THE TRAIN LAW

January 27, 2018, TBC Activity Hall, Tacloban City

Albert B. Baclea-an
Outline
Income Tax
Estate Tax
Donor’s Tax
Value-Added Tax
Percentage Tax
Excise Tax
Documentary Stamp Tax
Tax Administration
Income Tax Updates
Graduated Tax Rates (Old Rule)
Until December 31, 2017
Not over ₱10,000 5%
Over ₱10,000 but not over ₱30,000 ₱500 + 10% of the excess over
₱10,000
Over ₱30,000 but not over ₱70,000 ₱2,500 + 15% of the excess over
₱30,000
Over ₱70,000 but not over ₱140,000 ₱8,500 + 20% of the excess over
₱70,000
Over ₱140,000 but not over ₱250,000 ₱22,500 + 25% of the excess over
₱140,000
Over ₱250,000 but not over ₱500,000 ₱50,000 + 30% of the excess over
₱250,000
Over ₱500,000 ₱125,000 + 32% of the excess over
₱500,000
Graduated Tax Rates (TRAIN Law)
January 1, 2018 – December 31, 2022 January 1, 2023 onwards
Not over ₱250,000 0% Not over ₱250,000 0%
Over ₱250,000 but 20% of the excess Over ₱250,000 but 15% of the excess
not over ₱400,000 over ₱250,000 not over ₱400,000 over ₱250,000
Over ₱400,000 but ₱30,000 + 25% of the Over ₱400,000 but ₱22,500 + 20% of the
not over ₱800,000 excess over ₱400,000 not over ₱800,000 excess over
₱400,000
Over ₱800,000 but ₱130,000 + 30% of Over ₱800,000 but ₱102,500 + 25% of
not over ₱2,000,000 the excess over not over ₱2,000,000 the excess over
₱800,000 ₱800,000
Over ₱2,000,000 but ₱490,000 + 32% of Over ₱2,000,000 but ₱402,500 + 30% of
not over ₱8,000,000 the excess over not over ₱8,000,000 the excess over
₱2,000,000 ₱2,000,000
Over ₱8,000,000 ₱2,410,000 + 35% of Over ₱8,000,000 ₱2,202,500 + 35% of
the excess over the excess over
₱8,000,000 ₱8,000,000
 Graduated Tax
 For purely compensation income earners;
 For business or professional income earners
with annual gross sales or receipts exceed the
VAT threshold of ₱3,000,000;
 8% Tax on Gross Sales or Gross Income
 In excess of ₱250,000 (annual);
 Purely self-employed individuals and/or
professionals;
 In lieu of income tax and percentage tax;
 If annual gross income or sales does not
exceed the VAT threshold.
 Mixed Income Earners
 Graduated rates for compensation income;
 8% tax for business or professional income,
provided that the gross annual sales or
receipts does not exceed the VAT threshold;
 Personal Exemptions
Old Rule TRAIN Law
Basic – ₱50,000; Not Allowed
Additional – ₱25,000 per
qualified dependent
 Final Tax on Passive Income
Tax Old Rule TRAIN Law
PCSO and Exempt 20% (but
Lotto Winnings exempt if
₱10,000 or less)
Interest Income 7.5% 15%
under EFCDS
 Capital Gains Tax
Old Rule TRAIN Law
First ₱100,000 gain – 15% of the gain on sale
5%
Excess – 10%
 Sale of shares of stocks of a domestic
corporation;
 Not traded in the stock exchange.
 Fringe Benefit Tax
Old Rule TRAIN Law
32% of the Grossed-Up 35% of the Grossed-Up
Monetary Value of the Monetary Value of the
benefit benefit
 15% Preferential Tax
 Imposed on aliens and Filipinos employed
by Regional Area or Operating
Headquarters of Multi-National Companies,
Offshore Banking Units, and Petroleum
Service Contractors;
 Applicants after January 1, 2018 shall not
be extended with the aforesaid privilege;
 15% Preferential Tax
 Existing privileges granted before January
1, 2018 will be retained;
 This provision was vetoed by the President
in his Veto Message dated December 19,
2017 for violating the Equal Protection
Clause of the Constitution.
 Exemption of GOCCs
NIRC TRAIN Law
GSIS, SSS, PHIC, GSIS, SSS, PHIC,
PCSO, and LWD and LWD
 Exempt 13th Month Pay and Other Benefits

NIRC TRAIN Law

First ₱82,000 First ₱90,000

 Excess over de minimis benefits

threshold shall form part of the “Other
Benefits”.
 Withholding of Creditable Tax at Source

Old Rule TRAIN Law

1% - 32% 1% - 32% (2018)
1% - 15% (2019
thereafter)
 Withholding Tax for Payments to Individuals

Old Rule TRAIN Law

10% 8%
 Filing of Quarterly Income Tax Returns
Period Old Rule TRAIN Law
1st Quarter April 15 May 15
2nd Quarter August 15 August 15
3rd Quarter November 15 November 15
4th Quarter April 15 (following May 15 (following
year) year)
 Installment Payment of Income Tax
Period Old Rule TRAIN Law
1st Payment April 15 May 15
Balance July 15 October 15

 If tax due is more than ₱2,000.

Estate Tax Updates
Estate Tax Rates
Old Rule TRAIN LAW
Not over ₱200,000 Exempt
Over ₱200,000 but ₱0 + 5% of the
not over ₱500,000 excess over ₱200,000
Over ₱500,000 but ₱15,000 + 8% of the
not over ₱2,000,000 excess over ₱500,000
Over ₱2,000,000 but ₱135,000 + 11% of
not over ₱5,000,000 the excess over
₱2,000,000
6% of Net Estate
Over ₱5,000,000 but ₱456,000 + 15% of
not over ₱10,000,000 the excess over
₱5,000,000
Over ₱10,000,000 ₱1,215,000 + 20% of
the excess over
₱10,000,000
 Special Deductions from Gross Estate
(Resident/Citizen)
Deduction Old Rule TRAIN Law
Standard Deduction ₱1,000,000 ₱5,000,000
Family Home ₱1,000,000 ₱10,000,000
 Special Deductions from Gross Estate (Non-
Resident Alien)
Deduction Old Rule TRAIN Law
Standard Deduction None ₱500,000
 CPA Certificate for Estate Tax Filing
Old Rule TRAIN Law
Gross Estate exceeds Gross Estate
₱2,000,000 exceeds
₱5,000,000
 Deadline for Filing
Old Rule TRAIN Law
6 Months from the 1 Year from the
decedent’s death decedent’s death
Donor’s Tax Updates
Donor’s Tax Rates
Old Rule (Net Gifts) - Relatives TRAIN LAW
Not over ₱100,000 Exempt
Over ₱100,000 but not ₱0 + 2% of the excess
over ₱200,000 over ₱100,000
Over ₱200,000 but not ₱2,000 + 2% of the
over ₱500,000 excess over ₱200,000
Over ₱500,000 but not ₱14,000 + 6% of the 6% of Total Gifts in
over ₱1,000,000
Over ₱1,000,000 but
excess over ₱500,000
₱44,000 + 8% of the
Excess of ₱250,000
not over ₱3,000,000 excess over
₱1,000,000
regardless of
Over ₱3,000,000 but ₱204,000 + 10% of the relationship
not over ₱5,000,000 excess over
₱3,000,000
Over ₱5,000,000 but ₱404,000 + 12% of the
not over ₱10,000,000 excess over
₱5,000,000
Over ₱10,000,000 ₱1,004,000 + 15% of
the excess over
₱10,000,000
 Deduction for Dowries
Old Rule TRAIN Law
₱10,000 None
Value-Added Tax Updates
 Additional Zero-Rated Transactions
 Sale and delivery of goods or services to:
a. Registered enterprises within a separate
customs territory as provided under special
laws;
b. Registered enterprises within tourism
enterprise zones as declared by Tourism
Infrastructure and Enterprise Zone Authority
(TIEZA).
 Subjected to veto by the President
 Additional VAT Exempt Transactions
 Sale or lease of goods or services to senior
citizens and persons with disability;
 Transfer of property pursuant to Sec. 40 (C)(2)
of the NIRC;
 Association dues, membership fees, and other
assessments and charges collected by
homeowners association and condominium
corporations;
 Additional VAT Exempt Transactions
 Sale of gold to Bangko Sentral ng Pilipinas;
 Sale of drugs and medicines prescribed for
diabetes, high cholesterol, and hypertension
beginning January 1, 2019;
 Sale or lease of goods or properties or
performance of services with annual sales or
receipts not exceeding ₱3,000,000.
 Lifting of VAT Exempt Transactions
 Importation of vehicle, vessel, aircraft,
machinery and similar goods for use in the
manufacture.
 Amortization of Input Tax for Depreciable
Goods (Cost exceeding ₱1,000,000)
Old Rule TRAIN Law
60 months or useful Amortization shall
life of the asset, be allowed only
whichever is shorter until December 31,
2021
 Period to Refund for Creditable Input Tax
Old Rule TRAIN Law
120 days from the 90 days from the
date of submission date of submission
of supporting of supporting
documents for the documents for the
claim (retroactive) claim
(prospective)
 5% VAT Withheld by the Government
Old Rule TRAIN Law
Final Tax Creditable Tax
beginning January 1,
2021
 Filing and Payment of VAT
Old Rule TRAIN Law
Monthly – 20 days Payment – monthly;
after the end of each Filing – quarterly
month;
Quarterly – 25 days
after the end of each
quarter
(except EFPS filers)
Percentage Tax Updates
 Percentage Tax Rates
Old Rule TRAIN Law
Generally, 3% of Generally, 3% of
monthly Gross Sales quarterly sales or
or Receipts receipts, except if
Annual Gross Sales
or Receipts do not
exceed ₱500,000*

* Exempt beginning January 1, 2019 but vetoed by the

President.
 Stock Transaction Tax
Old Rule TRAIN Law
Initial Public Offering:
Up to 25% - 4%
25% to 33.33% - 2% 6/10 of 1%
More than 33.33% - 1%
Subsequent Offering:
½ of 1%
Excise Tax Updates
Excise Tax Rates on Automobiles
Old Rule TRAIN Law
Up to ₱600,000 2% Up to 4%
₱600,000
Over ₱600,000 ₱12,000 + 8% of Over ₱600,000
but not over the excess over but not over 10%
₱1,100,000 ₱600,000 ₱1,000,000
Over ₱112,000 + 40% Over
₱1,100,000 but of the excess ₱1,000,000 but 20%
not over over ₱1,100,000 not over
₱2,100,000 ₱4,000,000
Over ₱512,000 + 60% Over
₱2,100,000 of the excess ₱4,000,000 50%
over ₱2,100,000
Excise Tax on Tobacco Products
Product Old Rule 1/1/18- 7/1/18- 1/1/20- 1/1/22- 1/1/24-
6/30/18 12/31/19 12/31/21 12/31/23 Onwards
Cigarettes
Packed by ₱30 per ₱32.50 ₱35 per ₱37.50 ₱40 per Shall be
Hand or pack per pack pack per pack pack increased
by by 4%
Machine
Excise Tax on Mineral Oils and Other Fuels
Product Old Rule 2018 2019 2020
Lubricating Oils and ₱4.50 per ₱8.00 per ₱9.00 per ₱10.00 per
Greases volume volume volume volume
capacity capacity capacity capacity
Processed Gas ₱0.05 per ₱8.00 per ₱9.00 per ₱10.00 per
volume volume volume volume
capacity capacity capacity capacity
Waxes and ₱3.50 per kg. ₱8.00 per ₱9.00 per ₱10.00 per
Petrolatum kilo kilo kilo
Denatured Alcohol ₱0.05 per liter ₱8.00 per ₱9.00 per ₱10.00 per
liter liter liter
Naphtha, Regular ₱4.35 per liter ₱7.00 per ₱9.00 per ₱10.00 per
Gasoline liter liter liter
Excise Tax on Mineral Oils and Other Fuels
Product Old Rule 2018 2019 2020
Unleaded Premium ₱4.35 per ₱7.00 per ₱9.00 per ₱10.00
Gasoline liter liter liter per liter
Aviation Turbo Jet ₱3.67 per ₱4.00 per ₱4.00 per ₱4.00 per
Fuel liter liter liter liter
Kerosene ₱0.00 per ₱3.00 per ₱4.00 per ₱5.00 per
liter liter liter liter
Diesel Fuel Oils and ₱0.00 per ₱2.50 per ₱4.50 per ₱6.00 per
Similar Oils liter liter liter liter
Liquefied ₱0.00 per ₱1.00 per ₱2.00 per ₱3.00 per
Petroleum Gas liter kilo kilo kilo
Excise Tax on Mineral Oils and Other Fuels
Product Old Rule 2018 2019 2020
Asphalts ₱0.56 per ₱8.00 per ₱9.00 per ₱10.00 per
kilo kilo kilo kilo
Bunker Fuel ₱0.00 per ₱2.50 per ₱4.50 per ₱6.00 per
liter liter liter liter
Petroleum Coke None ₱2.50 per ₱4.50 per ₱6.00 per
metric ton metric ton metric ton
Excise Tax on Cosmetic Procedures
 5% of the Gross Receipts
 Excise Tax on Sweetened Beverages
Using Purely Caloric or
Purely Non-caloric or ₱6.00 per liter
Mixed Sweeteners
Using Purely High
Fructose Corn Syrup or in ₱12.00 per liter
combination with Caloric
or Non-Caloric
Sweeteners
 Excise Tax on Sweetened Beverages
Exempt Products:
 Beverages using coconut sap sugar
and purely steviol glycosides;
 All milk products;
 100% Natural Fruit Juices;
 100% Natural Vegetable Juices;
 Meal replacement and medically indicated
beverages;
 Excise Tax on Sweetened Beverages
Exempt Products: …continued
 Ground coffee, instant soluble coffee, and
pre-packed powdered coffee products.
Excise Tax on Mineral Products
Product Old Rule 2018 2019 2020
Domestic and ₱10.00 per ₱50.00 per ₱100.00 ₱150.00
Imported Coal and metric ton metric ton per metric per metric
Coke ton ton
Non-Metallic 2% of Actual 4% of Actual
Minerals and Market Market
Quarry Resources, Value of the Value of the
except Locally Gross Gross
Extracted Natural Output Output
and Liquefied (local) or
Natural Gas Value used
by BOC
(imported)
Excise Tax on Mineral Products
Product Old Rule 2018
Metallic Minerals 2% of Actual 4% of Actual Market
Market Value of Value of the Gross
the Gross Output (local) or Value
Output used by BOC (imported)
Indigenous 3% of 6% of International
Petroleum International Market Value
Market Value
Documentary Stamp Tax Updates
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Original Issue of Shares of ₱1.00 per ₱2.00 per
Stocks ₱200.00 of the ₱200.00 of the
par value par value
Sales, Agreements to Sell, ₱0.75 per ₱1.50 per
Memoranda of Sales, ₱200.00 of the ₱200.00 of the
Deliveries or Transfers of par value par value
Shares or Certificates of Stock (50% of DST of (50% of DST of
original issue in original issue in
case of no-par case of no-par
shares) shares)
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Certificates of Profits or ₱0.50 per ₱1.00 per
Interest in Property or ₱200.00 of the ₱200.00 of the
Accumulations face value face value
Bank Checks, Drafts,
Certificates of Deposit not ₱1.50 ₱3.00
Bearing Interest, and Other
Instruments
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Debt Instruments ₱1.00 per ₱1.50 per
₱200.00 of the ₱200.00 of the
issue price issue price
Bills of Exchange or Drafts ₱0.30 per ₱0.60 per
₱200.00 of the ₱200.00 of the
face value face value
Acceptance of Bills of ₱0.30 per ₱0.60 per
Exchange and Others ₱200.00 of the ₱200.00 of the
face value face value
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Foreign Bills of Exchange and ₱0.30 per ₱0.60 per
Letters of Credit ₱200.00 of the ₱200.00 of the
face value face value
Documentary Stamp Tax Rates
(Life Insurance Policies)
Amount of Insurance Old Rule TRAIN Law
Not exceeding ₱100,000 Exempt Exempt
More than ₱100,000 but not ₱10.00 ₱20.00
more than ₱300,000
More than ₱300,000 but not ₱25.00 ₱50.00
more than ₱500,000
More than ₱500,000 but not ₱50.00 ₱100.00
more than ₱750,000
Documentary Stamp Tax Rates
(Life Insurance Policies) …continued
Amount of Insurance Old Rule TRAIN Law
More than ₱750,000 but not ₱75.00 ₱150.00
more than ₱1,000,000
More than ₱1,000,000 ₱100.00 ₱200.00
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Policies of Annuities ₱0.50 per ₱1.00 per
₱200.00 of the ₱200.00 of the
premium premium
collected collected
Pre-Need Plans ₱0.20 per ₱0.40 per
₱200.00 of the ₱200.00 of the
premium premium
collected collected
Certificates (Proof of Fact) ₱15.00 ₱30.00
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Warehouse Receipts ₱15.00 ₱30.00
Jai-Alai, Horse Race, Tickets, ₱0.10 (cost of ₱0.20 (cost of
Lotto or Other Authorized ticket is ₱1.00 or ticket is ₱1.00 or
Numbers Games less); less);
Additional Additional
₱0.10 for every ₱0.20 for every
₱1.00 (cost of ₱1.00 (cost of
ticket is more ticket is more
than ₱1.00); than ₱1.00);
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Bills of Lading or Receipts ₱1.00 (value of ₱2.00 (value of
goods is ₱100 – goods is ₱100 –
₱1,000); ₱1,000);
₱10.00 (value of ₱20.00 (value of
goods exceeds goods exceeds
₱1,000); ₱1,000);
Proxies ₱15.00 ₱30.00
Powers of Attorney ₱5.00 ₱10.00
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Leases and Other Hiring ₱3.00 for the ₱6.00 for the
Agreements first ₱2,000 + first ₱2,000 +
additional ₱1.00 additional ₱2.00
for every ₱1,000 for every ₱1,000
in excess of the in excess of the
first ₱2,000 first ₱2,000
Documentary Stamp Tax Rates
Document Old Rule TRAIN Law
Mortgages, Pledges, and Deeds ₱20.00 for the ₱40.00 for the
of Trust first ₱5,000 + first ₱5,000 +
additional additional
₱10.00 for every ₱20.00 for every
₱5,000 in excess ₱5,000 in excess
of the first of the first
₱5,000 ₱5,000
Documentary Stamp Tax Rates
(Charter Parties and Similar Instruments)
Document Old Rule TRAIN Law
Gross Tonnage does not ₱500 + ₱1,000 +
exceed 1,000 tons and Duration additional additional
of Charter does not exceed 6 ₱50.00 for each ₱100.00 for each
months month or month or
fraction of a fraction of a
month in excess month in excess
of 6 months of 6 months
Documentary Stamp Tax Rates
(Charter Parties and Similar Instruments) …
continued
Document Old Rule TRAIN Law
Gross Tonnage exceeds 1,000 ₱1,000 + ₱2,000 +
tons but does not exceed 10,000 additional additional
tons and Duration of Charter ₱100.00 for each ₱200.00 for each
does not exceed 6 months month or month or
fraction of a fraction of a
month in excess month in excess
of 6 months of 6 months
Documentary Stamp Tax Rates
(Charter Parties and Similar Instruments) …
continued
Document Old Rule TRAIN Law
Gross Tonnage exceeds 10,000 ₱1,500 + ₱3,000 +
tons and Duration of Charter additional additional
does not exceed 6 months ₱150.00 for each ₱300.00 for each
month or month or
fraction of a fraction of a
month in excess month in excess
of 6 months of 6 months
Tax Administration Updates
 Audited Financial Statements
Old Rule TRAIN Law
Quarterly Annual
Sales/Receipts/Earnings Sales/Receipts/Earnings
exceeds ₱150,000 exceeds ₱3,000,000
 Filing of Annual Individual Income Tax
Returns Old Rule TRAIN Law
Required regardless of Not required for
the amount of taxable those with taxable
income. income not exceeding
₱250,000, except for
business or
professional income
earner.
 Filing and Payment of Final and Creditable
Withholding Tax
Type Old Rule TRAIN Law
Creditable Within 25 days
after the close of
the taxable On or before the
quarter last day of the
Final On or before the month after the
last day of the close of the
month after the taxable quarter
close of the
taxable quarter
 No. of Pages for Annual Income Tax Returns
Taxpayer Old TRAIN
Rule Law
Individual 12 4
Corporate 8 4
 Mandatory Issuance of Invoice or Receipts
Old Rule TRAIN Law
Transactions amounting Transactions amounting
to at least ₱25.00 to at least ₱100.00
 Deficiency or Delinquency Interest
Old Rule TRAIN Law
20% per annum Double the Legal
Interest for loans set by
BSP
 Penalty for Attempt to Evade or Defeat Tax
Old Rule TRAIN Law
Penalty of ₱30,000 – Penalty of ₱500,000 –
₱100,000 and ₱10,000,000 and
Imprisonment of 2 – 4 Imprisonment of 6 – 10
years years
 Penalty for Refusal or Failure to Issue
Receipt/Invoice and Other Violations
Old Rule TRAIN Law
Penalty of ₱1,000 – Penalty of ₱500,000 –
₱50,000 and ₱10,000,000 and
Imprisonment of 2 – 4 Imprisonment of 6 – 10
years years
 CDA Report to BIR
Old Rule TRAIN Law
None Report on Tax
Incentives availed by
CDA-Registered
Cooperatives
 Automatic Adjustment of Zonal Values
Old Rule TRAIN Law
None Every 3 years
Questions?
Thank You!