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10 TRAIN Tax Reform Items That You Probably Didn't Know
10 TRAIN Tax Reform Items That You Probably Didn't Know
10 TRAIN Tax Reform Items That You Probably Didn't Know
The Tax Reform for Acceleration and Inclusion (TRAIN) law or Republic Act (RA) No. 10963 sets a new
deadline for the filing of the annual Income Tax Return (ITR).
Previously, the deadline to submit the taxpayer’s ITR to the Bureau of Internal Revenue (BIR) is April 15.
Under the TRAIN law, the new deadline to file the annual ITR is May 15.
Note:
Note:
Some people already know this, but many are still unaware:
Under the tax reform, the personal exemption of P50,000 and additional exemption of P25,000 per
dependent, which were enjoyed by taxpayers in the old tax system, have now been removed.
In the past, an individual may avail of personal exemption (P50,000) and additional exemption
(maximum of P100,000 if there are four dependents) to be deducted from the taxable income.
Under TRAIN, the exemption has been simplified and made more straightforward. This simply means:
if the taxpayer’s taxable income is P250,000 or below, he or she is automatically exempted from paying
the income tax; and
it doesn’t matter now if the taxpayer has one dependent or four dependents or no dependent at all
That means two taxpayers with the same gross income "may" pay exactly the same tax due —
regardless if one taxpayer has four children (i.e., four dependents) while the other has none.
In addition to the removal of personal and additional exemptions, the maximum P2,400 premium for
health and hospitalization insurance, which is previously deductible from taxable income, has also been
removed.
Under the existing National Internal Revenue Code (NIRC), lotto winnings and all PCSO prizes are tax-
exempt. This has now been changed by the TRAIN law.
Starting 2018, all PCSO and lotto prizes are taxed 20% if the amount of the prize or winnings is above ten
thousand pesos (P10,000).
From the current rate of 5-20%, the tax charged on the interest income of long-term time deposits that
are preterminated (meaning, withdrawn prior to the scheduled maturity date) has been increased to a
fixed 20%.
20%
Under the existing tax code, the interest income on foreign currency accounts (e.g., US dollar, Euro,
Japanese Yen, Korean won, etc.) deposited in Philippine banks is 7.5%. The TRAIN law has increased the
foreign currency deposit unit (FCDU)’s interest income tax rate to 15%.
7.5%
15%
Meanwhile, sale of stocks that are traded in the PSE will be taxed 0.6% of the gross trade amount, up
from the previous rate of 0.5%.
The documentary stamp tax (DST) has been doubled, with the new doc stamps tax ranging from P1.50 to
P3.00 under the tax reform.
8. DONOR'S TAX
The donor’s tax was revised to a flat rate of 6% regardless of the relationship between the donor and
the donee. Previously, the donor’s tax was 2% to 15% if the donor and donee are related, and 30% if the
donation was to a stranger.
Donations or gifts below P250,000 are tax-exempt. Donations with value of at least P250,000 are taxed
using the new rate of 6% on the amount in excess of P250,000.
9. ESTATE TAX
Under TRAIN, the estate tax is now a flat 6% rate on the amount in excess of P5 million.
Estates with a net value of P5 million and below will be tax-exempt. Family homes that are valued at no
more than P10 million will also be exempted. Under current tax laws, only family homes worth P1
million are tax-exempt.
https://www.pinoymoneytalk.com/train-tax-reform-provisions-summary-package/
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