Amending Section 30 And 53 Of The National Internal Revenue Code

MALACAÑANG
M a n i l a

PRESIDENTIAL DECREE No. 1156

AMENDING SECTION 30 AND 53 OF THE NATIONAL INTERNAL REVENUE CODE

WHEREAS, interest on bank deposit is one of the items includible in gross income;

WHEREAS, many bank depositors fail to declare interest income in their income tax returns;

WHEREAS, in order to maximize the collection of the income tax on interest on bank deposits, it is necessary to apply the withholdings system on this type of fixed or determinable income;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree the following:

Section 1. Section 30 (b) of the National Internal Revenue Code is hereby amended to read as follows:

"(b) Interest:

"(1) In general. The amount of interest paid within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations the interest upon which is exempt from taxation as income under this Title: Provided, however, that interest...

Login to see full content

Summary of Presidential Decree No. 1156

Amending Sections 30 and 53 of the National Internal Revenue Code

• Interest on Bank Deposits Subject to Withholding Tax
- Banks required to withhold 15% tax on interest paid on bank deposits (Section 53(c)(1))
- Exception: No withholding if aggregate interest on all deposit accounts does not exceed ₱350 per year or ₱87.50 per quarter (Section 53(c)(1))
- Interest on deposits owned jointly is deemed equally owned (Section 53(c)(1))

• Treatment of Interest Income
- Interest income to be included in depositor's gross income for computing income tax liability (Section 53(c)(2))

• Tax Exemption and Preferential Tax Treatment
- Withholding tax to be refunded or credited for tax-exempt entities or those enjoying preferential tax treatment upon proof submitted to Commissioner of Internal Revenue (Section 53(c)(3))

• Deductibility of Interest Expense for Banks
- Banks can deduct interest paid to depositors only if withholding tax was withheld and paid (Section 30(b)(1))

• Exclusions
- No withholding on interest paid to non-resident alien individuals and foreign corporations (Section 53(c)(1))

• Manner of Withholding
- Withholding to be done without divulging depositors' names, following conditions in Section 54 (Section 53(c)(4))

• Effectivity
- Applicable to interest on bank deposits accruing on or after the decree's approval (Section 3)