BIR Ruling

February 14, 1969 J.A. Sison & Associates Certified Public Accountants 205 El Hogar Filipino Bldg. Juan Luna, Manila Gentlemen : This refers to your letter dated November 21, 1968 requesting enlightenment as to the correct implementation of Republic Act No. 5431 (not 5423), which amended Sections 24, 26, 29, 32, 49, 53, 54, and 84(e) of the Tax Code. In reply, I have I have the honor to inform you as follows: The new rates of corporate income tax provided for in Republic Act No. 5431 which amended Sections 24 and 53, among others, of the Tax Code, apply on income earned from July 1, 1968. Corporations filing on a calendar year basis, will pay a tax on the old rate of 22/30% on of the total net income for the calendar year 1968, while the second half should be taxed at the rate of 25/35%. The 22% should be applied on the first P50,000.00 of the first half of the net income and the excess over P50,000.00 should be taxed at the rate of 30%. In the case of the income belonging to the second half, the first P50,000.00 should be taxed at 25% and the excess over P50,000.00 should be taxed at 35%. In the case of corporations filing on fiscal year basis, the tax on the total net income for fiscal years ending July 31, 1968 and thereafter shall be arrived at by multiplying by 22/30% that portion of the net income for the fiscal year which bears the same ratio to such income as the number of months from the beginning of the fiscal year to June 30, 1968 bears to 12 months; and by 25/35% that portion of the net income which bears the same ratio to such income as the number of months from July 1, 1968 to the end of the fiscal year bears to 12 months. The amount subject to 22% is the amount corresponding to that portion of P100,000.00 which bears the same ratio to such amount as the number of months from the beginning of the fiscal year up to June 30, 1968 bears to 12 months; and the excess over this amount shall be taxed at 30%. The amount subject to 25% is that portion of P100,000.00 which bears the same ratio to such amount as the number of months from July 1, 1968 to the end of the fiscal year bears to 12 months. The excess over the amount shall be taxed at 35%. cdll Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue