BIR Ruling

July 8, 1969 The Acting Director BIR Revenue Region No. 14 Bacolod City S i r : This refers to your letter dated June 18, 1969 requesting clarification on the contents of the memorandum dated December 26, 1968 addressed to all Regional Directors specifically with respect to the applicability and/or effectivity of the new rates of income tax prescribed by R.A. No. 5431 on income of corporations which filed returns for 1968 on the calendar year basis. Doubts is expressed on the administrative interpretation of Section 10 of R.A. 5431 which reads thus: "Sec. 10. The provisions of this Act shall apply to income for taxable years beginning after June 30, 1968." It is surmised that since the said calendar year corporate taxpayers derived their "income within the taxable year 1968 and not beginning after taxable year 1968", the new rates or earned by such corporations beginning January 1, 1969. In reply, I have the honor you that the increased rates of corporate income tax prescribed by Republic Act No. 5431 are applicable to income received or earned starting July 1, 1968 by corporations other than those expressly exempted by the amendatory law, whether on the calendar or fiscal year basis. LibLex It will be observed that before House Bill No. 14543 was enacted into law (R.A. 5431) the date of effectivity provided there (in H. B. No. 14543) was "beginning after December 31, 1968". Under such provision, the effectivity of the law for the purpose of implementing its provisions would have commenced on January 1, 1969. However, this particular provision of Section 4 of H. B. No. 14543 was not carried in toto in the actual enactment of Republic Act No. 5431 a change was made in that, the provision is now worded, thus, "The provisions of this Act shall apply to income for taxable years beginning after June 30, 1968." In other words, its effectivity for the purpose of implementing its provisions commenced on July 1, 1968. Consequently, the provisions of R. A. No. 5431 increasing the rates of tax shall apply to income received or earned by corporate taxpayers, whether on the calendar or fiscal year basis, starting July 1, 1968. Please be guided accordingly. LibLex Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue