OLD TAX LAW(RA 8424) VS.

TRAIN LAW(RA 10967)

1. DEADLINE FOR FILING ANNUAL INCOME TAX RETURN (ITR)

The Tax Reform for Acceleration and Inclusion (TRAIN) law or Republic Act (RA) No. 10963 sets a
new deadline for the filing of the annual Income Tax Return (ITR).

Previously, the deadline to submit the taxpayer’s ITR to the Bureau of Internal Revenue (BIR) is
April 15.

Under the TRAIN law, the new deadline to file the annual ITR is May 15.
Note:
Dealine for filing (Self-employed, Professionals)
2017 Annual ITR => April 15, 2018***
2018 Annual ITR => April 15, 2019 (updated)

Note:
Deadline for filing (Self-employed, Professionals)
2018 Quarterly ITR (1st Quarter) => May 15, 2018
2018 Quarterly ITR (2nd Quarter) => Aug 15, 2018
2018 Quarterly ITR (3rd Quarter) => Nov 15, 2018

2. PERSONAL AND ADDITIONAL EXEMPTIONS HAVE BEEN REMOVED

Some people already know this, but many are still unaware:

Under the tax reform, the personal exemption of P50,000 and additional exemption of P25,000
per dependent, which were enjoyed by taxpayers in the old tax system, have now been removed.

In the past, an individual may avail of personal exemption (P50,000) and additional exemption
(maximum of P100,000 if there are four dependents) to be deducted from the taxable income.
Under TRAIN, the exemption has been simplified and made more straightforward. This simply
means:

If the taxpayer’s taxable income is P250,000 or below, he or she is automatically exempted from
paying the income tax; and it doesn’t matter now if the taxpayer has one dependent or four
dependents or no dependent at all.

That means two taxpayers with the same gross income "may" pay exactly the same tax due —
regardless if one taxpayer has four children (i.e., four dependents) while the other has none.
In addition to the removal of personal and additional exemptions, the maximum P2,400 premium
for health and hospitalization insurance, which is previously deductible from taxable income, has
also been removed.
3. TAX ON LOTTO WINNINGS AND PCSO PRIZES
Under the existing National Internal Revenue Code (NIRC), lotto winnings and all PCSO prizes are
tax-exempt. This has now been changed by the TRAIN law.

Starting 2018, all PCSO and lotto prizes are taxed 20% if the amount of the prize or winnings is
above ten thousand pesos (P10,000).
OLD TAX RATE
Lotto Winnings and PCSO Prizes None (Tax-exempt)
NEW TAX RATE (TRAIN TAX REFORM)
20% if amount is above P10,000

4. TAX ON PRE-TERMINATED LONG-TERM TIME DEPOSITS

Long-term time deposits (TD), or time deposits with duration of 5 years and 1 day, will continue
to be tax-exempt. However, the tax on interest income of these deposits once preterminated has
been changed.

From the current rate of 5-20%, the tax charged on the interest income of long-term time
deposits that are preterminated (meaning, withdrawn prior to the scheduled maturity date) has
been increased to a fixed 20%.

OLD TAX RATE

Interest Income on Pre-terminated Long-Term Time Deposit 5-20%

NEW TAX RATE (TRAIN TAX REFORM)

20%

5. TAX ON INTEREST INCOME OF FOREIGN CURRENCY DEPOSITS

Under the existing tax code, the interest income on foreign currency accounts (e.g., US dollar,
Euro, Japanese Yen, Korean won, etc.) deposited in Philippine banks is 7.5%. The TRAIN law has
increased the foreign currency deposit unit (FCDU)’s interest income tax rate to 15%.
OLD TAX RATE
Interest Income of FCDU
7.5%
NEW TAX RATE (TRAIN TAX REFORM)
15%

6. TAX ON STOCK TRANSACTION

The tax rate on sale of stocks have been increased. The sale of stocks not traded in the Philippine
Stock Exchange (PSE) is previously taxed 5-10%. This is now increased to 15% under the tax
reform.

Meanwhile, sale of stocks that are traded in the PSE will be taxed 0.6% of the gross trade amount,
up from the previous rate of 0.5%.
7. DOCUMENTARY STAMPS (DOC STAMPS) TAX
Documentary Stamps (Doc Stamps) Tax
The documentary stamp tax (DST) has been doubled, with the new doc stamps tax ranging from
P1.50 to P3.00 under the tax reform.

8. DONOR'S TAX
The donor’s tax was revised to a flat rate of 6% regardless of the relationship between the donor
and the donee. Previously, the donor’s tax was 2% to 15% if the donor and donee are related,
and 30% if the donation was to a stranger.

Donations or gifts below P250,000 are tax-exempt. Donations with value of at least P250,000 are
taxed using the new rate of 6% on the amount in excess of P250,000.

9. ESTATE TAX
Under TRAIN, the estate tax is now a flat 6% rate on the amount in excess of P5 million.
Estates with a net value of P5 million and below will be tax-exempt. Family homes that are valued
at no more than P10 million will also be exempted. Under current tax laws, only family homes
worth P1 million are tax-exempt.

10. COSMETIC SURGERY TAX

Starting 2018, all cosmetic surgeries, aesthetic procedures, and body enhancements intended to
improve, alter, or enhance a person’s appearance is now subject to a tax of 5%.