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Things you need to know about Tax Reform for Attracting Better and High-quality

Opportunities (TRABAHO) bill


TRABAHO Bill is the 2nd Package of the government’s comprehensive tax reform program.

There are two version of the said bill listed as follows:


 House Bill No. 8083 otherwise known as Tax Reform for Attracting Better and High-quality Opportunities or “TRABAHO Bill” submitted to and approved by
the House of Representatives in its third and final reading last 10 September 2018.
 Senate Bill No 1906 otherwise known as Comprehensive Income Tax and Incentive Reform Act filed by Sen. Vicente Sotto last 2 August 2018

Salient Provisions

Senate Bill House Bill


Lower Tax Rate 25% 20% (2% reduction annually)

 Effectively reduce the non-deductible


interest expense ratio

Removal of the preferential tax rate granted to the -do- None


following
 Proprietary educational institutions
 NRFC lessor of cinematographic films
 NRFC lessor and owner of chartered
machineries and aircraft
Definition of Non Resident Citizen Replaced the definition of non-resident citizen
from “most of the time” with “for 183 days or more”

.
 Senate version removed income tax preferential rate granted to proprietary educational institutions, NRFC lessor of cinematographic films, NRFC lessor and
owner of chartered machineries and aircraft.
 The house version replace the definition of non-resident citizen from “most of the time” with “for 183 days or more”
 Increase in income tax rates of: (a) interest income derived by RFCs from a depository bank under the expanded foreign currency deposit system from 7.5%
to 15%; and (b) capital gains tax on sale of shares of stocks not traded in the stock exchange by RFC and NRFCs from 5%/10% to 15%
Sec Current Law House Bill No. 8083 Senate Bill No 1906

 The OSD regulation is repealed in both version. The House version is that 40% optional standard deduction (“OSD”) on gross income shall be applicable
only to individuals (except non-resident aliens) and Micro, Small and Medium Enterprises (“MSME”) as determined by the Department of Trade and Industry
while the senate version reduced OSD to 20%.
 Introduction of a general anti-avoidance rule where the commissioner is authorized to impute income and deductions.
 Removal of the option to apply for the issuance of tax credit certificate on the refund of input VAT attributable to zero-rated sales
 Both versions increased the penalties and imprisonment period for specific violations of the Tax Code.
 The senate version repealed Sec 25 (c) , Sec 25 (d) and Sec 25 (f)
 The house version aims to remove the 15% preferential tax rate to NRFC ROHQ within 2 year from the enactment of the proposed bill.
 The house and senate versions defined reorganization that will be used to determine tax free merger and consolidation.
 In the senate version, Sec 220 is amended to include a provision where all civil and criminal actions shall be brought in the name of the government of the
Philippines.
 Instead of the taxpayer and the commissioner to agree on the extension of the assessment. The proposed HB requires the taxpayer to apply for the
extension which should not exceed 6 months.
 House and senate versions aims to regulate the grant of fiscal incentive. The law aims to grant incentives only to the strategic investment priority plan of
the government such as those that will provide influx of investment outside metro manila, influx of investment in the Philippines, influx of employment, spur
regional or global operations in the country, agribusiness related and increase market competitiveness
 Both house and senate have limited the ITH of enterprise granted with fiscal incentive to a maximum of 5 years
Sec Current Law House Bill No. 8083 Senate Bill No 1906

4 SECTION 4. Power of the Commissioner to Provides that the power to interpret Title XIII None
Interpret Tax Laws and to Decide Tax Cases . — (Repealing Provisions) of the NIRC shall be under the
The power to interpret the provisions of this Code exclusive and original jurisdiction of the secretary of
and other tax laws shall be under the exclusive finance
and original jurisdiction of the Commissioner,
subject to review by the Secretary of Finance.
"The power to decide disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or
other matters arising under this Code or other
laws or portions thereof administered by the
Bureau of Internal Revenue is vested in the
Commissioner, subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals.
5 SECTION 5. Power of the Commissioner to Sec 5 powers of the commissioner will include the Same in substance with the house bill
Obtain Information, and to Summon, Examine, power to issue SDT upon the failure of the TP to furnish
and Take Testimony of Persons. information and records requested. The SDT shall be
served by the revenue officer assigned to investigate
the case through personal service or in accordance to
the rules of court.
6 "(A) Examination of Returns and Determination Sec 6-A provides that the LOA and assessment notices Inclusion of a provision that the known address
of Tax Due. — After a return has been 8led as may be served in accordance with the rules of court where the LOA shall be served shall either be the
required under the provisions of this Code, the place of residence or a place other than the
Commissioner or his duly authorized registered address but in which the business
representative may authorize the examination of activities is conducted.
any taxpayer and the assessment of the correct
amount of tax: Provided, however, That failure to
8le a return shall not prevent the Commissioner
from authorizing the examination of any
taxpayer. "The tax or any de8ciency tax so
assessed shall be paid upon notice and demand
from the Commissioner or from his duly
authorized representative.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

20 SEC. 20. Submission of Report and Pertinent Added a new provision which is the SUBMISSION OF Same in substance with the house bill.
Information by the Commissioner - (A) TAX RELATED INFORAMATION TO THE
Submission of Pertinent Information to DEPARTMENT OF FINANCE.
Congress. - The provision of Section 270 of this
Code to the contrary notwithstanding, the
Commissioner shall, upon request of Congress
and in aid of legislation, furnish its appropriate
Committee pertinent information including but
not limited to: industry audits, collection
performance data, status reports in criminal
actions initiated against persons and taxpayer's
returns: Provided, however, That any return or
return information which can be associated with,
or otherwise identify, directly or indirectly, a
particular taxpayer shall be furnished the
appropriate Committee of Congress only when
sitting in Executive Session Unless such
taxpayer otherwise consents in writing to such
disclosure.

(B) Report to Oversight Committee. - The


Commissioner shall, with reference to Section
204 of this Code, submit to the Oversight
Committee referred to in Section 290 hereof,
through the Chairmen of the Committee on Ways
and Means of the Senate and House of
Representatives, a report on the exercise of his
powers pursuant to the said section, every six (6)
months of each calendar year
Sec Current Law House Bill No. 8083 Senate Bill No 1906

22 The definition of a non-resident citizen includes The phrase “most of the time” was replaced with “for The bill include the definition of the following in the
citizen of the Philippines who works and derives 183 days or more” tax code.
income from abroad and whose employment  Capital Equipment – machinery, equipment,
thereat requires him to be physically present major component, fittings and accompaniments
abroad most of the time during the taxable year. which is reasonably needed in the registered
activity.
 Export Enterprise – a registered enterprise that
is a manufacturer, processor or service provider
and whose sale is at least 90% of its annual
production
 Domestic Enterprise – renders service or
produce goods locally and does not meet the
export requirements
 Export Sales of Goods – shall mean sale of an
EE paid for in FREELY CONVERTIBLE
CURRENCY INWARDLY remitted from the ff:
a. Sale and actual shipment of goods to a
foreign country
b. Sales to Diplomatic institutions under a
treaty
c. Sale of an EE to international transport by
sea or air EXCEPT FUEL forming part of
direct cost needed for the transport
operations (A REVISION ON THE TRAIN
LAW)
 Export Sales of Service - shall mean sale of an
EE paid for in FREELY CONVERTIBLE
CURRENCY INWARDLY remitted from the ff:
a. Services rendered to NRF clients
b. Services to Diplomatic institutions under
a treaty
c. Services for OVERHAUL, REPAIR and
MAINTENANCE of international
Sec Current Law House Bill No. 8083 Senate Bill No 1906

shipping or transport (REVISION TO


THE TRAIN LAW)
 Investment Promotion
 Registered Enterprise
Sec Current Law House Bill No. 8083 Senate Bill No 1906

25 SEC. 25. Tax on Nonresident Alien Individual- None The bill repealed Sec 25 (c) , Sec 25 (d) and Sec 25
(f)
(A) Nonresident Alien Engaged in trade or
Business Within the Philippines. - (1) In
General. - A nonresident alien individual
engaged in trade or business in the Philippines
shall be subject to an income tax in the same
manner as an individual citizen and a resident
alien individual, on taxable income received
from all sources within the Philippines.

A nonresident alien individual who shall come


to the Philippines and stay therein for an
aggregate period of more than one hundred
eighty (180) days during any calendar year
shall be deemed a 'nonresident alien doing
business in the Philippines'. Section 22 (G) of
this Code notwithstanding.

(2) Cash and/or Property Dividends from a


Domestic Corporation or Joint Stock Company,
or Insurance or Mutual Fund Company or
Regional Operating Headquarters or
Multinational Company, or Share in the
Distributable Net Income of a Partnership
(Except a General Professional Partnership),
Joint Account, Joint Venture Taxable as a
Corporation or Association., Interests,
Royalties, Prizes, and Other Winnings. - Cash
and/or property dividends from a domestic
corporation, or from a joint stock company, or
from an insurance or mutual fund company or
from a regional operating headquarters of
multinational company, or the share of a
nonresident alien individual in the distributable
Sec Current Law House Bill No. 8083 Senate Bill No 1906

net income after tax of a partnership (except a


general professional partnership) of which he is
a partner, or the share of a nonresident alien
individual in the net income after tax of an
association, a joint account, or a joint venture
taxable as a corporation of which he is a
member or a co-venturer; interests; royalties (in
any form); and prizes (except prizes amounting
to Ten thousand pesos (P10,000) or less which
shall be subject to tax under Subsection (B)(1)
of Section 24) and other winnings (except
Philippine Charity Sweepstakes and Lotto
winnings); shall be subject to an income tax of
twenty percent (20%) on the total amount
thereof: Provided, however, that royalties on
books as well as other literary works, and
royalties on musical compositions shall be
subject to a final tax of ten percent (10%) on the
total amount thereof: Provided, further, That
cinematographic films and similar works shall
be subject to the tax provided under Section 28
of this Code: Provided, furthermore, That
interest income from long-term deposit or
investment in the form of savings, common or
individual trust funds, deposit substitutes,
investment management accounts and other
investments evidenced by certificates in such
form prescribed by the Bangko Sentral ng
Pilipinas (BSP) shall be exempt from the tax
imposed under this Subsection: Provided,
finally, that should the holder of the certificate
pre-terminate the deposit or investment before
the fifth (5th) year, a final tax shall be imposed
on the entire income and shall be deducted and
withheld by the depository bank from the
Sec Current Law House Bill No. 8083 Senate Bill No 1906

proceeds of the long-term deposit or investment


certificate based on the remaining maturity
thereof:

Four (4) years to less than five (5) years - 5%;

Three (3) years to less than four (4) years -


12%; and Less than three (3) years - 20%.

(3) Capital Gains. - Capital gains realized from


sale, barter or exchange of shares of stock in
domestic corporations not traded through the
local stock exchange, and real properties shall
be subject to the tax prescribed under
Subsections (C) and (D) of Section 24.

(B) Nonresident Alien Individual Not Engaged


in Trade or Business Within the Philippines. -
There shall be levied, collected and paid for
each taxable year upon the entire income
received from all sources within the Philippines
by every nonresident alien individual not
engaged in trade or business within the
Philippines as interest, cash and/or property
dividends, rents, salaries, wages, premiums,
annuities, compensation, remuneration,
emoluments, or other fixed or determinable
annual or periodic or casual gains, profits, and
income, and capital gains, a tax equal to
twenty-five percent (25%) of such income.

Capital gains realized by a nonresident alien


individual not engaged in trade or business in
the Philippines from the sale of shares of stock
in any domestic corporation and real property
Sec Current Law House Bill No. 8083 Senate Bill No 1906

shall be subject to the income tax prescribed


under Subsections (C) and (D) of Section 24.

(C) Alien Individual Employed by Regional or


Area Headquarters and Regional Operating
Headquarters of Multinational Companies. -
There shall be levied, collected and paid for
each taxable year upon the gross income
received by every alien individual employed by
regional or area headquarters and regional
operating headquarters established in the
Philippines by multinational companies as
salaries, wages, annuities, compensation,
remuneration and other emoluments, such as
honoraria and allowances, from such regional
or area headquarters and regional operating
headquarters, a tax equal to fifteen percent
(15%) of such gross income: Provided,
however, That the same tax treatment shall
apply to Filipinos employed and occupying the
same position as those of aliens employed by
these multinational companies.

For purposes of this Chapter, the term


'multinational company' means a foreign firm or
entity engaged in international trade with
affiliates or subsidiaries or branch offices in the
Asia-Pacific Region and other foreign markets.

(D) Alien Individual Employed by Offshore


Banking Units. - There shall be levied, collected
and paid for each taxable year upon the gross
income received by every alien individual
employed by offshore banking units established
in the Philippines as salaries, wages, annuities,
Sec Current Law House Bill No. 8083 Senate Bill No 1906

compensation, remuneration and other


emoluments, such as honoraria and
allowances, from such off-shore banking units,
a tax equal to fifteen percent (15%) of such
gross income: Provided, however, That the
same tax treatment shall apply to Filipinos
employed and occupying the same positions as
those of aliens employed by these offshore
banking units. cralaw

(E) Alien Individual Employed by Petroleum


Service Contractor and Subcontractor - An
Alien individual who is a permanent resident of
a foreign country but who is employed and
assigned in the Philippines by a foreign service
contractor or by a foreign service subcontractor
engaged in petroleum operations in the
Philippines shall be liable to a tax of fifteen
percent (15%) of the salaries, wages, annuities,
compensation, remuneration and other
emoluments, such as honoraria and
allowances, received from such contractor or
subcontractor: Provided, however, That the
same tax treatment shall apply to a Filipino
employed and occupying the same position as
an alien employed by petroleum service
contractor and subcontractor. cralaw

Any income earned from all other sources


within the Philippines by the alien employees
referred to under Subsections (C), (D) and (E)
hereof shall be subject to the pertinent income
tax, as the case may be, imposed under this
Code.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

27 Section 27(A) Domestic corporations are taxed  Current RCIT of 30% is to be reduced by 2%  CIT rate is reduced to 25%. Note that across the
on taxable income sourced from within and points every other year beginning 1 January 2021 ASEAN, Philippine has the highest rate at 30%
outside the Philippines based on the following until 1 January 2029. By 2029, tax rate will be followed by Indonesia and Myanmar at 25%.
tax rates: 20%  Deleted the optional tax rate of 15%
 Removed the preferential rate of 10% granted to
• 30% effective 1 January 2009; or  The President may advance the reduction when proprietary educational institutions
• Optional tax rate of 15% of gross income adequate savings are realized from the additional  Removed tax exemption of local water districts
subject to certain conditions provisions on realization of fiscal incentives. (GOCC)
 Deleted the optional tax rate of 15%
Sec Current Law House Bill No. 8083 Senate Bill No 1906

27B "(B) Proprietary Educational Institutions and  Replaced DECS with DEPED None
Hospitals. — Proprietary educational institutions
and hospitals which are nonprofit shall pay a tax
of ten percent (10%) on their taxable income
except those covered by Subsection (D) hereof:
Provided, That if the gross income from
unrelated trade, business or other activity
exceeds 8fty percent (50%) of the total gross
income derived by such educational institutions
or hospitals from all sources, the tax prescribed
in Subsection (A) hereof shall be imposed on the
entire taxable income. For purposes of this
Subsection, the term 'unrelated trade, business
or other activity' means any trade, business or
other activity, the conduct of which is not
substantially related to the exercise or
performance by such educational institution or
hospital of its primary purpose or function. A
'proprietary educational institution' is any private
school maintained and administered by private
individuals or groups with an issued permit to
operate from the Department of Education,
Culture and Sports (DECS), or the Commission
on Higher Education (CHED), or the Technical
Education and Skills Development Authority
(TESDA), as the case may be, in accordance
with existing laws and regulations
Sec Current Law House Bill No. 8083 Senate Bill No 1906

27C "(C) Government-owned or Controlled  Included Home Development Mutual Fund  Removed tax exemption of local water districts
Corporations, Agencies or Instrumentalities. — (“HDMF”) in the coverage of income tax exempt (GOCC)
The provisions of existing special or general laws government- owned and – controlled
to the contrary notwithstanding, all corporations, corporations, agencies or instrumentalities
agencies, or instrumentalities owned or
controlled by the Government, except the
Government Service Insurance System (GSIS),
the Social Security System (SSS), the Philippine
Health Insurance Corporation (PHIC), the
Philippine Charity Sweepstakes Office PCSO)
and the local water districts shall pay such rate
of tax upon their taxable income as are imposed
by this Section upon corporations or associations
engaged in a similar business, industry, or
activity.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

28 (A)(1) "SECTION 28. Rates of Income Tax on Foreign  Current RCIT of 30% is to be reduced by 2%  CIT rate is reduced to 25%. Note that across the
Corporations. — "(A) Tax on Resident Foreign points every other year beginning 1 January 2021 ASEAN, Philippine has the highest rate at 30%
Corporations. — "(1) In General. — Except as until 1 January 2029. By 2029, tax rate will be followed by Indonesia and Myanmar at 25%.
otherwise provided in this Code, a corporation 20%
organized, authorized, or existing under the laws
of any foreign country, engaged in trade or  The President may advance the reduction when
business within the Philippines, shall be subject adequate savings are realized from the additional
to an income tax equivalent to thirty-8ve percent provisions on realization of fiscal incentives.
(35%) of the taxable income derived in the
preceding taxable year from all sources within
the Philippines: Provided, That effective January
1, 1998, the rate of income tax shall be thirty-four
percent (34%); effective January 1, 1999, the
rate shall be thirty-three percent (33%); and
effective January 1, 2000 and thereafter, the rate
shall be thirty-two percent (32%). "In the case of
corporations adopting the fiscal year accounting
period, the taxable income shall be computed
without regard to the specific date when sales,
purchases and other transactions occur. Their
income and expenses for the 8scal year shall be
deemed to have been earned and spent equally
for each month of the period.

The reduced corporate income tax rates shall be


applied on the amount computed by multiplying
the number of months covered by the new rates
within the fiscal year by the taxable income of the
corporation for the period, divided by twelve.
"Provided, however, That a resident foreign
corporation shall be granted the option to be
taxed at 8fteen percent (15%) on gross income
under the same conditions, as provided in
Section 27(A).
Sec Current Law House Bill No. 8083 Senate Bill No 1906

28(A)(4) (4) Offshore Banking Units. — The provisions of  Repealed the 10% special tax rate of OBUs  No amendment
any law to the contrary notwithstanding, income
derived by offshore banking units authorized by
the Bangko Sentral ng Pilipinas (BSP), from
foreign currency transactions with local
commercial banks, including branches of foreign
banks that may be authorized by the Bangko
Sentral ng Pilipinas (BSP) to transact business
with offshore banking units, including any
interest income derived from foreign currency
loans granted to residents, shall be subject to a
final income tax at the rate of ten percent (10%)
of such income.

Any income of nonresidents, whether individuals


or corporations, from transactions with said
offshore banking units shall be exempt from
income tax.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

28(A)(5) 5 Tax on Branch Profits Remittances. — Any  Removed the exemption of PEZA-registered  Retained the preferential rate of 15%
profit remitted by a branch to its head office shall branches from the 15% BPRT
be subject to a tax of fifteen percent (15%) which
shall be based on the total profits applied or
earmarked for remittance without any deduction
for the tax component thereof (except those
activities which are registered with the Philippine
Economic Zone Authority). The tax shall be
collected and paid in the same manner as
provided in Sections 57 and 58 of this
Code: Provided, That interests, dividends, rents,
royalties, including remuneration for technical
services, salaries, wages, premiums, annuities,
emoluments or other fixed or determinable
annual, periodic or casual gains, profits, income
and capital gains received by a foreign
corporation during each taxable year from all
sources within the Philippines shall not be
treated as branch profits unless the same are
effectively connected with the conduct of its trade
or business in the Philippines
24(A)(6) (6) Regional or Area Headquarters and  ROHQs shall be subject to the regular Repealed the provision
Regional Operating Headquarters of corporate income tax after 2 years from
Multinational Companies. — effectivity of the law.

(a) Regional or area headquarters as defined


in Section 22(DD) shall not be subject to
income tax.

(b) Regional operating headquarters as


defined in Section 22(EE) shall pay a tax of ten
percent (10%) of their taxable income.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

24(A)(7) Section 28 (A)(7)(a) Interest income of an RFC  Increased the tax rate from 7 ½% to 15%  Increased the tax rate from 7 ½% to 15%
from a depository bank under the expanded
foreign currency deposit system shall be
subject to a final income tax rate of 7 ½%.
24(A)(7)(C) (7) Tax on Certain Incomes Received by a  Increased the capital gains tax rate from 5%/10%  Increased the capital gains tax rate from 5%/10%
Resident Foreign Corporation. — to 15% to 15%

(c) Capital Gains from Sale of Shares of


Stock Not Traded in the Stock Exchange. — A
final tax at the rates prescribed below is
hereby imposed upon the net capital gains
realized during the taxable year from the sale,
barter, exchange or other disposition of
shares of stock in a domestic corporation
except shares sold or disposed of through the
stock exchange:

Not over P100,000 5%


On any amount in
excess of P100,000 10%
Sec Current Law House Bill No. 8083 Senate Bill No 1906

28(B)(1) "(B) Tax on Nonresident Foreign Corporation. —  Current RCIT of 30% is to be reduced by 2%  CIT rate is reduced to 25%. Note that across the
"(1) In General. — Except as otherwise points every other year beginning 1 January 2021 ASEAN, Philippine has the highest rate at 30%
provided in this Code, a foreign corporation not until 1 January 2029. By 2029, tax rate will be followed by Indonesia and Myanmar at 25%.
engaged in trade or business in the Philippines 20%  Repealed Sec 28(B)(2) – NRFC
shall pay a tax equal to thirty-five percent (35%) Cinematographic film lessor, Sec 28(B)(3) –
of the gross income received during each  The President may advance the reduction when NRFC owner or lessor of vessels chartered by
taxable year from all sources within the adequate savings are realized from the additional Philippine nationals, Sec 28(B)(4) – NRFC owner
Philippines, such as interests, dividends, rents, provisions on realization of fiscal incentives. or lessor of aircraft, machineries and other
royalties, salaries, premiums (except equipment.
reinsurance premiums), annuities, emoluments
or other fixed or determinable annual, periodic or
casual gains, profits and income, and capital
gains, except capital gains subject to tax under
subparagraphs 5(c) and (d): Provided, That
effective January 1, 1998, the rate of income tax
shall be thirty-four percent (34%); effective
January 1, 1999, the rate shall be thirty-three
percent (33%); and, effective January 1, 2000
and thereafter, the rate shall be thirty-two
percent (32%). cdtai
Sec Current Law House Bill No. 8083 Senate Bill No 1906

28(b)(5)(b) (B) Tax on Nonresident Foreign Corporation. —  Adjusted the percentage of the required allowed Adjusted the percentage of the required allowed
credit against the tax due in the foreign country to credit against the tax due in the foreign country to
(5) Tax on Certain Incomes Received by a 15%, which represents the difference between the 10%, which represents the difference between the
Nonresident Foreign Corporation. — RCIT rate and 15% tax on dividends beginning 1 RCIT rate
January 2019
(b) Intercorporate Dividends. — A final
withholding tax at the rate of fifteen percent
(15%) is hereby imposed on the amount of cash
and/or property dividends received from a
domestic corporation, which shall be collected
and paid as provided in Section 57(A) of this
Code, subject to the condition that the country in
which the nonresident foreign corporation is
domiciled, shall allow a credit against the tax due
from the nonresident foreign corporation taxes
deemed to have been paid in the Philippines
equivalent to twenty percent (20%) for 1997,
nineteen percent (19%) for 1998, eighteen
percent (18%) for 1999, and seventeen percent
(17%) thereafter, which represents the difference
between the regular income tax of thirty-five
percent (35%) in 1997, thirty-four percent (34%)
in 1998, thirty-three percent (33%) in 1999, and
thirty-two percent (32%) thereafter on
corporations and the fifteen percent (15%) tax on
dividends as provided in this subparagraph;|||
Sec Current Law House Bill No. 8083 Senate Bill No 1906

28 (B)(5)(c) "(B) Tax on Nonresident Foreign Corporation. — • Increased the capital gains tax rate from 5%/10% to • Increased the capital gains tax rate from 5%/10% to
"(5) Tax on Certain Incomes Received by a 15% 15%
Nonresident Foreign Corporation. - Capital
Gains from Sale of Shares of Stock not Traded
in the Stock Exchange. — A final tax at the rates
prescribed below is hereby imposed upon the net
capital gains realized during the taxable year
from the sale, barter, exchange or other
disposition of shares of stock in a domestic
corporation, except shares sold, or disposed of
through the stock exchange:

Not over P100,000 5%


On any amount in excess of P100,000 10%

34 (A)(2) SEC. 34. Deductions from Gross Income. None Repealed


(A) Expenses
(2) Expenses Allowable to Private Educational
Institutions. - In addition to the expenses
allowable as deductions under this Chapter, a
private educational institution, referred to under
Section 27 (B) of this Code, may at its option
elect either: (a) to deduct expenditures otherwise
considered as capital outlays of depreciable
assets incurred during the taxable year for the
expansion of school facilities or (b) to deduct
allowance for depreciation thereof under
Subsection (F) hereof.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

.34 (B)(1) SECTION 34. Deductions from Gross Income. The interest expense reduction shall be lowered to as The interest expense reduction rate to 20% if the CIT
— low as nil of the interest income subjected to fnal tax in is 25%
B) Interest. — consonance with the reduced RCIT

(1) In General. — The amount of interest


paid or incurred within a taxable year on
indebtedness in connection with the
taxpayer's profession, trade or business shall
be allowed as deduction from gross
income: Provided, however, That the
taxpayer's otherwise allowable deduction for
interest expense shall be reduced by an
amount equal to the following percentages of
the interest income subjected to final tax:

Forty-one percent (41%) beginning


January 1, 1998;
Thirty-nine percent (39%) beginning
January 1, 1999; and
Thirty-eight percent (38%) beginning
January 1, 2000
Sec Current Law House Bill No. 8083 Senate Bill No 1906

34(L) Optional Standard Deduction. — In lieu of the  OSD shall be based on “gross income” and OSD rate is reduced to 20%
deductions allowed under the preceding applicable only to the following: Individuals
Subsections, an individual subject to tax under (except non-resident alien); and Micro, small and
Section 24, other than a nonresident alien, may medium sized enterprise as determined by the
elect a standard deduction in an amount not Department of Trade and Industry
exceeding ten percent (10%), now 40% of his  Deleted the provision added by TRAIN prescribing
gross income. Unless the taxpayer signifies in that general professional partnership and the
his return his intention to elect the optional partners comprising the partnership may avail of
standard deduction, he shall be considered as the OSD only once
having availed himself of the deductions allowed
in the preceding Subsections. Such election
when made in the return shall be irrevocable for
the taxable year for which the return is
made: Provided, That an individual who is
entitled to and claimed for the optional standard
deduction shall not be required to submit with his
tax return such financial statements otherwise
required under this Code: Provided, further, That
except when the Commissioner otherwise
permits, the said individual shall keep such
records pertaining to his gross income during the
taxable year, as may be required by the rules and
regulations promulgated by the Secretary of
Finance, upon recommendation of the
Commissioner.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

40 "SECTION 40. Determination of Amount and  Defined Reorganization as Same in substance with the house bill as to the
Recognition of Gain or Loss. — definition of reorganization
a) A corporation, which is a party to a merger or
(C) Exchange of Property. — consolidation, exchanges property solely for
stock in a corporation, which is a party to the
(1) General Rule. — Except as herein merger or consolidation; or(
provided, upon the sale or exchange of b) THE ACQUISITION BY ONE CORPORATION,
property, the entire amount of the gain or loss, IN EXCHANGE SOLELY FOR ALL OR A PART
as the case may be, shall be recognized. OF ITS VOTING STOCK, OR IN EXCHANGE
SOLELY FOR ALL OR A PART OF THE
(2) Exception. — No gain or loss shall be VOTING STOCK OF A CORPORATION
recognized if in pursuance of a plan of merger WHICH IS IN CONTROL OF THE ACQUIRING
or consolidation — CORPORATION, OF STOCK OF ANOTHER
CORPORATION IF, IMMEDIATELY AFTER
(a) A corporation, which is a party to a merger THE ACQUISITION, THE ACQUIRING
or consolidation, exchanges property solely for CORPORATION HAS CONTROL OF SUCH
stock in a corporation, which is a party to the OTHER CORPORATION WHETHER OR NOT
merger or consolidation; or SUCH ACQUIRING CORPORATION HAD
(b) A shareholder exchanges stock in a CONTROL IMMEDIATELY BEFORE THE
corporation, which is a party to the merger or ACQUISITION;
consolidation, solely for the stock of another c) THE ACQUISITION BY ONE CORPORATION,
corporation also a party to the merger or IN EXCHANGE SOLELY FOR ALL OR A PART
consolidation; or OF ITS VOTING STOCK OR IN EXCHANGE
(c) A security holder of a corporation, which SOLELY FOR ALL OR A PART OF THE
is a party to the merger or consolidation, VOTING STOCK OF A CORPORATION
exchanges his securities in such corporation, WHICH IS IN CONTROL OF THE ACQUIRING
solely for stock or securities in another CORPORATION, OR SUBSTANTIALLY ALL
corporation, a party to the merger or OF THE PROPERTIES OF ANOTHER
consolidation. CORPORATION, BUT IN DETERMINING
No gain or loss shall also be recognized if WHETHER THE EXCHANGE IS SOLELY FOR
property is transferred to a corporation by a STOCK THE ASSUMPTION BY THE
person in exchange for stock or unit of ACQUIRING CORPORATION OF A LIABILITY
participation in such a corporation of which OF THE OTHER SHALL BE DISREGARDED;
as a result of such exchange said person, d) A RECAPITALIZATION; OR
alone or together with others, not exceeding e) A REINCORPORATION.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

four (4) persons, gains control of said


corporation: Provided, That stocks issued for
services shall not be considered as issued in The phrase “gains control of said corporation” was
return for property. replaced with “and immediately after, such person or
persons are in control

Expressly included the bona fde or legitimate business


purpose requirement of the transaction; otherwise,
Section 50 (i.e., on related-party transactions) would
apply

Sale or exchanges of property used for business for


shares of stock covered under this subsection shall not
be subject to VAT.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

50 "SECTION 50. Allocation of Income and Includes AUTHORITY OF THE COMMISSIONER TO Same in substance with the house bill including the
Deductions. — In the case of two or more DISTRIBUTE, APPORTION, ALLOCATE, AND inclusion of the authority of the commissioner to
organizations, trades or businesses (whether or IMPUTE INCOME AND DEDUCTIONS TO distribute, apportion, allocate and impute income and
not incorporated and whether or not organized in DISREGARD AND COUNTERACT TAX AVOIDANCE deductions to disregard and counter act tax
the Philippines) owned or controlled directly or ARRANGEMENTS. – IN CASE OF TWO (2) OR avoidance arrangements.
indirectly by the same interests, the MORE ORGANIZATIONS, TRADES OR
Commissioner is authorized to distribute, BUSINESSES, WHETHER OR NOT ORGANIZED IN
apportion or allocate gross income or deductions THE PHILIPPINES, OWNED OR CONTROLLED
between or among such organization, trade or DIRECTLY OR INDIRECTLY BY THE SAME
business, if he determines that such distribution, INTERESTS, THECOMMISSIONER IS AUTHORIZED
apportionment or allocation is necessary in order TO DISTRIBUTE, APPORTION, ALLOCATE, OR
to prevent evasion of taxes or clearly to reflect IMPUTE INCOME OR DEDUCTIONS BETWEEN OR
the income of any such organization, trade or AMONG SUCH ORGANIZATIONS, TRADES OR
business BUSINESSES, IF THE COMMISSIONER
DETERMINES THAT SUCH DISTRIBUTION,
APPORTIONMENT, ALLOCATION, OR
IMPUTATION IS NECESSARY IN ORDER TO
PREVENT AVOIDANCE OF TAXES OR TO
CLEARLY REFLECT THE INCOME OF ANY SUCH
RGANIZATION, TRADE, OR BUSINESS.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

73 SECTION 73. Distribution of Dividends or Provided definition for and corresponding taxation of Same with house bill
Assets by Corporations. — liquidating dividends, which reads:

(A) Definition of Dividends. — The term “(C) LIQUIDATING DIVIDENDS. – LIQUIDATING


'dividends' when used in this Title means any DIVIDENDS ARE DIVIDENDS REPRESENTING
distribution made by a corporation to its THEREMAINING GAINS REALIZED OR LOSS
shareholders out of its earnings or profits and SUSTAINED BYREMAINING GAINS REALIZED OR
payable to its shareholders, whether in money LOSS SUSTAINED BY THE STOCKHOLDER IN A
or in other property. COMPLETE LIQUIDATION ORDISSOLUTION BY A
CORPORATION AND SHALL BECONSIDERED AS
Where a corporation distributes all of its assets TAXABLE INCOME OR A DEDUCTIBLELOSS, AS
in complete liquidation or dissolution, the gain THE CASE MAY BE
realized or loss sustained by the stockholder,
whether individual or corporate, is a taxable
income or a deductible loss, as the case may
be.

(B) Stock Dividend. — A stock dividend


representing the transfer of surplus to capital
account shall not be subject to tax. However, if
a corporation cancels or redeems stock issued
as a dividend at such time and in such manner
as to make the distribution and cancellation or
redemption, in whole or in part, essentially
equivalent to the distribution of a taxable
dividend, the amount so distributed in
redemption or cancellation of the stock shall be
considered as taxable income to the extent that
it represents a distribution of earnings or
profits.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

112 SECTION 112. Refunds or Tax Credits of Input Removed the option to apply for the issuance of tax Sec 112 is amended to include a provision that (A)
Tax. — credit certificate. Sale of raw materials or packaging materials to a
nonresident buyer for delivery to a resident local
(A) Zero-rated or Effectively Zero-rated Sales. Sec 112 now reads as follows: export-oriented enterprise and (B) sale of services to
— Any VAT-registered person, whose sales VAT registered entities in the Philippines for
are zero-rated or effectively zero-rated may, SEC. 112. Refunds of Input Tax. –“(A) Zero-Rated or Processing, manufacturing or repacking goods for
within two (2) years after the close of the Effectively Zero-Rated Sales. –Any VAT-registered other persons doing business outside the Philippines
taxable quarter when the sales were made, person, whose sales are zero-rated or effectively zero- which goods are subsequently exported, where the
apply for the issuance of a tax credit certificate rated may, within two (2) years after the close of the services are paid for in acceptable foreign currency
or refund of creditable input tax due or paid taxable quarter when the sales were made, apply for and accounted for in accordance with the rules and
attributable to such sales, except transitional refund of creditable input tax due or paid attributable to regulations of the Bangko Sentral ng Pilipinas (BSP)
input tax, to the extent that such input tax has such sales, except transitional input tax, to the extent will no longer be subjected to ZERO VAT in
not been applied against output that such input tax has not been applied against output accordance with the VAT refund provision of the
tax: Provided, however, That in the case of tax: Provided, however, That in the case of zero-rated TRAIN LAW.
zero-rated sales under Section sales under Section 106(A)(2)(a)(1), (2) and Section  Removed TCC
106(A)(2)(a)(1),(2) and (B) and Section 108 108 1 (B)(1) and (2), the acceptable foreign currency
(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted
exchange proceeds thereof had been duly for in accordance with the rules and regulations of the
accounted for in accordance with the rules and Bangko Sentral ng Pilipinas (BSP):Provided, further,
regulations of the Bangko Sentral ng Pilipinas That where the taxpayer is engaged in zero-rated or
(BSP): Provided, further, That where the effectively zero-rated sale and also in taxable or
taxpayer is engaged in zero-rated or effectively exempt sale of goods or properties or services, and
zero-rated sale and also in taxable or exempt the amount of creditable input tax due or paid cannot
sale of goods or properties or services, and the be directly and entirely attributed to any one of the
amount of creditable input tax due or paid transactions, it shall be allocated proportionately on the
cannot be directly and entirely attributed to any basis of the volume of sales: Provided, finally, That for
one of the transactions, it shall be allocated a person making sales that are zero-rated under
proportionately on the basis of the volume of Section 108(B)(6), the input taxes shall be allocated
sales. ratably between his zero-rated and non-zero-rated
(B) Capital Goods. — A VAT-registered sales. “(B) Cancellation of VAT Registration. – A
person may apply for the issuance of a tax person whose registration has been cancelled due to
credit certificate or refund of input taxes paid retirement from or cessation of business, or due to
on capital goods imported or locally purchased, changes in or cessation of status under Section 106(C)
to the extent that such input taxes have not of this Code may, within two (2) years from the date of
been applied against output taxes. The cancellation, apply for REFUND.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

application may be made only within two (2)


years after the close of the taxable quarter
when the importation or purchase was made.

117 Section 117 Owners of bancas and owners of Included owners/operators of tricycles operating not None
animal drawn two wheeled vehicles are the more than two (2) units in the coverage of the 3%
only exceptions of the percentage tax of three percentage tax on domestic carriers and keepers of
percent (3%) on domestic carriers and garages
keepers of garages.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

119 SEC. 119. Tax on Franchises. - Any provision of No amendment in the final reading of the HB Included telecommunication and domestic airline
general or special law to the contrary companies in this section
notwithstanding, there shall be levied, assessed
and collected in respect to all franchises on radio
and/or television broadcasting companies which
annual gross receipts of the preceding year does
not exceed Ten million pesos (P10,000.00),
subject to Section 236 of this Code, a tax of three
percent (3%) and on electric, gas and water
utilities, a tax of two percent (2%) on the gross
receipts derived from the business covered by
the law granting the franchise: Provided,
however, That radio and television broadcasting
companies referred to in this Section shall have
an option to be registered as a value-added
taxpayer and pay the tax due thereon: Provided,
further, That once the option is exercised, it shall
not be revoked.

The grantee shall file the return with, and pay the
tax due thereon to the Commissioner or his duly
authorized representative, in accordance with
the provisions of Section 128 of this Code, and
the return shall be subject to audit by the Bureau
of Internal Revenue, any provision of any
existing law to the contrary notwithstanding.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

204 SECTION 204. Authority of the Commissioner Increased the benchmark for the amount of basic tax Same
to Compromise, Abate and Refund or Credit in which compromise subject to the approval of the
Taxes. — The Commissioner may — Evaluation Board which shall be composed of the
Commissioner and the four (4) Deputy Commissioners
(A) Compromise the payment of to 10 million
any internal revenue tax, when:

(1) A reasonable doubt as to the validity of


the claim against the taxpayer exists; or
(2) The financial position of the taxpayer
demonstrates a clear inability to pay the
assessed tax.

The compromise settlement of any tax


liability shall be subject to the following
minimum amounts:

"For cases of financial incapacity, a minimum


compromise rate equivalent to ten percent
(10%) of the basic assessed tax; and

"For other cases, a minimum compromise


rate equivalent to forty percent (40%) of the
basic assessed tax.

"Where the basic tax involved exceeds One


million pesos (P1,000,000) or where the
settlement offered is less than the prescribed
minimum rates, the compromise shall be
subject to the approval of the Evaluation
Board which shall be composed of the
Commissioner and the four (4) Deputy
Commissioners.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

220 "SECTION 220. Form and Mode of Proceeding None Sec 220 is amended to include a provision where all
in Actions Arising under this Code. — Civil and civil and criminal actions shall be brought in the name
criminal actions and proceedings instituted in of the government of the Philippines.
behalf of the Government under the authority of
this Code or other law enforced by the Bureau of Civil actions involving disputed assessments and
Internal Revenue shall be brought in the name of collections or refunds shall be handled exclusively by
the Government of the Philippines and shall be the legal officers of the Bureau.
conducted by legal officers of the Bureau of
Internal Revenue but no civil or criminal action
for the recovery of taxes or the enforcement of
any fine, penalty or forfeiture under this Code
shall be filed in court without the approval of the
Commissioner
Sec Current Law House Bill No. 8083 Senate Bill No 1906

222 SECTION 222. Exceptions as to Period of Instead of the taxpayer and the commissioner to agree Same
Limitation of Assessment and Collection of on the extension of the assessment. The proposed HB
Taxes. — requires the taxpayer to apply for the extension which
(a) In the case of a false or fraudulent return should not exceed 6 months.
with intent to evade tax or of failure to file a
return, the tax may be assessed, or a
proceeding in court for the collection of such
tax may be filed without assessment, at any
time within ten (10) years after the discovery
of the falsity, fraud or omission: Provided,
That in a fraud assessment which has
become final and executory, the fact of fraud
shall be judicially taken cognizance of in the
civil or criminal action for the collection
thereof.
(b) If before the expiration of the time
prescribed in Section 203 for the assessment
of the tax, both the Commissioner and the
taxpayer have agreed in writing to its
assessment after such time, the tax may be
assessed within the period agreed upon. The
period so agreed upon may be extended by
subsequent written agreement made before
the expiration of the period previously agreed
upon.
(c) Any internal revenue tax which has been
assessed within the period of limitation as
prescribed in paragraph (a) hereof may be
collected by distraint or levy or by a
proceeding in court within five (5) years
following the assessment of the tax.
(d) Any internal revenue tax, which has been
assessed within the period agreed upon as
Sec Current Law House Bill No. 8083 Senate Bill No 1906

provided in paragraph (b) hereinabove, may


be collected by distraint or levy or by a
proceeding in court within the period agreed
upon in writing before the expiration of the
five (5)-year period. The period so agreed
upon may be extended by subsequent
written agreements made before the
expiration of the period previously agreed
upon.
(e) Provided, however, That nothing in the
immediately preceding Section and
paragraph (a) hereof shall be construed to
authorize the examination and investigation
or inquiry into any tax return filed in
accordance with the provisions of any tax
amnesty law or decree.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

237 SECTION 237. Issuance of Receipts or In the proposed bill, within 5 years from the effectivity Same
Sales or Commercial Invoices. — All persons of the act and upon establishment of a capable system
subject to an internal revenue tax shall, for of storing and processing required data , the BIR shall
each sale or transfer of merchandise or for require EE, TP engaged in e-commerce and LT TP to
services rendered valued at Twenty-five transmit the e-receipts and invoices to the BIR
pesos (P25.00) or more, issue duly designated e-channel.
registered receipts or sales or commercial
invoices, prepared at least in duplicate,
showing the date of transaction, quantity, unit
cost and description of merchandise or
nature of service: Provided, however, That in
the case of sales, receipts or transfers in the
amount of One hundred pesos (P100.00) or
more, or regardless of amount, where the
sale or transfer is made by a person liable to
value-added tax to another person also liable
to value-added tax; or where the receipt is
issued to cover payment made as rentals,
commissions, compensations or fees,
receipts or invoices shall be issued which
shall show the name, business style, if any,
and address of the purchaser, customer or
client: Provided, further, That where the
purchaser is a VAT-registered person, in
addition to the information herein required,
the invoice or receipt shall further show the
Taxpayer Identification Number (TIN) of the
purchaser.
The original of each receipt or invoice shall
be issued to the purchaser, customer or
client at the time the transaction is effected,
who, if engaged in business or in the exercise
of profession, shall keep and preserve the
same in his place of business for a period of
Sec Current Law House Bill No. 8083 Senate Bill No 1906

three (3) years from the close of the taxable


year in which such invoice or receipt was
issued, while the duplicate shall be kept and
preserved by the issuer, also in his place of
business, for a like period.
The Commissioner may, in meritorious
cases, exempt any person subject to an
internal revenue tax from compliance with the
provisions of this Section.
250 SECTION 250. Failure to File Certain None Increase the penalty amounts of 1k to 5k and 25K to
Information Returns. — In the case of each 50K
failure to file an information return, statement or
list, or keep any record, or supply any information
required by this Code or by the Commissioner on
the date prescribed therefor, unless it is shown
that such failure is due to reasonable cause and
not to willful neglect, there shall, upon notice and
demand by the Commissioner, be paid by the
person failing to file, keep or supply the same,
One thousand pesos (P1,000) for each such
failure: Provided, however, That the aggregate
amount to be imposed for all such failures during
a calendar year shall not exceed Twenty-five
thousand pesos (P25,000)
Sec Current Law House Bill No. 8083 Senate Bill No 1906

255 SECTION 255. Failure to File Return, Supply Penalty/fine on violation of Sec 255 is increased from Increase the penalty to a fine of not less than 100K
Correct and Accurate Information, Pay originally 10K to 100K but not more than 1.2 million from the original 10K. But the fine on the person who
Tax, Withhold and Remit Tax and Refund files a return but subsequently withdraws the filed
Excess Taxes Withheld on Compensation. — return after obtaining the stamp/seal amount to not
Any person required under this Code or by rules less than 100K but not to exceed 200K
and regulations promulgated thereunder to pay
any tax, make a return, keep any record, or
supply correct and accurate information, who
willfully fails to pay such tax, make such return,
keep such record, or supply such correct and
accurate information, or withhold or remit taxes
withheld, or refund excess taxes withheld on
compensation, at the time or times required by
law or rules and regulations shall, in addition to
other penalties provided by law, upon conviction
thereof, be punished by a fine of not less than
Ten thousand pesos (P10,000) and suffer
imprisonment of not less than one (1) year but
not more than ten (10) years.
Any person who attempts to make it appear for
any reason that he or another has in fact filed a
return or statement, or actually files a return or
statement and subsequently withdraws the
same return or statement after securing the
official receiving seal or stamp of receipt of an
internal revenue office wherein the same was
actually filed shall, upon conviction therefor, be
punished by a fine of not less than Ten thousand
pesos (P10,000) but not more than Twenty
thousand pesos (P20,000) and suffer
imprisonment of not less than one (1) year but
not more than three (3) years.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

256 "SECTION 256. Penal Liability of Corporations. Increase the penal liability of corporations from 50K- Senate version is 100K to 300K
— Any corporation, association or general co- 100K to 200K to 2.4 million.
partnership liable for any of the acts or omissions
penalized under this Code, in addition to the
penalties imposed herein upon the responsible
corporate officers, partners, or employees, shall,
upon conviction for each act or omission, be
punished by a fine of not less than Fifty thousand
pesos (P50,000) but not more than One hundred
thousand pesos (P100,000).
Sec Current Law House Bill No. 8083 Senate Bill No 1906

257 SECTION 257. Penal Liability for Making Penal Liability for Making False Entries, Records or Senate version is 100K to 300K
False Entries, Records or Reports, or Using Reports, or Using Falsified or Fake Accountable Forms
Falsified or Fake Accountable Forms. — have been increased from 50K up to 100K to 300K up
(A) Any financial officer or independent to 1.2 million
Certified Public Accountant engaged to
examine and audit books of accounts of
taxpayers under Section 232 (A) and any
person under his direction who:
(1) Willfully falsifies any report or statement
bearing on any examination or audit, or
renders a report, including exhibits,
statements, schedules or other forms of
accountancy work which has not been
verified by him personally or under his
supervision or by a member of his firm or by
a member of his staff in accordance with
sound auditing practices; or
(2) Certifies financial statements of a
business enterprise containing an essential
misstatement of facts or omission in respect
of the transactions, taxable income,
deduction and exemption of his client; or
(B) Any person who:
(1) Not being an independent Certified
Public Accountant according to Section
232(B) or a financial officer, examines and
audits books of accounts of taxpayers; or
(2) Offers to sign and certify financial
statements without audit; or
(3) Offers any taxpayer the use of
accounting bookkeeping records for internal
revenue purposes not in conformity with the
Sec Current Law House Bill No. 8083 Senate Bill No 1906

requirements prescribed in this Code or rules


and regulations promulgated thereunder; or
(4) Knowingly makes any false entry or
enters any false or fictitious name in the
books of accounts or records mentioned in
the preceding paragraphs; or
(5) Keeps two (2) or more sets of such
records or books of accounts; or
(6) In any way commits an act or omission,
in violation of the provisions of this Section;
or
(7) Fails to keep the books of accounts or
records mentioned in Section 232 in a native
language, English or Spanish, or to make a
true and complete translation as required in
Section 234 of this Code, or whose books of
accounts or records kept in a native
language, English or Spanish, and found to
be at material variance with books or records
kept by him in another language; or
(8) Willfully attempts in any manner to evade
or defeat any tax imposed under this Code,
or knowingly uses fake or falsified revenue
official receipts, Letters of Authority,
certificates authorizing registration, Tax
Credit Certificates, Tax Debit Memoranda
and other accountable forms shall, upon
conviction for each act or omission, be
punished by a fine of not less than Fifty
thousand pesos (P50,000) but not more than
One hundred thousand pesos (P100,000)
Sec Current Law House Bill No. 8083 Senate Bill No 1906

and suffer imprisonment of not less than two


(2) years but not more than six (6) years.
If the offender is a Certified Public
Accountant, his certificate as a Certified
Public Accountant shall be automatically
revoked or cancelled upon conviction.
"In the case of foreigners, conviction
under this Code shall result in his immediate
deportation after serving sentence, without
further proceedings for deportation.
|
258 SECTION 258. Unlawful Pursuit of Business. — The proposed law increase the penalty imposed on the The proposed law increase the penalty imposed on
Any person who carries on any business for following: the following:
which an annual registration fee is imposed
without paying the tax as required by law shall, Taxpayer Penalty Proposed Taxpayer Penalty Proposed
upon conviction for each act or omission, be per NIRC per NIRC
punished by a fine of not less than Five thousand 1997 1997
pesos (P5,000) but not more than Twenty TP who carries on a 5K up to 50K to TP who carries on a 5K up to 50K to
thousand pesos (P20,000) and suffer business subject for 20K 300K business subject for 20K 200K
ARF without paying the ARF without paying the
imprisonment of not less than six (6) months but
tax required by law tax required by law
not more than two (2) years: Provided, That in TP whom manufacture 30K up to 300K up to TP whom manufacture 30K up to 300K up to
the case of a person engaged in the business of articles subject to 50K 700K. articles subject to 50K 500K.
distilling, rectifying, repacking, compounding or excise tax excise tax
manufacturing any article subject to excise tax,
he shall, upon conviction for each act or
omission, be punished by a fine of not less than
Thirty thousand pesos (P30,000) but not more
than Fifty thousand pesos (P50,000) and suffer
imprisonment of not less than two (2) years but
not more than four (4) years
Sec Current Law House Bill No. 8083 Senate Bill No 1906

260 "SECTION 260. Unlawful Possession of Penalty imposed on any person, importer, Senate version is 100K to 500K
Cigarette Paper in Bobbins or Rolls, Etc. — It manufacturer of cigar and cigarettes, who has been
shall be unlawful for any person to have in his found guilty under sec 260 shall, upon conviction for
possession cigarette paper in bobbins or rolls, each act or omission, be punished by a fine of not less
cigarette tipping paper or cigarette filter tips, than 1.5 million to 15 million (Penalty per NIRC 1997 is
without the corresponding authority therefor 20K to 100K)
issued by the Commissioner. Any person,
importer, manufacturer of cigar and cigarettes,
who has been found guilty under this Section,
shall, upon conviction for each act or omission,
be punished by a fine of not less than Twenty
thousand pesos (P20,000) but not more than
One hundred thousand pesos (P100,000) and
suffer imprisonment for a term of not less than
six (6) years and one (1) day but not more than
twelve (12) years.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

261 SECTION 261. Unlawful Use of Denatured Penalty imposed to any person who for the purpose of Senate version is 100K to 500K
Alcohol. — Any person who for the purpose of manufacturing any beverage, uses denatured alcohol
manufacturing any beverage, uses denatured or alcohol specially denatured to be used for motive
alcohol or alcohol specially denatured to be used power or withdrawn under bond for industrial uses or
for motive power or withdrawn under bond for alcohol knowingly misrepresented to be denatured to
industrial uses or alcohol knowingly be unfit for oral intake or who knowingly sells or offers
misrepresented to be denatured to be unfit for for sale any beverage made in whole or in part from
oral intake or who knowingly sells or offers for such alcohol or who uses such alcohol for the
sale any beverage made in whole or in part from manufacture of liquid medicinal preparations taken
such alcohol or who uses such alcohol for the internally, or knowingly sells or offers for sale such
manufacture of liquid medicinal preparations preparations containing as an ingredient such alcohol
taken internally, or knowingly sells or offers for is a fine of 1.5 million to 15 million (Penalty per NIRC
sale such preparations containing as an 1997 is 20K up to 100K)
ingredient such alcohol, shall, upon conviction for
each act or omission be punished by a fine of not
less than Twenty thousand pesos (P20,000) but
not more than One hundred thousand pesos
(P100,000) and suffer imprisonment for a term of
not less than six (6) years and one (1) day but not
more than twelve (12) years.
Any person who shall unlawfully recover or
attempt to recover by distillation or other process
any denatured alcohol or who knowingly sells or
offers for sale, conceals or otherwise disposes
of alcohol so recovered or redistilled shall be
subject to the same penalties imposed under
this Section.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

262 SECTION 262. Shipment or Removal of Liquor Penalty imposed to any person who ships, transports Senate version is 200K to 500K
or Tobacco Products under False Name or or removes spirituous, compounded or fermented
Brand or as an Imitation of any Existing or liquors, wines or any manufactured products of
Otherwise Known Product Name or Brand. — tobacco under any other than the proper name or
Any person who ships, transports or removes brand known to the trade as designating the kind and
spirituous, compounded or fermented liquors, quality of the contents of the cask, bottle or package
wines or any manufactured products of tobacco containing the same or as an imitation of any existing
under any other than the proper name or brand or otherwise known product name or brand or causes
known to the trade as designating the kind and such act to be done is a fine of 1.5 million to 15 million
quality of the contents of the cask, bottle or (Penalty per NIRC 1997 is 20K up to 100K)
package containing the same or as an imitation
of any existing or otherwise known product
name or brand or causes such act to be done,
shall, upon conviction for each act or omission,
be punished by a fine of not less than Twenty
thousand pesos (P20,000) but not more than
One hundred thousand pesos (P100,000) and
suffer imprisonment of not less than six (6)
years and one (1) day but not more than twelve
(12) years.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

263 "SECTION 263. Unlawful Possession or Penalty imposed to any person who owns and/or is Penalty Proposed
Removal of Articles Subject to Excise Tax found in possession of imported articles subject to per NIRC
1997
without Payment of the Tax. — Any person excise tax, the tax on which has not been paid in if the appraised value of 1,000 to 25K to 75K
who owns and/or is found in possession of accordance with law, or any person who owns and/or the articles does not 2,000
imported articles subject to excise tax, the tax is found in possession of imported tax-exempt exceed 250K (1k per
on which has not been paid in accordance with articles other than those to whom they are legally NIRC) Imprisonme Imprisonment
law, or any person who owns and/or is found in issued are as follows nt of 60 to of 30 days to
100 days 6 mos.
possession of imported tax-exempt articles Penalty per Proposed
other than those to whom they are legally NIRC 1997 if the appraised value of 10K up to 75K up to
issued shall be punished by: if the appraised value of 1,000 to 25K to 75K the articles exceed 250K 20K 150K.
the articles does not 2,000 but does not exceed 500k
(a) A fine of not less than One thousand pesos exceed 250K (1k per ( 1K to 50K per NIRC) Imprisonme Imprisonment
(P1,000) nor more than Two thousand pesos NIRC) Imprisonmen Imprisonme nt of 2 to 4 of 6 mos. To 1
(P2,000) and suffer imprisonment of not less t of 60 to 100 nt of 30 days years year
than sixty (60) days but not more than one days to 6 mos.
if the appraised value of 30K up to 150K up to
hundred (100) days, if the appraised value, to if the appraised value of 10K up to 75K up to the articles exceed 500K 60K 300K.
be determined in the manner prescribed in the the articles exceed 250K 20K 150K. but does not exceed 1
tariff and Customs Code, including duties and but does not exceed 500k million ( 5K to 150K per Imprisonme Imprisonment
taxes, of the articles does not exceed One ( 1K to 50K per NIRC) Imprisonmen Imprisonme NIRC) nt of 4 to 6 of 1 to 3 years
t of 2 to 4 nt of 6 mos. years
thousand pesos (P1,000); years To 1 year
(b) A fine of not less than Ten thousand pesos if the appraised value of 50K up to 300K up to
(P10,000) but not more than Twenty thousand if the appraised value of 30K up to 150K up to the articles exceed 1 100K 1.5 million.
the articles exceed 500K 60K 300K. million ( exceeds 150K
pesos (P20,000) and suffer imprisonment of but does not exceed 1 per NIRC) Imprisonme Imprisonment
not less than two (2) years but not more than million ( 5K to 150K per Imprisonmen Imprisonme nt of 5 to 10 of 3 to 6 years
four (4) years, if the appraised value, to be NIRC) t of 4 to 6 nt of 1 to 3 years
determined in the manner prescribed in the years years
Tariff and Customs Code, including duties and
if the appraised value of 50K up to 300K up to
taxes, of the articles exceeds One thousand the articles exceed 1 100K 1.5 million.
pesos (P1,000) but does not exceed Fifty million but does not
thousand pesos (P50,000); exceed 5 million ( Imprisonmen Imprisonme
exceeds 150K per NIRC) t of 5 to 10 nt of 3 to 6
(c) A fine of not less than Thirty thousand years years
pesos (P30,000) but not more than Sixty
thousand pesos (P60,000) and suffer if the appraised value of 1.5 million up
imprisonment of not less than four (4) years but the articles exceed 5 to 15 million.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

not more than six (6) years, if the appraised million but does not Imprisonme
value, to be determined in the manner exceed 50 million (New) nt of 6 to 12
years
prescribed in the Tariff and Customs Code,
including duties and taxes, of the articles is if the appraised value of 15 million up
more than Fifty thousand pesos (P50,000) but the articles exceed 50 to 50 million.
does not exceed One hundred fifty thousand million but does not
pesos (P150,000); or exceed 200 million (New) Imprisonme
nt of 12 to 20
(d) A fine of not less than Fifty thousand pesos years
(P50,000) but not more than One hundred
if the appraised value of Not less than
thousand pesos (P100,000) and suffer the articles exceed 200 50 million
imprisonment of not less than ten (10) years million (New)
but not more than twelve (12) years, if the Imprisonme
appraised value, to be determined in the nt of 20 to 30
manner prescribed in the Tariff and Customs years
Code, including duties and taxes, of the articles
.
exceeds One hundred fifty thousand pesos
(P150,000).
Any person who is found in possession of
locally manufactured articles subject to excise
tax, the tax on which have not been paid in
accordance with law, or any person who is
found in possession of such articles which are
exempt from excise tax other than those to
whom the same is lawfully issued shall be
punished with a fine of not less than ten (10)
times the amount of excise tax due on the
articles found but not less than Five hundred
pesos (P500) and suffer imprisonment of not
less than two (2) years but not more than four
(4) years.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

264 SECTION 264. Failure or Refusal to Issue Penalty imposed to any person who, being required Senate version is 5K to 25K
Receipts or Sales or Commercial under Section 237 to issue receipts or sales or
Invoices, Violations Related to the Printing of commercial invoices or any other violation as provided
such Receipts or Invoices and Other in sec 264 is a fine of 100K to 500 (Per NIRC penalty
Violations. — is 1K to 50K)
(a) Any person who, being required under
Section 237 to issue receipts or sales or
commercial invoices, fails or refuses to issue
such receipts or invoices, issues receipts or
invoices that do not truly reflect and/or contain
all the information required to be known
therein, or uses multiple or double receipts or
invoices, shall, upon conviction for each act or
omission, be punished by a fine of not less than
One thousand pesos (P1,000) but not more
than Fifty thousand pesos (P50,000) and suffer
imprisonment of not less than two (2) years but
not more than four (4) years.
(b) Any person who commits any of the acts
enumerated hereunder shall be penalized in
the same manner and to the same extent as
provided for in this Section:
(1) Printing of receipts or sales or commercial
invoices without authority from the Bureau of
Internal Revenue; or
(2) Printing of double or multiple sets of
invoices or receipts; or
(3) Printing of unnumbered receipts or sales or
commercial invoices, not bearing the name,
business style, Taxpayer Identification
Number, and business address of the person
or entity.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

265 SECTION 265. Offenses Relating to Stamps. Penalty imposed to any person who commits offenses Senate version is 200K to 500K
— Any person who commits any of the acts under sec 265 is a fine of 700K to 1.2K (Per NIRC
enumerated hereunder shall, upon conviction penalty is 20K to 50K)
thereof, be punished by a fine of not less than
Twenty thousand pesos (P20,000) but not
more than Fifty thousand pesos (P50,000) and
suffer imprisonment of not less than four (4)
years but not more than eight (8) years:
(a) Making, importing, selling, using or
possessing without express authority from the
Commissioner, any die for printing or making
stamps, labels, tags or playing cards;
(b) Erasing the cancellation marks of any
stamp previously used, or altering the written
figures or letters or cancellation marks on
internal revenue stamps;
(c) Possessing false, counterfeit, restored or
altered stamps, labels or tags or causing the
commission of any such offense by another;
(d) Selling or offering for sale any box or
package containing articles subject to excise
tax with false, spurious or counterfeit stamps or
labels or selling from any such fraudulent box,
package or container as aforementioned; or
(e) Giving away or accepting from another, or
selling, buying or using containers on which the
stamps are not completely destroyed.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

266 "SECTION 266. Failure to Obey Summons — The penalty imposed to any person who, being duly Senate version is 50K to 100K
Any person who, being duly summoned to summoned to appear to testify, or to appear and
appear to testify, or to appear and produce books produce books of accounts, records, memoranda or
of accounts, records, memoranda or other other papers, or to furnish information as required
papers, or to furnish information as required under the pertinent provisions of this Code, neglects to
under the pertinent provisions of this Code, appear or to produce such books of accounts, records,
neglects to appear or to produce such books of memoranda or other papers, or to furnish such
accounts, records, memoranda or other papers, information is a fine of not less than 100K but not
or to furnish such information, shall, upon exceeding 300K (Per NIRC penalty is 5K to 10K)
conviction, be punished by a fine of not less than
Five thousand pesos (P5,000) but not more than
Ten thousand pesos (P10,000) and suffer
imprisonment of not less than one (1) year but
not more than two (2) years.
275 "SECTION 275. Violation of Other Provisions of Penalty imposed in sec 275 is increased from 1K to Penalty imposed in sec 275 is increased from 1K to
this Code or Rules and Regulations in General. 10K. 10K.
— Any person who violates any provision of this
Code or any rule or regulation promulgated by
the Department of Finance, for which no specific
penalty is provided by law, shall, upon conviction
for each act or omission, be punished by a fine
of not more than One thousand pesos (P1,000)
or suffer imprisonment of not more than six (6)
months, or both.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

282-A A new section is inserted after sec 282 which is as


follows

“SEC. 282-A. VIOLATION 1 OF THE PROVISIONS


OFTHIS CODE AMOUNTING TO ECONOMIC
SABOTAGE. –ANY VIOLATION OF SECTION 254 OF
THIS CODE THATUNDERMINES, WEAKENS OR
RENDERS INTO DISREPUTE THE ECONOMIC
SYSTEM OR VIABILITY OF THE COUNTRY OR
TENDS TO BRING OUT SUCH EFFECTS, IN LIEU
OF THE PENALTY SET IN THE PRECEDING
PROVISIONS, SHALL CONSTITUTE ECONOMIC
SABOTAGE, AND, UPON CONVICTION FOR EACH
ACT OR OMISSION, BE PUNISHED BY A FINE OF
NOT LESS THAN FIFTY MILLION PESOS
(P50,000,000) AND IMPRISONMENT OF TWELVE
(12) YEARS AND ONE (1) DAY BUT NOT MORE
THAN TWENTY (20) YEARS.”

288 Section 288 is amended to include the following as the


beneficiary programs of the government on the
incremental tax revenues earned

A. Student vouchers
B. Universal Healthcare
C. Housing Vouchers
290 Section 290 is hereby amended to include a provision
that gives congressional oversight over the review on
the performance of functions of the investment
promotion agencies as well as formulation of strategic
investment priority plan (SIPP)
Sec Current Law House Bill No. 8083 Senate Bill No 1906

291 A new title is being inserted in the current tax code. Significant difference from the house version are the
Such is the General Provisions on Tax Incentives. following
Salient points of the said Title are listed below
 Instead of 18% CIT, the rate proposed is
 All IPAs (investment promotion agencies) vested 15% CIT
with power to confer and administer incentives  No allowance for the depreciation
shall grant tax incentives to registered enterprises  Inclusion of tax allowance for investment on
only to the extent of their approved registered actual capital expenditure of 50% up to 3
activity or activities under SIPP. years.
 The period of availment of incentive shall be at the  NO Enhanced NOLCO
start of commercial operations.  No additional deduction on the increment of
 Receipts and other Income derived from non- domestic expense
registered activity shall be subject to appropriate
taxes under the Tax Code.
 Direct exports are subject to VAT zero-rating and
domestic sales are subject to regular VAT rate.
 The term registered enterprise is defined as any
individual, partnership or corporation, Philippine
branch of a foreign corporation or other entity
organized in the Philippines and registered with an
IPA. It should not include the following
a) Customs brokers
b) Trucking and forwarding services
c) Janitorial and security services
d) Insurance
e) Banking
f) Other financial Services
g) Consumer cooperatives
h) Credit Unions
i) Consultancy Services
j) Retail Business
k) Restaurants
l) Or other services as determined by the IPA
whether inside or outside the zones.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

 Registered projects or activities under to


SIPP shall be qualified to any of the following
 Income Tax
a. ITH not exceeding 3 years which can be
extended at a max of 5 years (including the
original ITH period)
b. Reduced CIT of 18% to 13% by 2029
divided to national and local government
c. Depreciation allowance on the assets
acquired for the entities production or
services. 10% for building and 20% for
machinery and equipment.
d. Up to 50% additional deduction on the
labor expense in the taxable year for
bringing direct local employment
e. Up to 100% additional deduction on the
R&D provided it is related to the registered
activity
f. Up to 100% additional deduction on
training costs
g. Up to 100% additional deduction on the
infra development designated ro country
wide development such as irrigation,
drainage, etc. provided title passes to
government upon completion.
h. Deduction of reinvestment allowance for
manufacturing entity – reinvested
undistributed profits at a maximum of 50%
shall be allowed as deduction.
i. Enhanced NOLCO. Losses earned in the
first three years from the start of
commercial operation can be used in the
next 5 years.
j. Up to 50% additional deduction on the
increment of domestic expense
Sec Current Law House Bill No. 8083 Senate Bill No 1906

 Exemption from duties on the imported


capital equipment and raw materials which
can be extended up to 5 years.
 Value Added Tax- Enterprise which meet
the 90% Export requirement may avail
VAT EXEMPT import and VAT Zero rated
domestic purchase of capital equipment
and raw materials
 The SIPP shall include the following
a. Activity shall be covered by the
Philippine Development plan
b. Any activity taken into account the
following
I. Substantial amount of
investment
II. Use of modern technology
III. Adopt inclusive business
activities with MSME
IV. Considerable generation of
employment
V. Adequate environmental
production system
VI. Address missing gaps in the
supply chain
VII. Promotion of market
competitiveness
VIII. Agribusiness Activities
IX. Services that can spur regional
or global operations in the
country
X. Include existing registred
activities that shall relocate from
manila to other areas in the
country.
Sec Current Law House Bill No. 8083 Senate Bill No 1906

The DOF is not just pushing for the TRABAHO bill but also for the following bills which is in the Lower House, and thus, are expected to be acted upon by the Senate:

1. HB No. 8453, or the proposed Real Property Valuation and Assessment Reform Act (Package 2 of the TRAIN)
2. HB No. 8677 which proposes to raise excise taxes on tobacco products and HB No. 8618 which seeks to raise excise tax rates on alcohol from the rates
imposed under the Tax Code have also gotten the final and third reading nod of the Lower House.
3. HB No. 8645 (Package 4 of the TRAIN), also known as the proposed Passive Income and Financial Intermediary Act — It seeks to make the tax system for
the financial sector fairer, more efficient, and more regionally competitive. Its key provisions include the yearly reduction in the final tax on stock transactions
from 0.6 percent to 0.1 percent. The bill also harmonizes the tax rates on capital gains on unlisted stocks for both individuals and corporations into a unitary
final tax rate of 15 percent. It also (1) fixes the gross receipts tax at 5 percent from the current 0-7 percent, removing distinctions according to security type,
nature and maturity; (2) standardizes at 0.75 percent the documentary stamp tax (DST) rate from the current 0-1 percent on the sale of original issue shares
of stock, bonds; and (3) removes DST on sales or transfer of shares or certificates of stock.
4. SB No.1979 (otherwise known as An Act Establishing the Fiscal Regime for the Mining Industry), is also now pending with the Ways and Means Committee
of the Senate.
5. The Senate, on the other hand, approved on final reading SB No. 1616 in December 2018, extending the authority of the Tourism Infrastructure and Enterprise
Zone Authority (TIEZA) to grant incentives to tourism enterprises until December 31, 2029.