Philippine Income Tax Act of 1919

Taxable net income includes all gains, profits, and income from salaries, businesses, properties, interest, rents, dividends, securities, or any source.
Income received by estates or trusts is taxed to the estate or trustee unless returned by the beneficiary.
Income from property acquired before March 1, 1913, uses fair market value on that date as basis for gain or loss calculation.

Additional tax includes the shares of individuals in undistributed gains and profits of corporations and similar entities if retained fraudulently to evade tax.
Accumulation beyond reasonable business needs is prima facie evidence of tax evasion.
Corporations must provide statements of gains and distributable shares upon request.

Exempt income includes proceeds of life insurance upon death, return of premiums, property acquired by gift or inheritance (but income from such property is taxable), and interest on certain government obligations.

Allowed deductions for business expenses, interest on indebtedness (except for tax-exempt securities), taxes paid, losses not covered by insurance, bad debts, depreciation, depletion of mines/oil wells, and contributions to qualifying charitable organizations.
Contributions deductible up to 5% of taxable net income with verification.

Deductions permitted for expenses and losses related to business within the Philippines, proportionate interest paid, taxes within the Philippines, bad debts, depreciation, and credits similar to residents.
Deductions allowed only upon filing a true income return.

6,000 pesos exemption for individuals.
Additional 2,000 pesos for heads of family or married persons living with spouse.
Additional 400 pesos per dependent child under 18 or incapacitated.
Only one spouse can claim marital exemption.
Exemptions also apply to estates during administration.

True and accurate annual income tax returns must be filed by March 1 each year for incomes of 6,000 pesos or more.
Returns may be filed by agents under certain conditions.
Fiduciaries must file returns for estates or trusts.
Partnerships and general co-partnerships taxed on individual shares.
Returns may be based on accounting methods clearly reflecting income.

Assessments notified by June 1; taxes due by June 15 yearly.
Penalties of 5% and interest of 1% per month for late payments, except for estates of insane, deceased, insolvent persons.
Withholding requirements on income payments to nonresident aliens.
Licensed collectors required for foreign payment collections; violations carry fines and imprisonment.
Assessment based on returns or information and ownership for the taxable year.

2% annual tax on total net income from all sources for domestic and foreign corporations operating in the Philippines.
Fair market value of property as of March 1, 1913, used for gain/loss computation.

Exemptions for labor/agricultural organizations, mutual savings and cooperative banks, fraternal beneficiary societies, loan/building associations, cemetery companies, non-profit organizations (religious, charitable, educational), business leagues, social welfare organizations, non-profit clubs, mutual insurance companies, marketing associations, holding companies directing income to exempt organizations, and joint-stock land banks on specific income.
Exemptions for public utility income derived by government entities under certain conditions.

Ordinary and necessary expenses, losses not insured, depreciation, depletion of mines/oil wells, reserve fund additions (insurance), and taxes paid.
Interest on indebtedness deductible up to specific limits related to paid-up capital and interest-bearing debt.
No deductions for new buildings, permanent improvements, or restoration expenses where allowance made.
Specific provisions for mutual insurance companies regarding premium deposits and refunds.

Annual returns filed by March 1 or within 60 days after fiscal year-end.
Returns sworn by principal officers.
Receivers and trustees must file returns when operating taxable corporations.
Returns may be based on accounting methods clearly reflecting income.
Withholding tax provisions for nonresident alien entities on interest and dividends applicable.

Assessments notified by June 1; payments due June 15 or within 105 days after fiscal year return filing.
Penalties of 5% and interest of 1% per month for late payments.
Penalties up to 20,000 pesos for refusal, neglect, or false returns.
Returns and corrections are public records.
Second assessments based on errors or fraud have special recovery rules.

Collector of Internal Revenue responsible for assessment.
Penalties of 50% added for failure to file and 100% for false or fraudulent returns.
Written receipts required for all tax payments.
Penalties of 40 to 2,000 pesos for refusal or neglect to pay or file; misdemeanor and fines/imprisonment for false returns.
Verification and appeals allowed for assessments.
Law incorporates applicable existing revenue laws.

Disclosure of taxpayer's confidential business or income information by Bureau employees punishable by fine or imprisonment.
Procuring unlawful disclosure or publishing income tax return information similarly penalized.

Invalid provisions do not affect remainder of the law.
"Alien" and "foreign government" include U.S. citizens and government.
U.S. citizens in the Philippines not taxed on income from U.S. sources if taxed there.