TAX REFORM FOR ACCELERATION

AND INCLUSION (Package 1)

(R.A. 10963)
 NIRC Provisions amended by TRAIN
 Income tax
Estate and donor’s taxes
Value added tax
Excise tax
Documentary stamp tax
Administrative provisions & penalties
 POWER AND AUTHORITY OF COMMISSIONER

NIRC - Sec. 5 (B) – Power of CIR to obtain information,

summon and examine witnesses

TRAIN - retained but with additional provision:

- The CDA shall submit to BIR and DOF a tax incentive
report, which shall include income tax, vat, and other
tax incentives availed of by cooperatives registered
and enjoying incentives under RA 6938
.
 NIRC – Sec. 6 – Power to make assessments and
examination of taxpayer.

 TRAIN – retained with additional requirements –

* notwithstanding any law requiring the prior

Authorization of any gov’t. agency or instrumentality
 NIRC - Power of the Comm. to determine fair
market value of real properties –

TRAIN - retained; but with additional

requirements -
 These requirements are: MAPPVA
* Mandatory consultation with private and public
appraisers
* Prior notice to affected taxpayers
* publication or posting of adjustments
* basis of valuation and records of consultation
- public records open to public
* automatic adjustment once every 3 years
 INDIVIDUAL INCOME TAX

Under the TRAIN LAW as implemented

By Rev. Reg. No. 8-2018 (1/25/18)
 TAXABLE INCOME (Sec. 3 RR)

A. Individual Citizen and Resident Alien:

* Reduction of income tax rate –

P250,000 and below - exempt

NIRC - rate - 5% to 32%
* over P250,000 but not over P500,000
Tax due- P50,000 + 30% of excess over P250,000

TRAIN LAW – For Jan 1, 2018 to Dec. 31, 2022 - 0% to 35%

* Not over P250,000 - 0% - exempt
* over P250,000 but not over P400,000
Tax due : 20% of excess of P250,000

* over P800,000 but not over P2M –

Tax Due = P130,000 + 30% of excess over
P800,000
 FOR 2023 ONWARDS - 0% to 35%

* not over P 250,000 - 0% exempt

* over P250,000 not over P400,000

Tax due : 15% of excess over P250,000


 SELF-EMPLOYED/PROFESSIONALS:

 TRAIN –Purely Self-employed/Professionals:

** gross receipts and other non-operating income
do not exceed the VAT threshold of P3M –
TP – has option to avail -
a) 8% income tax on gross sales/receipts over
P250,000; OR
b) based on graduated income tax rate as amended
 When self- employed can avail of 8% tax on gross
sales or gross receipts:

* Signify his intention to avail of 8% option

on 1st Quarter Percentage or Income tax return
or initial quarter return.
* option is irrevocable
* Financial Statement is not required in final
income tax return
 Who cannot avail of 8% Option:

1. Vat registered taxpayer

2. subject to percentage tax under Title V
(except those under Sec. 116 )
3. partners in GPP
 FOR MIXED INCOME EARNERS: (compensation
income and business and professional income)

 * compensation income – graduated income tax

rate -0% to 35%; AND
* business and prof. income – gross sales/receipts
do not exceed VAT threshold of P3M –
TP has option – 8% on gross or graduated rate
 SEC. 24 (B)(1) –

 NIRC – PCSO and Lotto winnings

** exempt from 20% FIT

TRAIN – PCSO and Lotto winnings

** in excess of P10,000 – subject to 20% FIT
 SEC. 24 ( C) : Capital gains on sale of shares
of DC not traded through stock exchange

NIRC – DC - net capital gains realized

not over P100,000 -5%; over P100,000 – 10%

TRAIN - Flat rate – 15% CGT

 SEC. 25 (C), (D), (E) –

NIRC - Preferential Tax Rate

Aliens and Filipinos employed by
RHQ, ROHQ; OBU, POC –
- 15% FWT on GCI
 TRAIN - Preferential Tax Rate

 a) enjoyed by present and future qualified

employees of existing RHQ, ROHQ; OBU, POC;

b) not applicable to those registered with the

SEC after Jan. 1, 2018.
Sec. 25 (C ), (D), (E) – Preferential income tax rate of 15%
on employees of RHQ, ROHQ, Off shore Banking Units
and Petroleum Contractors and subcontractors.

original version of TRAIN LAW –Retained BUT VETOED

BY PRES. DUTERTE -
Ground: violative of equal protection
- “these firms should follow the regular
rates applicable to individual taxpayers”
 SEC. 31 - Definition of Taxable Income
 SEC. 35 – Removal of PE and AE
 TRAIN - removed - “ and/or personal and
additional exemptions”

Effect: no need to prove TP has qualified

dependent
SECTION 32 (B) –

 NIRC – 13TH month tax exempt and

Other benefits - P82,000

TRAIN - increased to P90,000

 SEC. 33 (A) - Fringe benefit tax 32%

TRAIN – increased to 35% - Jan. 1, 2018

SEC. 34 (M) – health/hospitalization insurance

premium –P2,400 (P200/mo.) with gross family
income of P250,000 –

TRAIN – removed said deduction

SEC. 51 – Filing of individual ITR
NIRC- gross income does not exceed
PE and AE - not required to file ITR

TRAIN – taxable income subject to 0% (not

exceed P250,000 - not required to file ITR
SEC. 51 - Additional provision in TRAIN

- 4 page ITR in paper/electronic form –contain-

* personal profile
* gross income –
* allowable deductions
* taxable income
* income tax due and payable
 SEC. 51-A – New provision – not found in NIRC
Substituted Filing of ITR for:
* individual TP
* purely compensation income regardless of amount
* only one employer in the Phil. For TY
* correctly withheld income tax

Certificate of Withholding filed by employer duly

stamped “RECEIVED” by BIR – substituted filing
 SEC. 56 (A) (2) –
 Installment payment of tax due –
exceeds P2,000

- 1st inst. – at the time of filing of Itr

- 2nd inst. - NIRC – July 15
TRAIN – October 15
 SEC. 62 – Personal Exemption for
Estates and Trusts –

NIRC - P50,000

TRAIN – PE is removed
 SEC. 74 –Declaration of Income tax for Individuals –
 NIRC – April 15 of the taxable year
paid in 4 installments - time of dec. -April 15;
Aug. 15; Nov. 15; April 15 succeeding year

TRAIN – May 15 of the taxable year;

paid in 4 installments – time of dec. May 15
Aug. 15, Nov. 15; May 15 of succeeding year
 PERSONAL AND CORPORATE INCOME TAX

Sec. 34 (L) Optional Standard Deduction-

NIRC and TRAIN – individuals except NRA
-40% of gross sales/receipts
corporations- 40% of gross income
GPP and partners- avail of OSD only once
 SEC. 57- Withholding of CWT at source:

NIRC – CWT of payor-corporation/persons

rate – 1% not more than 32%

TRAIN - effective Jan. 1, 2018

rate -1% not more than 15%
 CORPORATE INCOME TAX –

Sec. 27 (C ) – GOCC exempt from corporate

income tax –

NIRC – SSS, GSIS, PHIC, PCSO

TRAIN – PCSO not exempt anymore

 SEC. 27 (D) (1) – FIT on interest on EFCD

NIRC – interest received by DC from depository

bank under EFCD system – 7.5% final
tax

TRAIN - increased to 15%

 SEC. 27 (D) (2) - CGT – sale of shares of stock
 Not traded in stock exchange –

TRAIN- one rate – 15%

 SECTION 52 – Filing of Corporate ITR
NIRC and TRAIN - a) quarterly and
b)
Final/adjustment return –
Additional provision in TRAIN:
1) 4 pages
2) Company profile and information
There requirements shall not affect implementation
of TIMTA
 SEC. 58 – Filing of return and payment of tax
NIRC – return for FWT & CWT –
- within 10 days after the end of the month

TRAIN – not later than the last day of the month

following the close of quarter

Note: provision that Comm. may require payment

at more frequent intervals was removed
  ESTATE TAX –
SEC. 84 – Rates of estate tax

NIRC – graduated schedule based on value

of NET ESTATE -0% (below P200,000) to 20%

TRAIN – 6% of NET ESTATE

 SEC. 86 (A) - Allowable Deductions – RC, NRC, RA

NIRC
TRAIN

1. Standard - P1M - P5M

2. ELIT
3. claims against the estate - same
4. Claims against insolvent debtor - same
5. Unpaid mortgages - same or indebtedness
on property
6. Property previously taxed - same
7. Family Home – P1M - P10M
8. Transfer for public use - same
9. Benefits received by heirs under RA 4917 (retirement benefits of private firm
 SEC. 86 (B) – Allowable Deductions – NRA
NIRC
TRAIN
1. ELIT -
Standard – P500,000
2. property prev. taxed - claims against the estate

claims against insolvent debtor

unpaid mortgages
3. transfer for public use - same
Note- above deductions must
be included in the estate
tax return . - deleted
 SEC. 89 – Notice Of Death

 NIRC – 2 months after death or after qualifying

as executor/administrator In all cases; or
though exempt from tax, the gross value of
estate exceeds P20,000.

TRAIN - notice of death is removed

 SEC. 90 – Attachment –

NIRC – gross value exceeds P2M - CPA certification

TRAIN – increased to P5M - CPA certification

 SEC. 90 (B) - Time for Filing of Estate tax Return

NIRC – 6 months from death

TRAIN - one (1) year from death

New provision- SEC. 91 (C ) – installment
- WITHIN 2 YEARS from statutory date of payment
w/o civil penalty and interest.
 SEC. 97 - Payment of tax before transfer of
Shares bonds or rights

NIRC – bank deposit alone or jointly with another

bank will not allow withdrawal unless estate
due thereon was paid per BIR certification

TRAIN – bank shall allow withdrawal subject to

final withholding tax of 6% thereof.
 DONOR’S TAX
SEC. 99 – Rates of Tax – annual total gifts
NIRC – graduated – 0% to 15% - related taxpayer
P100,000 and below 0% ; stranger- 30%

TRAIN – 6% -annual total gifts

P250,000 & below – exempt
regardless whether stranger or not
 SEC. 100 – Exemption of certain gifts

 NIRC – dowries –first P10,000 – exempt

 TRAIN – dowries – not exempt

  VALUE-ADDED TAX

SEC. 106 (A) Rate and Base of Tax –

TRAIN – retained only the first sentence

of the first paragraph of Sec. 106 (A)
SEC. 106 (A) (2) – Zero rated sale of goods/properties
Sec. 106 (A) (2) (a) (1) - retained

TRAIN – new provision – Sec. 106 (A) (2) (a) (2) -

“(2) Sale and deliver of goods to:

(i) Regional enterprises within a separate customs
territory as provided under special laws;
and
Thus –

NIRC Sec. 106 (A) (2) (a) (2) and (3)

TRAIN –now Sec. 106 (A)(2)(a)(3) and (4)

NIRC - Sec. 106 (A)(2)(a)(4) – Sale of gold to BSP

no longer zero-rated but vat-exempt
Additional provision in Sec. 106 (A)(2)(a) –
 -subparagraphs (3), (4) and (5) shall be subject to 12% vat and no
longer be consideredexport sale subject to 0% vat rate upon
satisfaction……..
a) establishment/implementation of enhanced VAT refund
system – grants vat refund within 90 days from the filing of
application;
b) all pending vat refund claims as of Dec. 31, 2017
Shall be fully settled in cash by Dec. 31, 2019
 TRAIN – the following provisions were deleted:
 Sec. 106 (A) (2) (a) (4) –sale of gold to BSP –
This is now VAT EXEMPT

Sec. 106 (A) (2) (b)- Foreign currency denominated

sale – deleted.
 Sec. 108 (A) – Definition of sale or exchange
of services
TRAIN – include “sales of electricity by generation
companies, transmission by any entity,
and distribution companies, including
electric cooperatives.
 (ii) Regional enterprises within tourism enterprise
zones as declared by the “Tourism Infracture
And Enterprise Zone Authority (TIEZA)” subject
to the provisions under Republic Act No. 9593
of the Tourism Act of 2009
 SEC. 108 (B) – ZERO-RATED SALE OF SERVICES

 NIRC – Sec. 108 (B) (1) to (7) –

 TRAIN – retained, but with additional “proviso” in

sub-par. (4) – “provided, that these services shall
be exclusively for international shipping or air
transport operations.
 Additional provisions:
 “Provided, That sub-paragraphs (B)(1) and (B)(5)
shall be subject to 12% vat and no longer zero (0%)
per cent VAT upon satisfaction… (see Sec. 106 (B)

DOF to establish a VAT REFUNED CENTER in BIR & BOC

- Process and grant cash refund or creditable input tax
-** 5% of total vat collection of BIR & BOC from the
 Immediately preceding year shall be
 A) automatically appropriated annually
 B) treated as special account or as trust receipts to
 Fund claims for VAT refund.

** BIR & BOC – submit to Congressional Oversight Committee on the

Comprehensive Tax Reform Program – QUARTERLY REPORT of all
Pending claims for refund and unused fund.
 SEC. 109 – VAT EXEMPT TRANSACTIONS
TRAIN – Sec. 109 (D) – added the ff:
(D) - x x x, tools of trade, occupation or employment, x x x
belonging to persons coming to settle in the Phil. Or Filipinos
of their families and dependents who ae now residents or
citizens of other countries, such parties hereainafter referred
to as overseas Filipinos, in quantities and of the class suitable
to the profession, rank or position of the persons importing
said items for their own use and not for barter or sale, x x
xarriving within a reasonable time. ….
 BOC upon presentation of satisfactory proof that such
 Persons are coming to settle in the Phil. And the goods
 Are brought from former abode – exempt

 vehicles, vessels, aircraft, machineries and other

 Similar goods for use in manufacture - subject to duties. Taxes
and charges.
 SEC. 109 (F)
 - sale of real properties not primarily held for sale
or held for lease in the ordinary course of trade or
business; or real property utilized for low-cost and
Socialized housing, residential lot – P1.5M & below
- house and lot, and other residential dwellings-
- P2.5M & below
Beginning Jan. 1, 2021:-

a) Vat exemption of low cost and socialized

housing and residential lot -not apply anymore
b) Threshold in selling price for vat exemption–
--house and lot and other residential dwellings –
reduced to P2M & below

NOTE: Threshold shall be adjusted every 3 years

 SEC. 109 (Q) – Threshold on lease of residential
 Unit – P12,8000 increased to P15,000/mo.

SEC. 109 (U) – importation of fuel, goods and supplies x x x

Additional proviso: “Provided, that the fuel, goods,
and supplies shall be used for international
shipping or air transport operations.”
 TRAIN – Additional exempt transactions –
 (W) – Sale/lease of goods and services to SC & PWD

(X) –Transfer of property in merger or consolidation

under Sec. 40 (C )(2) of NIRC/tax-free exchange)

(Y) Association dues, membership fee and other

assessments/charges collected by homeowners
associations and condominium corporations.
 (Z) – Sale of gold to BSP

 (AA) Sale of drugs and medicines prescribed for diabetes, high

cholesterol, and hypertension beginning Jan. 1, 2019;

(BB) Sale/lease of goods/properties or the performance of services

not mentioned in the preceding paragraphs
–gross annual sales/receipts – P3M & below.
 SEC. 110 (A)(2)(b) – amortization of input vat on the
purchase of goods with costs exceeding P1M
 based on its useful life or 60 months whichever is
 Shorter.

 TRAIN – amortization up to December 31, 2021.

unutilized input vat on capital goods shall be
allowed to apply as schedules until fully utilized.
 SEC. 112 (C ) – Comm. shall grant refund or issue
TCC for within 120 days from submission of
complete documents.

TRAIN –* period reduced to 90 days

*grant of tax credit is removed
If denied – Comm. must state in writing the legal
and factual basis for the denial
 NIRC –failure to act on claim for refund or tax credit –
deemed denial

TRAIN - deemed denial of failure to act –removed

Additional – failure on the part of any BIR official, agent,
or employee to act on the application for
refund within 90 days– punishable under Sec. 269 of the
Tax Code (adm. Fine and imprisonment)
  SEC. 114 (A) – Return and payment of Vat

NIRC – return filed quarterly within 25 days

following the close of the quarter
PAYMENT – monthly upon filing of
monthly
declaration.
TRAIN – Jan. 1, 2023 – within 25 days following the
close of each taxasble quarter.
 SEC. 114 (B) – vat payable by the Government, pol.
Subd., agencies, GI, OGCC – shall deduct and withhold
a final VAT of 5% of the gross payment

TRAIN – Jan 1, 2021- VAT withholding system –shift

from final to creditable system.
Payments/purchases of goods and services arising
From projects of ODA – not subject to final withholding tax
system.
  OTHER PERCENTAGE TAXES

Sec. 116 – 3% gross receipts – those exempt from vat

except cooperatives

TRAIN – Pres. VETOED exemption of prof. and self-

employed with gross receipts not exceeding P500k
exempt from this tax.
 SEC. 127 – Stock transaction tax
 NIRC – ½ of 1% of gross selling price or gross value in
money - sale, barter, exchange of shares of stock listed
and traded through the local stock exchange

 TRAIN – increased to 6/10 of 1%

 SEC. 128 – Power of Comm. to prescribe rules
and regulation on intervals for time of filing and
scheme of payment.

TRAIN - removed
  EXCISE TAXES
Sec. 129 – on goods and services

TRAIN – also imposed to services performed in

the Philippines
SEC. 145 (B) AND (C )- cigarette
packed by hand and by machine

TRAIN –
1/1/2018 - 6/30/18 - P32.50/pack
7/1/18 - 12/31/19 - 35/pk
1/1/20 - 12/31/21 - 37.50/pk
1/1/22 - 12/31/22 - 40/pk.
Note: from 1/20/24 – increase by 4% every year
TRAIN law –
 *increased the excise taxes on :
 Petroleum products – Sec. 148

* Sec. 148-A – new provision – Marking of petroleum

products
Use of fraudulent marker – prima facie evidence
that the same has been withdrawn/imported without
payment of taxes and duties.
 PRODUCTS COVERED BY SSB EXCISE TAX
sweetened juice drink
other beverages:
cartooned beverages with sugar sweeteners
flavored water
sports drinks
powdered drinks not classified as milk
cereal and grain beverages
non-alcoholic beverages containing sugar
 NOT COVERED BY SSB EXCISE TAX

 3-in-1 coffee
 Milk
 100% natural joice
 DOCUMENTARY STAMP TAX –

 Under TRAIN – increased the tax payable

 REVENUE IMPACT OF TRAIN LAW

 2018 - P128.8 B
 2019 - 175.1 B
 2020 - 221.7 B
 2021 - 224.3 B
 2022 - 219.2 B
 PHP969.1 B

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