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RA 10963:  The first Php 90,000 of 13th mo pay and other

TRAIN-Tax Reform for Acceleration and Inclusion bonuses is exempt from income tax
Package 1  No more deductions for personal and additional
exemptions
Key Amendments  Purely Compensation Income: Graduated
1. Individual Income Tax income tax rates
2. Final Income Tax  Purely Self-employed/Practice of Profession
3. Estate Tax Income:
4. Donor’s Tax -if exceeds VAT Threshold (3M): Graduated
5. Value Added Tax Income tax rates
6. Documentary Stamp Tax -does not exceed VAT Threshold: Options
7. Some administrative provisions (Availment irrevocable for the year)
8. Penalties 1. Graduated income tax rate
9. Excise Tax on: 2. 8% on gross sales/receipts and other
a. Petroleum products non-operating income in excess of P250,000
b. Automobiles in lieu of the graduated rates and
c. Sweetened Beverages percentage tax under SEC 116 of NIRC
d. Mineral products  Mixed Income Earner
e. Cosmetic procedures (non-essential -On Income from Compensation: Graduated
services) Income Tax Rates
f. Tobacco -On income from self-employment/practice of
I. INDIVUDUAL INCOME TAX profession:
 Graduated Income Tax Rates -if exceeds VAT Threshold (3M): Graduated
Previous Tax Schedule: Income tax rates
Php % of excess of lower range -does not exceed VAT Threshold: Options
Not over 10,000 5% (Availment irrevocable for the year)
Over 10,000-30,000 500+10% 1. Graduated income tax rate
Over 30,000-70,000 2,500+15%
2. 8% on gross sales/receipts and other
Over 70,000-140,000 8,500+20%
non-operating income in excess of P250,000
Over 140,000-250,000 22,500+25%
Over 250,000-500,000 50,000+30% in lieu of the graduated rates and
Over 500,000 125,000+32% percentage tax under SEC 116 of NIRC
Tax Schedule effective Jan. 1, 2018-Dec.31, 2022  Cannot avail of 8% Gross Income Tax
Php % of excess of lower range 1. VAT registered taxpayer
Not over 250,000 0 2. Partners in General Professional
Over 250,000-400,000 20% Partnership
Over 400,000-800,000 30,000+25% 3. Those subject to Other Percentage Tax
Over 800,000-2M 130,000+30% other than Sec. 116, like common
Over 2M-8M 490,000+32%
carriers, operators of cabarets and
Over 8M 2,410,000+35%
other amusement places
Tax Schedule effective Jan. 1, 2023 onwards
II. FINAL INCOME TAX
Php % of excess of lower range
Not over 250,000 0  Foreign currency deposit unit (FCDU) -increase
Over 250,000-400,000 15% from 7.5% to 15% final tax on interest income
Over 400,000-800,000 22,500+20%  Capital Gains of Non-traded Stock -increase
Over 800,000-2M 102,500+25% from 5-10% to 15% final tax on net gains
Over 2M-8M 402,500+30%  Stock transaction tax-increase from 0.5% to
Over 8M 2,202,500+35% 0.6% of the transaction value
III. ESTATE TAX 5. Amendments on VAT-exempt transactions
 Lowered from the highest 20% rate to a single NIRC TRAIN
rate of 6% for net estate with standard Sale or lease of goods or Sale or lease of goods or
deduction of P5M to simplify the system as well properties or the properties or the
as exemption for the first P10M for the family performance of services performance of services
other than the other than the
income
transactions specifically transactions specifically
IV. DONOR’S TAX mentioned as VAT- mentioned as VAT-
 Lowered from the highest 15% rate to a single exempt, the gross annual exempt, the gross annual
rate of 6% of net donations above P250,000 sales and/or receipts do sales and/or receipts do
yearly not exceed the amount of not exceed the amount of
V. VALUE ADDED TAX P1,919,500 P3,000,000
1. Repealed 54 out of 61 laws with non-essential
* Every three years, the * Every three years, the
VAT exceptions
threshold amount shall be threshold amount shall be
2. Sale or exchanges of services include sale of adjusted to its present adjusted to its present
electricity by generation companies, value using the Consumer value using the Consumer
transmission by any entity including the Price Index as published Price Index as published
National Grid Corporations of the Philippines by the National Statistics by the Philippine Statistics
(NGCP), and distribution companies, including Office Authority
electric cooperatives: VATable Sale of real properties not Sale of real properties not
3. VAT to Non-VAT primarily held for sale to primarily held for sale to
 All existing VAT registered taxpayers whose customers or held for customers or held for
gross sales/receipts and other non-operating lease in the ordinary lease in the ordinary
course of trade or course of trade or
income in the preceding year did not exceed
business or real property business or real property
the VAT threshold have the option to update utilized for low-cost and utilized for low-cost and
their registration to non-VAT as early as socialized housing, socialized housing,
possible but not later than March 31, 2018 (BIR residential lot valued at residential lot valued at
Form 1905), following the existing procedures P1,919,500 and below; P1,500,000 and below;
on registration updates, and the inventory and house and lot, and other house and lot, and other
surrender/cancellation of unused VAT residential dwellings residential dwellings
valued at P3,199,200 and valued at P2,500,000 and
invoices/receipts.
below below
 Those who failed to update their registration on
time will be subjected to an evaluation of their Beginning January 1, 2021:
last 3 years ITR prior to TY 2018 (1)The VAT exemption
4. Additional VAT-exempt transactions shall no longer apply to
a. Sale of gold to the BSP the sale of:
 low-cost housing
b. Sale of drugs and medicines prescribed for
 residential lot
diabetes, high cholesterol, and
(2)The threshold selling
hypertension beginning January 1, 2019 price amount for sale of
c. Sale or lease of goods and services to senior house and lot and other
citizens and persons with disabilities residential dwellings shall
d. Transfer of property in merger or be P2,000,000
consolidation Lease of a residential unit Lease of a residential unit
e. Association dues, membership fees and with a monthly rental not with a monthly rental not
other assessments and charges collected by exceeding P12,800 exceeding P15,000
homeowners’ associations and
condominium corporations
Importation of Importation of VI. DOCUMENTARY STAMP TAX
professional instruments professional instruments  100% increase except for loans (50%) and
and implements, wearing and implements, tools of property, savings and non-life insurance (no
apparel, domestic animals, trade, occupation or
change)
and personal household employment, wearing
effects (except any apparel, domestic animals, VII. ADMINISTRATIVE PROVISIONS
vehicle, vessel, aircraft, and personal household 1. Mandatory fuel marking and metering
machinery and other effects (except any  In product stamp that cannot be
goods for use in the vehicle, vessel, aircraft, removed, altered or copied
manufacture and machinery and other  Used by national governments to
merchandise of any kind in goods for use in the combat smuggling, dilution and
commercial quantity) manufacture and
adulteration
belonging to persons merchandise of any kind in
coming to settle in the commercial quantity) 2. Mandatory e-invoicing, e-sales reporting and
Philippines for their own belonging to persons connectivity (for large taxpayers, e-commerce
use and not for coming to settle in the and exporters, especially those claiming a VAR
sale/barter, accompanying Philippines OR Filipinos or refund)
such persons or arriving their families and 3. Maximum of 4 pages for ITR
within 90 days before or descendants who are now 4. 1Q Income tax deadline filing moved to May 15
after their arrival, upon residents of other
(previously April 15)
the production of countries, such parties
evidence satisfactory to hereinafter referred to as 5. 2nd installment payment moved to Oct. 15
the Commissioner, that overseas Filipinos, in (previously July 15)
such persons are actually quantities and of the class 6. Percentage Tax Filing: Quarterly, BIR Form
coming to settle in the suitable to the profession, 2251Q deadline on or before 25th day of the
Philippines and that the rank or position of the month after the end of each taxable quarter
change of residence is persons importing said
7. Those taxpayers who are withholding
bona fide items, for their own use
and for their own use and percentage taxes and VAT, remittance and filing
not for sale/barter, remains the same: Monthly, BIR Form 1600
accompanying such (also applicable for government money
persons or arriving within payments, LGUs, NGAs and GOCCs)
a reasonable time 8. As to withholding and remittance of
PROVIDED that the Bureau compensation withholding tax: Monthly, BIR
of Customs may, upon the
Form 1601-C
production of satisfactory
evidence that such 9. As to expanded withholding tax, remittance
persons are actually must be made for the first two months on or
coming to settle in the before the 10th day of the following month
Philippines and that the using BIR Form 0605 with tax type WE if
goods are brought from expanded and WF if final and ATC should be
their former place of MC200. This is before the BIR could formalize
abode
and finalize the remittance returns,
Importation of fuel, goods Importation of fuel, goods
On the 3rd month, BIR Form 1601EQ for the
and supplies by persons and supplies by persons
engaged in international engaged in international expanded and applicable return for the final
shipping or air transport shipping or air transport shall be filed as quarterly withholding tax return
operations operations PROVIDED that to be filed not later than the last day of the
the fuel, goods and following month after the close of the taxable
supplies shall be used for quarter.
international shipping or VIII. PENALTIES
air transport operations
IX. EXCISE TAXES
A. Petroleum Products Sources:
One of the major provisions of tax reform is the Atty. Ellen P. Galendez
staggered increase in oil excise. The current rates Atty. Jonaidah M. Darimbang
have been unadjusted since 1997. Under the TRAIN RO Amor Charmaigne G. Hernandez
law, rates will be adjusted gradually between 2018 TO Angela De Villa Angeles
and 2020.
Php/L 1997-2017 2018 2019 2020 onwards
Diesel 0 2.50 4.50 6.00
Gas 4.35 7.00 9.00 10.00
B. Automobiles
Price range (PHP) Rates (%)
O.6M and below 4
Over 0.6M-1M 10
Over 1M-4M 20
Over 4M 50

Exempted from Tax:


 Purely electric cars
 Pick ups
 Hybrid cars (50%)
C. Sweetened Beverages
 Purely caloric, purely non-caloric sweetener, or
a mix of both: P6.00 per liter
 Purely high fructose corn syrup or in
combination with any caloric/non-caloric
sweetener: P12.00 per liter
 Products covered:
 Sweetened juice drinks
 Sweetened tea
 All carbonated beverages
 Flavored water
 Energy and sports drinks
 Other powdered drinks not classified as
milk, juice, tea and coffee
 Cereal and grain beverages
 Other non-alcoholic beverages that
contain added sugar
D. Mineral Products
 double rate from 2% to 4%
E. Cosmetic Procedures
 a new tax at 5% of gross receipts
F. Tobacco
Rate per pack
Before Jan-June July 2018- 2020 and 2022 and
2018 2018 Dec 2019 2021 2023
P31.20 P32.50 P35 P37.50 P40*
*followed by annual indexation of 4%