Section 9
SEC. 9. Paragraphs [a] [3]; [b] [1]; and [b] [2] of Section 30 of the National Internal Revenue Code are hereby amended and a new sub-paragraph to Section 30 [d] [1], denoted as 30 [d] [1] [c] is hereby inserted, to read as follows: “[a] [3] Expenses allowable to private educational institutions. – In addition to the expenses allowable as deductions under subparagraph [1] of this paragraph, a private educational institution, whether stock or nonstock, may at its option, elect either [a] to deduct expenditures otherwise considered as capital outlays of depreciable assets incurred during the taxable year for the expansion of school facilities or [b] to deduct allowances for depreciation therefor under paragraph [f] of this Section.” “[b] [1] In general. – That amount of interest paid or accrued within a taxable year on indebtedness in connection with the taxpayer’s profession, trade or business, except on indebtedness incurred or continued to purchase or carry obligation the interest upon which is exempt from taxation as income under this Title. However, no such deduction shall be allowed to a branch in the Philippines in respect to the amount of interest paid or incurred abroad by a non-resident parent lending institution, unless the indebtedness was incurred to provide funds for investment in the said resident branch, the income from which is taxable under this Title. “The deduction shall be allowed to the branch if it submits an authenticated copy of the investment agreement and such other information as may be required for its determination. “[b] [2] Interest allowable to non-resident aliens. – In the case of a non-resident alien individual or a foreign corporation, the amount of interest allowable is the amount of interest paid within the year on indebtedness incurred in connection with his profession, trade or business in the Philippines, except on indebtedness incurred or continued to purchase or carry obligations, the interest upon which is wholly exempt from taxation as income under this Title, and a ratable part of any interest effectively connected with the business or trade conducted exclusively within the Philippines which cannot definitely be allocated to income from within the Philippines; but this deduction shall be allowed only if such non-resident alien individual or foreign corporation includes in the return required by this Title all the information necessary for its calculation.” “[d] [7] [C] No loss shall be allowed as a deduction under this paragraph if at the time of the filing of the return, such loss has been claimed as a deduction for estate tax purposes in the estate tax return.”