Section 290-B is hereby renumbered and amended to read as follows: “SEC. 241. Flexibility clause.
Section 41
SEC. 41. Section 290-B is hereby renumbered and amended to read as follows: “SEC. 241. 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 for 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 or 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 and special dislocation; “[b] Where, due to adverse economic conditions, it becomes imperative to revise tax rates 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 is 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 base 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; and “[h] Where such adjustments are necessary pursuant to ASEAN or international commitments in respect of trade, tariff and other similar arrangements. “[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. Provided, further, That in the case of the sales on second sale of agricultural food products sold in their original state or where such agricultural food products merely have undergone the simple processes, the existing rate may be increased to not more than 3%. “[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. “[3] [a] Counter-measure against discriminatory tax treatment of Philippine taxpayers. -Whenever it is established by the Philippine Government that - “[1] the law of any foreign country discriminates against Philippine citizens or domestic corporations with respect to the effective tax rate on their income in that country or on articles coming from the Philippines and brought into that country, and “[2] such foreign country, inspite of appropriate request by the Philippine Government, refuses or fails to abate or otherwise remedy such discriminatory and adverse tax treatment of Philippine citizens, corporations or products, the President may, upon recommendation of the Commissioner of Internal Revenue, through the Minister of Finance, and as a counter measure against such discrimination, adjust the effective rate of tax to be applied on income in the Philippines of nationals, residents or corporations of such foreign country or on articles produced or manufactured thereat and imported into the Philippines. “The tax rate adjustment, which shall be aimed at alleviating the effect of such discrimination by placing the reciprocal tax treatment of citizens, corporations and products of the Philippines and those of the foreign countries on a parity basis or on substantially equivalent terms, may consist of: “[i] disallowance in whole or part of any deduction, credit or exemption, or “[ii] increase in the rate of tax. “[b] Rescission of retaliatory tax rate adjustment. – Upon being advised that the foreign country has so amended its law as to remove the cause of discrimination against Philippine citizens, corporations, or products, the President, at the instance of the Minister of Finance and the Commissioner of Internal Revenue, shall rescind the retaliatory tax rate adjustment, whereupon the citizens, corporations or products of the foreign country shall again be subject to tax in accordance with the applicable provisions of this Code. “[4] Rules and regulations. – The Minister of Finance, upon recommendation of the Commissioner of Internal Revenue, shall promulgate the necessary rules and regulations to implement the provisions of this section.”