TRAIN LAW

Tax Reform for Acceleration and Inclusion Law

ADVANTAGES DISADVANTAGES
Higher take home pay Higher household bills
Reduced personal income taxes Higher imposition of excise taxes on cars,
tobacco, sugar-sweetened beverages, and
fuel.
Raises significant revenue to fund the Higher fuel prices will have a trickle down
President’s priority and social effect on public transport service
infrastructure programs to reduce poverty providers, therefore higher fares
(Build, Build, Build projects)
Reduced estate and donor’s taxes to a flat The burden imposed on the companies
rate of 6% regardless of the value of the will just be passed on to the consumers
net estate.
Simplified tax compliance (i.e., limiting Minimum wage earners and people with
income tax returns to 4 pages and no fixed income will have a difficulty in
requiring quarterly rather than monthly coping up with the price increase
filing for certain forms)
Amendments in VAT which lessen the Inflation in prices of goods and services
burden of taxpayers (i.e., increase of VAT especially the essential commodities
threshold from P1,919,500 to 3,000,000,
sale of drugs and medicines for diabetes,
high cholesterol, and hypertension will be
exempt from VAT, increase of Vat
exemption from 12,800 to P15,000,
association dues, membership fees, and
other assessments and charges collected
by homeowners associations and
condominium corporations, sale of gold to
BSP, transfer of property in merger or
consolidation are now exempt)
More job opportunities, better Increased taxes on certain passive
infrastructure that will lower the transport incomes, documentary stamp tax
and distribution costs of goods, and
improved services.

Up to 30% of the incremental revenues Removed the tax exemption of Lotto and
from the Train will help fund a targeted other PCSO winnings amounting to more
cash transfer program for the country’s than P10,000
poorest 10 million households to aid the
bottom 50 percent of the population in
coping with the initial effects of the tax
reform law on the prices of basic

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 necessities
Officials, agents, or employees of the BIR
who fail to act on the application for VAT
refund are now punished. The deemed
denial of failure to act on the application is
removed.
Purely self-employed individuals and/or
professionals who do not exceed the VAT
threshold of P3M have now the option to
be taxed at 8% income tax on gross sales
or gross receipts in excess of P250,000 or
income tax based on the graduated
income tax rates for individuals.
Those earning P250,000 and below are tax
exempt. Wider tax bases.
Tax exemption of 13th month pay and
other benefits is increased from P82,000
to P90,000
Substituted filing of ITRs by employees
receiving purely compensation income
from only one employer, to ensure
compliance in tax procedures
Standard deduction in the estate tax is
increased from P1,000,000 to P5,000,000
for resident or citizens and added a
standard deduction of P500,000 for non
residents. Deductions on family home
increased from P1,000,000 to P10,000,000
The threshold amount for the requirement
of attaching a statement duly certified by a
CPA is increased from P2,000,000 to
P5,000,000 which is more practical.
Personal exemption of P50,000, additional
exemption of P25,000 per dependent
child, and the premium for health and
hospitalization insurance of P2,400 per
year were removed
Laying off of employees because of higher
production costs (ex: Coke PH)
Foreign currency deposit units increased
from 7.5 to 15-percent final tax on interest
income. Capital gains of non-traded stocks
increased from 5 to 10-percent to 15-
percent final tax on net gains only
Tax on petroleum products usually causes
a domino effect on prices of basic
commodities, public transport fares,
services, and electricity rates among
others.
the data of 7.5 million who would no
longer pay taxes that the government kept
on mentioning appeared to have included
minimum wage earners who have long
been exempted from paying personal
income tax because of another law
Several VAT exemptions will be removed
‘Build Build Build’ is mainly about flagship
transport infrastructure projects
concentrated in the country’s highest-
income regions National Capital Region,
Southern Tagalog and Central Luzon with
little for the poorest regions in the rest of
Luzon, Visayas and Mindanao.
The filing of estate tax returns is extended Capital gains tax increased from the
from 6 months to 1 year from the 5/10% to a flat rate of 15%
decedent’s death, thus making it more
favorable to the heirs.
There is now a payment by installment Tax on fringe benefits is increased from
within 2 years from the statutory date of 32% to 35%
payment without civil penalty and interest
incase the estate has no available cash or
insufficient to pay.
Withdrawal from the bank account of the Allowable deduction for premium
decedent is now allowed without the need payments on health and/or hospitalization
of the certification of the Commissioner, insurance is removed
however it is subject to FWT of 6%. This is
better and faster because BIR officials
might just sleep on the application.
Establishment of VAT Refund Centers in Beginning January 1, 2021, VAT
BIR and BOC offices exemptions no longer apply to sale of low-
cost housing and sale of residential lot.
The requirement to keep books of
accounts certified by CPAs is now being
imposed to those whose gross sales,
earnings, receipts or output exceed
P3,000,000. Before it was P150,000.
Threshold amount for self-employed
individuals and/or professionals is
increased to P3,000,000 from P1,500,000.
Electronic Sales Reporting System in
keeping with today’s modern
technological age. Monitoring of taxes are
now easier and faster for the BIR.

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