Amending Title Iv (Specific Taxes) Of The National Internal Revenue Code Of 1977, By Adding A New Section Thereto Providing For A Flexibility Clause, And Further Amending Section 193 (C). T

Case Overview and Summary

Summary of Presidential Decree No. 1393

Flexibility Clause for Specific Taxes (Section 158-A):
- Empowers the President, upon recommendation of the Secretary of Finance and the National Economic and Development Authority (NEDA), to revise the rates of specific taxes.
- Conditions for exercising this authority:
• Where economic development requires redirecting expenditure or consumption patterns. (Section 158-A(a)(1))
• When currency fluctuations and/or inflation/deflation make existing taxable base and rates unrealistic or inconsistent with current price levels. (Section 158-A(a)(2))
• When necessary to counter adverse action by another country. (Section 158-A(a)(3))
- Limitations:
• Existing rates of specific taxes may be increased by not more than 50%, or decreased by not more than 10%. (Section 158-A(b)(1))
• Public hearing shall be held whenever practicable, and interested parties shall be given a reasonable opportunity to be heard. (Section 158-A(b)(2))

Flexibility Clause for Percentage Taxes (Section 193(c)):
- Empowers the President, upon recommendation of the Secretary of Finance and NEDA, to:
• Revise the rates of percentage taxes. (Section 193(c)(1)(a))
• Change the classification of articles enumerated in Sections 194, 195, 196, 197, 198, 199, and 201. (Section 193(c)(1)(b))
• Revise the taxable base levels in Sections 195 and 197. (Section 193(c)(1)(c))
- Conditions for exercising this authority:
• Where economic development requires redirecting expenditure or consumption patterns. (Section 193(c)(1)(1))
• Where technological and social changes necessitate changing the classification of certain articles based on essentiality or degree of manufacturing. (Section 193(c)(1)(2))
• When currency fluctuations and/or inflation/deflation make existing taxable base and/or price levels unrealistic or inconsistent with current price levels. (Section 193(c)(1)(3))
• When necessary to counter adverse action by another country. (Section 193(c)(1)(4))
- Limitations:
• Existing rates of percentage taxes may be increased by not more than 50%, or decreased by not more than 10%. (Section 193(c)(2)(a))
• Existing price levels may be increased or decreased by not more than 50%. (Section 193(c)(2)(b))
• Public hearing shall be held whenever practicable, and interested parties shall be given a reasonable opportunity to be heard. (Section 193(c)(2)(c))