Section 12
SEC. 12. Section 37 [b] of the Tax Code is hereby amended to read as follows: “[b] Net income from sources in the Philippines. – From the items of gross income specified in subsection [a] of this section there shall be deducted the expenses, losses, and other deductions properly allocated thereto and a ratable part of any expenses, interests, losses, and other deductions effectively connected with the business or trade conducted exclusively within the Philippines which cannot definitely be allocated to some items or class of gross income: Provided, That such items of deductions shall be allowed only if fully substantiated by all the information necessary for its calculation. The remainder, if any, shall be treated in full as net income from sources within the Philippines.”