Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 69[1])
The primary purpose of Presidential Decree No. 69 is to amend certain sections of the National Internal Revenue Code to simplify tax incentive policies, increase the financial resources of the government, and make the tax system more responsive to a developing economy.
The Bureau of Internal Revenue has the power to assess and collect all national internal revenue taxes, fees, and charges, enforce forfeitures, penalties, and fines connected to these taxes, execute judgments in its favor, and administer supervisory and police power conferred by the Code or other laws.
The Commissioner of Internal Revenue, with the approval of the Secretary of Finance, divides the Philippines into revenue districts as needed for administrative purposes, each supervised by a Revenue District Officer.
A Revenue District Officer must ensure that all laws and regulations regarding national internal revenues are faithfully executed and complied with, aid in the prevention, detection, and punishment of frauds or delinquencies, and examine the efficiency of officers and employees under his supervision, reporting any neglect, incompetency, or malfeasance.
Every Filipino citizen, whether residing in the Philippines or abroad, every alien residing in the Philippines with gross income of at least P1,800, every nonresident alien engaged in trade or business in the Philippines regardless of income, and certain individuals meeting specific criteria such as government employees, professionals, property owners, or those who travelled abroad are required to file an income tax return.
Personal exemptions include P1,800 for single individuals, P3,000 for married persons or heads of families (only one exemption per couple), and an additional P1,000 for each legitimate, recognized natural, or adopted child dependent, with a maximum of four dependents.
Tax rates for taxable net income of individuals range progressively from 3% on income not over P2,000 to 70% on income over P500,000, with detailed brackets and rates increasing with higher income.
A surcharge of 50% of the unpaid tax or deficiency tax is imposed for willful neglect to file returns or for filing false or fraudulent returns, while a 25% surcharge is imposed for failure to file returns without willful neglect, with collection mechanics similar to the tax itself.
Distilled spirits produced domestically from locally produced raw materials are taxed at 85 centavos per proof liter, with reduced rates of 78 centavos per proof liter for pot still distillers producing not more than 100 liters per day with alcohol by volume not exceeding 50%.
The Commissioner may compromise civil tax cases where there is reasonable doubt or financial inability, abate unjust or excessive tax payments, credit or refund taxes or penalties erroneously collected, redeem or refund values of internal revenue stamps, and requires the filing of refund claims within two years of payment.