Briefing on RA 10963: Tax
Reform for Acceleration and
Inclusion (TRAIN) – Income Tax
NIRC Provision NIRC TRAIN
Section 24 Taxable income of individuals are subject to the Revised personal income tax
Income tax rates following graduated rates: brackets of 2018-2022:
on individual Tax Schedule Tax Schedule effective January 1,
citizen and 2018 to December 31, 2022
individual resident Not over P10,000 5%
alien of the Not over 0%
Over P10,000 but not P500 + 10% of the
Philippines over P30,000 excess over P10,000
P250,000
Over P30,000 but not P2,500 + 15% of the
over P70,000 excess over P30,000
Over P70,000 but not P8,500 + 20% of the
over P140,000 excess over P70,000
Over P140,000 but P22,500 + 25% of the
not over P250,000 excess over P140,000
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC NIRC TRAIN
Provision
Section 24 Taxable income of individuals are Revised personal income tax brackets of 2018-
Income tax subject to the following graduated rates: 2022:
rates on Tax Schedule Tax Schedule effective January 1, 2018 to
individual December 31, 2022
citizen and Over P250,000 P50,000 + 30% of Over P250,000 but 20% of the excess over
individual but not over the excess over not over P400000 P250,000
resident alien of P500,000 P250,000 Over P400,000 but P30,000 + 25% of the
the Philippines Over P500,000 P125,000 + 32% not over P800,000 excess over P400,000
of the excess over Over P800,000 but P130,000 + 30% of the
P500,000 not over P2million excess over P800,000
Over P2Million but P490,000 + 32% of the
not over P8Million excess over P2Million
Over P8Million P2,410,000 + 35% of
the excess over
P8Million
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 24 For 2023 onwards:
Income tax rates Tax Schedule effective January 1, 2018 to
on individual December 31, 2022
citizen and Not over P250,000 0%
individual resident
Over P250,000 but 15% of the excess over
alien of the not over P400,000 P250,000
Philippines
Over P400,000 but P22,500 +20% of the
not over P800,000 excess over P400,000
Over P800,000 but P102,500 + 25% of the
not over P2,000,000 excess over P800,000
Over P2Million but P402,500 + 30% of the
not over P8Million excess over P2Million
Over P8Million P2,202,500 + 35% of the
excess over P2Million
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 24 Refer to Revenue Memorandum Circular (RMC)
Income tax rates on Nos. 105-2017 and 1-2018, Revised
individual citizen Withholding Tax on Compensation Table
and individual
resident alien of the
Philippines
Section 24 Taxable income is subject to the For purely self-employed and/or professionals
Income tax of self- same graduated rates whose gross sales/receipt and other non-
employed and/or operating income do not exceed the VAT
professionals threshold of P3Million, the tax shall be, at the
taxpayer’s option, either:
1. 8% income tax on gross sales or gross
receipts in excess of P250,000 in lieu of the
graduated income tax rates and the
percentage tax under Sec. 116; OR
2. Income tax based on the graduated income
tax rates for individuals
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 24 Taxable income is subject For mixed income earners (earning both
Income tax of to the same graduated compensation income and income from business
mixed income rates and/or practice of profession), their income taxes shall
earners be:
1. For income from compensation: based on
graduated income tax rates for individuals, AND
2. For income from business and/or practice of
profession:
a. Gross sales/receipts which do not exceed the
VAT threshold of P3Million – 8% income tax
on gross sales/receipts and other non-
operating income OR income tax based on
graduated income tax rates on taxable
income, at the taxpayer’s OPTION
b. Gross sales/receipts and other non-operating
income which exceeds the VAT threshold of
P3Million – income tax based on graduated
tax rates for individuals
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 24 (B) (1) Philippine Charity Sweepstakes Philippine Charity Sweepstakes and
Final tax on and Lotto winnings – exempt Lotto winnings of more than P10,000
winnings from the 20% final tax shall be subject to the 20% final tax
Section 24 (B) (1) Interest income received by an The rate of final tax on interest
Final tax on individual taxpayer (except a income received by resident
interest on foreign non-resident individual) from a individual taxpayer under the
currency deposit depository bank under the expanded foreign currency deposit
expanded foreign currency system increased from 7.5% to 15%
deposit (EFCD) system is final tax
subject to 7.5% final tax
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 24 (C) The capital gains tax on net The final tax rate of 15% for net capital
Capital gains tax capital gains realized from sale, gains realized during the taxable year
on sale of shares barter, or exchange or other from the sale, barter, exchange or
not traded disposition of shares of stock in other disposition of shares of stock in a
through the stock a domestic corporation not domestic corporation except shares
exchange traded through the stock sold or disposed of through the stock
exchange is: exchange
Not over P100,000 – 5%
On any amount in excess of
P100,000 – 10%
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC NIRC TRAIN
Provision
Section 25 (C) Alien individuals and qualified Additional provision [Subsection (F)]
(D) (E) Filipino employees employed by The 15% preferential tax rate provided
Preferential tax 1. Regional or area and Regional in Subsection (C), (D) and (E) shall not
rate for Operating headquarters or be applicable to RHQs. ROHQs,
individuals multinational companies OBUs or Petroleum service contractor
employed by (RHQs and ROHQs) and subcontractor registering with the
SEC after January 1, 2018
RHQ, ROHQ, [Subsection (C)]
OBU and 2. Offshore banking units (OBUs)
But existing RHQs, ROHQs, OBUs or
Petroleum [Subsection (D)] Petroleum service contractor and
Contractors 3. Petroleum Service contractor subcontractor presently availing of the
Capital and and subcontractor [Subsection preferential tax rates for qualified
subcontractors (E)] employees shall continue to be entitled
are subject to a preferential tax of to avail of the preferential tax rate for
15% final withholding tax on gross present and future qualified
compensation income. employees.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC NIRC TRAIN
Provision
Section 24 (C) Presidential Veto:
(D) (E) The President vetoed this line item under
Preferential tax Subsection (F)
rate for “But existing RHQs, ROHQs, OBUs or
individuals Petroleum service contractor and
employed by subcontractor shall continuously be entitled to
RHQ, ROHQ, avail of the preferential tax treatment for their
OBU and present and future qualified employees.”
Petroleum
for being violative of equal protection
Contractors
Capital and The President stated in his letter that, “given
subcontractors the significant reduction in the personal
income tax, the employees of these firms
should follow the regular tax rates applicable
to other individual taxpayers.”
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 31 Means the pertinent items of The phrase “and/or personal and
Definition of gross income specified in this additional exemptions” is removed in
Taxable Income Code, less the deductions and/or the definition.
personal and additional
exemptions, if any, authorized for
such types of income by this Code
or other special laws
Section 35 Individual taxpayers are entitled The Basic Personal and Additional
Personal to: Exemptions of individual taxpayers
Exemptions Basic Personal Exemption – are removed.
P50,000
The related provision on furnishing
and exemption certificate is likewise
Additional Exemption – P25,000 removed.
per qualified dependent child
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 32 (B) The amount of tax-exempt 13th The amount of tax-exempt 13th month pay
Tax exempt 13th month pay and other benefits is and other benefits is increased to P90,000.
month pay P82,000.
Section 33 (A) Fringe benefits given to non- The Fringe Benefits Tax is
Tax on fringe rank and file employees are increased to 35% effective
benefits given to subject to 32% final tax January 1, 2018
non-rank and file The grossed up monetary The grossed up monetary value of
employees value of the fringe benefit the fringe benefit given to non-
given to non-rank and file rank and file employees shall be
employees shall be determined by dividing the actual
determined by dividing the monetary value by 65%
actual monetary value by 68%
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 33 (A) Fringe benefits given to non- Fringe benefits furnished to
Tax on fringe rank and file employees are employees and taxable under
benefits given to subject to 32% final tax Subsections (B), (C), (D) and (E)
non-rank and file The grossed up monetary of Sec. 25 shall be taxed at the
employees value of the fringe benefit applicable rates imposed
given to non-rank and file The grossed-up monetary value of
employees shall be the fringe benefit shall be
determined by dividing the determined by dividing the actual
actual monetary value by 68% monetary value of the fringe
benefit by the difference between
100% and the applicable rates of
income tax under Subsections (B),
(C), (D) and (E) of Sec. 25
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 34 (M) The allowable deduction for Allowable deduction for premium
Allowable premium payments on health payments on health and/or
deduction for and/or hospitalization insurance hospitalization insurance of an
premium of an individual taxpayer is individual taxpayer is removed.
payments on P2400 per year or P200 per
health and/or month, subject to a gross family
hospitalization income threshold of P250,000.
insurance
Section 51 An individual whose gross Individual taxpayers whose taxable
Filing of individual income does not exceed his total income is subject to zero percent
income tax return personal and additional under the new graduated tax table
exemptions for dependents are (i.e., does not exceed P250,000)
not required to file income tax shall not be required to file an income
return (ITR). tax return.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Additional provision:
The ITR shall consist of a maximum
of four (4) pages in paper OR
electronic form. It shall only contain
the following information:
Personal profile and information
Gross sales receipts or income
from compensation, from
business, or from exercise of
profession (except income subject
to final tax)
Allowable deductions
Taxable income
Income tax due and payable
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 51-A No provision Substituted filing or ITRs is available
Substituted Filing for individual taxpayers:
of income tax Receiving purely compensation
returns by income, regardless of amount
employees From only one employer in the
receiving purely Philippines for he calendar year
compensation The income tax of which has been
income from only correctly withheld by the employer
one employer in (i.e., tax due = tax withheld)
the Philippines The Certificate of Withholding filed by
the employers duly stamped
“RECEIVED” by the BIR shall be the
substituted filing by such employers
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 56 (A) (2) When tax due exceeds ₱2,000, the The new deadline of payment of
Installment taxpayer (other than a corporation) second installment is October 15
Payment of tax may elect to pay the tax in two following the close of the calendar
due for individuals equal installments. Payment of year.
and corporations installments:
First installment – time of filing
of return
Second installment – on or
before July 15 following the
close of the calendar year.
Section 62 There is allowed personal The exemption for estates and
Exemption for exemption of ₱50,000 from the trusts is removed.
estates and trusts income of the estate or trust.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 51 (C) The return of individual The return of individual required
(1) required to file an income tax to file an income tax return shall
Filing of return shall be filed on or be filed on or before April 15 of
Individual Tax before April 15 of each year each year covering income for
Return covering income for the the preceding taxable year.
preceding taxable year. (Note: The TRAIN Law did not
remove this provision)
Section 74 Every individual subject to The deadline for filing of
Declaration of income tax shall make and file declaration estimated income for
estimated a declaration of his estimated the current taxable year is on or
income for income for the current taxable before May 15 of the same
individuals year on or before April 15 of taxable year.
the same taxable year.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 74 The amount of estimated The payment of the four
Declaration of income with respect to which installments shall be:
estimated a declaration is required shall First – May 15
income for be paid in four (4) Second – August 15
individuals installments: Third – November 15
First – at time of declaration Fourth – on or before May 15
Second – August 15 of the following calendar year
Third – November 15 when the final adjusted
Fourth – on or before April income tax return is due to be
15 of the following calendar filed.
year when the final
adjusted income tax return
is due to be filed.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 34 (L) Individual taxpayers (except non- For GPPs and the partners comprising
Optional Standard resident alien) may elect a standard them, OSD may be availed only once,
Deduction deduction not exceeding 40% of i.e., either by the GPP itself or by the
gross sales/receipts and partners comprising the GPP.
corporations may elect standard
deduction not exceeding 40% gross
income, in lieu of itemized allowable
deductions.
Section 57 The rate of withholding tax on items Beginning January 1, 2019, the rate of
Withholding of of income payable by payor- withholding tax shall be not less than
creditable tax at corporations/persons shall be not one percent (1%) but not more than
source less than one percent (1%) but not fifteen percent (15%).
more than thirty-two percent (32%).
The tax withheld shall be credited
against the income tax liability of the
taxpayer.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 27 (C) The Philippine Charity PCSO is not anymore exempt
Exemption Sweepstakes Office (PCSO) is from payment of corporate
Government- among the list GOCCs, income tax.
owned or – agencies, or instrumentalities
Controlled that are exempt from payment
Corporations, of corporate income tax.
Agencies or
Instrumentalities
Section 27 (D) Interest income received by a The rate of final tax on interest
(1) domestic corporation from a income received by domestic
Final Tax on depository bank under the corporation under the expanded
interest on expanded foreign currency foreign currency deposit system
foreign currency deposit (EFCD) system is increased from 7.5% to 15% final
deposit subject to 7.5% final tax. tax.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 27 (D) The capital gains tax on net Final tax rate of 15% for net
(2) capital gains realized from capital gains realized from the
Capital gains tax sale, barter, or exchange or sale, barter, exchange or other
on sale of shares other disposition of shares of disposition of shares of stock in
not traded stock in a domestic a domestic corporation not
through the stock corporation nor traded through traded through the stock
exchange the stock exchange is: exchange.
Not over ₱100,000 – 5%
On any amount in excess of
₱100,000 – 10%
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
NIRC Provision NIRC TRAIN
Section 52 Every corporation subject to tax, Additional provision:
Filing of corporate except foreign corporations not The ITR shall consist a maximum of
income tax return engaged in trade or business in four (4) pages in paper OR electronic
the Philippines, shall render in form.
duplicate, a true and accurate
Quarterly income tax return; It shall only contain the following:
information:
AND
1. Corporate profile and information
Final or adjustment return
2. Gross sales, receipts or income
from services rendered or conduct
of trade or business except income
subject to final tax
3. Allowable deductions
4. Taxable income
5. Income tax due and payable
These requirements shall not affect the
implementation of TMTA.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
Final Withholding Tax and Expanded Withholding Tax Returns
NIRC Provision NIRC TRAIN
Section 58 The return for FWT and the FWT and EWT returns shall be
Return and return for creditable filed and the payment made not
payments of withholding taxes (EWT later than the last day of the
taxes withheld at returns) shall be filed within month following the close of the
source ten (10) days after the end of quarter during which the
each month [Sec. 2.58 of RR withholding was made.
No. 2-98]
The provision that the
Commissioner may require the
payment of the taxes withheld at
more frequent intervals is
removed.
TRAIN Briefing – Income Tax
VER 1.0 – January 2018
