REPUBLIC ACT NO.

10963
HIGHLIGHTS OF TRAIN LAW
01.10.18 [Wednesday 10-2 P.M.]
Attorney Willie B. Santiago, CPA
A. ADMINISTRATIVE
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Power of the Commissioner to obtain

No TIMTA yet at the time of the enactment
of 1997 Tax Code
information to include data supplied by
Cooperative Development Authority in
compliance with “The Tax Incentives
Management & Transparency Act (TIMTA)”

Power of the Commissioner to make assessments

Presence of counterpart restrictions notwithstanding any law requiring prior
authorization of any government agency or
instrumentality

No period is provided Authority of the Commissioner to prescribe real

property values subject to automatic adjustment
once every three (3) years
B. INDIVIDUAL INCOME & RETURNS
& PAYMENT
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

 Below Php10,000.00 taxed at 5%  Below Php250,000.00 no tax

 Over Php500,000.00 taxed at 32%  Over Php8Million taxed at 35%
 No counter-part provision  Optional for self-employed &
professionals to be taxed at 8% for
gross revenues below Php3Million

 Personal exemption-Php50,000.00
 Additional exemption-Php25,000.00 per No more Personal and Additional
child exemptions

Minimum wage earners receiving holiday

No counter-part provision
pay still exempt from income tax
 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Tax exempt 13th Month Pay & Other

Benefits including Productivity Incentives & Increase to Php90,000.00
Christmas Bonus-Php82,000.00

Employees of RHQ, ROHQ, OBU, & Preferential tax treatment of 15% shall not
Petroleum Service Contractors taxed at apply anymore to registrants after January
15% 1, 2018

Fringe Benefit Tax-32% Fringe Benefit Tax-35%

Returns to consist of maximum of 4 pages

None showing personal profile & information,
gross revenues, allowable deductions,
taxable income, income tax due & payable
 Deadline for 1st Quarter & Annual ITR-
April 15  May 15
 Deadline for 2nd Installment of Annual  October 15
Income Tax Due-July 15
C. PASSIVE INCOME
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

PCSO & Lotto Winnings-exempt Taxable above Php10,000.00

Interest income on foreign currency 15% whether recipient is individual or

denominated units-7.5% domestic corporation

Capital gains tax on unlisted shares-5% for

1st Php100,000.00 net capital gains realized Flat tax rate of 15%
and 10% in excess of Php100,000.00
D. ESTATE TAX
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Progressive at 5% to 20% Flat rate of 6%

Standard deduction at Php1 Million Php5 Million

Family home Php1 Million Php10 Million

 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Final withholding tax at 6% on withdrawals

None
on deposits of decedent

Estate tax return filing deadline-within 6

1 year
months from the date of death

Payment by installment in 2 years in case

No counterpart provisions of insufficient cash without civil penalty &
interest
E. DONORS TAX
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

0%-15% & 30% on donations to strangers 6% in excess of PhP250,000.00

F. VALUE ADDED TAX
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

VAT threshold-Php1,919,500.00 Taxable above Php3M

 Sale of goods to PEZA-0%

 Subject to 12% upon implementation of
 VAT exempt sale of residential lot-not
enhanced VAT refund system
more than Php 1,919,200.00
 Php1.5Million
 VAT exempt sale of residential house &
 Php2.5Million, by 2021 Php2Million
lot-Php 3,199,200.00
 VAT exempt lease of residential unit-
 Php15,000.00
Php 12,800.00
 Association dues, membership fees &
 VAT exempt
other assessments & charges of
homeowner’s association &
 VAT exempt
condominium corporation-vatable
 VAT exempt Transfer of Sale of drugs
 Transfer property pursuant to Section
and medicines for diabetes, high
40 (C) (2) of the Tax Code on tax-free
cholesterol & hypertension-VAT exempt
exchange-vatable
effective January 1, 2019
 Sale of medicines-12% VAT
 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Amortization of input VAT on capital goods Repealed by 2022

 120-day period within which to refund

 90 days reckoned from the date of
reckoned from the complete
submission of official receipts &
submission of documents
invoices
 In case of inaction, appeal to CTA after
 BIR officer may be punished
the expiration of 120-day period

Monthly & quarterly VAT filing Effective 2023 only quarterly VAT filing
G. PERCENTAGE TAX
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Beginning January 1, 2019 , annual gross

Cooperatives are exempt from 3% gross
receipts not exceeding Php500,000.00 shall
receipts tax
be exempt from 3%

Self-employed & professionals with gross Exempt effective January 1, 2019 if annual
receipts of Php1,919,500.00 and less- gross receipts not exceeding
subject to 3% Php500,000.00

Stock transaction tax on listed shares-0.50

0.60 of 1%
of 1%
H. EXCISE TAX
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

 Php32.50-January 2018
Php31.20 per pack with 4% increase Php35.00-January 2019
annually Php37.50-January 2020
Php40.00-January 2022
 4% annual increase

 PhP2.50 per liter-2018

 Diesel-Php0.00 per liter PhP4.50 per liter-2019
Php6.00 per liter-2020

 Unleaded & premium gasoline-Php4.35  Php7.00 per liter-2018

per liter Php9.00 per liter-2019
Php10.00 per liter-2020

No counter provisions Mandatory mafking of all fuel products

 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

 2% for up to Php600,000.00
 Php12,000.00 + 20% in excess of
Php600,00.00
 Php112,000.00 + 40% in excess over
Php1.1 Million
 Php512,000.00 + 60% of excess over
Php2.1 Million
 4%
 10% for over Php600,000.00-Php1
Million
 20% for over Php1 Million-Php4 Million
 50% for over Php4 Million

Cosmetic procedures for aesthetic reasons-

5%
none

 Php6.00 per liter using caloric & non-

Sweetened beverages-none caloric sweeteners
 Php12.00 per liter using high-fructose
corn syrup

 Php50.00-2018
 Php10.00. per metric ton of coal
Php100.00-2019
Php150.00-2020
 Various rates for other minerals
 100% increase in rate for other minerals
I. DOCUMENTARY STAMP TAXES

AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Various transactions subject to different 100% increase in rate except DST on loans
rates & amounts from Php 1.00 to Php 1.50 per Php 200.00
& no increase in sale of real property &
insurance policies
J. COMPLIANCE REQUIREMENTS

AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Php600,000.00 threshold for keeping of

Php3 Million
books of accounts for entities
K. ADMINISTRATIVE PROVISIONS
OLD TAX CODE
PhP25.00 sale required to issue official
receipt/invoice
Electronic sales reporting-none except the
current Quarterly Summary List of Sales &
Purchases & List of Importation, e-Sales
Reporting
Monthly filing of withholding tax &
percentage tax/VAT
Deficiency interest-20%
Penalty for failure to transmit sales data
entered on Cash Register Machine/Point of
Sales Machine to the BIR’s Electronic Sales
Reporting System-administrative penalty
AMENDMENTS INTRODUCED BY
TRAIN LAW
Php100.00
Enhanced electronic point of sales
reporting by taxpayers engaged in export of
goods & services & Large Taxpayers within
5 years from enactment of TRAIN
Quarterly filing of withholding tax except
compensation & VAT/percentage
Double the legal interest rate per annum
1/10 of 1% of the annual net income for
the 2nd year preceding the current taxable
year for each day of violation or Php 10,000
whichever is higher & permanent closure if
violation exceeds 180 days
L. REVENUE MEMORANDUM
CIRCULAR NO. 105-2017
Revised Withholding Tax Table on Compensation pursuant to
amendments to the NIRC of 1997 as introduced by RA No. 10963
“TRAIN Law”
M. REVENUE MEMORANDUM
CIRCULAR NO. 1-2018
A. Guidelines in the Use of Withholding Tax Table

B. Change in Creditable Withholding Tax Rate on

Income Payments to Self-employed Individuals or
Professionals be subject to Eight Percent (8%)

• Professional fee, talent fees, commissions etc.

for services rendered by individuals
• Income distribution to beneficiaries of Estates
and Trust
• Income payment to certain brokers and
agents

• Income payments to partners of general

professional partnership

• Professional fee paid to medical practitioners

• Commission of independent and/or exclusive

sales representatives, and marketing agents
of companies.