Philippine Law Central

THE NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES
Tax Reform Act of 1997/Republic Act No. 8424

AN ACT AMENDING THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES

SECTION 1. Short Title – This Act shall be cited as the “Tax Reform Act of 1997″.

SEC. 2. State Policy. – It is hereby declared the policy of the State to promote sustainable economic growth through the rationalization of the Philippine internal revenue tax system, including tax administration; to provide, as much as possible, an equitable relief to a greater number of taxpayers in order to improve levels of disposable income and increase economic activity; and to create a robust environment for business to enable firms to compete better in the regional as well as the global market, at the same time that the State ensures that Government is able to provide for the needs of those under its jurisdiction and care.

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TITLE II
TAX ON INCOME

CHAPTER I
DEFINITIONS

SEC. 22. Definitions – When used in this Title:

(A) The term “person” means an individual, a trust, estate or corporation.

(B) The term “corporation” shall include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), association, or insurance companies, but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating consortium agreement under a service contract with the Government. “General professional partnerships” are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business.

(C) The term “domestic”, when applied to a corporation, means created or organized in the Philippines or under its laws.

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TITLE III

CHAPTER I
ESTATE TAX

SEC. 84. Rates of Estate Tax. – There shall be levied, assessed, collected and paid upon the transfer of the net estate as determined in accordance with Sections 85 and 86 of every decedent, whether resident or nonresident of the Philippines, a tax based on the value of such net estate, as computed in accordance with the following schedule:

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TITLE IV
VALUE-ADDED TAX

CHAPTER I
IMPOSITION OF TAX

SEC. 105. Persons Liable. – Any person who, in the course of trade or business, sells barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of this Code.

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TITLE V
OTHER PERCENTAGE TAXES

SEC. 116. Tax on Persons Exempt From Value-Added Tax (VAT). – Any person whose sales or receipts are exempt under Section 109(z) of this Code from the payment of value-added tax and who is not a VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts: Provided, That cooperatives shall be exempt from the three percent (3%)gross receipts tax herein imposed.

SEC. 117. Percentage Tax on Domestic Carriers and Keepers of Garages. – Cars for rent or hire driven by the lessee, transportation contractors, including persons who transport passengers for hire, and other domestic carriers by land, air or water, for the transport of passengers, except owners of bancas and owner of animal-drawn two wheeled vehicle, and keepers of garages shall pay a tax equivalent to three percent (3%) of their quarterly gross receipts.

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