TRAIN Public Seminar.27.4.2018

Tax Reform for
Acceleration and
Inclusion
(RA No. 10963) – Part I
Daryl Matthew A. Sales
Manager, Tax Advisory and
Compliance
©2017 Grant Thornton International Ltd. All rights reserved.
The TRAIN Law (RA No. 10963)
Effective
Jan. 1, 2018,
except on certain
provisions with
Lowering of Simplifying the Expanding the specific effectivity
personal Estate and VAT Base date
income tax Donor’s Tax
Increasing Excise Tax on Compliance/

Increasing
Excise tax on Excise Tax on Sweetened Administrative
Excise Tax on
cosmetic Petroleum Beverages Requirements/
Automobiles
procedures Products Penalties
2 ©2017 Grant Thornton International Ltd. All rights reserved.
Personal Income Tax
• Employees
• Self-Employed Individuals and Professionals
• Mixed Income Earner

Review of Applicable Taxes on Employees
5% to 32%
graduated income
tax rates
32%/15% FBT
15% on on benefits
Aliens & Filipinos (managerial/
employed supervisory
by ROHQs/ employees)
OBUs/Pet Cont
Net Taxable Compensation Income (BEFORE)
Gross Compensation Income Pxxx
Less: Exclusions/Deductions/Non-taxable Income
Non-taxable Bonus Pxx
SSS/PHIC/HDMF Contributions xx
Personal Exemptions xx
Premium Payments x
De minimis Benefits xx xx
Net Taxable Compensation Pxxx
Tax Due (graduated tax table of 5% - 32%)

Exclusions
P90,000
13thmonth pay and

P82,000
Other benefits
such as
productivity
incentives and
Christmas bonus

Deductions
Basic Personal Additional Personal

Exemption Exemption
P50,000 P25,000
per dependent
Applicable - Qualified dependent child, not
whether single, more than 21 years old
married, or legally - Qualified PWD within fourth
separated degree of affinity/ consanguinity

Employee Updates
Change/Update Required
?
Additional
dependent X
Change in civil
status (surname in case
of married individuals)
a
Change in
employer a
Deductions
Premium Payments on Health

and/or Hospitalization
Insurance
P2,400/year
- Family gross income < P250,000 annual
- Different from the non-taxable group
life/health insurance for employees

Tax Table •
•
Employees earning not more than P250,000/annual is exempt from paying personal taxes
Top rate of 8% on income over P8M
Taxable Rate Rate

Rate Taxable
Income (Jan. 1, 2018 to (Jan. 1, 2023
Income
Less Dec. 31, 2022) Onwards)
5% <P250K 0% 0%
10K
Over
10K to 20% in excess of 15% in excess of
P500 + 10% in excess of 10K P250K
30K P250K P250K
to 400K
30K to P2.5K + 15% in excess of
Over
70K P30K P30K + 25% in P22.5K + 20% in
P400K
70K to P8.5K + 20% in excess of excess of P400K excess of P400K
to 800K
140K P70K
Over
140K to P22.5k + 25% in excess of P130K + 30% in P102.5K + 25% in
P800K
250K P140K excess of P800K excess of P800K
to 2M
250K to P50K + 30% in excess of
Over P2M P490K + 32% in P402.5K + 30%
500K P250K
to 8M excess of P2M in excess of P2M
Over P125K + 32% in excess of
P2.410M + 35% in P2.2025M + 35%
500K P500K Over P8M
excess of P8M in excess of P8M

Revised Withholding Tax Table Effective Jan 1, 2018 – Dec 31, 2022
(Applicable to all employees, regardless if single, married, or with dependents)
Daily 1 2 3 4 5 6
Compensation P685 and P1,096 – P2,192 – P5,479 – P21,918 and

P685 - 1095
Range below 2,191 5,478 21,917 above
Prescribed P82.19 + P356.16 + P1,342.47 + P6,602.74 +
0 + 20% over
Minimum 0.00 25% over 30% over 32% over 35% over
P685
Withholding Tax P1,096 P2,192 P5,479 P21,918
Weekly 1 2 3 4 5 6
P4,808
Compensation P7,692 – P15,385 – P38,462 - P153,846
and P4,808 – 7,691
Range 15,384 38,461 153,845 and above
below
Prescribed P576.92 + P2,500 + P9,423.08 P46,346.15
0.00 + 20%
Minimum 0.00 25% over 30% over + 32% over + 35% over
over P4,808

Revised Withholding Tax Table Effective Jan 1, 2018 – Dec 31, 2022
(Applicable to all employees, regardless if single, married, or with dependents)
Semi-Monthly 1 2 3 4 5 6
P10,417
Compensation P16,667 – P33,333 – P83,333 – P333,333
and P10,417 - 16,666
Range 33,332 83,332 333,332 and above
below
Prescribed P1,250.00 + P5,416.67 + P20,416.67 P100,416.67
0.00 + 20%
Minimum 0.00 25% over 30% over + 32% over + 35% over
over P10,417
Monthly 1 2 3 4 5 6
P20,83
Compensation P20,833 – P33,333 – P66,667 – P166,667 – P666,667
3 and
Range 33,332 66,666 166,666 666,666 and above
below
P200,833.3
Prescribed P2,500.00 P10,833.33 + P40,833.33
0.00 + 20% 3
Minimum 0.00 + 25% over 30% over + 32% over
over P20,833 + 35% over
Withholding Tax P33,333 P66,667 P166,667
P666,667

Net Taxable Compensation Income (BEFORE)
Gross Compensation Income Pxxx
Less: Exclusions/Deductions
Non-taxable Bonus Pxx 90K
SSS/PHIC/HDMF Contributions xx
Personal Exemptions xx
Premium Payments xx
De minimis Benefits xx
Net Taxable Compensation Pxxx
Tax Due (graduated tax table of 5% - 32%) 0% to 35%

Compensation Income Defined
All remuneration received for services

performed by an employee for his employer
under an employer-employee relationship.
- Section 2 (A), RR 8-18

Compensation Income
The name by which the remuneration for services is

designated is immaterial.
 Salaries, wages, honoraria, allowances,

commissions, director’s fees of employee-
director, bonuses, pensions, other income of
similar nature
 Does not include benefits subject to fringe

benefit tax, income exempt from
withholding tax
Compensation Income
RR Nos. 08-2018 and 11-2018: The following income are

exempt from withholding tax on compensation
• 13th month pay and other bonuses amounting to

P90,000;
• Compensation during the year not exceeding P250,000;
• Compensation income of minimum wage earners within
the statutory minimum wage, including holiday pay, OT
pay, night shift differential, and hazard pay;
• De minimis benefits;
• SSS, PHIC, HDMF employee contributions;
Taxation of De Minimis Benefits

De minimis benefits defined
Facilities or privileges furnished or offered by

an employer to his employees that are
relatively small value and offered or furnished
by the employer merely as a means of
promoting the health, goodwill, contentment, or
efficiency of his employees.

General rule on tax treatment of de minimis benefits
benefits shall not be included as items of

gross income for income tax purposes
Facilities or privileges
considered as de minimis
benefits which conform to benefits shall not be included in the
the prescribed ceiling are computation of P90,000 threshold under
not subject to FBT & Section 32(B)(7)(e) of the Tax Code
INCOME TAX ON
COMPENSATION.
no withholding tax shall be imposed
in view of their exclusion and
exemption from tax

Update on De minimis Benefits
(RR No. 08-2018)
Before Current
• Uniform and clothing • Uniform and clothing
allowance (P5,000 per allowance (P6,000 per
annum) annum)
• Medical cash allowance to • Medical cash allowance to

dependents of employees dependents of employees
(P750 per semester/P125 per (P1,500 per semester/P250
month) per month)
No need to substantiate with receipts for medicine or
medical services
Update on De minimis Benefits
(RR No. 08-2018)
Before Current
• Rice subsidy (P1,500 • Rice subsidy (P2,000
per month) OR one sack per month) OR One
of 50 kg. rice per month sack of 50 kg. rice per
amounting to not more month amounting to
than P1,500. not more than P2,000.
Rice subsidy may be given on a quarterly basis
(BIR Ruling No. DA-053-01)
Minimum Wage Earners

Who are considered minimum wage earners
1. Private sector - Employees who are
being paid the Statutory Minimum
Wage (SMW) applicable to the place
where he/she is assigned.
2. Public sector - Employees with

compensation income of not more than
the SMW in the non -agricultural sector
applicable to the place where he/she is
assigned.

Who are considered minimum wage earners
Definition of "statutory minimum wage“
Statutory minimum wage (SMW) refers to

the rate fixed by the Regional Tripartite
Wage and Productivity Board (RTWB),
as defined by the Bureau of Labor and
Employment Statistics (BLES) of the
Department of Labor and Employment
(DOLE).

Minimum Wage Earner (MWE)
Tax Treatment prior to RR No. 11-2018

Minimum Wage Earner Tax exempt
Still Treatment even if
SMW + (holiday, overtime, hazard & night-shift differential pay) + total
Exemptis beyond
de minimis benefits within ceiling and/or other benefits not P250,000
(entire earnings)
exceeding 90,000 (RR No. 08-2018)
SMW + (holiday, overtime, hazard & night-shift differential pay) + Taxable
de minimis benefits beyond limit and/or other benefits over (entire earnings)
P90,000 ceiling
SMW + (holiday, overtime, hazard & night-shift differential pay) + Taxable
de minimis benefits + commission & other taxable allowances (entire earnings)
SMW + Business income Taxable
(entire earnings)

TRAIN LAW as implemented by RR

Nos. 08-2018 and 11-2018
Remains exempt from income tax on

the ff: Still exempt even
• Basic minimum wage if total is beyond
• Holiday/Overtime pay P250,000
(RR No. 08-2018)
• Night differential/Hazzard pay

Tax Treatment per RR No. 11-2018

Minimum Wage Earner Tax Treatment
Still exempt even if
SMW + (holiday, overtime, hazard & night-shift Exempt
total is beyond
differential pay) + de minimis benefits within (entire earnings)
ceiling and/or other benefits not exceeding P250,000
90,000 (RR No. 08-2018)
differential pay) + de minimis benefits beyond limit Taxable only on excess over P90k
and/or other benefits over P90,000 ceiling
differential pay) + de minimis benefits + Taxable only on commission and
commission & other taxable allowances other taxable allowances
SMW + Business income Exempt
Taxable only on business income
Compensation Income
Illustration 1
Employee: Mr. A, married with one child
Basic Salary P 800,000

13th month pay and other bonus P 100,000
SSS/PHIC/HDMF Contributions P 15,000
Rice Allowance P 18,000

Illustration 1
His income tax liability will be computed as Before TRAIN
follows:
Gross Compensation Income ₱ 918,000.00 ₱ 918,000.00
Less: Non-taxable Bonus 82,000 90,000
Rice Allowance 18,000 18,000
SSS/PHIC/HDMF 15,000 15,000
Personal and Additional Exemptions 75,000 -
Taxable Compensation Income ₱ 728,000 ₱ 795,000
Tax Due:
On P400,000.00 ₱ 125,000 ₱ 30,000
On excess (P795,000.00 -P400,000.00) x 25% 72,960 98,750
Tax Due ₱ 197,960 ₱ 128,750
Self-employed Professionals
IF GROSS SALES/RECEIPTS
P3M
< P3M VAT threshold > P3M VAT threshold
8% on gross
sales/receipts 0% to 35% 0% to 35%
and other graduated graduated
income income tax income tax
OR
(in lieu of rates rates
graduated +
+
income tax 3%
percentage value
rates and
tax added tax
percentage tax

IF GROSS SALES/RECEIPTS P3M
Does not exceed P3M VAT threshold

OPTION 1 OPTION 2 OPTION 3 OPTION 4 OPTION 5
Gross Sales or Gross
TAX BASE Receipts and Other Net Taxable Income Net Taxable Income
Income
N/A Itemized Optional Itemized Optional
DEDUCTIONS Deductions Standard Deductions Standard
Deduction (OSD) Deduction (OSD)
8% in excess of
P250k Graduated income tax rates of Graduated income tax rates of
TAX DUE (in lieu of the Graduated
0% to 35% 0% to 35%
Income Tax rates and
Percentage Tax)
VAT/ 3% Percentage Tax on Business
N/A 12% VAT
Percentage Tax Income
Rules in electing the 8% income tax

• Cannot be availed by the Period Choice
following: 1st 8% 0% to No
o VAT-registered taxpayer Quarter 35% choice
(those who opted for 8%
made
cannot opt to register to VAT)
o taxpayers subject to other 2nd 8% 0% to 0% to
Quarter 35% 35%
percentage tax (e.g.
amusement tax) 3rd 8% 0% to 0% to
o Partners of GPP Quarter 35% 35%
• Choice must be made in the 1st Annual 8% 0% to 0% to
quarter return 35% 35%

Self-employed/Professionals
• If taxpayer opted for 8% income tax but Jan. 01 Jul 31 Dec. 31

exceeds the VAT threshold during the
year
o Pay 3% percentage tax on the
P3M P5M
first P3M receipts
o Compute income tax on PT VAT
accumulated income using
graduated income tax rates
o Deduct the 8% income tax paid 0% to 35%
from previous quarter graduated income tax
o Pay VAT on succeeding receipts rates


Tax base = gross sales/receipts and other income not subjected to
final tax
• Gross sales – all sales transactions reported in the period subject to the
following deductions:
• Sales returns
• Discounts granted at the time of sale, expressly indicated in the
invoice, amount forming part of sales recorded in the books of
accounts, not dependent upon happening of a future event
• Gross receipts – amount of money or its equivalent actually or

constructively received during the period, including deposits and advance
payments

Gross Receipts – not exceeding P3M

Illustration
Gross Sales - Convenience Store P 800,000

Gross Receipts - Bookkeeping services P 300,000
Cost of Sales P 600,000
Operating Expenses P 200,000

Gross Receipts – not exceeding P3M
8% Income Tax Rate Graduated Income Tax Rate Graduated Income Tax Rate
Itemized Deductions Optional Standard Deductions
Gross Sales - P 800,000
Convenience Gross P 1,100,000
Gross P 1,100,000
Store Sales/Receipts
Sales/Receipts
Gross Receipts - 300,000 Less: OSD @ 40% 440,000
Less: Cost of Sales 600,000
Bookkeeping
services Gross Income P 500,000 Taxable Income P 660,000
Total P 1,100,000
Less: Operating 200,000
Sales/Receipts
Expenses
Less: Tax Exempt 250,000
Taxable Income P 300,000
Income Tax: P 95,000
Taxable Income P 850,000
Income Tax: P 10,000 Percentage Tax: P33,000
Tax Due: P 68,000 Percentage Tax: P33,000
Illustration
In 2018, Mr. GCC owns a nightclub and videoke bar
• Gross sales/receipts ₱2,500,000.00

• Cost of sales ₱1,000,000.00
• Operating expenses ₱ 600,000.00
• Non-operating income ₱ 100,000.00

Illustration
His tax due for 2018 computed as follows:
Taxable Income (using itemized deductions) ₱ 1,000,000
Tax Due:
On ₱ 800,000.00 ₱ 130,000.00
On excess (₱1,000,000.00 - ₱800,000.00) x 30% 60,000.00
Total Income Tax ₱ 190,000.00
*cannot avail 8% income tax since subject to amusement tax on

nightclub
- Can also opt to apply OSD
Gross Receipts – exceeding P3M

Illustration
Gross Sales - Convenience Store P 3,200,000

Cost of Sales P 750,000
Operating Expenses P 400,000
Input VAT P 250,000

Gross Receipts – exceeding P3M

Gross 3,200,000 Gross 3,200,000
OPTIONAL STANDARD DEDUCTIONS

ITEMIZED DEDUCTIONS
Sales/Receipts Sales/Receipts
Less: Cost of Sales 750,000 Less: OSD @ 40% 1,280,000
Gross Income 2,450,000
Taxable Income 1,920,000
Expenses
Taxable Income 2,050,000
Tax Due: P 466,000
Tax Due: P 506,000
Vat Payable: P 134,000
VAT Payable: P 134,000
Illustration
Mr. JMLH signified her intention to be taxed at 8% income tax rate on
gross sales in her 1st Quarter Income Tax Return. However, her gross
sales during the taxable year has exceeded the VAT threshold. Input VAT
for the fourth quarter is P100,000. (with updated registration to VAT)
Q1 Q2 Q3 Q4
(8% Rate) (8% Rate) (8% Rate)
Total Sales ₱ 500,000.00 ₱ 500,000.00 ₱ 2,000,000.00 ₱ 3,000,000.00

Less: Cost of Sales 300,000.00 300,000.00 1,200,000.00 1,200,000.00
Gross Income ₱ 200,000.00 ₱ 200,000.00 ₱ 800,000.00 ₱ 1,800,000.00
Less: OPEX 120,000.00 120,000.00 480,000.00 720,000.00
Taxable Income ₱ 80,000.00 ₱ 80,000.00 ₱ 320,000.00 ₱ 1,080,000.00

Illustration
Tax due shall be computed as follows:
Total Sales ₱ 6,000,000.00

Less: Cost of Sales 3,000,000.00
Gross Income ₱ 3,000,000.00
Less: Operating Expenses 1,440,000.00
Taxable Income ₱ 1,560,000.00
Tax Due:
Under the graduated rates ₱ 358,000
Less: 8% income tax previously paid (Q1 to Q3) 220,000
Annual Income Tax Payable ₱ 138,000
Percentage Tax ₱ 90,000
VAT ₱ 260,000
Mixed Income Earner
IF GROSS SALES/RECEIPTS
P3M
Not exceeding the P3M VAT threshold Above VAT threshold
Business Income at 8% income tax Business income

+
and
Compensation income at 0% to
35% graduated income tax rates compensation
income at 0% to
OR 35% graduated
Business Income and income tax rates
Compensation Income at 0% to +
35% graduated income tax rates value added tax
+
3% percentage tax
Mixed Income Earner
Illustration
Mr. MAG, a Financial Comptroller of JAB Company, has the following
income and expenses:
Total Sales ₱2,400,000 Basic Salary (net of ₱ 1,380,000
SSS/PHIC/HDMF)
Less: Cost of Sales 1,000,000 13th month pay 120,000

Gross Income ₱ 1,400,000
Other Income 100,000
Total Gross Income 1,500,000
Expenses
Taxable Income ₱ 900,000
Mixed Income Earner
8% Income Tax Rate

8% Income Tax on Graduated Income Tax Rate
Business Income On Compensation Income
Gross Sales P 2,400,000 Basic Salary (net of P 1,380,000
SSS/PHIC/HDMF)
Add: Other 100,000
13th month pay 120,000
Income
Total P 1,500,000
Taxable P 2,500,000 Less: Non-taxable Bonus 90,000
Income
Taxable Income P1,4100,000
Tax Due: P 200,000
Income Tax: P 313,000
Mixed Income Earner
Graduated Income Tax Rates

Itemized Deduction Optional Standard Deduction
Taxable P 1,410,000
Taxable P 1,410,000
Compensation
Compensation
Income
Income
Net Taxable 1,540,000
Net Taxable 900,000
Business Income
Business Income
Total P 2,950,000
Total P 2,310,000
Income Tax: P 589,200 Income Tax: P 794,000

Percentage Tax: P 72,000 Percentage Tax: P72,000
Fringe Benefits Tax
Gross Monetary Value =
32% 35% Monetary Value

65%
Still to be shouldered by the employer

Fringe Benefits vs Compensation
Compensation income subject to
FBT of
Rate Rate
Taxable
(Jan. 1, 2018 to (Jan. 1, 2023
Income
Dec. 31, 2022) Onwards)
P250K or less 0% 0%
35%
Over P250K
20% in excess of P250K 15% in excess of P250K
to 400K
Over P400K
vs
P30K + 25% in excess of P400K P22.5K + 20% in excess of P400K
to 800K
P130K + 30% in
Over P800K P102.5K + 25% in
excess of
to 2M excess of P800K
P800K
Over P2M P490K + 32% in P402.5K + 30% in
(Housing and car
to 8M excess of P2M excess of P2M subject to FBT at 50%)
P2.410M + 35%
P2.2025M + 35% in
Over P8M in excess of
excess of P8M
P8M

Employees of ROHQ, RHQ, OBU, and Petroleum
Contractors
Optional 15% Preferential Income Tax Rate
- Managerial or technical position

- gross annual taxable compensation of at least P975,000
- Exclusively work for the RHQ or ROHQ
- should not be a consultant or contractual personnel
- BIR Form 1947

Employees of ROHQ, RHQ, OBU, and Petroleum
Contractors
RA No. 10963 - Veto Message/Draft

Shall not be applicable RR
to RHQ, ROHQ, OBUs o Shall not be applicable to
and petroleum all RHQ, ROHQ, OBUs and
contractors registering petroleum contractors
after Jan. 1, 2018
o Regular income rates

RA 10963 Veto Message

Requirement to file an ITR
BEFORE TRAIN
All are required to file except:

All are required to file o employees qualified for
except employees substituted filing; OR
qualified for o employees with annual taxable
substituted filing. compensation income not
exceeding P250,000
Substituted Filing
• Pure compensation income earner
• One employer during the year
• Tax properly withheld
• BIR Form 2316 duly stamped received by BIR
Requirement to file an ITR
BEFORE TRAIN
• Filing/Payment Deadline • Filing/Payment Deadline

o Annual ITR: April 15 o Annual ITR: April 15
o 1st Quarter ITR: April 15 o 1st Quarter ITR: May 15
• Annual Income Tax Return • Annual Income Tax Return
o 4-page -purely compensation o 4-page - purely compensation
income earner income earner
o 12-page - self-employed/ o 4-page return - self-
professionals /mixed income employed/professionals or
earner mixed income earner
• Installment payment of Tax Due of • Installment payment of Tax Due of
more than P2,000 more than P2,000
o 1st installment – April 15 o 1st installment – April 15
o 2nd installment – July 15 o 2nd installment – October 15
Final Tax on Passive Income

LOTTERY BEFORE TRAIN
P100,000
20% Final
P50,000 Withholding
Tax
P25,000
Exempt
P10,000
P5,000 Exempt
P1,000

On individuals and domestic corporations

Interest on FCDU deposits 15%
(previously 7.50 %)
15% On individuals and domestic corporations

Capital gains from sale of shares of
(previously 5%/10%)
stocks not traded in the stock exchange

Transfer Tax
Estate Tax
Donor’s Tax

Estate Tax
Gross Estate XX
Less: Ordinary Deductions
Funeral Expenses/Judicial Expenses (xx)
Transfer for Public Use (xx)
Property Previously Taxed (xx)
Claims Against the Estate (Indebtedness) /Unpaid Mortgages (xx)
Claims of the Deceased Against Insolvent Person (xx)
Unpaid Mortgages (xx)
Amount Received by Heirs under R.A. No. 4917 (xx)
Medical Expenses (xx)
Standard Deduction (1,000,000)
Family Home (1,000,000)
NET TAXABLE ESTATE xx
Estate Tax (5% to 20%)

Estate Tax Rate
Bracket Previous
Up to P200K Exempt
P200K to P500K
P500K to P2M
P2M to P5M
P0 + 5%
P15K + 8%
P135K + 11%
6%
Flat Rate
P5M to P10M P465K + 15%
P10M and over P1,215K + 20%

Deductions to Estate (Citizen and Resident Alien)
BEFORE TRAIN
• Funeral Expenses • Funeral Expenses

• Judicial Expenses • Judicial Expenses
• Medical Expenses • Medical Expenses

Deductions to Estate (Citizen and Resident Alien)
BEFORE TRAIN
• Family Home of • Family Home of
P1 million
P10 million
• Standard Deduction of
P1 million • Standard Deduction of
P5 million

Deductions to Estate (Non-Resident Alien)
BEFORE TRAIN
• Expenses, losses, • Expenses, losses,

indebtedness, and indebtedness and
taxes taxes
• Standard deduction
of P500,000

Estate Tax
Gross Estate XX
Funeral Expenses/Judicial Expenses (xx)
Transfer for Public Use (xx)
Property Previously Taxed (xx)
Claims Against the Estate (Indebtedness) /Unpaid (xx)
Mortgages
Claims of the Deceased Against Insolvent Person (xx)
Unpaid Mortgages (xx)
Amount Received by Heirs under R.A. No. 4917 (xx)
Medical Expenses (xx) P5M
Standard Deduction (1,000,000) or
Family Home P10M (1,000,000) P500k
NET TAXABLE ESTATE xx

Estate Tax (5% to 20%) 6%
Compliance Requirements
BEFORE TRAIN
Notice of Death Notice of Death
– Transfers subject to – Transfers subject to
tax tax
– Gross estate exceeds – Gross estate exceeds
P20k P20k
– Within 2 months from – Within 2 months from
decendent’s death decendent’s death
64

Estate Tax Return (BIR Form 1801)

BEFORE TRAIN
– Transfers subject to – Transfers subject to
tax tax
– Gross estate exceeds – Gross estate exceeds
P200k P200k
– Estate includes – Estate includes
registered/ registered/
registrable properties registrable properties
65


BEFORE TRAIN
– Statement duly – Statement duly
certified by CPA is certified by CPA is
mandatory for estate mandatory for estate
with gross value with gross value
exceeding P2M exceeding P5M
– Deadline: within 6 – Deadline: within one

months from year from decedent’s
66 decedent’s death death

BEFORE TRAIN
– Installment payment of – Installment payment of
estate tax due – no estate tax due – allowed in
option case available cash is
insufficient to pay total
estate tax due (2 years)
– Bank withdrawals –
– Bank withdrawals –
6% final withholding tax in
requires Commissioner’s
case of withdrawal from
certification on payment of
bank deposits
67 estate tax
Donor’s Tax

Donor’s Tax
Net gift value Previous
Up to P100K Exempt
P100K to P200K P0 + 2%
6%
P200K to P500K P2K + 4%
P500K to P1M P14K + 6%
P1M to P3M P44K + 8%
P3M to P5M P204K + 10% Flat Rate
P5M to P10M P404K + 12%
P10M and over P1,004K + 15%
In excess of
Stranger Donee 30%
P250,000

Exempt Gifts by Residents
Dowries on account of
marriage
P10,000

Donor’s Tax
Sec. 100. Transfer for less than adequate and full consideration
• Transfer of property other than capital asset for less than FMV
• Difference between FMV and consideration shall be deemed gift

subject to donor’s tax
• Excludes sale or transfer made in the ordinary course of

business (bonafide transaction, at arm’s length price, and
free from any donative intent)

Donor’s Tax
Gross Gift XX
Dowries (xx)
Encumbrances (xx)
Diminution (xx)
To Government (xx)
To NGO (xx)
Net Taxable Gift xx
Less: Exempt Donation 250,000
Net taxable Gift
6%
Donor’s Tax Due (2% - 15%, OR 30%) xx
Value Added Tax
VAT threshold
Zero-rated Sales
VAT Exempt Sales
Input Tax Credit
Value Added Tax
10% -> 12%

VAT Threshold
P3,000,000
P1,919,500
Gross annual sale of

goods/properties or
receipts from
performance of service
other than transactions
which are VAT-exempt
Value Added Tax
-> VAT zero-rating exclusively
for direct exports

VAT Zero-rating
Zero-rated Sale of Goods
Current Enhanced
VAT Refund
Rule
System
• Sale of raw materials/packaging to 0% VAT 12% VAT
nonresident for delivery to a resident
local export-oriented enterprise
• Sale to export oriented enterprise 0% VAT 12% VAT
(70% exporter)
• Those considered export sales under 0% VAT 12% VAT
EO 226 and other special laws

VAT Zero-rating
Zero-rated Sale of Service
Current Enhanced
VAT Refund
Rule
System
Processing, manufacturing, repacking of 0% VAT 12% VAT
goods subsequently exported for
nonresidents, paid for in foreign currency
Services of contractors/subcontractors in 0% VAT 12% VAT

processing or manufacturing goods for
export oriented enterprise (70% exporter)

VAT Zero-rating
Conditions for 12% VAT on currently zero-rated sales
• Enhanced VAT refund system – processing/grant of refund
within 90 days
• All pending claims as of Dec. 31, 2017 shall be fully paid in
cash by Dec. 31, 2019
• BIR and BOC VAT refund centers
• 5% of total VAT collection = special account in the general
fund/trust receipts for funding claims for refund
• BIR and BOC’s submission of quarterly report of pending
claims and unused fund to COCCTRP
Refund of Input VAT from zero-rated sales
OLD
2 30 days
Tax- BIR
payer
years from denial CTA
120 days
OR inaction
80
(120 days)
TRAIN
Tax- 2 BIR 30 days CTA
payer years 90 days
from denial
OR inaction
(90 days)
Refund of Input VAT from zero-rated sales
Before TRAIN
Basis No specific The Commissioner must
of provision state in writing the legal and
Denial factual basis for the denial.
Examples of reason for denial

- No basis for VAT zero-rating
- Not properly supported input VAT
- Not properly supported zero-rated sales
VAT Zero-rating
BEFORE TRAIN
Sale of goods/services Additional proviso that
rendered to persons goods/supplies/fuel/
engaged in international equipment, services should
shipping/air transport be used for (exclusive for)
operations, including leases international shipping/air
of property for use thereof transport operations.

VAT Zero-rating
BEFORE TRAIN
Foreign currency Repealed Nonres
denominated sale – sale of buyer
goods mfd/assembled in PH $
to a nonres for delivery to a
PH resident, paid for in PH goods PH
foreign currency seller customer

VAT Zero-Rating – Vetoed Amendments
Sale and delivery of goods to/ Services rendered to:
i. Registered enterprises ii. Registered enterprises
within a separate customs within tourism enterprise
territory as provided under zones as declared by the
special laws Tourism Infrastructure and
Enterprise Zone Authority
(TIEZA)
No effect on current treatment; subject to BIR rules

VAT Exempt Sales
BEFORE TRAIN
• Properties utilized for Low- • By 2018 - P1.9192M -> P1.5M
cost/Socialized housing, • By 2018 - P3.1992M -> P2.5M
residential lot - P1.9192M • By 2021 – P2.5M -> P2.0
• Residential house and lot and • By 2021 – repeal exemption for
other residential dwellings residential lot; low cost housing
amounting to P3.1992M

VAT Exempt Sales
BEFORE TRAIN
• Association dues/membership • VAT exempt (input VAT on
fees collected by homeowners purchases cannot offset other VAT
association or condominium payable)
corporation – 12% VAT
• Lease of residential unit for • Lease of residential unit*
P12,800 per month for P15,000 per month
* apartment unit, house /& lot, building or part thereof , per person in case of
dormitories/boarding house/bed spaces
VAT Exempt Sales
Lease of Residential Unit

Monthly lease of P15,000 Monthly lease of P18,000
• Exempt from VAT Aggregate Business

Rentals
even if total >P3M Tax
• Exempt from PT < P3M 3% PT
> P3M 12% VAT

VAT Exempt Sales
Lessor owns 18 residential units at
P14,000/mo and 3 units at P20,000/mo.
Gross receipts from rentals at P14,000/mo
(P3,024,000 per year) – exempt from VAT/PT
Gross receipts from rentals at P20,000
(P720,000/yr) – exempt from VAT but subject
to 3% PT
VAT Exempt Sales
P14,500/mo and accumulated gross receipts
amounted to P2,610,000.
Monthly lease does not exceed P15k

- exempt from VAT/PT

VAT Exempt Sales
Monthly lease does not exceed P15k

- exempt from VAT even if gross
receipts exceed the VAT threshold

VAT Exempt Sales
Monthly lease exceeds P15k

- exempt from VAT but subject to
PT of 3% since gross receipts
does not exceed P3M
VAT Exempt Sales
Monthly lease exceeds P15k

- subject to VAT since gross
receipts exceed P3M

VAT Exempt Sales
P14,000/mo and 3 units at P20,000/mo.
Gross receipts from rentals at P14,000/mo
(P3,024,000 per year) – exempt from VAT/PT
Gross receipts from rentals at P20,000
(P720,000/yr) – exempt from VAT but subject
to 3% PT
VAT Exempt Sales
Lessor owns 18 commercial units at
P14,000/mo and 3 units at P20,000/mo,
accumulated gross receipts amounted to
P3,744,000
Subject to 12% VAT, since lease is
on commercial units.

VAT Exempt Sales
BEFORE TRAIN
• Sale of prescription drugs
• Sale of medicine for diabetes, hypertension,
– 12% VAT (except high cholesterol – VAT
sale to senior exempt effective Jan. 1,
citizen/PWD) 2019 (at all stages of
production/distribution)

VAT Exempt Sales
BEFORE TRAIN
• Transfer of property under • VAT exempt
Section 40 (c) (2)
Issue: Attributable input VAT shall
– 12% VAT (if property be treated as expense (removed
transferred forms part from available input VAT)
of inventory or used in
business)

VAT Exempt Sales
BEFORE TRAIN
• Sale of gold to Bangko • VAT exempt
Sentral Pilipinas (BSP)
– 0% VAT Issue: Input tax on production of
gold shall not be creditable, but
recognized as expense

Amortization of Input VAT
4
Input VAT on Capital Goods exceeding P1M years
• Amortization required only until 2021

• Beginning Jan. 1, 2022
• Input VAT creditable in full.
• Unamortized input VAT from prior periods
shall continue to be amortized until fully
utilized. Dec 2021
-> 2026
Percentage Tax
Other percentage tax
Stock transaction tax
Compliance Requirement

Other Percentage Tax
3% percentage tax on persons
exempt from VAT - gross annual
sales/receipts does not exceed P3M
Additional
(previously P1,919,500) P1,000/P1M
Stock transaction tax (STT) on

listed shares – 0.60 of 1%
(previously 0.50 of 1%)
Percentage Tax - Compliance Requirement
BEFORE (by regulations) TRAIN

Monthly Filing  Quarterly filing/payment
 20th day after end of month - 25th month following
(for non-EFPS filers) the close of the taxable
 21st to 25th day after end of quarter
month (filing thru EFPS),
payment on 25th day end of  Monthly filing/payment
month

Excise Tax
Fuel, Motor Vehicle, Minerals, Cigarettes,
Sugar Sweetened Beverages, Cosmetic Procedures

Salient Provisions
Excise Tax
2018 - 31.20
2019 - 32.45
BEFORE 2020 - 33.75 AFTER
2021 - 35.95
Sec. 129
• Excise tax applies 2022• - 36.50
Expanded the coverage to
Coverage
2023 – include
38.00 services
only to goods. of Excise performed in theP2.50/yr
Phils.
tax
Cigarettes Cigarettes
Unitary excise rate 01/2018 to 06/2018 - P32.50
of P30.00 per pack Sec. 145 07/2018 to 12/2019 - P35.00
and a 4% increase Excise 01/2020 to 12/2021 - P37.50
every year effective Tax 01/2022 to 12/2023 - P40.00
January 1, 2018. Cigarettes
And a 4% increase every
year by January 1, 2024.

Manufactured Oils and Fuels
2017 Products 2018 2019 2020
P4.50 Lubricating oils/greases (/L or /kg) P8.00 P9.00 P10.00
P0.05 Processed gas (/L) P8.00 P9.00 P10.00
P3.50 Waxes and petrolatum (/kg) P8.00 P9.00 P10.00
P0.05 Denatured alcohol for motive P8.00 P9.00 P10.00
power (/L)
P4.35 Naphtha, regular gasoline, P7.00 P9.00 P10.00
(excl Pyrolysis pyrolysis gasoline and other similar
gasoline) products of distillation (/L)
Subject to Production of petroleum products, Exempt Exempt Exempt
applicable whether or not as products of
excise tax rate. distillation and for use solely for
production of gasoline.
Manufactured Oils and Fuels
2017 Products 2018 2019 2020
P4.35 Unleaded premium (/L) P7.00 P9.00 P10.00
P3.67 Aviation turbo jet fuel (/L) P4.00 P4.00 P4.00
P0.00 Kerosene(/L) P3.00 P4.00 P5.00
P0.00 Diesel (/L) P2.50 P4.50 P6.00
P0.00 LPG (/kg) P1.00 P2.00 P3.00
P0.56 Asphalts (/kg) P8.00 P9.00 P10.0
P0.00 Bunker (/L) P2.50 P4.50 P6.00
N/A Petroleum coke (/ton) P2.50 P4.50 P6.00
For 2018 to 2020, increases shall be suspended if average

Dubai crude oil price reaches $80 per barrel.
Vetoed Provisions
1. Exemption of various petroleum products from
excise tax when used as input, feedback, or as
raw material in the manufacturing of
petrochemical products, or in the refining of
petroleum products, or as replacement fuel for
natural gas fired combined cycle power plants
2. Earmarking of incremental tobacco taxes

Excise Tax – Petroleum Products
Marking of Petroleum Products
• All petroleum products shall be marked with the
official marking agent designated by the Department
of Finance (DOF)
• Absence of marker or the use of fraudulent marker is
considered prima facie evidence that the same have
been withdrawn or imported without the payment of
the excise tax.
• Mandatory within 5 years from the Jan. 1, 2018
Excise Taxes on Minerals
P50/ metric ton (2018)
Domestic or imported P100/metric ton (2019)
coals and coke P150/ metric ton (2020)
(previously P10/metric ton)
Non-metallic minerals
4% (previously 2%)
and quarry resources
Metallic minerals 4% (previously 2%)
(copper/gold)
Indigenous petroleum 6% (previously 3%)
Automobiles
PREVIOUS TRAIN
Net manufacturer's
price/ Importer's Net manufacturer's price/
selling price Importer's selling price Rates
(net of excise and (net of excise and VAT)
VAT) Rates
< P 600K 2% < P600K 4%
>P 600K-1.1M 12K +20% >P600K-1M 10%
>P 1.1 M-P
112K +40% >P 1 M-P 4M 20%
2.1M
>P 2.1M 512 +60% >P 4M 50%

Automobiles
Previous TRAIN
Purely electric Regular rate exempt

50% of regular
Hybrid Regular rate
rate
Excluded from
Pick up Regular Rate
coverage

Sweetened Beverages
Using purely caloric and/or non-
P6 per liter
caloric sweeteners
Using purely or partly high
P12 per liter
fructose corn syrup
Using purely coconut sap sugar /
Exempt
purely steviol glycosides

Sweetened Beverages
Covered:
Locally manufactured – before removal from
place of production (SBs consumed within the
place of production subject also to ET)
Imported – before release from customs custody
Not covered: Beverages for export

Non-excisable Beverages
1. All milk products
2. 100% natural fruit/vegetable juices
3. Meal replacement and medically
indicated beverages
4. Ground coffee, instant soluble
coffee, and prepackaged powdered
coffee products

Excisable Beverages
1. Sweetened juice drinks, tea
2. All carbonated beverages (?water)
3. Flavored water
4. Energy & sports drinks
5. Cereal & grain beverages
6. Other powdered drinks (not milk,
coffee)
7. Non-alcoholic beverages with added
sugar
Sweetened Beverages
Administrative Requirements:
• Registration of New Brands/Variants
• Application for eATRIG
• New BIR Forms
• Excise Tax Return BIR Form 2200-S
• Excise Tax Removal Declaration (BIR Form 2299)
• Official Register Books/Transcript Sheets
• Every 8th of the following month
Filing/Payment: RDO of place of production
Cosmetic procedures for aesthetic reasons
Coverage:
• Invasive
directed solely towards
Cosmetic
improving, altering, or
Procedures;
enhancing the patient’s
• Surgeries; and appearance
• Body
enhancements

Cosmetic procedures for aesthetic reasons
Exclusions: necessary to ameliorate a deformity

arising from or directly related to, a
Non-invasive
congenital or developmental defect
Cosmetic OR or abnormality, a personal injury
Procedures
resulting from an accident or
trauma, or disfiguring disease,
tumor, virus or infection (see
enumerated in draft RR)

Invasive vs Non-invasive
Invasive Cosmetic Procedure

- surgery carried out by entering the body
through the skin or through a body cavity or
anatomical opening, but with the smallest
damage possible to these structures

Invasive Cosmetic Procedure
- Laser/Liposuction, Breast Augmentation/ Reduction,
Breastlift/Mastopexy, Buccal Fat Reduction, Buttocks/
Chin Augmentation, Facelift/Necklift, Featherlift –
Aptos – Thread Lift, Hair Restoration/Transplantation,
Blepharoplasty or Eyelid Surgery, Vulvovaginal
Surgery, Abdominoplasty or Tummy Tuck, Stem Cell
Auto Grafting, Rhinoplasty/Alar Trimming, Otoplasty
and Cobra Coglift.
Non-Invasive Cosmetic Procedure
- Conservative treatment, no incision into or
removal of tissue, or no break created in the
skin, no contact with mucosa or internal body
cavity beyond a natural or artificial body
orifice.

Non-Invasive Cosmetic Procedure
- Acupuncture Rejuvenation Therapy, Air Dissector,
Botox/Dysport, Collagen Induction Therapy, Dermal
Fillers, Embedded Protein Threads, Fotona 4d
Facelift, Fractional CO 2, Instalift, Restylane Skin
Booster, Sculpsure, Thermage, Time Capsule,
Ulthera, Ultra Form, Femilift, Thermiva, Lasers and
Light Treatments, Body Treatments/Contouring,
Cleanings/Facials, Peels, Injectables and Weight
Management Treatment.
Tax Base and Tax Rate
• Tax Base - Gross receipts derived from

performance of services, net of excise
tax and value added tax.
• Tax Rate – 5%
Person Liable to File a Return
Seller of Service/Service Provider
(Hospital/Clinic/Doctor)
Any person, whether individual or juridical entity,
performing the covered procedures
Excise Tax is considered an INDIRECT TAX: the service

provider who is the statutory bearer of the tax is expected to
shift the tax by billing the same to the customer-client.

Place of Filing of the Return and Payment of the Tax
Item Manner of Place of Filing and Payment of Tax
Filing
Tax Return - A. With Payment

BIR Form 1. For NCR – With AAB in RDO where taxpayer
Form No. Manual (Head Office) is registered
1620-XC 2. Outside NCR – AAB or LGU where taxpayer
(Monthly (head office) is registered.
Remittance B. Without Payment
Return of 1. For NCR - Excise Large Taxpayers Field
Final Operations Division (ELTFOD) for Large
Withholding Taxpayers
of Excise Tax 2. RDO for taxpayers in the NCR
on Cosmetic 3. Outside NCR - Excise Tax Area (EXTA) in
Procedures) Regional Offices for taxpayers
Place of Filing of the Return and Payment of the Tax
Item Manner of Filing Place of Filing and

Payment of Tax
Taxpayers filing via EFPS EFPS
Attachment -
Summary of Submission via email at
Invasive Electronically xcp.attachment@bir.gov.
Cosmetic ph
Procedures
Performed

Time for Filing of Return and Payment of Tax
Within ten (10) days following

the close of the month (for both
BIR Form No. 1620-XC and
attachment.

Documentary Stamp Tax
Rates were general doubled with a few
exceptions.

Before TRAIN
Sec 174 – On original P1.00 / P200 par value P2.00 / P200 par value
issue of of shares/actual value of shares/ actual
shares of stocks of shares value of shares
Sec 175 – On Sale P0.75 / P200 of par P1.50 / P200 of par value of
Agreements, Deliveries value of shares shares
or Transfer of Shares or Without par value: Without par value: 50% of
Certificate of Stock 25% of DST on original DST on original issue
issue
Sec 177– On Certifi- P0.50 /P200 face P1.00 /P200 face value of
cate of Profits or value of such such certificate
Interest in Property certificate
or Accumulations
P30 Before TRAIN
Section 178 – On bank
Check, Drafts, P 1.50 on each P3.00 on each
Certificate of Deposit document document
not bearing interest &
other instruments
Section 179‐ Stamp Tax P1.00 /P200 of issue P1.50 / P200 of issue
on All Debt Instruments price of the instrument price of the
instrument
Section 180 – Stamp Tax

on all bill of exchange P0.30 on each P200 P0.60 on each P200
or drafts face value of the bill face value of the bill
Before TRAIN
Section 181 ‐ Stamp Tax P0.30 on each P200 face P0.60on each P200
Upon Acceptance of Bills value of the bill face value of the bill
of
Exchange and Others
Section 182 ‐ Stamp Tax P0.30 on each P200 face P0.60 on each P200
on Foreign Bills of value of the bill face value of the bill
Exchange
and Letters of Credit

Before TRAIN
Section One time based on the amount of One time based on the amount of
183 ‐ On insurance insurance
Life
Insurance Exempt if ≤ P100,000, Exempt if ≤ P100,000,
Policies P10.00 if > P100,000 ≤ P300,000, P20.00 if > P100,000 ≤ P300,000,
P25.00 if > P300,000 ≤ P500,000, P50.00 if > P300,000 ≤ P500,000,
P50.00 if > P500,000 ≤ P750,000, P100.00 if > P500,000 ≤ P750,000,
P75.00 if > P750,000 ≤ P1,000,000, P150.00 if > P750,000 ≤ 1,000,000
P100.00 if > P1,000,000. P200.00 if > P1,000,000.
(As amended by R.A. 1001)

Before TRAIN
Sec 186 ‐ On Policies of For annuities: P0.50 / For annuities: P1.00 /
Annuities and P200 premium P200 premium
Pre‐Need Plans For pre-need plans: P0.20 For pre-need plans: P0.40
/P200 premium / P200 premium
Sec 188 ‐ On Certificates P15.00 on each certificate P30.00 on each

certificate
Sec 189 ‐ On Warehouse P15.00 / receipt P30.00 on each receipt

Receipts exceeding P200 exceeding P200

Before TRAIN
Sec 190 ‐ On Jai‐alai, Horse P0.10 / P1 cost of the ticket P0.20 / P1 cost of the ticket
Race Tickets, Lotto or
Other Authorized Numbers
Games
Sec 191 ‐ On Bills of Lading P1.00 if value of goods > P2.00 if value of goods
or Receipts P100 ≤ P1,000, > P100 ≤ P1,000,
P10.00 if value of goods P20.00 if value of goods
> P1,000. > P1,000.
Sec 192 ‐ On Proxies P15.00 on each proxy P30.00 on each proxy
Sec 193 ‐ On Powers of P5.00 on each power of P10.00 on each power of

Attorney attorney attorney

Before TRAIN
Sec 194 ‐ On Leases and P3.00 for first P2,000 and P6.00 for first P2,000 and
Other Hiring P1.00 / P1,000 in excess P2.00 /P1,000 in excess
Agreements
Sec 195 ‐ On Mortgages, P20.00 for first P5,000 and P40.00 for first P5,000 and
Pledges and P10.00 / P5,000 in excess P20.00 / P5,000 in excess
Deeds of Trust
Sec196 ‐ Deeds of sale, P15.00 / P1,000 No increase in rate

conveyances consideration/FMV
and donation of real Donation of real property is Donation of real property is
property exempt (no consideration). subject to DST, except those
exempt from Donor’s tax
under Section 101(A) & (B)
Before TRAIN
Sec 197 ‐ On P500.00 (addt’l P50.00/mo. in P1,000.00 (addt’l P100 /mo.
Charter excess of 6 months) if the in excess of 6 months) if the
Parties and registered gross tonnage (RGT) registered gross tonnage (RGT)
Similar of the ship/vessel ≤ 1,000, of the ship/vessel ≤ 1,000,
Instruments
P1,000.00 (addt’l P100.00/mo. in P2,000.00 (addt’l P200 /mo.
excess of 6 months) if the RGT > in excess of 6 months) if the RGT
1,000 ≤ 10,000 > 1,000 ≤ 10,000
P1,500.00 (addt’l P150.00/mo. in P3,000.00 (addt’l P300 /mo.

excess of 6 months) if the RGT > in excess of 6 months) if the RGT
10,000 > 10,000

Other Compliance and
Administrative Requirements

Keeping of Books of Accounts
Present Rules Proposed Rules
Simplified set of No option
bookkeeping
• Quarterly sales not
exceeding P50,000
Audit by independent CPA Audit by independent CPA

• Quarterly sales • Annual sales
exceeding P150,000 exceeding P3M

Invoicing Requirement
Present Rules TRAIN
Section 237. Issuance of receipts/invoices. • Transactions valued at P100

• A receipt or invoice shall be issued at • Electronic receipts/invoices to
least in duplicate for each sale valued at be implemented within 5
years/establishment of BIR
P25.00 or more
system
• Required Information: name, business
style, and address of customer if issued • Covered: LTs, Exporters, e-
to cover rentals, compensation or fees. Commerce
• If issued to VAT registered person, the TIN
• Digital record shall be kept by
of customer must be indicated in the purchasers, customers within 3
receipt and invoices (P1,000 or more years
sales)
Salient Provisions
Electronic Sales Reporting (Large Taxpayers and

Exporters)
• Taxpayers shall be required by the BIR to

electronically report their sales data to BIR’s
electronic system through the use of CRM/POS
machines.
• Within 5 years and establishment by the BIR of the
electronic sales reporting system

Penalty Provisions

Penalty Provisions
Penalty Interest
• Penalty interest rate shall be twice the legal rate
as set by BSP (currently at 6%, hence, interest
rate shall be 12%).
• Deficiency interest to be assessed from date
prescribed for payment or upon issuance of
notice and demand by CIR, whichever is earlier.

Penalty Provisions
Penalty: Attempt to Evade or Defeat Tax (Sec.

254)
• Increase of administrative fine from
P30k - P100k, to not less than P500k
but not more than P10M
• Imprisonment of from 2 - 4 years, to 6
– 10 years
Penalty Provisions
Penalty: Offenses on Printing of ORs/Invoices

• Increase of administrative fine from P1k –
P50k, to not less than P500k but not
more than P10M
• Imprisonment of from 2 - 4 years, to 6 –

10 years

Penalty Provisions
Penalty: Offenses on electronic sales

reporting
• 1/10 of 1% of annual net income/day, or
P10,000 whichever is higher
• Aggregate number of days of violation
exceed 180 days – permanent closure of
taxpayer
Penalty Provisions
Penalty: Offenses on Sales Suppression

Devices
• administrative fine from P500k - P10M
• Imprisonment of from 2 – 4 years

Penalty Provisions
Penalty: Offenses on Fuel Marking

• Sale, trade, delivery, distribution, transportation of
unmarked fuel in commercial quantity
Administrative fine from P2.5M – P10M
• Fuel markers without authority, counterfeited markers,
conduits to the above acts
Administrative fine from P2.5M – P5M plus imprisonment
of 4-8 years

Obtaining Information by the CIR
• Examination of returns/determination of
tax due
Can be done by the BIR notwithstanding any
law requiring prior authorization of any
government agency or instrumentality
• Inquiry on bank deposits not approved

Comments/Questions?

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Tax Reform for

Increasing Excise Tax on Compliance/

3 ©2017 Grant Thornton International Ltd. All rights reserved.

5 ©2017 Grant Thornton International Ltd. All rights reserved.

13thmonth pay and

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Basic Personal Additional Personal

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Premium Payments on Health

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Taxable Rate Rate

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Compensation P685 and P1,096 – P2,192 – P5,479 – P21,918 and

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All remuneration received for services

- Section 2 (A), RR 8-18

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The name by which the remuneration for services is

 Salaries, wages, honoraria, allowances,

 Does not include benefits subject to fringe

RR Nos. 08-2018 and 11-2018: The following income are

• 13th month pay and other bonuses amounting to

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Facilities or privileges furnished or offered by

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benefits shall not be included as items of

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• Medical cash allowance to • Medical cash allowance to

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2. Public sector - Employees with

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Definition of "statutory minimum wage“

Statutory minimum wage (SMW) refers to

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Tax Treatment prior to RR No. 11-2018

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TRAIN LAW as implemented by RR

Remains exempt from income tax on

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Tax Treatment per RR No. 11-2018

Basic Salary P 800,000

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< P3M VAT threshold > P3M VAT threshold

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Does not exceed P3M VAT threshold

Rules in electing the 8% income tax

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Rules in electing the 8% income tax

• If taxpayer opted for 8% income tax but Jan. 01 Jul 31 Dec. 31

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Rules in electing the 8% income tax

• Gross receipts – amount of money or its equivalent actually or

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Gross Receipts – not exceeding P3M

Gross Sales - Convenience Store P 800,000

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• Gross sales/receipts ₱2,500,000.00

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Taxable Income (using itemized deductions) ₱ 1,000,000

*cannot avail 8% income tax since subject to amusement tax on

Gross Receipts – exceeding P3M

Gross Sales - Convenience Store P 3,200,000