RA 10963: Tax Reform for

Acceleration and Inclusion

(TRAIN) – BIR Training of
Trainers
National Training Center – BIR, NOB
22 – 24 January 2018
2

Background on the Tax Reform

 The Tax Reform for Acceleration and inclusion amends certain
provisions of Republic Act No. 8424 (The National Internal
revenue Code of 1997), as amended.
 The enrolled bill was sent to President Duterte for approval and
was signed into law as Republic Act No. 10963 on December
19, 2017. The law takes effect January 1, 2018 following its
complete publication in the Official Gazette last December 27,
2017.
 The President has issued a separate letter vetoing five
provisions of the signed TRAIN law.
 The law is just the first tax reform package. The second
package (reduction of corporate income tax and rationalization
of fiscal incentives) is estimated to be released by early 2018.
3
Key amendments
1. Individual Income Tax 9. Excise Tax on:
2. Final Income Tax  Automobiles
3. Estate Tax  Petroleum products
4. Donor’s Tax  Sweetened beverages
5. Value Added Tax  Mineral products
6. Documentary Stamp Tax  Cosmetic procedures
7. Some administrative (non-essential
provisions services)
8. Penalties
4

What is the purpose of TRAIN?

The purpose of TRAIN is to make
our country’s tax system
The purpose of TRAIN is to make
our country’s tax system
The purpose of TRAIN is to make
our country’s tax system
 It is the first package in the Comprehensive
Tax Reform Program (CTRP) which is expected
to generate

Php 130 Billion

in revenues for the government.
9

What is TRAIN?
The goal of the first package of the CTRP or
TRAIN is to create a simpler, fair, and more
efficient system, as per the constitution,
where the rich will have a bigger contribution
and the poor will benefit more from the
government’s programs and services.
 Lowering the Simplifying Estate Simplified Value Added
Personal Income Tax and Donor’s Tax Tax (VAT) System

Increasing the Excise Tax Increasing the Excise Introducing an Excise

on Petroleum Products
Tax on Automobiles Tax on Sweetened
Beverages
11

The Vision of TRAIN by 2020….

Poverty rate Law abiding Peace within Achieve high

reduced from country middle income
the country
status, where
26% to 17% and per capita
(or some 10 neighbors increases from
million USD3,000 to
Filipinos USD4100 by
uplifted from 2022 in today’s
poverty) money
12

The Vision of TRAIN by 2040….

Extreme Inclusive Achieve high

poverty economic income
status where
eradicated and political
per capita
institutions increased
where from USD
everyone has 30,000 to
equal USD 12,000
opportunities by 2040 in
today’s
money
 “The benefits to be derived from this tax reform
measure will sustainably finance the government’s
envisioned “BUILD, BUILD, BUILD, CAMPAIGN”,
that pushes for massive investments in
infrastructure thereby encouraging economic
activity and job creation, as well as fund the
desired increase in the public budget for health,
education and social programs to alleviate poverty.
 Benefits of TRAIN

Higher budget for Infrastructure development

• Job Creation
• Lower cost of transporting goods and services

Higher efficiencies, increase in business

activities and revenues
• Attract Investors
• Better quality of life for Filipinos
 Benefits of TRAIN

Higher budget for education

• Competitive advantages for new graduates
• Better employment viability
• Higher pay potentials
• Attract investors
• Better quality of life for Filipinos
 Benefits of TRAIN

Higher budget for health

• More public hospitals and clinics
• Better public access to better health care
• Stronger work force
• Attract investors
• Better quality of life for Filipinos
 Benefits of TRAIN

Higher budget for Social Protection, Welfare and

Employment
• Better government relief and assistance programs
• Better subsidies
• Better social security and overall peace and order
• Better quality of life for Filipinos
 Briefing on RA 10963: Tax
Reform for Acceleration and
Inclusion (TRAIN) – Income Tax
 NIRC NIRC TRAIN
Provision
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 effective January
citizen and Tax Schedule
1, 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 P250,000
over P30,000 excess over P10,000
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
not over P250,000 the excess over
P140,000
 NIRC NIRC TRAIN
Provision
Section 24 Taxable income of individuals are Revised personal income tax brackets of
Income tax subject to the following graduated 2018-2022:
rates on rates: Tax Schedule effective January 1, 2018 to
Tax Schedule
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 P800,000 but P130,000 + 30% of the
over 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
 NIRC NIRC TRAIN
Provision
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
 NIRC NIRC TRAIN
Provision
Section 24 Refer to Revenue Memorandum Circular
Income tax rates (RMC) Nos. 105-2017 and 1-2018, Revised
on individual Withholding Tax on Compensation Table
citizen 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 individualsIllustration2&3.pptx
 NIRC NIRC TRAIN
Provision
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
earners shall 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
NIRC Provision NIRC
Section 24 (B) (1) Philippine Charity Sweepstakes
Final tax on and Lotto winnings – exempt
winnings from the 20% final tax
Section 24 (B) (1) Interest income received by an
Final tax on individual taxpayer (except a
interest on foreign non-resident individual) from a
currency deposit depository bank under the
expanded foreign currency
deposit (EFCD) system is
subject to 7.5% final tax
TRAIN
Philippine Charity Sweepstakes and
Lotto winnings of more than P10,000
shall be subject to the 20% final tax
The rate of final tax on interest
income received by resident individual
taxpayer under the expanded foreign
currency deposit system increased
from 7.5% to 15% final tax
 NIRC NIRC TRAIN
Provision
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 other
not traded disposition of shares of stock in 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%
 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 (RHQs OBUs or Petroleum service contractor
employed by and ROHQs) [Subsection (C)] and subcontractor registering with the
RHQ, ROHQ, 2. Offshore banking units (OBUs) SEC after January 1, 2018
OBU and [Subsection (D)]
But existing RHQs, ROHQs, OBUs or
Petroleum 3. Petroleum Service contractor
Petroleum service contractor and
Contractors and subcontractor [Subsection
subcontractor presently availing of the
Capital and (E)]
preferential tax rates for qualified
subcontractors are subject to a preferential tax of employees shall continue to be entitled
15% final withholding tax on gross to avail of the preferential tax rate for
compensation income. present and future qualified
employees.
 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 subcontractor
employed by shall continuously be entitled to avail of the
RHQ, ROHQ, preferential tax treatment for their present and
OBU 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.”
 NIRC NIRC TRAIN
Provision
Section 31 Means the pertinent items of gross The phrase “and/or personal and
Definition of income specified in this Code, less additional exemptions” is removed in
Taxable Income the deductions and/or personal the definition.
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
 NIRC NIRC TRAIN
Provision
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
month pay P82,000. P90,000.

Section 33 (A)  Fringe benefits given to non-
Tax on fringe rank and file employees are
benefits given to subject to 32% final tax
non-rank and file  The grossed up monetary value
employees of the fringe benefit given to
non-rank and file employees
shall be determined by dividing
the actual monetary value by
68%
 The Fringe Benefits Tax is
increased to 35% effective January
1, 2018
 The grossed up monetary value of
the fringe benefit given to non-rank
and file employees shall be
determined by dividing the actual
monetary value by 65%
 NIRC NIRC TRAIN
Provision
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) of
non-rank and file  The grossed up monetary value Sec. 25 shall be taxed at the
employees of the fringe benefit given to applicable rates imposed
non-rank and file employees  The grossed-up monetary value of
shall be determined by dividing the fringe benefit shall be
the actual monetary value by determined by dividing the actual
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
 NIRC NIRC TRAIN
Provision
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 P2400 individual taxpayer is removed.
payments on per year or P200 per month,
health and/or subject to a gross family income
hospitalization 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) shall
not required to file income tax not be required to file an income tax
return (ITR). return.
 NIRC NIRC TRAIN
Provision
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
 NIRC NIRC TRAIN
Provision
Section 51-A No provision Substituted filing or ITRs is available for
Substituted Filing 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
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 due may elect to pay the tax in two following the close of the calendar
for individuals and equal installments. Payment of year.
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.
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
estimated a declaration of his estimated for the current taxable year is
income for income for the current on or before May 15 of the
individuals taxable year on or before same taxable year.
April 15 of the same taxable
year.
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.
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.
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%
deposit subject to 7.5% final tax. final tax.
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%
NIRC Provision NIRC
Section 52 Every corporation subject to tax,
Filing of corporate except foreign corporations not
income tax return engaged in trade or business in
the Philippines, shall render in
duplicate, a true and accurate
 Quarterly income tax return;
AND
 Final or adjustment return
TRAIN
Additional provision:
The ITR shall consist a maximum of
four (4) pages in paper OR electronic
form.
It shall only contain the following:
information:
1. Corporate profile and information
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.
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
source ten (10) days after the end of the 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.
Briefing on RA 10963: Tax Reform
for Acceleration and Inclusion
(TRAIN) – Value Added Tax
 NIRC Provision NIRC TRAIN
Section 106 (A)(2) Deleted provision:
Zero-rated Sale of
Goods or Properties The following shall no longer be subject to 0%
VAT:

1. Sale of gold to BSP

2. Foreign-currency denominated sales
Section 108 (A) Sale or exchange Sale or exchange of services include “sale of
Definition of Sale or of services include electricity by generation companies,
Exchange of Services “sale of electricity transmission by any entity including the
by generation National Grid Corporations of the Philippines
companies, [NGCP], and distribution companies, including
transmission, and electric Cooperatives”.
distribution
companies”
 NIRC NIRC TRAIN
Provision
Section 109 Sale of real properties not Sale of real properties not primarily held for sale to
VAT-exempt primarily held for sale to customers or held for lease in the ordinary course
Transactions customers or held for lease of trade or business or real property utilized for low-
in the ordinary course of cost and socialized housing, residential lot valued at
trade or business or real P1,500,000.00 and below; house and lot, and other
property utilized for low- residential dwellings valued at P2,500,000.00 and
cost and socialized below.
housing, residential lot
valued at P1,919,500.00 Beginning January 1, 2021:
and below; house and lot,  The VAT exemption shall not anymore apply to:
and other residential - Sale of low-cost housing
dwellings valued at - Sale of residential lot
P3,199,200.00 and below.  The threshold selling price amount for sale of
house and lot, and other residential dwellings
shall be P2,000,000.00
NIRC Provision NIRC TRAIN
Section 109 Every 3 years, the threshold Every 3 years, the threshold amount shall be
VAT-exempt amount shall be adjusted to adjusted to its present value using the
Transactions its present value using the Consumer Price Index, as published by the
Consumer Price Index, as Philippine Statistics Authority (PSA).
published by the National
Statistics Office.
Section 109 (Q) Lease of a residential (Q) Lease of a residential unit with a
VAT-exempt unit with a monthly rental not monthly rental not exceeding P15,000.00.
Transactions exceeding P12,800.00.

(U) Importation of fuel, (U) Additional provision:

goods and supplies by
persons engaged in Xxx Provided, That the fuel, goods, and
international shipping or air supplies shall be used for international
transport operations. shipping or air transport operations.
NIRC Provision NIRC TRAIN

Section 109 Additional exempt transactions:

VAT-exempt
Transactions (W) Sale or lease of goods and services to
senior citizens and person with disabilities.

(X) Transfer of property in merger or

consolidation [under Section 40(C)(2) of
the NIRC/tax-free exchange].

(Y) Association dues, membership fees,

and other assessments and charges
collected by homeowners associations and
condominium corporations.
NIRC Provision NIRC TRAIN

Section 109 (W) Sale or lease of goods (Z) Sale of gold to the BSP.
VAT-exempt or properties or the
Transactions performance of services (AA) Sale of drugs and medicines prescribed
other than the transactions for diabetes, high cholesterol, and
specifically mentioned as hypertension beginning January 1, 2019.
VAT-exempt, the gross
annual sales and/or Now (BB) Sale or lease of goods or
receipts do not exceed the properties or the performance of services
amount of P1,919,500.00 other than the transactions mentioned in the
(as amended). preceding paragraphs, the gross annual
sales and/or receipts do not exceed the
amount of P3,000,000.
 NIRC Provision NIRC TRAIN

Section 110 The input tax on the Amortization of input VAT shall only
(A)(2)(b) purchase of capital allowed until December 31, 2021.
Amortization of goods with a cost
Input VAT from exceeding After such date, taxpayers with
Purchases of P1,000,000.00 shall be unutilized input VAT on capital goods
Capital Goods amortized based on its purchased or imported shall be
useful life or 60 months, allowed to apply the same as
whichever is shorter. scheduled until fully utilized.
 NIRC Provision NIRC TRAIN

Section 114 (A) VAT taxpayers shall file Beginning January 1, 2023, the filing and
Return and Payment quarterly return within 25 payment shall be done within 25 days
of VAT days following the close of following the close of each taxable
each taxable quarter, quarter.
while payment of the VAT
shall be made on a
monthly basis upon filing
of monthly VAT
declaration.
 NIRC Provision NIRC
Section 114 (B) Government or any of its
Withholding of VAT political subdivisions,
instrumentalities or agencies,
including government-owned
or -controlled corporations
(GOCCs) shall, before making
payment on account of each
purchase of goods and
services which are subject to
the value-added tax shall
deduct and withhold a final
value-added tax at the rate of
five percent (5%) of the gross
payment thereof.
TRAIN
Additional provision:
Beginning January 1, 2021, the VAT
withholding system shall shift from final
to a creditable system.
Payments for purchases of goods and
services arising from projects funded by
Official Development Assistance (ODA)
shall not be subject to the final
withholding tax system.
 NIRC NIRC TRAIN
Provision
Section 116 Cooperatives are exempt from Additional exemption:
3% gross receipts the 3% gross receipts tax
tax of persons Beginning January 1, 2019, self-
exempt from the employed and professionals with total
VAT annual gross sales and/or gross
receipts not exceeding P500,000 shall
be exempt from the 3% gross receipts

(The above provision was vetoed by

President Duterte because the
proposed exemption will result in
unnecessary erosion of revenues
and would lead to abuse and
leakages.)
Briefing on RA 10963: Tax Reform
for Acceleration and Inclusion
(TRAIN) – Transfer Taxes
Estate Tax
NIRC NIRC TRAIN
Provision
Section 84 The Estate Tax rate is based on graduated schedule. The Estate Tax rate is fixed at
Rates of NET ESTATE TAX 6% based on the value of the
Estate Tax net estate.
Not over ₱200,000 Exempt
Over ₱200,000 but not 5% of the excess over
over ₱500,000 ₱200,000
Over ₱500,000 but not ₱15,000 + 8% of the
over ₱2M excess over ₱500,000
Over ₱2M but not over ₱135,000 + 11% of the
₱5M excess over ₱2M
Over ₱5M but not over ₱465,000 + 15% of the
P10M excess over ₱5M
Over ₱10M ₱1,215,000 + 20% of the
excess over ₱10M
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (A) The value of the net estate of a The following are the allowable
Allowable resident or citizen is determined by deductions from the gross estate of a
deductions from the deducting the following from the resident or citizen:
gross estate of a gross estate: 1. Standard deduction of
citizen/resident 1. Standard deduction of ₱5,000,000;
₱1,000,000; 2. Claims against the estate;
2. Expenses, losses, 3. Claims against insolvent persons;
indebtedness, and taxes 4. Unpaid mortgage or indebtedness
a. Funeral expenses on property;
b. Judicial expenses
c. Claims against insolvent
persons
d. Unpaid mortgages
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (A) 3. Property previously taxed; 5. Property previously taxed;
Allowable 4. Transfers for public use; 6. Transfers for public use;
deductions from the 5. Family home in the amount of 7. Family home, in the increased
gross estate of a ₱1,000,000; amount of ₱10,000,000;
citizen/resident 6. Medical expenses, not 8. Amounts received by heirs RA No.
exceeding ₱500,000; 4917 (Retirement benefits of
7. Amount received by heirs private firm employees)
under RA No. 4917
(Retirement benefits of private
firm employees)
Estate Tax
NIRC Provision NIRC
Section 86 (B) The value of the net estate of a
Allowable non-resident is determined by
deductions from the deducting the following from the
gross estate of a gross estate:
non-resident alien 1. Expenses, losses,
indebtedness, and taxes in
proportion to the value of
entire gross estate situated in
the Philippines;
2. Property previously taxed;
3. Transfers for public use
TRAIN
For Non-residents:
1. Standard deduction in the amount
of ₱500,000;
2. Value of
 Claims against the estate
 Claims against the insolvent
person
 Unpaid mortgages
In proportion to the value of the
entire gross estate situated in the
Philippines
3. Property previously taxed;
4. Transfers for public use
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (D) No deduction shall be allowed in Miscellaneous provision is deleted.
Miscellaneous the case of a non-resident not a
provision for non- citizen of the Philippines, unless
residents the executor, administrator, or
anyone of the heirs, as the case
may be, includes in the return
required to be filed under the
Section 90 the value at the time of
his death of that part of the gross
estate of the non-resident not
situated in the Philippines.
Estate Tax
NIRC Provision NIRC TRAIN
Section 89 Notice of decedent’s death shall be Requirement for filing of notice of
Notice of Death filed by the executor, administrator, death is removed.
or any of the legal heirs within two
months after death or after
qualifying as such executor or
administrator:
 In all cases of transfers subject
to tax
 In cases where though exempt
from tax, the gross value of the
estate exceeds ₱20,000.
Estate Tax
NIRC Provision NIRC TRAIN
Section 90 Estate tax returns showing a gross The threshold amount for the
Attachment to value exceeding ₱2,000,000 shall requirement of attaching a statement
Estate Tax Return be supported with a statement duly duly certified by a CPA is increased
– CPA certification certified by a CPA to ₱5,000,000 (from ₱2,000,000).

Section 90 Estate tax returns shall be filed The filing of estate tax returns shall
Time of filing of within six (6) months from the be within one (1) year from the
estate tax return decedent’s death. decedent’s death.
Estate Tax
NIRC Provision NIRC TRAIN
Section 91 (C) No provision In case the available cash of the
Payment by estate is insufficient to pay the total
installment of estate estate tax due, payment by
tax [new] installment shall be allowed within
two (2) years from the statutory
date of payments, without civil
penalty and interest.
Estate Tax
NIRC Provision NIRC
Section 97 If a bank has knowledge of the
Payment of tax death of a person, who maintained
antecedent to the a bank deposit account alone, or
transfer of shares, jointly with another, it shall not
bonds, or rights allow any withdrawal from the said
deposit account unless the
Commissioner has certified that
the taxes imposed thereon have
been paid.
TRAIN
If a bank has knowledge of the death
of a person, who maintained a bank
deposit account alone, or jointly with
another, it shall allow any withdrawal
from the said deposit account,
subject to a final withholding tax
of (6%).
Donor’s Tax
NIRC NIRC TRAIN
Provision
Section 99 The donor’s tax for each calendar year shall be The donor’s tax for is fixed at 6%
Rates of tax computed on the basis of the total net gifts made based on annual total gifts exceeding
during the calendar year in accordance with the ₱250,000 (exempt gift), regardless of
graduated tax table. whether the donee is a stranger or not.

NET GIFT TAX NET GIFT TAX

Not over ₱100,000 Exempt Over ₱1M but ₱44,000 + 8% of the
Over ₱100,000 but 2% of the excess not over ₱3M excess over ₱1M
not over ₱200,000 over ₱100,000 Over ₱3M but ₱204,000 + 10% of
Over ₱200,000 but ₱2,000 + 4% of not over ₱5M the excess over ₱3M
not over ₱500,000 the excess overOver ₱5M but ₱404,000 + 12% of
₱200,000 not over the excess over ₱5M
Over ₱500,000but ₱14,000 + 6% of ₱10M
not over ₱1M the excess over Over ₱10M ₱1,004,000 + 15% of
₱500,000 the excess over
₱10M
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 99 The donor’s tax shall be 30% of The donor’s tax is fixed at 6% based
Rates of tax the net gifts when the donee or on annual total gifts exceeding
beneficiary is a stranger. ₱250,000 (exempt gift) regardless of
whether the donee is a stranger or
not.
Donor’s Tax
NIRC Provision NIRC
Section 100 The amount by which the fair
Transfer for less market value of the property
than adequate transferred exceeded the value of
consideration the consideration received for such
transfer, shall for purpose of
donor’s tax, be deemed a gift and
included in computing the amount
of gifts made during the year.
TRAIN
Additional proviso:
Even if the sale, exchange or other
transfer of property is for an
insufficient consideration, the same
will still be considered made for
adequate and full consideration
provided that such transfer is made in
the ordinary course of business, i.e.,:
 A bona fide transaction;
 At arm’s length; and
 Free from donative intent.
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 101 Dowries or gifts made on account The exemption of dowries (gifts made
Exemption of of marriage by parents to each of on account of marriage) is removed.
certain gifts their legitimate, recognized ,
natural, or adopted children to the
extent of the first ₱10,000 shall be
exempt from donor’s tax.
 Briefing on RA 10963:
Tax Reform for Acceleration
and Inclusion (TRAIN) –
Documentary Stamp Tax
 NIRC Provision NIRC TRAIN
Section 174 ₱ 1.00/₱ 200.00 ₱2.00/₱ 200.00
Original Issue of
Shares of Stock

Section 175 ₱ 0.75/₱ 200.00 ₱ 1.50/₱ 200.00

Sales, Agreements to
Sell, Memoranda of
Sales, Deliveries or
Transfer of Shares or
Certificates of Stock
with par value
 NIRC Provision NIRC TRAIN
Section 175 25% of DST paid on 50% of DST paid on
Sales, Agreements to original issue original issue
Sell, Memoranda of
Sales, Deliveries or
Transfer of Shares or
Certificates of Stock
without par value
Section 177 ₱ 0.50/₱ 200.00 ₱ 1.00/₱ 200.00
Certificates of Profits or
Interest in Property or
Accumulations
 NIRC Provision NIRC TRAIN
Section 178 ₱ 1.50/piece of check ₱ 3.00/piece of check
Bank Checks, Drafts,
Certificates of Deposit
not Bearing Interest,
and Other Instruments

Section 179 ₱ 1.00/₱ 200.00 of FV ₱ 1.50/₱ 200.00 of FV

All Debt Instruments or a fraction of 365 or a fraction of 365
days for instruments days for instruments
with term of less than 1 with term of less than 1
year year
 NIRC Provision NIRC TRAIN
Section 180 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00
All Bills of Exchange
(between points within
the Philippines) or
Drafts
Section 181 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00
Acceptance of Bills of
Exchange or Order
Drawn in a Foreign
Country but Payable in
the Philippines
 NIRC Provision NIRC TRAIN
Section 182 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00
Foreign Bills of
Exchange and Letters
of Credit
Section 183 Not Over ₱ 100K = Not Over ₱ 100K =
Life Insurance Policies Exempt Exempt

Over ₱ 100K but not Over ₱ 100K but not

over ₱ 300K = ₱ 10.00 over ₱ 300K = ₱ 20.00
 NIRC Provision NIRC TRAIN
Section 183 Over ₱ 300K but not Over ₱ 300K but not
Life Insurance Policies over ₱ 500K – ₱ 25.00 over ₱ 500K – ₱ 50.00

Over ₱ 500K but not Over ₱ 500K but not

over ₱ 750K – ₱ 50.00 over ₱ 750K – ₱ 100.00

Over ₱ 750K but not Over ₱ 750K but not

over ₱ 1M – ₱ 75.00 over ₱ 1M – ₱ 150.00
 NIRC Provision NIRC TRAIN
Section 183 Over ₱ 1M - ₱ 100.00 Over ₱ 1M - ₱ 200.00
Life Insurance Policies

Section 186 ₱ 0.50/₱200.00 ₱ 1.00/₱200.00

Policies of Annuities

Section 186 ₱ 0.20/₱200.00 ₱ 0.40/₱200.00

Pre-Need Plans

Section 188 ₱ 15.00/Certificate ₱ 30.00/Certificate

Certificates Issued
 NIRC Provision NIRC TRAIN
Section 189 Above ₱ 200.00 = Above ₱ 200.00 =
Warehouse Receipts ₱15.00 ₱30.00

Section 190 ₱ 1.00 and below = ₱ 1.00 and below =

Jai-Alai, Horse Race, ₱ 0.10 ₱ 0.20
Tickets, Lotto or Other
Authorized Number
Games Above ₱ 1.00 = Above ₱ 1.00 =
₱ 0.10/₱ 1.00 ₱ 0.20/₱ 1.00
 NIRC Provision NIRC TRAIN
Section 191 Over ₱ 100.00 but not Over ₱ 100.00 but not
Bills of Lading or over ₱ 1K = ₱1.00 over ₱ 1K = ₱2.00
Receipts

Over ₱ 1K = ₱10.00 Over ₱ 1K = ₱ 20.00

Section 192 ₱ 15.00/proxy vote ₱ 30.00/proxy vote

Proxies for Voting at
any Election
 NIRC Provision NIRC TRAIN
Section 193 ₱ 5.00/issued power of ₱ 10.00/issued power
Powers of Attorney attorney of attorney

Section 194 First ₱ 2K = ₱ 3.00 First ₱ 2K = ₱ 6.00

Leases and Other
Hiring Agreements
Over ₱ 2K = Over ₱ 2K =
₱ 1.00/₱ 1K ₱ 2.00/₱ 1K
 NIRC Provision NIRC TRAIN
Section 195 First ₱ 5K = ₱ 20.00 First ₱ 5K = ₱ 40.00
Mortgages, Pledges
and Deeds of Trust
Over ₱ 5K = Over ₱ 5K =
₱ 10.00/₱ 5K ₱ 20.00/₱ 5K
Section 197 First 6 months = First 6 months =
Charter Parties and ₱ 500.00 + ₱ 50.00 for ₱ 1K + ₱ 100.00 for
Similar Instruments if each month or fractions each month or fractions
gross tonnage of ship, of a month in excess of of a month in excess of
vessel or steamer is 6 months 6 months
1,000 tons and below
 NIRC Provision NIRC TRAIN
Section 197 First 6 months = First 6 months =
Charter Parties and ₱ 1K + ₱ 100.00 for ₱ 2K + ₱ 200.00 for
Similar Instruments if each month or each month or
gross tonnage of ship, fractions of a month in fractions of a month in
vessel or steamer is 1,001 excess of 6 months excess of 6 months
tons to 10,000 tons
Section 197 First 6 months = First 6 months =
Charter Parties and ₱ 1.5K + ₱ 150.00 for ₱ 3K + ₱ 300.00 for
Similar Instruments if each month or each month or
gross tonnage of ship, fractions of a month in fractions of a month in
vessel or steamer is more excess of 6 months excess of 6 months
than 10,000 tons
 NIRC Provision NIRC TRAIN
Section 196 No DST On first ₱ 1K = ₱15.00
Deeds of Sale,
Conveyances and In excess of ₱ 1K or
Donations of Real fractional part thereof =
Property ₱ 15.00/₱ 1K

Transfers exempt from

donor’s tax under
Section 101 (a) and (b)
of the Tax Code shall
be exempt from DST
 Briefing on RA 10963: Tax
Reform for Acceleration and
Inclusion (TRAIN) – Excise Taxes
 Tobacco
RA 10351/ TRAIN
RR 17-2012
CIGARETTES, 2017 January 1, July 1, 2018 January 1, January 1, January
per pack 2018 until until 2020 until 2022 until 1, 2024
June 30, December December December Onwards
2018 31, 2019 31, 2021 31, 2023
Cigarettes P 30.00 P 32.50 P 35.00 P 37.50 P40.00 Effectivity
1/1/2024,
packed by the
hand specific
tax rate
Cigarettes P 30.00 P 32.50 P 35.00 P 37.50 P40.00
shall be
packed by increased
machine by 4%
every year
thereafter
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January January
2012 1, 2018 1, 2019 1, 2020
(a) Lubricating oils and greases, including but not P 4.50
limited to basestock for lube oils and greases,
high vacuum distillates, aromatic extracts and
other similar preparations, and additives for
lubricating oils and greases, whether such
additives are petroleum based or not, per liter
and kilogram respectively, of volume capacity or P 8.00 P 9.00 P 10.00
weight.
(a.1) Locally produced or imported oils previously P 4.50
taxed but are subsequently reprocessed,
refined or recycled, per liter and kilogram of
volume capacity or weight.
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January January
2012 1, 2018 1, 2019 1, 2020
(b) Processed gas, per liter of volume P 0.05
capacity.
(c) Waxes and petrolatum per kilogram. P 3.50
P 0.05 P 8.00 P 9.00 P 10.00
(d) Denatured alcohol to be used for motive
power, per liter of volume capacity.
(e) Asphalts, per kilogram. P 0.56
(f) Naphtha, regular gasoline, and other P 4.35
similar products of distillation, per liter of P 7.00 P 9.00 P 10.00
volume capacity
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January January
2012 1, 2018 1, 2019 1, 2020
-
Pyrolysis gasoline
P 7.00 P 9.00 P 10.00
(g) Unleaded premium gasoline, per liter of P 4.35
volume capacity
(h) Kerosene, per liter of volume capacity P 0.00 P 3.00 P 4.00 P 5.00
(i) Aviation turbo jet fuel, per liter of volume P 3.67
capacity
Aviation gas - P 4.00 P 4.00 P 4.00
(j) Kerosene, when used as aviation fuel, per P 3.67
liter of volume capacity
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January January
2012 1, 2018 1, 2019 1, 2020
(k) Diesel fuel oil, and on similar fuel oils P 0.00
having more or less the same generating
power, per liter of volume capacity
(l) Liquefied petroleum gas used for motive P 0.00
power, per kilogram P 2.50 P 4.50 P 6.00
(m) Bunker fuel oil, and on similar oils having P 0.00
more or less the same generating power,
per liter of volume capacity
(n) Petroleum coke, per metric ton -
(o) Liquefied petroleum gas, per kilogram P 0.00 P 1.00 P 2.00 P 3.00
Petroleum
PRODUCTS RA TRAIN
10351/
RR 17- January January January
2012 1, 2018 1, 2019 1, 2020
(p) Naphtha and pyrolysis gasoline, when used as a raw P 0.00
material in the production of petrochemical products
or in the refining of petroleum products, or as
replacement fuel for natural-gas-fired-combined cycle
power plant, in lieu of locally-extracted natural gas
during the non-availability thereof, per liter of volume
capacity P 0.00 P 0.00 P 0.00
(q) Liquefied petroleum gas, when used as raw material P 0.00
in the production of petrochemical products, per
kilogram
(r) Petroleum coke, when used as feedstock to any -
power generating facility, per metric ton
Minerals

PRODUCT TYPE RA TRAIN

10351/
RR 17- January January January
2012 1, 2018 1, 2019 1, 2020

On coal and coke, per metric ton P 10.00 P 50.00 P 100.00 P 150.00
Minerals

PRODUCT TYPE RA 10351/ TRAIN

RR 17-
2012

On all non-metallic mineral and quarry resources

1. Locally extracted or produced, based on actual
2% 4%
market value
2. In the case of importation based on value used
by Bureau of Customs in determining tariff and 2% 4%
customs duties, net of excise tax and VAT
3. Locally-extracted natural gas and liquefied natural
P0.00 Exempt
gas
Minerals

PRODUCT TYPE RA 10351/ TRAIN

RR 17-
2012

On all non-metallic mineral and quarry resources

1. Locally extracted or produced, based on actual
market value
a) Copper and other metallic minerals 2% 4%
b) Gold and chromite 2% 4%
Minerals
PRODUCT TYPE RA 10351/ TRAIN
RR 17-
2012

On all non-metallic mineral and quarry resources

2. In the case of importation based on value used
by Bureau of Customs in determining tariff and
customs duties, net of excise tax and VAT
a) Copper and other metallic minerals 2% 4%
b) Gold and chromite 2% 4%
On indigenous petroleum, based on the fair
international market price thereof, on the first
3% 6%
taxable sale, barter, exchange or similar
transaction.
Automobiles
Based on the Net Manufacturer’s Price/Importer’s Selling Price
RR 25-2003 TRAIN
Up to P600 Thousand 2% P0 up to P600,000 4%
P 12,000 + 20%
Over P600,000 up to Over P600,000
P 1,100,000
in excess of 10%
P 600,000 up to P1,000,000
P112,000+ 40%
Over P 1,100,000 Over P1,000,000
Up to P2,100,000
in excess of 20%
P1,100,000 up to P4,000,000
P512,000 + 60%
Over P2,100,000 in excess of Over P4,000,000 50%
P2,100,000
 Briefing on Republic Act (RA)
10963: Tax Reform for
Acceleration and Inclusion
(TRAIN) – Sweetened
Beverages [Section 150B of the
Tax Code]
93

Sweetened Beverages (SBs) - refer

to non-alcoholic beverages of any constitution
Sweetened (liquid, powder, or concentrates), that are pre-
Beverages packaged and sealed in accordance with the
Food and Drug Administration (FDA) standards,
that contain High Fructose Corn Syrup (HFCS)
and other caloric and/or non-caloric sweeteners
added by the manufacturers.
94

Types of Sweeteners
 Caloric Sweetener - refers to a substance that is
sweet and includes sucrose, fructose, and glucose
Sweetened
that produces a certain sweetness.
Beverages
 High Fructose Corn Syrup – refers to a sweet
saccharide mixture containing fructose and glucose
which is derived from corn and added to provide
sweetness to beverages, and which includes other
similar fructose syrup preparations.
95
Types of Sweeteners
 Non-Caloric Sweetener - refers to a substance
that is artificially or chemically processed that
Sweetened produces a certain sweetness. These are
substances which can be directly added to
Beverages
beverages, such as aspartame, sucralose,
saccharin, acesulfame potassium, neotame,
cyclamates and other non-nutritive sweeteners
approved by the codex alimentarius and adopted
by the FDA.
96
Subject to Excise Tax
 Sweetened juice drinks;
 Sweetened tea;
 All carbonated beverages;
Sweetened
 Flavored water;
Beverages
Products  Energy and sports drinks;
 Other powdered drinks not classified as milk,
juice, tea, and coffee;
 Cereal and grain beverages; and
 Other non-alcoholic beverages that contain
added sugar
97
NOT Subject to Excise Tax
 All milk products
 One Hundred Percent (100%) natural fruit juices
w/o added sugar/ caloric sweetener
Sweetened
 One Hundred Percent (100%) natural vegetable
Beverages juices w/o added sugar/ caloric sweetener
Products
 Meal replacement and medically indicated
beverages for oral nutritional therapy
 Ground, instant soluble and pre-packaged
powdered coffee products.
98

 Manufacturer
Persons  Owner or Possessor of untaxed
Liable
products
 Importer
99
Tax Rate
PRODUCT (per liter)
Using purely caloric sweeteners, and P6.00
Tax Rates purely non-caloric sweeteners, or a
and Bases mix of caloric and non-caloric
sweeteners
Using purely high fructose corn syrup P12.00
or in combination with any caloric or
non-caloric sweetener
Using purely coconut sap sugar and Exempt
purely steviol glycosides
100

Computation Number of Liters

of Excise EXCISE TAX DUE = X
Tax (Specific Tax) Excise Tax Rate
 Briefing on Republic Act (RA)
10963: Tax Reform for
Acceleration and Inclusion
(TRAIN) – Invasive Cosmetic
Procedure (Section 150A of the
Tax Code)
102

1. Plastic Surgery - refers to a surgical

Definition specialty dedicated to reconstruction of
of Terms facial and body defects due to birth
disorders, trauma, burns, and disease.
It intends to correct dysfunctional areas
of the body and is reconstructive in
nature.
103

2. Cosmetic Surgery - refers to a type of

plastic surgery that aims to improve a person’s
appearance, through invasive cosmetic
Definition procedures, surgeries, and body
of Terms enhancements directed solely on improving,
altering, or enhancing the person’s
appearance and do not necessarily promote
the proper functions of the body or prevent or
treat illness or disease.
104

3. Reconstructive Surgery shall refer

to another type of plastic surgery which
aims to improve function and give a
Definition normal appearance to a part of a
of Terms person’s body that has been damaged,
ameliorate a deformity arising from, or
directly related to, a congenital or
developmental defect or abnormality, a
personal injury resulting from accident
or trauma, or disfiguring disease, tumor,
virus or infection.
105

4. Invasive Cosmetic Procedure - refers to

a surgery that is carried out by entering
Definition the body through the skin or through a
body cavity or anatomical opening, but
of Terms
with the smallest damage possible to
these structures. Invasive Cosmetic
Procedures shall include, but not be
limited to the following:
106
Invasive Cosmetics Procedures

1. Liposuction

Definition 2. Mammoplasty
of Terms 3. Breastlift
4. Buccal Fat Reduction
5. Buttocks Augmentation
107
Invasive Cosmetics Procedures
6. Chin Augmentation
7. Facelift/Necklift
Definition
8. Thread Lift
of Terms
9. Hair Restoration/
Transplantation
10. Eyelid Surgery
108

Invasive Cosmetics Procedures

11. Vaginal Plastic
Surgery
Definition 12. Abdominoplasty or
of Terms Tummy Tuck
13. Auto Grafting
14. Rhinoplasty/ Alar
Trimming
15. Otoplasty
109

5. Non-Invasive Cosmetic Procedure -

refers to a conservative treatment that
does not require incision into the body or
Definition the removal of tissue, or when no break in
of Terms the skin is created and there is no contact
with mucosa, or skin break, or internal
body cavity beyond a natural or artificial
body orifice. Non- Invasive Cosmetic
Procedures shall include, but not be
limited to the following:
110
Non-invasive Cosmetics Procedures
1. Acupuncture Rejuvenation
Therapy
Definition 2. Air Dissector
of Terms 3. Botulinum Toxin
Injection/Treatment
4. Collagen Induction Therapy
5. Dermal Fillers (Crosslinked and
Non-Crosslinked)
6. Embedded Protein Threads
111
Non-invasive Cosmetics Procedures
7. Non-surgical facelifting &
skin tightening using
radio frequency,
Definition ultrasound, infrared
of Terms 8. Fractional CO 2
9. Lasers and Light
Treatments
10.Body Treatments and
Contouring Procedures
112
Non-invasive Cosmetics Procedures

11. Cleanings and

Definition Facials
of Terms 12. Peelings (Face and
Body)
13. Injectables and
Weight
Management
Treatment
113
Rate and Base of Excise Tax
Rate = five percent (5%)
Coverage,
Tax Base = Gross Receipts, net of excise
Nature, Basis
tax and VAT
and Rate of
Excise Tax Coverage = invasive cosmetic procedures,
surgeries and body enhancements directed
solely towards improving, altering, or
enhancing the patient’s appearance and do not
meaningfully promote the proper function of
the body or prevent or treat illness or disease.
114

1. Non-invasive cosmetic procedures and

surgeries necessary to ameliorate a deformity
arising from or directly related to,
 congenital or developmental defect or
Exclusion abnormality,
 personal injury resulting from an accident
or trauma,
 disfiguring disease, tumor, virus or infection
2. Cases or treatments covered by the National
Health Insurance Program
115
Rate and Base of Excise Tax
 “Gross Receipts” means the total amount of
money or its equivalent representing the contract
Coverage, price including deposits applied as payments for
Nature, Basis services rendered and advance payments actually
and Rate of or constructively received for services performed
Excise Tax or to be performed for another person

 “Constructive Receipt” occurs when the money

consideration or its equivalent is placed at the
control of the person who rendered the service
without restrictions by the payor/customer. Also
covers exchange deal arrangement.
116
Persons Liable to File a Return
Any person, whether individual or juridical
Filing of entity, performing invasive medical/cosmetic
Returns and procedures, surgeries, body enhancements
Payment of directed solely on improving, altering, or
Excise Tax enhancing the patient’s appearance and do not
on Invasive meaningfully promote the proper functions of
Procedures the body or prevent or treat illness.
117
Nature and Characteristic of
Excise Tax
Filing of An excise tax is considered an indirect tax,
Returns and meaning that the service provider who is
Payment of the statutory bearer of the said excise tax
Excise Tax is expected to shift the tax by billing the
on Invasive same to the customer-client.
Procedures
118
Nature and Characteristic of Excise Tax
Excise taxes are typically imposed in addition to
another indirect tax such as VAT. The service
Filing of provider is hereby authorized to act as
Returns and withholding agent for the five percent (5%) excise
Payment of tax billed and is ultimately liable to remit the
Excise Tax excise tax collected from the client/customer.
The five percent (5%) excise tax to be withheld
on Invasive
and remitted is based on gross receipts net of
Procedures VAT and is considered final and no adjustment
shall be allowed to be made by the statutory
bearer of the said excise tax.
119

Manner of Remittance of Excise Tax

Under existing rules on goods subject to

Filing of
excise taxes, the excise tax return is
Returns and
required to be filed and the excise tax
Payment of
paid by the manufacturer or producer of
Excise Tax
the goods before removal from the place
on Invasive
of production.
Procedures
120

Manner of Remittance of Excise Tax

However, Section 150-A (Non-Essential Services)
Filing of of the Tax Code involves performance of
Returns and medical/cosmetic services and not goods, hence,
Payment of an innovative remittance scheme is hereby
Excise Tax employed under which the seller of
on Invasive services/service provider collects the five percent
Procedures (5%) excise tax based on gross receipts from its
client/customer and remits the same to the
Bureau.
121

Manner of Remittance of Excise Tax

This practice outlines the circumstances when the
Filing of withholding tax obligation in respect of payment is
Returns and reversed and placed on the recipient of the
Payment of payment instead of the payor, as an exception to
the existing tax rules on withholding on income
Excise Tax
payments for good and services. This concept of
on Invasive withholding tax reverse charge obligation on
Procedures payments is herein prescribed for administrative
expediency.
122
Manner of Remittance of Excise Tax
In cases where no service subject to excise tax is
Filing of performed and there are no payments received, the
Monthly Remittance Return of Final Withholding of
Returns and Excise Tax shall still be filed with Excise Large
Payment of Taxpayers Field Operations Division (ELTFOD) for
Excise Tax Large Taxpayers/Revenue District Office for
on Invasive taxpayers in the National Capital Region
Procedures (NCR)/Excise Tax Area (EXTA) in Regional Offices for
taxpayers outside NCR.
Taxpayers filing via EFPS shall comply with the
provisions of the EFPS Regulations.
 123

Invoicing Requirements

Every person subject to excise tax herein

imposed shall issue:
Administrative
Requirements 1. An Official Receipt for services
performed whether invasive/non-
invasive.
2. The following information shall be
indicated in the Official Receipt:
 124

Invoicing Requirements
The total amount which the patient/client pays or is
obligated to pay to the service provider including the
excise tax and value added tax: Provided, that:
Administrative  The amount of excise tax shall be shown as
Requirements a separate item in the OR;
 Discounts given shall be indicated in the OR,
otherwise the same shall not be allowed as
deduction from gross receipts;
 If the procedure performed is non-invasive
and considered exempt from excise tax, the
term Exempt from Excise Tax shall be shown
on the OR;
125

Invoicing Requirements
 If the services performed involved both invasive
(excisable) and non-invasive (exempt from excise
tax) procedures, the receipt shall clearly indicate
Administrative the breakdown of the amount received between its
Requirements taxable and exempt components and the
calculation of excise tax on each portion of the
procedure performed shall be shown on the
receipt:
 Provided, that the service provider may issue
separate ORs for the excisable and exempt
components of the services rendered.
126
Illustration
A. Where the invasive cosmetic procedure is
performed in a clinic outside a hospital.
To improve her body shape, Starlet S engaged
Administrative the services of Dok Salamat, a well-known
Requirements
cosmetic surgeon in the country, to perform a
liposuction procedure on her thighs, and Dok
Salamat charged Starlet S the amount of
P50,000.00 inclusive of 12% VAT for the
services rendered.
Based on the foregoing, the 5% excise tax shall be computed, as follows:

Contract Price (inclusive of 12% VAT) (50,000/112%) P 50,000.00

Price (net of 12% VAT) (Excise Tax Base) P 44,642.85
Add: 5% excise tax (44,642.85 x 5%) 2,232.15*
12% VAT (44,642.85 x 12%) 5,357.15
Total Amount to be Collected from Customer P 52,232.15

*The excise tax is to be billed/withheld and remitted by the Melo Medical

Group, Inc. and should be shown as a separate item in the Official
Receipt
(as shown in Annex A)
A”
 129

Accounting Entries

CASH 52,232.15
Administrative
Requirements FWT-EXCISE TAX 2,232.15
OUTPUT TAX 5,357.15
SERVICE INCOME 44, 642.85
130
Illustration
B. Where the procedure is performed in a clinic
operating inside a hospital.

Same as in Illustration A, except this time

Administrative
Starlet S had procedure done by Doctor P, an
Requirements
individual practitioner operating a clinic inside a
hospital. The hospital bill for the procedure
amounts to P70,000.00 inclusive of P20,000.00
Doctor’s Fee (inclusive of 12% VAT).
Billing by Hospital (VAT exempt) Note (1) P 50,000.00
Doctor’s Fee (20,000/112%) Note (2) 17,857.14
Total Excise Tax Base P 67,857.14
Add: 5% excise tax (67,857.14 x 5%) 3,392.86
12% VAT (20,000.00 x 12%) 2,142.86
Total Amount to be Collected from Customer P 73,392.86

Note (1): Medical, dental, hospital and veterinary services are exempt from value
added tax under Section 109(G) of the NIRC, as amended, except those rendered
by professionals.

Note (2): Doctor P is presumed to be self-employed and his annual receipts

exceeded the threshold for VAT of P3 Million.
 132
Accounting Entry (Doctor P’s book):

Accounts Receivable - Hospital P 18,571.43

Prepaid Tax 1,428.57
Administrative Service Fee P 17,857.14
Requirements Output VAT 2,142.86

Cash 18,571.43
Accounts Receivable – Hospital
18,571.43
 133
Accounting Entry (Hospital’s books):

Cash P 73,392.86
Professional Fees Expense 17,857.14
Administrative Input VAT 2,142.86
Requirements FWT-Excise Payable P 3,392.86
Output VAT 2,142.86
Payable to Doctor 18,571.43
Expanded Withholding Tax Payable
- Prof Fees 1,428.57
Service Income - VAT 17,857.14
Service Income – Non-VAT 50,000.00
134

Accounting Requirements
Not withstanding the provisions of Section
233, all persons subject to excise tax under
Section 150-A of the Tax Code shall, in
Administrative
Requirements addition to the regular accounting records
required, maintain a subsidiary ledger on
which every service rendered/performed on
any given day is recorded. The subsidiary
ledger shall contain the following information:
135
Accounting Requirements
1. Name of Patient
2. Taxpayers Identification Number
3. Invasive Cosmetic Procedures Performed (indicate if
excisable or not; if not excisable, keep records as proof that
Administrative the procedures are not taxable)
Requirements 4. Non-invasive Cosmetic Procedures Performed
5. Official Receipts Number
6. Gross Receipts Number (net of VAT and 5% excise tax)
7. 5% Excise Tax to be Withheld and Remitted
8. 12% VAT due
9. Total Amount to be Collected from Customer (sum of 6, 7, 8)
10. Remarks (description of cosmetic procedure performed)
136 Violations of these Regulations shall be subject to the
corresponding penalties under Title X of the NIRC, as amended.
1. Any violation of the provision of this Regulation shall be
subject to the corresponding penalties under Sec. 250
and 255 of the NIRC as amended and RMO 7-2015.
2. Any person who willfully attempts in any manner to
Penalties evade or defeat any tax imposed under this regulation or
the payment thereof shall, in addition to other penalties
provided by law, upon conviction thereof, be punished
with a fine of not less than P500,000 but not more than
P10 Million, and imprisonment of not less than 6 years
but not more than 10 years. The conviction or acquittal
obtained under this section shall not be a bar to the filing
of a civil suit for the collection of taxes.
137

2. Any person willfully aids or abets in the

commission of any such act or omission shall
be criminally liable in the same manner as
the principal; and
Penalties
3. If the offender is not a citizen of the
Philippines, he shall be deported immediately
after serving the sentence, without further
proceedings for deportation.
138
Except as the Commissioner otherwise permits, the
return shall be filed with and the final excise tax
withheld remitted to any authorized agent bank
Filing of (AAB) under the jurisdiction of the Revenue District
Returns and Office/BIR Office where the taxpayer (Head Office of
Payment of the business establishment) is registered or required
Excise Tax on to register.
Invasive
Procedures For taxpayers located outside the National Capital
Region (NCR) and in cases where there are no duly
accredited agent banks within the municipality or city,
Excise Tax due shall be filed and payments made to the
Collection Agent or duly authorized Treasurer of the
Municipality/City where such taxpayer (head office of the
business establishment) is required to be registered.
139

Exceptions

Filing of The Secretary of Finance, upon the

Returns and recommendation of the Commissioner, may, by
rules and regulations, prescribe the manner and
Payment of
time for filing of the return and payment of excise
Excise Tax tax other than as prescribed under Section 130,
on Invasive Chapter I, Title VI of the Tax Code, as amended.
Procedures
140

Time and Place for Filing of Return and

Payment of the Tax
Filing of BIR TIME OF FILING PLACE
FORM AND
Returns and REMITTANCE
Payment of BIR Every 10th of the authorized agent bank (AAB)
Excise Tax FORM following month under the jurisdiction of the
on Invasive 1620- Revenue District Office/BIR
XC Office where the taxpayer
Procedures
(Head Office of the business
establishment) is registered or
required to register
141
Time and Place for Filing of Return and
Payment of the Tax
Filing of Submit Summary of Invasive Cosmetic Procedures
Returns and Performed (please refer to prescribed format on Annex
Payment of A hereof) as an attachment to the said form for
submission via email at xcp.attachment@bir.gov.ph.
Excise Tax
on Invasive NAME OF TAXPAYER
"Annex B"

Procedures Monthly Summary of Invasive Cosmetic Procedures Performed

For the Month _______________

COSMETIC
OFFICIAL RECEIPT PROCEDURES AMOUNT COLLECTED

Gross Receipts
(Net of VAT 5% Excise Tax
No. Date PERFORMED /Excise) Withheld 12% VAT Total
 142
Application for Permit to Operate
Any person subject to excise tax under
Section 150-A of the Tax Code, as amended,
Administrative shall file an application for a Permit to
Requirements Operate with the Excise LT Regulatory
Division (ELTRD) BIR National Office
(whether Large or Non-Large Taxpayers) not
later than fifteen (15) days from the effectivity
of this Regulations.
 143
Application for Permit to Operate
The application shall be accompanied by the following:
1. Request Letter
Attention: Chief, Excise LT Regulatory Division
Administrative
Requirements 2. Certificate of Securities and Exchange
Commission, together with Articles of
Incorporation and By-Laws (for corporation and
partnership) and Certificate of Registration with
the Office of the Domestic Trade and Industry (for
individual)
 144
Application for Permit to Operate
3. Mayor’s Permit
4. BIR Certificate of Registration (with latest
registration fee BIR Form 0605)
Administrative
5. Latest Copy of Income Tax Return
Requirements
6. Location Map of Clinics/Hospitals where the
medical professionals/practitioners perform
the services
7. Price list (whether inclusive of VAT or the 5%
excise tax) of Invasive/Non-invasive
Cosmetic Procedures
 145
Application for Registration
Every person subject to excise tax under Section
150-A of the Tax Code, as amended, shall register
as Excise Taxpayer engaged in the performance of
Administrative Invasive Cosmetic Procedures with the ELTRD for
Requirements Large Taxpayers or with the Revenue District Office
(RDO) for Non-Large Taxpayers where the taxpayer
is required to be registered for updating of
Certificate of Registration. The application for
registration shall be filed within ten (10) days from
the effectivity date of this Regulations.
146

For the effective implementation of the Act, the

following guidelines shall be followed during
the transitory period:
Transitory
1. Taxpayer may continue to use existing
Provision
Official Receipts for a period of six (6)
months. After the said period, taxpayer
must apply for separate sets of Official
Receipts for invasive cosmetic procedures
and non-evasive cosmetic procedures.
147

2. All individual practitioners and juridical entities

including medical clinics or hospitals performing
invasive cosmetic procedures shall update their
Transitory current Certificate of Registration (COR) to
include the tax type: Final Withholding Tax –
Provision Excise (FWT-Excise) on Cosmetic Procedures
using BIR Form 1905 with the concerned offices:
the ELTRD or Large Taxpayers Assistance
Division (LTAD) for large taxpayers registered
under the LTS and Revenue District Office (RDO)
having jurisdiction over the non-large taxpayer.
148

The individual practitioners and juridical entities

including medical clinics or hospitals performing
Transitory non-invasive cosmetic procedures, will execute
Provision and submit a Sworn Statement stating that only
non-invasive cosmetic procedures are being
performed by the said individual practitioners
and juridical entities.
149

3. The BIR Form No. 1620-XC (Monthly Remittance

Return of Final Withholding of Excise Tax on
Cosmetic Procedures) is available for downloading
from the BIR website and shall be manually filed
Transitory with the FWT-Excise shall be remitted to any
authorized agent bank under the jurisdiction of the
Provision RDO where the taxpayer (head office of the
business establishment) is registered or required
to register. The prescribed attachment to the to the
said form (Monthly Summary of Cosmetic
Procedures Performed, Annex B, shall be
submitted via e-mail at xcp.attachment@bir.gov.ph.
150

4. The Pricelist as of December 31, 2017

(indicate whether inclusive of VAT
Transitory and/or inclusive of Excise Tax, as the
Provision case may be) for Invasive/Non-Invasive
Medical Procedures shall be submitted
to the ELTRD upon the filing of the
application of Permit to Operate.
 Briefing on RA 10963: Tax
Reform for Acceleration and
Inclusion (TRAIN) –
Administrative Provisions
 NIRC NIRC TRAIN
Provision
Section 232 All corporations, companies, All corporations, companies,
Keeping of books partnerships or persons required partnerships or persons required by
of accounts by law to pay internal revenue law to pay internal revenue taxes
taxes shall keep a journal and a shall keep and use relevant and
ledger. appropriate set of bookkeeping
records duly authorized by the
Those whose quarterly sales, Secretary of Finance.
earnings, receipts, or output do not
exceed PHP50,000 shall keep and
use simplified set of bookkeeping
records.
 NIRC NIRC TRAIN
Provision
Section 232 Those whose gross quarterly Those whose gross annual sales,
Keeping of books sales, earnings, receipts or output earnings, receipts or output exceed
of accounts exceed P150,000 shall have their ₱3,000,000 shall have their books of
books of accounts audited and accounts audited and examined
examined yearly by independent yearly by independent CPAs and their
Certified Public Accountants ITRs accompanied with a duly
(CPAs) and their ITRs accomplished AIF.
accompanied Account Information
Form (AIF).
 NIRC NIRC TRAIN
Provision
Section 232 All corporations, companies, All corporations, companies,
Keeping of books partnerships, or persons required partnerships or persons required by
of accounts by law to pay internal revenue law to pay internal revenue taxes
taxes shall keep a journal and a shall keep and use relevant and
ledger. appropriate set of bookkeeping
records duly authorized by the
Those whose quarterly sales, Secretary of Finance.
earnings, receipts, or output do
not exceed P50,000 shall keep
and use simplified set of
bookkeeping records
 NIRC NIRC TRAIN
Provision
Section 236 The taxpayer’s registration shall Additional proviso:
Registration contain the information as may be
Requirements required by the Commissioner in the The Commissioner shall simplify the
form prescribed business registration and tax
compliance requirements of self-
employed individuals and/or
professionals.

Persons required to register for VAT:

those whose gross receipts
• for the past 12 months have Threshold amount is increased to
exceeded ₱1,500,000 ₱3,000,000.
 NIRC NIRC TRAIN
Provision
Section 236 • For the next 12 months can be Additional proviso:
Registration reasonably believe to exceed
Requirements ₱1,500,000 Any taxable individual who elects to pay
the 8% tax on gross sales or receipts
shall not be allowed to avail of optional
VAT registration.
Any person not required to register
for VAT may elect to register for VAT.

Section 237 A duly-registered receipt or sales or It is expressly provided that the

Receipts or commercial invoice , prepared at issuance of the receipt or invoice shall
Invoices least in duplicate, shall be issued for be made at the point of sale.
each sale of merchandise or service
rendered valued at ₱25 or more.
The threshold amount is increased to
₱100.00
 NIRC NIRC TRAIN
Provision
Section 237 Additional provision:
Receipts or Within 5 years from the effectivity of the
Invoices law and upon the establishment of the
necessary storing and processing
system, the following shall be required
to issue electronic receipts or sales or
commercial invoices in lieu of manual
receipts/invoices:
• taxpayers engaged in the export of
goods and services
• taxpayers engaged in e-commerce,
and
• taxpayers under the jurisdiction of the
Large Taxpayers Service
 NIRC NIRC TRAIN
Provision
Section 237 Other taxpayers may also opt to issue
Receipts or electronic receipts/invoices in lieu of
Invoices manual ones.

The digital record of electronic receipts/

invoices shall be kept by the purchaser,
customer or client and the issuer for a
period of 3 years from the close of the
taxable year.
 NIRC NIRC TRAIN
Provision
Section 237 (A) No provision The taxpayers that will be mandated
Electronic Sales under Sections 236 to issue electronic
Reporting System receipts/invoices shall be required to
[new] electronically report their sales data to
the BIR through the use of electronic
point of sales systems.

The machines, fiscal devices, and fiscal

memory devices shall be at the expense
of the taxpayers.
 NIRC NIRC TRAIN
Provision
Section 237 (A) No provision The data processing of sales and
Electronic Sales purchase data shall comply with:
Reporting System • the Data Privacy Act
[new] • the provision of the Tax Code on
unlawful divulgence of taxpayer
information (Section 270)
• other laws relating to the
confidentiality of information

The BIR shall also establish policies,

risk management approaches, actions,
trainings, and technologies to protect the
cyber environment, organization, and
data.
 Briefing on RA 10963: Tax
Reform for Acceleration and
Inclusion (TRAIN) – Penalties
 NIRC NIRC TRAIN
Provision
General interest 20% interest on any unpaid amount General interest on unpaid amount of
of tax from the date prescribed for tax is changed to 12% (at double the
payment until the amount fully paid rate of legal interest rate for loans or
forbearance of any money in the
absence of an express stipulation as
set by the BSP; prevailing BSP-set
legal interest is 6%)

Additional proviso:
Deficiency and delinquency interest
shall in no case be imposed
simultaneously.
 NIRC NIRC TRAIN
Provision
Deficiency Deficiency interest is assessed and The period when deficiency interest
interest collected from the date prescribed shall stop to run is until full payment
for its payment until full payment OR upon issuance of a notice and
thereof. demand by the BIR Commissioner;
whichever comes earlier.
 NIRC NIRC TRAIN
Provision
Section 254 Any person who willfully attempts Administrative fine is increased to not
Attempt to evade in any manner to evade or defeat less than P500,000 but not more
or defeat tax any tax imposed under this Code than P10,000,000
or the payment thereof shall, in
addition to other penalties provided Imprisonment is increased to not
by law, upon conviction thereof; be less than 6 years but not more
punished by a fine of not less than than 10 years
P30,000 but not more than
P100,000 and suffer imprisonment
of not less than 2 years but not
more than 4 years.
 NIRC NIRC TRAIN
Provision
Section 264 Any person who: Same
Failure or refusal  fails or refuses to issue
to issue receipts receipts/invoices
or invoices  issues receipts/invoices that do
not fully reflect required
information
 uses multiple or double receipts
or invoices
shall upon conviction be punished
by a fine of not less than P1,000
but not more than P50,000 and
suffer imprisonment of not less
than 2 years but not more than 4
years
 NIRC NIRC
Provision
Section 264 Fine of not less than P1,000 but
Failure or refusal not more than P50,000 and
to issue receipts imprisonment of not less than 2
or invoices years but not more than 4 years for
any person who:
 Print receipts/invoices without
authority from the BIR
 Print double or multiple sets of
invoices or receipts
 Print unnumbered
receipts/invoices not bearing the
name, business style, TIN and
business address of the entity
TRAIN
Administrative Fine is increased to
not less than P500,000 but not more
than P10,000,000
Imprisonment is increased to not
less than 6 years but not more
than 10 years
Additional punishable offense:
Printing of other fraudulent receipts
or sales or commercial invoices
 NIRC NIRC TRAIN
Provision
Section 264-A No provision Any taxpayer required to transmit
Failure or sales data to the BIR’s electronic
transmit Sales sales reporting system but fails to do
Data Entered on so, shall pay:
Cash Register
Machine/Point of For each day of violation:
Sales System 1/10 of 1% of the annual net income
(POS) Machines as reflected in the Audited FS for the
to the BIR’s second year preceding the current
Electronic Sales taxable year OR P10,000, whichever
Reporting is higher.
System [new]
 NIRC NIRC TRAIN
Provision
Section 264-A No provision IF the aggregate number of days of
Failure or violation exceed 180 days within a
transmit Sales taxable year, additional penalty shall
Data Entered on be: permanent closure of the
Cash Register taxpayer
Machine/Point of
Sales System The penalty shall not apply if the
(POS) Machines failure to transmit is due to force
to the BIR’s majeure or any causes beyond the
Electronic Sales control of the taxpayer
Reporting
System [new]
 NIRC NIRC TRAIN
Provision
Section 264-B No provision Covered person shall be any person
Sales who purchase, use, possess, sell or
suppression offer to sell, install, transfer, update,
devices [new] upgrade, keep, or maintain such
automated sales suppression device
or software designed for or is capable
of:
 Suppressing the creation of
electronic records of sale
transactions that a taxpayer is
required to keep under existing tax
laws and/or regulation; or
 Modifying, hiding or deleting
electronic records of sales
transactions and providing ready
means of access to them
 NIRC NIRC TRAIN
Provision
Section 264-B No provision Penalty:
Sales Administrative Fine of not less than
suppression P500,000 but not more than
devices [new] P10,000,000 and imprisonment of
not less than 2 years but not more
than 4 years

Cumulative suppression of electronic

sales record in excess of
P50,000,000 shall be considered as
economic sabotage and shall be
subject to maximum penalty