Republic of the Philippines HOUSE OF REPRESENTATIVES Quezon City SEVENTEENTH CONGRESS First Regular Session 25 COMMITTEE REPORT NO. Submitted by the Committee on Ways and Means on _MAY 15 2017 RE House BillNo _ 5636 Recommending its approval in substitution of House Bill Nos. 20, 35, 39, 67, 103, 137, 183, 292, 295, 333, 362, 363, 403, 411, 466, 562, 997, 1000, 1002, 1272, 1326, 1522, 1536, 1601, 1604, 1656, 1657, 1860, 1696, 1705, 1803, 1945, 1950, 2140, 2154, 2168, 2347, 2427, 2544, 2599, 2600, 2601, 3259, 3327, 3360, 3668, 3720, 3734, 3741, 4068, 4134, 4299, 4688, 4698 and 4774 SPONSORS Representatives Dakila Carlo E. Cua and Joey Sarte Salceda Mr. Speaker: The Committee on Ways and Means to which were referred House Bill No. 20, introduced by Rep. Romero “Miro” S. Quimbo, entitled “AN ACT RESTRUCTURING THE INCOME TAX IMPOSED ON INDIVIDUALS, AMENDING FOR THE PURPOSE SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 35 introduced by Rep. Raul V. Del Mar, entitled “AN ACT RESTRUCTURING THE INCOME TAXES IMPOSED ON INDIVIDUALS AND CORPORATIONS, AMENDING FOR THE PURPOSE ont SESESECTIONS 24 (A) (2); 27 (A); AND 28 (A) (1) AND (B) (1) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 39 introduced by Rep. Arthur C. Yap, entitled “AN ACT CREATING A MORE EQUITABLE PROGRESSIVE AND JUST TAX SYSTEM, BY ADJUSTING THE LEVEL OF NET TAXABLE INCOME AND NOMINAL TAX RATES OF THE INDIVIDUAL INCOME TAX, AMENDING FOR THE PURPOSE SECTION 24 (A) (1) OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED BY REPUBLIC ACT NO. 9504, AND FOR OTHER PURPOSES"; HOUSE BILL NO. 57 introduced by Reps. Antonio L. Tinio and Francisca L. Castro, entitled “AN ACT RESTRUCTURING THE INCOME BRACKETS AND RATES OF TAX IMPOSED ON TAXABLE INCOME OF INDIVIDUALS, AMENDING FOR THE PURPOSE SECTIONS 24, 32, 33, 34 AND 35 OF THE 1997 NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES, AS AMENDED"; HOUSE BILL NO. 103 introduced by Rep. Angelina “Helen” D.L. Tan, entited “AN ACT INSTITUTING INCOME TAX REFORM FOR INDIVIDUAL TAXPAYERS, AMENDING FOR THIS PURPOSE SECTION 24(A)(2) AND 35(A) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES”; HOUSE BILL NO. 137 introduced by Rep. Victoria Isabel G. Noel, entitled “AN ACT AMENDING SECTIONS 24 AND 27 OF REPUBLIC ACT 8424, AS AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997”; HOUSE BILL NO. 183 introduced by Rep. Eric L. Olivarez, entitled “AN ACT INCREASING THE AGE BRACKET OF THE HOUSEHOLD MEMBERS CONSIDERED AS DEPENDENTS OF A TAXPAYER FROM. 21 TO 23 YEARS OLD, AND FOR THAT PURPOSE, AMENDING SECTION 35, ITEMS (A) AND (B) OF THE NATIONAL INTERNAL REVENUE CODE"; HOUSE BILL NO. 292 introduced by Reps. Horacio P. Suansing, Jr. and Estrellita B. Suansing, entitled “AN ACT IMPOSING EXCISE TAX ON SUGAR SWEETENED BEVERAGES BY INSERTING A NEW SECTION150-A IN THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO, 295 introduced by Reps. Horacio P. Suansing, Jr. and Estrellita B. Suansing, entitled “AN ACT AMENDING SECTIONS 24 AND 27 OF REPUBLIC ACT NO. 8424, AS AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997"; HOUSE BILL NO. 333 introduced by Rep. Carlos Isagani T. Zarate, entitled “AN ACT RESTRUCTURING THE INCOME BRACKETS AND RATES OF TAX IMPOSED ON TAXABLE INCOME OF INDIVIDUALS, AMENDING FOR THE PURPOSE SECTIONS 24, 32, 33, 34 AND 35 OF THE 1997 NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES, AS AMENDED"; HOUSE BILL NO. 362 introduced by Rep. Maria Carmen S. Zamora entitied “AN ACT AMENDING CHAPTER VII, SECTION 35 (B) OF THE NATIONAL INTERNAL REVENUE CODE (NIRC), AS AMENDED, BY INCREASING THE AGE CEILING FOR A QUALIFIED DEPENDENT, AND FOR OTHER PURPOSES”; HOUSE BILL NO. 363 introduced by Rep. Maria Carmen S. Zamora, entitled “AN ACT INCREASING THE ADDITIONAL INCOME TAX EXEMPTION FOR EACH QUALIFIED DEPENDENT FROM TWENTY- FIVE THOUSAND PESOS (P25,000) TO FIFTY THOUSAND PESOS (P50,000), AMENDING CHAPTER Vil, SECTION 35 (B) OF THE NATIONAL INTERNAL REVENUE CODE (NIRC), AS AMENDED, AND FOR OTHER PURPOSES"; HOUSE BILL NO. 403 introduced by Rep. Rodrigo A. Abellanosa, entitled “AN ACT RESTRUCTURING THE INCOME TAXES IMPOSED ON INDIVIDUALS, AMENDING FOR THE PURPOSE SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES"; HOUSE BILL NO. 411 introduced by Rep. Tobias “Toby” M. Tiangco, entitied “AN ACT AMENDING SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED AND FOR OTHER PURPOSES";HOUSE BILL NO. 466 introduced by Rep. Raneo E. Abu, entitled “AN ACT RESTRUCTURING THE INCOME TAX IMPOSED ON INDIVIDUALS, AMENDING FOR THE PURPOSE SECTIONS 24(A)(2) AND 35(B) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 562 introduced by Rep. Winston “Winnie” Castelo, entitied “AN ACT AMENDING SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES”; HOUSE BILL NO. 997 introduced by Rep. Luis Angel N. Campos, Jr., entied “AN ACT PROVIDING ADDITIONAL EXEMPTIONS TO FAMILIES WHERE THE TAXPAYER |S SUPPORTING AGING PARENTS AND/OR PERSONS WITH DISABILITIES"; HOUSE BILL NO. 1000 introduced by Rep. Luis Angel N. Campos, Jr. entiied “AN ACT EXCLUDING OVERTIME PAY FROM THE COMPUTATION OF TAXABLE INCOME AMENDING FOR THE PURPOSE SECTION 32 (B) (7) OF REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AMENDED"; HOUSE BILL NO. 1002 introduced by Rep. Luis Angel N. Campos, Jr., entitled “AN ACT EXCLUDING NIGHT SHIFT DIFFERENTIAL PAY FROM THE COMPUTATION OF TAXABLE INCOME AMENDING FOR THE PURPOSE SECTION 32 (8) (7) OF REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED”; HOUSE BILL NO. 1272 introduced by Rep. Rozzano Rufino B. Biazon, entitled “AN ACT INCLUDING MEDICAL EXPENSES AS ALLOWABLE ‘TAX DEDUCTIONS FOR INDIVIDUAL TAXPAYERS, AMENDING FOR THE PURPOSE SECTION 34 OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE TAX REFORM ACT OF 1997"; HOUSE BILL NO. 1326 introduced by Rep. Weslie T. Gatchalian, entitled “AN ACT INCREASING THE ALLOWANCE FOR PERSONAL EXEMPTIONS OF INDIVIDUAL TAXPAYERS, AMENDING SECTION 35OF REPUBLIC ACT NO. 8424, AS AMENDED OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997"; HOUSE BILL NO. 1522 introduced by Rep. Gloria Macapagal-Arroyo, entitied “AN ACT PROVIDING ADDITIONAL PERSONAL EXEMPTION FOR INDIVIDUAL TAXPAYERS WHO TAKE CARE OF THEIR ELDERLY PARENTS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8424, AS AMENDED, OTHERWISE KNOWN AS THE ‘NATIONAL INTERNAL REVENUE CODE OF 1997"; HOUSE BILL NO. 1536 introduced by Rep. Bernadette R. Herrera-Dy, entitled “AN ACT RESTRUCTURING THE INCOME TAX BRACKETS AND RATES OF TAX IMPOSED ON TAXABLE INCOME OF INDIVIDUALS, AMENDING FOR THE PURPOSE SECTIONS 24, 33, 34 AND 35 OF THE 1997 NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES, AS AMENDED"; HOUSE BILL NO. 1601 introduced by Rep. Teddy Brawner Baguilat, entitled “AN ACT ADJUSTING THE LEVEL OF NET TAXABLE INCOME AND NOMINAL TAX RATES FOR PURPOSES OF PROMOTING THE INDIVIDUAL INCOME TAX, AMENDING SECTION 24(A)(2) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES"; HOUSE BILL NO. 1604 introduced by Rep. Teddy Brawner Baguilat, entitled “AN ACT ADJUSTING THE LEVEL OF NET TAXABLE INCOME AND NOMINAL TAX RATES FOR PURPOSES OF PROMOTING THE INDIVIDUAL INCOME TAX, AMENDING SECTION 24(A)(2) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES”; HOUSE BILL NO. 1656 introduced by Rep. Bellaflor J, Angara-Casiillo, entitied “AN ACT AMENDING SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES”; HOUSE BILL NO.1657 introduced by Rep. Bellaflor J. Angara-Castillo, entitled “AN ACT AMENDING SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES”;HOUSE BILL NO. 1660 introduced by Rep. Bellaflor J. Angara-Castillo, entitied “AN ACT PROVIDING FOR TAX DEDUCTIONS FOR FAMILY REQUIREMENTS INCLUDING PAYMENTS FOR TERTIARY EDUCATION TUITION AND ALLIED EXPENSES AS WELL AS INTEREST PAYMENTS FOR A FIRST HOME MORTGAGE, AMENDING FOR THE PURPOSE SECTION 34 OF THE NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES, AS AMENDED, AND FOR OTHER PURPOSE”; HOUSE BILL NO. 1696 introduced by Rep. Maximo B. Rodriguez, Jr., entitled “AN ACT AMENDING SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1987, AS AMENDED, AND FOR OTHER PURPOSES”; HOUSE BILL NO. 1705 introduced by Rep. Rozzano Rufino B. Biazon, entitled “AN ACT EXEMPTING FROM TAX ALLOWANCES AND BENEFITS GRANTED TO PUBLIC SCHOOL TEACHERS, INCLUDING THOSE IN THE STATE COLLEGES AND UNIVERSITIES” HOUSE BILL NO. 1803 introduced by Rep. Greg G. Gasataya, entitled “AN ACT AMENDING SECTION 35, PARAGRAPH B (4) OF REPUBLIC ACT NO. 8424, AS AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997"; HOUSE BILL NO. 1945 introduced by Rep. Vilma Santos-Recto, entitled “AN ACT ADJUSTING THE LEVEL OF NET TAXABLE INCOME AND NOMINAL TAX RATES FOR PURPOSES OF COMPUTING THE INDIVIDUAL INCOME TAX, AMENDING SECTION 24(A)(2) OF THE NATIONAL INTERNAL REVENUE CODE OF 1987, AS AMENDED, AND FOR OTHER PURPOSES"; HOUSE BILL NO. 1950 introduced by Rep. Vilma Santos-Recto, entitled “AN ACT INSTITUTING INCOME TAX REFORM FOR INDIVIDUAL AND CORPORATE TAXPAYERS, AMENDING FOR THIS PURPOSE SECTIONS 24(A)(2), 27(A) AND 35(A) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES”;HOUSE BILL NO. 2140 introduced by Rep. Luisa Lioren Cuaresma, entitied “AN ACT FURTHER AMENDING SECTION 35 OF THE REPUBLIC ACT NO. 8424, AS AMENDED OTHERWISE KNOWN AS. THE NATIONAL INTERNAL REVENUE CODE OF 1997 TO GIVE HIGHER ADDITIONAL PERSONAL EXEMPTIONS TO TAXPAYERS WHO HAVE DEPENDENTS THAT ARE PERSONS WITH DISABILITY”; HOUSE BILL NO. 2184 introduced by Reps. Enrico A. Pineda and Michael Odylon L. Romero, entitled “AN ACT EXCLUDING OVERTIME PAY FROM THE COMPUTATION OF TAXABLE INCOME AMENDING FOR THE PURPOSE SECTION 32 (8) (7) OF REPUBLIC ACT NUMBER 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 2168 introduced by Vilma Santos-Recto, entitled “AN ACT INCREASING THE THRESHOLD FOR CERTAIN NON-VAT TAXPAYERS, AMENDING FOR THE PURPOSE SECTIONS 109 AND 236 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 2347 introduced by Rep. Gloria Macapagal-Arroyo, entitled “AN ACT AMENDING SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES"; HOUSE BILL NO. 2427 introduced by Rep. Paolo Everardo S. Javier, entitled “AN ACT RESTRUCTURING THE INCOME TAXES IMPOSED ON INDIVIDUALS AND CORPORATIONS, AMENDING FOR THE PURPOSE SECTIONS 24(A)(2); 27(A); 28(A)(1) AND (B)(1); AND 35(B) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 2544 introduced by Reps. Enrico A. Pineda and Michael Odylon L. Romero, entitled “AN ACT PRESCRIBING NEW RATES OF TAX ON TAXABLE INCOME OF INDIVIDUALS, AMENDING FOR THE PURPOSE SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSE: HOUSE BILL NO. 2599 introduced by Rep. Vilma Santos-Recto, entitled “AN ACT EXCLUDING OVERTIME PAY FROM THE COMPUTATION OFTAXABLE INCOME AMENDING FOR THIS PURPOSE SECTION 32 (8) (7) OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED”; HOUSE BILL NO. 2600 introduced by Rep. Vilma Santos-Recto, entitled “AN ACT EXCLUDING 13TH MONTH PAY FROM THE COMPUTATION OF TAXABLE INCOME AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (e) OF REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 2601 introduced by Rep. Vilma Santos-Recto, entitled “AN ACT EXCLUDING THE PERFORMANCE-BASED BONUS FROM THE COMPUTATION OF TAXABLE INCOME AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED"; HOUSE BILL NO. 3259 introduced by Rep. Emmeline Y. Aglipay-Villar, entitled “AN ACT ADJUSTING THE INCOME BRACKETS AND RATES OF TAX IMPOSED ON TAXABLE INCOME OF INDIVIDUALS, AMENDING FOR THIS PURPOSE SECTION 24 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES”; HOUSE BILL NO. 3327 introduced by Rep. Rosenda Ann Ocampo, entitled “AN ACT GRANTING TAX DEDUCTIONS TO PARENTS AND LEGAL. GUARDIANS OF CHILDREN WITH SPECIAL NEEDS”; HOUSE BILL NO. 3360 introduced by Rep. Sharon S. Garin, entitled “AN ACT RESTRUCTURING THE INCOME TAXES IMPOSED ON INDIVIDUALS AND CORPORATIONS, AMENDING FOR THE PURPOSE SECTIONS 24(A)(2); 27(A); 28(A)(1) AND (B)(1); AND 35(B) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED”; HOUSE BILL NO. 3868 introduced by Rep. Gus S. Tambunting, entitled “AN ACT EXCLUDING OVERTIME PAY FROM THE COMPUTATION OF TAXABLE INCOME AMENDING FOR THE PURPOSE SECTION 32 (B) (7) OF REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED";HOUSE BILL NO. 3720 introduced by Rep. Scott Davies S. Lanete, entitled “AN ACT AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT NO, 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997 AND FOR OTHER PURPOSES”; HOUSE BILL NO. 3734 introduced by Rep. Julieta R. Cortuna, entitled “AN ACT INCREASING THE ADDITIONAL INCOME TAX EXEMPTION FOR EACH DEPENDENT FROM EIGHT THOUSAND PESOS (P8,000) TO FIFTY THOUSAND PESOS (P50,000), AMENDING FOR THE PURPOSE SEC. 35 (B), CHAPTER Vil OF REPUBLIC ACT NO. 8424, A.K.A, THE TAX REFORM ACT OF 1997, AND FOR OTHER PURPOSES”; HOUSE BILL NO. 3741 introduced by Rep. Rodante D. Marcoleta, entitled “AN ACT INCLUDING INCIDENTAL EXPENSES IN THE EXERCISE OF PROFESSION AS ADDITIONAL ALLOWABLE DEDUCTIONS FROM THE TAXABLE INCOME OF TEACHERS"; HOUSE BILL NO. 4068 introduced by Rep. Manuel F. Zubiri, entitled “AN ACT INCREASING THE ALLOWABLE PERSONAL AND ADDITIONAL EXEMPTIONS OF INDIVIDUAL TAXPAYERS, AMENDING FOR THE PURPOSE SECTION 35 (A) AND (8) OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES"; HOUSE BILL NO. 4134 introduced by Rep. Kaka J. Bag-ao, entitled “AN ACT AMENDING SECTIONS 24, 34 AND 110 OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE “NATIONAL INTERNAL REVENUE CODE OF 1997", AS AMENDED, REDUCING THE INCOME TAX LIABILITIES OF INDIVIDUALS AND FOR OTHER PURPOSES"; HOUSE BILL NO. 4299 introduced by Rep. Julieta R. Cortuna, entitled “AN ACT AMENDING THE DEFINITION OF A DEPENDENT OF THE TAXPAYER UNDER SECTION 35 (B) OF R.A. 8424, AK.A., THE TAX REFORM ACT OF 1997, BY INCREASING THE AGE OF A DEPENDENT FROM 21 TO 23 YEARS OLD"; HOUSE BILL NO. 4688, introduced by Rep. Joey Sarte Saiceda, entitled “AN ACT AMENDING SECTIONS 22, 24, 31, 32, 34, 35, 79, 106, 107,108, 109, 110, 148 AND TITLE VI OF REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS ‘THE NATIONAL INTERNAL REVENUE ‘CODE OF 1997’, AS AMENDED, AND FOR OTHER PURPOSE”; HOUSE BILL NO. 4696 introduced by Rep. Luis Raymund F. Villafuerte, dr, entitled “AN ACT AMENDING SECTION 24 OF REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS “NATIONAL INTERNAL REVENUE ‘CODE OF 1997" AS AMENDED, AND FOR OTHER PURPOSES” and HOUSE BILL NO. 4774 introduced by Rep. Dakila Carlo E. Cua, entitled “AN ACT AMENDING SECTIONS 6, 22, 24, 25, 31, 33, 34, 79, 84, 86, 99, 106, 107, 108, 109, 113, 116, 148, 149, 155, 232, 237 AND 288; CREATING NEW SECTIONS 148-A, 237-A, 264-A, AND 264-B; AND REPEALING SECTIONS 36 AND 62 ALL UNDER REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS ‘THE NATIONAL INTERNAL REVENUE CODE OF 1997"; has considered the same and recommends that the attached House Bill No. , entitled: “AN ACT AMENDING SECTIONS 6, 6, 22, 24, 25, 31, 33, 34, 79, 84, 86, 99, 106, 107, 108, 109, 116, 148, 149, 155, 171, 232, 237, 238, 264 AND 288; CREATING NEW SECTIONS 148-A, 150-A, 237-A, 264-A, 264-B AND 265-A; AND REPEALING SECTIONS 35 AND 62 ALL UNDER REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS “THE NATIONAL INTERNAL REVENUE CODE OF 1997” be approved in substitution of House Bill Nos. 20, 35, 39, 57, 103, 137, 183, 292, 295, 333, 362, 363, 403, 411, 466, 562, 997, 1000, 1002, 1272, 1326, 1522, 1536, 1601, 1604, 1656, 1657, 1660, 1696, 1705, 1803, 1945, 1950, 2140, 2154, 2168, 2347, 2427, 2544, 2599, 2600, 2601, 3259, 3927, 3360, 3668, 3720, 3734, 3741, 4068, 4134, 4299, 4688, 4696 and 4774 with Representatives Dakila Carlo E. Cua, Joey Sarte Salceda, Romero “Miro” S. Quimbo, Francis Gerald Abaya, Rozzano Rufino Biazon, Raul V. Del Mar, Arthur C. Yap, Antonio L. Tinio, Francisca L. Castro, Angelina “Helen” D.L. Tan, Victoria Isabel G. Noel, Eric L. Olivarez, Horacio P. Suansing, Estrellita B. Suansing, Carlos Isagani T. Zarate.Maria Carmen S. Zamora, Rodrigo A. Abellanosa, Tobias “Toby” M. Tiangoo, Raneo E. Abu, Winston “Winnie” Castelo, Luis Jose Angel N. Campos, Jr., Weslie T. Gatchalian, Gloria Macapagal-Arroyo, Bemadette R. Herrera-Dy, Teddy Brawner Baguilat, Bellaflor J. Angara-Castilo, Maximo B. Rodriguez, Jr., Greg G. Gasataya, Vilma Santos-Recto, Luisa Lloren Cuaresma, Enrico A. Pineda, Michael Gdylon L. Romero, Paolo Everardo S. Javier, Emmeline Y. Aglipay-Villar Rosenda Ann Ocampo, Sharon S. Garin, Gus S. Tambunting, Julieta R, Cortuna, Rodante D. Marcoleta, Manuel F. Zubin, Kaka J. Bag-ao, Luis Raymund “Lray” F Villafuerte, Jr., Benhur L. Salimbangon, Ramon Vicente Antonio M. Rocamora, Eric D. Singson, Franz E. Alvarez, Alberto T. Ungab, Teodoro G. Montoro. Suharto T. Mangudadatu, Isagani S. Amatong, Gil P. Acosta, Nancy A. Catamco, Antonio R. Fioirendo, Raul C. Tupas, Ruby M, Sanali, Randolph S. Ting, Karlo Alexei B. Nograles, Juliette T. Uy, Scott Davies S. Lanete, Raul A. Daza, Ferjenel G. Biron, Carlito S. Marquez, Jesus “Boying” F. Celeste, Baby Aline Vargas- Alfonso, Pablo C. Ortega, Seth Frederick P. Jalosjos, Joel Mayo Z. Almario, Alex “AA” L. Advincula, Rodel M. Batocabe, Jericho Jonas B. Nograles, Michaelina M. Antonio, Edgar Mary S. Sarmiento, Jerry P. Trefias, Ann K. Hofer, Allen Jesse C. Mangaoang, Eripe John “Ping’ M. Amante, Ma. Lucille L. Nava, Ma. Theresa V. Collantes, Noel L. Villanueva, Ricardo “RJ” T. Belmonte, Imelda R. Marcos, Napoleon S. Dy, Virgilio S. Lacson, Sabiniano S. Canama, Salvador B. Belaro, Jr., Prospero A. Pichay, Jr., Henry S. Oaminal, Shernee Abubakar Tan, Arthur R. Defensor, Jf., Cheryl P. Deloso-Montalla, Ma. Lourdes R. Aggabao, Aileen C. Radaza and Jesulito“Jess" A. Manalo as authors thereof Respectfully submitted, KILA CARLO E. CUA Chairman Committee on Ways and Means ‘The HONORABLE SPEAKER HOUSE OF REPRESENTATIVES QUEZON CITYRepublic of the Philippines HOUSE OF REPRESENTATIVES Quezon City Seventeenth Congress First Regular Session House Bill No, 963 (in substitution of House Bill Nos. 20, 35, 39, 57, 103, 137, 183, 292, 295, 333, 362, 363, 403, 411, 466, 562, 997, 1000, 1002, 1272, 1326, 1529, 1536, 1601, 1604, 1656, 1657, 1660, 1696, 1705, 1803, 1945, 1950, 2140, 2154, 2168, 2347, 2427, 2544, 2599, 2600, 2601, 3250, 3327, 3360, 3668, 3720, 3734, 3741, 4068, 4134, 4299, 4688, 4696 and 4774) Introduced by Representatives Dakila Carlo E. Cua, Joey Sarte Salceda, Romero “Miro” S. Quimbo, Francis Gerald Abaya, Rozzano Rufino Biazon, Raul V. Del Mar, Arthur C. Yap, Antonio L. Tinio, Francisca L. Castro, Angelina “Helen” D.L. Tan, Victoria Isabel G. Noel, Eric L. Olivarez, Horacio P, Suansing, Estrellita B. Suansing, Carlos Isagani T. Zarate, Maria Carmen S. Zamora, Rodrigo A. Abellanosa, Tobias “Toby” M. Tiangco, Raneo E. Abu, Winston “Winnie” Castelo, Luis Jose Angel N. Campos, Jr., Weslie T. Gatchalian, Gloria Macapagal-Arroyo, Bernadette R. Herrera-Dy, Teddy Brawner Baguilat, Bellaflor J. Angara-Castillo, Maximo B. Rodriguez, Jr., Greg G. Gasataya, Vilma Santos-Recto, Luisa Lloren Cuaresma, Enrico A. Pineda, Michael Odylon L. Romero, Paolo Everardo S. Javier, Emmeline Y. Aglipay-Villar, Rosenda Ann Ocampo, Sharon S. Garin, Gus S. Tambunting, Julieta R. Cortuna, Rodante D. Marcoleta, Manuel F. Zubiri, Kaka J. Bag ao, Luis Raymund “Lray” F. Villafuerte, Jr., Benhur L. Salimbangon, Ramon Vicente Antonio M, Rocamora, Eric D. Singson, Franz E. Alvarez, Alberto T. Ungab, Teodoro G. Montoro, Suharto T. Mangudadatu, Isagani S, Amatong, Gil P. Acosta, Nancy A. Catamco, Antonio R. Floirendo, Ratil C. Tupas, Ruby M. Sahali, Randolph S. Ting, Karlo Alexei B, Nograles, Juliette T. Uy, Scott Davies S. Lanete, Raul A. Daza, Ferjenel G. Biron, Carlito S. Marquez, Jesus “Boying’ F. Celeste, Baby Aline Vargas-Alfonso, Pablo C. Ortega, Seth Frederick P. Jalosjos, Joel Mayo Z. Almario, Alex *AA” L. Advincula, Rodel M. Batocabe, Jericho Jonas B. Nograles, Michaclina M. Antonio, Edgar Mary S. Sarmiento, Jerry P. Trenas, Ann K. Hofer, Allen Jesse C. Mangaoang, Eripe John “Ping” M. Amante, Ma. Lucille L. Nava, Ma. Theresa V. Collantes, Noel L. Villanueva, Ricardo “RJ” T. Belmonte, Imelda R. Marcos, Napoleon S. Dy, Virgilio $. Lacson, Sabiniano S. Canama, Salvador B. Belaro, Jr., Prospero A. Pichay, Jr., Henry S. Oaminal, Shernee Abubakar Tan, Arthur R. Defensor, Jr., Cheryl P. Deloso-Montalla, Ma. Lourdes R. Aggabao, Aileen C, Radaza and Jesulito “Jess” A. Manalo3 32 AN ACT AMENDING SECTIONS 5, 6, 22, 24, 25, 31, 33, 34, 79, 84, 86, 99,106, 107, 108, 109, 116, 148, 149, 155, 171, 232, 237, 238, 264 AND 288; CREATING NEW SECTIONS 148-A, 150-A, 237-A, 264-A, 264- B AND 265-A; AND REPEALING SECTIONS 35 AND 62, ALL UNDER REPUBLIC ACT NO. 8424 OTHERWISE KNOWN AS “THE NATIONAL INTERNAL REVENUE CODE OF 1997” Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: SECTION 1. Title. This Act shall be known as the “Tax Reform for Acceleration and Inclusion” SEC. 2. Declaration of Policy, It is hereby declared the policy of the State: 1. To enhance the progressivity of the tax system through the rationalization of the Philippine internal revenue tax system, thereby promoting sustainable economic growth; 2. To provide, as much as possible, an equitable relief to a greater number of taxpayers in order to improve levels of disposable income and increase economic activity; and 3, To ensure that the government is able to provide for the needs of those under its jurisdiction and care through the provision of better infrastructure, health, education and social protection for the people. SEC. 3. Section 5 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. - In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized: eX OK XK (B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments,government agencies and instrumentalities, including [the Bangko Sentral ng Pilipinas] GOVERNMENT FINANCIAL INSTITUTIONS and government- owned or -controlled corporations, any RELEVANT information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures of consortia and registered partnerships, and their members; PROVIDED, THAT THE BIR AND OTHER NATIONAL GOVERNMENT AGENCIES, LOCAL GOVERNMENT UNITS, AND GOVERNMENT AGENCIES AND INSTRUMENTALITIES, INCLUDING GOVERNMENT — FINANCIAL INSTITUTIONS AND GOVERNMENT- OWNED OR -CONTROLLED CORPORATIONS, SHALL ESTABLISH ELECTRONIC INTERCONNECTIVITY THAT WILL ALLOW EXCHANGE OF INFORMATION RELEVANT TO THE NEEDS OF EACH AGENCY AS DETERMINED BY THE HEADS OF THE SAID OFFICES AND THE SECRETARY OF FINANCE UNDER JOINT RULES TO BE ISSUED; PROVIDED FURTHER, THAT IF THE DATA REQUIREMENTS CONSISTS OF INFORMATION FOUND IN THE INCOME TAX RETURN OF TAXPAYERS, THE REQUIREMENTS UNDER SCTION 71 SHALL STILL BE COMPLIED WITH.” SEC. 4. Section 6 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement. — (A) Xxx (B) 200 (C) 2000 {D) xx (B) x (F) Authority of the Commissioner to Inquire into AND RECEIVE INFORMATION ON [into] Bank Deposit Accounts and Other Related DATA [Information] Held by Financial Institutions. - Notwithstanding any contrary provision of Republic Act No. 1405, OTHERWISE KNOWN AS THE “BANK SECRECY LAW,”, Republic Act No. 6426, otherwise known as the “Foreign Currency Deposit Act,” and other 339 40 41 42 general or special laws, the Commissioner is hereby authorized to inquire into AND RECEIVE INFORMATION ON the bank deposits and other related DATA [information] held by financial institutions of: (1) A decedent to determine his gross estate. (2) Any taxpayer who has filed an application for compromise of his tax liability under Sec. 204 (A)(2) reason of financial incapacity to pay his tax liability. In case a taxpayer files an application to compromise the payment of his tax liabilities on his claim that his financial position demonstrates a clear inability to pay the tax assessed, his application shall not be considered unless and until he waives in writing his privilege under Republic Act No. 1405, Republic Act No. 6426, [otherwise known as the Foreign Currency Deposit Act of the Philippines,] or under other general or special laws, and such waiver shall constitute the authority of the Commissioner to inquire into the bank deposits of the taxpayer. (3) A specific taxpayer or taxpayers, UPON AN OBLIGATION TO EXCHANGE TAX INFORMATION WITH A FOREIGN TAX AUTHORITY, WHETHER ON REQUEST OR AUTOMATIC, subject of a request for the supply of tax information from a foreign tax authority] pursuant to an international convention or agreement on tax matters to which the Philippines is a signatory or a party of: Provided, That the information obtained from the banks and other financial institutions may be used by the Bureau of Internal Revenue for tax assessment, verification, audit and enforcement purposes. [In case of request from a foreign tax authority for tax information held by banks and financial institutions,] the exchange of information WITH A FOREIGN TAX AUTHORITY, WHETHER ON REQUEST OR AUTOMATIC, shall be done in a secure manner to ensure confidentiality thereof under such rules and regulations as may be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. IN CASE THE EXCHANGE OF INFORMATION IS UPON REQUEST FROM A FOREIGN TAX AUTHORITY, the Commissioner shall provide the tax information obtained from banks and financial institutions Pursuant to a convention or agreement upon request of such foreign tax authority when such requesting foreign tax authority has provided the following information to demonstrate the foreseeable relevance of the information to the request: (a) The identity of the person under examination or investigation; (b) A statement of the information being sought including its nature and the form in which the said foreign tax authority prefers to receive the information from the Commissioner;(c) The tax purpose for which the information is being sought; (a) Grounds for believing that the information requested is held in the Philippines or is in the possession or control of a person within the jurisdiction of the Philippines; (e) To the extent known, the name and address of any person believed to be in possession of the requested information; (A Statement that the request is in conformity with the law and administrative practices of the said foreign tax authority, such that if the requested information was within the jurisdiction of the said foreign tax authority then it would be able to obtain the information under its law or in the normal course of administrative practice and that it is conformity with a convention or international agreement; and (g) A statement that the requesting foreign tax authority has exhausted all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties, The Commissioner shall forward the information as promptly as possible to the requesting foreign tax authority. To ensure a prompt response, the Commissioner shall confirm receipt of a request in writing to the requesting tax authority and shall notify the latter of deficiencies in the request, if any, within sixty (60) days from the receipt of the request. If the Commissioner is unable to obtain and provide the information within ninety (90) days from the receipt of the request, due to obstacles encountered in furnishing the information or when the bank or financial institution refuses to furnish the information, he shall immediately inform the requesting tax authority of the same, explaining the nature of the obstacles encountered or the reasons of refusal. IN CASE THE EXCHANGE OF INFORMATION IS AUTOMATIC, THE COMMISSIONER SHALL PROVIDE TAX INFORMATION OBTAINED FROM BANKS AND FINANCIAL INSTITUTIONS IN ACCORDANCE WITH INTERNATIONAL COMMON REPORTING STANDARDS. ‘The term ‘foreign tax authority’, as used herein, shall refer to the tax authority or tax administration of the requesting State under the tax treaty or convention to which the Philippines is a signatory or a party of. (4) ANY TAXPAYER UPON ORDER OF ANY COMPETENT COURT IN CASES INVOLVING OFFENSES COVERED UNDER SECTION 254 OF R.A. 8424, AS AMENDED, SUBJECT TO RULES AND REGULATIONS PRESCRIBED BY THE SECRETARY OF FINANCE UPON sRECOMMENDATION OF THE COMMISSIONER OF INTERNAL REVENUE.” SEC. 5. Section 22 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 22. Definitions. - When used in this Title: [(GG) The term “statutory minimum wage” shall refer to the rate fixed by the Regional Tripartite Wage and Productivity Board, as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE). (HH) The term “statutory minimum wage earner” shall refer toa worker in the private sector paid the statutory minimum wage, or to an employee in the public sector with compensation income of not more than the statutory minimum wage in the non-agricultural sector where he/she is assigned." SEC. 6. Section 24 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 24. Income Tax Rates. — (A) Rates of Income Tax on Individual Citizen and Individual Resident Alien of the Philippines, ~ (1) An income tax is hereby imposed: (a) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within and without the Philippines by every individual citizen of the Philippines residing therein; (b) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C) and D| of this Section, derived for each taxable year from all sources within the Philippines by an individual citizen of the Philippines who is residing outside of the Philippines including overseas 6contract workers referred to in Subsection (C) of Section 23 hereof; and (c) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within the Philippines by an individual alien who is a resident of the Philippines. (2) Rates of Tax on Taxable Income of Individuals. — The tax shall be computed in accordance with and at the rates established in the following schedule: {Not over P10,000 .......... . 5% Over P10,000 but not over P30,000..... ...P500 + 10% of the excess over P10,000 Over P30,000 but not over P70,000 .. ....P2,500 + 15% of the excess over P30,000 Over P70,000 but not over P140,000.... .-P8,500 + 20% of the excess overP70,000 Over P140,000 but not over P250,000..... P22,500 +25% of the excess over P140,000 Over P250,000 but not over P500,000..... P50,000 +30% of the excess over P250,000 Over P500,000.... -.P125,000+32%of the excess over P500,000 | (A) ON COMPENSATION INCOME EARNERS. - TAX SCHEDULE EFFECTIVE JULY 1, 2017 AND TAXABLE YEARS 2018 AND 2019 NOT OVER P250,000 ... + O% OVER P250,000 BUT NOT OVER P400,000 .. ... 20% OF THE EXCESS OVER P250,000 OVER P400,000 BUT NOT OVER P800,000 P30,000 + 25% THE EXCESS OVER P400,000Swomiuavnewn— i 12 13 4 1S 16 17 18 19 20 21 2 24 25 26 27 28 29 30 3 32 33 34 35 36 37 38 39 40 41 42 43 45 46 47 48 49 50 OVER P800,000 BUT NOT OVER P2,000,001 P130,000 + 30% THE EXCESS OVER P800,000 OVER P2,000,000 BUT NOT OVER P5,000,000 ........P490,000 + 32% OF THE EXCESS OVER P2,000,000 OVER P5,000,000 ............ .-P1,450,000 + 35% OF THE EXCESS OVER P5,000,000 TAX SCHEDULE EFFECTIVE JANUARY 1, 2020 AND ONWARDS NOT OVER P250,000 .. 0% OVER P250,000 BUT NOT OVER P400,000 .. ..15% OF THE EXCESS OVER P250,000 OVER P400,000 BUT NOT OVER P800,000 ... .P22,500 + 20% OF THE EXCESS OVER P400,000 OVER P800,000 BUT NOT OVER P2,000,000 ...........P102,500 + 25% OF THE EXCESS OVER P800,000 OVER P2,000,000 BUT NOT OVER P5,000,000 ........P402,500 + 30% OF THE EXCESS OVER P2,000,000 OVER P5,000,000 ... .--P1,302,500 + 35% OF THE EXCESS OVER P5,000,000 PROVIDED, THAT AFTER 2021, THE TAXABLE INCOME LEVELS AND BASE IN THE ABOVE SCHEDULE SHALL BE ADJUSTED ONCE EVERY THREE (3) YEARS THROUGH RULES AND REGULATIONS ISSUED BY THE SECRETARY OF FINANCE AFTER CONSIDERING THE EFFECT ON THE SAME OF THE FIVE-YEAR CUMULATIVE CPI INFLATION RATE ROUNDED OFF TO THE NEAREST THOUSANDTH. For married individuals, the husband and wife, subject to the provision of Section 51 (D) hereof, shall compute separately theirindividual income tax based on their respective total taxable income: Provided, That if any income cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income. (Provided, That minimum wage earners as defined in Section 22 (HH) of this Code shall be exempt from the payment of income tax on their taxable income: Provided, further, That the holiday pay, overtime pay, night shift differential pay and hazard pay received by such minimum wage earners shall likewise be exempt from income tax.] (B) RATE OF TAX FOR SELF-EMPLOYED AND/OR PROFESSIONALS WHOSE GROSS SALES OR GROSS RECEIPTS DO NOT EXCEED THE VAT THRESHOLD AS PROVIDED IN SECTION 109 OF THIS CODE. - AN EIGHT PERCENT (8%) INCOME TAX ON GROSS SALES OR GROSS RECEIPTS SHALL BE IMPOSED IN LIEU OF PERCENTAGE TAX. (C) RATE OF TAX FOR SELF-EMPLOYED AND/OR PROFESSIONALS WHOSE GROSS SALES OR GROSS RECEIPTS EXCEED THE VAT THRESHOLD AS PROVIDED IN SECTION 109 OF THIS CODE. — SELF-EMPLOYED AND/OR PROFESSIONALS SHALL BE TAXED IN THE SAME MANNER AS CORPORATIONS AS TO APPLICABLE TAX RATE, MINIMUM INCOME TAX AND ALLOWABLE DEDUCTIONS, AS. PROVIDED IN SECTIONS 27 (A), 27 (E) AND 34, RESPECTIVELY, OF THIS CODE. (D) RENEWAL REQUIREMENT FOR PROFESSIONAL LICENSE — PROFESSIONALS SHALL BE REQUIRED TO PRESENT A CERTIFICATE OF TAX PAYMENT FROM THE BIR OR CERTIFIED TRUE COPY OF THEIR LATEST INCOME TAX RETURN (ITR), AT THE OPTION OF THE TAXPAYER, UPON APPLICATION FOR RENEWAL OF THEIR RESPECTIVE PROFESSIONAL LICENSE. (B) Rate of Tax on Certain Passive Income: - (1) Interests, Royalties, Prizes and Other Winnings. — A final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements; royalties, except on books, as well as other literary works and musical compositions, which shall be imposed a final tax of ten percent (10%); prizes (except prizes amounting to Ten thousand pesos (P10,000) or less which shall be subject to tax under Subsection (A) of section 24; and other 9