Residence Tax Imposition Act

Definitions and computation of additional tax

The additional tax for individuals is based on: (a) the value of real property, (b) gross receipts or earnings from business, and (c) salaries or gross receipts or earnings from professions or occupations in the Philippines, using the schedule in Section 1.
For individuals, the schedule for real property is: for every five thousand pesos worth of real property owned during the preceding year, the valuation is one peso, based on the assessment rolls of the municipality where the property is situated (Section 1).
For individuals, the schedule for business is: for every five thousand pesos of gross receipts or earnings derived from business in the Philippines during the preceding year, the valuation is one peso (Section 1).
For individuals, the schedule for professions or occupations is: for every one thousand pesos of salaries or gross receipts or earnings derived from the exercise of any profession or pursuit of any occupation in the Philippines during the preceding year, the valuation is one peso (Section 1).
For individuals, dividends received from any corporation are not considered part of gross receipts or earnings for purposes of the additional tax (Section 1).
For husband and wife, the additional tax is based on the total property owned or the total gross receipts or earnings derived by them, computed under Section 1.
The corporation term used for purposes of the Act includes joint-stock company, partnership, joint account (cuenta en participdeion), association, or insurance company, regardless of how created or organized (Section 2).
The term “resident foreign” when applied to a corporation means a foreign corporation engaged in trade or business within the Philippines or having an office or place of business therein (Section 2).
For corporations, the schedule for real property is: for every five thousand pesos worth of real property owned during the preceding year, based on municipal assessment rolls, the valuation is one peso (Section 2).
For corporations, the schedule for gross receipts or earnings is: for every five thousand pesos of gross receipts or earnings derived from business in the Philippines during the preceding year, the valuation is one peso (Section 2).
For corporations, dividends received from another corporation are not considered part of the corporation’s gross receipts or earnings for purposes of the additional tax (Section 2).

Residence certificates and contents required

A residence certificate shall be issued to every person or corporation upon payment of the residence tax (Section 3).
A residence certificate shall also be issued to any person or corporation not liable to the payment of the residence tax upon payment of twenty centavos (Section 3).
The residence certificate for persons shall contain the full name, place and date of birth, citizenship, civil status, length of residence in the Philippines, length of residence in the city or municipality where issued, occupation or calling, a right hand thumb mark, and the person’s signature (Section 3).
The residence certificate for persons shall also contain the signature of the officer issuing it (Section 3).

Exemptions from residence tax

The following are not taxed under the Act: the United States High Commissioner and members of his staff (Section 4).
The following are not taxed under the Act: commissioned officers of the United States Army and Navy (Section 4).
The following are not taxed under the Act: enlisted soldiers, sailors and marines of the United States Army and Navy (Section 4).
The following are not taxed under the Act: civilian employees of the military or naval branches of the United States Government who have come to the Philippines under orders from the United States Government (Section 4).
The following are not taxed under the Act: diplomatic and consular representatives and officers of foreign powers (Section 4).
Transient visitors are not taxed when their stay in the Philippines does not exceed three months (Section 4).

Payment schedule and delinquency rules

Liability for residence taxes for persons accrues on the first day of January of each year as regards persons then resident and liable to the taxes (Section 5).
Persons become delinquent if they fail to pay on or before the last day of April (Section 5).
For persons who cope to reside in the Philippines on or before the last day of June, liability attaches upon the day of arrival or the day exemption ceases when they lose the benefit of exemption on or before that day (Section 5).
If arriving or becoming liable on or before the tenth day of April, delinquency occurs upon failure to pay on or before the last day of April (Section 5).
If arriving or becoming liable after the tenth day of April, a person has twenty days to pay without becoming delinquent (Section 5).
Persons who come to reside in the Philippines or arrive at the age of eighteen years or who cease to belong to an exempt class on or after the first day of July are not subject to taxes for that year (Section 5).
For corporations established or organized on or before the thirtieth day of June, liability attaches for that year (Section 5).
For corporations becoming liable on or before the tenth day of April, delinquency occurs upon failure to pay on or before the last day of April (Section 5).
For corporations becoming liable after the tenth day of April, the corporation has twenty days to pay without becoming delinquent (Section 5).
Corporations established or organized on or after the first day of July are not subject to the tax for that year (Section 5).
If taxes are unpaid within the prescribed time, a surcharge of five per centum is added for every month or fractional part until paid, but the total surcharge shall not exceed twenty-five per centum (Section 5).

When residence certificates must be shown

When a person liable to the taxes acknowledges any document before a notary public, takes the oath of office upon election or appointment to government service, receives any license, certificate or permit from any public authority, pays any tax or fee, receives any money from any public fund, transacts other official business, or receives any salary or wage from any person or corporation, the other party or officer must require exhibition of the person’s residence certificate showing payment of residence taxes (Section 6).
Presentation of the residence certificate is not required for registration of a voter (Section 6).
When a corporation liable to the taxes, through its authorized officers, receives any license, certificate or permit, pays any tax or fee, receives any money from a public fund, or transacts other official business, public officials involved must require exhibition of the corporation’s residence certificate showing payment (Section 6).
The residence certificate to be exhibited is the one issued for the current year, except during January of each year and except when residence tax is paid at any time during the year, in which cases exhibition of the previous year’s certificate suffices (Section 6).

Administrative remedies and collection of taxes

All administrative, special, and general provisions of law on assessment, remission, collection, and refund of national internal-revenue taxes apply to the residence taxes imposed by the Act when not inconsistent with its provisions (Section 7).
Provincial or city treasurers and their deputies shall collect the taxes imposed by the Act (Section 8).
Treasurers shall remit collections to the Collector of Internal Revenue (Section 8).
Proceeds are allotted by the Collector among provinces, cities, municipalities, and municipal districts based on population shown by the latest official census (Section 8).
One-fourth of proceeds goes to the general funds of provinces, and a sub-province receives its proportionate share within the provincial allotment (Section 8).
One-fourth of proceeds goes to the general funds of cities, municipalities, and municipal districts (Section 8).
Two-fourths of proceeds goes to the school fund of the cities, municipalities, and municipal districts (Section 8).

Rules, unlawful use, and criminal penalties

The Secretary of Finance shall promulgate all needful rules and regulations for effective enforcement of the Act (Section 9).
Any person who uses, attempts to use, or is in possession of, with intent to defraud the revenues, deceive the courts, or mislead any revenue officer or other person, any residence certificate issued to another person or corporation shall be fined in a sum not exceeding two hundred pesos or imprisoned for a term not exceeding six months (Section 10).
Any person who makes, sells, or uses any false or counterfeit residence certificate or any dye for printing or making such certificate, or who alters the written or printed figures or letters in it, or who possesses such false, counterfeit, or altered certificate for use in paying revenue or securing an exemption or privilege, or who procures another person’s commission of any such offense shall be fined not less than two hundred pesos nor more than five thousand pesos and imprisoned for not less than two months nor more than five years, or both, for each offense (Section 11).
Any person who violates any provision of the Act, or any regulation promulgated under it, for which delinquency has no specific penalty, shall be punished by a fine not more than three hundred pesos, or imprisonment not more than six months, or both (Section 12).
Delinquency in payment of the residence tax is dealt with under the surcharge and administrative remedies rules in Section 5 and Section 7 (Section 12).

Effectivity and transitory timing

The Act takes effect on January first, nineteen hundred and forty (Section 13).