MMSU TRAIN Seminar – Banggawan, Rex B.

LIST OF CHANGES IN THE NIRC UNDER RA 10963

INCOME TAXATION
A. Individual income taxation
1. Change in the personal income tax table.
- For Year 2018 - 2022

- For Year 2023 onwards

Note: First P250,000 annual taxable income = exempt.

2. Personal exemption and PHHI are now part of P250,000 exemption and
shall no longer be deductible.
3. 13th month pay and other benefits exemption from P82,000 to P90,000
4. Imposition of 20% final tax on PCSO and lotto winnings.
5. Final tax of 7.5% to 15% final tax on interest income from FCDU.
6. 15% CGT on sale of stocks directly to buyer and .6% of sale of stocks
through PSE.
7. No more 15% tax on special aliens. Proposal to retain previously existing
SAs was repealed by the President.
8. On de minimis (RR11-2018)

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MMSU TRAIN Seminar – Banggawan, Rex B.

a. Medical cash allowance to dependents – P1,500 per employee or

P250/month
b. Rice = P2,000 per month or one sack with value not exceeding P2,000
per month
c. Clothing = P6,000 per annum
9. Increase the FBT from 32% to 35%.
10.Unnecessary provision: OSD shall be availed only once by the GPP and the
partner.
11.Removal of P20,000 personal exemption on estate and trust.
12.Optional 8% tax on individuals with gross sales/receipt not exceeding P3M.
The tax shall be applied above P250,000. (Annual option)
Regulatory updates
- Withholding tax rates on individuals lowered to 8% from 10%/15%. For
corporations, same rates as old (10%/15%).

B. Corporate income taxation

1. PCSO is no longer an exempt GOCC.
2. Final tax on FCDU interest income to 15%.
3. 15% CGT on sales of stocks directly to buyer and .6% on sale of stocks
through PSE.

TRANSFER TAXATION
A. Estate taxation
1. Simplification of the tax bracket to a 6% flat rate on net estate.
2. RR 12-2018 on gross estate valuation:
o Reinstatement of average price on listed shares (high and low)
o Removal of the net asset value method (ignore appraisal surplus and
remove preference share value in book value computation for
unlisted common stocks)
3. Removal of expenses (funeral, judicial and medical) and increase in
standard deduction to P5M

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MMSU TRAIN Seminar – Banggawan, Rex B.

o Retained CAIP, CAE, mortgage and indebtedness, VD, TFPU, FH,

RA4917
4. Family home deduction to P10M (no more barangay certification
requirement)
5. NRA decedents (proportional ELIT is accordingly revised)
o Allows a prorated CAE, mortgage & indebtedness, CAIP
o A standard deduction of P500,000 is introduced.
6. No more notice of death.
7. P200,000 estate tax return filing threshold is deleted; meaning, file
always.
8. CPA certification threshold moved to P5,000,000.
9. Filing deadline extension from 6 months to 1 year.
10.Installment payment of estate tax. Payment may be allowed in two
years from filing without civil penalties and interest. (RR12-2018
provides for monthly, quarterly, or annual installments)
11.Removes the P20,000 limit on money that may be withdrawn from the
decedent’s account but and allows a withdrawal of any amount but is
subject to a final withholding tax of 6%.
o RR12-2018 provides for exemption on this rule if the bank account is
included in GE and the estate tax is paid thereon.
B. Donor’s taxation
1. Simplification of tax table to 6% tax in excess of P250,000. The first
P250,000 of the cumulative donation is exempt from 6%.
2. A bona fide, at arm’s length and donative-intent free sale, exchange or
other transfer of other property made in the ordinary course of business
shall be considered made for full and adequate consideration in money
and money’s worth and is not subject to donor’s tax.
3. Removal of relatives and stranger distinction.
4. No more deduction for dowries of P10,000.
5. Donors engaged in business to qualified donee institutions shall give
notice of donation for every donation worth at least P50,000 to the RDO
which has jurisdiction over the place of business within 30 days after the
receipt of the qualified donee institutions certificate of donation.

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MMSU TRAIN Seminar – Banggawan, Rex B.

RETURNS AND PAYMENT OF TAX

1. Reduction of ITR pages from 5 to a maximum of 4. This rule is also specified
with corporate taxpayers.
2. Adjustment of second installment of tax for both individuals and
corporations on or before July 15 to October 15 following the close of the
calendar year.
3. Withholding tax rates on income payments:
a. To natural persons = not less than 1% to nor more than 32%
b. To juridical persons = not less than 1% to not more than 15%
o RR11-2018
▪ Talent fees shall be counted as supplemental compensation if the
recipient is an employee.
▪ New rate structure for professional fees, talent fees, for services
rendered
● Individuals (Up to 3M GI for current year 5%, if more than 10%)
o Those with not more than P3M are required to submit a
sworn declaration of his or her gross sales or receipt to all
payors before January 15 or before the payment of fees or
commissions of each year.
o Without this declaration, they shall be subject to the 10%
withholding rate.
● Corporations (Up to P720,000 – 10%; more than P720,000 –
15%)
o For less than P720,000, responsible official shall submit
declaration to that effect and shall submit the same
together with its COR to that to all payors before January 1
of the year.
▪ Not subject to withholding if individual seller-income
payee/earner derives income from a lone income payor and total
income payment is less than P250,000 during the taxable year.
Income payee’s sworn declaration is that sales or receipt will not
exceed P250,000 is needed. Withholding will commence on the
excess when gross income exceeds P250,000 during the year.

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▪ Withholding tax statement (3 copies) is required of withholding

agents within 20 days from the close of the quarter.
4. Uniform period for the filing of final and creditable withholding tax.
Payment shall be made not later than the last day of the month following
the close of the quarter during with the withholding was made.
5. Adjustment of required filing of declaration of estimated income for self-
employed and mixed income earner for the current taxable year from on or
before April 15 to on or before May 15 of the same taxable year.
6. Adjustment of the final adjustment return to be filed on May 15 of the
following year. This is the now the new deadline of the ITR.
BUSINESS TAXATION
1. Indirect exports re-classed from 0% to 12%.
a. Sale of raw material or packaging materials to a non-resident buyer
for delivery to a resident local export-oriented enterprise.
b. Sale of raw material or packaging materials to a local export-oriented
enterprise whose export sales exceed 70% of total annual
production.
c. Export sales under EO 226 and other special laws.
2. Provision for the export treatment of goods to registered enterprises within
a separate customs territory (PEZA and TIEZA) is vetoed.
3. Sale of gold to BSP is reclassified from zero-rated to exempt.
4. Removal of foreign currency denominated sales from zero-rating.
5. Additions to VAT-exempt transactions:
a. Sale or lease of goods and services to senior citizens and persons
with disabilities
b. Transfer of property in pursuant to a plan of merger and
consolidation (acquisition of control with up to 4 other persons)
i. Property for stocks
ii. Stocks for stocks
iii. Security for stocks
c. Association dues, membership dues, and other assessment and
charges collected by homeowners association and condominium
corporations
d. Sale of gold to BSP

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MMSU TRAIN Seminar – Banggawan, Rex B.

e. Sale of drugs and medicines prescribed for diabetes, high cholesterol

and hypertension (effective Jan. 1. 2019)
6. Reduction of the P3,199,200 VAT threshold on sale of residential properties
to P2M but to be adjusted by inflation every three years.
7. Increase of lease threshold from P12,800 to P15,000 with no CPI
adjustment thereafter.
8. Inclusion of the sale of electricity in the definition of sale or exchange of
services.
9. VAT refund period of 120 days to 90 days.
10.Amortization of deferred input VAT shall be only until December 31, 2021.
Those with existing deferred input VAT shall amortize the same until fully
utilized.
11.Shifts the VAT withholding system from final to creditable (effective
January 1, 2021). Payments for goods and services arising from Official
Development Assistance (ODA)-funded projects shall not be subject to the
final withholding VAT.
12.Exemption on self-employed individuals (SEPs) and/or gross receipts not
exceeding P500,000 from 3% gross receipt tax effective Jan. 19, 2019 is
vetoed. Consequently, they will pay 3% percentage tax.
13.VAT will be paid quarterly every 25 days following the close of each taxable
quarter effective January 21, 2023.
Key features on VAT revision:
- Limitation of the exemptions to food, agriculture, health and educational
services and eliminates exemptions that directly target individuals, firms or
those that have no or little economic justification.
DOCUMENTARY STAMP TAX (related to income tax)
1. Original issue of stocks = double rate (P4/P200 of par value).
2. Sale of stocks = double rate (P3/P200 of par value)
3. Stamp on life insurance policies = (P1/P200 of amount insured)
4. DST on sale of real property was not adjusted.
5. Donation of real property is now subject to the same DST on sale or
conveyances of real property; but donations exempt (i.e. deductions from
gross gift under the NIRC) from donor’s tax are exempt from DST on
donation.

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MMSU TRAIN Seminar – Banggawan, Rex B.

ON TAX ADMINISTRATION
1. CDA shall now submit a tax incentive report to the BIR and the DOF to be
part of the Tax Incentive Management and Transparency Act (TIMTA).
2. Automatic adjustment of zonal value every three years subject to
publication and posting requirements for validity.
3. Establishment of VAT refund center in the BIR and the BOC and the
earmarking of 5% of the total collection for the purpose of funding claims
for VAT refund. Unused fund shall revert to the general fund.
4. Threshold on CPA certification of ITR moved from P150,000/quarter sales
or receipts to P3M annual sales. No more threshold before taxpayers are
required to keep books of accounts.
5. Requirement on issuance of official receipts – from P25 to P100.
6. Electronic sales reporting for taxpayers engaged in export of goods and
services and large taxpayers at their own expense within 5 years of the
effectivity of the TRAIN (Jan. 1, 2023)

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