Revenue Regulations 02-40 Page 1 of 1
REVENUE REGULATIONS NO. 02-40 80,000 90,000 10,000 48% 4,800 32,080
90,000 100,000 10,000 50% 5,000 37,080
February 10, 1940
100,000 120,000 20,000 52% 10,400 47,480
120,000 140,000 20,000 53% 10,600 58,080
INCOME TAX REGULATIONS 140,000 160,000 20,000 54% 10,800 68,880
160,000 200,000 40,000 55% 22,000 90,880
SECTION 1. Scope. — In accordance with the provisions of Sections 4 (I) and 338 of 200,000 250,000 50,000 56% 28,000 118,880
Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, the following 250,000 300,000 50,000 57% 28,500 147,380
regulations affecting Sections 19 to 84 of the same Code relating to the income tax are hereby 300,000 400,000 100,000 58% 58,000 205,380
promulgated to supersede all circulars, precedents, rulings, and regulations heretofore published on 400,000 500,000 100,000 59% 59,000 264,380
the same subject, and they shall be known as Revenue Regulations No. 2, or the Income Tax 500,000 - - 60% - -
Regulations:
(Only the section numbers of the Code are given below as their texts will be found in the same Code.
They serve as captions of the pertinent provisions of the Regulations.)
(Section 20 of the Code)
SECTION 2. Application of title. — Section 20 provides that the provisions of Title II of the National
Internal Revenue Code shall apply only to income received from January 1, 1939.
(Section 21 of the Code)
SECTION 3. Persons considered citizens of the Philippines. — The following shall be considered
citizens of the Philippines:
(1) Those who were citizens of the Philippines at the time of the adoption of the Constitution of the
Philippines.
(2) Those born in the Philippines of foreign parents who, before the adoption of the Constitution, had
been elected to public office in the Philippines.
(3) Those whose fathers are citizens of the Philippines.
(4) Those whose mothers are citizens of the Philippines and, upon reaching the age of majority,
elect Philippine citizenship.
(5) Those who are naturalized in accordance with law. (Sec. 1, Article IV, Constitution of the
Philippines.)
Philippine citizenship may be lost or reacquired in the manner provided by law. A foreigner who has
come to reside in the Philippines and has filed his petition to acquire Philippine citizenship but has not
yet received the requisite naturalization certificate still remains an alien.
SECTION 4. Tax on citizens and residents. — Section 21 imposes progressive rates of income
taxes on citizens and residents, starting from 3 per cent upon the amount by which the net income
does not exceed P2,000 and rising gradually to 60 per cent upon the amount by which the net income
exceeds P500,000. (Conforms with amendments by R.A. 2343, effective June 20, 1959.)
The following is a table, showing the rates of income tax under Section 21, as amended by Section 1
of R.A. No. 2343, applicable to income received from Jan. 1, 1959 and for fiscal periods ending after
June 30, 1959:
1 2 3 4 5 6
Exceeding Not Bracket Rate Tax on Each Cumulative
Exceeding of Tax Bracket Amount of Tax
P- P2,000 2,000 3% P60 P60
2,000 4,000 2,000 6% 120 180
4,000 6,000 2,000 9% 180 360
6,000 8,000 2,000 16% 320 680
8,000 10,000 2,000 20% 400 1,080
10,000 20,000 10,000 24% 2,400 3,480
20,000 30,000 10,000 30% 3,000 6,480
30,000 40,000 10,000 36% 3,600 10,080
40,000 50,000 10,000 40% 4,000 14,080
50,000 60,000 10,000 42% 4,200 18,280
60,000 70,000 10,000 44% 4,400 22,680
70,000 80,000 10,000 46% 4,600 27,280
