REPUBLIC ACT NO. 8424 TAX REFORM ACT OF 1997 AN ACT AMENDING THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: SECTION 1. Short Title - This Act shall be cited as the "Tax Reform Act of 1997". SECTION 2. State Policy. It is hereby declared the policy of the State to promote sustainable economic growth through the rationalization of the Philippine internal revenue tax system, including tax administration; to provide, as much as possible, an equitable relief to a greater number of taxpayers in order to improve levels of disposable income and increase economic activity; and to create a robust environment for business to enable firms to compete better in the regional as well as the global market, at the same time that the State ensures that Government is able to provide for the needs of those under its jurisdiction and care. SECTION 3. Presidential Decree No. 1158, as amended by, among others, Presidential Decree No. 1994 and Executive Order No. 273, otherwise known as the National Internal Revenue Code, is hereby further amended. NIRC Outline
CHAPTER IX - RETURNS AND PAYMENT OF TAX CHAPTER X - ESTATES AND TRUSTS CHAPTER XI - OTHER INCOME TAX REQUIREMENTS CHAPTER XII - QUARTERLY CORPORATE INCOME TAX ANNUAL DECLARATION AND QUARTERLY PAYMENTS OF INCOME TAXES CHAPTER XIII - WITHHOLDING ON WAGES TITLE III ESTATE AND DONOR'S TAXES CHAPTER I - ESTATE TAX CHAPTER II - DONOR'S TAX TITLE IV VALUE- ADDED TAX CHAPTER I - IMPOSITION OF TAX CHAPTER II - COMPLIANCE REQUIREMENTS TITLE V OTHER PERCENTAGE TAXES
TITLE I ORGANIZATION AND FUNCTION OF THE BUREAU OF INTERNAL REVENUE TITLE VI EXCISE TAXES ON CERTAIN GOODS TITLE II TAX ON INCOME CHAPTER I - GENERAL PROVISIONS CHAPTER VII - ALLOWABLE DEDUCTIONS - A CHAPTER VII - ALLOWABLE DEDUCTIONS - B CHAPTER I - DEFINITIONS CHAPTER II - GENERAL PRINCIPLES CHAPTER III - TAX ON INDIVIDUALS CHAPTER IV - TAX ON CORPORATIONS CHAPTER V - COMPUTATION OF TAXABLE INCOME CHAPTER VI - COMPUTATION OF GROSS INCOME CHAPTER VII - ALLOWABLE DEDUCTIONS TITLE VII DOCUMENTARY STAMP TAX CHAPTER VIII - ACCOUNTING PERIODS AND METHODS OF ACCOUNTING CHAPTER II - EXEMPTION OR CONDITIONAL TAX-FREE REMOVAL OF CERTAIN ARTICLES CHAPTER III- EXCISE TAX ON ALCOHOL PRODUCTS CHAPTER IV - EXCISE TAX ON TOBACCO PRODUCTS CHAPTER V - EXCISE TAX ON PETROLEUM PRODUCTS CHAPTER VI EXCISE TAX ON MISCELLANEOUS ARTICLES CHAPTER VII EXCISE TAX ON MINERAL PRODUCTS CHAPTER VIII - ADMINISTRATIVE PROVISIONS REGULATING BUSINESS OF PERSONS DEALING IN ARTICLES SUBJECT TO EXCISE TAX
TITLE VIII REMEDIES CHAPTER I - REMEDIES IN GENERAL CHAPTER II - CIVIL REMEDIES FOR COLLECTION OF TAXES CHAPTER III PROTESTING AN ASSESSMENT, REFUND, ETC. TITLE IX COMPLIANCE REQUIREMENTS CHAPTER I - KEEPING OF BOOKS OF ACCOUNTS AND RECORDS CHAPTER II - ADMINISTRATIVE PROVISIONS CHAPTER III - RULES AND REGULATIONS TITLE X STATUTORY OFFENSES AND PENALTIES CHAPTER I - ADDITIONS TO THE TAX CHAPTER II - CRIMES, OTHER OFFENSES AND FORFEITURES CHAPTER III - PENALTIES IMPOSED ON PUBLIC OFFICERS CHAPTER IV - OTHER PENAL PROVISIONS TITLE XI ALLOTMENT OF INTERNAL REVENUE CHAPTER I - DISPOSITION AND ALLOTMENT OF NATIONAL INTERNAL REVENUE IN GENERAL CHAPTER II - SPECIAL DISPOSITION OF CERTAIN NATIONAL INTERNAL REVENUE TAXES TITLE XII OVERSIGHT COMMITTEE TITLE XIII REPEALING PROVISIONS TITLE XIV FINAL PROVISIONS ANNEXES Annex A-1 Annex A-2 Annex A-3
Annex A-4 Annex B Annex C-1 Annex C-2 Annex D NIRC Outline TITLE I ORGANIZATION AND FUNCTION OF THE BUREAU OF INTERNAL REVENUE SECTION 1. Title of the Code. - This Code shall be known as the National Internal Revenue Code of 1997.
SEC. 2. Powers and duties of the Bureau of Internal Revenue. - The Bureau of Internal Revenue shall be under the supervision and control of the Department of Finance and its powers and duties shall comprehend the assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts. The Bureau shall give effect to and administer the supervisory and police powers conferred to it by this Code or other laws.
SEC. 3. Chief Officials of the Bureau of Internal Revenue. - The Bureau of Internal Revenue shall have a chief to be known as Commissioner of Internal Revenue, hereinafter referred to as the Commissioner and four (4) assistant chiefs to be known as Deputy Commissioners.
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals.
SEC. 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. - In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized:
(A) To examine any book, paper, record, or other data which may be relevant or material to such inquiry; (B) To Obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or -controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures of consortia and registered partnerships, and their members; (C) To summon the person liable for tax or required to file a return, or any officer or employee of such person, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, or any other person, to appear before the Commissioner or his duly authorized representative at a time and place specified in the summons and to produce such books, papers, records, or other data, and to give testimony; (D) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry; and (E) To cause revenue officers and employees to make a canvass from time to time of any revenue district or region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax, and all persons owning or having the care, management or possession of any object with respect to which a tax is imposed. The provisions of the foregoing paragraphs notwithstanding, nothing in this Section shall be construed as granting the Commissioner the authority to inquire into bank deposits other than as provided for in Section 6(F) of this Code. SEC. 6. Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and Enforcement. (A) Examination of Returns and Determination of Tax Due. After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however; That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. The tax or any deficiency tax so assessed shall be paid upon notice and demand from the Commissioner or from his duly authorized representative.
Any return, statement of declaration filed in any office authorized to receive the same shall not be withdrawn: Provided, That within three (3) years from the date of such filing , the same may be modified, changed, or amended: Provided, further, That no notice for audit or investigation of such return, statement or declaration has in the meantime been actually served upon the taxpayer. (B) Failure to Submit Required Returns, Statements, Reports and other Documents. - When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by laws or rules and regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable. In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes. (C) Authority to Conduct Inventory-taking, surveillance and to Prescribe Presumptive Gross Sales and Receipts. - The Commissioner may, at any time during the taxable year, order inventory-taking of goods of any taxpayer as a basis for determining his internal revenue tax liabilities, or may place the business