Tax Reform for Acceleration and Inclusion (TRAIN) - PwC
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Tax Reform for
Acceleration and
Inclusion (TRAIN)
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Tax Reform for Acceleration and Inclusion (TRAIN)
Revised income tax table for individuals
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Income tax
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Effective:
1 January 2018
1 January 2023
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Effective:
0%
0%
Over PHP250,000 but not
over PHP400,000
20% of the excess over
PHP250,000
15% of the excess over
PHP250,000
Over PHP400,000 but not
over PHP800,000
PHP30,000+25% of the
excess over PHP400,000
PHP22,500+20% of the
excess over PHP400,000
Over PHP800,000 but not
over PHP2m
PHP130,000+30% of the
excess over PHP800,000
PHP102,500+25% of the
excess over PHP800,000
Over PHP2m but not over
PHP8m
PHP490,000+32% of the
excess over PHP2m
PHP402,500+30% of the
excess over PHP2m
Over PHP8m
PHP2,410,000+35% of the
excess over PHP8m
PHP2,202,500+35% of the
excess over PHP8m
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Not over PHP250,000
Optional taxation for self-employed and
professionals (SEPs)
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SEPs whose gross sales/receipts and other non-operating income do
not exceed PHP3m (new VAT threshold) may opt to be taxed at:
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Graduated rates; or
8% based on gross sales and/or gross receipts and other non-operating
income in excess of PHP250,000 in lieu of graduated rates and
percentage tax
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Failure to signify the intention to elect the 8% optional taxation in the 1st
quarter of the taxable year shall be considered as having availed of the
graduated rates and such shall be irrevocable for the taxable year.
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Taxation of mixed income earners
Mixed income earners are subject to:
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Graduated rates on their compensation income;
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If their gross sales/receipts and other non-operating income
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do not exceed PHP3m ¨C at the taxpayer¡¯s option, either:
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exceed PHP3m ¨C graduated rates
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8% based on gross sales and/or gross receipts and other non-operating
income in lieu of graduated rates and percentage tax; or
graduated rates
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Other amendments to income taxation
Employees of RHQs, ROHQs, OBUs, and Petroleum Service Contractors
and Subcontractors
The 15% preferential tax rate shall not apply to employees of ROHQs,
RHQs, OBUs, and Petroleum Service Contractors and Subcontractors which
registered with the Securities and Exchange Commission after 1 January 2018.
Vetoed
Present and future qualified employees of existing RHQs/ROHQs, OBUs,
or Petroleum Service Contractors and Subcontractors shall be entitled to
the 15% preferential rate.
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Revenue Regulations (RR) No. 8-2018 provides that employees of RHQs,
ROHQs, OBUs, and Petroleum Service Contractors and Subcontractors shall
be subject to graduated tax rates.
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Vetoed
New passive income tax rates
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PCSO and lotto winnings exceeding PHP10,000
of citizens and resident aliens
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Interest income on FCDU deposits of citizens,
resident aliens, and domestic corporations
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Capital Gains Tax (CGT) on sale of unlisted
shares by citizens, resident aliens, non-resident
aliens, and domestic corporations
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Exempt 13th-month pay and other
benefits increased to PHP90,000
Fringe benefits tax rate increased to
35%
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15%
15%
Deletions
Escalations
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20%
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Personal and additional exemptions
Deductions for premiums paid
on health and/or hospitalization
insurance
Exemption of PCSO from corporate
income tax
Tax Reform for Acceleration and Inclusion (TRAIN)
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Simplified individual and corporate income tax returns (ITR), i.e., max. of 4
pages
Individuals earning purely compensation income from only one employer
are not required to file annual ITR
BIR Form No. 2316 stamped ¡°received¡± by the Bureau of Internal Revenue
(BIR) tantamounts to substituted filing of ITR of employees
Quarterly Alphabetical List of Payees (QAP) shall accompany BIR Form
Nos. 1601-EQ and 1601-FQ1
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Miscellaneous provisions
Filing deadlines
Final (FWT) and expanded/creditable (EWT/CWT) withholding taxes
- last day of the month following the close of the quarter during which taxes
were withheld thru BIR Form Nos. 1601-EQ (for EWT/CWT) and 1601-FQ
(for FWT)1
- remittance every 10th and 15th of the following month (for manual and
electronic filers, res pectively) during which taxes were withheld,
regardless of the amount withheld, thru BIR Form Nos. 0619-E (for EWT/
CWT) and 0619-F (for FWT)1
For individuals
- Second installment payment of the income tax due ¨C 15 October
- Filing of declaration of estimated income tax ¨C 15 May
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Filing of annual ITR - 15 April (unchanged) [Sec. 51(C), Tax Code]1
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Amendments to the existing withholding
tax regulations1
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An individual whose gross income exceeds PHP3m or is VAT-registered,
regardless of the gross income amount, is subject to 10% CWT rate on his/
her gross professional fees, or any other form of remuneration for services
rendered.
Sworn declarations regarding the income payees¡¯ gross sales/receipts are
required to be submitted by income payee to income payors/withholding
agents and by income payors/withholding agents to the BIR.
Inclusion of identified top 5,000 individuals and taxpayers identified as
medium taxpayers, and those under the Taxpayer Account Management
Program to ¡°top withholding agents¡± who shall withhold 1% and 2%
withholding tax on income payments on supplies of goods and services,
respectively
Adjustment on the thresholds for certain de minimis benefits
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RR No. 11-2018
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