The TRAIN

Not to be reproduced or disseminated without permission.

 TAX REFORM FOR ACCELERATION
AND INCLUSION
• Signed by President Duterte on December
19, 2017. He vetoed 5 provisions

• Published in the December 28, 2017

edition of the Manila Bulletin

• Shall take effect on January 1, 2018

 TOPICS UNDER THE TRAIN

• Simplified Personal Income Tax system

• Broader VAT Base

• Increase in Excise Tax on Automobiles,

Fuel, Coal, Sugar Sweetened Beverages
and Cigarettes

• Simplified Donor’s and Estate Tax

• Administration and Enforcement

• Senate Version

• House Version

• Bicameral Conference
Committee

• General Topics
PERSONAL INCOME
TAX SYSTEM
 PERSONAL INCOME TAX SYSTEM

COMPENSATION INCOME EARNERS

(or “CIEs”)
 TAX RATES FOR CIES
(BEFORE TRAIN)
Annual Income Tax Payable
Not over P10,000 5%
Over P10,000 but not over P30,000 P500 + 10%
of the excess over P10,000
Over P30,000 but not over P70,000 P2,500 + 15%
of the excess over P30,000
Over P70,000 but not over P140,000 P8,500 +20%
of the excess over P70,000
Over P140,000 but not over P250,000 P22,500 + 25%
of the excess over P140,000
Over P250,000 but not over P500,000 P50,000 + 30%
of the excess over P250,000
Over P500,000 P125,2000 + 32% of the excess over
P500,000
 TRAIN TAX RATES FOR CIES
(AFTER TRAIN: 2018 TO 2022)
Annual Income Tax payable

P250,000 to P400,000 20% of the excess over P250,000

P400,000 to P800,000 P30,000 plus 25%

of the excess over P400,000

P800,000 to P2,000,000 P130,000 plus 30%

of the excess over P800,000

P2,000,000 to P8,000,000 P490,000 plus 32%

of the excess over P2,000,000

Over P8,000,000 P2,410,000 plus 35%

of the excess over P8,000,000
 TRAIN TAX RATES FOR CIES
(AFTER TRAIN: 2023 ONWARDS)
Annual Income Tax payable

P250,000 to P400,000 15% of the excess over P250,000

P400,000 to P800,000 P22,500 plus 20% of the

excess over P400,000

P800,000 to P2,000,000 P102,500 plus 25% of the

excess over P800,000

P2,000,000 to P8,000,000 P402,500 plus 30% of the

excess over P2,000,000

Over P8,000,000 P2,202,500 plus 35% of the

excess over P8,000,000
 BRACKETS COMPARISON
(BEFORE V. AFTER TRAIN)
Before TRAIN After TRAIN

Not over P10,000 Not over P250,000

Over P10,000 but not over
P250,000 to P400,000
P30,000
Over P30,000 but not over
P400,000 to P800,000
P70,000
Over P70,000 but not over
P800,000 to P2,000,000
P140,000
Over P140,000 but not over
P2,000,000 to P8,000,000
P250,000
Over P250,000 but not over
P500,000 Over P8,000,000

Over P500,000
 RATES COMPARISON
(BEFORE V. AFTER TRAIN)
Rates before TRAIN 2018 2023
5%

P500 + 10% of the excess over 20% of the excess over

P250,000 15% of the excess over
P10,000
P250,000

P2,500 + 15% of the excess

P30,000 plus 25% of the P22,500 plus 20% of the
over P30,000
excess over P400,000 excess over P400,000

P8,500 +20% of the excess

over P70,000 P130,000 plus 30% of the P102,500 plus 25% of the
excess over P800,000 excess over P800,000

P22,500 + 25% of the excess

P490,000 plus 32% of the P402,500 plus 30% of the
over P140,000
excess over P2,000,000 excess over P2,000,000

P50,000 + 30% of the excess

over P250,000
P2,410,000 plus 35% of the P2,202,500 plus 35% of the
P125,2000 + 32% of the excess over P8,000,000 excess over P8,000,000
excess over P500,000
 REMOVAL OF CERTAIN DEDUCTIONS
AND EXEMPTIONS
Deduction/Exemption After
TRAIN
Deduction for Hospitalization
Insurance Premium of
P2,400/family Removed
Personal Exemption of
P50,000 Removed

Exemption of P25,000 for

every dependent not Removed
exceeding 4
Exemption of P20,000
allowed to estates and trusts Removed
 13TH MONTH AND OTHER BENEFITS
EXCLUSION

Section 32(B)(e) excluding 13th month

pay and other gross benefits up to the
amount of P82,000.
P90,000.00
 SAMPLE COMPARISON OF TAX PAYABLE
(WITH ASSUMPTIONS)
Person A

- 2 dependents

Before TRAIN After TRAIN

Personal Exemption P50,000 No deduction allowed
Deduction for each
P25,000/dependent x2 =
dependent not No deduction allowed
P50,000
exceeding 4
Total allowable
personal exemption
and deduction for
P100,000 P0
dependents
 COMPARISON OF TAX PAYABLE
(IN TERMS OF AMOUNT PAYABLE)
Before TRAIN After TRAIN

Annual Tax Tax

Taxable
Income Taxable Payable Payable
(before allowable Income Tax Payable
deductions) (after deducting Income from 2018 from 2023
total of P100k)
to 2022 onwards

P250,000 P150,000 P25,000 P250,000 0 0

P400,000 P300,000 P65,000 P400,000 P30,000 P22,500
P800,000 P700,000 P189,000 P800,000 P130,000 P102,500
P2,000,000 P1,900,000 P573,000 P2,000,000 P490,000 P402,500
P8,000,000 P7,900,000 P2,493,000 P8,000,000 P2,410,000 P2,202,500
 COMPARISON OF TAX PAYABLE
(IN TERMS OF PERCENTAGE TO INCOME)
Before TRAIN After TRAIN
Annual Taxable Tax Payable Tax Payable
Income Taxable (% to annual income)
Income (% to
(before allowable (after deducting Income
deductions) total of P100k) annual from 2018 from 2023
income) to 2022 onwards
P250,000 P150,000 10% P250,000 0 0
P400,000 P300,000 16.25% P400,000 7.5% 5.63%
P800,000 P700,000 23.63% P800,000 16.25% 12.81%
P2,000,000 P1,900,000 28.65% P2,000,000 24.50% 20.13%
P8,000,000 P7,900,000 31.16% P8,000,000 30.13% 27.53%
PERSONAL INCOME TAX SYSTEM

FRINGE BENEFITS
 FRINGE BENEFITS
After
Before TRAIN TRAIN

Fringe Benefit 32% 35%

Tax

Base Amount Grossed-up monetary

value by dividing the 65%
actual monetary value
by 68%
 FRINGE BENEFITS
(SAMPLE CALCULATION)
Before TRAIN After TRAIN

Monetary Value 68,000 68,000

of the Benefit

Grossed-up 100,000* 104,615*

monetary value
*Divide actual monetary *Divide actual monetary
value by 68% value by 65%

FBT Rate 32% 35%

FBT Due 32,000 36,615

 PREFERENTIAL RATE FOR EMPLOYEES
OF RHQS, ROHQS, OBUS, PETROLEUM CONTRACTORS

Before TRAIN After TRAIN

Removed for RHQs, ROHQs, OBUs

and petroleum contractors registered
15% final withholding
tax for alien individuals
and Filipinos employed
by RHQs, ROHQs, OBUs
and petroleum
contractors
with SEC after January 1, 2018.
Existing RHQs, ROHQs, OBUs
and petroleum contractors
?
presently availing of 15% rate
shall continue to be entitled to
avail for present and future
employees

Vetoed by President Duterte.

 PERSONAL INCOME TAX SYSTEM

SELF-EMPLOYED AND/OR PROFESSIONALS

(or “SEPs”)
and
MIXED INCOME EARNERS (“MIEs”)
 PERSONAL INCOME TAX SYSTEM

and

Purely SEPs MIEs

 PURELY SEPS

For those whose gross For those whose gross

sales/receipts exceed the VAT sales/receipts DO NOT exceed
Threshold the VAT Threshold

8% on gross sales or receipts

Subject to the rates prescribed
for CIEs on their taxable income
(plus VAT)
and other non-operating
income in excess of P250,000
Same Rates prescribed for
CIEs on their taxable income
 MIES
All Income from Business or Practice of
Profession
If Total Gross Sales
For Income from If Total Gross Sales
and/or Receipts and
and/or Receipts and
Compensation other non-operating
other non-operating
income DO NOT
income EXCEED THE
EXCEED THE VAT
VAT THRESHOLD
THRESHOLD

Either 8% rate

Rates on gross income Rates

OR
prescribed prescribed
for CIEs Rates prescribed for CIEs
for CIEs
on their
taxable income
 VAT AND PERCENTAGE TAX
ON SEPS AND MIES

Gross sales or receipts If an SEP or MIE

Gross sales or do not exceed P3Million Gross sales or chooses to avail
receipts exceed but exceed P500,000 receipts do not of the 8% fixed
P3Million (and option of graduated exceed P500,000 tax rate on gross
rates is chosen) income

Not subject
Not subject Not subject
to VAT
to VAT to VAT
Subject to VAT
Not subject to

?
Not subject
Subject to 3%
3% Percentage to 3%
Percentage Tax
Tax Tax

Vetoed by President Duterte.

 OPTIONAL STANDARD DEDUCTION

• Same as before, except that:

• A GPP, and the partners comprising such
partnership may avail of the OSD only once,
either by the GPP or the partners comprising the
partnership*

*Codification of RR No. 2-2010 with respect to the determination of OSD of GPPs.

 REVISIONS ON PASSIVE INCOME TAX

Passive Income Before TRAIN After TRAIN

Exemption removed
except for winnings
PCSO and lotto winnings Exempt from 20% final tax
of not more than
P10,000

Interest Income from Final tax of 7.5% of the

Foreign Exchange interest income Increased to 15%
Deposits

Gains not over P100,000 Increased to 15%,

Capital Gains from Sales subject to final tax of 5%
of Unlisted Shares of regardless of amount
Gains in excess of P100,000
Stock of gain
subject to final tax of 10%
TAX ON DOMESTIC
CORPORATIONS
 REVISIONS ON TAX ON CORPORATIONS

Passive Income Before TRAIN After TRAIN

Interest Income from Final tax of 7.5% of the

Foreign Exchange interest income Increased to 15%
Deposits

Gains not over P100,000

Capital Gains from Sales subject to final tax of 5%
of Unlisted Shares of Increased to 15%
Gains in excess of P100,000
Stock
subject to final tax of 10%
PERSONAL INCOME TAX SYSTEM

FILING REQUIREMENTS
 PERSONAL INCOME TAX SYSTEM
Before TRAIN After TRAIN

Individuals (except SEPs and

Exemption from MIEs) whose gross income Individuals (except SEPs and
filing ITR does not exceed the personal MIEs) whose taxable income
(individuals) and additional exemptions does not exceed P250,000
allowed

Must not exceed 4 pages. Shall

only contain the following:
ITR - Personal profile and
No limitation on number information
(individuals - Total gross sales, receipts
and of pages or income
corporations) - Allowable deductions
- Taxable income
- Income tax due and payable
 PERSONAL INCOME TAX SYSTEM
Before TRAIN After TRAIN

Creditable Withholding Tax Starting January 1, 2019, rate of

1-32%
Rates withholding will be from 1-15%

FWT: 25 days from the close of

each calendar quarter
Deadline for filing of FWT
CWT: last day of the month
and CWT will both be not
following the close of the quarter
later than the last day of the
during which withholding
Deadline for filing of FWT month following the close of
was made
and CWT returns the quarter during which the
CIR (with DOF Secretary withholding was made*
approval) can require more
frequent intervals for
withholding
 PERSONAL INCOME TAX SYSTEM
Date of filing declaration
and payment for SEPs and
MIEs
Payment in installments of
tax due in excess of P2,000
Before TRAIN
Date of filing declaration
April 15 of the same taxable year
th
Payment of the 4 installment
April 15 of the following year
1st installment at time
return is filed
2nd installment on/before July
15 following close of calendar
year
After TRAIN
Filing declaration now on May 15
of the same year
Payment now on May 15 of
the following year
2nd installment now payable
on/before October 15
following close of the calendar
year

Substituted Filing

CIE no longer needs to file an annual ITR if:

- CIE with only one employer
- Income tax due correctly withheld by employer
- Certificate of withholding filed by employer, duly stamped received by BIR equivalent to
filing of ITR
VAT
 ZERO-RATED TRANSACTIONS

To be subjected to 12% Rate

Foreign Currency Denominated Sales Indirect Exports
 ZERO-RATED TRANSACTIONS
Conditional removal of Zero-Rate
for Indirect Exports
• Sale of raw materials and packaging materials to a non-
resident buyer for delivery to a resident local export-
oriented export enterprise to be used in the manufacturing,
processing, packing or repackaging of the buyer’s goods
paid for in acceptable foreign currency and accounted for
under BSP regulations

• Processing, manufacturing or repacking of goods for other

persons doing business outside the Philippines which goods
are subsequently exported, where the services are paid for
in acceptable foreign currency and accounted for under BSP
regulations
 ZERO-RATED TRANSACTIONS

Conditional removal of Zero-Rate

for Indirect Exports
• Sale or raw materials and packaging materials/
performance of services to export-oriented enterprises
whose export sales exceed 70% of total annual production.

• Those considered export sales of goods and services under

the Omnibus Investments Code (for example, sale of
export product from one export producer to another export
producer) and other special laws.

Note: Direct export of goods and services to non-residents are still zero-rated
 ZERO-RATED TRANSACTIONS

Timing of removal of zero-rating

Nature of Transaction Removal

Foreign-currency
denominated sale
Immediate

Indirect Exports Conditional

 ZERO-RATED TRANSACTIONS

Conditions for Removal of Zero-Rating for

Indirect Exports
• Successful establishment and implementation of a VAT
refund system that grants refunds of creditable input tax
within 90 days from filing of the application

• All pending VAT refund claims as of December 31, 2017

shall be fully paid in cash by December 31, 2019
 ZERO-RATED TRANSACTIONS

Before TRAIN

A 12%
B 12%
C 12%
IE 0%
DE
0%

*Legend:
A,B,C- Suppliers
IE- Indirect Exporter
DE- Direct Exporter
 ZERO-RATED TRANSACTIONS

Before TRAIN

A 12%
B 12%
C 12%
IE 0%
DE
0%

*Legend:
A,B,C- Suppliers
IE- Indirect Exporter
DE- Direct Exporter
 ZERO-RATED TRANSACTIONS

After TRAIN

A 12%
B 12%
C 12%
IE 12%
DE
0%

*Legend:
A,B,C- Suppliers
IE- Indirect Exporter
DE- Direct Exporter
 OTHER ZERO-RATING PROVISIONS

Transaction TRAIN

Sale of Gold to the BSP Now exempt

Sale of goods/services to
entities engaged in Still zero-rated but added “must-
international shipping or use-for-operations” requirement
air transport operations

Transport of passengers by
domestic air or sea vessels
Zero-rated
from the Philippines to a
foreign country
 OTHER ZERO-RATING PROVISIONS
Transactions Before TRAIN After TRAIN

Sale and actual shipment of

goods and rendition of services
to:

1) Registered enterprises

?
within a separate customs Considered as an
territory by virtue of
Zero-rated “export sale” and
special laws and; subject to
zero-rating

2) Registered enterprises
within tourism enterprise
zones

Vetoed by President Duterte.

 TRANSMISSION AND DISTRIBUTION
OF ELECTRICITY

Transactions After TRAIN

Considered as a “sale or
Transmission of electricity exchange of services” and
“by any entity” thus subject to 12% VAT

Considered as a “sale or
Distribution of electricity by exchange of services” and
electric cooperatives thus subject to 12% VAT
 VAT

REVISIONS ON CERTAIN
VAT-EXEMPT TRANSACTIONS
REVISIONS ON VAT-EXEMPT TRANSACTIONS
Transaction After TRAIN

Exemption NOW AVAILABLE

Importation of TO OVERSEAS FILIPINOS and
professional instruments their families and descendants
coming to live in the Philippines

Exempt ONLY if the

Importation of fuel, goods
imported fuel, goods and
and supplies by persons
supplies are USED for
engaged in international
international shipping or air
shipping or air transport
transport operations
operations

Sale/lease of goods or
services to senior citizens CODIFIED to list of VAT-Exempt
and persons with under Tax Code
disabilities
REVISIONS ON VAT-EXEMPT TRANSACTIONS
Transaction After TRAIN

Association dues, membership

fees and other assessments by
homeowners associations and VAT EXEMPT
condominium corporations

Sale of drugs and medicines

prescribed for: VAT EXEMPT
starting
1) Diabetes
January 1, 2019
2) High cholesterol

3) Hypertension
 REVISIONS ON VAT-EXEMPT TRANSACTIONS

Before TRAIN After TRAIN

Lease of a residential unit

with a monthly rental not
Threshold increased to
exceeding P12,800 P15,000.00*

*Indexation to CPI removed

 REVISIONS ON VAT-EXEMPT TRANSACTIONS

After TRAIN
Before TRAIN
(Starting January 1, 2021)

Sale of residential lot

valued at P1,919,500 RETAINED ONLY FOR real
property with selling price
of not more than
P2,000,000*

Sale of other residential

dwellings valued at
P3,199,200

*Amount to be adjusted every 3 years based on CPI

 REVISIONS ON VAT-EXEMPT TRANSACTIONS
After TRAIN
Before TRAIN
(Starting January 1, 2021)
Sale of real properties not
primarily held for sale or held
for lease in ordinary course of
RETAINED
trade or business

Sale of real property

utilized for Socialized RETAINED
housing

Sale of real property utilized REMOVED

for Low-Cost housing
REVISIONS ON VAT-EXEMPT TRANSACTIONS
Transaction After TRAIN

Transfer of Property Pursuant

to Section 40(C)(2) Added to VAT-exempt transactions
of the Tax Code*

*Examples are:
a) Transfer by a corporation that’s a party to a merger or consolidation (MC) of its
property for stock in another corporation that’s also party to said MC;
b) Transfer by a shareholder of stock in a corporation that’s a party to a MC solely for
stock of another corporation that’s also party to said MC.
REVISIONS ON VAT-EXEMPT TRANSACTIONS

VAT Exemption Threshold

Threshold before TRAIN P1,919,500

Threshold after TRAIN P3,000,000

 REFUNDS

Period to grant refunds by the CIR

Before TRAIN After TRAIN

Within 90 days from the date of

Within 120 days from the
submission of the official receipts or
date of submission of
invoices and other documents in
complete documents
support
 OTHER AREAS AMENDED

Before TRAIN After TRAIN

Exemption for payments for

purchases of goods and services
from projects funded
Final withholding VAT of
by the Official Development
5% for payments made
Assistance (ODA)
by Gov’t agencies and
GOCCs
Shift from final withholding system
to creditable system beginning
January 1, 2021
 CREDITABLE VAT ON GOVERNMENT PAYMENTS
Purchase of Goods by Government
Selling Price P100,000
12% VAT 12,000
———
Total P112,000
=======
The 5% Creditable Withholding VAT shall be computed as
follows:
Total payment (net of VAT) P100,000
Withholding tax rate x 5%
———
Amount to be Withheld P5,000*
*This amount shall be creditable against the value-added tax
liability of the company
 OTHER AREAS AMENDED
Before TRAIN After TRAIN

Amortization of input VAT for

purchase or import of capital goods
Creditable Input Tax for allowed only
Capital Goods until December 31, 2021, after
which taxpayers with unutilized
input VAT on capital goods purchase
or imported shall be allowed to
apply the same as scheduled until
fully utilized.

Monthly and quarterly

Starting January 1, 2023,
payment and filing of VAT the filing AND payment of VAT shall
Returns be done within 25 days following the
close of each taxable quarter.
 VAT LAWS REPEALED

Repealing Clause
(no general repealing language)

“The following laws or provisions of laws are hereby

repealed and the persons and/or transactions affected herein
are made subject to the VAT provision of Title IV of the NIRC,
as amended:
a) Section 3 of P.D. 1972, s. 1985, as amended, Sections 4 and 5 of
Executive Order No. (E.O.) 1057, s. 1985, and Section 4 of E.O. 1064,
s. 1985, insofar as the VAT tax exemption and tax credit is concerned;

Xxxx xxxx xxxx

bbb) Section 9, with respect to VAT, of Republic Act No. 9511 or the National
Grid Corporation of the Philippines Act

Xxxxxxx xxxxxxx xxxxx

 VAT LAWS REPEALED

Xxxxx xxxxxxx

v) Article 65, insofar as VAT exemption and zero rating

is concerned, of regional or area headquarters and
zero-rating of the sale or lease of goods and
property and the rendition of services to regional or
area headquarters, and Article 67, insofar as VAT
exemption is concerned, of R.A. 8756; Provided, That
existing RHQs and ROHQs enjoying VAT exemption and
zero-rating at the time of the effectivity of TRAIN shall not
be affected;….”
EXCISE TAX
 EXCISE TAX

INCREASE IN EXCISE TAX ON AUTOMOBILES

 BEFORE TRAIN
EXCISE TAX RATES on AUTOMOBILES
(Before TRAIN)
Over Up to Excise Tax Rates

0 P600,000 2%

P12,000 + 20%
P600,000 P1,100,000 in excess of P600,000

P112,000 + 40%
P1,100,000 P2,100,000 in excess of P1,100,000

P512,000 + 60%
P2,100,000 in excess of P2,100,000
 EXCISE TAX AFTER TRAIN

Effective
Brackets
January 1 2018
Over Up to Excise Tax Rates
0 P600,000 4%
P600,000 P1,000,000 10%

P1,000,000 P4,000,000 20%

P4,000,000 50%
 NEW EXEMPTIONS/RATES

Before TRAIN After TRAIN

Subject to 50% of the

Hybrids Subject to excise tax applicable excise tax rates
on automobiles

Exempt from the

Electric Cars Subject to excise tax
excise tax

Exempt from the

Pick-ups Subject to excise tax
excise tax
 ESTIMATED INCREASE IN SRPS
PROJECTED SRP UNDER
BRAND MODEL FORMER HOUSE SENATE FINAL CURRENT
SRP VERSION VERSION VERSION SRP
Mitsubishi Mirage GLX 560,000 559,973 594,782 564,946 570,000
Mitsubishi Mirage G4 GX 573,000 578,134 614,073 583,268 584,000
Toyota Vios 1.3 Base 617,000 604,367 641,936 609,734 629,000
Nissan Almera 1.2 630,000 635,645 675,158 641,290 634,000
Honda City 1.5 E 764,000 771,974 816,506 816,506 820,000
Isuzu Crosswind XS 800,000 811,200 849,280 849,280 834,000
Toyota Vios 1.5 G 925,000 867,859 896,621 896,621 953,000
Toyota Innova 2.0 G 954,000 940,862 957,618 957,618 990,000
Mitsubishi L300 XV 958,000 983,357 993,123 993,123 1,062,000
Honda CR-V 2.0 S 1,539,000 1,391,957 1,453,960 1,453,960 1,648,000
Toyota Fortuner 2.4 G 1,555,000 1,449,706 1,504,989 1,504,989 1,682,000
Toyota Camry 2.5 G 1,595,000 1,631,669 1,642,062 1,642,062 1,705,000
Ford Mustang 2.3 EcoBoost Premium 2,585,000 2,673,326 2,426,747 2,426,747 2,748,000
Mitsubishi Pajero GLS 3.2D 2,770,000 2,723,448 2,464,504 2,464,504 2,770,000
Toyota Alphard 3.5 V6 3,379,000 3,568,558 2,940,283 2,940,283 3,379,000
Toyota Land Cruiser Prado 3.0 MT 3,941,000 3,261,966 2,773,467 2,773,467 3,739,000
 EXCISE TAX

INCREASE IN EXCISE TAX

ON PETROLEUM PRODUCTS
 INCREASE IN EXCISE TAX ON PETROLEUM
PRODUCTS
Manufactured Oils and
Before TRAIN After TRAIN
Other Fuels
January 1, 2018 January 1, 2019 January 1, 2020
Lubricating oils and greases P4.50/liter P8.00/liter and kg P9.00/liter and kg P10.00/liter and kg
Processed gas P0.05/liter P8.00/liter P9.00/liter P10.00/liter
Waxes and petrolatum P3.50/kg P8.00/kg P9.00/kg P10.00/kg
Denatured alcohol P0.05/liter P8.00/liter P9.00/liter P10.00/liter
Asphalt P0.56/kg P8.00/kg P9.00/kg P10.00/kg
Unleaded premium gasoline P5.35/liter P7.00/liter P9.00/liter P10.00/liter
Naphtha, regular gasoline,
PYROLYSIS GASOLINE and
P4.35/liter P7.00/liter P9.00/liter P10.00/liter
other similar products of
distillation
Diesel fuel oil P0.00/liter P2.50/liter P4.50/liter P6.00/liter
Aviation turbo jet fuel P3.67/liter P4.00/liter P4.00/liter P4.00/liter

Kerosene P0.00/liter P3.00/liter P4.00/liter P5.00/liter

Petroleum Coke P0.00/metric ton P2.50/metric ton P4.50/metric ton P6.00/metric ton

Bunker fuel oil P0.00/liter P2.50/liter P4.50/liter P6.00/liter

Liquefied Petroleum Gas

P0.00/liter P1.00/liter P2.00/liter P3.00/liter
(“LPG”)
 SUSPENSION OF IMPLEMENTATION

CONDITION FOR SUSPENSION

OF INCREASE IN EXCISE TAX RATES for 2018-2020

Dubai Crude Oil Price reaches $80/barrel or more

 EXEMPTION AND CREDIT FOR EXCISE TAX

Exempt/Credited Petroleum
After TRAIN
Products

LPG used in the production of Subject to P0.00/liter

petrochemical products Excise tax

Bunker fuel oil used in the Crediting retained but placed

manufacture of excisable together with the new rates on
articles and forming part bunker fuel oil under Section
thereof 148(l)
 EXEMPTION AND CREDIT FOR EXCISE TAX

Exempt/Credited Petroleum
After TRAIN
Products

Petroleum products,
including Naptha, LPG,
Petroleum Coke, Refinery
fuel and other products of
distillation, when used as:
- Input
- Feedstock
- Raw material in
manufacturing of
?
Subject to P0.00 per liter of
volume capacity

petrochemical products
- Refining of petroleum
products
- Replacement fuel

Vetoed by President Duterte.

ENFORCEMENT MEASURES

FUEL MARKING
 FUEL MARKING
• All petroleum products shall be marked with the official
marking agent designated by the Department of Finance

• Aims to:

• Prevent the illegal import of no or low-tax products as

well as the dumping of transit, export or subsidized fuels

• Minimize losses from fuel fraud

 EXCISE TAX

COAL and QUARRY RESOURCES

 EXCISE TAX ON COAL
Before TRAIN After TRAIN*
Beginning January 1, P50.00/
2018 metric ton

P10.00/ P100.00/
January 1, 2019
Metric ton metric ton

P150.00/
January 1, 2020 metric ton

*Notwithstanding any incentives granted in any law

or special law**
**i.e. Coal Development Act of 1976 which exempts all coal
operating contractors from all tax except income tax
 EXCISE TAX ON COAL
Imported Coal – Year 2020

Volume 1,000 metric ton

Excise Tax x P150
--------------
Excise Tax Due P150,000

CIF P1,000,000
Excise Tax 150,000
----------------
Landed Cost P1,150,000
12% VAT 138,000
----------------
Total Cost of Coal P1,288,000
 EXCISE TAX ON
QUARRY RESOURCES
Before TRAIN After TRAIN
2%
Nonmetallic minerals based on actual market 4%
and quarry resources value of gross output

Copper and other metallic

minerals:
1% on first three years
Copper and other 1.5% on the fourth and fifth
metallic minerals, gold year 4%
and chromite 2% on the sixth year and
thereafter
Gold and chromite:
2%
3%
Indigenous petroleum of fair international 6%
market price
 EXCISE TAX

OTHER PRODUCTS AND SERVICES

 EXCISE TAX ON
OTHER PRODUCTS AND SERVICES
After TRAIN

P6.00/liter on SSBs using purely caloric

sweeteners, purely non-caloric sweeteners or mix
Sugar of caloric and non-caloric
Sweetened
Beverages P12.00/liter on SSBs using purely high fructose
corn syrup or in combination with any caloric or
non-caloric sweetener

Cosmetic
Tax of 5% on the gross receipts
Procedures,
derived from the performance of
Surgeries, Body services
Enhancements
 EXCISE TAX

INCREASE IN EXCISE TAX ON CIGARETTES

 EXCISE TAX FOR CIGARETTES
PACKED BY HAND
Date of Effectivity Excise Tax Applicable*
From To
January 1, 2015 December 31, 2015 P15.00/pack
January 1, 2016 December 31, 2016 P21.00/pack
January 1, 2017 December 31, 2017 P30.00/pack

January 1, 2018 June 30, 2018 P32.50/pack

July 1, 2018 December 31, 2019 P35.00/pack

January 1, 2020 December 31, 2021 P37.50/pack

January 1, 2022 December 31, 2023 P40.00/pack

*To be increased by 4% every year thereafter effective on January 1, 2024.

 EXCISE TAX FOR CIGARETTES
PACKED BY MACHINE
Date of Effectivity Excise Tax Applicable*
From To
If net retail price is P11.50< :
P21.00/pack
January 1, 2015 December 31, 2015
If net retail price is >P11.50:
P28.00/pack
If net retail price is P11.50< :
P25.00/pack
January 1, 2016 December 31, 2016
If net retail price is >P11.50:
P29.00/pack
January 1, 2017 December 31, 2017 P30.00/pack

January 1, 2018 June 30, 2018 P32.50/pack

July 1, 2018 December 31, 2019 P35.00/pack

January 1, 2020 December 31, 2021 P37.50/pack

January 1, 2022 December 31, 2023 P40.00/pack

*To be increased by 4% every year thereafter effective on January 1, 2024.
 STAMP TAX
AND
OTHER FORMS OF
TAX
 DST
Transaction/Document Before TRAIN After TRAIN
Original issue of shares of stock P1.00 on each P200 of par value 2x
Sales, Agreements to Sell, Memoranda of
Sales, Deliveries or Transfer of Shares or P0.75 on each P200 of par value 2x
Certificate of Stock
Certificates of Profits or Interest in Property
P0.50 on each P200 of face value 2x
or Accumulations
Bank Checks, Drafts, Certificates of Deposit
P1.50/ document 2x
not Bearing Interest
Debt Instruments P1.00 on each P200 of the issue price 1.5x
Bills of Exchange or Drafts,
Acceptance of Bills of Exchange,
P0.30 on each P200 of face value 2x
Foreign Bills of Exchange and
Letters of Credit
If amount of insurance P100,000-P300,000:
P20.00
If amount of insurance P300,000-P500,000:
P25.00
Life Insurance Policies 2x
If amount of insurance P500,000-P750,000:
P50.00
If amount of insurance P750,000-P1M: P75.00
If amount of insurance exceeds P1ML P100.00

P0.50 on each P4.00 of the amount of premium

Policies of Insurance Upon Property Same
charged

P0.50 on each P4.00 of the amount of premium

Fidelity Bonds and Other Insurance Policies Same
charged
 DST
Transaction/Document Before TRAIN After TRAIN
Policies of Annuities:
Policies of Annuities:
2x
P0.50 on each P200 of the premium or installment
Policies of Annuities and Pre-Need Plans payment
Pre-need:
Pre-need plans:
2x
P0.20 on each P200 of the premium or contribution

Indemnity Bonds P0.30 on each P4.00 of the premium charged Same

Certificates,
P15.00/document 2x
Warehouse Receipts,
Jai-alai, Horse Race, Tickets, Lotto P0.10 on every P1 2x

If value of goods is P100-P1000:

P1.00
Bills of Lading/Receipts 2x
If value exceeds P1000:
P10.00

Proxies P15.00 2x

Powers of Attorney P5.00 2x

First P2000:
P3.00
Leases and other Hiring Agreements 2x
Every P1000 in excess of P2000:
P1.00
 DST
Transaction/Document Before TRAIN After TRAIN
If amount secured doesn’t exceed P5000:
P20.00
Mortgages, Pledges, Deeds of Trust 2x
Foe each P5,000 in excess of first P5,000:
P10.00
If consideration does not exceed P1,000:
P15.00
Deeds of Sale. Conveyance, and Donation Same
For each additional P1,000 or fractional part
of Real Property Donations of real property now subject to tax
thereof :
P15.00

Transaction/Document Before TRAIN After TRAIN

Duration of charter or
Registered gross tonnage Stamp Tax
contract
P500
1,000tons< 6mos< +50 for each month in excess of 2x
6mos
Charter Parties and Similar
Instruments P1,000
>1,0000tons
6mos< +P100 for each month in excess 2x
10,000tons<
of 6mos
P1,500
>10,000 tons 6mos< +P150 for each month in excess 2x
of 6mos
 DST
(SAMPLE CALCULATIONS)
Contract price of
100,000.00 Before TRAIN After TRAIN

Deed of Sale of 375 750

Shares

Debt 500 750

Instrument

Lease Contract 101 202

Deed of Sale of 1,500 1,500

Real Property
 STOCK TRANSACTION TAX

Before TRAIN After TRAIN

Sale, Barter or Exchange of Shares

½ of 1% of gross
of Stock Listed and 6/10 of 1%
selling price
Traded through PSE
DONOR’S AND
ESTATE TAX
 DONOR’S TAX
(BEFORE TRAIN)
Over But not over Tax
P100,000 Exempt
P100,000 P200,000 0 + 2% of the excess over P100,000
P200,000 P500,000 P2,000 + 4% of the excess over P200,000

P500,000 P1,000,000 P14,000 + 6% of the excess over P500,000

P1,000,000 P3,000,000 P44,000 + 8% of the excess over P1,000,000

P3,000,000 P5,000,000 P204,000 + 10% of the excess over P3,000,000

P5,000,000 P10,000,000 P404,000 + 12% of the excess over P5,000,000

P10,000,000 And over P1,0004,000 + 15% of the excess over P10,000,000

• If the donee is a stranger, the tax payable will be 30%

based on net gifts
 DONOR’S TAX
(AFTER TRAIN)
Over But not over Tax
P100,000 Exempt
P100,000 P200,000 0 + 2% of the excess over P100,000
P200,000 P500,000 P2,000 + 4% of the excess over P200,000

P500,000 P1,000,000 P14,000 + 6% of the excess over P500,000

P1,000,000 P3,000,000 P44,000 + 8% of the excess over P1,000,000

P3,000,000 P5,000,000 P204,000 + 10% of the excess over P3,000,000

P5,000,000 P10,000,000 P404,000 + 12% of the excess over P5,000,000

P10,000,000 And over P1,0004,000 + 15% of the excess over P10,000,000

• If the donee is a stranger, the tax payable will be 30%

based on net gifts
 DONOR’S TAX
(AFTER TRAIN)
• Donor’s tax rate fixed at 6% based on total
gifts made during the calendar year,
regardless of whether the donee is a
stranger or not

• Retention of the tax exemption on total gifts

made during the calendar year not exceeding
P100,000 P250,000
 ESTATE TAX
(BEFORE TRAIN)
Value of Net Estate
Tax
Over But not over

P200,000 Exempt

P200,000 P500,000 0 + 5% of the excess over P200,000

P500,000 P2,000,000 P15,000 + 8% of the excess over P500,000

P2,000,000 P5,000,000 P135,000 + 11% of the excess over P2,000,000

P5,000,000 P10,000,000 P465,000 + 15% of the excess over P5,000,000

P10,000,000 And over P1,215,000 + 20% of the excess over P10,000,000

 ESTATE TAX
(AFTER TRAIN)
Value of Net Estate
Tax
Over But not over

P200,000 Exempt

P200,000 P500,000 0 + 5% of the excess over P200,000

P500,000 P2,000,000 P15,000 + 8% of the excess over P500,000

P2,000,000 P5,000,000 P135,000 + 11% of the excess over P2,000,000

P5,000,000 P10,000,000 P465,000 + 15% of the excess over P5,000,000

P10,000,000 And over P1,215,000 + 20% of the excess over P10,000,000

 ESTATE TAX
(AFTER TRAIN)
• Estate tax rate fixed at 6% based on the net
estate

• After TRAIN, capital gains tax on sale of real

property, donor’s tax and estate tax will have
a single rate of 6%
 OTHER DONOR’S TAX PROVISIONS
TRAIN

Considered as made for

adequate and full
consideration so long as:
Sale or exchange of
property made in the a) Transaction is bona
ordinary course of fide;
business b) At arm’s length; and
c) Free from donative
intent.

P10k deduction for Removed

dowries
 DONATION-RELATED PROVISION (DST)

Before TRAIN After TRAIN

DST imposed on
donations of real
DST on Donation of real property unless
Donation of Real property transfer is exempt
Property not subject to DST
Same rate as DST on
sale of real property
 ESTATE TAX DEDUCTIONS
Before TRAIN After TRAIN
Standard Deduction P1,000,000 P5,000,000

Medical Expenses P500,000 (ceiling) Removed

Funeral Expenses P200,000 (ceiling) Removed

Judicial Expenses No ceiling Removed

Family home P1,000,000 (ceiling) P10,000,000

 OTHER ESTATE TAX PROVISIONS
Before TRAIN After TRAIN
Within 2 months from
Notice of death requirement
decedent’s death
Removed

Filing and payment of estate 6 months from decedent’s 1 year from death
tax death

Gross value of estate P5,000,000

CPA Statement requirement
exceeds P2,000,000
 OTHER ESTATE TAX PROVISIONS
Before TRAIN After TRAIN
Any amount, subject
to final withholding
Amount heirs may withdraw P20,000, subject to
before issuance of CAR authorization from the CIR. tax of 6%
No need for CIR
authorization

In case the available cash

of the estate is insufficient
to pay the total estate tax,
Payment by Installment Not allowed, only extension payment by installment
of time of payment allowed allowed within two years
from statutory date of
payment without civil
penalty and interest
 SAMPLE CALCULATIONS

Example:
• A owns a house and lot with a FMV of P15
Million.

• No spouse

• 2 children.
 SAMPLE CALCULATIONS
Before TRAIN
Sale Donation Estate
Taxes Imposable CGT- 6% Donor’s Tax of Estate Tax
DST- 1.5% P1,004,000 + *Subject to:
15% of amount Standard Deduction
in excess of (P1 Million)
Funeral Expenses
P10,000,000
(P200,000)
Family Home
(P1 Million)
Medical Expenses
(P500,000)
= P1,215,000 + 20%
of excess over
P10Million
Tax Payable P1,125,000 P1,754,000 P1,675,000
 SAMPLE CALCULATIONS
After TRAIN
Sale Donation Estate
Taxes Imposable CGT- 6% Donor’s Tax 6% Estate Tax 6%
DST- 1.5% DST – 1.5% *Subject to:
Less: 250,000 Standard Deduction
exemption (P5 Million)
Deduction for the Family
Home- P10 Million

Tax Payable P1,125,000 P1,106,250 0

ADMINISTRATION
AND
ENFORCEMENT
 SUB-TOPICS

• Powers of the BIR Commissioner

• Compliance Requirements

• Additions to the Tax

• Penalties and other Offenses

• Implementing Rules and Regulations

ADMINISTRATION AND ENFORCEMENT

POWERS OF THE BIR COMMISSIONER

 AUTO ADJUSTMENT OF VALUATION OF
ZONAL VALUES OF LAND
Valuation done by the BIR Commissioner shall be
automatically adjusted once every 3 years based on
current Philippine valuation standards -- subject to:

1) Mandatory consultations with competent

appraisers;
2) Prior notice to affected taxpayers;
3) Prior publication; and
4) Bases of valuations will be open to inquiry by any
taxpayer.
 OTHER POWERS OF THE BIR
a) Requirement for the Cooperatives Development
Authority to submit to the BIR a tax incentive report;

b) BIR can now examine returns “notwithstanding any law

requiring the prior authorization of any government
agency or instrumentality”;

c) Power to prescribe rules on filing of returns and pre-

payment of percentage taxes REMOVED.
 COMPLIANCE REQUIREMENTS
POINT-OF-SALE ISSUANCE OF RECEIPTS AND
INVOICES/
MANDATORY ISSUANCE OF
E-RECEIPTS AND E-INVOICES
POINT OF SALE ISSUANCE OF RECEIPTS AND
INVOICES

Before TRAIN After TRAIN

Threshold
amount
P25 P100
 E-RECEIPTS AND E-INVOICES
- Taxpayers engaged in export
- Taxpayers engaged in E-
Who are required to issue? commerce
- Taxpayers under jurisdiction
of the large taxpayers service

- Within 5 years
Establishment of Electronic - Establishment of a system
Sales and Reporting System capable of storing and
processing the required data

Confidentiality Maintained
Compliance with Data
Privacy and Cybercrime Required
Prevention Laws
 COMPLIANCE REQUIREMENTS

KEEPING OF BOOKS OF ACCOUNTS/

VAT REGISTRATION
 KEEPING OF BOOKS OF ACCOUNTS

Book Keeping/ Before TRAIN After TRAIN

Audit Requirement

Book keeping
requirements for
those whose Use of RELEVANT
Use of simplified
quarterly sales, and APPROPRIATE
book keeping
earnings, receipts, set of book keeping
records
do not exceed records
P50,000
 KEEPING OF BOOKS OF ACCOUNTS

Book Keeping/ Before TRAIN After TRAIN

Audit Requirement

Gross ANNUAL sales,

Yearly audit by Gross quarterly sales
earnings, receipts
independent CPAs exceed P150,000
exceed P3,000,000
 VAT REGISTRATION

VAT Registration
Before TRAIN After TRAIN
Requirement

Gross sales/receipts for

past 12 months have or
Threshold for there are reasonable P3,000,000
registration grounds to believe have
exceeded
P1,500,000
SEPs or MIEs who
Any person not elect to pay the 8%
Optional registration of required to register tax on gross
VAT Exempt Persons for VAT may elect sales/receipts shall
to register not be allowed to
register for VAT.
 ADDITIONS TO TAX

REVISIONS OF INTEREST ON TAX

 REVISIONS ON INTEREST
Before TRAIN After TRAIN
Twice the legal rate
20% per annum as set by the BSP
(currently at 6%)

Deficiency interest computed

Deficiency interest computed from “date prescribed for its
from “date prescribed for its payment” OR “upon issuance of a
payment” notice and demand” by the CIR,
whichever comes earlier

Imposition of deficiency In no case shall the deficiency

and delinquency interest and delinquency interest be
allowed imposed simultaneously
 PENALTIES

ADDITIONAL AND UPDATED PENAL

PROVISIONS
 INCREASE IN PENALTY ON EXISTING PROHIBITED ACTS

Penalties Penalties
Offenses
(Before TRAIN) (After TRAIN)

Fine of P30,000-
Attempt to evade or P100,000 and Increased penalty to a fine of
defeat tax imprisonment of 2-4 P500,000-P10M and
years Imprisonment of 6-10 years

Failure/Refusal to Fine of P30,000-

Increased penalty to a fine of
issue receipts or P100,000 and
P500,000-P10M and
sales or commercial imprisonment of Imprisonment of 6-10 years
invoices* 2-4 years

*Included printing of other fraudulent receipts or sales or commercial invoices

 FAILURE TO TRANSMIT SALES DATA TO ELECTRONIC
SALES REPORTING SYSTEM
Penalties TRAIN
Fine amounting to one-tenth
of 1 percent (1/10 of 1%) of
the Annual Gross Sales as
Fine per day reflected in AFS* or
P10,000,
whichever is higher

If aggregate number of days

of violation exceed 180 days

Permanent Closure (but will be excused if failure

to transmit is caused by force
majeure)

*AFS is for the second immediately preceding year.

 USE, POSSESSION, SALE, PURCHASE ETC.
OF SUPPRESSION SOFTWARE AND DEVICES
What are suppression
Penalties
devices?

Any software or device designed

or is capable of:

a) Suppressing the creation of

P500,000-P10M plus
electronic records of sale
transactions that a taxpayer is Imprisonment of 2-4 years
required to keep; OR

b) Modifying, hiding, or deleting

electronic records of sales
transactions and providing a
ready means of access to
them.
 OFFENSES RELATED TO FUEL MARKING
Punishable Act Penalties
Sale, trade, delivery, distribution or
transportation of Unmarked Fuel in 1st offense: Fine of P2.5M
Commercial Quantity;
2nd offense: Fine of P5M
Removal of official fuel marking 3rd offense: Fine of P10M + Revocation
agent from marked fuel;
of license to engage in trade

Adulteration or dilution of fuel or business

intended for sale in domestic
market;

Making, importing, selling, using

fuel markers without authority;

Making, importing, selling, using Fine of P1M to P5M and

counterfeit fuel markers; Imprisonment of 4-8 years.

Sale, distribution, supply of legitimate fuel

to persons penalized for offenses related
to fuel marking.
 OFFENSES RELATED TO VAT REFUND

Punishable Act Penalties

Fine of P50,000-P100,0000

Deliberate failure on the part of any Imprisonment of 10-15 years

BIR official, agent or employee to
act on a VAT refund application
within 90 days
Perpetual disqualification to
hold public office, vote,
participate in any public
election
 IMPLEMENTING RULES AND REGULATIONS

Secretary of Finance mandated to promulgate the

necessary rules and regulations for the effective
implementation of the TRAIN within 30 days from
its effectivity.
 ISSUANCES BY THE BIR

WITHOLDING TAX

- Revenue Memorandum Circular No. 105-

2017
- Publishes the revised Withholding Tax table on
compensation
 ISSUANCES BY THE BIR

DOCUMENTARY STAMP TAX

- Advisory to all eDST System Users

- Advisory on workaround procedures for the
eDST system for transactions subject to new
DST rates

- RR No. 4-2018
- Rules and regulations implementing the DST
rate adjustment
 ISSUANCES BY THE BIR
EXCISE TAX
On SSBs:
- Operations Memorandum No. 2017-12-06: Transition rules
before the issuance of Form No. 2200-S in relation to Excise
Tax for SSBs
- Form No. 2200-S and Guidelines and Instructions: Excise
Tax Returns for SSBs

On Automobiles:
- RR No. 5-2018: Revised tax rates

On Cigarettes:
- RR No. 3-2018: Revised tax rates

On Mineral Products:
- RR No. 1-2018: Revised tax rates
Thank you!