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

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 290-B (1) of the National Internal
Revenue Code, as amended, is hereby amended as follows:

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.”

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.

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.

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.

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