Republic Act No. 10963

Seventeenth Congress Second Regular Session Begun and held in Metro Manila, on Monday, the twenty-fourth day of July, two thousand seventeen. REPUBLIC ACT No. 10963 An Act Amending Sections 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237, 249, 254, 264, 269, and 288; Creating New Sections 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, and 265-A; and Repealing Sections 35, 62, And 89; All Under Republic Act No. 8424, Otherwise Known as the National Internal Revenue Code of 1997, as Amended, and for Other Purposes Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled: Section 1. Title. - This Act shall be known as the "Tax Reform for Acceleration and Inclusion (TRAIN)". Section 2. Declaration of Policy. - It is hereby declared the policy of the State: (a) To enhance the progressivity of the tax system through the rationalization of the Philippine internal revenue tax system, thereby promoting sustainable and inclusive economic growth; (b) To provide, as much as possible, an equitable relief to a greater number of taxpayers and their families in order to improve levels of disposable income and increase economic activity; and (c) 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, jobs, and social protection for the people. Section 3. Section 5 of the National Internal Revenue Code of 1997 (NIRC), 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 deter

mining 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: "(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 and government-owned or -controlled corporations, any 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 or consortia and registered partnerships, and their members: Provided, That the Cooperative Development Authority shall submit to the Bureau a tax incentive report, which shall include information on the income tax, value-added tax, and other tax incentives availed of by cooperatives registered and enjoying incentives under Republic Act No. 6938, as amended: Provided, further, That the information submitted by the Cooperative Development Authority to the Bureau shall be submitted to the Department of Finance and shall be included in the database created under Republic Act No. 10708, otherwise known as The Tax Incentives Management and Transparency Act (TIMTA). Section 4. Section 6 of the NIRC, 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) Examination of Returns and Determination of Tax Due. After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination

of any taxpayer and the assessment of the correct amount of tax, notwithstanding any law requiring the prior authorization of any government agency or instrumentality: Provided, however, That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. "x x x "x x x "(E) Authority of the Commissioner to Prescribe Real Property Values. The Commissioner is hereby -authorized to divide the Philippines into different zones or areas and shall, upon mandatory consultation with competent appraisers both from the private and public sectors, and with prior notice to affected taxpayers, determine the fair market value af real properties located in each zone or area, subject to automatic adjustment once every three (3) years through rules and regulations issued by the Secretary of Finance based on the current Philippine valuation standards: Provided, That no adjustment in zonal valuation shall be valid unless published in a newspaper of general circulation in the province, city or municipality concerned, or in the absence thereof, shall be posted in the provincial capitol, city or municipal hall and in two (2) other conspicuous public places therein: Provided, further, That the basis of any valuation, including the records of consultations done, shall be public records open to the inquiry of any taxpayer. For purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of: "(1) the fair market value as determined by the Commissioner; or "(2) the fair market value as shown in the schedule of values of the Provincial and City Assessors." Section 5. Section 24 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 24. Income Tax Rates. 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 Co

de, 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 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. 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: "(a) Tax Schedule Effective January 1, 2018 until December 31, 2022: "Not over ₱250,000 0% "Over ₱250,000 but not over ₱400,000 20% of the excess over ₱250,000 "Over ₱400,000 but not over ₱800,000 ₱30,000 + 25% of the excess over ₱400,000 "Over ₱800,000 but not over ₱2,000,000 ₱130,000 + 30% of the excess over ₱800,000 "Over ₱2,000,000 but not over ₱5,000,000 ₱490,000 + 32% of the excess over ₱2,000,000 "Over ₱8,000,000 ₱2,410,000 + 35% of the excess over ₱8,000,000 "Tax Schedule Effective January 1, 2023 and onwards: "Not over ₱250,000 0% "Over ₱250,000 but not over ₱400,000 15% of the excess over ₱250,000 "Over ₱400,000 but not over ₱800,000 ₱22,500 + 20% of the excess over ₱400,000 "Over ₱800,000 but not over ₱2,000,000 ₱102,500 + 25% of the excess over ₱800,000 "Over ₱2,000,000 but not over ₱8,000,000 ₱402,500 + 30% of the excess over ₱2,000,000 "Over ₱8,000,000 ₱2,202,500 + 35% of the excess over ₱8,000,000 "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, pay received by such minimum wage earners shall likewise be exempt from income tax. "(b) Rate of Tax on Income of "Purely Self-employed Individuals and/ or Professionals Whose Gross Sales or Gross Receipts and Other Non-operating Income Does Not Exceed the Value-added Tax (VAT) Threshold as Provided in Section 109(BB). Self-employed individuals and/or professionals shall have the option to avail of an eight percent (8%) tax on gross sales or gross receipts and other non-operating income in excess of Two hundred fifty thousand pesos (₱250,000) in lieu of the graduated income tax rates under Subsection (A)(2)(a) of this Section and the percentage tax under Section 116 of this Code. "(c) Rate of Tax for Mixed Income Earners. Taxpayers earning both compensation income and income from business or practice of profession shall be subject to the following taxes: "(1) All Income from Compensation The rates prescribed under Subsection (A)(2)(a) of this Section. "(2) All Income from Business or Practice of Profession "(a) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Do Not Exceed the VAT Threshold as Provided in Section 109(BB) of this Code. The rates prescribed under Subsection (A)(2)(a) of this Section on taxable income, or eight percent (8%) income tax based on gross sales or gross receipts and other

non-operating income in lieu of the graduated income tax rates under Subsection (A)(2)(a) of this Section and the percentage tax under Section 116 of this Code. "(b) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Exceeds the VAT Threshold as Provided in Section 109(BB) of this Code. The rates prescribed under Subsection (A)(2)(a) of this Section. "(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 (₱10,000) or less which shall be subject to tax under Subsection (A) of Section 24; and other winnings (except winnings amounting to Ten thousand pesos (₱10,000) or less from Philippine Charity Sweepstakes and Lotto which shall be exempt), derived from sources within the Philippines: Provided, however, That interest income received by an individual taxpayer (except a nonresident individual) from a depository bank under the expanded foreign currency deposit system shall be subject to a final income tax at the rate of fifteen percent (15%) of such interest income: Provided, further, 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 impose

d on the entire income and shall be deducted and withheld by the depository bank from the proceeds of the long-term deposit or investment certificate based on the remaining maturity thereof: Cash and/or Property Dividends. - A final tax at the rate of ten percent (10%) shall be imposed upon the cash and/or property dividends actually or constructively received by an individual from a domestic corporation or from a joint stock company, insurance or mutual fund companies and regional operating headquarters of multinational companies, or on the share of an individual in the distributable net income after tax of a partnership (except a general professional partnership) of which he is a partner, or on the share of an individual in the net income after tax of an association, a joint account, or a joint venture or consortium taxable as a corporation of which he is a member or co-venturer. Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange. - The provisions of Section 39(B) notwithstanding, a final tax at the rate of fifteen percent (15%) 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. Section 6. Section 25 of the NIRC, as amended, is hereby further am.ended to read as follows: "Sec. 25. Tax on Nonresident Alien Individual Nonresident Alien Engaged in Trade or Business Within the Philippines. Nonresident Alien Individual Not Engaged in Trade or Business Within the Philippines. 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 esta

blished 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. 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, compensation, remuneration and other emoluments such as honoraria and allowances, from such offshore 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 position as those of aliens employed by these offshore banking units. 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 ali

en employed by petroleum service contractor and subcontractor. "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. "(F) The preferential tax treatment provided in Subsections (C), (D), and (E) of this Section shall not be applicable to regional headquarters (RHQs), regional operating headquarters (ROHQs), offshore banking units (OBUs) or petroleum service contractors and subcontractors registering with the Securities and Exchange Commission (SEC) after January 1, 2018: Provided, however, That existing RHQs/ROHQs, OBUs or petroleum service contractors and subcontractors presently availing of preferential tax rates for qualified employees shall continue to be entitled to avail of the preferential tax rate for present and future qualified employees." Section 7. Section 27 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 27. Rates of Income Tax on Domestic Corporations "(A) In General. x x x "x x x Government-owned or -Controlled Corporations, Agencies or Instrumentalities - The provisions of existing special or general laws to the contrary notwithstanding, all corporations, 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), 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 similar business, industry, or activity. Rates of Tax on Certain Passive Incomes Interest from Deposits and Yield or any other Monetary Benefit from Deposit Substitutes and from Trust Funds and Similar Arrangements, and Royalties. - A final tax at the rate of twenty percent (20%) is hereby imposed upon the amou

nt of interest on currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements received by domestic corporations, and royalties, derived from sources within the Philippines: Provided, however, That interest income derived by a domestic corporation from a depository bank under the expanded foreign currency deposit system shall be subject to a final income tax at the rate of fifteen percent (15%) of such interest income. Capital Gains from the Sale of Shares of Stock Not Traded in the Stock Exchange. - A final tax at the rate of fifteen percent (15%) shall be imposed on net capital gains realized during the taxable year from the sale, exchange or other disposition of shares of stock in a domestic corporation except shares sold or disposed of through the stock exchange. Section 8. Section 31 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 31. Taxable Income Defined. - The term taxable income means the pertinent items of gross income specified in this Code, less deductions, if any, authorized for such types of income by this Code or other special laws." Section 9. Section 32 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 32. Gross Income General Definition Exclusions from Gross Income. Miscellaneous Items 13th Month Pay and Other Benefits. - Gross benefits received by officials and employees of public and private entities: Provided, however, That the total exclusion under this subparagraph shall not exceed Ninety thousand pesos (₱90,000) which shall cover: "(i) Benefits received by officials and employees of the national and local government pursuant to Republic Act No. 6686; "(ii) Benefits received by employees pursuant to Presidential Decree No. 851, as amended by Memorandum Order No. 28, dated August 13, 1986; "(iii) Benefits received by officials and employees n

ot covered by Presidential Decree No. 851, as amended by Memorandum Order No. 28, dated August 13,1986; and "(iv) Other benefits such as productivity incentives and Christmas bonus." Section 10. Section 33 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 33. Special Treatment of Fringe Benefit. Imposition of Tax. - Effective January 1, 2018 and onwards, a final tax of thirty-five percent (35%) is hereby imposed on the grossed-up monetary value of fringe benefit furnished or granted to the employee (except rank and file employees as defined herein) by the employer, whether an individual or a corporation (unless the fringe benefit is required by the nature of, or necessary to the trade, business or profession of the employer, or when the fringe benefit is for the convenience or advantage of the employer). The tax herein imposed is payable by the employer which tax shall be paid in the same manner as provided for under Section 57(A) of this Code. The grossed-up monetary value of the fringe benefit shall be determined by dividing the actual monetary value of the fringe benefit by sixty five percent (65%) effective January 1, 2018 and onwards: Provided, however, That fringe benefit furnished to employees and taxable under Subsections (B), (C), (D), and (E) of Section 25 shall be taxed at the applicable rates imposed thereat: Provided, further, That the grossed-up value of the fringe benefit shall be determined by dividing the actual monetary value of the fringe benefit by the difference between one hundred percent (100%) and the applicable rates of income tax under Subsections (B), (C), (D), and (E) of Section 25. Section 11. Section 34 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 34. Deductions from Gross Income. - Except for taxpayers earning compensation income arising from personal services rendered under an employer-employee relationship where no deductions shall be allowed under this Section

, in computing taxable income subject to income tax under Sections 24(A); 25(A); 26; 27(A), (B), and (C); and 28(A)(1), there shall be allowed the following deductions from gross income: "(A) Expenses. Ordinary and Necessary Trade, Business or Professional Expenses In General "x x x Optional Standard Deduction (OSD) - In lieu of the deductions allowed under the preceding Subsections, an individual subject to tax under Section 24, other than a nonresident alien, may elect a standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts, as the case may be. In the case of a corporation subject to tax under Sections 27(A) and 28(A)(l), it may elect a standard deduction in an amount not exceeding forty percent (40%) of its gross income as defined in Section 32 of this Code. Unless the taxpayer signifies in his return his intention to elect the optional standard deduction, he shall be considered as 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 a general professional partnership and the partners comprising such partnership may avail of the optional standard deduction only once, either by the general professional partnership or the partners comprising the partnership: Provided, finally, That except when the Commissioner otherwise permits, the said individual shall keep such records pertaining to his gross sales or gross receipts, the said corporation shall keep such records pertaining to his gross income as defined in Section 32 of this Code during the taxable year, as may be required by the rules and regulations promulgated by the Secret

ary of Finance, upon recommendation of the Commissioner. "Notwithstanding the provisions of the preceding Subsections, x x x." Section 12. Section 35 of the NIRC, as amended, is hereby repealed. Section 13. Section 51 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 51. Individual Returns "x x x "(2) The following individuals shall not be required to file an income tax return: "(a) An individual whose taxable income does not exceed Two hundred fifty thousand pesos (₱250,000) under Section 24(A)(2)(a): Provided, That a citizen of the Philippines and any alien individual engaged in business or practice of profession within the Philippines shall file an income tax return, regardless of the amount of gross income; "x x x "(5) The income tax return (ITR) shall consist of a maximum of four (4) pages in paper form or electronic form, and shall only contain the following information: "(A) Personal profile and information; "(B) Total gross sales, receipts or income from compensation for services rendered, conduct of trade or business or the exercise of a profession, except income subject to final tax as provided under this Code; "(C) Allowable deductions under this Code; "(D) Taxable income as defined in Section 31 of this Code; and "(E) Income tax due and payable. Section 14. A new section designated as Section 51-A of the NIRC, as amended, is hereby inserted to read as follows: "Sec. 51-A. Substituted Filing of Income Tax Returns by Employees Receiving Purely Compensation Income - Individual taxpayers receiving purely compensation income, regardless of amount, from only one employer in the Philippines for the calendar year, the income tax of which has been withheld correctly by the said employer (tax due equals tax withheld) shall not be required to file an annual income tax return. The certificate of withholding filed by the respective employers, duly stamped received by the BIR, shall be tantamount to the sub

stituted filing of income tax returns by said employees." Section 15. Section 52 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 52. Corporation Returns Requirements. - Every corporation subject to the tax herein imposed, except foreign corporations not engaged in trade or business in the Philippines, shall render, in duplicate, a true and accurate quarterly income tax return and final or adjustment return in accordance with the provisions of Chapter XII of this Title. The income tax return shall consist of a maximum of four (4) pages in paper form or electronic form, be filed by the president, vice president or other principal officer, shall be sworn to by such officer and by the treasurer or assistant treasurer, and shall only contain the following information: "(1) Corporate profile and information; "(2) Gross sales, receipts or income from services rendered, or conduct of trade or business, except income subject to final tax as provided under this Code; "(3) Allowable deductions under this Code; "(4) Taxable income as defined in Section 31 of this Code; and "(5) Income tax due and payable. Provided, That the foregoing provisions shall not affect the implementation of Republic Act No. 10708 or TIMTA. Section 16. Section 56 of the NIRC, as amended. is hereby further amended to read as follows: "Sec. 56. Payment and Assessment of Income Tax for Individuals and Corporations Payment of Tax x x Installment of Payment. - When a tax due is in excess of Two thousand pesos (₱2,000), the taxpayer other than a corporation, may elect to pay the tax in two (2) equal installments, in which case, the first installment shall be paid at the time the return is filed and the second installment on or before October 15 following the close of the calendar year, if any installment is not paid on or before the date fixed for its payment, the whole amount of the tax unpaid becomes due and payable together with the delinque

ncy penalties." Section 17. Section 57 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 57. Withholding of Tax at Source. x x Withholding of Creditable Tax at Source. - The Secretary of Finance may, upon the recommendation of the Commissioner, require the withholding of a tax on the items of income payable to natural or juridical persons, residing in the Philippines, by payor-corporation/persons as provided for by law, at the rate of not less than one percent (1%) but not more than thirty-two percent (32%) thereof, which shall be credited against the income tax liability of the taxpayer for the taxable year: Provided, That, beginning January 1, 2019, the rate of withholding shall not be less than one percent (1%) but not more than fifteen percent (15%) of the income payment. x x Section 18. Section 58 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 58. Return and Payment of Taxes Withheld at Source. "x x x "The return for final and creditable withholding taxes shall be filed and the payment made not later than the last day of the month following the close of the quarter during which withholding was made." Section 19. Section 62 of the NIRC, as amended, is hereby repealed. Section 20. Section 74 of the NIRC, as amended. is hereby further amended to read as follows: "Sec. 74. Declaration of Income Tax for Individuals. In General - Except as otherwise provided in this Section, every individual subject to income tax under Sections 24 and 25(A) of this Title, who is receiving self-employment income, whether it constitutes the sole source of his income or in combination with salaries, wages and other fixed or determinable income, shall make and file a declaration of his estimated income for the current taxable year on or before May 15 of the same taxable year. x x x Return and Payment of Estimated Income Tax by Individuals - The amount of estimated income as defined in

Subsection (C) with respect to which a declaration is required under Subsection (A) shall be paid in four (4) installments. The first installment shall be paid at the time of declaration and the second and third shall be paid on August 15 and November 15 of the current year, respectively. The fourth installment shall be paid on or before May 15 of the following calendar year when the final adjusted income tax return is due to be filed. x x Section 21. Section 79 of the NIRC, as amended. is hereby further amended to read as follows: "Sec. 79. Income Tax Collected at Source. "x x x Refunds or Credits. Employer. Employees. "x x x Withholding on Basis of Average Wages. x x x x x x; and x x x. Nonresident Aliens Year-end Adjustment. Section 22. Section 84 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 84. Rate of Estate Tax. - There shall be levied, assessed, collected and paid upon the transfer of the net estate as determined in accordance with Sections 85 and 86 of every decedent, whether resident or nonresident of the Philippines, a tax at the rate of six percent (6%) based on the value of such net estate." Section 23. Section 86 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 86. Computation of Net Estate. For the purpose of the tax imposed in this Chapter, the value of the net estate shall be determined: Deductions Allowed to the Estate of a Citizen or a Resident - In the case of a citizen or resident of the Philippines, by deducting from the value of the gross estate Standard Deduction - An amount equivalent to Five million pesos (₱5,000,000). "(2) For claims against the estate: Provided, That at the time the indebtedness was incurred the debt instrument was duly notarized and, if the loan was contracted within three (3) years before the death of the decedent, the administrator or executor shall

submit a statement showing the disposition of the proceeds of the loan. "(3) For claims of the deceased against insolvent persons where the value of decedents interest therein is included in the value of the gross estate. "(4) For unpaid mortgages upon, or any indebtedness in respect to, property where the value of decedents interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate, but not including any income tax upon income received after the death of the decedent, or property taxes not accrued before his death, or any estate tax. The deduction herein allowed in the case of claims against the estate, unpaid mortgages or any indebtedness shall, when founded upon a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or moneys worth. There shall also be deducted losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualties, or from robbery, theft or embezzlement, when such losses are not compensated for by insurance or otherwise, and if at the time of the filing of the return such losses have not been claimed as a deduction for the income tax purposes in an income tax return, and provided that such losses were incurred not later than the last day for the payment of the estate tax as prescribed in Subsection (A) of Section 91. Property Previously Taxed. - An amount equal to the value specified below of any property forming part of the gross estate situated in the Philippines of any person who died within five (5) years prior to the death of the decedent, or transferred to the decedent by gift within five (5) years prior to his death, where such property can be identified as having been received by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as having been acquired in exchange for property so

received: "One hundred percent (100%) of the value, if the prior decedent died within one (1) year prior to the death of the decedent, or if the property was transferred to him by gift, within the same period prior to his death; "Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more than two (2) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death; "Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more than three (3) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death; "Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not more than four (4) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death; and "Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not more than five (5) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death. "These deductions shall be allowed only where a donors tax, or estate tax imposed under this Title was finally determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the case may be, and only in the amount finally determined as the value of such property in determining the value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such property is included in the decedents gross estate, and only if in determining the value of the estate of the prior decedent, no deduction was allowable under paragraph (5) in respect of the property or properties given in exchange therefor. Where a deduction was allowed of any mortgage or other lien in determining the donors tax, or the estate

tax of the prior decedent, which was paid in whole or in part prior to the decedents death, then the deduction allowable under said Subsection shall be reduced by the amount so paid. Such deduction allowable shall be reduced by an amount which bears the same ratio to the amounts allowed as deductions under paragraphs (2), (3), (4), and (6) of this Subsection as the amount otherwise deductible under said paragraph (5) bears to the value of the decedents estate. Where the property referred to consists of two or more items, the aggregate value of such items shall be used for the purpose of computing the deduction. Transfers for Public Use - The amount of all bequests, legacies, devises or transfers to or for the use of the Government of the Republic of the Philippines, or any political subdivision thereof for exclusively public purposes. The Family Home. - An amount equivalent to the current fair market value of the decedents family home: Provided, however, That if the said current fair market value exceeds Ten million pesos (₱10,000,000), the excess shall be subject to estate tax. Amount Received by Heirs Under Republic Act No. 4917 - Any amount received by the heirs from the decedents employee as a consequence of the death of the decedent-employee in accordance with Republic Act No. 4917: Provided, That such amount is included in the gross estate of the decedent. Deductions Allowed to Nonresident Estates - In the case of a nonresident not a citizen of the Philippines, by deducting from the value of that part of his gross estate which at the time of his death is situated in the Philippines: Standard Deduction - An amount equivalent to Five hundred thousand pesos (₱500,000); "(2) That proportion of the deductions specified in paragraphs (2), (3), and (4) of Subsection (A) of this Section which the value of such part bears to the value of his entire gross estate wherever situated; Property Previously Taxed Transfers for Pub

lic Use - The amount of all bequests, legacies, devises or transfers to or for the use of the Government of the Republic of the Philippines or any political subdivision thereof, for exclusively public purposes. Share in the Conjugal Property - The net share of the surviving spouse in the conjugal partnership property as diminished by the obligations properly chargeable to such property shall, for the purpose of this Section, be deducted from the net estate of the decedent. Tax Credit for Estate Taxes Paid to a Foreign Country In General - The tax imposed by this Title shall be credited with the amounts of any estate tax imposed by the authority of a foreign country. Limitations on Credit. - The amount of the credit taken under this Section shall be subject to each of the following limitations: "(a) The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is taken, which the decedents net estate situated within such country taxable under this Title bears to his entire net estate; and "(b) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which the decedents net estate situated outside the Philippines taxable under this Title bears to his entire net estate." Section 24. Section 89 of the NIRC, as amended, is hereby repealed. Section 25. Section 90 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 90. Estate Tax Returns. Requirements. - In all cases of transfers subject to the tax imposed herein, or regardless of the gross value of the estate, where the said estate consists of registered or registrable property such as real property, motor vehicle, shares of stock or other similar property for which a clearance from the Bureau of Internal Revenue is required as a condition precedent for the transfer of ownership thereof in the name of the transferee, the executor, o

r the administrator, or any of the legal heirs, as the case may be, shall file a return under oath in duplicate, setting forth: "(3) Such part of such information as may at the time be ascertainable and such supplemental data as may be necessary to establish the correct taxes. Provided, however, That estate tax returns showing a gross value exceeding Five million pesos (₱5,000,000) shall be supported with a statement duly certified to by a Certified Public Accountant containing the following: "x x x Time for Filing - For the purpose of determining the estate tax provided for in Section 84 of this Code, the estate tax return required under the preceding Subsection (A) shall be filed within one (1) year from the decedents death. Section 26. Section 91 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 91. Payment of Tax. Time of Payment Extension of Time "x x x Payment by Installment - In case the available cash of the estate is insufficient to pay the total estate tax due, payment by installment shall be allowed within two (2) years from the statutory date for its payment without civil penalty and interest. Liability for Payment "x x x Section 27. Section 97 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights "If a bank has knowledge of the death of a person, who maintained a bank deposit account alone, or jointly with another, it shall allow any withdrawal from the said deposit account, subject to a final withholding tax of six percent (6%). For this purpose, all withdrawal slips shall contain a statement to the effect that all of the joint depositors are still living at the time of withdrawal by any one of the joint depositors and such statement shall be under oath by the said depositors." Section 28. Section 99 of the NIRC, as amended, is hereby furt

her amended to read as follows: "Sec. 99. Rate of Tax Payable by Donor In General. - The tax for each calendar year shall be six percent (6%) computed on the basis of the total gifts in excess of Two hundred fifty thousand pesos (₱250,000) exempt gift made during the calendar year. "(B) Any contribution in cash or in kind to any candidate, political party or coalition of parties for campaign purposes shall be governed by the Election Code, as amended." Section 29. Section 100 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 100. Transfer for Less Than Adequate and Full Consideration - Where property, other than real property referred to in Section 24(D), is transferred for less than an adequate and full consideration in money or moneys worth, then the amount by which the fair market value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this Chapter, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year: Provided, however, That a sale, exchange, or other transfer of property made in the ordinary course of business (a transaction which is a bona fide, at arms length, and free from any donative intent), will be considered as made for an adequate and full consideration in money or moneys worth." Section 30. Section 101 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 101. Exemption of Certain Gifts - The following gifts or donations shall be exempt from the tax provided for in this Chapter: In the Case of Gifts Made by a Resident "(1) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government; and "(2) Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited nongovernment organization, trust or phila

nthropic organization or research institution or organization: Provided, however, That not more than thirty percent (30%) of said gifts shall be used by such donee for administration purposes. For the purpose of this exemption, a non-profit educational and/or charitable corporation, institution, accredited nongovernment organization, trust or philanthropic organization and/or research institution or organization is a school, college or university and/or charitable corporation, accredited nongovernment organization, trust or philanthropic organization and/ or research institution or organization, incorporated as a nonstock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all its income, whether students fees or gifts, donation, subsidies or other forms of philanthropy, to the accomplishment and promotion of the purposes enumerated in its Articles of Incorporation. Section 31. Section 106 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 106. Value-added Tax on Sale of Goods or Properties Rate and Base of Tax - There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, a value-added tax equivalent to twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor. "(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: Export Sales - The term export sales means: "(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas

(BSP); "(2) Sale and delivery of goods to: "(i) Registered enterprises within a separate customs territory as provided under special laws; and "(ii) Registered enterprises within tourism enterprise zones as declared by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) subject to the provisions under Republic Act No. 9593 or The Tourism Act of 2009. "(3) Sale of raw materials or packaging materials to a nonresident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyers goods and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); "(4) Sale of raw materials or packaging materials to export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production; "(5) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws; and "(6) The sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations: Provided, That the goods, supplies, equipment and fuel shall be used for international shipping or air transport operations. Provided, That subparagraphs (3), (4), and (5) hereof shall be subject to the twelve percent (12%) value-added tax and no longer be considered export sales subject to zero percent (0%) VAT rate upon satisfaction of the following conditions: "(1) The successful establishment and implementation of an enhanced VAT refund system that grants refunds of creditable input tax within ninety (90) days from the filing of the VAT refund application with the Bureau: Provided, That, to determine the effectivity of item no. 1, all applications filed from January 1, 2018 shall be processed and must be decided within ninety (90) days from the filing of the VAT refund application

; and "(2) All pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by December 31, 2019. Provided, That the Department of Finance shall establish a VAT refund center in the Bureau of Internal Revenue (BIR) and in the Bureau of Customs (BOC) that will handle the processing and granting of cash refunds of creditable input tax. "An amount equivalent to five percent (5%) of the total VAT collection of the BIR and the BOC from the immediately preceding year shall be automatically appropriated annually and shall be treated as a special account in the General Fund or as trust receipts for the purpose of funding claims for VAT refund: Provided, That any unused fund, at the end of the year shall revert to the General Fund. Provided, further, That the BIR and the BOC shall be required to submit to the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) a quarterly report of all pending claims for refund and any unused fund. "(b) Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate. Section 32. Section 107 of the NIRC, as amended, is hereby further amended to read as follows: "Sec. 107. Value-added Tax on Importation of Goods. In General. - There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to twelve percent (12%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any. Transfer of Goods by Tax-exempt Persons. Section 33. Section 108