Article 9p. 9

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

amended, otherwise known as the " General banking

Act ." A bank may either be a commercial bank, a thrift

bank, a development bank, a rural bank or specialized

government bank.

(W) The term ' non-bank financial intermediary ' means

a financial intermediary, as defined in Section 2(D)(C) of

Republic Act No. 337, [7] as amended, otherwise known as

the " General Banking Act, " authorized by the Bangko

Sentral

ng

Pilipinas (BSP) to perform quasi-banking

activities.

(X) The term ' quasi-banking activities ' means borrowing

funds from twenty (20) or more personal or corporate

lenders

at

any

one

time,

through

the

issuance,

endorsement, or acceptance of debt instruments of any

kind other than deposits for the borrower's own account,

or through the issuance of certificates of assignment or

similar

instruments,

with

recourse, or of repurchase

agreements for purposes of relending or purchasing

receivables

and

other

similar

obligations:

Provided,

however,

That

commercial,

industrial

and

other

non-financial companies, which borrow funds through

any of these means for the limited purpose of financing

their own needs or the needs of their agents or dealers,

shall not be considered as performing quasi-banking

functions.

(Y)

The

term

' deposit

substitutes '

shall

mean

an

alternative from of obtaining funds from the public (the

term ' public ' means borrowing from twenty (20) or more

individual or corporate lenders at any one time) other

than deposits, through the issuance, endorsement, or

acceptance of debt instruments for the borrowers own

account, for the purpose of relending or purchasing of

receivables and other obligations, or financing their own

needs or the needs of their agent or dealer. These

instruments may include, but need not be limited to

bankers'

acceptances,

promissory

notes,

repurchase

agreements, including reverse repurchase agreements

entered into by and between the Bangko Sentral ng

Pilipinas

(BSP)

and

any

authorized

agent

bank,

certificates of assignment or participation and similar

instruments with recourse: Provided, however, That debt

instruments issued for interbank call loans with maturity

of not more than five (5) days to cover deficiency in

reserves

against

deposit

liabilities,

including

those

between or among banks and quasi-banks, shall not be

considered as deposit substitute debt instruments.

(Z) The term ' ordinary income ' includes any gain from

the sale or exchange of property which is not a capital

asset or property described in Section 39(A)(1). Any gain

from the sale or exchange of property which is treated or

considered,

under

other

provisions

of

this

Title,

as

' ordinary income ' shall be treated as gain from the sale

or exchange of property which is not a capital asset as

defined in Section 39(A)(1). The term ' ordinary loss '

includes any loss from the sale or exchange of property

which is not a capital asset. Any loss from the sale or

exchange of property which is treated or considered,

under other provisions of this Title, as ' ordinary loss ' shall

be treated as loss from the sale or exchange of property

which is not a capital asset.

(AA) The term ' rank and file employees ' shall mean all

employees

who

are

holding neither managerial nor

supervisory position as defined under existing provisions

of the Labor Code of the Philippines, as amended.

(BB) The term ' mutual fund company ' shall mean an

open-end and close-end investment company as defined

under the Investment Company Act. [8]

(CC) The term ' trade, business or profession ' shall not

include performance of services by the taxpayer as an

employee.

(DD) The term ' regional or area headquarters ' shall

mean

a

branch

established

in

the

Philippines

by

multinational companies and which headquarters do not

earn or derive income from the Philippines and which act

as supervisory, communications and coordinating center

for

their

affiliates,

subsidiaries,

or

branches

in

the

Asia-Pacific Region and other foreign markets.

(EE) The term ' regional operating headquarters ' shall

mean

a

branch

established

in

the

Philippines

by

multinational companies which are engaged in any of the

following services: general administration and planning;

business

planning

and

coordination;

sourcing

and

procurement

of

raw

materials

and

components;

corporate finance advisory services; marketing control

and

sales

promotion;

training

and

personnel

management;

logistic

services;

research

and

development

services

and

product

development;

technical support and maintenance; data processing and

communications; and business development.

(FF)

The

term

' long-term

deposit

or

investment

certificate ' shall refer to certificate of time deposit or

investment in the form of savings, common or individual

trust funds, deposit substitutes, investment management

accounts and other investments with a maturity period of

not less than five (5) years, the form of which shall be

prescribed by the Bangko Sentral ng Pilipinas (BSP) and

issued

by

banks

only

(not

by

non-bank

financial

intermediaries and finance companies) to individuals in

denominations of Ten thousand pesos (P10,000) and

other denominations as may be prescribed by the BSP.

(GG) The term ' statutory minimum wage ' shall refer to

the rate fixed by the Regional Tripartite Wage and

Productivity Board, as defined by the Bureau of Labor

and Employment Statistics (BLES) of the Department of

Labor and Employment (DOLE). [9]

(HH) The term ' minimum wage earner ' shall refer to a

worker in the private sector paid the statutory minimum

wage or to an employee in the public sector with

compensation income of not more than the statutory

minimum wage in the non-agricultural sector where

he/she is assigned. [10]

CHAPTER II GENERAL PRINCIPLES

SEC. 23. General Principles of Income Taxation in the

Philippines. - Except when otherwise provided in this

Code:

(A) A citizen of the Philippines residing therein is taxable

on all income derived from sources within and without

the Philippines;

(B)

A nonresident citizen is taxable only on income

derived from sources within the Philippines;

(C) An individual citizen of the Philippines who is working

and deriving income from abroad as an overseas contract

worker is taxable only on income derived 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

shall

be

treated

as

an

overseas

contract worker;

(D)

An alien individual, whether a resident or not of the

Philippines, is taxable only on income derived from

sources within the Philippines;

(E)

A domestic corporation is taxable on all income

derived from sources within and without the Philippines;

and

(F)

A foreign corporation, whether engaged or not in

trade or business in the Philippines, is taxable only on

income derived from sources within the Philippines.

CHAPTER III TAX ON INDIVIDUALS

SEC. 24. Income Tax Rates. -

(A) Rates of Income Tax on Individual Citizen and

Individual Resident Alien of the Philippines . —

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