speltate Wilice of the doccretarp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) 25 OCT -7 P2:40 First Regular Session SENATE RECEIVED BY: Senate Bill No. 1446 Introduced by Senator Erwin T. Tulfo AN ACT DECLARING A ONE-MONTH TAX HOLIDAY, EXEMPTING COMPENSATION INCOME FROM INCOME TAX, AND FOR OTHER PURPOSES EXPLANATORY NOTE The exposure of alleged ghost flood control projects involving billions of pesos in public funds has gravely eroded public trust in government fiscal stewardship. In the wake of these controversies, the Filipino people have raised a clear and resounding clamor: "Ibalik ang pera ng bayan. Ibaba ang tax." Our Constitution affirms that "sovereignty resides in the people and all government authority emanates from them."' As the maxim goes, salus populi est suprema lex - that is, the welfare of the people is the supreme law. It is therefore both just and necessary that the State respond by providing tangible relief to the very taxpayers who sustain it. This measure grants a one-time, one-month tax holiday on compensation income, allowing Filipino workers, particularly those in the middle class who bear much of the tax burden, to take home their salaries in full for the said period. 1 1987 Constitution, Art. II, Sec. 1.
While taxation is recognized as the lifeblood of the State, we must equally recognize that this lifeblood flows from the people themselves. At a time when public confidence has been shaken, this bill provides a fair, extraordinary, and immediate form of relief that returns benefits directly to the people. To safeguard its intent, the bill includes a non-diminution clause to ensure that employers cannot offset or reduce employee wages during the tax holiday. It likewise mandates transparency and accountability in its implementation, particularly from the Bureau of Internal Revenue (BIR) and the employers. In view of the foregoing, the immediate passage of the bill is earnestly sought. ERWIN T. TULFO
Senate Dice of tige Zeurtarp TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) ) OCT -7 P2:40 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1446 Introduced by Senator Erwin T. Tulfo AN ACT DECLARING A ONE-MONTH TAX HOLIDAY, EXEMPTING COMPENSATION INCOME FROM INCOME TAX, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:
SECTION 1. Short Title. - This Act shall be known as "One-
2 Month Tax Holiday Act of 2025."
SEC. 2. Declaration of Policy. - It is the policy of the State to
restore public trust in fiscal governance and uphold an equitable tax system that is responsive to the needs of the people and mindful of their 7 contributions to national development. Towards this end, the State shall, as an extraordinary measure, grant a one-time, one-month tax holiday on compensation income, without prejudice to existing social security contributions and benefits.
SEC. 3. One-Month Tax Holiday on Compensation Income. -
Notwithstanding any provision of the National Internal Revenue Code of 1997, as amended, and other applicable laws, rules, and regulations, there is hereby granted a one-time, one-month income tax holiday applicable to individual taxpayers receiving compensation income.
For the duration of the designated tax holiday month: (a) All compensation income shall be exempt from income tax; (b) The exemption shall apply exclusively to individual taxpayers receiving compensation income: Provided, that in the case of mixed income earners, only that portion of income which is classified as compensation income shall be exempt under this Act; (c) Employers shall not withhold or remit income taxes for said period; and (d) No penalties shall be imposed on either employers or employees for the suspension of tax withholding during the tax holiday.
SEC. 4. Non-Diminution of Benefits. - Nothing in this Act shall
authorize any employer, whether public or private, to reduce, defer, withhold, or otherwise diminish the compensation, allowances, or benefits of employees during the tax holiday month.
SEC. 5. Authorized Deductions. - The tax holiday granted under
this Act shall not cover deductions pertaining to: (a) mandatory contributions to the Government Service Insurance System (GSIS), Social Security System (SSS), PhilHealth, and Home Development Mutual Fund (HDMF) also known as PAGIBIG Fund; and (b) loan amortizations or other payments voluntarily authorized in writing by the employee.
SEC. 6. Period of Implementation. - The one-month tax holiday
shall take effect on the first payroll month immediately following the approval of this Act. It shall be availed of only once during the taxable year and shall not be carried over in subsequent taxable years.
SEC. 7. Uniform Application. - To ensure equity and fairness,
the tax exemption granted under this Act shall apply uniformly to all individual taxpayers receiving compensation income, regardless of sector, employment status, or compensation level, for income derived from sources within the Philippines.
SEC. 8. Transparency and Accountability. - The Department of
Finance (DOF) through the Bureau of Internal Revenue (BIR) shall submit to Congress, within sixty (60) days after implementation, a report detailing the foregone revenue, the number of taxpayer- beneficiaries, and measures undertaken to ensure compliance with this 12 Act. Employers shall maintain a record of exempted compensation and make such records available for audit.
SEC. 9. Implementing Rules and Regulations. - Within fifteen
(15) days from the effectivity of this Act, the BIR shall issue the necessary rules and regulations for its effective implementation. Failure to promulgate such rules and regulations shall not prevent the implementation of this Act.
SEC. 10. Separability Clause. - Should any provision or part of
this Act be declared unconstitutional or invalid, the other provisions and parts hereof, insofar as they are separable from the invalid ones, shall remain in full force and effect.
SEC. 11. Repealing Clause. - All laws, decrees, orders,
issuances, rules, and regulations or parts thereof, which are inconsistent with this Act are hereby repealed or modified accordingly.
SEC. 12. Effectivity. - This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in at least two (2) newspapers of general circulation. Approved,