WHEREAS, capital gains accrue irregularly, and are
commonly considered as addition or accretion to capital, and not to
disposable income;
WHEREAS, most capital gains accumulate for a period
longer than one year, and to hold them as taxable income at the
particular year that they accrue creates a heavy tax burden for the
recipient;
WHEREAS, it has been observed that the capital gains
tax has locked in effects or causes the freezing of assets, which could
otherwise be mobilized to stimulate production and industry;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of
the Philippines, by virtue of the powers vested in me by the
Constitution as Commander-in-Chief of the Armed Forces of the
Philippines and pursuant to Proclamation No. 1081, dated September 21,
1972, do hereby decree and order that Section 34 (b) of the National
Internal Revenue Code, as amended, be further amended to read as
follows:
"SEC. 34(b) — In the case of a taxpayer, other than a corporation,
no gain or loss will be recognized upon the sale or exchange of a
capital asset except shares of stocks of corporations covered in Section
2 of Republic Act No. 6141, provided that such gains are
invested in the following within six (6) months from the date the gains
are realized:
(1) Government Bonds;
(2) Government Securities;
(3) Treasury Notes;
(4) Government Debentures; and
(5) Any productive enterprise."
All persons, natural or juridical, availing of this exemption shall
file a notice and a tax return on the sale or exchange of such capital
assets within thirty (30) days after such sale or exchange. All
investments shall also be reported to the Commissioner of Internal
Revenue within six (6) months after such sale or exchange of capital
assets out of which such capital gains have been derived.
The Commissioner of Internal Revenue, upon approval by the Secretary
of Finance, shall promulgate the implementing regulations and shall
prescribe the forms to be used by the taxpayers.
This Decree shall be effective for one year from the date of
promulgation.
Done in the City of Manila, this 5th day of October, in the year of
Our Lord, nineteen hundred and seventy-two.
(Sgd.) FERDINAND E. MARCOS
President
Republic of the Philippines
By the President:
(Sgd.) ROBERTO V. REYES
Acting Executive Secretary