Republic Act No. 10963, otherwise known as the Tax Reform for Acceleration and Inclusion Act or the TRAIN Act, was signed into law and subsequently took effect on 01 January 2018. The following table summarizes the major changes introduced by the TRAIN Act vis-à-vis Republic Act No. 8424, otherwise known as the National Internal Revenue Code of the Philippines (“NIRC”), as amended:

 

TRAIN NIRC
Administration, Collection and Payment
Deadline for filing of returns for final and creditable withholding tax On or before the last day of the month following the close of each calendar quarter On or before the 25th day from the close of each calendar quarter
Deadline for the filing of declaration of income for self-employed individuals 15 May 15 April
Deadline for filing of estate tax returns Within one (1) year from the decedent’s death Within six (6) months from the decedent’s death
Payment in installments of estate taxes Estate taxes may be paid in installments Estate taxes may not be paid in installments
Period to grant or deny creditable input tax refund The CIR has 90 days to grant a refund for creditable input taxes Consequence of failure to act within 90 days: criminal penalty The CIR had 120 days to grant a refund for creditable input taxes Consequence of failure to act within 120 days: taxpayer may immediately elevate the matter to the CTA
Individual Income Taxes
Claim of personal and additional exemptions for dependents Not allowed Allowed
Exemption from income tax Income of up to PhP250,000.00 per year Income of minimum wage earners
Amount of 13th month pay excluded from gross income PhP90,000.00 PhP82,000.00
Income tax rate for self-employed individuals Either 8% tax on gross sales or gross receipts and other non-operating income in excess of PhP250,000.00; or

Graduated rates

Graduated rates only
Income tax rate for mixed income earners Compensation: graduated rates

Business/professional income:

  • If less than PhP3,000,000.00: 8% or graduated rates
  • If more than PhP3,000,000.00: graduated rates only
 Graduated rates only
Exemption from 20% final tax on winnings PCSO and Lotto winnings of up to PhP10,000.00 Any amount of PCSO and Lotto winnings
Tax on interest income under the expanded foreign currency deposit system 15% 7½%
Tax on sale of shares of stock not traded in the stock exchange 15% 5% for gains not over PhP100,000.00 and 10% on any amount in excess of PhP100,000.00
Fringe benefit taxes 35% 32%
Estate Tax
Rate 6% Graduated rates
Standard deduction PhP5,000,000.00 PhP1,000,000.00
Donor’s Tax
Rate 6% Graduated rates, 30% if donee is a stranger
Exemption PhP250,000.00

Dowries are no longer exempt

PhP100,000.00

Dowries are exempt up to PhP10,000.00

DST Donation of real estate is now subject to DST Donation of real estate was not subject to DST
Value-Added Tax
0% VAT Gradually limits the transactions subject to 0% VAT Extensive list of transactions
VAT threshold for exemption PhP3,000,000.00 PhP1,919,500.00
VAT threshold for exemption for lease of a residential unit PhP15,000.00 per month PhP10,000.00 per month
VAT threshold for exemption for sale of residential house and lot PhP2,500,000.00 (PhP2,000,000.00 by 2021) PhP3,199,200.00
Excise Tax
Cigarettes, whether packed by hand or by machines PhP32.50 – January 2018 to  June 2018
PhP35.00 – July 2018 to December 2019
PhP37.50 – January 2020 to December 2021
PhP40.00 – January 2022 to December 2023
4% annual increase effective on January 2024
PhP31.20 per pack with 4% increase annually
Unleaded premium gasoline PhP7.00/liter – 2018
PhP9.00/liter – 2019
PhP10.00/liter – 2020
 PhP4.35/liter
 Diesel PhP2.50/liter – 2018
PhP4.50/liter – 2019
PhP6.00/liter – 2020
 PhP0.00/liter
 Liquefied Petroleum Gas PhP1.00/liter – 2018
PhP2.00/liter – 2019
PhP3.00/liter – 2020
 PhP0.00/liter
Mandatory marking of all fuel products Prescribed Not prescribed
Automobiles 4% – up to PhP600,000.00
10% – over PhP600,000.00 to PhP1,000,000.00
20% – over PhP1,000,000.00 to PhP4,000,000.00
50% – over PhP4,000,000.00
2% – up to PhP600,000.00
PhP12,000.00 + 20% in excess of PhP600,000.00 – over PhP600,000.00 to PhP1.1 Million
PhP112,000.00 + 40% in excess over PhP1.1 Million – over PhP1.1 Million to PhP2.1 Million
PhP512,000.00 + 60% in excess over PhP2.1 Million – over 2.1 Million
Hybrid vehicles 50% of applicable tax rates above  No counterpart provision
Purely electric vehicles Exempt No counterpart provision
Invasive cosmetic procedures, surgeries, and body enhancements for aesthetic purposes 5% on gross receipts None
Sweetened beverages PhP6.00/liter – caloric and non-caloric sweeteners
PhP12.00/liter – high-fructose corn syrup
None
Domestic or imported coal and coke PhP50.00/metric ton effective 01 January 2018
PhP100.00/metric ton effective 01 January 2019
PhP150.00/metric ton effective 01 January 2020
 PhP10.00/metric ton
Nonmetallic minerals and quarry resources 4% based on actual market value of gross output 2% based on actual market value of gross output
Copper and other metallic minerals 4% based on actual market value of gross output 2% based on actual market value of gross output
Gold and Chromite 4% based on actual market value of gross output 2% based on actual market value of gross output
Indigenous Petroleum 6% of fair international market price 3% of fair international market price
Documentary Stamp Tax
Original Issue of Shares of Stock PhP2.00 on each PhP200.00 of the par value of such shares PhP1.00 on each PhP200.00 of the par value of such shares
Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Shares or Certificates of Stock PhP1.50 on each PhP200.00 pesos of the par value of such stock PhP0.75 on each PhP200.00 pesos of the par value of such stock
Certificates of Profits or Interest in Property or Accumulations PhP1.00 on each PhP200.00 of the face value of such certificate or memorandum PhP0.50 on each PhP200.00 of the face value of such certificate or memorandum
Bank Checks, Drafts, Certificates of Deposit not Bearing Interest PhP3.00 for every check PhP1.50 for every check
Debt Instruments PhP1.50 on each PhP200.00 of the issue price of any debt instrument PhP1.00 on each PhP200.00 of the issue price of any debt instrument
Bills of Exchange or Drafts, Acceptance of Bills of Exchange or Drafts, and Foreign Bills of Exchange and Letters of Credit PhP0.60 on each PhP200.00 of the face value of the bill of exchange or draft PhP0.30 on each PhP200.00 of the face value of the bill of exchange or draft
Life Insurance Polices Graduated PhP0.50 on each PhP200.00 of the amount of premium collected
Annuities PhP1.00 on each PhP200.00 of the premium or installment payment PhP0.50 on each PhP200.00 of the premium or installment payment
Pre-Need Plans PhP0.40 on each PhP200.00 of the premium or contribution collected PhP0.20 on each PhP200.00 of the premium or contribution collected
Certificates PhP30.00 on each certificate PhP15.00 on each certificate
Warehouse Receipts PhP30.00 on each warehouse receipt PhP15.00 on each warehouse receipt
Jai-alai, Horse Race, Tickets, Lotto or Other Authorized Numbers Games PhP0.20 on each ticket PhP0.10 on each ticket
Bills of Lading or Receipts for Any Goods Shipped PhP2.00 on each set if the value of the goods exceeds PhP100.00 and does not exceed PhP1000.00
PhP20.00 on each set if the value exceeds PhP1000.00
PhP1.00 on each set if the value of the goods exceeds PhP100.00 and does not exceed PhP1000.00
PhP10.00 on each set if the value exceeds PhP1000.00
 Proxies PhP30.00 on each proxy PhP15.00 on each proxy
Powers of Attorney PhP10.00 each PhP5.00 each
Leases and Other Hiring Agreements PhP6.00 for the first PhP2,000.00, and an additional PhP2.00 for every PhP1,000.00 in excess of the first PhP2,000.00 PhP3.00 for the first PhP2,000.00, and an additional PhP1.00 for every PhP1,000.00 in excess of the first PhP2,000.00
Mortgages, Pledges and Deeds of Trust PhP40.00 when the amount does not exceed PhP5,000.00
Additional PhP20.00 on each PhP5,000.00 in excess of the first PhP5,000.00
PhP20.00 when the amount does not exceed PhP5,000.00
Additional PhP10.00 on each PhP5,000.00 in excess of the first PhP5,000.00
Deeds of Sale, Conveyances and Donations of Real Property No change on the DST rate.
Donation of real property is now subject to DST.
PhP15.00 when the amount does not exceed PhP1,000.00.
Additional PhP15.00 on each PhP1,000.00 in excess of the first PhP1,000.00
Compliance Requirements
Threshold amount to have books of account audited by independent Certified Public Accountants  PhP3,000,000.00  PhP150,000.00
Administrative Provisions
Threshold amount in the determination of whether or not a person is required to register for VAT  PhP3,000,000.00 PhP1,500,000.00
When to issue receipt based on the value of the sale  PhP100.00 PhP25.00
Sales reporting Electronic point of sales reporting by taxpayers engaged in export of goods and services, and Large Taxpayers No counterpart provision.
Interest rate Double the legal interest rate per annum 20% per annum
Penalty for tax evasion Fine of not less than PhP500,000.00 but not more than PhP10,000,000.00, and imprisonment of not less than 6 years but not more than 10 years Fine of not less than PhP30,000.00 but not more than PhP100,000.00, and imprisonment of not less than 2 years but not more than 4 years

A Primer on its salient provisions vis-à-vis the provisions of the National Internal Revenue Code, as amended, is available upon request by e-mailing corpo@cruzmarcelo.com.

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