NATIONAL INTERNAL REVENUE CODE OF 1997

Case Overview and Summary

Summary of the National Internal Revenue Code of the Republic of the Philippines

Organization and Function of the Bureau of Internal Revenue
- Defines the powers, duties, and officials of the Bureau of Internal Revenue (Sections 1-21)
- Outlines the sources of revenue subject to internal revenue taxes (Section 21)

Tax on Income
- Definitions related to income taxation (Section 22)
- General principles of income taxation for citizens, non-residents, aliens, corporations (Sections 23-30)
- Computation of taxable income (Sections 31-32)
- Special treatment of fringe benefits (Section 33)
- Allowable deductions, including expenses, interest, taxes, losses, bad debts, depreciation, depletion, charitable contributions, research and development, pension trusts (Sections 34-42)
- Personal and additional exemptions for individual taxpayers (Section 35)
- Items not deductible, including personal expenses, losses from related-party transactions (Section 36)
- Special provisions for insurance companies, mutual funds, estates, and trusts (Sections 37-66)
- Other income tax requirements, including returns, information reporting, and record-keeping (Sections 67-73)
- Quarterly corporate income tax declaration and payments (Sections 74-77)
- Withholding on wages, including rates, exemptions, and requirements (Sections 78-83)

Estate and Donor's Taxes
- Rates of estate tax based on net estate value (Section 84)
- Computation of gross and net estate, including deductions and exemptions (Sections 85-88)
- Requirements for filing estate tax returns and paying tax (Sections 89-97)
- Rates of donor's tax based on net gifts (Section 99)
- Exemptions from donor's tax, including certain gifts and donations (Section 101)
- Requirements for filing donor's tax returns and paying tax (Section 103)
- Definitions related to estates and gifts (Section 104)

Value-Added Tax
- Persons liable for value-added tax (VAT) on sale of goods, properties, and services (Section 105)
- Rates and base for VAT on sale of goods, properties, services, and imports (Sections 106-108)
- Exempt transactions from VAT, including certain agricultural products, educational services, and low-income businesses (Section 109)
- Tax credits, including creditable input tax, transitional input tax, and presumptive input tax (Sections 110-111)
- Refunds or tax credits for input tax on exports, capital goods, and business cessation (Section 112)
- Invoicing, accounting, return filing, and payment requirements for VAT-registered persons (Sections 113-114)
- Power of the Commissioner to suspend business operations for VAT violations (Section 115)

Other Percentage Taxes
- Tax on persons exempt from VAT with gross sales below a threshold (Section 116)
- Percentage taxes on domestic carriers, keepers of garages, international carriers, and franchises (Sections 117-119)
- Tax on overseas dispatch, messages, or conversations originating from the Philippines (Section 120)
- Taxes on banks, non-bank financial intermediaries, finance companies, and life insurance premiums (Sections 121-123)
- Taxes on agents of foreign insurance companies and amusement taxes (Sections 124-125)
- Tax on winnings from horse races and requirements for returns and payment (Sections 126-128)

Excise Taxes
- Goods subject to excise taxes, including alcohol, tobacco, petroleum, automobiles, non-essentials (Sections 129-151)
- Filing returns, payment, and determination of tax base for domestic and imported products (Sections 130-131)
- Administrative provisions regulating businesses dealing with excisable articles (Sections 152-172)

Documentary Stamp Tax
- Imposition of documentary stamp tax on various instruments and transactions (Sections 173-199)
- Payment, filing requirements, effect of failure to stamp, and allowable deductions (Sections 200-201)

Remedies
- Civil remedies for tax collection, including distraint, levy, and judicial proceedings (Sections 202-227)
- Protesting assessments, claims for refund, and statutory periods (Sections 228-231)
- Forfeiture of property used in unlicensed business or for counterfeiting stamps (Section 268)

Compliance Requirements
- Registration requirements for taxpayers, including annual fees (Section 236)
- Issuance of receipts, sales invoices, and printing requirements (Sections 237-238)
- Signage and certificate display requirements for certain businesses (Sections 239-241)
- Continuation of business after death of proprietor and removal to new location (Sections 242-243)
- Authority of the Secretary of Finance to promulgate rules and regulations (Sections 244-246)

Statutory Offenses and Penalties
- Additions to tax, including civil penalties and interest (Sections 247-249)
- Penalties for failure to file returns, supply information, pay taxes, and other offenses (Sections 250-257)
- Penalties for unlawful business, divulging trade secrets, and other violations (Sections 258-278)
- Confiscation and forfeiture of proceeds and instruments of crime (Section 279)
- Subsidiary penalties and prescription periods for violations (Sections 280-281)
- Informer's reward for reporting violations and smuggled goods (Section 282)
- Penalties for violations by government enforcement officers (Sections 269-273)

Allotment of Internal Revenue
- Disposition of national internal revenue collections (Section 283)
- Allotments for the Commission on Audit and Bureau of Internal Revenue (Sections 284-285)
- Special disposition of insurance premium tax and shares of local governments (Sections 286-289)
- Incremental revenues from tax reforms (Section 288)

Oversight Committee
- Establishment of a Congressional Oversight Committee to monitor tax implementation (Section 290)

Repealing and Final Provisions (Sections 291-292)