AMENDING SECTION 290-B OF THE NATIONAL INTERNAL REVENUE CODE AS AMENDED, IN ORDER TO EXPAND THE SCOPE OF THE “FLEXIBILITY CLAUSE.”

• Number: Presidential Decree No. 1885
• Sections: 7

Preamble

WHEREAS, Sec. 290-B of the National Internal Revenue Code,

as amended, provides for a flexibility clause empowering the President, under

certain conditions and subject to specific limitations therein, to revise tax

rated, change the classification of taxable articles, and revise the taxable

base and manner of computing internal revenue tax;

WHEREAS, in order to enhance tax collection, it is necessary

to simplify and modify the existing tax structure through the systematization of

tax deadlines as well as the method and manner of tax computation;

WHEREAS, it appears that the present flexibility clause, is

inadequate to satisfy the foregoing objectives; moreover, the same is not an

effective instrument to enable the country to fulfill its ASEAN an international

commitments;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers in me vested by the Constitution, do hereby

order and decree, as follows:

Section 1

SECTION 1. Section 290-B (1) of the National Internal

Revenue Code, as amended, is hereby amended as follows:

Section 2

SEC. 2. Paragraph (2) of Section 290-B of the National

Internal Revenue Code, as amended, is hereby amended as follows:

“(2) Specific limitations on the exercise of authority to make adjustments in

all internal revenue taxes:

“(a) The existing tax rates may be increased or decreased by not more than

50% , Provided, that the rates as last revised shall be the basis for

this limitation.

“(b) Before any recommendation is submitted to the President by the Minister

of Finance pursuant to the provisions of this Section, a public hearing shall

whenever practicable be held and interested parties afforded a reasonable

opportunity to be heard.

Section 3

SEC. 3. Rules and Regulations. The Minister of

Finance upon the recommendation of the Commissioner of Internal Revenue, shall

promulgate the necessary rules and regulations to implement the provisions of

this Decree.

Section 4

SEC. 4. Repealing Clause. All laws, decrees,

executive orders, rules and regulations and other issuances or parts thereof

which are inconsistent with this Decree are hereby repealed, amended or modified

accordingly.

Section 5

SEC. 5. Effectivity. This Decree shall take effect

upon its approval.

Done in the City of Manila, this 5th day of October in the year of Our Lord,

nineteen hundred and eighty-three.

(Sgd.) FERDINAND E. MARCOS

President of the

Philippines

By the President:

(Sgd.) JUAN C. TUVERA

Presidential Executive

Assistant

Section 290-B

SEC. 290-B Flexibility Clause —

”(1) In general. In the interest of the national economy and general welfare

and subject to the limitations herein prescribed, the President upon

recommendation of the Minister of Finance is hereby empowered to make

adjustments on all internal revenue taxes where such adjustments refer to the

following:

“(a) Revision of rates;

“(b) Change in the classification of articles;

“(c) Revision of taxable base including modification or change of the manner

and method of computing the tax such as, but not limited to, the change in

deduction scheme from tax credit to cost deduction;

“(d) Revision of deadlines for the filing of tax returns, payment of tax and

compliance with other tax requirements; and

“(e) Modification of integration of safeguards to ensure the collection of

the correct tax.

“The above authority may be exercised by the President if any of the

following conditions exists:

“(a) When there is a need to obviate unemployment and economic ans social

dislocation;

“(b) Where, due to adverse economic conditions it becomes imperative to

revise tax rated and/or taxable bases;

“(c) Where, in the interest of economic development it is necessary to

redirect expenditure or consumption patterns;

“(d) Where, in the light of technological and social changes, it sis

necessary to change the classification of certain articles on the bases of the

concepts of essentiality or the degree of manufacturing done;

“(e) Whenever by reason of fluctuation or currency values and/or inflation or

deflation, the existing bases and/or price levels are no longer realistic or

consistent with the current price levels;

“(f) Where, it is necessary to counter adverse economic action on the part of

another country;

“(g) Where such revision is necessary to simplify and systematize the various

tax deadlines;

“(h) Where such adjustments are necessary pursuant to Asean or International

commitments in respect of trade, tariff and other similar

arrangements.”