SALIENT FEATURES OF TRAIN LAW

1. Sec. 24: Purely compensation income earner; business/professional income earner; mixed
income earner

Under the NIRC, a) compensation income earners, b) business income earners, c)

professional income earners, and d) mixed income earners (a+b, b+c, a+c, or a+b+c), are subject
to the same tax rates - 5%-32% NIT.

Under the TRAIN these individuals are subject to different tax rates, and are granted
options, to wit:
a. Purely compensation income earners - subject to the 0%-35% NIT rates.
b. Self-employed individuals (business income earner) - has option to avail:
1. 8% tax on gross sales in excess of P250k; or
2. 0%-35% NIT rates.
c. Self-employed professionals (business income earner) - has option to avail:
1. 8% tax on gross receipts in excess of P250k; or
2. 0%-35% NIT rates.
d. Mixed income earners (a+b, b+c, a+c, or a+b+c) - subject to the following taxes:
1. All compensation income - subject to the 0%-35% NIT rates;
2. All income from business and/or profession - subject to tax as follows:
i. If gross sales/receipts do not exceed P3million -
1. 8% tax on gross sales/receipts; or
2. 0%-35% NIT rates
ii. If gross sales/receipts exceed P3million - 0%-35% NIT rates

2. Section 24: NIT rates changed

NIRC - 5%-32%
TRAIN - 0%-35%

3. Section 35: Personal Exemptions and Additional Exemptions are removed. In lieu of that, the
individual taxpayer is indirectly benefited of the P250k exemption on taxable income since
income not over P250k is taxed at 0% under the TRAIN.

4. Section 34: Premium payments on Health and/or Hospitalization Insurance is removed as

deduction from purely compensation income earners.

5. Section 24: FWT rates on passive income changed; FBT increased to 35%

6. Section 25: Duterte’s veto - preferential rates for special NRA-NETBs

The preferential tax treatment to special NRA-NETBs which make them subject to 15%
GIT (regional headquarters, regional operating headquarters, offshore banking units, or petroleum
service contractors) shall not apply if they registered with the SEC after January 1, 2018.
 Provided, however, that those existing special NRA-NETBs shall continue to avail of the
preferential tax rates for their present and future employees.

7. Section 27: PCSO not an exempt corporation anymore

8. Section 32(B)(e): P90k threshold for 13th month pay and other benefits (from P82k under the
NIRC)

9. Section 86: Deductions from estate tax - funeral expenses and medical expenses removed;
standard deduction increased to P5million

10. Section 101: Exempt donation - dowries removed