TAX REFORM FOR

ACCELERATION AND
INCLUSION (TRAIN)
DOF PROPOSED TAX REFORM PACKAGE 1
 Reduction of Personal Income Tax and shift to
simplified PIT system
 Limit on Vat zero rating to direct exporters and
expansion of VAT Base
 Reduction in Donors Tax and Estate Tax
 Increase in Excise Tax on Automobiles and
Petroleum
 Tax on sweetened beverages and invasive cosmetic
procedures
 Increase in documentary stamp
 Changes in Documentary requirements and penalties
 NIRC NIRC TRAIN
Provision
Section 24 Taxable income of individuals are Revised personal income
Income tax subject to the following graduated tax brackets of 2018-2022:
rates on rates:
individual Tax Schedule Tax Schedule effective
citizen and Not over P10,000 5% January 1, 2018 to
individual December 31, 2022
Over P10,000 but P500 + 10% of the
resident alien not over P30,000 excess over
of the P10,000 Not over 0%
Philippines Over P30,000 but P2,500 + 15% of
P250,000
not over P70,000 the excess over
P30,000

Over P70,000 but P8,500 + 20% of

not over P140,000 the excess over
P70,000
Over P140,000 but P22,500 + 25% of
not over P250,000 the excess over
P140,000
 NIRC NIRC TRAIN
Provisio
n
Section 24 Taxable income of Revised personal income tax
Income tax individuals are subject to brackets of 2018-2022:
rates on the following graduated
individual rates: Tax Schedule effective January 1, 2018 to
December 31, 2022
citizen and Tax Schedule
individual Over P250,000 but 20% of the excess over
Over P50,000 + not over P400000 P250,000
resident
alien of the P250,000 but 30% of the Over P400,000 but P30,000 + 25% of the
Philippines not over excess over not over P800,000 excess over P400,000
P500,000 P250,000
Over P800,000 but P130,000 + 30% of the
Over P125,000 + not over P2million excess over P800,000
P500,000 32% of the
excess over Over P2Million but P490,000 + 32% of the
P500,000 not over P8Million excess over P2Million

Over P8Million P2,410,000 + 35% of

the excess over
P8Million
NIRC Provision NIRC TRAIN

Section 24 For 2023 onwards:

Income tax rates Tax Schedule effective January 1, 2023 onwards
on individual
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
EXEMPTION DEDUCTION FROM GROSS
INCOME

Removed the following:

Personal and
Additional
Exemptions

Premium payments on
health and/or
hospitalization Insurance
amounting to Php 2,400
per family
R.A. NO. 10963 PERSONAL INCOME TAX
R.A. NO. 10963 PERSONAL INCOME TAX
R.A. NO. 10963 PERSONAL INCOME TAX
INDIVIDUAL INCOME OF SELF-
EMPLOYED/PROFESSIONALS

Gross Sales/receipts
≤ P3M
(optional)

8% Income Tax on
gross sales/receipts in Graduated income
excess of P250k* tax rates (0% - 35%)

 Note: Mixed income earners the phrase “in excess

of P250k” is not applicable. Thus for Mixed
Income earners the 8% income tax is on the
entire gross sales/ receipts
INDIVIDUAL INCOME OF SELF-
EMPLOYED/PROFESSIONALS
Under RR No. 8-2018 dated January 25, 2018
 Taxpayer must elect the 8% income tax rate in the 1st Qtr
percentage or income tax returns or on initial qtr return
after commencement o new business/practice profession.
Otherwise, he shall be considered as having availed the
graduated rates.
 8% Income Tax rate is NOT available to:

1. Vat-registered taxpayer, regardless of amount of gross

sales/receipts.
2. Taxpayer who is subject to Other Percentage Taxes
3. Partners of General Professional Partnership by virtue
of their distributive share from GPP which is already net of
cost and expenses.
INDIVIDUAL INCOME OF SELF-
EMPLOYED/PROFESSIONALS
INDIVIDUAL INCOME OF SELF-
EMPLOYED/PROFESSIONALS
INDIVIDUAL INCOME OF SELF-
EMPLOYED/PROFESSIONALS
INDIVIDUAL INCOME OF SELF-
EMPLOYED/PROFESSIONALS
INDIVIDUAL INCOME OF SELF-
EMPLOYED/PROFESSIONALS
PASSIVE INCOME TAX RATES
TYPE OF INCOME 1997 TAX CODE RA NO. 10963
Sale of shares of First 15% CGT
stock not traded in P100k – 5% CGT (Applies to citizen,
the stock exchange resident aliens,
In excess of P100k nonresident aliens
-10% CGT and domestic
corporation)
Interest Income from 7.5% final tax 15% Final Tax
expanded Foreign (Applies to resident
Currency Deposit citizen, resident
Units (FCDU) aliens, domestic
corporation)
Briefing on RA 10963: Tax Reform
for Acceleration and Inclusion
(TRAIN) – Value Added Tax
 Value Added Tax

NIRC NIRC TRAIN

Provision
Section 110 The input tax on Amortization of input VAT
(A)(2)(b) the purchase of shall only be allowed until
Amortization capital goods with December 31, 2021.
of Input VAT a cost exceeding
from P1,000,000.00 After such date, taxpayers
Purchases of shall be amortized with unutilized input VAT on
Capital based on its useful capital goods purchased or
Goods life or 60 months, imported shall be allowed to
whichever is apply the same as
shorter. scheduled until fully utilized.
 NIRC Provision NIRC TRAIN

Section 112 The Commissioner shall  The period of granting by the

Refunds or Tax grant a refund or issue a Commissioner of refunds is decreased to
Credit of Input VAT tax credit certificate for 90 days (from 120 days) from the date of
creditable input taxes submission of complete documents in
within 120 days from the support of 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
state in writing the legal and factual basis for
denial.
 NIRC NIRC TRAIN
Provision
Section 112 Failure on the The deemed denial of failure to
Refunds or part of the act on the application is
Tax Credit of Commissioner removed.
Input VAT to act on the
application Additional provision:
within the period
prescribed shall Failure on the part of any
be deemed a official, agent, or employee of
denial of the the BIR to act on the
application. application within the ninety
(90) – day period shall be
punishable under Section 269
of the Tax Code
(administrative fine and
 NIRC Provision NIRC TRAIN

Section 114 (A) VAT taxpayers shall Beginning January 1, 2023, the filing
Return and file quarterly return and payment shall be done within 25
Payment of VAT within 25 days days following the close of each
following the close of taxable quarter.
each taxable quarter,
while payment of the
VAT shall be made on
a monthly basis upon
filing of monthly VAT
declaration.
 Documentary Stamp

NIRC Provision NIRC TRAIN

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 days or a fraction of 365 days
for instruments with for instruments with
term of less than 1 year term of less than 1 year
Automobiles
Based on the Net Manufacturer’s Price/Importer’s Selling Price

RR 25-2003 TRAIN
Up to P600
2% P0 up to P600,000 4%
Thousand
Over P600,000 P 12,000 + 20%
Over P600,000
up to in excess of 10%
up to P1,000,000
P 1,100,000 P 600,000

P112,000+ 40%
Over P 1,100,000 Over P1,000,000
in excess of 20%
Up to P2,100,000 up to P4,000,000
P1,100,000

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
other motive power: provided, that, for purposes of this
Act, a Hybrid Electric Vehicle must be able to propel itself

31
Automobiles
from a stationary condition using solely electric motor

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 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
SAMPLE COMPUTATION
Net Old Law TRAIN
Manufacturing
Selling Price
P600,000.00 P12,000.00 P24,000.00

P1,000,000.00 P92,000.00 P100,000.00

P1,640,000.00 P328,000.00 P328,000.00

P2,000,000.00 P472,000.00 P400,000.00

P3,000,000.00 P1,050,000.00 P600,000.00

P4,000.000.00 P1,650,000.00 P800,000.00

P5,000,000.00 P2,252,000.00 P2,500,000.00

Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January Januar
2012 1, 2018 1, 2019 y 1,
2020
(a) Lubricating oils and greases, including P 4.50
but not 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 P 8.00 P 9.00 P 10.00
or weight.

(a.1) Locally produced or imported oils P 4.50

previously taxed but are subsequently
reprocessed, refined or recycled, per
liter and kilogram of volume capacity or
weight.
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January Januar
2012 1, 2018 1, 2019 y 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 P 7.00 P 9.00 P 10.00
of volume capacity
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January Januar
2012 1, 2018 1, 2019 y 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/
RR 17- January January Januar
2012 1, 2018 1, 2019 y 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/
RR 17- January January Januar
2012 1, 2018 1, 2019 y 1,
2020
P 0.00
(p) Naphtha and pyrolysis gasoline, when used as a
raw 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 P 0.00

material in the production of petrochemical
products, per kilogram
(r) Petroleum coke, when used as feedstock to any -
power generating facility, per metric ton
Briefing on RA 10963: Tax
Reform for Acceleration and
Inclusion (TRAIN) – Penalties
 NIRC NIRC TRAIN
Provision
General 20% interest on any General interest on unpaid
interest unpaid amount of tax from amount of tax is changed to
the date prescribed for 12% (at double the rate of
payment until the amount legal interest rate for loans
fully paid 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.
 NIRC NIRC TRAIN
Provision
Deficiency Deficiency interest is The period when
interest assessed and collected deficiency interest shall
from the date stop to run is until full
prescribed for its payment OR upon
payment until full issuance of a notice and
payment thereof. demand by the BIR
Commissioner;
whichever comes earlier.
 NIRC NIRC TRAIN
Provision
Section 254 Any person who willfully Administrative fine is
Attempt to attempts in any manner to increased to not less than
evade or evade or defeat any tax P500,000 but not more than
defeat tax imposed under this Code P10,000,000
or the payment thereof
shall, in addition to other Imprisonment is increased
penalties provided by law, to not less than 6 years but
upon conviction thereof; not more than 10 years
be punished by a fine of
not less than P30,000 but
not more than P100,000
and suffer imprisonment
of not less than 2 years
but not more than 4 years.
 NIRC NIRC TRAIN
Provision
Section 264 Any person who: Same
Failure or  fails or refuses to issue
refusal to receipts/invoices
issue  issues receipts/invoices
receipts or that do not fully reflect
invoices 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
 NIRC NIRC
Provision
Section 264 Fine of not less than P1,000
Failure or but not more than P50,000
and imprisonment of not less
refusal to
than 2 years but not more than
issue 4 years for any person who:
receipts or  Print receipts/invoices
invoices without authority from the
BIR
 Print double or multiple sets
of invoices or receipts
 Print unnumbered
receipts/invoices not
bearing the name, business
style, TIN and business
address of the entity
TRAIN
Administrative Fine is
increased to not less than
P500,000 but not more than
P10,000,000
Imprisonment is increased
to not less than 6 years but
not more than 10 years
Additional punishable
offense:
Printing of other fraudulent
receipts or sales or
commercial invoices
 NIRC NIRC TRAIN
Provision
Section 264-A No provision Any taxpayer required to
Failure or transmit sales data to the
transmit Sales
BIR’s electronic sales
Data Entered
on Cash reporting system but fails to
Register do so, shall pay:
Machine/Point
of Sales For each day of violation:
System (POS) 1/10 of 1% of the annual net
Machines to
income as reflected in the
the BIR’s
Electronic Audited FS for the second
Sales year preceding the current
Reporting taxable year OR P10,000,
System [new] whichever is higher.
 NIRC NIRC TRAIN
Provision
Section 264-A No provision IF the aggregate number of
Failure or days of violation exceed 180
transmit Sales
days within a taxable year,
Data Entered
on Cash additional penalty shall be:
Register permanent closure of the
Machine/Point taxpayer
of Sales
System (POS) The penalty shall not apply
Machines to
if the failure to transmit is
the BIR’s
Electronic due to force majeure or any
Sales causes beyond the control
Reporting of the taxpayer
System [new]
 NIRC NIRC TRAIN
Provision
Section 264- No provision Covered person shall be any
B person who purchase, use,
possess, sell or offer to sell,
Sales
install, transfer, update, upgrade,
suppression keep, or maintain such
devices automated sales suppression
[new] 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- No provision Penalty:
B Administrative Fine of not
Sales less than P500,000 but not
suppression more than P10,000,000 and
devices imprisonment of not less
[new] 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- No provision Additional punishment for all
A offenses relating to fuel marking:
Offenses a. Any person engaged in the
relating to sale, trade, delivery,
fuel marking 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- No provision  knows the possession,
A storage, transfer or offer for
Offenses sale of fuel obtained as a
relating to result of such removal,
fuel marking adulteration or dilution
First ₱2,500,000
offense
Second ₱5,0100,000
offense
Third ₱10,000,000 plus
offense revocation of
license to engage
in any trade or
business
 NIRC NIRC TRAIN
Provision
Section 265- No provision c. fine of not less than
A P1,000,000 but not more
Offenses than P5,000,000 AND
relating to imprisonment of not less
fuel marking 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- No provision Causing another person
A or entity to commit any of
Offenses the two preceding acts
relating to Causing the sale,
fuel marking 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- No provision d. Fine of not less than
A P5,000,000 but no more than
P10,000,000 AND
Offenses
imprisonment of not less than 4
relating to years but not more than 8 years
fuel marking 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- No provision e. Any person authorized, licensed
A or accredited to conduct fuel
tests, who issues false or
Offenses
fraudulent test results
relating to knowingly, willfully OR through
fuel marking 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
committed the application for VAT
by refunds within the prescribed
Government period
Enforcement
Officers