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I No 3971

No 2293

Begun and held in Metro Manila on Monday the twenty-third day

of July two thousand seven.

[REPUBLIC

ACT

NO. 95041

A N A CT A M E N D I N G S E C T I O N S 22,24,34,35,51,

AND

79

OF

REPU BLIC ACT NO.

8424,

AS AMENDED, OTHERW ISE

KNOW N AS THE NATIONAL INTERNAL REVEN UE

CODE O F 1997

Be it

en cled

by the Senate

and

House of Represenlari iws

of the

Phil ippines

in ongress

assembled.

SECTION

1.

S e c t i o n

22

of Republ ic Act No.

8424,

a s

amended, o therwise know n

as

th e Nat ional In ternal Revenue

Code of

1997,

i s he reby fu r th e r amended by adding th e following

definit ion afte r Subse ction

FF)

o read

as follows:

SEC. 22.

Definitions. -

When used in th i s

Title:

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"(A) x x x

'IX x x

(FF)

x x x

(GG) The term 's tatutory minimum wage'

shall refer to the r a te fixed by t h e R egionalTripart ite

W age and Productiv ity Board , a s defined by th e

Bure au of Labor a n d Emp loyment Stat istics (BLES)

of t h e D e p a r t m e n t of L a b or a n d E m p l o ym e n t

(DOLE).

(HH)The term 'min imum wage earner ' shall

r e fe r t o a w orker i n t he p r iva t e s ec to r paid t he

s ta tu tory minimum w age, or

to

a n employee

in

t h e

public sector with c om pensation income of not m ore

t h a n t h e s t a t u t o r y m i n im u m w a ge i n th e n o n -

agricul tural sector wh ere helshe

is

assigned.

SEC. 2. Section 24(A) of Republic Act No.

8424,

a s

am ende d, o therwise known as the N at ional In ternal Revenue

C od e of 1997, i s hereby fur ther amend ed to read as follows:

SEC.

24.

Income ax Rates.

-

"(A) Rates of Income Tax o n I n d i v id u a l

C i t i zen a n d I n d i v id u a l Res id en t A l i en of the

Philippines.

(1) x

x:

x x x: a n d

(c) On t he taxa ble income defined i n Section

31

of this Code, oth er t h a n income subject to tax

unde r Subsections

(B),

(C) a nd (D)

of

this Section,

derived for eac h taxable y ea r from. al l sources

within t h e Phil ippines by an individua l al ien who

is a res ident of th e Phi l ippines .

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3

(2)

R a t e s

of

T a x

on

Taxable Income

of

I n d iv i du a ls . T h e t a x s h a l l b e c om p u te d i n

accordance wi th and a t th e ra tes establ ished i n

the following schedu ie:

Not over P10.000. . . . . . . . . . . . . . . . .

%

"Over Pl0,OOO but not

over

P30,OOU

P500+10%

of

the

PXCBSS

Yer

P1o.ooo

"Over

P30,OOO

but not

over

P70,OOO

.....

P2,500+15%

of

the

B Y C ~ S S

ver

P30,OOO

Over P70,OOO but not over P140,OW ... .P8,500+20%of the

excess over

P70,OOO

"Over

P140,OUO but not over

P250,OOO P22.50012536 of t he

P X C ~ S S

W Pia,ooo

"Over

250,000

but not

over

P500,OOO

50,000130%of the

ex ess

over

Pzmoon

~ X C ~ S S

W PS~O,OOO.

"Over P500.000 P125,000*32% of fhc

For ma r r i ed ind iv idua ls , t h e husband an d

wife , subject to the provision of Sect ion 51(D)

hereof, shal l comp ute se par ate ly th eir individual

income tax b ased on th eir res pect ive tota l taxable

income: Prouided, Th at if an y income cannot be

def in i te ly a t t r ib ut ed to

or

ident i f ied as income

exclusively ea rn ed or real iz ed by ei ther of th e

spouses, the s a m e shall be divided equally between

the spouses for th e purp ose of determining thei r

respective ta xa ble income.

Provided,

Th a t min imum wage ea rne r s a s

defined in Section 22(HH) of thi s Code shall b e

exempt from t he paymen t

of

income tax on th eir

taxable income:

Prouided,

further,

Th at the holiday

pay, over t ime pay , nig ht s hif t different ia l pay a n d

ha z a r d pa y r e c e i ve d by s uc h m i n i m um w a ge

earn ers shal l l ikewise be exem pt f rom income tax.

x x x.

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Sb;c. 3. S e c t i o n 3 4 ( L ) of Republ ic A c t No. 8424 . a s

am end ed , otherwise known as the h 'a tional Internal R evenue

Code of 19 97, is hereby amend ed

to

read as follows:

S E C . 34.

Deductions from Gross Income.

Exc ept for tax pay ers earnin g compensation income

ar isin g f rom personal services rendered und er a n

e m p l o y e r - e m p l o y e e r e l a t io n s h i p w h e r e n o

ded uct ion s shal l be a llowed u nder this Sect ion other

than

unde r Subsec t ion (M) hereof, in com put ing

tax ab le income subject to income tax u nd er Sections

24(A); 25(A); 26;27(A),

(B)

and (C); and 28(A)(1), there

sh all be allowed th e following deductions from gross

income:

"(A) Expenses. -

I'X x x.

(L) Optional Sta nda rd Deduction. - In l ieu

of t he de duc t i ons a l l ow e d unde r

the

preceding

S u bs e c t i on s , a n i nd i vi dual s ubj ec t to t a x unde r

Sect ion 24, other th an a n bnresident a l ien, may elect

a s t a nd a rd deduc t ion , in a n amount no t exceed ing

f o r t y p e r c e n t (40%) of h i s g ross sa l e s o r g ross

r e c e i p t s , a s t h e c a s e m a y b e. I n t h e c a s e of a

corp orat ion subject to tax und er Sect ions 27(A) and

28 A) 1),

it may elect a s t anda rd deduct ion in a n

am o un t not exceeding forty percent

(40%)

of ita gross

income a s defined in Sec tion 32 of th is Code. U nle ss

the ta xp ay er s ignifies in his re turn his intent ion to

e lec t th e opt iona l s tanda rd deduct ion, h e sha l l

be

considered

as

hav ing a vaile d himself of t h e deductions

al lowed in th e p receding Subsect ions. Such elect ion

w he n m ad e in th e r e tu rn sha ll be i rr evocab le fo r

the

t a xa b l e ye a r f o r w h i c h t he r e t u r n i s m a de :

Provided,

T h a t an individ ual who is enti t led to and

claime d for th e optional sta nd ard deduction shall not

be r e qu i r e d t o s ubm i t w i t h h i s t a x r e t u r n such

f inanc ia l s ta tem ents o therwise requi red under th is

Code :

Prov ided, f u r ther ,

T h a t e xc ep t w h e n t h e

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5

Com missioner otherwise permits, the said individual

shall

keep

such records pe r ta in ing to

his gross

sa les

or gross receipts, or the said corporation sh all keep

such records perta ining to his

gross

incom e a s defined

in Section 32

of

th i s Code dur ing the taxable yea r ,

as

ma y b e r e qu i r ed by t he r u le s a nd r e gu la tions

p r o m u l g a t e d b y t h e S e c re t ar y of Fina nc e , upon

recom me nda tion of the Commissioner.

(M) x

x

x.

-

I'X

x

x.

SEC.

4. Section 35(A) an d (B) of Republic Act

No. 8424, as

a me nded , o the rw ise know n a s t h e N a t ional I n t e r n a l Re ve nue

Code of 1997,

is

hereb y a m ende d to read as follows:

5 C .

35.

Allowance

of

Personal Exem ption

for Indiv idu al Taxpayer .

-

"(A) n

General.

-

For purposes

of

de te r min ing

th e tax provided

in

Se ctio n 24(A)

of

this Tit le , there

s h a l l b e a l l o w e d a b a si c p e r so n a l e x e m p t i o n

amount ing

to

Fifty tho usa nd pesos

(P50,OOO)for

each

individual taxpa yer.

In

th e case of marr ie d individuals wh ere only

one of the spouses

is

deriving gross income, only

such spouse shal l

be

allowed the personal exem ption.

(B)

Ad dit ion al Exemption for Dependents.

Th ere shal l be a l lowed an addi tional exem ption of

T w e n t y - f i v e t h o u s a n d p e so s

(P25,OOO) for

e a c h

dep ende nt not exceeding four (4).

The additio nal exemption

for

dependents shal l

be claim ed by only one

of

t h e spouses in

the

case

of

marr ied individuals .

In t h e c a s e of l e ga l ly s e pa r a t e d spouse s ,

additio nal ex em ption s may be claimed only

by

t h e

spouse w ho ha s c us tody

of

the child

vr

chi ldren:

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Prouided,

T h a t t h e t o ta l a m o u n t

of

addi t iona l

exemptions th a t m ay be claimed by both shall not

exceed the m axim um additional exemptions here in

allowed.

For

pu rpo ses of thi s Subsection,

a

'dependent'

means

a

legit imate, i l legit imate

or

legally adopted

child chiefly dependent upon apd living with the

taxpaye r if such depe nd ent

is

not more than tw enty-

one

(21)

yea rs of age, unm arr ied and not gainfully

employed or if suc h dep en de nt, rega rdles s of age,

is

incapable of sel f-su pportbecause

of

mental

or

physical

defect.

'tx

x

x. '

SEC. 5. Sect ion

51(A)(2)

of Republic Act No. 8424, as

ame nded , o therwise known as th e Nat iona l In te rna l Revenue

Code of 1997, is hereby fu r th er amended to read as follows:

SEC.

1. Individual Return.

-

(A)

Requirements.

(1)Except as provided in paragraph (2) f th is

Subsection, th e following ind ividuals are required

to file a n income ta x re tu rn:

(a)x x x;

NIX x

x.

"(2) T h e following individua ls sha l l not be

required

to

file a n income ta x re turn:

(a) x x

x

(b ) A n i n d i v i d u a l w i t h r e s p e c t t o p u r e

compensation income,

as

defined in Section

32(A)(1),

der ived f rom sources wi thin th e Phi l ippines, the

income tax on wh ich h a s been correctly withheld

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under the provis ions of Sect ion 79 of this Code:

Prouided,

Th at a n ind iv idual deriving compensat ion

concurrent ly from two or more employers a t any

t ime durin g th e tax able year shal l file a n income'tax

re turn ;

(c)

x

x x; an d

(d)

A

m i n i m u m w a g e e a r n e r a s d ef in ed i n

Section 22(HH) of th is Code

or

a n ind iv idual who is

exempt from inco me tax pu rsua nt to the provis ions

of

th i s Code a nd o th er l aws , genera l or special.

'Px x x."

SEC.6. Section 79(A) of Republic Act No.

8424, as

amended,

otherwise know n as

the

Nationa l Interna l Revenue Code of 1997,

is hereby fu r ther am en de d to read a s fo llows:

SEC. 79. Income

Tax

Collected a t Sou rce.

"(A) Requirement of Withholding. -Ex cep t in

the case of a m in imum wage ea rn er

as

defined in

Section 22(H H)

ofthis

Code, eve ry employer m ak ing

paym ent of wa ges sha l l deduct and w ithhold up on

such wages a t ax de t ermined in accordance wi th t h e

r u l e s and r e g u l a t i o n s t o be p resc r ibed by the

Sec retary of Fina nce , upo n recom men dation of the

Commissioner.

x x x."

SEC.7. Sep arab il i ty Clause. If any provisionof th is Act

is declared invalid

or

uncon st i tut ional , o ther provisions hereof

wh ich are not affected thereby shal l continue

to

be in ful l force

a n d effect.

SEC.8.

Repe al ing Clause. Any law, presidential decree

or

issuance, executive ord er, let ter of instruction, admin istrat ive

order , rule or regulat ion contrary to

or

i nconsi st en t w i th a n y

provision of this Act is hereby am end ed or modified acco rding ly.

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SEC.

9 E f f ~ c t i u i t y lause.

This Act sh all ta k e effect

fifteen

(15)

days following i ts publication in th e

Official

Gazetle

or in a t l eas t two 2 )new spape rs of general circulation.

Approved,

l

ANNY

VILLAR

President o the Senate

This Act which

is a

consolidation of H ous e Bill

No.

3971

an d Se na t e B ill

No.

2293 was f ina lly passed by th e H ouse

of R e p r e s e n t a ti v e s a n d t h e S e n a t e on M a y 2 8 , 2 00 8 a n d

M ay 2 7,2008 , respectively.

SecveturyGeneral

House of Representatives

Approved: UN 2 8