A.

A COMPARATIVE ANALYSIS ON THE PROVISIONS OF THE 1997 TAX CODE &

AMENDMENTS/REPEALS INTRODUCED BY TAX REFORM FOR ACCELERATION & INCLUSION
(TRAIN) LAW

We are sending below highlights of significant changes introduced by TRAIN Law based on
our comparative study conducted and pending the implementing rules and regulations to
be issued by the Bureau of Internal Revenue.

A. ADMINISTRATIVE
OLD TAX CODE AMENDMENTS INTRODUCED BY TRAIN LAW
 No TIMTA yet at the time of the enactment  Power of the Commissioner to obtain
of 1997 Tax Code information to include data supplied by
Cooperative Development Authority in
compliance with “The Tax Incentives
Management & Transparency Act (TIMTA)”
 Presence of counterpart restrictions
 Power of the Commissioner to make
assessments notwithstanding any law
requiring prior authorization of any
government agency or instrumentality
 No period is provided
 Authority of the Commissioner to prescribe
real property values subject to automatic
adjustment once every three (3) years

B. INDIVIDUAL INCOME & RETURNS & PAYMENT

 Below Php 10,000.00 taxed at 5%
 Over Php 500,000.00 taxed at 32%
 No counter-part provision
 Personal exemption-Php 50,000.00
 Additional exemption-Php 25,000.00 per
child
 No counter-part provision
 Tax exempt 13 Month Pay & Other  Php 90,000.00
th
 Below Php 250,000.00 no tax
 Over Php 8M taxed at 35%
 Optional for self-employed & professionals to
be taxed at 8% for gross revenues below
Php 3M or the new VAT threshold
 No more personal and additional exemptions
 Minimum wage earners receiving holiday pay
still exempt from income tax

Benefits including Productivity Incentives

& Christmas Bonus-Php 82,000.00
 Employees of RHQ, ROHQ, OBU, &  Preferential tax treatment of 15% shall not
Petroleum Service Contractors taxed at apply anymore to registrants after January
15% 1, 2018
 Fringe Benefit Tax-32%  35%
 None  Returns to consist of maximum of 4 pages
showing personal profile & information,
gross revenues, allowable deductions,
taxable income, income tax due & payable
 Deadline for 1 Quarter & Annual ITR-April  May 15
st

15
 Deadline for 2nd Installment of Annual  October 15
Income Tax Due-July 15
C. PASSIVE INCOME
 PCSO & Lotto Winnings-exempt  Taxable above Php 10,000.00
 Interest income on foreign currency  15% whether recipient is individual or
denominated units-7.5% domestic corporation
 Capital gains tax on unlisted shares-5% for  15%
1stPhp 100,000.00 net capital gains
realized and 10% in excess of Php
100,000.00
D. ESTATE
 Progressive at 5% to 20%  Flat rate of 6%
 Standard deduction at Php 1M  Php 5M
 Family home Php 1M  Php 10M
 CPA Certification needed at Php 2M  Php 5M
 None  Final withholding tax at 6% on withdrawals
on deposits of decedent
 Estate tax return filing deadline-within 6  1 year
months from the date of death
 No counterpart provisions  Payment by installment in 2 years in case of
insufficient cash without civil penalty &
interest
E. DONATION
 0%-15% & 30% on donations to strangers  6% in excess of Php 250,000.00
F. VAT
 VAT threshold-Php 1,919,500.00  Php 3M
 Sale of goods to PEZA-0%  Subject to 12% upon implementation of
enhanced VAT refund system
 VAT exempt sale of residential lot-not more  Php 1.5M
than Php 1,919,200.00
 VAT exempt sale of residential house & lot-  Php 2.5M, by 2021 Php 2M
Php 3,199,200.00
 VAT exempt lease of residential unit-Php
10,000.00  Php 15,000.00
 Association dues, membership fees & other
assessments & charges of homeowner’s  VAT exempt
 association & condominium corporation-
vatable
 Transfer property pursuant to Section 40 (C)  VAT exempt
(2) of the Tax Code on tax-free exchange-
vatable
 Sale of medicines-12% VAT  VAT exempt Transfer of Sale of drugs and
medicines for diabetes, high cholesterol &
hypertension-VAT exempt effective
January 1, 2019

 Amortization of input VAT on capital goods  Repealed by 2022

 120-day period within which to refund  90 days reckoned from the date of
reckoned from the complete submission submission of official receipts & invoices
of documents
 In case of inaction, appeal to CTA after the
expiration of 120-day period  BIR officer may be punished
 Monthly & quarterly VAT filing  Effective 2023 only quarterly VAT filing
G. PERCENTAGE TAX
 Cooperatives are exempt from 3% gross  Beginning January 1, 2019 , annual gross
receipts tax receipts not exceeding Php 500,000.0 shall
be exempt from 3%
 Self-employed & professionals with gross  Exempt effective January 1, 2019 if annual
receipts of Php 1,919,500.00 and less- gross receipts not exceeding Php
subject to 3% 500,000.00
 Stock transaction tax on listed shares-0.50  0.60 of 1%
of 1%
H. EXCISE TAX
 Php 31.20 per pack with 4% increase  Php 32.50-January 2018
annually Php 35.00-January 2019
Php 37.50-January 2020
Php 40.00-January 2022
4% annual increase
 Diesel-Php 0.00 per liter  Php 2.50 per liter-2018
Php 4.50 per liter-2019
Php 6.00 per liter-2020
 Unleaded & premium gasoline-Php 4.35 per
liter  Php 7.00 per liter-2018
Php 9.00 per liter-2019
Php 10.00 per liter-2020
 No counterpart provisions  Mandatory marking of all fuel products
 2% for up to Php 600,000.00  4%
 10% for over Php 600,000.00-Php 1M
 Php 12,000.00 + 20% in excess of Php
600,00.00
 Php 112,000.00 + 40% in excess over Php
1.1M  20% for over Php 1M-Php 4M
 Php 512,000.00 + 60% of excess over Php
2.1M  50% for over Php 4M
 Cosmetic procedures for aesthetic reasons-  5%
none
 Sweetened beverages-none  Php 6.00 per liter using caloric & non-caloric
sweeteners
 Php 12.00 per liter using high-fructose corn
syrup
 Php 10.00.00 per metric ton of coal  Php 50.00-2018
Php 100.00-2019
Php 150.00-2020
 Various rates for other minerals
100% increase in rate for other minerals
I. DOCUMENTARY STAMP TAX
 Various transactions subject to different  100% increase in rate except DST on loans
rates & amounts from Php 1.00 to Php 1.50 per Php 200.00
& no increase in sale of real property &
insurance policies

J. COMPLIANCE REQUIREMENTS
 Php 600,000.00 threshold for keeping of  Php 3M
books of accounts for entities
K. ADMINISTRATIVE PROVISIONS
 Php 25.00 sale required to issue official  Php 100.00.0
receipt/invoice
 Electronic sales reporting-none except the  Enhanced electronic point of sales reporting
current Quarterly Summary List of Sales & by taxpayers engaged in export of goods &
Purchases & List of Importation, e-Sales services & Large Taxpayers within 5 years
Reporting from enactment of TRAIN
 Monthly filing of withholding tax &  Quarterly filing of withholding tax except
percentage tax/VAT compensation & VAT/percentage
 Deficiency interest-20%  Double the legal interest rate per annum
 Penalty for failure to transmit sales data  1/10 of 1% of the annual net income for the
entered on Cash Register Machine/Point 2nd year preceding the current taxable
of Sales Machine to the BIR’s Electronic year for each day of violation or Php
Sales Reporting System-administrative 10,000 whichever is higher & permanent
penalty closure if violation exceeds 180 days