BIR Ruling

August 29, 1977 Increased Rates of Graduated Fixed Tax; Operation of PD 1158 Not Retroactive In reply to your radiogram dated August 4, 1977 regarding application for the year 1977 of the increased rates of graduated fixed tax under the Consolidated Tax Code of 1977 (Presidential Decree No. 1158), please be advised that notwithstanding the effectivity of the aforesaid Code on June 3, 1977, the difference between the new and old rates shall not be collected where the corresponding tax under old rates prescribed in Section 182(A)(2) of the Tax Code has been paid as of January 31, 1977. It should be noted that prior to the promulgation of PD 1158, a lower rate of tax has been imposed, payable on or before January 31, 1977 in accordance with Section 180 of the Tax Code. Such being the case and considering that said tax is payable annually, a demand for the payment of an additional sum representing the difference between the new and old rates would result in the imposition of a tax burden to which one is not liable before the promulgation of PD 1158. This will render the operation of PD 1158 retroactive rather than prospective, which cannot be done, as it would contravene the established rule regarding the prospective operation of statutes. (Commissioner of Internal Revenue vs. Filipinas Compania de Seguros, G. R. No. L-14880 dated April 29, 1960). cdtai