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Didn’t Know
Did you know that there are other provisions in the approved TRAIN tax reform aside from the reduced personal
income tax rates, new sugar tax, oil and fuel tax, and automobile excise tax?
By now, we’re most likely familiar already with those tax items. Still, the approved Tax Reform for Acceleration and
Inclusion (TRAIN) bill is much more comprehensive and includes dozens of other tax provisions not highlighted or
explained very well in mainstream media.
We explain below these relatively unknown tax items. Here are 10 TRAIN tax reform provisions that you probably do
not know — but ought to know.
Lotto Winnings and PCSO Prizes None (Tax-exempt) 20% if amount is above P10,000
4. Tax on pre-terminated long-term time deposits
Long-term time deposits (TD), or time deposits with duration of 5 years and 1 day, will continue to be tax-exempt.
However, the tax on interest income of these deposits once preterminated has been changed.
From the current rate of 5-20%, the tax charged on the interest income of long-term time deposits that are
preterminated (meaning, withdrawn prior to the scheduled maturity date) has been increased to a fixed 20%.
8. Donor’s Tax
The donor’s tax was revised to a flat rate of 6% regardless of the relationship between the donor and the
donee. Previously, the donor’s tax was 2% to 15% if the donor and donee are related, and 30% if the donation was to
a stranger.
Donations or gifts below P250,000 are tax-exempt. Donations with value of at least P250,000 are taxed using the
new rate of 6% on the amount in excess of P250,000.
9. Estate Tax
Under TRAIN, the estate tax is now a flat 6% rate on the amount in excess of P5 million.
Estates with a net value of P5 million and below will be tax-exempt. Family homes that are valued at no more than
P10 million will also be exempted. Under current tax laws, only family homes worth P1 million are tax-exempt.