In providing our comments in these slides we have relied upon our understanding of current Philippine tax laws, regulations, rules,
and issuances of the relevant tax authorities as of this date. Should these laws, regulations, rules, and issuances change, some of
the issues/conclusions discussed in these slides may change as well. We will not be responsible for updating the information herein,
unless we are specifically requested to do so. Please also note that our comments and conclusions have been put together on the
basis of our understanding of the facts as discussed above. These slides are solely for your needs and are not to be relied upon by
any other person or entity. Hence, if you wish to disclose copies of these slides to any other person or entity, you must inform them
that they may not rely upon our work for any purpose without our written consent.
What is TRAIN?
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DOF Proposed Tax
DOF Proposed TaxReform
ReformPackages
Packages
Inclusion
secrecy law
Property
Act (TRAIN)
Capital
Income
Tax
Tax
• Lower estate and donor’s •Harmonization of
tax rates capital income tax rates on
• Lower rate of transaction deposits and investment,
taxes on land dividends, equity and other
passive income to 10%
• Update Schedule of Zonal
Values •Increase stock transaction
tax from 0.5% to 1%
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RA No. 10963
Page 4
Personal Income Tax Rates
Personal Income Tax Rates
Taxable Income Old Rate 2018 – 2022 2023 Onwards
Not over P10,000 5%
Not over P30,000 500 + 10%
Not over P70,000 2,500 + 15% 0% 0%
Not over P140,000 8,500 + 20%
Not over P250,000 22,500 + 25%
Not over P400,000 20% 15%
50,000 + 30%
Not over P500,000
30,000 + 25% 22,500 + 20%
Not over P800,000
Not over
130,000 + 30% 102,500 + 25%
P2,000,000
125,000 + 32%
Not over
490,000 + 32% 402,500 + 30%
P8,000,000
Over P8,000,000 2,410,000 + 35% 2,202,500 + 35%
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Personal Income Tax Exemption
Additional
Personal
Exemption
Exemption
P25,000/
P50,000
dependent
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Sample Computation
Tax Due
Taxable Old Tax Code New Tax Code
Income (2018-2022) Difference
*
Rate Due Rate Due
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Self-employed and Professionals
Personal Income Tax Rates
Gross sales/
receipts ≤ P3M
(Optional)
Graduated income
8% income tax on
gross sales/receipts tax rates
(0% - 35%)
3% percentage tax
RMC No. 1-2018 (Procedure on the use of withholding tax table on compensation and 8% withholding
tax on income payments to self-employed individuals or professionals)
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Other Individual Tax Rates
Final Tax
FBT
Page 9
Creditable Withholding
Personal Income Tax Rates Tax Rates
Jan. 1, 2019
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Passive Income
Final Tax
Citizens
Resident Aliens
FCDU
Deposit Domestic Corporations
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Passive Income
Final Tax
Citizens
Resident Aliens
CGT Nonresident Aliens
Domestic Corporations
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Percentage Tax
Final Tax
STT
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Donor’s Tax Rate
Final Tax
2% - 15% 6%
30% - strangers 6%
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Donor’s Tax
Final Tax
EXCEPT:
Transfer for Made in the ordinary
insufficient course of business
consideration (bona fide, at arm’s
length, and free from
any donative intent)
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VAT Zero-Rating on Export Sale of Goods
and Services
Sale of goods to non-resident buyer for delivery to resident
local export-oriented enterprise
* Upon establishment of Enhanced VAT Refund System and if all pending VAT refund claims
as of Dec. 31, 2017 shall be fully paid in cash by Dec. 31, 2019
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VAT Zero-Rating on Export Sale of Goods
and Services
Page 17
Other VAT Amendments
Final Tax
VAT threshold
≤ P1,919,500 P3M
BIR - 90 days
Timing for claim for 30 days to appeal
refund – 120 days to CTA on
deemed denial
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Excise Tax on Cigars and Cigarettes
Excise Tax
(RR No. 3-2018 datedRates on
Jan. 5, 2018 Petroleum
- received by BIR RecordsProducts
Management Division on
January 15, 2018)
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Excise Tax on Petroleum Products
Excise Tax
(RR No. 2-2018 datedRates on
Jan. 5, 2018 Petroleum
- received by BIR RecordsProducts
Management Division on
January 24, 2018)
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Excise Tax on Petroleum Products
Mandatory Marking of All Petroleum Products
Counting of Metering Devices: (1) Manufacturers and/or Importers to provide with counting
or metering devices; (2) DOF shall maintain a registry of all petroleum manufacturers and/or
importers and articles of being manufactured and/or imported; (3) DOF shall mandate the
creation of a real-time inventory of petroleum; and (4) Importers of finished petroleum
products shall provide with Bureau-accredited metering devices to determine the accuracy of
the volume of petroleum products they imported
Penalties on offenses relating to fuel marking (may amount from P1M to P10M,
imprisonment from 4 to 8 years, and/or revocation of licenses to engaged in business)
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Excise Tax on Automobiles
Excise Tax
(RR No. 5-2018 datedRates on
Jan. 5, 2018 Automobiles
- received by BIR Records Management Division on
January 15, 2018)
► Vehicles purely powered by electricity and pick-ups – not subject to excise tax
► Hybrid vehicles – subject to 50% of applicable rate
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SampleTax
Excise Computation
Rates on Automobiles
Tax Due
Manufacturer’s OLD RULE NEW RULE Difference*
Selling Price Effective
Due Rate Due
Rate
600,000 2% 12,000 4% 24,000 12,000
1,100,000 10.18% 112,000 20% 220,000 108,000
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Excise Tax on Sweetened Beverages
2L Soda
P6.00/liter
caloric sweeteners and non- SP @ P62
caloric sweeteners*
P12/liter
SP @ P74
high fructose corn syrup
SP @ P50
Page 24
ExciseTax
Excise TaxRates
on Sweetened Beverages
on Automobiles
EXCLUSIONS
100%
COFFEE
Page 25
Excise Tax on Mineral Products
Excise Tax
(RR No. 1-2018 on
dated Jan.Mineral Products
5, 2018 - received by BIR Records Management Division on
January 15, 2018)
2% 4%
2018 – P50
2019 – P100
2020 up – P150
P10/MT
Indigenous petroleum
3% 6%
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Documentary Stamp Tax
Documentary Stamp
(RR No. 4-2018 dated Dec. Tax by BIR Records Management Division
19, 2017 - received
on January 15, 2018)
PARTICULARS TAXABLE UNIT CURRENT TAX AMENDMENT
CODE PROVISION UNDER TRAIN
Original issuance of shares of PhP 200, or fractional thereof, PhP 1.00 PhP 2.00
stocks of the par value
Sales, agreements to sell, PhP 200, or fractional part PhP 0.75 PhP 1.50
memoranda of sales, deliveries thereof, of the par value
or transfer of shares or
certificates of stock
DST paid upon original issue in 25% 50%
case of stock without par value
Certificates of profits or interest PhP 200 pesos, or fractional PhP 0.50 PhP 1.00
in property or accumulations part thereof, of the face value
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
PARTICULARS TAXABLE UNIT CURRENT TAX AMENDMENT
CODE PROVISION UNDER TRAIN
All debt instruments PhP 200, or fractional part PhP 1.00 PhP 1.50
thereof, of the issue price
All bills of exchange or drafts PhP 200, or fractional part PhP 0.30 PhP 0.60
thereof, of the face value
Page 28
Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
* A document that provides proof of ownership of commodities that are stored in a warehouse, vault, or
depository for safekeeping.
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
First
PhP 2,000 PhP 3.00 PhP 6.00
or fractional part thereof
Page 34
Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
On each
PhP 5,000 PhP 10.00 PhP 20.00
or fractional part thereof in excess of
the first
PhP 5,000
*Transfers exempt from donor’s tax under Section 101 (a) and (b) of this Code shall be exempt from the tax imposed
under this Section.
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
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Documentary Stamp Tax
(RR No. 4-2018 dated Dec. 19, 2017 - received by BIR Records Management Division
on January 15, 2018)
DST
PARTICULARS TAXABLE UNIT CURRENT TAX CODE AMENDMENT UNDER
PROVISION TRAIN
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Other Penalties
• P1,000 – P50,000
Failure or
refusal to • 2 – 4 years
issue
receipts or
invoices
• P500,000 – P10million
• 6 – 10 years
Attempt to
evade or
defeat tax • P30,000 – P100,000
• 2 – 4 years
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Appropriation of Incremental Revenues
Final Tax
from TRAIN
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Appropriation of Incremental Revenues
from TRAIN (cont’d)
For minimum wage earners, unemployed, and the poorest 50% of the
population: (1) 10% fare discount; (2) NFA purchase discount; (3) Free
skills under TESDA
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Other Amendments: Income Tax
Simplified Filing of Tax Returns (i.e., 4-page ITR, May 15 (before April
15) for 1st Qtr. ITR filing for individual, October 15 (before July 15)
installment payment of tax due for individual)
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Other Amendments: Estate Tax
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Other Amendments: Value Added Tax
For 2018 to 2020: Retained VAT exempt treatment on: (1) sale of
residential lot < P1,919,500 (?); (2) sale of house and lot, and other
residential dwellings < P3,199,200 (?); and (3) sale of low-cost and
socialized housing
For 2021 onwards: (1) sale of residential lot < P1,919,500 will no longer
be exempt from VAT; (2) sale of house and lot, and other residential
dwellings is exempt if < P2,000,000 (before P3,199,200); and (3) only
the sale of socialized housing (i.e., not including low-cost) will be VAT
exempt
P15,000 (before P12,800) per month lease of residential units is VAT exempt
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Other Amendments: Value Added Tax
(cont’d)
Additional VAT exempt transactions: (1) sale or lease of goods and
services to senior citizens and PWDs pursuant to RA No. 9994 and RA
No. 10754, respectively; (2) tax-free exchange; (3) sale of drugs and
medicines prescribed for diabetes, high cholesterol, and hypertension
starting Jan. 1, 2019; and (4) association dues collected by homeowners
associations and condominium corporations
Quarterly filing of VAT effective January 1, 2023 and final withholding VAT
on sales to government will shift to creditable system effective January 1,
2021
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Other Amendments: Excise Tax
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Other Amendments: Admin Matters
Issuance of receipts and invoices on sale of merchandise and service rendered valued at
P100 (before P25) or more. And, issuance of electronic receipts and invoices (within 5
years from effectivity of this act) by exporters, those engaged in e-commerce and
taxpayers under the jurisdiction of the Large Taxpayers Service
Electronic reporting of sales data to the BIR through the use of electronic POS
System for exporters and large taxpayers (within 5 years from effectivity of this act)
Change of interest for unpaid amount of tax from 20% (40% for deficiency and
delinquency interests) to double of legal rate of interest (i.e., 2 x 6%)
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Questions?