Pinoytax NIRC, Updated Tax Code of the Philippines

NIRC Table of Contents

NATIONAL INTERNAL REVENUE CODE (NIRC) of 1997

(As amended by RA Nos. 8761, 9010, 9224, 9238, 9243, 9294, 9334, 9337, 9361, 9504 and 9648)

TABLE OF CONTENTS

Content	Sec.
Short Title	1
State Policy	2
Amendments to Presidential Decree Nos. 1158, 1994 and Executive Order No. 273	3

Title 1 Organization and Function of the Bureau of Internal Revenue

Title of the Code	1
Powers and Duties of the Bureau of Internal Revenue	2
Chief Officials of the Bureau of Internal Revenue	3
Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases	4
Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons	5
Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement	6
Authority of the Commissioner to Delegate Power	7
Duty of the Commissioner to Ensure the Provision and Distribution of Forms, Receipts, Certificates, and Appliances, and the Acknowledgement of Payment of Taxes	8
Internal Revenue Districts	9
Revenue Regional Director	10
Duties of Revenue District Officers and Other Internal Revenue Officers	11
Agents and Deputies for Collection of National Internal Revenue Taxes	12
Authority of a Revenue Officer	13
Authority of Officers to Administer Oaths and Take Testimony	14
Authority of Internal Revenue Officers to Make Arrests and Seizures	15
Assignment of Internal Revenue Officers Involved in Excise Tax Functions To Establishments where Articles Subject to Excise Tax Are Produced or Kept	16
Assignment of Internal Revenue Officers and Other Employees to Other Duties	17
Reports of Violation of Laws	18
Contents of Commissioner’s Annual Report	19
Submission of Report and Pertinent Information by the Commissioner	20
Sources of Revenue	21

Title II Tax on Income

Chapter 1 Definitions
Definitions	22
Chapter II General Principles
General Principles of Income Taxation in the Philippines	23
Chapter III Tax on Individuals
Income Tax Rates On Individuals	24
Tax on Nonresident Alien Individual	25
Tax Liability of Members of General Professional Partnerships	26
Chapter IV Tax on Corporations
Rates of Income Tax on Domestic Corporations	27
Rates of Income Tax on Foreign Corporations	28
Imposition of Improperly Accumulated Earnings Tax	29
Exemptions from Tax on Corporations/Certain Entities/Activities	30
Chapter V Computation of Taxable Income
Taxable Income Defined	31
Chapter VI Computation of Gross Income
Gross Income	32
Special Treatment of Fringe Benefit	33
Chapter VII Allowable Deductions
Deductions from Gross Income	34
Allowance of Personal Exemption for Individual Taxpayer	35
Items not Deductible	36
Special Provisions Regarding Income and Deductions of Insurance	37
Losses from Wash Sales of Stock or Securities	38
Capital Gains and Losses	39
Determination of Amount of and Recognition of Gain or Loss	40
Inventories	41
Income from Sources Within the Philippines	42
Chapter VIII Accounting Periods and Methods of Accounting
General Rule on Accounting Periods and Methods of Accounting	43
Period in which Items of Gross Income Included	44
Period for which Deductions and Credits Taken	45
Change of Accounting Period	46
Final or Adjustment Returns for a Period of less than Twelve Months	47
Accounting for Long-term Contracts	48
Installment Basis	49
Allocation of Income and Deductions	50
Chapter IX Returns and Payment of Tax
Individual Return	51
Corporation Returns	52
Extension of Time to File Returns	53
Returns of Receivers, Trustees in Bankruptcy or Assignees	54
Returns of General Professional Partnerships	55
Payment and Assessment of Income Tax for Individuals and Corporations	56
Withholding of Tax at Source Sale of Real Properties	57
Returns and Payment of Taxes Withheld at Source	58
Tax on Profits Collectible from Owner or Other Persons	59
Chapter X Estates and Trusts
Imposition of Tax on Estates and Trusts	60
Taxable Income of Estates and Trusts	61
Exemption Allowed to Estates and Trusts	62
Revocable Trusts	63
Income for Benefit of Grantor	64
Fiduciary Returns	65
Fiduciaries Indemnified Against Claims for Taxes Paid	66
Chapter XI Other Income Tax Requirements
Collection of Foreign Payments	67
Information at Source as to Income Payments	68
Return of Information of Brokers	69
Returns of Foreign Corporations	70
Disposition of Income Tax Returns, Publication of Lists of Taxpayers and Filers	71
Suit to Recover Tax Based on False or Fraudulent Returns	72
Distribution of Dividends or Assets by Corporations	73
Chapter XII Quarterly Corporate Income Tax Annual Declaration and Quarterly Payments of Income Taxes
Declaration of Income Tax for Individuals	74
Declaration of Corporate Quarterly Income Tax	75
Final Adjustment Return	76
Place and Time of Filing and Payment of Quarterly Corporate Income Tax	77
Chapter XIII Withholding on Wages
Definitions – Withholding on Wages	78
Income Tax Collected at Source	79
Liability for Tax	80
Filing of Return and Payment of Taxes Withheld	81
Return and payment in Case of Government Employees	82
Statement and Returns	83

Title III Estate and Donor’s Taxes

	Chapter I Estate Tax
III-1	Rates of Estate Tax	84
	Gross Estate	85
	Computation of Net Estate	86
	Exemption of Certain Acquisitions and Transmissions	87
	Determination of the Value of the Estate	88
	Notice of Death to be Filed	89
	Estate Tax Returns	90
	Payment of Tax	91
	Discharge of Executor or Administrator from Personal Liability	92
	Definition of Deficiency	93
	Payment Before Delivery by Executor or Administrator	94
	Duties of Certain Officers and Debtors	95
	Restitution of Tax Upon Satisfaction of Outstanding Obligations	96
	Payment of Tax Antecedent to the Transfer of Shares, Bonds, or Rights	97
	Chapter II Donor’s Tax
III-2	Imposition of Tax	98
	Rates of Tax Payable by Donor	99
	Transfer for Less Than Adequate and Full Consideration	100
	Exemption of Certain Gifts	101
	Valuation of Gifts Made in Property	102
	Filing of Return and Payment of Tax	103
	Definitions	104

Title IV Value-Added Tax (VAT)

Chapter I Imposition of Tax
Persons Liable to VAT	105
Value-added Tax on Sales of Goods or Properties	106
Value-added Tax on Importation of Goods	107
Value-added Tax on Sales of Services and Use or Lease or Properties Freight Forwarder, Brokers	108
Exempt Transactions	109
Tax Credits	110
Transitional/Presumptive Input Tax Credits	111
Refunds or Tax Credits of Input Tax	112
Chapter II Compliance Requirements
Invoicing and Accounting Requirements for Vat-Registered Persons	113
Return and Payment of Value-added Tax	114
Power of the Commissioner to Suspend the Business Operations of a Taxpayer	115

Title V Other Percentage Taxes

Tax on Persons Exempt from Value-added Tax	116
Percentage Tax on Domestic Carriers and Keepers of Garages	117
Percentage Tax on International Carriers	118
Tax on Franchises	119
Tax on Overseas Dispatch, Message, or Conversation Originating from the Philippines	120
Tax on Banks and Non-bank Financial Intermediaries	121
Tax on Other Non-Bank Financial Intermediaries	122
Tax on Life Insurance Premiums	123
Tax on Agents of Foreign Insurance Companies	124
Amusement Taxes	125
Tax on Winnings	126
Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded Through the Local Stock Exchange or through Initial Public Offering	127
Returns and Payment of Percentage Taxes	128

Title VI Excise Tax on Certain Goods

Chapter I General Provisions
Goods Subject to Excise Taxes	129
Filing of Return and Payment of Excise Taxes on Domestic Products	130
Payment of Excise Taxes on Imported Articles	131
Mode of Computing Contents of Cask or Package	132
Chapter II Exemption or Conditional Tax-Free Removal of Certain Articles
Removal of Wines and Distilled Spirits for Treatment of Tobacco Leaf	133
Domestic Denatured Alcohol	134
Petroleum Products Sold to International Carriers, And Exempt Entities Or Agencies	135
Denaturation, Withdrawal and Use Denatured Alcohol	136
Removal of Spirits Under Bond for Rectification	137
Removal of Fermented Liquors to Bonded Warehouse	138
Removal of Damaged Liquors Free of Tax	139
Removal of Tobacco Products Without Prepayment of Tax	140
Chapter III Excise Tax on Alcohol Products
Distilled Spirits	141
Wines	142
Fermented Liquor	143
Chapter IV Excise Tax on Tobacco Products
Tobacco Products	144
Cigars and Cigarettes	145
Inspection Fee	146
Definition of Terms	147
Chapter V Excise Tax on Petroleum Products
Manufactured Oils and Other Fuels	148
Chapter VI Excise Tax on Miscellaneous Articles
Automobiles	149
Non-essential Goods	150
Chapter VII Excise Tax on Mineral Products
Mineral Products	151
Chapter VIII Administrative Provisions Regulating Business of Persons Dealing in Articles Subject to Excise Tax
Extent of Supervision Over Establishments Producing Taxable Output	152
Records to be Kept by Manufacturers; Assessment Based Thereon	153
Premises Subject to Approval by Commissioner	154
Manufacturer to Provide Themselves with Counting or Metering Devices to Determine Production	155
Labels and Form of Packages	156
Removal of Articles After the Payment of Tax	157
Storage of Goods in Internal-revenue Bonded Warehouses	158
Proof of Exportation; Exporter’s Bond	159
Manufacturers’ and Importers’ Bond	160
Records to be Kept by Wholesale Dealers	161
Records to be Kept by Dealers in leaf Tobacco	162
Preservation of Invoices and Stamps	163
Information to be Given by Manufacturers, Importers, Indentors, and Wholesalers of any Apparatus or Mechanical Contrivance Specialty for the Manufacture of Articles Subject to Excise Tax and Importers, Indentors, Manufacturers or Sellers of Cigarette Paper in Bobbins, Cigarette Tipping Paper or Cigarette Filter Tips	164
Establishment of Distillery Warehouse	165
Custody of Distillery or Distillery Warehouse	166
Limitation on Quantity of Spirits Removed from Warehouse	167
Denaturing Within Premises	168
Recovery of Alcohol for Use in Arts and Industries	169
Requirements Governing Rectification and Compounding	170
Authority of Internal Revenue Officer in Searching for Taxable Articles	171
Detention of Package Containing Taxable Articles	172

Title VII Documentary Stamp Tax

Stamp Taxes Upon Documents, Loan Agreements, Instruments, and Papers	173
Stamp Tax on Debentures, and Certificates of Indebtedness	174
Stamp Tax on Original Issue of Shares of Stock	175
Stamp Tax on Sales, Agreements to Sell, Memoranda of Sales, Deliveries Or Transfer of Due-bills, Certificates of Obligations, or Shares or Shares of Stock	176
Stamp Tax on Bonds, Debentures, Certificates of Stock or Indebtedness Issued in Foreign Countries	177
Stamp Tax on Certificates of Profits or Interest in Property or Accumulations	178
Stamp Tax on Bank Checks, Drafts, Certificates of Deposit not Bearing Interest, and Other Instruments	179
Stamp Tax on All Bonds, Loan Agreements, Promissory Notes, Bills of Exchange, Drafts, Instruments and Securities Issued by the Government Or Any of its Instrumentalities, Deposit Substitute Debt Instruments, Certificates of Deposits Bearing Interest and Others Not Payable on Sight or Demand	180
Stamp Tax Upon Acceptance of Bills of Exchange and Others	181
Stamp Tax on Foreign Bills of Exchange and Letters of Credit	182
Stamp Tax on Life Insurance Policies	183
Stamp Tax on Policies of Insurance Upon Property	184
Stamp Tax on Fidelity Bonds and Other Insurance Policies	185
Stamp Tax on Policies of Annuities and Pre-need Plans	186
Stamp Tax on Indemnity Bonds	187
Stamp Tax on Certificates	188
Stamp Tax on Warehouse Receipts	189
Stamp Tax on Jai-alai, Horse Race Tickets, Lotto, or Other Authorized Number Games	190
Stamp Tax on Bills of Lading or Receipts	191
Stamp on Proxies	192
Stamp Tax on Powers of Attorney	193
Stamp Tax on Leases and Other Hiring Agreements	194
Stamp Tax on Mortgages, Pledges, and Deeds of Trust	195
Stamp Tax on Deeds of Sale and Conveyances of Real Property	196
Stamp Tax on Charter Parties and Similar Instruments	197
Stamp Tax on Assignments and Renewals of Certain Instruments	198
Documents and Papers not Subject to Stamp Tax	199
Payments of Documentary Stamp Tax	200
Effect of Failure to Stamp Taxable Document	201

Title VIII Remedies

Chapter I Remedies in General
Final Deed to Purchases	202
Period of Limitation upon Assessment and Collection	203
Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes	204
Chapter II Civil Remedies for Collection of Taxes
Remedies for the Collection of Delinquent Taxes	205
Constructive Distraint of the Property of a Taxpayer	206
Summary Remedies	207
Procedure for Distraint and Garnishment	208
Sale of Property Distrained and Disposition of Proceeds	209
Release of Distrained Property Upon Payment Prior to Sale	210
Report of Sale to Bureau of Internal Revenue	211
Purchase by Government at Sale Upon Distraint	212
Advertisement and Sale	213
Redemption of Property Sold	214
Forfeiture to Government for Want of Bidder	215
Resale of Real Estate Taken for Taxes	216
Further Distraint or Levy	217
Injunction not Available to Restrain Collection of Tax	218
Nature and Extent of Tax Lien	219
Form and Mode of Proceedings in Actions Arising under this Code	220
Remedy for Enforcement of Statutory Penal Provisions	221
Exceptions as to Period of Limitation of Assessment and Collection of Taxes	222
Suspension of Running of Statute of Limitations	223
Remedy for Enforcement of Forfeitures	224
When Property to Be Sold or Destroyed	225
Disposition of Funds Recovered in Legal Proceedings or Obtained from Forfeitures	226
Satisfaction of Judgment Recovered Against Any Internal Revenue Officer	227
Chapter III Protesting an Assessment, Refund, Etc.
Protesting of Assessment	228
Recovery of Tax Erroneously or Illegally Collected	229
Forfeiture of Cash Refund and of Tax Credit	230
Action to Contest Forfeiture of Chattel	231

Title IX Compliance Requirements

Chapter I Keeping of Books of Accounts and Records
Keeping of Books of Accounts	232
Subsidiary Books	233
Language in which Books are to be Kept Translation	234
Preservation of Books of Accounts and Other Accounting Records	235
Chapter II Administrative Provisions
Registration Requirements	236
Issuance of Receipts or Sales or Commercial Invoices	237
Printing of Receipts or Sales or Commercial Invoices	238
Sign to be Exhibited by Distiller, Rectifier, Compounder, Repacker, and Wholesale Liquor Dealer	239
Sign to be Exhibited by Manufacturer of Products of Tobacco	240
Exhibition of Certificate of Payment at Place of Business	241
Continuation of Business of Deceased Person	242
Removal of Business to Other Location	243
Chapter III Rules and Regulations
Authority of Secretary of Finance to Promulgate Rules and Regulations	244
Specific Provisions to be Contained in Rules and Regulations	245
Non-retroactivity of Rulings	246

Title X Statutory Offenses and Penalties

Chapter I Additions to the Tax
General Provisions	247
Civil Penalties	248
Interest	249
Failure to File Certain Information Returns	250
Failure of a Withholding Agent to Collect and Remit Tax	251
Failure of a Withholding Agent to Refund Excess Withholding Tax	252
Chapter II Crimes, Other Offenses and Forfeitures
General Provisions – Crimes, Other Offenses and Forfeitures	253
Attempts to Evade or Defeat Tax	254
Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withholding and Remit Tax and Refund Excess Taxes Withheld on Compensation	255
Penal Liability of Corporations	256
Penal Liability for Making False Entries, Records or Reports, or Using Falsified or Fake Accountable Forms	257
Unlawful Pursuit of Business	258
Illegal Collection of Foreign Payments	259
Unlawful Possession of cigarette Paper in Bobbins or Rolls, Etc.	260
Unlawful Use of Denatured Alcohol	261
Shipment or Removal of Liquor or Tobacco Products under False Name or Brand or as an Imitation of any Existing or Otherwise Known Product Name or Brand	262
Unlawful Possession or Removal of Articles Subject to Excise Tax Without Payment of the	263
Failure or Refusal to Issue Receipts or Sales or Commercial Invoices, Violations Related to the Printing of Such Receipts or Invoices and Other Violations	264
Offenses Relating to Stamps	265
Failure to Obey Summons	266
Declaration under Penalties of Perjury	267
Other Crimes and Offenses	268
Chapter III Penalties Imposed on Public Officers
Violations Committed by Government Enforcement Officers	269
Unlawful Divulgence of Trade Secrets	270
Unlawful Interest of Revenue Law Enforcers in Business	271
Violation of Withholding Tax Provision	272
Penalty for Failure to Issue and Execute Warrant	273
Chapter IV Other Penal Provisions
Penalty for Second and Subsequent Offenses	274
Violation of Other Provisions of the Tax Code or Rules or Regulations In General	275
Penalty for Selling, Transferring, Encumbering, or in Any Way Disposing of Property Placed Under Constructive Distraint	276
Failure to Surrender Property Placed Under Distraint and Levy	277
Procuring Unlawful Divulgence of Trade Secrets	278
Confiscation and Forfeiture of the Proceeds or Instruments of Crime	279
Subsidiary Penalty	280
Prescription for Violations of Any Provision of the Tax Code	281
Informer’s Reward to Persons Instrumental in the Discovery of Violations of the National Internal Revenue Code and in the Discovery and Seizure of Smuggled Goods	282

Title XI

Allotment of Internal Revenue

Chapter I Disposition and Allotment of National Internal Revenue in General
Disposition of National Internal Revenue	283
Allotment for the Commission on Audit	284
Allotment for the Bureau of Internal Revenue	285
Chapter II Special Disposition of Certain National Internal Revenue Taxes
Disposition of Proceeds of Insurance Premium Tax	286
Shares of Local Government Units in the Proceeds from the Development and Utilization of the National Wealth	287
Disposition of Incremental Revenues	288
Special Financial Support to Beneficiary Provinces Producing Virginia Tobacco	289

Title XII

Oversight Committee

Congressional Oversight Committee

290

Title XIII

Repealing Provisions

In General

291

Title XIV

Final Provisions

Separability Clause

292

Annexes

Annex “A-1”

Ammex “A-2”

Annex “A-3”

Annex “A-4”

Annex “B”

Annex “C-1”

Annex “C-2”

Annex “D”