Question & AnswerQ&A (Commonwealth Act No. 466)
Commonwealth Act No. 466 is officially known as the National Internal Revenue Code.
The Bureau of Internal Revenue is headed by the Collector of Internal Revenue and the Deputy Collector of Internal Revenue.
The Bureau is responsible for collecting all national internal-revenue taxes, fees, and charges, enforcing penalties and fines related to such taxes, and administering supervisory and police powers conferred by the Code or other laws.
They include income tax, estate, inheritance and gift taxes, specific taxes on certain articles, privilege taxes on business or occupation, documentary stamp taxes, mining taxes, and miscellaneous taxes and charges such as those on banks, insurance companies, amusements, firearms license fees, and water rentals.
Every citizen or resident individual of the Philippines and corporations (including domestic and some foreign corporations) receiving net income from sources within the Philippines are liable to pay the income tax under this Code.
Willful neglect to file returns or false/fraudulent returns may result in a 50% surcharge on the tax due and penalties including fines up to four thousand pesos or imprisonment for up to one year, or both.
Estate tax is levied on the transfer of the net estate of a decedent at graduated rates based on the net estate value, starting from 1% for estates exceeding three thousand pesos and increasing incrementally up to 10% for estates exceeding one million five hundred thousand pesos.
The estate tax lien on the gross estate lasts for five years from the date the tax becomes legally due.
Any person manufacturing such articles without paying required taxes is subject to fines between five hundred to five thousand pesos, imprisonment for not less than six years, forfeiture of products and property used in the illegal business, and in case of recurrence, harsher fines and imprisonment up to twelve years.
Banks pay taxes based on capital employed, average deposits, average circulation, and reserve deficiencies, with specific percentages applied monthly to these amounts.
Taxes on imported articles are collected by the Insular Collector of Customs and his subordinates, who act as agents of the Collector of Internal Revenue, before release from the customhouse.
Excluded income includes proceeds from life insurance policies, returns of premiums, gifts, bequests, devises, certain government securities interest, compensation for injuries or sickness, and income exempt under applicable treaties.
Every citizen of the Philippines of lawful age, every resident with gross income over one thousand pesos, and every non-resident alien earning income from sources within the Philippines must file income tax returns.
They have authority to enter premises, examine, discover, seize articles subject to tax, administer oaths, take testimony, and arrest for violations related to internal revenue laws.
Interest at six percent per annum is imposed on unpaid taxes, and if payment is further delayed, additional interest at one percent per month and surcharges apply. The Collector of Internal Revenue may also extend payment periods under hardship conditions.