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The amendments and provision made to TRAIN (Tax Reform for Acceleration and Inclusion) in relation
As the present government is committed to effect real positive change among Filipinos, President
Duterte prompted what is said to be a fairer and simpler tax system for Filipinos: the Tax Reform for
Passed into law on December 19, 2017 by the president, TRAIN is considered as the first tax reform
policy that aims to alleviate poverty among Filipinos by reducing personal income tax rates and
imposing higher tax on certain goods with the hopes that such measures will raise the country to
upper middle income status by 2022. While it is seems to be music to the ears of most low-wage
earners, the revisions of the tax policy under the Duterte administration are a mixture of good and bad
for other affected sectors. In this article, we will focus solely on the distinct changes that TRAIN
decedent, was previously computed based on a tax schedule where an estate worth Php200,000 and
over was taxed between 5 and 20 percent. Under the TRAIN law, all estate tax will be subject to a flat
rate of 6 percent.
Also under the provisions of TRAIN, estate properties with a net value of Php5 million and below, and
family homes valued at Php10 million or less are now exempted from tax. In the former tax law, only
tax law, funeral expenses, judicial expenses, and medical expenses are removed from the allowable
deductions. The law also increases the Standard Deduction to Php5 million instead of the previous
Php1 million.
In addition, estate tax deduction will only be available to citizens (resident and non-resident) and
resident aliens. In the case of non-resident aliens, they can avail of standard deductions but only up to
certified by a certified public accountant (CPA). In the reformed tax law, CPA certifications are
required for estate tax returns with a gross value exceeding Php5 million.
The deadline for filing of estate tax return is also lengthened. In the old tax rule, filing is only allowed
within six months from the decedent’s death; under TRAIN, filing is extended to one year relative to the
decedent’s death.
the full estate-tax liability is limited to only two years, a limit that was not included in the old tax rule.
A. Sale of real properties not primarily held for sale to customers or for lease in the ordinary course of
trade or business; sale of real property utilized for socialized housing as defined by Republic Act No.
7279, otherwise known as the Urban Development and Housing Act of 1992, and other related laws;
residential lot valued at Php1,500,000 and below; house and lot, and other residential dwellings valued
at Php2,500,000 and below: Provided that, 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 as defined by RA 7279,
sale of house and lot, and other residential dwellings with selling price of not more than Php2 million:
Provided, further, that every three years thereafter, the amount herein stated shall be adjusted to its
present value using the Consumer Price Index as published by the Philippine Statistics Authority
(PSA);
Php1.919 million and sale of other residential dwellings valued at Php3.199 million; and lease of
estate taxes real estate tax tax reform TRAIN
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