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Executive Orders

Furthering Amending Section 227 Of The National Internal Revenue Code, As Amended, And For Other Purposes

Executive Order No. 72

EXECUTIVE ORDER NO. 72 November 25, 1986

FURTHERING AMENDING SECTION 227 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES

WHEREAS, there is a need to rationalize the taxes and exemptions on franchises by prescribing a new rate structure on franchise operators and withdrawing income tax exemptions;

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do hereby order:

Sec. 1. Section 227 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:

"Sec. 227. Tax on franchises. Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises, upon the gross receipts from the business covered by the law granting the franchise, a tax in accordance with the schedule prescribed hereunder:

(a) On electric utilities, city gas and water supplies Two (2%) per cent

(b) On telephone and/or telegraph systems, and radio broadcasting stations Three (3%) per cent

(c) On other franchises Five (5%) per...

Summary of Executive Order No. 72

Tax on Franchises
- Levies a tax on franchises based on gross receipts from the business covered by the franchise law. (Sec. 1)
• Electric utilities, city gas, and water supplies: 2% tax rate (Sec. 1(a))
• Telephone, telegraph systems, and radio broadcasting stations: 3% tax rate (Sec. 1(b))
• Other franchises: 5% tax rate (Sec. 1(c))
• Franchise grantees must file tax returns and pay taxes to the Commissioner of Internal Revenue. (Sec. 1)

Income Tax on Franchise Grantees
- All grantees of franchises are subject to income tax under the National Internal Revenue Code. (Sec. 2)

Repeal of Inconsistent Laws
- Repeals or modifies the following laws and issuances that are inconsistent with this Executive Order: (Sec. 3)
• Section 1 of Republic Act No. 2889
• Section 1 of Presidential Decree No. 551, as amended
• Section 15 (1) of Presidential Decree No. 1445
• Pertinent provisions of charters of franchise grantees
• All other inconsistent laws, orders, issuances, rules, and regulations

Effectivity
- This Executive Order takes effect immediately. (Sec. 4)

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