Philippine Tax Rates 1.

Taxation in the Philippines The countrys taxation system is governed by the Tax Reform Act 1997, passed into law on December 11, 1997 and became effective on 01 January 1998. The law was aimed at the expanding the countrys tax base and maintaining the healthy fiscal standing of the government. 1.1 Corporate Income Taxes Domestic/Resident Foreign CorporationsRegular Income Tax Rate 32% of net taxable income Non-Resident Corporation Regular Income Tax 32% of the gross amount of Philippine-source income such as dividend, rents, royalties, compensation, and remuneration for technical services. 1.2 Income Tax Rates as Passive Income of Domestic/Resident Corporation Dividends received from domestic corporations Not subject to tax Interest on any currency bank deposit and yield or other monetary benefit from deposit substitutes and from trust fund and similar arrangements 20% of final tax Interest from foreign currency deposits with foreign currency deposit units (FCDUs) 7 1/2% of final tax gains from sale or exchange of shares of stock not listed and traded in the local stock exchange 5% capital gains tax (CGT) on net gains not exceeding P 100,00 and 10% on the excess. Gains from sale or exchange of land or buildings not actually used in business and treated as capital issue 6% CGT on gross selling price or fair market value, whichever is higher Royalties 20% final tax 1.3 New Taxes for Corporation Under the Tax Reform Act of 1997 Minimum Corporate Income Tax (MCIT) A 2% MCIT on gross income on an annual basis is imposed on corporations whose regular corporate income tax liability is less than the MCIT beginning the fourth taxable year following the year they commenced business operation. Any excess of the MCIT over the normal tax shall be carried forward and credited against the normal tax for the three (3) immediately succeeding taxable years.Fringe Benefits Tax Fringe benefits granted to supervisory and managerial employees are subject to 32% tax on the grossed-up monetary value of the fringe benefit. Fringe benefits given by OBUs regional operating headquarters of multinational companies, petroleum contractors and subcontractors to qualified alien employees and in certain cases, to Filipino employees, are taxed at 15% of the grossed-up monetary value of the fringed benefit.Improperly Accumulated Earnings Tax a 10% tax is imposed on the improperly accumulated earnings of a corporation, except in the case of publicly held corporations, banks, and other non-bank financial intermediaries and insurance companies. When a corporation allows its earnings or profits to accumulate beyond its reasonable needs, it shall be assumed that the purpose is to avoid tax on stockholders, unless proven to the contrary. 1.4 Preferential Income Tax Rates for Non-Resident Corporations Interest on foreign loans 20% Dividends received form domestic corporations In general, 32%. This is reduced to 15% if the recipient foreign corporation is resident of a country which: Does not impose any tax on dividends

received from foreign sources, or Allows a credit against the tax due from the nonresident foreign corporation taxes deemed to have been paid in the Philippines equivalent to 17% Income derived form any foreign currency transaction with FCDUs and OBUs Exempt Gains from sale of unlisted shares of stock in a domestic corporation 5% capital gains tax (CGT) on net gains not exceeding P100,000 and 10% on the excess Rents and other fees paid to nonresident corporate lessors of aircraft, machinery and other equipment 7 1/2% on gross rentals or fees Rents of charter fees paid to non-resident corporate owners of vessels chartered by Philippine Nationals 4 1/2% on gross rentals or fees Fees paid to non-resident cinematographic film owners or lessors 25% on gross income 1.5 Individual Taxation Non-resident aliens not engage in trade and business flat income tax rate 25% Resident citizens/aliens (gainfully employed) Graduated income tax rates 0%-35% Who Shall File: 1. An individual whose gross compensation income does not exceed his total personal and additional exemptions ; 2. An individual whose compensation derived from one year employer does not exceed P60,000 and the income tax on which has been correctly withheld; 3. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional or area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors, and offshore banking units, non-resident alien not engaged in trade or business), and 4. An individual who is exempt from income tax. Married individuals shall file single return for the taxable year to include the income of both spouses, separately computing their individual income tax based on their respective taxable income. Where it is impracticable for the spouses to file one return, each spouse may file a separate return. TAX TABLE If Taxable Income is: Tax Due is: Not over P10,000 5% Over P10,000 but not over P30,000 P500+10% of the excess over P10,000 Over P30,000 but not over P70,000 P2,500+15% of the excess over P30,000 Over P70,000 but not over P140,000 P8,500+20% of the excess over P70,000 P140,000 but not over P250,000 P22,500+25% of the excess over P140,000 Over P250,000 but not over P500,000 P50,000+30% of the excess over P250,000 Over 500,000 P125,000+34% of the excess over P500,000 1.6 Value Added Tax (VAT) Sale of goods, other properties, and services in the Philippines, as well as importation of goods to

the Philippines, are subject to the 12% VAT. VAT is imposed on the gross selling price (in case of sale of goods) and gross receipts (in case of sale of services). 1/2 of 1% of gross selling price is imposed on the sale, barter, exchange or other disposition of shares through the facilities of stock exchange. 1.8 Percentage Tax TYPES OF BUSINESS PERCENTAGE OF TAX RATE Banks income from lending and financial leasing activities 1%, 3%, or 5% of gross receipts depending on the maturity date of the instruments, tax exempt if maturity period is over seven years. Life insurance companies doing business in the Philippines 5% of the total premium collected Electric, water and gas utilities 2% of gross receipts Domestic common carriers of passengers 3% of gross receipts International carriers 3% of gross receipts Finance companies income from lending and financial leasing activities 1%, 3%, or 5% of gross receipts depending on the maturity date of the instruments, tax-exempt if maturity period is over seven years Other non-VAT registered businesses 3% of gross sales or gross receipts not exceeding P550,000. 1/2 of 1% of gross selling price is imposed on the sale, barter, exchange or other disposition of shares through the facilities of stock exchange.

Description Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of profession, conduct of trade or business or on the pertinent items of gross income specified in the Tax Code of 1997 less the deductions and/or personal and additional exemptions, if any, authorized for such types of income, by the Tax Code or other special laws. Who Are Required To File Income Tax Returns Individuals * Resident citizens receiving income from sources within or outside the Philippines o individuals deriving compensation income from 2 or more employers, concurrently or successively at anytime during the taxable year o employees deriving compensation income regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return o employees whose monthly gross compensation income does not exceed P5,000 or the statutory minimum wage, whichever is higher, and opted for non-withholding of tax on said income

o individuals deriving other non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax o individuals receiving purely compensation income from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing * Non-resident citizens receiving income from sources within the Philippines * Citizens working abroad receiving income from sources within the Philippines * Aliens, whether resident or not, receiving income from sources within the Philippines Corporations no matter how created or organized including general professional partnerships * domestic corporations receiving income from sources within and outside the Philippines * foreign corporations receiving income from sources within the Philippines Estates and trusts engaged in trade or business

Annual Income Tax For Individuals Earning Purely Compensation Income (Including NonBusiness/Non-Profession Related Income)

Tax Form BIR Form 1700 - Annual Income Tax Return (For Individual Earning Purely Compensation Income Including Non-Business/Non-Profession Related Income) Documentary Requirements 1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316) 2. Waiver of the Husbands right to claim additional exemption, if applicable 3. Duly approved Tax Debit Memo, if applicable 4. Proof of Foreign Tax Credits, if applicable 5. Return previously filed return and proof of payment, if amended return Procedures 1. Fill-up BIR Form 1700 in triplicate. 2. If there is payment: o Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1700, together with the required attachments and your payment. o In places where there are no AABs, proceed to the Revenue Collection Officer or duly

Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1700, together with the required attachments and your payment. o Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer. 3. For Refundable Returns and for tax returns with second installment: o Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by the BIR and present the duly accomplished BIR Form 1700, together with the required attachments. o Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative. Deadline On or before the 15th day of April of each year covering income for the preceding taxable year

Annual Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those With Business And Compensation Income) Tax Form BIR Form 1701 - Annual Income Tax Return (For Self-Employed Individuals, Estates and Trusts Including Those With Business and Compensation Income) Documentary Requirements 1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable 2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable 3. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable 4. Waiver of the Husbands right to claim additional exemption, if applicable 5. Duly approved Tax Debit Memo, if applicable 6. Proof of Foreign Tax Credits, if applicable 7. Return previously filed return and proof of payment, if amended return 8. Account Information Form (AIF) and the Certificate of the independent CPA or Audited Financial Statements except for taxpayers who opted for the Optional Standard Deduction (The CPA Certificate is required if the gross quarterly sales, earnings, receipts or output exceed P 150,000.00) 9. Proof of prior years excess tax credits, if applicable Procedures 1. Fill-up BIR Form 1701 in triplicate copies.

2. If there is payment: o Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1701, together with the required attachments and your payment. o In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1701, together with the required attachments and your payment. o Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer 3. For Refundable Returns and for those returns with second installment: o Proceed to the Revenue District Office where you are registered or to any established Tax Filing Centers established by the BIR and present the duly accomplished BIR Form 1701, together with the required attachments. o Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative. Deadline Final Adjustment Return - On or before the 15th day of April of each year covering income for the preceding year

Account Information Form For Self-Employed Individuals, Estates And Trusts (Including Those With Mixed Income , I.E., Business And Compensation Income) Tax Form BIR Form 1701 AIF - Account Information Form For Self-Employed Individuals, Estates and Trusts (Including those with Mixed Income, i.e., Business and Compensation Income) NOTE: Pursuant to Revenue Memorandum Circular No. 6 2001, corporations, companies or persons whose gross quarterly sales, earnings, receipts or output exceed P 150,000.00 may not accomplish this form. In lieu thereof, they may file their annual income tax returns accompanied by balance sheets, profit and loss statement, schedules listing income-producing properties and the corresponding income therefrom, and other relevant statements duly certified by an independent CPA. Documentary Requirements None Procedures 1. Accomplish BIR Form 1701 AIF in triplicate. 2. Attach the same to BIR Form 1701. Deadline

Same deadline as BIR Form 1701 - On or before the 15th day of April of each year covering income for the preceding year

Quarterly Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those With Mixed Income, I.E., Business And Compensation Income) Tax Form BIR Form 1701Q - Quarterly Income Tax Return For Self-Employed Individuals, Estates and Trusts (Including those with Mixed Income, i.e., Business and Compensation Income) Documentary Requirements 1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable 2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable 3. Duly approved Tax Debit Memo, if applicable Procedures 1. Fill-up BIR Form 1701Q in triplicate. 2. If there is payment: o Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you registered and present the duly accomplished BIR Form 1701 Q, together with the required attachments and your payment. o In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1701Q, together with the required attachments and your payment. o Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer. 3. For Refundable Returns and for those returns with second installment: o Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by the BIR and present the duly accomplished BIR Form 1701Q, together with the required attachments. o Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative. Deadlines * April 15 for the first quarter * August 15 for the second quarter * November 15 for the third quarter

Annual Income Tax For Corporations And Partnerships Tax Form BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships) Documentary Requirements 1. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable 2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable 3. Duly approved Tax Debit Memo, if applicable 4. Proof of Foreign Tax Credits, if applicable 5. Return previously filed return and proof of payment, if amended return 6. Account Information Form (AIF) and the Certificate of the independent CPA /or Audited Financial Statements except for taxpayers who opted for the Optional Standard Deduction. (The CPA Certificate is required if the gross quarterly sales, earnings, receipts or output exceed P150,000.00) 7. Proof of prior years excess tax credits, if applicable Procedures 1. Fill-up BIR Form 1702 in triplicate. 2. If there is payment: o Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702, together with the required attachments and your payment. o In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 with the required attachments and your payments. o Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer. 3. For No Payment Returns and Refundable Returns: o Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by BIR and present the duly accomplished BIR Form 1702, together with the required attachments. o Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative Deadline Final Adjustment Return - On or before the 15th day of the fourth month following the close of the taxpayers taxable year

Account Information Form For Corporations And Partnerships Tax Form BIR Form 1702 AIF - Account Information Form (For Corporations and Partnerships) NOTE: Pursuant to Revenue Memorandum Circular No. 6 2001, corporations, companies or persons whose gross quarterly sales, earnings, receipts or output exceed P 150,000.00 may not accomplish this form. In lieu thereof, they may file their annual income tax returns accompanied by balance sheets, profit and loss statement, schedules listing income-producing properties and the corresponding income therefrom, and other relevant statements duly certified by an independent CPA. Documentary Requirements None Procedures 1. Accomplish BIR Form 1702 AIF in triplicate. 2. Attach the same to BIR Form 1702. Deadline Same deadline as BIR Form 1702 - On or before the 15th day of the fourth month following the close of the taxpayers taxable year

Quarterly Income Tax For Corporations And Partnerships Tax Form BIR Form 1702 Q - Quarterly Income Tax Return (For Corporations and Partnerships) Documentary Requirements 1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable 2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable 3. Duly approved Tax Debit Memo, if applicable Procedures 1. Fill-up BIR Form 1702 Q in triplicate. 2. If there is payment: o Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 Q, together with the required attachments and your payment.

o In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 Q. o Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer. 3. For Refundable Returns and for those returns with second installment: o Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 Q, together with the required attachments. o Receive your copy of the duly stamped and validated form from the RDO representative. Deadline Corporate Quarterly Declaration - On or before the 60th day following the close of each of the quarters of the taxable year

Improperly Accumulated Earnings Tax For Corporations Tax Form BIR Form 1704 - Improperly Accumulated Earnings Tax Return (For Corporations) Documentary Requirements 1. Photocopy of Annual Income Tax Return (BIR Form 1702) and Audited Financial Statements or Account Information Form of the covered taxable year duly received by the BIR; and 2. Sworn declaration as to dividends declared taken from the covered year's earnings and the corresponding tax withheld, if any Procedures 1. Fill-up BIR Form 1704 in triplicate. 2. If there is payment: o Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1704, together with the required attachments and your payment. o In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1704 o Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer. 3. If there is no payment: o Proceed to the Revenue District Office where you are registered and present the duly

accomplished BIR Form 1704, together with the required attachments. o Receive your copy of the duly stamped and validated form from the RDO representative Deadline Within fifteen (15) days after the close of the year

Annual Income Information For Non Resident Citizens/OCWs and Seamen (For Foreign-Sourced Income) Tax Form BIR Form 1703 - Annual Income Information Return For Non Resident Citizens/OCWs and Seamen (For Foreign-Sourced Income) Note: Now optional based on Revenue Regulations No. 5-2001.

Tax Rate For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession Over But Not Over Rate P10,000 5% P10,000 P30,000 P500 + 10% of the Excess over P10,000 P30,000 P70,000 P2,500 + 15% of the Excess over P30,000 P70,000 P140,000 P8,500 + 20% of the Excess over P70,000 P140,000 P250,000 P22,500 + 25% of the Excess over P140,000 P250,000 P500,000 P50,000 + 30% of the Excess over P250,000 P500,000 P125,000 + 34% of the Excess over P500,000 in 1998 Note: Effective January 1, 1999, the maximum rate shall be thirty-three percent (33%) and thirtytwo percent (32%) on January 1, 2000. Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second installment on or before July 15 of the same year at the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered.

Tax Rate

Taxable Base 1. Domestic Corporations: a. In General 32% Taxable income from all sources b. Minimum Corporate Income Tax* 2% Gross Income c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income 2. Proprietary Educational Institution 10% Taxable income from all sources 3. Non-stock, Non-profit Hospitals 10% Taxable income from all sources 4. GOCC, Agencies & Instrumentalities a. In General 32% Taxable income from all sources b. Minimum Corporate Income Tax* 2% Gross Income c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income 5. National Gov't. & LGUs a. In General 32% Taxable income from all sources b. Minimum Corporate Income Tax* 2% Gross Income c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income 6. Taxable Partnerships a. In General 32% Taxable income from all sources b. Minimum Corporate Income Tax* 2% Gross Income c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income 7. Exempt Corporation a. On Exempt Activities 0% b. On Taxable Activities 32% Taxable income from all sources 8. General Professional Partnerships 0% 9. Corporation covered by Special Laws Rate specified under the respective special laws a. In General 32% Taxable income from all sources b. Minimum Corporate Income Tax* 2% Gross Income c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income *Beginning on the 4th year immediately following the year in which such corporation commenced its business operations, when the minimum corporate income tax is greater than the tax computed using the normal income tax.

Tax Rate Taxable Base 10. International Carriers 2.5% Gross Philippine Billings 11. Regional Operating Head 10% Taxable Income 12. Offshore Banking Units (OBUs) 10% Gross Taxable Income On Foreign Currency Transaction 32% On Taxable Income other than Foreign Currency Transaction 13. Foreign Currency Deposit Units (FCDU) 10% Gross Taxable Income On Foreign Currency Transaction 32% On Taxable Income other than Foreign Currency Transaction In General Over But Not Over P10,000 5% P10,000 P30,000 P500 + 10% of the Excess over P10,000 P30,000 P70,000 P2,500 + 15% of the Excess over P30,000 P70,000 P140,000 P8,500 + 20% of the Excess over P70,000 P140,000 P250,000 P22,500 + 25% of the Excess over P140,000 P250,000 P500,000 P50,000 + 30% of the Excess over P250,000 P500,000 P125,000 + 34%* of the Excess over P500,000 in 1998.

Note: Effective January 1, 1999, the maximum rate shall be thirty-three percent (33%) and thirtytwo percent (32%) on January 1, 2000. Passive Income 1. Interest on any peso bank deposit 20% 2. Royalties (except on books as well as literary & musical composition - 10%) 20% 3. Prizes (except prizes amounting to P10,000 or less -5%) 20% 4. Winnings (except from PCSO and lotto) 20% 5. Interest Income of Foreign Currency Deposit 7.5% 6. Interest from long-term deposit Holding Period - Four (4) years to less than five (5) years 5% - Three (3) years to less than four (4) years 12% - Less than three (3) years 20% 7. Cash and/or Property Dividends Beginning January 1, 1998 6% Beginning January 1, 1999 8% Beginning January 1, 2000 & thereafter 10% 8. On capital gains presumed to have been realized from sale, exchange or other disposition of real property (capital asset) 6% 9. On capital gains for shares of stock not traded in the stock exchange - Not over P100,000 5% - Any amount in excess of P100,000 10%

B. For Non-Resident Aliens Engaged in Trade or Business 1. On Certain Passive Income* 20% 2. Interest Income from long time deposits Holding Period -Four (4) years to less than five (5) years 5% -Three (3) years to less than four (4) years 12% -Less than three (3) years 20% 3. On capital gains presumed to have been realized from the sale, exchange or other disposition of real property 6% 4. On capital gains for shares of stock not traded in the Stock Exchange - Not over P100,000 5% - Any amount in excess of P100,000 10% *Cash and/or Property Dividends, Share in the distributable net income of the partnership, Interest on any bank deposits, Royalties (except on books as well as literary works and musical composition), Prizes (except prizes amounting to P10,000 or less), Winnings C) For Non-Resident Aliens Not Engaged in Trade or Business 1. On the gross amount of income derived from all sources within the Philippines 25% 2. On capital gains presumed to have been realized from the exchange or other disposition of real property located in the Phils. 6% D) Aliens Employed by Regional Headquarters (RHQ), Regional Operating (ROH), Offshore Banking Units (OBU), Petroleum Service Contractors and Subcontractors 15%

E) General Professional Partnerships F) Domestic Corporations 1) a. In General 32% b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 2) Proprietary Educational Institution 3) Non-stock, Non-profit Hospitals 4) GOCC, Agencies & Instrumentalities a. In General 32% b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 5) National Gov't & LGUs a. In General 32% b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 6) Taxable Partnerships a. In General 32% b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 7) Exempt Corporation a. On Exempt Activities 0% b. On Taxable Activities 32% 8) Corporation covered by Special Laws

0% 2% 10% 10% 10% 2% 10% 2% 10% 2% 10%

Rate specified under the respective special laws

G) Resident Foreign Corporation 1)a. In General 32% b. Minimum Corporate Income Tax 2% c. Improperly Accumulated Earnings 10% 2) International Carriers 25% 3) Regional Operating Headquarters 10% 4) Corporation Covered by Special Laws Rate specified under the respective special laws 5) Offshore Banking Units (OBUs) 10% 6) Foreign Currency Deposit Units (FCDU) 10%

Related Revenue Issuances RR No. 4-95, RR No. 4-96, RR No. 5-97, RR No. 1-98 Codal Reference Sections 23-59, 67-73 and 74-77 of the National Internal Revenue Code Frequently Asked Questions

1) What is income?

Income means all wealth, which flows into the taxpayer other than as a mere return of capital.

2) What is Taxable Income?

Taxable income means the pertinent items of gross income specified in the Tax Code less the deductions and/or personal and additional exemptions, if any, authorized for such types of income, by the Tax Code or other special laws.

3) What is Gross Income?

Gross income means all income derived from whatever source.

4) What comprises gross income?

Gross income includes, but is not limited to the following: * Compensation for services, in whatever form paid, including but not limited to fees, salaries, wages, commissions and similar item * Gross income derived from the conduct of trade or business or the exercise of profession * Gains derived from dealings in property * Interest * Rents * Royalties * Dividends * Annuities * Prizes and winnings * Pensions * Partner's distributive share from the net income of the general professional partnerships 5) What are some of the exclusions from gross income? * Life insurance * Amount received by insured as return of premium * Gifts, bequests and devises * Compensation for injuries or sickness * Income exempt under treaty * Retirement benefits, pensions, gratuities, etc. * Miscellaneous items * income derived by foreign government * income derived by the government or its political subdivision * prizes and awards in sport competition * prizes and awards which met the conditions set in the Tax Code

* 13th month pay and other benefits * GSIS, SSS, Medicare and other contributions * gain from the sale of bonds, debentures or other certificate of indebtedness * gain from redemption of shares in mutual fund 6) What are the allowable deductions from gross income?

Except for taxpayers earning compensation income arising from personal services rendered under an employer-employee relationships where the only deduction up to a maximum limit of P 2,400 per year per family is the premium payment on health and/or hospitalization insurance, a taxpayer may opt to avail any of the following allowable deductions from gross income: * Optional Standard Deduction - an amount not exceeding 10% of the gross income; or * Itemized Deductions which include the following: * Expenses * Interest * Taxes * Losses * Bad Debts * Depreciation * Depletion of Oil and Gas Wells and Mines * Charitable Contributions and Other Contributions * Research and Development * Pension Trusts In addition, individuals who are either earning compensation income, engaged in business or deriving income from the practice of profession are entitled to personal and additional exemptions as follows: Personal Exemptions: For single individual or married individual judicially decreed as legally separated with no qualified dependents...P 20,000.00 For head of family.....P 25,000.00 For each married individual *... .P 32,000.00 Note: In case of married individuals where only one of the spouses is deriving gross income, only such spouse will be allowed to claim the personal exemption. Additional Exemptions * For each qualified dependent, an P 8,000 additional exemption can be claimed but only up to 4 qualified dependents * The additional exemption can be claimed by the following: * The husband who is deemed the head of the family unless he explicitly waives his right in favor of his wife * The spouse who has custody of the child or children in case of legally separated spouses. Provided, that the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions allowed by the Tax Code. * The individuals considered as Head of the Family supporting a qualified dependent

The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance can be claimed if: * Family gross income yearly should not be more than P 250,000 * For married individuals, the spouse claiming the additional exemptions for the qualified dependents shall be entitled to this deduction 7) Who are required to file the Income Tax returns? * Individuals o resident citizens receiving income from sources within or outside the Philippines o individuals deriving compensation income from 2 or more employers, concurrently or successively at anytime during the taxable year o employees deriving compensation income regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return o employees whose monthly gross compensation income does not exceed P5,000 or the statutory minimum wage, whichever is higher, and opted for non-withholding of tax on said income o individuals deriving pother non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax o individuals receiving purely compensation income from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing o non-resident citizens receiving income from sources within the Philippines o citizens working abroad receiving income from sources within the Philippines o aliens, whether resident or not, receiving income from sources within the Philippines * Corporations no matter how created or organized including general professional partnerships o domestic corporations receiving income from sources within and outside the Philippines o foreign corporations receiving income from sources within the Philippines * Estates and trusts engaged in trade or business 8) Who are not required to file Income Tax returns? * An individual whose gross income does not exceed his total personal and additional exemptions * An individual whose compensation income derived from one employer does not exceed P 60,000 and the income tax on which has been correctly withheld * An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors and offshore-banking units, non-resident aliens not engaged in trade or business) * Those who are qualified under substituted filing. However, substituted filing applies only if all of the following requirements are present * the employee received purely compensation income (regardless of amount) during the taxable year * the employee received the income from only one employer in the Philippines during the taxable year * the amount of tax due from the employee at the end of the year equals the amount of tax withheld by the employer * the employees spouse also complies with all 3 conditions stated above * the employer files the annual information return (BIR Form No. 1604-CF) * the employer issues BIR Form No. 2316 (Oct 2002 ENCS version ) to each employee. 9) Who are exempt from Income Tax?

* Non-resident citizen who is: a) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein b) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis c) A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present abroad most of the time during the taxable year d) A citizen who has been previously considered as a non-resident citizen and who arrives in the Philippines at any time during the year to reside permanently in the Philippines will likewise be treated as a non-resident citizen during the taxable year in which he arrives in the Philippines, with respect to his income derived from sources abroad until the date of his arrival in the Philippines. * Overseas Contract Worker, including overseas seaman An individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract worker is taxable only on income from sources within the Philippines; Provided, that a seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively in international trade will be treated as an overseas contract worker. NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the Philippine Embassy/consulate is not treated as a non-resident citizen, hence his income is taxable.

10) What are the procedures in filing Income Tax returns (ITRs)? * For with payment ITRs (BIR Form Nos. 1700 / 1701 / 1701Q / 1702 / 1702Q / 1704) File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) of the place where taxpayer is registered or required to be registered. In places where there are no AABs, the return will be filed directly with the Revenue Collection Officer or duly Authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business in the Philippines, or if there is none, filing of the return will be at the Office of the Commissioner. * For no payment ITRs -- refundable, breakeven, exempt and no operation/transaction, including returns to be paid on 2nd installment, withholding tax returns (WTRs) covered by Tax Remittance Advice (TRA) and returns paid through a Tax Debit Memo(TDM)/Credit Memo (CM) File the return with the concerned Revenue District Office (RDO) where the taxpayer is registered. However, no payment returns filed late shall not be accepted by the RDO but instead shall be filed with an Authorized Agent Bank (AAB) or Collection Officer/Deputized Municipal Treasurer (in places where there are no AABs), for payment of necessary penalties. 11) How is Income Tax computed?

Gross Income P ___________

Less: Allowable Deductions ___________ Net Income P ___________ Less: Personal & Additional Exemptions ___________ Taxable Income P ___________ Multiply by Tax Rate (5 to 32%) Income Tax Due P ___________

12) How is Income Tax paid? * Through withholding o Generally 10% o 20% - Fees paid to directors who are not employees * Pay the balance as you file the tax return, computed as follows: Income Tax Due P ___________ Less: 20% or 10% Withholding Tax ___________ Net Income Tax Due P ___________

13) Is the Minimum Corporate Income Tax (MCIT) an addition to the regular or normal income tax?

No, the MCIT is not an additional tax. An MCIT of 2% of the gross income at the end of taxable year (whether calendar or fiscal year, depending on the accounting period employed) is hereby imposed upon any domestic corporation beginning the 4th taxable year immediately following the taxable year in which such corporation commenced its business operations. The MCIT is compared with the regular income tax, which is due from a corporation. If the regular income is higher than the MCIT, then the corporation does not pay the MCIT.

14) Who are covered by MCIT?

The MCIT covers domestic and resident foreign corporations which are subject to the regular income tax. The term regular income tax refers to the regular income tax rates under the Tax Code. Thus, corporations which are subject to a special corporate tax system do not fall within the coverage of the MCIT. * Schools, hospitals and income of Offshore Banking Units (OBUs), and Foreign Currency Deposit Unit (FCDU) from foreign currency transactions * Regional Operating Headquarters The incomes of these corporations are subject to ten percent (10%) preferential tax rate. * Firms under special income tax regime such as those under the PEZA law and the Bases Conversion Development Act * International carriers subject to tax at 2 % of their gross Philippine billings For corporations whose operations or activities are partly covered by the regular income tax and partly covered under special income tax system, the MCIT shall apply on operations by the regular income tax system. Newly established corporations or firms which are on their first 3 years of operations are not covered by the MCIT.

15) When does a corporation start to be covered by the MCIT?

A corporation starts to be covered by the MCIT on the 4th year of its business operations. The period of reckoning which is the start of its business operations is the year when the corporation was registered with the BIR. This rule will apply regardless of whether the corporation is using the calendar year or fiscal year as its taxable year. * Firms that were registered in 1994 and earlier years are covered by the MCIT beginning January 1, 1998 * Firms which were registered with the BIR in any month in 1998 will be covered by the MCIT after the lapse of 3 calendar years, i.e. 2002 16) When is the MCIT reported and paid? Is it quarterly?

The MCIT is paid on an annual basis. It is not computed nor paid on a quarterly basis. It is reported under BIR Form No. 1702

17) How is MCIT computed?

The MCIT is 2% of the gross income of the corporation at the end of the year.

Gross income means gross sales less sales returns, discounts and cost of goods sold. Passive income, which have been subject to a final tax at source do not form part of gross income for purposes of the MCIT. Cost of goods sold includes all business expenses directly incurred to produce the merchandise to bring them to their present location and use. For trading or merchandising concern, cost of goods sold means the invoice cost of goods sold, plus import duties, freight in transporting the goods to the place where the goods are actually sold, including insurance while the goods are in transit. For a manufacturing concern, cost of goods manufactured and sold means all costs of production of finished goods such as raw materials used, direct labor and manufacturing overhead, freight cost, insurance premiums and other costs incurred to bring the raw materials to the factory or warehouse. For sale of services, gross income means gross receipts less sales returns, allowances, discounts and cost of services which cover all direct costs and expenses necessarily incurred to provide the services required by the customers and clients including: * Salaries and employees benefits of personnel, consultants and specialists directly rendering the service; * Cost of facilities directly utilized in providing the service such as depreciation or rental of equipment used; * Cost of supplies Interest Expense is not included as part of cost of service, except in the case of banks and other financial institutions. Gross Receipts means amounts actually or constructively received during the taxable year. However, for taxpayers employing the accrual basis of accounting, it means amounts earned as gross income.

18) What is the carry forward provision under the MCIT?

Any excess of the MCIT over the normal income tax may be carried forward on an annual basis and be credited against the normal income tax for 3 immediately succeeding taxable years.

19) How would the MCIT be recorded for accounting purposes?

Any amount paid as excess minimum corporate income tax should be recorded in the corporations books as an asset under account title Deferred charges-MCIT

20) How long can we amend our income tax return?

There is no prescription period for amending the return. Only when the taxpayer is being audited that he can no longer amend the return.

21) Can a benefactor of a senior citizen claim him/her as additional dependent in addition to his/her 3 qualified dependent children at P 8,000 each?

No. According to Revenue Regulations 2-94, the benefactor of a senior citizen cannot claim the P 8,000 additional exemption. The P 8,000 additional exemption is for only the dependent child. 22) What are tax treaties?

Tax treaties are defined primarily by their purpose. They are entered into by the Philippines with other foreign governments in order to spur national stability and development mainly by encouraging investors to invest in the Philippines and for the purpose of increasing flow of trade and investment between the Philippines and other countries. In this regard, among the objectives of tax treaties are the following: 1) to eliminate double taxation caused by multiple jurisdiction asserting tax authority over the same income; 2) to assist tax administrators in the fight against tax evasion and avoidance through Exchange of Information and Mutual Agreement Procedure; and 3) the reciprocal reduction of tax impediments to cross-border investment and trade to promote international trade and investment.

23) What are the effective Philippine tax treaties?

The Philippines has thirty-one (31) effective tax treaties. The following tax treaties are in effect as of January 01, 2002: EFFECTIVITY 1. Australia 1 January 1980 2. Austria 1 January 1983 3. Belgium 1 January 1981 4. Brazil 1 January 1992 5. Canada 1 January 1977 6. China 1 January 2002 7. Denmark (Re-negotiated) 1 January 1998 8. Finland 1 January 1982

9. France 1 January 1978 10. Germany 1 January 1985 11. Hungary 8 April 1998 (for taxes withheld at source) 1 January 1998 (for other taxes) 12. India 1 January 1995 13. Indonesia 1 January 1983 14. Israel 1 January 1997 (for taxes withheld at source) 25 July 1990 (for other taxes) 15. Italy 1 January 1990 16. Japan 1 January 1981 17. Korea 1 January 1987 18. Malaysia 1 January 1985 19. Netherlands 1 January 1992 20. New Zealand 1 January 1981 21. Norway 1 January 1997 22. Pakistan 1 January 1979 23. Romania 1 January 1998 24. Russia 1 January 1998 25. Singapore 1 January 1977 26. Spain 1 January 1994 27. Sweden 1 January 1990 28. Switzerland 1 January 2002 29. Thailand 1 January 1990 30. United Kingdom of Great 1 January 1978 Britain and Northern Ireland 31.United States of America 1 January 1983

24) What office can we inquire about the said tax treaties?

The International Tax Affairs Division (ITAD).

25) What taxes are covered by the Philippine tax treaties?

Income taxes imposed by the domestic laws of the Contracting States, including substantially similar taxes that may be imposed later, in addition to, or in its place, are covered by the tax treaties. In the Philippines, this is limited to Title II (Tax on Income) and the stock transaction tax of the Tax Code of 1997.

26) How is business income treated under our tax treaties?

The business profits of a resident of a Contracting State shall not be taxable in the Philippines unless that enterprise of a resident of a Contracting State carries on business in the Philippines through a permanent establishment.

27) What is the concept of permanent establishment (PE) as used in tax treaties?

PE is defined as a fixed place of business through which the business of the enterprise is wholly or partly carried on. The concept of permanent establishment is used to determine the rights of a Contracting State to tax the business profits of enterprises of the other Contracting State. Under this concept, profits of an enterprise of a Contracting State are not taxable by the other Contracting State, unless the enterprise carries on business through a permanent establishment situated in the other Contracting State. A list of places, circumstances, and activities which constitute a permanent establishment is provided under the different tax treaties which the Philippines has with other countries.

28) What is the Most-Favored-Nation clause (MFN)?

The appearance of the MFN clause in the tax treaty means that a Contracting State will grant to a resident of the other Contracting State the same lower rate of tax or exemption the former has granted to a resident of a third State.

29) What is the tax treatment on immovable property?

Income from an immovable property is taxable in the Contracting State where the property is situated. This term is generally defined under the domestic laws of the Contracting States. However, this is further defined in the tax treaties. 30) How are capital gains taxed under our tax treaties?

Gains from the alienation of immovable property or movable property forming part of the business property of a permanent establishment or pertaining to a fixed base are taxed in the Philippines if the immovable property or permanent establishment or fixed base is located here.

31) How are shares of stock taxed under the tax treaties?

Gains from the alienation of shares of stock in a Philippine

RP gross international reserves up in August By Michelle Remo Philippine Daily Inquirer First Posted 16:46:00 09/08/2009 Filed Under: Economic Indicators MANILA, Philippines - The countrys external liquidity position improved further in August, with the gross international reserves [GIR] climbing to a new historic high of $41.3 billion. GIR -- which indicates the country's ability to engage in commercial transactions with the rest of the world, such as payment for imports and settlement of foreign currency-denominated debts -- is the total amount of foreign currency reserves and gold kept at and managed by the central bank. According to the Bangko Sentral ng Pilipinas, the latest GIR was 2.7 percent higher than the revised figure of $40.2 billion as of end-July. The BSP has estimated that about 74 percent of the country's GIR are in US dollar, 16 percent in yen, 8 percent in euro, and the rest are in gold and other currencies. In a statement, the BSP said the rise in the foreign exchange reserves was partly due to the income generated by the central bank from its foreign exchange operations and other investments offshore. The BSP's investments are mostly in US treasuries. The increase in the reserves resulting from the BSP's income from investments and foreignexchange trading income more than offset the decline caused by the government's payment of maturing external obligations and the drop in gold prices.

According to the BSP, the latest GIR was enough to cover for 7.1 months worth of the country's import requirements. It was also equivalent to 6.6 times the country's short-term external debts based on original maturity and 3.3 times based on residual maturity. Short-term debts based on residual maturity refers to debts with maturities of one year or less, plus principal payments for medium- to long-term loans that will mature in the next 12 months. Inflows of foreign currencies into the country allowed the GIR to continually grow, settling within the Top 10 biggest reserves in Asia. According to the Asian Development Bank, the Philippines' GIR was the tenth biggest as of 2008, when the GIR stood at $33 billion. Earlier, the ADB urged central banks in developing countries in Asia to consider investing a portion of the reserves to more productive activities. The ADB said foreign currency reserves in the region were already excessive and could be put to better use if invested in developmental projects rather than placed entirely in US treasuries and other risk-free assets. The BSP, however, said it preferred to keep its conservative way of managing the Philippines' GIR. BSP Deputy Governor Diwa Guinigundo earlier said the central bank had a mandate to ensure external liquidity, and so it would continue investing the GIR only in safe instruments. Guinigundo said Southeast Asian countries learned from the Asian financial crisis of 1997 that maintaining healthy levels of foreign exchange reserves was essential to ensure stability of the financial sectors. The central bank official said it was prudent for countries to have high reserves than rely solely on institutions like the International Monetary Fund for liquidity support in case of crisis. "The IMF did not have a quick disbursing facility and so we [Asian countries] deemed it prudent to increase the reserves," Guinigundo said.

Tagalog News: Gross International Reserves (GIR) inasahang tataas Koronadal, South Cotabato (30 April) -- Inaasahang tataas ang Gross International Reserves ng bansa sa halagang $26 billion ngayong taon, mataas kaysa sa inaasahang target nito na $24 billion dollars itoy dahil na rin sa heavy dollar inflow mula sa Ovesease Filipino Workers (OFW), higher exports, foreign portfolio investments, at foreign direct investments. Ang GIR na itinuturing na key indicator ng bansa na may kakayahan na makatulong sa foreign exchange requirements ay binubuo ng central banks holdings of gold, Special Drawing Rights (SDR) kasama rin ang International Monetary Fund, foreign investments at foreign exchange. Ito rin ay nagpapahintulot ng pagbabayad ng maaga sa panlabas na utang ng bansa na naging resulta ng mababang interest rates ng borrowing sa hinaharap at upang manumbalik ang kakayahan ng bansa na maprotektahan ang local currency mula sa mababang epekto ng speculation at hindi matatag na foreign exchange market. (Abb/PIA 12) [top]

DEFINITION OF TERMS Gross International Reserves (Months of Imports of Goods & Services) (100%)

The actual level of GIR is a measure in dollar equivalent of the available foreign exchange resources to meet essential import requirements. The GIR in terms of equivalent months of imports shows how many months of importation can be covered by the current level of the reserves. It is computed as the ratio of GIR to the average imports of goods and services for the immediately preceding 12 months. Basic data are sourced from the BSP. Gross International Reserves (100%) Foreign assets of the BSP consists of holdings of gold, Special Drawing Rights (SDRs), foreign investments and foreign exchange denominated in currencies eligible to form part of the reserves. Foreign currencies eligible for reserves are the Australian dollar, Austrian schilling, Bahrain dinar, Belgian franc, Brunei dollar, Canadian dollar, Deutsche mark, Hongkong dollar, French franc, Indonesian rupiah, Italian lira, Japanese yen, Kuwaiti dinar, Malaysian ringgit, Netherlands guilder, pound sterling, Saudi rial, Singapore dollar, Swiss franc, Thai baht, United Arab Emirates dirham and the US dollar. Included in the GIR of the BSP is the Reserve Position in the Fund which refers to the country's reserve tranche position in the Fund or the difference between the quota and the Fund holdings of Philippine peso, excluding holdings acquired as a result of a member's use of Fund credit and peso holdings in the IMF deposit Account No. 2. (Source: Bangko Sentral ng Pilipinas)

RP gold, dollar reserves hit record high

PHILIPPINE NEWS SERVICE -- DOLLARS, gold and other foreign exchange held by the central bank reached a new all-time high of $43.73 billion at the end of November, higher than the $43.15 billion reported at the end of October, the Bangko Sentral reported Monday. The gross international reserves are closely monitored by investors and creditors because they reflect a countrys ability to pay for its imports and foreign loans. The end-November official reserves are enough to cover eight months worth of imports and four times the Philippines shortterm debt. Bankers said the central bank had been buying dollars in the spot currency market, and that many people expected the central banks official and unofficial reserves to continue to rise in the coming months. In a statement, the central bank attributed the increase in its official reserves to rising gold prices that translated into revaluation gains on its gold holdings, the governments foreign currency deposits from its loans, and income from the central banks investments abroad. The central bank limits its gold holdings to 10 percent of its official reserves. At the end of November, the value of its gold holdings had reached $5.633 billion, or higher than Octobers $5.275 billion. The central bank also reported a modest rise in its investments abroad, to $36.37 billion in November from Octobers $36.169 billion. The central bank had forecast its year-end reserves to reach $43 billion, a target that it has already surpassed. If unofficial reserves are taken into account, the central banks reserves can easily exceed $50 billion.

Because of the steady remittance flows, higher investment and foreign loans, the central bank has forecast a $4- to $5-billion balance-of-payments surplus for 2009. The balance of payments is a record of the countrys transactions with the rest of the world, and a surplus means the Philippines made more money from exports, remittances and borrowings than it paid out.

Congress OKs Free Patent Bill By ROLLY T. CARANDANG December 28, 2009, 5:55pm The Senate and the House of Representatives have ratified the Free Patent Bill that would allow 39 million Filipinos, mostly low and middle income individuals, to legally obtain title to the lands that they have possessed for at least 10 years. Senator Richard J. Gordon, cosponsor and author of Senate Bill 3429 (an Act Reforming the Administrative Titling Process), said the measure, which was ratified by both chambers of Congress before the Christmas break, aims to ease the requirements and procedures in the titling of residential and commercial land. Many landowners, despite possession of their land, have only rights or a tax declaration to their land due to the high cost, long delay, and inconvenient procedures of judicial titling, he said. Under the present Public Land Act, residential and commercial landholders can acquire title only through the courts, which requires hiring a lawyer, paying for a survey, securing testimonies from neighbors and clearances from the barangay, and filing a court petition, among others. The senator explained that the current situation, where many land parcels remain untitled, make for bad economics because landowners cannot secure loans on their property for business and home improvement. It is also bad policy because without a title, land owners will not be secure in their possession, potentially becoming victims of illegally issued land titles by criminal syndicates. Gordon said business organizations such as the Chamber of Thrift Banks (CTB) and the Makati Business Club (MBC) have been anticipating the enactment of the Free Patent Act, which is also expected to benefit the economy. This measure is expected to stimulate bank lending with better collateral, allowing homeowners access to credit in banking institutions, said Pascual Garcia III, president of CTB, in his letter to Gordon. With these benefits for both the government and the people, Gordon said that the President is expected to immediately sign the measure once it is transmitted to her office.

Free Patent bill ratification seen to boost biz, devt Economy Sunday, 27 December 2009 19:46

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AT least 39 million Filipinos, mostly in the low and middle income, will soon obtain legal title to land they have occupied for at least 10 years following the ratification by Congress of the Free Patent bill just before lawmakers went on Christmas vacation last week. Sen. Richard Gordon, who authored Senate Bill 3429, also known as an Act Reforming the Administrative Titling Process, said the remedial legislation on free patent was crafted to ease the requirements and procedures in the titling of residential and commercial land because many landowners, despite possession of their land, have only rights or a tax declaration of their land due to the high cost, long delay and inconvenient procedures of judicial titling. He noted that under the present Public Land Act, residential and commercial landholders can acquire title only through the courts, which requires hiring a lawyer, paying for a survey, securing testimonies from neighbors, and clearances from the barangay, and filing a court petition, among others. Gordon had argued the current situation, where many land parcels remain untitled, make for bad economics because landowners cannot secure loans on their property for business and home improvement; and was also a bad policy because without a title, landowners are not secure in their possession, potentially becoming victims of illegally issued land titles by criminal syndicates. He said several business organizations, including the Chamber of Thrift Banks (CTB) and the Makati Business Club (MBC), have been anticipating the enactment of the Free Patent Act. CTB president Pascual Garcia III wrote Gordon, saying the measure is expected to stimulate bank lending with better collateral, allowing homeowners access to credit in banking institutions. Gordon added that MBC executive director Alberto Lim also acknowledged that titled land increases in value more steadily than untitled land and, therefore, increases the local governments tax base. Aside from more business taxes, Lim said there will also be more legitimate property transactions so the take from transfer fees, documentary stamps and capital gains taxes will increase. Gordon said he expects President Arroyo to immediately sign the measure into law as soon as it is transmitted to her office, given the benefits the legislation will bring to both government and the people. B. Fernandez

Free patent bill to benefit 39 million Filipinos with untitled lands - Gordon Senator Richard J. Gordon (Ind.) today said approximately 39 million Filipinos would be able to legally obtain the lands that they possessed in the concept of owner for a long period of time once the free patent bill is passed into law. Gordon said Senate Bill 3429 or an Act Reforming the Administrative Titling Process, which passed

on third reading in the Senate, will help the country towards its goal of attaining a robust economy. As this developed, Pascual Garcia III, president of the Chamber of Thrift Banks (CTB), commended the senator for sponsoring the bill and invited him to be the guest speaker during the chamber's general membership meeting on Oct. 23. "There is no better economic stimulus right now than passing this bill. Our local governments see an improvement in urban development and an increase in realty taxes resulting from the expected increase in land values of properties once they are titled. Rural and thrift bankers can now grant loans to the owners since the titled properties could be used as collateral," said Gordon, one of the authors of the bill. "Most importantly, are the landowners themselves. There are millions of them. They will get a higher value for their property because they now have a registered title. These families will be able to sleep better because they have secure titles to their lands. They will be able to obtain loans from their banks if they need to. They will be able to bequeath the property or divide it among their children if they wish to," he added. "Allow me to extend our sincere appreciation and gratitude for sponsoring the Free Patent Bill in the Senate, a measure that is envisioned to stimulate bank lending, among others. Given the importance of this measure to the industry, we would like to respectfully invite you to be our guest speaker," Garcia, for his part, said. "We feel that this is an opportune time for our member-banks to hear directly from you the importance of the bill in terms of boosting bank lending with better collateral, allowing homeowners access to credit in banking institutions for entrepreneurial or homebuilding activities and reducing the risk of fake titling and land frauds," he added. Gordon said the bill aims to ease the requirements and/or procedures in the titling of residential and commercial lands. The salient features of the bill include: the reduction of the period of eligibility for titling from 30 years to 10 years; the issuance of free patents without payment of outstanding real estate taxes; the extension of free patents to residential lands (in all municipalities and cities) regardless of income classification; and the removal of restrictions after patent issuance.

ROXAS FILES BILL ENSURING LAND TENURE FOR FARMERS, FISHERMEN SECURE FARMERS' AND FISHERMEN'S FUTURE THROUGH LAND, SUPPORT Liberal President Senator Mar Roxas today filed a bill seeking to ensure the land tenure of farmers and fishermen over public lands they presently cultivate through a free patent system. "Dapat nang matupad ang matagal nang pangako sa mga magsasaka at mangingisda na sa wakas ay sila na ang may-ari ng lupang binungkal at tinirhan nila at ng mga ninuno nila (We should fulfill the promise to farmers and fishermen that they finally own the land they and their ancestors have tilled and lived on)," he said. "Sa lupa inaasa ng mga magsasaka at mangingisda ang kanilang kabuhayan. Kung hindi pa mapapasakanila ito, parang sinabi na rin nating hindi na nila mapapanghawakan ang kinabukasan nila (Farmers and fishermen rely on land for their livelihood. If we don't give them a chance to own this land, as if we've declared that they will never be able to hold onto their destiny)," he said. Senate Bill No. 3202 proposes a mechanism that seeks to ensure equitable access to, and ownership of, alienable and disposable lands of public domain by: farmers who have continuously

occupied and cultivated a parcel of such public land by themselves or by their predecessors; and fishermen who have been living along coastal areas and similar areas of the public domain near their fishing ground. The bill proposes that any natural-born citizen who has been, or through his predecessor-ininterest, residing on a parcel of untitled land of the public domain for 10 years, under a bona fide claim of acquisition of ownership, is entitled to have a free patent issued to him for the said parcel of land. Those accorded with a free patent are not allowed to sell or convert the land into other uses within five years after such free patent is issued. Similarly, the bill proposes a 20-year ban against largescale conversions of public lands. Meanwhile, the bill proposes criminal penalties for persons who obstruct or impede the acquisition of a free patent by a farmer or fisherman, or those who sell, transfer or acquire land of public domain to circumvent the proposed law. "Pero hindi natatapos sa lupa ang lahat. Sa ilalim nitong bill, inaatasan ang DA, DTI, DENR at iba pang ahensiya na magbigay ng suporta sa mga magsasaka at mangingisda na nagawaran ng free patent. (Because land is not everything, this bill mandates the Agriculture, Trade and Environment Departments and other government agencies to give support to these farmers and fishermen who were awarded with a free patent)," he stressed. Roxas also filed Senate Resolution No. 1045 which seeks a probe into the status of implementation of the Public Land Act vis--vis farmers' and fishermen's access to and ownership of public lands.

Free Patent bill OKd By: Bernadette E. Tamayo CONGRESS has ratified the Free Patent bill which would allow 39 million Filipinos, mostly low-andmiddle income individuals, to legally obtain title to the lands they have been possessing for at least 10 years now. Sen. Richard Gordon, author of Senate Bill 3429 or an Act Reforming the Administrative Titling Process, said the measure will ease the requirements and procedures in the titling of residential and commercial land. Many landowners, despite possession of their land, have only rights or tax declaration due to the high cost, long delay and inconvenient procedures of judicial titling, he said. Under the present law, residential and commercial landholders can acquire a title only through the court, which would entail hiring of a lawyer, paying for a survey, securing testimonies from neighbors, clearances from the barangay and filing of a court petition, among others. Gordon said this situation, where many land parcels remain untitled, make for bad economics because landowners cannot secure loans using their property for business and home improvement. Without a title, landowners will not be secure in their possession, becoming victims of illegally issued land titles by criminal syndicates, he said, adding that the Chamber of Thrift Banks and the Makati Business Club have been anticipating the enactment of the Free Patent Act which is seen to benefit the economy. This measure is expected to stimulate bank lending with better collateral, allowing homeowners access to credit in banking institutions, said Pascual Garcia III, president of CTB, in his letter to Gordon.

Alberto Lim, MBC executive director, said titled land has more value than untitled land. This will increase the local governments tax base. Aside from more business tax, there will also be more legitimate property transactions so the take from transfer fees, documentary stamps, and capital gains taxes will increase, he said.

Congress ratifies patent bill MANILA, Philippines - The Senate and the House of Representatives had ratified the free patent bill that would allow 39 million Filipinos, mostly from low and middle-income families, to legally obtain title to the land that they have possessed for at least 10 years. Sen. Richard Gordon, co-sponsor and author of Senate Bill 3429 (an Act Reforming the Administrative Titling Process), said the measure that was ratified by both the Senate and House before the Christmas break, aims to ease the requirements and procedures in the issuance of titles on residential and commercial land. Many landowners, despite possession of their land, have only rights or a tax declaration to their land due to the high cost, long delay, and inconvenient procedures of judicial titling, Gordon said. Under the present Public Land Act, residential and commercial landholders could acquire titles only through court, which requires hiring a lawyer, paying for a survey, securing testimonies from neighbors and clearances from the barangay, and filing a court petition, among others. The senator explained that the current situation, where many land parcels remain untitled, make for bad economics, because landowners cannot secure loans on their property for business and home improvement; and bad policy, because without a title, landowners will not be secure in their possession, potentially becoming victims of illegally issued land titles by criminal syndicates. Business organizations such as the Chamber of Thrift Banks (CTB) and the Makati Business Club (MBC) have been anticipating the enactment of the Free Patent Act, which is also expected to benefit the economy. This measure is expected to stimulate bank lending with better collateral, allowing homeowners access to credit in banking institutions, said Pascual Garcia III, president of CTB, in his letter to Gordon.

House pushes free land patents for 9-million families 17 June 2008 11:47:12 AM Writer: Gil Bugaoisan / Diony Tubianosa, MAS-PRID

Some nine million Filipino families who have long been occupying unregistered residential lands of public domain may soon call their lands truly their own, with the revival of the law that grants free patents for residential areas nationwide. This came after Speaker Prospero C. Nograles announced that the House Special Committee on Land Use is working on the proposed revival of the grant of Free Patent, which was originally implemented during the Marcos era. Rep. Antonio Cerilles (2nd Dist., Zamboanga del Sur), chairs this committee. "The Cerilles panel is now collating all the pertinent data that support the revival of the grant of Free Patents to residential lands as proposed by Rep. Rodolfo Valencia," Nograles said. Valencia, (1st Dist., Oriental Mindoro) chairman of the House Committee on Housing and Urban Development, is author of House Bill 3401 that seeks to reactivate Batas Pambansa 223, a law that extended the grant of Free Patent to actual occupants of unregistered/untitled residential lands until it expired on December 31, 1987. HB 3401 seeks to "hasten titling of residential lands of public domain by extending the grant of Free Patents to residential lands under certain conditions." Speaker Nograles expressed optimism that the Valencia's bill would see the light of day in the Senate since a counterpart measure had been filed and is being pursued by Senator Loren Legarda. "This is good news. We still have millions of Filipino families who are in constant threat of eviction because they are occupying lands of public domain," Nograles, former chairman of the Committee on Housing, said. Nograles added that HB 3401 would also help in the government's efforts to activate "sleeping" capital resources in the country. "A free patent would allow them to use their lots as collateral for productive economic enterprises." In his report to Nograles, Valencia noted that as much as 46% of the total land parcels in the country are untitled. Of the estimated 24 million land parcels, 11 million are held without formal rights and the bulk of these untitled parcels are residential lands. A parcel may range from 200 square meters to 1,000 square meters. "Addressing untitled residential parcels may affect 39 million to 45 million Filipinos," Valencia estimated. "The importance of a title to land cannot be overemphasized. The main objectives of land title registrations are to protect property rights, facilitate transactions on land, and to enable land to be used as collateral for a loan," Valencia explained. A title, Valencia said, provides incentives for investment in land and therefore creates an impetus for sustainable economic development. "In order to hasten title registration and thus spun economic growth, the process should be simple, reliable, prompt and affordable," he said. The following are the salient features of HB 3401: 1. Extension of Free Patent to residential lands classified/zoned by the local government in its land use plan as residential, and is not needed for public service and public use and subject to area limitations; 2. Reduction of the period of occupation to ten (10) years; and

3. Removal of the restriction on encumbrance on the title.

Under the Valencia bill, actual occupants of residential lands for ten or more years may apply for free patent title to a parcel of land not exceeding 200 square meters in highly urbanized cities; 500 square meters in other cities; and 1,000 square meters in all municipalities. Considering that around 80% of the remaining unregistered land parcels in the country are residential lands, the reenactment and improvement of residential free patents will expedite mass titling of lands and will in turn promote human dignity and economic growth. "This proposal seeks to enable the land sector to contribute considerably to the country's sustainable development, economic growth and poverty alleviation. It will provide improved access to land, services and capital to landless and homeless families," Valencia said.

Congress OKs law on easier land-titling Small owners to greatly benefit from itGordon INQUIRER.net First Posted 14:10:00 12/28/2009 Filed Under: Congress, Laws, Philippines Regions * Reprint this article * Send as an e-mail * Post a comment * Share Related Articles * Arroyo urged to enact Coast Guard law * Palace hits Senate on maritime safety bill * Filing of certificate of candidacy by appointive government employees * Pacman film flop bad for Congress bid, says 2 solons * One for history: Speaker Arroyo * When the tail is smarter than the dog * More on CHEd * Good things for US immigrants in 2010 * Fish spa lures tourists to quiet Antique town Also in this section * US to help prevent future maritime accidents * 80 repatriated OFWs return on New Years Day * Zero tariffs for Asean-6 starting January 1 * Somali pirates kidnap 18 Filipino seamen, DFA confirms * OFWs from Lebanon urged to sue recruiters * Thrill-seeking tourists flock to Mayon * Filipina housekeeper found dead in Vienna identified * 76 journalists killed in 2009--watchdog * Filipina dead at Lebanon envoy's Vienna home--police * Myanmar frees 14 Filipino fishers, 116 others * Filipina found dead at Lebanese envoy's housepolice

Advertisement Click here to find out more! MANILA, PhilippinesCongress has ratified the Free Patent bill that would allow 39 million Filipinos, mostly low and middle income individuals, to legally obtain title to the lands that they have possessed for at least 10 years, Senator Richard Gordon said in a statement. Gordon, co-sponsor and author of Senate Bill 3429 (an Act Reforming the Administrative Titling Process), said that the measure, which was ratified by both chambers of Congress before the Christmas break, aims to ease the requirements and procedures in the titling of residential and commercial land. Many landowners, despite possession of their land, have only rights or a tax declaration to their land due to the high cost, long delay, and inconvenient procedures of judicial titling, he said. Under the present Public Land Act, residential and commercial landholders can acquire title only through court, which requires hiring a lawyer, paying for a survey, securing testimonies from neighbors and clearances from the barangay (village), and filing a court petition, among others. The senator explained that the current situation, where many land parcels remain untitled, make for bad economics, because landowners cannot secure loans on their property for business and home improvement; and bad policy, because without a title, landowners will not be secure in their possession, potentially becoming victims of illegally issued land titles by criminal syndicates. Business organizations such as the Chamber of Thrift Banks (CTB) and the Makati Business Club (MBC) have been anticipating the enactment of the Free Patent Act, which is also expected to benefit the economy. This measure is expected to stimulate bank lending with better collateral, allowing homeowners access to credit in banking institutions, said Pascual Garcia III, president of CTB, in his letter to Gordon. Meanwhile, Alberto Lim, executive director of MBC, wrote in a newspaper column, Titled land increases in value more steadily than untitled land and therefore increases the local governments tax base. Aside from more business tax, there will also be more legitimate property transactions so the take from transfer fees, documentary stamps, and capital gains taxes will increase. With these benefits for both the government and the people, Gordon said that the President is expected to immediately sign the measure once it is transmitted to her office.