Train PDF

REPUBLIC OF THE PHILIPPINES
Department of Finance
Bureau of Internal Revenue
presents
Tax Reform for Acceleration and

Inclusion (TRAIn)
Presented by:
Ipher Q. Tabañag, CPA

Chief, Assessment Section
BIR Large Taxpayers Division-Cebu
1
RA 8424, Internal Revenue Code of 1997
(Effective Jan. 1, 1998)
Amendments introduced:
1. RA 8761 – VAT on banks-prof-brkers eff 1.1.2000;
2. RA 9010 – eff. 1.1.2001, defers RA 8761 to Jan 1, 2003;
3. RA 9224 – 8.29.03 – Adjust Excise Tax, Automobiles
4. RA 9238 - Banks are reverted to GRT eff 1.1. 2004
5. RA 9243 - DST eff March 20, 2004
6. RA 9294 - OBU-FCDU
7. RA 9334 – Excise Tax, Alcohol/Tobacco, eff 1.1.2005
8. RA 9337 – RVAT eff Nov. 1 2005, 21 sections affected
9. RA 9361 - INPUT CAP removed eff 12 14 06
10. RA 9504- eff. July 6, 2008, MWEs exempt from IT
11. RA 9648 – DST, amends RA 9243
2
continued..
Amendments introduced:
12. RA 10001 – eff. 2.23.2010, Life Insurance GRT 5% to 2%
13. RA 10021 –Exchange of Info, foreign authority
14. RA 10026 - IT exempt, Local Water Districts dtd 3.11.10
15. RA 10351- eff. 1.1.2013 Excise Tax, Alcohol-Tobacco
16. RA 10378 - IT exempt, International Carriers (3.2013)
17. RA 10653 -13TH Mo/OB increased P82K (2.2015)
18. RA 10963 – TRAIn, eff. Jan. 1, 2018
3
I1
Republic Act (RA) 10963

Effective Jan. 1, 2018
Introduction:
“The Tax Reform for Acceleration and Inclusion

(TRAIn) envisions to create a tax system that is
simpler, fairer and more efficient, characterized by
low rates and a broad base that improve levels of
disposable income to a greater number of taxpayers
and their families and provide for better
infrastructure, health, education, jobs and social
protection for the people.”
4
Slide 4
I1 after months of deliberation, study and debate, and after more than 50 versions were introduced by the House of Representatives to the
original DOF proposal, plus several modifications made by the Senate and further modifications made by the Bicameral body of both the
House and Senate, the TRAIN has finally arrived.
And this is effective, New Years Day of 2018.
RA 10963 was approved into law, but its not without scratch. 6 Line provisions of the TRAIN were VETOED by President Duterte,
making these 6 provisions unefforceable as of this time, until both the House and the Senate can come up with an "acceptable" version,
send it back to Malacanang and get a final approval.
Ipher-Main; 07/01/2018
I8
Introduction:
This will be complemented by major tax

administration reforms in the Bureau of Internal
Revenue.
In addition to tax policy and administration reforms,

budget reforms are being pursued to promote
spending transparency and efficiency.
5
Slide 5
I8 after months of deliberation, study and debate, and after more than 50 versions were introduced by the House of Representatives to the
original DOF proposal, plus several modifications made by the Senate and further modifications made by the Bicameral body of both the
House and Senate, the TRAIN has finally arrived.
And this is effective, New Years Day of 2018.
RA 10963 was approved into law, but its not without scratch. 6 Line provisions of the TRAIN were VETOED by President Duterte,
making these 6 provisions unefforceable as of this time, until both the House and the Senate can come up with an "acceptable" version,
send it back to Malacanang and get a final approval.
I2
Salient Features –
A. Tax Policy Reforms:

1. Lower personal income tax
2. Adjustment on passive income for Ind/Corp.
3. Reduction of the estate and donor’s tax
4. Broadening the VAT base
5. Adjustment on Documentary Stamp Tax
6. Adjust excise taxes on petroleum and automobiles
7. Imposition of excise taxes on cosmetic procedures
8. Imposition of excise taxes on sweetened
beverages (SB)
6
Slide 6
I2 Brief discussion of each item: 1. Lower PIT. MAIN SELLING POINT OF THE TRAIN. not affected is corp IT. reduced rates and repeal of
personal/add exemptions. P21T/mo & below enjoys. 2. passive income - Interest FCDU/CGT on shares/ winnings. 3. ESTATE tax - flat
rate 6% 4. Broaden VAT base. Foreign Currency Denominated Sale subject to VAT/ VAT exempt to VATABLE like transmission, TRAIn
amended RA 8424, specifically it amends 68 Sections, adds 8 new sections and deleted 5 Sections.
Naming Convention. When we state the legal basis, how do we name it, in accordance with TRAIN or in accordance with RA 8424, or
NIRC of 1997, as amended?
RA 8424 was amended several times:
RA 9337 -RVAT Law 2006
RA 9503 - MIN WAGE & INC IN BANKS GRT 2008
RA 9243 - DST 2004
RA 10653 - INCREASE 13th mo pay to P82,000
I7
B. Budget Reforms:
 Earmarking for social protection programs
(to mitigate the impact of the tax increases on the
poor and vulnerable households) . .
7
Slide 7
I7 TRAIn amended RA 8424, specifically it amends 68 Sections, adds 8 new sections and deleted 5 Sections.
Naming Convention. When we state the legal basis, how do we name it, in accordance with TRAIN or in accordance with RA 8424, or
NIRC of 1997, as amended?
RA 8424 was amended several times:
RA 9337 -RVAT Law 2006
RA 9503 - MIN WAGE & INC IN BANKS GRT 2008
RA 9243 - DST 2004
RA 10653 - INCREASE 13th mo pay to P82,000
C. Tax administration Reforms:

1. e-reporting of sales through the use of Point of
Sale (POS) machines
2. issuance of e-receipts;
3. mandatory use of fuel marking;
. .
8
Tax Particulars NIRC of 1997 RA 10963
(RA 8424 as amended) (Effective Jan. 1, 2018)
Sec. 24 (A) (2) Personal income tax
A. Personal Income table for both compensation A. For compensation income earners
Tax table income earners, and self-employed Effective Jan. 1, 2018-Dec. 31, 2022
and/or professionals:
Not Over P10,000 5% Not Over P250,000 0%
Over P10,000 but not P500 + 10% of the Over P250,000 but not 20% of the excess
over P30,000 excess over P10,000 over P400,000 over P250,000
Over 30,000 but not over 2,500 + 15% of the Over P400,000 but not P30,000 + 25% of the
70,000 excess over 30,000 over P800,000 excess over P400,000
Over 70,000 but not over 8,500 + 20% of the Over 800,000 but not P130,000 + 30% of the
140,000 excess over 70,000 over P2,000,000 excess over P800,000
Over 140,000 but not 22,500 + 25% of the Over P2,000,000 but P490,000 + 32% of the
over 250,000 excess over 140,000 not over P8,000,000 excess over P2,000,000
Over 250,000 but not 50,000 + 30% of the Over 8,000,000 P2,410,000 + 35% of the
over 500,000 excess over 250,000 excess over P8,000,000
Over 500,000 125,000 + 32% of the

excess over 500,000
9
A. Personal Income
Tax table Effective Jan. 1, 2023
Not Over P250,000 0%
Over P250,000 but not 15% of the excess

over P400,000 over P250,000
Over P400,000 but not P22,500 + 20% of the

over P800,000 excess over P400,000
Over 800,000 but not P102,500 + 25% of the

over P2,000,000 excess over P800,000
Over P2,000,000 but P402,500 + 30% of the

not over P8,000,000 excess over P2,000,000
Over 8,000,000 P2,202,500 + 35% of the

excess over P8,000,000
10
B. Personal Income (Same Tax table

Tax for Self-employed/ for Compensation B. For purely self-employed and/or professionals
Professionals Income Earners)
If gross sales/receipts and other non-operating
income do not exceed the PHP3m VAT threshold,
taxpayer may opt to be taxed at:
• 8% of gross sales/receipts and other non-

operating income in excess of PHP250,000 in lieu
of graduated rates and percentage tax; or
• Graduated rates in (A) above.
11
IQT15
NIRC of 1997 RA 10963
Tax Particulars (RA 8424 as amended) (Effective Jan. 1, 2018)
B. Personal Income (Same Tax table C. Mixed income earners shall be taxed as follows:
Tax for Self-employed/ for Compensation
Professionals Income Earners) - On their compensation income – at graduated rates
[Sec. 24(A)(2)(c)(1)]
- On their income from the conduct of trade or

business or the practice of profession
[Sec. 24(A)(2)(c)(2)]
• If exceeding the VAT threshold – at graduated rates
• If below the VAT threshold – either 8% of gross

sales/receipts and other non-operating income in
excess of PHP250,000 in lieu of graduated rates and
percentage tax or graduated rates, at the option of the
taxpayer
12
Slide 12
IQT15 Mixed income earners should compute their IT separately, i.e. income from compensation and income from business/profession. Unlike
before TRAIN it is computed as total income or "global" income.
Ipher Q. Tabanag; 08/01/2018
I15
NIRC of 1997 RA 10963
On personal and Sec. 35 and 79 (D)

additional exemptions Exemptions on the
following: - Repealed
- P50,000
personal exemption
- P25,000 per
- Repealed
qualified dependent
child
- Personal exemption
allowable to non- - Repealed
resident alien individual
13
Slide 13
I15 PWD. IS THE ADDITIONAL DEPENDENTS FOR PWD deemed revoked?
additional qualified dependent for PWD under RA 10754 /RA 9442 (magna carta for PWD)
I19
NIRC of 1997 RA 10963

On deduction for Sec. 34 (M)

premium payments on PHP2,400 per year or
health and/or PHP200/month of Repealed.
hospitalization premium payments on
insurance health and/or
hospitalization
Sec. 62 Exemption of
On Exemption allowed PHP20,000 allowed from Repealed.
to estate and trust the income of the
estate or trust.
14
Slide 14
I19 GSIS, SSS, Medicare/PhilHealth, PagIbig, and Union dues of individuals not affected under
Section 32(B)(7)(f)
what was affected is Section 32(B)(7)(e). 13th month pay and other benefits
I36
NIRC of 1997 RA 10963

On minimum wage Sec. 24 (A) (2) MWEs are exempt

earners (MWEs) Retained.
from income tax on their
provisions compensation including
1. holiday pay
2. overtime pay
3. night shift differential pay, and
4. hazard pay.
15
Slide 15
I36 Ipher-Main; 07/01/2018

I13
NIRC of 1997 RA 10963

On the exemption of Exemption up to P82,000 exemption for the 13th

13th Month pay and [Section 32(B)(7)(e) as month pay and other
other benefits amended by RA 10653] benefits increased to
P90,000.
- 13th Month Pay
- Other Benefits which includes:
- Christmas bonus,
- productivity incentives,
- loyalty award,
- gift in cash or in kind, and
- other benefits of
similar nature
16
Slide 16
I13 Ipher-Main; 07/01/2018

NIRC of 1997 RA 10963
On Fringe benefit tax Sec. 33 (A) FB are subject Effective 1 January

given to non-rank and to 32% final tax rate. The 2018, fringe benefits
file employees grossed-up monetary given to non-rank
value is determined by and file employees are
dividing the actual subject to 35% final tax
monetary value by 68%. rate. The grossed-up
monetary value is
1. Housing determined by dividing
2. Vehicle the actual monetary
3. Expense Account value by 65%.
4. Household personnel
5. Interest on loan less than
market value
6. Holiday and Vacation expense
7. Expenses for foreign travel
8. Education assistance
9. Life or health insurance in
excess or what the law allows
17
I18
NIRC of 1997 RA 10963

On GSIS, SSS and Sec. 32(B)(7)(f)

Retained.
other contributions GSIS, SSS, Medicare/
(what was amended was Sec.
of individuals Philhealth, Pag-ibig
32(B)(7)(e) – 13th mo.
contributions, and union
Pay/other benefits).
dues of individuals.
18
Slide 18
Section 32(B)(7)(f)
I35
NIRC of 1997 RA 10963

Sec. 33(C)(4).
De Minimis Benefits
On De Minimis Retained.
Benefits (Fringe 1) Monetized unused VL credits of private employees
not exceeding 10 days during the year;
(What was amended
Benefits not 2) Monetized value of VL & SL credits paid to govt was Sec. 33(A),
taxable) officials and employees; Imposition of Fringe
3) Medical cash allowance to dependents of employees
not exceeding P750.00 per employee per semester or
Benefits Tax).
P125/mo;
4) Rice subsidy of P1,500 (per RR 5-2008)
5) Uniform/clothing allowance not exceeding P5,000
per annum (Per RR 8-2012 EFFECTIVE JAN 1, 2012
6) Actual medical assistance, not exceeding P10,000 per
annum;
7) Laundry Allowance not exceeding P300 per month;
8) Employee achievement awards, with an annual
monetary value not exceeding P10,000
9) Gifts given during christmas and major anniversary
celebrations not exceeding P5,000;
10) Daily meal allowance for overtime work not
exceeding 25% of basic minimum wage;
11) Benefits received by an employee by virtue of a CBA
and productivity incentive schemes, amount not
exceeding P10,000.00.
19
Slide 19
Section 32(B)(7)(f)
I23
NIRC of 1997 RA 10963

On filing of tax returns Sec. 51 (A) (2) (a) An An individual whose

for INDIVIDUAL individual whose gross taxable income does
TAXPAYERS income does not exceed not exceed
his total personal and PHP250,000 based on
additional exemptions the tax schedule for
for dependents are not compensation
required to file an income earners shall
income tax return not be required to file
(“ITR”). an ITR.
20
Slide 20
I23 Ipher-Main; 07/01/2018

I24
NIRC of 1997 RA 10963

Additional Provisions:
(continued…) No current rule.
On filing of tax returns
The ITR shall consist of a maximum of four
FOR INDIVIDUAL
(4) pages in paper or electronic form
TAXPAYERS
containing only the following information:
• Personal profile and information;
• Total gross sales, receipts or income from
compensation for services rendered, conduct
of trade or business or
the exercise of a profession, except income
subject to final tax…
• Allowable deductions under the Tax Code;
• Taxable income as defined in Sec. 31 of this
Code; and
• Income tax due and payable.
21
Slide 21
I24 Ipher-Main; 07/01/2018

I25
NIRC of 1997 RA 10963

Additional Provisions:
(continued…)
On filing of tax returns
Sec. 51-A An individual receiving purely
for INDIVIDUAL
compensation income from one employer
TAXPAYERS
wherein the tax of which has been correctly
withheld shall not be required to file an annual
ITR.
The certificate of withholding, filed by the

employer and stamped “received” by the BIR,
shall be tantamount to the substituted filing of
income tax return of the employees.
22
Slide 22
I25 Ipher-Main; 07/01/2018

I26
NIRC of 1997 RA 10963

On filing of tax returns Sec. 52 (A) The return The ITR shall consist of a maximum of
for CORPORATE shall be filed by the four (4) pages in paper or electronic
TAXPAYERS president, vice-president form containing only the following
or other principal information:
officer, and shall be • Corporate profile and information;
sworn to by such officer • Gross sales, receipts or income from
and by the treasurer or services rendered, or conduct of trade
assistant treasurer or business, except income subject
to final tax as provided under the Tax
Code;
• Allowable deductions under the Tax
Code;
• Taxable income as defined in Sec. 31
of this Code; and
• Income tax due and payable
23
Slide 23
I26 Ipher-Main; 07/01/2018

NIRC of 1997 RA 10963
On Passive income Sec. 24 (B) (1) Philippine • PCSO and lotto

from interest, Charity Sweepstakes winnings exceeding
royalties, prizes and Office (“PCSO”) and PHP10,000 is subject to
other winnings of lotto winnings are the 20% final tax.
individual citizen and exempt from 20% final
resident alien withholding tax
Interest income from a • Interest income from a

depository bank under depository bank under
the expanded foreign the expanded foreign
currency deposit system currency deposit
is subject to a final tax of system is subject to a
7.5%. final tax of 15%.
24
NIRC of 1997 RA 10963
On cash and/or Sec. 24 (B) (2) Cash

property dividends and/or property - Retained
dividend received by an
individual from a
domestic corporation is
subject to the 10% final
tax.
On capital gains from  Individual citizen and

sale of stock not resident alien ,Sec. 24 (C) Capital gains tax on sale of
traded in the local and; shares not traded in the
stock exchange • domestic corporations, local stock exchange is
Sec. 27 (D) (2): increased to a flat rate of
15%
Capital gains tax of 5% on
the first PHP100,000 and 10%
in the excess thereof is
imposed on sale of shares
not traded in the local stock
exchange
25
NIRC of 1997 RA 10963
On optional standard Sec. 34. (L) In lieu of the

deduction (OSD) itemized allowable
deductions, an individual
subject to tax, other • The 40% OSD may be
than a nonresident alien, availed of ONLY ONCE
may elect an OSD of by either the general
forty percent (40%) of professional
gross sales or gross partnership or the
receipts. partners comprising
such partnership
In case of a corp xxx it

may elect an OSD in the
amt not exceeding 40%
of its gross income.
26
IQT16
NIRC of 1997 RA 10963
On alien individuals Sec. 25 (C) (D) and (E) A rate of [Sec. 6(F) of RA 10963, adds a new
and qualified Filipinos 15% final withholding tax on section referred as Sec. 25 (F)]
employed by specific the gross compensation
employers income of alien individuals and Preferential tax treatment shall not
qualified Filipinos employed apply for employees of ROHQ, RHQ,
by the following employers: OBU, and Petroleum service
contractors and subcontractors
a. Regional or area registering with the SEC beginning
headquarters and January 1, 2018.
regional operating
headquarters of VETOED BY MALACAÑANG:
multinational companies; Provided, However, That Existing
RHOs, ROHQs, OBUs or Petroleum
b. Offshore banking units; Service Contractor$ & Subcontractors
Presently Availing Of Preferential Tax
c. Petroleum contractors and Rates For qualified Employees Shall
subcontractors. Continue To Be Entitled To Avail Of The
Preferential Tax Rate For Present And
Future Qualified employees.
27
Slide 27
IQT16 RHQ, ROHQ, OBU & Petroleum Service Contractors and Sub-contractors. VETOED BY MALACANANG: this
provision maintains the special tax rate of 15% of gross income for employees for these firms. In line with the equal protection clause of
the 1987 constitution, the employees of these firms should follow the regular tax rates applicable to other individual taxpayers While I
understand the laudable objective of the proposal, the provision is
violative of the Equal Protection Clausa under Section 1, Article lll of the 1987
Constitution, as well as the rule of equity and uniformity in the application of the
burden sf taxation:
Section 1. No person shall be deprived of life, liberty, or prcperty without due
proce$s sf law, nor shall any person be denied the equal prctection sf the Iaws.
ln line with this, the overriding consideration is the promotion of fairness of the
tax system for individuals perforning similar work. Given the significant reduction in
the personal income tax, the employees of these firms shCIuld follow the regular tax
rates applicable to other individual taxpayers.
NIRC of 1997 RA 10963
GOCCs, agencies or Sec. 27 (C). GSIS, SSS, Corporate income tax

instrumentalities PhilHealth, local water exemption of PCSO was
districts and the PCSO removed
are exempt from
corporate income tax
28
NIRC of 1997 RA 10963
On Payment of 2nd Sec. 56 (A) (2) When a tax

Installment of income due is in excess of The second installment
tax for individual PHP2,000, the taxpayer of the tax due to be paid
taxpayers other than a corporation on or before 15 October
may elect to pay the tax following the close of the
due in two equal calendar year.
installments; the first
installment paid at the time
the return is filed and the
second installment on or
before 15 July following the
close of the calendar year.
29
NIRC of 1997 RA 10963
On Withholding of Sec. 57 (B)xxx requires Same rates of 1% to 32%

creditable tax at the withholding of a tax up to Dec. 31, 2018.
source on the items xxx by Beginning 1 January
payor-corporations/ 2019, the rate of
persons at the rate of 1% withholding shall not
to 32% thereof, which shall be less than 1% but not
be credited against the more than 15% of the
income tax liability of the income payment.
taxpayer for the taxable
year.
30
I27
NIRC of 1997 RA 10963
On return and Sec. 58 The return for final withholding The return for both final and
payment of taxes tax shall be filed and the payment made creditable withholding taxes
withheld at source within 25 days from the close of each shall be filed and the payment
calendar quarter. made not later than the last day
of the month following the
The return for creditable withholding close of the quarter during
taxes shall be filed and payment made which the withholding was
not later than the last day of the month made.
following the close of the quarter
during which the withholding taxes The provision allowing the
was made. Commissioner of Internal\
Revenue to adjust the
The Commissioner, with the approval withholding of tax at more
of the Secretary of Finance, may frequent intervals is removed
require the withholding agents to pay
or deposit the taxes deducted
or withheld at more frequent intervals
when necessary to protect the interest
of the government.
31
Slide 31
I27 Remittance of Withholding Tax:
This could mean it will be done QUARTERLY?

Will wait for an IRR
I28
NIRC of 1997 RA 10963
Sec. 74 (A) Every individual subject Filing of declaration of

Declaration of
to income tax and is receiving self estimated income shall be on or
income tax for
employment income shall make and before 15 May of the same
individual
file a declaration of his estimated taxable year
(1ST QTR 1701Q,
income for the current taxable year
current year)
on or before 15 April of the same
taxable year.
Return and Sec. 74 (B) The amount of estimated Payment of the fourth
payment income shall be paid in 4 installment shall be paid on or
of estimated installments with the fourth before 15 May of the following
income tax installment to be paid on or before calendar year.
15 April of the following calendar
year.
32
Slide 32

I34
NIRC of 1997 RA 10963
Return and The return of any individual

Payment of xxx shall be filed on or before
Final Income Tax the fifteenth (15th) day of April Retained.
(1701) of each year covering income
for the preceding taxable year.
33
Slide 33

I30
NIRC of 1997 RA 10963
Power of the CIR Sec. 5 (B) Commissioner’s power Additional provision:

to obtain information from any Submission of a tax incentive
to obtain
person other than the person report by Cooperatives
information, etc.
whose internal revenue tax Development Authority to the
liability is subject to audit or BIR and the DOF. The report
investigation or from any office shall include information on the
or officer of the national and income tax, VAT and other tax
local governments, govt agencies incentive availed of. The tax
& instrumentalities. incentive report shall be
included in the database
created under the Tax
Incentives Management and
Transparency Act (“TIMTA”).
34
Slide 34

I31
NIRC of 1997 RA 10963
Sec. 6 (A) The Commissioner The Commissioner or his

Power of the CIR –
or his duly authorized duly authorized
authority to
representative representative
examine
may authorize the shall have the said
examination of any taxpayer authority notwithstanding
and the assessment of any law requiring the prior
the correct amount of tax authorization of any
after a return has been filed. government agency or
instrumentality.
35
Slide 35

I32
NIRC of 1997 RA 10963
Sec. 6 (E) The The determination of the fair market value

Authority of the
Commissioner is of real properties requires mandatory
CIR to prescribe
authorized to determine consultation from both public and private
real property
the fair market value of appraisers, and with prior notice to affected
values
real properties. parties. There is an automatic adjustment of
the zonal valuation once every three years
through issuance of regulations by the
Secretary of Finance.
No adjustment in zonal valuation shall be

valid unless published or posted. The basis
of valuation, as well as records of
consultation, shall be public records
available for inquiry of any taxpayer.
36
Slide 36

NIRC of 1997 RA 10963
Sec. 84 Estate tax table:

On Estate Tax rates Of the Removal of the estate tax
Over But not
Over
This tax
shall be
Plus Excess Over
table
P200,000 Exempt Estate tax rate fixed at six

percent (6%) based on net
estate.
200,000 500,000 0 5% 200,000
500,000 2,000,000 15,000 8% 500,000
2,000,000 5,000,000 135,000 11% 2,000,000
5,000,000 10,000,000 465,000 15% 5,000,000
10,000,000 And Over 1,215,000 20% 10,000,000
37
IQT17
NIRC of 1997 RA 10963
Allowed deductions (Sec. 86(A) (B)

The following are the retained
A. Citizens or residents
allowable deductions:
On estate tax 1. Expenses, losses, indebtedness and
A. Citizens or residents:
deductions taxes;
1. Claims against the estate;
2. Property Previously Taxed (Vanishing
deductions); 2. Claims against insolvent persons
3. Transfers for public use; 3. Unpaid Mortgages
4. Family home amounting to 4. Vanishing deductions;
PHP1,000,000; 5. Transfers for public use;
5. Standard deduction, P1,000,000 6. Family home, P10,000,000
6. Medical expenses, P500,000 7. Standard deduction, P5,000,000
7. Amount received by heirs under 8. Amount received by heirs under
Republic Act 4917 Republic Act 4917
B. Nonresident estates
B. Nonresident estates
1. Expenses, losses, indebtedness and
taxes 1. Standard Deduction, P500,000
2. Vanishing deductions; 2. Provides that a proportion of the
3. Transfers for public use. claims against the
estate, claims against insolvent
persons, and unpaid mortgages
may be claimed as a deduction
from the estate.
3. Vanishing Deductions
4. Transfers for public use
38
Slide 38
IQT17 Deductions deleted by RA 10963 1. Funeral Expenses 2. Judicial Expenses 3. Medical Expenses
NIRC of 1997 RA 10963
On estate tax returns • Sec. 90 (A) (3) Estate • Estate tax returns
tax returns showing showing a gross value
a gross value exceeding P5,000,000
exceeding must be certified by a
PHP2,000,000 must CPA
be certified by a CPA.
• Sec. 90 (B) The estate • The estate tax return

tax return must be must be filed within
filed within 6 months one (1) year from the
from the death of the death of the decedent.
decedent
Filing Notice of Death • Sec. 89 Written

• Repealed
notice of death
required for gross
estates exceeding
P20,000 within 2 mos.
after decedent’s death
39
NIRC of 1997 RA 10963
On payment of tax Sec. 97 The

antecedent to the administrator of the Banks, which has
transfer of shares, estate or any one of the knowledge of the death of
bonds, or rights heirs may, when the person, shall allow
authorized by the withdrawals from a
Commissioner, withdraw decedent’s deposit
an amount not account subject to a 6%
exceeding PHP20,000 final withholding tax.
even without the
certification from the
Commissioner that the
estate taxes have been
paid.
40
NIRC of 1997 RA 10963
Additional provision:
Installment Payment An estate with insufficient
Sec. 91 Payment of
of estate taxes cash is allowed to pay the
estate tax
estate tax due by
installment within two
years from the statutory
date for its payment
without civil penalty and
interest.
41
NIRC of 1997 RA 10963
On donor’s tax rates Sec. 99 (A) and (B) Donor’s tax

rates are as follows:
A. Not Stranger
Of the
- Removal of the donor’s
Over But not This tax Plus Excess tax table
Over shall be Over
100,000 Exempt - Donor’s tax rate fixed at

100,000 200,000 0 2% 100,000 six percent (6%) based on
200,000 500,000 2,000 4% 200,000
total gifts in excess of
P250,000 exempt gift made
during the calendar year,
500,000 1,000,000 14,000 6% 500,000
1,000,000 3,000,000 44,000 8% 1,000,000

whether the donee is a
3,000,000 5,000,000 204,000 10% 3,000,000 stranger or not.
5,000,000 10,000,000 404,000 12% 5,000,000
Over
10,000,000 1,004,000 15% 10,000,000
B. Stranger – 30% based on net gifts
42
NIRC of 1997 RA 10963
Sec. 100. Where -Retained and with additional

Transfer for less than
property, other than real provision:
adequate and full
property xx is
consideration
transferred for less than A sale, exchange, or other
an adequate and full transfer made in the ordinary
consideration xx then course of business (i.e., bona
the amount by which the fide transaction, at arm’s
fair market value of the length, and free from
property exceeded the donative intent) shall be
value of the considered as made for an
consideration shall, for adequate and full
the purpose of the tax consideration.
imposed by this Chapter,
be deemed a gift.
43
NIRC of 1997 RA 10963
Sec. 196 DST is collected • DST collected on deeds

DST on Donations on deeds of sale and of sale, conveyances
conveyances of real and DONATIONS of
property only. real property.
• Transfers exempt from

donor’s tax are
exempted from DST.
Exemption of certain
Exemption of certain Gifts Repealed.
Gifts
44
I29
NIRC of 1997 RA 10963
Sec. 106 (A) (2) VAT zero-rating on sale of

On VAT Zero- goods classified as: - Items 2, 3, and 5 shall be subject to 12%
rated sale Of a) Export sales which include the following: VAT upon
Goods 1. sale and actual shipment of goods from the 1. the successful establishment and
Philippines to a foreign country; ; implementation of an enhanced VAT
2. sale of raw materials or packaging refund system that grants refunds of
materials to a nonresident buyer for delivery
creditable input tax within 90 days from
to a resident local export-oriented enterprise;
filing of the VAT refund application with
3. sale of raw materials or packaging the BIR and
materials to export oriented enterprise 2. all pending VAT refund claims as of 31
whose export sales exceed 70% of total annual December 2017 shall be fully paid in cash
production; by 31 December 2019
4. sale of gold to the BSP;
- Sale of gold to BSP is reclassified from
5. those considered export sales under EO export sales to exempt transactions.
226, Omnibus Investment Code of 1987, and - Item 6 will qualify as export
other special laws; and sales provided that the goods, supplies,
equipment and fuel shall be used for
6. sale of goods, supplies, equipment and fuel
international shipping and air transport
to persons engaged in international shipping
or international air transport operations. operations.
b) Foreign currency denominated sales; and - Foreign currency denominated sales are
c) Sales to persons or entities exempted removed from zero-rated sale of goods.
under special laws or international
agreements
45
Slide 45
I29 Conditional VAT, slide #36
VERY CONTROVERSIAL BECAUSE BOI AND PEZA WILL NOW BE SUBJECT TO THE VAT
NIRC of 1997 RA 10963
(VETOED BY MALACAÑANG)
On VAT Zero-rated
sale Of Goods Sec. 31 and 33 of RA 10963 added 4 new
sections referred as:
Sec. 106(A)(2)(a)(2)(i) & (ii)
Expressly added as “export sales” (VAT

zero-rated) the sale and delivery of
goods to registered enterprises within a
separate customs territory as provided
under special laws and within Tourism
Enterprise Zones declared by TIEZA, and
Sec. 108(B)(8)(i) & (ii):
Expressly added as zero-rated

transactions the sale of services to
registered enterprises within a separate
customs territory as provided under
special laws and within Tourism
Enterprise Zones as declared by TIEZA.
46
IQT14
NIRC of 1997 RA 10963
Inclusion of sale of electricity by

Scope of sale or Sec. 108 (A) Provision generation companies, transmission
exchange of services defines sale or by any entity, and distribution
exchange of services. companies, including electric
cooperatives in the definition of sale
or exchange of services
47
Slide 47
IQT14 The following sectors will keep their VAT exemptions:

- agricultural cooperatives;
- gross receipts from lending activities by credit or multipurpose cooperatives;
- sales by non-agricultural non-electric and non-credit cooperatives duly registered with the cooperatives development authority
provided that the share of the capital contribution of each member does not exceed P15,000;
- export sales by persons who are not VAT registered;
- socialized housing;
- lease rental of less than P10,000 provided that it will be adjusted every three years after 2009 according to inflation;
- exemptions for senior citizens, and persons with disabilities.
I29
NIRC of 1997 RA 10963
Sec. 108 (B) Zero-rated sales of services • Item 1 will qualify as zero-rated sale of
On VAT Zero- services if these services are exclusively for
include:
sale of international shipping and air transport
1. Services rendered to persons
services operations.
engaged in international shipping or • Zero-rating for transport of passenger and
international air transport operations; cargo from the Philippines to foreign country
2. Transport of passengers and cargo shall apply for domestic air or sea vessels only.
by air or sea vessels from the
Philippines to a foreign country;
3. Services performed by • [ITEM VETOED] Expressly added as
subcontractors and/or contractors in zero-rated transactions the sale of
processing, converting, of services to registered enterprises within
manufacturing goods for an enterprise a separate customs territory as provided
whose export sales exceed 70% of total under special laws and within Tourism
annual production; and Enterprise Zones as declared by TIEZA.
4. Processing, manufacturing or
repacking goods for other persons • Items 3 and 4 shall be subjected to 12% VAT
doing business outside the Philippines upon successful establishment and
which goods implementation of an enhanced VAT refund
are subsequently exported, where the system that grants refunds of creditable input
services are paid for in acceptable tax within 90 days from filing of the VAT
refund application with the BIR and all pending
foreign currency and accounted for in VAT refund claims as of 31 December 2017 shall
accordance with the rules and be fully paid in cash by 31 December 2019.I
regulations of BSP
48
Slide 48
I29 Conditional VAT, slide #36
VERY CONTROVERSIAL BECAUSE BOI AND PEZA WILL NOW BE SUBJECT TO THE VAT
IQT18
NIRC of 1997 RA 10963
Sec. 109 (1) VAT exemptions include, among • The VAT threshold is increased from
others, the following transactions:
On VAT P1,919,500 to P3M.
Exemptions 1. Importation of professional instruments,
etc. belonging to persons coming to settle in • increase in monthly threshold for
the Philippines, for their personal use, lease of residential units from P12,800 to
accompanying such persons or arriving within P15,000;
90 days before or after their arrival;
• Beginning 1 January 2021, the VAT
2. Sale of real property utilized for low- cost
exemption shall only apply to sale of
housing, sale of residential lot valued at
PHP1,919,500* and sale of house and lot and real properties not primarily held for
other residential dwellings valued at sale to customers or held for lease in the
P3,199,200*. ordinary course of trade or business,
sale of real property utilized for
3. Lease of residential unit with monthly socialized housing and sale of house and
rental of P12,800*);
lot and other residential dwellings with
4. Importation of fuel, goods, and supplies by threshold reduced to P2M.
persons engaged in international shipping of
air transport operations; and • Beginning 1 January 2019, sale of drugs
and medicines prescribed for diabetes,
5. Other sale of lease of goods or properties high cholesterol and hypertension
or the performance of services, the amount of
would be included as VAT exempt
which does not exceed P1,919,500*.
transactions.
*As adjusted by RR 16-2011
49
Slide 49
IQT18 Conditional VAT, slide #36

IQT19
NIRC of 1997 RA 10963
• VAT exemption for association dues, membership

On VAT fees, and other assessments and charges collected
Exemptions by homeowners associations and condominium
Corporations;
• VAT exemption of sale or lease of goods and

services to senior citizens and persons with
disabilities.
• VAT exemption for transfers of property pursuant

to Section 40 (C)(2) of the Tax Code.
• Expansion of the importation

exemption on professional instruments to include
those belonging to overseas Filipinos, and their
families and descendants who are now residents or
citizens of other countries.
• Exemption of the importation of fuel, goods and

supplies shall only apply if such are used for
international shipping or air transport operations.
• Sale of gold to BSP is now classified under VAT

exempt transactions.
50
Slide 50
IQT19 Conditional VAT, slide #36

I5
NIRC of 1997 RA 10963
Amortization/Spread Sec. 110 (A) (2)(b) The input tax

of Input Tax on goods purchased or imported The amortization of the input
for use in trade or business for VAT shall only be allowed until 31
which deduction for depreciation December 2021 after which
is allowed shall be spread evenly taxpayers with unutilized input
over the month of acquisition VAT on capital goods purchased
andthe 59 succeeding months if or imported shall be allowed to
the aggregate acquisition cost apply the same as scheduled
for suchgoods, excluding the until fully utilized
VAT component thereof,
exceeds P1M.
51
Slide 51
I5 The following sectors will keep their VAT exemptions:

- exemptions for senior citizens and PWD.
IQT14
NIRC of 1997 RA 10963
Sec. 112 (C) The • The Commissioner shall

Period within Commissioner shall grant a grant a refund for creditable
which VAT refund refund or issue the tax credit input taxes within 90 days from
of input taxes certificate for creditable the date of submission of the
shall be made input taxes within 120 days official receipts or invoices and
from the date of submission other documents in support of
of complete documents. the application filed.
• In case of full or partial

denial of claim for tax refund,
the taxpayer may within 30 days
from receipt of the decision
denying the claim appeal the
decision with the CTA.
• Penalty for failure on the

part of any official, agent, or
employee of the BIR to act on
the application within the 90-day
period shall be imposed.
52
Slide 52

IQT14
NIRC of 1997 RA 10963
VAT returns and Sec. 114 (A) Every person

payment liable to pay the VAT shall file
a quarterly return of his Effective 1 January 2023, the
gross amount of his gross filing and payment of VAT shall
sales/receipts within 25 days be done within 25 days
following the close of each following the close of each
taxable quarter. taxable quarter.
Furthermore, VAT-registered
persons shall pay VAT on a
monthly basis.
53
Slide 53

IQT20
NIRC of 1997 RA 10963
VAT withholding Sec. 114 (C) The Government or Effective 1 January 2021, the VAT
by government any of its political subdivisions, withholding system shall shift
instrumentalities or agencies from final to a creditable
shall, before making payment system. Payments for purchase
of purchase of goods and of goods and services arising
services, deduct and withhold from Official Development
a final VAT at the rate of 5% of Assistance funded projects shall
the gross payment thereof not be subject to the final
withholding VAT.
54
Slide 54

IQT21
NIRC of 1997 RA 10963
Tax implication Sec. 116 Any person whose VETOED by MALACAÑANG:

below the sales or receipts are exempt
VAT threshold of from VAT and who is not a Effective 1 January 2019,
P3M VAT-registered person shall selfemployed and professionals
pay a tax equivalent to 3% of with total annual gross sales
his gross quarterly sales or and/or gross receipts not
receipts. exceeding PHP500,000 shall be
exempt from 3% gross receipts
tax.
Tax on Shares
of Stock Listed & Sec. 127 (A) a tax rate of ½ of
The tax rate imposed is
Traded through 1% of the gross selling price or
increased to 6/10 of 1%.
Local Stock gross value in money of the
Exchange or shares of stock.
through IPO
55
Slide 55

IQT22
NIRC of 1997 RA 10963
Sec. 145 (B) and (C) Excise tax on cigarettes

Excise Tax packed by hand shall be
On cigars and based on the following schedule:
Effective 1 Jan. 2013 PHP12/pack Imposes excise tax on both
cigarettes
1 Jan. 2014 15/pack cigarettes packed by hand
1 Jan. 2015 18/pack and packed by machines at the
1 Jan. 2016 21/pack following schedule:
1 Jan. 2017 30/pack Effective 1 Jan. 2018 P32.50/pack
Excise tax on cigarettes packed by machine 1 Jul. 2018 35/pack
shall be based on the 1 Jan. 2020 37.50/pack
following schedule: 1 Jan. 2022 40/pack
Net retail price
PHP11.50 and below More than PHP12.00 The rate of tax imposed shall be
Effective increased by 4% every
1 Jan. 2013 PHP12.00/pack PHP25.00/pack year effective on 1 January 2024,
1 Jan. 2014 PHP17.00/pack PHP27.00/pack through revenue regulations
1 Jan. 2015 PHP21.00/pack PHP28.00/pack issued by the Secretary of
1 Jan. 2016 PHP25.00/pack PHP29.00/pack Finance.
1 Jan. 2017 PHP30.00/pack PHP30.00/pack
56
Slide 56

I3
NIRC of 1997 RA 10963
On excise tax on Sec. 149 Excise tax imposed on

automobiles automobiles are as follows: Effective January 1, 2018
S.P. Up to Excise tax S.P. Up to Excise tax

Over rate Over rate
0 P600,000 2% 0 P600,000 4%
600,000 1,100,000 12,000 600,000 1,000,000 10%

+20% in
excess of 1,000,000 4,000,000 20%
600,000
4,000,000 50%
1,100,000 2,100,000 112,000
+40% in
excess of
1,100,000
2,100,000 512,000 +
60% in
excess of
2,100,000
57
Slide 57
I3 Excise Tax on automobiles under Sec 149 was last amended by RA 9224 eff. August 2003 the rates are 2% 20% 40% and 60%. (15 years
ago from TRAIN)
the original RA 8424 taxed automobiles based on engine displacement.
NIRC of 1997 RA 10963
Hybrid vehicles shall be

(continued…) subject to 50% of the
applicable excise tax rates on
On excise tax on automobiles.
automobiles
Purely electric vehicles and
pick-ups shall be exempt
from excise tax on
automobiles.
Jeeps are considered

automobiles.
Pick-ups are considered as

trucks (and as such are not
considered automobiles).
58
I4
NIRC of 1997 RA 10963
Sec. 148 Excise Taxes, Petroleum

Products:
On Excise Tax on EFFECTIVE .
Petroleum Products Manufactured
Current Rate Jan 1 2018 Jan 1 2019 Jan1 2020
Oils/Fuels
Lubricating Oils and PHP8.00 PHP9.00 PHP10.00
greases 4.50 per liter
Processed gas 0.05 per liter 8.00 9.00 10.00

Waxes and Petrolatum 3.50 per kg 8.00 9.00 10.00
Denatured alcohol 0.05 per liter 8.00 9.00 10.00
Naphtha, regular gasoline 7.00 9.00 10.00
and other similar products 4.35 per liter
of distillation
UnLeaded premium 4.35 per liter 7.00 9.00
gasoline 10.00
Aviation turbo jet fuel 3.67 per liter 4.00 4.00 4.00
Kerosene 0.00 per liter 3.00 4.00 5.00
Diesel fuel oil 0.00 per liter 2.50 4.50 6.00
Liquefied Petroleum Gas 0.00 per liter 1.00 2.00 3.00
Bunker fuel oil 0.00 per liter 2.50 4.50 6.00
Asphalt 0.56 per kg 8.00 9.00 10.00
Petroleum Coke 2.50 4.50 6.00
Leaded Premium gasoline 5.35
59
Slide 59
I4 These new excise tax on petroleum products the current rates are under sec 148 of RA 8424 eff jan 1, 1998 or 20 years ago.
NIRC of 1997 RA 10963
Mandatory (No current tax rule) The Secretary of Finance shall

Fuel marking of all require the use of an official fuel
petroleum products marking agent or similar technology
in petroleum products that are
refined, manufactured, or imported
into the Philippines, and that are
subject to the payment oftaxes and
duties.
60
NIRC of 1997 RA 10963
VETOED BY MALACAÑANG]
On manufactured oils
and other fuels EXEMPTION OF SOME PETROLEUM
PRODUCTS
Petroleum products, including

naphtha, LPG, petroleum, coke, refinery
fuel andother products of distillation,
when 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-firedcombined
cycle power plant in lieu of locally-
extracted natural gas during non-
availability thereof, subject to the rules
and regulations to be promulgated by the
Secretary of Finance, shall be subject to
PHP0 per liter of volume capacity.
61
NIRC of 1997 RA 10963
On non-essential (No current tax rule) Sec. 150-A Imposes a 5% tax on gross
goods and services receipts, net of excise tax and VAT derived
from performance of invasive cosmetic
surgeries, procedures, and body
enhancements for aesthetic purposes.
Excise tax exempt are the following:
• Procedures necessary to ameliorate a

deformity arising from, or directly related
to a congenital or developmental
defect or abnormality, a personal injury
resulting from an accident or trauma, or
disfiguring disease, tumor, virus
or infection; and
• Cases or treatments covered by the

National Health Insurance Program.
62
NIRC of 1997 RA 10963
(No current
Excise Tax on Sweetened Beverages refer to non-alcoholic
tax rule)
Sweetened beverages of any constituion (liquid, power or
Beverages (SB) concentrates) that are pre-packed & sealed in
accordance with FDA standards that contain
caloric and/or non-caloric sweeterners added by
the manufacturers and shall include to the
following, as described in the Food Category
System from Codes Alimentarius Food Category
Descriptions:
(a) Sweetened Juice Drinks

(b) Sweetened Tea
(c) All carbonated beverages
(d) Flavored water
(e) Energy and sports drinks
(f) Other powdered drinks not classified as milk,
juice, tea and coffee
(g) Cereal and grain beverages and
(h) Other non-alcoholic beverages that contain
added sugar
63
NIRC of 1997 RA 10963
(No current
Excise Tax on
tax rule)
Sweetened Sec. 150-B Imposes a tax per liter of volume
Beverages (SB) capacity on sweetened beverages based on the
following schedule:
Using purely caloric sweetener, purely non-caloric

sweetener, or mixture of both -
P6.00/liter
Using purely high-fructose corn syrup or in
combination with any caloric or non-caloric
sweetener -
P12.00/liter
Using purely coconut sap sugar / purely steviol
glycosides - exempt
64
NIRC of 1997 RA 10963
The following products are not considered

Excise Tax on (No current tax rule) excisable products under this provision:
Sweetened Beverages
1. All milk products
2. 100% natural fruit juices
3. 100% natural vegetable juices
4. Meal replacement and medically indicated
beverages
5. Ground coffee, instant soluble coffee, and pre-
packaged powdered coffee products
65
NIRC of 1997 RA 10963
Sec. 151
• Excise tax of P10/metric ton Increased excise taxes on domestic or
Excise Tax
on coal and coke imported coal and coke, notwithstanding
Mineral Products
• 2% of actual market value of any incentives granted in any law or special
Coal & Coke
the gross output of all law, to wit:
nonmetallic minerals and
quarry resources Effective 1 Jan. 2018 PHP50/metric ton
• Metallic minerals are 1 Jan. 2019 100/metric ton
subject to the following 1 Jan. 2020 150/metric ton
taxes: • Increased excise tax on nonmetallic and
- copper and other metallic metallic minerals to 4%
minerals – 1 to 2%; • Increased excise tax on indigenous
- gold and chromite – 2% petroleum to 6%
• Indigenous petroleum is
subject to 3% excise tax
66
Adjustments in
Documentary Stamp Tax (DST)
67
NIRC of 1997 RA 10963
Keeping of Sec. 232 All that are required All that are required by law to
books by law to pay internal pay internal revenue taxes
Of accounts revenue taxes shall keep a shall keep and use relevant
journal and a ledger or their and appropriate set of
equivalents. bookkeeping records.
Those whose quarterly sales, Books of accounts with gross

earnings, receipts, or output annual sales, earnings, receipts
do not exceed PHP50,000 or output exceeding PHP3m
shall keep and use simplified must be audited by a CPA.
set of bookkeeping records.
Books of accounts with gross

quarterly sales, earnings,
receipts or output exceeding
PHP150,000 must be audited
by a CPA.
70
NIRC of 1997 RA 10963
Registration Sec. 236 (A) Registration shall contain Additional provision:

requirements a taxpayer’s name, style, place of The Commissioner shall simplify
residence, business and other the business registration and tax
information required by the compliance requirements of self-
Commissioner. employed individuals and/or
professionals
Sec. 236 (G) The following are the
persons required to register for VAT: The following are the persons
• With gross sales or receipts for the required to register for VAT:
past 12 months, other than those that
are VAT–exempt, have exceeded • With gross sales or receipts for
PHP1.5m. the past 12 mos, other than those
• With reasonable grounds that the that are VAT–exempt, have
gross sales or receipts for the next 12 exceeded P3m.
months, other than those that are VAT-
exempt, will exceed PHP1.5m. • With reasonable grounds that
the gross sales or receipts for the
Sec. 236 (H) VAT exempt persons who next 12 months, other than those
elected to register for VAT shall not be that are VATexempt, will exceed
entitled to cancel his registration for P3m.
the next three years.
71
NIRC of 1997 RA 10963
Registration Sec. 236 (H) VAT exempt Additional provision:

requirements persons who elected to register Persons who elected to pay
for VAT shall not be entitled to the 8% tax on gross sales or
cancel his registration for the receipts, in lieu of the
next three years. graduated income tax rates,
shall not be allowed to avail
of the option of registering
for VAT.
72
NIRC of 1997 RA 10963
Issuance of Sec. 237 (A) All persons All persons subject to an

receipts or sales subject to an internal internal revenue tax shall at
or revenue tax shall for each the point of each sale and
commercial sale and transfer of transfer of merchandise or for
invoices merchandise or for services services rendered valued at
rendered valued at PHP25 or PHP100 or more, issue duly
more, issue duly registered registered receipts or sale or
receipts or sale or commercial invoices.
commercial invoices
prepared in duplicates.
73
NIRC of 1997 RA 10963
Additional provisions:
(continued..) Sec. 237 (A)… • Within five years from the effectivity
Issuance of of the Act and upon establishment of a
receipts or sales system capable of storing and
or processing the required data, taxpayers
commercial engaged in the export of goods and
invoices services, e-commerce, and under the
jurisdiction of the Large Taxpayers
Service are required to ISSUE electronic
receipts or sales or commercial invoices
in lieu of manual receipts or sales
or commercial invoices.
• Taxpayers not required to issue

electronic receipts or sales or
commercial invoices may opt to do so.
• Digital records must be kept in the

place of business for a period of three
years.
74
NIRC of 1997 RA 10963
No existing Sec. 237-A. Within 5 years from the

(continued..) effectivity of the Act and upon
Issuance of provision
establishment of a system capable of
receipts or sales storing and processing the required
or data, taxpayers engaged in the export
commercial of goods and services, and under the
invoices jurisdiction of the large taxpayers
service are required to
ELECTRONICALLY REPORT their sales
data to the BIR through the use of
electronic point of sales systems.
Machines, fiscal devices and fiscal

memory devices shall be at the expense
of the taxpayer.
75
NIRC of 1997 RA 10963
The data processing of sales and

(continued..) No existing purchase data shall comply with the
Issuance of provision provisions of R.A. No. 10173 or the
receipts or sales Data Privacy Act, the unlawful
or divulgence of taxpayer information
commercial under the Tax Code and other laws
invoices relating to the confidentiality of
information.
Policies, risk management

approaches, actions, trainings,and
technologies to protect the cyber
environment, organization, and data
shall be established in compliance
with R.A. No. 10175 or the Cybercrime
Prevention Act.
76
NIRC of 1997 RA 10963
On penalties - Sec. 249 Interest of Interest imposed shall be DOUBLE

INTEREST 20% per annum on THE LEGAL INTEREST RATE for loans
any unpaid amount or forbearance of any money in the
of tax. absence of an express stipulation as
set by BSP.
Deficiency interest is
due from the date Delinquency and deficiency interest
prescribed for its shall in no case be imposed
payment simultaneously.
until full payment
thereof.
77
NIRC of 1997 RA 10963
On penalties – Sec. 254 (upon Increased the fine to not

WILLFULL conviction thereof)… less than PHP500,000 but
ATTEMPT TO Fine of not less than not more than PHP10m
EVADE OR PHP30,000 but not and imprisonment of not
DEFEAT A TAX more than P100,000 less than six years but not
and imprisonment of more than ten years.
not less than two
years but not more
than four years for
WILLFULL attempt to
evade or defeat any
tax.
78
NIRC of 1997 RA 10963
On penalties – Sec. 264 (upon conviction)… Increased the fine to not less
FAILURE/ Fine of not less than PHP1,000
REFUSAL TO than P500,000 but not more
but not more than P50,000 and than PHP10m and
ISSUE RECEIPTS/
PRINTING
imprisonment of not less than imprisonment of not less
VIOLATIONS two years but not more than than six years but not more
four years for the following: than ten years.
• Printing of receipts or sales or
commercial invoices w/o Included printing of
authority from the BIR; or fraudulent receipts to the list
• Printing of double or multiple of offenses.
sets of invoices or receipts; or
•Printing of unnumbered
receipts or sales or commercial
invoices, not bearing the name,
business style, Taxpayer
Identification Number, and
business address of the person
or entity
79
NIRC of 1997 RA 10963
Sec. 264-A Imposes a penalty of

On penalties – No existing penalty provisions 1/10 of 1% of annual net
CRM-POS in case of failure to transmit income reflected in the audited
data entered on Cash Register financial statements for the 2nd
Machine (CRM)/ Point of Sales year preceding the current
System (POS) machines to taxable year for each day of
BIR’s electronic sales reporting violation or PHP10,000 whichever
system. is higher, except if failure to
transmit is due to force majeure
or causes beyond the control of
the taxpayer.
If the aggregate number of days

of violation exceed 180 days
within a taxable year, an
additional penalty of permanent
closure of the taxpayer shall be
imposed.
80
NIRC of 1997 RA 10963
On penalties – No existing penalty Sec. 264-B Imposes a fine of not

CRM-POS provisions in case of less than P500,000 but not more
purchase, use, possession, than P10m, and imprisonment of
sale or offer to sell, not less than two years but not
installment, transfer, more than four years.
update, upgrade, keeping or
maintaining of sales Cumulative suppression of
suppression devices. electronic sales record in excess
of P50m shall be considered as
economic sabotage and shall be
punished in the maximum
penalty.
81
NIRC of 1997 RA 10963
Sec. 265-A Any person found to be

On penalties – No existing penalty engaged in the sale, trade, delivery,
FUEL MARKING provisions for offenses distribution or transportation of
(UNMARKED FUEL) relating to fuel marking unmarked fuel in commercial quantity
held for domestic use or merchandise
and any person who causes the removal
of the official fuel marking agent from
marked fuel, and the adulteration or
dilution of fuel intended for sale to the
domestic market, or the knowing
possession, storage, transfer or offer for
sale of fuel obtained as a result of such
removal, adulteration or dilution shall be
penalized as follows:
• 1st offense: a fine of PHP2.5m

• 2nd offense: a fine of PHP5m
• 3rd offense: a fine of PHP10m and
revocation of license to engage in any
trade or business
82
NIRC of 1997 RA 10963
Any person who commits any of the
following acts shall, upon conviction, be
On penalties – No existing penalty
counterfiet FUEL punished by a fine of not less than P1M
provisions for offenses
MARKERS BUT NOT MORE THAN P5M and suffer
relating to fuel marking
imprisonment of not less than four years
but not more than eight years:
1. making, importing, selling, using or

possessing fuel markers without express
authority;
2. making, importing, selling, using or
possessing counterfeit fuel markers;
3. causing another person or entity to
commit any of the 2 preceding acts; or
4. causing the sale, distribution, supply or
transport of legitimately imported, in-
transit, manufactured or procured
controlled precursors and essential
chemicals, in diluted, mixtures or in
concentrated form, to any person or
entity penalized in subsections
(a), (b), or (c) hereof.
83
NIRC of 1997 RA 10963
On penalties – ON No existing penalty Any person who willfully inserts, places, adds or attaches
PERSONS, FUEL provisions for directly or indirectly, through any overt or covert act,
MARKING offenses relating to whatever quantity of any unmarked fuel, counterfeit
fuel marking 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 of this Act
shall, upon conviction, be punished by a fine of not less
than P5M BUT NOT MORE THAN P10M, and suffer
imprisonment of not less than four years but not more
than eight years.
Any person who is authorized, licensed or accredited to

conduct fuel tests, who issues false or fraudulent fuel
test results knowingly, willfully or through gross
negligence, shall suffer the additional penalty of
imprisonment ranging from one year and one day to two
years and six months.
The additional penalties of revocation of the license to

practice his/her profession in case of a practitioner, and
the closure of the fuel testing facility, may also be
imposed at the instance of the court.
84
NIRC of 1997 RA 10963
For the incremental revenues from the

Earmarking of Sec. 288 on TRAIN, for 5 years from effectivity,
incremental Disposition of incremental revenues shall be appropriated
revenues Incremental as follows:
Revenues
• Not more than 70% to fund infrastructure
projects (e.g., mass transport and new road
network, military infrastructure, sports
facilities for public schools, potable drinking
water supplies)
• Note more than 30% to fund:

- Programs supporting the sugarcane
industry
- Social mitigating measures and
investments in education, health, social
protection, and housing among others.
- Social welfare and benefits programs
• [ITEM VETOED] Incremental revenues

from tobacco taxes shall be covered by
Section 3 of R.A. No. 7171 and Section 8 of
R.A. No. 8240.
85
QUOTES
“In this world nothing can be said to

be certain, except death and taxes”
- Benjamin Franklin
Inventor and one of the Founding Fathers of the US
86
QUOTES
“We have what it takes to take what

you have.”
- suggested IRS Motto
87
QUOTES
“A tax is a fine for doing well, a fine is

a tax for doing wrong.”
- Mark Twain
American Humorist
88
END OF PRESENTATION
HAVE A NICE DAY!
89

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REPUBLIC OF THE PHILIPPINES

Tax Reform for Acceleration and

Ipher Q. Tabañag, CPA

18. RA 10963 – TRAIn, eff. Jan. 1, 2018

Republic Act (RA) 10963

“The Tax Reform for Acceleration and Inclusion

And this is effective, New Years Day of 2018.

This will be complemented by major tax

In addition to tax policy and administration reforms,

And this is effective, New Years Day of 2018.

A. Tax Policy Reforms:

C. Tax administration Reforms:

Not Over P10,000 5% Not Over P250,000 0%

Over 500,000 125,000 + 32% of the

Not Over P250,000 0%

Over P250,000 but not 15% of the excess

Over P400,000 but not P22,500 + 20% of the

Over 800,000 but not P102,500 + 25% of the

Over P2,000,000 but P402,500 + 30% of the

Over 8,000,000 P2,202,500 + 35% of the

B. Personal Income (Same Tax table

• 8% of gross sales/receipts and other non-

• Graduated rates in (A) above.

- On their income from the conduct of trade or

• If exceeding the VAT threshold – at graduated rates

• If below the VAT threshold – either 8% of gross

On personal and Sec. 35 and 79 (D)

I15 PWD. IS THE ADDITIONAL DEPENDENTS FOR PWD deemed revoked?

NIRC of 1997 RA 10963

On deduction for Sec. 34 (M)

NIRC of 1997 RA 10963

On minimum wage Sec. 24 (A) (2) MWEs are exempt

I36 Ipher-Main; 07/01/2018

NIRC of 1997 RA 10963

On the exemption of Exemption up to P82,000 exemption for the 13th

I13 Ipher-Main; 07/01/2018

On Fringe benefit tax Sec. 33 (A) FB are subject Effective 1 January

NIRC of 1997 RA 10963

On GSIS, SSS and Sec. 32(B)(7)(f)

NIRC of 1997 RA 10963

NIRC of 1997 RA 10963

On filing of tax returns Sec. 51 (A) (2) (a) An An individual whose

I23 Ipher-Main; 07/01/2018

NIRC of 1997 RA 10963

I24 Ipher-Main; 07/01/2018

NIRC of 1997 RA 10963

The certificate of withholding, filed by the

I25 Ipher-Main; 07/01/2018

NIRC of 1997 RA 10963

I26 Ipher-Main; 07/01/2018

On Passive income Sec. 24 (B) (1) Philippine • PCSO and lotto

Interest income from a • Interest income from a

On cash and/or Sec. 24 (B) (2) Cash

On capital gains from  Individual citizen and

On optional standard Sec. 34. (L) In lieu of the

In case of a corp xxx it

GOCCs, agencies or Sec. 27 (C). GSIS, SSS, Corporate income tax

On Payment of 2nd Sec. 56 (A) (2) When a tax

On Withholding of Sec. 57 (B)xxx requires Same rates of 1% to 32%