Section 6Sec./Art. 6

Section 27 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 27. Rates of Income Tax on Domestic Corporations. -

x x x

(D) Rates of Tax on Certain Passive Income. -

(1) Interests. - A final tax of twenty percent (20%) is hereby imposed upon the the amount of interest, yield, or other monetary benefit earned or received from any currency bank deposit, deposit substitute, trust fund, or other similar arrangements.

(2) Tax on Income Derived under the Expanded Foreign Currency Deposit System. - Income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions with nonresidents, offshore banking units in the Philippines, local commercial banks including branches of foreign banks that may be authorized by the Bangko Sentral of the Philippines (BSP) to transact business with foreign currency deposit system units and other depository banks under the expanded foreign currency deposit system shall be exempt from all taxes, except net income from such transactions as may be specified by the Secretary of Finance, upon the recommendation by the Monetary Board to be subject to the regular income tax payable by banks: Provided, however, That interest income from foreign currency loans granted by such depository banks under said expanded system to residents other than offshore banking units in the Philippines or other depository banks under the expanded system shall be subject to a final tax at the rate of ten percent (10%).

(3) Intercorporate Dividends. - x x x

(4) Capital Gains from the Sale, Exchange, or Disposition of Shares of Stock Not Traded in a Local or Foreign Stock Exchange. - 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, exchange, or other modes of disposition of shares of stock of a domestic or foreign corporation, except shares sold or disposed of through a local or foreign stock exchange subject to stock transaction tax under Section 127(A) and (B) of this Code.

(5) Capital Gains Realized from the Sale, Exchange, or Disposition of Lands and/or Buildings. -

(6) Royalties. - A final tax of twenty percent (20%) is hereby imposed on royalties earned as passive income.

x x x."