Amendments to NIRC, As Amended, Re: Addition of "Supplement B" To Title II (Income Tax)

October 27, 1972

PRESIDENTIAL DECREE NO. 30

AMENDING THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, BY ADDING ANOTHER SUPPLEMENT, TO BE KNOWN AS "SUPPLEMENT B" TO TITLE II (INCOME TAX), BY PLACING CORPORATIONS ON A TAX WITHHOLDING SYSTEM

WHEREAS, there is a need to ensure the continuous and even flow of revenue collection in order to provide ready financing for essential Government operations and projects;

WHEREAS, in order to achieve that desired end it is necessary to introduce a new system of income tax payment on a quarterly basis that is both advantageous to the Government and the taxpayer; and

WHEREAS, there were pending before Congress before the promulgation of Proclamation No. 1081, dated September 21, 1972, a bill on the subject, entitled "AN ACT AMENDING THE NATIONAL REVENUE CODE, AS AMENDED, BY ADDING ANOTHER SUPPLEMENT, TO BE KNOWN AS 'SUPPLEMENT B,' TO TITLE II (INCOME TAX), BY PLACING CORPORATIONS ON A TAX WITHHOLDING SYSTEM." and denominated as H. No. 5480: cd

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081 dated September 21, 1972, and General Orders No. 1 dated September 22, 1973, as amended, do hereby decree that H. B. No. 5480 is hereby adopted, approved and made as part of the law of the land.

This decree shall take effect immediately.

DONE in the City of Manila, this 27th of October, in the year of Our Lord, Nineteen Hundred and Seventy-Two.

ATTACHMENT

HOUSE OF REPRESENTATIVES

H. No. 5480

AN ACT AMENDING THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY ADDING ANOTHER SUPPLEMENT, TO BE KNOWN AS "SUPPLEMENT B," TO TITLE II (INCOME TAX), BY PLACING CORPORATIONS ON A TAX WITHHOLDING SYSTEM.

SEC. 1. The National Internal Revenue Code is amended by adding another supplement to Title II, to be known as Supplement B, thereby placing corporations on a tax withholding system, to be entitled as "Supplement B. — A System of Corporate Income Tax Withholding."

Supplement B. — A System of Income Tax Withholding

on Non-Wage Income

"ART. 1. Requirements of Declaration. — Every individual, subject to income tax under Section Twenty-one or Twenty-two of this Title, receiving income other than that subject to withholding under Supplement A of this Title, and every corporation subject to income tax under Section Twenty-four of this Title shall file a declaration of its estimated net taxable income for each quarter of its taxable year: Provided, however, that individuals and corporations that have paid the estimated income tax herein required and have filed the adjustment return prescribed in Article Three of this Supplement shall be exempt from filing the return required in Section Forty-five and Forty-six of this Title.

"ART. 2. Time for filing declaration and paying estimated income tax. — A summary declaration of the gross income, deductions, personal and additional exemptions in case of individuals, and net taxable income for the preceding quarter shall be filed, and the income tax thereon, computed in accordance with the provisions of Title II of this Code, shall be paid, not later than sixty days from the close of each of the first three quarters of the taxable year whether, calendar or fiscal year.

"ART. 3. Place of filing declaration and paying estimated income tax. — The declaration shall be filed with, and the tax thereon paid to the Commissioner of Internal Revenue, Revenue Regional Director, Revenue District Officer, or the Collection Agent of the city or municipality where the individual is residing, or in case of a corporation, in which is located its principal office and where its books of accounts and other data from which the return is prepared and kept; in case of an individual who has no legal residence in the Philippines, or a corporation that has no office of any kind or agency in the Philippines then the return shall be filed and the tax thereon paid, with the Commissioner of Internal Revenue in Manila.

"ART. 4. Filing of adjustment return and final payment of income tax. — On or before the fifteenth day of or on or before the fifteenth day of the fourth month following the close of the fiscal year, every taxpayer covered by this Supplement shall file an Adjustment Return covering the total net taxable income of the preceding calendar or fiscal year and, if the quarterly tax payment made during that year, are not equal to the total tax due on the entire net taxable income of that year, the taxpayer shall, as the case may be, either pay the excess tax due or refund to the taxpayer the excess amount paid.

"ART. 5. Civil penalties. — (1) Deficiency. — Definition. — As used, and in respect of the estimated tax referred to, in this Supplement: The term 'DEFICIENCY' means:

"(a) The amount by which Eighty per centum of the estimated tax referred to in this Supplement exceeds the amount shown by the taxpayer as the estimated tax on his or its return, including tax credit allowable;

"(b) If no amount is shown by the taxpayer as estimated tax on his or its return, or if no return is filed by the taxpayer, and the taxpayer has tax credit allowable, the amount by which eighty per centum of the estimated tax referred to in this Supplement exceeds the tax credit allowable against such estimated tax; or

"(c) If no amount is shown by the taxpayer as estimated tax on his or its return, and the taxpayer has no tax credit allowable, eighty per centum of the estimated tax referred to in this Supplement.

(2) (a) Interest. — Interest upon the amount determined as a deficiency shall be assessed at the same time as the deficiency; shall be paid upon notice and demand from the Commissioner of Internal Revenue; and shall be collected as part of the estimated tax, at the rate of fifteen per centum per annum from the date prescribed for the payment of the estimated tax to the date the deficiency is assessed: Provided, That the maximum amount that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period not later than the fifteenth day of April or the fifteenth day of the fourth month, following the close of the taxable year: Provided, further, That no interest on deficiency estimated income tax shall be assessed at any time after assessment of the actual income tax due for the taxable year.

"(b) Addition to estimated tax in case of non-payment. —

(1) Estimated tax shown on the return. — Where the amount shown by the taxpayer as estimated tax on his or its return or part of such amount, is not paid on or before the date prescribed for its payment, there shall be collected, as part of the estimated tax, interest upon such unpaid amount at the rate of fifteen per centum per annum from the date prescribed until it is paid but not later than the fifteenth day of April or the fifteenth day of the fourth month, following the close of the taxable year.

"(2) Deficiency. — Where the deficiency, or interest on deficiency, assessed under Subsection (a) of this Article, or part thereof, is not paid in full within thirty days from the date of receipt by the taxpayer of the notice and demand from the Commissioner of Internal Revenue, there shall be collected upon such unpaid amount, as part of the estimated tax, interest at the rate of fifteen per centum per annum from the date of receipt by the taxpayer of such notice and demand until it is paid but not later than the fifteenth day of April or the fifteenth day of the fourth month, following the close of the taxable year.

"ART. 6. Declaration under penalties of perjury. ) (1) The declaration and return required under this Supplement shall, in lieu of an oath, contain a written declaration that they are made under the penalties of perjury.

(2) Any person who wilfully files a declaration or return containing information which is not true and correct as to every material matter shall, upon conviction, be subject to the penalties prescribed for perjury under the Revised Penal Code.

"ART. 7. Transitory Provision. — For taxable year 1972, the declaration of estimated net taxable income shall be filed, and the tax due thereon shall be paid, as follows: for the first quarter, on or before the last day of the seventh month of the taxable year; for the second quarter, on or before the last day of the ninth month of the taxable year; for the third quarter, on or before the last day of the eleventh month of the taxable year; and the adjustment and final return shall be filed, and the tax due thereon paid, on or before April fifteen, nineteen hundred and seventy-three or on or before the fifteenth day of the fourth month following the close of fiscal year nineteen hundred and seventy-two.

"The income tax due for taxable year nineteen hundred and seventy-one which still remains unpaid at the time of the approval of this Act shall, notwithstanding the provisions in Section Fifty-one of this Title, be payable in equal monthly installments starting on the last day of the first month following the approval of this Act; up to December thirty-first, nineteen hundred and seventy-two, or up to the last day of the last month of fiscal year nineteen hundred and seventy-two."

"ART. 8. Effectivity. — This Act shall take effect upon its approval, and shall apply to income received beginning taxable years starting after December 31, 1972.

"ART. 9. Implementing rules and regulations. — The provisions of this Supplement shall be implemented under rules and regulations issued by the Commissioner of Internal Revenue, upon approval of the Secretary of Finance.

"ART. 10. Repealing clause. — All provisions of this Code, and of all other Acts, Executive Orders, Proclamations, rules or regulations or parts thereof, inconsistent with the provision of this Supplement are hereby repealed or modified accordingly."

SEC. 2. This Act shall take effect upon its approval.