ANA CT AMENDING SECTION 22

Case Overview and Summary

Summary of Republic Act No. 9504 Amending the National Internal Revenue Code of 1997

Definitions (Section 1)
- Defines "statutory minimum wage" as the rate fixed by the Regional Tripartite Wage and Productivity Board, as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE).
- Defines "minimum wage earner" as a worker in the private sector paid the statutory minimum wage, or an employee in the public sector with compensation income not more than the statutory minimum wage in the non-agricultural sector where they are assigned.

Income Tax Rates for Individuals (Section 2)
- Establishes a progressive tax rate schedule for individual taxpayers, ranging from 5% for taxable income not over ₱10,000 to 32% for taxable income over ₱500,000.
- Exempts minimum wage earners, as defined in Section 22(HH), from paying income tax on their taxable income.
- Exempts holiday pay, overtime pay, night shift differential pay, and hazard pay received by minimum wage earners from income tax.

Deductions from Gross Income (Section 3)
- Allows individual taxpayers, other than nonresident aliens, to elect an optional standard deduction not exceeding 40% of their gross sales or gross receipts.
- Allows corporations subject to tax under Section 27(A) and 28(A)(1) to elect an optional standard deduction not exceeding 40% of their gross income as defined in Section 32.

Personal Exemptions (Section 4)
- Allows a basic personal exemption of ₱50,000 for each individual taxpayer.
- Allows an additional exemption of ₱25,000 for each dependent, not exceeding four dependents.
- Defines "dependent" as a legitimate, illegitimate, or legally adopted child who is chiefly dependent upon and living with the taxpayer, not more than 21 years old, unmarried, and not gainfully employed, or a dependent of any age who is incapable of self-support due to mental or physical defect.

Filing of Income Tax Returns (Section 5)
- Exempts individuals with pure compensation income, as defined in Section 32(A)(1), from filing an income tax return if the income tax has been correctly withheld under Section 79.
- Exempts minimum wage earners, as defined in Section 22(HH), or individuals exempt from income tax under the Code or other laws from filing an income tax return.

Withholding of Income Tax (Section 6)
- Requires employers to deduct and withhold income tax from wages paid to employees, except for minimum wage earners as defined in Section 22(HH).