Briefing On TRAIN

RA 10963: Tax Reform for
Acceleration and Inclusion

(TRAIN) – BIR Training of
Trainers
National Training Center – BIR, NOB
22 – 24 January 2018
2
Background on the Tax Reform

 The Tax Reform for Acceleration and inclusion amends certain
provisions of Republic Act No. 8424 (The National Internal
revenue Code of 1997), as amended.
 The enrolled bill was sent to President Duterte for approval and
was signed into law as Republic Act No. 10963 on December
19, 2017. The law takes effect January 1, 2018 following its
complete publication in the Official Gazette last December 27,
2017.
 The President has issued a separate letter vetoing five
provisions of the signed TRAIN law.
 The law is just the first tax reform package. The second
package (reduction of corporate income tax and rationalization
of fiscal incentives) is estimated to be released by early 2018.
3
Key amendments
1. Individual Income Tax 9. Excise Tax on:
2. Final Income Tax  Automobiles
3. Estate Tax  Petroleum products
4. Donor’s Tax  Sweetened beverages
5. Value Added Tax  Mineral products
6. Documentary Stamp Tax  Cosmetic procedures
7. Some administrative (non-essential
provisions services)
8. Penalties
4
What is the purpose of TRAIN?

The purpose of TRAIN is to make
our country’s tax system
It is the first package in the Comprehensive
Tax Reform Program (CTRP) which is expected
to generate
Php 130 Billion

in revenues for the government.
9
What is TRAIN?
The goal of the first package of the CTRP or

TRAIN is to create a simpler, fair, and more
efficient system, as per the constitution,
where the rich will have a bigger contribution
and the poor will benefit more from the
government’s programs and services.
Lowering the Simplifying Estate Simplified Value Added
Personal Income and Donor’s Tax Tax (VAT) System
Tax
Increasing the Excise Tax Increasing the Excise Introducing an Excise

on Petroleum Products
Tax on Automobiles Tax on Sweetened
Beverages
11
The Vision of TRAIN by 2020….
Poverty rate Law abiding Peace within Achieve high

reduced from middle income
country the country
status, where
26% to 17% and per capita
(or some 10 neighbors increases from
million USD3,000 to
Filipinos USD4100 by
uplifted from 2022 in today’s
poverty) money
12
The Vision of TRAIN by 2040….
Extreme Inclusive Achieve high

economic income
poverty
status where
eradicated and political
per capita
institutions increased
where from USD
everyone has 30,000 to
equal USD 12,000
opportunities by 2040 in
today’s
money
13
What is the motive for TRAIN?

“The benefits to be derived from this tax reform
measure will sustainably finance the government’s
envisioned “BUILD, BUILD, BUILD, CAMPAIGN”,
that pushes for massive investments in
infrastructure thereby encouraging economic
activity and job creation, as well as fund the
desired increase in the public budget for health,
education and social programs to alleviate poverty.
Benefits of TRAIN
Higher budget for Infrastructure development

• Job Creation
• Lower cost of transporting goods and services
Higher efficiencies, increase in business activities

and revenues
• Attract Investors
• Better quality of life for Filipinos
Benefits of TRAIN
Higher budget for education

• Competitive advantages for new graduates
• Better employment viability
• Higher pay potentials
• Attract investors
Benefits of TRAIN
Higher budget for health

• More public hospitals and clinics
• Better public access to better health care
• Stronger work force
• Attract investors
Benefits of TRAIN
Higher budget for Social Protection, Welfare and

Employment
• Better government relief and assistance programs
• Better subsidies
• Better social security and overall peace and order
Briefing on RA 10963: Tax
Reform for Acceleration and
Inclusion (TRAIN) –
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 232 All corporations, companies, All corporations, companies,

Keeping of books partnerships or persons required partnerships or persons required by
of accounts by law to pay internal revenue law to pay internal revenue taxes
taxes shall keep a journal and a shall keep and use relevant and
ledger. appropriate set of bookkeeping
records duly authorized by the
Those whose quarterly sales, Secretary of Finance.
earnings, receipts, or output do not
exceed PHP50,000 shall keep and
use simplified set of bookkeeping
records.
NIRC NIRC TRAIN
Provision
Section 232 Those whose gross quarterly Those whose gross annual sales,
Keeping of books sales, earnings, receipts or output earnings, receipts or output exceed
of accounts exceed P150,000 shall have their ₱3,000,000 shall have their books of
books of accounts audited and accounts audited and examined
examined yearly by independent yearly by independent CPAs and their
Certified Public Accountants ITRs accompanied with a duly
(CPAs) and their ITRs accomplished AIF.
accompanied Account Information
Form (AIF).
NIRC NIRC TRAIN
Provision
Section 232 All corporations, companies, All corporations, companies,
Keeping of books partnerships, or persons required partnerships or persons required by
of accounts by law to pay internal revenue law to pay internal revenue taxes
taxes shall keep a journal and a shall keep and use relevant and
ledger. appropriate set of bookkeeping
records duly authorized by the
Those whose quarterly sales, Secretary of Finance.
earnings, receipts, or output do
not exceed P50,000 shall keep
and use simplified set of
bookkeeping records
Section 236 The taxpayer’s registration shall Additional proviso:

Registration contain the information as may be
Requirements required by the Commissioner in the The Commissioner shall simplify the
form prescribed business registration and tax
compliance requirements of self-
employed individuals and/or
professionals.
Persons required to register for VAT:

those whose gross receipts
• for the past 12 months have Threshold amount is increased to
exceeded ₱1,500,000 ₱3,000,000.
Section 236 • For the next 12 months can be Additional proviso:
Registration reasonably believe to exceed
Requirements ₱1,500,000 Any taxable individual who elects to pay
the 8% tax on gross sales or receipts
shall not be allowed to avail of optional
VAT registration.
Any person not required to register
for VAT may elect to register for VAT.
Section 237 A duly-registered receipt or sales or It is expressly provided that the

Receipts or commercial invoice , prepared at issuance of the receipt or invoice shall
Invoices least in duplicate, shall be issued for be made at the point of sale.
each sale of merchandise or service
rendered valued at ₱25 or more.
The threshold amount is increased to
₱100.00
Section 237 Additional provision:

Receipts or Within 5 years from the effectivity of the
Invoices law and upon the establishment of the
necessary storing and processing
system, the following shall be required
to issue electronic receipts or sales or
commercial invoices in lieu of manual
receipts/invoices:
• taxpayers engaged in the export of
goods and services
• taxpayers engaged in e-commerce,
and
• taxpayers under the jurisdiction of the
Large Taxpayers Service
Section 237 Other taxpayers may also opt to issue

Receipts or electronic receipts/invoices in lieu of
Invoices manual ones.
The digital record of electronic receipts/

invoices shall be kept by the purchaser,
customer or client and the issuer for a
period of 3 years from the close of the
taxable year.
Section 237 (A) No provision The taxpayers that will be mandated

Electronic Sales under Sections 236 to issue electronic
Reporting System receipts/invoices shall be required to
[new] electronically report their sales data to
the BIR through the use of electronic
point of sales systems.
The machines, fiscal devices, and fiscal

memory devices shall be at the expense
of the taxpayers.
Section 237 (A) No provision The data processing of sales and

Electronic Sales purchase data shall comply with:
Reporting System • the Data Privacy Act
[new] • the provision of the Tax Code on
unlawful divulgence of taxpayer
information (Section 270)
• other laws relating to the
confidentiality of information
The BIR shall also establish policies,

risk management approaches, actions,
trainings, and technologies to protect the
cyber environment, organization, and
data.
Inclusion (TRAIN) – Penalties
General interest 20% interest on any unpaid amount General interest on unpaid amount of
of tax from the date prescribed for tax is changed to 12% (at double the
payment until the amount fully paid rate of legal interest rate for loans or
forbearance of any money in the
absence of an express stipulation as
set by the BSP; prevailing BSP-set
legal interest is 6%)
Additional proviso:
Deficiency and delinquency interest
shall in no case be imposed
simultaneously.
Deficiency Deficiency interest is assessed and The period when deficiency interest
interest collected from the date prescribed shall stop to run is until full payment
for its payment until full payment OR upon issuance of a notice and
thereof. demand by the BIR Commissioner;
whichever comes earlier.
Section 254 Any person who willfully attempts Administrative fine is increased to not
Attempt to evade in any manner to evade or defeat less than P500,000 but not more than
or defeat tax any tax imposed under this Code P10,000,000
or the payment thereof shall, in
addition to other penalties provided Imprisonment is increased to not less
by law, upon conviction thereof; be than 6 years but not more than 10
punished by a fine of not less than years
P30,000 but not more than
P100,000 and suffer imprisonment
of not less than 2 years but not
more than 4 years.
Section 264 Any person who: Same
Failure or refusal  fails or refuses to issue
to issue receipts receipts/invoices
or invoices  issues receipts/invoices that do
not fully reflect required
information
 uses multiple or double receipts
or invoices
shall upon conviction be punished
by a fine of not less than P1,000
but not more than P50,000 and
suffer imprisonment of not less
than 2 years but not more than 4
years
Section 264 Fine of not less than P1,000 but Administrative Fine is increased to
Failure or refusal not more than P50,000 and not less than P500,000 but not more
to issue receipts imprisonment of not less than 2 than P10,000,000
or invoices years but not more than 4 years for
any person who: Imprisonment is increased to not less
 Print receipts/invoices without than 6 years but not more than 10
authority from the BIR years
 Print double or multiple sets of
invoices or receipts Additional punishable offense:
 Print unnumbered Printing of other fraudulent receipts or
receipts/invoices not bearing the sales or commercial invoices
name, business style, TIN and
business address of the entity
Section 264-A No provision Any taxpayer required to transmit
Failure or sales data to the BIR’s electronic
transmit Sales sales reporting system but fails to do
Data Entered on so, shall pay:
Cash Register
Machine/Point of For each day of violation:
Sales System 1/10 of 1% of the annual net income
(POS) Machines as reflected in the Audited FS for the
to the BIR’s second year preceding the current
Electronic Sales taxable year OR P10,000, whichever
Reporting is higher.
System [new]
Section 264-A No provision IF the aggregate number of days of
Failure or violation exceed 180 days within a
transmit Sales taxable year, additional penalty shall
Data Entered on be: permanent closure of the
Cash Register taxpayer
Machine/Point of
Sales System The penalty shall not apply if the
(POS) Machines failure to transmit is due to force
to the BIR’s majeure or any causes beyond the
Electronic Sales control of the taxpayer
Reporting
System [new]
Section 264-B No provision Covered person shall be any person
Sales who purchase, use, possess, sell or
suppression offer to sell, install, transfer, update,
devices [new] upgrade, keep, or maintain such
automated sales suppression device
or software designed for or is capable
of:
 Suppressing the creation of
electronic records of sale
transactions that a taxpayer is
required to keep under existing tax
laws and/or regulation; or
 Modifying, hiding or deleting
electronic records of sales
transactions and providing ready
means of access to them
NIRC NIRC TRAIN
Provision
Section 264-B No provision Penalty:
Sales Administrative Fine of not less than
suppression P500,000 but not more than
devices [new] P10,000,000 and imprisonment of not
less than 2 years but not more than 4
years
Cumulative suppression of electronic

sales record in excess of
P50,000,000 shall be considered as
economic sabotage and shall be
subject to maximum penalty
NIRC NIRC TRAIN
Provision
Section 265-A No provision Additional punishment for all offenses
Offenses relating relating to fuel marking:
to fuel marking a. Any person engaged in the sale,
trade, delivery, distribution or
transportation of unmarked fuel in
commercial quantity held for domestic
use or merchandise (upon conviction)
b. Any person who:
 causes removal of the official fuel
marking agent from marked fuel, and
the adulteration or dilution of the fuel
intended for sale to the domestic
market, or
NIRC NIRC TRAIN
Provision
Section 265-A No provision  knows the possession, storage,
Offenses relating transfer or offer for sale of fuel
to fuel marking obtained as a result of such removal,
adulteration or dilution
First offense ₱2,500,000
Second ₱5,0100,000
offense
Third offense ₱10,000,000 plus
revocation of license to
engage in any trade or
business
NIRC NIRC TRAIN
Provision
Section 265-A No provision c. fine of not less than P1,000,000 but
Offenses relating not more than P5,000,000 AND
to fuel marking imprisonment of not less than 4 years
but not more than 8 years for any
person who commits any of the
following acts:
Making, importing, selling, using or
possessing fuel markers without
express authority
Making, importing, selling, using or
possessing counterfeit fuel markers
NIRC NIRC TRAIN
Provision
Section 265-A No provision Causing another person or entity to
Offenses relating commit any of the two preceding
to fuel marking acts
Causing the sale, distribution,
supply or transport of legitimately
imported, in-transit, manufactured
or procured controlled precursors
and essential chemicals to any
person or entity penalized under
the preceding and this subsection
NIRC NIRC TRAIN
Provision
Section 265-A No provision d. Fine of not less than P5,000,000 but
Offenses relating no more than P10,000,000 AND
to fuel marking imprisonment of not less than 4 years
but not more than 8 years for any
person who willfully inserts, places,
adds or attaches whatever quantity of
any unmarked fuel, counterfeit
additive or chemical in the person,
house, effects, inventory, or in the
immediate vicinity of an innocent
individual for the purpose of
implicating, incriminating or imputing
the commission of any violation
herein
NIRC NIRC TRAIN
Provision
Section 265-A No provision e. Any person authorized, licensed or
Offenses relating accredited to conduct fuel tests, who
to fuel marking issues false or fraudulent test results
knowingly, willfully OR through gross
negligence, shall suffer additional
penalty of imprisonment from 1 year
and 1 day to 2 years and 6 months
Additional penalties that may be

imposed by the court:
 Revocation of the license to practice
profession in case of a practitioner
 Closure of the fuel testing facility
NIRC NIRC TRAIN
Provision
Section 269 No provision Additional punishable offense:
Violations (j) Deliberate failure to act on the
committed by application for VAT refunds within the
Government prescribed period
Enforcement
Officers
Inclusion (TRAIN) – Power and
Authority of the Commissioner
Section 5 (B) Provides for the authority of the Additional provision:

Power of the Commissioner to obtain information
Commissioner to from national and local The Cooperative development
obtain governments, government Authority shall submit a report on tax
information to agencies and instrumentalities incentives availed by cooperatives to
summon, the BIR and DOF.
examine and take
testimony of Theses information shall be included
persons in the Tax Incentives Management
and Transparency Act (TIMTA)
database.
NIRC NIRC TRAIN
Provision
Section 6 The Commissioner or his duly Additional proviso:
Power of the authorized representative may This authority is nothwithstanding any
Commissioner to authorize the examination of law requiring the prior authorization of
make taxpayer and assessment of the any government agency or
assessments correct amount of tax. instrumentality.
and prescribe
additional
requirements for
tax
administration
and enforcement
Section 6 The Commissioner has the In exercising this authority, the following shall be
Power of the authority to determine fair observed:
Commissioner to market value of real 1. Mandatory consultation with both private and
make properties. public competent appraisers before division of
assessments and the Philippines into zones.
prescribe 2. Prior notice to affected taxpayers before the
additional determination of fair market values of the real
requirements for properties.
tax administration 3. Publication or posting of adjustments in zonal
and enforcement value in a newspaper of general circulation in
the province, city or municipality concerned.
4. The basis of valuation and records of
consultation shall be public records open to the
inquiry of any taxpayer.
5. Zonal valuations shall be automatically
adjusted once every three years.
Inclusion (TRAIN) – Income Tax
Section 24 Taxable income of individuals are subject to the Revised personal income tax
Income tax rates following graduated rates: brackets of 2018-2022:
on individual
citizen and
Tax Schedule Tax Schedule effective January 1,
2018 to December 31, 2022
individual resident Not over 5%
alien of the Not over 0%
P10,000 P250,000
Philippines
Over P10,000 P500 + 10% of
but not over the excess over
P30,000 P10,000
Over P30,000 P2,500 + 15% of
P70,000 P30,000
Over P70,000 P8,500 + 20% of

Section 24 Taxable income of individuals are subject Revised personal income tax brackets of 2018-
Income tax rates to the following graduated rates: 2022:
on individual Tax Schedule Tax Schedule effective January 1, 2018 to
citizen and December 31, 2022
individual Over P250,000 P50,000 + 30% of Over P250,000 but 20% of the excess over
resident alien of but not over the excess over not over P400000 P250,000
the Philippines P500,000 P250,000 Over P400,000 but P30,000 + 25% of the
Over P500,000 P125,000 + 32% not over P800,000 excess over P400,000
of the excess Over P800,000 but P130,000 + 30% of the
over P500,000 not over P2million excess over P800,000
Over P2Million but P490,000 + 32% of the

not over P8Million excess over P2Million
Over P8Million P2,410,000 + 35% of
the excess over
P8Million
Section 24 For 2023 onwards:

Income tax rates Tax Schedule effective January 1, 2018 to
on individual December 31, 2022
citizen and Not over P250,000 0%
individual resident
Over P250,000 but 15% of the excess over
alien of the
not over P400,000 P250,000
Philippines
Over P400,000 but P22,500 +20% of the
not over P800,000 excess over P400,000
Over P800,000 but P102,500 + 25% of the
not over P2,000,000 excess over P800,000
Over P2Million but P402,500 + 30% of the
not over P8Million excess over P2Million
Over P8Million P2,202,500 + 35% of the
excess over P2Million
NIRC NIRC TRAIN
Provision
Section 24 Refer to Revenue Memorandum Circular
Income tax rates (RMC) Nos. 105-2017 and 1-2018, Revised
on individual Withholding Tax on Compensation Table
citizen and
individual resident
alien of the
Philippines
Section 24 Taxable income is subject to the For purely self-employed and/or professionals
Income tax of self- same graduated rates whose gross sales/receipt and other non-
employed and/or operating income do not exceed the VAT
professionals threshold of P3Million, the tax shall be, at the
taxpayer’s option, either:
1. 8% income tax on gross sales or gross
receipts in excess of P250,000 in lieu of the
graduated income tax rates and the
percentage tax under Sec. 116; OR
2. Income tax based on the graduated income
tax rates for individuals
NIRC NIRC TRAIN
Provision
Section 24 Taxable income is subject For mixed income earners (earning both
Income tax of to the same graduated compensation income and income from business
mixed income rates and/or practice of profession), their income taxes
earners shall be:
1. For income from compensation: based on
graduated income tax rates for individuals, AND
2. For income from business and/or practice of
profession:
a. Gross sales/receipts which do not exceed the
VAT threshold of P3Million – 8% income tax
on gross sales/receipts and other non-
operating income OR income tax based on
graduated income tax rates on taxable
income, at the taxpayer’s OPTION
b. Gross sales/receipts and other non-operating
income which exceeds the VAT threshold of
P3Million – income tax based on graduated
tax rates for individuals
Section 24 (B) (1) Philippine Charity Sweepstakes Philippine Charity Sweepstakes and
Final tax on and Lotto winnings – exempt Lotto winnings of more than P10,000
winnings from the 20% final tax shall be subject to the 20% final tax
Section 24 (B) (1) Interest income received by an The rate of final tax on interest
Final tax on individual taxpayer (except a income received by resident individual
interest on foreign non-resident individual) from a taxpayer under the expanded foreign
currency deposit depository bank under the currency deposit system increased
expanded foreign currency from 7.5% to 15% final tax
deposit (EFCD) system is
subject to 7.5% final tax
Section 24 (C) The capital gains tax on net The final tax rate of 15% for net capital
Capital gains tax capital gains realized from sale, gains realized during the taxable year
on sale of shares barter, or exchange or other from the sale, barter, exchange or other
not traded disposition of shares of stock in disposition of shares of stock in a
through the stock a domestic corporation not domestic corporation except shares
exchange traded through the stock sold or disposed of through the stock
exchange is: exchange
Not over P100,000 – 5%
On any amount in excess of

P100,000 – 10%
Section 25 (C) Alien individuals and qualified Additional provision [Subsection (F)]
(D) (E) Filipino employees employed by The 15% preferential tax rate provided
Preferential tax 1. Regional or area and Regional in Subsection (C), (D) and (E) shall not
rate for Operating headquarters or be applicable to RHQs. ROHQs,
individuals multinational companies (RHQs OBUs or Petroleum service contractor
employed by and ROHQs) [Subsection (C)] and subcontractor registering with the
RHQ, ROHQ, 2. Offshore banking units (OBUs) SEC after January 1, 2018
OBU and [Subsection (D)]
But existing RHQs, ROHQs, OBUs or
Petroleum 3. Petroleum Service contractor
Petroleum service contractor and
Contractors and subcontractor [Subsection
subcontractor presently availing of the
Capital and (E)]
preferential tax rates for qualified
subcontractors are subject to a preferential tax of employees shall continue to be entitled
15% final withholding tax on gross to avail of the preferential tax rate for
compensation income. present and future qualified
employees.
Section 24 (C) Presidential Veto:

(D) (E) The President vetoed this line item under
Preferential tax Subsection (F)
rate for “But existing RHQs, ROHQs, OBUs or
individuals Petroleum service contractor and subcontractor
employed by shall continuously be entitled to avail of the
RHQ, ROHQ, preferential tax treatment for their present and
OBU and future qualified employees.”
Petroleum
for being violative of equal protection
Contractors
Capital and The President stated in his letter that, “given
subcontractors the significant reduction in the personal income
tax, the employees of these firms should follow
the regular tax rates applicable to other
individual taxpayers.”
Section 31 Means the pertinent items of gross The phrase “and/or personal and
Definition of income specified in this Code, less additional exemptions” is removed in
Taxable Income the deductions and/or personal the definition.
and additional exemptions, if any,
authorized for such types of
income by this Code or other
special laws
Section 35 Individual taxpayers are entitled The Basic Personal and Additional
Personal to: Exemptions of individual taxpayers
Exemptions Basic Personal Exemption – are removed.
P50,000
The related provision on furnishing
and
exemption certificate is likewise
Additional Exemption – P25,000 removed.
per qualified dependent child
Section 32 (B) The amount of tax-exempt 13th The amount of tax-exempt 13th month pay
Tax exempt 13th month pay and other benefits is and other benefits is increased to
month pay P82,000. P90,000.
Section 33 (A)  Fringe benefits given to non-  The Fringe Benefits Tax is
Tax on fringe rank and file employees are increased to 35% effective January
benefits given to subject to 32% final tax 1, 2018
non-rank and file  The grossed up monetary value  The grossed up monetary value of
employees of the fringe benefit given to the fringe benefit given to non-rank
non-rank and file employees and file employees shall be
shall be determined by dividing determined by dividing the actual
the actual monetary value by monetary value by 65%
68%
Section 33 (A)  Fringe benefits given to non-  Fringe benefits furnished to
Tax on fringe rank and file employees are employees and taxable under
benefits given to subject to 32% final tax Subsections (B), (C), (D) and (E) of
non-rank and file  The grossed up monetary value Sec. 25 shall be taxed at the
employees of the fringe benefit given to applicable rates imposed
non-rank and file employees  The grossed-up monetary value of
shall be determined by dividing the fringe benefit shall be
the actual monetary value by determined by dividing the actual
68% monetary value of the fringe benefit
by the difference between 100%
and the applicable rates of income
tax under Subsections (B), (C), (D)
and (E) of Sec. 25
Section 34 (M) The allowable deduction for Allowable deduction for premium
Allowable premium payments on health payments on health and/or
deduction for and/or hospitalization insurance hospitalization insurance of an
premium of an individual taxpayer is P2400 individual taxpayer is removed.
payments on per year or P200 per month,
health and/or subject to a gross family income
hospitalization threshold of P250,000.
insurance
Section 51 An individual whose gross Individual taxpayers whose taxable
Filing of individual income does not exceed his total income is subject to zero percent
income tax return personal and additional under the new graduated tax table
exemptions for dependents are (i.e., does not exceed P250,000) shall
not required to file income tax not be required to file an income tax
return (ITR). return.
Additional provision:
The ITR shall consist of a maximum
of four (4) pages in paper OR
electronic form. It shall only contain
the following information:
 Personal profile and information
 Gross sales receipts or income
from compensation, from business,
or from exercise of profession
(except income subject to final tax)
 Allowable deductions
 Taxable income
 Income tax due and payable
Section 51-A No provision Substituted filing or ITRs is available for

Substituted Filing individual taxpayers:
of income tax  Receiving purely compensation
returns by income, regardless of amount
employees  From only one employer in the
receiving purely Philippines for he calendar year
compensation  The income tax of which has been
income from only correctly withheld by the employer
one employer in (i.e., tax due = tax withheld)
the Philippines The Certificate of Withholding filed by
the employers duly stamped
“RECEIVED” by the BIR shall be the
substituted filing by such employers
Section 56 (A) (2) When tax due exceeds ₱2,000, the The new deadline of payment of
Installment taxpayer (other than a corporation) second installment is October 15
Payment of tax due may elect to pay the tax in two following the close of the calendar
for individuals and equal installments. Payment of year.
corporations installments:
 First installment – time of filing of
return
 Second installment – on or
before July 15 following the close
of the calendar year.
Section 62 There is allowed personal The exemption for estates and
Exemption for exemption of ₱50,000 from the trusts is removed.
estates and trusts income of the estate or trust.
Section 51 (C) The return of individual The return of individual required
(1) required to file an income tax to file an income tax return shall
Filing of return shall be filed on or be filed on or before April 15 of
Individual Tax before April 15 of each year each year covering income for
Return covering income for the the preceding taxable year.
preceding taxable year. (Note: The TRAIN Law did
not remove this provision)
Section 74 Every individual subject to The deadline for filing of
Declaration of income tax shall make and file declaration estimated income
estimated a declaration of his estimated for the current taxable year is on
income for income for the current taxable or before May 15 of the same
individuals year on or before April 15 of taxable year.
the same taxable year.
Section 74 The amount of estimated The payment of the four
Declaration of income with respect to which installments shall be:
estimated a declaration is required shall  First – May 15
income for be paid in four (4)  Second – August 15
individuals installments:  Third – November 15
 First – at time of declaration  Fourth – on or before May 15
 Second – August 15 of the following calendar year
 Third – November 15 when the final adjusted
 Fourth – on or before April income tax return is due to be
15 of the following calendar filed.
year when the final adjusted
income tax return is due to
be filed.
Section 34 (L) Individual taxpayers (except non- For GPPs and the partners comprising
Optional Standard resident alien) may elect a standard them, OSD may be availed only once,
Deduction deduction not exceeding 40% of i.e., either by the GPP itself or by the
gross sales/receipts and partners comprising the GPP.
corporations may elect standard
deduction not exceeding 40% gross
income, in lieu of itemized allowable
deductions.
Section 57 The rate of withholding tax on items Beginning January 1, 2019, the rate of
Withholding of of income payable by payor- withholding tax shall be not less than
creditable tax at corporations/persons shall be not one percent (1%) but not more than
source less than one percent (1%) but not fifteen percent (15%).
more than thirty-two percent (32%).
The tax withheld shall be credited

against the income tax liability of the
taxpayer.
Section 27 (C) The Philippine Charity PCSO is not anymore exempt
Exemption Sweepstakes Office (PCSO) is from payment of corporate
Government- among the list GOCCs, income tax.
owned or – agencies, or instrumentalities
Controlled that are exempt from payment
Corporations, of corporate income tax.
Agencies or
Instrumentalities
Section 27 (D) Interest income received by a The rate of final tax on interest
(1) domestic corporation from a income received by domestic
Final Tax on depository bank under the corporation under the expanded
interest on expanded foreign currency foreign currency deposit system
foreign currency deposit (EFCD) system is increased from 7.5% to 15%
deposit subject to 7.5% final tax. final tax.
Section 27 (D) The capital gains tax on net Final tax rate of 15% for net
(2) capital gains realized from capital gains realized from the
Capital gains tax sale, barter, or exchange or sale, barter, exchange or other
on sale of shares other disposition of shares of disposition of shares of stock in
not traded stock in a domestic a domestic corporation not
through the stock corporation nor traded through traded through the stock
exchange the stock exchange is: exchange.
Not over ₱100,000 – 5%
On any amount in excess of

₱100,000 – 10%
Section 52 Every corporation subject to tax, Additional provision:
Filing of corporate except foreign corporations not The ITR shall consist a maximum of
income tax return engaged in trade or business in four (4) pages in paper OR electronic
the Philippines, shall render in form.
duplicate, a true and accurate
 Quarterly income tax return; It shall only contain the following:
AND information:
 Final or adjustment return 1. Corporate profile and information
2. Gross sales, receipts or income
from services rendered or conduct
of trade or business except income
subject to final tax
3. Allowable deductions
4. Taxable income
5. Income tax due and payable
These requirements shall not affect the
implementation of TMTA.
Final Withholding Tax and Expanded Withholding Tax Returns
Section 58 The return for FWT and the FWT and EWT returns shall be
Return and return for creditable filed and the payment made not
payments of withholding taxes (EWT later than the last day of the
taxes withheld at returns) shall be filed within month following the close of the
source ten (10) days after the end of quarter during which the
each month [Sec. 2.58 of RR withholding was made.
No. 2-98]
The provision that the
Commissioner may require the
payment of the taxes withheld at
more frequent intervals is
removed.
Briefing on RA 10963: Tax Reform
for Acceleration and Inclusion
(TRAIN) – Value Added Tax
Section 106 (A)(2) The following are entitled to VAT zero- The following sales by VAT
Zero-rated Sale of rating: registered persons shall be subject
Goods or Properties to zero percent 0% rate:
1. The sale and actual shipment of
goods from the Philippines to a 1. The sale and actual shipment of
foreign country, irrespective of any goods from the Philippines to a
shipping arrangement that may be foreign country, irrespective of
agreed upon which may influence any shipping arrangement, paid
or determine the transfer of for in acceptable foreign currency
ownership of the goods so or its equivalent in goods or
exported and paid for in acceptable services, and accounted for in
foreign currency or its equivalent in accordance with the rules and
goods or services, and accounted regulations of the Bangko Sentral
for in accordance with the rules and ng Pilipinas (BSP).
regulations of the Bangko Sentral
ng Pilipinas (BSP).
Section 106 (A)(2) 2. Sale and delivery of goods to:
Zero-rated Sale of
Goods or Properties Registered enterprises within a
separate customs territory
Registered enterprises within tourism

enterprise zones
(The above provision was vetoed by

President Duterte because this go against
the principle of limiting the VAT zero-rating
to direct exporters.)
Section 106 (A)(2) 2. Sale of raw materials or 3. Sale of raw materials or packaging
Zero-rated Sale of packaging materials to a materials to a nonresident buyer
Goods or Properties nonresident buyer for for delivery to a resident local
delivery to a resident local export-oriented enterprise to be
export-oriented enterprise to used in manufacturing, processing,
be used in manufacturing, packing or repacking and paid for
processing, packing or in acceptable foreign currency and
repacking in the Philippines accounted for in accordance with
of the said buyer's goods and the rules and regulations of the
paid for in acceptable foreign Bangko Sentral ng Pilipinas (BSP).
currency and accounted for
in accordance with the rules
and regulations of the
Bangko Sentral ng Pilipinas
(BSP).
Section 106 (A)(2) 3. Sale of raw materials or 4. Sale of raw materials or
Zero-rated Sale of packaging materials to packaging materials to
Goods or Properties export-oriented enterprise export-oriented enterprise
whose export sales whose export sales exceed
exceed seventy percent seventy percent (70%) of
(70%) of total annual total annual production.
production.
4. Sale of gold to BSP.

Section 106 (A)(2) 5. Those considered export 5. Those considered export sales
Zero-rated Sale of sales under Executive Order under Executive Order No. 226,
Goods or Properties NO. 226, otherwise known otherwise known as the “Omnibus
as the “Omnibus Investment Investment Code of 1987”, and
Code of 1987”, and other other special laws; and
special laws.
6. The sale of goods, supplies,
6. The sale of goods, supplies, equipment and fuel to persons
equipment and fuel to engaged in international shipping
persons engaged in or international air transport;
international shipping or provided, that the goods, supplies,
international air transport equipment and fuel have been
operations. sold and used for international
shipping or air transport
operations.
Section 106 (A)(2) Additional provision:
Zero-rated Sale of Items 3, 4, and 5 shall be subject to the 12% VAT
Goods or Properties and no longer be considered export sales subject
to 0% VAT upon satisfaction of the following
conditions:
 There is a successful establishment and
implementation of an enhanced VAT refund
system that grants refunds of creditable input
tax within 90 days from the filing of the VAT
refund application with the Bureau.
 All pending VAT refund claims as of December

31, 2017 shall be fully paid in cash by
December 31, 2019.
Section 106 (A)(2) The Department of Finance shall establish a VAT

Zero-rated Sale of Refund Center in the BIR and BOC that will handle the
Goods or Properties processing and granting of cash refunds of creditable
input tax.
An amount equivalent to 5% of the total VAT collection
of the BIR and BOC from the immediately preceding
year shall automatically be appropriated annually and
shall be treated as a special account in the General
Fund or as trust receipts for funding VAT refund
claims.
Further, the BIR and BOC shall be required to submit
to the Congressional Oversight Committee on the
CTRP a quarterly report of all pending claims for
refund and any unused fund.
Section 106 (A)(2) Deleted provision:
Zero-rated Sale of
Goods or Properties The following shall no longer be subject to 0%
VAT:
1. Sale of gold to BSP

2. Foreign-currency denominated sales
Section 108 (A) Sale or exchange Sale or exchange of services include “sale of
Definition of Sale or of services include electricity by generation companies, transmission
Exchange of Services “sale of electricity by any entity including the National Grid
by generation Corporations of the Philippines [NGCP], and
companies, distribution companies, including electric
transmission, and Cooperatives”.
distribution
companies”
Section 108 (B) The following are entitled to VAT The following are entitled to VAT
Zero-rated Sale of zero-rating: zero-rating:
Services
1. Processing, manufacturing or 1. Processing, manufacturing or
repacking goods for other repacking goods for other
persons doing business persons doing business outside
outside the Philippines which the Philippines which goods are
goods are subsequently subsequently exported, where
exported, where the services the services are paid for in
are paid for in acceptable acceptable foreign currency and
foreign currency and accounted for in accordance with
accounted for in accordance the rules and regulations of the
with the rules and regulations Bangko Sentral ng Pilipinas
of the Bangko Sentral ng (BSP).
Pilipinas (BSP).
NIRC NIRC TRAIN
Provision
Section 108 (B) 2. Services other than those 2. Services other than those
Zero-rated Sale mentioned in the preceding mentioned in the preceding
of Services paragraph, rendered to a person paragraph, rendered to a person
engaged in business conducted engaged in business conducted
outside the Philippines or to a outside the Philippines or to a
nonresident person not engaged nonresident person not engaged in
in business who is outside the business who is outside the
Philippines when the services are Philippines when the services are
performed, [51] the consideration performed, the consideration for
for which is paid for in acceptable which is paid for in acceptable
foreign currency and accounted foreign currency and accounted for
for in accordance with the rules in accordance with the rules and
and regulations of the Bangko regulations of the Bangko Sentral
Sentral ng Pilipinas (BSP); ng Pilipinas (BSP);
NIRC NIRC TRAIN
Provision
Section 108 (B) 3. Services rendered to persons or 3. Services rendered to persons or
Zero-rated Sale of entities whose exemption under entities whose exemption under
Services special laws or international special laws or international
agreements to which the Philippines agreements to which the Philippines
is a signatory effectively subjects is a signatory effectively subjects the
the supply of such services to zero supply of such services to zero
percent (0%) rate; percent (0%) rate;
4. Services rendered to persons
engaged in international shipping or 4. Services rendered to persons
international air transport engaged in international shipping or
operations, including leases of international air transport operations,
property for use thereof; including leases of property for use
thereof: provided, that these services
shall be exclusively for international
shipping or air transport operations;
NIRC NIRC TRAIN
Provision
Section 108 (B) 5. Services performed by 5. Services performed by
Zero-rated Sale subcontractors and/or contractors subcontractors and/or contractors
of Services in processing, converting, or in processing, converting, or
manufacturing goods for an manufacturing goods for an
enterprise whose export sales enterprise whose export sales
exceed seventy percent (70%) of exceed seventy percent (70%) of
total annual production; total annual production are no
longer entitled to VAT zero-rating.
NIRC NIRC TRAIN
Provision
Section 108 (B) 6. Transport of passengers and 6. Transport of passengers and cargo
Zero-rated Sale cargo by domestic air or sea by domestic air or sea vessels
of Services vessels from the Philippines to a from the Philippines to a foreign
foreign country. country.
7. Sale of power or fuel generated 7. Sale of power or fuel generated

through renewable sourced of through renewable sourced of
energy such as, but not limited to, energy such as but not limited to
biomass, solar, wind, hydropower, biomass, solar, wind, hydropower,
geothermal, ocean energy, and geothermal, ocean energy, and
other emerging energy sources other emerging energy sources
using technologies such as fuel using technologies such as fuel
cells and hydrogen fuels. cells and hydrogen fuels.
NIRC NIRC TRAIN
Provision
Section 108 (B) 8. Services rendered to:
Zero-rated Sale
of Services  Registered enterprises within a
separate customs territory
 Registered enterprises within

tourism enterprise
(Above provision was vetoed by

President Duterte)
NIRC NIRC TRAIN
Provision
Section 108 (B) Additional provision:
Zero-rated Sale
of Services Items 1 and 5 shall be subject to the 12% VAT
and no longer be considered export sales subject
to 0% VAT upon satisfaction of the following
conditions:
 There is a successful establishment and
implementation of an enhanced VAT refund
system that grants refunds of creditable input
tax within 90 days from the filing of the VAT
refund application with the Bureau.
 All pending VAT refund claims as of December

31, 2017 shall be fully paid in cash by
December 31, 2019.
Section 108 (B) Additional provision:

Zero-rated Sale of
Goods or properties The Department of Finance shall establish a VAT
and zero-rated sale Refund Center in the BIR and BOC that will handle
of services the processing and granting of cash refunds of
creditable input tax.
To fund claims for VAT refund 5% of the total VAT

collection of the BIR and BOC from the immediately
preceding year shall be:
 Automatically appropriated annually.

 Treated as a special account in the General Fund
or as trust receipts.

Zero-rated Sale of
Goods or Properties The BIR and BOC shall submit to the
and Zero-rated Sale Congressional Oversight Committee on the
of Services Comprehensive Tax Reform Program a quarterly
report of all pending claims for refund and unused
fund.
NIRC NIRC TRAIN
Provision
Section 109 The following transactions, among others, The following are the changes on
VAT-exempt are exempt from value-added tax: VAT-exempt transactions:
Transactions (D) Importation of professional instruments (D) Importation of professional
and implements, wearing apparel, domestic instruments and implements, tools of
animals, and personal household effects trade, occupation or employment,
(except any vehicle, vessel, aircraft, wearing apparel, domestic animals,
machinery other goods for use in the and personal and household effects
manufacture and merchandise of any kind in belonging to persons coming to settle
commercial quantity) belonging to persons in the Philippines or Filipinos or their
coming to settle in the Philippines, for their families and descendants who are
own use and not for sale, barter or now residents or citizens of other
exchange, accompanying such persons, or countries, such parties hereinafter
arriving within ninety (90) days before or referred to as overseas Filipinos, in
after their arrival, quantities and of the class suitable to
the profession, rank or position of the
persons importing said items,
Section 109 upon the production of for their own use and not for barter or sale,
VAT-exempt evidence satisfactory to the accompanying such persons, or arriving
transactions Commissioner, that such within a reasonable time: Provided, That
persons are actually coming to the Bureau of Customs may, upon the
settle in the Philippines and production of satisfactory evidence that
that the change of residence is such persons are actually coming to settle
bona fide. in the Philippines and that the goods are
brought from their former place of abode,
exempt such goods from payment of duties
and taxes:
Section 109 Provided, further, That vehicles, vessels,

VAT-exempt aircrafts, machineries and other similar
Transactions goods for use in manufacture, shall not fall
within this classification and shall therefore
be subject to duties, taxes and other
charges.
NIRC NIRC TRAIN
Provision
Section 109 Sale of real properties not Sale of real properties not primarily held for sale to
VAT-exempt primarily held for sale to customers or held for lease in the ordinary course
Transactions customers or held for lease of trade or business or real property utilized for low-
in the ordinary course of cost and socialized housing, residential lot valued at
trade or business or real P1,500,000.00 and below; house and lot, and other
property utilized for low- residential dwellings valued at P2,500,000.00 and
cost and socialized below.
housing, residential lot
valued at P1,919,500.00 Beginning January 1, 2021:
and below; house and lot,  The VAT exemption shall not anymore apply to:
and other residential - Sale of low-cost housing
dwellings valued at - Sale of residential lot
P3,199,200.00 and below.  The threshold selling price amount for sale of
house and lot, and other residential dwellings
shall be P2,000,000.00
Section 109 Every 3 years, the threshold Every 3 years, the threshold amount shall be
VAT-exempt amount shall be adjusted to adjusted to its present value using the
Transactions its present value using the Consumer Price Index, as published by the
Consumer Price Index, as Philippine Statistics Authority (PSA).
published by the National
Statistics Office.
Section 109 (Q) Lease of a residential (Q) Lease of a residential unit with a
VAT-exempt unit with a monthly rental not monthly rental not exceeding P15,000.00.
Transactions exceeding P12,800.00.
(U) Importation of fuel, (U) Additional provision:

goods and supplies by
persons engaged in Xxx Provided, That the fuel, goods, and
international shipping or air supplies shall be used for international
transport operations. shipping or air transport operations.
Section 109 Additional exempt transactions:

VAT-exempt
Transactions (W) Sale or lease of goods and services to
senior citizens and person with disabilities.
(X) Transfer of property in merger or

consolidation [under Section 40(C)(2) of
the NIRC/tax-free exchange].
(Y) Association dues, membership fees,

and other assessments and charges
collected by homeowners associations and
condominium corporations.
Section 109 (W) Sale or lease of goods (Z) Sale of gold to the BSP.
VAT-exempt or properties or the
Transactions performance of services (AA) Sale of drugs and medicines prescribed
other than the transactions for diabetes, high cholesterol, and
specifically mentioned as hypertension beginning January 1, 2019.
VAT-exempt, the gross
annual sales and/or Now (BB) Sale or lease of goods or
receipts do not exceed the properties or the performance of services
amount of P1,919,500.00 other than the transactions mentioned in the
(as amended). preceding paragraphs, the gross annual
sales and/or receipts do not exceed the
amount of P3,000,000.
Section 110 The input tax on the Amortization of input VAT shall only
(A)(2)(b) purchase of capital allowed until December 31, 2021.
Amortization of goods with a cost
Input VAT from exceeding After such date, taxpayers with
Purchases of P1,000,000.00 shall be unutilized input VAT on capital goods
Capital Goods amortized based on its purchased or imported shall be
useful life or 60 months, allowed to apply the same as
whichever is shorter. scheduled until fully utilized.
Section 112 The Commissioner shall  The period of granting by the Commissioner
Refunds or Tax grant a refund or issue a of refunds is decreased to 90 days (from 120
Credit of Input VAT tax credit certificate for days) from the date of submission of
creditable input taxes complete documents in support of the
within 120 days from the application.
date of submission of
complete documents.  The granting of tax credit instead of refund is
removed.
Additional provision:
Should the Commissioner find that the grant of
refund is not proper, the Commissioner must
sate in writing the legal and factual basis for
denial.
Section 112 Failure on the part of the The deemed denial of failure to act on the
Refunds or Tax Commissioner to act on application is removed.
Credit of Input VAT the application within the
period prescribed shall Additional provision:
be deemed a denial of
the application. Failure on the part of any official, agent, or
employee of the BIR to act on the application
within the ninety (90) – day period shall be
punishable under Section 269 of the Tax Code
(administrative fine and imprisonment).
Section 114 (A) VAT taxpayers shall file Beginning January 1, 2023, the filing and
Return and Payment quarterly return within 25 payment shall be done within 25 days
of VAT days following the close of following the close of each taxable quarter.
each taxable quarter,
while payment of the VAT
shall be made on a
monthly basis upon filing
of monthly VAT
declaration.
Section 114 (B) Government or any of its Additional provision:

Withholding of VAT political subdivisions,
instrumentalities or agencies, Beginning January 1, 2021, the VAT
including government-owned withholding system shall shift from final
or -controlled corporations to a creditable system.
(GOCCs) shall, before making
payment on account of each Payments for purchases of goods and
purchase of goods and services arising from projects funded by
services which are subject to Official Development Assistance (ODA)
the value-added tax shall shall not be subject to the final
deduct and withhold a final withholding tax system.
value-added tax at the rate of
five percent (5%) of the gross
payment thereof.
Section 116 Cooperatives are exempt from Additional exemption:

3% gross receipts the 3% gross receipts tax
tax of persons Beginning January 1, 2019, self-
exempt from the employed and professionals with total
VAT annual gross sales and/or gross
receipts not exceeding P500,000 shall
be exempt from the 3% gross receipts
(The above provision was vetoed by

President Duterte because the
proposed exemption will result in
unnecessary erosion of revenues and
would lead to abuse and leakages.)
Section 127 Sale, barter or exchange of shares of The rate of the stock transaction
Stock transaction stock listed and traded through the tax is increased to 6/10 of 1%
tax local stock exchange shall be subject
to a tax of ½ of 1% of the gross
selling price or gross value in money
of the shares of stock sold, bartered,
exchanged or otherwise disposed

Violations
committed by “(j) Deliberate failure to act on the
government application for refunds within the
enforcement prescribed period provided under
officers Section 112 of this Act.”
Briefing on RA 10963: Tax Reform
for Acceleration and Inclusion
(TRAIN) – Transfer Taxes
Estate Tax
NIRC NIRC TRAIN
Provision
Section 84 The Estate Tax rate is based on graduated schedule. The Estate Tax rate is fixed at
Rates of NET ESTATE TAX 6% based on the value of the
Estate Tax net estate.
Not over ₱200,000 Exempt
Over ₱200,000 but not 5% of the excess over
over ₱500,000 ₱200,000
Over ₱500,000 but not ₱15,000 + 8% of the excess
over ₱2M over ₱500,000
Over ₱2M but not over ₱135,000 + 11% of the excess
₱5M over ₱2M
Over ₱5M but not over ₱465,000 + 15% of the excess
P10M over ₱5M
Over ₱10M ₱1,215,000 + 20% of the
excess over ₱10M
Estate Tax
Section 86 (A) The value of the net estate of a The following are the allowable
Allowable resident or citizen is determined by deductions from the gross estate of a
deductions from the deducting the following from the resident or citizen:
gross estate of a gross estate: 1. Standard deduction of
citizen/resident 1. Standard deduction of ₱5,000,000;
₱1,000,000; 2. Claims against the estate;
2. Expenses, losses, 3. Claims against insolvent persons;
indebtedness, and taxes 4. Unpaid mortgage or indebtedness
a. Funeral expenses on property;
b. Judicial expenses
c. Claims against insolvent
persons
d. Unpaid mortgages
Estate Tax
Section 86 (A) 3. Property previously taxed; 5. Property previously taxed;
Allowable 4. Transfers for public use; 6. Transfers for public use;
deductions from the 5. Family home in the amount of 7. Family home, in the increased
gross estate of a ₱100,000,000; amount of ₱10,000,000;
citizen/resident 6. Medical expenses, not 8. Amounts received by heirs RA No.
exceeding ₱500,000; 4917 (Retirement benefits of
7. Amount received by heirs private firm employees)
under RA No. 4917
(Retirement benefits of private
firm employees)
Estate Tax
Section 86 (B) The value of the net estate of a For Non-residents:
Allowable non-resident is determined by 1. Standard deduction in the amount
deductions from the deducting the following from the of ₱500,000;
gross estate of a gross estate: 2. Value of
non-resident alien 1. Expenses, losses,  Claims against the estate
indebtedness, and taxes in  Claims against the insolvent
proportion to the value of person
entire gross estate situated in  Unpaid mortgages
the Philippines; In proportion to the value of the
2. Property previously taxed; entire gross estate situated in the
3. Transfers for public use Philippines
3. Property previously taxed;
4. Transfers for public use
Estate Tax
Section 86 (D) No deduction shall be allowed in Miscellaneous provision is deleted.
Miscellaneous the case of a non-resident not a
provision for non- citizen of the Philippines, unless
residents the executor, administrator, or
anyone of the heirs, as the case
may be, includes in the return
required to be filed under the
Section 90 the value at the time of
his death of that part of the gross
estate of the non-resident not
situated in the Philippines.
Estate Tax
Section 89 Notice of decedent’s death shall be Requirement for filing of notice of
Notice of Death filed by the executor, administrator, death is removed.
or any of the legal heirs within two
months after death or after
qualifying as such executor or
administrator:
 In all cases of transfers subject
to tax
 In cases where though exempt
from tax, the gross value of the
estate exceeds ₱20,000.
Estate Tax
Section 90 Estate tax returns showing a gross The threshold amount for the
Attachment to value exceeding ₱2,000,000 shall requirement of attaching a statement
Estate Tax Return – be supported with a statement duly duly certified by a CPA is increased
CPA certification certified by a CPA to ₱5,000,000 (from ₱2,000,000).
Section 90 Estate tax returns shall be filed The filing of estate tax returns shall
Time of filing of within six (6) months from the be within one (1) year from the
estate tax return decedent’s death. decedent’s death.
Estate Tax
Section 91 (C) No provision In case the available cash of the
Payment by estate is insufficient to pay the total
installment of estate estate tax due, payment by
tax [new] installment shall be allowed within
two (2) years from the statutory date
of payments, without civil penalty and
interest.
Estate Tax
Section 97 If a bank has knowledge of the If a bank has knowledge of the death
Payment of tax death of a person, who maintained of a person, who maintained a bank
antecedent to the a bank deposit account alone, or deposit account alone, or jointly with
transfer of shares, jointly with another, it shall not another, it shall allow any withdrawal
bonds, or rights allow any withdrawal from the said from the said deposit account,
deposit account unless the subject to a final withholding tax of
Commissioner has certified that (6%).
the taxes imposed thereon have
been paid.
Donor’s Tax
NIRC NIRC TRAIN
Provision
Section 99 The donor’s tax for each calendar year shall be The donor’s tax for is fixed at 6%
Rates of tax computed on the basis of the total net gifts made based on annual total gifts exceeding
during the calendar year in accordance with the ₱250,000 (exempt gift), regardless of
graduated tax table. whether the done is a stranger or not.
NET GIFT TAX NET GIFT TAX
Not over ₱100,000 Exempt Over ₱1M but ₱44,000 + 8% of the
Over ₱100,000 but 2% of the excess not over ₱3M excess over ₱1M
not over ₱200,000 over ₱100,000 Over ₱3M but ₱204,000 + 10% of
Over ₱200,000 but ₱2,000 + 4% of not over ₱5M the excess over ₱3M
not over ₱500,000 the excess over Over ₱5M but ₱404,000 + 12% of
₱200,000 not over the excess over ₱5M
Over ₱500,000but ₱14,000 + 6% of ₱10M
not over ₱1M the excess over Over ₱10M ₱1,004,000 + 15% of
₱500,000 the excess over
₱10M
Donor’s Tax
Section 99 The donor’s tax shall be 30% of The donor’s at is fixed at 6% based
Rates of tax the net gifts when the done or on annual total gifts exceeding
beneficiary is a stranger. ₱250,000 (exempt gift) regardless of
whether the donee is a stranger or
not.
Donor’s Tax
Section 100 The amount by which the fair Additional proviso:
Transfer for less market value of the property Even if the sale, exchange or other
than adequate transferred exceeded the value of transfer of property is for an
consideration the consideration received for such insufficient consideration, the same
transfer, shall for purpose of will still be considered made for
donor’s tax, be deemed a gift and adequate and full consideration
included in computing the amount provided that such transfer is made in
of gifts made during the year. the ordinary course of business, i.e.,:
 A bona fide transaction;
 At arm’s length; and
 Free from donative intent.
Donor’s Tax
Section 101 Dowries or gifts made on account The exemption of dowries (gifts made
Exemption of of marriage by parents to each of on account of marriage) is removed.
certain gifts their legitimate, recognized ,
natural, or adopted children to the
extent of the first ₱10,000 shall be
exempt from donor’s tax.
Briefing on RA 10963:
Tax Reform for Acceleration
and Inclusion (TRAIN) –
Documentary Stamp Tax
Section 174 ₱ 1.00/₱ 200.00 ₱2.00/₱ 200.00
Original Issue of
Shares of Stock
Section 175 ₱ 0.75/₱ 200.00 ₱ 1.50/₱ 200.00

Sales, Agreements to
Sell, Memoranda of
Sales, Deliveries or
Transfer of Shares or
Certificates of Stock
with par value
Section 175 25% of DST paid on 50% of DST paid on
Sales, Agreements to original issue original issue
Sell, Memoranda of
Sales, Deliveries or
Transfer of Shares or
Certificates of Stock
without par value
Section 177 ₱ 0.50/₱ 200.00 ₱ 1.00/₱ 200.00
Certificates of Profits or
Interest in Property or
Accumulations
Section 178 ₱ 1.50/piece of check ₱ 3.00/piece of check
Bank Checks, Drafts,
Certificates of Deposit
not Bearing Interest,
and Other Instruments
Section 179 ₱ 1.00/₱ 200.00 of FV ₱ 1.50/₱ 200.00 of FV

All Debt Instruments or a fraction of 365 or a fraction of 365
days for instruments days for instruments
with term of less than 1 with term of less than 1
year year
Section 180 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00
All Bills of Exchange
(between points within
the Philippines) or
Drafts
Section 181 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00
Acceptance of Bills of
Exchange or Order
Drawn in a Foreign
Country but Payable in
the Philippines
Section 182 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00
Foreign Bills of
Exchange and Letters
of Credit
Section 183 Not Over ₱ 100K = Not Over ₱ 100K =
Life Insurance Policies Exempt Exempt
Over ₱ 100K but not Over ₱ 100K but not

over ₱ 300K = ₱ 10.00 over ₱ 300K = ₱ 20.00
Section 183 Over ₱ 300K but not Over ₱ 300K but not
Life Insurance Policies over ₱ 500K – ₱ 25.00 over ₱ 500K – ₱ 50.00

over ₱ 750K – ₱ 50.00 over ₱ 750K – ₱ 100.00

over ₱ 1M – ₱ 75.00 over ₱ 1M – ₱ 150.00
Section 183 Over ₱ 1M - ₱ 100.00 Over ₱ 1M - ₱ 200.00
Life Insurance Policies
Section 186 ₱ 0.50/₱200.00 ₱ 1.00/₱200.00

Policies of Annuities
Section 186 ₱ 0.20/₱200.00 ₱ 0.40/₱200.00

Pre-Need Plans
Section 188 ₱ 15.00/Certificate ₱ 30.00/Certificate

Certificates Issued
Section 189 Above ₱ 200.00 = Above ₱ 200.00 =
Warehouse Receipts ₱15.00 ₱30.00
Section 190 ₱ 1.00 and below = ₱ 1.00 and below =

Jai-Alai, Horse Race, ₱ 0.10 ₱ 0.20
Tickets, Lotto or Other
Authorized Number
Games Above ₱ 1.00 = Above ₱ 1.00 =
₱ 0.10/₱ 1.00 ₱ 0.20/₱ 1.00
Section 191 Over ₱ 100.00 but not Over ₱ 100.00 but not
Bills of Lading or over ₱ 1K = ₱1.00 over ₱ 1K = ₱2.00
Receipts
Over ₱ 1K = ₱10.00 Over ₱ 1K = ₱ 20.00
Section 192 ₱ 15.00/proxy vote ₱ 30.00/proxy vote

Proxies for Voting at
any Election
Section 193 ₱ 5.00/issued power of ₱ 10.00/issued power
Powers of Attorney attorney of attorney
Section 194 First ₱ 2K = ₱ 3.00 First ₱ 2K = ₱ 6.00

Leases and Other
Hiring Agreements
Over ₱ 2K = Over ₱ 2K =
₱ 1.00/₱ 1K ₱ 2.00/₱ 1K
Section 195 First ₱ 5K = ₱ 20.00 First ₱ 5K = ₱ 40.00
Mortgages, Pledges
and Deeds of Trust
Over ₱ 5K = Over ₱ 5K =
₱ 10.00/₱ 5K ₱ 20.00/₱ 5K
Section 197 First 6 months = First 6 months =
Charter Parties and ₱ 500.00 + ₱ 50.00 for ₱ 1K + ₱ 100.00 for
Similar Instruments if each month or fractions each month or fractions
gross tonnage of ship, of a month in excess of of a month in excess of
vessel or steamer is 6 months 6 months
1,000 tons and below
Charter Parties and ₱ 1K + ₱ 100.00 for ₱ 2K + ₱ 200.00 for
Similar Instruments if each month or each month or
gross tonnage of ship, fractions of a month in fractions of a month in
vessel or steamer is 1,001 excess of 6 months excess of 6 months
tons to 10,000 tons
Charter Parties and ₱ 1.5K + ₱ 150.00 for ₱ 3K + ₱ 300.00 for
Similar Instruments if each month or each month or
gross tonnage of ship, fractions of a month in fractions of a month in
vessel or steamer is more excess of 6 months excess of 6 months
than 10,000 tons
Section 196 No DST On first ₱ 1K = ₱15.00
Deeds of Sale,
Conveyances and In excess of ₱ 1K or
Donations of Real fractional part thereof =
Property ₱ 15.00/₱ 1K
Transfers exempt from

donor’s tax under
Section 101 (a) and (b)
of the Tax Code shall
be exempt from DST
Inclusion (TRAIN) – Excise Taxes
Tobacco
RA 10351/ TRAIN
RR 17-2012
CIGARETTES, 2017 January 1, July 1, 2018 January 1, January 1, January
per pack 2018 until until 2020 until 2022 until 1, 2024
June 30, December December December Onwards
2018 31, 2019 31, 2021 31, 2023
Cigarettes P 30.00 P 32.50 P 35.00 P 37.50 P40.00 Effectivity
1/1/2024,
packed by
the
hand specific
Cigarettes P 30.00 P 32.50 P 35.00 P 37.50 P40.00 tax rate
shall be
packed by increased
machine by 4%
every year
thereafter
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January January
2012 1, 2018 1, 2019 1, 2020
(a) Lubricating oils and greases, including but not P 4.50
limited to basestock for lube oils and greases,
high vacuum distillates, aromatic extracts and
other similar preparations, and additives for
lubricating oils and greases, whether such
additives are petroleum based or not, per liter
and kilogram respectively, of volume capacity or P 8.00 P 9.00 P 10.00
weight.
(a.1) Locally produced or imported oils previously P 4.50
taxed but are subsequently reprocessed,
refined or recycled, per liter and kilogram of
volume capacity or weight.
Petroleum
PRODUCTS RA TRAIN
10351/
2012 1, 2018 1, 2019 1, 2020
(b) Processed gas, per liter of volume P 0.05
capacity.
(c) Waxes and petrolatum per kilogram. P 3.50
P 0.05 P 8.00 P 9.00 P 10.00
(d) Denatured alcohol to be used for motive
power, per liter of volume capacity.
(e) Asphalts, per kilogram. P 0.56
(f) Naphtha, regular gasoline, and other P 4.35
similar products of distillation, per liter of P 7.00 P 9.00 P 10.00
volume capacity
Petroleum
PRODUCTS RA TRAIN
10351/
2012 1, 2018 1, 2019 1, 2020
-
Pyrolysis gasoline
P 7.00 P 9.00 P 10.00
(g) Unleaded premium gasoline, per liter of P 4.35
volume capacity
(h) Kerosene, per liter of volume capacity P 0.00 P 3.00 P 4.00 P 5.00
(i) Aviation turbo jet fuel, per liter of volume P 3.67

capacity
Aviation gas - P 4.00 P 4.00 P 4.00
(j) Kerosene, when used as aviation fuel, per P 3.67
liter of volume capacity
Petroleum
PRODUCTS RA TRAIN
10351/
2012 1, 2018 1, 2019 1, 2020
(k) Diesel fuel oil, and on similar fuel oils P 0.00
having more or less the same generating
power, per liter of volume capacity
(l) Liquefied petroleum gas used for motive P 0.00
power, per kilogram P 2.50 P 4.50 P 6.00
(m) Bunker fuel oil, and on similar oils having P 0.00
more or less the same generating power,
per liter of volume capacity
(n) Petroleum coke, per metric ton -
(o) Liquefied petroleum gas, per kilogram P 0.00 P 1.00 P 2.00 P 3.00
Petroleum
PRODUCTS RA TRAIN
10351/
2012 1, 2018 1, 2019 1, 2020
(p) Naphtha and pyrolysis gasoline, when used as a raw P 0.00
material in the production of petrochemical products
or in the refining of petroleum products, or as
replacement fuel for natural-gas-fired-combined cycle
power plant, in lieu of locally-extracted natural gas
during the non-availability thereof, per liter of volume
capacity P 0.00 P 0.00 P 0.00
(q) Liquefied petroleum gas, when used as raw material P 0.00
in the production of petrochemical products, per
kilogram
(r) Petroleum coke, when used as feedstock to any -
power generating facility, per metric ton
Exception to Revised Excise Tax Rates
The revised rates under Section 2 shall not apply under the
following instances:
a) Lubricating oils and greases produced from basestocks and
additives on which the excise tax has already been paid
Petroleum shall no longer be subject to excise tax.
b) Unless otherwise provided by special laws, if the denatured
alcohol is mixed with gasoline, the excise tax on which has
already been paid, only the alcohol content shall be subject
to the tax herein prescribed. The removal of denatured
alcohol of not less than one hundred eighty degrees (180°)
proof (ninety percent (90%) absolute alcohol) shall be
deemed to have been removed for motive power, unless
shown otherwise;
144
Creditable Excise Tax
The excise tax paid on the purchased base
stock (bunker) used in the manufacture of
excisable articles and forming part thereof shall
Petroleum be credited against the excise tax due thereon.
For purposes of these regulations, any excess of
excise taxes paid on raw materials resulting
from manufacturing, blending, processing,
storage and handling losses shall not give rise to
a tax refund or credit.
145
Suspension of Scheduled Increase
For the period covering 2018 to 2020, the
scheduled increase in the excise tax on fuel as
imposed in this section shall be suspended when
Petroleum
the average Dubai crude oil based on Mean Of
Platts Singapore (MOPS) for three (3) months
prior to the scheduled increase of the month
reaches or exceeds eighty dollars (USD 80) per
barrel. A separate Revenue Regulation (RR)
shall be issued for this purpose.
146
Mandatory Marking of all Petroleum
Products
The use of an official fuel marking or similar technology
on petroleum products that are refined, manufactured, or
imported into the Philippines, and that are subject to the
Petroleum payment of taxes and duties, such as but not limited to
unleaded premium gasoline, kerosene, and diesel fuel oil
shall be required. It shall be implemented in accordance
with rules and regulations to be issued by the Secretary
of Finance in consultation with the Commissioner of
Internal Revenue and Commissioner of Customs and in
coordination with the Secretary of Energy.
147
Transitory Provision
a) Submission of Stock Inventories. Concerned oil
companies, owners, operators or lessees of
storage depots shall submit duly notarized
inventories of all petroleum products as of
Petroleum midnight of December 31, 2017 to Excise LT Field
Operations Division (ELTFOD)
b) Accounting for stocks or inventory of goods after

each date of effectivity of the new excise tax rates.
These inventories of petroleum products taken
prior to each date of effectivity shall be liquidated
and accounted for on a “First-In First-Out” (FIFO)
method of inventory.
148
Transitory Provision
c) Issuance of Withdrawal Certificates. All Withdrawal

Certificates issued covering the removals of
petroleum products subject to the old or previous
Petroleum tax rates products shall be prominently stamped
with the phrase “STOCKS ON HAND PRIOR TO
APPLICABLE DATE OF EFFECTIVITY”.
149
Minerals
PRODUCT TYPE RA TRAIN

10351/
2012 1, 2018 1, 2019 1, 2020
On coal and coke, per metric ton P 10.00 P 50.00 P 100.00 P 150.00
Minerals
PRODUCT TYPE RA 10351/ TRAIN

RR 17-
2012
On all non-metallic mineral and quarry resources

1. Locally extracted or produced, based on actual
2% 4%
market value
2. In the case of importation based on value used
by Bureau of Customs in determining tariff and 2% 4%
customs duties, net of excise tax and VAT
3. Locally-extracted natural gas and liquefied natural
P0.00 Exempt
gas
Minerals

RR 17-
2012

1. Locally extracted or produced, based on actual
market value
a) Copper and other metallic minerals 2% 4%
b) Gold and chromite 2% 4%
Minerals
RR 17-
2012

2. In the case of importation based on value used
by Bureau of Customs in determining tariff and
customs duties, net of excise tax and VAT
a) Copper and other metallic minerals 2% 4%
b) Gold and chromite 2% 4%
On indigenous petroleum, based on the fair
international market price thereof, on the first
3% 6%
taxable sale, barter, exchange or similar
transaction.
Automobiles
Based on the Net Manufacturer’s Price/Importer’s Selling Price
RR 25-2003 TRAIN
Up to P600 Thousand 2% P0 up to P600,000 4%
P 12,000 + 20%
Over P600,000 up to Over P600,000
P 1,100,000
in excess of 10%
P 600,000 up to P1,000,000
P112,000+ 40%
Over P 1,100,000 Over P1,000,000
Up to P2,100,000
in excess of 20%
P1,100,000 up to P4,000,000
P512,000 + 60%
Over P2,100,000 in excess of Over P4,000,000 50%
P2,100,000
Hybrid Electric Vehicle – refer to a motor
vehicle powered by electric energy, with or
without provision for off-vehicle charging, in
combination with gasoline, diesel or any
Automobiles
other motive power: provided, that, for
purposes of this Act, a Hybrid Electric
Vehicle must be able to propel itself from a
stationary condition using solely electric
motor
155
Provided, that Hybrid Vehicles shall be
taxed at fifty percent (50%) of the applicable
excise tax rates on automobiles subject to
the conditions in Section 9(E) of this
Automobiles regulation: Provided, further, that in the
case of imported automobiles not for sale,
the tax imposed herein shall be based on
the total landed value, including transaction
value, customs duty and all other charges.
156
Tax-Exempt Removals of Automobiles
E. Purely electric vehicles shall be exempt from the excise
tax on automobiles. Hybrid vehicles shall be subject to
fifty percent (50%) of the applicable excise tax rates on
automobiles. Prior to the removal of the automobiles
from the manufacturing plant or customs custody, the
Automobiles department of energy (DOE) shall determine whether the
automobiles are hybrid vehicles or purely electric
vehicles, and furnish the Commissioner of Internal
Revenue, Attention: Chief, Excise Large Taxpayers
Regulatory Division (ELTRD), certified copies of the
results of such examination or indorsement to that effect.
F. Pick-ups
157
Validation of Manufacturer’s and Importer’s
Selling Price
By the end of three months from the imposition of the new
rates, the Bureau of Internal Revenue shall validate the
Manufacturer’s or Importer’s Selling Price of the newly
introduced models against the Manufacturer’s or Importer’s
Automobiles Selling Price as defined herein and initially determine the
correct bracket under which a newly introduced model shall be
classified. After the end of one year from such validation, and
every year thereafter, the Bureau of Internal Revenue shall
revalidate the initially validated Net Manufacturer’s or
Importer’s Selling Price against the Net Manufacturer’s or
Importer’s Selling Price as of the time of revalidation in order
to finally determine the correct tax bracket under which a
newly introduced model shall be classified.
158
1. All manufacturer’s/assembler’s or importers are hereby
required to file an updated manufacturer’s/assemblers or
importer’s sworn statement for each brands/models of
automobiles as of the day immediately before the date
Transitory of effectivity of these Regulations.
Provisions 2. All manufacturers/assemblers or importers shall submit
a duly notarized list of inventory on-hand that are
located within the manufacturing/assembly plant,
storage facility or warehouse or the customs’ premises
for which import entries have been filed as of the day
immediately before the date of effectivity of these
Regulations, indicating therein the brand, year model,
engine, body and chassis numbers thereof,
159
Briefing on Republic Act (RA)
10963: Tax Reform for
(TRAIN) – Sweetened
Beverages [Section 150B of the
Tax Code]
Sweetened Beverages (SBs) - refer
to non-alcoholic beverages of any constitution
Sweetened (liquid, powder, or concentrates), that are pre-
Beverages packaged and sealed in accordance with the
Food and Drug Administration (FDA) standards,
that contain High Fructose Corn Syrup (HFCS)
and other caloric and/or non-caloric sweeteners
added by the manufacturers.
161
Types of Sweeteners
 Caloric Sweetener - refers to a substance that is
sweet and includes sucrose, fructose, and glucose
Sweetened that produces a certain sweetness.
Beverages
 High Fructose Corn Syrup – refers to a sweet
saccharide mixture containing fructose and glucose
which is derived from corn and added to provide
sweetness to beverages, and which includes other
similar fructose syrup preparations.
162
Types of Sweeteners
 Non-Caloric Sweetener - refers to a substance that
is artificially or chemically processed that produces
Sweetened a certain sweetness. These are substances which
can be directly added to beverages, such as
Beverages aspartame, sucralose, saccharin, acesulfame
potassium, neotame, cyclamates and other non-
nutritive sweeteners approved by the codex
alimentarius and adopted by the FDA.
163
Subject to Excise Tax
 Sweetened juice drinks;
 Sweetened tea;
 All carbonated beverages;
Sweetened
 Flavored water;
Beverages
 Energy and sports drinks;
Products
 Other powdered drinks not classified as milk,
juice, tea, and coffee;
 Cereal and grain beverages; and
 Other non-alcoholic beverages that contain added
sugar
164
NOT Subject to Excise Tax
 All milk products
 One Hundred Percent (100%) natural fruit juices
w/o added sugar/ caloric sweetener
Sweetened
 One Hundred Percent (100%) natural vegetable
Beverages juices w/o added sugar/ caloric sweetener
Products  Meal replacement and medically indicated
beverages for oral nutritional therapy
 Ground, instant soluble and pre-packaged
powdered coffee products.
165
 Manufacturer
Persons  Owner or Possessor of untaxed
Liable
products
 Importer
166
Tax Rate
PRODUCT (per liter)
Using purely caloric sweeteners, and P6.00
Tax Rates purely non-caloric sweeteners, or a
and Bases mix of caloric and non-caloric
sweeteners
Using purely high fructose corn syrup P12.00
or in combination with any caloric or
non-caloric sweetener
Using purely coconut sap sugar and Exempt
purely steviol glycosides
167
Computation Number of Liters
of Excise EXCISE TAX DUE = X
Tax (Specific Tax) Excise Tax Rate
168
Illustration
1. Carbonated Beverages
Dulce Manufacturing Corp. will remove
Computation 100 cases of Super Cola using HFCS
of Excise Tax and non-caloric sweetener from place
of production. Each case contains 6
bottles of 1.5 liters each.
Compute for the excise tax.
169
Solution
No. of Cases 100
Multiplied by no. of bottles per case x 6
Computation Total no. of bottles 600
of Excise Tax Multiplied by contents per bottle x 1.5L
Total Volume in Liters 900L
Multiplied by Specific Tax Rate x P12.00
Total Excise Tax Due P10,800.00
170
Illustration
2. Powdered Juice
Sweety Import Corp. will remove from
Computation customs custody 50 cases of Four
of Excise Tax Seasons Juice using caloric and non-
caloric sweetener containing 144 packs
by 25 grams. Each 25grams pack can
make 1Liter.
Compute for the excise tax.
171
Solution
No. of Cases 50
Multiplied by no. of packs per case x 144
Computation Total no. of packs 7,200
of Excise Tax Multiplied by consumable yield per pack x 1L
Total Volume in Liters 7,200L
Multiplied by Specific Tax Rate x P6.00
Total Excise Tax Due P 43,200.00
172
In general
 Before removal from the place of
production, in case of locally manufactured
Filing and products
Payment of Advance Payment/Deposit – Taxpayer,
Excise Tax at his option pay to the BIR using BIR
Form 2200S
 Before release from Customs house, in

case of imported products
173
1. Require Manufacturer/Importer to indicate on
the label the:
Specific a. Type of sweetener used
Responsibility b. Equivalent of each serving per liter
of Food and
Drug
2. FDA shall conduct post marketing
Administration
(FDA) surveillance of SBs on display in markets
and/or manufacturing plants
174
3. Require Manufacturer/Importer to submit
monthly report of sugar and other sweetener
Specific used in the production
Responsibility
of Food and 4. Provide to BIR summary of Certificate of
Drug
Product Registration for each existing brand
Administration
(FDA) of sweetened beverages
175
VIOLATION PENALTIES
Misdeclaration or summary cancellation
misrepresentation of or withdrawal of his
Penalties
sworn statement permit
any of the acts or treble the aggregate
omissions in violation amount of deficiency
of the Act and taxes, surcharges and
implemented by these interest
Regulations
176
VIOLATION PENALTIES
any of the acts or omission criminal liability and
prohibited under the Act penalty under
Section 254 of the
NIRC
Penalties
willfully aids or abets in the criminal liability as
commission of any such the principal;
act or omission
If the offender is not a Deported
citizen of the Philippines immediately after
serving the sentence
177
1. Registration (Sec. 154; RMO 38-2003)
 Permit to Operate as Manufacturer/ Permit to
Operate as Toll-Manufacture/ Permit to
Admnistrative Operate as Importer
Requirements
 Permit to Register Brands and Variants (Sec.
for Excise
143 & Sec. 245)
Taxpayers
2. Issuance of Assessment Number (RMO 38-2003)
3. Posting of Bonds (Sec. 160)
4. Issuance of ATRIGs (RMO 35-2002; RMO 14-2014)
5. Issuance of Export Permit (RMO 38-2003; Sec. 159)
178
6. Transfer or Sale or Disposition of Raw
Materials and/or Semi-processed goods
7. Maintenance of Official Register Book
Admnistrative
(ORB) (Sec. 153)
Requirements 8. Assignment of Revenue Officer On Premise
for Excise (ROOPs) (Sec. 16; RMO 18-86/LTS Memo 3-2005)
Taxpayers 9. Regular Stocktaking of Inventories (Sec. 6C)
10. Use of BIR Form on All Removals of SB
(BIR Form No. 2299 - Excise Taxpayer’s
Removal Declaration)
179
1. Excise Taxpayer engaged in manufacturing
and importing of SBs shall register with
Excise LT Regulatory Division (ELTRD) for
Large Taxpayers or with the Revenue
Transitory District Office (RDO) for Non-Large
Provisions Taxpayers where the taxpayer is required to
be registered for updating of their Certificate
of Registration (BIR Form No. 2303) using
BIR Form No. 1905 to add an excise tax
type. The application for registration shall
be filed on or before January 31, 2018.
180
2. Submit to the ELTRD copy furnished
ELTFOD notarized list of existing and new
locally manufactured and imported brands
Transitory of SBs for purposes of registration of said
Provisions brands on or before January 31, 2018.
(Please refer to Sec. 13 A for the
requirements).
181
3. Submit Sworn Declarations of Inventory
List as of December 31, 2017 to ELTFOD
on or before January 15, 2018. This
Transitory requirement is in addition to the regular
Provisions filing of Inventory List as of December 31,
2017 on or before January 30, 2018
4. Use the downloadable BIR Form No.
2200-S in filing and paying of excise tax
due upon removals of excisable products
from the place of production.
182
5. Submit summary of transactions of Excise
Taxpayer’s Removal Declaration (ETRD),
Delivery Receipt/ Sales Invoice/ Transfer
Slips as supporting attachments to the BIR
Transitory Form 2200S to its designated email address
Provisions at sb.attachment@bir.gov.ph
6. Secure Permit to Operate as
Manufacturer/Toll Manufacturer/Importer of
Sweetened Beverages whether registered
as large taxpayers or non-large taxpayers at
ELTRD on or before January 31, 2018
183
7. Secure an Authority to Release Imported
Goods (ATRIGs) at the ELTRD before
release of shipment from customs custody
Transitory
Provisions 8. Requisition from ELTFOD in writing the BIR
Form No. 2299 (ETRD) to be used in
supporting the removals of the excisable
products
184
Briefing on Republic Act (RA)
10963: Tax Reform for
(TRAIN) – Invasive Cosmetic
Procedure (Section 150A of the
Tax Code)
1. Plastic Surgery - refers to a surgical
Definition specialty dedicated to reconstruction of
facial and body defects due to birth
of Terms
disorders, trauma, burns, and disease.
It intends to correct dysfunctional areas
of the body and is reconstructive in
nature.
186
2. Cosmetic Surgery - refers to a type of plastic
surgery that aims to improve a person’s
appearance, through invasive cosmetic
Definition procedures, surgeries, and body
of Terms enhancements directed solely on improving,
altering, or enhancing the person’s
appearance and do not necessarily promote
the proper functions of the body or prevent or
treat illness or disease.
187
3. Reconstructive Surgery shall refer to
another type of plastic surgery which
aims to improve function and give a
Definition normal appearance to a part of a
of Terms person’s body that has been damaged,
ameliorate a deformity arising from, or
directly related to, a congenital or
developmental defect or abnormality, a
personal injury resulting from accident or
trauma, or disfiguring disease, tumor,
virus or infection.
188
4. Invasive Cosmetic Procedure - refers to a
surgery that is carried out by entering the
Definition body through the skin or through a body
cavity or anatomical opening, but with the
of Terms
smallest damage possible to these
structures. Invasive Cosmetic Procedures
shall include, but not be limited to the
following:
189
Invasive Cosmetics Procedures
1. Liposuction
Definition 2. Mammoplasty
of Terms 3. Breastlift
4. Buccal Fat Reduction
5. Buttocks Augmentation
190
6. Chin Augmentation
7. Facelift/Necklift
Definition
8. Thread Lift
of Terms
9. Hair Restoration/
Transplantation
10. Eyelid Surgery
191
11. Vaginal Plastic
Surgery
Definition 12. Abdominoplasty or
of Terms Tummy Tuck
13. Auto Grafting
14. Rhinoplasty/ Alar
Trimming
15. Otoplasty
192
5. Non-Invasive Cosmetic Procedure - refers
to a conservative treatment that does not
require incision into the body or the
Definition removal of tissue, or when no break in the
of Terms skin is created and there is no contact
with mucosa, or skin break, or internal
body cavity beyond a natural or artificial
body orifice. Non- Invasive Cosmetic
Procedures shall include, but not be
limited to the following:
193
Non-invasive Cosmetics Procedures
1. Acupuncture Rejuvenation
Therapy
Definition 2. Air Dissector

of Terms 3. Botulinum Toxin
Injection/Treatment
4. Collagen Induction Therapy
5. Dermal Fillers (Crosslinked and
Non-Crosslinked)
6. Embedded Protein Threads
194
7. Non-surgical facelifting &
skin tightening using
radio frequency,
Definition ultrasound, infrared
of Terms 8. Fractional CO 2
9. Lasers and Light
Treatments
10.Body Treatments and
Contouring Procedures
195
11. Cleanings and

Definition Facials
of Terms 12. Peelings (Face and
Body)
13. Injectables and
Weight
Management
Treatment
196
Rate and Base of Excise Tax
Rate = five percent (5%)
Coverage, Tax Base = Gross Receipts, net of excise tax
Nature, Basis and VAT
and Rate of
Excise Tax Coverage = invasive cosmetic procedures,
surgeries and body enhancements directed
solely towards improving, altering, or enhancing
the patient’s appearance and do not
meaningfully promote the proper function of the
body or prevent or treat illness or disease.
197
1. Non-invasive cosmetic procedures and
surgeries necessary to ameliorate a deformity
arising from or directly related to,
 congenital or developmental defect or
Exclusion abnormality,
 personal injury resulting from an accident
or trauma,
 disfiguring disease, tumor, virus or infection
2. Cases or treatments covered by the National
Health Insurance Program
198
Rate and Base of Excise Tax
 “Gross Receipts” means the total amount of money
or its equivalent representing the contract price
Coverage, including deposits applied as payments for services
Nature, Basis rendered and advance payments actually or
and Rate of constructively received for services performed or to
Excise Tax be performed for another person
 “Constructive Receipt” occurs when the money

consideration or its equivalent is placed at the
control of the person who rendered the service
without restrictions by the payor/customer. Also
covers exchange deal arrangement.
199
Persons Liable to File a Return
Any person, whether individual or juridical entity,
Filing of performing invasive medical/cosmetic
Returns and procedures, surgeries, body enhancements
Payment of directed solely on improving, altering, or
Excise Tax enhancing the patient’s appearance and do not
on Invasive meaningfully promote the proper functions of the
Procedures body or prevent or treat illness.
200
Nature and Characteristic of
Excise Tax
Filing of An excise tax is considered an indirect tax,
Returns and meaning that the service provider who is
Payment of the statutory bearer of the said excise tax
Excise Tax is expected to shift the tax by billing the
on Invasive same to the customer-client.
Procedures
201
Nature and Characteristic of Excise Tax
Excise taxes are typically imposed in addition to
another indirect tax such as VAT. The service
Filing of provider is hereby authorized to act as withholding
Returns and agent for the five percent (5%) excise tax billed
Payment of and is ultimately liable to remit the excise tax
Excise Tax collected from the client/customer. The five
percent (5%) excise tax to be withheld and
on Invasive remitted is based on gross receipts net of VAT
Procedures and is considered final and no adjustment shall be
allowed to be made by the statutory bearer of the
said excise tax.
202
Manner of Remittance of Excise Tax
Under existing rules on goods subject to

Filing of
excise taxes, the excise tax return is
Returns and
required to be filed and the excise tax
Payment of
paid by the manufacturer or producer of
Excise Tax
the goods before removal from the place
on Invasive
of production.
Procedures
203
However, Section 150-A (Non-Essential
Filing of Services) of the Tax Code involves performance
Returns and of medical/cosmetic services and not goods,
Payment of hence, an innovative remittance scheme is
Excise Tax hereby employed under which the seller of
on Invasive services/service provider collects the five percent
Procedures (5%) excise tax based on gross receipts from its
client/customer and remits the same to the
Bureau.
204
This practice outlines the circumstances when the
Filing of withholding tax obligation in respect of payment is
Returns and reversed and placed on the recipient of the
Payment of payment instead of the payor, as an exception to
the existing tax rules on withholding on income
Excise Tax payments for good and services. This concept of
on Invasive withholding tax reverse charge obligation on
Procedures payments is herein prescribed for administrative
expediency.
205
In cases where no service subject to excise tax is
performed and there are no payments received, the
Filing of
Monthly Remittance Return of Final Withholding of
Returns and Excise Tax shall still be filed with Excise Large
Payment of Taxpayers Field Operations Division (ELTFOD) for
Excise Tax Large Taxpayers/Revenue District Office for taxpayers
on Invasive in the National Capital Region (NCR)/Excise Tax Area
(EXTA) in Regional Offices for taxpayers outside NCR.
Procedures
Taxpayers filing via EFPS shall comply with the
provisions of the EFPS Regulations.
206
Invoicing Requirements
Every person subject to excise tax herein

imposed shall issue:
Administrative
Requirements 1. An Official Receipt for services performed
whether invasive/non-invasive.
2. The following information shall be
indicated in the Official Receipt:
207
The total amount which the patient/client pays or is
obligated to pay to the service provider including the
excise tax and value added tax: Provided, that:
Administrative  The amount of excise tax shall be shown as a
Requirements separate item in the OR;
 Discounts given shall be indicated in the OR,
otherwise the same shall not be allowed as
deduction from gross receipts;
 If the procedure performed is non-invasive
and considered exempt from excise tax, the
term Exempt from Excise Tax shall be shown
on the OR;
208
 If the services performed involved both invasive
(excisable) and non-invasive (exempt from excise
tax) procedures, the receipt shall clearly indicate
Administrative the breakdown of the amount received between its
Requirements taxable and exempt components and the
calculation of excise tax on each portion of the
procedure performed shall be shown on the receipt:
 Provided, that the service provider may issue
separate ORs for the excisable and exempt
components of the services rendered.
209
Illustration
A. Where the invasive cosmetic procedure is
performed in a clinic outside a hospital.
To improve her body shape, Starlet S engaged

Administrative the services of Dok Salamat, a well-known
Requirements
cosmetic surgeon in the country, to perform a
liposuction procedure on her thighs, and Dok
Salamat charged Starlet S the amount of
P50,000.00 inclusive of 12% VAT for the
services rendered.
210
Based on the foregoing, the 5% excise tax shall be computed, as follows:
Contract Price (inclusive of 12% VAT) (50,000/112%) P 50,000.00

Price (net of 12% VAT) (Excise Tax Base) P 44,642.85
Add: 5% excise tax (44,642.85 x 5%) 2,232.15*
12% VAT (44,642.85 x 12%) 5,357.15
Total Amount to be Collected from Customer P 52,232.15
*The excise tax is to be billed/withheld and remitted by the Melo Medical

Group, Inc. and should be shown as a separate item in the Official Receipt
(as shown in Annex A)
A”
Accounting Entries
CASH 52,232.15
Administrative
Requirements FWT-EXCISE TAX 2,232.15
OUTPUT TAX 5,357.15
SERVICE INCOME 44, 642.85
213
Illustration
B. Where the procedure is performed in a clinic
operating inside a hospital.
Same as in Illustration A, except this time

Administrative
Starlet S had procedure done by Doctor P, an
Requirements
individual practitioner operating a clinic inside a
hospital. The hospital bill for the procedure
amounts to P70,000.00 inclusive of P20,000.00
Doctor’s Fee (inclusive of 12% VAT).
214
Billing by Hospital (VAT exempt) Note (1) P 50,000.00
Doctor’s Fee (20,000/112%) Note (2) 17,857.14
Total Excise Tax Base P 67,857.14
Add: 5% excise tax (67,857.14 x 5%) 3,392.86
12% VAT (20,000.00 x 12%) 2,142.86
Total Amount to be Collected from Customer P 73,392.86
Note (1): Medical, dental, hospital and veterinary services are exempt from value
added tax under Section 109(G) of the NIRC, as amended, except those rendered
by professionals.
Note (2): Doctor P is presumed to be self-employed and his annual receipts

exceeded the threshold for VAT of P3 Million.
Accounting Entry (Doctor P’s book):
Accounts Receivable - Hospital P 18,571.43
Prepaid Tax 1,428.57
Administrative Service Fee P 17,857.14
Requirements Output VAT 2,142.86
Cash 18,571.43
Accounts Receivable – Hospital 18,571.43
216
Accounting Entry (Hospital’s books):
Cash P 73,392.86
Professional Fees Expense 17,857.14
Administrative Input VAT 2,142.86
Requirements FWT-Excise Payable P 3,392.86
Output VAT 2,142.86
Payable to Doctor 18,571.43
Expanded Withholding Tax Payable
- Prof Fees 1,428.57
Service Income - VAT 17,857.14
Service Income – Non-VAT 50,000.00
217
Accounting Requirements
Not withstanding the provisions of Section
233, all persons subject to excise tax under
Section 150-A of the Tax Code shall, in
Administrative
Requirements
addition to the regular accounting records
required, maintain a subsidiary ledger on
which every service rendered/performed on
any given day is recorded. The subsidiary
ledger shall contain the following information:
218
Accounting Requirements
1. Name of Patient
2. Taxpayers Identification Number
3. Invasive Cosmetic Procedures Performed (indicate if
excisable or not; if not excisable, keep records as proof that
Administrative the procedures are not taxable)
4. Non-invasive Cosmetic Procedures Performed
Requirements 5. Official Receipts Number
6. Gross Receipts Number (net of VAT and 5% excise tax)
7. 5% Excise Tax to be Withheld and Remitted
8. 12% VAT due
9. Total Amount to be Collected from Customer (sum of 6, 7, 8)
10. Remarks (description of cosmetic procedure performed)
219
Violations of these Regulations shall be subject to the
corresponding penalties under Title X of the NIRC, as amended.
1. Any violation of the provision of this Regulation shall be
subject to the corresponding penalties under Sec. 250
and 255 of the NIRC as amended and RMO 7-2015.
2. Any person who willfully attempts in any manner to
Penalties evade or defeat any tax imposed under this regulation or
the payment thereof shall, in addition to other penalties
provided by law, upon conviction thereof, be punished
with a fine of not less than P500,000 but not more than
P10 Million, and imprisonment of not less than 6 years
but not more than 10 years. The conviction or acquittal
obtained under this section shall not be a bar to the filing
of a civil suit for the collection of taxes.
220
2. Any person willfully aids or abets in the
commission of any such act or omission shall
be criminally liable in the same manner as the
principal; and
Penalties
3. If the offender is not a citizen of the
Philippines, he shall be deported immediately
after serving the sentence, without further
proceedings for deportation.
221
Except as the Commissioner otherwise permits, the
return shall be filed with and the final excise tax
withheld remitted to any authorized agent bank (AAB)
Filing of under the jurisdiction of the Revenue District
Returns and Office/BIR Office where the taxpayer (Head Office of
Payment of the business establishment) is registered or required
Excise Tax on to register.
Invasive
Procedures For taxpayers located outside the National Capital
Region (NCR) and in cases where there are no duly
accredited agent banks within the municipality or city,
Excise Tax due shall be filed and payments made to the
Collection Agent or duly authorized Treasurer of the
Municipality/City where such taxpayer (head office of the
business establishment) is required to be registered.
222
Exceptions
Filing of The Secretary of Finance, upon the

Returns and recommendation of the Commissioner, may, by
rules and regulations, prescribe the manner and
Payment of
time for filing of the return and payment of
Excise Tax excise tax other than as prescribed under
on Invasive Section 130, Chapter I, Title VI of the Tax Code,
Procedures as amended.
223
Time and Place for Filing of Return and
Payment of the Tax
Filing of BIR TIME OF FILING PLACE
FORM AND
Returns and REMITTANCE
Payment of BIR Every 10th of the authorized agent bank (AAB)
Excise Tax FORM following month under the jurisdiction of the
on Invasive 1620- Revenue District Office/BIR
XC Office where the taxpayer
Procedures
(Head Office of the business
establishment) is registered or
required to register
224
Time and Place for Filing of Return and
Payment of the Tax
Filing of Submit Summary of Invasive Cosmetic Procedures
Returns and Performed (please refer to prescribed format on Annex
A hereof) as an attachment to the said form for
Payment of
submission via email at xcp.attachment@bir.gov.ph.
Excise Tax
on Invasive NAME OF TAXPAYER
"Annex B"
Procedures Monthly Summary of Invasive Cosmetic Procedures Performed

For the Month _______________
COSMETIC
OFFICIAL RECEIPT PROCEDURES AMOUNT COLLECTED
Gross Receipts
(Net of VAT 5% Excise Tax
No. Date PERFORMED /Excise) Withheld 12% VAT Total
225
Application for Permit to Operate
Any person subject to excise tax under
Section 150-A of the Tax Code, as amended,
Administrative shall file an application for a Permit to
Requirements Operate with the Excise LT Regulatory
Division (ELTRD) BIR National Office
(whether Large or Non-Large Taxpayers) not
later than fifteen (15) days from the effectivity
of this Regulations.
226
The application shall be accompanied by the following:
1. Request Letter
Attention: Chief, Excise LT Regulatory Division
Administrative
Requirements 2. Certificate of Securities and Exchange
Commission, together with Articles of Incorporation
and By-Laws (for corporation and partnership) and
Certificate of Registration with the Office of the
Domestic Trade and Industry (for individual)
227
3. Mayor’s Permit
4. BIR Certificate of Registration (with latest
registration fee BIR Form 0605)
Administrative
5. Latest Copy of Income Tax Return
Requirements
6. Location Map of Clinics/Hospitals where the
medical professionals/practitioners perform
the services
7. Price list (whether inclusive of VAT or the 5%
excise tax) of Invasive/Non-invasive
Cosmetic Procedures
228
Application for Registration
Every person subject to excise tax under Section
150-A of the Tax Code, as amended, shall register
as Excise Taxpayer engaged in the performance of
Administrative Invasive Cosmetic Procedures with the ELTRD for
Requirements Large Taxpayers or with the Revenue District Office
(RDO) for Non-Large Taxpayers where the taxpayer
is required to be registered for updating of
Certificate of Registration. The application for
registration shall be filed within ten (10) days from
the effectivity date of this Regulations.
229
For the effective implementation of the Act, the
following guidelines shall be followed during
the transitory period:
Transitory
1. Taxpayer may continue to use existing
Provision
Official Receipts for a period of six (6)
months. After the said period, taxpayer
must apply for separate sets of Official
Receipts for invasive cosmetic procedures
and non-evasive cosmetic procedures.
230
2. All individual practitioners and juridical entities
including medical clinics or hospitals performing
invasive cosmetic procedures shall update their
current Certificate of Registration (COR) to include
Transitory the tax type: Final Withholding Tax – Excise
Provision (FWT-Excise) on Cosmetic Procedures using BIR
Form 1905 with the concerned offices: the ELTRD
or Large Taxpayers Assistance Division (LTAD)
for large taxpayers registered under the LTS and
Revenue District Office (RDO) having jurisdiction
over the non-large taxpayer.
231
The individual practitioners and juridical entities
including medical clinics or hospitals performing
Transitory non-invasive cosmetic procedures, will execute
Provision and submit a Sworn Statement stating that only
non-invasive cosmetic procedures are being
performed by the said individual practitioners and
juridical entities.
232
3. The BIR Form No. 1620-XC (Monthly Remittance
Return of Final Withholding of Excise Tax on
Cosmetic Procedures) is available for downloading
from the BIR website and shall be manually filed
Transitory with the FWT-Excise shall be remitted to any
authorized agent bank under the jurisdiction of the
Provision RDO where the taxpayer (head office of the
business establishment) is registered or required to
register. The prescribed attachment to the to the
said form (Monthly Summary of Cosmetic
Procedures Performed, Annex B, shall be submitted
via e-mail at xcp.attachment@bir.gov.ph.
233
4. The Pricelist as of December 31, 2017
(indicate whether inclusive of VAT
Transitory and/or inclusive of Excise Tax, as the
Provision case may be) for Invasive/Non-Invasive
Medical Procedures shall be submitted
to the ELTRD upon the filing of the
application of Permit to Operate.
234

Briefing On TRAIN

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Briefing On TRAIN

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RA 10963: Tax Reform for

Acceleration and Inclusion

Background on the Tax Reform

What is the purpose of TRAIN?

Php 130 Billion

The goal of the first package of the CTRP or

Increasing the Excise Tax Increasing the Excise Introducing an Excise

The Vision of TRAIN by 2020….

Poverty rate Law abiding Peace within Achieve high

The Vision of TRAIN by 2040….

Extreme Inclusive Achieve high

What is the motive for TRAIN?

Higher budget for Infrastructure development

Higher efficiencies, increase in business activities

Higher budget for education

Higher budget for health

Higher budget for Social Protection, Welfare and

Section 232 All corporations, companies, All corporations, companies,

Section 236 The taxpayer’s registration shall Additional proviso:

Persons required to register for VAT:

Section 237 A duly-registered receipt or sales or It is expressly provided that the

Section 237 Additional provision:

Section 237 Other taxpayers may also opt to issue

The digital record of electronic receipts/

Section 237 (A) No provision The taxpayers that will be mandated

The machines, fiscal devices, and fiscal

Section 237 (A) No provision The data processing of sales and

The BIR shall also establish policies,

Cumulative suppression of electronic

Additional penalties that may be

Section 5 (B) Provides for the authority of the Additional provision:

Over P70,000 P8,500 + 20% of

Over P2Million but P490,000 + 32% of the

Section 24 For 2023 onwards:

Not over P100,000 – 5%

On any amount in excess of

Section 24 (C) Presidential Veto:

Section 51-A No provision Substituted filing or ITRs is available for

The tax withheld shall be credited

Not over ₱100,000 – 5%

On any amount in excess of

Registered enterprises within tourism

(The above provision was vetoed by

4. Sale of gold to BSP.

 All pending VAT refund claims as of December

Section 106 (A)(2) The Department of Finance shall establish a VAT

1. Sale of gold to BSP

7. Sale of power or fuel generated 7. Sale of power or fuel generated

 Registered enterprises within

(Above provision was vetoed by

 All pending VAT refund claims as of December

Section 108 (B) Additional provision:

To fund claims for VAT refund 5% of the total VAT

 Automatically appropriated annually.

Section 108 Additional provision:

Section 109 Provided, further, That vehicles, vessels,

(U) Importation of fuel, (U) Additional provision:

Section 109 Additional exempt transactions:

(X) Transfer of property in merger or

(Y) Association dues, membership fees,

Section 114 (B) Government or any of its Additional provision:

Section 116 Cooperatives are exempt from Additional exemption: