iRealtee OS Glossary

National Internal Revenue Code

The NIRC is organized into 13 titles covering all aspects of Philippine taxation:

National Internal Revenue Code

National Internal Revenue Code (NIRC) is the primary tax law of the Philippines that governs the assessment and collection of all national internal revenue taxes, fees, and charges administered by the Bureau of Internal Revenue (BIR). Originally enacted as Republic Act No. 8424 (Tax Reform Act of 1997), the NIRC establishes tax rates, filing requirements, compliance standards, and penalties for violations.

Key Provisions

The NIRC is organized into 13 titles covering all aspects of Philippine taxation:

  • Title I: Organization and Function of the Bureau of Internal Revenue
  • Title II: Tax on Income (individual, corporate, withholding)
  • Title III: Estate and Donor's Taxes
  • Title IV: Value-Added Tax (VAT)
  • Title V: Other Percentage Taxes
  • Title VI: Excise Taxes on Certain Goods
  • Title VII: Documentary Stamp Tax
  • Title VIII: Remedies
  • Title IX: Compliance Requirements (books of accounts, registration)
  • Title X: Statutory Offenses and Penalties
  • Title XI: Allotment of Internal Revenue
  • Title XII: Oversight Committee
  • Title XIII: Tax Incentives

Amendments to the NIRC

The NIRC has been amended by several laws to modernize Philippine taxation:

  • RA 10963 (TRAIN Law, 2017): Reformed personal income tax brackets and adjusted VAT exemptions
  • RA 11256 (2019): Extended tax amnesty provisions
  • RA 11346 (2019): Increased excise taxes on tobacco products
  • RA 11467 (2020): Further increased excise taxes on alcohol and tobacco
  • RA 11534 (CREATE Law, 2021): Reduced corporate income tax from 30% to 25% (20% for small businesses)

Who is Affected?

The NIRC applies to:

  • Individual taxpayers earning income in the Philippines
  • Corporations registered with the Securities and Exchange Commission (SEC)
  • Self-employed professionals and sole proprietors
  • Real estate developers and PRC-licensed brokers
  • Employers required to withhold taxes from employees
  • VAT-registered businesses exceeding the PHP 3 million annual threshold

Penalties Under the NIRC

The NIRC establishes civil and criminal penalties for non-compliance. These are particularly relevant for real estate practitioners who must maintain proper records.

Civil Penalties (Section 248):

  • 25% surcharge on unpaid taxes for failure to file returns or pay on time
  • 20% annual interest on unpaid amounts from due date until full payment

Criminal Penalties (Section 255):

  • Fine of not less than PHP 10,000
  • Imprisonment of 1-10 years
  • Applies to willful failure to pay tax, file returns, keep records, or supply accurate information

Books of Accounts Violations (Section 232): Failure to maintain proper books of accounts exposes taxpayers to both compromise penalties and criminal liability under Section 255.

Unpaid Tax Amount Compromise Penalty
Up to PHP 5,000 PHP 1,000
PHP 5,001-10,000 PHP 3,000
PHP 10,001-20,000 PHP 5,000
PHP 20,001-50,000 PHP 10,000
PHP 50,001-100,000 PHP 15,000
Over PHP 5,000,000 PHP 50,000

Relevance to Philippine Real Estate

For real estate brokerages and developers, NIRC compliance involves:

Real estate platforms like iRealtee help practitioners automate BIR tax report generation to ensure compliance with NIRC requirements.

References

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