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Starting 2018, all PCSO and lotto prizes are taxed 20% if the amount of
the prize or winnings is above ten thousand pesos (P10,000).
OLD TAX RATE NEW TAX RATE (TRAIN TAX REFORM)
Lotto Winnings and PCSO Prizes None (Tax-exempt) 20% if amount is above P10,000
From the current rate of 5-20%, the tax charged on the interest income
of long-term time deposits that are preterminated (meaning, withdrawn
prior to the scheduled maturity date) has been increased to a fixed 20%.
OLD TAX RATE NEW TAX RATE (TRAIN TAX REF
9. Estate Tax
Under TRAIN, the estate tax is now a flat 6% rate on the amount in
excess of P5 million.
Estates with a net value of P5 million and below will be tax-exempt.
Family homes that are valued at no more than P10 million will also be
exempted. Under current tax laws, only family homes worth P1 million
are tax-exempt.
1. Look for the row closest to the amount of gross salary you’re receiving per
month.
2. Check the corresponding next column which shows how much withholding tax
is currently being deducted from your salary.
3. The next column “Monthly Tax in 2018 (under Tax Reform)” shows the
expected amount of income tax that will be deducted from your salary
beginning January 2018.
4. Finally, the column “Additional Take-Home Pay per Month” shows your tax
savings, that is, how much incremental salary you will receive as additional
take-home pay due to the implementation of the reduced personal income tax
rates.
Income Tax Table: Additional Take-Home Pay in 2018
MONTHLY MONTHLY TAX IN MONTHLY TAX IN 2018 ADDITIONAL TAKE-HOME PAY P
SALARY 2017 (CURRENT) (UNDER TAX REFORM) MONTH (UNDER 2018 TAX REFOR
Below P3 million May choose either 8% flat tax on gross receipts or follow personal income ta
Professionals will no longer have to file and pay the percentage tax;
instead they will be charged a withholding tax of 8% flat rate on gross
sales or receipts.
Self-employed professionals earning annual income of P3 million and
below may choose to pay the 8% flat tax or follow the personal income
tax table.
The new excise taxes for cars will follow a four-tier scheme:
8. Tax on Coal
The approved excise tax on coal is as follows (currently P10.00 tax per
metric ton):
P50.00 tax per metric ton in 2018
P100.00 tax per metric ton in 2019
P150.00 tax per metric ton in 2020
9. Tax on Tobacco Products
Excise taxes on tobacco products will be increased to P32.50 initially
during the first six months of 2018, then will rise to P35.00 from the rest
of 2018 until 2019.
From 2020 to 2021, the tobacco tax will rise to P37.50, followed by a
fixed tax of P40.00 to be imposed from 2022 to 2023. From 2023
onwards, tobacco taxes will rise 4% annually.
10. Donor’s Tax
Donations or gifts with at least P250,000 worth will be charged a donor’s
tax of 6% flat rate. This will be charged regardless of the relationship
between the donor and the donee.
11. Estate Tax
The estate tax, or tax levied on the properties or estate of lawful heirs and
beneficiaries inherited from a deceased person, will now be subject to a
flat rate of 6% on the amount in excess of P5 million.
Estates with a net value of P5 million and below will be exempted from
paying the estate tax. Family homes that are valued at P10 million or
less will also be exempted from estate tax. Under existing tax laws, only
family homes worth P1 million are exempted.
12. Tax on Cosmetic Surgery and other Aesthetic Procedures
Starting 2018, there will be a 5% tax on cosmetic surgeries, aesthetic
procedures, and body enhancements.
The stock transaction tax — a tax charged on stock sellers when a buy or
sell transaction is made — will be increased to 0.6% of the gross trade
amount from the current 0.5% rate.
Stock-related transactions of companies not listed in the Philippine Stock
Exchange (PSE) will be slapped with a higher stock transaction tax of
15%, an increase from the current 5% or 10%.
1. Veto on the 15% special tax rate for employees of Regional Headquarters
(RHQ), Regional Operating Headquarters (ROHQ), Offshore Banking
Units, and Petroleum Service Contractors and Subcontractors. Thes
employees will be taxed using the regular income tax table as shown in Item
No. 1 above.
2. Veto on the exemption of self-employed professionals, with gross sales or
receipts not exceeding P500,000, from the payment of the 3% percentage tax.
3. Veto on the excise tax exemption of petroleum products used as input,
feedstock, or as raw material in the manufacturing of petrochemical products, or
in the refining of petroleum products, or as replacement fuel for natural gas fired
combined cycle power plants (see Item No. 6 above).
4. Veto on the zero rating of sales of goods and services to separate customs
territory and tourism enterprise zones, specifically, the areas under the Tourism
Infrastructure Enterprise Zone Authority (Tieza).
5. Veto on the earmarking of incremental tobacco taxes
VAT exemptions under new
Philippine Tax Reform (2018)
Included in the tax reform is the updating of VAT-able products and
transactions. The list of items that will or won’t be charged the 12%
Value Added Tax (VAT) underwent several revisions in Congress in the
last few months, but the final version is shown below.
We begin with a list of products or transactions that currently enjoy VAT
exemption and will continue to be VAT-exempt under the new tax reform
program.