"Changes introduced by TRAIN LAW

to our tax system."

ACTCY 12S2

Maria Florence Esperanza

Rhogio Harry Munoz
Natalia Patricio
Ralph Sumaculub
"Changes introduced by TRAIN LAW to our tax system."

Introduction
The Tax Reform for Acceleration and Inclusion Law (TRAIN
Law), officially designated as Republic Act No. 10963, is the
initial package of the Comprehensive Tax Reform Program
(CTRP) signed into law by President Rodrigo Duterte on
December 19, 2017. The TRAIN Act is the first of four packages
of tax reforms to the National Internal Revenue Code of 1997,
or the Tax Code, as amended. This package introduced
changes in personal income tax (PIT), estate tax, donor's tax,
value added tax (VAT), documentary stamp tax (DST) and the
excise tax of tobacco products, petroleum products, mineral
products, automobiles, sweetened beverages, and cosmetic
procedures.

FINAL REQUIREMENT
"Changes introduced by TRAIN LAW to our tax system."

Changes on PERSONAL INCOME TAX

OLD TAX SCHEDULE

NET TAXABLE INCOME RA 10963 restructures the personal income tax (PIT)
OVER BUT NOT OVER
TAX RATE schedule, with separate schedules for compensation income
10,000 5% earners (CIEs), purely self-employed individuals and/or
10,000 30,000 500 + 10% of excess over 10,000 professionals (SEPs) whose gross sales or receipts and other
30,000 70,000 2,500 + 15% of excess over 30,000 non-operating income do not exceed the Value-Added Tax
70,000 140,000 8500 + 20% of excess over 70,000 (VAT) threshold pf P3 million and mixed income earners.
140,000 250,000 22,500 + 25% of excess over 140,000
250,000 500,00 50,000 + 30% of excess over 250,000 NEW TAX SCHEDULE
NET TAXABLE INCOME
500,000 125,000 +32% of excess over 500,000 TAX RATE
OVER BUT NOT OVER
250,000 0%
This tax reform package corrects a longstanding inequity of 250,000 400,000 20% + of excess over 250,000
the tax system by reducing personal income taxes for 99

FINAL REQUIREMENT
400,000 800,000 30,000 + 25% of excess over 400,000
percent of taxpayers, thereby giving them the much needed 800,000 2,000,000 130,000 + 30% of excess over 800,000
relief after 20 years of non-adjustment of the tax rates and 2,000,000 8,000,000 490,000 + 32% of excess over 2,000,000
brackets. This is the biggest Christmas and New Year gift the 8,000,00 2,410,000 + 35% of excess over 8,000,000
government is giving to the people.
"Changes introduced by TRAIN LAW to our tax system."

Changes on PERSONAL INCOME TAX

Effective January 1, 2023 Onwards
NET TAXABLE INCOME
TAX RATE
OVER BUT NOT OVER
250,000 0%
250,000 400,000 15% + of excess over 250,000
400,000 800,000 22,500 + 20% of excess over 400,000
800,000 2,000,000 102,500 + 25% of excess over 800,000
2,000,000 8,000,000 402,500 + 30% of excess over 2,000,000
8,000,000 2,202,500 + 35% of excess over 8,000,000

For Self-employed and Professionals or Mixed Income Earners

(Effective January 1, 2018)

FINAL REQUIREMENT
GROSS SALES/RECEIPTS TAX RATE
Not exceeding P3 million Option 1: Regular PIT Rates or
Option 2: 8% of gross sales/receipts
in excess of P250,000*
Above P3 million Regular Personal Income Tax Rates
Compensation Income Regular Personal Income Tax Rates
"Changes introduced by TRAIN LAW to our tax system."

Other Reforms
 Reduces the number of Tax Brackets from 7 to 6;
 Exempts the first P250,000 annual taxable income of taxpayers;
 Sets the highest amount of taxable income at more than P8 million and subjects it to a higher marginal
rate of 35%;
 Repeals the provision on basic personal and additional exemptions and premiums paid on health
and/or hospitalization insurance which are deemed integrated into the P250,000 exempts threshold;
 Retains the income tax exemption of minimum wage earners;
 Retains the exemption from tax de minimis benefits as well as the non-taxability of mandatory
contributions such as those made to the GSIS, SSS, PhilHealth, Pag-IBIG Fund and unions dues;
 Increase the amount of tax-exempt benefits ceiling (13 th month pay and other benefits) from P82,000
to P90,000;
 Imposes a 20% final tax on PCSO and lotto winnigs exceeding P10,000;
 Removes the preferential tax rate of 15% for employees of regional or area headquarters, regional

FINAL REQUIREMENT
operating headquarters, offshore banking units and petroleum service contractions and
subcontractors;
 Increase fringe benefits tax (FBT) rate from 32% to 35%; and
 Inserts a provision that the Optional Standard Deduction by a general professional partnership (GPP)
may only be availed once, either by the GGP or the partners comprising such partnership.
"Changes introduced by TRAIN LAW to our tax system."

Changes on ESTATE TAX

OLD TAX SCHEDULE Section 22 of the TRAIN law amends Section 84 of

the Tax Code, which provides for the estate-tax rate.
NET ESTATE BRACKET
TAX RATE Previously, a tax based on the value of the net estate
OVER BUT NOT OVER of the decedent, whether resident or nonresident of
200,000 Exempt the Philippines, was computed based on a tax
200,000 500,000 5% of excess over 200,000 schedule where an estate worth P200,000 and over
was taxed from 5 percent to 20 percent. Under the
500,000 2,000,000 15,000 + 8% of excess over 500,000
TRAIN law, it will now be subject to a flat rate of 6%.
2,000,000 5,000,000 135,000 + 11% of excess over 2,000,000

5,000,000 10,000,000 465,000 + 15% of excess over 5,000,000

10,000,000 1,215,000 + 20% of excess over NEW TAX RATE

10,000,000

FINAL REQUIREMENT
TAX BASE TAX RATE

Value of Net Estate* 6%

 "Changes introduced by TRAIN LAW to our tax system."

Changes on ESTATE TAX

Changes on the Computation of Estate Tax

 Removes the deductions from gross estate pertaining to actual funeral expenses or 5% of the gross estate, whichever is lower;
judicial expenses; medical expenses but increased the amount of standard deduction from P1 million to P5 million;
 Increases the amount of deduction for family home from up to P1,000,000 to up to P10,000,000 and removes the sine qua non
condition for the exemption or deduction, that the family home must have been the decedent’s family home as certified by the
barangay captain of the locality;
 Removes the deductions for nonresident estates pertaining to expenses, losses, indebtedness, and taxes but provides for a standard
deductions amounting to Php500,000;
 Deletes the provision that requires executor, administrator or anyone of the heirs to include in the estate tax return that part of the
nonresident alien’s gross estate not situated in the Philippines to be able to claim deductions;

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 Increases the amount of gross value of estate provided in estate tax returns that requires to be supported with a statement duly
certified by a Certified Public Accountant (CPA) from P2,000,000 to P5,000,000.
 "Changes introduced by TRAIN LAW to our tax system."

Changes on ESTATE TAX

Changes on Administrative Procedures

 Deadline of Filing - Extends the period within which the estate tax return should be filed, from 6 months to 1 year from the decedent's death.

 Withdrawal Limit - Removes the P200,000 limit that may be withdrawn from the bank account of the decedent without certification from the BIR
and allows for the withdrawal of any amount but subject to a final withholding tax of 6%.

 Payment on Installment Basis - Provides for the payment by installment basis in the case available cash is insufficient to pay the estate tax due.
Payment shall be allowed within 2 years from the statutory date for it’s payment without civil penalty and interest.

FINAL REQUIREMENT
 Filing of Notice of Death - Repeals the provision requiring the filling of notice of death of the decedent by his/her executor, administrator or any of
the legal heirs within 2 months after the decedent’s death.
"Changes introduced by TRAIN LAW to our tax system."

Changes on DONOR’s TAX

OLD TAX SCHEDULE
NET GIFTS BRACKET
OVER BUT NOT OVER
TAX RATE
The previous Tax Code contained a complex tax
100,000 Exempt schedule with different tax rates. With the TRAIN
100,000 200,000 2% of excess over 100,000 Law, that schedule has been likewise simplified to a
200,000 500,000 2,000 + 4% of excess over 200,000 single tax rate of 6% of net donations for gifts
500,000 1,000,000 14,000 + 6% of excess over 500,000 above P250,000 yearly, regardless of the donee’s
relationship to the donor.
1,000,000 3,000,000 44,000 + 8% of excess over 1,000,000
3,000,000 5,000,000 204,000 + 10% of excess over 30,000,000

5,000,000 10,000,000 404,000 + 12% of excess over 5,000,000

NEW TAX RATE
10,000,000 1,004,000 + 15% of excess over
10,000,000 TAX BASE TAX RATE

FINAL REQUIREMENT
Total Gifts not exceeding Exempt
250,000
In excess of 250,000 6%
"Changes introduced by TRAIN LAW to our tax system."

Changes on VALUE-ADDED TAX

 Section 37 of the TRAIN Law, which amends Section 114(c) of the Tax Code, provides that
beginning 01 January 2021, the 5% final withholding VAT system will shift to a creditable
withholding system, except for payments for purchases of goods and services arising from
projects funded by Official Development Assistance (ODA) as defined under RA No. 8182,
otherwise known as the 'Official Development Assistance Act of 1996,' as amended, which
shall not be subject to withholding tax.

Amendments to VAT which lessen the burden of taxpayers:

 Increase of VAT threshold from P1,919,500 to P3,000,000
 Starting 2019, the sale of drugs and medicines for diabetes, high cholesterol, and
hypertension will be exempt from VAT

FINAL REQUIREMENT
 Increase of VAT exemption for lease of a residential unit from P12,800 to P15,000
 Association dues, membership fees, and other assessments and charges collected by
homeowners associations and condominium corporations are now expressly VAT exempt
"Changes introduced by TRAIN LAW to our tax system."

VALUE-ADDED TAX RATES

Tax Rate

On sale of goods and properties 12%

On sale of services and use or lease of properties 12%

On importation of goods 12%

On export sales and other zero-rated sales 0%

FINAL REQUIREMENT
"Changes introduced by TRAIN LAW to our tax system."

Changes on DOCUMENTARY STAMP TAX

The documentary stamp tax (DST) imposes a rate that is dependent on the value of the transaction. Several types of
business transactions are required to have documentary stamps. For example, the original issuance of shares is subject to a
DST of P2 for every P200 of the share's value. Under the TRAIN law, several DST rates have either doubled or increased.
Previously, Deeds of Donation of Real Property were not subject to DST, but this was imposed a tax rate under the TRAIN
law.
Section in
Tax Code
Document/Instrument/Transaction Tax Base Old Tax Rates New Tax Rates
174 Original Issue of Shares of Stock Par Value P1.00 on each P200 0.50% P2.00 on each P200 1.00%
Sales, Agreements to sell, Memoranda of
175 Sales, Deliveries or Transfer of
Shares/Certificates of Stock
With Par Value Par Value P0.75 on each P200 0.38% P1.50 on each P200 0.75%
DST of original
Without Par Value issue 25% 50%

FINAL REQUIREMENT
Listed Shares of Stocks at PSE - Exempt Exempt
Bonds, Debentures, Certificates of Stock or
176 indebtedness Issued in Foreign Countries Par Value Tax as required by law Tax as required by law

Certificates of Profits or Interest in Property

177 or Accumulations Face Value P0.50 on each P200 0.25% P1.00 on each P200 0.50%

Bank Checks, Drafts, Certificates of Deposit P1.50 P3.00

178 not Bearing Interest and other Instruments Per Instrument
"Changes introduced by TRAIN LAW to our tax system."

Changes on DOCUMENTARY STAMP TAX

Section in
Tax Code
Document/Instrument/Transaction Tax Base Old Tax Rates New Tax Rates

179 Original Issue of all Debt Instruments Issue Price P1.00 on each P200 0.50% P1.50 on each P200 0.75%

180 All Bills of Exchange or Drafts Face Value P0.30 on each P200 0.15% P0.60 on each P200 0.30%

Upon Acceptance of Bills of Exchange and

181 Face Value P0.30 on each P200 0.15% P0.60 on each P200 0.30%
Others
182 Foreign Bills of Exchange and Letters of Credit Face Value P0.30 on each P200 0.15% P0.60 on each P200 0.30%
Amount of
183 Life Insurance Policies insurance P10.00 – P100.00 P20.00 – P200.00

184 Policies of Insurance upon Property Premium P0.50 on each P4.00 12.50% P0.50 on each P4.00 12.50%

185 Fidelity Bonds and Other Insurance Policies Premium P0.50 on each P4.00 12.50% P0.50 on each P4.00 12.50%

Premium/
Installment P0.50 on each P200

FINAL REQUIREMENT
186 Policies of Annuities or Other Instruments 0.25% P1.00 on each P200 0.50%
payment/
Contract Price
186 Pre-need Plans Premium P0.20 on each P200 0.10% P0.40 on each P200 0.20%
187 Indemnity Bonds Premium P0.30 on each P4.00 7.50% P0.30 on each P4.00 7.50%
"Changes introduced by TRAIN LAW to our tax system."

Changes on DOCUMENTARY STAMP TAX

Section in
Tax Code
Document/Instrument/Transaction Tax Base Old Tax Rates New Tax Rates
188 Certificates Per certificate P15.00 P30.000

189 Warehouse Receipts Per warehouse P15.00 P30.00

receipt
Jai-Alai, Horse Racing Tickets, Lotto or Other P0.10; Additional P0.10 on each P1.00 P0.20; Additional P0.20 on each P1.00 if
190 Per Ticket if ticket exceeds P1.00 ticket exceeds P1.00
Authorized Number Games
191 P1.00 if value > P100 or P10.00 if value P2.00 if value > P100 or P20.00 if value >
Bills of Lading or Receipts Value > P1,000 P1,000
192 Proxies Per Instrument P15.00 P30.00
193 Powers of Attorney Per Instrument P5.00 P10.00
P3.00 for 1st P2,000; P1.00 for each P6.00 for 1st P2,000; P2.00 for each next
194 Leases and Other Hiring Agreements Value
next 1,000 1,000
P20.00 for 1st P5,000; P15.00 for each P40.00 for 1st P5,000; P20.00 for each
195 Mortgages, Pledges and Deeds of Trust Amount secured
next 5,000 next 5,000
Deeds of Sales, Conveyances and Donation of P15.00 for 1st P1,000; P15.00 for each P15.00 for 1st P1,000; P15.00 for each

FINAL REQUIREMENT
196 Value
Real Property next P1,000 next P1,000
197 Charter Parties and Similar Instruments Gross tonnage P500 – P1,500 P1,000 – P3,000

198 Assignment and Renewals of Certain Same as Original Same rates as original Same rates as original
Instruments
"Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON

CIGARETTES
NEW TAX RATES based on RA No. 10963 (Train Law)
OLD TAX RATES based on Republic Act No. 10351 Per Pack
Per Pack
Tobacco Products Jan 1, Jan 1, Jan 1, Jan 1, Jan 1, Jan 1, 2018 July 1, 2018 January 1, January 1,
2013 2014 2015 2016 2017 Tobacco Products January 1
until 2020 until 2022 until January 1, 2024
until June onwards
Cigarettes Packed by 30, 2018 December December December
P12.00 P15.00 P18.00 P21.00 P30.00 31, 2019 31, 2021 31,2023
Hand
Cigarettes Packed by *To be
Machine increased by Cigarettes Packed Effective
P32.50 P35.00 P37.50 P40.00
4% every year by Hand 1/1/2024, the
NRP P11.50 and specific tax rate
P12.00 P17.00 P21.00 P25.00 thereafter
Below shall be
P30.00 increased by 4%
NRP more than Cigarettes Packed
P25.00 P27.00 P28.00 P29.00 P32.50 P35.00 P37.50 P40.00 every year
P11.50 by Machine thereafter

The newly signed law imposing higher taxes on cigarettes and a new tax on

FINAL REQUIREMENT
e-cigarettes and other alternative devices for smoking will enable the
government to properly implement the Universal Health Care (UHC)
program, in keeping with President Duterte’s commitment to improve the
lives of Filipinos by expanding the delivery of healthcare services, especially
to low-income families, Finance Secretary Carlos Dominguez III said.
"Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON

AUTOMOBILES
 In 2017, the Auto Industry had been into a critical situation due to the
implementation of the TRAIN Law. Because of the execution of this Law, the Tax
on Automobiles increased. The lower price cars are taxed lower compared to a
more expensive cars which are taxed higher. The DOF stated that those
individual who will purchase a Vios will be able to save P12,122 despite the
increase in taxes and those who buy an Innova will save around P29,923 even if
they buy with the new rates.

 Not all vehicles are taxed such as the Utility Vehicles like trucks, jeepneys, and
special purpose vehicles. Hybrid and Electric Vehicles can be taxed lower or be

FINAL REQUIREMENT
exempted from the excise tax.

 However, the adjustments in SRP of the cars are up to the manufacturers

"Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON

AUTOMOBILES
AVERAGE EFFECTIVE
BRACKET TRAIN TAX RATE
TAX RATE

P600,000 4% 3%

600,000 to 1 Million 10% 8%

Over 1 Million to 4
20% 15%
Million

FINAL REQUIREMENT
4,000,000 and above 50% 30%
"Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON PETROLEUM

PRODUCTS
 Since the beginning of 2019, the Filipinos paid more for fuel due to an additional excise tax issued by
the TRAIN Law. In 2019, an additional ₱2 per liter excise tax is imposed on diesel and gasoline, ₱1 for
every liter of kerosene, and ₱1 for every kilogram of cooking gas or liquefied petroleum gas (LPG).

 In January 2020, the price of the fuel rose as the third and final wave of excise tax increases. The TRAIN
Law required another increase in fuel excise duties, pegged at ₱1 per liter for gasoline and kerosene, ₱1.50
per liter for diesel, and ₱1 per kilogram of liquefied petroleum gas (LPG).

 The government collected ₱78 billion in fuel excise taxes in 2018, broken down into ₱39 billion from the
Bureau of Internal Revenue and ₱38.6 billion from the Bureau of Customs

FINAL REQUIREMENT
 The TRAIN law sought to slap higher taxes on fuel products to raise more funds for big-ticket
infrastructure and other government projects.
"Changes introduced by TRAIN LAW to our tax system."

EXCISE TAX ON FUEL

STARTING JANUARY 1, 2019

2018 TRAIN
2019 TRAIN
EXCISE TAX W/ EXCISE TAX 12% VAT TOTAL
VAT

Gasoline (per
litre) P7.84 P2 P0.24 P10.08
BEGINNING JANUARY 1, 2020
Kerosene (per P0.12
litre) P3.36 P1 P4.48
2019 EXCISE TAX 2020 EXCISE TAX TOTAL
Diesel (per
litre) P2.80 P2 P0.24 P5.04
Gasoline (per P10
P9 P1
litre) + 12% VAT
LPG (per P1.12 P1 P0.12 P2.24
kilogram) Kerosene (per P5
litre) P4 P1 + 12% VAT

FINAL REQUIREMENT
Diesel (per litre) P6
P4.50 P1.50
+ 12% VAT

LPG (per P3
kilogram) P2 P1 + 12% VAT
 "Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON SWEETENED

BEVERAGES
 As of January 2018, our Government implemented an excise tax on sugary drinks equivalent
to P6 per liter for beverages using purely caloric sweeteners and a P12 per liter for those using
high fructose corn syrup (HFCS). Fortunately, Sweetened Beverages that uses purely coconut
sap sugar and purely steviol glycosides are exempted from this tax.

 With the presence of this tax, the consumption of sweetened beverages decreased by 6.5
percent, with powdered concentrates critically declined at 25 percent, based on the 2018 data
from Euro monitor on the sales of beverage companies in the Philippines.

FINAL REQUIREMENT
 This Tax was imposed on Sweetened Beverages to prioritize the reformulation and production
of healthier food and beverage. It was a part of the project activity of the ASEAN on achieving
its goal of promoting a healthy lifestyle in the region. Among ASEAN’s health priorities is the
prevention and control of non-communicable diseases.
"Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON SWEETENED

BEVERAGES

FINAL REQUIREMENT
"Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON MINERAL

PRODUCTS
 The Secretary of Finance has issued Revenue Regulations (RR) No. 1-2018
dated 5 January 2018 to provide for the Revised Tax Rates on Mineral
Products pursuant to the provisions of the Tax Reform for Acceleration and
Inclusion (TRAIN) Law for the purpose of amending RR No. 13-94 which
governs the imposition of excise tax on minerals and mineral products.

FINAL REQUIREMENT
 "Changes introduced by TRAIN LAW to our tax system."

Changes on EXCISE TAX ON MINERAL

PRODUCTS
OLD TAX RATE NEW TAX RATE

Per metric ton

Mineral Product Per metric ton Mineral Product
2018 2019 2020

Coal and Coke P 10.00 Coal and Coke P 50.00 P100.00 P150.00

OTHER MINERAL PRODUCT

Old Tax New Tax
Mineral Products
Rate Rate
All metallic minerals and quarry
2% 4%
resources

FINAL REQUIREMENT
Copper and other metallic materials 2% 4%

Gold and Chromites 2% 4%

Indigenous petroleum 3% 6%
"Changes introduced by TRAIN LAW to our tax system."

EXCISE TAX ON COSMETIC

PROCEDURES
SERVICE TAX RATE

Performance of Services on Invasive Cosmetic 5%

Procedures

 Under RR 2-2019, “there shall be levied, assessed, and collected, an excise tax equivalent to 5
percent based on gross receipts derived from the performance of services, net of excise tax
and value-added tax (VAT) on invasive cosmetic procedures, surgeries and body enhancements
directed solely towards improving, altering, or enhancing the patient’s appearance and do not

FINAL REQUIREMENT
meaningfully promote the proper functions of the body or prevent or treat illness or disease.”

 The persons and establishments performing cosmetic procedures must file a return of monthly
gross receipts alongside a monthly summary of cosmetic procedures performed, BIR said.
"Changes introduced by TRAIN LAW to our tax system."

Changes on OTHER TAXES

FINAL REQUIREMENT
 THANK YOU!

"Changes introduced by TRAIN LAW to our tax system."