Tax Imposition and Rate
- Imposes an additional tax equal to 25% of the undistributed portion of accumulated profits or surplus.
- This tax is assessed annually for each taxable year.
- The additional tax is supplementary to the regular corporate income tax imposed under Section 24 of the National Internal Revenue Code.
Tax Computation, Collection, and Payment
- The additional tax is computed, collected, and paid similarly to the ordinary corporate income tax.
- All provisions, including penalties applicable under the National Internal Revenue Code for corporate income tax, apply to this additional tax.
Exceptions and Exemptions
- No additional tax will be levied on accumulated profits or surplus if such amounts are invested in dollar-producing or dollar-saving industries.
- Investments in bonds issued by the Central Bank of the Philippines are also exempt from this additional tax.
Purpose and Legislative Intent
- The law aims to prevent the use of corporations as tax avoidance vehicles through the improper accumulation of profits.
- Encourages distribution of earnings to shareholders or reinvestment in specified productive areas.
Effective Date
- The Act is effective immediately upon approval on June 22, 1957.