TAX OUTLINE

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SEC. 22. Definitions. - When used in this Title:

(A) The term 'person' means an individual, a trust, estate or corporation.

(B) The term 'corporation' shall include partnerships, no matter how created or
organized, joint-stock companies, joint accounts (cuentas en participacion), association,
or insurance companies, but does not include general professional partnerships and a
joint venture or consortium formed for the purpose of undertaking construction projects
or engaging in petroleum, coal, geothermal and other energy operations pursuant to an
operating consortium agreement under a service contract with the Government.
'General professional partnerships' are partnerships formed by persons for the sole
purpose of exercising their common profession, no part of the income of which is
derived from engaging in any trade or business.

(C) The term 'domestic', when applied to a corporation, means created or organized in
the Philippines or under its laws.

(D) The term 'foreign', when applied to a corporation, means a corporation which is not
domestic

(E) The term 'nonresident citizen' means;

(1) A citizen of the Philippines who establishes to the satisfaction of the Commissioner
the fact of his physical presence abroad with a definite intention to reside therein.

(2) A citizen of the Philippines who leaves the Philippines during the taxable year to
reside abroad, either as an immigrant or for employment on a permanent basis.

(3) A citizen of the Philippines who works and derives income from abroad and whose
employment thereat requires him to be physically present abroad most of the time
during the taxable year.

(4) A citizen who has been previously considered as nonresident citizen and who
arrives in the Philippines at any time during the taxable year to reside permanently in
the Philippines shall likewise be treated as a nonresident citizen for the taxable year in
which he arrives in the Philippines with respect to his income derived from sources
abroad until the date of his arrival in the Philippines.

(5) The taxpayer shall submit proof to the Commissioner to show his intention of leaving
the Philippines to reside permanently abroad or to return to and reside in the Philippines
as the case may be for purpose of this Section.
(F) The term 'resident alien' means an individual whose residence is within the
Philippines and who is not a citizen thereof.

(G) The term 'nonresident alien' means an individual whose residence is not within the
Philippines and who is not a citizen thereof.

(H) The term 'resident foreign corporation' applies to a foreign corporation engaged in
trade or business within the Philippines.

(I) The term 'nonresident foreign corporation' applies to a foreign corporation not
engaged in trade or business within the Philippines.

(J) The term 'fiduciary' means a guardian, trustee, executor, administrator, receiver,
conservator or any person acting in any fiduciary capacity for any person.

(K) The term 'withholding agent' means any person required to deduct and withhold
any tax under the provisions of Section 57.

(L) The term 'shares of stock' shall include shares of stock of a corporation, warrants
and/or options to purchase shares of stock, as well as units of participation in a
partnership (except general professional partnerships), joint stock companies, joint
accounts, joint ventures taxable as corporations, associations and recreation or
amusement clubs (such as golf, polo or similar clubs), and mutual fund certificates.

(M) The term 'shareholder' shall include holders of a share/s of stock, warrant/s and/or
option/s to purchase shares of stock of a corporation, as well as a holder of a unit of
participation in a partnership (except general professional partnerships) in a joint stock
company, a joint account, a taxable joint venture, a member of an association,
recreation or amusement club (such as golf, polo or similar clubs) and a holder of a
mutual fund certificate, a member in an association, joint-stock company, or insurance
company.

(N) The term 'taxpayer' means any person subject to tax imposed by this Title.

(O) The terms 'including' and 'includes', when used in a definition contained in this
Title, shall not be deemed to exclude other things otherwise within the meaning of the
term defined.

(P) The term 'taxable year' means the calendar year, or the fiscal year ending during
such calendar year, upon the basis of which the net income is computed under this
Title. 'Taxable year' includes, in the case of a return made for a fractional part of a year
under the provisions of this Title or under rules and regulations prescribed by the
Secretary of Finance, upon recommendation of the commissioner, the period for which
such return is made.
(Q) The term 'fiscal year' means an accounting period of twelve (12) months ending on
the last day of any month other than December.

(R) The terms 'paid or incurred' and 'paid or accrued' shall be construed according to
the method of accounting upon the basis of which the net income is computed under
this Title.

(S) The term 'trade or business' includes the performance of the functions of a public
office.

(T) The term 'securities' means shares of stock in a corporation and rights to subscribe
for or to receive such shares. The term includes bonds, debentures, notes or
certificates, or other evidence or indebtedness, issued by any corporation, including
those issued by a government or political subdivision thereof, with interest coupons or in
registered form.

(U) The term 'dealer in securities' means a merchant of stocks or securities, whether
an individual, partnership or corporation, with an established place of business,
regularly engaged in the purchase of securities and the resale thereof to customers; that
is, one who, as a merchant, buys securities and re-sells them to customers with a view
to the gains and profits that may be derived therefrom.

(V) The term 'bank' means every banking institution, as defined in Section 2 of Republic
Act No. 337, [6] as amended, otherwise known as the "General banking Act." A bank
may either be a commercial bank, a thrift bank, a development bank, a rural bank or
specialized government bank.

(W) The term 'non-bank financial intermediary' means a financial intermediary, as

defined in Section 2(D)(C) of Republic Act No. 337, [7] as amended, otherwise known as
the "General Banking Act," authorized by the Bangko Sentral ng Pilipinas (BSP) to
perform quasi-banking activities.

(X) The term 'quasi-banking activities' means borrowing funds from twenty (20) or
more personal or corporate lenders at any one time, through the issuance,
endorsement, or acceptance of debt instruments of any kind other than deposits for the
borrower's own account, or through the issuance of certificates of assignment or similar
instruments, with recourse, or of repurchase agreements for purposes of relending or
purchasing receivables and other similar obligations: Provided, however, That
commercial, industrial and other non-financial companies, which borrow funds through
any of these means for the limited purpose of financing their own needs or the needs of
their agents or dealers, shall not be considered as performing quasi-banking functions.

(Y) The term 'deposit substitutes' shall mean an alternative from of obtaining funds
from the public (the term 'public' means borrowing from twenty (20) or more individual
or corporate lenders at any one time) other than deposits, through the issuance,
endorsement, or acceptance of debt instruments for the borrowers own account, for the
purpose of relending or purchasing of receivables and other obligations, or financing
their own needs or the needs of their agent or dealer. These instruments may include,
but need not be limited to bankers' acceptances, promissory notes, repurchase
agreements, including reverse repurchase agreements entered into by and between the
Bangko Sentral ng Pilipinas (BSP) and any authorized agent bank, certificates of
assignment or participation and similar instruments with recourse: Provided, however,
That debt instruments issued for interbank call loans with maturity of not more than five
(5) days to cover deficiency in reserves against deposit liabilities, including those
between or among banks and quasi-banks, shall not be considered as deposit
substitute debt instruments.

(Z) The term 'ordinary income' includes any gain from the sale or exchange of property
which is not a capital asset or property described in Section 39(A)(1). Any gain from the
sale or exchange of property which is treated or considered, under other provisions of
this Title, as 'ordinary income' shall be treated as gain from the sale or exchange of
property which is not a capital asset as defined in Section 39(A)(1). The term 'ordinary
loss' includes any loss from the sale or exchange of property which is not a capital
asset. Any loss from the sale or exchange of property which is treated or considered,
under other provisions of this Title, as 'ordinary loss' shall be treated as loss from the
sale or exchange of property which is not a capital asset.

(AA) The term 'rank and file employees' shall mean all employees who are holding
neither managerial nor supervisory position as defined under existing provisions of the
Labor Code of the Philippines, as amended.

(BB) The term 'mutual fund company' shall mean an open-end and close-end
investment company as defined under the Investment Company Act. [8]

(CC) The term 'trade, business or profession' shall not include performance of
services by the taxpayer as an employee.

(DD) The term 'regional or area headquarters' shall mean a branch established in the
Philippines by multinational companies and which headquarters do not earn or derive
income from the Philippines and which act as supervisory, communications and
coordinating center for their affiliates, subsidiaries, or branches in the Asia-Pacific
Region and other foreign markets.

(EE) The term 'regional operating headquarters' shall mean a branch established in
the Philippines by multinational companies which are engaged in any of the following
services: general administration and planning; business planning and coordination;
sourcing and procurement of raw materials and components; corporate finance advisory
services; marketing control and sales promotion; training and personnel management;
logistic services; research and development services and product development;
technical support and maintenance; data processing and communications; and
business development.
(FF) The term 'long-term deposit or investment certificate' shall refer to certificate of
time deposit or investment in the form of savings, common or individual trust funds,
deposit substitutes, investment management accounts and other investments with a
maturity period of not less than five (5) years, the form of which shall be prescribed by
the Bangko Sentral ng Pilipinas (BSP) and issued by banks only (not by non-bank
financial intermediaries and finance companies) to individuals in denominations of Ten
thousand pesos (P10,000) and other denominations as may be prescribed by the BSP.

(GG) The term 'statutory minimum wage' shall refer to the rate fixed by the Regional
Tripartite Wage and Productivity Board, as defined by the Bureau of Labor and
Employment Statistics (BLES) of the Department of Labor and Employment (DOLE). [9]

(HH) The term 'minimum wage earner' shall refer to a worker in the private sector paid
the statutory minimum wage or to an employee in the public sector with compensation
income of not more than the statutory minimum wage in the non-agricultural sector
where he/she is assigned. [10]

CHAPTER II

GENERAL PRINCIPLES

SEC. 23. General Principles of Income Taxation in the Philippines. - Except when
otherwise provided in this Code:

(A) A citizen of the Philippines residing therein is taxable on all income derived from
sources within and without the Philippines;

(B) A nonresident citizen is taxable only on income derived from sources within the
Philippines;

(C) An individual citizen of the Philippines who is working and deriving income from
abroad as an overseas contract worker is taxable only on income derived from sources
within the Philippines: Provided, That a seaman who is a citizen of the Philippines and
who receives compensation for services rendered abroad as a member of the
complement of a vessel engaged exclusively in international trade shall be treated as an
overseas contract worker;

(D) An alien individual, whether a resident or not of the Philippines, is taxable only on
income derived from sources within the Philippines;

(E) A domestic corporation is taxable on all income derived from sources within and
without the Philippines; and
(F) A foreign corporation, whether engaged or not in trade or business in the
Philippines, is taxable only on income derived from sources within the Philippines.

CHAPTER III

TAX ON INDIVIDUALS

SEC. 24. Income Tax Rates. -

(A) Rates of Income Tax on Individual Citizen and Individual Resident Alien of the
Philippines.-

(1) An income tax is hereby imposed:

(a) On the taxable income defined in Section 31 of this Code, other than income subject
to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year
from all sources within and without the Philippines be every individual citizen of the
Philippines residing therein;

(b) On the taxable income defined in Section 31 of this Code, other than income subject
to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year
from all sources within the Philippines by an individual citizen of the Philippines who is
residing outside of the Philippines including overseas contract workers referred to in
Subsection(C) of Section 23 hereof; and

(c) On the taxable income defined in Section 31 of this Code, other than income subject
to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year
from all sources within the Philippines by an individual alien who is a resident of the
Philippines.

(2) Rates of Tax on Taxable Income of Individuals. [11] - The tax shall be computed in
accordance with and at the rates established in the following schedule:

Not over P10,000 5%

Over P10,000 but not over P500+10% of the excess over
P30,000 P10,000
Over P30,000 but not over P2,500+15% of the excess over
P70,000 P30,000
Over P70,000 but not over P8,500+20% of the excess over
P140,000 P70,000
Over P140,000 but not over P22,500+25% of the excess over
P250,00 P140,000
Over P250,000 but not over P50,000+30% of the excess over
 P500,000 P250,000
Over P500,000 P125,000+32% of the excess over
P500,000.[12]

For married individuals, the husband and wife, subject to the provision of Section 51 (D)
hereof, shall compute separately their individual income tax based on their respective
total taxable income: Provided, That if any income cannot be definitely attributed to or
identified as income exclusively earned or realized by either of the spouses, the same
shall be divided equally between the spouses for the purpose of determining their
respective taxable income.

Provided, That minimum wage earners as defined in Section 22(HH) of this Code shall
be exempt from the payment of income tax on their taxable income: provided, further,
That the holiday pay, overtime pay, night shift differential pay and hazard pay received
by such minimum wage earners shall likewise be exempt from income tax. [13]

(B) Rate of Tax on Certain Passive Income: -

(1) Interests, Royalties, Prizes, and Other Winnings. -

A final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of
interest from any currency bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust funds and similar arrangements; royalties, except on
books, as well as other literary works and musical compositions, which shall be imposed
a final tax of ten percent (10%); prizes (except prizes amounting to Ten thousand pesos
(P10,000) or less which shall be subject to tax under Subsection (A) of Section 24; and
other winnings (except Philippine Charity Sweepstakes and Lotto winnings), derived
from sources within the Philippines: Provided, however, That interest income received
by an individual taxpayer (except a nonresident individual) from a depository bank under
the expanded foreign currency deposit system shall be subject to a final income tax at
the rate of seven and one-half percent (7 1/2%) of such interest income: Provided,
further, That interest income from long-term deposit or investment in the form of
savings, common or individual trust funds, deposit substitutes, investment management
accounts and other investments evidenced by certificates in such form prescribed by
the Bangko Sentral ng Pilipinas (BSP) shall be exempt from the tax imposed under this
Subsection: Provided, finally, That should the holder of the certificate pre-terminate the
deposit or investment before the fifth (5th) year, a final tax shall be imposed on the entire
income and shall be deducted and withheld by the depository bank from the proceeds of
the long-term deposit or investment certificate based on the remaining maturity thereof:

Four (4) years to less than five (5) years - 5%;

Three (3) years to less than (4) years - 12%; and
Less than three (3) years - 20%
(2) Cash and/or Property Dividends. - A final tax at the following rates shall be
imposed upon the cash and/or property dividends actually or constructively received by
an individual from a domestic corporation or from a joint stock company, insurance or
mutual fund companies and regional operating headquarters of multinational
companies, or on the share of an individual in the distributable net income after tax of a
partnership (except a general professional partnership) of which he is a partner, or on
the share of an individual in the net income after tax of an association, a joint account,
or a joint venture or consortium taxable as a corporation of which he is a member or co-
venturer:

Six percent (6%) beginning January 1, 1998;

Eight percent (8%) beginning January 1, 1999;
Ten percent (10%) beginning January 1, 2000.

Provided, however, That the tax on dividends shall apply only on income earned on or
after January 1, 1998. Income forming part of retained earnings as of December 31,
1997 shall not, even if declared or distributed on or after January 1, 1998, be subject to
this tax.

SEC. 25. Tax on Nonresident Alien Individual. -

(A) Nonresident Alien Engaged in trade or Business Within the Philippines. -

(1) In General. - A nonresident alien individual engaged in trade or business in the

Philippines shall be subject to an income tax in the same manner as an individual
citizen and a resident alien individual, on taxable income received from all sources
within the Philippines. A nonresident alien individual who shall come to the Philippines
and stay therein for an aggregate period of more than one hundred eighty (180) days
during any calendar year shall be deemed a 'nonresident alien doing business in the
Philippines'. Section 22 (G) of this Code notwithstanding.

(B) Nonresident Alien Individual Not Engaged in Trade or Business Within the
Philippines. - There shall be levied, collected and paid for each taxable year upon the
entire income received from all sources within the Philippines by every nonresident alien
individual not engaged in trade or business within the Philippines as interest, cash
and/or property dividends, rents, salaries, wages, premiums, annuities, compensation,
remuneration, emoluments, or other fixed or determinable annual or periodic or casual
gains, profits, and income, and capital gains, a tax equal to twenty-five percent (25%) of
such income. Capital gains realized by a nonresident alien individual not engaged in
trade or business in the Philippines from the sale of shares of stock in any domestic
corporation and real property shall be subject to the income tax prescribed under
Subsections (C) and (D) of Section 24.

(C) Alien Individual Employed by Regional or Area Headquarters and Regional

Operating Headquarters of Multinational Companies. - There shall be levied,
collected and paid for each taxable year upon the gross income received by every alien
individual employed by regional or area headquarters and regional operating
headquarters established in the Philippines by multinational companies as salaries,
wages, annuities, compensation, remuneration and other emoluments, such as
honoraria and allowances, from such regional or area headquarters and regional
operating headquarters, a tax equal to fifteen percent (15%) of such gross income:
Provided, however, That the same tax treatment shall apply to Filipinos employed and
occupying the same position as those of aliens employed by these multinational
companies. For purposes of this Chapter, the term 'multinational company' means a
foreign firm or entity engaged in international trade with affiliates or subsidiaries or
branch offices in the Asia-Pacific Region and other foreign markets.

(D) Alien Individual Employed by Offshore Banking Units. - There shall be levied,
collected and paid for each taxable year upon the gross income received by every alien
individual employed by offshore banking units established in the Philippines as salaries,
wages, annuities, compensation, remuneration and other emoluments, such as
honoraria and allowances, from such off-shore banking units, a tax equal to fifteen
percent (15%) of such gross income: Provided, however, That the same tax treatment
shall apply to Filipinos employed and occupying the same positions as those of aliens
employed by these offshore banking units.

(E) Alien Individual Employed by Petroleum Service Contractor and

Subcontractor. [14] - An Alien individual who is a permanent resident of a foreign
country but who is employed and assigned in the Philippines by a foreign service
contractor or by a foreign service subcontractor engaged in petroleum operations in the
Philippines shall be liable to a tax of fifteen percent (15%) of the salaries, wages,
annuities, compensation, remuneration and other emoluments, such as honoraria and
allowances, received from such contractor or subcontractor: Provided, however, That
the same tax treatment shall apply to a Filipino employed and occupying the same
position as an alien employed by petroleum service contractor and subcontractor.

Any income earned from all other sources within the Philippines by the alien employees
referred to under Subsections (C), (D) and (E) hereof shall be subject to the pertinent
income tax, as the case may be, imposed under this Code.

Section 27 B

(B) Proprietary Educational Institutions and Hospitals. -

Proprietary educational institutions and hospitals which are nonprofit shall pay a tax of
ten percent (10%) on their taxable income except those covered by Subsection (D)
hereof: Provided, that if the gross income from 'unrelated trade, business or other
activity' exceeds fifty percent (50%) of the total gross income derived by such
educational institutions or hospitals from all sources, the tax prescribed in Subsection
(A) hereof shall be imposed on the entire taxable income. For purposes of this
Subsection, the term 'unrelated trade, business or other activity' means any trade,
business or other activity, the conduct of which is not substantially related to the
exercise or performance by such educational institution or hospital of its primary
purpose or function. A 'proprietary educational institution' is any private school
maintained and administered by private individuals or groups with an issued permit to
operate from the Department of Education, Culture and Sports (DECS) [17], or the
Commission on Higher Education (CHED), or the Technical Education and Skills
Development Authority (TESDA), as the case may be, in accordance with existing laws
and regulations.

SEC. 28. Rates of Income Tax on Foreign Corporations. - [21]

(A) Tax on Resident Foreign Corporations. -

(3) International Carrier. - An international carrier doing business in the Philippines

shall pay a tax of two and one-half percent (2 1/2 %) on its 'Gross Philippine Billings' as
defined hereunder:

(a) International Air Carrier. - 'Gross Philippine Billings' refers to the amount of
gross revenue derived from carriage of persons, excess baggage, cargo, and mail
originating from the Philippines in a continuous and uninterrupted flight, irrespective of
the place of sale or issue and the place of payment of the ticket or passage document:
Provided, That tickets revalidated, exchanged and/or indorsed to another international
airline form part of the Gross Philippine Billings if the passenger boards a plane in a port
or point in the Philippines: Provided, further, That for a flight which originates from the
Philippines, but transshipment of passenger takes place at any part outside the
Philippines on another airline, only the aliquot portion of the cost of the ticket
corresponding to the leg flown from the Philippines to the point of transshipment shall
form part of Gross Philippine Billings.

(b) International Shipping. - 'Gross Philippine Billings' means gross revenue

whether for passenger, cargo or mail originating from the Philippines up to final
destination, regardless of the place of sale or payments of the passage or freight
documents.

Provided, That international carriers doing business in the Philippines may avail of a
preferential rate or exemption from the tax herein imposed on their gross revenue
derived from the carriage of persons and their excess baggage on the basis of an
applicable tax treaty or international agreement to which the Philippines is a signatory or
on the basis of reciprocity such that an international carrier, whose home country grants
income tax exemption to Philippine carriers, shall likewise be exempt from the tax
imposed under this provision.

(6) Regional or Area Headquarters and Regional Operating Headquarters of

Multinational Companies. -
(a) Regional or area headquarters as defined in Section 22(DD) shall not be subject to
income tax.

(b) Regional operating headquarters as defined in Section 22(EE) shall pay a tax of ten
percent (10%) of their taxable income.

(B) Tax on Nonresident Foreign Corporation.

(2) Nonresident Cinematographic Film Owner, Lessor or Distributor. - A

cinematographic film owner, lessor, or distributor shall pay a tax of twenty-five percent
(25%) of its gross income from all sources within the Philippines.

(3) Nonresident Owner or Lessor of Vessels Chartered by Philippine Nationals. - A

nonresident owner or lessor of vessels shall be subject to a tax of four and one-half
percent (4 1/2%) of gross rentals, lease or charter fees from leases or charters to Filipino
citizens or corporations, as approved by the Maritime Industry Authority.

(4) Nonresident Owner or Lessor of Aircraft, Machineries and Other Equipment. -

Rentals, charters and other fees derived by a nonresident lessor of aircraft, machineries
and other equipment shall be subject to a tax of seven and one-half percent (7 1/2%) of
gross rentals or fees.

SECTION 25

(C) Alien Individual Employed by Regional or Area Headquarters and Regional

Operating Headquarters of Multinational Companies. - There shall be levied,
collected and paid for each taxable year upon the gross income received by every alien
individual employed by regional or area headquarters and regional operating
headquarters established in the Philippines by multinational companies as salaries,
wages, annuities, compensation, remuneration and other emoluments, such as
honoraria and allowances, from such regional or area headquarters and regional
operating headquarters, a tax equal to fifteen percent (15%) of such gross income:
Provided, however, That the same tax treatment shall apply to Filipinos employed and
occupying the same position as those of aliens employed by these multinational
companies. For purposes of this Chapter, the term 'multinational company' means a
foreign firm or entity engaged in international trade with affiliates or subsidiaries or
branch offices in the Asia-Pacific Region and other foreign markets.

(D) Alien Individual Employed by Offshore Banking Units. - There shall be levied,
collected and paid for each taxable year upon the gross income received by every alien
individual employed by offshore banking units established in the Philippines as salaries,
wages, annuities, compensation, remuneration and other emoluments, such as
honoraria and allowances, from such off-shore banking units, a tax equal to fifteen
percent (15%) of such gross income: Provided, however, That the same tax treatment
shall apply to Filipinos employed and occupying the same positions as those of aliens
employed by these offshore banking units.
SEC. 30. Exemptions from Tax on Corporations. - The following organizations shall
not be taxed under this Title in respect to income received by them as such:

(A) Labor, agricultural or horticultural organization not organized principally for profit;

(B) Mutual savings bank not having a capital stock represented by shares, and
cooperative bank without capital stock organized and operated for mutual purposes and
without profit;

(C) A beneficiary society, order or association, operating for the exclusive benefit of the
members such as a fraternal organization operating under the lodge system, or mutual
aid association or a nonstock corporation organized by employees providing for the
payment of life, sickness, accident, or other benefits exclusively to the members of such
society, order, or association, or nonstock corporation or their dependents;

(D) Cemetery company owned and operated exclusively for the benefit of its members;

(E) Nonstock corporation or association organized and operated exclusively for

religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of
veterans, no part of its net income or asset shall belong to or inure to the benefit of any
member, organizer, officer or any specific person;

(F) Business league chamber of commerce, or board of trade, not organized for profit
and no part of the net income of which inures to the benefit of any private stock-holder,
or individual;

(G) Civic league or organization not organized for profit but operated exclusively for the
promotion of social welfare;

(H) A nonstock and nonprofit educational institution;

(I) Government educational institution;

(J) Farmers' or other mutual typhoon or fire insurance company, mutual ditch or
irrigation company, mutual or cooperative telephone company, or like organization of a
purely local character, the income of which consists solely of assessments, dues, and
fees collected from members for the sole purpose of meeting its expenses; and

(K) Farmers', fruit growers', or like association organized and operated as a sales agent
for the purpose of marketing the products of its members and turning back to them the
proceeds of sales, less the necessary selling expenses on the basis of the quantity of
produce finished by them;

Notwithstanding the provisions in the preceding paragraphs, the income of whatever

kind and character of the foregoing organizations from any of their properties, real or
personal, or from any of their activities conducted for profit regardless of the disposition
made of such income, shall be subject to tax imposed under this Code.

CHAPTER V

COMPUTATION OF TAXABLE INCOME

SEC. 31. Taxable Income Defined. -The term 'taxable income' [28] means the pertinent
items of gross income specified in this Code, less the deductions and/or personal and
additional exemptions, if any, authorized for such types of income by this Code or other
special laws.