TAXATION

RA10963: TAX REFORM FOR ACCELERATION AND INCLUSION LAW (TRAIN)

1. INCOME TAXES
A. Section 24 (A) Table
NIRC TRAIN LAW
1997-2017 2018-2022 2023
Not over P10,000 5% Not over P250,000 0% or Tax exempt

Over P10,000 but not P500+10% of the Over P250,000 but 20% of the excess 15% of the excess
over P30,000 excess over not over P400,000 over P250,000 over P250,000
P10,000
Over P30,000 but not P2,500+15% of Over P400,000 but P30,000+25% of P22,500+20% of
over P70,000 the excess over not over P800,000 the excess over the excess over
P30,000 P400,000 P400,000
Over P70,000 but not P8,500+20% of Over P800,000 but P130,000+30% of P102,500+25% of
over P140,000 the excess over not over the excess over the excess over
P70,000 P2,000,000 P800,000 P800,000
Over P140,000 but P22,500+25% of Over P2,000,000 P490,000+32% of P402,500+30% of
not over P250,000 the excess over but not over the excess over the excess over
P140,000 P8,000,000 P2,000,000 P2,000,000
Over P250,000 but P50,000+30% of Over P8,000,000 P2,410,000+35% P2,202,500+35%
not over P500,000 the excess over of the excess over of the excess over
P250,000 P8,000,000 P8,000,000
Over 500,000 P125,000+32% of
the excess over - - -
P500,000

NIRC TRAIN LAW

B. Exemptions and HHIP
Basic Personal Exemption (BPE) P50,000 regardless of the status
Additional Exemption (AE) P25,000 per dependent child
(max. of 4) NO LONGER DEDUCTIBLE
Health and hospitalization P2,400 per year or whichever is
Insurance Premium (HHIP) lower
C. Deductible Benefits
13th month pay and other benefits Maximum of P82,000. Any excess Maximum of P90,000. Any excess
is taxable subject to SEC24A or is taxable subject to SEC24A or
FBT FBT
D. Income Tax for:
P250,000 and below taxable
Self-employed and income– 0%
Professionals (SEPs)
NONE Less than P3000,000 of Gross
sales or Receipts and other non-
operating income – May opt to
choose 8% withholding tax or
SEC24A
More than P3000,000 – 0% to
35% (SEC24A)
32% for Managerial and 35% for Managerial and
Fringe Benefit Tax Rate Supervisory Positions Supervisory Positions

Employees of Regional Area HQ,

Regional Operating HQ, Off-shore 15% Preferential Tax 0% to 35% (SEC24A)
Banking Units, and Petroleum
Contractors

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 E. Passive Income
Interest income from Expanded RC,RA – 7.5% RC,RA – 15%
Foreign Current Deposit (EFCDS) NRC,NRAs – Exempted NRC,NRAs – Exempted

Interest income from pre- 1-3 years – 20%

terminated long term deposits 3-4 years - 12% 20% fixed rate
4-5 years – 5%
More than 5 years – EXEMPTED

PCSO Winnings Exempted 20% if more than P10,000

F. Shares of Stocks
Sale of shares of stocks traded in ½ of 1% of the selling price or 6/10 of 1% of the selling price or
the stock exchange (STT) FMV whichever is higher FMV whichever is higher

Sale of shares of stocks NOT 5% - First P100,000

traded in the stock exchange 10% in excess of P100,000 15% Capital Gains Tax

G. Compliance Requirements
Income Tax Returns filing 12 pages Shall NOT be more than 4 pages

DEADLINE OF FILING ITR APRIL 15 MAY 15

DEADLINE OF 2ND JULY 15 OCTOBER 15

INSTALLMENT

Tax Return for Final and MONTHLY (10days after the end QUARTERLY (30days at the end
Creditable Withholding Tax of the month) of the taxable quarter)

NOTE: Except for Compensation

Income
Audited Financial Statements Must be audited if Gross sales or Must be audited if Gross sales or
receipts exceeded P150,000 receipts exceeded P3000,000
Penalty Interest 20% Interest per annum Double the legal interest rate per
annum

2. ESTATE TAX
NIRC TRAIN LAW
A. Tax Rate
5% to 20% of taxable net estate 6% FLAT RATE
(ESTATE TAX TABLE)
B. Deductions:
Funeral Expenses Maximum of P200,000 or 5% of
GE or Actual Funeral Expenses
whichever is lower
Judicial Expenses Regardless of amount incurred NO LONGER DEDUCTIBLE
before the settlement of the estate
tax
Medical Expenses Maximum of P500,000 incurred
one year before the death
Family home P1,000,000 P10,000,000
Standard deductions P1,000,000 P5,000,000
C. Compliance requirements:
Estate Tax Returns filing 6 MONTHS 1 YEAR

NOTE: Paying the estate tax due

can be made in two years
installment without civil penalty
and interest.
Notice of Death To be submitted 20days from the NO LONGER REQUIRED
date of death

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 CPA Certification IF GROSS ESTATE IS P2000,000 IF GROSS ESTATE IS P5000,000
and above and above
Bank deposit left by the decedent Cannot be withdrawn by the heirs, May be withdrawn by the heirs
unless the Estate Tax has been even WITHOUT certification from
paid. BIR.
Subject to 6% final withholding tax

3. DONORS TAX
NIRC TRAIN LAW
A. Tax Rate Net gift of more than P250,000 –
Relatives – 5% to 15% 6% flat rate
Strangers – 30% Net gift of P250,000 and below –
Exempted from Donors Tax

NOTE: regardless of the

relationship bet. the Donor and the
Donee
The donation of real property is
NONE now subject to Documentary
Stamp Tax of P15 for every P1000
of value

4. VALUE ADDED TAX

NIRC TRAIN LAW
A. Threshold P1919,500 and below – VAT P3000,000 and below – VAT
EXEMPT EXEMPT
B. Sales of drugs and meds for
diabetes, high-cholesterol and VAT EXEMPT (Effective 2019)
hypertension
C. Transfer under Sec. 40 [c][2]
--Exchanges of stock
between a shareholder and
corporation.
--Transfer to a controlled
corporation where not more
than five persons transfer
property in exchange for at
12% VAT VAT EXEMPT
least 51% of the voting
shares of the transferee
corporation. (No Gain or
Loss)
D. Association dues, membership
fees, and other assessments and
charges collected by homeowners
associations and condominium
corporations

E. VAT exemption for lease of Exempt if P12,800 per month and Exempt if P15,000 per month and
residential lot below below
F. VAT Exemption for:

Sale of Residential Lot P1919,500 and below P1500,000 and below

Sale of House and Lot P3199,200 and below P2500,000 and below
P2M and below (Effective 2022)
G. Electric Cooperatives, and
registered with Cooperative VAT EXEMPT 12% VAT
Development Authority

H. Amortization of Input VAT on Amortize for 60 months or

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 Capital Goods whichever is shorter if more than
P1000,000 Repealed by 2022

Recognized in full if less than

P1000,000
I. Sale of goods to PEZA Zero-Rated Sales 12% VAT upon implementation of
enhanced VAT refund System

J. Compliance Requirements
VAT Returns filing MONTHLY (20 days after the end QUARTERLY (EFFECTIVE
of the month) 1/1/2023) (25 days after the end of
the quarter
The BIR is required to act on
application for VAT refund within
90 days. Otherwise, the BIR
official, agent or employee will be
criminally liable
K. BIR penalty for refusal to issue P50, 000 and imprisonment of 2 P10M and imprisonment of 6
or failure to an official receipts or years years
sales invoice

5. EXCISE TAXES
NIRC TRAIN LAW
A. Cigarettes /Tobacco 1/1/18-6/30/18 P32.50
7/1/18-12/31/19 P35
P30 1/1/20-12/31/21 P37.50
1/1/2022-12/31/23 P40
1/1/24 onwards 4% Increase
every year
B. Automobiles Up to 2% Up to P600,000 4%
P600,000
Over P600,00 P12,000+20% Over P600,000 to
to P1100,000 of the value in P1000,000 10%
excess of
P600,000

Over P112,000+60% Over P1000,000 to

P1100,000 to of the value in P4000,000 20%
P2100,000 excess of
P1100,000

Over P512,000+60% Over P4000,000 50%

P2100,000 of the value in
excess of
P2100,000
Hybrid Vehicles Half rates only
Pure Electric Vehicles and pick-up
trucks EXEMPTED

C. Manufactured Oils and other 2018 2019 2020

products ( PER LITER OR KILO)

Processed Gas P0.50

Denatured Alcohol to be used for
motive power P8.00 P9.00 P10.00
Asphalts P0.56
Waxes and Petroleum P3.50
Lubricating Oils and Gases P4.50
Naphthalene, regular gasoline and P4.35
similar products P7.00
Unleaded Premium Gasoline P5.35
Aviation Turbo Jet Fuel P3.67 P4.00

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 Kerosene P3.00 P4.00 P5.00
Diesel Fuel Oil
Bunker Fuel Oil P0.00 P2.50 P4.50 P6.00
Petroleum Coke (Per metric ton)
LPG P1.00 P2.00 P3.00

D. Mineral Products
Coal and Coke P10.00 P50/MT P100/MT P150/MT
Non-metallic and quarry resources
Copper and other non-metallic
resources 2% 4%
Gold and Chromite
Indigenous Petroleum 3% 6%

E. Sweetened Beverages
Using Purely Caloric and Purely
Non-Caloric or Mix of the 2 NONE P6.00 per liter
sweeteners
Using Purely High Fructose Corn
Syrup or Combination of Caloric NONE P12.00 per liter
and Non-Caloric
Milk, 3-in-1 coffee,
100% natural fruit juice or
vegetable juice, medically-
indicated beverages, and drinks NONE EXEMPTED FROM EXCISE TAX
and beverages that use natural
sweeteners such as coco sugar or
stevia.
F. Non-Essential Services
Invasive cosmetic procedures
directed solely towards improving, NONE 5%
altering, or enhancing the patient’s
appearance

6. DOCUMENTARY STAMP TAX

NIRC TRAIN LAW
Jai-Alai, Horse Racing Tickets, P0.10 per P1.00 P0.20 per 1.00
Lotto or other authorized games
Bills of exchange or drafts
Acceptance of a bills of exchange P0.30 per P200 P0.60 per P200
Foreign bills of exchange
Pre-need plans P0.20 per P200 P0.40 per P200
Policies Annuities P0.50 per P200 P1.00 perP200
Stamp Tax on Certificate of profits P0.50 per P200 of the Par Value P1.00 per P200 of the Par Value
and interest
Sales, agreement to sell, Deliveries
of sales, Transfer of due bills, P0.75 per P200 of the Par Value P1.50 per P200 of the Par Value
Certificate of obligations or Shares
of stocks
Original Issue of Share of stocks P1.00 per P200 of the Par Value P2.00 per P200 of the Par Value
Debt Instruments P1.00 per P200 P1.50 per P200
Bank Check, Drafts, Certificates of
interest in Property or P1.50 P3.00
Accumulations’
Bill of Lading or Receipts P1-P100 P2-P200
Powers of attorney P5.00 P10.00
Life Insurance Policies P10-P100 P20-P200
Proxies and Certificates P15.00 P30.00
Warehouse Receipts P15.00 P15.00
Deed of Sales and Conveyances of P15.00 per P1000 (Donations P15.00 per P1000 (Donations
Real Property EXCLUDED) INCLUDED)

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 Charter Parties and Similar P50-P100 P100-P300
Instruments
Lease and Other Hiring P3.00 for the first P2000 P6.00 for the first P2000
Agreements P1.00 for every P1000 in excess of P2.00 for every P1000 in excess of
P2000 P2000
Mortgages, Pledges, Deeds of P20.00 for the first P5,000 P6.00 for the first P2000
Trust P10.00 for every P5000 in excess P2.00 for every P1000 in excess of
of P5000 P2000

THE VETOED FIVE LINE ITEMS

1. 1. Veto on the 15% special tax rate for employees of Regional Headquarters (RHQ), Regional Operating
Headquarters (ROHQ), Offshore Banking Units, and Petroleum Service Contractors and Subcontractors.
These employees will be taxed using the regular income tax table as shown in Item No. 1 above.

1. 2. Veto on the exemption of self-employed professionals, with gross sales or receipts not exceeding P500,000,
from the payment of the 3% percentage tax.

3. Veto on the excise tax exemption of petroleum products used as input, feedstock, 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

1. 4. Veto on the zero rating of sales of goods and services to separate customs territory and tourism enterprise
zones, specifically, the areas under the Tourism Infrastructure Enterprise Zone Authority (TIEZA).

5. Veto on the earmarking of incremental tobacco taxes

“GOD ANSWERS WHEN YOU LEAST EXPECT IT”

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