R.A. 6110

REPUBLIC ACT No. 6110

AN ACT AMENDING CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED.

Section 1. Section two of Commonwealth Act Numbered Four hundred and sixty-six, as amended, is hereby amended to read as follows:

"Sec. 2. Chief Officials of Bureau. The Bureau of Internal Revenue shall have a chief to be known as Commissioner of Internal Revenue, and two assistant chiefs, to be known as deputy commissioners."

Section 2. Section five of the same Act is hereby amended to read as follows:

"Sec. 5. Forms, certificates, and appliances supplied by the Commissioner of Internal Revenue. It shall be the duty of the Commissioner of Internal Revenue, among other things, to prescribe, provide, and distribute to the proper officials the requisite licenses, internal revenue stamps, and labels or tags used in sealing weights, and measures, and all other forms, certificates, bonds, records, invoice books, instruments, appliances, and apparatus used in administering the laws falling within the jurisdiction of the Bureau. For this purpose, internal revenue stamps, strip stamps, science stamps and labels shall be caused by the Commissioner of Internal Revenue to be printed in the same manner as Philippine currency."

Section 3. A new section is hereby inserted after Section seven of the same Act to be known as Section seven-A, which shall read as follows:

"Sec. 7-A. Power of Commissioner of Internal Revenue to obtain information on potential taxpayers. When it comes to the knowledge of the Commissioner of Internal Revenue that certain offices of the national and local governments, such as the Office of Register of Deeds, the Securities and Exchange Commission, the Philippines Patent Office, those of mayors and treasurers, the Government Service Insurance System, the Social Security System and others, possess valuable information for discovery of potential taxpayers, the Commissioner or his deputies shall obtain that information upon proper request from the offices concerned. It shall be the duty of those offices to furnish the desired information within thirty days from receipt of the request of the Commissioner of Internal Revenue or his deputies."

Section 4. Section eighteen of the same Act is hereby amended to read as follows:

"Sec. 18. Sources of Revenue. The following taxes, fees and charges are deemed to be national internal revenue taxes:

Section 5. Subsection (d) of Section twenty-three of the same Act is hereby amended to read as follows:

If the taxpayer married or should have additional dependents as defined in subsection (c) above during the taxable year the taxpayer may claim the corresponding personal exemptions in full for such year.

"If the taxpayer should die during the taxable year, his estate may still claim the personal and additional deductions for himself and his dependents as if he died at the close of such year.

"If the spouse or any of the dependents should die during the year, the taxpayer may still claim the same deductions as if they died at the close of such year."

Section 6. Subsection (b) of Section twenty-four of the same Act is hereby amended to read as follows:

Section 7. Paragraph (a) of Section twenty-five of the same Act is hereby amended to read as follows:

"Sec. 25. Additional tax on corporations improperly accumulating profits or surplus. (a) Imposition of tax. If any corporation, except banks, insurance companies, or personal holding companies, whether domestic or foreign, is formed or availed of for the purpose of preventing the imposition of the tax upon its share- holders or members of the share-holders or members of another corporation, through the medium of permitting its gain and profits to accumulate instead of being divided or distributed, there is levied and assessed against such corporation, for each taxable year, a tax equal to twenty-five per centum of the undistributed portion of its accumulated profits or surplus which shall be in addition to the tax imposed by section twenty-four, and shall be computed, collected and paid in the same manner and subject to the same provisions of law, including penalties, as that tax."

Section 8. Section twenty-seven of the same Act is hereby amended by adding at the end thereof a new paragraph to read as follows:

Section 9. Subsection (b) (7) of Section twenty-nine of the same Act is hereby amended to read as follows:

"Sec. 29. Gross Income . . .

Section 10. Subsection (c) of Section twenty-nine of the same Act is hereby amended to read as follows:

Section 11. Paragraph (1) subsection (a) of Section thirty of the same Act is hereby amended to read as follows:

Section 12. Section thirty (h) of the same Act is hereby amended to read as follows:

"Sec. 30. (h) Charitable and other contributions. Contributions or gifts actually paid or made within the taxable year to or for the use of the Government of the Philippines or any political subdivision thereof for exclusively public purposes, or to domestic corporations or associations organized and operated exclusively for religious, charitable, scientific, athletic, cultural or educational purposes or for the rehabilitation of veterans, or to societies for the prevention of cruelty to children or animals, no part of the net income of which inures to the benefit of any private stockholder or individual to an amount not in excess of six per centum in the case of an individual, and three per centum in the case of a corporation, of the taxpayer's taxable net income as computed without the benefit of this paragraph.

"Notwithstanding the foregoing, the following donations shall be deductible in full and shall not be included for purposes of computing the maximum amount deductible under the preceding paragraph:

"The provisions of existing special laws to the contrary notwithstanding, all other contributions or donations shall be subject to the limitations provided in the first paragraph of this subsection.

"Such contribution or gifts shall be allowable as deductions only if verified under rules and regulations prescribed by the Secretary of Finance."

Section 13. Subsection (k) of Section thirty of the same Act is hereby amended to read as follows:

Section 14. Subsection (a) of Section forty-five of the same act is hereby amended to read as follows:

"Sec. 45. Individual returns. (a) Requirements.

Section 15. Section fifty of the same Act is hereby amended to read as follows:

"Sec. 50. Verification of returns. The income tax return shall contain a declaration that the taxpayer or his authorized representative made it under the penalties of perjury."

Section 16. Section eighty-one of the same Act is hereby amended to read as follows:

"Sec. 81. Disposition of income tax returns; publication of lists of persons filing returns and paying taxes. After the assessment shall have been made, as provided in this Title, the returns, together with any corrections thereof which may have been made by the Commissioner, shall be filed in the office of the Commissioner of Internal Revenue and shall constitute public records and be open to inspection as such upon the order of the President of the Philippines under rules and regulations to be prescribed within sixty days from the date of the effectivity of this Act by the Secretary of Finance.

"The Commissioner of Internal Revenue may in each year cause to be prepared and published in any newspaper and otherwise make available to public inspection upon written request and pursuant to regulations to be prescribed by the Secretary of Finance, lists containing the names and addresses of persons who have filed income tax return with the amount of income declared and the income tax paid by each. The list of taxpayers for the preceding taxable year in each municipality or city shall be posted at the main entrance of the respective municipal building or city hall."

Section 17. Section ninety-one of the same Act is hereby amended to read as follows:

"Sec. 91. Determination of value of usufructs, annuities, and other property. To determine the value of the right of usufruct, use of habitation, as well as that of annuity, there shall be taken into account the probable life of the beneficiary in accordance with the American Tropical Experience Table calculated at eight per centum annual interest.

"The estate shall be appraised at its fair market value as of the time of death, or as of six months thereafter, at the election of the executor or administrator in the case of the estate tax or the heirs in the case of inheritance tax. However, for the purpose of determining the value of real property, the value as of the time of death, or, at the election of the executor, administrator or the heirs, as of six months after death, as shown in the schedule of values fixed by the Department of Finance shall, be considered as the fair market value, and unless the contrary is shown by the taxpayer, the schedule shall be binding upon all concerned for purposes of computing any internal revenue tax based on the value of real property.

"For this purpose, a real property valuation committee shall be created in the Department of Finance which shall submit to the Secretary of Finance a schedule of percentage adjustment of the assessed value of real property in each municipality and city after due notice and hearing. This schedule shall be revised every three years.

"The Real Property Valuation Committee shall be composed of a chairman and four members, two of whom shall come from the private sector who shall be appointed by the Secretary of Finance. The representatives from the private sector shall hold office for six years. One representative shall be recommended by the Board of Realtors of the Philippines and the other representative shall be recommended by the registered Homeowners Association of the Philippines, but in the absence of either or both associations, the Secretary of Finance shall appoint any qualified real property owner or owners.

"The Secretary of Finance shall promulgate uniform rules and regulations for the guidance of the real property valuation committee in the discharge of their functions under this section. The presence of at least three members of the committee shall constitute a quorum sufficient to transact business. The members of the committee representing the private sector shall be entitled to a per diem of thirty pesos for each day of session actually attended, plus actual and ordinary traveling expenses from and to his usual place of residence, to be paid from the appropriations of the Department of Finance. The other members of the committee who are government officials shall serve without additional compensation."

Section 18. Section one hundred of the same Act is hereby amended to read as follows:

"Sec. 100. Interest on deficiency. 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 a part of the tax, at the rate of twelve per centum per annum from the due date of the tax to the date the deficiency is assessed."

Section 19. Section one hundred and eight of the same Act is hereby amended to read as follows:

"Sec. 108. Imposition of tax. (a) There shall be levied, assessed, collected, and paid upon the transfer by any person, resident or non-resident, of the property by gift, a tax, computed as provided in Section one hundred and nine.

Section 20. The last paragraph of Section one hundred and nine of the same Act is hereby amended to read as follows:

"Sec. 109. Rates of tax payable by donor. . . .

"The tax provided in this section shall not apply in every case where the donor makes the gift in favor of an educational and/or charitable corporation, institution, foundation, trust or philanthropic organization or research institution or organization as defined in the next section."

Section 21. Section one hundred and ten of the same Act is hereby amended to read as follows:

"Sec. 110. Rates of tax payable by donee. In addition to the gift tax imposed under the preceding section, there shall be levied a tax in the amount equal to the excess of a tax, computed in accordance with the rate schedule hereinafter set forth, on the aggregate sum of the net gifts received by each donee for such calendar year and for each of the preceding calendar years over a tax computed in accordance with the rate schedule, on the aggregate sum of the net gifts for each of the preceding calendar years received by each donee.

"Rate Schedule

"For the purpose of this tax, strangers are deemed those relatives by consanguinity in the collateral line not within the degree of relationship recognized by law in intestate succession, and all relatives by affinity not included in subsections (a) and (b); Provided, however, That where the beneficiary is a domestic servant or a trusted employee, there shall be collected on the first two thousand pesos and five thousand pesos, respectively, the tax fixed in subsection (a) of this section and, on the excess, the tax prescribed in this subsection. In cases of property which by the desire of the donor should be divided among the poor, without the designation of any particular persons, or which should be disposed of for masses or other pious works, there shall be collected from the donee the tax at the rate fixed in this subsection upon the total aggregate amount of such gifts.

"In case the property donated is subject to the usufructuary interest, use or habitation or annuity of a third person, the tax shall be based on the value of the net gifts less that of the usufruct, use or habitation or annuity determined in accordance with the provisions of Section ninety-one."

Section 22. Section one hundred and thirteen of the same Act is hereby amended to read as follows:

"Sec. 113. Valuation of gifts made in property. If the gift is made in property, the fair market value thereof at the time of the gift shall be considered the amount of the gift. In case of real property, the provisions of paragraph two, Section ninety-one shall apply to the valuation thereof.

Section 23. A new section is hereby inserted between Sections one hundred and eighteen and one hundred and nineteen of the same Act, to be known as Section one hundred and eighteen-A which shall read as follows:

"Sec. 118-A. Interest on Deficiency. Interest upon the amount determined as a deficiency, shall be paid upon notice and demand from the Commissioner of Internal Revenue, and shall be collected as a part of the tax, at the rate of twelve per centum per annum from the due date of the tax to the date the deficiency is assessed."

Section 24. Section one hundred and thirty-seven (b) of the same Act is hereby amended to read as follows:

"Sec. 137. (a) . . .

Section 25. Section one hundred and forty-eight of the same Act is hereby amended to read as follows:

"Sec. 148. Specific tax on saccharine. On saccharine, sodium saccharinate and all its derivatives or salts of saccharine and other artificial sweetening agents, there shall be collected a tax of seventy-five pesos per kilogram."

Section 26. Section one hundred and sixty of the same Act is hereby amended to read as follows:

"Sec. 160. Information to be given by manufacturers, importers, indentors, and wholesalers of any apparatus or mechanical contrivance specially for the manufacture of articles subject to specific tax and importers, indentors, manufacturers or sellers of cigarette paper in bobbins, cigarette tipping paper or cigarette filter tips. Manufacturers, indentors, wholesalers and importers of any apparatus or mechanical contrivance specifically for the manufacture of articles subject to specific tax shall before any such apparatus or mechanical contrivance is removed from the place of manufacture or from the customhouse, give written information to the Commissioner of Internal Revenue as to the nature and capacity of the same, the time when it is to be removed, and the place for which it is destined as well as the name of the person by whom it is to be used; and such apparatus or mechanical contrivance shall not be set up nor dismantled or transferred without a permit in writing from the Commissioner of Internal Revenue.

"A written permit from the Commissioner of Internal Revenue for importing, manufacturing or selling of cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips is required before any person shall engage in the importation, manufacture, or sale of the said articles. No permit to sell said article shall be granted unless the name and address of the prospective buyer is first submitted to the Commissioner of Internal Revenue and approved by him. Records showing the stock of the said articles and the disposal thereof by sale to persons with their respective addresses as approved by the Commissioner of Internal Revenue shall be kept by the seller, and records showing stock of said articles and consumption thereof shall be kept by the buyer, subject to inspection by internal revenue officers.

"It shall be unlawful for any person to have in his possession cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips, without the corresponding authority therefor issued by the Commissioner of Internal Revenue. Any person, importer, manufacturer of cigar and cigarettes, who has in his or its stock cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips and which are not supported by permit from the Commissioner of Internal Revenue shall be fined in an amount of not less than ten thousand pesos and imprisoned for not less than five years."

Section 27. Section one hundred and eighty of the same Act is hereby amended to read as follows:

"Sec. 180. Time for payment of fixed taxes. All fixed taxes shall be payable, at the option of the taxpayer, annually, on or before the twentieth of January or semi-annually, on or before the twentieth of January and July. But any person first beginning a business or occupation must pay the tax before engaging therein.

"If the privilege tax is not paid within the time specified, the amount of the tax shall be increased by twenty-five per centum, the increment to be part of the tax."

Section 28. Section one hundred and eighty-two of the same Act is hereby amended to read as follows:

"Sec. 182. Fixed taxes. (A) On business. (1) Persons subject to percentage tax. Unless otherwise provided, every person engaging in a business on which the percentage tax is imposed shall pay a fixed annual tax of fifty pesos.

Section 29. Section one hundred and eighty-three of the same Act is hereby amended to read as follows:

"Sec. 183. Payment of percentage taxes. (a) In general. It shall be the duty of every person conducting a business on which a percentage tax is imposed under this Title, to make a true and complete return of the amount of his, her or its gross monthly sales, receipts or earnings or gross value of output actually removed from the factory or mill warehouse and within twenty days after the end of each month, pay the tax due thereon: Provided, That any person retiring from a business subject to the percentage tax shall notify the nearest internal revenue officer thereof, file his return or declaration, and pay the tax due thereon within twenty days after closing his business.

"For purposes of this section, sales on consignment shall be considered actually sold on the day of sale or sixty days after the date consigned, whichever is earlier: Provided, however, That the corresponding adjustment shall be allowed for consigned goods actually returned to the consignor."

"If the percentage tax in any business is not paid within the time specified above, the amount of the tax shall be increased by twenty-five per centum, the increment to be a part of the tax.

"In case of willful neglect to file the return within the period prescribed herein, or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made on the basis of such return before the discovery of the falsity or fraud, a surcharge of fifty per centum of its amount. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the falsity or fraud, in which case the amount so added shall be collected in the same manner as the tax.

Section 30. Section one hundred and eighty-four of the same Act is hereby amended to read as follows:

"Sec. 184. Percentage tax on sales of jewelry, automobiles, toilet preparations and others. There shall be levied, assessed, and collected once only on every original sale, barter, exchange, or similar transaction for nominal or valuable considerations intended to transfer ownership of, or title to, the articles hereinbelow enumerated a tax equivalent to seventy per centum of the gross value in money of the articles so sold, bartered, exchanged, or transferred, such tax to be paid by the manufacturer or producer: Provided, That where the articles enumerated hereinbelow are manufactured out of materials subject to tax under this section, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles."

"Any part or accessories of the above-mentioned articles, shall be taxed at the same rate as the finished articles."

Section 31. Section one hundred and eighty-five of the same Act is hereby amended to read as follows:

"Sec. 185. Percentage tax on sales of sporting goods, and others. There shall be levied, assessed, and collected once only on every original sale, barter, exchange, or similar transaction intended to transfer ownership of, or title to, the articles hereinbelow enumerated, a tax equivalent to forty per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer: Provided, That where the articles enumerated hereinbelow are manufactured out of materials subject to tax under this section, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles.

"Any part or accessory of the above-mentioned articles shall be taxed at the same rate as the finished articles."

Section 32. Section one hundred and eighty-five-A of the same Act is hereby amended to read as follows:

"Sec. 185-A. Percentage tax on sales of refrigerators, air-conditioners, beverage coolers, ice cream cabinets, and others. There shall be levied, assessed and collected once only on every original sale, barter, exchange, or similar transaction intended to transfer ownership of, or title to, the articles hereinbelow enumerated a tax equivalent to forty per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer: Provided, however, That where the articles hereinbelow enumerated are locally manufactured and come under the classification of non-integrated manufactured products as hereinafter defined, the tax shall be fifteen per centum: Provided, further, That where the articles hereinbelow enumerated are locally manufactured and come under the classification of integrated manufactured products as hereinafter defined, the tax shall be seven per centum: Provided, still further, That where the articles enumerated hereinbelow are manufactured out of materials subject to tax under this section, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles:

"Any part or accessory of the above-mentioned articles shall be taxed at the same rate as the finished articles.

"The words 'integrated manufactured products' mean articles manufactured in a manufacturing enterprise which undertakes the operations of processing and/or physically converting raw materials such as metal sheets, plastic pellets, wires, rods, extrusion tubings, castings, forgings and chemical compounds into various intermediate components and parts, and subsequently assembling or fitting them together into completed and finished articles: Provided, however, That not less than eighty per centum of the total quantity, including the compressor unit, if any, of all the aforementioned intermediate components and parts of said products are manufactured by and within the said manufacturing enterprise.

"The words 'non-integrated manufactured products' mean articles manufactured in a manufacturing enterprise which undertakes the operations of a manufacturing plant as defined in the preceding paragraph: Provided, however, That not less than fifty per centum of the total quantity of all the aforementioned intermediate components and parts of said products are manufactured by and within the said manufacturing enterprises."

Section 33. Section one hundred and eighty-five-B of the same Act is hereby amended to read as follows:

"Sec. 185-B. Percentage tax on sales of phonographs, combination radio and phonograph sets of all types, television sets, combination radio and television sets, combination radio-phonograph television sets, gramophones, and similar articles. There shall be levied, assessed and collected once only on every original sale, barter, exchange, or similar transaction intended to transfer ownership of, or title to, the articles hereinbelow enumerated a tax equivalent to forty per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer: Provided, however, That where the articles hereinbelow enumerated are locally manufactured articles as hereinafter defined, the tax shall be seven per centum: Provided, further, That where the articles enumerated hereinbelow are manufactured from materials subject to tax under this section the total cost of such materials shall be deducted from the gross selling price or gross value in money of such manufactured articles:

Section 34. Section one hundred and eighty-six of the same Act is hereby amended to read as follows:

"Sec. 186. Percentage tax on sales of other articles. There shall be levied, assessed and collected once only on every original sale, barter, exchange, and similar transaction either for nominal or valuable considerations, intended to transfer ownership of, or title to, the articles not enumerated in sections one hundred and eighty-four, one hundred and eighty-five, one hundred and eighty-five-A, and one hundred eighty-five-B a tax equivalent to seven per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer, or producer: Provided, That where the articles subject to tax under this section are manufactured out of materials likewise subject to tax under this section and Section one hundred and eighty-nine, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles."

Section 35. Section one hundred and eighty-nine of the same Act is hereby amended to read as follows:

"Sec. 189. Percentage tax upon processors of pineapple, proprietors or operators of rope factories, sugar centrals, coconut oil mills, cassava mills and desiccated coconut factories. Processors of pineapple, proprietors or operators of rope factories, sugar centrals, coconut oil mills, cassava mills and desiccated coconut factories shall pay a tax equivalent to two per centum of the gross value in money of all the pineapple, rope, sugar, coconut oil, cassava flour or starch, and desiccated coconut manufactured, processed or milled by them, including the by-products of the raw materials from which said articles are produced, processed, or manufactured, such tax to be based on the actual selling price or market value of these articles at the time they leave the factory or mill warehouse: Provided, however, That this tax shall not apply to pineapple, ropes, coconut oil, and the by-product of copra from which it is produced or manufactured, and desiccated coconuts, if such pineapple, ropes, oil, copra by-products and desiccated coconuts shall be removed for exportation and are actually exported without returning to the Philippines, whether so exported in their original state, or as an ingredient or part of any manufactured article or product.

"In case the raw materials are processed, manufactured or milled in pursuance of a contract where the factory, central, or mill receives a share of the finished products, the tax on the share pertaining to the planter or owner of the raw materials shall be charged to the planter or owner and withheld by the proprietor or operator of the factory, central or mill and paid by him to the Commissioner of Internal Revenue.

"A proprietor or operator of a refined sugar factory shall be subject to the tax imposed by this section but shall be permitted to deduct from the actual selling price or market value of the refined sugar the total cost, as duly established, of the raw sugar upon which the tax under this section has previously been paid.

"Where articles are manufactured out of materials subject to tax under this section, the total cost, as duly established, of the said materials shall be deductible from the gross selling price or gross value in money of the manufactured articles."

Section 36. Section one hundred and ninety-one of the same Act is hereby amended to read as follows:

"Sec. 191. Contractors, proprietors or operators of dockyards, and others. A contractor's tax of three per cent of gross receipts is hereby imposed on the following:

Section 37. A new section is hereby inserted between sections one hundred and ninety-one and one hundred ninety-two, to be known as Section one hundred and ninety-one-A which shall read as follows:

"Sec. 191-A. Caterers. A caterer's tax is hereby imposed as follows:

"Where the establishments enumerated above are operated or maintained by clubs of any kind or nature (irrespective of the disposition of their net income and whether or not they cater exclusively to members or their guests) the keepers of the establishments shall pay the corresponding tax at the rates fixed above."

Section 38. Section one hundred and ninety-two of the same Act is hereby amended to read as follows:

"Sec. 192. Percentage tax on carriers and keepers of garages. Keepers of garages, cars for rent or hire driven by the lessee, transportation contractors, persons who transport passengers or freight for hire, and common carriers by land, air, or water, except owners of bancas, and owners of animal-drawn two-wheeled vehicles, shall pay a tax equivalent to two per centum of their monthly gross receipts.

"In computing the percentage tax provided in this section, the following shall be considered the minimum monthly gross receipts in each particular case: