(National Internal Revenue Code)
SECTION 1. Title of the
Code. - This Code shall be known as the National Internal Revenue
Code of 1997.
2. Powers and duties of the Bureau of Internal Revenue. - The Bureau
of Internal Revenue shall be under the supervision and control of the
Department of Finance and its powers and duties shall comprehend the assessment
and collection of all national internal revenue taxes, fees, and charges,
and the enforcement of all forfeitures, penalties, and fines connected
therewith, including the execution of judgments in all cases decided in
its favor by the Court of Tax Appeals and the ordinary courts. The Bureau
shall give effect to and administer the supervisory and police powers
conferred to it by this Code or other laws.
SEC. 3. Chief Officials
of the Bureau of Internal Revenue. - The Bureau of Internal Revenue
shall have a chief to be known as Commissioner of Internal Revenue, hereinafter
referred to as the Commissioner and four (4) assistant chiefs to be known
as Deputy Commissioners.
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance.
The power to decide disputed
assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under
this Code or other laws or portions thereof administered by the Bureau
of Internal Revenue is vested in the Commissioner, subject to the exclusive
appellate jurisdiction of the Court of Tax Appeals.
SEC. 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. - In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized:
(B) To Obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or -controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures of consortia and registered partnerships, and their members;
(C) To summon the person liable for tax or required to file a return, or any officer or employee of such person, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, or any other person, to appear before the Commissioner or his duly authorized representative at a time and place specified in the summons and to produce such books, papers, records, or other data, and to give testimony;
(D) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry; and
(E) To cause revenue officers
and employees to make a canvass from time to time of any revenue district
or region and inquire after and concerning all persons therein who may
be liable to pay any internal revenue tax, and all persons owning or
having the care, management or possession of any object with respect
to which a tax is imposed.
The tax or any deficiency tax so assessed shall be paid upon notice and demand from the Commissioner or from his duly authorized representative.
Any return, statement of declaration filed in any office authorized to receive the same shall not be withdrawn: Provided, That within three (3) years from the date of such filing , the same may be modified, changed, or amended: Provided, further, That no notice for audit or investigation of such return, statement or declaration has in the meantime been actually served upon the taxpayer.
(B) Failure to Submit Required Returns, Statements, Reports and other Documents. - When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by laws or rules and regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable.
In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes.
(C) Authority to Conduct Inventory-taking, surveillance and to Prescribe Presumptive Gross Sales and Receipts. - The Commissioner may, at any time during the taxable year, order inventory-taking of goods of any taxpayer as a basis for determining his internal revenue tax liabilities, or may place the business operations of any person, natural or juridical, under observation or surveillance if there is reason to believe that such person is not declaring his correct income, sales or receipts for internal revenue tax purposes. The findings may be used as the basis for assessing the taxes for the other months or quarters of the same or different taxable years and such assessment shall be deemed prima facie correct.
When it is found that a person has failed to issue receipts and invoices in violation of the requirements of Sections 113 and 237 of this Code, or when there is reason to believe that the books of accounts or other records do not correctly reflect the declarations made or to be made in a return required to be filed under the provisions of this Code, the Commissioner, after taking into account the sales, receipts, income or other taxable base of other persons engaged in similar businesses under similar situations or circumstances or after considering other relevant information may prescribe a minimum amount of such gross receipts, sales and taxable base, and such amount so prescribed shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person.
(D) Authority to Terminate Taxable Period. _ When it shall come to the knowledge of the Commissioner that a taxpayer is retiring from business subject to tax, or is intending to leave the Philippines or to remove his property therefrom or to hide or conceal his property, or is performing any act tending to obstruct the proceedings for the collection of the tax for the past or current quarter or year or to render the same totally or partly ineffective unless such proceedings are begun immediately, the Commissioner shall declare the tax period of such taxpayer terminated at any time and shall send the taxpayer a notice of such decision, together with a request for the immediate payment of the tax for the period so declared terminated and the tax for the preceding year or quarter, or such portion thereof as may be unpaid, and said taxes shall be due and payable immediately and shall be subject to all the penalties hereafter prescribed, unless paid within the time fixed in the demand made by the Commissioner.
(E) Authority of the Commissioner
to Prescribe Real Property Values. - The Commissioner is hereby authorized
to divide the Philippines into different zones or areas and shall, upon
consultation with competent appraisers both from the private and public
sectors, determine the fair market value of real properties located
in each zone or area. For purposes of computing any internal revenue
tax, the value of the property shall be, whichever is the higher of;
(2) the fair market value as shown in the schedule of values of the Provincial and City Assessors.
(2) any taxpayer who has filed an application for compromise of his tax liability under Sec. 204 (A) (2) of this Code by reason of financial incapacity to pay his tax liability.
(G) Authority to Accredit and Register Tax Agents. - The Commissioner shall accredit and register, based on their professional competence, integrity and moral fitness, individuals and general professional partnerships and their representatives who prepare and file tax returns, statements, reports, protests, and other papers with or who appear before, the Bureau for taxpayers. Within one hundred twenty (120) days from January 1, 1998, the Commissioner shall create national and regional accreditation boards, the members of which shall serve for three (3) years, and shall designate from among the senior officials of the Bureau, one (1) chairman and two (2) members for each board, subject to such rules and regulations as the Secretary of Finance shall promulgate upon the recommendation of the Commissioner.
Individuals and general professional partnerships and their representatives who are denied accreditation by the Commissioner and/or the national and regional accreditation boards may appeal such denial to the Secretary of Finance, who shall rule on the appeal within sixty (60) days from receipt of such appeal. Failure of the Secretary of Finance to rule on the Appeal within the prescribed period shall be deemed as approval of the application for accreditation of the appellant.
(H) Authority of the Commissioner
to Prescribe Additional Procedural or Documentary Requirements. - The
Commissioner may prescribe the manner of compliance with any documentary
or procedural requirement in connection with the submission or preparation
of financial statements accompanying the tax returns.
(b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau;
(c) The power to compromise or abate, under Sec. 204 (A) and (B) of this Code, any tax liability: Provided, however, That assessments issued by the regional offices involving basic deficiency taxes of Five hundred thousand pesos (P500,000) or less, and minor criminal violations, as may be determined by rules and regulations to be promulgated by the Secretary of finance, upon recommendation of the Commissioner, discovered by regional and district officials, may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman, the Assistant Regional Director, the heads of the Legal, Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer, as members; and
(d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept.
Internal revenue stamps, whether of a bar code or fuson design, shall be firmly and conspicuously affixed on each pack of cigars and cigarettes subject to excise tax in the manner and form as prescribed by the Commissioner, upon approval of the Secretary of Finance.
(B) Receipts for Payment
Made. - It shall be the duty of the Commissioner or his duly authorized
representative or an authorized agent bank to whom any payment of any
tax is made under the provision of this Code to acknowledge the payment
of such tax, expressing the amount paid and the particular account for
which such payment was made in a form and manner prescribed therefor
by the Commissioner.
SEC. 10. - Revenue Regional Director. - Under rules and regulations, policies and standards formulated by the Commissioner, with the approval of the Secretary of Finance, the Revenue Regional director shall, within the region and district offices under his jurisdiction, among others:
(b) Administer and enforce internal revenue laws, and rules and regulations, including the assessment and collection of all internal revenue taxes, charges and fees.
(c) Issue Letters of authority for the examination of taxpayers within the region;
(d) Provide economical, efficient and effective service to the people in the area;
(e) Coordinate with regional offices or other departments, bureaus and agencies in the area;
(f) Coordinate with local government units in the area;
(g) Exercise control and supervision over the officers and employees within the region; and
(h) Perform such other functions as may be provided by law and as may be delegated by the Commissioner.
It shall be the duty of every
Revenue District Officer to examine the efficiency of all officers and
employees of the Bureau of Internal Revenue under his supervision, and
to report in writing to the Commissioner, through the Regional Director,
any neglect of duty, incompetency, delinquency, or malfeasance in office
of any internal revenue officer of which he may obtain knowledge, with
a statement of all the facts and any evidence sustaining each case.
SEC. 12. Agents and Deputies for Collection of National Internal Revenue Taxes. - The following are hereby constituted agents of the Commissioner:
(b) The head of the appropriate government office and his subordinates with respect to the collection of energy tax; and
(c) Banks duly accredited by the Commissioner with respect to receipt of payments internal revenue taxes authorized to be made thru bank.
Any officer or employee
of an authorized agent bank assigned to receive internal revenue tax
payments and transmit tax returns or documents to the Bureau of Internal
Revenue shall be subject to the same sanctions and penalties prescribed
in Sections 269 and 270 of this Code.
SEC. 14. Authority of Officers
to Administer Oaths and Take Testimony. - The Commissioner, Deputy
Commissioners, Service Chiefs, Assistant Service Chiefs, Revenue Regional
Directors, Assistant Revenue Regional Directors, Chiefs and Assistant
Chiefs of Divisions, Revenue District Officers, special deputies of the
Commissioner, internal revenue officers and any other employee of the
Bureau thereunto especially deputized by the Commissioner shall have the
power to administer oaths and to take testimony in any official matter
or investigation conducted by them regarding matters within the jurisdiction
of the Bureau.
SEC. 15. Authority of Internal
Revenue Officers to Make Arrests and Seizures. - The Commissioner,
the Deputy Commissioners, the Revenue Regional Directors, the Revenue
District Officers and other internal revenue officers shall have authority
to make arrests and seizures for the violation of any penal law, rule
or regulation administered by the Bureau of Internal Revenue. Any person
so arrested shall be forthwith brought before a court, there to be dealt
with according to law.
SEC. 16. Assignment of
Internal Revenue Officers Involved in Excise Tax Functions to Establishments
Where Articles subject to Excise Tax are Produced or Kept. - The Commissioner
shall employ, assign, or reassign internal revenue officers involved in
excise tax functions, as often as the exigencies of the revenue service
may require, to establishments or places where articles subject to excise
tax are produced or kept: Provided, That an internal revenue officer assigned
to any such establishment shall in no case stay in his assignment for
more than two (2) years, subject to rules and regulations to be prescribed
by the Secretary of Finance, upon recommendation of the Commissioner.
SEC. 17. Assignment of Internal Revenue Officers and Other Employees to Other Duties. - The Commissioner may, subject to the provisions of Section 16 and the laws on civil service, as well as the rules and regulations to be prescribed by the Secretary of Finance upon the recommendation of the Commissioner, assign or reassign internal revenue officers and employees of the Bureau of Internal Revenue, without change in their official rank and salary, to other or special duties connected with the enforcement or administration of the revenue laws as the exigencies of the service may require: Provided, That internal revenue officers assigned to perform assessment or collection function shall not remain in the same assignment for more than three (3) years; Provided, further, That assignment of internal revenue officers and employees of the Bureau to special duties shall not exceed one (1) year.
SEC. 19. Contents of Commissioner's Annual Report. - The annual Report of the Commissioner shall contain detailed statements of the collections of the Bureau with specifications of the sources of revenue by type of tax, by manner of payment, by revenue region and by industry group and its disbursements by classes of expenditures.
In case the actual collection
exceeds or falls short of target as set in the annual national budget
by fifteen percent (15%) or more, the Commissioner shall explain the reason
for such excess or shortfall.
SEC. 20. Submission of Report and Pertinent Information by the Commissioner.
(B) Report to Oversight
Committee. - The Commissioner shall, with reference to Section 204 of
this Code, submit to the Oversight Committee referred to in Section
290 hereof, through the Chairmen of the Committee on Ways and Means
of the Senate and House of Representatives, a report on the exercise
of his powers pursuant to the said section, every six (6) months of
each calendar year.
(b) Estate and donor's taxes;
(c) Value-added tax;
(d) Other percentage taxes;
(e) Excise taxes;
(f) Documentary stamp taxes; and
(g) Such other taxes as are or hereafter may be imposed and collected by the Bureau of Internal Revenue.