3/3/2018

Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion

Source: BIR Training Module with amendments

Specific Amendments
1. Individual Income Tax 9. Excise Tax on:
2. Final Income Tax  Tobacco
3. Estate Tax  Automobiles
4. Donor’s Tax  Petroleum products
5. Value Added Tax  Sweetened beverages
6. Documentary Stamp Tax  Mineral products
7. Administrative provisions  Cosmetic procedures
8. Penalties (non-essential
services)

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 3/3/2018

Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

– Power and Authority of the Commissioner

NIRC Provision NIRC TRAIN

Section 5 (B) - Provides for the authority of Additional provision:

Power of the the Commissioner to obtain
Commissioner information from national and The Cooperative Development
to obtain local governments, Authority shall submit a report
information to government agencies and on tax incentives availed by
summon, instrumentalities cooperatives to the BIR and DOF.
examine and
take testimony These information shall be
of persons included in the Tax Incentives
Management and Transparency
Act (TIMTA) database.

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NIRC Provision NIRC TRAIN

Section 6 - The Commissioner or his duly Additional proviso:

Power of the authorized representative This authority is
Commissioner may authorize the nothwithstanding any law
to make examination of taxpayer and requiring the prior authorization
assessments assessment of the correct of any government agency or
and prescribe amount of tax. instrumentality.
additional
requirements
for tax
administration
and
enforcement

NIRC Provision NIRC TRAIN

Section 6 - The Commissioner has the In exercising this authority, the following shall be
Power of the authority to determine fair observed:
Commissioner to market value of real 1. Mandatory consultation with both private and
make assessments properties. public competent appraisers before division of
and prescribe the Philippines into zones.
additional 2. Prior notice to affected taxpayers before the
requirements for determination of fair market values of the real
tax administration properties.
and enforcement 3. Publication or posting of adjustments in zonal
value in a newspaper of general circulation in
the province, city or municipality concerned.
4. The basis of valuation and records of
consultation shall be public records open to
the inquiry of any taxpayer.
5. Zonal valuations shall be automatically
adjusted once every three years.

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Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

- Personal Income Tax

Revenue Regulations No. 8-2018

NIRC Provision NIRC TRAIN

Section 24 - Tax Schedule Tax Schedule effective January 1, 2018 to

Income tax December 31, 2022
Not over P10,000 5%
rates on Not over P250,000 0%
Over P10,000 but P500 + 10% of the
individual not over P30,000 excess over
citizen and P10,000
individual Over P30,000 but P2,500 + 15% of
resident alien not over P70,000 the excess over
of the P30,000

Philippines Over P70,000 but P8,500 + 20% of

not over P140,000 the excess over
P70,000
Over P140,000 but P22,500 + 25% of
not over P250,000 the excess over
P140,000

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NIRC Provision NIRC TRAIN

Section 24 - Taxable income of individuals are subject Revised personal income tax brackets of 2018-
to the following graduated rates: 2022:
Income tax
Tax Schedule
rates on
individual Over P250,000 but P50,000 + 30% of
citizen and not over P500,000 the excess over
individual P250,000

resident alien Over P500,000 P125,000 + 32% of

the excess over
of the P500,000
Philippines

NIRC Provision NIRC TRAIN

Section 24 - For 2023 onwards:

Income tax Tax Schedule effective January 1, 2023 onwards

rates on
Not over P250,000 0%
individual
Over P250,000 but not 15% of the excess over
citizen and over P400,000 P250,000
individual Over P400,000 but not P22,500 +20% of the excess
resident alien over P800,000 over P400,000
of the Over P800,000 but not P102,500 + 25% of the excess
Philippines over P2,000,000 over P800,000
Over P2Million but not P402,500 + 30% of the excess
over P8Million over P2Million
Over P8Million P2,202,500 + 35% of the
excess over P2Million

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NIRC Provision NIRC TRAIN

Section 24 - Refer to Revenue Memorandum

Income tax rates Circular (RMC) Nos. 105-2017 and 1-
on individual
2018, Revised Withholding Tax on
citizen and
individual Compensation Table
resident alien of
the Philippines
Section 24 - Taxable income is subject to the For purely self-employed and/or professionals
Income tax of same graduated rates whose gross sales/receipt and other non-
self-employed operating income do not exceed the VAT
and/or threshold of P3Million, the tax shall be, at the
taxpayer’s option, either:
professionals
1. 8% income tax on gross sales or gross
receipts in excess of P250,000 in lieu of the
graduated income tax rates and the
percentage tax under Sec. 116; OR
2. Income tax based on the graduated income
tax rates for individuals

NIRC Provision NIRC TRAIN

Section 24 - Taxable income is subject to For mixed income earners (earning both compensation
the same graduated rates income and income from business and/or practice of
Income tax of profession), their income taxes shall be:
mixed income 1. For income from compensation: based on graduated
earners income tax rates for individuals, AND
2. For income from business and/or practice of
profession:
a. Gross sales/receipts which do not exceed the VAT
threshold of P3Million – 8% income tax on gross
sales/receipts and other non-operating income OR
income tax based on graduated income tax rates
on taxable income, at the taxpayer’s OPTION
b. Gross sales/receipts and other non-operating
income which exceeds the VAT threshold of
P3Million – income tax based on graduated tax
rates for individuals

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NIRC Provision TAX ADVISORY

Section 24 –
Registration
update

NIRC Provision NIRC TRAIN

Section 24 (B) Philippine Charity Philippine Charity Sweepstakes

(1) - Sweepstakes and Lotto and Lotto winnings of more than
Final tax on winnings – exempt from the P10,000 shall be subject to the
winnings 20% final tax 20% final tax

Section 24 (B) Interest income received by
(1) - an individual taxpayer
Final tax on (except a non-resident
interest on individual) from a depository
foreign currency bank under the expanded
deposit foreign currency deposit
(EFCD) system is subject to
7.5% final tax
The rate of final tax on interest
income received by resident
individual taxpayer under the
expanded foreign currency
deposit system increased from
7.5% to 15% final tax

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NIRC Provision NIRC TRAIN

Section 24 (C) - The capital gains tax on net The final tax rate of 15% for net
Capital gains capital gains realized from capital gains realized during the
tax on sale of sale, barter, or exchange or taxable year from the sale, barter,
shares not other disposition of shares exchange or other disposition of
traded through of stock in a domestic shares of stock in a domestic
the stock corporation not traded corporation except shares sold or
exchange through the stock exchange disposed of through the stock
is: exchange

Not over P100,000 – 5%

On any amount in excess of

P100,000 – 10%

NIRC Provision NIRC TRAIN

Section 25 (C) Alien individuals and qualified Filipino Additional provision [Subsection (F)]
employees employed by The 15% preferential tax rate provided in
(D) (E) - Subsection (C), (D) and (E) shall not be
1. Regional Headquarters and
Preferential tax Regional Operating Headquarters applicable to RHQs, ROHQs, OBUs or
rate for of multinational companies (RHQs Petroleum service contractor and
subcontractor registering with the SEC
individuals and ROHQs) [Subsection (C)]
2. Offshore Banking Units (OBUs) after January 1, 2018
employed by
[Subsection (D)]
RHQ, ROHQ, 3. Petroleum Service contractor and But existing RHQs, ROHQs, OBUs or
OBU and Petroleum service contractor and
subcontractor [Subsection (E)]
subcontractor presently availing of the
Petroleum are subject to a preferential tax of 15%
preferential tax rates for qualified
Contractors final withholding tax on gross employees shall continue to be entitled to
compensation income.
Capital and avail of the preferential tax rate for
present and future qualified employees.
subcontractors

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NIRC Provision NIRC TRAIN

Section 25 (C) Presidential Veto:

(D) (E) - The President vetoed this line item under
Subsection (F)
Preferential tax
“But existing RHQs, ROHQs, OBUs or Petroleum
rate for service contractor and subcontractor shall
individuals continuously be entitled to avail of the
employed by preferential tax treatment for their present and
RHQ, ROHQ, future qualified employees.”
OBU and
for being violative of equal protection
Petroleum
Contractors The President stated in his letter that, “given the
Capital and significant reduction in the personal income tax,
subcontractors the employees of these firms should follow the
regular tax rates applicable to other individual
taxpayers.”

NIRC Provision TAX ADVISORY

Section 25 (C)
(D) (E) -
Preferential tax
rate for
individuals
employed by
RHQ, ROHQ,
OBU and
Petroleum
Contractors
Capital and
subcontractors

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NIRC Provision NIRC TRAIN

Section 31 - Means the pertinent items of The phrase “and/or personal and
Definition of gross income specified in this additional exemptions” is removed
Taxable Income Code, less the deductions and/or in the definition.
personal and additional
exemptions, if any, authorized
for such types of income by this
Code or other special laws
Section 35 - Individual taxpayers are entitled The Basic Personal and Additional
Personal to: Exemptions of individual taxpayers
Exemptions Basic Personal Exemption – are removed.
P50,000
and The related provision on furnishing
exemption certificate is likewise
Additional Exemption – P25,000 removed.
per qualified dependent child

NIRC Provision NIRC TRAIN

Section 32 (B) - The amount of tax-exempt The amount of tax-exempt 13th

Tax exempt 13th month pay and other
13th month pay benefits is P82,000.
Section 33 (A) - Fringe benefits given to
Tax on fringe non-rank and file employees
benefits given are subject to 32% final tax January 1, 2018
to non-rank The grossed up monetary
and file value of the fringe benefit
employees given to non-rank and file
employees shall be
determined by dividing the
actual monetary value by
68%
month pay and other benefits is
increased to P90,000.
The Fringe Benefits Tax is
increased to 35% effective
The grossed up monetary value
of the fringe benefit given to
non-rank and file employees
shall be determined by dividing
the actual monetary value by
65%

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NIRC Provision NIRC TRAIN

Section 33 (A) - Fringe benefits given to Fringe benefits furnished to

Tax on fringe non-rank and file employees employees and taxable under
benefits given are subject to 32% final tax Subsections (B), (C), (D) and (E)
to non-rank The grossed up monetary of Sec. 25 shall be taxed at the
and file value of the fringe benefit applicable rates imposed
employees given to non-rank and file The grossed-up monetary value
employees shall be of the fringe benefit shall be
determined by dividing the determined by dividing the
actual monetary value by actual monetary value of the
68% fringe benefit by the difference
between 100% and the
applicable rates of income tax
under Subsections (B), (C), (D)
and (E) of Sec. 25

NIRC Provision NIRC TRAIN

Section 34 (M) - The allowable deduction for Allowable deduction for
Allowable premium payments on health premium payments on health
deduction for and/or hospitalization and/or hospitalization insurance
premium insurance of an individual of an individual taxpayer is
payments on taxpayer is P2400 per year or removed.
health and/or P200 per month, subject to a
hospitalization gross family income
insurance threshold of P250,000.
Section 51 - An individual whose gross Individual taxpayers whose
Filing of income does not exceed his taxable income is subject to zero
individual total personal and additional percent under the new
income tax exemptions for dependents graduated tax table (i.e., does
return are not required to file not exceed P250,000) shall not
income tax return (ITR). be required to file an income tax
return.

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NIRC Provision NIRC TRAIN

Additional provision:
The ITR shall consist of a maximum
of four (4) pages in paper OR
electronic form. It shall only
contain the following information:
 Personal profile and information
 Gross sales receipts or income
from compensation, from
business, or from exercise of
profession (except income
subject to final tax)
 Allowable deductions
 Taxable income
 Income tax due and payable

NIRC Provision NIRC TRAIN

Section 51-A - No provision Substituted filing or ITRs is available

Substituted for individual taxpayers:
Filing of income  Receiving purely compensation
tax returns by income, regardless of amount
employees  From only one employer in the
receiving purely Philippines for the calendar year
compensation  The income tax of which has been
income from correctly withheld by the
only one employer (i.e., tax due = tax
employer in the withheld)
The Certificate of Withholding filed
Philippines
by the employers duly stamped
“RECEIVED” by the BIR shall be the
substituted filing by such employers

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NIRC Provision NIRC TRAIN

Section 56 (A) (2) When tax due exceeds ₱2,000, The new deadline of payment
- the taxpayer (other than a of second installment is
Installment corporation) may elect to pay the October 15 following the close
Payment of tax tax in two equal installments. of the calendar year.
due for Payment of installments:
 First installment – time of filing
individuals and
of return
corporations  Second installment – on or
before July 15 following the
close of the calendar year.
Section 62 - There is allowed personal The exemption for estates and
Exemption for exemption of ₱50,000 from the trusts is removed.
estates and income of the estate or trust.
trusts

NIRC Provision NIRC TRAIN

Section 51 (C) (1) The return of individual The return of individual required
- required to file an income tax to file an income tax return shall
Filing of return shall be filed on or be filed on or before April 15 of
Individual Tax before April 15 of each year each year covering income for
Return covering income for the the preceding taxable year. *
preceding taxable year. *

Section 74 - Every individual subject to The deadline for filing of

Declaration of income tax shall make and file
estimated a declaration of his estimated
income for income for the current taxable
individuals year on or before April 15 of
the same taxable year.
declaration estimated income
for the current taxable year is on
or before May 15 of the same
taxable year.

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NIRC Provision NIRC TRAIN

Section 74 - The amount of estimated The payment of the four
Declaration of income with respect to which installments shall be:
estimated a declaration is required shall First – May 15
income for be paid in four (4) Second – August 15
individuals installments: Third – November 15
First – at time of declaration Fourth – on or before May 15
Second – August 15 of the following calendar year
Third – November 15 when the final adjusted
Fourth – on or before April income tax return is due to be
15 of the following calendar filed.
year when the final
adjusted income tax return
is due to be filed.

NIRC Provision NIRC TRAIN

Section 34 (L) - Individual taxpayers (except non- For GPPs and the partners comprising
Optional Standard resident alien) may elect a standard them, OSD may be availed only once,
Deduction deduction not exceeding 40% of i.e., either by the GPP itself or by the
gross sales/receipts and partners comprising the GPP.
corporations may elect standard
deduction not exceeding 40% gross
income, in lieu of itemized
allowable deductions.
Section 57 - The rate of withholding tax on items Beginning January 1, 2019, the rate of
Withholding of of income payable by payor- withholding tax shall be not less than
creditable tax at corporations/persons shall be not one percent (1%) but not more than
source less than one percent (1%) but not fifteen percent (15%).
more than thirty-two percent
(32%).

The tax withheld shall be credited

against the income tax liability of
the taxpayer.

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NIRC Provision NIRC TRAIN

Section 27 (C) - The Philippine Charity PCSO is not anymore exempt from
Exemption Sweepstakes Office (PCSO) is payment of corporate income tax.
Government- among the list GOCCs, agencies,
owned or – or instrumentalities that are
Controlled exempt from payment of
Corporations, corporate income tax.
Agencies or
Instrumentalities
Section 27 (D) (1) - Interest income received by a The rate of final tax on interest
Final Tax on domestic corporation from a income received by domestic
interest on foreign depository bank under the corporation under the expanded
currency deposit expanded foreign currency foreign currency deposit system
deposit (EFCD) system is subject increased from 7.5% to 15% final
to 7.5% final tax. tax.

NIRC Provision NIRC TRAIN

Section 27 (D) (2) The capital gains tax on net Final tax rate of 15% for net
- capital gains realized from capital gains realized from the
Capital gains tax sale, barter, or exchange or sale, barter, exchange or other
on sale of shares other disposition of shares of disposition of shares of stock in a
not traded stock in a domestic domestic corporation not traded
through the stock corporation not traded through the stock exchange.
exchange through the stock exchange is:

Not over ₱100,000 – 5%

On any amount in excess of

₱100,000 – 10%

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NIRC Provision NIRC TRAIN

Section 52 - Every corporation subject to Additional provision:
Filing of tax, except foreign The ITR shall consist a maximum of
four (4) pages in paper OR electronic
corporate corporations not engaged in
form.
income tax trade or business in the
return Philippines, shall render in It shall only contain the following:
duplicate, a true and accurate information:
 Quarterly income tax 1. Corporate profile and information
return; AND 2. Gross sales, receipts or income
from services rendered or conduct
 Final or adjustment return of trade or business except income
subject to final tax
3. Allowable deductions
4. Taxable income
5. Income tax due and payable

These requirements shall not affect the

implementation of TMTA.

NIRC Provision NIRC TRAIN

Section 58 - The return for FWT and the
Return and return for creditable
payments of withholding taxes (EWT
taxes withheld at returns) shall be filed within
source ten (10) days after the end of
each month [Sec. 2.58 of RR
No. 2-98]
FWT and EWT returns shall be
filed and the payment made not
later than the last day of the
month following the close of the
quarter during which the
withholding was made.
Note: The provision that the
Commissioner may require the
payment of the taxes withheld at
more frequent intervals was
removed.

Tax Advisory dated 1/31/18 BIR

invoked Sec. 6 of Tax Code

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NIRC Provision TAX ADVISORY

Section 58 -
Return and
payments of
taxes withheld at
source

ap2

NIRC Provision TAX ADVISORY

Section 58 -
Return and
payments of
taxes withheld at
source

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Slide 34

ap2 asus phil, 2/20/2018


Tax Reform for Acceleration and Inclusion (TRAIN)
NIRC Provision NIRC
Section 106 (A)(2) The following are entitled to VAT
- zero-rating:
Zero-rated Sale of
1. The sale and actual shipment of
Goods or
goods from the Philippines to a
Properties foreign country, irrespective of
any shipping arrangement that
may be agreed upon which may
influence or determine the
transfer of ownership of the
goods so exported and paid for in
acceptable foreign currency or its
equivalent in goods or services,
and accounted for in accordance
with the rules and regulations of
the Bangko Sentral ng Pilipinas
(BSP).
3/3/2018
RA 10963:
– Value Added Tax
TRAIN
The following sales by VAT
registered persons shall be subject
to zero percent (0%) rate:
1. The sale and actual shipment
of goods from the Philippines
to a foreign country,
irrespective of any shipping
arrangement, paid for in
acceptable foreign currency or
its equivalent in goods or
services, and accounted for in
accordance with the rules and
regulations of the Bangko
Sentral ng Pilipinas (BSP).
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NIRC Provision NIRC TRAIN

Section 106 (A)(2) - 2. Sale and delivery of goods to:
Zero-rated Sale of
Goods or Registered enterprises within a
Properties separate customs territory

Registered enterprises within

tourism enterprise zones

(The above provision was vetoed by

President Duterte because this go
against the principle of limiting the
VAT zero-rating to direct exporters.)

NIRC Provision NIRC TRAIN

Section 106 (A)(2) - 2. Sale of raw materials or 3. Sale of raw materials or
Zero-rated Sale of packaging materials to a packaging materials to a
Goods or nonresident buyer for nonresident buyer for delivery to
Properties delivery to a resident local a resident local export-oriented
export-oriented enterprise enterprise to be used in
to be used in manufacturing, processing,
manufacturing, processing, packing or repacking and paid
packing or repacking in the for in acceptable foreign
Philippines of the said currency and accounted for in
buyer's goods and paid for accordance with the rules and
in acceptable foreign regulations of the Bangko Sentral
currency and accounted for ng Pilipinas (BSP). *
in accordance with the rules
and regulations of the
Bangko Sentral ng Pilipinas
(BSP).

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NIRC Provision NIRC TRAIN

Section 106 (A)(2) - 3. Sale of raw materials or 4. Sale of raw materials or
Zero-rated Sale of packaging materials to packaging materials to
Goods or Properties export-oriented enterprise export-oriented enterprise
whose export sales exceed whose export sales exceed
seventy percent (70%) of seventy percent (70%) of
total annual production. total annual production. *

4. Sale of gold to BSP.

NIRC Provision NIRC TRAIN

Section 106 (A)(2) - 5. Those considered export 5. Those considered export sales
Zero-rated Sale of sales under Executive under Executive Order No. 226,
Goods or Properties Order No. 226, otherwise known as the
otherwise known as the “Omnibus Investment Code of
“Omnibus Investment 1987”, and other special laws; *
Code of 1987”, and other and
special laws.

6. The sale of goods, 6. The sale of goods, supplies,

supplies, equipment and equipment and fuel to persons
engaged in international
fuel to persons engaged
shipping or international air
in international shipping
transport; provided, that the
or international air
goods, supplies, equipment and
transport operations.
fuel have been sold and used
for international shipping or air

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NIRC Provision NIRC TRAIN

Section 106 (A)(2) - Additional provision:
Zero-rated Sale of Items 3, 4, and 5 shall be subject to the 12%
Goods or VAT and no longer be considered export
Properties sales subject to 0% VAT upon satisfaction of
the following conditions:
There is a successful establishment and
implementation of an enhanced VAT
refund system that grants refunds of
creditable input tax within 90 days from
the filing of the VAT refund application
with the Bureau.

All pending VAT refund claims as of

December 31, 2017 shall be fully paid in
cash by December 31, 2019.

NIRC Provision NIRC TRAIN

Section 106 (A)(2) - The Department of Finance shall establish a VAT

Zero-rated Sale of Refund Center in the BIR and BOC that will handle
Goods or Properties the processing and granting of cash refunds of
creditable input tax.

An amount equivalent to 5% of the total VAT

collection of the BIR and BOC from the immediately
preceding year shall automatically be appropriated
annually and shall be treated as a special account in
the General Fund or as trust receipts for funding
VAT refund claims.

Further, the BIR and BOC shall be required to submit

to the Congressional Oversight Committee on the
CTRP a quarterly report of all pending claims for
refund and any unused fund.

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NIRC Provision NIRC TRAIN

Section 106 (A)(2) - Deleted provision:
Zero-rated Sale of The following shall no longer be subject to
Goods or Properties 0% VAT:

1. Sale of gold to BSP

2. Foreign-currency denominated sales
Section 108 (A) - Sale or exchange Sale or exchange of services include “sale
Definition of Sale or of services of electricity by generation companies,
Exchange of include “sale of transmission by any entity including the
Services electricity by National Grid Corporations of the
generation Philippines [NGCP], and distribution
companies, companies, including electric cooperatives”.
transmission,
and distribution
companies”

NIRC Provision NIRC TRAIN

Section 108 (B) - The following are entitled to The following are entitled to VAT
Zero-rated Sale of VAT zero-rating: zero-rating:
Services
1. Processing, manufacturing or 1. Processing, manufacturing or
repacking goods for other repacking goods for other
persons doing business persons doing business outside
outside the Philippines which the Philippines which goods
goods are subsequently are subsequently exported,
exported, where the services where the services are paid for
are paid for in acceptable in acceptable foreign currency
foreign currency and and accounted for in
accounted for in accordance accordance with the rules and
with the rules and regulations of the Bangko
regulations of the Bangko Sentral ng Pilipinas (BSP)*.
Sentral ng Pilipinas (BSP).

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NIRC Provision NIRC TRAIN

Section 108 (B) 2. Services other than those 2. Services other than those
- mentioned in the preceding mentioned in the preceding
Zero-rated paragraph, rendered to a paragraph, rendered to a person
Sale of person engaged in business engaged in business conducted
Services conducted outside the outside the Philippines or to a
Philippines or to a nonresident nonresident person not engaged
person not engaged in business in business who is outside the
who is outside the Philippines Philippines when the services
when the services are are performed, the consideration
performed, [51] the for which is paid for in
consideration for which is paid acceptable foreign currency and
for in acceptable foreign accounted for in accordance with
currency and accounted for in the rules and regulations of the
accordance with the rules and Bangko Sentral ng Pilipinas (BSP);
regulations of the Bangko
Sentral ng Pilipinas (BSP);

NIRC Provision NIRC TRAIN

Section 108 (B) 3. Services rendered to persons or 3. Services rendered to persons or
- entities whose exemption under entities whose exemption under
Zero-rated Sale special laws or international special laws or international
agreements to which the agreements to which the
of Services
Philippines is a signatory Philippines is a signatory effectively
effectively subjects the supply of subjects the supply of such
such services to zero percent (0%) services to zero percent (0%) rate;
rate;
4. Services rendered to persons 4. Services rendered to persons
engaged in international shipping engaged in international shipping
or international air transport or international air transport
operations, including leases of operations, including leases of
property for use thereof; property for use thereof: provided,
that these services shall be
exclusively for international
shipping or air transport
operations;

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NIRC Provision NIRC TRAIN

Section 108 (B) 5. Services performed by 5. Services performed by

- subcontractors and/or
Zero-rated Sale contractors in processing,
of Services converting, or manufacturing
goods for an enterprise whose
export sales exceed seventy
percent (70%) of total annual
production;
subcontractors and/or
contractors in processing,
converting, or manufacturing
goods for an enterprise whose
export sales exceed seventy
percent (70%) of total annual
production are no longer
entitled to VAT zero-rating*.

NIRC Provision NIRC TRAIN

Section 108 (B) 6. Transport of passengers and 6. Transport of passengers and
Zero-rated Sale cargo by domestic air or sea cargo by domestic air or sea
of Services vessels from the Philippines vessels from the Philippines to
to a foreign country. a foreign country.

7. Sale of power or fuel 7. Sale of power or fuel

generated through renewable generated through renewable
sourced of energy such as, sourced of energy such as but
but not limited to, biomass, not limited to biomass, solar,
solar, wind, hydropower, wind, hydropower,
geothermal, ocean energy, geothermal, ocean energy, and
and other emerging energy other emerging energy sources
sources using technologies using technologies such as fuel
such as fuel cells and cells and hydrogen fuels.
hydrogen fuels.

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NIRC Provision NIRC TRAIN

Section 108 (B) 8. Services rendered to:

Zero-rated Sale
of Services Registered enterprises within a
separate customs territory

Registered enterprises within

tourism enterprise

(Above provision was vetoed by

President Duterte)

Note: Veto message stated

companies can still apply the
TIEZA incentives

NIRC Provision NIRC TRAIN

Section 108 (B) Additional provision:
- Items 1 and 5 shall be subject to the 12%
Zero-rated Sale VAT and no longer be considered export
of Services sales subject to 0% VAT upon satisfaction of
the following conditions:
There is a successful establishment and
implementation of an enhanced VAT
refund system that grants refunds of
creditable input tax within 90 days from
the filing of the VAT refund application
with the Bureau.

All pending VAT refund claims as of

December 31, 2017 shall be fully paid in
cash by December 31, 2019.

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 3/3/2018

NIRC Provision NIRC TRAIN

Section 108 (B) - Additional provision:

Zero-rated Sale of The Department of Finance shall establish a
Goods or VAT Refund Center in the BIR and BOC that
properties and will handle the processing and granting of
zero-rated sale of cash refunds of creditable input tax.
services
To fund claims for VAT refund 5% of the total
VAT collection of the BIR and BOC from the
immediately preceding year shall be:

Automatically appropriated annually.

Treated as a special account in the General
Fund or as trust receipts.

NIRC Provision NIRC TRAIN

Section 108 - Additional provision:

Zero-rated Sale of
Goods or The BIR and BOC shall submit to the
Properties and Congressional Oversight Committee on the
Zero-rated Sale of Comprehensive Tax Reform Program a
Services quarterly report of all pending claims for
refund and unused fund.

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NIRC NIRC TRAIN

Provision
Section 109 The following transactions, among others,
- are exempt from value-added tax:
(D) Importation of professional instruments
VAT-exempt
and implements, wearing apparel, domestic
Transaction animals, and personal household effects
s (except any vehicle, vessel, aircraft,
machinery other goods for use in the
manufacture and merchandise of any kind
in commercial quantity) belonging to
persons coming to settle in the Philippines,
for their own use and not for sale, barter or
exchange, accompanying such persons, or
arriving within ninety (90) days before or
after their arrival,
The following are the changes on VAT-
exempt transactions:
(D) Importation of professional
instruments and implements, tools of
trade, occupation or employment,
wearing apparel, domestic animals,
and personal and household effects
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, such parties hereinafter
referred to as overseas Filipinos, in
quantities and of the class suitable to
the profession, rank or position of the
persons importing said items,

NIRC Provision NIRC TRAIN

Section 109 - upon the production of
VAT-exempt evidence satisfactory to
transactions the Commissioner, that
such persons are actually
coming to settle in the
Philippines and that the
change of residence is
bona fide.
for their own use and not for barter or
sale, accompanying such persons, or
arriving within a reasonable time:
Provided, That the Bureau of Customs
may, upon the production of
satisfactory evidence that such
persons are actually coming to settle
in the Philippines and that the goods
are brought from their former place of
abode, exempt such goods from
payment of duties and taxes:

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NIRC Provision NIRC TRAIN

Section 109 - Provided, further, That vehicles, vessels,

VAT-exempt aircrafts, machineries and other similar
Transactions goods for use in manufacture, shall not
fall within this classification and shall
therefore be subject to duties, taxes
and other charges.

NIRC NIRC TRAIN

Provision
Section 109 Sale of real properties not
- primarily held for sale to
VAT-exempt customers or held for
lease in the ordinary
Transaction
course of trade or business
s or real property utilized for
low-cost and socialized
housing, residential lot
valued at P1,919,500.00
and below; house and lot,
and other residential
dwellings valued at
P3,199,200.00 and below.
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 P1,500,000.00 and below; house and lot,
and other residential dwellings valued at
P2,500,000.00 and below.
Beginning January 1, 2021:
 The VAT exemption shall not anymore apply to:
- Sale of low-cost housing
- Sale of residential lot
 The threshold selling price amount for sale of
house and lot, and other residential dwellings
shall be P2,000,000.00

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NIRC Provision NIRC TRAIN

Section 109 - Every 3 years, the Every 3 years, the threshold amount shall
VAT-exempt threshold amount shall be be adjusted to its present value using the
Transactions adjusted to its present Consumer Price Index, as published by the
value using the Consumer Philippine Statistics Authority (PSA).
Price Index, as published
by the National Statistics
Office.
Section 109 - (Q) Lease of a residential (Q) Lease of a residential unit with a
VAT-exempt unit with a monthly rental monthly rental not exceeding P15,000.00.
Transactions not exceeding P12,800.00.

(U) Importation of fuel, (U) Additional provision:

goods and supplies by
persons engaged in Xxx Provided, That the fuel, goods, and
international shipping or supplies shall be used for international
air transport operations. shipping or air transport operations.

NIRC Provision NIRC TRAIN

Section 109 - Additional exempt transactions:

VAT-exempt (W) Sale or lease of goods and
Transactions services to senior citizens and person
with disabilities.

(X) Transfer of property in merger or

consolidation [under Section 40(C)(2)
of the NIRC/tax-free exchange].

(Y) Association dues, membership

fees, and other assessments and
charges collected by homeowners
associations and condominium
corporations.

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NIRC Provision NIRC TRAIN

Section 109 - (W) Sale or lease of (Z) Sale of gold to the BSP.
VAT-exempt goods or properties or
Transactions the performance of (AA) Sale of drugs and medicines
services other than the prescribed for diabetes, high
transactions specifically cholesterol, and hypertension
mentioned as VAT- beginning January 1, 2019.
exempt, the gross
annual sales and/or Now (BB) Sale or lease of goods or
receipts do not exceed properties or the performance of
the amount of services other than the transactions
P1,919,500.00 (as mentioned in the preceding
amended). paragraphs, the gross annual sales
and/or receipts do not exceed the
amount of P3,000,000.

NIRC Provision NIRC TRAIN

Section 110 The input tax on the Amortization of input VAT shall only
(A)(2)(b) - purchase of capital goods be allowed until December 31, 2021.
Amortization of with a cost exceeding
Input VAT from P1,000,000.00 shall be After such date, taxpayers with
Purchases of amortized based on its unutilized input VAT on capital goods
Capital Goods useful life or 60 months, purchased or imported shall be
whichever is shorter. allowed to apply the same as
scheduled until fully utilized.

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NIRC Provision NIRC TRAIN

Section 112 - The Commissioner The period of granting by the
Refunds or Tax shall grant a refund or Commissioner of refunds is decreased
Credit of Input issue a tax credit to 90 days (from 120 days) from the
VAT certificate for date of submission of complete
creditable input taxes documents in support of the
within 120 days from application.
the date of
submission of The granting of tax credit instead of
complete documents. refund is removed.

Additional provision:
Should the Commissioner find that the
grant of refund is not proper, the
Commissioner must state in writing the
legal and factual basis for denial.

NIRC Provision NIRC TRAIN

Section 112 - Failure on the part of The deemed denial of failure to act on
Refunds or Tax the Commissioner to the application is removed.
Credit of Input act on the application
VAT within the period Additional provision:
prescribed shall be
deemed a denial of Failure on the part of any official, agent,
the application. or employee of the BIR to act on the
application within the ninety (90) – day
period shall be punishable under Section
269 of the Tax Code (administrative fine
and imprisonment).

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NIRC Provision NIRC TRAIN

Section 114 (A) - VAT taxpayers shall file Beginning January 1, 2023, the filing
Return and quarterly return within and payment shall be done within 25
Payment of VAT 25 days following the days following the close of each taxable
close of each taxable quarter.
quarter, while payment
of the VAT shall be
made on a monthly
basis upon filing of
monthly VAT
declaration.

NIRC Provision NIRC TRAIN

Section 114 (B) - Government or any of its Additional provision:

Withholding of VAT political subdivisions,
instrumentalities or Beginning January 1, 2021, the VAT
agencies, including withholding system shall shift from
government-owned or - final to a creditable system.
controlled corporations
(GOCCs) shall, before making Payments for purchases of goods and
payment on account of each services arising from projects funded
purchase of goods and by Official Development Assistance
services which are subject to (ODA) shall not be subject to the final
the value-added tax shall withholding tax system.
deduct and withhold a final
value-added tax at the rate
of five percent (5%) of the
gross payment thereof.

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NIRC Provision NIRC TRAIN

Section 116 - Cooperatives are exempt Additional exemption:

3% gross from the 3% gross receipts
receipts tax of tax Beginning January 1, 2019, self-
persons exempt employed and professionals with
from the VAT total annual gross sales and/or
gross receipts not exceeding
P500,000 shall be exempt from the
3% gross receipts

(The above provision was vetoed

by President Duterte because the
proposed exemption will result in
unnecessary erosion of revenues
and would lead to abuse and
leakages.)

NIRC Provision NIRC TRAIN

Section 127 - Sale, barter or exchange of The rate of the stock
Stock shares of stock listed and traded transaction tax is increased to
transaction tax through the local stock exchange 6/10 of 1%
shall be subject to a tax of ½ of
1% of the gross selling price or
gross value in money of the
shares of stock sold, bartered,
exchanged or otherwise
disposed
Section 269 - Additional provision:
Violations “(j) Deliberate failure to act
committed by on the application for refunds
government within the prescribed period
enforcement provided under Section 112 of
officers this Act.”

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NIRC Provision TAX ADVISORY

Section 128 -
Returns and
Payment of Tax

TRAIN removed
the provision
on CIR
authority to file
return at
intervals

NIRC Provision SUPPLEMENTAL TAX ADVISORY

Section 128 -
Returns and
Payment of Tax

TRAIN removed
the provision
on CIR
authority to file
return at
intervals

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Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

– Transfer Taxes

Estate Tax
NIRC NIRC TRAIN
Provision
Section 84 - The Estate Tax rate is based on graduated schedule. The Estate Tax rate is
NET ESTATE TAX
Rates of fixed at 6% based on the
Not over ₱200,000 Exempt
Estate Tax value of the net estate.
Over ₱200,000 but not 5% of the excess over
over ₱500,000 ₱200,000
Over ₱500,000 but not ₱15,000 + 8% of the excess
over ₱2M over ₱500,000
Over ₱2M but not over ₱135,000 + 11% of the excess
₱5M over ₱2M
Over ₱5M but not over ₱465,000 + 15% of the excess
P10M over ₱5M
Over ₱10M ₱1,215,000 + 20% of the
excess over ₱10M

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Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (A) - The value of the net estate of The following are the allowable
Allowable a resident or citizen is deductions from the gross estate
deductions from determined by deducting the of a resident or citizen:
the gross estate following from the gross 1. Standard deduction of
of a estate: ₱5,000,000;
citizen/resident 1. Standard deduction of 2. Claims against the estate;
₱1,000,000; 3. Claims against insolvent
2. Expenses, losses, persons;
indebtedness, and taxes 4. Unpaid mortgage or
a.Funeral expenses indebtedness on property and
b.Judicial expenses losses;
c. Claims against insolvent
persons
d.Unpaid mortgages

Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (A) - 3. Property previously taxed; 5. Property previously taxed;
Allowable 4. Transfers for public use; 6. Transfers for public use;
deductions from 5. Family home in the amount 7. Family home, in the increased
the gross estate of ₱1,000,000; amount of ₱10,000,000;
of a 6. Medical expenses, not 8. Amounts received by heirs RA
citizen/resident exceeding ₱500,000; No. 4917 (Retirement benefits of
7. Amount received by heirs private firm employees)
under RA No. 4917
(Retirement benefits of
private firm employees)

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Estate Tax
NIRC Provision NIRC
Section 86 (B) - The value of the net estate of For Non-residents:
Allowable a non-resident is determined
deductions from by deducting the following
the gross estate from the gross estate:
of a non-resident 1. Expenses, losses,
alien indebtedness, and taxes in
proportion to the value of
entire gross estate situated
in
the Philippines;
2. Property previously taxed;
3. Transfers for public use
TRAIN
1. Standard deduction in the
amount of ₱500,000;
2. Value of
Claims against the estate
Claims against the insolvent
person
Unpaid mortgages
In proportion to the value of
the entire gross estate
situated in the Philippines
3. Property previously taxed;
4. Transfers for public use

Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (D) - No deduction shall be allowed Miscellaneous provision is
Miscellaneous in the case of a non-resident deleted.
provision for not a citizen of the Philippines,
non-residents unless the executor,
administrator, or anyone of
the heirs, as the case may be,
includes in the return required
to be filed under the Section
90 the value at the time of his
death of that part of the gross
estate of the non-resident not
situated in the Philippines.

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Estate Tax
NIRC Provision NIRC TRAIN
Section 89 - Notice of decedent’s death Requirement for filing of notice
Notice of Death shall be filed by the executor, of death is removed.
administrator, or any of the
legal heirs within two months
after death or after qualifying
as such executor or
administrator:
In all cases of transfers
subject to tax
In cases where though
exempt from tax, the gross
value of the estate exceeds
₱20,000.

Estate Tax
NIRC Provision NIRC TRAIN
Section 90 - Estate tax returns showing a The threshold amount for the
Attachment to gross value exceeding requirement of attaching a
Estate Tax Return ₱2,000,000 shall be supported statement duly certified by a CPA
– CPA with a statement duly certified is increased to ₱5,000,000 (from
certification by a CPA ₱2,000,000).

Section 90 - Estate tax returns shall be filed The filing of estate tax returns
Time of filing of within six (6) months from the shall be within one (1) year from
estate tax return decedent’s death. the decedent’s death.

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Estate Tax
NIRC Provision NIRC TRAIN
Section 91 (C) - No provision In case the available cash of the
Payment by estate is insufficient to pay the
installment of total estate tax due, payment
estate tax [new] by installment shall be allowed
within two (2) years from the
statutory date of payments,
without civil penalty and
interest.

Estate Tax
NIRC Provision NIRC
Section 97 - If a bank has knowledge of the
Payment of tax death of a person, who
antecedent to maintained a bank deposit
the transfer of account alone, or jointly with
shares, bonds, or another, it shall not allow any
rights withdrawal from the said
deposit account unless the
Commissioner has certified
that the taxes imposed
thereon have been paid.
TRAIN
If a bank has knowledge of the
death of a person, who
maintained a bank deposit
account alone, or jointly with
another, it shall allow any
withdrawal from the said deposit
account, subject to a final
withholding tax of (6%).

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Donor’s Tax
NIRC NIRC TRAIN
Provision
Section 99 - The donor’s tax for each calendar year shall The donor’s tax for is fixed at 6%
Rates of tax be computed on the basis of the total net based on annual total gifts
gifts made during the calendar year in exceeding ₱250,000 (exempt
accordance with the graduated tax table. gift), regardless of whether the
done is a stranger or not.
NET GIFT TAX NET GIFT TAX
Not over ₱100,000 Exempt Over ₱1M but ₱44,000 + 8% of the
Over ₱100,000 but 2% of the excess not over ₱3M excess over ₱1M
not over ₱200,000 over ₱100,000 Over ₱3M but ₱204,000 + 10% of the
Over ₱200,000 but ₱2,000 + 4% of the not over ₱5M excess over ₱3M
not over ₱500,000 excess over Over ₱5M but ₱404,000 + 12% of the
₱200,000 not over ₱10M excess over ₱5M
Over ₱500,000but ₱14,000 + 6% of Over ₱10M ₱1,004,000 + 15% of
not over ₱1M the excess over the excess over ₱10M
₱500,000

Donor’s Tax
NIRC Provision NIRC TRAIN
Section 99 - The donor’s tax shall be 30% The donor’s tax is fixed at 6%
Rates of tax of the net gifts when the done based on annual total gifts
or beneficiary is a stranger. exceeding ₱250,000 (exempt
gift) regardless of whether the
donee is a stranger or not.

40

Donor’s Tax
NIRC Provision NIRC
Section 100 - When property, other than the
Transfer for less RP referred to in Sec 24D, is
than adequate transferred for less than an
consideration adequate/full consideration in
money or money’s worth, the
amount by which the fair market
value of the property transferred
exceeded the value of the
consideration received for such
transfer, shall for purpose of
donor’s tax, be deemed a gift
and included in computing the
amount of gifts made during the
year.
Donor’s Tax
NIRC Provision NIRC
Section 101 - Dowries or gifts made on
Exemption of account of marriage by
certain gifts parents to each of their
legitimate, recognized ,
natural, or adopted children to
the extent of the first ₱10,000
shall be exempt from donor’s
tax.
Note: DST on See Section 20 of Revenue Regulations No. 4-2018
donation
3/3/2018
TRAIN
Additional proviso:
Even if the sale, exchange or other
transfer of property is for an
insufficient consideration, the same
will still be considered made for
adequate and full consideration
provided that such transfer is
made in the ordinary course of
business, i.e.,:
 A bona fide transaction;
 At arm’s length; and
 Free from donative intent.
TRAIN
The exemption of dowries (gifts
made on account of marriage) is
removed.
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Briefing on RA 10963:
Tax Reform for Acceleration and Inclusion (TRAIN)

– Documentary Stamp Tax

Revenue Regulations No. 4-2018 dated December 19, 2017

NIRC Provision NIRC TRAIN

Section 174 - Original Issue of Shares of Stock ₱ 1.00/₱ 200.00 ₱2.00/₱ 200.00

Section 175 -Sales, Agreements to Sell, Memoranda of Sales, ₱ 0.75/₱ 200.00 ₱ 1.50/₱ 200.00
Deliveries or Transfer of Shares or Certificates of Stock with par value

Section 175 - Sales, Agreements to Sell, Memoranda of Sales, 25% of DST paid 50% of DST paid
Deliveries or Transfer of Shares or Certificates of Stock without par on original issue on original issue
value
Section 177 - Certificates of Profits or Interest in Property ₱ 0.50/₱ 200.00 ₱ 1.00/₱ 200.00

Section 178 - ₱ 1.50/piece of ₱ 3.00/piece of

Bank Checks, Drafts, Certificates of Deposit not Bearing Interest, and check check
Other Instruments
Section 179 - All Debt Instruments ₱ 1.00/₱ 200.00 ₱ 1.50/₱ 200.00 of
of FV or a FV or a fraction of
fraction of 365 365 days for
days for instruments with
instruments with term of less than 1
term of less than year
1 year

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NIRC Provision NIRC TRAIN

Section 180 - All Bills of Exchange or Drafts ₱ 0.30/₱200.00 ₱ 0.60/₱200.00

Section 181 - Acceptance of Bills of Exchange or Order Drawn in a ₱ 0.30/₱200.00 ₱ 0.60/₱200.00

Foreign Country but Payable in the Philippines
Section 182 - Foreign Bills of Exchange and Letters of Credit ₱ 0.30/₱200.00 ₱ 0.60/₱200.00
Section 183 - Life Insurance Policies Not Over ₱ 100K Not Over ₱
= Exempt 100K = Exempt

Over ₱ 100K but Over ₱ 100K

not over ₱ 300K but not over ₱
= ₱ 10.00 300K = ₱ 20.00
Section 183 - Life Insurance Policies Over ₱1M-₱ 100 Over ₱1M-₱ 200
Section 186 - Policies of Annuities ₱ 0.50/₱200.00 ₱ 1.00/₱200.00
Section 186 - Pre-Need Plans ₱ 0.20/₱200.00 ₱ 0.40/₱200.00

Section 188 - Certificates Issued ₱ 15/Certificate ₱ 30/Certificate

NIRC Provision NIRC TRAIN

Section 189 - Warehouse Receipts >₱200.00 = ₱15.00 >₱200.00=₱30.00

Section 190 - Jai-Alai, Horse Race, Tickets, Lotto or Other Authorized ₱1.00 < = ₱ 0.10 ₱1.00 and <=₱0.20
Number Games
Above ₱ 1.00 = Above ₱ 1.00 =
₱ 0.10/₱ 1.00 ₱ 0.20/₱ 1.00

Section 191 - Bills of Lading or Receipts Over ₱ 100.00 but Over ₱ 100.00 but
not over ₱ 1K = not over ₱ 1K =
₱1.00 ₱2.00

Over ₱ 1K = Over ₱ 1K = ₱
₱10.00 20.00
Section 192 - Proxies for Voting at any Election ₱ 15.00/proxy vote ₱ 30.00/proxy
vote

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NIRC Provision NIRC TRAIN

Section 193 - Powers of Attorney ₱ 5.00/issued power ₱ 10.00/issued
of attorney power of attorney
Section 194 - Leases and Other Hiring Agreements First ₱ 2K = ₱ 3.00 First ₱ 2K = ₱ 6.00

Over ₱ 2K = Over ₱ 2K =
₱ 1.00/₱ 1K ₱ 2.00/₱ 1K
Section 195 - Mortgages, Pledges and Deeds of Trust First ₱ 5K = ₱ 20.00 First ₱ 5K = ₱ 40.00

Over ₱ 5K = Over ₱ 5K =
₱ 10.00/₱ 5K ₱ 20.00/₱ 5K
Section 197 - Charter Parties and Similar Instruments if gross First 6 months = First 6 months =
tonnage of ship, vessel or steamer is 1,000 tons and below ₱ 500.00 + ₱ 50.00 for ₱ 1K + ₱ 100.00 for
each month or each month or
fractions of a month fractions of a month
in excess of 6 months in excess of 6
months

NIRC Provision NIRC TRAIN

Section 196 - No DST On first ₱ 1K = ₱15.00
Deeds of Sale,
Conveyances and In excess of ₱ 1K or
Donations of Real fractional part thereof = ₱
Property 15.00/₱ 1K

Transfers exempt from

donor’s tax under Section
101 (a) and (b) of the Tax
Code shall be exempt
from DST

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 3/3/2018

Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

– Excise Taxes

Revenue Regulations No. 1-2018 – Mineral Products

Revenue Regulations No. 2-2018 – Petroleum Products
Revenue Regulations No. 3-2018 – Tobacco Products
Revenue Regulations No. 5-2018 – Automobiles

Republic Act (RA) 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

– Sweetened Beverages

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 3/3/2018

Subject to Excise Tax

 Sweetened juice drinks;
 Sweetened tea;
 All carbonated beverages;
 Flavored water;
 Energy and sports drinks;
 Other powdered drinks not classified as milk,
juice, tea, and coffee;
 Cereal and grain beverages; and
 Other non-alcoholic beverages that contain added
sugar
91

NOT Subject to Excise Tax

 All milk products including infant & formula milk,
soymilk, flavored milk, etc.
 One Hundred Percent (100%) natural fruit juices w/o
added sugar/ caloric sweetener
 One Hundred Percent (100%) natural vegetable juices
w/o added sugar/ caloric sweetener
 Meal replacement and medically indicated beverages
for oral nutritional therapy
 Ground, instant soluble and pre-packaged powdered
coffee products.

92

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Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

– Invasive Cosmetic Procedure

Invasive Cosmetics Procedures

1. Liposuction 6. Chin Augmentation 11. Vaginal Plastic Surgery

7. Facelift/Necklift 12. Abdominoplasty or Tummy Tuck
2. Mammoplasty
13. Auto Grafting
3. Breastlift 8. Thread Lift
14. Rhinoplasty/Alar Trimming
4. Buccal Fat Reduction 9. Hair Restoration/ 15. Otoplasty
Transplantation
5. Buttocks Augmentation
10. Eyelid Surgery

94

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Non-invasive Cosmetics Procedures

1. Acupuncture Rejuvenation Therapy 11. Cleanings and Facials

2. Air Dissector 12. Peelings (Face and Body)
3. Botulinum Toxin Injection/Treatment 13. Injectables and Weight Management
4. Collagen Induction Therapy Treatment

5. Dermal Fillers (Crosslinked and Non-

Crosslinked)
6. Embedded Protein Threads
7. Non-surgical facelifting & skin tightening using radio
frequency, ultrasound, infrared
8. Fractional CO 2
9. Lasers and Light Treatments
10. Body Treatments and Contouring Procedures

Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

– Administrative Provisions

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 3/3/2018

NIRC Provision NIRC TRAIN

Section 232 - All corporations, companies, All corporations, companies,
Keeping of books partnerships or persons required by partnerships or persons required by
of accounts law to pay internal revenue taxes law to pay internal revenue taxes shall
shall keep a journal and a ledger. keep and use relevant and appropriate
set of bookkeeping records duly
Those whose quarterly sales, authorized by the Secretary of Finance.
earnings, receipts, or output do not
exceed PHP50,000 shall keep and
use simplified set of bookkeeping
records.
Section 232 - Those whose gross quarterly sales, Those whose gross annual sales,
Keeping of books earnings, receipts or output exceed earnings, receipts or output exceed
of accounts P150,000 shall have their books of ₱3,000,000 shall have their books of
accounts audited and examined accounts audited and examined yearly
yearly by independent Certified by independent CPAs and their ITRs
Public Accountants (CPAs) and their accompanied with a duly accomplished
ITRs accompanied Account AIF.
Information Form (AIF).

NIRC Provision NIRC TRAIN

Section 236 - The taxpayer’s registration shall Additional proviso:

Registration contain the information as may
Requirements be required by the The Commissioner shall simplify
Commissioner in the form the business registration and tax
prescribed compliance requirements of self-
employed individuals and/or
professionals.

Persons required to register for

VAT: those whose gross receipts Threshold amount is increased to
• for the past 12 months have ₱3,000,000.
exceeded ₱1,500,000

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NIRC Provision NIRC TRAIN

Section 236 - • For the next 12 months can Additional proviso:
Registration be reasonably believe to
Requirements exceed ₱1,500,000 Any taxable individual who elects
to pay the 8% tax on gross sales
Any person not required to or receipts shall not be allowed
register for VAT may elect to to avail of optional VAT
register for VAT. registration.
Section 237 - A duly-registered receipt or It is expressly provided that the
Receipts or sales or commercial invoice , issuance of the receipt or invoice
Invoices prepared at least in duplicate, shall be made at the point of
shall be issued for each sale of sale.
merchandise or service
rendered valued at ₱25 or The threshold amount is
more. increased to ₱100.00

NIRC Provision NIRC TRAIN

Section 237 - Additional provision:

Receipts or Within 5 years from the effectivity of
Invoices the law and upon the establishment
of the necessary storing and
processing system, the following
shall be required to issue electronic
receipts or sales or commercial
invoices in lieu of manual
receipts/invoices:
• taxpayers engaged in the export of
goods and services
• taxpayers engaged in e-commerce,
and
• taxpayers under the jurisdiction of
the Large Taxpayers Service

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Section 237 - Other taxpayers may also opt to

Receipts or issue electronic receipts/invoices
Invoices in lieu of manual ones.

The digital record of electronic

receipts/ invoices shall be kept by
the purchaser, customer or client
and the issuer for a period of 3
years from the close of the
taxable year.

NIRC Provision NIRC TRAIN

Section 237 (A) No provision The taxpayers that will be

- mandated under Sections 236 to
Electronic Sales issue electronic receipts/invoices
Reporting shall be required to electronically
System [new] report their sales data to the BIR
through the use of electronic
point of sales systems.

The machines, fiscal devices, and

fiscal memory devices shall be at
the expense of the taxpayers.

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Section 237 (A) - No provision The data processing of sales and

Electronic Sales purchase data shall comply with:
Reporting • the Data Privacy Act
System [new] • the provision of the Tax Code on
unlawful divulgence of taxpayer
information (Section 270)
• other laws relating to the
confidentiality of information

The BIR shall also establish policies,

risk management approaches,
actions, trainings, and technologies
to protect the cyber environment,
organization, and data.

Republic Act No. 10963:

Tax Reform for Acceleration and Inclusion (TRAIN)

– Penalties

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NIRC Provision NIRC
General 20% interest on any unpaid
interest amount of tax from the date
prescribed for payment until
the amount fully paid
NIRC Provision NIRC
Deficiency Deficiency interest is assessed
interest and collected from the date
prescribed for its payment until
full payment thereof.
3/3/2018
TRAIN
General interest on unpaid
amount of tax is changed to 12%
(at double the rate of legal
interest rate for loans or
forbearance of any money in the
absence of an express stipulation
as set by the BSP; prevailing BSP-
set legal interest is 6%)
Additional proviso:
Deficiency and delinquency
interest shall in no case be
imposed simultaneously.
TRAIN
The period when deficiency
interest shall stop to run is until
full payment OR upon issuance of
a notice and demand by the BIR
Commissioner; whichever comes
earlier.
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Section 254 - Any person who willfully Administrative fine is increased
Attempt to attempts in any manner to to not less than P500,000 but not
evade or evade or defeat any tax more than P10,000,000
defeat tax imposed under this Code or
the payment thereof shall, in Imprisonment is increased to not
addition to other penalties less than 6 years but not more
provided by law, upon than 10 years
conviction thereof; be
punished by a fine of not less
than P30,000 but not more
than P100,000 and suffer
imprisonment of not less than
2 years but not more than 4
years.

NIRC Provision NIRC TRAIN

Section 264 - Any person who: Same
Failure or fails or refuses to issue
refusal to issue receipts/invoices
receipts or issues receipts/invoices that
invoices do not fully reflect required
information
uses multiple or double
receipts or invoices
shall upon conviction be
punished by a fine of not less
than P1,000 but not more than
P50,000 and suffer
imprisonment of not less than
2 years but not more than 4
years

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Section 264 - Fine of not less than P1,000 but
Failure or not more than P50,000 and
refusal to issue imprisonment of not less than 2
receipts or years but not more than 4 years
invoices for any person who:
 Print receipts/invoices
without authority from the
BIR
 Print double or multiple sets
of invoices or receipts
 Print unnumbered
receipts/invoices not bearing
the name, business style, TIN
and business address of the
entity
Administrative Fine is increased to
not less than P500,000 but not
more than P10,000,000
Imprisonment is increased to not
less than 6 years but not more
than 10 years
Additional punishable offense:
Printing of other fraudulent
receipts or sales or commercial
invoices

NIRC Provision NIRC TRAIN

Section 264-A - No provision Any taxpayer required to
Failure or transmit sales data to the BIR’s
transmit Sales electronic sales reporting system
Data Entered but fails to do so, shall pay:
on Cash
Register For each day of violation:
Machine/Point 1/10 of 1% of the annual net
of Sales System income as reflected in the
(POS) Audited FS for the second year
Machines to preceding the current taxable
the BIR’s year OR P10,000, whichever is
Electronic Sales higher.
Reporting
System [new]

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Section 264-A - No provision IF the aggregate number of days
Failure or of violation exceed 180 days
transmit Sales within a taxable year, additional
Data Entered penalty shall be: permanent
on Cash closure of the taxpayer
Register
Machine/Point The penalty shall not apply if the
of Sales System failure to transmit is due to force
(POS) majeure or any causes beyond
Machines to the control of the taxpayer
the BIR’s
Electronic Sales
Reporting
System [new]

NIRC Provision NIRC TRAIN

Section 264-B - No provision Covered person shall be any person
Sales who purchase, use, possess, sell or
suppression offer to sell, install, transfer, update,
devices [new] upgrade, keep, or maintain such
automated sales suppression device
or software designed for or is
capable of:
 Suppressing the creation of
electronic records of sale
transactions that a taxpayer is
required to keep under existing
tax laws and/or regulation; or
 Modifying, hiding or deleting
electronic records of sales
transactions and providing ready
means of access to them

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Section 264-B - No provision Penalty:
Sales Administrative Fine of not less
suppression than P500,000 but not more
devices [new] than P10,000,000 and
imprisonment of not less than 2
years but not more than 4 years

Cumulative suppression of
electronic sales record in excess
of P50,000,000 shall be
considered as economic
sabotage and shall be subject to
maximum penalty

NIRC Provision NIRC TRAIN

Section 265-A - No provision Additional punishment for all
Offenses offenses relating to fuel marking:
relating to fuel a. Any person engaged in the sale,
marking trade, delivery, distribution or
transportation of unmarked fuel
in commercial quantity held for
domestic use or merchandise
(upon conviction)
b. Any person who:
causes removal of the official fuel
marking agent from marked fuel,
and the adulteration or dilution of
the fuel intended for sale to the
domestic market, or

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Section 265-A - No provision knows the possession, storage,

Offenses transfer or offer for sale of fuel
relating to fuel obtained as a result of such
marking removal, adulteration or dilution

First offense ₱2,500,000

Second offense ₱5,000,000

Third offense ₱10,000,000 plus

revocation of license to
engage in any trade or
business

NIRC Provision NIRC TRAIN

Section 265-A - No provision c. fine of not less than P1,000,000

Offenses but not more than P5,000,000
relating to fuel AND imprisonment of not less
marking than 4 years but not more than 8
years for any person who
commits any of the following
acts:
Making, importing, selling,
using or possessing fuel
markers without express
authority
Making, importing, selling,
using or possessing counterfeit
fuel markers

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Section 265-A - No provision Causing another person or

Offenses entity to commit any of the
relating to fuel two preceding acts
marking Causing the sale, distribution,
supply or transport of
legitimately imported, in-
transit, manufactured or
procured controlled precursors
and essential chemicals to any
person or entity penalized
under the preceding and this
subsection

NIRC Provision NIRC TRAIN

Section 265-A - No provision d. Fine of not less than P5,000,000
Offenses but no more than P10,000,000
relating to fuel AND imprisonment of not less
marking than 4 years but not more than 8
years for any person who willfully
inserts, places, adds or attaches
whatever quantity of any
unmarked fuel, counterfeit
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
herein

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Section 265-A - No provision e. Any person authorized, licensed
Offenses or accredited to conduct fuel
relating to fuel tests, who issues false or
marking fraudulent test results knowingly,
willfully OR through gross
negligence, shall suffer additional
penalty of imprisonment from 1
year and 1 day to 2 years and 6
months

Additional penalties that may be

imposed by the court:
 Revocation of the license to
practice profession in case of a
practitioner
 Closure of the fuel testing facility

NIRC Provision NIRC TRAIN

Section 269 - No provision Additional punishable offense:

Violations (j) Deliberate failure to act on the
committed by application for VAT refunds within
Government the prescribed period
Enforcement
Officers

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