A NEED-TO-KNOW GUIDE TO

REPUBLIC ACT NO. 10963

(Effective January 1, 2018)
NOTES:
 Exclusions/Deductions: The Personal Exemption (P50,000.00) and
Additional Exemption (P25,000.00/dependent) under the NIRC was
deleted in the new TRAIN Law.

 Tax-Exempt Bonus: The P82,000.00 ceiling for tax-exempt bonuses

(including 13th month pay and other benefits) under the NIRC is increased
to P90,000.00 under the TRAIN Law.
Notes:

 NIRC Preferential Tax Treatment (15% of gross income) of qualified Filipinos and
aliens employed by RHQ/ROHQ of multinational companies, Offshore Banking Units,
and Petroleum Service Contractors and Subcontractors no longer applicable in
TRAIN, if RHQ, ROHQ, OBU and Petroleum Service Contractor or Subcontractor
registered with SEC beginning January 1, 2018.

 PCSO now subject to corporate income tax. (Tax-Exempt in NIRC.)

NOTES:

 TRAIN repealed the P20,000.00 exemption allowed to the income of the estate or
trust under Section 62 of the NIRC.
 For PH Citizens/Residents: TRAIN removed the allowance for deductions of funeral,
judicial and medical expenses under the NIRC but increased allowable deduction for
family home from P1 Million to P10 Million.
 For Non-Resident Alien: TRAIN provided a standard deduction of P500,000.00 but
removed allowance for deductions of expenses, losses, indebtedness and taxes.
 Estate Tax Return: Written notice no longer required under TRAIN; Return must be
filed within 1 year from decedent’s death (6 months – NIRC);
 TRAIN allows installment payments for Estate Tax within 2 years from statutory date
for its payment sans civil penalty or interest.
NOTES:

 TRAIN removed the exemption for dowries or gifts made on account of marriage in
the amount of P10,000.00 under the NIRC.

 Transfer for less than adequate and full consideration. The TRAIN now considers
sales, exchanges, or other transfers made in the ordinary course of business (i.e.
bona fide transactions, at arm’s length and free from donative intent) as made for an
adequate and full consideration. Hence, exempted from Donor’s Tax.
NOTES:
 VAT Threshold increased from P 1,919,500.00 (NIRC) to P 3,000,000.00.

 VAT Exemption for lease of residential units from P12,800.00 (NIRC) to P15,000.00.

 Association dues, membership fees and other assessments and charges collected by
homeowners associations and condominium corporations are EXPRESSLY VAT
EXEMPT under TRAIN.
 (Documentary stamps, foreign currency deposits, stocks not traded in the stock
exchange, stock transaction tax)
NOTES:

 PCSO & Lotto Winnings: Taxable if prize or winnings exceed P10,000.00 under the
TRAIN. Otherwise, (below P10,000.00) tax-exempt. (Previously tax-exempt under
NIRC regardless of amount.
 Donation of Real Property now subject to Documentary Stamp Tax of P15.00 for
every P1,000.00.