SECTION 5.

Section 24 of the NIRC,as amended, is hereby further

amended to read as follows:
"SEC. 24. Income Tax Rates. —
"(A) Rates of Income Tax on Individual Citizen and Individual
Resident Alien of the Philippines. —
"(1) An income tax is hereby imposed:
"(a) On the taxable income defined in Section 31 of this Code,
other than income subject to tax under Subsections (B), (C), and (D) of
this Section, derived for each taxable year from all sources within and
without the Philippines by every individual citizen of the Philippines
residing therein;
"(b) On the taxable income defined in Section 31 of this Code,
other than income subject to tax under Subsections (B), (C), and (D) of
this Section, derived for each taxable year from all sources within the
Philippines by an individual citizen of the Philippines who is residing
outside of the Philippines including overseas contract workers referred
to in Subsection (C) of Section 23 hereof; and
"(c) On the taxable income defined in Section 31 of this Code,
other than income subject to tax under Subsections (B), (C), and (D) of
this Section, derived for each taxable year from all sources within the
Philippines by an individual alien who is a resident of the Philippines.
"(2) Rates of Tax on Taxable Income of Individuals. — The tax
shall be computed in accordance with and at the rates established in the
following schedule:
"(a) Tax Schedule Effective January 1, 2018 until December 31,
2022:

"Not over P250,000 0%

"Over P250,000 but not over 20% of the excess over
P400,000 P250,000
"Over P400,000 but not over P30,000 + 25% of the
P800,000 excess over P400,000
"Over P800,000 but not over P130,000 + 30% of the
P2,000,000 excess over P800,000
"Over P2,000,000 but not over P490,000 + 32% of the
P8,000,000 excess over P2,000,000
"Over P8,000,000 P2,410,000 + 35% of the
excess over P8,000,000
"Tax Schedule Effective January 1, 2023 and onwards:
 "Not over P250,000 0%
"Over P250,000 but not over 15% of the excess over
P400,000 P250,000
"Over P400,000 but not over P22,500 + 20% of the
P800,000 excess over P400,000
"Over P800,000 but not over P102,500 + 25% of the
P2,000,000 excess over P800,000
"Over P2,000,000 but not over P402,500 + 30% of the
P8,000,000 excess over P2,000,000
"Over P8,000,000 P2,202,500 + 35% of
the excess over
P8,000,000
"For married individuals, the husband and wife, subject to the
provision of Section 51(D) hereof, shall compute separately their
individual income tax based on their respective total taxable
income: Provided, That if any income cannot be definitely attributed to
or identified as income exclusively earned or realized by either of the
spouses, the same shall be divided equally between the spouses for the
purpose of determining their respective taxable income.
"Provided, That minimum wage earners as defined in Section
22(HH) of this Code shall be exempt from the payment of income tax on
their taxable income: Provided, further, That the holiday pay, overtime
pay, night shift differential pay and hazard pay received by such
minimum wage earners shall likewise be exempt from income tax.
"(b) Rate of Tax on Income of Purely Self-employed Individuals
and/or Professionals Whose Gross Sales or Gross Receipts and Other
Non-operating Income Does Not Exceed the Value-added Tax (VAT)
Threshold as Provided in Section 109(BB). — Self-employed individuals
and/or professionals shall have the option to avail of an eight percent
(8%) tax on gross sales or gross receipts and other non-operating
income in excess of Two hundred fifty thousand pesos (P250,000) in
lieu of the graduated income tax rates under Subsection (a)(2)(a) of this
Section and the percentage tax under Section 116 of this Code.
"(c) Rate of Tax for Mixed Income Earners. — Taxpayers earning
both compensation income and income from business or practice of
profession shall be subject to the following taxes:
"(1) All Income from Compensation — The rates prescribed
under Subsection (A)(2)(A) of this Section.
"(2) All Income from Business or Practice of Profession —
"(a) If Total Gross Sales and/or Gross Receipts and Other Non-
operating Income Do Not Exceed the VAT Threshold as Provided in
Section 109(BB) of this Code. — The rates prescribed under Subsection
(A)(2)(a) of this Section on taxable income, or eight percent (8%) income
tax based on gross sales or gross receipts and other non-operating
income in lieu of the graduated income tax rates under Subsection
(A)(2)(a) of this Section and the percentage tax under Section 116 of
this Code.
(b) If Total Gross Sales and/or Gross Receipts and Other Non-
operating Income Exceeds the VAT Threshold as Provided in Section
109(BB) of this Code. — The rates prescribed under Subsection
(A)(2)(a) of this Section.
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"(B) Rate of Tax on Certain Passive Income: —

"(1) Interests, Royalties, Prizes, and Other Winnings. — A final
tax at the rate of twenty percent (20%) is hereby imposed upon the
amount of interest from any currency bank deposit and yield or any other
monetary benefit from deposit substitutes and from trust funds and
similar arrangements; royalties, except on books, as well as other
literary works and musical compositions, which shall be imposed a final
tax of ten percent (10%); prizes (except prizes amounting to Ten
thousand pesos (P10,000) or less which shall be subject to tax under
Subsection (A) of Section 24; and other winnings (except winnings
amounting to Ten thousand pesos (P10,000) or less from Philippine
Charity Sweepstakes and Lotto which shall be exempt), derived from
sources within the Philippines: Provided, however, That interest income
received by an individual taxpayer (except a nonresident individual) from
a depository bank under the expanded foreign currency deposit system
shall be subject to a final income tax at the rate of fifteen percent (15%)
of such interest income: Provided, further, That interest income from
long-term deposit or investment in the form of savings, common or
individual trust funds, deposit substitutes, investment management
accounts and other investments evidenced by certificates in such form
prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be exempt
from the tax imposed under this Subsection:Provided, finally, That
should the holder of the certificate pre-terminate the deposit or
investment before the fifth (5th) year, a final tax shall be imposed on the
entire income and shall be deducted and withheld by the depository
bank from the proceeds of the long-term deposit or investment certificate
based on the remaining maturity thereof:
"xxx xxx xxx."
"(2) Cash and/or Property Dividends. — A final tax at the rate of
ten percent (10%) shall be imposed upon the cash and/or property
dividends actually or constructively received by an individual from a
domestic corporation or from a joint stock company, insurance or mutual
fund companies and regional operating headquarters of multinational
companies, or on the share of an individual in the distributable net
income after tax of a partnership (except a general professional
partnership) of which he is a partner, or on the share of an individual in
 the net income after tax of an association, a joint account, or a joint
venture or consortium taxable as a corporation of which he is a member
or co-venturer.
"(C) Capital Gains from Sale of Shares of Stock not Traded in the
Stock Exchange. — The provisions of Section 39(B) notwithstanding, a
final tax at the rate of fifteen percent (15%) is hereby imposed upon the
net capital gains realized during the taxable year from the sale, barter,
exchange or other disposition of shares of stock in a domestic
corporation, except shares sold, or disposed of through the stock
exchange.
"xxx xxx xxx."
SECTION 6. Section 25 of the NIRC,as amended, is hereby further
amended to read as follows:
"SEC. 25. Tax on Nonresident Alien Individual. —
"(A) Nonresident Alien Engaged in Trade or Business within the
Philippines. —
"xxx xxx xxx
"(B) Nonresident Alien Individual Not Engaged in Trade or
Business within the Philippines. —
"xxx xxx xxx
"(C) Alien Individual Employed by Regional or Area Headquarters
and Regional Operating Headquarters of Multinational Companies. —
There shall be levied, collected and paid for each taxable year upon the
gross income received by every alien individual employed by regional or
area headquarters and regional operating headquarters established in
the Philippines by multinational companies as salaries, wages,
annuities, compensation, remuneration and other emoluments, such as
honoraria and allowances, from such regional or area headquarters and
regional operating headquarters, a tax equal to fifteen percent (15%) of
such gross income: Provided, however, That the same tax treatment
shall apply to Filipinos employed and occupying the same position as
those of aliens employed by these multinational companies. For
purposes of this Chapter, the term 'multinational company' means a
foreign firm or entity engaged in international trade with affiliates or
subsidiaries or branch offices in the Asia-Pacific Region and other
foreign markets.
"(D) Alien Individual Employed by Offshore Banking Units. —
There shall be levied, collected and paid for each taxable year upon the
gross income received by every alien individual employed by offshore
banking units established in the Philippines as salaries, wages,
annuities, compensation, remuneration and other emoluments, such as
honoraria and allowances, from such offshore banking units, a tax equal
 to fifteen percent (15%) of such gross income: Provided, however, That
the same tax treatment shall apply to Filipinos employed and occupying
the same position as those of aliens employed by these offshore banking
units.
"(E) Alien Individual Employed by Petroleum Service Contractor
and Subcontractor. — An alien individual who is a permanent resident
of a foreign country but who is employed and assigned in the Philippines
by a foreign service contractor or by a foreign service subcontractor
engaged in petroleum operations in the Philippines shall be liable to a
tax of fifteen percent (15%) of the salaries, wages, annuities,
compensation, remuneration and other emoluments, such as honoraria
and allowances, received from such contractor or
subcontractor: Provided, however, That the same tax treatment shall
apply to a Filipino employed and occupying the same position as an
alien employed by petroleum service contractor and subcontractor.
"Any income earned from all other sources within the Philippines
by the alien employees referred to under Subsections (C), (D), and (E)
hereof shall be subject to the pertinent income tax, as the case may be,
imposed under this Code.
"(F) The preferential tax treatment provided in Subsections (C),
(D), and (E) of this Section shall not be applicable to regional
headquarters (RHQs), regional operating headquarters (ROHQs),
offshore banking units (OBUs) or petroleum service contractors and
subcontractors registering with the Securities and Exchange
Commission (SEC) after January 1, 2018: Provided, however, That
existing RHQs/ROHQs, OBUs or petroleum service contractors and
subcontractors presently availing of preferential tax rates for qualified
employees shall continue to be entitled to avail of the preferential tax
rate for present and future qualified employees."
SECTION 7. Section 27 of the NIRC,as amended, is hereby further
amended to read as follows:
"SEC. 27. Rates of Income Tax on Domestic Corporations. —
"(A) In General. — x x x
"xxx xxx xxx
"(C) Government-owned or -Controlled Corporations, Agencies
or Instrumentalities. — The provisions of existing special or general laws
to the contrary notwithstanding, all corporations, agencies, or
instrumentalities owned or controlled by the Government, except the
Government Service Insurance System (GSIS), the Social Security
System (SSS), the Philippine Health Insurance Corporation (PHIC), and
the local water districts shall pay such rate of tax upon their taxable
income as are imposed by this Section upon corporations or
associations engaged in a similar business, industry, or activity.
 "(D) Rates of Tax on Certain Passive Incomes. —
"(1) Interest from Deposits and Yield or any other Monetary
Benefit from Deposit Substitutes and from Trust Funds and Similar
Arrangements, and Royalties. — A final tax at the rate of twenty percent
(20%) is hereby imposed upon the amount of interest on currency bank
deposit and yield or any other monetary benefit from deposit substitutes
and from trust funds and similar arrangements received by domestic
corporations, and royalties, derived from sources within the
Philippines: Provided, however, That interest income derived by a
domestic corporation from a depository bank under the expanded
foreign currency deposit system shall be subject to a final income tax at
the rate of fifteen percent (15%) of such interest income.
"(2) Capital Gains from the Sale of Shares of Stock Not Traded in
the Stock Exchange. — A final tax at the rate of fifteen percent
(15%) shall be imposed on net capital gains realized during the taxable
year from the sale, exchange or other disposition of shares of stock in a
domestic corporation except shares sold or disposed of through the
stock exchange.
"xxx xxx xxx."
SECTION 8. Section 31 of the NIRC,as amended, is hereby further
amended to read as follows:
"SEC. 31. Taxable Income Defined. — The term 'taxable
income' means the pertinent items of gross income specified in this
Code, less deductions, if any, authorized for such types of income by
this Code or other special laws."
SECTION 9. Section 32 of the NIRC,as amended, is hereby further
amended to read as follows:
"SEC. 32. Gross Income. —
"(A) General Definition. — x x x
"(B) Exclusions from Gross Income. — x x x
"(1) x x x
"(7) Miscellaneous Items. —
"(a) x x x
"(e) 13th Month Pay and Other Benefits. — Gross benefits
received by officials and employees of public and private
entities: Provided, however, That the total exclusion under this
subparagraph shall not exceed Ninety thousand pesos (P90,000) which
shall cover:
"(i) Benefits received by officials and employees of the national
and local government pursuant to Republic Act No. 6686;
 "(ii) Benefits received by employees pursuant to Presidential
Decree No. 851, as amended by Memorandum Order No. 28, dated
August 13, 1986;
"(iii) Benefits received by officials and employees not covered by
Presidential Decree No. 851, as amended by Memorandum Order No.
28, dated August 13, 1986; and
"(iv) Other benefits such as productivity incentives and Christmas
bonus."
(Tax Reform for Acceleration and Inclusion (TRAIN), Republic Act No. 10963,
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[December 19, 2017])