Section 7. Section 28 of The National Internal Revenue Code of 1997, As

Section 7.
Section 28 of the National Internal Revenue Code of 1997, as

amended, is hereby further amended to read as follows:
"SEC. 28. Rates of Income Tax on Foreign Corporations. -
"(1) In General. — Except as otherwise provided in this Code, a

corporation organized, authorized, or existing under the laws of any
foreign country, engaged in trade or business within the Philippines,
shall be subject to an income tax equivalent to twenty-five percent
(25%) of the taxable income derived in the preceding taxable year
from all sources within the Philippines effective July 1, 2020.
"In the case of corporations adopting the fiscal-year accounting

period, the taxable income shall be computed without regard to the
specific date when sales, purchases and other transactions occur.
Their income and expenses for the fiscal year shall be deemed to
have been earned and spent equally for each month of the period.
"The corporate income tax rate shall be applied on the amount

computed by multiplying the number of months covered by the new
rate within the fiscal year by the taxable income of the corporation
for the period, divided by twelve.
"(2) Minimum Corporate Income Tax of Resident Foreign

Corporations. — A minimum corporate income tax of two percent
(2%) of gross income, as prescribed under Section 27(E) of this Code,
shall be imposed, under the same conditions, on a resident foreign
corporation taxable under paragraph (1) of this
Subsection: Provided, That effective July 1, 2020 until Ju.ne 303
2023, the rate shall be one percent (1%).
"(3) x x x
"(4) Tax on Branch Profits Remittances. - x x x
"(5) Regional or Area Headquarters and Regional Operating

Headquarters of Multinational Companies. -
"(a) Regional or area headquarters as defined in Section 22

(DD) shall not be subject to income tax.
"(b) Regional operating headquarters as defined in Section 22

(EE) shall pay a tax of ten percent (10%) of their taxable
income: Provided, That effective January 1, 2022, regional
operating headquarters shall be subject to the regular
corporate income tax.
"(6) Tax on Certain Incomes Received by a Resident Foreign

Corporation. -
"(a) Interest from Deposits and Yield or any other Monetary

Benefit from Deposit Substitutes, Trust Funds and Similar
Arrangements and Royalties. — Interest from any currency
bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust funds and similar
arrangements and royalties derived from sources within the
Philippines shall be subject to a final income tax at the rate of
twenty percent (20%) of such interest: Provided, however,
That interest income derived by a resident foreign 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.
"(b) Income Derived under the Expanded Foreign Currency

Deposit System. - x x x
"(c) Capital Gains from Sale of Shares of Stock Not Traded in
the Stock Exchange.ℒαwρhi ৷ — 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.
"(d) Intercorporate Dividends. - x x x
"(B) Tax on Nonresident Foreign Corporation. -
"(1) In General. — Except as otherwise provided in this Code, a

foreign corporation not engaged in trade or business in the
Philippines, effective January 1, 2021, shall pay a ta.x equal to
twenty-five percent (25%) of the gross income received during each
taxable year from all sources within the Philippines, such as
interests, dividends, rents, royalties, salaries, premiums (except
reinsurance premiums), annuities, emoluments or other fixed or
determinable annual, periodic or casual gains, profits and income,
and capital gains, except capital gains subject to tax under
subparagraph 5(c).
"(2) x x x
"(3) x x x
"(4) x x x
"(5) Tax on Certain Incomes Received by a Nonresident Foreign

Corporation. -
"(a) Interest on Foreign Loans. - x x x

"
"(b) Intercorporate Dividends. - A final withholding tax at the

rate of fifteen percent (15%) is hereby imposed on the amount
of cash and/or property dividends received from a domestic
corporation, which shall be collected and paid as provided in
Section 57(A) of this Code, subject to the condition that the
country in which the nonresident foreign corporation is
domiciled, shall allow a credit against the tax due from the
nonresident foreign corporation taxes deemed to have been
paid in the Philippines equivalent to fifteen percent (15%),
which represents the difference between the regular income
tax and the fifteen percent (15%) tax on dividends as provided
in this subparagraph: Provided, That effective July 1, 2020,
the credit against the tax due shall be equivalent to the
difference between the regular income tax rate provided in
Section 28(B)(1) of this Code and the fifteen percent (15%) tax
on dividends;
"(c) Capital Gains from Sale of Shares of Stock Not Traded in

the Stock Exchange. — A final senior high schools, public
higher education 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 the stock exchange.
Section 8. Section 29 of the National Internal Revenue Code of 1997, as

amended, on the imposition of improperly accumulated earnings tax, is hereby
repealed.
Section 9. Section 34 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 34. Deductions from Gross Income. - Except for taxpayers earning

compensation income arising from personal services rendered under an
employer-employee relationship where no deductions shall be allowed under this
Section, in computing taxable income subject to income tax under Sections 24(A);
25(A); 26; 27(A), (B), and (C); and 28(A)(I), there shall be allowed the following
deductions from gross income:
"(A) Expenses. -
"(1) Ordinary and Necessary trade, Business or Professional

Expenses. -
"(a) x x x
"(i) x x x
"x x x
"(v) An additional deduction from taxable income of one-half

(1/2) of the value of labor training expenses incurred for skills
development of enterprise-based trainees enrolled in public
senior high schools, public higher education institutions, or
public technical and vocational institutions and duly covered
by an apprenticeship agreement under Presidential Decree
No. 442, series of 1974, or the 'Labor Code of the Philippines',
as amended, shall be granted to
enterprises: Provided, further, That for the additional
deduction foe enterprise-based training of students from
public educational institutions, the enterprise shall secure
proper certification from the DepEd, TESDA, or
CHED: Provided, finally, That such deduction shall not
exceed ten percent (10%) of direct labor wage.
"(B) Interest. -
"(1) In General. - The amount of interest paid or incurred

within a taxable year on indebtedness in connection with the
taxpayer's profession, trade or business shall be allowed as
deduction from gross income: Provided, however, That the
taxpayer's otherwise allowable deduction for interest expense
shall be reduced by twenty percent (20%) of the interest
income subjected to final tax: Provided, finally, That if the
interest income tax is adjusted in the future, the interest
expense reduction rate shall be adjusted accordingly based
on the prescribed standard formula as defined in the rules
and regulations to be promulgated by the Secretary of
Finance, upon the recommendation of the Commissioner of
Internal Revenue.
"(2) x x x
"(C) Taxes. - x x x
"(D) Losses. - x x x

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Section 7. Section 28 of The National Internal Revenue Code of 1997, As

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Section 7.

Section 28 of the National Internal Revenue Code of 1997, as

"SEC. 28. Rates of Income Tax on Foreign Corporations. -

"(1) In General. — Except as otherwise provided in this Code, a

"In the case of corporations adopting the fiscal-year accounting

"The corporate income tax rate shall be applied on the amount

"(2) Minimum Corporate Income Tax of Resident Foreign

"(5) Regional or Area Headquarters and Regional Operating

"(a) Regional or area headquarters as defined in Section 22

"(b) Regional operating headquarters as defined in Section 22

"(6) Tax on Certain Incomes Received by a Resident Foreign

"(a) Interest from Deposits and Yield or any other Monetary

"(b) Income Derived under the Expanded Foreign Currency

"(d) Intercorporate Dividends. - x x x

"(B) Tax on Nonresident Foreign Corporation. -

"(1) In General. — Except as otherwise provided in this Code, a

"(5) Tax on Certain Incomes Received by a Nonresident Foreign

"(a) Interest on Foreign Loans. - x x x

"(b) Intercorporate Dividends. - A final withholding tax at the

"(c) Capital Gains from Sale of Shares of Stock Not Traded in

Section 8. Section 29 of the National Internal Revenue Code of 1997, as

"SEC. 34. Deductions from Gross Income. - Except for taxpayers earning

"(1) Ordinary and Necessary trade, Business or Professional

"(v) An additional deduction from taxable income of one-half

"(1) In General. - The amount of interest paid or incurred

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