REPUBLIC ACT NO. 5325 - AN ACT AMENDING SECTIONS TWENTY-ONE, TWENTY-TWO, TWENTY-THREE, AND THIRTY OF COMMONWEALTH ACT NUMBERED FOUR HUNDRED SIXTY-SIX, AS AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE, AND FOR OTHER PURPOSES
1. Section twenty-one of Commonwealth Act Numbered
Four hundred sixty-six, as amended, otherwise known as the National
Internal Revenue Code, is hereby further amended to read as
"Sec. 21. Rates of tax on citizens or residents. – A tax is hereby imposed upon the taxable net income received during each taxable year from all sources by every individual, whether a citizen of the Philippines residing therein or abroad or an alien residing in the Philippines, determined in accordance with the following schedule:
"Not over P2,000 3%
"Over P2,000 but not over P4,000 P60 plus 6%
of excess over P2,000.
"Over P4,000 but not over P6,000 P180 plus 9%
of excess over P4,000.
"Over P6,000 but not over P8,000 P360 plus 12%
of excess over P6,000.
"Over P8,000 but not over P10,000 P600 plus 14%
of excess over P8,000.
"Over P10,000 but not over P12,000 P880 plus 16%
of excess over P10,000.
"Over P12,000 but not over P14,000 P1,200 plus 18%
of excess over P12,000.
"Over P14,000 but not over P16,000 P1,560 plus 20%
of excess over P14,000.
"Over P16,000 but not over P18,000 P1,960 plus 22%
of excess over P16,000.
"Over P18,000 but not over P20,000 P2,400 plus 24%
of excess over P18,000.
"Over P20,000 but not over P24,000 P2,880 plus 27%
of excess over P20,000.
"Over P24,000 but not over P28,000 P3,960 plus 30%
of excess over P24,000.
"Over P28,000 but not over P32,000 P5,160 plus 33%
of excess over P28,000.
"Over P32,000 but not over P36,000 P6,480 plus 36%
of excess over P32,000.
Over P36,000 but not over P40,000 P7,920 plus 39%
of excess over P36,000.
Over P40,000 but not over P46,000 P9,480 plus 42%
of excess over P40,000.
Over P46,000 but not over P52,000 P12,000 plus 44%
of excess over P46,000.
Over P52,000 but not over P58,000 P14,640 plus 46%
of excess over P52,000.
Over P58,000 but not over P64,000 P17,400 plus 48%
of excess over P58,000.
Over P64,000 but not over P70,000 P20,280 plus 50%
of excess over P64,000.
Over P70,000 but not over P78,000 P23,280 plus 52%
of excess over P70,000.
Over P78,000 but not over P86,000 P27,440 plus 54%
of excess over P78,000.
Over P86,000 but not over P94,000 P31,760 plus 56%
of excess over P86,000.
Over P94,000 but not over P102,000 P36,240 plus 57%
of excess over P94,000.
Over P102,000 but not over P110,000 P40,800 plus 58%
of excess over P102,000.
Over P110,000 but not over P120,000 P45,440 plus 59%
of excess over P110,000.
Over P120,000 but not over P130,000 P51,340 plus 60%
of excess over P120,000.
Over P130,000 but not over P140,000 P57,340 plus 61%
of excess over P130,000.
Over P140,000 but not over P150,000 P63,440 plus 62%
of excess over P140,000.
Over P150,000 but not over P160,000 P69,640 plus 63%
of excess over P150,000.
Over P160,000 but not over P180,000 P75,940 plus 64%
of excess over P160,000.
Over P180,000 but not over P200,000 P88,740 plus 65%
of excess over P180,000.
Over P200,000 but not over P250,000 P101,740 plus 66%
of excess over P200,000.
Over P250,000 but not over P300,000 P134,740 plus 67%
of excess over P250,000.
Over P300,000 but not over P400,000 P168,240 plus 68%
of excess over P300,000.
Over P400,000 but not over P500,000 P236,240 plus 69%
of excess over P400,000.
Over P500,000 P305,240 plus 70%
of excess over P500,000.
Sec. 2. Section twenty-two of Commonwealth Act Numbered Four hundred and sixty-six, as amended, is hereby further amended to read as follows:
"Sec. 22. Tax on non-resident alien individual. – (a) Non-resident alien engaged in trade or business within the Philippines. – There shall be levied, collected, and paid for each taxable year upon the entire net income received from all sources within the Philippines by every non-resident alien individual engaged in trade or business within the Philippines the tax imposed by Section twenty-one: Provided, That for purposes of this Title, a no-resident alien individual who shall come to the Philippines and stay therein for an aggregate period of more than one hundred eighty days during any calendar year shall be deemed a non-resident alien doing business in the Philippines, the provision of Section eighty-four (f) of this Code to the contrary notwithstanding.
"(b) Non-resident alien not engaged in trade or business within the Philippines. – There shall be levied, collected and paid for each taxable year upon the entire income received from all sources within the Philippines by every non-resident alien individual not engaged in trade or business within the Philippines as interest, dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical or casual gains, profits and income, and capital gains, a tax equal to twenty-five per centum, of such income: Provided, That if the total income received by such non-resident alien individual from all sources within the Philippines exceeds forty-three thousand sixty-pesos, the rates established in Section twenty-one shall apply, but in no case shall the tax imposed under this subsection be less than twenty-five per centum of the total income.
Sec. 3. Subsection (b) of Section twenty-three of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:
"Sec. 23. Amount of personal exemptions allowable to individuals. – For the purpose of the tax provided for in this Title, there shall be allowed in the nature of a deduction from the amount of net income the following personal exemptions:
"(b) Personal exemption of married persons or heads of family. – The sum of three thousand pesos, if the person making the return is a married man or a married woman or the head of a family: Provided, That only one exemption of three thousand pesos shall be made from the aggregate income of both husband and wife when not legally separated. For the purpose of this section, the term "head of family" includes an unmarried man or woman with one or both parents, or one or more brothers or sisters, or one or more legitimate, recognized natural, or adopted children living with and dependent upon him or her for their chief support where such brothers, sisters, or children are not more than twenty-three years of age, unmarried, and not gainfully employed, or where such children are incapable of self-support because mentally or physically defective.
Sec. 4. Paragraph (a), Section thirty of Commonwealth Act Numbered Four hundred sixty-six, as amended, otherwise known as the National Internal Revenue Code, is hereby further amended by adding a new subparagraph (2), and designating the existing subparagraph (2) as subparagraph (3), to read as follows:
"Sec. 30. Deductions from gross income. – In computing net income there shall be allowed as deductions –
"(1) . . . .
"(2) Expenses allowable to citizens or resident individuals. –
(A) Expenses incurred and paid in the Philippines during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or his dependents as defined in Section twenty-three (c),
1. Definitions. – For purposes of this subsection, the term "medical care expenses" means amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of diseases, or for the purpose of affecting any structure or function of the body, but excluding amounts paid for medicines.
2. Limitation. – The deduction allowed in this subsection shall not exceed five hundred pesos for the taxpayer and an additional five hundred pesos for the spouse and each dependents as defined in Section twenty-three (c), but not to exceed two thousand pesos in the aggregate.
3. Proof of deductions. – In the connection with claims for medical care expense deduction, the taxpayer shall furnish the name and address of each person to whom payment for medical care expenses has been made during the taxable year, as well as the amount and the date of the actual payment thereof in each case. Claims for deductions must be substantiated by a receipt or a statement from the individual to whom or entity to which payment for medical care was paid, showing the nature of the service rendered, the name of the person for whom the service is rendered, the amount paid therefor, and the date of actual payment thereof, and such other information as the Commissioner may deem necessary.
"(B) Expenses incurred and paid in the Philippines during the taxable year, for basic tuition fees of taxpayer's dependents, as defined in Section twenty-three (c), who are studying in high schools.
1. Definition. – For purposes of this subsection, the term 'basic tuition fees' means amounts paid for the privilege to receive instruction in a high school but does not include matriculation fee, and other miscellaneous fees such as library and athletic fees, laboratory fee, entrance fee, ROTC fee, student council fee, graduation fee and similar fees.
2. Limitation. – The deduction allowed in this subsection shall be two hundred fifty pesos for each of the taxpayer's dependents, as defined in Section twenty-three (c), who are studying in high schools but shall not exceed one thousand pesos in the aggregate.
3. Proof of deductions. – In connection with claims for basic tuition fees deduction, the taxpayer shall furnish the name and date of birth of each dependent child who incurred the expense during the taxable year, as well as the amount and the date of actual payment thereof in each case. Claims for deductions must be substantiated by a receipt or statement of the school to which payment for basic tuition fees was made, showing the total school fees paid, as well as a breakdown of such fees, and such other information as the Commissioner may deem necessary.
"(4) Expenses allowable to non-resident alien individuals and foreign corporations. – In the case of a non-resident alien individual or a foreign corporation, the expenses deductible are the necessary expenses paid or incurred in carrying on any business or trade conducted within the Philippines exclusively.
Sec. 5. The provisions of this Act shall apply only to income for taxable years beginning January one, nineteen hundred and sixty-eight.
Approved: June 15, 1968.