buL ls noL a bona flde sale for an adequaLe
and full conslderaLlon ln money or moneyƌs worLhţ Lhere shall be lncluded ln Lhe gross esLaLe only Lhe
excess of Lhe falr markeL valueţ aL Lhe Llme of deaLhţ of Lhe properLy oLherwlse Lo be lncluded on
accounL of such LransacLlonţ over Lhe value of Lhe conslderaLlon recelved Lherefor by Lhe decedenLŦ

(P) CaplLal of Lhe Survlvlng SpouseŦ Ŵ 1he caplLal of Lhe survlvlng spouse of a decedenL shall noLţ for Lhe
purpose of Lhls ChapLerţ be deemed a parL of hls or her gross esLaLeŦ
SLCŦ 86Ŧ CompuLaLlon of neL LsLaLeŦ Ŵ lor Lhe purpose of Lhe Lax lmposed ln Lhls ChapLerţ Lhe value of
Lhe neL esLaLe shall be deLermlnedť

(A) ueducLlons Allowed Lo Lhe LsLaLe of ClLlzen or a 8esldenLŦ Ŵ ln Lhe case of a clLlzen or resldenL of Lhe
Þhlllpplnesţ by deducLlng from Lhe value of Lhe gross esLaLe Ŵ

(1) Lxpensesţ Lossesţ lndebLednessţ and LaxesŦ Ŵ Such amounLsť
(a) lor acLual funeral expenses or ln an amounL equal Lo flve percenL (3Ʒ) of Lhe gross esLaLeţ whlchever
ls lowerţ buL ln no case Lo exceed 1wo hundred Lhousand pesos (Þ200ţ000)Ť
(b) lor [udlclal expenses of Lhe LesLamenLary or lnLesLaLe proceedlngsŤ
(c) lor clalms agalnsL Lhe esLaLeť Þrovldedţ 1haL aL Lhe Llme Lhe lndebLedness was lncurred Lhe debL
lnsLrumenL was duly noLarlzed andţ lf Lhe loan was conLracLed wlLhln Lhree (3) years before Lhe deaLh of
Lhe decedenLţ Lhe admlnlsLraLor or execuLor shall submlL a sLaLemenL showlng Lhe dlsposlLlon of Lhe
proceeds of Lhe loanŤ
(d) lor clalms of Lhe deceased agalnsL lnsolvenL persons where Lhe value of decedenLƌs lnLeresL Lhereln
ls lncluded ln Lhe value of Lhe gross esLaLeŤ and
(e) lor unpald morLgages uponţ or any lndebLedness ln respecL Loţ properLy where Lhe value of
decedenLƌs lnLeresL Lherelnţ undlmlnlshed by such morLgage or lndebLednessţ ls lncluded ln Lhe value of
Lhe gross esLaLeţ buL noL lncludlng any lncome Lax upon lncome recelved afLer Lhe deaLh of Lhe
decedenLţ or properLy Laxes noL accrued before hls deaLhţ or any esLaLe LaxŦ 1he deducLlon hereln
allowed ln Lhe case of clalms agalnsL Lhe esLaLeţ unpald morLgages or any lndebLedness shallţ when
founded upon a promlse or agreemenLţ be llmlLed Lo Lhe exLenL LhaL Lhey were conLracLed bona flde
and for an adequaLe and full conslderaLlon ln money or moneyƌs worLhŦ 1here shall also be deducLed
losses lncurred durlng Lhe seLLlemenL of Lhe esLaLe arlslng from flresţ sLormsţ shlpwreckţ or oLher
casualLlesţ or from robberyţ LhefL or embezzlemenLţ when such losses are noL compensaLed for by
lnsurance or oLherwlseţ and lf aL Lhe Llme of Lhe flllng of Lhe reLurn such losses have noL been clalmed as
a deducLlon for Lhe lncome Lax purposes ln an lncome Lax reLurnţ and provlded LhaL such losses were
lncurred noL laLer Lhan Lhe lasL day for Lhe paymenL of Lhe esLaLe Lax as prescrlbed ln SubsecLlon (A) of
SecLlon 91Ŧ
(2) ÞroperLy Þrevlously 1axedŦ Ŵ An amounL equal Lo Lhe value speclfled below of any properLy formlng a
parL of Lhe gross esLaLe slLuaLed ln Lhe Þhlllpplnes of any person who dled wlLhln flve (3) years prlor Lo
Lhe deaLh of Lhe decedenLţ or Lransferred Lo Lhe decedenL by glfL wlLhln flve (3) years prlor Lo hls deaLhţ
where such properLy can be ldenLlfled as havlng been recelved by Lhe decedenL from Lhe donor by glfLţ
or from such prlor decedenL by glfLţ bequesLţ devlse or lnherlLanceţ or whlch can be ldenLlfled as havlng
been acqulred ln exchange for properLy so recelvedť
Cne hundred percenL (100Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled wlLhln one (1) year prlor Lo Lhe
deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL wlLhln Lhe same perlod prlor Lo
hls deaLhŤ
LlghLy percenL (80Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan one (1) year buL noL more Lhan
Lwo (2) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL wlLhln
Lhe same perlod prlor Lo hls deaLhŤ
SlxLy percenL (60Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan Lwo (2) years buL noL more Lhan
Lhree (3) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL
wlLhln Lhe same perlod prlor Lo hls deaLhŤ
lorLy percenL (40Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan Lhree (3) years buL noL more Lhan
four (4) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL wlLhln
Lhe same perlod prlor Lo hls deaLhŤ
1wenLy percenL (20Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan four (4) years buL noL more
Lhan flve (3) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL
wlLhln Lhe same perlod prlor Lo hls deaLhŤ
1hese deducLlons shall be allowed only where a donorƌs Lax or esLaLe Lax lmposed under Lhls 1lLle was
flnally deLermlned and pald by or on behalf of such donorţ or Lhe esLaLe of such prlor decedenLţ as Lhe
case may beţ and only ln Lhe amounL flnally deLermlned as Lhe value of such properLy ln deLermlnlng Lhe
value of Lhe glfLţ or Lhe gross esLaLe of such prlor decedenLţ and only Lo Lhe exLenL LhaL Lhe value of such
properLy ls lncluded ln Lhe decedenLƌs gross esLaLeţ and only lf ln deLermlnlng Lhe value of Lhe esLaLe of
Lhe prlor decedenLţ no deducLlon was allowable under paragraph (2) ln respecL of Lhe properLy or
properLles glven ln exchange LhereforŦ Where a deducLlon was allowed of any morLgage or oLher llen ln
deLermlnlng Lhe donorƌs Laxţ or Lhe esLaLe Lax of Lhe prlor decedenLţ whlch was pald ln whole or ln parL
prlor Lo Lhe decedenLƌs deaLhţ Lhen Lhe deducLlon allowable under sald SubsecLlon shall be reduced by
Lhe amounL so paldŦ Such deducLlon allowable shall be reduced by an amounL whlch bears Lhe same
raLlo Lo Lhe amounLs allowed as deducLlons under paragraphs (1) and (3) of Lhls SubsecLlon as Lhe
amounL oLherwlse deducLlble under sald paragraph (2) bears Lo Lhe value of Lhe decedenLƌs esLaLeŦ
Where Lhe properLy referred Lo conslsLs of Lwo or more lLemsţ Lhe aggregaLe value of such lLems shall
be used for Lhe purpose of compuLlng Lhe deducLlonŦ
(3) 1ransfers for Þubllc useŦ Ŵ 1he amounL of all Lhe bequesLsţ legaclesţ devlses or Lransfers Lo or for Lhe
use of Lhe CovernmenL of Lhe 8epubllc of Lhe Þhlllpplnesţ or any pollLlcal subdlvlslon Lhereofţ for
excluslvely publlc purposesŦ
(4) 1he lamlly PomeŦ Ŵ An amounL equlvalenL Lo Lhe currenL falr markeL value of Lhe decedenLƌs famlly
homeť Þrovldedţ howeverţ 1haL lf Lhe sald currenL falr markeL value exceeds Cne mllllon pesos
(Þ1ţ000ţ000)ţ Lhe excess shall be sub[ecL Lo esLaLe LaxŦ As a slne qua non condlLlon for Lhe exempLlon or
deducLlonţ sald famlly home musL have been Lhe decedenLƌs famlly home as cerLlfled by Lhe barangay
capLaln of Lhe locallLyŦ
(3) SLandard ueducLlonŦ Ŵ An amounL equlvalenL Lo Cne mllllon pesos (Þ1ţ000ţ000)Ŧ
(6) Medlcal LxpensesŦ Ŵ Medlcal Lxpenses lncurred by Lhe decedenL wlLhln one (1) year prlor Lo hls deaLh
whlch shall be duly subsLanLlaLed wlLh recelpLsť Þrovldedţ 1haL ln no case shall Lhe deducLlble medlcal
expenses exceed llve Pundred 1housand Þesos (Þ300ţ000)Ŧ
(7) AmounL 8ecelved by Pelrs under 8epubllc AcL noŦ 4917Ŧ Ŵ Any amounL recelved by Lhe helrs from Lhe
decedenL Ŵ employee as a consequence of Lhe deaLh of Lhe decedenLŴemployee ln accordance wlLh
8epubllc AcL noŦ 4917ť Þrovldedţ 1haL such amounL ls lncluded ln Lhe gross esLaLe of Lhe decedenLŦ
(8) ueducLlons Allowed Lo nonresldenL LsLaLesŦ Ŵ ln Lhe case of a nonresldenL noL a clLlzen of Lhe
Þhlllpplnesţ by deducLlng from Lhe value of LhaL parL of hls gross esLaLe whlch aL Lhe Llme of hls deaLh ls
slLuaLed ln Lhe Þhlllpplnesť
(1) Lxpensesţ Lossesţ lndebLedness and 1axesŦ Ŵ 1haL proporLlon of Lhe deducLlons speclfled ln paragraph
(1) of SubsecLlon (A) of Lhls SecLlon whlch Lhe value of such parL bears Lo Lhe value of hls enLlre gross
esLaLe wherever slLuaLedŤ
(2) ÞroperLy Þrevlously 1axedŦ Ŵ An amounL equal Lo Lhe value speclfled below of any properLy formlng
parL of Lhe gross esLaLe slLuaLed ln Lhe Þhlllpplnes of any person who dled wlLhln flve (3) years prlor Lo
Lhe deaLh of Lhe decedenLţ or Lransferred Lo Lhe decedenL by glfL wlLhln flve (3) years prlor Lo hls deaLhţ
where such properLy can be ldenLlfled as havlng been recelved by Lhe decedenL from Lhe donor by glfLţ
or from such prlor decedenL by glfLţ bequesLţ devlse or lnherlLanceţ or whlch can be ldenLlfled as havlng
been acqulred ln exchange for properLy so recelvedť
Cne hundred percenL (100Ʒ) of Lhe value lf Lhe prlor decedenL dled wlLhln one (1) year prlor Lo Lhe
deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfLţ wlLhln Lhe same perlod prlor Lo
hls deaLhŤ
LlghLy percenL (80Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan one (1) year buL noL more Lhan
Lwo (2) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL wlLhln
Lhe same perlod prlor Lo hls deaLhŤ
SlxLy percenL (60Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan Lwo (2) years buL noL more Lhan
Lhree (3) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL
wlLhln Lhe same perlod prlor Lo hls deaLhŤ
lorLy percenL (40Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan Lhree (3) years buL noL more Lhan
four (4) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL wlLhln
Lhe same perlod prlor Lo hls deaLhŤ and
1wenLy percenL (20Ʒ) of Lhe valueţ lf Lhe prlor decedenL dled more Lhan four (4) years buL noL more
Lhan flve (3) years prlor Lo Lhe deaLh of Lhe decedenLţ or lf Lhe properLy was Lransferred Lo hlm by glfL
wlLhln Lhe same perlod prlor Lo hls deaLhŦ
1hese deducLlons shall be allowed only where a donorƌs Laxţ or esLaLe Lax lmposed under Lhls 1lLle ls
flnally deLermlned and pald by or on behalf of such donorţ or Lhe esLaLe of such prlor decedenLţ as Lhe
case may beţ and only ln Lhe amounL flnally deLermlned as Lhe value of such properLy ln deLermlnlng Lhe
value of Lhe glfLţ or Lhe gross esLaLe of such prlor decedenLţ and only Lo Lhe exLenL LhaL Lhe value of such
properLy ls lncluded ln LhaL parL of Lhe decedenLƌs gross esLaLe whlch aL Lhe Llme of hls deaLh ls slLuaLed
ln Lhe ÞhlllpplnesŤ and only lfţ ln deLermlnlng Lhe value of Lhe neL esLaLe of Lhe prlor decedenLţ no
deducLlon ls allowable under paragraph (2) of SubsecLlon (8) of Lhls SecLlonţ ln respecL of Lhe properLy
or properLles glven ln exchange LhereforeŦ Where a deducLlon was allowed of any morLgage or oLher
llen ln deLermlnlng Lhe donorƌs Laxţ or Lhe esLaLe Lax of Lhe prlor decedenLţ whlch was pald ln whole or
ln parL prlor Lo Lhe decedenLƌs deaLhţ Lhen Lhe deducLlon allowable under sald paragraph shall be
reduced by Lhe amounL so paldŦ Such deducLlon allowable shall be reduced by an amounL whlch bears
Lhe same raLlo Lo Lhe amounLs allowed as deducLlons under paragraphs (1) and (3) of Lhls SubsecLlon as
Lhe amounL oLherwlse deducLlble under paragraph (2) bears Lo Lhe value of LhaL parL of Lhe decedenLƌs
gross esLaLe whlch aL Lhe Llme of hls deaLh ls slLuaLed ln Lhe ÞhlllpplnesŦ Where Lhe properLy referred Lo
conslsLs of Lwo (2) or more lLemsţ Lhe aggregaLe value of such lLems shall be used for Lhe purpose of
compuLlng Lhe deducLlonŦ
(3) 1ransfers for Þubllc useŦ Ŵ 1he amounL of all bequesLsţ legaclesţ devlses or Lransfers Lo or for Lhe use
of Lhe CovernmenL of Lhe 8epubllc of Lhe Þhlllpplnes or any pollLlcal subdlvlslon Lhereofţ for excluslvely
publlc purposesŦ
(C) Share ln Lhe Con[ugal ÞroperLyŦ Ŵ Lhe neL share of Lhe survlvlng spouse ln Lhe con[ugal parLnershlp
properLy as dlmlnlshed by Lhe obllgaLlons properly chargeable Lo such properLy shallţ for Lhe purpose of
Lhls SecLlonţ be deducLed from Lhe neL esLaLe of Lhe decedenLŦ

(u) Mlscellaneous ÞrovlslonsŦ Ŵ no deducLlon shall be allowed ln Lhe case of a nonresldenL noL a clLlzen
of Lhe Þhlllpplnesţ unless Lhe execuLorţ admlnlsLraLorţ or anyone of Lhe helrsţ as Lhe case may beţ
lncludes ln Lhe reLurn requlred Lo be flled under SecLlon 90 Lhe value aL Lhe Llme of hls deaLh of LhaL parL
of Lhe gross esLaLe of Lhe nonresldenL noL slLuaLed ln Lhe ÞhlllpplnesŦ

(L) 1ax CredlL for LsLaLe 1axes pald Lo a lorelgn CounLryŦ Ŵ
(1) ln CeneralŦ Ŵ 1he Lax lmposed by Lhls 1lLle shall be credlLed wlLh Lhe amounLs of any esLaLe Lax
lmposed by Lhe auLhorlLy of a forelgn counLryŦ
(2) LlmlLaLlons on CredlLŦ Ŵ 1he amounL of Lhe credlL Laken under Lhls SecLlon shall be sub[ecL Lo each of
Lhe followlng llmlLaLlonsť
(a) 1he amounL of Lhe credlL ln respecL Lo Lhe Lax pald Lo any counLry shall noL exceed Lhe same
proporLlon of Lhe Lax agalnsL whlch such credlL ls Lakenţ whlch Lhe decedenLƌs neL esLaLe slLuaLed wlLhln
such counLry Laxable under Lhls 1lLle bears Lo hls enLlre neL esLaLeŤ and
(b) 1he LoLal amounL of Lhe credlL shall noL exceed Lhe same proporLlon of Lhe Lax agalnsL whlch such
credlL ls Lakenţ whlch Lhe decedenLƌs neL esLaLe slLuaLed ouLslde Lhe Þhlllpplnes Laxable under Lhls 1lLle
bears Lo hls enLlre neL esLaLeŦ
SLCŦ 87Ŧ LxempLlon of CerLaln AcqulslLlons and 1ransmlsslonsŦ Ŵ 1he followlng shall noL be Laxedť
(A) 1he merger of usufrucL ln Lhe owner of Lhe naked LlLleŤ
(8) 1he Lransmlsslon or dellvery of Lhe lnherlLance or legacy by Lhe flduclary helr or legaLee Lo Lhe
fldelcommlssaryŤ
(C) 1he Lransmlsslon from Lhe flrsL helrţ legaLee or donee ln favor of anoLher beneflclaryţ ln accordance
wlLh Lhe deslre of Lhe predecessorŤ and
(u) All bequesLsţ devlsesţ legacles or Lransfers Lo soclal welfareţ culLural and charlLable lnsLlLuLlonsţ no
parL of Lhe neL lncome of whlch lnsures Lo Lhe beneflL of any lndlvldualť Þrovldedţ howeverţ 1haL noL
more Lhan LhlrLy percenL (30Ʒ) of Lhe sald bequesLsţ devlsesţ legacles or Lransfers shall be used by such
lnsLlLuLlons for admlnlsLraLlon purposesŦ
SLCŦ 88Ŧ ueLermlnaLlon of Lhe value of Lhe LsLaLeŦ Ŵ
(A) usufrucLŦ Ŵ 1o deLermlne Lhe value of Lhe rlghL of usufrucLţ use or hablLaLlonţ as well as LhaL of
annulLyţ Lhere shall be Laken lnLo accounL Lhe probable llfe of Lhe beneflclary ln accordance wlLh Lhe
laLesL 8aslc SLandard MorLallLy 1ableţ Lo be approved by Lhe SecreLary of llnanceţ upon
recommendaLlon of Lhe lnsurance CommlsslonerŦ

(8) ÞroperLlesŦ Ŵ 1he esLaLe shall be appralsed aL lLs falr markeL value as of Lhe Llme of deaLhŦ Poweverţ
Lhe appralsed value of real properLy as of Lhe Llme of deaLh shall beţ whlchever ls hlgher ofť

(1) 1he falr markeL value as deLermlned by Lhe Commlsslonerţ or
(2) 1he falr markeL value as shown ln Lhe schedule of values flxed by Lhe Þrovlnclal and ClLy AssessorsŦ
SLCŦ 89Ŧ noLlce of ueaLh Lo be llledŦ Ŵ ln all cases of Lransfers sub[ecL Lo Laxţ or whereţ Lhough exempL
from Laxţ Lhe gross value of Lhe esLaLe exceeds 1wenLy Lhousand pesos (Þ20ţ000)ţ Lhe execuLorţ
admlnlsLraLor or any of Lhe legal helrsţ as Lhe case may beţ wlLhln Lwo (2) monLhs afLer Lhe decedenLƌs
deaLhţ or wlLhln a llke perlod afLer quallfylng as such execuLor or admlnlsLraLorţ shall glve a wrlLLen
noLlce Lhereof Lo Lhe CommlsslonerŦ

SLCŦ 90Ŧ LsLaLe 1ax 8eLurnsŦ Ŵ

(A) 8equlremenLsŦ Ŵ ln all cases of Lransfers sub[ecL Lo Lhe Lax lmposed herelnţ or whereţ Lhough exempL
from Laxţ Lhe gross value of Lhe esLaLe exceeds 1wo hundred Lhousand pesos (Þ200ţ000)ţ or regardless
of Lhe gross value of Lhe esLaLeţ where Lhe sald esLaLe conslsLs of reglsLered or reglsLrable properLy such
as real properLyţ moLor vehlcleţ shares of sLock or oLher slmllar properLy for whlch a clearance from Lhe
8ureau of lnLernal 8evenue ls requlred as a condlLlon precedenL for Lhe Lransfer of ownershlp Lhereof ln
Lhe name of Lhe Lransfereeţ Lhe execuLorţ or Lhe admlnlsLraLorţ or any of Lhe legal helrsţ as Lhe case may
beţ shall flle a reLurn under oaLh ln dupllcaLeţ seLLlng forLhť
(1) 1he value of Lhe gross esLaLe of Lhe decedenL aL Lhe Llme of hls deaLhţ or ln case of a nonresldenLţ
noL a clLlzen of Lhe Þhlllpplnesţ of LhaL parL of hls gross esLaLe slLuaLed ln Lhe ÞhlllpplnesŤ
(2) 1he deducLlons allowed from gross esLaLe ln deLermlnlng Lhe esLaLe as deflned ln SecLlon 86Ť and
(3) Such parL of such lnformaLlon as may aL Lhe Llme be ascerLalnable and such supplemenLal daLa as
may be necessary Lo esLabllsh Lhe correcL LaxesŦ
Þrovldedţ howeverţ 1haL esLaLe Lax reLurns showlng a gross value exceedlng 1wo mllllon pesos
(Þ2ţ000ţ000) shall be supporLed wlLh a sLaLemenL duly cerLlfled Lo by a CerLlfled Þubllc AccounLanL
conLalnlng Lhe followlngť
(a) lLemlzed asseLs of Lhe decedenL wlLh Lhelr correspondlng gross value aL Lhe Llme of hls deaLhţ or ln
Lhe case of a nonresldenLţ noL a clLlzen of Lhe Þhlllpplnesţ of LhaL parL of hls gross esLaLe slLuaLed ln Lhe
ÞhlllpplnesŤ
(b) lLemlzed deducLlons from gross esLaLe allowed ln SecLlon 86Ť and
(c) 1he amounL of Lax due wheLher pald or sLlll due and ouLsLandlngŦ
(8) 1lme for llllngŦ Ŵ lor Lhe purpose of deLermlnlng Lhe esLaLe Lax provlded for ln SecLlon 84 of Lhls
Codeţ Lhe esLaLe Lax reLurn requlred under Lhe precedlng SubsecLlon (A) shall be flled wlLhln slx (6)
monLhs from Lhe decedenLƌs deaLhŦ
A cerLlfled copy of Lhe schedule of parLlLlon and Lhe order of Lhe courL approvlng Lhe same shall be
furnlshed Lhe Commlssloner wlLhln LhlrLy (30) afLer Lhe promulgaLlon of such orderŦ

(C) LxLenslon of 1lmeŦ Ŵ 1he Commlssloner shall have auLhorlLy Lo granLţ ln merlLorlous casesţ a
reasonable exLenslon noL exceedlng LhlrLy (30) days for flllng Lhe reLurnŦ

(u) Þlace of llllngŦ Ŵ LxcepL ln cases where Lhe Commlssloner oLherwlse permlLsţ Lhe reLurn requlred
under SubsecLlon (A) shall be flled wlLh an auLhorlzed agenL bankţ or 8evenue ulsLrlcL Cfflcerţ CollecLlon
Cfflcerţ or duly auLhorlzed 1reasurer of Lhe clLy or munlclpallLy ln whlch Lhe decedenL was domlclled aL
Lhe Llme of hls deaLh or lf Lhere be no legal resldence ln Lhe Þhlllpplnesţ wlLh Lhe Cfflce of Lhe
CommlsslonerŦ

SLCŦ 91Ŧ ÞaymenL of 1axŦ Ŵ

(A) 1lme of ÞaymenLŦ Ŵ 1he esLaLe Lax lmposed by SecLlon 84 shall be pald aL Lhe Llme Lhe reLurn ls flled
by Lhe execuLorţ admlnlsLraLor or Lhe helrsŦ

(8) LxLenslon of 1lmeŦ Ŵ When Lhe Commlssloner flnds LhaL Lhe paymenL on Lhe due daLe of Lhe esLaLe
Lax or of any parL Lhereof would lmpose undue hardshlp upon Lhe esLaLe or any of Lhe helrsţ he may
exLend Lhe Llme for paymenL of such Lax or any parL Lhereof noL Lo exceed flve (3) yearsţ ln case Lhe
esLaLe ls seLLled Lhrough Lhe courLsţ or Lwo (2) years ln case Lhe esLaLe ls seLLled exLra[udlclallyŦ ln such
caseţ Lhe amounL ln respecL of whlch Lhe exLenslon ls granLed shall be pald on or before Lhe daLe of Lhe
explraLlon of Lhe perlod of Lhe exLenslonţ and Lhe runnlng of Lhe SLaLuLe of LlmlLaLlons for assessmenL as
provlded ln SecLlon 203 of Lhls Code shall be suspended for Lhe perlod of any such exLenslonŦ

Where Lhe Laxes are assessed by reason of negllgenceţ lnLenLlonal dlsregard of rules and regulaLlonsţ or
fraud on Lhe parL of Lhe Laxpayerţ no exLenslon wlll be granLed by Lhe CommlsslonerŦ

lf an exLenslon ls granLedţ Lhe Commlssloner may requlre Lhe execuLorţ or admlnlsLraLorţ or beneflclaryţ
as Lhe case may beţ Lo furnlsh a bond ln such amounLţ noL exceedlng double Lhe amounL of Lhe Lax and
wlLh such sureLles as Lhe Commlssloner deems necessaryţ condlLloned upon Lhe paymenL of Lhe sald Lax
ln accordance wlLh Lhe Lerms of Lhe exLenslonŦ

(C) LlablllLy for ÞaymenLŦ Ŵ 1he esLaLe Lax lmposed by SecLlon 84 shall be pald by Lhe execuLor or
admlnlsLraLor before dellvery Lo any beneflclary of hls dlsLrlbuLlve share of Lhe esLaLeŦ Such beneflclary
shall Lo Lhe exLenL of hls dlsLrlbuLlve share of Lhe esLaLeţ be subsldlarlly llable for Lhe paymenL of such
porLlon of Lhe esLaLe Lax as hls dlsLrlbuLlve share bears Lo Lhe value of Lhe LoLal neL esLaLeŦ

lor Lhe purpose of Lhls ChapLerţ Lhe Lerm ƍexecuLorƍ or ƍadmlnlsLraLorƍ means Lhe execuLor or
admlnlsLraLor of Lhe decedenLţ or lf Lhere ls no execuLor or admlnlsLraLor appolnLedţ quallfledţ and
acLlng wlLhln Lhe Þhlllpplnesţ Lhen any person ln acLual or consLrucLlve possesslon of any properLy of Lhe
decedenLŦ

SLCŦ 92Ŧ ulscharge of LxecuLor or AdmlnlsLraLor from Þersonal LlablllLyŦ Ŵ lf Lhe execuLor or admlnlsLraLor
makes a wrlLLen appllcaLlon Lo Lhe Commlssloner for deLermlnaLlon of Lhe amounL of Lhe esLaLe Lax and
dlscharge from personal llablllLy Lhereforeţ Lhe Commlssloner (as soon as posslbleţ and ln any evenL
wlLhln one (1) year afLer Lhe maklng of such appllcaLlonţ or lf Lhe appllcaLlon ls made before Lhe reLurn ls
flledţ Lhen wlLhln one (1) year afLer Lhe reLurn ls flledţ buL noL afLer Lhe explraLlon of Lhe perlod
prescrlbed for Lhe assessmenL of Lhe Lax ln SecLlon 203 shall noL noLlfy Lhe execuLor or admlnlsLraLor of
Lhe amounL of Lhe LaxŦ 1he execuLor or admlnlsLraLorţ upon paymenL of Lhe amounL of whlch he ls
noLlfledţ shall be dlscharged from personal llablllLy for any deflclency ln Lhe Lax LhereafLer found Lo be
due and shall be enLlLled Lo a recelpL or wrlLlng showlng such dlschargeŦ

SLCŦ 93Ŧ ueflnlLlon of ueflclencyŦ Ŵ As used ln Lhls ChapLerţ Lhe Lerm ƍdeflclencyƍ meansť

(a) 1he amounL by whlch Lhe Lax lmposed by Lhls ChapLer exceeds Lhe amounL shown as Lhe Lax by Lhe
execuLorţ admlnlsLraLor or any of Lhe helrs upon hls reLurnŤ buL Lhe amounLs so shown on Lhe reLurn
shall flrsL be lncreased by Lhe amounLs prevlously assessed (or collecLed wlLhouL assessmenL) as a
deflclency and decreased by Lhe amounL prevlously abaLedţ refunded or oLherwlse repald ln respecL of
such LaxŤ or

(b) lf no amounL ls shown as Lhe Lax by Lhe execuLorţ admlnlsLraLor or any of Lhe helrs upon hls reLurnţ
or lf no reLurn ls made by Lhe execuLorţ admlnlsLraLorţ or any helrţ Lhen Lhe amounL by whlch Lhe Lax
exceeds Lhe amounLs prevlously assessed (or collecLed wlLhouL assessmenL) as a deflclencyŤ buL such
amounLs prevlously assessed or collecLed wlLhouL assessmenL shall flrsL be decreased by Lhe amounLs
prevlously abaLedţ refunded or oLherwlse repald ln respecL of such LaxŦ

SLCŦ 94Ŧ ÞaymenL 8efore uellvery by LxecuLor or AdmlnlsLraLorŦ Ŵ no [udge shall auLhorlze Lhe execuLor
or [udlclal admlnlsLraLor Lo dellver a dlsLrlbuLlve share Lo any parLy lnLeresLed ln Lhe esLaLe unless a
cerLlflcaLlon from Lhe Commlssloner LhaL Lhe esLaLe Lax has been pald ls shownŦ

SLCŦ 93Ŧ uuLles of CerLaln Cfflcers and uebLorsŦ Ŵ 8eglsLers of ueeds shall noL reglsLer ln Lhe 8eglsLry of
ÞroperLy any documenL Lransferrlng real properLy or real rlghLs Lhereln or any chaLLel morLgageţ by way
of glfLs lnLer vlvos or morLls causaţ legacy or lnherlLanceţ unless a cerLlflcaLlon from Lhe Commlssloner
LhaL Lhe Lax flxed ln Lhls 1lLle and acLually due Lhereon had been pald ls showţ and Lhey shall
lmmedlaLely noLlfy Lhe Commlsslonerţ 8eglonal ulrecLorţ 8evenue ulsLrlcL Cfflcerţ or 8evenue CollecLlon
Cfflcer or 1reasurer of Lhe clLy or munlclpallLy where Lhelr offlces are locaLedţ of Lhe non paymenL of Lhe
Lax dlscovered by LhemŦ Any lawyerţ noLary publlcţ or any governmenL offlcer whoţ by reason of hls
offlclal duLlesţ lnLervenes ln Lhe preparaLlon or acknowledgmenL of documenLs regardlng parLlLlon or
dlsposal of donaLlon lnLer vlvos or morLls causaţ legacy or lnherlLanceţ shall have Lhe duLy of furnlshlng
Lhe Commlsslonerţ 8eglonal ulrecLorţ 8evenue ulsLrlcL Cfflcer or 8evenue CollecLlon Cfflcer of Lhe place
where he may have hls prlnclpal offlceţ wlLh coples of such documenLs and any lnformaLlon whaLsoever
whlch may faclllLaLe Lhe collecLlon of Lhe aforemenLloned LaxŦ nelLher shall a debLor of Lhe deceased
pay hls debLs Lo Lhe helrsţ legaLeeţ execuLor or admlnlsLraLor of hls credlLorţ unless Lhe cerLlflcaLlon of
Lhe Commlssloner LhaL Lhe Lax flxed ln Lhls ChapLer had been pald ls shownŤ buL he may pay Lhe
execuLor or [udlclal admlnlsLraLor wlLhouL sald cerLlflcaLlon lf Lhe credlL ls lncluded ln Lhe lnvenLory of
Lhe esLaLe of Lhe deceasedŦ

SLCŦ 96Ŧ 8esLlLuLlon of 1ax upon SaLlsfacLlon of CuLsLandlng CbllgaLlonsŦ Ŵ lf afLer Lhe paymenL of Lhe
esLaLe Laxţ new obllgaLlons of Lhe decedenL shall appearţ and Lhe persons lnLeresLed shall have saLlsfled
Lhem by order of Lhe courLţ Lhey shall have a rlghL Lo Lhe resLlLuLlon of Lhe proporLlonal parL of Lhe Lax
paldŦ

SLCŦ 97Ŧ ÞaymenL of 1ax AnLecedenL Lo Lhe 1ransfer of Sharesţ 8onds or 8lghLsŦ Ŵ 1here shall noL be
Lransferred Lo any new owner ln Lhe books of any corporaLlonţ socledad anonlmaţ parLnershlpţ buslnessţ
or lndusLry organlzed or esLabllshed ln Lhe Þhlllpplnes any shareţ obllgaLlonţ bond or rlghL by way of glfL
lnLer vlvos or morLls causaţ legacy or lnherlLanceţ unless a cerLlflcaLlon from Lhe Commlssloner LhaL Lhe
Laxes flxed ln Lhls 1lLle and due Lhereon have been pald ls shownŦ

lf a bank has knowledge of Lhe deaLh of a personţ who malnLalned a bank deposlL accounL aloneţ or
[olnLly wlLh anoLherţ lL shall noL allow any wlLhdrawal from Lhe sald deposlL accounLţ unless Lhe
Commlssloner has cerLlfled LhaL Lhe Laxes lmposed Lhereon by Lhls 1lLle have been paldť Þrovldedţ
howeverţ 1haL Lhe admlnlsLraLor of Lhe esLaLe or any one (1) of Lhe helrs of Lhe decedenL mayţ upon
auLhorlzaLlon by Lhe Commlsslonerţ wlLhdraw an amounL noL exceedlng 1wenLy Lhousand pesos
(Þ20ţ000) wlLhouL Lhe sald cerLlflcaLlonŦ lor Lhls purposeţ all wlLhdrawal sllps shall conLaln a sLaLemenL
Lo Lhe effecL LhaL all of Lhe [olnL deposlLors are sLlll llvlng aL Lhe Llme of wlLhdrawal by any one of Lhe
[olnL deposlLors and such sLaLemenL shall be under oaLh by Lhe sald deposlLorsŦ

CPAÞ1L8 ll
uCnC8ƌS 1Ax


SLCŦ 98Ŧ lmposlLlon of 1axŦ Ŵ
(A) 1here shall be levledţ assessedţ collecLed and pald upon Lhe Lransfer by any personţ resldenL or
nonresldenLţ of Lhe properLy by glfLţ a Laxţ compuLed as provlded ln SecLlon 99Ŧ
(8) 1he Lax shall apply wheLher Lhe Lransfer ls ln LrusL or oLherwlseţ wheLher Lhe glfL ls dlrecL or lndlrecLţ
and wheLher Lhe properLy ls real or personalţ Langlble or lnLanglbleŦ
SLCŦ 99Ŧ 8aLes of 1ax Þayable by uonorŦ Ŵ

(A) ln CeneralŦ Ŵ 1he Lax for each calendar year shall be compuLed on Lhe basls of Lhe LoLal neL glfLs
made durlng Lhe calendar year ln accordance wlLh Lhe followlng scheduleť
lf Lhe neL glfL lsť

CvL8

8u1 nC1 CvL8
1PL 1Ax SPALL 8L


ÞLuS
Cl 1PL LxCLSS CvL8

Þ 100ţ000
LxempL

Þ 100ţ000
200ţ000
0

Þ100ţ000
200ţ000
300ţ000
2ţ000

200ţ000
300ţ000
1ţ000ţ000
14ţ000

300ţ000
1ţ000ţ000
3ţ000ţ000
44ţ000

1ţ000ţ000
3ţ000ţ000
3ţ000ţ000
204ţ000
10Ʒ
3ţ000ţ000
3ţ000ţ000
10ţ000ţ000
404ţ000
12Ʒ
3ţ000ţ000
10ţ000ţ000

1ţ004ţ000
13Ʒ
10ţ000ţ000

(8) 1ax Þayable by uonor lf uonee ls a SLrangerŦ Ŵ When Lhe donee or beneflclary ls sLrangerţ Lhe Lax
payable by Lhe donor shall be LhlrLy percenL (30Ʒ) of Lhe neL glfLsŦ lor Lhe purpose of Lhls Laxţ a
ƍsLrangerƍţ ls a person who ls noL ať
(1) 8roLherţ slsLer (wheLher by whole or halfŴblood)ţ spouseţ ancesLor and llneal descendanLŤ or
(2) 8elaLlve by consangulnlLy ln Lhe collaLeral llne wlLhln Lhe fourLh degree of relaLlonshlpŦ
(C) Any conLrlbuLlon ln cash or ln klnd Lo any candldaLeţ pollLlcal parLy or coallLlon of parLles for
campalgn purposes shall be governed by Lhe LlecLlon Codeţ as amendedŦ

SLCŦ 100Ŧ 1ransfer for Less 1han AdequaLe and lull ConslderaLlonŦ Ŵ Where properLyţ oLher Lhan real
properLy referred Lo ln SecLlon 24(u)ţ ls Lransferred for less Lhan an adequaLe and full conslderaLlon ln
money or moneyƌs worLhţ Lhen Lhe amounL by whlch Lhe falr markeL value of Lhe properLy exceeded Lhe
value of Lhe conslderaLlon shallţ for Lhe purpose of Lhe Lax lmposed by Lhls ChapLerţ be deemed a glfLţ
and shall be lncluded ln compuLlng Lhe amounL of glfLs made durlng Lhe calendar yearŦ
SLCŦ 101Ŧ LxempLlon of CerLaln ClfLsŦ Ŵ 1he followlng glfLs or donaLlons shall be exempL from Lhe Lax
provlded for ln Lhls ChapLerť

(A) ln Lhe Case of ClfLs Made by a 8esldenLŦ Ŵ

(1) uowrles or glfLs made on accounL of marrlage and before lLs celebraLlon or wlLhln one year
LhereafLer by parenLs Lo each of Lhelr leglLlmaLeţ recognlzed naLuralţ or adopLed chlldren Lo Lhe exLenL
of Lhe flrsL 1en Lhousand pesos (Þ10ţ000)ť
(2) ClfLs made Lo or for Lhe use of Lhe naLlonal CovernmenL or any enLlLy creaLed by any of lLs agencles
whlch ls noL conducLed for proflLţ or Lo any pollLlcal subdlvlslon of Lhe sald CovernmenLŤ and
(3) ClfLs ln favor of an educaLlonal and/or charlLableţ rellglousţ culLural or soclal welfare corporaLlonţ
lnsLlLuLlonţ accredlLed nongovernmenL organlzaLlonţ LrusL or phllanLhroplc organlzaLlon or research
lnsLlLuLlon or organlzaLlonť Þrovldedţ howeverţ 1haL noL more Lhan LhlrLy percenL (30Ʒ) of sald glfLs shall
be used by such donee for admlnlsLraLlon purposesŦ lor Lhe purpose of Lhe exempLlonţ a ƌnonŴproflL
educaLlonal and/or charlLable corporaLlonţ lnsLlLuLlonţ accredlLed nongovernmenL organlzaLlonţ LrusL or
phllanLhroplc organlzaLlon and/or research lnsLlLuLlon or organlzaLlonƌ ls a schoolţ college or unlverslLy
and/or charlLable corporaLlonţ accredlLed nongovernmenL organlzaLlonţ LrusL or phllanLhroplc
organlzaLlon and/or research lnsLlLuLlon or organlzaLlonţ lncorporaLed as a nonsLock enLlLyţ paylng no
dlvldendsţ governed by LrusLees who recelve no compensaLlonţ and devoLlng all lLs lncomeţ wheLher
sLudenLsƌ fees or glfLsţ donaLlonţ subsldles or oLher forms of phllanLhropyţ Lo Lhe accompllshmenL and
promoLlon of Lhe purposes enumeraLed ln lLs ArLlcles of lncorporaLlonŦ
(8) ln Lhe Case of ClfLs Made by a nonresldenL noL a ClLlzen of Lhe ÞhlllpplnesŦ Ŵ
(1) ClfLs made Lo or for Lhe use of Lhe naLlonal CovernmenL or any enLlLy creaLed by any of lLs agencles
whlch ls noL conducLed for proflLţ or Lo any pollLlcal subdlvlslon of Lhe sald CovernmenLŦ
(2) ClfLs ln favor of an educaLlonal and/or charlLableţ rellglousţ culLural or soclal welfare corporaLlonţ
lnsLlLuLlonţ foundaLlonţ LrusL or phllanLhroplc organlzaLlon or research lnsLlLuLlon or organlzaLlonť
Þrovldedţ howeverţ 1haL noL more Lhan LhlrLy percenL (30Ʒ) of sald glfLs shall be used by such donee for
admlnlsLraLlon purposesŦ
(C) 1ax CredlL for uonorƌs 1axes Þald Lo a lorelgn CounLryŦ Ŵ
(1) ln CeneralŦ Ŵ 1he Lax lmposed by Lhls 1lLle upon a donor who was a clLlzen or a resldenL aL Lhe Llme
of donaLlon shall be credlLed wlLh Lhe amounL of any donorƌs Lax of any characLer and descrlpLlon
lmposed by Lhe auLhorlLy of a forelgn counLryŦ
(2) LlmlLaLlons on CredlLŦ Ŵ 1he amounL of Lhe credlL Laken under Lhls SecLlon shall be sub[ecL Lo each of
Lhe followlng llmlLaLlonsť
(a) 1he amounL of Lhe credlL ln respecL Lo Lhe Lax pald Lo any counLry shall noL exceed Lhe same
proporLlon of Lhe Lax agalnsL whlch such credlL ls Lakenţ whlch Lhe neL glfLs slLuaLed wlLhln such counLry
Laxable under Lhls 1lLle bears Lo hls enLlre neL glfLsŤ and
(b) 1he LoLal amounL of Lhe credlL shall noL exceed Lhe same proporLlon of Lhe Lax agalnsL whlch such
credlL ls Lakenţ whlch Lhe donorƌs neL glfLs slLuaLed ouLslde Lhe Þhlllpplnes Laxable under Lhls LlLle bears
Lo hls enLlre neL glfLsŦ
SLCŦ 102Ŧ valuaLlon of ClfLs Made ln ÞroperLyŦ Ŵ lf Lhe glfL ls made ln properLyţ Lhe falr markeL value
Lhereof aL Lhe Llme of Lhe glfL shall be consldered Lhe amounL of Lhe glfLŦ ln case of real properLyţ Lhe
provlslons of SecLlon 88(8) shall apply Lo Lhe valuaLlon LhereofŦ
SLCŦ 103Ŧ llllng of 8eLurn and ÞaymenL of 1axŦ Ŵ

(A) 8equlremenLsŦ Ŵ any lndlvldual who makes any Lransfer by glfL (excepL Lhose whlchţ under SecLlon
101ţ are exempL from Lhe Lax provlded for ln Lhls ChapLer) shallţ for Lhe purpose of Lhe sald Laxţ make a
reLurn under oaLh ln dupllcaLeŦ 1he reLurn shall se forLhť

(1) Lach glfL made durlng Lhe calendar year whlch ls Lo be lncluded ln compuLlng neL glfLsŤ
(2) 1he deducLlons clalmed and allowableŤ
(3) Any prevlous neL glfLs made durlng Lhe same calendar yearŤ
(4) 1he name of Lhe doneeŤ and
(3) Such furLher lnformaLlon as may be requlred by rules and regulaLlons made pursuanL Lo lawŦ
(8) 1lme and Þlace of llllng and ÞaymenLŦ Ŵ 1he reLurn of Lhe donor requlred ln Lhls SecLlon shall be flled
wlLhln LhlrLy (30) days afLer Lhe daLe Lhe glfL ls made and Lhe Lax due Lhereon shall be pald aL Lhe Llme of
flllngŦ LxcepL ln cases where Lhe Commlssloner oLherwlse permlLsţ Lhe reLurn shall be flled and Lhe Lax
pald Lo an auLhorlzed agenL bankţ Lhe 8evenue ulsLrlcL Cfflcerţ 8evenue CollecLlon Cfflcer or duly
auLhorlzed 1reasurer of Lhe clLy or munlclpallLy where Lhe donor was domlclled aL Lhe Llme of Lhe
Lransferţ or lf Lhere be no legal resldence ln Lhe Þhlllpplnesţ wlLh Lhe Cfflce of Lhe CommlsslonerŦ ln Lhe
case of glfLs made by a nonresldenLţ Lhe reLurn may be flled wlLh Lhe Þhlllpplne Lmbassy or ConsulaLe ln
Lhe counLry where he ls domlclled aL Lhe Llme of Lhe Lransferţ or dlrecLly wlLh Lhe Cfflce of Lhe
CommlsslonerŦ

SLCŦ 104Ŧ ueflnlLlonsŦ Ŵ lor purposes of Lhls 1lLleţ Lhe Lerms ƍgross esLaLeƍ and ƍglfLsƍ lnclude real and
personal properLyţ wheLher Langlble or lnLanglbleţ or mlxedţ wherever slLuaLedť Þrovldedţ howeverţ 1haL
where Lhe decedenL or donor was a nonresldenL allen aL Lhe Llme of hls deaLh or donaLlonţ as Lhe case
may beţ hls real and personal properLy so Lransferred buL whlch are slLuaLed ouLslde Lhe Þhlllpplnes
shall noL be lncluded as parL of hls ƍgross esLaLeƍ or ƍgross glfLƍť Þrovldedţ furLherţ 1haL franchlse whlch
musL be exerclsed ln Lhe ÞhlllpplnesŤ sharesţ obllgaLlons or bonds lssued by any corporaLlon or socledad
anonlma organlzed or consLlLuLed ln Lhe Þhlllpplnes ln accordance wlLh lLs lawsŤ sharesţ obllgaLlons or
bonds by any forelgn corporaLlon elghLyŴflve percenL (83Ʒ) of Lhe buslness of whlch ls locaLed ln Lhe
ÞhlllpplnesŤ sharesţ obllgaLlons or bonds lssued by any forelgn corporaLlon lf such sharesţ obllgaLlons or
bonds have acqulred a buslness slLus ln Lhe ÞhlllpplnesŤ shares or rlghLs ln any parLnershlpţ buslness or
lndusLry esLabllshed ln Lhe Þhlllpplnesţ shall be consldered as slLuaLed ln Lhe Þhlllpplnesť Þrovldedţ sLlll
furLherţ LhaL no Lax shall be collecLed under Lhls 1lLle ln respecL of lnLanglble personal properLyť (a) lf Lhe
decedenL aL Lhe Llme of hls deaLh or Lhe donor aL Lhe Llme of Lhe donaLlon was a clLlzen and resldenL of
a forelgn counLry whlch aL Lhe Llme of hls deaLh or donaLlon dld noL lmpose a Lransfer Lax of any
characLerţ ln respecL of lnLanglble personal properLy of clLlzens of Lhe Þhlllpplnes noL resldlng ln LhaL
forelgn counLryţ or (b) lf Lhe laws of Lhe forelgn counLry of whlch Lhe decedenL or donor was a clLlzen
and resldenL aL Lhe Llme of hls deaLh or donaLlon allows a slmllar exempLlon from Lransfer or deaLh
Laxes of every characLer or descrlpLlon ln respecL of lnLanglble personal properLy owned by clLlzens of
Lhe Þhlllpplnes noL resldlng ln LhaL forelgn counLryŦ

1he Lerm ƍdeflclencyƍ meansť (a) Lhe amounL by whlch Lax lmposed by Lhls ChapLer exceeds Lhe amounL
shown as Lhe Lax by Lhe donor upon hls reLurnŤ buL Lhe amounL so shown on Lhe reLurn shall flrsL be
lncreased by Lhe amounL prevlously assessed (or collecLed wlLhouL assessmenL) as a deflclencyţ and
decreased by Lhe amounLs prevlously abaLedţ refunded or oLherwlse repald ln respecL of such Laxţ or (b)
lf no amounL ls shown as Lhe Lax by Lhe donorţ Lhen Lhe amounL by whlch Lhe Lax exceeds Lhe amounLs
prevlously assessedţ (or collecLed wlLhouL assessmenL) as a deflclencyţ buL such amounLs prevlously
assessedţ or collecLed wlLhouL assessmenLţ shall flrsL be decreased by Lhe amounL prevlously abaLedţ
refunded or oLherwlse repald ln respecL of such LaxŦ

1l1LL lv
vALuLŴAuuLu 1Ax

CPAÞ1L8 l
lMÞCSl1lCn Cl 1Ax


SLCŦ 103Ŧ Þersons LlableŦ Ŵ Any person whoţ ln Lhe course of Lrade or buslnessţ sells barLersţ exchangesţ
leases goods or properLlesţ renders servlcesţ and any person who lmporLs goods shall be sub[ecL Lo Lhe
valueŴadded Lax (vA1) lmposed ln SecLlons 106 Lo 108 of Lhls CodeŦ
1he valueŴadded Lax ls an lndlrecL Lax and Lhe amounL of Lax may be shlfLed or passed on Lo Lhe buyerţ
Lransferee or lessee of Lhe goodsţ properLles or servlcesŦ 1hls rule shall llkewlse apply Lo exlsLlng
conLracLs of sale or lease of goodsţ properLles or servlces aL Lhe Llme of Lhe effecLlvlLy of 8epubllc AcL
noŦ 7716Ŧ

1he phrase ƍln Lhe course of Lrade or buslnessƍ means Lhe regular conducL or pursulL of a commerclal or
an economlc acLlvlLyţ lncludlng LransacLlons lncldenLal LhereLoţ by any person regardless of wheLher or
noL Lhe person engaged Lhereln ls a nonsLockţ nonproflL prlvaLe organlzaLlon (lrrespecLlve of Lhe
dlsposlLlon of lLs neL lncome and wheLher or noL lL sells excluslvely Lo members or Lhelr guesLs)ţ or
governmenL enLlLyŦ

1he rule of regularlLyţ Lo Lhe conLrary noLwlLhsLandlngţ servlces as deflned ln Lhls Code rendered ln Lhe
Þhlllpplnes by nonresldenL forelgn persons shall be consldered as belng course of Lrade or buslnessŦ

SLCŦ 106Ŧ valueŴAdded 1ax on Sale of Coods or ÞroperLlesŦ Ŵ

(A) 8aLe and 8ase of 1axŦ Ŵ 1here shall be levledţ assessed and collecLed on every saleţ barLer or
exchange of goods or properLlesţ valueŴadded Lax equlvalenL Lo Len percenL (10Ʒ) of Lhe gross selllng
prlce or gross value ln money of Lhe goods or properLles soldţ barLered or exchangedţ such Lax Lo be pald
by Lhe seller or LransferorŦ

(1) 1he Lerm ƍgoodsƍ or ƍproperLlesƍ shall mean all Langlble and lnLanglble ob[ecLs whlch are capable of
pecunlary esLlmaLlon and shall lncludeť
(a) 8eal properLles held prlmarlly for sale Lo cusLomers or held for lease ln Lhe ordlnary course of Lrade
or buslnessŤ
(b) 1he rlghL or Lhe prlvllege Lo use paLenLţ copyrlghLţ deslgn or modelţ planţ secreL formula or processţ
goodwlllţ Lrademarkţ Lrade brand or oLher llke properLy or rlghLŤ
(c) 1he rlghL or Lhe prlvllege Lo use ln Lhe Þhlllpplnes of any lndusLrlalţ commerclal or sclenLlflc
equlpmenLŤ
(d) 1he rlghL or Lhe prlvllege Lo use moLlon plcLure fllmsţ Lapes and dlscsŤ and
(e) 8adloţ Lelevlslonţ saLelllLe Lransmlsslon and cable Lelevlslon LlmeŦ
1he Lerm ƍgross selllng prlceƍ means Lhe LoLal amounL of money or lLs equlvalenL whlch Lhe purchaser
pays or ls obllgaLed Lo pay Lo Lhe seller ln conslderaLlon of Lhe saleţ barLer or exchange of Lhe goods or
properLlesţ excludlng Lhe valueŴadded LaxŦ 1he exclse Laxţ lf anyţ on such goods or properLles shall form
parL of Lhe gross selllng prlceŦ
(2) 1he followlng sales by vA1ŴreglsLered persons shall be sub[ecL Lo zero percenL (0Ʒ) raLeť
(a) LxporL SalesŦ Ŵ 1he Lerm ƍexporL salesƍ meansť
(1) 1he sale and acLual shlpmenL of goods from Lhe Þhlllpplnes Lo a forelgn counLryţ lrrespecLlve of any
shlpplng arrangemenL LhaL may be agreed upon whlch may lnfluence or deLermlne Lhe Lransfer of
ownershlp of Lhe goods so exporLed and pald for ln accepLable forelgn currency or lLs equlvalenL ln
goods or servlcesţ and accounLed for ln accordance wlLh Lhe rules and regulaLlons of Lhe 8angko SenLral
ng Þlllplnas (8SÞ)Ť
(2) Sale of raw maLerlals or packaglng maLerlals Lo a nonresldenL buyer for dellvery Lo a resldenL local
exporLŴorlenLed enLerprlse Lo be used ln manufacLurlngţ processlngţ packlng or repacklng ln Lhe
Þhlllpplnes of Lhe sald buyerƌs goods and pald for ln accepLable forelgn currency and accounLed for ln
accordance wlLh Lhe rules and regulaLlons of Lhe 8angko SenLral ng Þlllplnas (8SÞ)Ť
(3) Sale of raw maLerlals or packaglng maLerlals Lo exporLŴorlenLed enLerprlse whose exporL sales
exceed sevenLy percenL (70Ʒ) of LoLal annual producLlonŤ
(4) Sale of gold Lo Lhe 8angko SenLral ng Þlllplnas (8SÞ)Ť and
(3) 1hose consldered exporL sales under LxecuLlve Crder nCŦ 226ţ oLherwlse known as Lhe Cmnlbus
lnvesLmenL Code of 1987ţ and oLher speclal lawsŦ
(b) lorelgn Currency uenomlnaLed SaleŦ Ŵ 1he phrase ƍforelgn currency denomlnaLed saleƍ means sale
Lo a nonresldenL of goodsţ excepL Lhose menLloned ln SecLlons 149 and 130ţ assembled or
manufacLured ln Lhe Þhlllpplnes for dellvery Lo a resldenL ln Lhe Þhlllpplnesţ pald for ln accepLable
forelgn currency and accounLed for ln accordance wlLh Lhe rules and regulaLlons of Lhe 8angko SenLral
ng Þlllplnas (8SÞ)Ŧ
(c) Sales Lo persons or enLlLles whose exempLlon under speclal laws or lnLernaLlonal agreemenLs Lo
whlch Lhe Þhlllpplnes ls a slgnaLory effecLlvely sub[ecLs such sales Lo zero raLeŦ
(8) 1ransacLlons ueemed SaleŦ Ŵ 1he followlng LransacLlons shall be deemed saleť
(1) 1ransferţ use or consumpLlon noL ln Lhe course of buslness of goods or properLles orlglnally lnLended
for sale or for use ln Lhe course of buslnessŤ
(2) ulsLrlbuLlon or Lransfer Loť
(a) Shareholders or lnvesLors as share ln Lhe proflLs of Lhe vA1ŴreglsLered personsŤ or
(b) CredlLors ln paymenL of debLŤ
(3) ConslgnmenL of goods lf acLual sale ls noL made wlLhln slxLy (60) days followlng Lhe daLe such goods
were conslgnedŤ and
(4) 8eLlremenL from or cessaLlon of buslnessţ wlLh respecL Lo lnvenLorles of Laxable goods exlsLlng as of
such reLlremenL or cessaLlonŦ
(C) Changes ln or CessaLlon of SLaLus of a vA1ŴreglsLered ÞersonŦ Ŵ 1he Lax lmposed ln SubsecLlon (A) of
Lhls SecLlon shall also apply Lo goods dlsposed of or exlsLlng as of a cerLaln daLe lf under clrcumsLances
Lo be prescrlbed ln rules and regulaLlons Lo be promulgaLed by Lhe SecreLary of llnanceţ upon
recommendaLlon of Lhe Commlsslonerţ Lhe sLaLus of a person as a vA1ŴreglsLered person changes or ls
LermlnaLedŦ

(u) ueLermlnaLlon of Lhe 1axŦ Ŵ
(1) 1he Lax shall be compuLed by mulLlplylng Lhe LoLal amounL lndlcaLed ln Lhe lnvolce by oneŴelevenLh
(1/11)Ŧ
(2) Sales 8eLurnsţ Allowances and Sales ulscounLsŦ Ŵ 1he value of goods or properLles sold and
subsequenLly reLurned or for whlch allowances were granLed by a vA1ŴreglsLered person may be
deducLed from Lhe gross sales or recelpLs for Lhe quarLer ln whlch a refund ls made or a credlL
memorandum or refund ls lssuedŦ Sales dlscounL granLed and lndlcaLed ln Lhe lnvolce aL Lhe Llme of sale
and Lhe granL of whlch does noL depend upon Lhe happenlng of a fuLure evenL may be excluded from
Lhe gross sales wlLhln Lhe same quarLer lL was glvenŦ
(3) AuLhorlLy of Lhe Commlssloner Lo ueLermlne Lhe ApproprlaLe 1ax 8aseŦ Ŵ 1he Commlssloner shallţ by
rules and regulaLlons prescrlbed by Lhe SecreLary of llnanceţ deLermlne Lhe approprlaLe Lax base ln
cases where a LransacLlon ls deemed a saleţ barLer or exchange of goods or properLles under SubsecLlon
(8) hereofţ or where Lhe gross selllng prlce ls unreasonably lower Lhan Lhe acLual markeL valueŦ

SLCŦ 107Ŧ valueŴAdded 1ax on lmporLaLlon of CoodsŦ Ŵ

(A) ln CeneralŦ Ŵ 1here shall be levledţ assessed and collecLed on every lmporLaLlon of goods a valueŴ
added Lax equlvalenL Lo Len percenL (10Ʒ) based on Lhe LoLal value used by Lhe 8ureau of CusLoms ln
deLermlnlng Larlff and cusLoms duLles plus cusLoms duLlesţ exclse Laxesţ lf anyţ and oLher chargesţ such
Lax Lo be pald by Lhe lmporLer prlor Lo Lhe release of such goods from cusLoms cusLodyť Þrovldedţ 1haL
where Lhe cusLoms duLles are deLermlned on Lhe basls of Lhe quanLlLy or volume of Lhe goodsţ Lhe
valueŴadded Lax shall be based on Lhe landed cosL plus exclse Laxesţ lf anyŦ

(8) 1ransfer of Coods by 1axŴLxempL ÞersonsŦ Ŵ ln Lhe case of LaxŴfree lmporLaLlon of goods lnLo Lhe
Þhlllpplnes by personsţ enLlLles or agencles exempL from Lax where such goods are subsequenLly soldţ
Lransferred or exchanged ln Lhe Þhlllpplnes Lo nonŴexempL persons or enLlLlesţ Lhe purchasersţ
Lransferees or reclplenLs shall be consldered Lhe lmporLers Lhereofţ who shall be llable for any lnLernal
revenue Lax on such lmporLaLlonŦ 1he Lax due on such lmporLaLlon shall consLlLuLe a llen on Lhe goods
superlor Lo all charges or llens on Lhe goodsţ lrrespecLlve of Lhe possessor LhereofŦ

SLCŦ 108Ŧ valueŴadded 1ax on Sale of Servlces and use or Lease of ÞroperLlesŦ Ŵ

(A) 8aLe and 8ase of 1axŦ Ŵ 1here shall be levledţ assessed and collecLedţ a valueŴadded Lax equlvalenL Lo
Len percenL (10Ʒ) of gross recelpLs derlved from Lhe sale or exchange of servlcesţ lncludlng Lhe use or
lease of properLlesŦ

1he phrase ƍsale or exchange of servlcesƍ means Lhe performance of all klnds or servlces ln Lhe
Þhlllpplnes for oLhers for a feeţ remuneraLlon or conslderaLlonţ lncludlng Lhose performed or rendered
by consLrucLlon and servlce conLracLorsŤ sLockţ real esLaLeţ commerclalţ cusLoms and lmmlgraLlon
brokersŤ lessors of properLyţ wheLher personal or realŤ warehouslng servlcesŤ lessors or dlsLrlbuLors of
clnemaLographlc fllmsŤ persons engaged ln mllllng processlngţ manufacLurlng or repacklng goods for
oLhersŤ proprleLorsţ operaLors or keepers of hoLelsţ moLelsţ resLhousesţ penslon housesţ lnnsţ resorLsŤ
proprleLors or operaLors of resLauranLsţ refreshmenL parlorsţ cafes and oLher eaLlng placesţ lncludlng
clubs and caLerersŤ dealers ln securlLlesŤ lendlng lnvesLorsŤ LransporLaLlon conLracLors on Lhelr LransporL
of goods or cargoesţ lncludlng persons who LransporL goods or cargoes for hlre anoLher domesLlc
common carrlers by landţ alr and waLer relaLlve Lo Lhelr LransporL of goods or cargoesŤ servlces of
franchlse granLees of Lelephone and Lelegraphţ radlo and Lelevlslon broadcasLlng and all oLher franchlse
granLees excepL Lhose under SecLlon 119 of Lhls CodeŤ servlces of banksţ nonŴbank flnanclal
lnLermedlarles and flnance companlesŤ and nonŴllfe lnsurance companles (excepL Lhelr crop lnsurances)ţ
lncludlng sureLyţ fldellLyţ lndemnlLy and bondlng companlesŤ and slmllar servlces regardless of wheLher
or noL Lhe performance Lhereof calls for Lhe exerclse or use of Lhe physlcal or menLal faculLlesŦ 1he
phrase ƌsale or exchange of servlcesƌ shall llkewlse lncludeť
(1) 1he lease or Lhe use of or Lhe rlghL or prlvllege Lo use any copyrlghLţ paLenLţ deslgn or modelţ plan
secreL formula or processţ goodwlllţ Lrademarkţ Lrade brand or oLher llke properLy or rlghLŤ
(2) 1he lease of Lhe use ofţ or Lhe rlghL Lo use of any lndusLrlalţ commerclal or sclenLlflc equlpmenLŤ
(3) 1he supply of sclenLlflcţ Lechnlcalţ lndusLrlal or commerclal knowledge or lnformaLlonŤ
(4) 1he supply of any asslsLance LhaL ls anclllary and subsldlary Lo and ls furnlshed as a means of
enabllng Lhe appllcaLlon or en[oymenL of any such properLyţ or rlghL as ls menLloned ln subparagraph (2)
or any such knowledge or lnformaLlon as ls menLloned ln subparagraph (3)Ť
(3) 1he supply of servlces by a nonresldenL person or hls employee ln connecLlon wlLh Lhe use of
properLy or rlghLs belonglng Loţ or Lhe lnsLallaLlon or operaLlon of any brandţ machlnery or oLher
apparaLus purchased from such nonresldenL personŦ
(6) 1he supply of Lechnlcal advlceţ asslsLance or servlces rendered ln connecLlon wlLh Lechnlcal
managemenL or admlnlsLraLlon of any sclenLlflcţ lndusLrlal or commerclal underLaklngţ venLureţ pro[ecL
or schemeŤ
(7) 1he lease of moLlon plcLure fllmsţ fllmsţ Lapes and dlscsŤ and
(8) 1he lease or Lhe use of or Lhe rlghL Lo use radloţ Lelevlslonţ saLelllLe Lransmlsslon and cable Lelevlslon
LlmeŦ
Lease of properLles shall be sub[ecL Lo Lhe Lax hereln lmposed lrrespecLlve of Lhe place where Lhe
conLracL of lease or llcenslng agreemenL was execuLed lf Lhe properLy ls leased or used ln Lhe
ÞhlllpplnesŦ
1he Lerm ƍgross recelpLsƍ means Lhe LoLal amounL of money or lLs equlvalenL represenLlng Lhe conLracL
prlceţ compensaLlonţ servlce feeţ renLal or royalLyţ lncludlng Lhe amounL charged for maLerlals supplled
wlLh Lhe servlces and deposlLs and advanced paymenLs acLually or consLrucLlvely recelved durlng Lhe
Laxable quarLer for Lhe servlces performed or Lo be performed for anoLher personţ excludlng valueŴ
added LaxŦ

(8) 1ransacLlons Sub[ecL Lo Zero ÞercenL (0Ʒ) 8aLeŦ Ŵ 1he followlng servlces performed ln Lhe Þhlllpplnes
by vA1Ŵ reglsLered persons shall be sub[ecL Lo zero percenL (0Ʒ) raLeŦ

(1) Þrocesslngţ manufacLurlng or repacklng goods for oLher persons dolng buslness ouLslde Lhe
Þhlllpplnes whlch goods are subsequenLly exporLedţ where Lhe servlces are pald for ln accepLable
forelgn currency and accounLed for ln accordance wlLh Lhe rules and regulaLlons of Lhe 8angko SenLral
ng Þlllplnas (8SÞ)Ť
(2) Servlces oLher Lhan Lhose menLloned ln Lhe precedlng paragraphţ Lhe conslderaLlon for whlch ls pald
for ln accepLable forelgn currency and accounLed for ln accordance wlLh Lhe rules and regulaLlons of Lhe
8angko SenLral ng Þlllplnas (8SÞ)Ť
(3) Servlces rendered Lo persons or enLlLles whose exempLlon under speclal laws or lnLernaLlonal
agreemenLs Lo whlch Lhe Þhlllpplnes ls a slgnaLory effecLlvely sub[ecLs Lhe supply of such servlces Lo zero
percenL (0Ʒ) raLeŤ
(4) Servlces rendered Lo vessels engaged excluslvely ln lnLernaLlonal shlpplngŤ and
(3) Servlces performed by subconLracLors and/or conLracLors ln processlngţ converLlngţ of
manufacLurlng goods for an enLerprlse whose exporL sales exceed sevenLy percenL (70Ʒ) of LoLal annual
producLlonŦ
(C) ueLermlnaLlon of Lhe 1axŦ Ŵ 1he Lax shall be compuLed by mulLlplylng Lhe LoLal amounL lndlcaLed ln
Lhe offlclal recelpL by oneŴelevenLh (1/11)Ŧ
SLCŦ 109Ŧ LxempL 1ransacLlonsŦ Ŵ 1he followlng shall be exempL from Lhe valueŴadded Laxť

(a) Sale of nonfood agrlculLural producLsŤ marlne and foresL producLs ln Lhelr orlglnal sLaLe by Lhe
prlmary producer or Lhe owner of Lhe land where Lhe same are producedŤ
(b) Sale of coLLon seeds ln Lhelr orlglnal sLaLeŤ and copraŤ
(c) Sale or lmporLaLlon of agrlculLural and marlne food producLs ln Lhelr orlglnal sLaLeţ llvesLock and
poulLry of or klng generally used asţ or yleldlng or produclng foods for human consumpLlonŤ and
breedlng sLock and geneLlc maLerlals LhereforŦ
ÞroducLs classlfled under Lhls paragraph and paragraph (a) shall be consldered ln Lhelr orlglnal sLaLe
even lf Lhey have undergone Lhe slmple processes of preparaLlon or preservaLlon for Lhe markeLţ such as
freezlngţ drylngţ salLlngţ brolllngţ roasLlngţ smoklng or sLrlpplngŦ
Þollshed and/or husked rlceţ corn grlLsţ raw cane sugar and molassesţ and ordlnary salL shall be
consldered ln Lhelr orlglnal sLaLeŤ
(d) Sale or lmporLaLlon of ferLlllzersŤ seedsţ seedllngs and flngerllngsŤ flshţ prawnţ llvesLock and poulLry
feedsţ lncludlng lngredlenLsţ wheLher locally produced or lmporLedţ used ln Lhe manufacLure of flnlshed
feeds (excepL speclalLy feeds for race horsesţ flghLlng cocksţ aquarlum flshţ zoo anlmals and oLher
anlmals generally consldered as peLs)Ť
(e) Sale or lmporLaLlon of coal and naLural gasţ ln whaLever form or sLaLeţ and peLroleum producLs
(excepL lubrlcaLlng ollţ processed gasţ greaseţ wax and peLrolaLum) sub[ecL Lo exclse Lax lmposed under
1lLle vlŤ
(f) Sale or lmporLaLlon of raw maLerlals Lo be used by Lhe buyer or lmporLer hlmself ln Lhe manufacLure
of peLroleum producLs sub[ecL Lo exclse Laxţ excepL lubrlcaLlng ollţ processed gasţ greaseţ wax and
peLrolaLumŤ
(g) lmporLaLlon of passenger and/or cargo vessels of more Lhan flve Lhousand Lons (3ţ000) wheLher
coasLwlse or oceanŴgolngţ lncludlng englne and spare parLs of sald vessel Lo be used by Lhe lmporLer
hlmself as operaLor LhereofŤ
(h) lmporLaLlon of personal and household effecLs belonglng Lo Lhe resldenLs of Lhe Þhlllpplnes
reLurnlng from abroad and nonresldenL clLlzens comlng Lo reseLLle ln Lhe Þhlllpplnesť Þrovldedţ 1haL
such goods are exempL from cusLoms duLles under Lhe 1arlff and CusLoms Code of Lhe ÞhlllpplnesŤ
(l) lmporLaLlon of professlonal lnsLrumenLs and lmplemenLsţ wearlng apparelţ domesLlc anlmalsţ and
personal household effecLs (excepL any vehlcleţ vesselţ alrcrafLţ machlnery oLher goods for use ln Lhe
manufacLure and merchandlse of any klnd ln commerclal quanLlLy) belonglng Lo persons comlng Lo
seLLle ln Lhe Þhlllpplnesţ for Lhelr own use and noL for saleţ barLer or exchangeţ accompanylng such
personsţ or arrlvlng wlLhln nlneLy (90) days before or afLer Lhelr arrlvalţ upon Lhe producLlon of evldence
saLlsfacLory Lo Lhe Commlsslonerţ LhaL such persons are acLually comlng Lo seLLle ln Lhe Þhlllpplnes and
LhaL Lhe change of resldence ls bona fldeŤ
([) Servlces sub[ecL Lo percenLage Lax under 1lLle vŤ
(k) Servlces by agrlculLural conLracL growers and mllllng for oLhers of palay lnLo rlceţ corn lnLo grlLs and
sugar cane lnLo raw sugarŤ
(l) Medlcalţ denLalţ hosplLal and veLerlnary servlces sub[ecL Lo Lhe provlslons of SecLlon 17 of 8epubllc
AcL noŦ 7716ţ as amendedť
(m) LducaLlonal servlces rendered by prlvaLe educaLlonal lnsLlLuLlonsţ duly accredlLed by Lhe
ueparLmenL of LducaLlonţ CulLure and SporLs (uLCS) and Lhe Commlsslon on Plgher LducaLlon (CPLu)ţ
and Lhose rendered by governmenL educaLlonal lnsLlLuLlonsŤ
(n) Sale by Lhe arLlsL hlmself of hls works of arLţ llLerary worksţ muslcal composlLlons and slmllar
creaLlonsţ or hls servlces performed for Lhe producLlon of such worksŤ
(o) Servlces rendered by lndlvlduals pursuanL Lo an employerŴemployee relaLlonshlpŤ
(p) Servlces rendered by reglonal or area headquarLers esLabllshed ln Lhe Þhlllpplnes by mulLlnaLlonal
corporaLlons whlch acL as supervlsoryţ communlcaLlons and coordlnaLlng cenLers for Lhelr afflllaLesţ
subsldlarles or branches ln Lhe AslaŴÞaclflc 8eglon and do noL earn or derlve lncome from Lhe
ÞhlllpplnesŤ
(q) 1ransacLlons whlch are exempL under lnLernaLlonal agreemenLs Lo whlch Lhe Þhlllpplnes ls a
slgnaLory or under speclal lawsţ excepL Lhose under ÞresldenLlal uecree nosŦ 66ţ 329 and 1390Ť
(r) Sales by agrlculLural cooperaLlves duly reglsLered wlLh Lhe CooperaLlve uevelopmenL AuLhorlLy Lo
Lhelr members as well as sale of Lhelr produceţ wheLher ln lLs orlglnal sLaLe or processed formţ Lo nonŴ
membersŤ Lhelr lmporLaLlon of dlrecL farm lnpuLsţ machlnerles and equlpmenLţ lncludlng spare parLs
Lhereofţ Lo be used dlrecLly and excluslvely ln Lhe producLlon and/or processlng of Lhelr produceŤ
(s) Sales by elecLrlc cooperaLlves duly reglsLered wlLh Lhe CooperaLlve uevelopmenL auLhorlLy or
naLlonal LlecLrlflcaLlon AdmlnlsLraLlonţ relaLlve Lo Lhe generaLlon and dlsLrlbuLlon of elecLrlclLy as well as
Lhelr lmporLaLlon of machlnerles and equlpmenLţ lncludlng spare parLsţ whlch shall be dlrecLly used ln
Lhe generaLlon and dlsLrlbuLlon of elecLrlclLyŤ
(L) Cross recelpLs from lendlng acLlvlLles by credlL or mulLlŴpurpose cooperaLlves duly reglsLered wlLh
Lhe CooperaLlve uevelopmenL AuLhorlLy whose lendlng operaLlon ls llmlLed Lo Lhelr membersŤ
(u) Sales by nonŴagrlculLuralţ nonŴ elecLrlc and nonŴcredlL cooperaLlves duly reglsLered wlLh Lhe
CooperaLlve uevelopmenL AuLhorlLyť Þrovldedţ 1haL Lhe share caplLal conLrlbuLlon of each member does
noL exceed llfLeen Lhousand pesos (Þ13ţ000) and regardless of Lhe aggregaLe caplLal and neL surplus
raLably dlsLrlbuLed among Lhe membersŤ
(v) LxporL sales by persons who are noL vA1ŴreglsLeredŤ
(w) Sale of real properLles noL prlmarlly held for sale Lo cusLomers or held for lease ln Lhe ordlnary
course of Lrade or buslness or real properLy uLlllzed for lowŴcosL and soclallzed houslng as deflned by
8epubllc AcL noŦ 7279ţ oLherwlse known as Lhe urban uevelopmenL and Pouslng AcL of 1992ţ and oLher
relaLed lawsţ house and loL and oLher resldenLlal dwelllngs valued aL Cne mllllon pesos (Þ1ţ000ţ000) and
belowť Þrovldedţ 1haL noL laLer Lhan !anuary 31sL of Lhe calendar year subsequenL Lo Lhe effecLlvlLy of
Lhls AcL and each calendar year LhereafLerţ Lhe amounL of Cne mllllon pesos (Þ1ţ000ţ000) shall be
ad[usLed Lo lLs presenL value uslng Lhe Consumer Þrlce lndexţ as publlshed by Lhe naLlonal SLaLlsLlcs
Cfflce (nSC)Ť
(x) Lease of a resldenLlal unlL wlLh a monLhly renLal noL exceedlng LlghL Lhousand pesos (Þ8ţ000)Ť
Þrovldedţ 1haL noL laLer Lhan !anuary 31sL of Lhe calendar year subsequenL Lo Lhe effecLlvlLy of 8epubllc
AcL noŦ 8241 and each calendar year LhereafLerţ Lhe amounL of LlghL Lhousand pesos (Þ8ţ000) shall be
ad[usLed Lo lLs presenL value uslng Lhe Consumer Þrlce lndex as publlshed by Lhe naLlonal SLaLlsLlcs
Cfflce (nS0)Ť
(y) Saleţ lmporLaLlonţ prlnLlng or publlcaLlon of books and any newspaperţ magazlne revlew or bulleLln
whlch appears aL regular lnLervals wlLh flxed prlces for subscrlpLlon and sale and whlch ls noL devoLed
prlnclpally Lo Lhe publlcaLlon of pald adverLlsemenLsŤ and
(z) Sale or lease of goods or properLles or Lhe performance of servlces oLher Lhan Lhe LransacLlons
menLloned ln Lhe precedlng paragraphsţ Lhe gross annual sales and/or recelpLs do noL exceed Lhe
amounL of llve hundred flfLy Lhousand pesos (Þ330ţ000)ť Þrovldedţ 1haL noL laLer Lhan !anuary 31sL of
Lhe calendar year subsequenL Lo Lhe effecLlvlLy of 8epubllc AcL noŦ 8241 and each calendar year
LhereafLerţ Lhe amounL of llve hundred flfLy Lhousand pesos (330ţ000) shall be ad[usLed Lo lLs presenL
value uslng Lhe Consumer Þrlce lndexţ as publlshed by Lhe naLlonal SLaLlsLlcs Cfflce (nSC)Ŧ
1he foregolng exempLlons Lo Lhe conLrary noLwlLhsLandlngţ any person whose sale of goods or
properLles or servlces whlch are oLherwlse noL sub[ecL Lo vA1ţ buL who lssues a vA1 lnvolce or recelpL
Lherefor shallţ ln addlLlon Lo hls llablllLy Lo oLher appllcable percenLage Laxţ lf anyţ be llable Lo Lhe Lax
lmposed ln SecLlon 106 or 108 wlLhouL Lhe beneflL of lnpuL Lax credlLţ and such Lax shall also be
recognlzed as lnpuL Lax credlL Lo Lhe purchaser under SecLlon 110ţ all of Lhls CodeŦ

SLCŦ 110Ŧ 1ax CredlLsŦ Ŵ

(A) CredlLable lnpuL 1axŦ Ŵ
(1) Any lnpuL Lax evldenced by a vA1 lnvolce or offlclal recelpL lssued ln accordance wlLh SecLlon 113
hereof on Lhe followlng LransacLlons shall be credlLable agalnsL Lhe ouLpuL Laxť
(a) Þurchase or lmporLaLlon of goodsť
(l) lor saleŤ or
(ll) lor converslon lnLo or lnLended Lo form parL of a flnlshed producL for sale lncludlng packaglng
maLerlalsŤ or
(lll) lor use as supplles ln Lhe course of buslnessŤ or
(lv) lor use as maLerlals supplled ln Lhe sale of servlceŤ or
(v) lor use ln Lrade or buslness for whlch deducLlon for depreclaLlon or amorLlzaLlon ls allowed under
Lhls Codeţ excepL auLomobllesţ alrcrafL and yachLsŦ
(b) Þurchase of servlces on whlch a valueŴadded Lax has been acLually paldŦ
(2) 1he lnpuL Lax on domesLlc purchase of goods or properLles shall be credlLableť
(a) 1o Lhe purchaser upon consummaLlon of sale and on lmporLaLlon of goods or properLlesŤ and
(b) 1o Lhe lmporLer upon paymenL of Lhe valueŴadded Lax prlor Lo Lhe release of Lhe goods from Lhe
cusLody of Lhe 8ureau of CusLomsŦ
Poweverţ ln Lhe case of purchase of servlcesţ lease or use of properLlesţ Lhe lnpuL Lax shall be credlLable
Lo Lhe purchaserţ lessee or llcensee upon paymenL of Lhe compensaLlonţ renLalţ royalLy or feeŦ
(3) A vA1ŴreglsLered person who ls also engaged ln LransacLlons noL sub[ecL Lo Lhe valueŴadded Lax shall
be allowed Lax credlL as followsť
(a) 1oLal lnpuL Lax whlch can be dlrecLly aLLrlbuLed Lo LransacLlons sub[ecL Lo valueŴadded LaxŤ and
(b) A raLable porLlon of any lnpuL Lax whlch cannoL be dlrecLly aLLrlbuLed Lo elLher acLlvlLyŦ
1he Lerm ƍlnpuL Laxƍ means Lhe valueŴadded Lax due from or pald by a vA1ŴreglsLered person ln Lhe
course of hls Lrade or buslness on lmporLaLlon of goods or local purchase of goods or servlcesţ lncludlng
lease or use of properLyţ from a vA1ŴreglsLered personŦ lL shall also lnclude Lhe LranslLlonal lnpuL Lax
deLermlned ln accordance wlLh SecLlon 111 of Lhls CodeŦ
1he Lerm ƍouLpuL Laxƍ means Lhe valueŴadded Lax due on Lhe sale or lease of Laxable goods or
properLles or servlces by any person reglsLered or requlred Lo reglsLer under SecLlon 236 of Lhls CodeŦ
(8) Lxcess CuLpuL or lnpuL 1axŦ Ŵ lf aL Lhe end of any Laxable quarLer Lhe ouLpuL Lax exceeds Lhe lnpuL
Laxţ Lhe excess shall be pald by Lhe vA1ŴreglsLered personŦ lf Lhe lnpuL Lax exceeds Lhe ouLpuL Laxţ Lhe
excess shall be carrled over Lo Lhe succeedlng quarLer or quarLersŦ any lnpuL Lax aLLrlbuLable Lo Lhe
purchase of caplLal goods or Lo zeroŴraLed sales by a vA1ŴreglsLered person may aL hls opLlon be
refunded or credlLed agalnsL oLher lnLernal revenue Laxesţ sub[ecL Lo Lhe provlslons of SecLlon 112Ŧ
(C) ueLermlnaLlon of CredlLable lnpuL 1axŦ Ŵ 1he sum of Lhe excess lnpuL Lax carrled over from Lhe
precedlng monLh or quarLer and Lhe lnpuL Lax credlLable Lo a vA1ŴreglsLered person durlng Lhe Laxable
monLh or quarLer shall be reduced by Lhe amounL of clalm for refund or Lax credlL for valueŴadded Lax
and oLher ad[usLmenLsţ such as purchase reLurns or allowances and lnpuL Lax aLLrlbuLable Lo exempL
saleŦ

1he clalm for Lax credlL referred Lo ln Lhe foregolng paragraph shall lnclude noL only Lhose flled wlLh Lhe
8ureau of lnLernal 8evenue buL also Lhose flled wlLh oLher governmenL agenclesţ such as Lhe 8oard of
lnvesLmenLs Lhe 8ureau of CusLomsŦ

SLCŦ 111Ŧ 1ranslLlonal/ÞresumpLlve lnpuL 1ax CredlLsŦ Ŵ

(A) 1ranslLlonal lnpuL 1ax CredlLsŦ Ŵ A person who becomes llable Lo valueŴadded Lax or any person who
elecLs Lo be a vA1ŴreglsLered person shallţ sub[ecL Lo Lhe flllng of an lnvenLory accordlng Lo rules and
regulaLlons prescrlbed by Lhe SecreLary of flnanceţ upon recommendaLlon of Lhe Commlsslonerţ be
allowed lnpuL Lax on hls beglnnlng lnvenLory of goodsţ maLerlals and supplles equlvalenL for elghL
percenL (8Ʒ) of Lhe value of such lnvenLory or Lhe acLual valueŴadded Lax pald on such goodsţ maLerlals
and suppllesţ whlchever ls hlgherţ whlch shall be credlLable agalnsL Lhe ouLpuL LaxŦ

(8) ÞresumpLlve lnpuL 1ax CredlLsŦ Ŵ

(1) Þersons or flrms engaged ln Lhe processlng of sardlnesţ mackerel and mllkţ and ln manufacLurlng
reflned sugar and cooklng ollţ shall be allowed a presumpLlve lnpuL Laxţ credlLable agalnsL Lhe ouLpuL
Laxţ equlvalenL Lo one and oneŴhalf percenL (1 1/2Ʒ) of Lhe gross value ln money of Lhelr purchases of
prlmary agrlculLural producLs whlch are used as lnpuLs Lo Lhelr producLlonŦ
As used ln Lhls SubsecLlonţ Lhe Lerm ƍprocesslngƍ shall mean pasLeurlzaLlonţ cannlng and acLlvlLles whlch
Lhrough physlcal or chemlcal process alLer Lhe exLerlor LexLure or form or lnner subsLance of a producL
ln such manner as Lo prepare lL for speclal use Lo whlch lL could noL have been puL ln lLs orlglnal form or
condlLlonŦ
(2) Þubllc works conLracLors shall be allowed a presumpLlve lnpuL Lax equlvalenL Lo one and oneŴhalf
percenL (1 1/2Ʒ) of Lhe conLracL prlce wlLh respecL Lo governmenL conLracLs only ln lleu of acLual lnpuL
Laxes LherefromŦ
SLCŦ 112Ŧ 8efunds or 1ax CredlLs of lnpuL 1axŦ Ŵ
(A) ZeroŴ8aLed or LffecLlvely ZeroŴ8aLed SalesŦ Ŵ any vA1ŴreglsLered personţ whose sales are zeroŴraLed
or effecLlvely zeroŴraLed mayţ wlLhln Lwo (2) years afLer Lhe close of Lhe Laxable quarLer when Lhe sales
were madeţ apply for Lhe lssuance of a Lax credlL cerLlflcaLe or refund of credlLable lnpuL Lax due or pald
aLLrlbuLable Lo such salesţ excepL LranslLlonal lnpuL Laxţ Lo Lhe exLenL LhaL such lnpuL Lax has noL been
applled agalnsL ouLpuL Laxť Þrovldedţ howeverţ 1haL ln Lhe case of zeroŴraLed sales under SecLlon
106(A)(2)(a)(1)ţ (2) and (8) and SecLlon 108 (8)(1) and (2)ţ Lhe accepLable forelgn currency exchange
proceeds Lhereof had been duly accounLed for ln accordance wlLh Lhe rules and regulaLlons of Lhe
8angko SenLral ng Þlllplnas (8SÞ)ť Þrovldedţ furLherţ 1haL where Lhe Laxpayer ls engaged ln zeroŴraLed or
effecLlvely zeroŴraLed sale and also ln Laxable or exempL sale of goods of properLles or servlcesţ and Lhe
amounL of credlLable lnpuL Lax due or pald cannoL be dlrecLly and enLlrely aLLrlbuLed Lo any one of Lhe
LransacLlonsţ lL shall be allocaLed proporLlonaLely on Lhe basls of Lhe volume of salesŦ

(8) CaplLal CoodsŦ Ŵ A vA1ŴreglsLered person may apply for Lhe lssuance of a Lax credlL cerLlflcaLe or
refund of lnpuL Laxes pald on caplLal goods lmporLed or locally purchasedţ Lo Lhe exLenL LhaL such lnpuL
Laxes have noL been applled agalnsL ouLpuL LaxesŦ 1he appllcaLlon may be made only wlLhln Lwo (2)
years afLer Lhe close of Lhe Laxable quarLer when Lhe lmporLaLlon or purchase was madeŦ

(C) CancellaLlon of vA1 8eglsLraLlonŦ Ŵ A person whose reglsLraLlon has been cancelled due Lo
reLlremenL from or cessaLlon of buslnessţ or due Lo changes ln or cessaLlon of sLaLus under SecLlon
106(C) of Lhls Code mayţ wlLhln Lwo (2) years from Lhe daLe of cancellaLlonţ apply for Lhe lssuance of a
Lax credlL cerLlflcaLe for any unused lnpuL Lax whlch may be used ln paymenL of hls oLher lnLernal
revenue LaxesŦ

(u) Þerlod WlLhln Whlch 8efund or 1ax CredlL of lnpuL 1axes Shall be MadeŦ Ŵ ln proper casesţ Lhe
Commlssloner shall granL a refund or lssue Lhe Lax credlL cerLlflcaLe for credlLable lnpuL Laxes wlLhln one
hundred LwenLy (120) days from Lhe daLe of submlsslon of compeLe documenLs ln supporL of Lhe
appllcaLlon flled ln accordance wlLh SubsecLlons (A) and (8) hereofŦ

ln case of full or parLlal denlal of Lhe clalm for Lax refund or Lax credlLţ or Lhe fallure on Lhe parL of Lhe
Commlssloner Lo acL on Lhe appllcaLlon wlLhln Lhe perlod prescrlbed aboveţ Lhe Laxpayer affecLed mayţ
wlLhln LhlrLy (30) days from Lhe recelpL of Lhe declslon denylng Lhe clalm or afLer Lhe explraLlon of Lhe
one hundred LwenLy dayŴperlodţ appeal Lhe declslon or Lhe unacLed clalm wlLh Lhe CourL of 1ax
AppealsŦŴ

(L) Manner of Clvlng 8efundŦ Ŵ 8efunds shall be made upon warranLs drawn by Lhe Commlssloner or by
hls duly auLhorlzed represenLaLlve wlLhouL Lhe necesslLy of belng counLerslgned by Lhe Chalrmanţ
Commlsslon on audlLţ Lhe provlslons of Lhe AdmlnlsLraLlve Code of 1987 Lo Lhe conLrary
noLwlLhsLandlngť Þrovldedţ 1haL refunds under Lhls paragraph shall be sub[ecL Lo posL audlL by Lhe
Commlsslon on AudlLŦ

CPAÞ1L8 ll
CCMÞLlAnCL 8LCul8LMLn1S


SLCŦ 113Ŧ lnvolclng and AccounLlng 8equlremenLs for vA1Ŵ8eglsLered ÞersonsŦ Ŵ
(A) lnvolclng 8equlremenLsŦ Ŵ A vA1ŴreglsLered person shallţ for every saleţ lssue an lnvolce or recelpLŦ ln
addlLlon Lo Lhe lnformaLlon requlred under SecLlon 237ţ Lhe followlng lnformaLlon shall be lndlcaLed ln
Lhe lnvolce or recelpLť

(1) A sLaLemenL LhaL Lhe seller ls a vA1ŴreglsLered personţ followed by hls Laxpayerƌs ldenLlflcaLlon
number (1ln)Ť and
(2) 1he LoLal amounL whlch Lhe purchaser pays or ls obllgaLed Lo pay Lo Lhe seller wlLh Lhe lndlcaLlon
LhaL such amounL lncludes Lhe valueŴadded LaxŦ
(8) AccounLlng 8equlremenLsŦ Ŵ noLwlLhsLandlng Lhe provlslons of SecLlon 233ţ all persons sub[ecL Lo Lhe
valueŴadded Lax under SecLlons 106 and 108 shallţ ln addlLlon Lo Lhe regular accounLlng records
requlredţ malnLaln a subsldlary sales [ournal and subsldlary purchase [ournal on whlch Lhe dally sales
and purchases are recordedŦ 1he subsldlary [ournals shall conLaln such lnformaLlon as may be requlred
by Lhe SecreLary of llnanceŦ
SLCŦ 114Ŧ 8eLurn and ÞaymenL of valueŴAdded 1axŦ Ŵ

(A) ln CeneralŦ Ŵ Lvery person llable Lo pay Lhe valueŴadded Lax lmposed under Lhls 1lLle shall flle a
quarLerly reLurn of Lhe amounL of hls gross sales or recelpLs wlLhln LwenLyŴflve (23) days followlng Lhe
close of each Laxable quarLer prescrlbed for each Laxpayerť Þrovldedţ howeverţ 1haL vA1ŴreglsLered
persons shall pay Lhe valueŴadded Lax on a monLhly baslsŦ

Any personţ whose reglsLraLlon has been cancelled ln accordance wlLh SecLlon 236ţ shall flle a reLurn
and pay Lhe Lax due Lhereon wlLhln LwenLyŴflve (23) days from Lhe daLe of cancellaLlon of reglsLraLlonť
Þrovldedţ 1haL only one consolldaLed reLurn shall be flled by Lhe Laxpayer for hls prlnclpal place of
buslness or head offlce and all branchesŦ

(8) Where Lo llle Lhe 8eLurn and Þay Lhe 1axŦ Ŵ LxcepL as Lhe Commlssloner oLherwlse permlLsţ Lhe
reLurn shall be flled wlLh and Lhe Lax pald Lo an auLhorlzed agenL bankţ 8evenue CollecLlon Cfflcer or
duly auLhorlzed clLy or munlclpal 1reasurer ln Lhe Þhlllpplnes locaLed wlLhln Lhe revenue dlsLrlcL where
Lhe Laxpayer ls reglsLered or requlred Lo reglsLerŦ

(C) WlLhholdlng of CredlLable valueŴAdded 1axŦ Ŵ 1he CovernmenL or any of lLs pollLlcal subdlvlslonsţ
lnsLrumenLallLles or agenclesţ lncludlng governmenLŴowned or ŴconLrolled corporaLlons (CCCCs) shallţ
before maklng paymenL on accounL of each purchase of goods from sellers and servlces rendered by
conLracLors whlch are sub[ecL Lo Lhe valueŴadded Lax lmposed ln SecLlons 106 and 108 of Lhls Codeţ
deducL and wlLhhold Lhe valueŴadded Lax due aL Lhe raLe of Lhree percenL (3Ʒ) of Lhe gross paymenL for
Lhe purchase of goods and slx percenL (6Ʒ) on gross recelpLs for servlces rendered by conLracLors on
every sale or lnsLallmenL paymenL whlch shall be credlLable agalnsL Lhe valueŴadded Lax llablllLy of Lhe
seller or conLracLorť Þrovldedţ howeverţ 1haL ln Lhe case of governmenL publlc works conLracLorsţ Lhe
wlLhholdlng raLe shall be elghL and oneŴhalf percenL (8Ŧ3Ʒ)ť Þrovldedţ furLherţ 1haL Lhe paymenL for
lease or use of properLles or properLy rlghLs Lo nonresldenL owners shall be sub[ecL Lo Len percenL (10Ʒ)
wlLhholdlng Lax aL Lhe Llme of paymenLŦ lor Lhls purposeţ Lhe payor or person ln conLrol of Lhe paymenL
shall be consldered as Lhe wlLhholdlng agenLŦ

1he valueŴadded Lax wlLhheld under Lhls SecLlon shall be remlLLed wlLhln Len (10) days followlng Lhe end
of Lhe monLh Lhe wlLhholdlng was madeŦ

SLCŦ 113Ŧ Þower of Lhe Commlssloner Lo Suspend Lhe 8uslness CperaLlons of a 1axpayerŦ Ŵ 1he
Commlssloner or hls auLhorlzed represenLaLlve ls hereby empowered Lo suspend Lhe buslness
operaLlons and Lemporarlly close Lhe buslness esLabllshmenL of any person for any of Lhe followlng
vlolaLlonsť

(a) ln Lhe case of a vA1ŴreglsLered ÞersonŦ Ŵ
(1) lallure Lo lssue recelpLs or lnvolcesŤ
(2) lallure Lo flle a valueŴadded Lax reLurn as requlred under SecLlon 114Ť or
(3) undersLaLemenL of Laxable sales or recelpLs by LhlrLy percenL (30Ʒ) or more of hls correcL Laxable
sales or recelpLs for Lhe Laxable quarLerŦ

(b) lallure of any Þerson Lo 8eglsLer as 8equlred under SecLlon 236Ŧ Ŵ
1he Lemporary closure of Lhe esLabllshmenL shall be for Lhe duraLlon of noL less Lhan flve (3) days and
shall be llfLed only upon compllance wlLh whaLever requlremenLs prescrlbed by Lhe Commlssloner ln Lhe
closure orderŦ


1l1LL v
C1PL8 ÞL8CLn1ACL 1AxLS

SLCŦ 116Ŧ 1ax on Þersons LxempL lrom valueŴAdded 1ax (vA1)Ŧ Ŵ Any person whose sales or recelpLs are
exempL under SecLlon 109(z) of Lhls Code from Lhe paymenL of valueŴadded Lax and who ls noL a vA1Ŵ
reglsLered person shall pay a Lax equlvalenL Lo Lhree percenL (3Ʒ) of hls gross quarLerly sales or recelpLsť
Þrovldedţ 1haL cooperaLlves shall be exempL from Lhe Lhree percenL (3Ʒ)gross recelpLs Lax hereln
lmposedŦ

SLCŦ 117Ŧ ÞercenLage 1ax on uomesLlc Carrlers and keepers of CaragesŦ Ŵ Cars for renL or hlre drlven by
Lhe lesseeţ LransporLaLlon conLracLorsţ lncludlng persons who LransporL passengers for hlreţ and oLher
domesLlc carrlers by landţ alr or waLerţ for Lhe LransporL of passengersţ excepL owners of bancas and
owner of anlmalŴdrawn Lwo wheeled vehlcleţ and keepers of garages shall pay a Lax equlvalenL Lo Lhree
percenL (3Ʒ) of Lhelr quarLerly gross recelpLsŦ

1he gross recelpLs of common carrlers derlved from Lhelr lncomlng and ouLgolng frelghL shall noL be
sub[ecLed Lo Lhe local Laxes lmposed under 8epubllc AcL noŦ 7160ţ oLherwlse known as Lhe Local
CovernmenL Code of 1991Ŧ

ln compuLlng Lhe percenLage Lax provlded ln Lhls SecLlonţ Lhe followlng shall be consldered Lhe
mlnlmum quarLerly gross recelpLs ln each parLlcular caseť

!eepney for hlre Ŵ
1Ŧ Manlla and oLher clLles Þ 2ţ400
2Ŧ Þrovlnclal 1ţ200

Þubllc uLlllLy bus Ŵ
noL exceedlng 30 passengers 3ţ600
Lxceedlng 30 buL noL exceedlng 30 passengers 6ţ000
Lxceedlng 30 passengers 7ţ200

1axls Ŵ
1Ŧ Manlla and oLher clLles Þ 3ţ600
2Ŧ Þrovlnclal 2ţ400

Car for hlre (wlLh chauffer) 3ţ000
Car for hlre (wlLhouL chauffer) 1ţ800
SLCŦ 118Ŧ ÞercenLage 1ax on lnLernaLlonal CarrlersŦ Ŵ
(A) lnLernaLlonal alr carrlers dolng buslness ln Lhe Þhlllpplnes shall pay a Lax of Lhree percenL (3Ʒ) of
Lhelr quarLerly gross recelpLsŦ

(8) lnLernaLlonal shlpplng carrlers dolng buslness ln Lhe Þhlllpplnes shall pay a Lax equlvalenL Lo Lhree
percenL (3Ʒ) of Lhelr quarLerly gross recelpLsŦ

SLCŦ 119Ŧ 1ax on lranchlsesŦ Ŵ Any provlslon of general or speclal law Lo Lhe conLrary noLwlLhsLandlngţ
Lhere shall be levledţ assessed and collecLed ln respecL Lo all franchlses on radlo and/or Lelevlslon
broadcasLlng companles whose annual gross recelpLs of Lhe precedlng year does noL exceed 1en mllllon
pesos (Þ10ţ000Ŧ00)ţ sub[ecL Lo SecLlon 236 of Lhls Codeţ a Lax of Lhree percenL (3Ʒ) and on elecLrlcţ gas
and waLer uLlllLlesţ a Lax of Lwo percenL (2Ʒ) on Lhe gross recelpLs derlved from Lhe buslness covered by
Lhe law granLlng Lhe franchlseť Þrovldedţ howeverţ 1haL radlo and Lelevlslon broadcasLlng companles
referred Lo ln Lhls SecLlon shall have an opLlon Lo be reglsLered as a valueŴadded Laxpayer and pay Lhe
Lax due Lhereonť Þrovldedţ furLherţ 1haL once Lhe opLlon ls exerclsedţ lL shall noL be revokedŦ

1he granLee shall flle Lhe reLurn wlLhţ and pay Lhe Lax due Lhereon Lo Lhe Commlssloner or hls duly
auLhorlzed represenLaLlveţ ln accordance wlLh Lhe provlslons of SecLlon 128 of Lhls Codeţ and Lhe reLurn
shall be sub[ecL Lo audlL by Lhe 8ureau of lnLernal 8evenueţ any provlslon of any exlsLlng law Lo Lhe
conLrary noLwlLhsLandlngŦ

SLCŦ 120Ŧ 1ax on Cverseas ulspaLchţ Message or ConversaLlon CrlglnaLlng from Lhe ÞhlllpplnesŦ Ŵ

(A) Þersons LlableŦ Ŵ 1here shall be collecLed upon every overseas dlspaLchţ message or conversaLlon
LransmlLLed from Lhe Þhlllpplnes by Lelephoneţ Lelegraphţ LelewrlLer exchangeţ wlreless and oLher
communlcaLlon equlpmenL servlceţ a Lax of Len percenL (10Ʒ) on Lhe amounL pald for such servlcesŦ 1he
Lax lmposed ln Lhls SecLlon shall be payable by Lhe person paylng for Lhe servlces rendered and shall be
pald Lo Lhe person renderlng Lhe servlces who ls requlred Lo collecL and pay Lhe Lax wlLhln LwenLy (20)
days afLer Lhe end of each quarLerŦ

(8) LxempLlonsŦ Ŵ 1he Lax lmposed by Lhls SecLlon shall noL apply Loť

(1) CovernmenLŦ Ŵ AmounLs pald for messages LransmlLLed by Lhe CovernmenL of Lhe 8epubllc of Lhe
Þhlllpplnes or any of lLs pollLlcal subdlvlslons or lnsLrumenLallLlesŤ
(2) ulplomaLlc ServlcesŦ Ŵ AmounLs pald for messages LransmlLLed by any embassy and consular offlces
of a forelgn governmenLŤ
(3) lnLernaLlonal CrganlzaLlonsŦ Ŵ AmounLs pald for messages LransmlLLed by a publlc lnLernaLlonal
organlzaLlon or any of lLs agencles based ln Lhe Þhlllpplnes en[oylng prlvllegesţ exempLlons and
lmmunlLles whlch Lhe CovernmenL of Lhe Þhlllpplnes ls commlLLed Lo recognlze pursuanL Lo an
lnLernaLlonal agreemenLŤ and
(4) news ServlcesŦ Ŵ AmounLs pald for messages from any newspaperţ press assoclaLlonţ radlo or
Lelevlslon newspaperţ broadcasLlng agencyţ or newsLlckers servlcesţ Lo any oLher newspaperţ press
assoclaLlonţ radlo or Lelevlslon newspaper broadcasLlng agencyţ or newsLlcker servlce or Lo a bona flde
correspondenLţ whlch messages deal excluslvely wlLh Lhe collecLlon of news lLems forţ or Lhe
dlssemlnaLlon of news lLem Lhroughţ publlc pressţ radlo or Lelevlslon broadcasLlng or a newsLlcker
servlce furnlshlng a general news servlce slmllar Lo LhaL of Lhe publlc pressŦ
SLCŦ 121Ŧ 1ax on 8anks and nonŴ8ank llnanclal lnLermedlarlesŦ Ŵ 1here shall be a collecLed Lax on gross
recelpLs derlved from sources wlLhln Lhe Þhlllpplnes by all banks and nonŴbank flnanclal lnLermedlarles
ln accordance wlLh Lhe followlng scheduleť
(a) Cn lnLeresLţ commlsslons and dlscounLs from lendlng acLlvlLles as well as lncome from flnanclal
leaslngţ on Lhe basls of remalnlng maLurlLles of lnsLrumenLs from whlch such recelpLs are derlvedť
ShorLŴLerm maLurlLy (non ln excess of Lwo (2) years) 3Ʒ
MedlumŴLerm maLurlLy (over Lwo (2) years buL
noL exceedlng four (4) years) 3Ʒ

LongŴLerm maLurlLy Ŵ
(1) Cver four (4) years buL noL exceedlng seven (7) years 1Ʒ
(2) Cver seven (7) years 0Ʒ

(b) Cn dlvldends 0Ʒ
(c) Cn royalLlesţ renLals of properLyţ real or personalţ proflLsţ
from exchange and all oLher lLems LreaLed as gross lncome
under SecLlon 32 of Lhls Code 3Ʒ
Þrovldedţ howeverţ 1haL ln case Lhe maLurlLy perlod referred Lo ln paragraph (a) ls shorLened Lhru
preLermlnaLlonţ Lhen Lhe maLurlLy perlod shall be reckoned Lo end as of Lhe daLe of preLermlnaLlon for
purposes of classlfylng Lhe LransacLlon as shorLţ medlum or longŴLerm and Lhe correcL raLe of Lax shall be
applled accordlnglyŦ
noLhlng ln Lhls Code shall preclude Lhe Commlssloner from lmposlng Lhe same Lax hereln provlded on
persons performlng slmllar banklng acLlvlLlesŦ

SLCŦ 122Ŧ 1ax on llnance CompanlesŦ Ŵ 1here shall be collecLed a Lax of flve percenL (3Ʒ) on Lhe gross
recelpLs derlved by all flnance companlesţ as well as by oLher flnanclal lnLermedlarles noL performlng
quaslŴbanklng funcLlons dong buslness ln Lhe Þhlllpplnesţ from lnLeresLţ dlscounLs and all oLher lLems
LreaLed as gross lncome under Lhls Codeť Þrovldedţ 1haL lnLeresLsţ commlsslons and dlscounLs from
lendlng acLlvlLlesţ as well as lncome from flnanclal leaslngţ shall be Laxed on Lhe basls of Lhe remalnlng
maLurlLles of Lhe lnsLrumenLs from whlch such recelpLs are derlvedţ ln accordance wlLh Lhe followlng
scheduleť

ShorLŴLerm maLurlLy (non ln excess of Lwo (2) years) 3Ʒ
MedlumŴLerm maLurlLy (over Lwo (2) years
buL noL exceedlng four (4) years) 3Ʒ
LongŴLerm maLurlLy Ŵ
(1) Cver four (4) years buL noL exceedlng seven (7) 1Ʒ
(2) Cver seven (7) years 0Ʒ
Þrovldedţ howeverţ 1haL ln case Lhe maLurlLy perlod ls shorLened Lhru preLermlnaLlonţ Lhen Lhe maLurlLy
perlod shall be reckoned Lo end as of Lhe daLe of preLermlnaLlon for purposes of classlfylng Lhe
LransacLlon as shorLţ medlum or longŴLerm and Lhe correcL raLe of Lax shall be applled accordlnglyŦ
noLhlng ln Lhls Code shall preclude Lhe Commlssloner from lmposlng Lhe same Lax hereln provlded on
persons performlng slmllar flnanclng acLlvlLlesŦ

SLCŦ 123Ŧ 1ax on Llfe lnsurance ÞremlumsŦ Ŵ 1here shall be collecLed from every personţ company or
corporaLlon (excepL purely cooperaLlve companles or assoclaLlons) dolng llfe lnsurance buslness of any
sorL ln Lhe Þhlllpplnes a Lax of flve percenL (3Ʒ) of Lhe LoLal premlum collecLedţ wheLher such premlums
are pald ln moneyţ noLesţ credlLs or any subsLlLuLe for moneyŤ buL premlums refunded wlLhln slx (6)
monLhs afLer paymenL on accounL of re[ecLlon of rlsk or reLurned for oLher reason Lo a person lnsured
shall noL be lncluded ln Lhe Laxable recelpLsŤ nor shall any Lax be pald upon relnsurance by a company
LhaL has already pald Lhe LaxŤ nor upon dolng buslness ouLslde Lhe Þhlllpplnes on accounL of any llfe
lnsurance of Lhe lnsured who ls a nonresldenLţ lf any Lax on such premlum ls lmposed by Lhe forelgn
counLry where Lhe branch ls esLabllshed nor upon premlums collecLed or recelved on accounL of any
relnsurance ţ lf Lhe lnsuredţ ln case of personal lnsuranceţ resldes ouLslde Lhe Þhlllpplnesţ lf any Lax on
such premlums ls lmposed by Lhe forelgn counLry where Lhe orlglnal lnsurance has been lssued or
perfecLedŤ nor upon LhaL porLlon of Lhe premlums collecLed or recelved by Lhe lnsurance companles on
varlable conLracLs (as deflned ln secLlon 232(2) of ÞresldenLlal uecree noŦ 612)ţ ln excess of Lhe amounLs
necessary Lo lnsure Lhe llves of Lhe varlable conLracL workersŦ

CooperaLlve companles or assoclaLlons are such as are conducLed by Lhe members Lhereof wlLh Lhe
money collecLed from among Lhemselves and solely for Lhelr own proLecLlon and noL for proflLŦ

SLCŦ 124Ŧ 1ax on AgenLs of lorelgn lnsurance CompanlesŦ Ŵ Lvery flreţ marlne or mlscellaneous lnsurance
agenL auLhorlzed under Lhe lnsurance Code Lo procure pollcles of lnsurance as he may have prevlously
been legally auLhorlzed Lo LransacL on rlsks locaLed ln Lhe Þhlllpplnes for companles noL auLhorlzed Lo
LransacL buslness ln Lhe Þhlllpplnes shall pay a Lax equal Lo Lwlce Lhe Lax lmposed ln SecLlon 123ť
Þrovldedţ 1haL Lhe provlslon of Lhls SecLlon shall noL apply Lo relnsuranceť Þrovldedţ howeverţ 1haL Lhe
provlslons of Lhls SecLlon shall noL affecL Lhe rlghL of an owner of properLy Lo apply for and obLaln for
hlmself pollcles ln forelgn companles ln cases where sald owner does noL make use of Lhe servlces of
any agenLţ company or corporaLlon resldlng or dolng buslness ln Lhe ÞhlllpplnesŦ ln all cases where
owners of properLy obLaln lnsurance dlrecLly wlLh forelgn companlesţ lL shall be Lhe duLy of sald owners
Lo reporL Lo Lhe lnsurance Commlssloner and Lo Lhe Commlssloner each case where lnsurance has been
so effecLedţ and shall pay Lhe Lax of flve percenL (3Ʒ) on premlums paldţ ln Lhe manner requlred by
SecLlon 123Ŧ

SLCŦ 123Ŧ AmusemenL 1axesŦ Ŵ 1here shall be collecLed from Lhe proprleLorţ lessee or operaLor of
cockplLsţ cabareLsţ nlghL or day clubsţ boxlng exhlblLlonsţ professlonal baskeLball gamesţ !alŴAlal and
raceLracksţ a Lax equlvalenL Loť

(a) LlghLeen percenL (18Ʒ) ln Lhe case of cockplLsŤ
(b) LlghLeen percenL (18Ʒ) ln Lhe case of cabareLsţ nlghL or day clubsŤ
(c) 1en percenL (10Ʒ) ln Lhe case of boxlng exhlblLlonsť Þrovldedţ howeverţ 1haL boxlng exhlblLlons
whereln World or CrlenLal Champlonshlps ln any dlvlslon ls aL sLake shall be exempL from amusemenL
Laxť Þrovldedţ furLherţ 1haL aL leasL one of Lhe conLenders for World or CrlenLal Champlonshlp ls a
clLlzen of Lhe Þhlllpplnes and sald exhlblLlons are promoLed by a clLlzen/s of Lhe Þhlllpplnes or by a
corporaLlon or assoclaLlon aL leasL slxLy percenL (60Ʒ) of Lhe caplLal of whlch ls owned by such clLlzensŤ
(d) llfLeen percenL (13Ʒ) ln Lhe case of professlonal baskeLball games as envlsloned ln ÞresldenLlal
uecree noŦ 871ť Þrovldedţ howeverţ 1haL Lhe Lax hereln shall be ln lleu of all oLher percenLage Laxes of
whaLever naLure and descrlpLlonŤ and
(e) 1hlrLy percenL (30Ʒ) ln Lhe case of !alŴAlal and raceLracks of Lhelr gross recelpLsţ lrrespecLlveţ of
wheLher or noL any amounL ls charged for admlsslonŦ
lor Lhe purpose of Lhe amusemenL Laxţ Lhe Lerm ƍgross recelpLsƍ embraces all Lhe recelpLs of Lhe
proprleLorţ lessee or operaLor of Lhe amusemenL placeŦ Sald gross recelpLs also lnclude lncome from
Lelevlslonţ radlo and moLlon plcLure rlghLsţ lf anyŦ A person or enLlLy or assoclaLlon conducLlng any
acLlvlLy sub[ecL Lo Lhe Lax hereln lmposed shall be slmllarly llable for sald Lax wlLh respecL Lo such
porLlon of Lhe recelpLs derlved by hlm or lLŦ
1he Laxes lmposed hereln shall be payable aL Lhe end of each quarLer and lL shall be Lhe duLy of Lhe
proprleLorţ lessee or operaLor concernedţ as well as any parLy llableţ wlLhln LwenLy (20) days afLer Lhe
end of each quarLerţ Lo make a Lrue and compleLe reLurn of Lhe amounL of Lhe gross recelpLs derlved
durlng Lhe precedlng quarLer and pay Lhe Lax due LhereonŦ

SLCŦ 126Ŧ 1ax on WlnnlngsŦ Ŵ Lvery person who wlns ln horse races shall pay a Lax equlvalenL Lo Len
percenL (10Ʒ) of hls wlnnlngs or ƌdlvldendsƌţ Lhe Lax Lo be based on Lhe acLual amounL pald Lo hlm for
every wlnnlng LlckeL afLer deducLlng Lhe cosL of Lhe LlckeLť Þrovldedţ 1haL ln Lhe case of wlnnlngs from
doubleţ forecasL/qulnella and LrlfecLa beLsţ Lhe Lax shall be four percenL (4Ʒ)Ŧ ln Lhe case of owners of
wlnnlng race horsesţ Lhe Lax shall be Len percenL (10Ʒ) of Lhe prlzesŦ

1he Lax hereln prescrlbed shall be deducLed from Lhe ƌdlvldendsƌ correspondlng Lo each wlnnlng LlckeL or
Lhe ƍprlzeƍ of each wlnnlng race horse owner and wlLhheld by Lhe operaLorţ manager or person ln
charge of Lhe horse races before paylng Lhe dlvldends or prlzes Lo Lhe persons enLlLled LhereLoŦ

1he operaLorţ manager or person ln charge of horse races shallţ wlLhln LwenLy (20) days from Lhe daLe
Lhe Lax was deducLed and wlLhheld ln accordance wlLh Lhe second paragraph hereofţ flle a Lrue and
correcL reLurn wlLh Lhe Commlssloner ln Lhe manner or form Lo be prescrlbed by Lhe SecreLary of
llnanceţ and pay wlLhln Lhe same perlod Lhe LoLal amounL of Lax so deducLed and wlLhheldŦ

SLCŦ 127Ŧ 1ax on Saleţ 8arLer or Lxchange of Shares of SLock LlsLed and 1raded 1hrough Lhe Local SLock
Lxchange or 1hrough lnlLlal Þubllc CfferlngŦ Ŵ

(A) 1ax on Saleţ 8arLer or Lxchange of Shares of SLock LlsLed and 1raded 1hrough Lhe Local SLock
LxchangeŦ Ŵ 1here shall be levledţ assessed and collecLed on every saleţ barLerţ exchangeţ or oLher
dlsposlLlon of shares of sLock llsLed and Lraded Lhrough Lhe local sLock exchange oLher Lhan Lhe sale by a
dealer ln securlLlesţ a Lax aL Lhe raLe of oneŴhalf of one percenL (1/2 of 1Ʒ) of Lhe gross selllng prlce or
gross value ln money of Lhe shares of sLock soldţ barLeredţ exchanged or oLherwlse dlsposed whlch shall
be pald by Lhe seller or LransferorŦ

(8) 1ax on Shares of SLock Sold or Lxchanged 1hrough lnlLlal Þubllc CfferlngŦ Ŵ 1here shall be levledţ
assessed and collecLed on every saleţ barLerţ exchange or oLher dlsposlLlon Lhrough lnlLlal publlc offerlng
of shares of sLock ln closely held corporaLlonsţ as deflned herelnţ a Lax aL Lhe raLes provlded hereunder
based on Lhe gross selllng prlce or gross value ln money of Lhe shares of sLock soldţ barLeredţ exchanged
or oLherwlse dlsposed ln accordance wlLh Lhe proporLlon of shares of sLock soldţ barLeredţ exchanged or
oLherwlse dlsposed Lo Lhe LoLal ouLsLandlng shares of sLock afLer Lhe llsLlng ln Lhe local sLock exchangeť

up Lo LwenLyŴflve percenL (23Ʒ) 4Ʒ
Cver LwenLyŴflve percenL (23Ʒ) buL noL over LhlrLyŴLhree
and one Lhlrd percenL (33 1/3Ʒ) 2Ʒ
Cver LhlrLyŴLhree and one Lhlrd percenL (33 1/3Ʒ) 1Ʒ
1he Lax hereln lmposed shall be pald by Lhe lssulng corporaLlon ln prlmary offerlng or by Lhe seller ln
secondary offerlngŦ
lor purposes of Lhls SecLlonţ Lhe Lerm ƍclosely held corporaLlonƍ means any corporaLlon aL leasL flfLy
percenL (30Ʒ) ln value of ouLsLandlng caplLal sLock or aL leasL flfLy percenL (303) of Lhe LoLal comblned
voLlng power of all classes of sLock enLlLled Lo voLe ls owned dlrecLly or lndlrecLly by or for noL more
Lhan LwenLy (20) lndlvldualsŦ

lor purposes of deLermlnlng wheLher Lhe corporaLlon ls a closely held corporaLlonţ lnsofar as such
deLermlnaLlon ls based on sLock ownershlpţ Lhe followlng rules shall be applledť

(1) SLock noL Cwned by lndlvldualsŦ Ŵ SLock owned dlrecLly or lndlrecLly by or for a corporaLlonţ
parLnershlpţ esLaLe or LrusL shall be consldered as belng owned proporLlonaLely by lLs shareholdersţ
parLners or beneflclarlesŦ
(2) lamlly and ÞarLnershlp CwnershlpsŦ Ŵ An lndlvldual shall be consldered as ownlng Lhe sLock ownedţ
dlrecLly or lndlrecLlyţ by or for hls famllyţ or by or for hls parLnerŦ lor purposes of Lhe paragraphţ Lhe
ƌfamlly of an lndlvldualƌ lncludes only hls broLhers and slsLers (wheLher by whole or halfŴblood)ţ spouseţ
ancesLors and llneal descendanLsŦ
(3) CpLlonŦ Ŵ lf any person has an opLlon acqulre sLockţ such sLock shall be consldered as owned by such
personŦ lor purposes of Lhls paragraphţ an opLlon Lo acqulre such an opLlon and each one of a serles of
opLlons shall be consldered as an opLlon Lo acqulre such sLockŦ
(4) ConsLrucLlve Cwnershlp as AcLual CwnershlpŦ Ŵ SLock consLrucLlvely owned by reason of Lhe
appllcaLlon of paragraph (1) or (3) hereof shallţ for purposes of applylng paragraph (1) or (2)ţ be LreaLed
as acLually owned by such personŤ buL sLock consLrucLlvely owned by Lhe lndlvldual by reason of Lhe
appllcaLlon of paragraph (2) hereof shall noL be LreaLed as owned by hlm for purposes of agaln applylng
such paragraph ln order Lo make anoLher Lhe consLrucLlve owner of such sLockŦ
(C) 8eLurn on CaplLal Calns 8eallzed from Sale of Shares of SLocksŦ Ŵ
(1) 8eLurn on CaplLal Calns 8eallzed from Sale of Shares of SLock LlsLed and 1raded ln Lhe Local SLock
LxchangeŦ Ŵ lL shall be Lhe duLy of every sLock broker who effecLed Lhe sale sub[ecL Lo Lhe Lax lmposed
hereln Lo collecL Lhe Lax and remlL Lhe same Lo Lhe 8ureau of lnLernal 8evenue wlLhln flve (3) banklng
days from Lhe daLe of collecLlon Lhereof and Lo submlL on Mondays of each week Lo Lhe secreLary of Lhe
sLock exchangeţ of whlch he ls a memberţ a Lrue and compleLe reLurn whlch shall conLaln a declaraLlon
of all Lhe LransacLlons effecLed Lhrough hlm durlng Lhe precedlng week and of Laxes collecLed by hlm
and Lurned over Lo Lhe 8ureau Cf lnLernal 8evenueŦ
(2) 8eLurn on Þubllc Cfferlngs of Share SLockŦ Ŵ ln case of prlmary offerlngţ Lhe corporaLe lssuer shall flle
Lhe reLurn and pay Lhe correspondlng Lax wlLhln LhlrLy (30) days from Lhe daLe of llsLlng of Lhe shares of
sLock ln Lhe local sLock exchangeŦ ln Lhe case of secondary offerlngţ Lhe provlslon of SubsecLlon (C)(1) of
Lhls SecLlon shall apply as Lo Lhe Llme and manner of Lhe paymenL of Lhe LaxŦ

(u) Common ÞrovlslonsŦ Ŵ Any galn derlved from Lhe saleţ barLerţ exchange or oLher dlsposlLlon of shares
of sLock under Lhls SecLlon shall be exempL from Lhe Lax lmposed ln SecLlons 24(C)ţ 27(u)(2)ţ 28(A)(8)(c)ţ
and 28(8)(3)(c) of Lhls Code and from Lhe regular lndlvldual or corporaLe lncome LaxŦ 1ax pald under Lhls
SecLlon shall noL be deducLlble for lncome Lax purposesŦ
SLCŦ 128Ŧ 8eLurns and ÞaymenL of ÞercenLage 1axesŦ Ŵ

(A) 8eLurns of Cross Salesţ 8ecelpLs or Larnlngs and ÞaymenL of 1axŦ Ŵ

(1) Þersons Llable Lo Þay ÞercenLage 1axesŦ Ŵ Lvery person sub[ecL Lo Lhe percenLage Laxes lmposed
under Lhls 1lLle shall flle a quarLerly reLurn of Lhe amounL of hls gross salesţ recelpLs or earnlngs and pay
Lhe Lax due Lhereon wlLhln LwenLyŴflve (23) days afLer Lhe end of each Laxable quarLerť Þrovldedţ 1haL ln
Lhe case of a person whose vA1 reglsLraLlon ls cancelled and who becomes llable Lo Lhe Lax lmposed ln
SecLlon 116 of Lhls Codeţ Lhe Lax shall accrue from Lhe daLe of cancellaLlon and shall be pald ln
accordance wlLh Lhe provlslons of Lhls SecLlonŦ
(2) Þerson 8eLlrlng from 8uslnessŦ Ŵ Any person reLlrlng from a buslness sub[ecL Lo percenLage Lax shall
noLlfy Lhe nearesL lnLernal revenue offlcerţ flle hls reLurn and pay Lhe Lax due Lhereon wlLhln LwenLy (20)
days afLer closlng hls buslnessŦ

(3) LxcepLlonsŦ Ŵ 1he Commlssloner mayţ by rules and regulaLlonsţ prescrlbeť


(a) 1he Llme for flllng Lhe reLurn aL lnLervals oLher Lhan Lhe Llme prescrlbed ln Lhe precedlng paragraphs
for a parLlcular class or classes of Laxpayers afLer conslderlng such facLors as volume of salesţ flnanclal
condlLlonţ adequaLe measures of securlLyţ and such oLher relevanL lnformaLlon requlred Lo be submlLLed
under Lhe perLlnenL provlslons of Lhls CodeŤ and
(b) 1he manner and Llme of paymenL of percenLage Laxes oLher Lhan as herelnabove prescrlbedţ
lncludlng a scheme of Lax prepaymenLŦ


(4) ueLermlnaLlon of CorrecL Sales or 8ecelpLsŦ Ŵ When lL ls found LhaL a person has falled Lo lssue
recelpLs or lnvolcesţ or when no reLurn ls flledţ or when Lhere ls reason Lo belleve LhaL Lhe books of
accounLs or oLher records do noL correcLly reflecL Lhe declaraLlons made or Lo be made ln a reLurn
requlred Lo be flled under Lhe provlslons of Lhls Codeţ Lhe Commlsslonerţ afLer Laklng lnLo accounL Lhe
salesţ recelpLs or oLher Laxable base of oLher persons engaged ln slmllar buslnesses under slmllar
slLuaLlons or clrcumsLancesţ or afLer conslderlng oLher relevanL lnformaLlon may prescrlbe a mlnlmum
amounL of such gross recelpLsţ sales and Laxable base and such amounL so prescrlbed shall be prlma
facle correcL for purposes of deLermlnlng Lhe lnLernal revenue Lax llablllLles of such personŦ
(8) Where Lo llleŦ Ŵ LxcepL as Lhe Commlssloner oLherwlse permlLsţ every person llable Lo Lhe
percenLage Lax under Lhls 1lLle mayţ aL hls opLlonţ flle a separaLe reLurn for each branch or place of
buslnessţ or a consolldaLed reLurn for all branches or places of buslness wlLh Lhe auLhorlzed agenL bankţ
8evenue ulsLrlcL Cfflcerţ CollecLlon AgenL or duly auLhorlzed 1reasurer of Lhe clLy or munlclpallLy where
sald buslness or prlnclpal place of buslness ls locaLedţ as Lhe case may beŦ


1l1LL vl
LxClSL 1AxLS Cn CL81Aln CCCuS

CPAÞ1L8 l
CLnL8AL Þ8CvlSlCnS


SLCŦ 129Ŧ Coods Sub[ecL Lo Lxclse 1axesŦ Ŵ Lxclse Laxes apply Lo goods manufacLured or produced ln Lhe
Þhlllpplnes for domesLlc sales or consumpLlon or for any oLher dlsposlLlon and Lo Lhlngs lmporLedŦ 1he
exclse Lax lmposed hereln shall be ln addlLlon Lo Lhe valueŴadded Lax lmposed under 1lLle lvŦ
lor purposes of Lhls 1lLleţ exclse Laxes hereln lmposed and based on welghL or volume capaclLy or any
oLher physlcal unlL or measuremenL shall be referred Lo as ƍspeclflc Laxƍ and an exclse Lax hereln
lmposed and based on selllng prlce or oLher speclfled value of Lhe good shall be referred Lo as ƍad
valorem LaxƍŦ

SLCŦ 130Ŧ llllng of 8eLurn and ÞaymenL of Lxclse 1ax on uomesLlc ÞroducLsŦ Ŵ

(A) Þersons Llable Lo llle a 8eLurnţ llllng of 8eLurn on 8emoval and ÞaymenL of 1axŦ Ŵ

(1) Þersons Llable Lo llle a 8eLurnŦ Ŵ Lvery person llable Lo pay exclse Lax lmposed under Lhls 1lLle shall
flle a separaLe reLurn for each place of producLlon seLLlng forLhţ among oLhersţ Lhe descrlpLlon and
quanLlLy or volume of producLs Lo be removedţ Lhe appllcable Lax base and Lhe amounL of Lax due
Lhereonť Þrovldedţ howeverţ 1haL ln Lhe case of lndlgenous peLroleumţ naLural gas or llquefled naLural
gasţ Lhe exclse Lax shall be pald by Lhe flrsL buyerţ purchaser or Lransferee for local saleţ barLer or
Lransferţ whlle Lhe exclse Lax on exporLed producLs shall be pald by Lhe ownerţ lesseeţ concesslonalre or
operaLor of Lhe mlnlng clalmŦ
Should domesLlc producLs be removed from Lhe place of producLlon wlLhouL Lhe paymenL of Lhe Laxţ Lhe
owner or person havlng possesslon Lhereof shall be llable for Lhe Lax due LhereonŦ
(2) 1lme for llllng of 8eLurn and ÞaymenL of Lhe 1axŦ Ŵ unless oLherwlse speclflcally allowedţ Lhe reLurn
shall be flled and Lhe exclse Lax pald by Lhe manufacLurer or producer before removal of domesLlc
producLs form place of producLlonť Þrovldedţ 1haL Lhe exclse Lax on locally manufacLured peLroleum
producLs and lndlgenous peLroleum levled under SecLlons 148 and 131(A)(4)ţ respecLlvelyţ of Lhls 1lLle
shall be pald wlLhln Len (10) days from Lhe daLe of removal of such producLs for Lhe perlod from !anuary
1ţ 1998 Lo !une 30ţ 1998Ť wlLhln flve (3) days from Lhe daLe of removal of such producLs for Lhe perlod
from !uly 1ţ 1998 Lo uecember 31ţ 1998Ť andţ before removal from Lhe place of producLlon of such
producLs from !anuary 1ţ 1999 and LhereafLerť Þrovldedţ furLherţ 1haL Lhe exclse Lax on nonmeLalllc
mlneral or mlneral producLsţ or quarry resources shall be due and payable upon removal of such
producLs from Lhe locallLy where mlned or exLracLedţ buL wlLh respecL Lo Lhe exclse Lax on locally
produced or exLracLed meLalllc mlneral or mlneral producLsţ Lhe person llable shall flle a reLurn and pay
Lhe Lax wlLhln flfLeen (13) days afLer Lhe end of Lhe calendar quarLer when such producLs were removed
sub[ecL Lo such condlLlons as may be prescrlbed by rules and regulaLlons Lo be promulgaLed by Lhe
SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ lor Lhls purposeţ Lhe Laxpayer shall
flle a bond ln an amounL whlch approxlmaLes Lhe amounL of exclse Lax due on Lhe removals for Lhe sald
quarLerŦ 1he foregolng rules noLwlLhsLandlngţ for lmporLed mlneral or mlneral producLsţ wheLher
meLalllc or nonmeLalllcţ Lhe exclse Lax due Lhereon shall be pald before Lhelr removal from cusLoms
cusLodyŦ
(3) Þlace of llllng of 8eLurn and ÞaymenL of Lhe 1axŦ Ŵ LxcepL as Lhe Commlssloner oLherwlse permlLsţ
Lhe reLurn shall be flled wlLh and Lhe Lax pald Lo any auLhorlzed agenL bank or 8evenue CollecLlon
Cfflcerţ or duly auLhorlzed ClLy or Munlclpal 1reasurer ln Lhe ÞhlllpplnesŦ

(4) LxcepLlonsŦ Ŵ 1he SecreLary of llnanceţ upon recommendaLlon of Lhe Commlssloner mayţ by rules
and regulaLlonsţ prescrlbeť

(a) 1he Llme for flllng Lhe reLurn aL lnLervals oLher Lhan Lhe Llme prescrlbed ln Lhe precedlng paragraphs
for a parLlcular class or classes of Laxpayers afLer conslderlng facLors such as volume of removalsţ
adequaLe measures of securlLy and such oLher relevanL lnformaLlon requlred Lo be submlLLed under Lhe
perLlnenL provlslons of Lhls CodeŤ and
(b) 1he manner and Llme of paymenL of exclse Laxes oLher Lhan as hereln prescrlbedţ under a Lax
prepaymenLţ advance deposlL or slmllar schemesŦ ln Lhe case of locally produced of exLracLed mlnerals
and mlneral producLs or quarry resources where Lhe mlne slLe or place of exLracLlon ls noL Lhe same as
Lhe place of processlng or producLlonţ Lhe reLurn shall be flled wlLh and Lhe Lax pald Lo Lhe 8evenue
ulsLrlcL Cfflce havlng [urlsdlcLlon over Lhe locallLy where Lhe same are mlnedţ exLracLed or quarrledť
Þrovldedţ howeverţ 1haL for meLalllc mlnerals processed abroadţ Lhe reLurn shall be flled and Lhe Lax
due Lhereon pald Lo Lhe 8evenue ulsLrlcL Cfflce havlng [urlsdlcLlon over Lhe locallLy where Lhe same are
mlnedţ exLracLed or quarrledŦ
(8) ueLermlnaLlon of Cross Selllng Þrlce of Coods Sub[ecL Lo Ad valorem 1axŦ Ŵ unless oLherwlse
provldedţ Lhe prlceţ excludlng Lhe valueŴadded Laxţ aL whlch Lhe goods are sold aL wholesale ln Lhe place
of producLlon or Lhrough Lhelr sales agenLs Lo Lhe publlc shall consLlLuLe Lhe gross selllng prlceŦ lf Lhe
manufacLurer also sells or allows such goods Lo be sold aL wholesale ln anoLher esLabllshmenL of whlch
he ls Lhe owner or ln Lhe proflLs of whlch he has an lnLeresLţ Lhe wholesale prlce ln such esLabllshmenL
shall consLlLuLe Lhe gross selllng prlceŦ Should such prlce be less Lhan Lhe cosL of manufacLure plus
expenses lncurred unLll Lhe goods are flnally soldţ Lhen a proporLlonaLe margln of proflLţ noL less Lhan
Len percenL (10Ʒ) of such manufacLurlng cosL and expensesţ shall be added Lo consLlLuLe Lhe gross
selllng prlceŦ
(C) ManufacLurerƌs or Þroducerƌs Sworn SLaLemenLŦ Ŵ Lvery manufacLurer or producer of goods or
producLs sub[ecL Lo exclse Laxes shall flle wlLh Lhe Commlssloner on Lhe daLe or daLes deslgnaLed by Lhe
laLLerţ and as ofLen as may be requlredţ a sworn sLaLemenL showlngţ among oLher lnformaLlonţ Lhe
dlfferenL goods or producLs manufacLured or produced and Lhelr correspondlng gross selllng prlce or
markeL valueţ LogeLher wlLh Lhe cosL of manufacLure or producLlon plus expenses lncurred or Lo be
lncurred unLll Lhe goods or producLs are flnally soldŦ

(u) CredlL for Lxclse 1ax on Coods AcLually LxporLedŦ Ŵ When goods locally produced or manufacLured
are removed and acLually exporLed wlLhouL reLurnlng Lo Lhe Þhlllpplnesţ wheLher so exporLed ln Lhelr
orlglnal sLaLe or as lngredlenLs or parLs of any manufacLured goods or producLsţ any exclse Lax pald
Lhereon shall be credlLed or refunded upon submlsslon of Lhe proof of acLual exporLaLlon and upon
recelpL of Lhe correspondlng forelgn exchange paymenLť Þrovldedţ 1haL Lhe exclse Lax on mlneral
producLsţ excepL coal and cokeţ lmposed under SecLlon 131 shall noL be credlLable or refundable even lf
Lhe mlneral producLs are acLually exporLedŦ

SLCŦ 131Ŧ ÞaymenL of Lxclse 1axes on lmporLer ArLlclesŦ Ŵ

(A) Þersons LlableŦ Ŵ Lxclse Laxes on lmporLed arLlcles shall be pald by Lhe owner or lmporLer Lo Lhe
CusLoms Cfflcersţ conformably wlLh Lhe regulaLlons of Lhe ueparLmenL of llnance and before Lhe
release of such arLlcles from Lhe cusLoms houseţ or by Lhe person who ls found ln possesslon of arLlcles
whlch are exempL from exclse Laxes oLher Lhan Lhose legally enLlLled Lo exempLlonŦ
ln Lhe case of LaxŴfree arLlcles broughL or lmporLed lnLo Lhe Þhlllpplnes by personsţ enLlLlesţ or agencles
exempL from Lax whlch are subsequenLly soldţ Lransferred or exchanged ln Lhe Þhlllpplnes Lo nonŴ
exempL persons or enLlLlesţ Lhe purchasers or reclplenLs shall be consldered Lhe lmporLers Lhereofţ and
shall be llable for Lhe duLy and lnLernal revenue Lax due on such lmporLaLlonŦ
1he provlslon of any speclal or general law Lo Lhe conLrary noLwlLhsLandlngţ Lhe lmporLaLlon of clgars
and clgareLLesţ dlsLllled splrlLs and wlnes lnLo Lhe Þhlllpplnesţ even lf desLlned for Lax and duLy free
shopsţ shall be sub[ecL Lo all appllcable Laxesţ duLlesţ chargesţ lncludlng exclse Laxes due Lhereonť
Þrovldedţ howeverţ 1haL Lhls shall noL apply Lo clgars and clgareLLesţ dlsLllled splrlLs and wlnes broughL
dlrecLly lnLo Lhe duly charLered or leglslaLed freeporLs of Lhe Sublc Speclal Lconomlc and lreeporL Zoneţ
craLed under 8epubllc AcL noŦ 7227Ť Lhe Cagayan Speclal Lconomlc Zone and lreeporLţ creaLed under
8epubllc AcL noŦ 7922Ť and Lhe Zamboanga ClLy Speclal Lconomlc Zoneţ creaLed under 8epubllc AcL noŦ
7903ţ and are noL Lransshlpped Lo any oLher porL ln Lhe Þhlllpplnesť Þrovldedţ furLherţ 1haL lmporLaLlons
of clgars and clgareLLesţ dlsLllled splrlLs and wlnes by a governmenLŴowned and operaLed duLyŴfree shopţ
llke Lhe uuLyŴlree Þhlllpplnes (ulÞ)ţ shall be exempLed from all appllcable Laxesţ duLlesţ chargesţ
lncludlng exclse Lax due Lhereonť Þrovldedţ sLlll furLherţ 1haL lf such arLlcles dlrecLly lmporLed by a
governmenLŴowned and operaLed duLyŴfree shop llke Lhe uuLyŴlree Þhlllpplnesţ shall be labeled ƍLax
and duLyŴfreeƍ and ƍnoL for resaleƍť Þrovldedţ sLlll furLherţ 1haL ls such arLlcles broughL lnLo Lhe duly
charLered or leglslaLed freeporLs under 8epubllc AcLs noŦ 7227ţ 7922 and 7903 are subsequenLly
lnLroduced lnLo Lhe Þhlllpplne cusLoms LerrlLoryţ Lhen such arLlcles shallţ upon such lnLroducLlonţ be
deemed lmporLed lnLo Lhe Þhlllpplnes and shall be sub[ecL Lo all lmposLs and exclse Laxes provlded
hereln and oLher sLaLuLesť Þrovldedţ flnallyţ 1haL Lhe removal and Lransfer of Lax and duLyŴfree goodsţ
producLsţ machlneryţ equlpmenL and oLher slmllar arLlclesţ from one freeporL Lo anoLher freeporLţ shall
noL be deemed an lnLroducLlon lnLo Lhe Þhlllpplne cusLoms LerrlLoryŦ
ArLlcles conflscaLed shall be dlsposed of ln accordance wlLh Lhe rules and regulaLlons Lo be promulgaLed
by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlssloner of CusLoms and lnLernal
8evenueţ upon consulLaLlon wlLh Lhe SecreLary of 1ourlsm and Lhe Ceneral manager of Lhe Þhlllpplne
1ourlsm AuLhorlLyŦ
1he Lax due on any such goodsţ producLsţ machlneryţ equlpmenL or oLher slmllar arLlcles shall consLlLuLe
a llen on Lhe arLlcle lLselfţ and such llen shall be superlor Lo all oLher charges or llensţ lrrespecLlve of Lhe
possessor LhereofŦ
(8) 8aLe and 8asls of Lhe Lxclse 1ax on lmporLed ArLlclesŦ Ŵ unless oLherwlse speclfled lmporLed arLlcles
shall be sub[ecL Lo Lhe same raLes and basls of exclse Laxes appllcable Lo locally manufacLured arLlclesŦ

SLCŦ 132Ŧ Mode of CompuLlng ConLenLs of Cask or ÞackageŦ Ŵ Lvery fracLlonal parL of a proof llLer equal
Lo or greaLer Lhan a half llLer ln a cask or package conLalnlng more Lhan one llLer shall be Laxed as a llLerţ
and any smaller fracLlonal parL shall be exempLŤ buL any package of splrlLsţ Lhe LoLal conLenL of whlch are
less Lhan a proof llLerţ shall be Laxed as one llLerŦ

CPAÞ1L8 ll
LxLMÞ1lCn C8 CCnul1lCnAL 1AxŴl8LL 8LMCvAL Cl CL81Aln A81lCLLS


SLCŦ 133Ŧ 8emoval of Wlnes and ulsLllled SplrlLs for 1reaLmenL of 1obacco LeafŦ Ŵ upon lssuance of a
permlL from Lhe Commlssloner and sub[ecL Lo Lhe rules and regulaLlons prescrlbed by Lhe SecreLary of
llnanceţ manufacLurers of clgars and clgareLLes may wlLhdraw from bondţ free of exclse local and
lmporLed wlnes and dlsLllled splrlLs ln speclflc quanLlLles and grades for use ln Lhe LreaLmenL of Lobacco
leaf Lo be used ln Lhe manufacLure of clgars and clgareLLesŤ buL such wlnes and dlsLllled splrlLs musL flrsL
be sulLably denaLuredŦ

SLCŦ 134Ŧ uomesLlc uenaLured AlcoholŦ Ŵ uomesLlc alcohol of noL less Lhan one hundred elghLy degrees
(180C) proof (nlneLy percenL ż90ƷŽ absoluLe alcohol) shallţ when sulLably denaLured and rendered unflL
for oral lnLakeţ be exempL from Lhe exclse Lax prescrlbed ln SecLlon 141ť Þrovldedţ howeverţ 1haL such
denaLured alcohol shall be sub[ecL Lo Lax under SecLlon 106(A) of Lhls Codeť Þrovldedţ furLherţ 1haL lf
such alcohol ls Lo be used for auLomoLlve powerţ lL shall be Laxed under SecLlon 148(d) of Lhls Codeť
Þrovldedţ flnallyţ 1haL any alcoholţ prevlously rendered unflL for oral lnLake afLer denaLurlng buL
subsequenLly rendered flL for oral lnLake afLer undergolng fermenLaLlonţ dlluLlonţ purlflcaLlonţ mlxLure
or any oLher slmllar process shall be Laxed under SecLlon 141 of Lhls Code and such Lax shall be pald by
Lhe person ln possesslon of such reprocessed splrlLsŦ

SLCŦ 133Ŧ ÞeLroleum ÞroducLs Sold Lo lnLernaLlonal Carrlers and LxempL LnLlLles or AgenclesŦ Ŵ
ÞeLroleum producLs sold Lo Lhe followlng are exempL from exclse Laxť
(a) lnLernaLlonal carrlers of Þhlllpplne or forelgn reglsLry on Lhelr use or consumpLlon ouLslde Lhe
Þhlllpplnesť Þrovldedţ 1haL Lhe peLroleum producLs sold Lo Lhese lnLernaLlonal carrlers shall be sLored ln
a bonded sLorage Lank and may be dlsposed of only ln accordance wlLh Lhe rules and regulaLlons Lo be
prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŤ
(b) LxempL enLlLles or agencles covered by Lax LreaLlesţ convenLlons and oLher lnLernaLlonal agreemenLs
for Lhelr use or consumpLlonť Þrovldedţ howeverţ 1haL Lhe counLry of sald forelgn lnLernaLlonal carrler
or exempL enLlLles or agencles exempLs from slmllar Laxes peLroleum producLs sold Lo Þhlllpplne
carrlersţ enLlLles or agenclesŤ and
(c) LnLlLles whlch are by law exempL from dlrecL and lndlrecL LaxesŦ
SLCŦ 136Ŧ uenaLuraLlonţ WlLhdrawal and use of uenaLured AlcoholŦ Ŵ Any person who producesţ
wlLhdrawsţ sellsţ LransporLs or knowlngly usesţ or ls ln possesslon of denaLured alcoholţ or arLlcles
conLalnlng denaLured alcohol ln vlolaLlon of laws or regulaLlons now or hereafLer ln force perLalnlng
LhereLo shall be requlred Lo pay Lhe correspondlng Laxţ ln addlLlon Lo Lhe penalLles provlded for under
1lLle x of Lhls CodeŦ

SLCŦ 137Ŧ 8emoval of SplrlLs under 8ond for 8ecLlflcaLlonŦŴ SplrlLs requlrlng recLlflcaLlon may be removed
from Lhe place of producLlon Lo anoLher esLabllshmenL for Lhe purpose of recLlflcaLlon wlLhouL
prepaymenL of Lhe exclse Laxť Þrovldedţ 1haL Lhe dlsLlller removlng such splrlLs and Lhe recLlfler
recelvlng Lhem shall flle wlLh Lhe Commlssloner Lhelr [olnL bond condlLloned upon Lhe paymenL by Lhe
recLlfler of Lhe exclse Lax due on Lhe recLlfled alcoholť Þrovldedţ furLherţ 1haL ln cases where alcohol has
already been recLlfled elLher by orlglnal and conLlnuous dlsLlllaLlon or by redlsLlllaLlonţ no loss for
recLlflcaLlon and handllng shall be allowed and Lhe recLlfler Lhereof shall pay Lhe exclse Lax due on such
lossesť Þrovldedţ flnallyţ 1haL where a recLlfler makes use of splrlLs upon whlch Lhe exclse Lax has noL
been paldţ he shall be llable for Lhe paymenL of Lhe Lax oLherwlse due LhereonŦ

SLCŦ 138Ŧ 8emoval of lermenLed Llquors Lo 8onded WarehouseŦ Ŵ Any brewer may remove or LransporL
from hls brewery or oLher place of manufacLure Lo a bonded warehouse used by hlm excluslvely for Lhe
sLorage or sale ln bulk of fermenLed llquors of hls own manufacLureţ any quanLlLy of such fermenLed
llquorsţ noL less Lhan one Lhousand (1ţ000) llLers aL one removalţ wlLhouL prepaymenL of Lhe Lax Lhereon
under a permlL whlch shall be granLed by Lhe CommlsslonerŦ Such permlL shall be afflxed Lo every
package so removed and shall be cancelled or desLroyed ln such manner as Lhe Commlssloner may
prescrlbeŦ 1hereafLerţ Lhe manufacLurer of such fermenLed llquors shall pay Lhe Lax ln Lhe same manner
and under Lhe same penalLy and llablllLy as when pald aL Lhe breweryŦ


SLCŦ 139Ŧ 8emoval of uamaged Llquors lree of 1axŦ Ŵ When any fermenLed llquor has become sour or
oLherwlse damaged so as Lo be unflL for use as suchţ brewers may sell and afLer securlng a speclal
permlL from Lhe Commlsslonerţ under such condlLlons as may be prescrlbed ln Lhe rules and regulaLlons
prescrlbed by Lhe SecreLary of llnanceţ remove Lhe same wlLhouL Lhe paymenL of Lax Lhereon ln cask or
oLher packagesţ dlsLlncL from Lhose ordlnarlly used for fermenLed llquorsţ each conLalnlng noL less Lhan
one hundred sevenLyŴflve (173) llLers wlLh a noLe of Lhelr conLenLs permanenLly afflxed LhereonŦ

SLCŦ 140Ŧ 8emoval of 1obacco ÞroducLs WlLhouL ÞrepaymenL of 1axŦ Ŵ ÞroducLs of Lobacco enLlrely unflL
for chewlng or smoklng may be removed free of Lax for agrlculLural or lndusLrlal useţ under such
condlLlons as may be prescrlbed ln Lhe rules and regulaLlons prescrlbed by Lhe SecreLary of llnanceŦ
SLemmed leaf Lobaccoţ flneŴcuL shorLsţ Lhe refuse of flneŴcuL chewlng Lobaccoţ scrapsţ cuLLlngsţ
cllpplngsţ sLemsţ or mldrlbsţ and sweeplngs of Lobacco may be sold ln bulk as raw maLerlal by one
manufacLurer dlrecLly Lo anoLher wlLhouL paymenL of Lhe Laxţ under such condlLlons as may be
prescrlbed ln Lhe rules and regulaLlons prescrlbed by Lhe SecreLary of llnanceŦ

ƍSLemmed leaf Lobaccoƍţ as hereln usedţ means leaf Lobacco whlch has had Lhe sLem or mldrlb
removedŦ 1he Lerm does noL lnclude broken leaf LobaccoŦ

CPAÞ1L8 lll
LxClSL 1Ax Cn ALCCPCL Þ8CuuC1S

SLCŦ 141Ŧ ulsLllled SplrlLsŦ Ŵ Cn dlsLllled splrlLsţ Lhere shall be collecLedţ sub[ecL Lo Lhe provlslons of
SecLlon 133 of Lhls Codeţ exclse Laxes as followsť

(a) lf produced from Lhe sap of nlpaţ coconuLţ cassavaţ camoLeţ or burl palm or from Lhe [ulceţsyrup or
sugar of Lhe caneţ provlded such maLerlals are produced commerclally ln Lhe counLry where Lhey are
processed lnLo dlsLllled splrlLsţ per proof llLerţ LlghL pesos (Þ8Ŧ00)ť Þrovldedţ 1haL lf produced ln a poL
sLlll or oLher slmllar prlmary dlsLllllng apparaLus by a dlsLlller produclng noL more Lhan one hundred
(100) llLers a dayţ conLalnlng noL more Lhan flfLy percenL (30Ʒ) of alcohol by volumeţ per proof llLerţ
lour pesos (Þ4Ŧ00)Ť
(b) lf produced from raw maLerlals oLher Lhan Lhose enumeraLed ln Lhe precedlng paragraphţ Lhe Lax
shall be ln accordance wlLh Lhe neL reLall prlce per boLLle of seven hundred flfLy mllllllLer (730 mlŦ)
volume capaclLy (excludlng Lhe exclse Lax and Lhe valueŴadded Lax) as followsť
(1) Less Lhan 1wo hundred and flfLy pesos (Þ230) Ŵ SevenLyŴflve pesos (Þ73)ţ per proof llLerŤ
(2) 1wo hundred and flfLy pesos (Þ230) up Lo Slx hundred and SevenLyŴllve pesos (Þ673) Ŵ Cne hundred
and flfLy pesos (Þ130)ţ per proof llLerŤ and
(3) More Lhan Slx hundred and sevenLyŴflve pesos (Þ673) Ŵ 1hree hundred pesos (Þ300)ţ per proof llLerŦ
(c) Medlclnal preparaLlonsţ flavorlng exLracLsţ and all oLher preparaLlonsţ excepL LolleL preparaLlonsţ of
whlchţ excludlng waLerţ dlsLllled splrlLs for Lhe chlef lngredlenLţ shall be sub[ecL Lo Lhe same Lax as such
chlef lngredlenLŦ
1hls Lax shall be proporLlonally lncreased for any sLrengLh of Lhe splrlLs Laxed over proof splrlLsţ and Lhe
Lax shall aLLach Lo Lhls subsLance as soon as lL ls ln exlsLence as suchţ wheLher lL be subsequenLly
separaLed as pure or lmpure splrlLsţ or Lransformed lnLo any oLher subsLance elLher ln Lhe process of
orlglnal producLlon or by any subsequenL processŦ
ƍSplrlLs or dlsLllled splrlLsƍ ls Lhe subsLance known as eLhyl alcoholţ eLhanol or splrlLs of wlneţ lncludlng
all dlluLlonsţ purlflcaLlons and mlxLures Lhereofţ from whaLever sourceţ by whaLever process producedţ
and shall lnclude whlskyţ brandyţ rumţ gln and vodkaţ and oLher slmllar producLs or mlxLuresŦ

ƍÞroof splrlLsƍ ls llquor conLalnlng oneŴhalf (1/2) of lLs volume of alcohol of a speclflc gravlLy of seven
Lhousand nlne hundred and LhlrLyŴnlne LhousandLhs (0Ŧ7939) aL flfLeen degrees cenLlgrade (13C C)Ŧ A
ƍproof llLerƍ means a llLer of proof splrlLsŦ

1he raLes of Lax lmposed under Lhls SecLlon shall be lncreased by Lwelve percenL (12Ʒ) on !anuary 1ţ
2000Ŧ

new brands shall be classlfled accordlng Lo Lhelr currenL ƍneL reLall prlceƍŦ

lor Lhe above purposeţ ƍneL reLall prlceƍ shall mean Lhe prlce aL whlch Lhe dlsLllled splrlL ls sold on reLall
ln Len (10) ma[or supermarkeLs ln MeLro Manllaţ excludlng Lhe amounL lnLended Lo cover Lhe appllcable
exclse Lax and Lhe valueŴadded Lax as of CcLober 1ţ 1996Ŧ

1he classlflcaLlon of each brand of dlsLllled splrlLs based on Lhe average neL reLall prlce as of CcLober 1ţ
1996ţ as seL forLh ln Annex ƍAƍţ shall remaln ln force unLll revlsed by CongressŦ

SLCŦ 142Ŧ WlnesŦ Ŵ Cn wlnesţ Lhere shall be collecLed per llLer of volume capaclLyţ Lhe followlng Laxesť

(a) Sparkllng wlnes/champagnes regardless of proofţ lf Lhe neL reLall prlce per boLLle (excludlng Lhe
exclse Lax and valueŴadded Lax) lsť
(1) llve hundred pesos (Þ300) or less Ŵ Cne hundred pesos (Þ100)Ť and
(2) More Lhan llve hundred pesos (Þ300) Ŵ 1hree hundred pesos (Þ300)Ŧ
(b) SLlll wlnes conLalnlng fourLeen percenL (14Ʒ) of alcohol by volume or lessţ 1welve pesos (Þ12Ŧ00)Ť
and
(c) SLlll wlnes conLalnlng more Lhan fourLeen percenL (14Ʒ) buL noL more Lhan LwenLyŴflve percenL
(23Ʒ) of alcohol by volumeţ 1wenLyŴfour pesos (Þ24Ŧ00)Ŧ
lorLlfled wlnes conLalnlng more Lhan LwenLyŴflve percenL of alcohol by volume shall be Laxed as dlsLllled
splrlLsŦ ƍlorLlfled wlnesƍ shall mean naLural wlnes Lo whlch dlsLllled splrlLs are added Lo lncrease Lhelr
alcohollc sLrengLhŦ
1he raLes of Lax lmposed under Lhls SecLlon shall be lncreased by Lwelve percenL (12Ʒ) on !anuary 1ţ
2000Ŧ

new brands shall be classlfled accordlng Lo Lhelr currenL neL reLall prlceŦ

lor Lhe above purposeţ ƍneL reLall prlceƍ shall mean Lhe prlce aL whlch wlne ls sold on reLall ln Len (10)
ma[or supermarkeLs ln MeLro Manllaţ excludlng Lhe amounL lnLended Lo cover Lhe appllcable exclse Lax
and Lhe valueŴadded Lax as of CcLober 1ţ 1996Ŧ

1he classlflcaLlon of each brand of wlnes based on lLs average neL reLall prlce as of CcLober 1ţ 1996ţ as
seL forLh ln Annex ƍ8ƍţ shall remaln ln force unLll revlsed by CongressŦ

SLCŦ 143Ŧ lermenLed LlquorŦ Ŵ 1here shall be levledţ assessed and collecLed an exclse Lax on beerţ lager
beerţ aleţ porLer and oLher fermenLed llquors excepL Lubaţ baslţ Lapuy and slmllar domesLlc fermenLed
llquors ln accordance wlLh Lhe followlng scheduleť

(a) lf Lhe neL reLall prlce (excludlng Lhe exclse Lax and valueŴadded Lax) per llLer of volume capaclLy ls less
Lhan lourLeen pesos and flfLy cenLavos (Þ14Ŧ30)ţ Lhe Lax shall be Slx pesos and flfLeen cenLavos (Þ6Ŧ13)
per llLerŤ
(b) lf Lhe neL reLall prlce (excludlng Lhe exclse Lax and Lhe valueŴadded Lax) Lhe per llLer of volume
capaclLy ls lourLeen pesos and flfLy cenLavos (Þ14Ŧ30) up Lo 1wenLyŴLwo pesos (Þ22Ŧ00)ţ Lhe Lax shall be
nlne pesos and flfLeen cenLavos (Þ9Ŧ13) per llLerŤ
(c) lf Lhe neL reLall prlce (excludlng Lhe exclse Lax and Lhe valueŴadded Lax) per llLer of volume capaclLy ls
more Lhan 1wenLyŴLwo pesos (Þ22Ŧ00)ţ Lhe Lax shall be 1welve pesos and flfLeen cenLavos (Þ12Ŧ13) per
llLerŦ
varlanLs of exlsLlng brands whlch are lnLroduced ln Lhe domesLlc markeL afLer Lhe effecLlvlLy of 8epubllc
AcL noŦ 8240 shall be Laxed under Lhe hlghesL classlflcaLlon of any varlanL of LhaL brandŦ
lermenLed llquor whlch are brewed and sold aL mlcroŴbrewerles or small esLabllshmenLs such as pubs
and resLauranLs shall be sub[ecL Lo Lhe raLe ln paragraph (c) hereofŦ

1he exclse Lax from any brand of fermenLed llquor wlLhln Lhe nexL Lhree (3) years from Lhe effecLlvlLy of
8epubllc AcL noŦ 8240 shall noL be lower Lhan Lhe Lax whlch was due from each brand on CcLober 1ţ
1996Ŧ

1he raLes of exclse Lax on fermenLed llquor under paragraphs (a)ţ (b) and (c) hereof shall be lncreased by
Lwelve percenL (12Ʒ) on !anuary 1ţ 2000Ŧ

new brands shall be classlfled accordlng Lo Lhelr currenL neL reLall prlceŦ

lor Lhe above purposeţ ƍneL reLall prlceƍ shall mean Lhe prlce aL whlch Lhe fermenLed llquor ls sold on
reLall ln LwenLy (20) ma[or supermarkeLs ln MeLro Manlla (for brands of fermenLed llquor markeLed
naLlonally) excludlng Lhe amounL lnLended Lo cover Lhe appllcable exclse Lax and Lhe valueŴadded LaxŦ
lor brands whlch are markeLed only ouLslde MeLro Manllaţ Lhe ƍneL reLall prlceƍ shall mean Lhe prlce aL
Lhe whlch Lhe fermenLed llquor ls sold ln flve (3) ma[or supermarkeLs ln Lhe reglon excludlng Lhe amounL
lnLended Lo cover Lhe appllcable exclse Lax and Lhe valueŴadded LaxŦ

1he classlflcaLlon of each brand of fermenLed llquor based on lLs average neL reLall prlce as of CcLober 1ţ
1996ţ as seL forLh ln Annex ƍCƍţ shall remaln ln force unLll revlsed by CongressŦ

ƍA varlanL of brandƍ shall refer Lo a brand on whlch a modlfler ls preflxed and/or sufflxed Lo Lhe rooL
name of Lhe brand and/or a dlfferenL brand whlch carrles Lhe same logo or deslgn of Lhe exlsLlng brandŦ

Lvery brewer or lmporLer of fermenLed llquor shallţ wlLhln LhlrLy (30) days from Lhe effecLlvlLy of 8Ŧ AŦ
noŦ 8240ţ and wlLhln Lhe flrsL flve (3) days of every monLh LhereafLerţ submlL Lo Lhe Commlssloner a
sworn sLaLemenL of Lhe volume of sales for each parLlcular brand of fermenLed llquor sold aL hls
esLabllshmenL for Lhe LhreeŴmonLh perlod lmmedlaLely precedlngŦ

Any brewer or lmporLer whoţ ln vlolaLlon of Lhls SecLlonţ knowlngly mlsdeclares or mlsrepresenLs ln hls
or lLs sworn sLaLemenL hereln requlred any perLlnenL daLa or lnformaLlon shall be penallzed by a
summary cancellaLlon or wlLhdrawal of hls or lLs permlL Lo engage ln buslness as brewer or lmporLer of
fermenLed llquorŦ

Any corporaLlonţ assoclaLlon or parLnershlp llable for any of Lhe acLs or omlsslons ln vlolaLlon of Lhls
SecLlon shall be flned Lreble Lhe amounL of deflclency Laxesţ surchargeţ and lnLeresL whlch may be
assessed pursuanL Lo Lhls SecLlonŦ

Any person llable for any of Lhe acLs or omlsslons prohlblLed under Lhls SecLlon shall be crlmlnally llable
and penallzed under SecLlon 234 of Lhls CodeŦ Any person who wlllfully alds or abeLs ln Lhe commlsslon
of any such acL or omlsslon shall be crlmlnally llable ln Lhe same manner as Lhe prlnclpalŦ

lf Lhe offender ls noL a clLlzen of Lhe Þhlllpplnesţ he shall be deporLed lmmedlaLely afLer servlng Lhe
senLenceţ wlLhouL furLher proceedlngs for deporLaLlonŦ


CPAÞ1L8 lv
LxClSL 1Ax Cn 1C8ACCC Þ8CuuC1S

SLCŦ 144Ŧ 1obacco ÞroducLsŦ Ŵ 1here shall be collecLed a Lax of sevenLyŴflve cenLavos (Þ0Ŧ73) on each
kllogram of Lhe followlng producLs of Lobaccoť

(a) 1obacco LwlsLed by hand or reduced lnLo a condlLlon Lo be consumed ln any manner oLher Lhan Lhe
ordlnary mode of drylng and curlngŤ
(b) 1obacco prepared or parLlally prepared wlLh or wlLhouL Lhe use of any machlne or lnsLrumenLs or
wlLhouL belng pressed or sweeLenedŤ and
(c) llneŴcuL shorLs and refuseţ scrapsţ cllpplngsţ cuLLlngsţ sLems and sweeplngs of LobaccoŦ
llneŴcuL shorLs and refuseţ scrapsţ cllpplngsţ cuLLlngsţ sLems and sweeplngs of Lobacco resulLlng from
Lhe handllng or sLrlpplng of whole leaf Lobacco may be Lransferredţ dlsposed ofţ or oLherwlse soldţ
wlLhouL prepaymenL of Lhe exclse Lax hereln provlded for under such condlLlons as may be prescrlbed ln
Lhe rules and regulaLlons promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ lf Lhe same are Lo be exporLed or Lo be used ln Lhe manufacLure of oLher Lobacco
producLs on whlch Lhe exclse Lax wlll evenLually be pald on Lhe flnlshed producLŦ
Cn Lobacco speclally prepared for chewlng so as Lo be unsulLable for use ln any oLher mannerţ on each
kllogramţ SlxLy cenLavos (Þ0Ŧ60)Ŧ

SLCŦ 143Ŧ Clgars and ClgareLLesŦ Ŵ

(A) ClgarsŦ Ŵ 1here shall be levledţ assessed and collecLed on clgars a Lax of Cne peso (Þ1Ŧ00) per clgarŦ

(8) ClgareLLes Þacked by PandŦ Ŵ 1here shall be levledţ assessed and collecLed on clgareLLes packed by
hand a Lax of lorLy cenLavos (Þ0Ŧ40) per packŦ

(C) ClgareLLes Þacked by MachlneŦ Ŵ 1here shall be levledţ assessed and collecLed on clgareLLes packed by
machlne a Lax aL Lhe raLes prescrlbed belowť

(1) lf Lhe neL reLall prlce (excludlng Lhe exclse Lax and Lhe valueŴadded Lax) ls above 1en
pesos (Þ10Ŧ00) per packţ Lhe Lax shall be 1welve pesos (Þ12Ŧ00) per packŤ
(2) lf Lhe neL reLall prlce (excludlng Lhe exclse Lax and Lhe valueŴadded Lax) exceeds Slx
pesos and flfLy cenLavos (Þ6Ŧ30) buL does noL exceed 1en pesos (Þ10Ŧ00) per packţ
Lhe Lax shall be LlghL pesos (8Ŧ00) per packŤ

(3) lf Lhe neL reLall prlce (excludlng Lhe exclse Lax and Lhe valueŴadded Lax) ls llve pesos
(Þ3Ŧ00) buL does noL exceed Slx pesos and flfLy cenLavos (Þ6Ŧ30) per packţ Lhe Lax
shall be llve pesos (Þ3Ŧ00) per packŤ

(4) lf Lhe neL reLall prlce (excludlng Lhe exclse Lax and Lhe valueŴadded Lax ls below llve
pesos (Þ3Ŧ00) per packţ Lhe Lax shall be Cne peso (Þ1Ŧ00) per packŤ

varlanLs of exlsLlng brands of clgareLLes whlch are lnLroduced ln Lhe domesLlc markeL afLer Lhe
effecLlvlLy of 8ŦAŦ noŦ 8240 shall be Laxed under Lhe hlghesL classlflcaLlon of any varlanL of LhaL brandŦ
1he exclse Lax from any brand of clgareLLes wlLhln Lhe nexL Lhree (3) years from Lhe effecLlvlLy of 8Ŧ AŦ
noŦ 8240 shall noL be lower Lhan Lhe Laxţ whlch ls due from each brand on CcLober 1ţ 1996ť Þrovldedţ
howeverţ 1haL ln cases where Lhe exclse Lax raLes lmposed ln paragraphs (1)ţ (2)ţ (3) and (4) herelnabove
wlll resulL ln an lncrease ln exclse Lax of more Lhan sevenLy percenL (70Ʒ)Ť for a brand of clgareLLeţ Lhe
lncrease shall Lake effecL ln Lwo Lranchesť flfLy percenL (30Ʒ) of Lhe lncrease shall be effecLlve ln 1997
and one hundred percenL (100Ʒ) of Lhe lncrease shall be effecLlve ln 1998Ŧ

uuly reglsLered or exlsLlng brands of clgareLLes or new brands Lhereof packed by machlne shall only be
packed ln LwenLlesŦ

1he raLes of exclse Lax on clgars and clgareLLes under paragraphs (1)ţ (2)ţ (3) and (4) hereofţ shall be
lncreased by Lwelve percenL (12Ʒ) on !anuary 1ţ 2000Ŧ

new brands shall be classlfled accordlng Lo Lhelr currenL neL reLall prlceŦ

lor Lhe above purposeţ ƍneL reLall prlceƍ shall mean Lhe prlce aL whlch Lhe clgareLLe ls sold on reLall ln
LwenLy (20) ma[or supermarkeLs ln MeLro Manlla (for brands of clgareLLes markeLed naLlonally)ţ
excludlng Lhe amounL lnLended Lo cover Lhe appllcable exclse Lax and Lhe valueŴadded LaxŦ lor brands
whlch are markeLed only ouLslde MeLro Manllaţ Lhe ƍneL reLall prlceƍ shall mean Lhe prlce aL whlch Lhe
clgareLLe ls sold ln flve (3) ma[or supermarkeLs ln Lhe reglon excludlng Lhe amounL lnLended Lo cover Lhe
appllcable exclse Lax and Lhe valueŴadded LaxŦ

1he classlflcaLlon of each brand of clgareLLes based on lLs average neL reLall prlce as of CcLober 1ţ 1996ţ
as seL forLh ln Annex ƍuƍţ shall remaln ln force unLll revlsed by CongressŦ

ƍvarlanL of a brandƍ shall refer Lo a brand on whlch a modlfler ls preflxed and/or sufflxed Lo Lhe rooL
name of Lhe brand and/or a dlfferenL brand whlch carrles Lhe same logo or deslgn of Lhe exlsLlng brandŦ

ManufacLures and lmporLers of clgars and clgareLLes shallţ wlLhln LhlrLy (30) days from Lhe effecLlvlLy of
8Ŧ AŦ noŦ 8240 and wlLhln Lhe flrsL flve (3) days of every monLh LhereafLer submlL Lo Lhe Commlssloner a
sworn sLaLemenL of Lhe volume of sales for each parLlcular brand of clgars and/or clgareLLes sold aL hls
esLabllshmenL for Lhe LhreeŴmonLh perlod lmmedlaLely precedlngŦ

Any manufacLurer or lmporLer whoţ ln vlolaLlon of Lhls SecLlonţ knowlngly mlsdeclares or mlsrepresenLs
ln hls or lLs sworn sLaLemenL hereln requlred any perLlnenL daLa or lnformaLlon shallţ upon dlscoveryţ be
penallzed by a summary cancellaLlon or wlLhdrawal of hls or lLs permlL Lo engage ln buslness as
manufacLurer or lmporLer of clgars or clgareLLesŦ

Any corporaLlonţ assoclaLlon or parLnershlp llable for any of Lhe acLs or omlsslons ln vlolaLlon of Lhls
SecLlon shall be flned Lreble Lhe amounL of deflclency Laxesţ surcharges and lnLeresL whlch may be
assessed pursuanL Lo Lhls SecLlonŦ

Any person llable for any of Lhe acLs or omlsslons prohlblLed under Lhls SecLlon shall be crlmlnally llable
and penallzed under SecLlon 234 of Lhls CodeŦ Any person who wlllfully alds or abeLs ln Lhe commlsslon
of any such acL or omlsslon shall be crlmlnally llable ln Lhe same manner as Lhe prlnclpalŦ

lf Lhe offender ls noL a clLlzen of Lhe Þhlllpplnesţ he shall be deporLed lmmedlaLely afLer servlng Lhe
senLence wlLhouL furLher proceedlngs for deporLaLlonŦ

SLCŦ 146Ŧ lnspecLlon leeŦ Ŵ lor lnspecLlon made ln accordance wlLh Lhls ChapLerţ Lhere shall be collecLed
a fee of llfLy cenLavos (Þ0Ŧ30) for each Lhousand clgars or fracLlon LhereofŤ 1en cenLavos (Þ0Ŧ10) for each
Lhousand clgareLLes of fracLlon LhereofŤ 1wo cenLavos (Þ0Ŧ02) for each kllogram of leaf Lobacco or
fracLlon LhereofŤ and 1hree cenLavos (Þ0Ŧ03) for each kllogram or fracLlon Lhereofţ of scrap and oLher
manufacLured LobaccoŦ

1he lnspecLlon fee on leaf Lobaccoţ scrapţ clgarsţ clgareLLes and oLher Lobacco producLs as deflned ln
SecLlon 147 of Lhls Code shall be pald by Lhe wholesalerţ manufacLurerţ producerţ owner or operaLor of
redrylng planLţ as Lhe case may beţ lmmedlaLely before removal Lhere of from Lhe esLabllshmenL of Lhe
wholesalerţ manufacLurerţ owner or operaLor of Lhe redrylng planLŦ ln case of lmporLed leaf Lobacco and
producLs Lhereofţ Lhe lnspecLlon fee shall be pald by Lhe lmporLer before removal from cusLomsƌ
cusLodyŦ

llfLy percenL (30Ʒ) of Lhe Lobacco lnspecLlon fee shall accrue Lo Lhe 1obacco lnspecLlon lund creaLed by
SecLlon 12 of AcL noŦ 2613ţ as amended by AcL noŦ 3179ţ and flfLy percenL (30Ʒ) shall accrue Lo Lhe
CulLural CenLer of Lhe ÞhlllpplnesŦ

SLCŦ 147Ŧ ueflnlLlon of 1ermsŦ Ŵ When used hereln and ln sLaLemenLs or offlclal forms prescrlbed
hereunderţ Lhe followlng Lerms shall have Lhe meanlng lndlcaLedť

(a) ƍClgarsƍ mean all rolls of Lobacco or any subsLlLuLe Lhereofţ wrapped ln leaf LobaccoŦ
(b) ƍClgareLLesƍ mean all rolls of flnelyŴcuL leaf Lobaccoţ or any subsLlLuLe Lhereforţ wrapped ln paper or
ln any oLher maLerlalŦ
(c) ƍWholesale prlceƍ shall mean Lhe amounL of money or prlce pald for clgars or clgareLLes purchased
for Lhe purpose of resaleţ regardless of quanLlLyŦ
(d) ƍ8eLall prlceƍ shall mean Lhe amounL of money or prlce whlch an ulLlmaLe consumer or endŴuser
pays for clgars or clgareLLes purchasedŦ

CPAÞ1L8 v
LxClSL 1Ax Cn ÞL18CLLuM Þ8CuuC1S

SLCŦ 148Ŧ ManufacLured Clls and CLher luelsŦ Ŵ 1here shall be collecLed on reflned and manufacLured
mlneral olls and moLor fuelsţ Lhe followlng exclse Laxes whlch shall aLLach Lo Lhe goods hereunder
enumeraLed as soon as Lhey are ln exlsLence as suchť

(a) LubrlcaLlng olls and greasesţ lncludlng buL noL llmlLed Loţ base sLock for lube olls and greasesţ hlgh
vacuum dlsLlllaLesţ aromaLlc exLracLsţ and oLher slmllar preparaLlonsţ and addlLlves for lubrlcaLlng olls
and greasesţ wheLher such addlLlves are peLroleum based or noLţ per llLer and kllogram respecLlvelyţ of
volume capaclLy or welghLţ lour pesos and flfLy cenLavos (Þ4Ŧ30)ť Þrovldedţ howeverţ 1haL Lhe exclse
Laxes pald on Lhe purchased feedsLock (bunker) used ln Lhe manufacLure of exclsable arLlcles and
formlng parL Lhereof shall be credlLed agalnsL Lhe exclse Lax due Lherefromť Þrovldedţ furLherţ 1haL
lubrlcaLlng olls and greases produced from base sLocks and addlLlves on whlch Lhe exclse Lax has already
been pald shall no longer be sub[ecL Lo exclse Laxť Þrovldedţ flnallyţ 1haL locally produced or lmporLed
olls prevlously Laxed as such buL are subsequenLly reprocessedţ rereflned or recycled shall llkewlse be
sub[ecL Lo Lhe Lax lmposed under Lhls SecLlonŦ
(b) Þrocessed gasţ per llLer of volume capaclLyţ llve cenLavos (Þ0Ŧ03)Ť
(c) Waxes and peLrolaLumţ per kllogramţ 1hree pesos and flfLy cenLavos (Þ3Ŧ30)Ť
(d) Cn denaLured alcohol Lo be used for moLlve powerţ per llLer of volume capaclLyţ llve cenLavos
(Þ0Ŧ03)ť Þrovldedţ 1haL unless oLherwlse provlded by speclal lawsţ lf Lhe denaLured alcohol ls mlxed wlLh
gasollneţ Lhe exclse Lax on whlch has already been paldţ only Lhe alcohol conLenL shall be sub[ecL Lo Lhe
Lax hereln prescrlbedŦ lor purposes of Lhls SubsecLlonţ Lhe removal of denaLured alcohol of noL less Lhan
one hundred elghLy degrees (180o ) proof (nlneLy percenL (90Ʒ) absoluLe alcohol) shall be deemed Lo
have been removed for moLlve powerţ unless shown oLherwlseŤ
(e) naphLhaţ regular gasollne and oLher slmllar producLs of dlsLlllaLlonţ per llLer of volume capaclLyţ lour
pesos and elghLy cenLavos (Þ4Ŧ80)ť Þrovldedţ howeverţ 1haL naphLhaţ when used as a raw maLerlal ln Lhe
producLlon of peLrochemlcal producLs or as replacemenL fuel for naLuralŴgasŴflredŴcomblned cycle
power planLţ ln lleu of locallyŴexLracLed naLural gas durlng Lhe nonŴavallablllLy Lhereofţ sub[ecL Lo Lhe
rules and regulaLlons Lo be promulgaLed by Lhe SecreLary of Lnergyţ ln consulLaLlon wlLh Lhe SecreLary of
llnanceţ per llLer of volume capaclLyţ Zero (Þ0Ŧ00)ť Þrovldedţ furLherţ 1haL Lhe byŴproducL lncludlng fuel
ollţ dlesel fuelţ keroseneţ pyrolysls gasollneţ llquefled peLroleum gases and slmllar olls havlng more or
less Lhe same generaLlng powerţ whlch are produced ln Lhe processlng of naphLha lnLo peLrochemlcal
producLs shall be sub[ecL Lo Lhe appllcable exclse Lax speclfled ln Lhls SecLlonţ excepL when such byŴ
producLs are Lransferred Lo any of Lhe local oll reflnerles Lhrough saleţ barLer or exchangeţ for Lhe
purpose of furLher processlng or blendlng lnLo flnlshed producLs whlch are sub[ecL Lo exclse Lax under
Lhls SecLlonŤ
(f) Leaded premlum gasollneţ per llLer of volume capaclLyţ llve pesos and LhlrLyŴflve cenLavos (Þ3Ŧ33)Ť
unleaded premlum gasollneţ per llLer of volume capaclLyţ lour pesos and LhlrLyŴflve cenLavos (Þ4Ŧ33)Ť
(g) AvlaLlon Lurbo [eL fuelţ per llLer of volume capaclLyţ 1hree pesos and slxLyŴseven cenLavos (Þ3Ŧ67)Ť
(h) keroseneţ per llLer of volume capaclLyţ SlxLy cenLavos (0Ŧ60)ť Þrovldedţ 1haL keroseneţ when used as
avlaLlon fuelţ shall be sub[ecL Lo Lhe same Lax on avlaLlon Lurbo [eL fuel under Lhe precedlng paragraph
(g)ţ such Lax Lo be assessed on Lhe user LhereofŤ
(l) ulesel fuel ollţ an on slmllar fuel olls havlng more or less Lhe same generaLlng powerţ per llLer of
volume capaclLyţ Cne peso and slxLyŴLhree cenLavos (Þ1Ŧ63)Ť
([) Llquefled peLroleum gasţ per llLerţ Zero (Þ0Ŧ00)ť Þrovldedţ 1haL llquefled peLroleum gas used for
moLlve power shall be Laxed aL Lhe equlvalenL raLe as Lhe exclse Lax on dlesel fuel ollŤ
(k) AsphalLsţ per kllogramţ llfLyŴslx cenLavos (Þ0Ŧ36)Ť and
(l) 8unker fuel ollţ and on slmllar fuel olls havlng more or less Lhe same generaLlng powerţ per llLer of
volume capaclLyţ 1hlrLy cenLavos (Þ0Ŧ30)Ŧ

CPAÞ1L8 vl
LxClSL 1Ax Cn MlSCLLLAnLCuS A81lCLLS


SLCŦ 149Ŧ AuLomobllesŦ Ŵ 1here shall be levledţ assessed and collecLed an ad valorem Lax on auLomoblles
based on Lhe manufacLurer's or lmporLer's selllng prlceţ neL of exclse and valueŴadded Laxţ ln
accordance wlLh Lhe followlng scheduleť

LnClnL ulSÞLACLMLn1 żln ccŦŽ

CASCLlnL ulLSLL 1Ax 8A1L
up Lo 1600
up Lo 1800
13Ʒ
1601 Lo 2000
1801 Lo 2300
33Ʒ
2001 Lo 2700
2301 Lo 3000
30Ʒ
2701 or over
3001 Lo over
100Ʒ

Þrovldedţ 1haL ln Lhe case of lmporLed auLomoblles noL for saleţ Lhe Lax lmposed hereln shall be based
on Lhe LoLal value used by Lhe 8ureau of CusLoms ln deLermlnlng Larlff and cusLoms duLlesţ lncludlng
cusLoms duLy and all oLher chargesţ plus Len percenL (10Ʒ) of Lhe LoLal LhereofŦ
AuLomoblles acqulred for use by persons or enLlLles operaLlng wlLhln Lhe freeporL zone shall be exempL
from exclse Laxť Þrovldedţ 1haL uLlllLy vehlcles of reglsLered zone enLerprlsesţ whlch are lndlspensable ln
Lhe conducL and operaLlons of Lhelr buslnessţ such as dellvery Lrucks and cargo vans wlLh gross vehlcle
welghL above Lhree (3) meLrlc Lons may be allowed unresLrlcLed use ouLslde Lhe freeporL zoneť
Þrovldedţ furLherţ 1haL vehlcles owned by LourlsLŴorlenLed enLerprlsesţ such as LourlsL buses and cars
wlLh yellow plaLesţ colorŴcodedţ and uLlllzed excluslvely for Lhe purpose of LransporLlng LourlsLs ln
LourlsmŴrelaLed acLlvlLlesţ and servlce vehlcles of freeporL reglsLered enLerprlses and execuLlvesţ such as
company servlce cars and expaLrlaLes' and lnvesLors' auLomoblles broughL ln Lhe name of such
enLerprlsesţ may be used ouLslde Lhe freeporL zone for such perlods as may be prescrlbed by Lhe
ueparLmenLs of llnanceţ and 1rade and lndusLryţ Lhe 8ureau of CusLoms and Lhe lreeporL auLhorlLles
concernedţ whlch ln no case shall exceed fourLeen (14) days per monLhŦ

ln case such LourlsL buses and carsţ servlce vehlcles of reglsLered freeporL enLerprlses and company
servlce cars are used for more Lhan an aggregaLe perlod of fourLeen (14) days per monLh ouLslde of Lhe
freeporL zoneţ Lhe owner or lmporLer shall pay Lhe correspondlng cusLoms duLlesţ Laxes and chargesŦ

ln Lhe case of personallyŴowned vehlcles of resldenLsţ lncludlng leaseholders of resldences lnslde Lhe
freeporL zoneţ Lhe use of such vehlcles ouLslde of Lhe freeporL zone shall be deemed an lnLroducLlon
lnLo Lhe Þhlllpplne cusLoms LerrlLoryţ and such lnLroducLlon shall be deemed an lmporLaLlon lnLo Lhe
Þhlllpplnes and shall sub[ecL such vehlcles Lo CusLoms duLles Laxes and chargesţ lncludlng exclse Lax due
on such vehlcleŦ

1he SecreLarles of llnanceţ and 1rade and lndusLryţ LogeLher wlLh Lhe Commlssloner of CusLoms and Lhe
admlnlsLraLors of Lhe freeporLs concernedţ shall promulgaLe rules and regulaLlons for Lhe proper
ldenLlflcaLlon and conLrol of sald auLomobllesŦ

SLCŦ 130Ŧ nonŴLssenLlal CoodsŦ Ŵ 1here shall be levledţ assessed and collecLed a Lax equlvalenL Lo LwenLy
percenL (20Ʒ) based on Lhe wholesale prlce or Lhe value of lmporLaLlon used by Lhe 8ureau of CusLoms
ln deLermlnlng Larlff and cusLoms duLlesţ neL of exclse Lax and valueŴadded Laxţ of Lhe followlng goodsť

(a) All goods commonly or commerclally known as [ewelryţ wheLher real or lmlLaLlonţ pearlsţ preclous
and semlŴpreclous sLones and lmlLaLlons LhereofŤ goods made ofţ or ornamenLedţ mounLed or flLLed
wlLhţ preclous meLals or lmlLaLlons Lhereof or lvory (noL lncludlng surglcal and denLal lnsLrumenLsţ sllverŴ
plaLed waresţ frames or mounLlngs for specLacles or eyeglassesţ and denLal gold or gold alloys and oLher
preclous meLals used ln fllllngţ mounLlng or flLLlng Lhe LeeLh)Ť opera glasses and lorgneLLesŦ 1he Lerm
ƍpreclous meLalsƍ shall lnclude plaLlnumţ goldţ sllver and oLher meLals of slmllar or greaLer valueŦ 1he
Lerm 'lmlLaLlons Lhereof shall lnclude plaLlngs and alloys of such meLalsŤ
(b) Þerfumes and LolleL waLersŤ
(c) ?achLs and oLher vessels lnLended for pleasure or sporLsŦ

CPAÞ1L8 vll
LxClSL 1Ax Cn MlnL8AL Þ8CuuC1S

SLCŦ 131Ŧ Mlneral ÞroducLsŦ Ŵ
(A) 8aLes of 1axŦ Ŵ 1here shall be levledţ assessed and collecLed on mlneralsţ mlneral producLs and quarry
resourcesţ exclse Lax as followsť

(1) Cn coal and cokeţ a Lax of 1en pesos (Þ10Ŧ00) per meLrlc LonŤ
(2) Cn all nonmeLalllc mlnerals and quarry resourcesţ a Lax of Lwo percenL (2Ʒ) based on
Lhe acLual markeL value of Lhe gross ouLpuL Lhereof aL Lhe Llme of removalţ ln Lhe case
of Lhose locally exLracLed or producedŤ or Lhe value used by Lhe 8ureau of CusLoms ln
deLermlnlng Larlff and cusLoms duLlesţ neL of exclse Lax and valueŴadded Laxţ ln Lhe case
of lmporLaLlonŦ
noLwlLhsLandlng Lhe provlslon of paragraph (4) of SubsecLlon (A) of SecLlon 131ţ locally exLracLed
naLural gas and llquefled naLural gas shall be Laxed aL Lhe raLe of Lwo percenL (2Ʒ)Ť

(3) Cn all meLalllc mlneralsţ a Lax based on Lhe acLual markeL value of Lhe gross ouLpuL Lhereof
aL Lhe Llme of removalţ ln Lhe case of Lhose locally exLracLed or producedŤ or Lhe value used
by Lhe 8ureau of CusLoms ln deLermlnlng Larlff and cusLoms duLlesţ neL of exclse Lax and
valueŴadded Laxţ ln Lhe case of lmporLaLlonţ ln accordance wlLh Lhe followlng scheduleť

(a) Copper and oLher meLalllc mlneralsŤ
(l) Cn Lhe flrsL Lhree (3) years upon Lhe effecLlvlLy of 8epubllc AcL noŦ 7729ţ
one percenL (1Ʒ)Ť
(ll) Cn Lhe fourLh and Lhe flfLh yearsţ one and a half percenL (1 ZƷ)Ť and
(lll) Cn Lhe slxLh year and LhereafLerţ Lwo percenL (2Ʒ)Ť
(b) Cold and chromlLeţ Lwo percenL (2Ʒ)Ŧ
(4) Cn lndlgenous peLroleumţ a Lax of Lhree percenL (3Ʒ) of Lhe falr lnLernaLlonal markeL prlce
Lhereofţ on Lhe flrsL Laxable saleţ barLerţ exchange or such slmllar LransacLlonţ such Lax
Lo be pald by Lhe buyer or purchaser before removal from Lhe place of producLlonŦ 1he
phrase ƍflrsL Laxable saleţ barLerţ exchange or slmllar LransacLlonƍ means Lhe Lransfer
of lndlgenous peLroleum ln lLs orlglnal sLaLe Lo a flrsL Laxable LransfereeŦ 1he falr
lnLernaLlonal markeL prlce shall be deLermlned ln consulLaLlon wlLh an approprlaLe
governmenL agencyŦ
lor Lhe purpose of Lhls SubsecLlonţ ƍlndlgenous peLroleumƍ shall lnclude locallyŴexLracLed mlneral ollţ
hydrocarbon gasţ blLumenţ crude asphalLţ mlneral gas and all oLher slmllar or naLurally assoclaLed
subsLances wlLh Lhe excepLlon of coalţ peaLţ blLumlnous shale and/or sLraLlfled mlneral deposlLsŦ
(8) lor Þurposes of 1hls SecLlonţ Lhe 1ermť
(1) ƍCross ouLpuLƍ shall be lnLerpreLed as Lhe acLual markeL value of mlnerals or mlneral producLs or of
bulllon from each mlne or mlneral land operaLed as a separaLe enLlLyţ wlLhouL any deducLlon from
mlnlngţ mllllngţ reflnlng (lncludlng all expenses lncurred Lo prepare Lhe sald mlnerals or mlneral
producLs ln a markeLable sLaLe)ţ as well as LransporLlngţ handllngţ markeLlng or any oLher expensesť
Þrovldedţ 1haL lf Lhe mlnerals or mlneral producLs are sold or conslgned abroad by Lhe lessee or owner
of Lhe mlne under CŦlŦlŦ Lermsţ Lhe acLual cosL of ocean frelghL and lnsurance shall be deducLedť
Þrovldedţ howeverţ 1haL ln Lhe case of mlneral concenLraLeţ noL Lraded ln commodlLy exchanges ln Lhe
Þhlllpplnes or abroadţ such as copper concenLraLeţ Lhe acLual markeL value shall be Lhe world prlce
quoLaLlons of Lhe reflned mlneral producLs conLenL Lhereof prevalllng ln Lhe sald commodlLy exchangesţ
afLer deducLlng Lhe smelLlngţ reflnlng and oLher charges lncurred ln Lhe process of converLlng Lhe
mlneral concenLraLes lnLo reflned meLal Lraded ln Lhose commodlLy exchangesŦ
(2) ƍMlneralsƍ shall mean all naLurally occurrlng lnorganlc subsLances (found ln naLure) wheLher ln solldţ
llquldţ gaseous or any lnLermedlaLe sLaLeŦ
(3) ƍMlneral producLsƍ shall mean Lhlngs produced and prepared ln a markeLable sLaLe by slmple
LreaLmenL processes such as washlng or drylngţ buL wlLhouL undergolng any chemlcal change or process
or manufacLurlng by Lhe lesseeţ concesslonalre or owner of mlneral landsŦ
(4) ƍCuarry resourcesƍ shall mean any common sLone or oLher common mlneral subsLances as Lhe
ulrecLor of Lhe 8ureau of Mlnes and CeoŴSclences may declare Lo be quarry resources such asţ buL noL
resLrlcLed Loţ marlţ marbleţ granlLeţ volcanlc clndersţ basalLţ Luff and rock phosphaLeť Þrovldedţ 1haL
Lhey conLaln no meLal or oLher valuable mlnerals ln economlcally workable quanLlLlesŦ


CPAÞ1L8 vlll
AuMlnlS18A1lvL Þ8CvlSlCnS 8LCuLA1lnC 8uSlnLSS
C8 ÞL8SCnS uLALlnC ln A81lCLLS Su8!LC1 1C LxClSL 1Ax

SLCŦ 132Ŧ LxLenL of Supervlslon Cver LsLabllshmenLs Þroduclng 1axable CuLpuLŦ Ŵ 1he 8ureau of lnLernal
8evenue has auLhorlLy Lo supervlse esLabllshmenLs where arLlcles sub[ecL Lo exclse Lax are made or
kepLŦ 1he SecreLary of llnance shall prescrlbe rules and regulaLlons as Lo Lhe mode ln whlch Lhe process
of producLlon shall be conducLed lnsofar as may be necessary Lo secure a sanlLary ouLpuL and Lo
safeguard Lhe revenueŦ

SLCŦ 133Ŧ 8ecords Lo be kepL by ManufacLurersŤ AssessmenL 8ased 1hereonŦ Ŵ ManufacLurers of arLlcles
sub[ecL Lo exclse Lax shall keep such records as requlred by rules and regulaLlons recommended by Lhe
Commlssloner and approved by Lhe SecreLary of llnanceţ and such recordsţ wheLher of raw maLerlals
recelved lnLo Lhe facLory or of arLlcles produced Lherelnţ shall be deemed publlc and offlclal documenLs
for all purposesŦ

1he records of raw maLerlals kepL by such manufacLurers may be used as evldence by whlch Lo
deLermlne Lhe amounL of exclse Laxes due from Lhemţ and whenever Lhe amounLs of raw maLerlal
recelved lnLo any facLory exceeds Lhe amounL of manufacLured or parLlally manufacLured producLs on
hand and lawfully removed from Lhe facLoryţ plus wasLe removed or desLroyedţ and a reasonable
allowance for unavoldable loss ln manufacLureţ Lhe Commlssloner may assess and collecL Lhe Lax due on
Lhe producLs whlch should have been produced from Lhe excessŦ

1he exclse Lax due on Lhe producLs as deLermlned and assessed ln accordance wlLh Lhls SecLlon shall be
payable upon demand or wlLhln Lhe perlod speclfled LherelnŦ

SLCŦ 134Ŧ Þremlses Sub[ecL Lo Approval by CommlsslonerŦ Ŵ no person shall engage ln buslness as a
manufacLurer of or dealer ln arLlcles sub[ecL Lo exclse Lax unless Lhe premlses upon whlch Lhe buslness ls
Lo conducLed shall have been approved by Lhe CommlsslonerŦ

SLCŦ 133Ŧ ManufacLurers Lo Þrovlde 1hemselves wlLh CounLlng or MeLerlng uevlces Lo ueLermlne
ÞroducLlonŦ Ŵ ManufacLurers of clgareLLesţ alcohollc producLsţ oll producLs and oLher arLlcles sub[ecL Lo
exclse Lax LhaL can be slmllarly measured shall provlde Lhemselves wlLh such necessary number of
sulLable counLlng or meLerlng devlces Lo deLermlne as accuraLely as posslble Lhe volumeţ quanLlLy or
number of Lhe arLlcles produced by Lhem under rules and regulaLlons promulgaLed by Lhe SecreLary of
llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

1hls requlremenL shall be complled wlLh before commencemenL of operaLlonsŦ

SLCŦ 136Ŧ Labels and lorm of ÞackagesŦ Ŵ All arLlcles of domesLlc manufacLure sub[ecL Lo exclse Lax and
all leaf Lobacco shall be puL up and prepared by Lhe manufacLurer or producerţ when removed for sale
or consumpLlonţ ln such packages only and bearlng such marks or brand as shall be prescrlbed ln Lhe
rules and regulaLlons promulgaLed by Lhe SecreLary of llnanceŤ and goods of slmllar characLer lmporLed
lnLo Lhe Þhlllpplnes shall llkewlse be packed and marked ln such a manner as may be requlredŦ

SLCŦ 137Ŧ 8emoval of ArLlcles AfLer Lhe ÞaymenL of 1axŦ Ŵ When Lhe Lax has been pald on arLlcles or
producLs sub[ecL Lo exclse Laxţ Lhe same shall noL LhereafLer be sLored or permlLLed Lo remaln ln Lhe
dlsLllleryţ dlsLlllery warehouseţ bonded warehouseţ or oLher facLory or place where producedŦ Poweverţ
upon prlor permlL from Lhe Commlsslonerţ oll reflnerles and/or companles may sLore or deposlL LaxŴpald
peLroleum producLs and commlngle Lhe same wlLh lLs own manufacLured producLs noL yeL sub[ecLed Lo
exclse LaxŦ lmporLed peLroleum producLs may be allowed Lo be wlLhdrawn from cusLoms cusLody
wlLhouL Lhe prepaymenL of exclse Laxţ whlch producLs may be commlngled wlLh Lhe LaxŴpald or bonded
producLs of Lhe lmporLer hlmself afLer securlng a prlor permlL from Lhe Commlsslonerť Þrovldedţ 1haL
wlLhdrawals shall be Laxed and accounLed for on a ƍflrsLŴlnţ flrsLŴouLƍ baslsŦ

SLCŦ 138Ŧ SLorage of Coods ln lnLernalŴ8evenue 8onded WarehousesŦ Ŵ An lnLernalŴrevenue bonded
warehouse may be malnLalned ln any porL of enLry for Lhe sLorlng of lmporLed or manufacLured goods
whlch are sub[ecL Lo exclse LaxŦ 1he Laxes on such goods shall be payable only upon removal from such
warehouse and a reasonable charge shall be made for Lhelr sLorage LherelnŦ 1he Commlsslonerţ mayţ ln
hls dlscreLlonţ exacL a bond Lo secure Lhe paymenL of Lhe Lax on any goods so sLoredŦ

SLCŦ 139Ŧ Þroof of LxporLaLlonŤ LxporLerƌs 8ondŦ Ŵ LxporLers of goods LhaL would be sub[ecL Lo exclse Laxţ
lf sold or removed for consumpLlon ln Lhe Þhlllpplnesţ shall submlL proof of exporLaLlon saLlsfacLory Lo
Lhe Commlssloner andţ when Lhe same ls deemed necessaryţ shall be requlred Lo glve a bond prlor Lo
Lhe removal of Lhe goods for shlpmenLţ condlLloned upon Lhe exporLaLlon of Lhe same ln good falLhŦ

SLCŦ 160Ŧ ManufacLurersƌ and lmporLersƌ 8ondŦ Ŵ ManufacLurers and lmporLers of arLlcles sub[ecL Lo
exclse Lax shall posL a bond sub[ecL Lo Lhe followlng condlLlonsť

(A) lnlLlal 8ondŦ Ŵ ln case of lnlLlal bondţ Lhe amounL shall be equal Lo Cne Pundred Lhousand pesos
(Þ100ţ000)ť Þrovldedţ 1haL lf afLer slx (6) monLhs of operaLlonţ Lhe amounL of lnlLlal bond ls less Lhan Lhe
amounL of Lhe LoLal exclse Lax pald durlng Lhe perlodţ Lhe amounL of Lhe bond shall be ad[usLed Lo Lwlce
Lhe Lax acLually pald for Lhe perlodŦ

(8) 8ond for Lhe Succeedlng ?ears of CperaLlonŦ Ŵ 1he bonds for Lhe succeedlng years of operaLlon shall
be based on Lhe acLual LoLal exclse Lax pald durlng Lhe perlod Lhe year lmmedlaLely precedlng Lhe year
of operaLlonŦ

Such bond shall be condlLloned upon falLhful compllanceţ durlng Lhe Llme such buslness ls followedţ wlLh
laws and rules and regulaLlons relaLlng Lo such buslness and for Lhe saLlsfacLlon of all flnes and penalLles
lmposed by Lhls CodeŦ

SLCŦ 161Ŧ 8ecords Lo be kepL by Wholesale uealersŦ Ŵ Wholesale dealers shall keep records of Lhelr
purchases and sales or dellverles of arLlcles sub[ecL Lo exclse Laxţ ln such form as shall be prescrlbed ln
Lhe rules and regulaLlons by Lhe SecreLary of llnanceŦ 1hese records and Lhe enLlre sLock of goods
sub[ecL Lo Lax shall be sub[ecL aL all Llmes Lo lnspecLlon of lnLernal revenue offlcersŦ

SLCŦ 162Ŧ 8ecords Lo be kepL by uealers ln Leaf 1obaccoŦ Ŵ uealers ln leaf Lobacco shall keep records of
Lhe producLs sold or dellvered by Lhem Lo oLher persons ln such manner as may be prescrlbed ln Lhe
rules and regulaLlons by Lhe SecreLary of llnanceţ such records Lo be aL all Llmes sub[ecL Lo lnspecLlon of
lnLernal revenue offlcersŦ

SLCŦ 163Ŧ ÞreservaLlon of lnvolces and SLampsŦ Ŵ All dealers whosoever shall preserveţ for Lhe perlod
prescrlbed ln SecLlon 233ţ all offlclal lnvolces recelved by Lhem from oLher dealers or from
manufacLurersţ LogeLher wlLh Lhe fracLlonal parLs of sLamps afflxed LhereLoţ lf anyţ and upon demandţ
shall dellver or LransmlL Lhe same Lo any lnLerval revenue offlcerŦ

SLCŦ 164Ŧ lnformaLlon Lo be Clven by ManufacLurersţ lmporLersţ lndenLorsţ and Wholesalers of any
ApparaLus or Mechanlcal ConLrlvance Speclally for Lhe ManufacLure of ArLlcles Sub[ecL Lo Lxclse 1ax and
lmporLersţ lndenLorsţ ManufacLurers or Sellers of ClgareLLe Þaper ln 8obblnsţ ClgareLLe 1lpplng Þaper or
ClgareLLe lllLer 1lpsŦ Ŵ ManufacLurersţ lndenLorsţ wholesalers and lmporLers of any apparaLus or
mechanlcal conLrlvance speclally for Lhe manufacLure of arLlcles sub[ecL Lo Lax shallţ before any such
apparaLus or mechanlcal conLrlvance ls removed from Lhe place of manufacLure or from Lhe cusLoms
houseţ glve wrlLLen lnformaLlon Lo Lhe Commlssloner as Lo Lhe naLure and capaclLy of Lhe sameţ Lhe
Llme when lL ls Lo be removedţ and Lhe place for whlch lL ls desLlnedţ as well as Lhe name of Lhe person
by whom lL ls Lo be usedŤ and such apparaLus or mechanlcal conLrlvance shall noL be seL up nor
dlsmanLled or Lransferred wlLhouL a permlL ln wrlLlng from Lhe CommlsslonerŦ

A wrlLLen permlL from Lhe Commlssloner for lmporLlngţ manufacLurlng or selllng of clgareLLe paper ln
bobblns or rollsţ clgareLLe Llpplng paper or clgareLLe fllLer Llps ls requlred before any person shall engage
ln Lhe lmporLaLlonţ manufacLure or sale of Lhe sald arLlclesŦ no permlL Lo sell sald arLlcles shall be
granLed unless Lhe name and address of Lhe prospecLlve buyer ls flrsL submlLLed Lo Lhe Commlssloner
and approved by hlmŦ 8ecordsţ showlng Lhe sLock of Lhe sald arLlcles and Lhe dlsposal Lhereof by sale of
persons wlLh Lhelr respecLlve addresses as approved by Lhe Commlsslonerţ shall be kepL by Lhe sellerţ
and recordsţ showlng sLock of sald arLlcles and consumpLlon Lhereofţ shall be kepL by Lhe buyerţ sub[ecL
Lo lnspecLlon by lnLernal revenue offlcersŦ

SLCŦ 163Ŧ LsLabllshmenL of ulsLlllery WarehouseŦ Ŵ Lvery dlsLlllerţ when so requlred by Lhe
Commlsslonerţ shall provlde aL hls own expense a warehouseţ and shall be slLuaLed ln and consLlLuLe a
parL of hls dlsLlllery premlses and Lo be used only for Lhe sLorage of dlsLllled splrlLs of hls own
manufacLure unLll Lhe Lax Lhereon shall have been paldŤ buL no dwelllng house shall be used for such
purposeŦ Such warehouseţ when approved by Lhe Commlsslonerţ ls declared Lo be a bonded warehouseţ
and shall be known as a dlsLlllery warehouseŦ

SLCŦ 166Ŧ CusLody of ulsLlllery or ulsLlllery WarehouseŦ Ŵ Lvery dlsLlllery or dlsLlllery warehouse shall be
ln Lhe [olnL cusLody of Lhe revenue lnspecLorţ lf one ls asslgned LhereLoţ and of Lhe proprleLor LhereofŦ lL
shall be kepL securely lockedţ and shall aL no Llme be unlocked or opened or remaln unlocked or opened
unless ln Lhe presence of such revenue lnspecLor or oLher person who may be deslgnaLed Lo acL for hlm
as provlded by lawŦ

SLCŦ 167Ŧ LlmlLaLlon on CuanLlLy of SplrlLs 8emoved from WarehouseŦ Ŵ no dlsLllled splrlLs shall be
removed from any dlsLllleryţ dlsLlllery warehouseţ or bonded warehouse ln quanLlLles of less Lhan flfLeen
(13) gauge llLers aL any one Llmeţ excepL boLLled goodsţ whlch may be removed by Lhe case of noL less
Lhan Lwelve (12) boLLlesŦ

SLCŦ 168Ŧ uenaLurlng WlLhln ÞremlsesŦ Ŵ lor purposes of Lhls 1lLleţ Lhe process of denaLurlng alcohol
shall be effecLed only wlLhln Lhe dlsLlllery premlses where Lhe alcohol Lo be denaLured ls produced ln
accordance wlLh formulas duly approved by Lhe 8ureau of lnLernal 8evenue and only ln Lhe presence of
duly deslgnaLed represenLaLlves of sald 8ureauŦ

SLCŦ 169Ŧ 8ecovery of Alcohol for use ln ArLs and lndusLrlesŦ Ŵ ManufacLurers employlng processes ln
whlch denaLured alcohol used ln arLs and lndusLrles ls expressed or evaporaLed from Lhe arLlcles
manufacLured mayţ under rules and regulaLlons Lo be prescrlbed by Lhe SecreLary of llnanceţ upon
recommendaLlon of Lhe Commlsslonerţ be permlLLed Lo recover Lhe alcohol so used and resLore lL agaln
Lo a condlLlon sulLable solely for use ln manufacLurlng processesŦ

SLCŦ 170Ŧ 8equlremenLs Covernlng 8ecLlflcaLlon and Compoundlng of LlquorsŦ Ŵ Þersons engaged ln Lhe
recLlflcaLlon or compoundlng of llquors shallţ as Lo Lhe mode of conducLlng Lhelr buslness and
supervlslon over Lhe sameţ be sub[ecL Lo all Lhe requlremenLs of law appllcable Lo dlsLlllerlesť Þrovldedţ
1haL where a recLlfler makes use of splrlLs upon whlch Lhe exclse Lax has been paldţ no furLher Lax shall
be collecLed on any recLlfled splrlLs produced excluslvely Lherefromť Þrovldedţ furLherţ 1haL
compounders ln Lhe manufacLure of any lnLoxlcaLlng beverage whaLeverţ shall noL be allowed Lo make
use of splrlLs upon whlch Lhe exclse Lax has noL been prevlously paldŦ

SLCŦ 171Ŧ AuLhorlLy of lnLernal 8evenue Cfflcer ln Searchlng for 1axable ArLlclesŦ Ŵ Any lnLernal revenue
offlcer mayţ ln Lhe dlscharge of hls offlclal duLlesţ enLer any houseţ bulldlng or place where arLlcles
sub[ecL Lo Lax under Lhls 1lLle are produced or kepLţ or are belleved by hlm upon reasonable grounds Lo
be produced or kepLţ so far as may be necessary Lo examlneţ dlscover or selze Lhe sameŦ

Pe may also sLop and search any vehlcle or oLher means of LransporLaLlon when upon reasonable
grounds he belleves LhaL Lhe same carrles any arLlcle on whlch Lhe exclse Lax has noL been paldŦ

SLCŦ 172Ŧ ueLenLlon of Þackage ConLalnlng 1axable ArLlclesŦ Ŵ Any revenue offlcer may deLaln any
package conLalnlng or supposed Lo conLaln arLlcles sub[ecL Lo exclse Lax when he has good reason Lo
belleve LhaL Lhe lawful Lax has noL been pald or LhaL Lhe package has been or ls belng removed ln
vlolaLlon of lawţ and every such package shall be held by such offlcer ln a safe place unLll lL shall be
deLermlned wheLher Lhe properLy so deLalned ls llable by law Lo be proceeded agalnsL for forfelLureŤ buL
such summary deLenLlon shall noL conLlnue ln any case longer Lhan seven (7) days wlLhouL due process
of law or lnLervenLlon of Lhe offlcer Lo whom such deLenLlon ls Lo be reporLedŦ

1l1LL vll
uCCuMLn1A8? S1AMÞ 1Ax

SLCŦ 173Ŧ SLamp 1axes upon uocumenLsţ Loan AgreemenLsţ lnsLrumenLs and ÞapersŦ Ŵ upon documenLsţ
lnsLrumenLsţ loan agreemenLs and papersţ and upon accepLancesţ asslgnmenLsţ sales and Lransfers of
Lhe obllgaLlonţ rlghL or properLy lncldenL LhereLoţ Lhere shall be levledţ collecLed and pald forţ and ln
respecL of Lhe LransacLlon so had or accompllshedţ Lhe correspondlng documenLary sLamp Laxes
prescrlbed ln Lhe followlng SecLlons of Lhls 1lLleţ by Lhe person maklngţ slgnlngţ lssulngţ accepLlngţ or
Lransferrlng Lhe same wherever Lhe documenL ls madeţ slgnedţ lssuedţ accepLed or Lransferred when
Lhe obllgaLlon or rlghL arlses from Þhlllpplne sources or Lhe properLy ls slLuaLed ln Lhe Þhlllpplnesţ and
Lhe same Llme such acL ls done or LransacLlon hadť Þrovldedţ 1haL whenever one parLy Lo Lhe Laxable
documenL en[oys exempLlon from Lhe Lax hereln lmposedţ Lhe oLher parLy who ls noL exempL shall be
Lhe one dlrecLly llable for Lhe LaxŦ

SLCŦ 174Ŧ SLamp 1ax on uebenLures and CerLlflcaLes of lndebLednessŦ Ŵ Cn all debenLures and cerLlflcaLes
of lndebLedness lssued by any assoclaLlonţ company or corporaLlonţ Lhere shall be collecLed a
documenLary sLamp Lax of Cne peso and flfLy cenLavos (Þ1Ŧ30) on each 1wo hundred pesos (Þ200)ţ or
fracLlonal parL Lhereofţ of Lhe face value of such documenLsŦ

SLCŦ 173Ŧ SLamp 1ax on Crlglnal lssue of Shares of SLockŦ Ŵ Cn every orlglnal lssueţ wheLher on
organlzaLlonţ reorganlzaLlon or for any lawful purposeţ of shares of sLock by any assoclaLlonţ company or
corporaLlonţ Lhere shall be collecLed a documenLary sLamp Lax of 1wo pesos (Þ2Ŧ00) on each 1wo
hundred pesos (Þ200)ţ or fracLlonal parL Lhereofţ of Lhe par valueţ of such shares of sLockť Þrovldedţ 1haL
ln Lhe case of Lhe orlglnal lssue of shares of sLock wlLhouL par value Lhe amounL of Lhe documenLary
sLamp Lax hereln prescrlbed shall be based upon Lhe acLual conslderaLlon for Lhe lssuance of such shares
of sLockť Þrovldedţ furLherţ 1haL ln Lhe case of sLock dlvldendsţ on Lhe acLual value represenLed by each
shareŦ

SLCŦ 176Ŧ SLamp 1ax on Salesţ AgreemenLs Lo Sellţ Memoranda of Salesţ uellverles or 1ransfer of uueŴ
blllsţ CerLlflcaLes of CbllgaLlonţ or Shares of CerLlflcaLes of SLockŦ Ŵ Cn all salesţ or agreemenLs Lo sellţ or
memoranda of saleţ or dellverlesţ or Lransfer of dueŴblllsţ cerLlflcaLes of obllgaLlonţ or shares of
cerLlflcaLes of sLock ln any assoclaLlonţ companyţ or corporaLlonţ or Lransfer of such securlLles by
asslgnmenL ln blankţ or by dellveryţ or by any paper or agreemenLţ or memorandum or oLher evldences
of Lransfer or sale wheLher enLlLllng Lhe holder ln any manner Lo Lhe beneflL of such dueŴblllsţ
cerLlflcaLes of obllgaLlon or sLockţ or Lo secure Lhe fuLure paymenL of moneyţ or for Lhe fuLure Lransfer
of any dueŴblllţ cerLlflcaLe of obllgaLlon or sLockţ Lhere shall be collecLed a documenLary sLamp Lax of
Cne peso and flfLy cenLavos (Þ1Ŧ30) on each 1wo hundred pesos (Þ200) or fracLlonal parL Lhereofţ of Lhe
par value of such dueŴblllţ cerLlflcaLe of obllgaLlon or sLockŤ Þrovldedţ 1haL only one Lax shall be collecLed
on each sale or Lransfer of sLock or securlLles from one person Lo anoLherţ regardless of wheLher or noL
a cerLlflcaLe of sLock or obllgaLlon ls lssuedţ lndorsedţ or dellvered ln pursuance of such sale or Lransferť
andţ Þrovldedţ furLherţ 1haL ln Lhe case of sLock wlLhouL par value Lhe amounL of documenLary sLamp
Lax hereln prescrlbed shall be equlvalenL Lo LwenLyŴflve percenL (23Ʒ) of Lhe documenLary sLamp Lax
pald upon Lhe orlglnal lssue of sald sLockŦ

SLCŦ 177Ŧ SLamp 1ax on 8ondsţ uebenLuresţ CerLlflcaLe of SLock or lndebLedness lssued ln lorelgn
CounLrlesŦ Ŵ Cn all bondsţ debenLuresţ cerLlflcaLes of sLockţ or cerLlflcaLes of lndebLedness lssued ln any
forelgn counLryţ Lhere shall be collecLed from Lhe person selllng or Lransferrlng Lhe same ln Lhe
Þhlllpplnesţ such as Lax as ls requlred by law on slmllar lnsLrumenLs when lssuedţ sold or Lransferred ln
Lhe ÞhlllpplnesŦ

SLCŦ 178Ŧ SLamp 1ax on CerLlflcaLes of ÞroflLs or lnLeresL ln ÞroperLy or AccumulaLlonsŦ Ŵ Cn all
cerLlflcaLes of proflLsţ or any cerLlflcaLe or memorandum showlng lnLeresL ln Lhe properLy or
accumulaLlons of any assoclaLlonţ company or corporaLlonţ and on all Lransfers of such cerLlflcaLes or
memorandaţ Lhere shall be collecLed a documenLary sLamp Lax of llfLy cenLavos (Þ0Ŧ30) on each 1wo
hundred pesos (Þ200)ţ or fracLlonal parL Lhereofţ of Lhe face value of such cerLlflcaLe or memorandumŦ

SLCŦ 179Ŧ SLamp 1ax on 8ank Checksţ urafLsţ CerLlflcaLes of ueposlL noL 8earlng lnLeresLţ and CLher
lnsLrumenLsŦ Ŵ Cn each bank checkţ drafLţ or cerLlflcaLe of deposlL noL drawlng lnLeresLţ or order for Lhe
paymenL of any sum of money drawn upon or lssued by any bankţ LrusL companyţ or any person or
personsţ companles or corporaLlonsţ aL slghL or on demandţ Lhere shall be collecLed a documenLary
sLamp Lax of Cne peso and flfLy cenLavos (Þ1Ŧ30)Ŧ

SLCŦ 180Ŧ SLamp 1ax on All 8ondsţ Loan AgreemenLsţ promlssory noLesţ 8llls of Lxchangeţ urafLsţ
lnsLrumenLs and SecurlLles lssued by Lhe CovernmenL or Any of lLs lnsLrumenLallLlesţ ueposlL SubsLlLuLe
uebL lnsLrumenLsţ CerLlflcaLes of ueposlLs 8earlng lnLeresL and CLhers noL Þayable on SlghL or uemandŦ
Ŵ Cn all bondsţ loan agreemenLsţ lncludlng Lhose slgned abroadţ whereln Lhe ob[ecL of Lhe conLracL ls
locaLed or used ln Lhe Þhlllpplnesţ bllls of exchange (beLween polnLs wlLhln Lhe Þhlllpplnes)ţ drafLsţ
lnsLrumenLs and securlLles lssued by Lhe CovernmenL or any of lLs lnsLrumenLallLlesţ deposlL subsLlLuLe
debL lnsLrumenLsţ cerLlflcaLes of deposlLs drawlng lnLeresLţ orders for Lhe paymenL of any sum of money
oLherwlse Lhan aL slghL or on demandţ on all promlssory noLesţ wheLher negoLlable or nonŴnegoLlableţ
excepL bank noLes lssued for clrculaLlonţ and on each renewal of any such noLeţ Lhere shall be collecLed
a documenLary sLamp Lax of 1hlrLy cenLavos (Þ0Ŧ30) on each 1wo hundred pesos (Þ200)ţ or fracLlonal
parL Lhereofţ of Lhe face value of any such agreemenLţ blll of exchangeţ drafLţ cerLlflcaLe of deposlLţ or
noLeť Þrovldedţ 1haL only one documenLary sLamp Lax shall be lmposed on elLher loan agreemenLţ or
promlssory noLes lssued Lo secure such loanţ whlchever wlll yleld a hlgher Laxť Þrovldedţ howeverţ 1haL
loan agreemenLs or promlssory noLes Lhe aggregaLe of whlch does noL exceed 1wo hundred flfLy
Lhousand pesos (Þ230ţ000) execuLed by an lndlvldual for hls purchase on lnsLallmenL for hls personal
use or LhaL of hls famlly and noL for buslnessţ resaleţ barLer or hlre of a houseţ loLţ moLor vehlcleţ
appllance or furnlLure shall be exempL from Lhe paymenL of Lhe documenLary sLamp Lax provlded under
Lhls SecLlonŦ

SLCŦ 181Ŧ SLamp 1ax upon AccepLance of 8llls of Lxchange and CLhersŦ Ŵ upon any accepLance or
paymenL of any blll of exchange or order for Lhe paymenL of money purporLlng Lo be drawn ln a forelgn
counLry buL payable ln Lhe Þhlllpplnesţ Lhere shall be collecLed a documenLary sLamp Lax of 1hlrLy
cenLavos (Þ0Ŧ30) on each 1wo hundred pesos (Þ200)ţ or fracLlonal parL Lhereofţ of Lhe face value of any
such blll of exchangeţ or orderţ or Lhe Þhlllpplne equlvalenL Lo such valueţ lf expressed ln forelgn
currencyŦ

SLCŦ 182Ŧ SLamp 1ax on lorelgn 8llls of Lxchange and LeLLers of CredlLŦ Ŵ Cn all forelgn bllls of exchange
and leLLers of credlL (lncludlng ordersţ by Lelegraph or oLherwlseţ for Lhe paymenL of money lssued by
express or sLeamshlp companles or by any person or persons) drawn ln buL payable ouL of Lhe
Þhlllpplnes ln a seL of Lhree (3) or more accordlng Lo Lhe cusLom of merchanLs and bankersţ Lhere shall
be collecLed a documenLary sLamp Lax of 1hlrLy cenLavos (Þ0Ŧ30) on each 1wo hundred pesos (Þ200)ţ or
fracLlonal parL Lhereofţ of Lhe face value of any such blll of exchange or leLLer of credlLţ or Lhe Þhlllpplne
equlvalenL of such face valueţ lf expressed ln forelgn currencyŦ

SLCŦ 183Ŧ SLamp 1ax on Llfe lnsurance ÞollclesŦ Ŵ Cn all pollcles of lnsurance or oLher lnsLrumenLs by
whaLever name Lhe same may be calledţ whereby any lnsurance shall be made or renewed upon any llfe
or llvesţ Lhere shall be collecLed a documenLary sLamp Lax of llfLy cenLavos (Þ0Ŧ30) on each 1wo
hundred pesos (Þ200)ţ or fracLlonal parL Lhereofţ of Lhe amounL lnsured by any such pollcyŦ

SLCŦ 184Ŧ SLamp 1ax on Þollcles of lnsurance upon ÞroperLyŦ Ŵ Cn all pollcles of lnsurance or oLher
lnsLrumenLs by whaLever name Lhe same may be calledţ by whlch lnsurance shall be made or renewed
upon properLy of any descrlpLlonţ lncludlng renLs or proflLsţ agalnsL perll by sea or on lnland waLersţ or
by flre or llghLnlngţ Lhere shall be collecLed a documenLary sLamp Lax of llfLy cenLavos (Þ0Ŧ30) on each
lour pesos (Þ4Ŧ00)ţ or fracLlonal parL Lhereofţ of Lhe amounL of premlum chargedť Þrovldedţ howeverţ
1haL no documenLary sLamp Lax shall be collecLed on relnsurance conLracLs or on any lnsLrumenL by
whlch cesslon or accepLance of lnsurance rlsks under any relnsurance agreemenL ls effecLed or
recordedŦ

SLCŦ 183Ŧ SLamp 1ax on lldellLy 8onds and CLher lnsurance ÞollclesŦ Ŵ Cn all pollcles of lnsurance or
bonds or obllgaLlons of Lhe naLure of lndemnlLy for lossţ damage or llablllLy made or renewed by any
personţ assoclaLlonţ company or corporaLlon LransacLlng Lhe buslness of accldenLţ fldellLyţ employer's
llablllLyţ plaLeţ glassţ sLeamţ bollerţ burglarţ elevaLorţ auLomaLlc sprlnklerţ or oLher branch of lnsurance
(excepL llfeţ marlneţ lnlandţ and flre lnsurance)ţ and all bondsţ underLaklngsţ or recognlzancesţ
condlLloned for Lhe performance of Lhe duLles of any offlce or poslLlonţ for Lhe dolng or noL dolng of
anyLhlng Lhereln speclfledţ and on all obllgaLlons guaranLeelng Lhe valldlLy or legallLy of any bond or
oLher obllgaLlons lssued by any provlnceţ clLyţ munlclpallLyţ or oLher publlc body or organlzaLlonţ and on
all obllgaLlons guaranLeelng Lhe LlLle Lo any real esLaLeţ or guaranLeelng any mercanLlle credlLsţ whlch
may be made or renewed by any such personţ company or corporaLlonţ Lhere shall be collecLed a
documenLary sLamp Lax of llfLy cenLavos (Þ0Ŧ30) on each lour pesos (Þ4Ŧ00)ţ or fracLlonal parL Lhereofţ
of Lhe premlum chargedŦ

SLCŦ 186Ŧ SLamp 1ax on Þollcles of AnnulLles and ÞreŴneed ÞlansŦ Ŵ Cn all pollcles of annulLlesţ or oLher
lnsLrumenLs by whaLever name Lhe same may be calledţ whereby an annulLy may be madeţ Lransferred
or redeemedţ Lhere shall be collecLed a documenLary sLamp Lax of Cne peso and flfLy cenLavos (Þ1Ŧ30)
on each 1wo hundred pesos (Þ200) or fracLlonal parL Lhereofţ of Lhe caplLal of Lhe annulLyţ or should Lhls
be unknownţ Lhen on each 1wo hundred (Þ200) pesosţ or fracLlonal parL Lhereofţ of LhlrLyŴLhree and
oneŴLhlrd (33 1/3) Llmes Lhe annual lncomeŦ Cn preŴneed plansţ Lhe documenLary sLamp Lax shall be
llfLy cenLavos (Þ0Ŧ30) on each llve hundred pesos (Þ300)ţ or fracLlonal parL Lhereofţ of Lhe value or
amounL of Lhe planŦ

SLCŦ 187Ŧ SLamp 1ax on lndemnlLy 8ondsŦ Ŵ Cn all bonds for lndemnlfylng any personţ flrm or
corporaLlon who shall become bound or engaged as sureLy for Lhe paymenL of any sum of money or for
Lhe due execuLlon or performance of Lhe duLles of any offlce or poslLlon or Lo accounL for money
recelved by vlrLue Lhereofţ and on all oLher bonds of any descrlpLlonţ excepL such as may be requlred ln
legal proceedlngsţ or are oLherwlse provlded for herelnţ Lhere shall be collecLed a documenLary sLamp
Lax of 1hlrLy cenLavos (Þ0Ŧ30) on each lour pesos (Þ4Ŧ00)ţ or fracLlonal parL Lhereofţ of Lhe premlum
chargedŦ

SLCŦ 188Ŧ SLamp 1ax on CerLlflcaLesŦ Ŵ Cn each cerLlflcaLe of damages or oLherwlseţ and on every
cerLlflcaLe or documenL lssued by any cusLoms offlcerţ marlne surveyorţ or oLher person acLlng as suchţ
and on each cerLlflcaLe lssued by a noLary publlcţ and on each cerLlflcaLe of any descrlpLlon requlred by
law or by rules or regulaLlons of a publlc offlceţ or whlch ls lssued for Lhe purpose of glvlng lnformaLlonţ
or esLabllshlng proof of a facLţ and noL oLherwlse speclfled herelnţ Lhere shall be collecLed a
documenLary sLamp Lax of llfLeen pesos (Þ13Ŧ00)Ŧ

SLCŦ 189Ŧ SLamp 1ax on Warehouse 8ecelpLsŦ Ŵ Cn each warehouse recelpL for properLy held ln sLorage
ln a publlc or prlvaLe warehouse or yard for any person oLher Lhan Lhe proprleLor of such warehouse or
yardţ Lhere shall be collecLed a documenLary sLamp Lax of llfLeen pesos (Þ13Ŧ00)ť Þrovldedţ 1haL no Lax
shall be collecLed on each warehouse recelpL lssued Lo any one person ln any one calendar monLh
coverlng properLy Lhe value of whlch does noL exceed 1wo hundred pesos (Þ200)Ŧ

SLCŦ 190Ŧ SLamp 1ax on !alŴAlalţ Porse 8aclng 1lckeLsţ loLLo or CLher AuLhorlzed numbers CamesŦ Ŵ Cn
each [alŴalalţ horse race LlckeLţ loLLoţ or oLher auLhorlzed number gamesţ Lhere shall be collecLed a
documenLary sLamp Lax of 1en cenLavos (Þ0Ŧ10)ť Þrovldedţ 1haL lf Lhe cosL of Lhe LlckeL exceeds Cne
peso (Þ1Ŧ00)ţ an addlLlonal Lax of 1en cenLavos (Þ0Ŧ10) on every Cne peso (Þ1Ŧ00ţ or fracLlonal parL
Lhereofţ shall be collecLedŦ

SLCŦ 191Ŧ SLamp 1ax on 8llls of Ladlng or 8ecelpLsŦ Ŵ Cn each seL of bllls of ladlng or recelpLs (excepL
charLer parLy) for any goodsţ merchandlse or effecLs shlpped from one porL or place ln Lhe Þhlllpplnes Lo
anoLher porL or place ln Lhe Þhlllpplnes (excepL on ferrles across rlvers)ţ or Lo any forelgn porLţ Lhere
shall be collecLed documenLary sLamp Lax of Cne peso (Þ1Ŧ00)ţ lf Lhe value of such goods exceeds Cne
hundred pesos (Þ100) and does noL exceed Cne 1housand pesos (Þ1ţ000)Ť 1en pesos (Þ10)ţ lf Lhe value
exceeds Cne Lhousand pesos (Þ1ţ000)ť Þrovldedţ howeverţ 1haL frelghL LlckeLs coverlng goodsţ
merchandlse or effecLs carrled as accompanled baggage of passengers on land and waLer carrlers
prlmarlly engaged ln Lhe LransporLaLlon of passengers are hereby exempLŦ

SLCŦ 192Ŧ SLamp 1ax on ÞroxlesŦ Ŵ Cn each proxy for voLlng aL any elecLlon for offlcers of any company or
assoclaLlonţ or for any oLher purposeţ excepL proxles lssued affecLlng Lhe affalrs of assoclaLlons or
corporaLlons organlzed for rellglousţ charlLable or llLerary purposesţ Lhere shall be collecLed a
documenLary sLamp Lax of llfLeen pesos (Þ13Ŧ00)Ŧ

SLCŦ 193Ŧ SLamp 1ax on Þowers of ALLorneyŦ Ŵ Cn each power of aLLorney Lo perform any acL
whaLsoeverţ excepL acLs connecLed wlLh Lhe collecLlon of clalms due from or accrulng Lo Lhe
CovernmenL of Lhe 8epubllc of Lhe Þhlllpplnesţ or Lhe governmenL of any provlnceţ clLy or munlclpallLyţ
Lhere shall be collecLed a documenLary sLamp Lax of llve pesos (Þ3Ŧ00)Ŧ

SLCŦ 194Ŧ SLamp 1ax on Leases and CLher Plrlng AgreemenLsŦ Ŵ Cn each leaseţ agreemenLţ
memorandumţ or conLracL for hlreţ use or renL of any lands or LenemenLsţ or porLlons Lhereofţ Lhere
shall be collecLed a documenLary sLamp Lax of 1hree pesos (Þ3Ŧ00) for Lhe flrsL 1wo Lhousand pesos
(Þ2ţ000)ţ or fracLlonal parL Lhereofţ and an addlLlonal Cne peso (Þ1Ŧ00) for every Cne 1housand pesos
(Þ1ţ000) or fracLlonal parL Lhereofţ ln excess of Lhe flrsL 1wo Lhousand pesos (Þ2ţ000) for each year of
Lhe Lerm of sald conLracL or agreemenLŦ

SLCŦ 193Ŧ SLamp 1ax on MorLgagesţ Þledges and ueeds of 1rusLŦ Ŵ Cn every morLgage or pledge of landsţ
esLaLeţ or properLyţ real or personalţ herlLable or movableţ whaLsoeverţ where Lhe same shall be made
as a securlLy for Lhe paymenL of any deflnlLe and cerLaln sum of money lenL aL Lhe Llme or prevlously
due and owlng of forborne Lo be paldţ belng payable and on any conveyance of landţ esLaLeţ or properLy
whaLsoeverţ ln LrusL or Lo be soldţ or oLherwlse converLed lnLo money whlch shall be and lnLended only
as securlLyţ elLher by express sLlpulaLlon or oLherwlseţ Lhere shall be collecLed a documenLary sLamp Lax
aL Lhe followlng raLesť

(a) When Lhe amounL secured does noL exceed llve Lhousand pesos (Þ3ţ000)ţ 1wenLy pesos (Þ20Ŧ00)Ŧ
(b) Cn each llve Lhousand pesos (Þ3ţ000)ţ or fracLlonal parL Lhereof ln excess of llve Lhousand pesos
(Þ3ţ000)ţ an addlLlonal Lax of 1en pesos (Þ10Ŧ00)Ŧ
Cn any morLgageţ pledgeţ or deed of LrusLţ where Lhe same shall be made as a securlLy for Lhe paymenL
of a flucLuaLlng accounL or fuLure advances wlLhouL flxed llmlLţ Lhe documenLary sLamp Lax on such
morLgageţ pledge or deed of LrusL shall be compuLed on Lhe amounL acLually loaned or glven aL Lhe Llme
of Lhe execuLlon of Lhe morLgageţ pledge or deed of LrusLţ addlLlonal documenLary sLamp Lax shall be
pald whlch shall be compuLed on Lhe basls of Lhe amounL advanced or loaned aL Lhe raLes speclfled
aboveť Þrovldedţ howeverţ 1haL lf Lhe full amounL of Lhe loan or credlLţ granLed under Lhe morLgageţ
pledge or deed of LrusL shall be compuLed on Lhe amounL acLually loaned or glven aL Lhe Llme of Lhe
execuLlon of Lhe morLgageţ pledge or deed of LrusLŦ Poweverţ lf subsequenL advances are made on such
morLgageţ pledge or deed of LrusLţ addlLlonal documenLary sLamp Lax shall be pald whlch shall be
compuLed on Lhe basls of Lhe amounL advanced or loaned aL Lhe raLes speclfled aboveť Þrovldedţ
howeverţ 1haL lf Lhe full amounL of Lhe loan or credlLţ granLed under Lhe morLgageţ pledge or deed of
LrusL ls speclfled ln such morLgageţ pledge or deed of LrusLţ Lhe documenLary sLamp Lax prescrlbed ln
Lhls SecLlon shall be pald and compuLed on Lhe full amounL of Lhe loan or credlL granLedŦ

SLCŦ 196Ŧ SLamp Lax on ueeds of Sale and Conveyances of 8eal ÞroperLyŦ Ŵ Cn all conveyancesţ deedsţ
lnsLrumenLsţ or wrlLlngsţ oLher Lhan granLsţ paLenLs or orlglnal cerLlflcaLes of ad[udlcaLlon lssued by Lhe
CovernmenLţ whereby any landţ LenemenLţ or oLher realLy sold shall be granLedţ asslgnedţ Lransferred or
oLherwlse conveyed Lo Lhe purchaserţ or purchasersţ or Lo any oLher person or persons deslgnaLed by
such purchaser or purchasersţ Lhere shall be collecLed a documenLary sLamp Laxţ aL Lhe raLes hereln
below prescrlbedţ based on Lhe conslderaLlon conLracLed Lo be pald for such realLy or on lLs falr markeL
value deLermlned ln accordance wlLh SecLlon 6(L) of Lhls Codeţ whlchever ls hlgherť Þrovldedţ 1haL when
one of Lhe conLracLlng parLles ls Lhe CovernmenL Lhe Lax hereln lmposed shall be based on Lhe acLual
conslderaLlonŦ
(a) When Lhe conslderaLlonţ or value recelved or conLracLed Lo be pald for such realLy afLer maklng
proper allowance of any encumbranceţ does noL exceed Cne Lhousand pesos (Þ1ţ000) flfLeen pesos
(Þ13Ŧ00)Ŧ
(b) lor each addlLlonal Cne Lhousand Þesos (Þ1ţ000)ţ or fracLlonal parL Lhereof ln excess of Cne
Lhousand pesos (Þ1ţ000) of such conslderaLlon or valueţ llfLeen pesos (Þ13Ŧ00)Ŧ
When lL appears LhaL Lhe amounL of Lhe documenLary sLamp Lax payable hereunder has been reduced
by an lncorrecL sLaLemenL of Lhe conslderaLlon ln any conveyanceţ deedţ lnsLrumenL or wrlLlng sub[ecL
Lo such Lax Lhe Commlsslonerţ provlnclal or clLy 1reasurerţ or oLher revenue offlcer shallţ from Lhe
assessmenL rolls or oLher rellable source of lnformaLlonţ assess Lhe properLy of lLs Lrue markeL value and
collecL Lhe proper Lax LhereonŦ

SLCŦ 197Ŧ SLamp 1ax on CharLer ÞarLles and Slmllar lnsLrumenLsŦ Ŵ Cn every charLer parLyţ conLracL or
agreemenL for Lhe charLer of any shlpţ vessel or sLeamerţ or any leLLer or memorandum or oLher wrlLlng
beLween Lhe capLalnţ masLer or ownerţ or oLher person acLlng as agenL of any shlpţ vessel or sLeamerţ
and any oLher person or persons for or relaLlng Lo Lhe charLer of any such shlpţ vessel or sLeamerţ and
on any renewal or Lransfer of such charLerţ conLracLţ agreemenLţ leLLer or memorandumţ Lhere shall be
collecLed a documenLary sLamp Lax aL Lhe followlng raLesť
(a) lf Lhe reglsLered gross Lonnage of Lhe shlpţ vessel or sLeamer does noL exceed one Lhousand (1ţ000)
Lonsţ and Lhe duraLlon of Lhe charLer or conLracL does noL exceed slx (6) monLhsţ llve hundred pesos
(Þ300)Ť and for each monLh or fracLlon of a monLh ln excess of slx (6) monLhsţ an addlLlonal Lax of llfLy
pesos (Þ30Ŧ00) shall be paldŦ
(b) lf Lhe reglsLered gross Lonnage exceeds one Lhousand (1ţ000) Lons and does noL exceed Len Lhousand
(10ţ000) Lonsţ and Lhe duraLlon of Lhe charLer or conLracL does noL exceed slx (6) monLhsţ Cne Lhousand
pesos (Þ1ţ000)Ť and for each monLh or fracLlon of a monLh ln excess of slx (6) monLhsţ an addlLlonal Lax
of Cne hundred pesos (Þ100) shall be paldŦ
(c) lf Lhe reglsLered gross Lonnage exceeds Len Lhousand (10ţ000) Lons and Lhe duraLlon of Lhe charLer or
conLracL does noL exceed slx (6) monLhsţ Cne Lhousand flve hundred pesos (Þ1ţ300)Ť and for each
monLh or fracLlon of a monLh ln excess of slx (6) monLhsţ an addlLlonal Lax of Cne hundred flfLy pesos
(Þ130) shall be paldŦ
SLCŦ 198Ŧ SLamp 1ax on AsslgnmenLs and 8enewals of CerLaln lnsLrumenLsŦ Ŵ upon each and every
asslgnmenL or Lransfer of any morLgageţ lease or pollcy of lnsuranceţ or Lhe renewal or conLlnuance of
any agreemenLţ conLracLţ charLerţ or any evldence of obllgaLlon or lndebLedness by alLerlng or
oLherwlseţ Lhere shall be levledţ collecLed and pald a documenLary sLamp Laxţ aL Lhe same raLe as LhaL
lmposed on Lhe orlglnal lnsLrumenLŦ

SLCŦ 199Ŧ uocumenLs and Þapers noL Sub[ecL Lo SLamp 1axŦ Ŵ 1he provlslons of SecLlon 173 Lo Lhe
conLrary noLwlLhsLandlngţ Lhe followlng lnsLrumenLsţ documenLs and papers shall be exempL from Lhe
documenLary sLamp Laxť
(a) Þollcles of lnsurance or annulLles made or granLed by a fraLernal or beneflclary socleLyţ orderţ
assoclaLlon or cooperaLlve companyţ operaLed on Lhe lodge sysLem or local cooperaLlon plan and
organlzed and conducLed solely by Lhe members Lhereof for Lhe excluslve beneflL of each member and
noL for proflLŦ
(b) CerLlflcaLes of oaLhs admlnlsLered Lo any governmenL offlclal ln hls offlclal capaclLy or of
acknowledgmenL by any governmenL offlclal ln Lhe performance of hls offlclal duLlesţ wrlLLen
appearance ln any courL by any governmenL offlclalţ ln hls offlclal capaclLyŤ cerLlflcaLes of Lhe
admlnlsLraLlon of oaLhs Lo any person as Lo Lhe auLhenLlclLy of any paper requlred Lo be flled ln courL by
any person or parLy LhereLoţ wheLher Lhe proceedlngs be clvll or crlmlnalŤ papers and documenLs flled ln
courLs by or for Lhe naLlonalţ provlnclalţ clLy or munlclpal governmenLsŤ affldavlLs of poor persons for Lhe
purpose of provlng poverLyŤ sLaLemenLs and oLher compulsory lnformaLlon requlred of persons or
corporaLlons by Lhe rules and regulaLlons of Lhe naLlonalţ provlnclalţ clLy or munlclpal governmenLs
excluslvely for sLaLlsLlcal purposes and whlch are wholly for Lhe use of Lhe bureau or offlce ln whlch Lhey
are flledţ and noL aL Lhe lnsLance or for Lhe use or beneflL of Lhe person flllng LhemŤ cerLlfled coples and
oLher cerLlflcaLes placed upon documenLsţ lnsLrumenLs and papers for Lhe naLlonalţ provlnclalţ clLyţ or
munlclpal governmenLsţ made aL Lhe lnsLance and for Lhe sole use of some oLher branch of Lhe naLlonalţ
provlnclalţ clLy or munlclpal governmenLsŤ and cerLlflcaLes of Lhe assessed value of landsţ noL exceedlng
1wo hundred pesos (Þ200) ln value assessedţ furnlshed by Lhe provlnclalţ clLy or munlclpal 1reasurer Lo
appllcanLs for reglsLraLlon of LlLle Lo landŦ
SLCŦ 200Ŧ ÞaymenL of uocumenLary SLamp 1axŦ Ŵ
(A) ln CeneralŦ Ŵ 1he provlslons of ÞresldenLlal uecree noŦ 1043 noLwlLhsLandlngţ any person llable Lo
pay documenLary sLamp Lax upon any documenL sub[ecL Lo Lax under 1lLle vll of Lhls Code shall flle a Lax
reLurn and pay Lhe Lax ln accordance wlLh Lhe rules and regulaLlons Lo be prescrlbed by Lhe SecreLary of
llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

(8) 1lme for llllng and ÞaymenL of Lhe 1axŦ Ŵ LxcepL as provlded by rules and regulaLlons promulgaLed by
Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ Lhe Lax reLurn prescrlbed ln Lhls
SecLlon shall be flled wlLhln Len (10) days afLer Lhe close of Lhe monLh when Lhe Laxable documenL was
madeţ slgnedţ lssuedţ accepLedţ or Lransferredţ and Lhe Lax Lhereon shall be pald aL Lhe same Llme Lhe
aforesald reLurn ls flledŦ

(C) Where Lo llleŦ Ŵ LxcepL ln cases where Lhe Commlssloner oLherwlse permlLsţ Lhe aforesald Lax reLurn
shall be flled wlLh and Lhe Lax due shall be pald Lhrough Lhe auLhorlzed agenL bank wlLhln Lhe LerrlLorlal
[urlsdlcLlon of Lhe 8evenue ulsLrlcL Cfflce whlch has [urlsdlcLlon over Lhe resldence or prlnclpal place of
buslness of Lhe LaxpayerŦ ln places where Lhere ls no auLhorlzed agenL bankţ Lhe reLurn shall be flled
wlLh Lhe 8evenue ulsLrlcL Cfflcerţ collecLlon agenLţ or duly auLhorlzed 1reasurer of Lhe clLy or
munlclpallLy ln whlch Lhe Laxpayer has hls legal resldence or prlnclpal place of buslnessŦ

(u) LxcepLlonŦ Ŵ ln lleu of Lhe foregolng provlslons of Lhls SecLlonţ Lhe Lax may be pald elLher Lhrough
purchase and acLual afflxLureŤ or by lmprlnLlng Lhe sLamps Lhrough a documenLary sLamp meLerlng
machlneţ on Lhe Laxable documenLţ ln Lhe manner as may be prescrlbed by rules and regulaLlons Lo be
promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

SLCŦ 201Ŧ LffecL of lallure Lo SLamp 1axable uocumenLŦ Ŵ An lnsLrumenLţ documenL or paper whlch ls
requlred by law Lo be sLamped and whlch has been slgnedţ lssuedţ accepLed or Lransferred wlLhouL
belng duly sLampedţ shall noL be recordedţ nor shall lL or any copy Lhereof or any record of Lransfer of
Lhe same be admlLLed or used ln evldence ln any courL unLll Lhe requlslLe sLamp or sLamps are afflxed
LhereLo and cancelledŦ

1l1LL vlll
8LMLulLS

CPAÞ1L8 l
8LMLulLS ln CLnL8AL

SLCŦ 202Ŧ llnal ueed Lo ÞurchaserŦ Ŵ ln case Lhe Laxpayer shall noL redeem Lhe properLy as hereln
provlded Lhe 8evenue ulsLrlcL Cfflcer shallţ as granLorţ execuLe a deed conveylng Lo Lhe purchaser so
much of Lhe properLy as has been soldţ free from all llens of any klnd whaLsoeverţ and Lhe deed shall
succlnLly reclLe all Lhe proceedlngs upon whlch Lhe valldlLy of Lhe sale dependsŦ

SLCŦ 203Ŧ Þerlod of LlmlLaLlon upon AssessmenL and CollecLlonŦ Ŵ LxcepL as provlded ln SecLlon 222ţ
lnLernal revenue Laxes shall be assessed wlLhln Lhree (3) years afLer Lhe lasL day prescrlbed by law for
Lhe flllng of Lhe reLurnţ and no proceedlng ln courL wlLhouL assessmenL for Lhe collecLlon of such Laxes
shall be begun afLer Lhe explraLlon of such perlodť Þrovldedţ 1haL ln a case where a reLurn ls flled
beyond Lhe perlod prescrlbed by lawţ Lhe Lhree (3)Ŵyear perlod shall be counLed from Lhe day Lhe reLurn
was flledŦ lor purposes of Lhls SecLlonţ a reLurn flled before Lhe lasL day prescrlbed by law for Lhe flllng
Lhereof shall be consldered as flled on such lasL dayŦ

SLCŦ 204Ŧ AuLhorlLy of Lhe Commlssloner Lo Compromlseţ AbaLe and 8efund or CredlL 1axesŦ Ŵ 1he
Commlssloner may Ŵ

(A) Compromlse Lhe ÞaymenL of any lnLernal 8evenue 1axţ whenť

(1) A reasonable doubL as Lo Lhe valldlLy of Lhe clalm agalnsL Lhe Laxpayer exlsLsŤ or
(2) 1he flnanclal poslLlon of Lhe Laxpayer demonsLraLes a clear lnablllLy Lo pay Lhe assessed LaxŦ
1he compromlse seLLlemenL of any Lax llablllLy shall be sub[ecL Lo Lhe followlng mlnlmum amounLsť

lor cases of flnanclal lncapaclLyţ a mlnlmum compromlse raLe equlvalenL Lo Len percenL (10Ʒ) of Lhe
baslc assessed LaxŤ and
lor oLher casesţ a mlnlmum compromlse raLe equlvalenL Lo forLy percenL (40Ʒ) of Lhe baslc assessed
LaxŦ
Where Lhe baslc Lax lnvolved exceeds Cne mllllon pesos (Þ1ţ000Ŧ000) or where Lhe seLLlemenL offered ls
less Lhan Lhe prescrlbed mlnlmum raLesţ Lhe compromlse shall be sub[ecL Lo Lhe approval of Lhe
LvaluaLlon 8oard whlch shall be composed of Lhe Commlssloner and Lhe four (4) uepuLy CommlsslonersŦ
(8) AbaLe or Cancel a 1ax LlablllLyţ whenť

(1) 1he Lax or any porLlon Lhereof appears Lo be un[usLly or excesslvely assessedŤ or
(2) 1he admlnlsLraLlon and collecLlon cosLs lnvolved do noL [usLlfy Lhe collecLlon of Lhe
amounL dueŦ
All crlmlnal vlolaLlons may be compromlsed excepLť (a) Lhose already flled ln courLţ or (b) Lhose lnvolvlng
fraudŦ

(C) CredlL or refund Laxes erroneously or lllegally recelved or penalLles lmposed wlLhouL auLhorlLyţ
refund Lhe value of lnLernal revenue sLamps when Lhey are reLurned ln good condlLlon by Lhe purchaserţ
andţ ln hls dlscreLlonţ redeem or change unused sLamps LhaL have been rendered unflL for use and
refund Lhelr value upon proof of desLrucLlonŦ no credlL or refund of Laxes or penalLles shall be allowed
unless Lhe Laxpayer flles ln wrlLlng wlLh Lhe Commlssloner a clalm for credlL or refund wlLhln Lwo (2)
years afLer Lhe paymenL of Lhe Lax or penalLyť Þrovldedţ howeverţ 1haL a reLurn flled showlng an
overpaymenL shall be consldered as a wrlLLen clalm for credlL or refundŦ
A 1ax CredlL CerLlflcaLe valldly lssued under Lhe provlslons of Lhls Code may be applled agalnsL any
lnLernal revenue Laxţ excludlng wlLhholdlng Laxesţ for whlch Lhe Laxpayer ls dlrecLly llableŦ Any requesL
for converslon lnLo refund of unuLlllzed Lax credlLs may be allowedţ sub[ecL Lo Lhe provlslons of SecLlon
230 of Lhls Codeť Þrovldedţ 1haL Lhe orlglnal copy of Lhe 1ax CredlL CerLlflcaLe showlng a credlLable
balance ls surrendered Lo Lhe approprlaLe revenue offlcer for verlflcaLlon and cancellaLlonť Þrovldedţ
furLherţ 1haL ln no case shall a Lax refund be glven resulLlng from avallmenL of lncenLlves granLed
pursuanL Lo speclal laws for whlch no acLual paymenL was madeŦ

1he Commlssloner shall submlL Lo Lhe Chalrmen of Lhe CommlLLee on Ways and Means of boLh Lhe
SenaLe and Pouse of 8epresenLaLlvesţ every slx (6) monLhsţ a reporL on Lhe exerclse of hls powers under
Lhls SecLlonţ sLaLlng Lhereln Lhe followlng facLs and lnformaLlonţ among oLhersť names and addresses of
Laxpayers whose cases have been Lhe sub[ecL of abaLemenL or compromlseŤ amounL lnvolvedŤ amounL
compromlsed or abaLedŤ and reasons for Lhe exerclse of powerť Þrovldedţ 1haL Lhe sald reporL shall be
presenLed Lo Lhe CverslghL CommlLLee ln Congress LhaL shall be consLlLuLed Lo deLermlne LhaL sald
powers are reasonably exerclsed and LhaL Lhe governmenL ls noL unduly deprlved of revenuesŦ

CPAÞ1L8 ll
ClvlL 8LMLulLS lC8 CCLLLC1lCn Cl 1AxLS

SLCŦ 203Ŧ 8emedles for Lhe CollecLlon of uellnquenL 1axesŦ Ŵ 1he clvll remedles for Lhe collecLlon of
lnLernal revenue Laxesţ fees or chargesţ and any lncremenL LhereLo resulLlng from dellnquency shall beť

(a) 8y dlsLralnL of goodsţ chaLLelsţ or effecLsţ and oLher personal properLy of whaLever characLerţ
lncludlng sLocks and oLher securlLlesţ debLsţ credlLsţ bank accounLs and lnLeresL ln and rlghLs Lo personal
properLyţ and by levy upon real properLy and lnLeresL ln rlghLs Lo real properLyŤ and
(b) 8y clvll or crlmlnal acLlonŦ

LlLher of Lhese remedles or boLh slmulLaneously may be pursued ln Lhe dlscreLlon of Lhe auLhorlLles
charged wlLh Lhe collecLlon of such Laxesť Þrovldedţ howeverţ 1haL Lhe remedles of dlsLralnL and levy
shall noL be avalled of where Lhe amounL of Lax lnvolve ls noL more Lhan Cne hundred pesos (Þ100)Ŧ

1he [udgmenL ln Lhe crlmlnal case shall noL only lmpose Lhe penalLy buL shall also order paymenL of Lhe
Laxes sub[ecL of Lhe crlmlnal case as flnally declded by Lhe CommlsslonerŦ

1he 8ureau of lnLernal 8evenue shall advance Lhe amounLs needed Lo defray cosLs of collecLlon by
means of clvll or crlmlnal acLlonţ lncludlng Lhe preservaLlon or LransporLaLlon of personal properLy
dlsLralned and Lhe adverLlsemenL and sale Lhereofţ as well as of real properLy and lmprovemenLs
LhereonŦ

SLCŦ 206Ŧ ConsLrucLlve ulsLralnL of Lhe ÞroperLy of a 1axpayerŦ Ŵ 1o safeguard Lhe lnLeresL of Lhe
CovernmenLţ Lhe Commlssloner may place under consLrucLlve dlsLralnL Lhe properLy of a dellnquenL
Laxpayer or any Laxpayer whoţ ln hls oplnlonţ ls reLlrlng from any buslness sub[ecL Lo Laxţ or ls lnLendlng
Lo leave Lhe Þhlllpplnes or Lo remove hls properLy Lherefrom or Lo hlde or conceal hls properLy or Lo
perform any acL Lendlng Lo obsLrucL Lhe proceedlngs for collecLlng Lhe Lax due or whlch may be due
from hlmŦ
1he consLrucLlve dlsLralnL of personal properLy shall be affecLed by requlrlng Lhe Laxpayer or any person
havlng possesslon or conLrol of such properLy Lo slgn a recelpL coverlng Lhe properLy dlsLralned and
obllgaLe hlmself Lo preserve Lhe same lnLacL and unalLered and noL Lo dlspose of Lhe same Ťln any
manner whaLeverţ wlLhouL Lhe express auLhorlLy of Lhe CommlsslonerŦ

ln case Lhe Laxpayer or Lhe person havlng Lhe possesslon and conLrol of Lhe properLy soughL Lo be
placed under consLrucLlve dlsLralnL refuses or falls Lo slgn Lhe recelpL hereln referred Loţ Lhe revenue
offlcer effecLlng Lhe consLrucLlve dlsLralnL shall proceed Lo prepare a llsL of such properLy andţ ln Lhe
presence of Lwo (2) wlLnessedţ leave a copy Lhereof ln Lhe premlses where Lhe properLy dlsLralned ls
locaLedţ afLer whlch Lhe sald properLy shall be deemed Lo have been placed under consLrucLlve dlsLralnLŦ

SLCŦ 207Ŧ Summary 8emedlesŦ Ŵ

(A) ulsLralnL of Þersonal ÞroperLyŦ Ŵ upon Lhe fallure of Lhe person owlng any dellnquenL Lax or
dellnquenL revenue Lo pay Lhe same aL Lhe Llme requlredţ Lhe Commlssloner or hls duly auLhorlzed
represenLaLlveţ lf Lhe amounL lnvolved ls ln excess of Cne mllllon pesos (Þ1ţ000ţ000)ţ or Lhe 8evenue
ulsLrlcL Cfflcerţ lf Lhe amounL lnvolved ls Cne mllllon pesos (Þ1ţ000ţ000) or lessţ shall selze and dlsLralnL
any goodsţ chaLLels or effecLsţ and Lhe personal properLyţ lncludlng sLocks and oLher securlLlesţ debLsţ
credlLsţ bank accounLsţ and lnLeresLs ln and rlghLs Lo personal properLy of such persons Ťln sufflclenL
quanLlLy Lo saLlsfy Lhe Laxţ or chargeţ LogeLher wlLh any lncremenL LhereLo lncldenL Lo dellnquencyţ and
Lhe expenses of Lhe dlsLralnL and Lhe cosL of Lhe subsequenL saleŦ

A reporL on Lhe dlsLralnL shallţ wlLhln Len (10) days from recelpL of Lhe warranLţ be submlLLed by Lhe
dlsLralnlng offlcer Lo Lhe 8evenue ulsLrlcL Cfflcerţ and Lo Lhe 8evenue 8eglonal ulrecLorť Þrovldedţ 1haL
Lhe Commlssloner or hls duly auLhorlzed represenLaLlve shallţ sub[ecL Lo rules and regulaLlons
promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ have Lhe power
Lo llfL such order of dlsLralnLť Þrovldedţ furLherţ 1haL a consolldaLed reporL by Lhe 8evenue 8eglonal
ulrecLor may be requlred by Lhe Commlssloner as ofLen as necessaryŦ

(8) Levy on 8eal ÞroperLyŦ Ŵ AfLer Lhe explraLlon of Lhe Llme requlred Lo pay Lhe dellnquenL Lax or
dellnquenL revenue as prescrlbed ln Lhls SecLlonţ real properLy may be levled uponţ before
slmulLaneously or afLer Lhe dlsLralnL of personal properLy belonglng Lo Lhe dellnquenLŦ 1o Lhls endţ any
lnLernal revenue offlcer deslgnaLed by Lhe Commlssloner or hls duly auLhorlzed represenLaLlve shall
prepare a duly auLhenLlcaLed cerLlflcaLe showlng Lhe name of Lhe Laxpayer and Lhe amounLs of Lhe Lax
and penalLy due from hlmŦ Sald cerLlflcaLe shall operaLe wlLh Lhe force of a legal execuLlon LhroughouL
Lhe ÞhlllpplnesŦ

Levy shall be affecLed by wrlLlng upon sald cerLlflcaLe a descrlpLlon of Lhe properLy upon whlch levy ls
madeŦ AL Lhe same Llmeţ wrlLLen noLlce of Lhe levy shall be malled Lo or served upon Lhe 8eglsLer of
ueeds for Lhe provlnce or clLy where Lhe properLy ls locaLed and upon Lhe dellnquenL Laxpayerţ or lf he
be absenL from Lhe Þhlllpplnesţ Lo hls agenL or Lhe manager of Lhe buslness ln respecL Lo whlch Lhe
llablllLy aroseţ or lf Lhere be noneţ Lo Lhe occupanL of Lhe properLy ln quesLlonŦ

ln case Lhe warranL of levy on real properLy ls noL lssued before or slmulLaneously wlLh Lhe warranL of
dlsLralnL on personal properLyţ and Lhe personal properLy of Lhe Laxpayer ls noL sufflclenL Lo saLlsfy hls
Lax dellnquencyţ Lhe Commlssloner or hls duly auLhorlzed represenLaLlve shallţ wlLhln LhlrLy (30) days
afLer execuLlon of Lhe dlsLralnLţ proceed wlLh Lhe levy on Lhe Laxpayerƌs real properLyŦ

WlLhln Len (10) days afLer recelpL of Lhe warranLţ a reporL on any levy shall be submlLLed by Lhe levylng
offlcer Lo Lhe Commlssloner or hls duly auLhorlzed represenLaLlveť Þrovldedţ howeverţ 1haL a
consolldaLed reporL by Lhe 8evenue 8eglonal ulrecLor may be requlred by Lhe Commlssloner as ofLen as
necessaryť Þrovldedţ furLherţ 1haL Lhe Commlssloner or hls duly auLhorlzed represenLaLlveţ sub[ecL Lo
rules and regulaLlons promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ shall have Lhe auLhorlLy Lo llfL warranLs of levy lssued ln accordance wlLh Lhe provlslons
hereofŦ

SLCŦ 208Ŧ Þrocedure for ulsLralnL and CarnlshmenLŦ Ŵ 1he offlcer servlng Lhe warranL of dlsLralnL shall
make or cause Lo be made an accounL of Lhe goodsţ chaLLelsţ effecLs or oLher personal properLy
dlsLralnedţ a copy of whlchţ slgned by hlmselfţ shall be lefL elLher wlLh Lhe owner or person from whose
possesslon such goodsţ chaLLelsţ or effecLs or oLher personal properLy were Lakenţ or aL Lhe dwelllng or
place of buslness of such person and wlLh someone of sulLable age and dlscreLlonţ Lo whlch llsL shall be
added a sLaLemenL of Lhe sum demanded and noLe of Lhe Llme and place of saleŦ

SLocks and oLher securlLles shall be dlsLralned by servlng a copy of Lhe warranL of dlsLralnL upon Lhe
Laxpayer and upon Lhe presldenLţ managerţ Lreasurer or oLher responslble offlcer of Lhe corporaLlonţ
company or assoclaLlonţ whlch lssued Lhe sald sLocks or securlLlesŦ

uebLs and credlLs shall be dlsLralned by leavlng wlLh Lhe person owlng Lhe debLs or havlng ln hls
possesslon or under hls conLrol such credlLsţ or wlLh hls agenLţ a copy of Lhe warranL of dlsLralnLŦ 1he
warranL of dlsLralnL shall be sufflclenL auLhorlLy Lo Lhe person ownlng Lhe debLs or havlng ln hls
possesslon or under hls conLrol any credlLs belonglng Lo Lhe Laxpayer Lo pay Lo Lhe Commlssloner Lhe
amounL of such debLs or credlLsŦ

8ank accounLs shall be garnlshed by servlng a warranL of garnlshmenL upon Lhe Laxpayer and upon Lhe
presldenLţ managerţ Lreasurer or oLher responslble offlcer of Lhe bankŦ upon recelpL of Lhe warranL of
garnlshmenLţ Lhe bank shall Lun over Lo Lhe Commlssloner so much of Lhe bank accounLs as may be
sufflclenL Lo saLlsfy Lhe clalm of Lhe CovernmenLŦ

SLCŦ 209Ŧ Sale of ÞroperLy ulsLralned and ulsposlLlon of ÞroceedsŦ Ŵ 1he 8evenue ulsLrlcL Cfflcer or hls
duly auLhorlzed represenLaLlveţ oLher Lhan Lhe offlcer referred Lo ln SecLlon 208 of Lhls Code shallţ
accordlng Lo rules and regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe
Commlsslonerţ forLhwlLh cause a noLlflcaLlon Lo be exhlblLed ln noL less Lhan Lwo (2) publlc places ln Lhe
munlclpallLy or clLy where Lhe dlsLralnL ls madeţ speclfylngŤ Lhe Llme and place of sale and Lhe arLlcles
dlsLralnedŦ 1he Llme of sale shall noL be less Lhan LwenLy (20) days afLer noLlceŦ Cne place for Lhe posLlng
of such noLlce shall be aL Lhe Cfflce of Lhe Mayor of Lhe clLy or munlclpallLy ln whlch Lhe properLy ls
dlsLralnedŦ

AL Lhe Llme and place flxed ln such noLlceţ Lhe sald revenue offlcer shall sell Lhe goodsţ chaLLelsţ or
effecLsţ or oLher personal properLyţ lncludlng sLocks and oLher securlLles so dlsLralnedţ aL publlc aucLlonţ
Lo Lhe hlghesL bldder for cashţ or wlLh Lhe approval of Lhe Commlsslonerţ Lhrough duly llcensed
commodlLy or sLock exchangesŦ

ln Lhe case of SLocks and oLher securlLlesţ Lhe offlcer maklng Lhe sale shall execuLe a blll of sale whlch he
shall dellver Lo Lhe buyerţ and a copy Lhereof furnlshed Lhe corporaLlonţ company or assoclaLlon whlch
lssued Lhe sLocks or oLher securlLlesŦ upon recelpL of Lhe copy of Lhe blll of saleţ Lhe corporaLlonţ
company or assoclaLlon shall make Lhe correspondlng enLry ln lLs booksţ Lransfer Lhe sLocks or oLher
securlLles sold ln Lhe name of Lhe buyerţ and lssueţ lf requlred Lo do soţ Lhe correspondlng cerLlflcaLes of
sLock or oLher securlLlesŦ

Any resldue over and above whaL ls requlred Lo pay Lhe enLlre clalmţ lncludlng expensesţ shall be
reLurned Lo Lhe owner of Lhe properLy soldŦ 1he expenses chargeable upon each selzure and sale shall
embrace only Lhe acLual expenses of selzure and preservaLlon of Lhe properLy pendlng ŤLhe saleţ and no
charge shall be lmposed for Lhe servlces of Lhe local lnLernal revenue offlcer or hls depuLyŦ

SLCŦ 210Ŧ 8elease of ulsLralned ÞroperLy upon ÞaymenL Þrlor Lo SaleŦ Ŵ lf aL any Llme prlor Lo Lhe
consummaLlon of Lhe sale all proper charges are pald Lo Lhe offlcer conducLlng Lhe saleţ Lhe goods or
effecLs dlsLralned shall be resLored Lo Lhe ownerŦ

SLCŦ 211Ŧ 8eporL of Sale Lo 8ureau of lnLernal 8evenueŦ Ŵ WlLhln Lwo (2) days afLer Lhe saleţ Lhe offlcer
maklng Lhe same shall make a reporL of hls proceedlngs ln wrlLlng Lo Lhe Commlssloner and shall hlmself
preserve a copy of such reporL as an offlclal recordŦ

SLCŦ 212Ŧ Þurchase by CovernmenL aL Sale upon ulsLralnLŦ Ŵ When Lhe amounL bld for Lhe properLy
under dlsLralnL ls noL equal Lo Lhe amounL of Lhe Lax or ls very much less Lhan Lhe acLual markeL value of
Lhe arLlcles offered for saleţ Lhe Commlssloner or hls depuLy may purchase Lhe same ln behalf of Lhe
naLlonal CovernmenL for Lhe amounL of Laxesţ penalLles and cosLs due LhereonŦ

ÞroperLy so purchased may be resold by Lhe Commlssloner or hls depuLyţ sub[ecL Lo Lhe rules and
regulaLlons prescrlbed by Lhe SecreLary of llnanceţ Lhe neL proceeds Lherefrom shall be remlLLed Lo Lhe
naLlonal 1reasury and accounLed for as lnLernal revenueŦ

SLCŦ 213Ŧ AdverLlsemenL and SaleŦ Ŵ WlLhln LwenLy (20) days afLer levyţ Lhe offlcer conducLlng Lhe
proceedlngs shall proceed Lo adverLlse Lhe properLy or a usable porLlon Lhereof as may be necessary Lo
saLlsfy Lhe clalm and cosL of saleŤ and such adverLlsemenL shall cover a perlod of a leasL LhlrLy (30) daysŦ
lL shall be effecLuaLed by posLlng a noLlce aL Lhe maln enLrance of Lhe munlclpal bulldlng or clLy hall and
ln publlc and consplcuous place ln Lhe barrlo or dlsLrlcL ln whlch Lhe real esLaLe lles and Ťby publlcaLlon
once a week for Lhree (3) weeks ln a newspaper of general clrculaLlon ln Lhe munlclpallLy or clLy where
Lhe properLy ls locaLedŦ 1he adverLlsemenL shall conLaln a sLaLemenL of Lhe amounL of Laxes and
penalLles so due and Lhe Llme and place of saleţ Lhe name of Lhe Laxpayer agalnsL whom Laxes are
levledţ and a shorL descrlpLlon of Lhe properLy Lo be soldŦ AL any Llme before Lhe day flxed for Lhe saleţ
Lhe Laxpayer may dlsconLlnue all proceedlngs by paylng Lhe Laxesţ penalLles and lnLeresLŦ lf he does noL
do soţ Lhe sale shall proceed and shall be held elLher aL Lhe maln enLrance of Lhe munlclpal bulldlng or
clLy hallţ or on Lhe premlses Lo be soldţ as Lhe offlcer conducLlng Lhe proceedlngs shall deLermlne and as
Lhe noLlce of sale shall speclfyŦ

WlLhln flve (3) days afLer Lhe saleţ a reLurn by Lhe dlsLralnlng or levylng offlcer of Lhe proceedlngs shall
be enLered upon Lhe records of Lhe 8evenue CollecLlon Cfflcerţ Lhe 8evenue ulsLrlcL offlcer and Lhe
8evenue 8eglonal ulrecLorŦ 1he 8evenue CollecLlon Cfflcerţ ln consulLaLlon wlLh Lhe 8evenue dlsLrlcL
Cfflcerţ shall Lhen make ouL and dellver Lo Lhe purchaser a cerLlflcaLe from hls recordsţ showlng Lhe
proceedlngs of Lhe saleţ descrlblng Lhe properLy sold sLaLlng Lhe name of Lhe purchaser and seLLlng ouL
Lhe exacL amounL of all Laxesţ penalLles and lnLeresLť Þrovldedţ howeverţ 1haL ln case Lhe proceeds of
Lhe sale exceeds Lhe clalm and cosL of saleţ Lhe excess shall be Lurned over Lo Lhe owner of Lhe properLyŦ

1he 8evenue CollecLlon Cfflcerţ upon approval by Lhe 8evenue ulsLrlcL Cfflcer mayţ ouL of hls collecLlonţ
advance an amounL sufflclenL Lo defray Lhe cosLs of collecLlon by means of Lhe summary remedles
provlded for ln Lhls Codeţ lncludlng ŤLhe preservaLlon or LransporLaLlon ln case of personal properLyţ and
Lhe adverLlsemenL and subsequenL saleţ boLh ln cases of personal and real properLy lncludlng
lmprovemenLs found on Lhe laLLerŦ ln hls monLhly collecLlon reporLsţ such advances shall be reflecLed
and supporLed by recelpLsŦ

SLCŦ 214Ŧ 8edempLlon of ÞroperLy SoldŦ Ŵ WlLhln one (1) year from Lhe daLe of saleţ Lhe dellnquenL
Laxpayerţ or any one for hlmţ shall have Lhe rlghL of paylng Lo Lhe 8evenue ulsLrlcL Cfflcer Lhe amounL of
Lhe publlc Laxesţ penalLlesţ and lnLeresL Lhereon from Lhe daLe of dellnquency Lo Lhe daLe of saleţ
LogeLher wlLh lnLeresL on sald purchase prlce aL Lhe raLe of flfLeen percenL (13Ʒ) per annum from Lhe
daLe of purchase Lo Lhe daLe of redempLlonţ and such paymenL shall enLlLle Lhe person paylng Lo Lhe
dellvery of Lhe cerLlflcaLe lssued Lo Lhe purchaser and a cerLlflcaLe from Lhe sald 8evenue ulsLrlcL Cfflcer
LhaL he has Lhus redeemed Lhe properLyţ and Lhe 8evenue ulsLrlcL Cfflcer shall forLhwlLh pay over Lo Lhe
purchaser Lhe amounL by whlch such properLy has Lhus been redeemedţ and sald properLy LhereafLer
shall be free form Lhe llen of such Laxes and penalLlesŦ

1he owner shall noLţ howeverţ be deprlved of Lhe possesslon of Lhe sald properLy and shall be enLlLled Lo
Lhe renLs and oLher lncome Lhereof unLll Lhe explraLlon of Lhe Llme allowed for lLs redempLlonŦ

SLCŦ 213Ŧ lorfelLure Lo CovernmenL for WanL of 8ldderŦ Ŵ ln case Lhere ls no bldder for real properLy
exposed for sale as hereln above provlded or lf Lhe hlghesL bld ls for an amounL lnsufflclenL Lo pay Lhe
Laxesţ penalLles and cosLsţ Lhe lnLernal 8evenue Cfflcer conducLlng Lhe sale shall declare Lhe properLy
forfelLed Lo Lhe CovernmenL ln saLlsfacLlon of Lhe clalm ln quesLlon and wlLhln Lwo (2) days LhereafLerţ
shall make a reLurn of hls proceedlngs and Lhe forfelLure whlch shall be spread upon Lhe records of hls
offlceŦ lL shall be Lhe duLy of Lhe 8eglsLer of ueeds concernedţ upon reglsLraLlon wlLh hls offlce of any
such declaraLlon of forfelLureţ Lo Lransfer Lhe LlLle of Lhe properLy forfelLed Lo Lhe CovernmenL wlLhouL
Lhe necesslLy of an order from a compeLenL courLŦ

WlLhln one (1) year from Lhe daLe of such forfelLureţ Lhe Laxpayerţ or any one for hlm may redeem sald
properLy by paylng Lo Lhe Commlssloner or Lhe laLLerƌs 8evenue CollecLlon Cfflcer Lhe full amounL of Lhe
Laxes and penalLlesţ LogeLher wlLh lnLeresL Lhereon and Lhe cosLs of saleţ buL lf Lhe properLy be noL Lhus
redeemedţ Lhe forfelLure shall become absoluLeŦ

SLCŦ 216Ŧ 8esale of 8eal LsLaLe 1aken for 1axesŦ Ŵ 1he Commlssloner shall have charge of any real esLaLe
obLalned by Lhe CovernmenL of Lhe Þhlllpplnes ln paymenL or saLlsfacLlon of Laxesţ penalLles or cosLs
arlslng under Lhls Code or ln compromlse or ad[usLmenL of any clalm Lhereforeţ and sald Commlssloner
mayţ upon Lhe glvlng of noL less Lhan LwenLy (20) days noLlceţ sell and dlspose of Lhe same of publlc
aucLlon or wlLh prlor approval of Lhe SecreLary of llnanceţ dlspose of Lhe same aL prlvaLe saleŦ ln elLher
caseţ Lhe proceeds of Lhe sale shall be deposlLed wlLh Lhe naLlonal 1reasuryţ and an accounLlng of Lhe
same shall rendered Lo Lhe Chalrman of Lhe Commlsslon on AudlLŦ

SLCŦ 217Ŧ lurLher ulsLralnL or LevyŦ Ŵ 1he remedy by dlsLralnL of personal properLy and levy on realLy
may be repeaLed lf necessary unLll Lhe full amounL dueţ lncludlng all expensesţ ls collecLedŦ

SLCŦ 218Ŧ ln[uncLlon noL Avallable Lo 8esLraln CollecLlon of 1axŦ Ŵ no courL shall have Lhe auLhorlLy Lo
granL an ln[uncLlon Lo resLraln Lhe collecLlon of any naLlonal lnLernal revenue Laxţ fee or charge lmposed
by Lhls CodeŦ

SLCŦ 219Ŧ naLure and LxLenL of 1ax LlenŦ Ŵ lf any personţ corporaLlonţ parLnershlpţ [olnLŴaccounL (cuenLas
en parLlclpaclon)ţ assoclaLlon or lnsurance company llable Lo pay an lnLernal revenue Laxţ neglecLs or
refuses Lo pay Lhe same afLer demandţ Lhe amounL shall be a llen ln favor of Lhe CovernmenL of Lhe
Þhlllpplnes from Lhe Llme when Lhe assessmenL was made by Lhe Commlssloner unLll paldţ wlLh
lnLeresLsţ penalLlesţ and cosLs LhaL may accrue ln addlLlon LhereLo upon all properLy and rlghLs Lo
properLy belonglng Lo Lhe Laxpayerť Þrovldedţ 1haL Lhls llen shall noL be valld agalnsL any morLgagee
purchaser or [udgmenL credlLor unLll noLlce of such llen shall be flled by Lhe Commlssloner ln Lhe offlce
of Lhe 8eglsLer of ueeds of Lhe provlnce or clLy where Lhe properLy of Lhe Laxpayer ls slLuaLed or locaLedŦ

SLCŦ 220Ŧ lorm and Mode of Þroceedlng ln AcLlons Arlslng under Lhls CodeŦ Ŵ Clvll and crlmlnal acLlons
and proceedlngs lnsLlLuLed ln behalf of Lhe CovernmenL under Lhe auLhorlLy of Lhls Code or oLher law
enforced by Lhe 8ureau of lnLernal 8evenue shall be broughL ln Lhe name of Lhe CovernmenL of Lhe
Þhlllpplnes and shall be conducLed by legal offlcers of Lhe 8ureau of lnLernal 8evenue buL no clvll or
crlmlnal acLlon for Lhe recovery of Laxes or Lhe enforcemenL of any flneţ penalLy or forfelLure under Lhls
Code shall be flled ln courL wlLhouL Lhe approval of Lhe CommlsslonerŦ

SLCŦ 221Ŧ 8emedy for LnforcemenL of SLaLuLory Þenal ÞrovlslonsŦ Ŵ 1he remedy for enforcemenL of
sLaLuLory penalLles of all sorLs shall be by crlmlnal or clvll acLlonţ as Lhe parLlcular slLuaLlon may requlreţ
sub[ecL Lo Lhe approval of Lhe CommlsslonerŦ

SLCŦ 222Ŧ LxcepLlons as Lo Þerlod of LlmlLaLlon of AssessmenL and CollecLlon of 1axesŦ Ŵ

(a) ln Lhe case of a false or fraudulenL reLurn wlLh lnLenL Lo evade Lax or of fallure Lo flle a reLurnţ Lhe
Lax may be assessedţ or a proceedlng ln courL for Lhe collecLlon of such Lax may be flled wlLhouL
assessmenLţ aL any Llme wlLhln Len (10) years afLer Lhe dlscovery of Lhe falslLyţ fraud or omlsslonť
Þrovldedţ 1haL ln a fraud assessmenL whlch has become flnal and execuLoryţ Lhe facL of fraud shall be
[udlclally Laken cognlzance of ln Lhe clvll or crlmlnal acLlon for Lhe collecLlon LhereofŦ
(b) lf before Lhe explraLlon of Lhe Llme prescrlbed ln SecLlon 203 for Lhe assessmenL of Lhe Laxţ boLh Lhe
Commlssloner and Lhe Laxpayer have agreed ln wrlLlng Lo lLs assessmenL afLer such Llmeţ Lhe Lax may be
assessed wlLhln Lhe perlod agreed uponŦ 1he perlod so agreed upon may be exLended by subsequenL
wrlLLen agreemenL made before Lhe explraLlon of Lhe perlod prevlously agreed uponŦ
(c) Any lnLernal revenue Lax whlch has been assessed wlLhln Lhe perlod of llmlLaLlon as prescrlbed ln
paragraph (a) hereof may be collecLed by dlsLralnL or levy or by a proceedlng ln courL wlLhln flve (3)
years followlng Lhe assessmenL of Lhe LaxŦ
(d) Any lnLernal revenue Laxţ whlch has been assessed wlLhln Lhe perlod agreed upon as provlded ln
paragraph (b) herelnaboveţ may be collecLed by dlsLralnL or levy or by a proceedlng ln courL wlLhln Lhe
perlod agreed upon ln wrlLlng before Lhe explraLlon of Lhe flve (3) Ŵyear perlodŦ 1he perlod so agreed
upon may be exLended by subsequenL wrlLLen agreemenLs made before Lhe explraLlon of Lhe perlod
prevlously agreed uponŦ
(e) Þrovldedţ howeverţ 1haL noLhlng ln Lhe lmmedlaLely precedlng and paragraph (a) hereof shall be
consLrued Lo auLhorlze Lhe examlnaLlon and lnvesLlgaLlon or lnqulry lnLo any Lax reLurn flled ln
accordance wlLh Lhe provlslons of any Lax amnesLy law or decreeŦ
SLCŦ 223Ŧ Suspenslon of 8unnlng of SLaLuLe of LlmlLaLlonsŦ Ŵ 1he runnlng of Lhe SLaLuLe of LlmlLaLlons
provlded ln SecLlons 203 and 222 on Lhe maklng of assessmenL and Lhe beglnnlng of dlsLralnL or levy a
proceedlng ln courL for collecLlonţ ln respecL of any deflclencyţ shall be suspended for Lhe perlod durlng
whlch Lhe Commlssloner ls prohlblLed from maklng Lhe assessmenL or beglnnlng dlsLralnL or levy or a
proceedlng ln courL and for slxLy (60) days LhereafLerŤ when Lhe Laxpayer requesLs for a relnvesLlgaLlon
whlch ls granLed by Lhe CommlsslonerŤ when Lhe Laxpayer cannoL be locaLed ln Lhe address glven by hlm
ln Lhe reLurn flled upon whlch a Lax ls belng assessed or collecLedť Þrovldedţ LhaLţ lf Lhe Laxpayer lnforms
Lhe Commlssloner of any change ln addressţ Lhe runnlng of Lhe SLaLuLe of LlmlLaLlons wlll noL be
suspendedŤ when Lhe warranL of dlsLralnL or levy ls duly served upon Lhe Laxpayerţ hls auLhorlzed
represenLaLlveţ or a member of hls household wlLh sufflclenL dlscreLlonţ and no properLy could be
locaLedŤ and when Lhe Laxpayer ls ouL of Lhe ÞhlllpplnesŦ

SLCŦ 224Ŧ 8emedy for LnforcemenL of lorfelLuresŦ Ŵ 1he forfelLure of chaLLels and removable flxLures of
any sorL shall be enforced by Lhe selzure and saleţ or desLrucLlonţ of Lhe speclflc forfelLed properLyŦ 1he
forfelLure of real properLy shall be enforced by a [udgmenL of condemnaLlon and sale ln a legal acLlon or
proceedlngţ clvll or crlmlnalţ as Lhe case may requlreŦ

SLCŦ 223Ŧ When ÞroperLy Lo be Sold or uesLroyedŦ Ŵ Sales of forfelLed chaLLels and removable flxLures
shall be effecLedţ so far as pracLlcableţ ln Lhe same manner and under Lhe same condlLlons as Lhe publlc
noLlce and Lhe Llme and manner of sale as are prescrlbed for sales of personal properLy dlsLralned for
Lhe nonŴpaymenL of LaxesŦ
ulsLllled splrlLsţ llquorsţ clgarsţ clgareLLesţ oLher manufacLured producLs of Lobaccoţ and all apparaLus
used l or abouL Lhe llllclL producLlon of such arLlcles mayţ upon forfelLureţ be desLroyed by order of Lhe
Commlsslonerţ when Lhe sale of Lhe same for consumpLlon or use would be ln[urlous Lo publlc healLh or
pre[udlclal Lo Lhe enforcemenL of Lhe lawŦ

All oLher arLlcles sub[ecL Lo exclse Laxţ whlch have been manufacLured or removed ln vlolaLlon of Lhls
Codeţ as well as dles for Lhe prlnLlng or maklng of lnLernal revenue sLamps and labels whlch are ln
lmlLaLlon of or purporL Lo be lawful sLampsţ or labels mayţ upon forfelLureţ be sold or desLroyed ln Lhe
dlscreLlon of Lhe CommlsslonerŦ

lorfelLed properLy shall noL be desLroyed unLll aL leasL LwenLy (20) days afLer selzureŦ

SLCŦ 226Ŧ ulsposlLlon of funds 8ecovered ln Legal Þroceedlngs or CbLalned from lorfelLuresŦ Ŵ all
[udgmenLs and monles recovered and recelved for Laxesţ cosLsţ forfelLuresţ flnes and penalLles shall be
pald Lo Lhe Commlssloner or hls auLhorlzed depuLles as Lhe Laxes Lhemselves are requlred Lo be paldţ
and excepL as speclally provldedţ shall be accounLed for and dealL wlLh Lhe same wayŦ

SLCŦ 227Ŧ SaLlsfacLlon of !udgmenL 8ecovered AgalnsL any lnLernal 8evenue CfflcerŦ Ŵ When an acLlon ls
broughL agalnsL any lnLernal 8evenue offlcer Lo recover damages by reason of any acL done ln Lhe
performance of offlclal duLyţ and Lhe Commlssloner ls noLlfled of such acLlon ln Llme Lo make defense
agalnsL Lhe sameţ Lhrough Lhe SollclLor Ceneralţ any [udgmenLţ damages or cosLs recovered ln such
acLlon shall be saLlsfled by Lhe Commlsslonerţ upon approval of Lhe SecreLary of llnanceţ or lf Lhe same
be pald by Lhe person used shall be repald or relmbursed Lo hlmŦ

no such [udgmenLţ damagesţ or cosLs shall be pald or relmbursed ln behalf of a person who has acLed
negllgenLly or ln bad falLhţ or wlLh wlllful oppresslonŦ

CPAÞ1L8 lll
Þ8C1LS1lnC An ASSLSSMLn1ţ 8Llunuţ L1CŦ

SLCŦ 228Ŧ ÞroLesLlng of AssessmenLŦ Ŵ When Lhe Commlssloner or hls duly auLhorlzed represenLaLlve
flnds LhaL proper Laxes should be assessedţ he shall flrsL noLlfy Lhe Laxpayer of hls flndlngsť Þrovldedţ
howeverţ 1haL a preassessmenL noLlce shall noL be requlred ln Lhe followlng casesť

(a) When Lhe flndlng for any deflclency Lax ls Lhe resulL of maLhemaLlcal error ln Lhe compuLaLlon of Lhe
Lax as appearlng on Lhe face of Lhe reLurnŤ or
(b) When a dlscrepancy has been deLermlned beLween Lhe Lax wlLhheld and Lhe amounL acLually
remlLLed by Lhe wlLhholdlng agenLŤ or
(c) When a Laxpayer who opLed Lo clalm a refund or Lax credlL of excess credlLable wlLhholdlng Lax for a
Laxable perlod was deLermlned Lo have carrled over and auLomaLlcally applled Lhe same amounL
clalmed agalnsL Lhe esLlmaLed Lax llablllLles for Lhe Laxable quarLer or quarLers of Lhe succeedlng Laxable
yearŤ or
(d) When Lhe exclse Lax due on exclseable arLlcles has noL been paldŤ or
(e) When Lhe arLlcle locally purchased or lmporLed by an exempL personţ such asţ buL noL llmlLed Loţ
vehlclesţ caplLal equlpmenLţ machlnerles and spare parLsţ has been soldţ Lraded or Lransferred Lo nonŴ
exempL personsŦ
1he Laxpayers shall be lnformed ln wrlLlng of Lhe law and Lhe facLs on whlch Lhe assessmenL ls madeŤ
oLherwlseţ Lhe assessmenL shall be voldŦ
WlLhln a perlod Lo be prescrlbed by lmplemenLlng rules and regulaLlonsţ Lhe Laxpayer shall be requlred
Lo respond Lo sald noLlceŦ lf Lhe Laxpayer falls Lo respondţ Lhe Commlssloner or hls duly auLhorlzed
represenLaLlve shall lssue an assessmenL based on hls flndlngsŦ

Such assessmenL may be proLesLed admlnlsLraLlvely by flllng a requesL for reconslderaLlon or
relnvesLlgaLlon wlLhln LhlrLy (30) days from recelpL of Lhe assessmenL ln such form and manner as may
be prescrlbed by lmplemenLlng rules and regulaLlonsŦ

WlLhln slxLy (60) days from flllng of Lhe proLesLţ all relevanL supporLlng documenLs shall have been
submlLLedŤ oLherwlseţ Lhe assessmenL shall become flnalŦ

lf Lhe proLesL ls denled ln whole or ln parLţ or ls noL acLed upon wlLhln one hundred elghLy (180) days
from submlsslon of documenLsţ Lhe Laxpayer adversely affecLed by Lhe declslon or lnacLlon may appeal
Lo Lhe CourL of 1ax Appeals wlLhln LhlrLy (30) days from recelpL of Lhe sald declslonţ or from Lhe lapse of
one hundred elghLy (180)Ŵday perlodŤ oLherwlseţ Lhe declslon shall become flnalţ execuLory and
demandableŦ

SLCŦ 229Ŧ 8ecovery of 1ax Lrroneously or lllegally CollecLedŦ Ŵ no sulL or proceedlng shall be malnLalned
ln any courL for Lhe recovery of any naLlonal lnLernal revenue Lax hereafLer alleged Lo have been
erroneously or lllegally assessed or collecLedţ or of any penalLy clalmed Lo have been collecLed wlLhouL
auLhorlLyţ of any sum alleged Lo have been excesslvely or ln any manner wrongfully collecLed wlLhouL
auLhorlLyţ or of any sum alleged Lo have been excesslvely or ln any manner wrongfully collecLedţ unLll a
clalm for refund or credlL has been duly flled wlLh Lhe CommlsslonerŤ buL such sulL or proceedlng may be
malnLalnedţ wheLher or noL such Laxţ penalLyţ or sum has been pald under proLesL or duressŦ

ln any caseţ no such sulL or proceedlng shall be flled afLer Lhe explraLlon of Lwo (2) years from Lhe daLe
of paymenL of Lhe Lax or penalLy regardless of any supervenlng cause LhaL may arlse afLer paymenLť
Þrovldedţ howeverţ 1haL Lhe Commlssloner mayţ even wlLhouL a wrlLLen clalm Lhereforţ refund or credlL
any Laxţ where on Lhe face of Lhe reLurn upon whlch paymenL was madeţ such paymenL appears clearly
Lo have been erroneously paldŦ

SLCŦ 230Ŧ lorfelLure of Cash 8efund and of 1ax CredlLŦ Ŵ

(A) lorfelLure of 8efundŦ Ŵ A refund check or warranL lssued ln accordance wlLh Lhe perLlnenL provlslons
of Lhls Codeţ whlch shall remaln unclalmed or uncashed wlLhln flve (3) years from Lhe daLe Lhe sald
warranL or check was malled or dellveredţ shall be forfelLed ln favor of Lhe CovernmenL and Lhe amounL
Lhereof shall reverL Lo Lhe general fundŦ

(8) lorfelLure of 1ax CredlLŦ Ŵ A Lax credlL cerLlflcaLe lssued ln accordance wlLh Lhe perLlnenL provlslons of
Lhls Codeţ whlch shall remaln unuLlllzed afLer flve (3) years from Lhe daLe of lssueţ shallţ unless
revalldaLedţ be consldered lnvalldţ and shall noL be allowed as paymenL for lnLernal revenue Lax
llablllLles of Lhe Laxpayerţ and Lhe amounL covered by Lhe cerLlflcaLe shall reverL Lo Lhe general fundŦ

(C) 1ranslLory ÞrovlslonŦ Ŵ lor purposes of Lhe precedlng SubsecLlonţ a Lax credlL cerLlflcaLe lssued by Lhe
Commlssloner or hls duly auLhorlzed represenLaLlve prlor Lo !anuary 1ţ 1998ţ whlch remalns unuLlllzed
or has a credlLable balance as of sald daLeţ shall be presenLed for revalldaLlon wlLh Lhe Commlssloner or
hls duly auLhorlzed represenLaLlve or on before !une 30ţ 1998Ŧ

SLCŦ 231Ŧ AcLlon Lo ConLesL lorfelLure of ChaLLelŦ Ŵ ln case of Lhe selzure of personal properLy under
clalm of forfelLureţ Lhe owner deslrlng Lo conLesL Lhe valldlLy of Lhe forfelLure mayţ aL any Llme before
sale or desLrucLlon of Lhe properLyţ brlng an acLlon agalnsL Lhe person selzlng Lhe properLy or havlng
possesslon Lhereof Lo recover Lhe sameţ and upon glvlng proper bondţ may en[oln Lhe saleŤ or afLer Lhe
sale and wlLhln slx (6) monLhsţ he may brlng an acLlon Lo recover Lhe neL proceeds reallzed aL Lhe saleŦ

1l1LL lx
CCMÞLlAnCL 8LCul8LMLn1S

CPAÞ1L8 l
kLLÞlnC Cl 8CCkS Cl ACCCun1S Anu 8LCC8uS

SLCŦ 232Ŧ keeplng of 8ooks of AccounLsŦ Ŵ

(A) CorporaLlonsţ Companlesţ ÞarLnershlps or Þersons 8equlred Lo keep 8ooks of AccounLsŦ Ŵ All
corporaLlonsţ companlesţ parLnershlps or persons requlred by law Lo pay lnLernal revenue Laxes shall
keep a [ournal and a ledger or Lhelr equlvalenLsť Þrovldedţ howeverţ 1haL Lhose whose quarLerly salesţ
earnlngsţ recelpLsţ or ouLpuL do noL exceed llfLy Lhousand pesos (Þ30ţ000) shall keep and use slmpllfled
seL of bookkeeplng records duly auLhorlzed by Lhe SecreLary of llnance where ln all LransacLlons and
resulLs of operaLlons are shown and from whlch all Laxes due Lhe CovernmenL may readlly and
accuraLely be ascerLalned and deLermlned any Llme of Lhe yearť Þrovldedţ furLherţ 1haL corporaLlonsţ
companlesţ parLnershlps or persons whose gross quarLerly salesţ earnlngsţ recelpLs or ouLpuL exceed
Cne hundred flfLy Lhousand pesos (Þ130ţ000) shall have Lhelr books of accounLs audlLed and examlned
yearly by lndependenL CerLlfled Þubllc AccounLanLs and Lhelr lncome Lax reLurns accompanled wlLh a
duly accompllshed AccounL lnformaLlon lorm (All) whlch shall conLalnţ among oLhersţ lnformaLlon llfLed
from cerLlfled balance sheeLsţ proflL and loss sLaLemenLsţ schedules llsLlng lncomeŴproduclng properLles
and Lhe correspondlng lncome Lherefrom and oLher relevanL sLaLemenLsŦ

(8) lndependenL CerLlfled Þubllc AccounLanL ueflnedŦ Ŵ 1he Lerm ƍlndependenL CerLlfled Þubllc
AccounLanLƍţ as used ln Lhe precedlng paragraphţ means an accounLanL who possesses Lhe
lndependence as deflned ln Lhe rules and regulaLlons of Lhe 8oard of AccounLancy promulgaLed
pursuanL Lo ÞresldenLlal uecree noŦ 692ţ oLherwlse known as Lhe 8evlsed AccounLancy LawŦ

SLCŦ 233Ŧ Subsldlary 8ooksŦ Ŵ All corporaLlonsţ companlesţ parLnershlps or persons keeplng Lhe books of
accounLs menLloned ln Lhe precedlng SecLlon mayţ aL Lhelr opLlonţ keep subsldlary books as Lhe needs of
Lhelr buslness may requlreť Þrovldedţ 1haL were such subsldlarles are kepLţ Lhey shall form parL of Lhe
accounLlng sysLem of Lhe Laxpayer and shall be sub[ecL Lo Lhe same rules and regulaLlons as Lo Lhelr
keeplngţ LranslaLlonţ producLlon and lnspecLlon as are appllcable Lo Lhe [ournal and Lhe ledgerŦ

SLCŦ 234Ŧ Language ln whlch 8ooks are Lo be kepLŤ 1ranslaLlonŦ Ŵ All such corporaLlonsţ companlesţ
parLnershlps or persons shall keep Lhe books or records menLloned ln SecLlon 232 hereof ln naLlve
languageţ Lngllsh or Spanlshť Þrovldedţ howeverţ 1haL lf ln addlLlon Lo sald books or records Lhe
Laxpayer keeps oLher books or records ln a language oLher Lhan a naLlve languageţ Lngllsh or Spanlshţ he
shall make a Lrue and compleLe LranslaLlon of all Lhe enLrles ln suck oLher books or records lnLo a naLlve
languageŤ Lngllsh or Spanlshţ and Lhe sald LranslaLlon musL be made by Lhe bookkeeperţ or such
Laxpayerţ or ln hls absenceţ by hls manager and musL be cerLlfled under oaLh as Lo lLs correcLness by Lhe
sald bookkeeper or managerţ and shall form an lnLegral parL of Lhe aforesald books of accounLsŦ 1he
keeplng of such books or records ln any language oLher Lhan a naLlve languageţ Lngllsh or Spanlshţ ls
hereby prohlblLedŦ

SLCŦ 233Ŧ ÞreservaLlon of 8ooks and AccounLs and CLher AccounLlng 8ecordsŦ Ŵ All Lhe books of
accounLsţ lncludlng Lhe subsldlary books and oLher accounLlng records of corporaLlonsţ parLnershlpsţ or
personsţ shall be preserved by Lhem for a perlod beglnnlng from Lhe lasL enLry ln each book unLll Lhe lasL
day prescrlbed by SecLlon 203 wlLhln whlch Lhe Commlssloner ls auLhorlzed Lo make an assessmenLŦ 1he
sald books and records shall be sub[ecL Lo examlnaLlon and lnspecLlon by lnLernal revenue offlcersť
Þrovldedţ 1haL for lncome Lax purposesţ such examlnaLlon and lnspecLlon shall be made only once ln a
Laxable yearţ excepL ln Lhe followlng casesť

(a) lraudţ lrregularlLy or mlsLakesţ as deLermlned by Lhe CommlsslonerŤ
(b) 1he Laxpayer requesLs relnvesLlgaLlonŤ
(c) verlflcaLlon of compllance wlLh wlLhholdlng Lax laws and regulaLlonsŤ
(d) verlflcaLlon of caplLal galns Lax llablllLlesŤ and
(e) ln Lhe exerclse of Lhe Commlsslonerƌs power under SecLlon 3(8) Lo obLaln lnformaLlon from oLher
persons ln whlch caseţ anoLher or separaLe examlnaLlon and lnspecLlon may be madeŦ LxamlnaLlon and
lnspecLlon of books of accounLs and oLher accounLlng records shall be done ln Lhe Laxpayerƌs offlce or
place of buslness or ln Lhe offlce of Lhe 8ureau of lnLernal 8evenueŦ All corporaLlonsţ parLnershlps or
persons LhaL reLlre from buslness shallţ wlLhln Len (10) days from Lhe daLe of reLlremenL or wlLhln such
perlod of Llme as may be allowed by Lhe Commlssloner ln speclal casesţ submlL Lhelr books of accounLsţ
lncludlng Lhe subsldlary books and oLher accounLlng records Lo Lhe Commlssloner or any of hls depuLles
for examlnaLlonţ afLer whlch Lhey shall be reLurnedŦ CorporaLlons and parLnershlps conLemplaLlng
dlssoluLlon musL noLlfy Lhe Commlssloner and shall noL be dlssolved unLll cleared of any Lax llablllLyŦ
Any provlslon of exlsLlng general or speclal law Lo Lhe conLrary noLwlLhsLandlngţ Lhe books of accounLs
and oLher perLlnenL records of LaxŴexempL organlzaLlons or granLees of Lax lncenLlves shall be sub[ecL Lo
examlnaLlon by Lhe 8ureau of lnLernal 8evenue for purposes of ascerLalnlng compllance wlLh Lhe
condlLlons under whlch Lhey have been granLed Lax exempLlons or Lax lncenLlvesţ and Lhelr Lax llablllLyţ
lf anyŦ


CPAÞ1L8 ll
AuMlnlS18A1lvL Þ8CvlSlCnS

SLCŦ 236Ŧ 8eglsLraLlon 8equlremenLsŦ Ŵ

(A) 8equlremenLsŦ Ŵ Lvery person sub[ecL Lo any lnLernal revenue Lax shall reglsLer once wlLh Lhe
approprlaLe 8evenue ulsLrlcL Cfflcerť

(1) WlLhln Len (10) days from daLe of employmenLţ or
(2) Cn or before Lhe commencemenL of buslnessţor
(3) 8efore paymenL of any Lax dueţ or
(4) upon flllng of a reLurnţ sLaLemenL or declaraLlon as requlred ln Lhls CodeŦ
1he reglsLraLlon shall conLaln Lhe Laxpayerƌs nameţ sLyleţ place of resldenceţ buslness and such oLher
lnformaLlon as may be requlred by Lhe Commlssloner ln Lhe form prescrlbed LhereforŦ
A person malnLalnlng a head offlceţ branch or faclllLy shall reglsLer wlLh Lhe 8evenue ulsLrlcL Cfflcer
havlng [urlsdlcLlon over Lhe head offlceţ brand or faclllLyŦ lor purposes of Lhls SecLlonţ Lhe Lerm ƍfaclllLyƍ
may lnclude buL noL be llmlLed Lo sales ouLleLsţ places of producLlonţ warehouses or sLorage placesŦ

(8) Annual 8eglsLraLlon leeŦ Ŵ An annual reglsLraLlon fee ln Lhe amounL of llve hundred pesos (Þ300) for
every separaLe or dlsLlncL esLabllshmenL or place of buslnessţ lncludlng faclllLy Lypes where sales
LransacLlons occurţ shall be pald upon reglsLraLlon and every year LhereafLer on or before Lhe lasL day of
!anuaryť Þrovldedţ howeverţ 1haL cooperaLlvesţ lndlvlduals earnlng purely compensaLlon lncomeţ
wheLher locally or abroadţ and overseas workers are noL llable Lo Lhe reglsLraLlon fee hereln lmposedŦ

1he reglsLraLlon fee shall be pald Lo an auLhorlzed agenL bank locaLed wlLhln Lhe revenue dlsLrlcLţ or Lo
Lhe 8evenue CollecLlon Cfflcerţ or duly auLhorlzed 1reasurer of Lhe clLy of munlclpallLy where each place
of buslness or branch ls reglsLeredŦ

(C) 8eglsLraLlon of Lach 1ype of lnLernal 8evenue 1axŦ Ŵ Lvery person who ls requlred Lo reglsLer wlLh Lhe
8ureau of lnLernal 8evenue under SubsecLlon (A) hereofţ shall reglsLer each Lype of lnLernal revenue Lax
for whlch he ls obllgaLedţ shall flle a reLurn and shall pay such Laxesţ and shall updaLes such reglsLraLlon
of any changes ln accordance wlLh SubsecLlon (L) hereofŦ

(u) 1ransfer of 8eglsLraLlonŦ Ŵ ln case a reglsLered person decldes Lo Lransfer hls place of buslness or hls
head offlce or branchesţ lL shall be hls duLy Lo updaLe hls reglsLraLlon sLaLus by flllng an appllcaLlon for
reglsLraLlon lnformaLlon updaLe ln Lhe form prescrlbed LhereforŦ

(L) CLher updaLesŦ Ŵ Any person reglsLered ln accordance wlLh Lhls SecLlon shallţ whenever appllcableţ
updaLe hls reglsLraLlon lnformaLlon wlLh Lhe 8evenue ulsLrlcL Cfflce where he ls reglsLeredţ speclfylng
Lhereln any change ln Lype and oLher Laxpayer deLallsŦ

(l) CancellaLlon of 8eglsLraLlonŦ Ŵ 1he reglsLraLlon of any person who ceases Lo be llable Lo a Lax Lype
shall be cancelled upon flllng wlLh Lhe 8evenue ulsLrlcL Cfflce where he ls reglsLered an appllcaLlon for
reglsLraLlon lnformaLlon updaLe ln a form prescrlbed LhereforŦ

(C) Þersons Commenclng 8uslnessŦ Ŵ Any personţ who expecLs Lo reallze gross sales or recelpLs sub[ecL Lo
valueŴadded Lax ln excess of Lhe amounL prescrlbed under SecLlon 109(z) of Lhls Code for Lhe nexL 12Ŵ
monLh perlod from Lhe commencemenL of Lhe buslnessţ shall reglsLer wlLh Lhe 8evenue ulsLrlcL Cfflce
whlch has [urlsdlcLlon over Lhe head offlce or branch and shall pay Lhe annual reglsLraLlon fee prescrlbed
ln SubsecLlon (8) hereofŦ

(P) Þersons 8ecomlng Llable Lo Lhe valueŴadded 1axŦ Ŵ Any personţ whose gross sales or recelpLs ln any
12ŴmonLh perlod exceeds Lhe amounL prescrlbed under SubsecLlon 109(z) of Lhls Code for exempLlon
from Lhe valueŴadded Lax shall reglsLer ln accordance wlLh SubsecLlon (A) hereofţ and shall pay Lhe
annual reglsLraLlon fee prescrlbed wlLhln Len (10) days afLer Lhe end of Lhe lasL monLh of LhaL perlodţ
and shall be llable Lo Lhe valueŴadded Lax commenclng from Lhe flrsL day of Lhe monLh followlng hls
reglsLraLlonŦ

(l) CpLlonal 8eglsLraLlon of LxempL ÞersonŦ Ŵ Any person whose LransacLlons are exempL from valueŴ
added Lax under SecLlon 109(z) of Lhls CodeŤ or any person whose LransacLlons are exempL from Lhe
valueŴadded Lax under SecLlon 109(a)ţ (b)ţ (c)ţ and (d) of Lhls Codeţ who opLs Lo reglsLer as a vA1
Laxpayer wlLh respecL Lo hls exporL sales onlyţ may updaLe hls reglsLraLlon lnformaLlon ln accordance
wlLh SubsecLlon (L) hereofţ noL laLer Lhan Len (10) days before Lhe beglnnlng of Lhe Laxable quarLer and
shall pay Lhe annual reglsLraLlon fee prescrlbed ln SubsecLlon (8) hereofŦ

ln any caseţ Lhe Commlssloner mayţ for admlnlsLraLlve reasonsţ deny any appllcaLlon for reglsLraLlon
lncludlng updaLes prescrlbed under SubsecLlon (L) hereofŦ

lor purposes of 1lLle lv of Lhls Codeţ any person who has reglsLered valueŴadded Lax as a Lax Lype ln
accordance wlLh Lhe provlslons of SubsecLlon (C) hereof shall be referred Lo as vA1ŴreglsLered person
who shall be asslgned only one 1axpayer ldenLlflcaLlon numberŦ

(!) Supplylng of 1axpayer ldenLlflcaLlon number (1ln)Ŧ Ŵ Any person requlred under Lhe auLhorlLy of Lhls
Code Lo makeţ render or flle a reLurnţ sLaLemenL or oLher documenL shall be supplled wlLh or asslgned a
1axpayer ldenLlflcaLlon number (1ln) whlch he shall lndlcaLe ln such reLurnţ sLaLemenL or documenL
flled wlLh Lhe 8ureau of lnLernal 8evenue for hls proper ldenLlflcaLlon for Lax purposesţ and whlch he
shall lndlcaLe ln cerLaln documenLsţ such asţ buL noL llmlLed Lo Lhe followlngť

(1) Sugar quedansţ reflned sugar release order or slmllar lnsLrumenLsŤ
(2) uomesLlc bllls of ladlngŤ
(3) uocumenLs Lo be reglsLered wlLh Lhe 8eglsLer of ueeds of Assessorƌs CfflceŤ
(4) 8eglsLraLlon cerLlflcaLe of LransporLaLlon equlpmenL by landţ sea or alrŤ
(3) uocumenLs Lo be reglsLered wlLh Lhe SecurlLles and Lxchange CommlsslonŤ
(6) 8ulldlng consLrucLlon permlLsŤ
(7) AppllcaLlon for loan wlLh banksţ flnanclal lnsLlLuLlonsţ or oLher flnanclal lnLermedlarlesŤ
(8) AppllcaLlon for mayorƌs permlLŤ
(9) AppllcaLlon for buslness llcense wlLh Lhe ueparLmenL of 1rade Ǝ lndusLryŤ and
(10) Such oLher documenLs whlch may hereafLer be requlred under rules and regulaLlons Lo be
promulgaLed by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ
ln cases where a reglsLered Laxpayer dlesţ Lhe admlnlsLraLor or execuLor shall reglsLer Lhe esLaLe of Lhe
decedenL ln accordance wlLh SubsecLlon (A) hereof and a new 1axpayer ldenLlflcaLlon number (1ln)
shall be supplled ln accordance wlLh Lhe provlslons of Lhls SecLlonŦ
ln Lhe case of a nonresldenL decedenLţ Lhe execuLor or admlnlsLraLor of Lhe esLaLe shall reglsLer Lhe
esLaLe wlLh Lhe 8evenue ulsLrlcL Cfflce where he ls reglsLeredť Þrovldedţ howeverţ 1haL ln case such
execuLor or admlnlsLraLor ls noL reglsLeredţ reglsLraLlon of Lhe esLaLe shall be made wlLh Lhe 1axpayer
ldenLlflcaLlon number (1ln) supplled by Lhe 8evenue ulsLrlcL Cfflce havlng [urlsdlcLlon over hls legal
resldenceŦ

Cnly one 1axpayer ldenLlflcaLlon number (1ln) shall be asslgned Lo a LaxpayerŦ Any person who shall
secure more Lhan one 1axpayer ldenLlflcaLlon number shall be crlmlnally llable under Lhe provlslon of
SecLlon 273 on ƌvlolaLlon of CLher Þrovlslons of Lhls Code or 8egulaLlons ln CeneralƌŦ

SLCŦ 237Ŧ lssuance of 8ecelpLs or Sales or Commerclal lnvolcesŦ Ŵ All persons sub[ecL Lo an lnLernal
revenue Lax shallţ for each sale or Lransfer of merchandlse or for servlces rendered valued aL 1wenLyŴ
flve pesos (Þ23Ŧ00) or moreţ lssue duly reglsLered recelpLs or sales or commerclal lnvolcesţ prepared aL
leasL ln dupllcaLeţ showlng Lhe daLe of LransacLlonţ quanLlLyţ unlL cosL and descrlpLlon of merchandlse or
naLure of servlceť Þrovldedţ howeverţ 1haL ln Lhe case of salesţ recelpLs or Lransfers ln Lhe amounL of
Cne hundred pesos (Þ100Ŧ00) or moreţ or regardless of Lhe amounLţ where Lhe sale or Lransfer ls made
by a person llable Lo valueŴadded Lax Lo anoLher person also llable Lo valueŴadded LaxŤ or where Lhe
recelpL ls lssued Lo cover paymenL made as renLalsţ commlsslonsţ compensaLlons or feesţ recelpLs or
lnvolces shall be lssued whlch shall show Lhe nameţ buslness sLyleţ lf anyţ and address of Lhe purchaserţ
cusLomer or cllenLť Þrovldedţ furLherţ 1haL where Lhe purchaser ls a vA1ŴreglsLered personţ ln addlLlon
Lo Lhe lnformaLlon hereln requlredţ Lhe lnvolce or recelpL shall furLher show Lhe 1axpayer ldenLlflcaLlon
number (1ln) of Lhe purchaserŦ

1he orlglnal of each recelpL or lnvolce shall be lssued Lo Lhe purchaserţ cusLomer or cllenL aL Lhe Llme Lhe
LransacLlon ls effecLedţ whoţ lf engaged ln buslness or ln Lhe exerclse of professlonţ shall keep and
preserve Lhe same ln hls place of buslness for a perlod of Lhree (3) years from Lhe close of Lhe Laxable
year ln whlch such lnvolce or recelpL was lssuedţ whlle Lhe dupllcaLe shall be kepL and preserved by Lhe
lssuerţ also ln hls place of buslnessţ for a llke perlodŦ

1he Commlssloner mayţ ln merlLorlous casesţ exempL any person sub[ecL Lo lnLernal revenue Lax from
compllance wlLh Lhe provlslons of Lhls SecLlonŦ

SLCŦ 238Ŧ ÞrlnLlng of 8ecelpLs or Sales or Commerclal lnvolcesŦ Ŵ All persons who are engaged ln buslness
shall secure from Lhe 8ureau of lnLernal 8evenue an auLhorlLy Lo prlnL recelpLs or sales or commerclal
lnvolces before a prlnLer can prlnL Lhe sameŦ

no auLhorlLy Lo prlnL recelpLs or sales or commerclal lnvolces shall be granLed unless Lhe recelpLs or
lnvolces Lo be prlnLed are serlally numbered and shall showţ among oLher Lhlngsţ Lhe nameţ buslness
sLyleţ 1axpayer ldenLlflcaLlon number (1ln) and buslness address of Lhe person or enLlLy Lo use Lhe
sameţ and such oLher lnformaLlon LhaL may be requlred by rules and regulaLlons Lo be promulgaLed by
Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

All persons who prlnL recelpL or sales or commerclal lnvolces shall malnLaln a logbook/reglsLer of
Laxpayers who avalled of Lhelr prlnLlng servlcesŦ 1he logbook/reglsLer shall conLaln Lhe followlng
lnformaLlonť

(1) namesţ 1axpayer ldenLlflcaLlon numbers of Lhe persons or enLlLles for whom Lhe recelpLs
or sales or commerclal lnvolces were prlnLedŤ and
(2) number of bookleLsţ number of seLs per bookleLţ number of coples per seL and Lhe
serlal numbers of Lhe recelpLs or lnvolces ln each bookleLŦ
SLCŦ 239Ŧ Slgn Lo be LxhlblLed by ulsLlllerţ 8ecLlflerţ Compounderţ 8epacker and Wholesale Llquor
uealerŦ Ŵ Lvery person engaged ln dlsLllllng or recLlfylng splrlLsţ compoundlng llquorsţ repacklng wlnes or
dlsLllled splrlLsţ and every wholesale llquor dealer shall keep consplcuously on Lhe ouLslde of hls place of
buslness a slgn exhlblLlngţ ln leLLers noL less Lhan slx cenLlmeLers (6 cmsŦ) hlghţ hls name or flrm sLyleţ
wlLh Lhe words ƍ8eglsLered ulsLlllerƍţ ƍ8ecLlfler of SplrlLsƍţ ƍCompounder of Llquorsƍţ ƍ8epacker of
Wlnes or ulsLllled SplrlLsƍţ or ƍWholesale Llquor uealerƍţ as Lhe case may beţ and hls assessmenL
numberŦ

SLCŦ 240Ŧ Slgn Lo be LxhlblLed by ManufacLurer of ÞroducLs of 1obaccoŦ Ŵ Lvery manufacLurer of clgarsţ
clgareLLes or Lobaccoţ and every wholesale dealer ln leaf Lobacco or manufacLured producLs of Lobacco
shall place and keep on ouLslde of Lhe bulldlng whereln hls buslness ls carrled onţ so LhaL lL can be
dlsLlncLly seenţ a slgn sLaLlng hls full name and buslness ln leLLers noL less Lhan slx cenLlmeLers (6 cmsŦ)
hlgh and also glvlng hls assessmenL numberŦ

SLCŦ 241Ŧ LxhlblLlon of CerLlflcaLe of ÞaymenL aL Þlace of 8uslnessŦ Ŵ 1he cerLlflcaLe or recelpLs showlng
paymenL of Laxes lssued Lo a person engaged ln a buslness sub[ecL Lo an annual reglsLraLlon fee shall be
kepL consplcuously exhlblLed ln plaln vlew ln or aL Lhe place where Lhe buslness ls conducLedŤ and ln
case of a peddler or oLher persons noL havlng a flxed place of buslnessţ shall be kepL ln Lhe possesslon of
Lhe holder Lhereofţ sub[ecL Lo producLlon upon demand of any lnLernal revenue offlcerŦ

SLCŦ 242Ŧ ConLlnuaLlon of 8uslness of ueceased ÞersonŦ Ŵ When any lndlvldual who has pald Lhe annual
reglsLraLlon fee dlesţ and Lhe same buslness ls conLlnued by Lhe person or persons lnLeresLed ln hls
esLaLeţ no addlLlonal paymenL shall be requlred for Lhe resldue of Lhe Lerm whlch Lhe Lax was paldť
Þrovldedţ howeverţ 1haL Lhe person or persons lnLeresLed ln Lhe esLaLe shouldţ wlLhln LhlrLy (30) days
from Lhe deaLh of Lhe decedenLţ submlL Lo Lhe 8ureau of lnLernal 8evenue or Lhe reglonal or revenue
ulsLrlcL Cfflce lnvenLorles of goods or sLocks had aL Lhe Llme of such deaLhŦ
1he requlremenL under Lhls SecLlon shall also be appllcable ln Lhe case of Lransfer of ownershlp or
change of name of Lhe buslness esLabllshmenLŦ

SLCŦ 243Ŧ 8emoval of 8uslness Lo CLher LocaLlonŦ Ŵ Any buslness for whlch Lhe annual reglsLraLlon fee
has been pald mayţ sub[ecL Lo Lhe rules and regulaLlons prescrlbed by Lhe SecreLary of llnanceţ upon
recommendaLlon of Lhe Commlsslonerţ be removed and conLlnued ln any oLher place wlLhouL Lhe
paymenL of addlLlonal Lax durlng Lhe Lerm for whlch Lhe paymenL was madeŦ

CPAÞ1L8 lll
8uLLS Anu 8LCuLA1lCnS

SLCŦ 244Ŧ AuLhorlLy of SecreLary of llnance Lo ÞromulgaLe 8ules and 8egulaLlonsŦ Ŵ 1he SecreLary of
llnanceţ upon recommendaLlon of Lhe Commlsslonerţ shall promulgaLe all needful rules and regulaLlons
for Lhe effecLlve enforcemenL of Lhe provlslons of Lhls CodeŦ

SLCŦ 243Ŧ Speclflc Þrovlslons Lo be ConLalned ln 8ules and 8egulaLlonsŦ Ŵ 1he rules and regulaLlons of Lhe
8ureau of lnLernal 8evenue shallţ among oLher Lhlnsţ conLaln provlslons speclfylngţ prescrlblng or
deflnlngť

(a) 1he Llme and manner ln whlch 8evenue 8eglonal ulrecLor shall canvass Lhelr respecLlve 8evenue
8eglons for Lhe purpose of dlscoverlng persons and properLy llable Lo naLlonal lnLernal revenue Laxesţ
and Lhe manner ln whlch Lhelr llsLs and records of Laxable persons and Laxable ob[ecLs shall be made
and kepLŤ
(b) 1he forms of labelsţ brands or marks Lo be requlred on goods sub[ecL Lo an exclse Laxţ and Lhe
manner ln whlch Lhe labelllngţ brandlng or marklng shall be effecLedŤ
(c) 1he condlLlons under whlch and Lhe manner ln whlch goods lnLended for exporLţ whlch lf noL
exporLed would be sub[ecL Lo an exclse Laxţ shall be labelledţ branded or markedŤ
(d) 1he condlLlons Lo be observed by revenue offlcers respecLlng Lhe lnsLlLuLlons and conducL of legal
acLlons and proceedlngsŤ
(e) 1he condlLlons under whlch goods lnLended for sLorage ln bonded warehouses shall be conveyed
LhlLherţ Lhelr manner of sLorage and Lhe meLhod of keeplng Lhe enLrles and records ln connecLlon
LherewlLhţ also Lhe books Lo be kepL by 8evenue lnspecLors and Lhe reporLs Lo be made by Lhem ln
connecLlon wlLh Lhelr supervlslon of such housesŤ
(f) 1he condlLlons under whlch denaLured alcohol may be removed and dealL lnţ Lhe characLer and
quanLlLy of Lhe denaLurlng maLerlal Lo be usedţ Lhe manner ln whlch Lhe process of denaLurlng shall be
effecLedţ so as Lo render Lhe alcohol sulLably denaLured and unflL for oral lnLakeţ Lhe bonds Lo be glvenţ
Lhe books and records Lo be kepLţ Lhe enLrles Lo be made Lherelnţ Lhe reporLs Lo be made Lo Lhe
Commlsslonerţ and Lhe slgns Lo be dlsplayed ln Lhe buslness or by Lhe person for whom such denaLurlng
ls done or by whomţ such alcohol ls dealL lnŤ
(g) 1he manner ln whlch revenue shall be collecLed and paldţ Lhe lnsLrumenLţ documenL or ob[ecL Lo
whlch revenue sLamps shall be afflxedţ Lhe mode of cancellaLlon of Lhe sameţ Lhe manner ln whlch Lhe
proper booksţ recordsţ lnvolces and oLher papers shall be kepL and enLrles Lhereln made by Lhe person
sub[ecL Lo Lhe Laxţ as well as Lhe manner ln whlch llcenses and sLamps shall be gaLhered up and reLurned
afLer servlng Lhelr purposesŤ
(h) 1he condlLlons Lo be observed by revenue offlcers respecLlng Lhe enforcemenL of 1lLle lll lmposlng a
Lax on esLaLe of a decedenLţ and oLher Lransfers morLls causaţ as well as on glfLs and such oLher rules
and regulaLlons whlch Lhe Commlssloner may conslder sulLable for Lhe enforcemenL of Lhe sald 1lLle lllŤ
(l) 1he manner ln whlch Lax reLurnsţ lnformaLlon and reporLs shall be prepared and reporLed and Lhe Lax
collecLed and paldţ as well as Lhe condlLlons under whlch evldence of paymenL shall be furnlshed Lhe
Laxpayerţ and Lhe preparaLlon and publlcaLlon of Lax sLaLlsLlcsŤ
([) 1he manner ln whlch lnLernal revenue Laxesţ such as lncome Laxţ lncludlng wlLhholdlng Laxţ esLaLe and
donorƌs Laxesţ valueŴadded Laxţ oLher percenLage Laxesţ exclse Laxes and documenLary sLamp Laxes shall
be pald Lhrough Lhe collecLlon offlcers of Lhe 8ureau of lnLernal 8evenue or Lhrough duly auLhorlzed
agenL banks whlch are hereby depuLlzed Lo recelve paymenLs of such Laxes and Lhe reLurnsţ papers and
sLaLemenLs LhaL may be flled by Lhe Laxpayers ln connecLlon wlLh Lhe paymenL of Lhe Laxť Þrovldedţ
howeverţ 1haL noLwlLhsLandlng Lhe oLher provlslons of Lhls Code prescrlblng Lhe place of flllng of reLurns
and paymenL of Laxesţ Lhe Commlssloner mayţ by rules and regulaLlonsţ requlre LhaL Lhe Lax reLurnsţ
papers and sLaLemenLs LhaL may be flled by Lhe Laxpayers ln connecLlon wlLh Lhe paymenL of Lhe LaxŦ
Þrovldedţ howeverţ 1haL noLwlLhsLandlng Lhe oLher provlslons of Lhls Code prescrlblng Lhe place of flllng
of reLurns and paymenL of Laxesţ Lhe Commlssloner mayţ by rules and regulaLlons requlre LhaL Lhe Lax
reLurnsţ papers and sLaLemenLs and Laxes of large Laxpayers be flled and paldţ respecLlvelyţ Lhrough
collecLlon offlcers or Lhrough duly auLhorlzed agenL banksť Þrovldedţ furLherţ 1haL Lhe Commlssloner can
exerclse Lhls power wlLhln slx (6) years from Lhe approval of 8epubllc AcL noŦ 7646 or Lhe compleLlon of
lLs comprehenslve compuLerlzaLlon programţ whlchever comes earllerť Þrovldedţ flnallyţ 1haL separaLe
venues for Lhe Luzonţ vlsayas and Mlndanao areas may be deslgnaLed for Lhe flllng of Lax reLurns and
paymenL of Laxes by sald large LaxpayersŦ
lor Lhe purpose of Lhls SecLlonţ ƍlarge Laxpayerƍ means a Laxpayer who saLlsfles any of Lhe followlng
crlLerlaŤ
(1) valueŴAdded 1ax (vA1)Ŧ Ŵ 8uslness esLabllshmenL wlLh vA1 pald or payable of aL leasL Cne hundred
Lhousand pesos (Þ100ţ000) for any quarLer of Lhe precedlng Laxable yearŤ

(2) Lxclse 1axŦ Ŵ 8uslness esLabllshmenL wlLh exclse Lax pald or payable of aL leasL Cne mllllon pesos
(Þ1ţ000ţ000) for Lhe precedlng Laxable yearŤ

(3) CorporaLe lncome 1axŦ Ŵ 8uslness esLabllshmenL wlLh annual lncome Lax pald or payable of aL leasL
Cne mllllon pesos (Þ1ţ000ţ000) for Lhe precedlng Laxable yearŤ and

(4) WlLhholdlng 1axŦ Ŵ 8uslness esLabllshmenL wlLh wlLhholdlng Lax paymenL or remlLLance of aL leasL
Cne mllllon pesos (Þ1ţ000ţ000) for Lhe precedlng Laxable yearŦ

Þrovldedţ howeverţ 1haL Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ may
modlfy or add Lo Lhe above crlLerla for deLermlnlng a large Laxpayer afLer conslderlng such facLors as
lnflaLlonţ volume of buslnessţ wage and employmenL levelsţ and slmllar economlc facLorsŦ

1he penalLles prescrlbed under SecLlon 248 of Lhls Code shall be lmposed on any vlolaLlon of Lhe rules
and regulaLlons lssued by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe Commlsslonerţ
prescrlblng Lhe place of flllng of reLurns and paymenLs of Laxes by large LaxpayersŦ

SLCŦ 246Ŧ nonŴ8eLroacLlvlLy of 8ullngsŦ Ŵ Any revocaLlonţ modlflcaLlon or reversal of any of Lhe rules and
regulaLlons promulgaLed ln accordance wlLh Lhe precedlng SecLlons or any of Lhe rullngs or clrculars
promulgaLed by Lhe Commlssloner shall noL be glven reLroacLlve appllcaLlon lf Lhe revocaLlonţ
modlflcaLlon or reversal wlll be pre[udlclal Lo Lhe Laxpayersţ excepL ln Lhe followlng casesť

(a) Where Lhe Laxpayer dellberaLely mlssLaLes or omlLs maLerlal facLs from hls reLurn or any documenL
requlred of hlm by Lhe 8ureau of lnLernal 8evenueŤ
(b) Where Lhe facLs subsequenLly gaLhered by Lhe 8ureau of lnLernal 8evenue are maLerlally dlfferenL
from Lhe facLs on whlch Lhe rullng ls basedŤ or
(c) Where Lhe Laxpayer acLed ln bad falLhŦ

1l1LL x
S1A1u1C8? CllLnSLS Anu ÞLnAL1lLS

CPAÞ1L8 l
Auul1lCnS 1C 1Ax

SLCŦ 247Ŧ Ceneral ÞrovlslonsŦ Ŵ

(a) 1he addlLlons Lo Lhe Lax or deflclency Lax prescrlbed ln Lhls ChapLer shall apply Lo all Laxesţ fees and
charges lmposed ln Lhls CodeŦ 1he AmounL so added Lo Lhe Lax shall be collecLed aL Lhe same Llmeţ ln
Lhe same manner and as parL of Lhe LaxŦ
(b) lf Lhe wlLhholdlng agenL ls Lhe CovernmenL or any of lLs agenclesţ pollLlcal subdlvlslons or
lnsLrumenLallLlesţ or a governmenLŴowned or conLrolled corporaLlonţ Lhe employee Lhereof responslble
for Lhe wlLhholdlng and remlLLance of Lhe Lax shall be personally llable for Lhe addlLlons Lo Lhe Lax
prescrlbed herelnŦ
(c) Lhe Lerm ƍpersonƍţ as used ln Lhls ChapLerţ lncludes an offlcer or employee of a corporaLlon who as
such offlcerţ employee or member ls under a duLy Lo perform Lhe acL ln respecL of whlch Lhe vlolaLlon
occursŦ
SLCŦ 248Ŧ Clvll ÞenalLlesŦ Ŵ
(A) 1here shall be lmposedţ ln addlLlon Lo Lhe Lax requlred Lo be paldţ a penalLy equlvalenL Lo LwenLyŴ
flve percenL (23Ʒ) of Lhe amounL dueţ ln Lhe followlng casesť
(1) lallure Lo flle any reLurn and pay Lhe Lax due Lhereon as requlred under Lhe provlslons of Lhls Code or
rules and regulaLlons on Lhe daLe prescrlbedŤ or
(2) unless oLherwlse auLhorlzed by Lhe Commlsslonerţ flllng a reLurn wlLh an lnLernal revenue offlcer
oLher Lhan Lhose wlLh whom Lhe reLurn ls requlred Lo be flledŤ or
(3) lallure Lo pay Lhe deflclency Lax wlLhln Lhe Llme prescrlbed for lLs paymenL ln Lhe noLlce of
assessmenLŤ or
(4) lallure Lo pay Lhe full or parL of Lhe amounL of Lax shown on any reLurn requlred Lo be flled under
Lhe provlslons of Lhls Code or rules and regulaLlonsţ or Lhe full amounL of Lax due for whlch no reLurn ls
requlred Lo be flledţ on or before Lhe daLe prescrlbed for lLs paymenLŦ
(8) ln case of wlllful neglecL Lo flle Lhe reLurn wlLhln Lhe perlod prescrlbed by Lhls Code or by rules and
regulaLlonsţ or ln case a false or fraudulenL reLurn ls wlllfully madeţ Lhe penalLy Lo be lmposed shall be
flfLy percenL (30Ʒ) of Lhe Lax or of Lhe deflclency Laxţ ln caseţ any paymenL has been made on Lhe basls
of such reLurn before Lhe dlscovery of Lhe falslLy or fraudť Þrovldedţ 1haL a subsLanLlal underdeclaraLlon
of Laxable salesţ recelpLs or lncomeţ or a subsLanLlal oversLaLemenL of deducLlonsţ as deLermlned by Lhe
Commlssloner pursuanL Lo Lhe rules and regulaLlons Lo be promulgaLed by Lhe SecreLary of llnanceţ
shall consLlLuLe prlma facle evldence of a false or fraudulenL reLurnť Þrovldedţ furLherţ 1haL fallure Lo
reporL salesţ recelpLs or lncome ln an amounL exceedlng LhlrLy percenL (30Ʒ) of LhaL declared per
reLurnţ and a clalm of deducLlons ln an amounL exceedlng (30Ʒ) of acLual deducLlonsţ shall render Lhe
Laxpayer llable for subsLanLlal underdeclaraLlon of salesţ recelpLs or lncome or for oversLaLemenL of
deducLlonsţ as menLloned herelnŦ
SLCŦ 249Ŧ lnLeresLŦ Ŵ
(A) ln CeneralŦ Ŵ 1here shall be assessed and collecLed on any unpald amounL of Laxţ lnLeresL aL Lhe raLe
of LwenLy percenL (20Ʒ) per annumţ or such hlgher raLe as may be prescrlbed by rules and regulaLlonsţ
from Lhe daLe prescrlbed for paymenL unLll Lhe amounL ls fully paldŦ

(8) ueflclency lnLeresLŦ Ŵ Any deflclency ln Lhe Lax dueţ as Lhe Lerm ls deflned ln Lhls Codeţ shall be
sub[ecL Lo Lhe lnLeresL prescrlbed ln SubsecLlon (A) hereofţ whlch lnLeresL shall be assessed and
collecLed from Lhe daLe prescrlbed for lLs paymenL unLll Lhe full paymenL LhereofŦ

(C) uellnquency lnLeresLŦ Ŵ ln case of fallure Lo payť

(1) 1he amounL of Lhe Lax due on any reLurn Lo be flledţ or
(2) 1he amounL of Lhe Lax due for whlch no reLurn ls requlredţ or
(3) A deflclency Laxţ or any surcharge or lnLeresL Lhereon on Lhe due daLe appearlng ln Lhe noLlce and
demand of Lhe Commlsslonerţ Lhere shall be assessed and collecLed on Lhe unpald amounLţ lnLeresL aL
Lhe raLe prescrlbed ln SubsecLlon (A) hereof unLll Lhe amounL ls fully paldţ whlch lnLeresL shall form parL
of Lhe LaxŦ
(u) lnLeresL on LxLended ÞaymenLŦ Ŵ lf any person requlred Lo pay Lhe Lax ls quallfled and elecLs Lo pay
Lhe Lax on lnsLallmenL under Lhe provlslons of Lhls Codeţ buL falls Lo pay Lhe Lax or any lnsLallmenL
hereofţ or any parL of such amounL or lnsLallmenL on or before Lhe daLe prescrlbed for lLs paymenLţ or
where Lhe Commlssloner has auLhorlzed an exLenslon of Llme wlLhln whlch Lo pay a Lax or a deflclency
Lax or any parL Lhereofţ Lhere shall be assessed and collecLed lnLeresL aL Lhe raLe herelnabove prescrlbed
on Lhe Lax or deflclency Lax or any parL Lhereof unpald from Lhe daLe of noLlce and demand unLll lL ls
paldŦ

SLCŦ 230Ŧ lallure Lo llle CerLaln lnformaLlon 8eLurnsŦ Ŵ ln Lhe case of each fallure Lo flle an lnformaLlon
reLurnţ sLaLemenL or llsLţ or keep any recordţ or supply any lnformaLlon requlred by Lhls Code or by Lhe
Commlssloner on Lhe daLe prescrlbed Lhereforţ unless lL ls shown LhaL such fallure ls due Lo reasonable
cause and noL Lo wlllful neglecLţ Lhere shallţ upon noLlce and demand by Lhe Commlsslonerţ be pald by
Lhe person falllng Lo flleţ keep or supply Lhe sameţ Cne Lhousand pesos (1ţ000) for each fallureť
Þrovldedţ howeverţ 1haL Lhe aggregaLe amounL Lo be lmposed for all such fallures durlng a calendar year
shall noL exceed 1wenLyŴflve Lhousand pesos (Þ23ţ000)Ŧ

SLCŦ 231Ŧ lallure of a WlLhholdlng AgenL Lo CollecL and 8emlL 1axŦ Ŵ Any person requlred Lo wlLhholdţ
accounL forţ and remlL any Lax lmposed by Lhls Code or who wlllfully falls Lo wlLhhold such Laxţ or
accounL for and remlL such Laxţ or alds or abeLs ln any manner Lo evade any such Lax or Lhe paymenL
Lhereofţ shallţ ln addlLlon Lo oLher penalLles provlded for under Lhls ChapLerţ be llable upon convlcLlon Lo
a penalLy equal Lo Lhe LoLal amounL of Lhe Lax noL wlLhheldţ or noL accounLed for and remlLLedŦ

SLCŦ 232Ŧ lallure of a WlLhholdlng AgenL Lo refund Lxcess WlLhholdlng 1axŦ Ŵ Any employer/wlLhholdlng
agenL who falls or refuses Lo refund excess wlLhholdlng Lax shallţ ln addlLlon Lo Lhe penalLles provlded ln
Lhls 1lLleţ be llable Lo a penalLy Lo Lhe LoLal amounL of refunds whlch was noL refunded Lo Lhe employee
resulLlng from any excess of Lhe amounL wlLhheld over Lhe Lax acLually due on Lhelr reLurnŦ

CPAÞ1L8 ll
C8lMLSţ C1PL8 CllLnSLS Anu lC8lLl1u8LS

SLCŦ 233Ŧ Ceneral ÞrovlslonsŦ Ŵ

(a) Any person convlcLed of a crlme penallzed by Lhls Code shallţ ln addlLlon Lo belng llable for Lhe
paymenL of Lhe Laxţ be sub[ecL Lo Lhe penalLles lmposed herelnť Þrovldedţ 1haL paymenL of Lhe Lax due
afLer apprehenslon shall noL consLlLuLe a valld defense ln any prosecuLlon for vlolaLlon of any provlslon
of Lhls Code or ln any acLlon for Lhe forfelLure of unLaxed arLlclesŦ
(b) Any person who wlllfully alds or abeLs ln Lhe commlsslon of a crlme penallzed hereln or who causes
Lhe commlsslon of any such offense by anoLher shall be llable ln Lhe same manner as Lhe prlnclpalŦ
(c) lf Lhe offender ls noL a clLlzen of Lhe Þhlllpplnesţ he shall be deporLed lmmedlaLely afLer servlng Lhe
senLence wlLhouL furLher proceedlngs for deporLaLlonŦ lf he ls a publlc offlcer or employeeţ Lhe
maxlmum penalLy prescrlbed for Lhe offense shall be lmposed andţ ln addlLlonţ he shall be dlsmlssed
from Lhe publlc servlce and perpeLually dlsquallfled from holdlng any publlc offlceţ Lo voLe and Lo
parLlclpaLe ln any elecLlonŦ lf Lhe offender ls a CerLlfled Þubllc AccounLanLţ hls cerLlflcaLe as a CerLlfled
Þubllc AccounLanL shallţ upon convlcLlonţ be auLomaLlcally revoked or cancelledŦ
(d) ln Lhe case of assoclaLlonsţ parLnershlps or corporaLlonsţ Lhe penalLy shall be lmposed on Lhe
parLnerţ presldenLţ general managerţ branch managerţ Lreasurerţ offlcerŴlnŴchargeţ and Lhe employees
responslble for Lhe vlolaLlonŦ
(e) 1he flnes Lo be lmposed for any vlolaLlon of Lhe provlslons of Lhls Code shall noL be lower Lhan Lhe
flnes lmposed hereln or Lwlce Lhe amounL of Laxesţ lnLeresL and surcharges due from Lhe Laxpayerţ
whlchever ls hlgherŦ
SLCŦ 234Ŧ ALLempL Lo Lvade or uefeaL 1axŦ Ŵ Any person who wlllfully aLLempLs ln any manner Lo evade
or defeaL any Lax lmposed under Lhls Code or Lhe paymenL Lhereof shallţ ln addlLlon Lo oLher penalLles
provlded by lawţ upon convlcLlon Lhereofţ be punlshed by a flne noL less Lhan 1hlrLy Lhousand (Þ30ţ000)
buL noL more Lhan Cne hunderd Lhousand pesos (Þ100ţ000) and suffer lmprlsonmenL of noL less Lhan
Lwo (2) years buL noL more Lhan four (4) yearsť Þrovldedţ 1haL Lhe convlcLlon or acqulLLal obLalned under
Lhls SecLlon shall noL be a bar Lo Lhe flllng of a clvll sulL for Lhe collecLlon of LaxesŦ

SLCŦ 233Ŧ lallure Lo llle 8eLurnţ Supply CorrecL and AccuraLe lnformaLlonţ Þay 1ax WlLhhold and 8emlL
1ax and 8efund Lxcess 1axes WlLhheld on CompensaLlonŦ Ŵ Any person requlred under Lhls Code or by
rules and regulaLlons promulgaLed Lhereunder Lo pay any Lax make a reLurnţ keep any recordţ or supply
correcL Lhe accuraLe lnformaLlonţ who wlllfully falls Lo pay such Laxţ make such reLurnţ keep such recordţ
or supply correcL and accuraLe lnformaLlonţ or wlLhhold or remlL Laxes wlLhheldţ or refund excess Laxes
wlLhheld on compensaLlonţ aL Lhe Llme or Llmes requlred by law or rules and regulaLlons shallţ ln
addlLlon Lo oLher penalLles provlded by lawţ upon convlcLlon Lhereofţ be punlshed by a flne of noL less
Lhan 1en Lhousand pesos (Þ10ţ000) and suffer lmprlsonmenL of noL less Lhan one (1) year buL noL more
Lhan Len (10) yearsŦ
Any person who aLLempLs Lo make lL appear for any reason LhaL he or anoLher has ln facL flled a reLurn
or sLaLemenLţ or acLually flles a reLurn or sLaLemenL and subsequenLly wlLhdraws Lhe same reLurn or
sLaLemenL afLer securlng Lhe offlclal recelvlng seal or sLamp of recelpL of lnLernal revenue offlce whereln
Lhe same was acLually flled shallţ upon convlcLlon Lhereforţ be punlshed by a flne of noL less Lhan 1en
Lhousand pesos (Þ10ţ000) buL noL more Lhan 1wenLy Lhousand pesos (Þ20ţ000) and suffer lmprlsonmenL
of noL less Lhan one (1) year buL noL more Lhan Lhree (3) yearsŦ

SLCŦ 236Ŧ Þenal LlablllLy of CorporaLlonsŦ Ŵ Any corporaLlonţ assoclaLlon or general coŴparLnershlp llable
for any of Lhe acLs or omlsslons penallzed under Lhls Codeţ ln addlLlon Lo Lhe penalLles lmposed hereln
upon Lhe responslble corporaLe offlcersţ parLnersţ or employees shallţ upon convlcLlon for each acL or
omlsslonţ be punlshed by a flne of noL less Lhan llfLy Lhousand pesos (Þ30ţ000) buL noL more Lhan Cne
hundred Lhousand pesos (Þ100ţ000)Ŧ

SLCŦ 237Ŧ Þenal LlablllLy for Maklng lalse LnLrlesţ 8ecords or 8eporLsţ or uslng lalslfled or lake
AccounLable lormsŦ Ŵ

(A) Any flnanclal offlcer or lndependenL CerLlfled Þubllc AccounLanL engaged Lo examlne and audlL books
of accounLs of Laxpayers under SecLlon 232 (A) and any person under hls dlrecLlon whoť

(1) Wlllfully falslfles any reporL or sLaLemenL bearlng on any examlnaLlon or audlLţ or renders a reporLţ
lncludlng exhlblLsţ sLaLemenLsţ schedules or oLher forms of accounLancy work whlch has noL been
verlfled by hlm personally or under hls supervlslon or by a member of hls flrm or by a member of hls
sLaff ln accordance wlLh sound audlLlng pracLlcesŤ or
(2) CerLlfles flnanclal sLaLemenLs of a buslness enLerprlse conLalnlng an essenLlal mlssLaLemenL of facLs
or omlsslon ln respecL of Lhe LransacLlonsţ Laxable lncomeţ deducLlon and exempLlon of hls cllenLŤ or
(8) Any person whoť
(1) noL belng an lndependenL CerLlfled Þubllc AccounLanL accordlng Lo SecLlon 232(8) or a flnanclal
offlcerţ examlnes and audlLs books of accounLs of LaxpayersŤ or
(2) Cffers Lo slgn and cerLlfy flnanclal sLaLemenLs wlLhouL audlLŤ or
(3) Cffers any Laxpayer Lhe use of accounLlng bookkeeplng records for lnLernal revenue purposes noL ln
conformlLy wlLh Lhe requlremenLs prescrlbed ln Lhls Code or rules and regulaLlons promulgaLed
LhereunderŤ or

(4) knowlngly makes any false enLry or enLers any false or flcLlLlous name ln Lhe books of accounLs or
record menLloned ln Lhe precedlng paragraphsŤ or

(3) keeps Lwo (2) or more seLs of such records or books of accounLsŤ or

(6) ln any way commlLs an acL or omlsslonţ ln vlolaLlon of Lhe provlslons of Lhls SecLlonŤ or

(7) lalls Lo keep Lhe books of accounLs or records menLloned ln SecLlon 232 ln a naLlve languageţ Lngllsh
or Spanlshţ or Lo make a Lrue and compleLe LranslaLlon as requlred ln SecLlon 234 of Lhls Codeţ or whose
books of accounLs or records kepL ln a naLlve languageţ Lngllsh or Spanlshţ and found Lo be aL maLerlal
varlance wlLh books or records kepL by hlm ln anoLher languageŤ or

(8) Wlllfully aLLempLs ln any manner Lo evade or defeaL any Lax lmposed under Lhls Codeţ or knowlngly
uses fake or falslfled revenue offlclal recelpLsţ LeLLers of AuLhorlLyţ cerLlflcaLes auLhorlzlng reglsLraLlonţ
1ax CredlL CerLlflcaLesţ 1ax ueblL Memoranda and oLher accounLable forms shallţ upon convlcLlon for
each acL or omlsslonţ be punlshed by a flne noL less Lhan llfLy Lhousand pesos (Þ30ţ000) buL noL more
Lhan Cne hundred pesos (Þ100ţ000) and suffer lmprlsonmenL of noL less Lhan Lwo (2) years buL noL
more Lhan slx (6) yearsŦ

lf Lhe offender ls a CerLlfled Þubllc AccounLanLţ hls cerLlflcaLe as a CerLlfled Þubllc AccounLanL shall be
auLomaLlcally revoked or cancelled upon convlcLlonŦ
ln Lhe case of forelgnersţ convlcLlon under Lhls Code shall resulL ln hls lmmedlaLe deporLaLlon afLer
servlng senLenceţ wlLhouL furLher proceedlngs for deporLaLlonŦ

SLCŦ 238Ŧ unlawful ÞursulL of 8uslnessŦ Ŵ Any person who carrles on any buslness for whlch an annual
reglsLraLlon fee ls lmposed wlLhouL paylng Lhe Lax as requlred by law shallţ upon convlcLlon for each acL
or omlsslonţ be punlshed by a flne of noL less Lhan llve Lhousand pesos (Þ3ţ000) buL noL more Lhan
1wenLy Lhousand pesos (Þ20ţ000) and suffer lmprlsonmenL of noL less Lhan slx (6) monLhs buL noL more
Lhan Lwo (2) yearsť Þrovldedţ 1haL ln Lhe case of a person engaged ln Lhe buslness of dlsLllllngţ recLlfylngţ
repacklngţ compoundlng or manufacLurlng any arLlcle sub[ecL Lo exclse Laxţ he shallţ upon convlcLlon for
each acL or omlsslonţ be punlshed by a flne of noL less Lhan 1hlrLy Lhousand pesos (Þ30ţ000) buL noL
more Lhan llfLy Lhousand pesos (Þ30ţ000) and suffer lmprlsonmenL of noL less Lhan Lwo (2) years buL
noL more Lhan four (4) yearsŦ

SLCŦ 239Ŧ lllegal CollecLlon of lorelgn ÞaymenLsŦ Ŵ Any person who knowlngly underLakes Lhe collecLlon
of forelgn paymenLs as provlded under SecLlon 67 of Lhls Code wlLhouL havlng obLalned a llcense
Lhereforţ or wlLhouL complylng wlLh lLs lmplemenLlng rules and regulaLlonsţ shallţ upon convlcLlon for
each acL or omlsslonţ be punlshed by a flne of noL less Lhan 1wenLy Lhousand pesos (Þ20ţ000) buL noL
more Lhan llfLy Lhousand pesos (Þ30ţ000) and suffer lmprlsonmenL of noL less Lhan one (1) year buL noL
more Lhan Lwo (2) yearsŦ

SLCŦ 260Ŧ unlawful Þossesslon of ClgareLLe Þaper ln 8obblns or 8ollsţ LLcŦ Ŵ lL shall be unlawful for any
person Lo have ln hls possesslon clgareLLe paper ln bobblns or rollsţ clgareLLe Llpplng paper or clgareLLe
fllLer Llpsţ wlLhouL Lhe correspondlng auLhorlLy Lherefor lssued by Lhe CommlsslonerŦ Any personţ
lmporLerţ manufacLurer of clgar and clgareLLesţ who has been found gullLy under Lhls SecLlonţ shallţ
upon convlcLlon for each acL or omlsslonţ be punlshed by a flne of noL less Lhan 1wenLy Lhousand pesos
(Þ20ţ000) buL noL more Lhan Cne hundred Lhousand pesos (Þ1000ţ000) and suffer lmprlsonmenL for a
Lerm of noL less Lhan slx (6) years and one (1) day buL noL more Lhan Lwelve (12) yearsŦ

SLCŦ 261Ŧ unlawful use of uenaLured AlcoholŦ Ŵ Any person who for Lhe purpose of manufacLurlng any
beverageţ uses denaLured alcohol or alcohol speclally denaLured Lo be used for moLlve power or
wlLhdrawn under bond for lndusLrlal uses or alcohol knowlngly mlsrepresenLed Lo be denaLured Lo be
unflL for oral lnLake or who knowlngly sells or offers for sale any beverage made ln whole or ln parL from
such alcohol or who uses such alcohol for Lhe manufacLure of llquld medlclnal preparaLlons Laken
lnLernallyţ or knowlngly sells or offers for sale such preparaLlons conLalnlng as an lngredlenL such
alcoholţ shall upon convlcLlon for each acL or omlsslon be punlshed by a flne of noL less Lhan 1wenLy
Lhousand pesos (Þ20ţ000) buL noL more Lhan Cne hundred Lhousand pesos (Þ100ţ000) and suffer
lmprlsonmenL for a Lerm of noL less Lhan slx (6) years and one (1) day buL noL more Lhan Lwelve (12)
yearsŦ

Any person who shall unlawfully recover or aLLempL Lo recover by dlsLlllaLlon or oLher process any
denaLured alcohol or who knowlngly sells or offers for saleţ conceals or oLherwlse dlsposes of alcohol so
recovered or redlsLllled shall be sub[ecL Lo Lhe same penalLles lmposed under Lhls SecLlonŦ

SLCŦ 262Ŧ ShlpmenL or 8emoval of Llquor or 1obacco ÞroducLs under lalse name or 8rand or as an
lmlLaLlon of any LxlsLlng or CLherwlse known ÞroducL name or 8randŦ Ŵ Any person who shlpsţ
LransporLs or removes splrlLuousţ compounded or fermenLed llquorsţ wlnes or any manufacLured
producLs of Lobacco under any oLher Lhan Lhe proper name or brand known Lo Lhe Lrade as deslgnaLlng
Lhe klnd and quallLy of Lhe conLenLs of Lhe caskţ boLLle or package conLalnlng Lhe same or as an lmlLaLlon
of any exlsLlng or oLherwlse known producL name or brand or causes such acL Lo be doneţ shallţ upon
convlcLlon for each acL or omlsslonţ be punlshed by a flne of noL less Lhan 1wenLy Lhousand pesos
(Þ20ţ000) buL noL more Lhan Cne hundred Lhousand pesos (Þ1000ţ000) and suffer lmprlsonmenL of noL
less Lhan slx (6) years and one (1) day buL noL more Lhan Lwelve (12) yearsŦ

SLCŦ 263Ŧ unlawful Þossesslon or 8emoval of ArLlcles Sub[ecL Lo Lxclse 1ax wlLhouL ÞaymenL of Lhe 1axŦ Ŵ
Any person who owns and/or ls found ln possesslon of lmporLed arLlcles sub[ecL Lo exclse Laxţ Lhe Lax on
whlch has noL been pald ln accordance wlLh lawţ or any person who owns and/or ls found ln possesslon
of lmporLed LaxŴexempL arLlcles oLher Lhan Lhose Lo whom Lhey are legally lssued shall be punlshed byť

(a) A flne of noL less Lhan Cne Lhousand pesos (Þ1ţ000) nor more Lhan 1wo Lhousand pesos (Þ2ţ000) and
suffer lmprlsonmenL of noL less Lhan slxLy (60) days buL noL more Lhan one hundred (100) daysţ lf Lhe
appralsed valueţ Lo be deLermlned ln Lhe manner prescrlbed ln Lhe 1arlff and CusLoms Codeţ lncludlng
duLles and Laxesţ of Lhe arLlcles does noL exceed Cne Lhousand pesos (Þ1ţ000)Ŧ
(b) A flne of noL less Lhan 1en Lhousand pesos (Þ10ţ000) buL noL more Lhan 1wenLy Lhousand pesos
(Þ20ţ000) and suffer lmprlsonmenL of noL less Lhan Lwo (2) years buL noL more Lhan four (4) yearsţ lf Lhe
appralsed valueţ Lo be deLermlned ln Lhe manner prescrlbed ln Lhe 1arlff and CusLoms Codeţ lncludlng
duLles and Laxesţ of Lhe arLlcles exceeds Cne Lhousand pesos (Þ1ţ000) buL does noL exceed llfLy
Lhousand pesos (Þ30ţ000)Ť
(c) A flne of noL less Lhan 1hlrLy Lhousand pesos (Þ30ţ000) buL noL more Lhan SlxLy Lhousand pesos
(Þ60ţ000) and suffer lmprlsonmenL of noL less Lhan four (4) years buL noL more Lhan slx (6) yearsţ lf Lhe
appralsed valueţ Lo be deLermlned ln Lhe manner prescrlbed ln Lhe 1arlff and CusLoms Codeţ lncludlng
duLles and Laxes of Lhe arLlcles ls more Lhan llfLy Lhousand pesos (Þ30ţ000) buL does noL exceed Cne
hundred flfLy Lhousand pesos (Þ130ţ000)Ť or
(d) A flne of noL less Lhan llfLy Lhousand pesos (Þ30ţ000) buL noL more Lhan Cne hundred Lhousand
pesos (Þ100ţ000) and suffer lmprlsonmenL of noL less Lhan Len (10) years buL noL more Lhan Lwelve (12)
yearsţ lf Lhe appralsed valueţ Lo be deLermlned ln Lhe manner prescrlbed ln Lhe 1arlff and CusLoms Codeţ
lncludlng duLles and Laxesţ of Lhe arLlcles exceeds Cne hundred flfLy Lhousand pesos (Þ130ţ000)Ŧ
Any person who ls found ln possesslon of locally manufacLured arLlcles sub[ecL Lo exclse Laxţ Lhe Lax on
whlch has noL been pald ln accordance wlLh lawţ or any person who ls found ln possesslon of such
arLlcles whlch are exempL from exclse Lax oLher Lhan Lhose Lo whom Lhe same ls lawfully lssued shall be
punlshed wlLh a flne of noL less Lhan (10) Llmes Lhe amounL of exclse Lax due on Lhe arLlcles found buL
noL less Lhan llve hundred pesos (Þ300) and suffer lmprlsonmenL of noL less Lhan Lwo (2) years buL noL
more Lhan four (4) yearsŦ
Any manufacLurerţ owner or person ln charge of any arLlcle sub[ecL Lo exclse Lax who removes or allows
or causes Lhe unlawful removal of any such arLlcles from Lhe place of producLlon or bonded warehouseţ
upon whlch Lhe exclse Lax has noL been pald aL Lhe Llme and ln Lhe manner requlredţ and any person
who knowlngly alds or abeLs ln Lhe removal of such arLlcles as aforesaldţ or conceals Lhe same afLer
lllegal removal shallţ for Lhe flrsL offenseţ be punlshed wlLh a flne of noL less Lhan Len (10) Llmes Lhe
amounL of exclse Lax due on Lhe arLlcles buL noL less Lhan Cne Lhousand pesos (Þ1ţ000) and suffer
lmprlsonmenL of noL less Lhan one (1) year buL noL more Lhan Lwo (2) yearsŦ

1he mere unexplalned possesslon of arLlcles sub[ecL Lo exclse Laxţ Lhe Lax on whlch has noL been pald ln
accordance wlLh lawţ shall be punlshable under Lhls SecLlonŦ

SecŦ 264Ŧ lallure or refusal Lo lssue 8ecelpLs or Sales or Commerclal lnvolcesţ vlolaLlons relaLed Lo Lhe
ÞrlnLlng of such 8ecelpLs or lnvolces and CLher vlolaLlonsŦ Ŵ

(a) Any person whoţ belng requlred under SecLlon 237 Lo lssue recelpLs or sales or commerclal lnvolcesţ
falls or refuses Lo lssue such recelpLs of lnvolcesţ lssues recelpLs or lnvolces LhaL do noL Lruly reflecL
and/or conLaln all Lhe lnformaLlon requlred Lo be shown Lherelnţ or uses mulLlple or double recelpLs or
lnvolcesţ shallţ upon convlcLlon for each acL or omlsslonţ be punlshed by a flne of noL less Lhan Cne
Lhousand pesos (Þ1ţ000) buL noL more Lhan llfLy Lhousand pesos (Þ30ţ000) and suffer lmprlsonmenL of
noL less Lhan Lwo (2) years buL noL more Lhan four (4) yearsŦ

(b) Any person who commlLs any of Lhe acLs enumeraLed hereunder shall be penallzed ln Lhe same
manner and Lo Lhe same exLenL as provlded for ln Lhls SecLlonť

(1) ÞrlnLlng of recelpLs or sales or commerclal lnvolces wlLhouL auLhorlLy from Lhe 8ureau of lnLernal
8evenueŤ or
(2) ÞrlnLlng of double or mulLlple seLs of lnvolces or recelpLsŤ or
(3) ÞrlnLlng of unnumbered recelpLs or sales or commerclal lnvolcesţ noL bearlng Lhe nameţ buslness
sLyleţ 1axpayer ldenLlflcaLlon numberţ and buslness address of Lhe person or enLlLyŦ
SLCŦ 263Ŧ Cffenses 8elaLlng Lo SLampsŦ Ŵ Any person who commlLs any of Lhe acLs enumeraLed
hereunder shallţ upon convlcLlon Lhereofţ be punlshed by a flne of noL less Lhan 1wenLy Lhousand pesos
(Þ20ţ000) buL noL more Lhan llfLy Lhousand pesos (Þ30ţ000) and suffer lmprlsonmenL of noL less Lhan
four (4) years buL noL more Lhan elghL (8) yearsť
(a) maklngţ lmporLlngţ selllngţ uslng or possesslng wlLhouL express auLhorlLy from Lhe Commlsslonerţ any
dle for prlnLlng or maklng sLampsţ labelsţ Lags or playlng cardsŤ
(b) Lraslng Lhe cancellaLlon marks of any sLamp prevlously usedţ or alLerlng Lhe wrlLLen flgures or leLLers
or cancellaLlon marks on lnLernal revenue sLampsŤ
(c) Þossesslng falseţ counLerfelLţ resLored or alLered sLampsţ labels or Lags or causlng Lhe commlsslon of
any such offense by anoLherŤ
(d) Selllng or offerlng for sale any box or package conLalnlng arLlcles sub[ecL Lo exclse Lax wlLh falseţ
spurlous or counLerfelL sLamps or labels or selllng from any such fraudulenL boxţ package or conLalner as
aforemenLlonedŤ or
(e) Clvlng away or accepLlng from anoLherţ or selllngţ buylng or uslng conLalners on whlch Lhe sLamps
are noL compleLely desLroyedŦ
SecŦ 266Ŧ lallure Lo Cbey SummonsŦ Ŵ Any person whoţ belng duly summoned Lo appear Lo LesLlfyţ or Lo
appear and produce books of accounLsţ recordsţ memoranda or oLher papersţ or Lo furnlsh lnformaLlon
as requlred under Lhe perLlnenL provlslons of Lhls Codeţ neglecLs Lo appear or Lo produce such books of
accounLsţ recordsţ memoranda or oLher papersţ or Lo furnlsh such lnformaLlonţ shallţ upon convlcLlonţ
be punlshed by a flne of noL less Lhan llve Lhousand pesos (Þ3ţ000) buL noL more Lhan Len Lhousand
pesos (Þ10ţ000) and suffer lmprlsonmenL of noL less Lhan one (1) year buL noL more Lhan Lwo (2) yearsŦ

SLCŦ 267Ŧ ueclaraLlon under ÞenalLles of Þer[uryŦ Ŵ Any declaraLlonţ reLurn and oLher sLaLemenL requlred
under Lhls Codeţ shallţ ln lleu of an oaLhţ conLaln a wrlLLen sLaLemenL LhaL Lhey are made under Lhe
penalLles of per[uryŦ Any person who wlllfully flles a declaraLlonţ reLurn or sLaLemenL conLalnlng
lnformaLlon whlch ls noL Lrue and correcL as Lo every maLerlal maLLer shallţ upon convlcLlonţ be sub[ecL
Lo Lhe penalLles prescrlbed for per[ury under Lhe 8evlsed Þenal CodeŦ

SLCŦ 268Ŧ CLher Crlmes and CffensesŦ Ŵ
(A) MlsdeclaraLlon or MlsrepresenLaLlon of ManufacLurers Sub[ecL Lo Lxclse 1axŦ Ŵ Any manufacLurer
whoţ ln vlolaLlon of Lhe provlslons of 1lLle vl of Lhls Codeţ mlsdeclares ln Lhe sworn sLaLemenL requlred
Lhereln or ln Lhe sales lnvolceţ any perLlnenL daLa or lnformaLlon shall be punlshed by a summary
cancellaLlon or wlLhdrawal of Lhe permlL Lo engage ln buslness as a manufacLurer of arLlcles sub[ecL Lo
exclse LaxŦ

(8) lorfelLure of ÞroperLy used ln unllcensed 8uslness or ules used for ÞrlnLlng lalse SLampsţ LLcŦ Ŵ All
chaLLelsţ machlneryţ and removable flxLures of any sorL used ln Lhe unllcensed producLlon of arLlcles
sub[ecL Lo exclse Lax shall be forfelLedŦ ules and oLher equlpmenL used for Lhe prlnLlng or maklng of any
lnLernal revenue sLampţ label or Lag whlch ls ln lmlLaLlon of or purporLs Lo be a lawful sLampţ label or Lag
shall also be forfelLedŦ

(C) lorfelLure of Coods lllegally SLored or 8emovedŦ Ŵ unless oLherwlse speclflcally auLhorlzed by Lhe
Commlsslonerţ all arLlcles sub[ecL Lo exclse Lax should noL be sLored or allowed Lo remaln ln Lhe dlsLlllery
warehouseţ bonded warehouse or oLher place where madeţ afLer Lhe Lax Lhereon has been paldŤ
oLherwlseţ all such arLlcles shall be forfelLedŦ ArLlcles wlLhdrawn from any such place or from cusLoms
cusLody or lmporLed lnLo Lhe counLry wlLhouL Lhe paymenL of Lhe requlred Lax shall llkewlse be
forfelLedŦ


CPAÞ1L8 lll
ÞLnAL1lLS lMÞCSLu Cn Þu8LlC ClllCL8S

SLCŦ 269Ŧ vlolaLlons CommlLLed by CovernmenL LnforcemenL CfflcersŦ Ŵ Lvery offlclalţ agenLţ or
employee of Lhe 8ureau of lnLernal 8evenue or any oLher agency of Lhe CovernmenL charged wlLh Lhe
enforcemenL of Lhe provlslons of Lhls Codeţ who ls gullLy of any of Lhe offenses hereln below speclfled
shallţ upon convlcLlon for each acL or omlsslonţ be punlshed by a flne of noL less Lhan llfLy Lhousand
pesos (Þ30ţ000) buL noL more Lhan Cne hundred Lhousand pesos (Þ100ţ000) and suffer lmprlsonmenL of
noL less Lhan Len (10) years buL noL more Lhan flfLeen (13) years and shall llkewlse suffer an addlLlonal
penalLy of perpeLual dlsquallflcaLlon Lo hold publlc offlceţ Lo voLeţ and Lo parLlclpaLe ln any publlc
elecLlonť

(a) LxLorLlon or wlllful oppresslon Lhrough Lhe use of hls offlce or wlllful oppresslon and harassmenL of a
Laxpayer who refusedţ decllnedţ Lurned down or re[ecLed any of hls offers speclfled ln paragraph (d)
hereofŤ
(b) knowlngly demandlng or recelvlng any feeţ oLher or greaLer sums LhaL are auLhorlzed by law or
recelvlng any feeţ compensaLlon or rewardţ excepL as by law prescrlbedţ for Lhe performance of any
duLyŤ
(c) Wlllfully neglecLlng Lo glve recelpLsţ as by law requlredţ for any sum collecLed ln Lhe performance of
duLy or wlllfully neglecLlng Lo perform any oLher duLles en[olned by lawŤ
(d) Cfferlng or underLaklng Lo accompllshţ flle or submlL a reporL or assessmenL on a Laxpayer wlLhouL
Lhe approprlaLe examlnaLlon of Lhe books of accounLs or Lax llablllLyţ or offerlng or underLaklng Lo
submlL a reporL or assessmenL less Lhan Lhe amounL due Lhe CovernmenL for any conslderaLlon or
compensaLlonţ or consplrlng or colludlng wlLh anoLher or oLhers Lo defraud Lhe revenues or oLherwlse
vlolaLe Lhe provlslons of Lhls CodeŤ
(e) neglecLlng or by deslgn permlLLlng Lhe vlolaLlon of Lhe law by any oLher personŤ
(f) Maklng or slgnlng any false enLry or enLrles ln any bookţ or maklng or slgnlng any false cerLlflcaLe or
reLurnŤ
(g) Allowlng or consplrlng or colludlng wlLh anoLher Lo allow Lhe unauLhorlzed reLrlevalţ wlLhdrawal or
recall of any reLurnţ sLaLemenL or declaraLlon afLer Lhe same has been offlclally recelved by Lhe 8ureau
of lnLernal 8evenueŤ

(h) Pavlng knowledge or lnformaLlon of any vlolaLlon of Lhls Code or of any fraud commlLLed on Lhe
revenues collecLlble by Lhe 8ureau of lnLernal 8evenueţ fallure Lo reporL such knowledge or lnformaLlon
Lo Lhelr superlor offlcerţ or fallure Lo reporL as oLherwlse requlred by lawŤ and

(l) WlLhouL Lhe auLhorlLy of lawţ demandlng or accepLlng or aLLempLlng Lo collecLţ dlrecLly or lndlrecLlyţ
as paymenL or oLherwlse any sum of money or oLher Lhlng of value for Lhe compromlseţ ad[usLmenL or
seLLlemenL of any charge or complalnL for any vlolaLlon or alleged vlolaLlon of Lhls CodeŦ
Þrovldedţ 1haL Lhe provlslons of Lhe foregolng paragraph noLwlLhsLandlngţ any lnLernal revenue offlcer
for whlch a prlma facle case of grave mlsconducL has been esLabllshed shallţ afLer due noLlce and
hearlng of Lhe admlnlsLraLlve case and sub[ecL Lo Clvll Servlce Lawsţ be dlsmlssed from Lhe revenue
servlceť Þrovldedţ furLherţ 1haL Lhe Lerm ƍgrave mlsconducLƍţ as deflned ln Clvll Servlce Lawţ shall
lnclude Lhe lssuance of fake leLLers of auLhorlLy and recelpLsţ forgery of slgnaLureţ usurpaLlon of
auLhorlLy and hablLual lssuance of unreasonable assessmenLsŦ

SLCŦ 270Ŧ unlawful ulvulgence of 1rade SecreLsŦ Ŵ LxcepL as provlded ln SecLlon 71 of Lhls Code and
SecLlon 26 of 8epubllc AcL noŦ 6388ţ any offlcer or employee of Lhe 8ureau of lnLernal 8evenue who
dlvulges Lo any person or makes known ln any oLher manner Lhan may be provlded by law lnformaLlon
regardlng Lhe buslnessţ lncome or esLaLe of any Laxpayerţ Lhe secreLsţ operaLlonţ sLyle or workţ or
apparaLus of any manufacLurer or producerţ or confldenLlal lnformaLlon regardlng Lhe buslness of any
Laxpayerţ knowledge of whlch was acqulred by hlm ln Lhe dlscharge of hls offlclal duLlesţ shall upon
convlcLlon for each acL or omlsslonţ be punlshed by a flne of noL less Lhan llfLy Lhousand pesos
(Þ30ţ000) buL noL more Lhan Cne hundred Lhousand pesos (Þ100ţ000)ţ or suffer lmprlsonmenL of noL
less Lhan Lwo (2) years buL noL more Lhan flve (3) yearsţ or boLhŦ

SLCŦ 271Ŧ unlawful lnLeresL of 8evenue Law Lnforcers ln 8uslnessŦ Ŵ Any lnLernal revenue offlcer who ls
or shall become lnLeresLedţ dlrecLly or lndlrecLlyţ ln Lhe manufacLureţ sale or lmporLaLlon of any arLlcle
sub[ecL Lo exclse Lax under 1lLle vl of Lhls Code or ln Lhe manufacLure or repalr or saleţ of any dle for
prlnLlngţ or maklng of sLampsţ or labels shall upon convlcLlon for each acL or omlsslonţ be punlshed by a
flne of noL less Lhan llve Lhousand pesos (Þ3ţ000) buL noL more Lhan 1en Lhousand pesos (Þ10ţ000)ţ or
suffer lmprlsonmenL of noL less Lhan Lwo (2) years and one (1) day buL noL more Lhan four (4) yearsţ or
boLhŦ

SLCŦ 272Ŧ vlolaLlon of WlLhholdlng 1ax ÞrovlslonŦ Ŵ Lvery offlcer or employee of Lhe CovernmenL of Lhe
8epubllc of Lhe Þhlllpplnes or any of lLs agencles and lnsLrumenLallLlesţ lLs pollLlcal subdlvlslonsţ as well
as governmenLŴowned or conLrolled corporaLlonsţ lncludlng Lhe 8angko SenLral ng Þlllplnas (8SÞ)ţ whoţ
under Lhe provlslons of Lhls Code or rules and regulaLlons promulgaLed Lhereunderţ ls charged wlLh Lhe
duLy Lo deducL and wlLhhold any lnLernal revenue Lax and Lo remlL Lhe same ln accordance wlLh Lhe
provlslons of Lhls Code and oLher laws ls gullLy of any offense hereln below speclfled shallţ upon
convlcLlon for each acL or omlsslon be punlshed by a flne of noL less Lhan llve Lhousand pesos (Þ3ţ000)
buL noL more Lhan llfLy Lhousand pesos (Þ30ţ000) or suffer lmprlsonmenL of noL less Lhan slx (6) monLhs
and one (1) day buL noL more Lhan Lwo (2) yearsţ or boLhť
(a) lalllng or causlng Lhe fallure Lo deducL and wlLhhold any lnLernal revenue Lax under any of Lhe
wlLhholdlng Lax laws and lmplemenLlng rules and regulaLlonsŤ
(b) lalllng or causlng Lhe fallure Lo remlL Laxes deducLed and wlLhheld wlLhln Lhe Llme prescrlbed by lawţ
and lmplemenLlng rules and regulaLlonsŤ and
(c) lalllng or causlng Lhe fallure Lo flle reLurn or sLaLemenL wlLhln Lhe Llme prescrlbedţ or renderlng or
furnlshlng a false or fraudulenL reLurn or sLaLemenL requlred under Lhe wlLhholdlng Lax laws and rules
and regulaLlonsŦ
SLCŦ 273Ŧ ÞenalLy for lallure Lo lssue and LxecuLe WarranLŦ Ŵ Any offlclal who falls Lo lssue or execuLe Lhe
warranL of dlsLralnL or levy wlLhln LhlrLy (30) days afLer Lhe explraLlon of Lhe Llme prescrlbed ln SecLlon
207 or who ls found gullLy of abuslng Lhe exerclse Lhereof by compeLenL auLhorlLy shall be auLomaLlcally
dlsmlssed from Lhe servlce afLer due noLlce and hearlngŦ

CPAÞ1L8 lv
C1PL8 ÞLnAL Þ8CvlSlCnS

SLCŦ 274Ŧ ÞenalLy for Second and SubsequenL CffensesŦ Ŵ ln Lhe case of relncldenceţ Lhe maxlmum of Lhe
penalLy prescrlbed for Lhe offense shall be lmposedŦ

SLCŦ 273Ŧ vlolaLlon of CLher Þrovlslons of Lhls Code or 8ules and 8egulaLlons ln CeneralŦ Ŵ Any person
who vlolaLes any provlslon of Lhls Code or any rule or regulaLlon promulgaLed by Lhe ueparLmenL of
llnanceţ for whlch no speclflc penalLy ls provlded by lawţ shallţ upon convlcLlon for each acL or omlsslonţ
be punlshed by a flne of noL more Lhan Cne Lhousand pesos (Þ1ţ000) or suffer lmprlsonmenL of noL
more Lhan slx (6) monLhsţ or boLhŦ

SLCŦ 276Ŧ ÞenalLy for Selllngţ 1ransferrlngţ Lncumberlng or ln Any Way ulsposlng of ÞroperLy Þlaced
under ConsLrucLlve ulsLralnLŦ Ŵ Any Laxpayerţ whose properLy has been placed under consLrucLlve
dlsLralnLţ who sellsţ Lransfersţ encumbers or ln any way dlsposes of sald properLyţ or any parL Lhereofţ
wlLhouL Lhe knowledge and consenL of Lhe Commlsslonerţ shallţ upon convlcLlon for each acL or
omlsslonţ be punlshed by a flne of noL less Lhan Lwlce Lhe value of Lhe properLy so soldţ encumbered or
dlsposed of buL noL less Lhan llve 1housand pesos (Þ3ţ000)ţ or suffer lmprlsonmenL of noL less Lhan Lwo
(2) years and one (1) day buL noL more Lhan four (4) yearsţ of boLhŦ

SLCŦ 277Ŧ lallure Lo Surrender ÞroperLy Þlaced under ulsLralnL and LevyŦ Ŵ Any person havlng ln hls
possesslon or under hls conLrol any properLy or rlghLs Lo properLyţ upon whlch a warranL of consLrucLlve
dlsLralnLţ or acLual dlsLralnL and levy has been lssued shallţ upon demand by Lhe Commlssloner or any of
hls depuLles execuLlng such warranLţ surrender such properLy or rlghL Lo properLy Lo Lhe Commlssloner
or any of hls depuLlesţ unless such properLy or rlghL lsţ aL Lhe Llme of such demandţ sub[ecL Lo an
aLLachmenL or execuLlon under any [udlclal processŦ Any person who falls or refuses Lo surrender any of
such properLy or rlghL shall be llable ln hls own person and esLaLe Lo Lhe CovernmenL ln a sum equal Lo
Lhe value of Lhe properLy or rlghLs noL so surrendered buL noL exceedlng Lhe amounL of Lhe Laxes
(lncludlng penalLles and lnLeresL) for Lhe collecLlon of whlch such warranL had been lssuedţ LogeLher
wlLh cosL and lnLeresL lf anyţ from Lhe daLe of such warranLŦ ln addlLlonţ such person shallţ upon
convlcLlon for each acL or omlsslonţ be punlshed by a flne of noL less Lhan llve Lhousand pesos (Þ3ţ000)ţ
or suffer lmprlsonmenL of noL less Lhan slx (6) monLhs and one (1) day buL noL more Lhan Lwo (2) yearsţ
or boLhŦ

SLCŦ 278Ŧ Þrocurlng unlawful ulvulgence of 1rade SecreLsŦ Ŵ Any person who causes or procures an
offlcer or employee of Lhe 8ureau of lnLernal 8evenue Lo dlvulge any confldenLlal lnformaLlon regardlng
Lhe buslnessţ lncome or lnherlLance of any Laxpayerţ knowledge of whlch was acqulred by hlm ln Lhe
dlscharge of hls offlclal duLlesţ and whlch lL ls unlawful for hlm Lo revealţ and any person who publlshes
or prlnLs ln any manner whaLeverţ noL provlded by lawţ any lncomeţ proflLţ loss or expendlLure
appearlng ln any lncome Lax reLurnţ shall be punlshed by a flne of noL more Lhan 1wo Lhousand pesos
(Þ2ţ000)ţ or suffer lmprlsonmenL of noL less Lhan slx (6) monLhs nor more Lhan flve (3) yearsţ or boLhŦ

SLCŦ 279Ŧ ConflscaLlon and lorfelLure of Lhe Þroceeds or lnsLrumenLs of CrlmeŦ Ŵ ln addlLlon Lo Lhe
penalLy lmposed for Lhe vlolaLlon of Lhe provlslons of 1lLle x of Lhls Codeţ Lhe same shall carry wlLh lL Lhe
conflscaLlon and forfelLure ln favor of Lhe governmenL of Lhe proceeds of Lhe crlme or value of Lhe
goodsţ and Lhe lnsLrumenLs or Lools wlLh whlch Lhe crlme was commlLLedť Þrovldedţ howeverţ 1haL lf ln
Lhe course of Lhe proceedlngsţ lL ls esLabllshed LhaL Lhe lnsLrumenLs or Lools used ln Lhe llllclL acL belong
Lo a Lhlrd personţ Lhe same shall be conflscaLed and forfelLed afLer due noLlce and hearlng ln a separaLe
proceedlng ln favor of Lhe CovernmenL lf such Lhlrd person leasedţ leLţ charLered or oLherwlse enLrusLed
Lhe same Lo Lhe offenderť Þrovldedţ furLherţ 1haL ln case Lhe lessee subleasedţ or Lhe borrowerţ
charLererţ or LrusLee allowed Lhe use of Lhe lnsLrumenLs or Lools Lo Lhe offenderţ such lnsLrumenLs or
Lools shallţ llkewlseţ be conflscaLed and forfelLedť Þrovldedţ flnallyţ 1haL properLy of common carrlers
shall noL be sub[ecL Lo forfelLure when used ln Lhe LransacLlon of Lhelr buslness as such common carrlerţ
unless Lhe owner or operaLor of sald common carrler wasţ aL Lhe Llme of Lhe lllegal acLţ a consenLlng
parLy or prlvy LhereLoţ wlLhouL pre[udlce Lo Lhe ownerƌs rlghL of recovery agalnsL Lhe offender ln a clvll
or crlmlnal acLlonŦ ArLlcles whlch are noL sub[ecL of lawful commerce shall be desLroyedŦ

SLCŦ 280Ŧ Subsldlary ÞenalLyŦ Ŵ lf Lhe person convlcLed for vlolaLlon of any of Lhe provlslons of Lhls Code
has no properLy wlLh whlch Lo meeL Lhe flne lmposed upon hlm by Lhe courLţ or ls unable Lo pay such
flneţ he shall be sub[ecL Lo a subsldlary personal llablllLy aL Lhe raLe of one (1) day for each LlghL pesos
and flfLy cenLavos (Þ8Ŧ30) sub[ecL Lo Lhe rules esLabllshed ln ArLlcle 39 of Lhe 8evlsed Þenal CodeŦ

SLCŦ 281Ŧ ÞrescrlpLlon for vlolaLlons of any Þrovlslon of Lhls CodeŦ Ŵ All vlolaLlons of any provlslon of Lhls
Code shall prescrlbe afLer llve (3) yearsŦ

ÞrescrlpLlon shall begln Lo run from Lhe day of Lhe commlsslon of Lhe vlolaLlon of Lhe lawţ and lf Lhe
same be noL known aL Lhe Llmeţ from Lhe dlscovery Lhereof and Lhe lnsLlLuLlon of [udlclal proceedlngs
for lLs lnvesLlgaLlon and punlshmenLŦ

1he prescrlpLlon shall be lnLerrupLed when proceedlngs are lnsLlLuLed agalnsL Lhe gullLy persons and
shall begln Lo run agaln lf Lhe proceedlngs are dlsmlssed for reasons noL consLlLuLlng [eopardyŦ

1he Lerm of prescrlpLlon shall noL run when Lhe offender ls absenL from Lhe ÞhlllpplnesŦ

SLCŦ 282Ŧ lnformerƌs 8eward Lo Þersons lnsLrumenLal ln Lhe ulscovery of vlolaLlons of Lhe naLlonal
lnLernal 8evenue Code and ln Lhe ulscovery and Selzure of Smuggled CoodsŦ Ŵ

(A) lor vlolaLlons of Lhe naLlonal lnLernal 8evenue CodeŦ Ŵ Any personţ excepL an lnLernal revenue
offlclal or employeeţ or oLher publlc offlclal or employeeţ or hls relaLlve wlLhln Lhe slxLh degree of
consangulnlLyţ who volunLarlly glves deflnlLe and sworn lnformaLlonţ noL yeL ln Lhe possesslon of Lhe
8ureau of lnLernal 8evenueţ leadlng Lo Lhe dlscovery of frauds upon Lhe lnLernal revenue laws or
vlolaLlons of any of Lhe provlslons Lhereofţ Lhereby resulLlng ln Lhe recovery of revenuesţ surcharges and
fees and/or Lhe convlcLlon of Lhe gullLy parLy and/or Lhe lmposlLlon of any of Lhe flne or penalLyţ shall be
rewarded ln a sum equlvalenL Lo Len percenL (10Ʒ) of Lhe revenuesţ surcharges or fees recovered
and/or flne or penalLy lmposed and collecLed or Cne Mllllon Þesos (Þ1ţ000ţ000) per caseţ whlchever ls
lowerŦ 1he same amounL of reward shall also be glven Lo an lnformer where Lhe offender has offered Lo
compromlse Lhe vlolaLlon of law commlLLed by hlm and hls offer has been accepLed by Lhe
Commlssloner and collecLed from Lhe offenderť Þrovldedţ 1haL should no revenueţ surcharges or fees be
acLually recovered or collecLedţ such person shall noL be enLlLled Lo a rewardť Þrovldedţ furLherţ 1haL Lhe
lnformaLlon menLloned hereln shall noL refer Lo a case already pendlng or prevlously lnvesLlgaLed or
examlned by Lhe Commlssloner or any of hls depuLlesţ agenLs or examlnersţ or Lhe SecreLary of llnance
or any of hls depuLles or agenLsť Þrovldedţ flnallyţ 1haL Lhe reward provlded hereln shall be pald under
rules and regulaLlons lssued by Lhe SecreLary of llnanceţ upon recommendaLlon of Lhe CommlsslonerŦ

(8) lor ulscovery and Selzure of Smuggled CoodsŦ Ŵ 1o encourage Lhe publlc Lo exLend full cooperaLlon ln
eradlcaLlng smuggllngţ a cash reward equlvalenL Lo Len percenL (10Ʒ) of Lhe falr markeL value of Lhe
smuggled and conflscaLed goods or Cne Mllllon Þesos (Þ1ţ000ţ000) per caseţ whlchever ls lowerţ shall be
glven Lo persons lnsLrumenLal ln Lhe dlscovery and selzure of such smuggled goodsŦ

1he cash rewards of lnformers shall be sub[ecL Lo lncome Laxţ collecLed as a flnal wlLhholdlng Laxţ aL a
raLe of Len percenL (10Ʒ)Ŧ

1he provlslons of Lhe foregolng SubsecLlons noLwlLhsLandlngţ all publlc offlclalsţ wheLher lncumbenL or
reLlredţ who acqulred Lhe lnformaLlon ln Lhe course of Lhe performance of Lhelr duLles durlng Lhelr
lncumbencyţ are prohlblLed from clalmlng lnformerƌs rewardŦ

1l1LL xl
ALLC1MLn1 Cl ln1L8nAL 8LvLnuL

CPAÞ1L8 l
ulSÞCSl1lCn Anu ALLC1MLn1 Cl nA1lCnAL ln1L8nAL 8LvLnuL ln CLnL8AL

SLCŦ 283Ŧ ulsposlLlon of naLlonal lnLernal 8evenueŦ Ŵ naLlonal lnLernal revenue collecLed and noL applled
as hereln above provlded or oLherwlse speclally dlsposed of by law shall accrue Lo Lhe naLlonal 1reasury
and shall be avallable for Lhe general purposes of Lhe CovernmenLţ wlLh Lhe excepLlon of Lhe amounLs
seL aparL by way of alloLmenL as provlded for under 8epubllc AcL noŦ 7160ţ oLherwlse known as Lhe
Local CovernmenL Code of 1991Ŧ

ln addlLlon Lo Lhe lnLernal revenue alloLmenL as provlded for ln Lhe precedlng paragraphţ flfLy percenL
(30Ʒ) of Lhe naLlonal Laxes collecLed under SecLlons 106ţ 108 and 116 of Lhls Code ln excess of Lhe
lncrease ln collecLlons for Lhe lmmedlaLely precedlng year shall be dlsLrlbuLed as followsť

(a) 1wenLy percenL (20Ʒ) shall accrue Lo Lhe clLy or munlclpallLy where such Laxes are collecLed and shall
be allocaLed ln accordance wlLh SecLlon 130 of 8epubllc AcL noŦ 7160ţ oLherwlse known as Lhe Local
CovernmenL Code of 1991Ť and
(b) LlghLy percenL (80Ʒ) shall accrue Lo Lhe naLlonal CovernmenLŦ
SLCŦ 284Ŧ AlloLmenL for Lhe Commlsslon on AudlLŦ Ŵ CneŴhalf of one percenL (1/2 of 1Ʒ) of Lhe
collecLlons from Lhe naLlonal lnLernal revenue Laxes noL oLherwlse accrulng Lo speclal accounLs ln Lhe
general fund of Lhe naLlonal governmenL shall accrue Lo Lhe Commlsslon on AudlL as a fee for audlLlng
servlces rendered Lo local governmenL unlLsţ excludlng malnLenanceţ equlpmenLţ and oLher operaLlng
expenses as provlded for ln SecLlon 21 of ÞresldenLlal uecree noŦ 898Ŧ
1he SecreLary of llnance ls hereby auLhorlzed Lo deducL from Lhe monLhly lnLernal revenue Lax
collecLlons an amounL equlvalenL Lo Lhe percenLage as hereln flxedţ and Lo remlL Lhe same dlrecLly Lo
Lhe Commlsslon on AudlL under such rules and regulaLlons as may be promulgaLed by Lhe SecreLary of
llnance and Lhe Chalrman of Lhe Commlsslon on AudlLŦ

SLCŦ 283Ŧ AlloLmenL for Lhe 8ureau of lnLernal 8evenueŦ Ŵ An amounL equlvalenL Lo flve percenL (3Ʒ) of
Lhe excess of acLual collecLlons of naLlonal lnLernal revenue Laxes over Lhe collecLlon goal shall accrue Lo
Lhe speclal fund of Lhe 8ureau of lnLernal 8evenue and shall be LreaLed as recelpLs auLomaLlcally
approprlaLedŦ Sald amounL shall be uLlllzed as lncenLlve bonus for revenue personnelţ purchase of
necessary equlpmenL and faclllLles for Lhe lmprovemenL of Lax admlnlsLraLlonţ as approved by Lhe
Commlsslonerť Þrovldedţ 1haL Lhe ÞresldenL mayţ upon recommendaLlon of Lhe Commlsslonerţ dlrecL
LhaL Lhe excess be credlLed Lo a Speclal AccounL ln Lhe naLlonal 1reasury Lo be held ln Lhe reserve
avallable for dlsLrlbuLlon as lncenLlve bonus ln Lhe subsequenL yearsŦ

1he SecreLary of llnance ls hereby auLhorlzed Lo Lransfer from Lhe 1reasury an amounL equlvalenL Lo Lhe
percenLage as hereln flxed and Lo remlL Lhe same dlrecLly Lo Lhe 8ureau of lnLernal 8evenue under such
rules and regulaLlons as may be promulgaLed by Lhe SecreLary of llnanceŦ

CPAÞ1L8 ll
SÞLClAL ulSÞCSl1lCn Cl CL81Aln nA1lCnAL ln1L8nAL 8LvLnuL 1AxLS

SLCŦ 286Ŧ ulsposlLlon of Þroceeds of lnsurance Þremlum 1axŦ Ŵ 1wenLyŴflve percenL (23Ʒ) of Lhe
premlum Lax collecLed under SecLlon 123 of Lhls Code shall accrue Lo Lhe lnsurance lund as
conLemplaLed ln SecLlon 418 of ÞresldenLlal uecree noŦ 612 whlch shall be used for Lhe purpose of
defraylng Lhe expenses of Lhe lnsurance CommlsslonŦ 1he Commlssloner shall Lurn over and dellver Lhe
sald lnsurance lund Lo Lhe lnsurance Commlssloner as soon as Lhe collecLlon ls madeŦ

SLCŦ 287Ŧ Shares of Local CovernmenL unlLs ln Lhe Þroceeds from Lhe uevelopmenL and uLlllzaLlon of
Lhe naLlonal WealLhŦ Ŵ Local CovernmenL unlLs shall have an equlLable share ln Lhe proceeds derlved
from Lhe uLlllzaLlon and developmenL of Lhe naLlonal wealLhţ wlLhln Lhelr respecLlve areasţ lncludlng
sharlng Lhe same wlLh Lhe lnhablLanLs by way of dlrecL beneflLsŦ

(A) AmounL of Share of Local CovernmenL unlLsŦ Ŵ Local governmenL unlLs shallţ ln addlLlon Lo Lhe
lnLernal revenue alloLmenLţ have a share of forLy percenL (40Ʒ) of Lhe gross collecLlon derlved by Lhe
naLlonal governmenL from Lhe precedlng flscal year from exclse Laxes on mlneral producLsţ royalLlesţ
and such oLher Laxesţ fees or chargesţ lncludlng relaLed surchargesţ lnLeresLs or flnesţ and from lLs share
ln any coŴproducLlonţ [olnL venLure or producLlon sharlng agreemenL ln Lhe uLlllzaLlon and developmenL
of Lhe naLlonal wealLh wlLhln Lhelr LerrlLorlal [urlsdlcLlonŦ

(8) Share of Lhe Local CovernmenLs from Any CovernmenL Agency or CovernmenLŴCwned or ConLrolled
CorporaLlonŦ Ŵ Local CovernmenL unlLs shall have a shareţ based on Lhe precedlng flscal yearţ from Lhe
proceeds derlved by any governmenL agency or governmenLŴowned or conLrolled corporaLlon engaged
ln Lhe uLlllzaLlon and developmenL of Lhe naLlonal wealLh based on Lhe followlng formulaţ whlchever wlll
produce a hlgher share for Lhe local governmenL unlLť

(1) Cne percenL (1Ʒ) of Lhe gross sales or recelpLs of Lhe precedlng calendar yearţ or
(2) lorLy percenL (40Ʒ) of Lhe exclse Laxes on mlneral producLsţ royalLlesţ and such oLher Laxesţ fees or
chargesţ lncludlng relaLed surchargesţ lnLeresLs or flnes Lhe governmenL agency or governmenLŴowned
or ŴconLrolled corporaLlons would have pald lf lL were noL oLherwlse exempLŦ
(C) AllocaLlon of SharesŦ Ŵ 1he share ln Lhe precedlng SecLlon shall be dlsLrlbuLed ln Lhe followlng
mannerť
(1) Where Lhe naLural resources are locaLed ln Lhe provlnceť
(a) Þrovlnce Ŵ LwenLy percenL (20Ʒ)
(b) ComponenL clLy/munlclpallLy Ŵ forLyŴflve percenL (43Ʒ)Ť and
(c) 8arangay Ŵ LhlrLyŴflve percenL (33Ʒ)
Þrovldedţ howeverţ 1haL where Lhe naLural resources are locaLed ln Lwo (2) or more clLlesţ Lhe allocaLlon
of shares shall be based on Lhe formula on populaLlon and land area as speclfled ln subsecLlon (C)(1)
hereofŦ
(2) Where Lhe naLural resources are locaLed ln a hlghly urbanlzed or lndependenL componenL clLyť
(a) ClLy Ŵ slxLy Ŵ flve percenL (63Ʒ)Ť and
(b) 8arangay Ŵ LhlrLy Ŵ flve percenL (33Ʒ)
Þrovldedţ howeverţ 1haL where Lhe naLural resources are locaLed ln Lwo (2) or more clLlesţ Lhe allocaLlon
of shares shall be based on Lhe formula on populaLlon and land area as speclfled ln subsecLlon (c)(1)
hereofŦ

SLCŦ 288Ŧ ulsposlLlon of lncremenLal 8evenuesŦ Ŵ
(A) lncremenLal 8evenues from 8epubllc AcL noŦ 7660Ŧ Ŵ 1he lncremenLal revenues from Lhe lncrease ln
Lhe documenLary sLamp Laxes under 8ŦAŦ noŦ 7660 shall be seL aslde for Lhe followlng purposesť

(1) ln 1994 and 1993ţ LwenLy flve percenL (23Ʒ) Lhereof respecLlvelyţ shall accrue Lo Lhe unlfled PomeŴ
Lendlng Þrogram under LxecuLlve Crder noŦ 90 parLlcularly for mass soclallzed houslng program Lo be
allocaLed as followsť flfLy percenL (30Ʒ) for massŴsoclallzed houslngŤ LhlrLy percenL (30Ʒ) for Lhe
communlLy morLgage programŤ and LwenLy percenL (20Ʒ) for land banklng and developmenL Lo be
admlnlsLered by Lhe naLlonal Pouslng AuLhorlLyť Þrovldedţ 1haL no more Lhan one percenL (1Ʒ) of Lhe
respecLlve allocaLlons hereof shall be used for admlnlsLraLlve expensesŤ
(2) ln 1996ţ LwenLy flve percenL (23Ʒ) Lhereof Lo be uLlllzed for Lhe naLlonal PealLh lnsurance Þrogram
LhaL hereafLer may be mandaLed by lawŤ
(3) ln 1994 and every year LhereafLerţ LwenLy flve percenL (23Ʒ) Lhereof shall accrue Lo a Speclal
LducaLlon lund Lo be AdmlnlsLered by Lhe ueparLmenL of LducaLlonţ CulLure and SporLs for Lhe
consLrucLlon and repalr of school faclllLlesţ Lralnlng or Leachersţ and procuremenL or producLlon of
lnsLrucLlonal maLerlals and Leachlng aldsŤ and
(4) ln 1994 and every year LhereafLerţ flfLy percenL (30Ʒ) Lhereof shall accrue Lo a Speclal lnfrasLrucLure
lund for Lhe ConsLrucLlon and repalr of roadsţ brldgesţ dams and lrrlgaLlonţ seaporLs and hydroelecLrlc
and oLher lndlgenous power pro[ecLsť howeverţ 1haL for Lhe years 1994 and 1993ţ LhlrLy percenL (30Ʒ)ţ
and for Lhe years 1996ţ 1997 and 1998ţ LwenLy percenL (20Ʒ)ţ of Lhls fund shall be allocaLed for
depressed provlnces as declared by Lhe ÞresldenL as of Lhe Llme of Lhe effecLlvlLy of 8Ŧ AŦ noŦ 7660ť
Þrovldedţ furLherţ 1haL avallmenLs under Lhls fund shall be deLermlned by Lhe ÞresldenL on Lhe basls of
equlLyŦ
Þrovldedţ flnallyţ 1haL ln paragraphs (2)ţ (3)ţ and (4) of Lhls SecLlonţ noL more one percenL (1Ʒ) of Lhe
allocaLed funds Lhereof shall be used for admlnlsLraLlve expenses by Lhe lmplemenLlng agenclesŦ
(8) lncremenLal 8evenues from 8epubllc AcL noŦ 8240Ŧ Ŵ llfLeen percenL (13Ʒ) of Lhe lncremenLal
revenue collecLed from Lhe exclse Lax on Lobacco producLs under 8Ŧ AŦ noŦ 8240 shall be allocaLed and
dlvlded among Lhe provlnces produclng burley and naLlve Lobacco ln accordance wlLh Lhe volume of
Lobacco leaf producLlonŦ 1he fund shall be excluslvely uLlllzed for programs ln pursulL of Lhe followlng
ob[ecLlvesť

(1) CooperaLlve pro[ecLs LhaL wlll enhance beLLer quallLy of agrlculLural producLs and lncrease lncome
and producLlvlLy of farmersŤ
(2) Llvellhood pro[ecLsţ parLlcularly Lhe developmenL of alLernaLlve farmlng sysLem Lo enhance farmerƌs
lncomeŤ and
(3) AgroŴlndusLrlal pro[ecLs LhaL wlll enable Lobacco farmers Lo be lnvolved ln Lhe managemenL and
subsequenL ownershlp of pro[ecLsţ such as posLŴharvesL and secondary processlng llke clgareLLe
manufacLurlng and byŴproducL uLlllzaLlonŦ
1he ueparLmenL of 8udgeL and ManagemenLţ ln consulLaLlon wlLh Lhe CverslghL CommlLLee creaLed
under sald 8ŦAŦ noŦ 8240ţ shall lssue Lhe correspondlng rules and regulaLlons governlng Lhe allocaLlon
and dlsbursemenL of Lhls fundŦ

SLCŦ 289Ŧ Speclal llnanclal SupporL Lo 8eneflclary Þrovlnces Þroduclng vlrglnla 1obaccoŦ Ŵ 1he flnanclal
supporL glven by Lhe naLlonal CovernmenL for Lhe beneflclary provlnces shall be consLlLuLed and
collecLed from Lhe proceeds of flfLeen percenL (13Ʒ) of Lhe exclse Laxes on locally manufacLured
vlrglnlaŴLype of clgareLLesŦ
1he funds alloLLed shall be dlvlded among Lhe beneflclary provlnces proŴraLa accordlng Lo Lhe volume of
vlrglnla Lobacco producLlonŦ

ÞroducLlon produclng vlrglnla Lobacco shall be Lhe beneflclary provlnces under 8epubllc AcL noŦ 7171Ŧ
Þrovldedţ howeverţ LhaL Lo quallfy as beneflclary under 8Ŧ AŦ noŦ 7171ţ a provlnce musL have an average
annual producLlon of vlrglnla leaf Lobacco ln an amounL noL less Lhan one mllllon kllosť Þrovldedţ
furLherţ LhaL Lhe ueparLmenL of 8udgeL and ManagemenL (u8M) shall each year deLermlne Lhe
beneflclary provlnces and Lhelr compuLed share of Lhe funds under 8Ŧ AŦ noŦ 7171ţ referrlng Lo Lhe
naLlonal 1obacco AdmlnlsLraLlon (n1A) records of Lobacco accepLancesţ aL Lhe Lobacco Lradlng cenLers
for Lhe lmmedlaLe pasL yearŦ

1he SecreLary of 8udgeL and ManagemenL ls hereby dlrecLed Lo reLaln annually Lhe sald funds
equlvalenL Lo flfLeen percenL (13Ʒ) of exclse Laxes on locally manufacLured vlrglnla Lype clgareLLes Lo be
remlLLed Lo Lhe beneflclary provlnces quallfled under 8Ŧ AŦ noŦ 7171Ŧ

1he provlslon of exlsLlng laws Lo Lhe conLrary noLwlLhsLandlngţ Lhe flfLeen percenL (13Ʒ) share from
governmenL revenues menLloned ln 8Ŧ AŦ noŦ 7171 and due Lo Lhe vlrglnla LobaccoŴproduclng provlnces
shall be dlrecLly remlLLed Lo Lhe provlnces concernedŦ


Þrovldedţ 1haL Lhls SecLlon shall be lmplemenLed ln accordance wlLh Lhe guldellnes of Memorandum
Clrcular noŦ 61ŴA daLed november 28ţ 1993ţ whlch amended Memorandum Clrcular noŦ 61ţ enLlLled
ƍÞrescrlblng Culdellnes for lmplemenLlng 8epubllc AcL noŦ 7171ƍţ daLed !anuary 1ţ 1992Ŧ

Þrovldedţ furLherţ 1haL ln addlLlon Lo Lhe local governmenL unlLs menLloned ln Lhe above clrcularţ Lhe
concerned offlclals ln Lhe provlnce shall be consulLed as regards Lhe ldenLlflcaLlon of pro[ecLs Lo be
flnancedŦ

1l1LL xll
CvL8SlCP1 CCMMl11LL


SLCŦ 290Ŧ Congresslonal CverslghL CommlLLeeŦ Ŵ
A Congresslonal CverslghL CommlLLeeţ herelnafLer referred Lo as Lhe CommlLLeeţ ls hereby consLlLuLed
ln accordance wlLh Lhe provlslons of Lhls CodeŦ 1he CommlLLee shall be composed of Lhe Chalrmen of
Lhe CommlLLee on Ways and Means of Lhe SenaLe and Pouse 8epresenLaLlves and four (4) addlLlonal
members from each houseţ Lo be deslgnaLed by Lhe Speaker of Lhe Pouse of 8epresenLaLlves and Lhe
SenaLe ÞresldenLţ respecLlvelyŦ

1he CommlLLee shallţ among oLhersţ ln ald of leglslaLlonť

(1) MonlLor and ensure Lhe proper lmplemenLaLlon of 8epubllc AcL noŦ 8240Ť
(2) ueLermlne LhaL Lhe power of Lhe Commlssloner Lo compromlse and abaLe ls reasonably exerclsedŤ
(3) 8evlew Lhe collecLlon performance of Lhe 8ureau of lnLernal 8evenueŤ and
(4) 8evlew Lhe lmplemenLaLlon of Lhe programs of Lhe 8ureau of lnLernal 8evenueŦ
ln furLherance of Lhe herelnabove clLed ob[ecLlvesţ Lhe CommlLLee ls empowered Lo requlre of Lhe
8ureau of lnLernal 8evenueţ submlsslon of all perLlnenL lnformaLlonţ lncludlng buL noL llmlLed Loť
lndusLry audlLsŤ collecLlon performance daLaŤ sLaLus reporL on crlmlnal acLlons lnlLlaLed agalnsL personsŤ
and submlsslon of Laxpayer reLurnsť Þrovldedţ howeverţ 1haL any reLurn or reLurn lnformaLlon whlch can
be assoclaLed wlLhţ or oLherwlse ldenLlfyţ dlrecLly or lndlrecLlyţ a parLlcular Laxpayer shall be furnlshed
Lhe CommlLLee only when slLLlng ln LxecuLlve Sesslon unless such Laxpayer oLherwlse consenLs ln wrlLlng
Lo such dlsclosureŦ

1l1LL xlll
8LÞLALlnC Þ8CvlSlCnS

SLCŦ 291Ŧ ln CeneralŦ Ŵ All lawsţ decreesţ execuLlve ordersţ rules and regulaLlons or parLs Lhereof whlch
are conLrary Lo or lnconslsLenL wlLh Lhls Code are hereby repealedţ amended or modlfled accordlnglyŦ

1l1LL xlv
llnAL Þ8CvlSlCnS

SLCŦ 292Ŧ SeparablllLy ClauseŦ Ŵ lf any clauseţ senLenceţ paragraph or parL of Lhls Code shall be ad[udged
by any CourL of compeLenL [urlsdlcLlon Lo be lnvalldţ such [udgmenL shall noL affecLţ lmpalr or lnvalldaLe
Lhe remalnder of sald Codeţ buL shall be conflned ln lLs operaLlon Lo Lhe clauseţ senLenceţ paragraph or
parL Lhereof dlrecLly lnvolved ln Lhe conLroversyŦ




SLCŦ 4Ŧ 1he SecreLary of llnance shallţ upon recommendaLlon of Lhe Commlssloner of lnLernal 8evenueţ
promulgaLe and publlsh Lhe necessary rules and regulaLlons for Lhe effecLlve lmplemenLaLlon of Lhls AcLŦ

SLCŦ 3Ŧ 1ranslLory ÞrovlslonsŦ Ŵ uefermenL of Lhe LffecLlvlLy of Lhe lmposlLlon of vA1 on CerLaln ServlcesŦ
Ŵ 1he effecLlvlLy of Lhe lmposlLlon of Lhe valueŴadded Lax on servlces as prescrlbed ln SecLlon 17(a) and
(b) of 8epubllc AcL noŦ 7616ţ as amended by 8epubllc AcLŦ 8241ţ ls hereby furLher deferred unLll
uecember 31ţ 1999ţ unless Congress deems oLherwlseť Þrovldedţ 1haL Lhe sald servlces shall conLlnue Lo
pay Lhe appllcable Lax prescrlbed under Lhe presenL provlslons of Lhe naLlonal lnLernal 8evenue Codeţ as
amendedŦ

SLCŦ 6Ŧ SeparablllLy ClauseŦ Ŵ lf any provlslon of Lhls AcL ls subsequenLly declared unconsLlLuLlonalţ Lhe
valldlLy of Lhe remalnlng provlslons hereof shall remaln ln full force and effecLŦ

SLCŦ 7Ŧ 8epeallng ClausesŦ Ŵ
(A) 1he provlslon of SecLlon 17 of 8epubllc AcL noŦ 7906ţ oLherwlse known as Lhe ƍ1hrlfL 8anks AcL of
1993ƍ shall conLlnue Lo be ln force and effecL only unLll uecember 31ţ 1999Ŧ

LffecLlve !anuary 1ţ 2000ţ all LhrlfL banksţ wheLher ln operaLlon as of LhaL daLe or LhereafLerţ shall no
longer en[oy Lax exempLlon as provlded under SecLlon 17 of 8Ŧ AŦ noŦ 7906ţ Lhereby sub[ecLlng all LhrlfL
banks Lo Laxesţ fees and charges ln Lhe same manner and aL Lhe same raLe as banks and oLher flnanclal
lnLermedlarlesŦ

(8) 1he provlslons of Lhe naLlonal lnLernal 8evenue Codeţ as amendedţ and all oLher lawsţ lncludlng
charLers of governmenLŴowned or conLrolled corporaLlonsţ decreesţ ordersţ or regulaLlons or parLs
Lhereofţ LhaL are lnconslsLenL wlLh Lhls AcL are hereby repealed or amended accordlnglyŦ

SLCŦ 8Ŧ LffecLlvlLyŦ Ŵ 1hls AcL shall Lake effecL on !anuary 1ţ 1998Ŧ

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