National Internal Revenue Code (NIRC)
Updated June 13, 2026
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Definition
The National Internal Revenue Code (NIRC) is the main tax law of the Philippines, officially known as Republic Act No. 8424, that establishes the legal framework for all national taxes including income tax, value-added tax, excise tax, and other internal revenue taxes, along with their administration and enforcement procedures.
The NIRC is the foundation of the Philippine national tax system. The first National Internal Revenue Code was Commonwealth Act No. 466 of 1939; it was replaced by the National Internal Revenue Code of 1977 (Presidential Decree No. 1158), which Republic Act No. 8424, the Tax Reform Act of 1997, amended and restated. The Code defines taxable income, sets tax rates, establishes filing requirements, and gives the Bureau of Internal Revenue (BIR) its powers to assess and collect taxes. The Code is divided into titles: Title I covers the organization and functions of the BIR; Title II, income tax; Title III, estate and donor's taxes; Title IV, value-added tax; Title V, other percentage taxes; Title VI, excise taxes; Title VII, documentary stamp tax; Title VIII, remedies; Title IX, compliance requirements; and Title X, statutory offenses and penalties. It has been amended many times, including by the TRAIN Law (RA 10963), the CREATE Act (RA 11534), the Ease of Paying Taxes Act (RA 11976), RA 12023 on VAT on digital services, and CMEPA (RA 12214).
Detailed explanation
Overview
The National Internal Revenue Code (NIRC), as restated by Republic Act No. 8424 (the Tax Reform Act of 1997, approved on December 11, 1997), is the main Philippine statute on national internal revenue taxes. It amended and restated the National Internal Revenue Code of 1977 (Presidential Decree No. 1158). It is the legal basis for national tax obligations, exemptions and enforcement administered by the Bureau of Internal Revenue (BIR).
Structure and Scope
The NIRC is organized into titles:
Title I: Organization and Function of the BIR sets the powers of the Commissioner, including the power to interpret tax laws and to make assessments (NIRC §§1 to 20).
Title II: Tax on Income covers individual and corporate income tax, gross income, deductions, returns and withholding (NIRC §§21 to 83).
Title III: Estate and Donor's Taxes (NIRC §§84 to 104).
Title IV: Value-Added Tax (NIRC §§105 to 115).
Titles V to VII: Other Percentage Taxes, Excise Taxes and Documentary Stamp Tax (NIRC §§116 to 201).
Titles VIII to X: Remedies, Compliance Requirements, and Statutory Offenses and Penalties cover assessment and collection, books of accounts, registration, invoicing, surcharges, interest and crimes (NIRC §§202 to 282).
Key Amendments
The NIRC has been substantially amended by later laws:
Tax Reform for Acceleration and Inclusion (TRAIN) Law, RA 10963 (2017) reformed individual income tax brackets, repealed personal and additional exemptions, set estate and donor's tax at 6%, and raised excise taxes on fuel, automobiles and sweetened beverages, effective January 1, 2018.
Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, RA 11534 (2021) cut the regular corporate income tax from 30% to 25% from July 1, 2020, with a 20% rate for small domestic corporations, and reformed tax incentives.
Minimum Corporate Income Tax (MCIT) is 2% of gross income and applies from a corporation's fourth taxable year when it is higher than the regular corporate income tax (NIRC §27(E)). The CREATE Act (RA 11534) cut it to 1% only from July 1, 2020 to June 30, 2023.
Ease of Paying Taxes Act, RA 11976 (2024) allowed returns to be filed with any authorized agent bank or Revenue District Office, classified taxpayers as micro, small, medium and large, and reduced penalties for micro and small taxpayers. The 8% income tax option for small self-employed taxpayers comes from the TRAIN Law (RA 10963).
Capital Markets Efficiency Promotion Act (CMEPA), RA 12214 (2025) set a 20% final tax on deposit interest in any currency and cut the stock transaction tax to 0.1%, effective July 1, 2025.
Core Tax Types Under NIRC
Income Tax (NIRC §21 et seq.) is imposed on individuals and corporations. Individual rates under the graduated table run from 0% on the first ₱250,000 to 35% on taxable income above ₱8,000,000 (as amended by TRAIN). Corporate income tax is 25%, or 20% for small domestic corporations (as amended by CREATE).
Value-Added Tax (NIRC §105 et seq.) is a 12% tax on sales of goods and services, with exempt transactions listed in NIRC §109. VAT-registered persons credit input VAT against output VAT.
Excise Tax (NIRC §129 et seq.) is imposed on specific goods including alcohol, tobacco, petroleum products and automobiles. Rates vary by product category and are set by law.
Estate Tax (NIRC §84 et seq.) is a flat 6% tax on the net estate of a deceased person, imposed on the estate itself rather than on heirs (NIRC §84, as amended by TRAIN).
Donor's Tax (NIRC §98 et seq.) is 6% of total gifts above ₱250,000 made during the calendar year (NIRC §99, as amended by TRAIN).
Administration and Enforcement
The BIR, under the Department of Finance, administers and enforces the NIRC through its national office, regional offices and Revenue District Offices. Revenue Regulations are promulgated by the Secretary of Finance upon recommendation of the Commissioner (NIRC §244), and the BIR issues Revenue Memorandum Circulars and rulings to guide taxpayers.
Key enforcement mechanisms include:
Assessment (NIRC §203, §222): The BIR generally assesses within three years from the filing deadline or the date of filing, whichever is later; the period is ten years from discovery in cases of fraud or failure to file.
Collection (NIRC §205 et seq.): The BIR may collect through distraint of personal property, levy on real property, or civil and criminal action.
Penalties (NIRC §248 et seq.): Taxpayers face surcharges (25%, or 50% for fraud), interest (12% a year), and criminal penalties for willful violations.
Protests and Appeals (NIRC §228): Taxpayers may protest an assessment within 30 days and appeal to the Court of Tax Appeals.
Recent Developments
CMEPA (RA 12214), approved on May 29, 2025 and effective July 1, 2025, changed the tax on interest and other passive income, documentary stamp tax and the stock transaction tax. It did not change estate or donor's tax, which have been at 6% since TRAIN took effect in 2018.
Why it matters
The NIRC is the legal foundation of every Filipino taxpayer's obligations. Whether you are an employee, self-employed, business owner, or investor, your tax liability, deductions, and compliance deadlines are determined by NIRC provisions. Understanding the NIRC helps you claim legitimate deductions, avoid penalties, and exercise your taxpayer rights before the BIR and courts.
How it works
Determine Your Tax Type
Identify which title of the NIRC applies to your income or transaction, for example Title II for income tax on salary or business income, Title IV for VAT on sales, or Title III for estate and donor's taxes. Each title sets the tax base, rate and exemptions.
Calculate Your Tax Liability
Apply the relevant NIRC formula to your gross income or transaction value, deduct allowable exclusions and deductions, and compute the tax using the applicable rate. File the required BIR form (e.g., Form 1700 for income tax) by the deadline.
Pay and Comply
Pay the BIR through authorized agent banks, Revenue District Offices or authorized tax software providers by the due date. Preserve books and records for five years from the filing deadline (NIRC §235, as amended by RA 11976). Late payment adds a 25% surcharge (NIRC §248) and 12% annual interest (NIRC §249).
Appeal if Disputed
If the BIR issues an assessment, you may protest it within 30 days from receipt. If the protest is denied, or not acted on within 180 days from submission of documents, you may appeal to the Court of Tax Appeals within 30 days (NIRC §228).
Examples
Salaried employee earning ₱600,000 annually
Juan dela Cruz has ₱600,000 of taxable income a year. Under NIRC §24(A)(2)(a) (as amended by TRAIN), the first ₱250,000 is taxed at 0%, the next ₱150,000 at 15% (₱22,500) and the remaining ₱200,000 at 20% (₱40,000), for income tax of ₱62,500.
Self-employed professional with ₱180,000 gross receipts
Maria Santos, a freelance consultant, earns ₱180,000 in gross receipts a year. Under NIRC §24(A)(2)(b) as amended by TRAIN, she may elect 8% on gross receipts above ₱250,000 instead of graduated rates and percentage tax. Her receipts are below ₱250,000, so her income tax under the 8% option is ₱0.
Corporation with ₱5,000,000 net income
ABC Corporation earns ₱5,000,000 net taxable income. Under NIRC §27(A) (as amended by CREATE), its corporate income tax at 25% is ₱1,250,000; if its total assets are ₱100,000,000 or less (excluding land for its office, plant and equipment), the 20% small-corporation rate applies instead. From its fourth taxable year it also computes the 2% Minimum Corporate Income Tax on gross income under NIRC §27(E) and pays whichever is higher.
Estate of deceased with ₱10,000,000 net estate
The estate of Anna Reyes has a net value of ₱10,000,000. Under NIRC §84 (as amended by TRAIN), estate tax is a flat 6% = ₱600,000, and the return is filed within one year of death (NIRC §90). This replaced the graduated estate tax that applied before 2018.
Gift of ₱500,000 property
Roberto Gonzales gives ₱500,000 in cash to his son and makes no other gifts that year. Under NIRC §99 (as amended by TRAIN), donor's tax is 6% of gifts above ₱250,000 in the calendar year: (₱500,000 - ₱250,000) × 6% = ₱15,000, due within 30 days after the gift. The gift is excluded from the son's gross income (NIRC §32(B)(3)).
Common misconceptions
- Myth: The NIRC applies only to large corporations and wealthy individuals.
- Fact: The NIRC applies to all Filipinos and foreign nationals earning Philippine-source income, including employees, self-employed persons, and micro-entrepreneurs. Even those below the taxable threshold must file returns if required by the BIR (NIRC §51).
- Myth: Once you pay income tax, you are exempt from other NIRC taxes like VAT and excise tax.
- Fact: Income tax, VAT, excise tax and other NIRC taxes are separate levies. A business may pay income tax on its net income, VAT on its sales and excise tax on specific goods (NIRC Titles II, IV and VI).
- Myth: The NIRC allows unlimited deductions from gross income.
- Fact: The NIRC permits only deductions explicitly allowed by law, such as cost of goods sold, salaries, rent, and interest on business debt. Personal expenses, fines, and penalties are not deductible (NIRC §34).
- Myth: Estate and donor's tax rates are the same as income tax rates.
- Fact: Estate tax is 6% of the net estate (NIRC §84) and donor's tax is 6% of gifts above ₱250,000 a year (NIRC §99), both as amended by TRAIN. They are separate from income tax.
- Myth: The NIRC has not changed since 1997.
- Fact: The NIRC has been amended many times, including by TRAIN (2018), CREATE (2021), the Ease of Paying Taxes Act (2024), RA 12023 (2024) and CMEPA (2025). Rates and rules change, so taxpayers need to follow the current amendments and BIR regulations.
Questions people ask
What is the difference between the NIRC and BIR Revenue Regulations?
The NIRC is the law enacted by Congress (RA 8424, as amended). Revenue Regulations (RRs) are rules promulgated by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, to implement the Code (NIRC §244). RRs bind taxpayers but cannot contradict the NIRC; if they conflict, the NIRC prevails.
Can the NIRC be amended by the BIR alone?
No. Only Congress can amend the NIRC, through a new Republic Act. The Secretary of Finance issues Revenue Regulations, and the Commissioner interprets the Code through rulings and circulars (NIRC §4, §244). Major changes such as TRAIN (RA 10963) and CREATE (RA 11534) required legislation.
How often does the NIRC change?
The NIRC is amended by Congress when it passes a new tax law. Recent amendments include TRAIN (RA 10963, effective 2018), CREATE (RA 11534, 2021), the Ease of Paying Taxes Act (RA 11976, 2024), RA 12023 on VAT on digital services (2024) and CMEPA (RA 12214, effective July 1, 2025). The BIR issues regulations and circulars to implement each one.
Does the NIRC apply to foreign nationals working in the Philippines?
Yes. Resident citizens are taxed on income from sources within and outside the Philippines. Nonresident citizens, overseas contract workers and aliens, whether resident or not, are taxed only on Philippine-source income (NIRC §23). Tax treaties may provide relief from double taxation.
What happens if I violate the NIRC?
Violations incur civil penalties: a 25% surcharge, or 50% for fraud (NIRC §248), and 12% annual interest (NIRC §249). Willful attempts to evade tax are criminal offenses punished by a fine of ₱500,000 to ₱10,000,000 and imprisonment of 6 to 10 years (NIRC §254, as amended by TRAIN).
Where can I find the current NIRC text and amendments?
The NIRC text and its amending laws are published in the Official Gazette (www.officialgazette.gov.ph), and the BIR publishes the Code and its regulations on its website (www.bir.gov.ph).
Does the NIRC provide any tax breaks for low-income earners?
Yes. Every individual pays 0% on the first ₱250,000 of taxable income under the graduated table (NIRC §24(A)(2)(a)). Also, self-employed individuals and professionals with gross sales or receipts of ₱3,000,000 or less who are not VAT-registered may elect 8% on the amount above ₱250,000 instead of graduated rates and percentage tax (NIRC §24(A)(2)(b)).
Can I claim a deduction for a business loss under the NIRC?
Yes. A net operating loss of a business may be carried over as a deduction for the next three consecutive taxable years, if it was not previously offset (NIRC §34(D)(3)). The loss must be supported by the taxpayer's books and records.
In practice
- The NIRC is the reference document for every BIR assessment, ruling, and enforcement action. When disputing a tax bill, you cite NIRC sections to support your position before the BIR and Court of Tax Appeals.
- Employers withhold income tax from employee salaries under NIRC §79 (withholding tax on compensation) and remit to the BIR monthly. Employees claim the withheld amount as a credit against their annual tax liability.
- VAT-registered businesses under NIRC §106 must issue invoices, maintain a VAT journal, and file quarterly VAT returns. Input tax credits are only available for VAT paid on business purchases, not personal expenses.
- The Secretary of Finance and the BIR issue Revenue Regulations and circulars to implement NIRC provisions. For example, RR 3-98 implements the fringe benefit tax and RR 11-2018 the TRAIN withholding rules. Regulations bind taxpayers as long as they are consistent with the Code.
- Unpaid taxes carry a 25% surcharge (NIRC §248) and 12% annual interest (NIRC §249). Even while you dispute an assessment, interest keeps running until you pay or win your appeal before the Court of Tax Appeals.
Next steps
Learn more
Income Tax Calculator
Withholding Tax Calculator
Vat Calculator
Estate Tax Calculator
Bir Form 1701
Bir Form 2316
Bir Form 2550q
Bir Form 1601e
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Sources & References (2)
Primary sources and the laws, regulations, and official issuances this page relies on. Links open the recorded source documents or references.
- LawPhil Project (Arellano Law Foundation). “NIRC of 1997 (RA 8424): full enacted text.” lawphil.net. Republic Act No. 8424, National Internal Revenue Code of 1997. Source checked .
- Bureau of Internal Revenue. “BIR: Tax Code (consolidated, as amended).” bir.gov.ph. Bureau of Internal Revenue, Tax Code. Source checked .