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starting 2018?
We summarize below a list of revised and brand-new taxes that are part of the Tax
Reform for Acceleration and Inclusion or TRAIN program initiated by the
Department of Finance (DOF) and recently ratified by Congress. Implementation of said
new taxation has begun on January 1, 2018 after being signed into law by Pres. Rodrigo
Duterte in December 2017.
Let’s take an in-depth look at what’s included in this tax reform program.
Full details of the New Personal Income Tax Rates and Income Tax Tables can be
found here.
Lower Tax Rates for Professionals
With the revised personal income tax table, salaried employees will surely benefit from
the lower tax rate. Self-employed professionals, meanwhile, can expect to pay lower
taxes as well with the reduced tax rates for professionals, as follows:
Below P3 million May choose either 8% flat tax on gross receipts or fol
tax table
Professionals will no longer have to file and pay the percentage tax; instead they will be
charged a withholding tax of 8% flat rate on gross sales or receipts.
Self-employed professionals earning annual income of P3 million and below may
choose to pay the 8% flat tax or follow the personal income tax table.
Liquefied Petroleum Gas or LPG is currently not taxed, but will be charged excise tax as
follows:
P1.00 tax per liter in 2018
P2.00 tax per liter in 2019
P3.00 tax per liter in 2020
Diesel is also currently not taxed, but will have new taxes, as follows:
P2.50 tax per liter in 2018
P4.50 tax per liter in 2019
P6.00 tax per liter in 2020
Gasoline, both regular and unleaded, will have the following excise taxes raised from
the current P4.35 per liter:
P7.00 tax per liter in 2018
P9.00 tax per liter in 2019
P10.00 tax per liter in 2020
Other fuels and oil products will be taxed as follows:
The new excise taxes for cars will follow a four-tier scheme:
Excise Tax on Cars and Automobiles
Pick-up trucks and electric vehicles will be exempted from additional taxes. Hybrid
cars, as seen in the table above, will be charged 1/2 (half) the taxes imposed on non-
hybrid automobiles.
Tax on Coal
The approved excise tax on coal is as follows (currently P10.00 tax per metric ton):
P50.00 tax per metric ton in 2018
P100.00 tax per metric ton in 2019
P150.00 tax per metric ton in 2020
Tax on Tobacco Products
Excise taxes on tobacco products will be increased to P32.50 initially during the first
six months of 2018, then will rise to P35.00 from the rest of 2018 until 2019.
From 2020 to 2021, the tobacco tax will rise to P37.50, followed by a fixed tax of
P40.00 to be imposed from 2022 to 2023. From 2023 onwards, tobacco taxes will rise
4% annually.
Donor’s Tax
Donations or gifts with at least P250,000 worth will be charged a donor’s tax of 6%
flat rate. This will be charged regardless of the relationship between the donor and the
donee.
Estate Tax
The estate tax, or tax levied on the properties or estate of lawful heirs and
beneficiaries inherited from a deceased person, will now be subject to a flat rate of 6%
on the amount in excess of P5 million.
Estates with a net value of P5 million and below will be exempted from paying the
estate tax. Family homes that are valued at P10 million or less will also be exempted
from estate tax. Under existing tax laws, only family homes worth P1 million are
exempted.
The stock transaction tax — a tax charged on stock sellers when a buy or sell
transaction is made — will be increased to 0.6% of the gross trade amount from the
current 0.5% rate.
Stock-related transactions of companies not listed in the Philippine Stock Exchange
(PSE) will be slapped with a higher stock transaction tax of 15%, an increase from the
current 5% or 10%.
Veto on the 15% special tax rate for employees of Regional Headquarters (RHQ),
Regional Operating Headquarters (ROHQ), Offshore Banking Units, and
Petroleum Service Contractors and Subcontractors. Thes employees will be taxed
using the regular income tax table as shown in Item No. 1 above.
Veto on the exemption of self-employed professionals, with gross sales or receipts
not exceeding P500,000, from the payment of the 3% percentage tax.
Veto on the excise tax exemption of petroleum products used as input, feedstock, or
as raw material in the manufacturing of petrochemical products, or in the refining of
petroleum products, or as replacement fuel for natural gas fired combined cycle power
plants (see Item No. 6 above).
Veto on the zero rating of sales of goods and services to separate customs territory
and tourism enterprise zones, specifically, the areas under the Tourism Infrastructure
Enterprise Zone Authority (Tieza).
Veto on the earmarking of incremental tobacco taxes