Further Amending Certain Provisions Of The National Internal Revenue Code
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Further Amending Certain Provisions Of The National Internal Revenue Code
Presidential Decree No. 1994
November 5, 1985
Case Overview and Summary
Summary of Presidential Decree No. 1994 (National Internal Revenue Code of 1985)General Provisions (Sections 1-4)
- Amends certain provisions of the National Internal Revenue Code
- Authorizes the Commissioner of Internal Revenue to prescribe forms, receipts, certificates, and appliances for tax administration (Section 5)
- Grants the Commissioner power to obtain information, examine records, summon taxpayers, and take testimony (Section 7)
- Empowers the Commissioner to make assessments, conduct inventory, and prescribe presumptive gross sales and receipts (Section 16)
Sources of Revenue (Sections 19-20)
- Enumerates sources of national internal revenue taxes, including income tax, estate and gift taxes, excise taxes, taxes on business, documentary stamp taxes, mining taxes, and miscellaneous taxes (Section 19)
Income Tax Provisions (Sections 21-37)
- Imposes tax on interest from bank deposits, deposit substitutes, and trust funds at 17.5% (Section 21)
- Taxes branch profits remittances at 15% (except for petroleum operations at 7.5%) (Section 24)
- Taxes royalties at 15% (Section 24)
- Exempts prizes and awards for religious, charitable, scientific, educational, artistic, literary, or civic achievement from income tax under certain conditions (Section 29)
- Allows deductions for expenses, interest, and depreciation, with specific provisions for private educational institutions, interest on indebtedness, and real property values (Sections 30-35)
- Defines net income from sources within the Philippines (Section 37)
Payment and Assessment of Income Tax (Sections 50-56)
- Requires payment of income tax at the time of filing the return (Section 50)
- Imposes withholding tax on interest from bank deposits and deposit substitutes at 17.5% (Section 51)
- Allows an exemption of ₱4,000 for estates and trusts (Section 56)
Estate and Gift Tax Provisions (Sections 70-94)
- Authorizes the Commissioner to inquire into bank deposits of a decedent for determining the gross estate (Section 16)
- Allows deductions for claims against the estate, subject to certain conditions (Section 89)
- Provides rules for determining the value of the estate, including the valuation of real property (Section 91)
- Requires filing of the estate tax return within 90 days from the decedent's death (Section 93)
Excise Tax Provisions (Sections 95-135)
- Imposes excise taxes on various articles, including distilled spirits, compounded liquors, wines, fermented liquors, tobacco products, cigars and cigarettes, petroleum products, matches, fireworks, coal, cinematographic films, video tapes, and saccharine (Sections 121-135)
- Provides rules for payment of excise taxes on domestic and imported products (Sections 109-112)
- Allows conditional tax-free removal of certain articles, such as wines and distilled spirits for tobacco leaf treatment, petroleum products sold to international carriers, and denatured alcohol (Sections 113-117)
- Permits removal of spirits, cigars, fermented liquors, and damaged liquor without prepayment of tax under certain conditions (Sections 117-120)
Percentage Taxes (Sections 160-180)
- Imposes fixed taxes on various businesses, including wholesale and retail dealers of distilled spirits, wines, tobacco products, importers and exporters, firearms and ammunition dealers, petroleum product dealers, video tape producers and distributors, automobile manufacturers and importers, logging operators, mineral and quarry producers, and manufacturers of non-essential articles (Section 161)
- Levies a 50% tax on the sale of non-essential articles, such as jewelry, perfumes, dice, mahjong sets, playing cards, jukeboxes, and automobile accessories (Section 163)
- Imposes a percentage tax on the sale of automobiles based on engine displacement, with rates ranging from 30% to 50% (Section 164)
- Taxes proprietors or operators of rope factories, sugar centrals and mills, coconut oil mills, palm oil mills, cassava mills, and desiccated coconut factories at 3% of the gross value (Section 168)
- Imposes a 4% contractor's tax on various businesses, including general contractors, dockyards, installation services, smelting plants, repair shops, parking lots, tailors, beauty parlors, printers, business agents, and lessors of personal property (Section 170)
- Levies a 12% tax on hotels, motels, resthouses, pension houses, lodging houses, and resorts (Section 171)
- Imposes a 12% tax on restaurants, refreshment parlors, bars, cafes, and eating places within the premises of cockpits, cabarets, night clubs, Jai Alai, and race tracks (Section 172)
- Taxes stock, real estate, commercial, customs, and immigration brokers at 7% of their gross compensation (Section 174)
- Imposes a 6% tax on dealers in securities and a 5% tax on lending investors (Section 175)
Registration and Compliance Requirements (Sections 181-186)
- Requires the issuance of receipts or sales or commercial invoices for every sale or transfer of merchandise or services (Section 181)
- Mandates the submission of quarterly reports on receipts or invoices issued (Section 182)
- Requires registration of business name or style with the revenue district officer or collection agent (Section 180)
Documentary Stamp Tax (Sections 186-212)
- Imposes documentary stamp taxes on various documents, instruments, and papers, such as bonds, debentures, certificates of stock, sales or transfers of obligations, mortgages, pledges, deeds of trust, and warehouse receipts (Sections 186-202)
- Exempts certain documents and papers from documentary stamp tax, such as policies of insurance by fraternal societies, certificates of oaths, court filings by the government, and certificates of assessed value of lands (Section 212)
Tax on Banks and Other Financial Institutions (Sections 220-223)
- Imposes a tax on banks and non-bank financial intermediaries based on their gross receipts from interest, discounts, and other income (Section 222)
- Levies a 5% tax on insurance premiums collected by insurance companies (Section 223)
Tax on Franchises (Sections 227-228)
- Imposes a 5% tax on franchises based on gross receipts from the business covered by the franchise (Section 227)
- Levies a 2% tax on electric franchise holders based on their gross receipts from the sale of electric current and manufactured city gas (Section 227)
Amusement Taxes (Section 229)
- Imposes taxes on various amusement places, such as theaters, boxing exhibitions, horse races, cockpits, and cabarets (Section 229)
Additions to the Tax and General Penal Provisions (Sections 281-312)
- Imposes civil penalties for failure to file returns, pay taxes, or comply with other requirements, ranging from 25% to 50% of the tax due (Section 282)
- Prescribes interest rates of 20% per annum on unpaid taxes (Section 283)
- Imposes penalties for failure to file information returns, failure of withholding agents to collect and remit taxes, and other violations (Sections 284-285)
- Defines criminal offenses related to tax evasion, failure to file returns or pay taxes, false entries or records, unlawful possession of tax-exempt articles, illegal cutting and removal of forest products, failure to issue receipts or invoices, offenses related to stamps, and other violations (Sections 287-302)
- Imposes penalties on public officers for extortion, neglect of duty, collusion, false entries, unlawful divulgence of trade secrets, and unlawful interest in businesses (Sections 303-307)
- Provides for increased penalties for second and subsequent offenses (Section 308)
- Penalizes violations of other provisions of the Code or regulations (Section 309)
- Imposes penalties for selling, transferring, or disposing of property under distraint, failure to surrender property under distraint, and procuring unlawful divulgence of trade secrets (Sections 310-312)
Flexibility Clause (Section 241)
- Empowers the President, upon recommendation of the Minister of Finance, to make adjustments to internal revenue taxes, such as revising rates, changing classification of articles, modifying the taxable base, revising deadlines, and modifying safeguards for tax collection (Section 241)
- Allows the President to impose counter-measures against discriminatory tax treatment of Philippine taxpayers by foreign countries (Section 241)
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Further Amending Certain Provisions Of The National Internal Revenue Code
Presidential Decree No. 1994
•November 5, 1985
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 1994
FURTHER AMENDING CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE
WHEREAS, the current economic crisis amounts to a grave emergency which affects the stability of the nation and requires immediate action;
WHEREAS, there is an imperative need to simplify and restructure certain provisions of the National Internal Revenue Code;
WHEREAS, the issuance of this Decree is an essential and necessary component of the national economic recovery program promulgated to meet and overcome the emergency;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree:
Section 1. Section 5 of the National Internal Revenue Code is hereby amended to read as follows:
"Sec. 5. Forms, receipts, certificates, and appliances. [a] Provision and distribution to proper officials. - It shall be the duty of the Commissioner, among other things, to prescribed, provide, and distribute to the proper officials the requisite licenses, internal revenue stamps, labels, all other forms,...
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