Passive Income and Financial Intermediary Taxation Act

202111: Offier of ts TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session AUG -6 A9:13 SENATE RECEIVED BY S. No. - Introduced by Senator Jinggoy Ejercito Estrada AN ACT AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 30, 32, 34, 37, 38, 39, 42, 51, 52, 54, 56, 57, 73, 108, 121, 122, 123, 174, 176, 179, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 194, 195, 196, 197, 198, AND 199; AND REPEALING SECTIONS 127, 175, 177, 178, 180, 192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES EXPLANATORY NOTE The Passive Income and Financial Intermediary Taxation Act (PIFITA) is seen to complement the previously passed Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Law (TRAIN Law) to support recovery from the COVID-19 pandemic and attract foreign capital and investments, which in turn could finance infrastructure projects that could encourage sustainable and inclusive growth through job generation. PIFITA seeks to streamline the taxation for passive income, financial services and transactions by reducing the number combinations of tax bases and rates from 80 to 36. The measure also seeks to harmonize the tax rates on interest, dividends, and capital gains to a standard fifteen percent (15%). Furthermore, this measure seeks to remove the Documentary Stamp Tax on non-monetary transactions.

This measure is included in the legislative agenda of the Philippine Development Plan 2023-2028 to ensure sound fiscal management and improve the tax regime in the country. The passage of this measure will continue the strong momentum brought in by measures in place that have contributed to the recovery of the economy due to the pandemic. Hence, the immediate passage of this bill is earnestly requested. JINGGOY EJERCITO ESTRADA

Offe of tr 121012 TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session ) AUG -6 A9:13 SENATE RECEIVED BY S. No. _ Introduced by Senator Jinggoy Ejercito Estrada AN ACT AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 30, 32, 34, 37, 38, 39, 42, 51, 52, 54, 56, 57, 73, 108, 121, 122, 123, 174, 176, 179, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 194, 195, 196, 197, 198, AND 199; AND REPEALING SECTIONS 127, 175, 177, 178, 180, 192, AND 193; 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 Representative of the Philippines in Congress assembled:

Section. 1. Title. - This Act shall be known as the " Passive Income and Financial

Intermediary Taxation Act".

Sec. 2. Declaration of Policy. - The financial sector plays a significant role in

the long-term growth of the national economy. A key policy consideration is to allow 5 the capital market to develop as efficiently as possible, with the least intervention. The optimal taxation of capital markets, and the products and transactions that come with them, is an essential element in developing the capital market. Towards this end, the State recognizes the necessity of a simpler, fairer, more efficient, and regionally more competitive tax system for passive income and financial intermediation to encourage savings and develop as well as deepen the capital markets. Accordingly, the State adopts the following policies: 1. Promote and develop a tax system that provides neutrality in the tax treatment across financial institutions and financial instruments; 2. Endeavor to simplify an otherwise complex tax system for easy compliance;

3. Ensure that the taxation of passive income and financial transactions is equitable across all stakeholders and discourages arbitrage opportunities; and 4. Promote capital market development and tax competitiveness within the context of globalization, increased capital mobility, and financial inclusion.

Sec. 3. Section 22 of the National Internal Revenue Code of 1997, as amended,

is hereby amended to read as follows: "Sec. 22. Definitions. - When used in this Title: "(A) × XX "(B) The term 'corporation' shall include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion SUCH AS COLLECTIVE INVESTMENT SCHEMES), associations, or insurance companies, but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal, and other energy operations pursuant to an operating or consortium agreement under a service contract with the Government. 'General professional partnerships' are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business. A COLLECTIVE INVESTMENT SCHEME MAY OR MAY NOT BE REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. "x XX "(L) The term 'shares of stock' shall [include] REFER TO shares of stock of a corporation, warrants and/or options, WHETHER TO BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND SUCH OTHER DERIVATIVE SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, as well

as units of participation in a partnership (except general professional partnerships), joint stock companies, joint accounts SUCH AS COLLECTIVE INVESTMENT SCHEMES, joint ventures taxable as corporations, associations, and recreation or amusement clubs (such as gold, polo, or similar clubs), and mutual funds certificates. "(M) The term 'shareholder' shall include holders of a share/s of stock, warrant/s, and/or option/s to purchase shares of stock if a corporation WHETHER TO BUY OR SELL SECURITIES, FUTURES CONTRACTS, AND SUCH OTHER DERIVATIVE SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, as well as a holder of a unit of participation in a partnership (except general professional partnerships), in a joint stock company, a joint account SUCH AS COLLECTIVE INVESTMENT SCHEMES, a taxable joint venture, a member of an association, recreation or amusement club (such as golf, polo, or similar clubs), and a holder of a mutual fund certificate, a member in an association, joint-stock company, or insurance company. "x xx "(T) The term 'securities' [means] SHALL REFER TO [shares of stock in a corporation, and rights to subscribe for or to receive such shares. The term includes bonds, debentures, notes or certificates, or other evidence of indebtedness, issued by any corporation, including those issued by a government or political subdivision thereof, with interest coupons or in registered form.] SHARES, PARTICIPATION, OR INTERESTS IN A CORPORTION OR IN A COMMERCIAL ENTERPRISE OR PROFIT- MAKING VENTURE EVIDENCED BY A CERTIFICATE,

CONTRACT, INSTRUMENTS, WHETHER WRITTEN OR ELECTRONIC IN CHARACTER. THESE INCLUDE: "1. SHARES OF STOCK, BONDS, DEBENTURES, NOTES, EVIDENCE OF INDEBTEDNESS, ASSET- BACKED SECURITIES; "2. INVESTMENT CONTRACTS, CERTIFICATES OF INTEREST, OR PARTICIPATION IN A PROFIT- SHARING AGREEMENT SUCH AS COLLECTIVE INVESTMENT SCHEMES OR CERTIFCATE OF DEPOSIT FOR A FUTURE SUBSCRIPTION; "3. FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS, OR OTHER MINERAL RIGHTS; " Ar CERTIFICATES OF ASSIGNMENTS, CERTIFICATES OF PARTICIPATION, TRUST CERTIFICATES, VOTING TRUST CERTIFICATES, OR SIMILAR INSTRUMENTS; "5. PROPRIETARY OR NON-PROPRIETARY MEMBERSHIP CERTIFICATES IN CORPORATIONS; AND, "6. OTHER INSTRUMENTS AS MAY IN THE FUTURE BE DETERMINED BY THE SECURITIES AND EXCHANGE COMMISSION. "x XX "(V) The term 'bank' [means every banking institution, as defined in Section 2 Republic Act No. 337, as amended, otherwise known as the General Banking Act. A bank may either be, a commercial bank, a thrift bank, a development bank, a rurar bank, a specialized government bank, or a cooperative bank] AS DEFINED IN SECTION 3 OF REPUBLIC ACT NO. 8791, OTHERWISE KNOWN AS THE GENERAL BANKING LAW OF 2000, SHALL REFER TO ENTITIES ENGAGED IN THE LENDING OF FUNDS

OBTAINED IN THE FORM OF DEPOSITS. BANKS SHALL BE CLASSIFIED INTO UNIVERSAL BANKS, COMMERCIAL BANKS, THRIFT BANKS COMPOSED OF: (A) SAVINGS AND MORTGAGE BANKS; (B) STOCKS SAVINGS AND LOAN ASSOCIATIONS; AND (C) PRIVATE DEVELOPMENT BANKS, AS DEFINED IN REPUBLIC ACT NO. 7906, OR THE THRIFT BANKS ACT; RURAL BANKS, AS DEFINED IN REPUBLIC ACT NO. 7353 OF THE RURAL BANKS ACT; COOPERATIVE BANKS, AS DEFINED IN REPUBLIC ACT NO. 6938 OR THE COOPERATIVE CODE; ISLAMIC BANKS AS DEFINED IN REPUBLIC ACT NO. 6484, OR THE CHARTER OF AL AMANAH ISLAMIC INVESTMENT BANK OF THE PHIIPPINES; AND OTHER CLASSIFICATIONS OF BANKS AS DETERMINED BY THE MONETARY BOARD OF THE BANGKO SENTRAL NG PILIPINAS. "(W) The term 'non-bank financial intermediary' means PERSONS OR ENTITIES ENGAGED IN THE BORROWING OF FUNDS, FOR THE BORROWER'S OWN ACCOUNT, THROUGH THE ISSUANCE, ENDORSEMENT, OR ACCEPTANCE OF DEBT INSTRUMENTS OF ANY KIND OTHER THAN DEPOSITS, OR THROUGH THE ISSUANCE OF PARTICIPATIONS, CERTIFCATES OR ASSIGNMENT, OR SIMILAR INSTRUMENTS WITH RECOURSE, TRUST CERTIFICATES, OR OF REPURCHASE AGREEMENTS, FROM TWENTY (20) OR MORE LENDERS AT ANY ONE TIME, FOR PURPOSE OF RELENDING OR PURCHASING OF RECEIVABLES AND OTHER OBLIGATIONS, BUT DOES NOT INCLUDE COMMERCIAL, INDUSTRIAL, AND OTHER NON- FINANCIAL COMPANIES, WHICH BORROW FUNDS

THROUGH ANY OF THESE MEANS FOR THE LIMITED PURPOSE OF FINANCING THEIR OWN NEEDS OF THE NEEDS OF THEIR AGENTS OR DEALERS, OR a financial intermediary, as defined in [Section 2(D)(c) of] Republic Act No. 337, as amended, otherwise known as the General Banking Act, authorized by the Bangko Sentral ng Pilipinas (BSP) to perform quasi-banking activities. "(X) THE TERM 'QUASI-BANK' SHALL REFER TO ENTITIES ENGAGED IN THE BORROWING OF FUNDS THROUGH THE ISSUANCE, ENDORSEMENT OR ASSIGNMENT WITH RECOURSE OR ACCEPTANCE OF DEPOSIT SUBSTITUTES, AS DEFINED IN SECTION 95 OF REPUBLIC ACT NO. 7653, OR THE NEW CENTRAL BANKING ACT FOR PURPOSES OF RELENDING OR PURCHASING OF RECEIVABLES AND OTHER OBLIGATIONS. "[(X)] (Y) The term 'quasi-banking activities' [means] SHALL REFER TO borrowing funds from twenty (20) or more [personal] INDIVIDUALS or corporate lenders at any one time through the issuance, endorsement, or acceptance of debt instruments of any kind other than deposits for the borrower's own account, or through the issuance of certificates of assignment or similar instruments, with recourse, or of repurchase agreements for purposes of relending or purchasing receivables and other similar obligations: Provided, however, That commercial, industrial and other non-financial companies, which borrow funds through any of these means for the limited purpose of financing their own needs or the needs of their agents or dealers, shall not be considered as performing quasi-banking functions: PROVIDED, FURTHER, THAT IF THE INTENTION IS FOR THE DEBT INSTRUMENTS TO BE

HELD BY MORE THAN NINETEEN (19) HOLDERS DURING THE ENTIRE TERM OF THE DEBT INSTRUMENT AND IF THE TENOR AND DENOMINATION ARE SUCH THAT THEY CAN BE HELD BY MORE THAN NINETEEN (19) LENDERS, THEN THE INSTRUMENT SHALL BE CONSIDERED DEPOSIT SUBSTITUTES. "[Y)] (Z) The term 'deposit substitutes' shall [mean] REFER TO an alternative form of obtaining funds from the public (the term 'public' means borrowing from twenty (20) or more individual or corporate lenders at any one time) other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrowers own account, for the purpose of relending or purchasing of receivables and other obligations, or financing their own needs or the needs of their agent or dealers. These instruments may include, but need not be limited to bankers' acceptances, promissory notes, repurchase agreements, [including] EXCLUDING reverse repurchase agreements entered into by and between the Bangko Sentral ng Pilipinas (BSP) and any authorized agent bank, certificates of assignment or participation and similar instruments with recourse. DEBT INSTRUMENTS ISSUED BY THE GOVERNMENT AND ANY OF ITS AGENCIES AND INSTRUMENTALITIES, INCLUDING GOVERNMENT FINANCIAL INSTITUTIONS SHALL BE DEEMED ISSUED TO THE PUBLIC AND CONSIDERED DEPOSIT SUBSTITUTES: Provided, however, That debts instruments issued for interbank call loans with maturity of not more than five (5) days to cover deficiency in reserves against deposit liabilities, including those between or among banks and quasi-

banks, shall not be considered as deposit substitute debt instruments. "[(Z)] (AA) The term 'ordinary income' x x x. "[(AA)] (BB) The term 'rank and file employees' x XX. "[(BB)] (CC) The term 'mutual fund company' shall [mean] REFER TO ANY INVESTMENT COMPANY WHICH IS OR HOLDS ITSELF OUT AS BEING ENGAGED PRIMARILY, OR PROPOSES TO ENGAGE PRIMARILY IN THE BUSINESS OF POOLING TOGETHER MONEY FROM VARIOUS INVESTORS AND INVESTS, REINVESTS, OR TRADES THE SAME IN SECURITIES, WHETHER IN STOCKS, BONDS, MONEY MARKET INSTRUMENTS, OTHER SECURITIES, CASH, OR ANY OTHER ASSET, OR an open-end and close-end investment company as defined under REPUBLIC ACT NO. 2629, ALSO KNOWN AS the Investment Company Act OF THE PHILIPPINES. "[(CC)] (DD) The term 'trade, business or profession' x x x. "[(DD)] (EE) The term 'regional or area headquarters' xxx. "[(EE)] (FF) The term 'regional operating headquarters' x x x. "[(FF)] (GG) The term [tong term deposit of investment certificate' shall refer to certificate of time deposit or investment in the form of savings, common, or individual trust funds, deposit substitutes, investment management accounts and other investments with a maturity period of not tess than five (5) years, the form of which shall be prescribed by the Bangko Sentral ng Pilipinas (BSP) and issued by banks only (not by non-bank financial intermediaries and finance

companies) to indivuduals in denominations of Ten thousand pesos (P10,000) and other denominations as may be prescribed-by the BSP.] 'FINANCIAL INSITUTIONS' OR 'FINANCIAL INTERMEDIARIES' SHALL REFER TO PERSONS OR ENTITIES WHOSE PRINICIPAL FUNCTIONS INCLUDE THE BUSINESS OF LENDING, FINANCING, INVESTING, OR PLACEMENT OF FUNDS OR EVIDENCES OF INDEBTEDNESS OR EQUITY DEPOSITED WITH THEM, ACQUIRED BY THEM, OR OTHERWISE COURSED THROUGH THEM, EITHER FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS, AND ARE AUTHORIZED BY THE BANGKO SENTRAL NG PILIPINAS OR BY THE SECURITIES AND EXCHANGE COMMISSION DEPENDING ON THE GOVERNMENT AGENCY AUTHORIZED TO REGULATE THEM. THESE SHALL INCLUDE BANKS, QUASI-BANKS, TRUST ENTITIES ENGAGED IN COLLECTIVE INVESTMENT SCHEMES, INVESTMENT HOUSES, LENDING INVESTORS OR ENTITIES ENGAGED IN FINANCIAL INTERMEDIATION ACTIVITIES, AND OTHER TYPES OF BUSINESS THAT MAY BE CLASSIFIED BY THE BANGKO SENTRAL NG PILIPINAS OR THE SECURITIES AND EXCHANGE COMMISSION AS FINANCIAL INSTITUTIONS. "LIFE AND NON-LIFE INSURANCE COMPANIES, PRE-NEED COMPANIES AND HEALTH MAINTENANCE ORGANIZATIONS ARE ALSO CONSIDERED FINANCIAL INSTITUTIONS UNDER THE SUPERVISION OF THE INSURANCE COMMISSION. "[(GG)] (HH) The term 'statutory minimum wage' xxX.

"[(HH)] (II) The term 'minimum wage earner' x x x. "(JJ) THE TERM 'COLLECTIVE INVESTMENT SCHEMES' OR 'CIS' SHALL REFER TO ANY ARRANGEMENT WHEREBY FUNDS ARE SOLICITED FROM THE INVESTING PUBLIC AND POOLED TOGETHER FOR THE PURPOSE OF INVESTING, RE- INVESTING, OR TRADING IN SECURITIES OR OTHER ASSETS OR DIFFERENT CLASSES THEREOF AS ALLOWED UNDER THE LAW, WHICH MAY EITHER HAVE A CORPORATE STRUCTURE, SUCH AS AN INVESTMENT COMPANY, OR A CONTRACTUAL STRUCTURE, SUCH AS A UNIT INVESTMENT TRUST FUND OR SIMILAR SCHEME HELD BY A TRUST CORPORATION OR A SEPARATE ACCOUNT FUND ESTABLISHED PURSUANT TO A VARIABLE UNIT LINKED LIFE INSURANCE POLICY ISSUED BY AN INSURANCE COMPANY, AND SUCH OTHER FORMS OF COLLECTIVE INVESTMENT SCHEMES AS MAY BE DETERMINED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES SUCH AS THE BANGKO SENTRAL NG PILIPINAS, THE SECURITIES AND EXCHANGE COMMISSION, A CIS MAY EITHER BE OPEN-END OR CLOSED-END, DEFINED AS FOLLOWS: "OPEN-END CIS SHALL REFER TO A CIS WHERE SECURITIES ARE OFFERED AND ARE ALWAYS REDEEMABLE BY THE CIS; AND, "CLOSED-END CIS SHALL REFER TO A CIS WHERE A FIXED NUMBER OF SECURITIES ARE OFFERED IN AN INITIAL PUBLIC OFFERING AND THEREAFTER MAY BE TRADED IN AN ORGANIZED MARKETPLACE AS DETERMINED BY THE SECURITIES

AND EXCHANGE COMMISSION, BUT MAY NOT BE REDEEMED BY THE CIS. A CLOSED-END CIS SHALL NOT BE ALLOWED TO INCREASE ITS NUMBER OF SECURITIES. "(KK) THE TERM 'UNIT LINKED INVESTMENT INSTRUMENT' SHALL REFER TO A CONTRACTUAL CIS ORGANIZED PURSUANT TO A CONTRACT, SUCH AS TRUST INDENTURE, OR AS AN INVESTMENT COMPONENT OF AN INSURANCE CONTRACT, ENGAGED OR HOLDS ITSELF OUT AS BEING ENGAGED, OR PROPOSES TO ENGAGE, IN THE BUSINESS OF INVESTING, REINVESTING, OR TRADING IN SECURITIES OR OTHER INVESTMENT ASSETS, AND ISSUES UNITS OF PARTICIPATION, EACH OF WHICH REPRESENTS AN UNDIVIDED INTEREST IN A POOL OF INVESTMENT ASSETS. "(LL) THE TERM 'HOLDING COMPANY' SHALL REFER TO ANY CORPORATION ORGANIZED TO HOLD THE STOCK OF ANOTHER OR OTHER COPORATIONS, AND OTHER FORMS OF HOLDING COMPANIES AS MAY DETERMINED BY APPROPRIATE GOVERNMENT REGULATORY AGENCIES. "(MM) THE TERM 'DEBT INSTRUMENT' SHALL REFER TO INSTRUMENTS REPRESENTING BORROWING AND LENDING TRANSACTIONS INCLUDING, BUT NOT LIMITED TO, DEBENTURES, CERTIFICATES OF INDEBTEDNESS, DUE BILLS, BONDS, LOAN AGREEMENTS, INSTRUMENTS, AND SECURITIES ISSUED BY THE GOVERNMENT OR ANY OF ITS INSTRUMENTALITIES, DEPOSIT SUBSTITUTES, CERTIFICATES OR OTHER EVIDENCES OF DEPOSITS, PROMISSORY NOTES, WHETHER

NEGOTIABLE OR NON-NEGOTIABLE, OTHER SIMILAR INSTRUMENTS, AND OTHER INSTRUMENTS AS MAY BE DETERMINED BY APPROPRIATE GOVERNMENT AGENCIES. "(NN) THE TERM 'ORGANIZED MARKETPLACE' SHALL REFER TO AN EXCHANGE AN OVER-THE- COUNTER MARKET, OR AN ALTERNATIVE TRADING SYSTEM RECOGNIZED AS SUCH BY THE SECURITIES AND EXCHANGE COMMISSION AS AN EXCHANGE UNDER REPUBLIC ACT NO. 8799, AS AMENDED, AND GOVERNED BY, AMONG OTHERS, TRANSPARENT AND BINDING RULES AND MARKET CONVENTIONS ON MEMBERSHIP, TRADING, PRICE TRANSPARENCY, TRADE REPORTING, MARKET MONITORING, AND ORDERLY CONDUCT OF THE MARKET WHICH ARE ENFORCEABLE ON THE MEMBERS AND PARTICIPANTS. "(00) THE TERM HEALTH INSURANCE PRODUCTS SHALL REFER TO THOSE THAT ARE BEING OFFERED AND SOLD BY INSURANCE COMPANIES, EITHER LIFE OR NON-LIFE, WHEREIN THERE IS A LIST OF COVERED ILLNESSES OF WHICH THE COMPANIES ASSUME RISKS AND INDEMNIFY LOSSES BROUGHT BY THE SAID COVERED ILLNESSES. "(PP) THE TERM HEALTH MAINTENANCE ORGANIZATION (HMO) PRODUCTS SHALL REFER TO PRE-AGREED OR DESIGNATED HEALTH CARE SERVICES TO THE ENROLLED MEMBERS FOR A FIXED PRE-PAID FEE FOR A SPECIFIED PERIOD OF TIME THROUGH THE USE OF SELECTED NETWORK OF HEALTH CARE PROVIDERS. HMO PRODUCTS PROVIDE A WIDE ARRAY OF MEDICAL, SURGICAL AND

HOSPITAL SERVICES THAT INCLUDE PREVENTIVE CARE AND WELLNESS PROGRAMS AND GENERALLY HAVE NO CASH-OUT TRANSACTION."

Sec. 4. Section 24 (B) and (C) of the National Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 24. Income Tax Rates. - "(A) Rates of Income Tax on Individual Citizen and Individual Resident Alien of the Philippines - "(B) Rate of Tax on Certain Passive Income: - "(1) Interests L, Royalties, Prizes, and Other Winnings]. - A final tax at the rate of [twenty percent (20%)] FIFTEEN PERCENT (15%) is hereby imposed upon the amount of interest [from any currency bank deposit, and yiele 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 impose a final tax of ten percent (10%); prizes (except prizes amounting to Ten thousand pesos (P10,000) or less which shall be subject to tax under Subsection (A) of Section 24; and other winnings (except winnings amounting to Ten thousand pesos (P10,000) or less from the Philippine Charity Sweepstakes and Lotto which shall be exempt), derived from sources within the Philippines:] YIELD, OR ANY OTHER MONETARY BENEFIT EARNED OR RECEIVED FROM BANK DEPOSIT, DEPOSIT SUBSTITUTE, TRUST FUND, AND SIMILAR ARRANGEMENTS. [Provided, however, That interest income received by an individual taxpayer (except a non resident 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 (5) year, a final tax shall be imposed on the entire income and shall be deducted and withheld by the depository bank from the proceeds of the tong 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%.] "(2) Cash and/or Property Dividends. - A final tax at the rate of [ten percent (10%)] FIFTEEN PERCENT (15%) 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, ENTITIES ENGAGED IN COLLECTIVE INVESTMENT SCHEMES, 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] ONE 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] ONE is a member or co-venturer: PROVIDED,

HOWEVER, THAT THE FIFTEEN PERCENT (15%) TAX ON DIVIDENDS SHALL APPLY ONLY ON INCOME EARNED ON OR AFTER JANUARY 1, 2026. INCOME FORMING PART OF RETAINED EARNNGS AS OF DECEMBER 31, 2025, EVEN IF DECLARED OR DISTRIBUTED ON OR AFTER JANUARY 1, 2020 SHALL BE SUBJECT TO TEN PERECENT (10%) TAX. "LIQUIDATING DIVIDEND SHALL BE SUBJECT TO SECTION 24(A) BASED ON NET GAIN. "IC)] (3) Capital Gains from THE Sale, EXCHANGE, BARTER, OR DISPOSITION of Shares of Stock not Traded in the Stock Exchange OR ORGANIZED MARKETPLACE. - [The provisions of Section 39(B) notwithstanding, a] 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 A LOCAL [the] stock exchangeL-] OR AN ORGANIZED MARKETPLACE. "(4) PRESUMPTIVE CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER, OR DISPOSITION OF SHARES OF STOCK TRADED IN THE STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE. - A FINAL TAX AT THE RATE OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) SHALL BE LEVIED, ASSESSED AND COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR ANY OTHER MODE OF DISPOSITION OF SHARES OF STOCK LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE, AND SHALL BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

"JANUARY 1, 2026: FIVE-TENTH OF ONE PERCENT (5/10 OF 1%) "JANUARY 1, 2027: FOUR-TENTH OF ONE PERCENT (4/10 OF 1%) "JANUARY 1, 2028: THREE-TENTH OF ONE PERCENT (3/10 OF 1%) "JANUARY 1, 2029: TWO-TENTH OF ONE PERCENT (2/10 OF 1% "JANUARY 1, 2030: ONE-TENTH OF ONE PERCENT (1/10 OF 1%) "THE TAX VALUE SHALL BE BASED ON THE GROSS SELLING PRICE OR GROSS VALUE IN MONEY OF THE SHARES OF STOCK SOLD, BARTERED, EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE PAID BY THE SELLER OR TRANSFEROR: PROVIDED, THAT EFFECTIVE JANUARY 1, 2031 EVERY SALE, BARTER, EXCHANGE, OR ANY OTHER MODE OF DISPOSITION OF SHARES OF STOCK LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER SECTION 24 OF THIS CODE. "ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC CORPORATION TRADED IN A FOREIGN EXCHANGE, SHALL BE TAXED UNDER SUBSECTION (A) OF THIS SECTION. "ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER, OR DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A DEALER IN SECURITIES LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES, FOR THE DEALER'S OWN ACCOUNT IN THE ORDINARY COURSE OF BUSINESS,

SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION BUT SUBSECTION (A) AS AN ORDINARY INCOME. "(5) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER, DISPOSITION OF NON-LISTED AND NON-TRADED DEBT INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION 24(B)(3) AND (4). - A FINAL TAX AT THE RATE OF FIFTEEN PERCENT (15%) SHALL BE IMPOSED ON THE NET CAPITAL GAIN EARNED FROM A DEBT INSTRUMENT AND OTHER SECURITIES NOT INCLUDED IN SUBSECTIONS (B)(3) AND (4), ISSUED BY A CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC CORPORATION, OR A RESIDENT FOREIGN CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS AGENCIES OR INSTRUMENTALITIES. "(6) PRESUMPTIVE CAPITAL GAINS ON LISTED AND TRADED DEBT INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION 24(B)(3) AND (4) - A FINAL TAX AT THE RATE OF ONE-TENTH OF ONE PERCENT (1/10 OF 1%) OF THE GROSS SELLING PRICE OR GROSS VALUE IN MONEY OF THE DEBT INSTRUMENT OR SECURITIES SOLD, BARTERED, EXCHANGED, OR OTHERWISE DISPOSED SHALL BE LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE, AND SHALL BE PAID BY THE SELLER OR TRANSFEROR: PROVIDED, THAT EFFECTIVE JANUARY 1, 2031 EVERY SALE, BARTER, EXCHANGE,

OR OTHER DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER SECTION 24 OF THIS CODE. IF TRADED IN A FOREIGN EXCHANGE, THE GAIN SHALL BE SUBJECT TO TAX UNDER SUBSECTION (A) HEREOF. "ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER OR DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED OR UNLISTED, BY A DEALER IN SECURITIES OR OTHER ENTITIES LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCY TO BUY AND SELL IN DEBT INSTRUMENTS AND OTHER SECURITIES FOR THE DEALER'S OWN ACCOUNT IN THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION BUT TO

SECTION 24(A) AS AN ORDINARY INCOME.

"[(D)](7) Capital Gains from Sale of Real Property. - [(1)](a) In General. - [The provisions of Section 39(B) notwithstanding,] a final tax of six percent (6%) based on the gross selling price or current fair market value as determined in accordance with Section 6(E) of this Code, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: Provided, That the tax liability, if any, on gains from sales or other dispositions of real property to the government or any of its political subdivisions or agencies or to government-owned or -controlled corporations shall be

determined either under Section 24(A) or under this Subsection, at the option of the taxpayer. "[(2)](b) Exception. - xxx "(C) ROYALITES, PRIZES, AND OTHER WINNINGS. - A FINAL TAX AT THE RATE OF TWENTY PERCENT (20%) IS HEREBY IMPOSED ON THE FOLLOWING INCOME DERIVED FROM SOURCES WITHIN THE PHILIPPINES: "(1) ROYALTIES EARNED AS PASSIVE INCOME, EXCEPT ROYALTIES FROM BOOKS, AS WELL AS OTHER LITERARY WORKS AND MUSICAL COMPOSITIONS WHICH SHALL BE SUBJECT TO A FINAL TAX OF TEN PERCENT (10%); (2) PRIZES (EXCEPT PRIZES AMOUNTING TO TEN THOUSAND PESOS (P10,000) OR LESS WHICH SHALL BE SUBJECT TO TAX UNDER SECTION 24(A); AND (3) OTHER WINNINGS (EXCEPT WINNINGS AMOUNTING TO TEN THOUSAND PESOS (P10,000) OR LESS FROM PHILIPPINE CHARITY SWEEPSTAKES AND LOTTO WHICH SHALL BE EXEMPT)."

Sec. 5. Section 25(A) and (B) of the National Internal Revenue Code of 1997,

as amended, is hereby amended to read as follows: "Sec. 25. Tax on Nonresident Alien Individual. - "(A) Nonresident Alien Engaged in Trade of Business Within the Philippines. - "[(1) In General. JA nonresident alien individual engaged in trade or business in the Philippines shall be subject to [an] income tax UNDER SECTION 24 OF THIS CODE L- in the same manner as an individual citizen and a resident alien ingividuat.] 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)] ONE

HUNDRED EIGHTY-THREE (183) 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 Headquarter of 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 headquarter of multinational company, or the share of a nonresident alien individual in the distributable net income after tax of a partnership (except a generat 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) years, a final tax shall be imposed on the entire income and shall be deducted and withheld by the depository banks from the proceeds of the tong 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%; andy 20%.] "[Less than three (3) years "I(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 rear properties shalt 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 andfor 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 FINAL 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 shall be subject to the income tax prescribed under Subsection [s (C) and (D)] (B)(7) of Section 24. "INTERESTS, DIVIDENDS AND CAPITAL GAINS ON SALE OF SHARES OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES SHALL BE SUBJECT TO TAX PRESCRIBED UNDER SECTION 24(B), OR TO THE PROVISIONS OF APPLICABLE TAX TREATY. "XXX."

Sec. 6. Section 27(D) of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 27. Rates of Income tax on Domestic Corporations. - "(A) In General. - Except as otherwise provided in this Code, an income tax rate of twenty-five percent (25%) effective July 1, 2020, is hereby imposed upon the taxable income derived during each taxable year from all sources within and without the Philippines by every corporation, as defined in Section 22(B) of this Code and taxable under this Title as a corporation, organized in, or existing under the laws of the Philippines. "x xx "(D) Rates of Tax on Certain Passive Incomes. - "[(1) 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 amount of interest on currency bank deposit and yield of any other monetary benefit from deposit substitutes an 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 rom 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.] "I(2) 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.] "[(3) Tax on Income Derived under the Expanded Foreign Currency Deposit System. Income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions with nonresidents, offshore banking units in the Philippines local commercial banks including branches of foreign banks that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with foreign currency deposit system shall be exempt from all taxes, except net income from such transaction as may be specified by the Secretary of Finance, upon recommendation by the Monetary Board to be subject to the regular income tax payable by banks: Provided, However, That interest income from foreign currency loans granted by such depository banks under said expanded system to residents other than offshore banking units in the Philippines or other depository banks under the expanded system, shall be subject to a final tax at the rate of ten percent (10%).1

"[Any income of nonresidents, whether individuals or corporations, from transactions with depository banks under the expanded systems shall be exempt from income tax.] [(4) Intercorporate Dividends. Dividends received by a domestic corporation from another domestic corporation shall not be subject to tax.] "(1) INTERESTS. - A FINAL TAX AT THE RATE OF FIFTEEN PERCENT (15%) IS HEREBY IMPOSED UPON THE AMOUNT OF INTEREST, YIELD, OR OTHER MONETARY BENEFIT EARNED OR RECEIVED FROM A BANK DEPOSIT, DEPOSIT SUBSTITUTE, TRUST FUND, AND SIMILAR ARRANGEMENTS. "(2) CASH AND/OR PROPERTY DIVIDENDS, - INTERCORPORATE DIVIDENDS OR DIVIDENDS RECEIVED FROM A DOMESTIC CORPORATION SHALL NOT BE SUBJECT TO TAX IMPOSED UNDER THIS SUBSECTION: PROVIDED, THAT NINETY-FIVE PERCENT (95%) OF DIVIDENDS RECEIVED BY A DOMESTIC CORPORATION FROM SUBSIDIARY COMPANIES LOCATED OUTSIDE THE PHILIPPINES SHALL NOT BE SUBJECT TO TAX: PROVIDED, FURTHER, THAT THE DOMESTIC CORPORATION HOLDS DIRECTLY OR INDIRECTLY AT LEAST TWENTY PERCENT (20%) SHAREHOLDINGS OF THE SUBSIDIARY COMPANY AND HAS HELD THE SHAREHOLDINGS FOR A MINIMUM OF TWO (2) YEARS AT THE TIME OF THE DIVIDENDS DISTRIBUTION: PROVIDED, FURTHERMORE, THAT THE SUBSIDIARY OPERATING COMPANY IS SUBJECT TO AT LEAST TEN PERCENT (10%) INCOME TAX AND TO WITHHOLDING TAX ON THE DIVIDENDS DISTRIBUTED TO THE DOMESTIC CORPORATION,

UNLESS OTHERWISE EXEMPT UNDER ITS LOCAL LAWS: PROVIDED, FINALLY, THAT THE LIMITATIONS UNDER SECTION 34(C) SHALL NOT BE OBSERVED IN CONNECTION WITH ANY TAXES PAID OR ACCRUED IN ANY FOREIGN COUNTRY IN RESPECT TO SUCH DIVIDEND. "LIQUIDATING DIVIDENDS SHALL BE SUBJECT TO SECTION 27(A) AND BASED ON NET GAIN. "(3) CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER OR DISPOSITION OF SHARES OF STOCK NOT TRADED IN THE STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE. - 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 MDOES OF DISPOSITION OF SHARES OF STOCK IN A DOMESTIC CORPORATION, EXCEPT SHARES SOLD, OR DISPOSED OF THORUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE. "(4) PRESUMPTIVE CAPITAL GAINS FROM THE SALE, EXCHANGE, BARTER OR DISPOSITION OF SHARES OF STOCK TRADED IN THE STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE. - A FINAL TAX AT THE RATE OF SIX-TENTH OF ONE PERCENT (6/10 OF 1%) SHALL BE LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF SHARES OF STOCK LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE, AND SHALL BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE:

"JANUARY 1, 2026: FIVE-TENTH OF ONE PERCENT (5/10 OF 1%) "JANUARY 1, 2027: FOUR-TENTH OF ONE PERCENT (4/10 OF 1%) "JANUARY 1, 2028: THREE-TENTH OF ONE PERCENT (3/10 OF 1%) "JANUARY 1, 2029: TWO-TENTH OF ONE PERCENT (2/10 OF 1%) "JANUARY 1, 2030: ONE-TENTH OF ONE PERCENT (1/10 OF 1%) "THE TAX SHALL BE BASED ON THE GROSS SELLING PRICE OR GROSS VALUE IN MONEY OF THE SHARES OF STOCK SOLD, BARTERED, EXCHANGED, OR OTHERWISE DISPOSED OF, TO BE PAID BY THE SELLER OR TRANSEROR: PROVIDED, THAT EFFECTIVE JANUARY 1, 2026, EVERY SALE, BARTER, EXCHANGE, OR ANY OTHER MODE OF DISPOSITION OF SHARES OF STOCK LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR AN ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER SECTION 27 OF THIS CODE. "ANY GAIN EARNED FROM SHARES OF STOCK IN A DOMESTIC CORPORATION TRADED IN A FOREIGN EXCHANGE, SHALL BE TAXED UNDER

SECTION 27(A) HEREOF.

"ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER OR DISPOSITION OF SHARES OF STOCK, LISTED OR UNLISTED, BY A DEALER IN SECURITIES LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES, FOR THIS OWN ACCOUNT IN THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE

SUBJECT TO TAX UNDER THIS SUBSECTION BUT TO

SECTION 27(A) AS AN ORDINARY INCOME.

"(5) CAPITAL GAINS FROM SALE, EXCHANGE, TRANSFER, BARTER, DISPOSITION OF NON-LISTED AND NON-TRADED DEBT INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION 27(D)(3) AND (4). - A FINAL TAX AT THE RATE OF FIFTEEN PERCENT (15%) SHALL BE IMPOSED ON NET CAPITAL GAINS EARNED FROM DEBT INSTRUMENT AND OTHER SECURITIES NOT INCLUDED IN SECTION 27(D)(3) AND (4), ISSUED BY A CITIZEN OR RESIDENT ALIEN, OR BY A DOMESTIC CORPORATION, OR A RESIDENT FOREIGN CORPORATION, OR BY THE GOVERNMENT OR ANY OF ITS AGENCIES OR INSTRUMENTALITIES. "(6) PRESUMPTIIVE CAPITAL GAINS ON LISTED AND TRADED DEBT INSTRUMENTS AND OTHER SECURITIES NOT INCLUDED IN SECTION 27(D)(3) AND (4) - A FINAL TAX AT THE RATE OF ONE-TENTH OF ONE PERCENT (1/10 OF 1%) OF THE GROSS SELLING PRICE OR GROSS VALUE IN MONEY OF THE DEBT INSTRUMENT OR SECURITIES SOLD, BARTERED, EXCHANGED, OR OTHERWISE DISPOSED SHALL BE LEVIED, ASSESSED, AND COLLECTED ON EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED AND TRADED THROUGH A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, AND SHALL BE PAID BY THE SELLER OR TRANSFEROR: PROVIDED, THAT EFFECTIVE JANUARY 1, 2031 EVERY SALE, BARTER, EXCHANGE, OR OTHER DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES,

LISTED AND TRADED THROUGH A LOCAL STOCK EXCHANGE OR A LICENSED ORGANIZED MARKETPLACE SHALL NOT BE SUBJECT TO TAX UNDER SECTION 27 OF THIS CODE, IF TRADED IN A FOREIGN EXCHANGE, THE GAIN SHALL BE SUBJECT TO TAX UNDER SECTION 27(A) HEREOF. "ANY GAIN REALIZED FROM THE SALE, EXCHANGE, BARTER OR DISPOSITION OF DEBT INSTRUMENTS AND OTHER SECURITIES, LISTED OR UNLISTED, BY A DEALER IN SECURITIES OR OTHER ENTITIES LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES TO BUY AND SELL IN DENT INSTSTRUMENTS AND OTHER SECURITIES, FOR THE DEALER'S OWN ACCOUNT IN THE ORDINARY COURSE OF BUSINESS, SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION BUT TO

SECTION 27(A) AS AN ORDINARY INCOME.

"[(5)] (7) Capital Gains Realized from the Sale, Exchange or Disposition of Lands and/or Buildings. - A final tax of six percent (6%) is hereby imposed on the gain presumed to have been realized on the sale, exchange or disposition of lands and/or buildings which are not actually used in the business of a corporation and are treated as capital assets, based on the gross selling price of fair market value as determined in accordance with Section 6(E) of this Code, whichever is higher, of such lands and/or buildings. "(E) ROYALTIES - A FINAL TAX AT THE RATE OF TWENTY PERCENT (20%) IS HEREBY IMPOSED ON ROYALTIES EARNED AS PASSIVE INCOME. "[(E)] (F) Minimum Corporate Income Tax on Domestic Corporations. - "(1) Imposition of Tax. - xxx

"(2) Carry Forward of Excess Minimum Tax. - xxx "(3) Relief from the Minimum Corporate Income Tax Under Certain Conditions. - xxx "(4) Gross Income Defined. - xxx "xxx "In the case of taxpayers engaged in the sale of service, 'gross income' means gross receipts less sales returns, allowances, discounts and costs of services. 'Cost of services' shall mean all direct costs and expenses necessarily incurred to provide the services required by the customers and clients including (A) salaries and employee benefits of personnel, consultants and specialists directly rendering the service and (B) cost of facilities directly utilized in providing the service such as depreciation or rental of equipment used and cost of supplies: Provided, however, That in the case of banks AND OTHER FINANCIAL INTERMEDIARIES, 'Cost of services' shall include interest expense."

Sec. 7. Section 28 (A) and (B) of the National Internal Revenue Code of 1997,

as amended, is hereby amended to read as follows: "Sec. 28. Rates of Income Tax on Foreign Corporations. "(A) Tax on Resident Foreign Corporations. - "(1) In General. - Except as otherwise provided in this Code, a corporation organized, authorized, or existing under the laws of any foreign country, engaged in trade or business within the Philippines, shall be subject to [an] income tax UNDER SECTION 27 OF THIS CODE [equivalent to twenty five percent (25%) of the] ON taxable income derived in the preceding taxable year from all sources within the Philippines [effective Jury 1, 2020]. "(2) Minimum Corporate Income Tax on Resident Foreign Corporations. - A minimum corporate income tax of

two percent (2%) of gross income, as prescribed under

Section 27(EF) of this Code, shall be imposed, under the same

conditions, on a resident foreign corporation taxable under paragraph (1) of this Subsection: Provided, That effective July 1, 2020 until June 30, 2023, the rate shall be one percent (1%). "(3) International Carrier. - xxx "(4) Tax on Branch Profits Remittances. - Any profit remitted by a branch to its head office shall 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 Economie Zone Authority)]. The tax shall be collected and paid in the same manner as provided in Section 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. "(5) Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies. - xxx "[(6) Tax on Certain Incomes Received by a Resident Foreign Corporation. ] "[(a) Interest from Deposits and Yield or any other Monetary Benefit from Deposit Substitutes, Trust Funds and - Interest from any Similar Arrangements and Royalties. currency bank deposit and yield or any other monetary benefit

from deposit substitutes and from trust funds and similar arrangements and royaities derived from sources within the Philippines shan be subject to a final income tax at the rate of twenty percent (20%) of such interest: Provided, however, That interest income derived by a resident foreign 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.] "[(b) Income Derived under the Expanded Foreign Currency Deposit System. Income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions with nonresidents, offshore banking units in the Philippines, local commercial banks including branches of foreign banks that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with foreign currency deposit system units, and other depository banks under the expanded foreign currency deposit system shall be exempt from all taxes, except net income from such transactions as may be specified by the Secretary of Finance, upon recommendation by the Monetary Beard to be subject to the regular income tax payable by banks: Provided, however, That interest income from foreign currency loans granted by such depository banks under said expanded system to residents other than offshore banking units in the Philippines or other depository banks under the expanded system shall be subject to a final tax at the rate of ten percent (10%).J "[Any income of nonresidents, whether individuals of corporations, from transactions with depository banks under the expanded system shall be exempt from income tax.] "[(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 domestie corporation except shares sold or disposed of through the stock exchange:] "[(d) Intercorporate Dividends. Dividends received by a resident foreign corporation from a domestic corporation liable to tax under this Code shall not be subject to tax under this Fitle.] "(B) Tax on Nonresident Foreign Corporation - "(1) In General. - Except as otherwise provided in this Code, a foreign corporation not engaged in trade or business in the Philippines, effective January 1, 2021, shall pay a tax equal to twenty-five percent (25%) of the gross income received during each taxable year from all sources within the Philippines, such as [interests, dividends,] rents, royalties, salaries, premiums (except 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 subparagraph 5[(c)]. "XXx "(5) Tax on Certain Incomes Received by a Nonresident Foreign Corporation. - "[(a) Interest on Foreign Loans. A final withholding tax at the rate of twenty percent (20%) is hereby imposed on the amount of interest on foreign loans contracted on or after August 1, 1986;1 "[(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 fifteen percent (15%), which represents the difference between the regular income tax and the fifteen percent (15%) tax on dividends as provided in this subparagraph: Provided, That effective July 1, 2020, the credit against the tax due shall be equivalent to the difference between the regular income tax rate provided in Section 28(B)(1) of this Code and the fifteen percent (15%) tax on dividends;] "Ic) Capital Gains from Sale of Shares of Stock not Fraded in the Stock Exchange. A final tax at the rate of fifteen percent (15%) is hereby imposed upon the net capitat gains realized during the taxable year from the sale, barter, exchange or other disposition of shares of stock in a domestie corporation, except shares sold, or disposed of through the stock exchange.]"

Sec. 8. Section 32(B)(7)(g) and (h) of the National Internal Revenue Code of

1997, as amended, is hereby amended to read as follows: "Sec. 32. Gross Income. - xxx "(A) Exclusions from Gross Income. - The following items shall not be included in gross income and shall be exempt from taxation under this Title: "xXX "(7) Miscellaneous Items. - "XXX "[(g) Gains from the Sale of Bonds, Debentures or other Certificate of Indebtedness. - Gains realized from the same or exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years.]

"(G) INTEREST INCOME FROM, AND GAINS FROM THE SALE, TRANSFER, OR DISPOSITION OF, PROJECT SPECIFIC BONDS THAT ARE ISSUED BY THE REPUBLIC OF THE PHILIPPINES OR ANY OF ITS INSTRUMENTALITIES TO FINANCE CAPITAL EXPENDITURES OR PROGRAMS COVERED BY THE PHILIPPINE DEVELOPMENT PLAN OR ITS EQUIVALENT AND OTHER GOVERNMENT PROGRAMS CONSIDERED TO BE OF HIGH-LEVEL PRIORITY OF THE COUNTRY: PROVIDED, THAT THE EXEMPTION SHALL BE UPON THE APPROVAL BY THE SECRETARY OF FINANCE. "(h) Gains from Redemption of Shares OR UNITS OF PARTICIPATION in [Mutual Fund] COLLECIVE INVESTMENT SCHEMES. - Gains realized by the investor upon redemption of shares of stock [in a mutual fund company] OR UNITS OF PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME as defined [in] UNDER Section 22 [(BB)] (JJ) of this Code. "XXX."

Sec. 9. Section 34(A), (B), (C), and (E) of the National Internal Revenue Code

of 1997, 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. -

"(1) Ordinary and Necessary Trade, Business or Professional Expenses. - "(a) In General. - There shall be allowed as deduction from gross income all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on or which are directly attributable to, the development, management, operation and/or conduct of the trade, business or exercise of a profession, including: "x xx "(b) Substantiation Requirements. - No deduction from gross income shall be allowed under Subsection (A) hereof unless the taxpayer shall substantiate with sufficient evidence, such as official receipts or other adequate records: (i) the amount of the expense being deducted, and (ii) the direct connection or relation of the expense being deducted to the development, management, operation and/or conduct of the trade, business or profession of the taxpayer. "(c) Bribes, Kickbacks and Other Similar Payments. - No deduction from gross income shall be allowed under Subsection (A) hereof for any payment made, directly or indirectly, to an official or employee of the national government, or to an official or employee of any local government unit, or to an official or employee of a government-owned or -controlled corporation, or to an official or employee or representative of a foreign government, or to a private corporation, general professional partnership, or a similar entity, if the payment constitutes a bribe or kickback. "x xx. "(B) Interest. - "(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 twenty percent (20%) of the interest income subjected to final tax: Provided, finally, That if the interest income tax is adjusted in the future, the interest expense reduction rate shall be adjusted accordingly based on the prescribed standard formula as defined in the rules and regulations to be promulgated by the Secretary of Finance, upon the recommendation of the Commissioner of Internal Revenue. "(2) Exceptions. - No deduction shall be allowed in respect of interest under the succeeding subparagraphs: "(a) If within the taxable year an individual taxpayer reporting income on the cash basis incurs an indebtedness on which an interest is paid in advance through discount or otherwise: Provided, That such interest shall be allowed as deduction in the year the indebtedness is paid: Provided, further, That if the indebtedness is payable in periodic amortizations, the amount of interest which corresponds to the amount of the principal amortized or paid during the year shall be allowed as deduction in such taxable year; OR "(b) If both the taxpayer and the person to whom the payment has been made or is to be made are persons specified under Section 36(B)[; or]. "[(e) If the indebtedness is incurred to finance petroleum exptoration.] "(3) [Optional] Treatment of Interest Expense RELATED TO ACQUISITION OF ASSET. - [At the option of the taxpayer,] interest EXPENSE incurred to acquire properly used in trade, business or exercise of a profession THAT WILL BENEFIT THE BUSINESS LONGER THAN ONE YEAR [may be allowed as a deduction or treated as a

capital expenditure] SHALL BE CAPITALIZED AND THEREAFTER AMORTIZED OR DEPRECIATED AS PART OF THE COST OF THE ASSET. "xxx. "(D) Bad Debts. - "(1) In General. - xxx. "(2) Securities Becoming Worthless. - If securities, as defined in Section 22 (T), are ascertained to be worthless and charged off within the taxable year and are capital assets, the loss resulting therefrom shall [, in the case of a taxpayer other than a bank or trust company incorporated under the laws of the Philippines a substantial part of whose business is the receipt of deposits, for the purpose of this Title,] be considered as a loss from the sale or exchangeL] OF CAPITAL ASSETS on the last day of such taxable yearL, of capital assets] SECURITIES HELD BY A DEALER IN SECURITIES OR AN ENTITY LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES INCLUDING BANKS, AND OTHER FINANCIAL INTERMEDIARIES, SHALL BE CONSIDERED ORDINARY ASSETS, AND SECURITIES HELD THAT ARE ASCERTAINED TO BE WORTHLESS SHALL BE CONSIDERED ORDINARY LOSSES THAT ARE ALLOWED AS DEDUCTION FROM TAXABLE INCOME. "XXX."

Sec. 10. Section 37 (A) and (B) of the National Internal Revenue Code of 1997,

as amended, is hereby amended to read as follows: "Sec. 37. Special Provisions Regarding Income and Deductions of Insurance Companies, Whether Domestic or Foreign. -

"(A) Special Deductions Allowed to Insurance Companies, PRE-NEED COMPANIES, AND PENSION FUNDS. - In the case of insurance companies, PRE-NEED COMPANIES, AND PENSION FUNDS, whether domestic or foreign doing business in the Philippines, the net additions, if any, required by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and annuity contracts may be deducted from their gross income: Provided, however, That the released reserve be treated as income for the year of release. "(B) Mutual Insurance Companies. - In the case of MUTUAL LIFE, mutual fire and mutual employers' liability and mutual workmen's compensation and mutual casualty insurance companies requiring their members to make premium deposits to provide for losses and expenses, said companies shall not [return] INCLUDE as income any portion of the premium deposits returned to their policyholders, but shall [return] INCLUDE as taxable income all income received by them from all other sources plus such portion of the premium deposits as are retained by the companies for purposes other than the payment of losses and expenses and reinsurance reserves. "x XX."

Sec. 11. Section 38 (A) of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 38. Losses from Wash Sales of Stock or Securities. - "(A) In the case of any loss claimed to have been sustained from any sale or other disposition of shares of stock or securities where it appears that within a period beginning thirty (30) days before the date of such sale or disposition and ending thirty (30) days after such date, the taxpayer has

acquired (by purchase or by exchange upon which the entire amount of gain or loss was recognized by law), or has entered into a [contact] CONTRACT or option so AS to acquire, substantially identical stock or securities, then no deduction for the loss shall be allowed under Section 34 unless the claim is made by a dealer in stock or securities OR BY ANY ENTITY OR FINANCIAL INTERMEDIARY DULY LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES TO BUY AND SELL IN SECURITIES EITHER FOR THE ENTITY'S OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS and with respect to a transaction made in the ordinary course of the business of such dealer. "XXX."

Sec. 12. Section 39 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 39. Capital Gains and Losses. - "(A) Definitions. - As used in this Title - "x xx. "[(B) Percentage Taken Into Account. - In the case of a taxpayer, other than a corporation, only the following percentages of the gain or loss recognized upon the sale or exchange of a capital asset shall be taken into account in computing net capital gain, net capital loss, and net income;] "[(1) One hundred percent (100%) if the capital asset has been held for not more than twelve (12) months; and] "[(2) Fifty percent (50%) if the capital asset has been held for more than twelve (12) months;] "[(C)] (B) Limitation on Capital Losses. - Losses from sales or exchanges capital assets shall be allowed only to the extent of the grains from such sales or exchanges. If a [bank or trust company incorporated under the laws of the

Philippines, a substantial part of whose business is the receipt of deposits,] DEALER IN SECURITIES OR OTHER ENTITIES OR FINANCIAL INTERMEDIARIES DULY LICENSED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES TO TRADE IN SECURITIES, sells any bond, debenture, note, or certificate or other evidence of indebtedness issued by any corporation [f] including one issued by a government or political subdivision thereof L7l, with interest coupons or in registered form, any loss resulting from such sale shall not be subject to the foregoing limitation and shall not be included in determining the applicability of such limitation to other losses. "[(D) Net Capital Loss Carry over. If any taxpayer, other than a corporation, sustains in any taxable year a net capital loss, such loss (in an amount not in excess of the net income for such year) shall be treated in the succeeding taxable year as a loss from the sale or exchange of a capital asset held for not more than twelve (12) menths] "[(E)] (C) Retirement of Bonds, etc. - X X x "[(F) Gains or Losses from Short Sales, Etc. -For purposes of this Hitle 1 "E(1) Gains or losses from short sales of property shall be considered as gains or losses from sales or exchanges of capital assets; and,] "[(2) Gains or losses attributable to the failure to exercise privileges or options to buy or sell property shall be considered as capital gains or losses.]"

Sec. 13. Section 42 (A) (1), (2) and (B) (2) of the National Internal Revenue

Code of 1997, as amended, is hereby amended to read as follows: "Sec. 42. Income from Sources Within the Philippines.

"(A) Gross Income from Sources Within the Philippines. - The following items of gross income shall be treated as gross income from sources within the Philippines" "(1) Interests. - Interests AND YIELD [derived from sources within the Philippines, and interest on] FROM DEBT INSTRUMENTS, BANK DEPOSITS, DEPOSIT SUBSTITUTES, TRUST FUNDS, AND SIMILAR ARRANGEMENTS SUCH AS bonds, notes or other interest- bearing obligation of residents, corporate or otherwise [;], INCLUDING DEBIT INSTRUMENTS OR DEBT SECURITIES ISSUED BY THE GOVERNMENT OR ANY OF ITS AGENCIES OR INSTRUMENTALITIES; "(2) Dividends. - The amount received as dividends: "(a) From a domestic corporation; and, "(b) From a foreign corporation, [unless less than] WITH AT LEAST fifty percent (50%) of the gross income of such foreign corporation for the three-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence) was derived from sources within the Philippines as determined under the provisions of this Section; but only in an amount which bears the same ratio to such dividends as the gross income of the corporation for such period derived from sources within the Philippines bears [to] ON its gross income from all sources. "xXX. "(B) Taxable Income from Sources Within the Philippines. - "(1) General Rule. - xxx "(2) Exception. - No deductions for interest paid or incurred abroad shall be allowed from the item of gross income specified in Subsection (A) unless indebtedness was

actually incurred to provide funds for use in connection with the conduct or operation of trade or business in the Philippines [-1, OR ON A TRADE OR BUSINESS OUTSIDE THE PHILIPPINES: PROVIDED, THAT INCOME GENERATED OR RECEIVED FROM THE USE OF SUCH FUNDS IN CONNECTION WITH THE CONDUCT OR OPERATION OF TRADE OR BUSINESS IN THE PHILIPPINES IS A TAXABLE INCOME IN THE PHILIPPINES."

Sec. 14. Section 51(C)(2) of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 51. Individual Return. - "(A) Requirements. - xxx "(B) Where to file. - xxx "(C) When to file. - xxx "(1) xxx "(2) Individuals subject to tax on capital gains: "(a) From the sale or exchange of shares of stock OR DEBT INSTRUMENTS AND OTHER SECURITIES not traded [thru] THROUGH a local [stock] exchange OR AN ORGANIZED MARKETPLACE as prescribed under Sections 24 [(C)] (B)(3) AND (5), AND 25(A) AND (B) [shall file] a return SHALL BE FILED within thirty (30) days after each transaction and a final consolidated return on or before April 15 of each year covering all stock transactions of the preceding taxable year; [and,] "(B) FROM THE SALE, EXCHANGE, OR BARTER OF SHARES OF STOCK OR DEBT INSTRUMENTS AND OTHER SECURITIES TRADED THROUGH A LOCALE EXCHANGE OR AN ORGANIZED MARKETPLACE AS PRESCRIBED UNDER SECTIONS 25(B)(4) AND (6), AND 25(A) AND (B), THE TAX SHALL BE COLLECTED BY

THE BROKER WHO EFFECTED THE SALE, AND SHALL BE REMITTED TO THE BUREAU OF INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS FROM THE DATE OF COLLECTION THEREOF. THE BROKER SHALL LIKEWISE SUBMIT ON MONDAYS OF EACH WEEK TO THE SECRETARY OF THE LOCAL EXCHANGE OR ORGANIZED MARKETPLACE OF WHICH THE BROKER IS A MEMBER, A TRUE AND COMPLETE RETURN WHICH SHALL CONTAIN A DECLARATION OF ALL THE TRANSACTIONS EFFECTED DURING THE PRECEDING WEEK, AND OF ALL TAXES COLLECTED AND TURNED OVER TO THE BUREAU OF INTERNAL REVENUE; AND, "[(b)] (C) From the sale or disposition of real property under Section 24 [(D)] (B)(7) shall file a return within thirty (30) days following each sale or other disposition."

Sec. 15. Section 52 (A) and (D) of the National Internal Revenue Code of 1997,

as amended, is hereby amended to read as follows: "Sec. 52. Corporation Returns. - "(A) Requirements. - Every corporation AS DEFINED UNDER SECTION 22(B) OF THIS CODE, AND 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, 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. "x × x "(D) Return on Capital Gains Realized from Sale of Shares of Stock, DEBT INSTRUMENTS, AND OTHER SECURITIES not Traded in the Local [Stock] Exchange OR AN ORGANIZED MARKETPLACE. - Every corporation deriving capital gains from the sale or exchange of share of stock, DEBT INSTRUMENTS AND OTHER SECURITIES not traded [thru] THROUGH a local [stock] exchange OR AN ORGANIZED MARKETPLACE as prescribed under [Sections 24(C), 25(A)(3), 27(E)(2), 28(A)(8)(c) and 28(B)(5)(c)] SECTIONS 27(D)(3), AND (5), AND 28 shall file a return within thirty (30) days after each transaction and a final consolidated return of all transactions during the taxable year on or before the fifteenth (15th) day of the fourth (4th) month following the close of the taxable year. "(E) RETURN ON CAPITAL GAINS REALIZED FROM SALE OF SHARES OF STOCK, DEBT INSTRUMENTS, AND OTHER SECURITIES TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE. - IT SHALL BE THE DUTY OF EVERY BROKER WHO EFFECTED A SALE OF SHARES OF STOCK, DEBT INSTRUMENTS AND OTHER SECURITIES

TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE, SUBJECT TO THE TAX IMPOSED UNDER SECTION 27(D)(4) AND (6), AND 28, TO COLLECT THE TAX DUE AND REMIT THE SAME TO THE BUREAU OF INTERNAL REVENUE WITHIN FIVE (5) BANKING DAYS FROM THE DATE OF COLLECTION THEREOF, AND TO SUBMIT ON MONDAYS OF EACH WEEK TO THE SECRETARY OF THE LOCAL EXCHANGE OR ORGANIZED MARKETPLACE, OF WHICH THE BORROWER IS A MEMBER, A TRUE AND COMPLETE RETURN WHICH SHALL CONTAIN A DECLARATION OF ALL THE TRANSACTIONS EFFECTED DURING THE PRECEDING WEEK, AND TAXES COLLECTED AND TURNED OVER TO THE BUREAU OF INTERNAL REVENUE."

Sec. 16. Section 54 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 54. Returns of Receivers, Trustees, [in Bankruptcy] or Assignees. - [In cases wherein] [f]Receivers, ADMINISTRATORS, trustees in AN IRREVOCABLE TRUST OR bankruptcy, or [assignees are] ANY OTHER PERSON ASSIGNED OR IN CHARGE OF operating the property or business of [a] ANOTHER PERSON OR corporation, subject to the tax UNDER THIS CODE [imposed by this Title, such receivers, trustees or assignees] shall BE IMPOSED WITH THE OBLIGATION TO FILE THE [make] returns AND PAY THE TAXES FOR SUCH PERSON OR CORPORATION IN THE SAME MANNER REQUIRED UNDER THIS CODE. [of net income as and for such corporation, in the same manner and form as such erganization is hereinbefore required to make returns, and] any tax due on the income as returned by receivers,

ADMINISTRATORS, trustees or assignees shall be assessed and collected in the same manner as if assessed directly against the [organizations] PERSON, ESTATE OR ORGANIZATION [ef] whose businesses or properties they have custody OF or control OVER. "THE TRUSTOR IN A REVOCABLE TRUST, NOT THE TRUSTEE, SHALL BE RESPONSIBLE IN FILING THE RETURNS REQUIRED UNDER THIS CODE AND IN DECLARING THE INCOME RECEIVED FROM THE TRUST IN ACCORDANCE WITH SECTION 24, 25, 27 AND 28 OF THIS CODE. INCOME OF THE TRUST SUBJECTED TO FINAL TAX UNDER SECTION 24, 25, 27, 28 SHALL NO LONGER BE SUBJECT TO TAX UPON DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR BENEFICIARY, NOR SHALL THE TRUSTOR OR BENEFICIARY BE REQUIRED TO DECLARE THE INCOME AS PART OF ITS TAXABLE INCOME. "ANY INCOME OF A REVOCABLE TRUST NOT SUBJECTED TO FINAL TAX SHALL BE SUBJECT TO CREDITABLE WITHHOLDING TAX UPON DISTRIBUTION OF THE INCOME TO THE TRUSTOR OR THE BENEFICIARY AT A RATE NOT EXCEEDING THE HIGHEST RATE OF TAX IMPOSED ON INDIVIDUALS UNDER SECTION 24 IN THE CASE OF INDIVIDUAL TRUSTORS, OR THE CORPORATE INCOME TAX UNDER

SECTION 27 IN THE CASE OF CORPORATE

TRUSTORS."

Sec. 17. Section 56 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 56. Payment and Assessment of Income Tax for Individuals and Corporations. - "(A) Payment of Tax. -

"x xx. "(3) Payment of Capital Gains Tax. - "IN GENERAL - The total amount of tax imposed and prescribed under Sections 24 [(C)] (B)(3), (24) [<D)] (B)(5), 24 (B)(7), 25, 27 [(EX2)] (D)(3), 27(D)(5), 27 (D)(7), 28(A) [(8)(c)] and 28(B)(5) [(c)] shall be paid on the date the return prescribed therefor is filed by the person liable thereto: Provided, That if the seller submits proof of [his] THE intention to avail [himself] of the benefit of exemption of capital gains under existing special laws OR TAX TREATY, no such payments shall be required: Provided, further, That in case of failure to qualify for exemption under such special laws, TAX TREATY and implementing rules and regulations, the tax due on the gains realized from the original transaction shall immediately become due and payable, and subject to the penalties prescribed under applicable provisions of this Code: Provided, finally, That if the seller, having paid the tax, submits such proof of intent within six (6) months from the registration of the document transferring the real property, [he] THE SELLER shall be entitled to a refund of such tax upon verification of [his] compliance with the requirements for such exemption. "X XX."

Sec. 18. Section 57 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 57. Withholding of Tax at Source. - "(A) Withholding of Final Tax on Certain Incomes. - Subject to rules and regulations, the Secretary of Finance may promulgate, upon the recommendation of the Commissioner, requiring the filing of income tax return by certain income payees, the tax imposed or prescribed [by] UNDER Sections [24(B)(1), 24(B)(2), 24(C), 24(D)(1); 25(A)(2), 25(A)(3),

25(B), 25(C), 25(D), 25(E); 27(D)(1), 27(D)(2), 27(D)(3), 27(D)(5); 28(A)(1), 28(A)(5), 28(A)(7)(a), 28(A)(7)(b), 28(A)(7)(c), 28(B)(1), 28(B)(2), 28(B)(3), 28(B)(4), 28(B)(5)(a), 28(B)(5)(b), 28(B)(5)(c)] 24(B), 24(C), 25(A), 25(B), 27(D), 27(E), 28(A), AND 28(B)(5); 33; and 282 of this Code on specified items of income SUBJECT TO FINAL TAX shall be withheld by payor-corporation and/or person and paid in the same manner and subject to the same conditions as provided in Section 58 of this Code. "(B) xxx "I(C) Tax-free Covenant Bonds. - In any case where bonds, mortgages, deeds of trust or other similar obligations of domestic or resident foreign corporations, contain a contract or provision by which the obligor agrees to pay any portion of the tax-imposed in this Title upon the obligee or to reimburse the obligee for any portion of the tax or to pay the interest without deduction for any tax which the obligor may be required or permitted to pay thereon or to retain therefrom under any law of the Philippines, or any state or country, the obligor shall deduct and withhold a tax equal to thirty percent (30%) of the interest or other payments-upon those bonds, mortgages, deeds of trust or other obligations, whether the interest or other payments are payable annually or at shorter or longer periods, and whether the bonds, securities of obligations had been or will be issued or marketed, and the interest or other payment thereon paid, within or without the Philippines, if the interest or other payment is payable to a nonresident alien or to a citizen or resident of the Philippines. ]"

Sec. 19. Section 73 (A) of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows:

"Sec. 73. Distribution of Dividends or Assets by Corporations. - "(A) Definition of Dividends. - The term "dividends" when used in this Title means any distribution made by a corporation to its shareholders out of its earnings or profits and payable to its shareholders, whether in money or in other property. "Where a corporation distributes all of its assets in complete liquidation or dissolution, the gain realized or loss sustained by the stockholder, whether individual or corporate, is a taxable income or a deductible loss, UNDER SECTIONS 24(A), 25(B), 27(A) AND 28(B), as the case may be. "(B) Stock Dividend. - xxx."

Sec. 20. Section 108 of the National Internal Revenue Code of 1997,

as amended, is hereby amended to read as follows: "Sec. 108. Value-added Tax on Sale of Service and Use or Lease of Properties. - "(A) Rate and Base of Tax. - x xx "The phrase 'sale or exchange of services' means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, including those performed or rendered by construction and service contractors; stock, real estate, commercial, customs and immigration brokers; lessors of property, whether personal or real; warehousing services; lessors or distributors of cinematographic films; persons engaged in milling, processing, manufacturing or repacking goods for others; proprietors, operators or keepers of hotels, motels, resthouses, pension houses, inns, resorts, proprietors or operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers; dealers in securities: [lending investors;] transport goods or cargoes for

hire and other domestic common carriers by land relative to their transport of goods or cargoes; common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines; sales of electricity by generation companies, transmission by any entity, and distribution companies, including electric cooperatives; services of franchise grantees of electric utilities, telephone and telegraph, radio and television broadcasting and all other franchise grantees except those under Section 119 of this Code and non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies; and similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties. The phrase 'sale or exchange of services' shall likewise include:

Sec. 21. Section 121 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 121. Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions. - There shall be collected a tax on gross receipts derived from sources within the Philippines by all banks and non-bank financial intermediaries [in] PERFORMING QUASI-BANKING FUNCTIONS AT THE RATE OF FIVE PERCENT (5%) ON INCOME SUCH AS INTEREST, COMMISSIONS, AND DISCOUNTS FROM LENDING ACTIVITIES AS WELL AS INCOME FROM FINANCIAL LEASING, ROYALTIES, RENTALS OF PROPERTY, REAL OR PERSONAL, PROFITS FROM SALE OR EXCHANGE INCLUDING GAINS DERIVED FROM SALE OR TRANSFER OF REAL PROPERTIES, NET TRADING GAINS WITHIN THE

TAXABLE YEARS OF FOREIGN CURRENCY, DEBT SECURITIES, DERIVATIVES, AND OTHER SIMILAR FINANCIAL INSTRUMENTS, AND ALL OTHER ITEMS TREATED AS GROSS INCOME UNDER SECTION 32 OF THIS CODE, EXCEPT DIVIDENDS AND EQUITY SHARES AND NET INCOME OF SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO PERCENT (0%) [in accordance with the following schedule]: "[fa) On interest, commissions and discounts from tending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which such receipts are derived:] "[Maturity period is five years or less ... 5%] "[Maturity period is more than five years 1%] "[(b) On dividends and equity shares and net income of subsidiaries 0%] "[fc) On royalties, rentals of property, real or personal, profits, from exchange and all other items treated as gross income under Section- 32 of this Code ........7%] "[fd) On net trading gains within the taxable year of foreign currency, debt securities, derivatives, and other similar financial instruments .7%] "[Provided, however, That in case the maturity period referred to in paragraph (a) is shortened thru pre termination, then the maturity period shall be reckoned to end as of the date of pre termination for purposes of classifying the

transaction and the correct rate of tax shall be applied accordingly.] "Provided, [finally,] That FOR PURPOSES OF COMPUTING THE GROSS RECEIPTS, the generally accepted accounting principles [as may be prescribed by the Bangko Sentral ng Pilipinas for the bank or non bank financial intermediary performing quasi banking functions shalt likewise be the basis for the calculation of gross receipts.] OF RECORDING INCOME AS ADOPTED BY THE BANK SHALL BE FOLLOWED: PROVIDED, THAT THE MERE INCREASE OR DECREASE IN VALUE OF PROPERTY AS A RESULT OF CHANGES IN MARKET VALUES SHALL NOT BE CONSIDERED IN THE COMPUTATION OF GROSS RECEIPTS: PROVIDED, FURTHER, THAT FOR PURPOSES OF DETERMINING THE GROSS RECEIPTS, NO DEDUCTION SHALL BE MADE ON THE INCOME EXCEPT IN THE CASE OF GAINS FROM DEALING IN PROPERTY AND TRADING, WHERE NET LOSS WITHIN THE SAME BUSINESS ACTIVITY CAN BE OFFSET TO DETERMINE THE NET GAIN SUBJECT TO THIS TAX: PROVIDED, FURTHER, THAT SUCH OFFSETTING SHALL BE ON A QUARTERLY BASIS, AND ANY NET LOSS INCURRED IN A QUARTER CAN BE CARRIED OVER AS DEDUCTION IN THE SUCCEEDING QUARTERS: PROVIDED, FINALLY, THAT NET LOSS INCURRED IN A TAXABLE YEAR CANNOT BE CARRIED OVER TO THE SUCCEEDING TAXABLE YEAR.

Sec. 22. Sec 122 of the National Internal Revenue Code of 1997, as amended,

is hereby amended to read as follows: "Sec. 122. Tax on Other Non-Bank Financial Intermediaries, - There shall be collected a tax of five percent

(5%) on the gross receipts derived by other non-bank financial intermediaries doing business in the Philippines, from interest, commissions, [discounts] AND DISCOUNTS FROM LENDING ACTIVITIES, AS WELL AS INCOME FROM FINANCIAL LEASING, ROYALTIES, RENTALS OF PROPERTY, REAL OR PERSONAL, PROFITS FROM SALE OR EXCHANGE INCLUDING GAINS DERIVED FROM SALE OR TRANSFER OF REAL PROPERTIES, NET TRADING GAINS WITHIN THE TAXABLE YEAR OF FOREIGN CURRENCY, DEBT SECURITIES, DERIVATIVES, AND OTHER SIMILAR FINANCIAL INSTRUMENTS, UNDERWRITING FEES, SERVICE INCOME, AND ALL OTHER ITEMS TREATED AS GROSS INCOME UNDER SECTION 32 OF THIS CODE, EXCEPT DIVIDENDS AND EQUITY SHARES AND NET INCOME OF SUBSIDIARIES WHICH SHALL BE SUBJECT TO ZERO PERCENT (0%). [and all other items treated as gross income under this Code: Provided, That interests, commissions and discounts from lending activities, as well as income from financial leasing, shall be taxed on the basis of the remaining maturities of the instruments from which such receipts are derived, in accordance with the following schedule:] "[Maturity -iS -five (5) years tess ...... 5%] "[Maturity period is more than five (5) years . 1%] "[Provided, however, That in case the maturity period is shortened thru pretermination, then the maturity period shall be reckoned to end as of the date of pretermination for purposes of classifying the transaction and the correct rate of tax shall be applied accordingly.]

"GROSS RECEIPTS SHALL BE COMPUTED IN THE SAME MANNER PROVIDED UNDER SECTION 121. "FINANCIAL INTERMEDIARIES SUBJECT TO TAX UNDER THIS SECTION SHALL INCLUDE FINANCING COMPANIES, FINANCE LEASING COMPANIES, INVESTMENT HOUSES, PAWNSHOPS, FOREIGN EXCHANGE DEALERS AND MONEY BROKERS, TRUST ENTITIES, CREDIT CARD COMPANIES, LENDING INVESTORS, SAVINGS AND LOAN ASSOCIATIONS, AND OTHER FINANCIAL INTERMEDIARIES EXCEPT BANKS AND NON-BANKS PERFORMING QUASI- BANKING FUNCTIONS WHICH SHALL BE TAXED UNDER SECTION 121 OF THIS CODE. "COLLECTIVE INVESTMENT SCHEMES SUCH AS MUTUAL FUNDS, UNIT LINKED INVESTMENT TRUST FUNDS, UNIT LINKED VARIABLE INSURANCE, AND OTHER COLLECTIVE INVESTMENT SCHEMES AS MAY BE DETERMINED BY APPROPRIATE GOVERNMENT REGULATORY AGENCIES SHALL NOT BE SUBJECT TO GROSS RECEIPTS TAX AND OTHER PERCENTAGE TAXES IMPOSED UNDER TITLE V, AND THE VALUE ADDED TAX IMPOSED UNDER TITLE IV OF THIS CODE. FOR PURPOSES OF THIS EXEMPTION, A CIS SHALL HAVE AT LEAST TWO HUNDRED (200) OWNERS, INVESTORS, OR PARTICIPANTS, AND SHALL HAVE COMPLIED WITH THE MINIMUM PUBLIC OWNERSHIP REQUIREMENT OF THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES. "THE INCOME OF A PERSON OR COMPANY NOT LICENSED TO DO FINANCIAL INTERMEDIATION BUT WHICH ENGAGES IN FINANCIAL INTERMEDIATION SERVICES AS AN INCIDENT TO ITS MAIN BUSINESS

ACTIVITY, AND DERIVES INCOME THEREFROM, SHALL BE SUBJECT TO THE TAX IMPOSED ON ITS PRINCIPAL ACTIVITY. TO BE CONSIDERED INCIDENTAL, THE INCOME FROM INTERMEDIATION SERVICES SHALL NOT EXCEED FIFTY PERCENT (50%) OF THE PERSON OR THE COMPANY'S TOTAL ANNUAL INCOME. IF THE TOTAL INCOME RECEIVED FROM FINANCIAL INTERMEDIATION IS MORE THAN FIFTY PERCENT (50%), AND THE PERSON OR COMPANY HAS ENTERED INTO AT LEAST SIX (6) TRANSACTIONS DURING THE YEAR, THE TOTAL INCOME FROM SUCH FINANCIAL INTERMEDIATION SHALL BE SUBJECT TO TAX UNDER THIS SUBSECTION. "IN-HOUSE LENDING OR SELLER FINANCING SHALL NOT BE SUBJECT TO TAX UNDER THIS SUBSECTION. ANY INCOME EARNED OR RECEIVED FROM IN-HOUSE LENDING OR SELLER FINANCING SHALL BE SUBJECT TO THE SAME TAX APPLICABLE TO THE PRINCIPAL BUSINESS ACTIVITY OR TRANSACTION. "HOLDING COMPANIES SHALL BE SUBJECT TO EITHER VALUE ADDED TAX OR GROSS RECEIPTS TAX DEPENDING ON THE NATURE OF THEIR BUSINESS ACTIVITIES. IF UNDERTAKING FINANCING AND OTHER SIMILAR ACTIVITIES, THEY SHALL BE SUBJECT TO GROSS RECEIPTS TAX UNDER THIS SECTION. INCOME DERIVED FROM THE SALE OF GOODS, PROPERTIES AND OTHER SERVICES SHALL BE SUBJECT TO VALUE ADDED TAX UNDER SECTION 105 OF THIS CODE. "[Provided, finally, That the generally accepted accounting principles as may be prescribed by the Securities

and Exchange Commission for other non bank financial intermediaries shall likewise be the basis for the calculation of gross reccipts.] "Nothing in this Code shall preclude the Commissioner from imposing the same tax herein provided on persons OR ENTITIES performing similar [financing] FINANCIAL INTERMEDIATION activities."

Sec. 23. Section 123 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 123. Tax on Life Insurance AND REINSURANCE Premiums. - There shall be collected from every person, company or corporation, Ifjexcept purely cooperative companies or associations [7] doing life insurance business of any sort in the Philippines, A PREMIUM TAX AT THE FOLLOWING RATES: "(A) FOR LIFE INSURANCE INCLUDING HEALTH INSURANCE AS A RIDER TO LIFE INSURANCE POLICY, a tax of two percent (2%) of the total premium collected, whether such premiums are paid in money, notes, credits, or any substitute for money; but premiums refunded within six (6) months after payment on account of rejection of risk or returned for other reason to a person insured shall not be included in the taxable receipts; nor shall any tax be paid upon reinsurance by a company IF THE TAX [that] has already BEEN paid [the tax] ON THE DIRECT PREMIUM; nor upon premiums collected or received by any branch of a domestic corporation, firm or association doing business outside the Philippines on account of any life insurance of the insured who is a non-resident, if any tax on such premium is imposed by the foreign country where the branch is established nor upon premiums collected or received on account of any reinsurance, if the insured, in case of personal insurance

resides outside the Philippines, if any tax on such premiums is imposed by the foreign country where the original insurance has been issued or perfected; nor upon that portion of the premiums collected or received by the insurance companies on variable contracts [-] IN A CIS in excess of the amounts necessary to insure the lives of the variable contract ownersl:]: PROVIDED, THAT THE CIS SHALL HAVE AT LEAST TWO HUNDRED (200) OWNERS, INVESTORS OR PARTICIPANTS, AND THAT ANY MINIMUM PUBLIC OWNERSHIP, AS MAY BE REQUIRED BY APPROPRIATE GOVERNMENT REGULATORY AGENCIES SHALL BE COMPLIED WITH. "(B) PERSONS DOING BUSINESS SIMILAR OR AKIN TO LIFE AND HEALTH INSURANCE SUCH AS PRE- NEED COMPANIES, PENSION FUND COMPANIES, HEALTH MAINTENANCE ORGANIZATIONS AND OTHER COMPANIES SIMILAR TO LIFE INSURANCE, AS MAY BE DETERMINED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES, SHALL BE SUBJECT TO TAX UNDER THIS SUBSECTION AT THE RATE OF TWO PERCENT (2%) OF THE GROSS PREMIUM, PLAN PAYMENT, OR INSTALMENT PAYMENTS COLLECTED WITHOUT ANY DEDUCTION FOR THE AMOUNTS REQUIRED BY THE APPROPRIATE GOVERNMENT REGULATORY AGENCIES TO BE EARMARKED FOR THE BENEFIT OF THE INSURED, OR PLANHOLDER. "NOTHING IN THIS CODE SHALL PRECLUDE THE COMMISSIONER FROM IMPOSING THE SAME TAX HEREIN PROVIDED ON PERSONS PERFORMING SIMILAR INSURANCE BUSINESS ACTIVITIES.

"LIFE REINSURANCE COMPANIES SHALL BE SUBJECT TO PREMIUM TAX ON PREMIUMS COLLECTED UNDER SUBSECTION (A) HEREOF. HOWEVER, PREMIUMS COLLECTED ON TRANSACTIONS WHERE THE TAX ON THE DIRECT PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT INSURER SHALL BE EXCLUDED FROM THE GROSS PREMIUM SUBJECT TO PREMIUM TAX. "NON-LIFE REINSURANCE COMPANIES SHALL BE SUBJECT TO VALUE ADDED TAX ON PREMIUMS COLLECTED UNDER SECTION 108 OF THIS CODE. HOWEVER, PREMIUMS COLLECTED ON TRANSACTIONS WHERE THE TAX ON THE DIRECT PREMIUM HAS ALREADY BEEN PAID BY THE DIRECT INSURER SHALL BE EXCLUDED FROM THE GROSS PREMIUM SUBJECT TO VALUE ADDED TAX. "FOR THE PURPOSE OF CLAIMING EXEMPTION ON REINSURANCE PREMIUMS, THE SECRETARY OF FINANCE, UPON THE RECOMMENDATIONS OF THE COMMISSIONER OF INTERNAL REVENUE AND INSURANCE COMMISSIONER, SHALL PROMULGATE THE REQUIRED REPORTS TO BE SUBMITTED TO THE BUREAU OF INTERNAL REVENUE. ANY MISREPRESENTATION SHALL SUBJECT THE DIRECT INSURER OR REINSURER TO PENALTIES UNDER SECTIONS 248, 249, 253, 254, 255, 256, AND 257 OF THIS CODE. "ANY INCOME, OTHER THAN RECEIPT OF PREMIUM SUCH AS MANAGEMENT FEES, SERVICE FEES, CHARGES, AND PENALTIES, COMMISSIONS, INCOME FROM THE SALE OR TRANSFER OF GOODS, PROPERTIES OR SERVICES, EARNED OR RECEIVED AS

AN INCIDENT OF DOING THE BUSINESS OF LIFE, NON-LIFE AND OTHER INSURANCE ACTIVITIES, SHALL BE SUBJECT TO THE VALUE ADDED TAX UNDER

SECTION 105 OF THIS CODE: PROVIDED, THAT

INCOME RECEIVED FROM THE INVESTMENT AND REINVESTMENT OF PREMIUMS EARNED SHALL NOT BE SUBJECT TO VALUE ADDED TAX NOR TO THE GROSS RECEIPTS TAX IMPOSED UNDER SECTIONS 121 AND 122 OF THIS CODE. "A VARIABLE INSURANCE CONTRACT WHERE AMOUNTS IN EXCESS OF INSURANCE COSTS ARE COLLECTED AS PART OF THE PREMIUM AND WHERE UNITS OF PARTICIPATION IN A POOLED FUND ARE ISSUED TO THE INSURED REPRESENTING THEIR RESPECTIVE SHARES IN THE POOLED FUND, IS A CIS. THE AMOUNTS OF PREMIUM COLLECTED IN EXCESS OF THE INSURANCE COST IS NOT SUBJECT TO PREMIUM TAX UNDER THIS SECTION AND TO THE GROSS RECEIPTS TAX IMPOSED UNDER SECTIONS 121 AND 122, OR TO ANY PERCENTAGE TAX IMPOSED UNDER TITLE V AND TO VALUE ADDED TAX UNDER

SECTION 105, TITLE IV OF THIS CODE.

"Cooperative companies or associations are such as are conducted by the members thereof with the money collected from among themselves and solely for their own protection and not for profit."

Sec. 24. Section 127 of the National Internal Revenue Code of 1997, as

amended is hereby repealed.

Sec. 25. Section 174 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 174. Stamp Tax on Original Issue of Shares of Stock. - On every original issue, whether on organization,

reorganization or for any lawful purpose, of shares of stock by any association, company or corporation, INCLUDING SHARES OF STOCK OR UNITS OF PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME, there shall be collected a documentary stamp tax of [Two pesos (P2.00) on each Two hundred pesos (P200), or fractional part thereof, of the par value.] SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) OF THE PAR VALUE of such shares of stock: Provided, That in the case of the original issue of shares of stock without par value, the amount of the documentary stamp tax herein prescribed shall be based upon the actual consideration for the issuance of such shares of stock: Provided, further, That in the case of stock dividends, on the actual value represented by each sharel] PROVIDED, FINALLY, THAT IN THE CASE OF COLLECTIVE INVESTMENT SCHEMES WITHOUT PAR VALUE, THE DOCUMENTARY STAMP TAX SHALL BE BASED ON THE INITIAL NET ASSET VALUE PER UNIT."

Sec. 26. Section 175 of the National Internal Revenue Code of 1997, as

amended, is hereby repealed.

Sec. 27. Section 176 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 176. Stamp Tax on Bonds, Debentures, Certificate of Stock or Indebtedness Issued in Foreign Countries. - [On all] A DOCUMENTARY STAMP TAX OF SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) OF THE VALUE OF THE TRANSACTION SHALL BE COLLECTED FROM A PERSON SELLING OR TRANSFERRING bonds, debentures, certificates of stock, or certificates of indebtedness issued in any foreign country.Li there shall be collected from the person selling or transferring the same in the Philippines, such tax as is required by law on

similar instruments when issued, sold or transferred in the Philippines.]"

Sec. 28. Sections 177 and 178 of the National Internal Revenue Code of 1997,

as amended, are hereby repealed.

Sec. 29. Section 179 of the National Internal Revenue Code of 1997, as

amended, is hereby amended to read as follows: "Sec. 179. Stamp Tax on All Debt Instruments. - On every original issue of debt instruments, there shall be collected a documentary stamp tax of [One peso and fifty centavos (P1.50) on each Two hundred pesos (P200), or fractional part thereof,] SEVENTY-FIVE PERCENT OF ONE PERCENT (0.75%) of the issue of any such debt instruments: Provided, That for such debt instruments with terms of less than one (1) year, the documentary stamp tax to be collected shall be of a proportional amount in accordance with the ratio of its term in number of days to three hundred sixty-five (365) days: Provided, further, That only one documentary stamp tax shall be imposed on either loan agreement, or promissory notes issued to secure such loan. "For purposes of this section, the term debt instrument shall mean instruments representing borrowing and lending transactions including but not limited to debentures, certificates of indebtedness, due bills, bonds, loan agreements, including those signed abroad wherein the object of contract is located or used in the Philippines, instruments and securities issued by the government or any of its instrumentalities, deposit substitute debt instruments, certificates or other evidences of deposits that either drawing interest significantly higher than the regular savings deposit taking into consideration the size of the deposit and the risks involved or drawing interest and having a specific maturity

date, [erders for payment of any sum of money otherwise than at sight or on demand,] promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation."

Sec. 30. Section 180 of the National Internal Revenue Code of 1997, as

amended is hereby repealed.

Sec. 31. Sections 181, 182, 183, 184, 185, 186, and 187 of the National Internal

Revenue Code of 1997, as amended, are hereby amended to read as follows: "Sec. 181. Stamp Tax Upon Acceptance of Bills of Exchange and Others. - Upon any acceptance or payment of any bill of exchange or order for the payment of money purporting to be drawn in a foreign country but payable in the Philippines, there shall be collected a documentary stamp tax OF THIRTY PERCENT OF ONE PERCENT (0.30%) [Sixty centavos (P0.60) on each Two hundred pesos (P200), or fractional part thereof,] of the face value of any such bill of exchange, or order, or the Philippine equivalent of such value, if expressed in foreign currency. "Sec. 182. Stamp Tax on Foreign Bills of Exchange and Letters of Credit. - On all foreign bills of exchange and letter of credit (including order, by telegraph or otherwise, for the payment of money issued by express or steamship companies or by any person or persons) drawn in but payable out of the Philippines in a set of three (3) or more according to the custom of merchants and bankers, there shall be collected a documentary stamp tax OF THIRTY PERCENT OF ONE PERCENT (0.30%) [Sixty centaves (P0.60) on each Two hundred pesos (P200) or fractional part thereof] of the face value of any such bill of exchange or letter of credit, or the Philippine equivalent of such face value, if expressed in foreign currencyL-]; PROVIDED, THAT A LETTER OF CREDIT ON WHICH THE DOCUMENTARY STAMP TAX

IMPOSED UNDER THIS SECTION IS PAID UPON OPENING SHALL NOT BE SUBJECT AGAIN TO THE TAX IMPOSED BY SECTION 195 UPON AVAILMENT OF THE TRUST RECEIPT LINE WHERE THE PROPERTY SUBJECT OF THE LETTER OF CREDIT IS MADE A SECURITY FOR PAYMENT. "Sec. 183. Stamp Tax on Life AND HEALTH Insurance Policies[:7 OF ANNUITIES, AND HEALTH MAINTENANCE ORGANIZATION PRODUCTS. - On all policies of insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives AND HEALTH OF PERSONS, there shall be collected a one-time documentary stamp tax at the following rates: "If the amount of insurance does not exceed P100,000 - Exempt "If the amount of insurance exceeds P100,000 but does not exceed P300,000 - P20.00 "If the amount of insurance exceeds P300,000 but does not exceed P500,000 - P50.00 "If the amount of insurance exceeds P500,000 but does not exceed P750,000 - P100.00 "If the amount of insurance exceeds P750,000 but - P150.00 does not exceed P1,000,000 "If the amount of insurance exceeds P1,000,000 - P200.00 "Sec. 184. Stamp Tax on Policies of Insurance Upon Property. - On all policies of insurance or other instruments by whatever name the same may be called, by which insurance shall be made or renewed upon property of any description, including rents or profits, against peril by sea or on inland waters, or by fire or lightning, there shall be

collected a documentary stamp tax [Fifty centavos (P0.50) on each Four pesos (P4.00), or fractional part thereof.] TWELVE AND ONE-HALF PERCENT (12.5%) of the amount of premium charged: Provided, however, That no documentary stamp tax shall be collected on reinsurance contracts or on any instrument by which cession or acceptance of insurance risks under any reinsurance agreement is effected or recorded, PROVIDED, FURTHER, THAT SUCH RATE SHALL BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE: "JANUARY 1, 2026: ELEVEN AND ONE-HALF PERCENT (11.5%), "JANUARY 1, 2027: TEN AND ONE-HALF PERCENT (10.5%), "JANUARY 1, 2028: NINE AND ONE-HALF PERCENT (9.5%), "JANUARY 1, 2029: EIGHT AND ONE-HALF PERCENT (8.5%), "JANUARY 1, 2030: SEVEN AND ONE-HALF PERCENT (7.5%). "Sec. 185. Stamp Tax on Fidelity Bonds and Other Insurance Policies. - On all policies of insurance or bonds or obligations of the nature of indemnity for loss, damage or liability made or renewed by any person, association, company or corporation transacting the business of accident, fidelity, employer's liability, plate glass, steam boiler, burglar, elevator, automatic sprinkler, or other branch of insurance (except life, marine, inland, and fire insurance), and all bonds, undertakings, or recognizances, conditioned for the performance of the duties of any officer or position, for the doing or not doing of anything therein specified, and on all obligations guaranteeing the validity or legality of any bond

or other obligations issued by any province, city, municipality, or other public body or organization, and on all obligations guaranteeing the title to any real estate, or guaranteeing any mercantile credits, which may be made or renewed by any such person, company or corporation, there shall be collected a documentary stamp tax of [Fifty centavos (P0.50) on each Four pesos (P4.00), or fractional part thereof, ] TWELVE AND ONE-HALF PERCENT (12.5%) OF THE PREMIUM CHARGED[-]: PROVIDED, THAT SUCH RATE SHALL BE REDUCED ACCORDING TO THE FOLLOWING SCHEDULE: "JANUARY 1, 2026: ELEVEN AND ONE-HALF PERCENT (11.5%), "JANUARY 1, 2027: TEN AND ONE-HALF PERCENT (10.5%), "JANUARY 1, 2028: NINE AND ONE-HALF PERCENT (9.5%), "JANUARY 1, 2029: EIGHT AND ONE-HALF PERCENT (8.5%), "JANUARY 1, 2030: SEVEN AND ONE-HALF PERCENT (7.5%). "Sec. 186. Stamp Tax on [Policies of Annuities, and] Pre-Need Plans. - [On all policies of annuities, or other instruments by whatever name the same may be called, whereby an annuity may be made, transferred, or redeemed, there shall be collected a documentary stamp tax of One peso (P1.00) on each Two hundred pesos (P200), or fractional part thereof, of the premium or instalment payment on contract price collectea.] On pre-need plans, [the documentary stamp tax shall be Forty centavos (P0.40) on each Two hundred pesos (P200), or fractional part therof, of the premium of contribution collected] THERE SHALL BE COLLECTED A

DOCUMENTARY STAMP TAX OF TWENTY PERCENT OF ONE PERCENT (0.20%) OF THE PREMIUM OR INSTALLMENT PAYMENT ON CONTRACT PRICE, OR CONTRIBUTION CHARGED. "Sec. 187. Stamp Tax on Indemnity Bonds. - On all bonds for indemnifying any person, firm or corporation who shall become bound or engaged as surety for the payment of any sum of money or for the due execution or performance of the duties of any office or position or to account for money received by virtue thereof, and on all other bonds of any description, except such as may be required in legal proceedings, or are otherwise provided for herein, there shall be collected a documentary stamp tax of [Thirty centavos (P0.30) on each Four pesos (P4.00), or fractional part thereof,] SEVEN AND ONE-HALF PERCENT (7.5%) of the premium charged."

Sec. 32. Section 188 of the National Internal Revenue Code of 1997, as

amended, is hereby repealed.

Sec. 33. Sections 192 and 193 of the National Internal Revenue Code of 1997,

as amended, are hereby amended to read as follows:

Sec. 34. Sections 195, 198, and 199 of the National Internal Revenue Code of

1997, as amended, are hereby amended to read as follows: "Sec. 195. Stamp Tax on Mortgages, Pledges, and Deeds of Trust. - On every mortgage or pledge of lands, estate or property, real or personal, heritable or movable, whatsoever, where the same shall be made as a security for the payment of any definite and certain sum of money lent at the time or previously due and owing or forborne to be paid, being payable, and on any conveyance of land, estate, or property whatsoever, in trust or to be sold, or otherwise converted into money which shall be and intended only as security, either by express stipulation or otherwise, there shall

be collected a documentary stamp tax [at the following rates:] "I(a) When the amount secured does not exceed Five thousand pesos (P5,000). Forty pesos (P40.00)-] "[b) On each Five thousand pesos (P5,000), or fractional part thereof in excess of Five thousand pesos (P5,000), an additional tax of Twenty pesos (P20.00)] OF THIRTY PERCENT OF ONE PERCENT (0.30%) OF THE AMOUNT SECURED. "XXX "Sec. 198. Stamp Tax on [Assignments and] Renewals of Certain Instruments. - Upon each and every [assignment or transfer of any mortgage, lease or policy of insurance, or the] renewal or continuance of any agreement, contract, charter, or any evidence of obligation or indebtedness by THE EXTENSION OF THE TERM OR MATURITY BY [altering or otherwise,] ALTERATION OF SUCH AGREEMENT, CONTRACT OR CHARTER, there shall be levied, collected, and paid a documentary stamp tax, at the same rate as that imposed on the original instrument. "Sec. 199. Documents and Papers Not Subject to Stamp Tax. - The provisions of Section 173 to the contrary notwithstanding, the instruments, documents and papers shall be exempt from the documentary stamp tax: (a) "(a) Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association or cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely by the members thereof for the exclusive benefit of each member and not for profit. "XXX

"(n) Interbank call loans with maturity of not more than [seven (7)] FIVE (5) days to cover deficiency in reserves against deposit liabilities, including those between or among banks and quasi-banks. "(O) REDEMPTION, SALE, BARTER, EXCHANGE, OR OTHER MODES OF DISPOSITION OR EXCHANGE OF SHARES OF STOCK OR UNITS OF PARTICIPATION IN A COLLECTIVE INVESTMENT SCHEME OR OTHER CIS SECURITIES LISTED AND TRADED IN A LOCAL EXCHANGE OR AN ORGANIZED MARKETPLACE. THE ORIGINAL ISSUANCE OF SHARES OR UNITS OF PARTICIPATION IN A CIS SHALL NOT BE COVERED BY THIS EXEMPTION."

Sec. 35. Prospective Clause. - The changes introduced under this Act shall

apply to transactions taking effect beginning January 1, 2020.

Sec. 36. Implementing Rules and Regulations. - The Department of Finance, in

consultation with the Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission, the Bureau of Treasury, and the Bureau of Internal Revenue, shall issue the implementing rules and regulations for the effective implementation of this Act.

Sec. 37. Separability Clause. - If, for any reason any article or provision of this

Act, or any portion thereof, or application of such article, provision, or portion thereof to any person, group, or circumstance is declared invalid or unconstitutional, the remainder of this Act shall not be affected by such decision or declaration.

Sec. 38. Repealing Clause. - The following laws or provisions of laws are hereby

repealed or modified accordingly and the persons and/or transactions affected herein are hereby made subject to applicable taxes on interest income, dividends, and capital gains, gross receipts tax, premium tax, and documentary stamp tax under the National Internal Revenue Code of 1997, as amended: (a) Section 9, insofar as the tax exemption on the issuance of bonds and securities is concerned, of Presidential Decree 1648, known as

"Reorganizing the National Development Company and Establishing a Revised Charter Therefor"; (b) Sections 6, 7, and 8, insofar as the tax exemptions on interest income, capital gains, and documentary stamp tax and on the issuance of bonds are concerned, of Executive Order 603, entitled "Creating a Light Rail Transit Authority, Vesting the Same With Authority to Construct and Operate the Light Rail Transit (LRT) Project and Providing Funds Therefor"; (c) Section 14, insofar as tax exemption on interest income, capital gains, and documentary stamp tax is concerned, of Republic Act No. 7354, entitled "An Act Creating the Philippine Postal Corporation, Defining Its Powers, Functions and Responsibilities, Providing for Regulation of the Industry and for Other Purposes Connected Therewith"; (d) Section 12, insofar as the tax exemptions on interest income, capital gains and documentary stamp tax and on the issuance of bonds are concerned, of Republic Act No. 4850, entitled "An Act Creating the Laguna Lake Development Authority, Prescribing its Powers, Functions and Duties, Providing Funds Therefor, and for Other Purposes"; (e) Number 8, insofar as tax exemption on interest income, capital gains, and documentary stamp tax is concerned, of Presidential Decree 37, entitled "Creating the Nayong Pilipino Foundation"; (f) Section 12, insofar as tax exemption on interest income, capital gains, and documentary stamp tax is concerned, of Presidential Decree 205, entitled "Creating and Establishing the Development Academy of the Philippines, Defining its Powers, Functions, and Responsibilities, and for Other Purposes"; (g) Article 202, insofar as tax exemption on interest income, capital gains, documentary stamp tax, and premium tax is concerned, of Presidential Decree 442 as amended, by Presidential Decree 626, entitled "Labor Code of the Philippines"; (h) Sections 10 and 11, insofar as the tax exemptions on interest income, capital gains, and documentary stamp tax of subsidiaries of Philippine Aerospace Development Corporation and on the issuance of bonds are concerned, of

Presidential Decree 696, entitled "Revising Presidential Decree No. 286, dated September 5, 1973, as amended, otherwise known as The Charter of the Philippine Aerospace Development Corporation and for Other Purposes"; (i) Section 2(g), insofar as the tax exemption on interest income and on the issuance of bonds are concerned, of Republic Act No. 85, as amended by Republic Act No. 2081, entitled "An Act Creating the Rehabilitation Finance Corporation"; (i) Sections 76, 77 and 98, insofar as tax exemption on interest income, dividends, capital gains, and documentary stamp tax on bonds is concerned, of Republic Act No. 3844 or The Agricultural Land Reform Code; (k) Section 37, insofar as the tax exemption on interest income, capital gains, gross receipts tax, and documentary stamp tax is concerned, of Republic Act 6848 or The Charter of The Al-Amanah Islamic Investment Bank of the Philippines; (1) Sections 19, insofar as the tax exemptions on interest income and issuance of bonds are concerned, of Republic Act No. 3591, as amended by Republic Act No. 9576 or An Act Increasing the Maximum Deposit Insurance Coverage, and in Connection Therewith, to Strengthen the Regulatory and Administrative Authority, and Financial Capability of the Philippine Deposit Insurance Corporation (PDIC), Amending for this Purpose Republic Act Numbered Three Thousand Five Hundred Ninety-One, as amended, otherwise known as The PDIC Charter, and for Other Purposes; (m) Section 12, insofar as tax exemption on interest income, capital gains, and documentary stamp tax and the issuance of bonds are concerned, of Executive Order 1037, entitled "An Act Creating the Philippine Retirement Park System, Providing Funds Therefor and for Other Purposes"; (n) Sections 5 and 19, insofar as the tax exemptions on the issuance of bonds, interest income and documentary stamp tax are concerned, of Republic Act No. 8763 or Home Guaranty Corporation Act of 2000; (o) Sections 19 and 25, insofar as tax exemption on documentary stamp tax is concerned, of Republic Act No. 7279 or The Urban Development and Housing Act of 1992;

(p) Section 8(a), insofar as tax exemption on interest income, capital gains, and documentary stamp tax of bonds is concerned, as provided under Section 1 of Republic Act No. 6395 or An Act Revising the Charter of the National Power Corporation; (q) Sections 9 and 15, insofar as the tax exemptions on the issuance of bonds, interest income, capital gains, and documentary stamp tax are concerned, of PD 334, entitled "Creating the Philippine National Oil Company, Defining its Powers and Functions, Providing Funds Therefor, and for Other Purposes"; (r) Section 16, insofar as tax exemption on interest income, capital gains, and documentary stamp tax is concerned, of Presidential Decree 1467, entitled "An Act Creating the Philippine Crop Insurance Corporation, Prescribing Its Powers and Activities, Providing For Its Capitalization and for the Required Government Premium Subsidy, and for Other Purposes"; (s) Section 3, insofar as the tax exemption on interest income, capital gains, and documentary stamp tax of bonds is concerned, of Republic Act No. 3601, entitled "An Act Granting the National Irrigation Administration"; (t) Section 6 (a. xviii (2)), insofar as tax exemption on interest income and documentary stamp tax is concerned, of PD 1485, as amended by PD 1770, entitled "Reconstituting the National Grains Authority to the National Food Authority, Broadening its Functions and Powers and for Other Purposes"; (u) Section 5 (c), insofar as tax exemption on interest income, capital gains, and documentary stamp tax on bonds is concerned, of Republic Act No. 6260, entitled "An Act Instituting a Coconut Investment Fund and Creating a Coconut Investment Company for the Administration Thereof"; (v) Section 9, insofar as tax exemption on interest income, capital gains, and documentary stamp tax on bonds is concerned, of Republic Act No. 10744 or Credit Surety Fund Act of 2014; (w) Section 20, insofar as tax on interest income, capital gains and documentary stamp tax is concerned, of Republic Act No. 10693, entitled "An Act Strengthening Nongovernment Organizations (NGOs) Engaged in Microfinance Operations for the Poor";

(x) Section 7, insofar as tax exemption on documentary stamp tax and premium tax is concerned, of Republic Act No. 7111, entitled "An Act Establishing the Overseas Workers' Investment Fund to Provide Incentives to Overseas Workers, Reduce the Foreign Debt Burden and for Other Purposes"; (y) Section 56, insofar as tax exemption on interest income, capital gains, and documentary stamp tax is concerned, of Republic Act No. 10801, entitled "An Act Governing the Operations and Administration of the Overseas Workers Welfare Administration"; (z) Section 5, insofar as tax exemption on interest income is concerned, of Republic Act No. 8367, entitled "An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations"; (aa) Section 28, insofar as tax exemption on capital gains on shares of stock and documentary stamp tax is concerned, of Republic Act No. 9267 or the "The Securitization Act of 2004"; (bb) Section 17, insofar as tax exemption on interest income, capital gains, gross receipts tax and documentary stamp tax is concerned, of Republic Act No. 7906, entitled "An Act Providing for the Regulation of the Organization and Operations of Thrift Banks, and for Other Purposes"; (cc) Section 15, insofar as tax exemption on capital gains and documentary stamp tax is concerned, of Republic Act No. 9182, as amended by Republic Act No. 9343, entitled "An Act Granting Tax Exemptions and Fee Privileges to Special Purpose Vehicles which Acquire or Invest in Non-Performing Assets, Setting the Regulatory Framework Therefor, and for Other Purposes"; (dd) Sections 13 and 14, insofar as tax exemption on DST and dividends is concerned, of Republic Act No. 9586 or The Real Estate Investment Act of 2009; (ee) Section 23, insofar as no deduction from gross income shall be allowed in respect of any interest if the indebtedness is incurred to finance petroleum exploration is concerned, of P.D. 87, entitled Amending Presidential Decree No. 8 issued on October 2, 1972 and Promulgating an Amended Act to

Promote the Discovery and Production of Indigenous Petroleum and Appropriate Funds Therefor; (ff) Section 6, insofar as tax exemption on interest income, dividends and capital gains are concerned, of RA 6426 or the Foreign Currency Deposit Act of the Philippines, as amended; and (gg) Section 32, insofar as the tax exemptions on capital gains, interest income and DST and issuance of bonds are concerned, of Republic Act No. 6424 or the Philippine Export Credit Insurance and Guarantee Corporation Act.

Sec. 39. Effectivity. - This Act shall take effect on January 1, 2023, or fifteen

(15) days after its complete publication in the Official Gazette or in at least two (2) newspapers of general circulation. Approved,