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AUTHORS’ PROFILE

Neil and Alina Sison (NAS: The Professional-in-Pajamas, a.k.a. Accountant-in-Pajamas) are the founders of Sison Corillo Parone & Co. (SCP & Co./www.scp-ph.com), now one of the top accounting firms in the Philippines and SJC Group of Companies. It is composed of over 12 companies engaged in professional services, education, training and certification, software and information technology, retail, construction and real estate, sales and marketing.

They are the authors of best-selling books: 1) Pass the CPA Board Exam, 10x the Probability, 2) Doctors can Avoid Unnecessary Taxes, 3) Doctors Taxes Made Easy, 4) Dentist Taxes Made Easy, and 5) EntraProfessional Accountants: 50 Stories. They have written 5 books to date and counting.

They consider themselves as Entrepreneurs by Intentional Accident.

They began their careers as ordinary employees for about 9 years. When Neil is applying for a job, he is either overqualified or underqualified for a position. He doesn’t want to work for a job he does not love to do. So, he focused on establishing an accounting practice, just to “employ 6 people would be enough.” A work closest to his heart. Right now, they manage more than 600 employees.

NAS have about 25 years each of expertise in the fields of organizational leadership, operations, taxation, financial and business fraud audit, business risk management, systems development and implementation, IT audit, business process outsourcing, business set-up and registration, human resource management and general business administration.

Neil has become a most-sought after and one of the in-demand inspirational speakers who talks from an intelligent heart: An Intelligent Heart Speaker. He was trained in Dale Carnegie School of Communications and Guthrie-Jensen programs. As a seasoned speaker, he has been travelling all over the country providing trainings on extraordinary attitude, work values, leadership and supervisory, counseling and mentoring, communication, sales negotiation and customer service.

He is Certified Public Accountant (CPA), Certified Fraud Examiner (CFE), Certified Internal Auditor (CIA), Certified Information Systems Auditor (CISA), Registered Financial Advisor (RFA), Certified Real Estate Appraiser (CREA), Certified Real Estate Broker (CRB), Certified Digital

Marketer (CDM), Certified Tax Return Preparer (CTRP) and a holder of various IT Certifications. He has a total of 15 certifications.

Alina is a Certified Public Accountant (CPA), Certified Internal Auditor (CIA), Registered Financial Advisor (RFA), Certified Real Estate Broker (CRB), and a holder of various IT Certifications.

They are graduates from the province UP Tacloban. Their mission:

Extraordinary Professionals. Heroic Professionals.

DISCLAIMER

This e-book is intended to aid the tax payers or their bookkeepers for an easy understanding and simplified reference of the TRAIN Law. Certain examples, opinions and interpretations cited here are only based on our own interpretation and available Implementing Rules and Regulations as of the release of this e-book. This, however, may not be used in lieu of an expert opinion. For more clarification, you may still need to consult an expert accountant or lawyer to address your specific concern.

INTRODUCTION

specifically for

PhilTax Window members or subscribers, for simpler and better

understanding of the new tax law.

This ebook TRAIN

Law Simplified

is

made

Someone asked, “I am an engineering consultant and I have learned from my accountant that with the new tax law I could have big savings in my tax returns. Is it true?”

Yes, it’s true. As a self-employed individual, you have an option to choose between the graduated tax rate and 8% flat tax rate provided, that, your sales or receipts are within the VAT threshold. You have a choice which option will benefit you.

There were also statements like, “I am just a simple employee and I think I won’t really feel the effect since most of the beverages I am buying will increase its price anyway”.

Well, it’s also true that excise tax on sweetened beverages increased but if you look at it on the other side, it may actually lead you to look for other healthier alternatives.

It only boils down to one conclusion that each of us have different opinion and understanding on our tax law. Most of us think it is a burden on one’s pocket. But it only depends on how we look at it. And we saw it as an opportunity to encourage every tax payer to be knowledgeable enough, know your options and pay the right taxes.

But, why are we doing this?

Our government needs our help to realize their planned projects, like, infrastructures and other “Build, Build, Build” projects which will not only benefit them but all of us as a citizen of our country. We know for a fact that our government greatly depends on the taxes that we are paying. But, what if taxes collected are not enough? Where will the government get its funds?

If we really want change, it should have to start from us. We heard that, with this TRAIN law, the government expects to generate around 80 to 90 billion pesos per year. However, what we believe is that, if each of us will pay the right taxes, the government will make more than enough.

We want to help government collect and the citizens or taxpayer pay the right taxes. With that in mind, we made an effort to summarize the TRAIN for you for easy reference and understanding.

OVERVIEW

The Tax Reform for Acceleration and Inclusion (TRAIN) is the first package of the comprehensive tax reform proposed by President Rodrigo Duterte’s administration.

The TRAIN law program aims to create a more just, simple and effective system of tax collection, as per the constitution, where the rich will have a bigger contribution and the poor will benefit more from the government’s programs and services.

TRAIN law seeks to raise P130 billion in revenue in order to facilitate the funding of the government’s Build, Build, Build infrastructure program and socio-economic programs.

The vision of TRAIN law is to achieve the following:

1. Poverty rate reduced from 26% to 17% (or some 10 million Filipinos uplifted from poverty).

2. Law-abiding country.

3. Peace within the country and with our neighbors.

4. Achieve high middle-income status, where per capital gross national income (GNI) increased from USD 3,000 to USD 4,200 by 2022 in today’s money.

5. Eradicate extreme poverty.

6. Inclusive economic and political institutions where everyone has equal opportunities.

7. Achieve high income status where per capital GNI increases from USD 3,000 to USD 12,000 by 2040 in today’s money.

TRAIN has finally been signed into law by President Duterte on December 19, 2017 as Republic Act No. 10963. It addresses several weaknesses of the current tax system such as lowering and simplifying personal income taxes, simplifying estate and donor’s taxes, expanding the value-added tax (VAT) base, adjusting oil and automobile excise tax, and introducing excise tax on sugar-sweetened beverages.

TRAIN has lowered the income tax rates in the personal income tax schedule of individual taxpayers and introduced a new tax rate equivalent to 8% allowing individual taxpayers to have significant tax savings and higher take-home pays. It also made the taxation for estate and donor’s taxes simpler and lower through the implementation of a 6% flat tax rate on net estate and net donations. Certain allowable deductions from gross

estate has also been increased. A considerable increase in VAT threshold is also one of the substantial amendments in TRAIN. From the P1,919,500 to P3,000,00 VAT threshold, a substantial number of taxpayers has now availed VAT exemption. Amendments increasing excise taxes particularly on petroleum, mineral products and automobiles were made and a tax on sugar-sweetened beverages has been implemented.

We’ve made this e-book color-coded for your easy reference. Please see below Color Coding guidance:

Red Common for all

Blue Employed

Violet Self-employed/ Professional

Pink Both Employed and Self-employed/ Professional

Orange Corporation

Yellow Common for all except for employed

Green Others

Be it noted that some of the amendments included in the law has corresponding VETO provision by the President. We have included notes for your reference.

TABLE OF CONTENTS

Page

Introduction .

 

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Overview .

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7

I.

Power and Duties of Internal Revenue

 

11

II. Tax on Income

 

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III. Tax on Corporation

 

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15

IV. Computation of Taxable Income

 

16

V. Computation of Gross Income

 

17

VI. Allowable Deduction

 

18

VII. Returns and Payment of Tax

 

19

VIII. Estate and Trust

 

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21

IX. Quarterly Corporate Income Tax Annual Declaration and Quarterly Payment of Income Taxes

 

22

X. Estate and Donor’s Taxes

 

22

XI. Value-Added Tax

 

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26

XII. Other Percentage Taxes

 

32

XIII. Excise Tax on Certain Goods

 

33

XIV. Provision Regulating Business of Persons Dealing in Articles subject to Excise Tax

 

39

XV. Documentary Stamp Tax

 

41

XVI. Compliance Requirements

 

45

XVII. Administrative Provisions

45

XVIII. Statutory Offenses and Penalties

 

48

XIX. Crime, Other Offenses and Forfeitures

 

49

XX. Penalties imposed on Public Officers

 

53

XXI. Special Disposition of Certain National Internal Revenue

 

Taxes .

 

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54

I.

POWERS AND DUTIES OF INTERNAL REVENUE

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Power to obtain information, and to summon, examine, and take testimony of

persons

 

Additional Provision:

Sec. 5 (b) The power of the commissioner to obtain information from any person

other than the person whose internal revenue tax liability is subject to audit or investigation or from any office or officer of the national and local governments, government agencies and

Cooperative Development Authority shall submit to the Bureau a tax incentive report, which shall include information on the income tax, value- added tax, and other tax incentives availed of by cooperatives registered and enjoying incentives under Republic Act No. 6938. The information submitted by the Cooperative Development Authority to the Bureau shall be submitted to the Department of Finance and shall be included in the database created under Republic Act No. 10708 otherwise known as Tax Incentives Management and Transparency Act (TIMTA).

instrumentalities.

B.

Examination of Returns and Determination of Tax Due

Sec. 6 (A) After a return has been filed, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax.

The Commissioner or his duly authorized representative shall have the authority notwithstanding any law requiring the prior authorization of any government agency or instrumentality.

C.

Authority of the Commissioner to Prescribe Real Property Values

Sec. 6 (E) The Commissioner is hereby authorized to determine the fair market value of real properties.

The Commissioner shall, upon mandatory consultation with competent appraisers both from the private and public sectors, and with prior notice to affected taxpayers, determine the fair market value of real properties, subject to automatic adjustment once every three (3) years through rules and regulations issued by the Secretary of Finance. No adjustment in zonal valuation shall be valid unless published in a newspaper of general circulation or

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

posted in conspicuous public places. The basis of any valuation, shall be public records open to the inquiry of any taxpayer.

II. TAX ON INCOME

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A. Rates of Income Tax on Individual

 

Sec. 24 (A) (2) Rates of Tax on Taxable Income of Individuals - Compensation income earners and self-employed and/or professionals.

A. For Compensation income earners Effective January 1, 2018

Amount of Net Taxable Income

Amount of Net Taxable Income

Over

But Not

Rate

Over

But Not

Rate

Over

Over

10,000

5%

250,000

0%

10,000

30,000

500 + 10% of the excess over 10,000

250,000

400,000

20%

of

the

   

excess over

 

250,000

30,000

70,000

2,500 + 15% of the excess over 30,000

400,000

800,000

30,000 + 25% of the excess over

   

400,000

70,000

140,000

8,500 + 20% of the excess over 70,000

800,000

2,000,000

130,000 + 30% of the excess over

   

800,000

140,000

250,000

22,500 + 25% of the excess over 140,000

2,000,000

8,000,000

490,000 + 32% of the excess over

   

2,000,000

250,000

500,000

50,000 + 30% of the excess over 250,000

8,000,000

2,410,000 + 35% of the excess over 8,000,000

500,000

125,000 + 32% of the excess over 500,000

 

Example: Ana is an accounting staff earning P20,000 monthly salary with 3 qualified dependents.

Example: Ana is an accounting staff earning P20,000 monthly salary with 3 qualified dependents.

National Internal Revenue Code of 1997 R.A. No. 10963 or TRAIN Law Basic Salary (P20,000
National Internal Revenue Code of 1997
R.A. No. 10963 or TRAIN Law
Basic
Salary
(P20,000
x
12
P240,000
Basic Salary (P20,000 x 12
mos.)
P240,000
mos.)
Less: Contribution to SSS,
PHIC, HDMF
11,175.6
Less:
Contribution
to
11,175.6
SSS,
PHIC,
Personal Exemption
50,000
HDMF
Additional
(P25,000 x 3)
exemption
75,000
Taxable Income
P228,824.4
Taxable Income
P103,824.4
Bracket over 70,000 to 140,000
8,500
20% of the excess over 70,000
6,764.88
Tax Due: Ana did not exceed
P250,000, she is not liable to pay any
tax at the end of the taxable year
Tax Due
P15,264.88
Effective January 1, 2023
Amount of Net Taxable Income
Over
But Not
Rate
Over
250,000
0%
250,000
400,000
15%
of
the
excess over
250,000
400,000
800,000
22,500 + 20% of
the excess over
400,000
800,000
2,000,000
102,500 + 25% of
the excess over
800,000
2,000,000
8,000,000
402,500 + 30% of
the excess over
2,000,000
8,000,000
2,202,500 + 35%
of the excess
over 8,000,000
B.
For
purely
self-employed
and
professionals
Earnings
Rate
Below 250,000
0%
3,000,000
and
Can choose between:
below
1. an 8% flat tax rate on
gross sales/receipt;
2. Based on the
graduated income tax
rate schedule
Over 3,000,000
Subject
to
graduated
income
tax
rate
schedule
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive

National Internal Revenue Code of 1997

National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income

B.

20%.

A

National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income
National Internal Revenue Code of 1997 B. 20%. A Rate of tax on certain passive income

Rate of tax on certain passive income

of 1997 B. 20%. A Rate of tax on certain passive income Sec. 24 (B) (1)

Sec. 24 (B) (1) Philippine Charity Sweepstakes Office (PCSO) and lotto

winnings are exempt from the final tax of

7.5% final tax on interest income

received by an individual taxpayer from a depository bank under the expanded

foreign currency deposit system.

C.

5%

Sec. 24 (C) A final tax at the rates

prescribed below is hereby imposed on the sale of shares of stock in a domestic corporation, except shares sold, or disposed of through the stock exchange.

- Not over P100,000

10% - Any amount in excess of P100,000

R.A. No. 10963 or TRAIN Law

Example:

Gross Sales/ Receipts

P700,000

In excess of 250,000

450,000

Flat Tax Rate

x 8%

Tax Due

P36,000

C. For Mixed Income Earners

1. All income from compensation will be subject to taxes imposed based on the graduated income tax rates.

2. All income from business or practice of profession will be taxed based on the graduated income tax rate. For gross sales/receipts which do not exceed the P3,000,000 VAT threshold, the taxpayer has an option to be taxed at an 8% flat tax rate.

taxpayer has an option to be taxed at an 8% flat tax rate. PCSO and lotto

PCSO and lotto winnings exceeding P10,000 would be subject to the 20% final tax.

An increase to 15% on final tax imposed on Interest income received by an individual taxpayer from a depository bank under the expanded foreign currency deposit system.

bank under the expanded foreign currency deposit system. A final tax at the rate of 15%

A final tax at the rate of 15% is imposed on the sale of shares of stocks in a domestic corporation, except shares sold or disposed of through the stock exchange.

shares sold or disposed of through the stock exchange. Capital Gains from Sale of Shares of
shares sold or disposed of through the stock exchange. Capital Gains from Sale of Shares of

Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange

or disposed of through the stock exchange. Capital Gains from Sale of Shares of Stock Not
or disposed of through the stock exchange. Capital Gains from Sale of Shares of Stock Not

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

Internal Revenue Code of 1997 R.A. No. 10963 or TRAIN Law Beginning January 1, 2018, the

Beginning January 1, 2018, the 15% Preferential Tax treatment shall not apply for all employees of RHQs, ROHQs, OBUs and PSCS registered with the Securities and Exchange Commission.

Note: This Item has been VETOED by

Note: This Item has been VETOED by

President Rodrigo R. Duterte.

Note: This Item has been VETOED by President Rodrigo R. Duterte.
Item has been VETOED by President Rodrigo R. Duterte. D. Alien individuals and qualified Filipinos employed

D. Alien individuals and qualified Filipinos employed by specific employers

Sec. 25 (C), (D) and (E) A rate of 15% final withholding tax on the gross compensation income of alien individuals and qualified Filipinos employed by the following employers:

Alien Individual Employed by Regional or Area Headquarters (RHQs) and Regional Operating Headquarters (ROHQs) of Multinational Companies

Alien Individual Employed by Offshore Banking Units (OBUs)

Alien Individual Employed by Petroleum Service Contractor and Subcontractor (PSCS)

III. TAX ON CORPORATIONS

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

 

A.

Government-owned

or

-Controlled

Corporations,

Agencies

or

Instrumentalities

 

Sec.

27 (C) The provisions of existing

Corporate income tax exemption of Philippine Charity Sweepstakes Office (PCSO) is removed.

special or general laws to the contrary notwithstanding, all corporations, agencies, or instrumentalities owned or controlled by the Government, except the Government Service and Insurance System (GSIS), the Social Security System (SSS), the Philippine Health Insurance Corporation (PHIC), the local water districts (LWD) and the Philippine

Charity Sweepstakes Office (PCSO), shall pay such rate of tax upon their taxable income as are imposed by this Section upon corporations or associations engaged in a similar business, industry, or activity.

 

National Internal Revenue Code of 1997

 

R.A. No. 10963 or TRAIN Law

B.

Passive Income on Interest from Deposits and Yield or any other Monetary

Benefit from Deposit Substitutes and from Trust Funds and Similar

Arrangements, and Royalties

Sec. 27 (D) (1) The interest income derived by a domestic corporation from a depository bank under the expanded foreign currency deposit system shall be subject to a final income tax at the rate of

The interest income derived by a domestic corporation from a

depository bank under the expanded foreign currency deposit system shall

be

subject to a final income tax at the

 

rate of fifteen percent (15%) of such

seven and one-half percent (7.5%) of such interest income.

interest income.

C.

Capital Gains from the Sale of Shares of Stock Not Traded in the Stock Exchange

Sec. 27 (D) (2) A final tax at the rates prescribed below is hereby imposed on the sale of shares of stock in a domestic corporation, except shares sold, or disposed of through the stock exchange.

A

final tax at the rate of 15% is

imposed on the sale of shares of stocks in a domestic corporation, except shares sold through the stock exchange.

5% - Not over P100,000 10% - On any amount in excess of

P100,000

IV. COMPUTATION OF TAXABLE INCOME

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Definition of Taxable Income

Sec. 31 The term ‘taxable income’ means the pertinent items of gross income, less the deductions and/or personal and additional exemptions, if any, authorized for such types of income by this Code or other special laws.

The personal and additional exemptions were removed.

V. COMPUTATION OF GROSS INCOME National Internal Revenue Code of 1997 A. 13th Month Pay

V. COMPUTATION OF GROSS INCOME

National Internal Revenue Code of 1997

A. 13th Month Pay and Other Benefits

Sec. 32 (B)(7)(e) 13th month pay and other benefits amounting to P82,000 is exempted from the computation of gross

income.

The President shall adjust the amount of income tax exemption to its present value using the Consumer Price Index (CPI) for other benefits such as productivity incentives and Christmas bonus every three years.

Example: Ana is an accounting staff earning P20,000 monthly salary. She

received incentive bonus and 13 th month pay amounting to P80,000 and P20,000,

respectively.

 

Non-

Taxable

taxable

13th month pay

20,000

Incentive Bonus

80,000

Exempt

(82,000)

18,000

B. Special Treatment of Fringe Benefit

Sec. 33 (A) A final tax of thirty-two percent (32%) is hereby imposed on the grossed-up monetary value of fringe benefit furnished or granted to the employee (except rank and file employees as defined herein) by the employer. The grossed-up monetary value of the fringe benefit shall be determined by dividing the actual monetary value of the fringe benefit by sixty eight percent (68%).

value of the fringe benefit by sixty eight percent (68%). R.A. No. 10963 or TRAIN Law

R.A. No. 10963 or TRAIN Law

by sixty eight percent (68%). R.A. No. 10963 or TRAIN Law 13th month pay, and other

13th month pay, and other benefits exempt from the computation of gross income is increased to P90,000.

The provision of power of the President to adjust the amount of benefit is removed.

Example: Ana is an accounting staff earning P20,000 monthly salary. She received incentive bonus and 13 th month pay amounting to P80,000 and P20,000, respectively.

 

Non-

Taxable

taxable

13th month pay

20,000

Incentive Bonus

80,000

Exempt

(90,000)

10,000

Incentive Bonus 80,000 Exempt (90,000) 10,000 A final tax of thirty-five percent (35%) is hereby imposed

A final tax of thirty-five percent

(35%) is hereby imposed on the grossed-up monetary value of fringe benefit furnished or granted to the employee (except rank and file employees as defined herein) by the employer. The grossed-up monetary value of the fringe benefit shall be determined by dividing the actual

monetary value of the fringe benefit

by sixty five percent (65%).

National Internal Revenue Code of 1997

Example: XYZ Co. purchased a residential unit and transferred the ownership of such property to Ana, a manager, as fringe benefit. The fair market value is P4,000,000. Compute for the fringe benefit tax.

Grossed-up monetary value (4,000,000/ 68%)

P5,882,353

Fringe Benefit rate

x 32%

Fringe Benefit Tax

P1,882,353

R.A. No. 10963 or TRAIN Law

Example: XYZ Co. purchased a residential unit and transferred the ownership of such property to Ana, a manager, as fringe benefit. The fair market value is P4,000,000. Compute for the fringe benefit tax.

Grossed-up monetary value (4,000,000/ 65%)

P6,153,846

Fringe Benefit rate

x 35%

Fringe Benefit Tax

P2,153,846

VI. ALLOWABLE DEDUCTION

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Deductions from Gross Income - Optional Standard Deduction

Sec. 34 (L) In lieu of the deductions allowed, an individual subject to tax, other than a nonresident alien, may elect a standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts, as the case may be.

Additional Provision:

A general professional partnership and the partners comprising such partnership may avail of the optional standard deduction only once, either by the general professional partnership or the partners comprising the partnership.

B.

Allowance of Personal Exemption for Individual Taxpayer

Sec. 35 Personal Exemption amounting to Fifty thousand pesos (P50,000); and Additional Exemption amounting to Twenty-five thousand pesos (P25,000) for each dependent not exceeding four (4).

Repealed

VII. RETURNS AND PAYMENT OF TAX

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A. Individual Return

Sec. 51 (A)(2)(a) An individual whose gross income does not exceed his total personal and additional exemptions for dependents shall not be required to file an income tax return. Provided, that a citizen of the Philippines and any alien individual engaged in business or practice of profession within the Philippine shall file an income tax return, regardless of the amount of gross income.

An individual whose taxable income does not exceed 250,000 shall not be required to file an income tax return.

Additional Provisions:

The income tax return (ITR) shall consist of a maximum of four (4) pages in paper form or electronic form, and shall only contain the following information:

 

1. Personal profile and information;

2. 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

3. Allowable deductions

4. Taxable income

5. Income tax due and payable

No Existing Provision

Sec. 51-A Individual taxpayers receiving purely compensation income, from only one employer in the Philippines for the calendar year, the income tax of which has been withheld correctly by the said employer shall not be required to file an annual income tax return. The certificate of withholding filed by the respective employers, duly stamped ‘received’ by the BIR, shall be tantamount to the substituted filing of income tax returns by said employees.

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

B.

Corporation Returns

Sec. 52 (A) The return shall be filed by the president, vice-president or other principal officer, and shall be sworn to by

such officer and by the treasurer or assistant treasurer.

Additional Provision:

The income tax return shall consist of a maximum of four (4) pages in paper form or electronic form, be filed by

the president, vice president or other principal officer, shall be sworn to by such officer and by the treasurer or assistant treasurer, and shall only contain the following information:

 

1. Corporate profile and information;

2. Gross sales, receipts or income from services rendered, or conduct of trade or business, except income subject to final tax as provided under this Code;

3. Allowable deductions under this Code;

4. Taxable income as defined in Section 31 of this Code; and

5. Income tax due and payable.

C.

Payment and Assessment of Income Tax for Individuals and Corporation

Sec. 56 (A)(2) Installment payment - When the tax due is in excess of Two thousand pesos (P2,000), the taxpayer other than a corporation may elect to pay the tax in two (2) equal installments in which case, the first installment shall be paid at the time the return is filed and the second installment, on or before July 15 following the close of the calendar year.

The second installment shall be paid on or before October 15 following the close of the calendar year.

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

D.

Withholding of Creditable Tax at Source

Sec. 57 (B) The Secretary of Finance may, require the withholding of a tax on the items of income payable to natural or juridical persons, residing in the Philippines, by payor- corporation/persons, at the rate of not less than one percent (1%) but not more than thirty-two percent (32%) thereof, which shall be credited against the income tax liability of the taxpayer for the taxable year.

Additional Provision:

Beginning January 1, 2019, the rate of withholding shall not be less than one percent (1%) but not more than fifteen percent (15%) of the income payment.

E.

Returns and Payment of Taxes Withheld at Source

Sec. 58 The return for final withholding tax shall be filed and the payment made within twenty-five (25) days from the close of each calendar quarter, while the return for creditable withholding taxes shall be filed and the payment made not later than the last day of the month following the close of the quarter during which withholding was made. Provided, that the Commissioner, with the approval of the Secretary of Finance, may require these withholding agents to pay or deposit the taxes deducted or withheld at more frequent intervals when necessary to protect the interest of the government.

The return for final and creditable withholding taxes shall be filed and the payment made not later than the last day of the month following the close of the quarter during which withholding was made.

The provision allowing the Commissioner of Internal Revenue to pay or deposit the taxes deducted or withheld tax at more frequent intervals is removed.

VIII. ESTATE AND TRUST

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Exemption Allowed to Estates and Trusts

Section 62. For the purpose of the tax provided for in this Title, there shall be allowed an exemption of Twenty thousand pesos (PhP20,000) from the income of the estate or trust.

Repealed

IX. QUARTERLY CORPORATE INCOME TAX ANNUAL DECLARATION AND QUARTERLY PAYMENTS OF INCOME TAXES

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Declaration of Income Tax for Individuals

Sec. 74 (A) Every individual subject to income tax, who is receiving self- employment income, whether it constitutes the sole source of his income or in combination with salaries, wages and other fixed or determinable income, shall make and file a declaration of his estimated income for the current taxable year on or before April 15 of the same taxable year.

Filing a declaration of estimated income is changed from April 15 to May 15.

B.

Return and Payment of Estimated Income Tax by Individuals

Sec. 74 (B) The amount of estimated income shall be paid in 4 installments. On which the fourth installment shall be paid on or before April 15 of the following calendar year.

Payment of fourth installment shall be paid on or before 15 May of the following calendar year.

C.

Income Tax Collected at Source

Sec. 79 (D) and (F) Personal Exemptions and Husband and Wife, respectively.

These provisions are removed.

X. ESTATE AND DONOR'S TAXES

 
 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Rates of Estate Tax

 

Sec. 84 Estate Tax table:

 

Estate tax rate is fixed at 6%.

 

Over

But not

Tax

Plus

Of the

 

Over

shall be

excess

 

over

 

P200,000

Exempt

 

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

 

1,215,000

20%

10,000,000

National Internal Revenue Code of 1997

Example:

Net Estate

P2,500,000

Tax at P2,000,000

135,000

11% of the excess over 2,000,000

55,000

Tax Due

P190,000

B. Computation of Net Estate

Sec. 86 (A) Deductions Allowed to the Estate of Citizen or a Resident

1. Expenses, losses, indebtedness, and taxes

- Funeral expenses not exceeding P200,000

- Judicial expenses

2. The Family home not exceeding P1,000,000

3. Standard deduction of P1,000,000

4. Medical expenses not exceeding P500,000

Sec. 86 (B) Deductions Allowed to Nonresident

Philippines is allowed the following deductions,

nonresident not a citizen of the

Estates

A

among others:

1. Expenses, losses, indebtedness, and taxes

- Funeral expenses not exceeding P200,000

- Judicial expenses

2. Property previously taxed

3. Transfers for public use

Sec. 86 (D) Miscellaneous Provisions. - No deduction shall be allowed in the case of a nonresident not a citizen of the Philippines, unless the executor, administrator, or anyone of the heirs, as the case may be, includes in the return required to be filed under Section 90 the value at the time of his death of that part of the gross estate of the nonresident not situated in the Philippines.

R.A. No. 10963 or TRAIN Law

Example:

Net Estate

P2,500,000

Estate tax rate

x 6%

Tax Due

P150,000

Estate tax rate x 6% Tax Due P150,000 Removed: • Funeral expenses • Judicial expenses

Removed:

Funeral expenses

Judicial expenses

Medical expenses

Increased:

Allowance for deduction of family home to

P10,000,000.

Standard deduction to

P5,000,000.

Removed:

Expenses,

losses,

indebtedness, and taxes.

Additional Provision:

A standard deduction of

P500,000.

A proportion of the

claims against the estate,

claims against insolvent persons, and unpaid mortgages may be claimed as a deduction from the estate.

This provision is removed.

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

C.

Notice of Death to be Filed

Sec. 89 In all cases of transfers subject to tax, or where, though exempt from tax, the gross value of the estate exceeds Twenty thousand pesos (PhP20,000), the executor, administrator or any of the legal heirs, as the case may be, within two (2) months after the decedent's death, or within a like period after qualifying as such executor or administrator, shall give a written notice thereof to the Commissioner.

Repealed

D.

Estate Tax Returns

Sec. 90 In all cases of transfers subject to the tax imposed herein, those have gross value of the estate exceeds Two hundred thousand pesos (P200,000), or regardless of the gross value of the estate, where the said estate consists of registered or registrable property shall file a return.

The exemption of P200,000 on the amount of gross estate is removed.

Sec. 90 (3) Estate tax returns showing a gross value exceeding Two million pesos (P2,000,000) shall be supported with a statement duly certified to by a Certified Public Accountant.

Certification by CPA shall now be required for those estate tax return exceeding Five million pesos

(P5,000,000).

Sec. 90 (B) The estate tax return shall be filed within six (6) months from the decedent's death.

The estate tax return shall be filed within one (1) year from the decedent’s death.

E.

Payment of Tax

Sec. 91 Payment of estate tax

Additional Provision:

Sec. 91 (C) Payment by Installment. In case the available cash of the estate is insufficient to pay the total estate tax due, payment by installment shall be allowed within two (2) years from the statutory date for its payment without civil penalty and interest.

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

Internal Revenue Code of 1997 R.A. No. 10963 or TRAIN Law Allow any withdrawals from the

Allow any withdrawals from the said deposit account which is subject to a final withholding tax of six

(6%).

which is subject to a final withholding tax of six (6%). The tax for each calendar
which is subject to a final withholding tax of six (6%). The tax for each calendar

The tax for each calendar year shall be six percent (6%) computed on the basis of the total gifts in excess of Two hundred fifty thousand pesos (250,000) exempt gift made during the calendar year whether the donee is a stranger or not.

the calendar year whether the donee is a stranger or not. Example: Net of Donation P700,000
the calendar year whether the donee is a stranger or not. Example: Net of Donation P700,000
the calendar year whether the donee is a stranger or not. Example: Net of Donation P700,000
the calendar year whether the donee is a stranger or not. Example: Net of Donation P700,000

Example:

Net of Donation

P700,000

In excess of:

250,000

Taxable Donation

450,000

Rate

x 6%

Tax Due

P27,000

Donation 450,000 Rate x 6% Tax Due P27,000 F. Payment of Tax Antecedent to the Transfer

F. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights

Sec. 97 Banks which has a knowledge of the death of the person, shall not allow any withdrawal from the said deposit account without the Commissioner certifying that taxes imposed thereon have already been paid.

The administrator of the estate or any one of the heirs may, when authorized by the Commissioner, withdraw an amount not exceeding P20,000 even without the certification from the Commissioner that the estate taxes have been paid.

G. Rates of Tax Payable by Donor

Sec. 99 (A) Donor’s Tax Rate

Over

But Not

Over

Tax

shall be

Plus

Of the

Excess

Over

P100,000

Exempt

P100,000

200,000

0

2%

P100,000

200,000

500,000

2,000

4%

200,000

500,000

1,000,000

14,000

6%

500,000

1,000,000

3,000,000

44,000

8%

1,000,000

3,000,000

5,000,000

204,000

10%

3,000,000

5,000,000

10,000,000

404,000

12%

5,000,000

10,000,000

1,004,000

15%

10,000,000

Sec. 99 (B) Tax Payable by Donor if Donee is a Stranger - When the donee or beneficiary is stranger, the tax payable by the donor shall be thirty percent (30%) of the net gifts.

Example:

Donated to relative:

Net of Donation

P700,000

Tax at P500,000

14,000

6% in excess of 500,000

12,000

Tax Due

P26,000

Donated to stranger:

Net of Donation

P700,000

Donor’s tax rate

30%

Tax due

P210,000

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

H.

Transfer for Less Than Adequate and full Consideration

Sec. 100 The amount by which the fair market value of the property exceeded the value of the consideration shall be deemed a gift and shall be included in computing the amount of gifts made during the calendar year.

Additional Provision:

The sale, exchange, or other transfer of property made in the ordinary course of business (a transaction which is a bona fide, at arm’s length, and free from any donative intent), will be considered as made for an adequate and full consideration in money or money’s worth.

I. Exemption of Certain Gifts

 

Sec. 101 Dowries or gifts made on account of marriage, the first P10,000 are exempt from donor’s tax.

Repealed

XI. VALUE- ADDED TAX

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Zero-Rated Sale

 

Sec. 106 (A)(2) VAT zero-rating on sale of goods classified as:

For Item 1 - Sale of gold to BSP is reclassified from export sales to exempt transactions. For Item 2 - The goods, supplies, equipment and fuel shall be used for international shipping or air transport operations. For Item 3, 4, 5 - shall be subject to 12% VAT upon the successful establishment and implementation of an enhanced VAT refund system that grants refunds of creditable

a)

The term export sales means:

1.

Sale of gold to the Bangko Sentral ng Pilipinas (BSP);

2. Sale of goods, supplies,

3.

equipment and fuel to persons engaged in international shipping or international air transport operations. Sale of raw materials or packaging materials to a nonresident buyer

National Internal Revenue Code of 1997

for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer’s goods and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the (BSP) 4. Sale of raw materials or packaging materials to export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production 5. Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws;

Foreign currency denominated sales

and other special laws; Foreign currency denominated sales B. Value-Added Tax on Importation of Goods Sec.

B. Value-Added Tax on Importation of Goods

Sec. 107 (A) There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to 10% based on the total value used by the Bureau of Custom in determining tariff and customs duties, plus customs duties, excise taxes.

R.A. No. 10963 or TRAIN Law

input tax within 90 days from filing of the VAT refund application with the BIR and all pending VAT refund claims as of 31 December 2017 shall be fully paid in cash by 31 December

2019.

Removed:

Foreign currency denominated sales

Note: This Item has been VETOED

Note: This Item has been VETOED

by President Rodrigo R. Duterte.

Note: This Item has been VETOED by President Rodrigo R. Duterte.

Note: The following are supposed to be included in the zero-rated sale but was vetoed by the President:

Sale and delivery of goods to:

(i)

Registered enterprise within a separate customs territory as provide under laws; and

(ii)

Registered enterprise within tourism enterprise zones as declared by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) subject to the provisions under Republic Act No. 9593 or The Tourism Act of 2009.

under Republic Act No. 9593 or The Tourism Act of 2009. The VAT on the Importation

The VAT on the Importation of Goods increased at Twelve percent

(12%).

National Internal Revenue Code of 1997

C. Rate and Base of Tax

Sec. 108 (A) Provision defines sale or exchange of services.

D.

R.A. No. 10963 or TRAIN Law

sale or exchange of services. D. R.A. No. 10963 or TRAIN Law Sale of electricity by

Sale of electricity by generation companies, transmission by any entity, and distribution companies, including electric cooperatives is included in the definition of sale or exchange of services.

included in the definition of sale or exchange of services. Transactions Subject to Zero Percent (0%)

Transactions Subject to Zero Percent (0%) Rate

Sec. 108 (B) Zero-rated sales of services include:

1. Services rendered to persons engaged in international shipping or international air transport operations, including leases of property for use thereof

2. Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP

3. Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed seventy percent (70%) of total annual production

For Item 1 - Those services shall be exclusive for international shipping or air transport operations For Items 2 and 3 - Subjected to 12% VAT upon successful establishment and implementation of an enhanced VAT refund system that grants refunds of creditable input tax within 90 days from filing of the VAT refund application with the BIR and all pending VAT refund

claims as of 31 December 2017 shall be fully paid in cash by 31 December

2019.

Note: This Item has been VETOED

Note: This Item has been VETOED

by President Rodrigo R. Duterte.

Note: This Item has been VETOED by President Rodrigo R. Duterte.

Note: The following are supposed to be included in the zero-rated sale but was vetoed by the President:

Services rendered to:

(i) Registered enterprise within a separate customs territory as provide under laws; and

(ii) Registered enterprise within

tourism enterprise zones as declared by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) subject to the provisions under Republic Act No. 9593 or The Tourism Act of 2009.

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

E. Exempt Transactions

Sec. 109 (1) Following transactions shall be exempt from the value-added tax:

For Item 1 - Importation of professional instruments and implements, tools of trade, occupation or employment, wearing apparel, etc. belonging to persons coming to settle in the Philippines or Filipinos or their families and descendants who are now residents or citizens of other countries, referred as overseas Filipinos, for their own use and not for sale, accompanying such persons, or arriving within a reasonable time. For Item 2 - Beginning January 1, 2021, the VAT exemption shall only apply to sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business, sale of real property utilized for socialized housing, sale of house and lot, and other residential dwellings with selling price of not more than Two million pesos P2,000,000. For Item 3 - Lease of a residential unit with a monthly rental not exceeding Fifteen thousand pesos

P15,000

1. Importation of professional instruments implements, wearing apparel, etc. belonging to persons coming to settle in the Philippines, for their own use and not for sale, accompanying such persons or arriving within 90 days before or after their arrival;

2. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business, or real property utilized for low-cost and socialized housing, residential lot valued at P1,500,000 and below, house and lot, and other residential dwellings valued at

P2,500,000.

3. Lease of a residential unit with a monthly rental not exceeding Ten thousand pesos P10,000

4. Importation of fuel, goods, and supplies by persons engaged in international shipping of air transport operations; and

5. Sale or lease of goods or properties or the performance of services, the gross annual sales and/or receipts do not exceed the amount of One million five hundred thousand pesos P1,500,000.

For Item 4 - Exemption of the importation of fuel, goods and supplies shall only apply if such are used for international shipping or air transport operations. For Item 5 - Sale or lease of goods or properties or the performance of services the, gross annual sales and/or receipts do not exceed the

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

 

amount of Three million pesos

P3,000,000.

Additional Provision:

Exemption for sale or lease of goods and services to senior citizens and persons with disability.

Exemption for transfer of property made by the parties involved during merger or

 

consolidation such as follows:

1. Property in exchange for stock in a corporation

2. Stock of a corporation in exchange of stock of another corporation

3. Securities of a corporation

in exchange for stock or securities of a corporation. Reference: Section 40 (C)(2) of NIRC

Exemption for association dues, membership fees, and other assessments and charges collected by homeowners’ associations and condominium corporation.

Exemption for sale of gold to BSP. Exemption for sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension beginning January 1, 2019

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

F. The input tax on domestic purchase or importation of goods or properties by a VAT-registered person

Sec. 110 (A) (2)(b) The input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed, shall be spread evenly over the month of acquisition and the 59 succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds

Additional Provision:

The amortization of the input VAT shall only be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized.

P1,000,000.

G. Refunds or Tax Credits of Input Tax

Section 112 (C) The Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed.

The Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed. The Commissioner should find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial.

In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within 30 days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals. The failure on the part of any official or agent or employee of the BIR to act on the application within the 90-day period shall be punishable under Sec. 269 of this Code.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals.

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

H. Return and Payment of Value-Added Tax

Sec. 114 (A) Every person liable to pay the value-added tax imposed shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer. The VAT-registered persons shall pay the value-added tax on a monthly basis.

Additional Provision:

Beginning January 1, 2023, the filing and payment shall be done within twenty-five (25) days following the close of each taxable quarter.

I. Withholding of Value-Added Tax

Sec. 114 (C) Government shall, before making payment on account of each purchase of goods and services which are subject to the value-added tax deduct and withhold a final value-added tax at the rate of five percent (5%) of the gross payment. Payment for lease or use of properties or property rights to nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment.

Beginning January 1, 2021, the VAT withholding system shall shift from final to a creditable system. The payment for lease or use of property rights to non-resident owners shall be subject to twelve percent (12%) withholding tax at the time of payment. The payments for purchases of goods and services arising from projects funded by Official Development Assistance (ODA) shall not be subject to the final withholding tax system.

XII. OTHER PERCENTAGE TAXES

National Internal Revenue Code of 1997

PERCENTAGE TAXES National Internal Revenue Code of 1997 R.A. No. 10963 or TRAIN Law This provision

R.A. No. 10963 or TRAIN Law

Internal Revenue Code of 1997 R.A. No. 10963 or TRAIN Law This provision is retained. Note:

This provision is retained.

Note: This Item has been VETOED

Note: This Item has been VETOED

by President Rodrigo R. Duterte.

Note: This Item has been VETOED by President Rodrigo R. Duterte.
Item has been VETOED by President Rodrigo R. Duterte. A. Tax on Persons Exempt from Value-Added

A. Tax on Persons Exempt from Value-Added Tax (VAT)

Sec. 116 Any person whose sales or receipts are exempt from the payment of VAT and who is not a VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts.

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

B.

Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through

the Local Stock Exchange or through Initial Public Offering

Sec. 127 (A) There shall be levied, assessed and collected on every sale, barter, exchange, or other disposition of shares of stock listed and traded through the local stock exchange other than the sale by a dealer in securities, a tax at the rate of one- half of one percent (1/2 of 1%) of the gross selling price or gross value in money of the shares of stock sold.

The tax rate imposed increase at the rate of six-tenths of one percent (6/10 of 1%).

C.

Returns and Payment of Percentage Taxes

Sec. 128 The Commissioner may prescribe the time for filing the return and time of payment, including a scheme of tax prepayment of other percentage taxes.

Repealed

XIII. EXCISE TAX ON CERTAIN GOODS

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Goods subject to Excise Taxes

 

Sec. 129 Excise taxes apply to goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition and to things imported.

Excise taxes also apply to the services performed in the Philippines.

B.

Cigars and Cigarettes

Sec. 145 (B) Cigarettes Packed by Hand shall be based on the following schedule:

Imposes excise tax on cigarettes packed by hand and packed by machines at the following schedule:

 

Effective Jan. 1, 2013 Jan. 1, 2014 Jan. 1, 2015

P12/pack

Effective Jan. 1, 2018 Jul. 1, 2018 Jan. 1, 2020 Jan 1, 2022

P32.50/pack

15/pack

35/pack

18/pack

37.50/pack

 

21/pack

40/pack

 

Jan. 1, 2016 Jan. 1, 2017

30/pack

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

Sec. 145 (C) Cigarettes Packed by Machine shall be based on the following schedule:

 

Effective

P11.50 and

More than

below

P12.00

Jan. 1, 2013 Jan. 1, 2014 Jan. 1, 2015 Jan. 1, 2016 Jan. 1, 2017

12.00/pack

25.00/pack

The rates of tax imposed shall be increased by 4% every year effective on January 1, 2024, through revenue regulations issued by the Secretary of Finance.

17.00/pack

27.00/pack

21.00/pack

28.00/pack

25.00/pack 29.00/pack

30.00/pack

30.00/pack

C. Manufactured Oils and Other Fuels

 

Sec. 148 Excise Tax Rate:

   

Manufactured Oils and Other Fuels

Excise tax rates

Manufactured Oils and Other Fuels

Jan.

Jan.

Jan.

1,

1,

1,

 

2018

2019

2020

Lubricating oils and greases

P4.50

 

per

Lubricating oils

P8.00

9.00

10.00

liter/kg

(per

liter) and

 
 

greases (per kg)

Processed gas

0.05 per liter

 

Processed

gas

P8.00

9.00

10.00

 

(per liter)

Waxes and petrolatum

3.50 per kg

 

Waxes

and

P8.00

9.00

10.00

 

petrolatum (per

 

kg)

Denatured alcohol

0.05 per liter

 

Denatured

P8.00

9.00

10.00

 

alcohol

(per

liter)

Naphtha, regular gasoline and other similar products of distillation

4.35

per liter

Naphtha,

7.00

9.00

10.00

 

regular

gasoline,

 

PYROLYSIS

 

GASOLINE

and

other

similar

products

of

distillation and

 

(per liter)

Unleaded

premium

5.35

per liter

UNLEADED

7.00

9.00

10.00

gasoline

premium

gasoline

(per

liter)

Aviation turbo jet fuel

3.67 per liter

 

Aviation turbo

4.00

4.00

4.00

 

jet fuel,)

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

Kerosene

0.00 per liter

AVIATION GAS (per liter Kerosene (per liter) Diesel fuel oil (per liter) Liquefied Petroleum Gas (per kg) Asphalt (per kg) Bunker fuel oil (per liter)

Petroleum coke (per metric ton)

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

Asphalt

0.56 per kg

8.00

9.00

10.00

Bunker fuel oil

0.00 per liter

2.50

4.50

6.00

 

2.50

4.50

6.00

For the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed in this Section shall be suspended when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS)for three (3) months prior to the scheduled increase of the month reaches or exceeds Eighty dollars (USD 80) per barrel.

The following items are exempt from excise tax:

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.

Production of petroleum products, whether they are

National Internal Revenue Code of 1997

National Internal Revenue Code of 1997 R.A. No. 10963 or TRAIN Law classified as products of

R.A. No. 10963 or TRAIN Law

classified as products of distillation and for use solely for the production of gasoline.

Liquefied petroleum gas when used as raw material in the production of petrochemical products;

Petroleum coke, when used as feedstock to any power generating facility.

Excise taxes paid on the purchased base stock (bunker) used in the manufacture or excisable articles and forming part thereof shall be credited against the excise tax due therefrom.

Note: This Item has been VETOED

Note: This Item has been VETOED

by President Rodrigo R. Duterte.

Note: This Item has been VETOED by President Rodrigo R. Duterte.
Item has been VETOED by President Rodrigo R. Duterte. Sec. 148-A - The Secretary of Finance

Sec. 148-A - The Secretary of Finance shall require the use of an official fuel marking or similar technology on petroleum products that are refined, manufactured, or imported into the Philippines, and that are subject to the payment of taxes and duties, such as but not limited to, unleaded premium gasoline, kerosene, and diesel fuel oil after the taxes and duties thereon have been paid.

fuel oil after the taxes and duties thereon have been paid. D. Mandatory Marking of all

D. Mandatory Marking of all Petroleum Products

No Existing Provision

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

E. Excise tax on automobiles

 

Sec. 149

Excise

Tax

imposed

on

Excise Tax schedule on automobiles, amended:

automobiles are as follows:

 

Net Manufacture’s price/ Importer’s selling price Up to P600,000 Over P600,000 to

 

Rate

   

Amount

Excise Tax Rate

2%

Not over P600,000 Over 600,000 to

4%

P12,000

 

+

20%

of

10%

P1,100,000

value

in

excess

of

1,000,000

 

P600,000

   

Over

P1,100,000

to

P112,000

+

40%

of

Over

1,000,000

to

20%

P2,100,000

value

in

excess

of

4,000,000

 

P1,100,000

   

Over P2,100,000

P512,000

+

60%

of

Over 4,000,000

 

50%

value

excess

of

 

P2,100,000

 

Indexation of brackets by the Secretary of Finance every two years is pegged on a percentage of the change in the exchange rate of the Philippine peso against the United States dollar.

Hybrid vehicles shall be subject to fifty percent (50%) of the applicable excise tax rates on automobiles. The purely electric vehicles and pick- ups shall be exempt from excise tax on automobiles. Jeeps are considered automobiles. Pick-ups are considered as trucks.

Indexation of brackets by the Secretary of Finance is removed.

Example:

Example:

 

Selling Price

P1,500,000

Selling Price Bracket over P1,100,000 to

P1,500,000

Bracket

over

P1,100,000

to

112,000

20%

2,100,000

4,000,000

 
   

160,000

Tax Due

 

P300,000

40% in excess of 1,100,000 Tax Due

P272,000

 

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

F.

Non-essential Services

No Existing Provision

Sec. 150 (A) A tax equivalent to five percent (5%) based on the gross receipts derived from the performance of services on invasive cosmetic procedures, surgeries, and

body

enhancements directed solely

towards improving, altering, or enhancing the patient’s appearance and do not meaningfully promote the proper function of the body or prevent or treat illness or disease.

This tax shall not apply to

procedures necessary to ameliorate a deformity arising from 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.

G.

Sweetened Beverages

No Existing Provision

Sec. 150 (B) A tax of Six pesos (P6.00) per liter of volume capacity shall be imposed on sweetened beverages

using

purely caloric sweeteners, and

purely non-caloric sweeteners, or a

mix

of caloric and non-caloric

sweeteners.

This

tax rate shall not apply to

sweetened beverages using high fructose corn syrup; and sweetened

beverages using purely coconut sap

sugar

and purely steviol glycosides.

National Internal Revenue Code of 1997

 

R.A. No. 10963 or TRAIN Law

H.

Mineral Products

Sec. 151 Excise Tax on Mineral Products

Increased excise taxes on domestic or imported coal and coke, notwithstanding any incentives granted in any law or special law, to wit:

P10/metric ton - On coal and coke

2% - Actual market value of the gross output of all nonmetallic minerals and quarry resources

Metallic minerals are subject to the following taxes:

Effective Jan. 1, 2018, P50/metric ton

 

1 to 2% - copper and other metallic minerals 2% - gold and chromite

Effective

Jan.

1,

2019,

P100/metric ton

 

3% - Indigenous petroleum

Effective

Jan.

1,

2020,

P150/metric ton

 

Increased excise tax on nonmetallic and metallic minerals to 4%.

Increased excise tax on indigenous petroleum to 6%.

XIV. PROVISIONS REGULATING BUSINESS OF PERSONS DEALING IN ARTICLES SUBJECT TO EXCISE TAX

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

A.

Manufacturers and/or Importers to Provide Themselves with Counting or

Metering Devices to Determine Volume of Production and Importation

Sec. 155 Manufacturers of cigarettes, alcoholic products, oil products and other articles subject to excise tax that can be similarly measured shall provide themselves with such necessary number of suitable counting or metering devices to

determine as accurately as possible the volume, quantity or number of the articles

produced.

Additional Provision:

Department of Finance shall maintain a registry of all petroleum manufacturers and/or importers and the articles being manufactured and/or imported.

Department of Finance shall mandate the creation of a real- time inventory of petroleum articles being manufactured, imported o found in storage depots of such petroleum

National Internal Revenue Code of 1997

 

R.A. No. 10963 or TRAIN Law

   

manufacturers

and/or

importers.

Importers of finished petroleum products shall also provide themselves with Bureau- accredited metering devices to determine as accurately as possible the volume of petroleum products imported by them.

B. Authority of Internal Revenue Officer in Searching for and Testing Taxable Articles

 

Additional Provisions:

Sec. 171 Authority of Internal Revenue Officer in Searching Taxable Articles

Subject to rules and regulations to be issued by the Secretary of Finance, the Commissioner of Internal Revenue or his authorized representatives may conduct periodic random field tests and confirmatory tests on fuel required to be marked found in warehouses, storage tanks, gas stations and other retail outlets, and in such other properties of persons engaged in the sale, delivery, trading, transportation, distribution, or importation of fuel intended for the domestic market.

Random field testing shall be conducted in the presence of revenue or customs officers, fuel marking provider, and the authorized representative of the owner of the fuel to be tested. An employee assigned or working at the place where the random field tests conducted shall be deemed an authorized representative of the owner.

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

 

All field tests shall be properly filmed or video-taped and documented.

A sample of the randomly tested fuel shall be immediately obtained by the revenue or customs officer upon discovering that the same is unmarked, adultered, or diluted.

Confirmatory fuel test certificates issued by fuel testing facilities shall be valid for any legal purpose from the date of issue and shall constitute admissible and conclusive evidence before any court.

XV. DOCUMENTARY STAMP TAX

 

National Internal Revenue Code of 1997

 

R.A. No. 10963 or TRAIN Law

 

A. Stamp Taxes

 

Secs. 174-175, 177-182, 186, 188-195 The following are the corresponding DSTs:

Increased the rates for the following transactions:

 

Sec. 174 Stamp Tax on Original Issue of Shares of Stock

P1.00 on each 200 of the par value or actual consideration for no-par shares

   

Sec. 174 Stamp Tax on Original Issue of Shares of Stock

P2.00 on each

 

200

of the par

value or actual consideration for no-par

 
   

shares

 

Sec. 175 Stamp Tax

0.75 on each 200 of the par value; or 25% of the DST paid upon original issuance of no-par shares

   

Sec. 175 Stamp Tax on Sales, Agreements to Sell. Memoranda of Sales, Deliveries or

1.50 on each

on

Sales,

200

of the par

Agreements to Sell. Memoranda of Sales, Deliveries or

value; or 50% of the DST paid upon original

 

Transfer of Shares or Certificates of Stock

issuance of no- par shares

 

Transfer

of

 

Shares or

National Internal Revenue Code of 1997

R.A. No. 10963 or TRAIN Law

 

Certificates of

 

Stock

 

Sec. 177 Stamp Tax on Certificates of Profits or Interest in Property or Accumulations

0.50

on each 200 of

 

Sec. 177 Stamp Tax

on

1.00

on each

the face value

 

200

of the face

 

Certificates of

value

 

Profits

or

Interest

in

 

Property or

 

Accumulations

 

Sec. 178 Stamp Tax

1.50

on

each

Sec. 178 Stamp

3.00

on

each

on Bank Checks, Drafts, Certificates of Deposit Not Bearing Interest,

instrument

Tax

on

Bank

instrument

 

Checks, Drafts,

 

Certificates of

Deposit Not

and

Other

Bearing

 

Instruments

Interest, and

 
 

Other

Instruments

 
 

Sec. 179 Stamp Tax

1.00

on each 200 of

 

Sec. 179 Stamp Tax on All Debt Instruments

1.50

on each

on

All Debt

the issue price

 

200

of the issue

Instruments

 

price

 

Sec. 180 Stamp Tax on All Bills of Exchange or Drafts

0.30

on each 200 of

 

Sec. 180 Stamp Tax on All Bills of Exchange or Drafts

0.60

on each

the face value

 

200

of the face

 

value

 

Sec. 181 Stamp Tax

0.30

on each 200 of

 

Sec. 181 Stamp

0.60

on each

Upon

Acceptance

the face value

 

Tax

Upon

200

of the face

of

Bills

of

Acceptance of

value

 

Exchange

and

Bills

of

Others

Exchange and

 
 

Others

 
 

Sec. 182 Stamp Tax on Foreign Bills of Exchange and Letters of Credit

0.30

on each 200 of

 

Sec. 182 Stamp Tax on Foreign

0.60 on each

the face value

 

200

of the face

 

Bills

of

value

 

Exchange and

 
 

Letters of

Credit

 

Sec. 186 Stamp Tax

0.50

on each 200 of

 

Sec. 186 Stamp Tax on Policies of Annuities

1.00

on

each

on

Policies of