BIR - TRAIN - TOT - Income - Tax

Briefing on RA 10963: Tax
Reform for Acceleration and

Inclusion (TRAIN) – Income Tax
NIRC Provision NIRC TRAIN
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 Tax Schedule effective January 1,
citizen and 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 over P30,000 excess over P10,000
P250,000
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 the
not over P250,000 excess over P140,000
TRAIN Briefing – Income Tax

VER 1.0 – January 2018
NIRC NIRC TRAIN
Provision
Section 24 Taxable income of individuals are Revised personal income tax brackets of 2018-
Income tax subject to the following graduated rates: 2022:
rates on Tax Schedule Tax Schedule effective January 1, 2018 to
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 + 20% of the
the Philippines Over P500,000 P125,000 + 32% not over P800,000 excess over P400,000
of the excess over Over P800,000 but P130,000 + 30% of the
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
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

Section 24 Refer to Revenue Memorandum Circular (RMC)

Income tax rates on Nos. 105-2017 and 1-2018, Revised
individual citizen Withholding Tax on Compensation Table
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 operational 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 other
percentage tax; OR
2. Income tax based on the graduated income
tax rates for individuals

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 or
mixed income rates practice of profession, their income taxes shall be:
earners 1. For income from compensation – Graduated
income tax rates fro individuals, AND
2. For income from business 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 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 – graduated income tax rates for
individuals

Section 24 (B) (1) Philippine Charity Sweepstakes Philippine Charity Sweepstakes and
Final tax on and Lotto winnings – exempt Lotto winnings in excess of P10,000
winnings from the 20% final tax shall be subject to the 20% final tax
Section 24 (B) (1) Interest income received by an The rate of final tax on interest
Final tax on individual taxpayer (except a income received by resident
interest on foreign non-resident individual) from a individual taxpayer under the
currency deposit depository bank under the expanded foreign currency deposit
expanded foreign currency system increased from 7.5% to 15%
deposit (EFCD) system is final tax
subject to 7.5% final tax

Section 24 (C) The capital gains tax on net The final tax rate for net capital gains
Capital gains tax capital gains realized from sale, tax on the sale, barter, exchange or
on sale of shares barter, or exchange or other other disposition of shares of stock in a
not traded disposition of shares of stock in domestic corporation no traded through
through the stock a domestic corporation not the stock exchange is increased from
exchange traded through the stock 5/10% CGT to a flat rate of 15% CGT
exchange is:
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
Preferential tax 1. Regional or area and Regional provided in Subsection (C), (D) and
rate for Operating headquarters or (E) shall not be applicable to RHQs.
individuals multinational companies ROHQs, OBUs or Petroleum service
employed by (RHQs and ROHQs) contractor and subcontractor
RHQ, ROHQ, [Subsection (C)] registering with the SEC after
OBU and 2. Offshore banking units (OBUs) January 1, 2018
Petroleum [Subsection (D)]
Contractors 3. Petroleum Service contractor But existing RHQs, ROHQs, OBUs
Capital and and subcontractor [Subsection or Petroleum service contractor and
subcontractors (E)] subcontractor shall continuously be
are subject to a preferential tax of entitled to avail of the preferential
15% final withholding tax on gross tax treatment for their present and
compensation income. 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
employed by subcontractor shall continuously be entitled to
RHQ, ROHQ, avail of the preferential tax treatment for their
OBU and present 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.”
Section 31 Means the pertinent items of The phrase “and/or personal and
Definition of gross income specified in this additional exemptions” is removed in
Taxable Income Code, less the deductions and/or the definition.
personal 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
Section 32 (B) The amount of tax-exempt 13th The amount of tax-exempt 13th month
Tax exempt 13th month pay and other benefits is pay and other benefits is increased to
month pay P82,000. P90,000.
Section 33 (A)  Fringe benefits given to non-  The Fringe Benefits Tax is
Tax on fringe rank and file employees are increased to 35% effective
benefits given to subject to 32% final tax January 1, 2018
non-rank and file  The grossed up monetary  The grossed up monetary value of
employees value of the fringe benefit the fringe benefit given to non-
given to non-rank and file rank and file employees shall be
employees shall be determined by dividing the actual
determined by dividing the monetary value by 65%
actual monetary value by 68%

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 individual taxpayer is removed.
payments on P2400 per year or P200 per
health and/or month, subject to a gross family
hospitalization income 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)
not required to file income tax shall not be required to file an income
return (ITR). tax return.

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

Section 51-A No provision Substituted filing or ITRs is available

Substituted Filing for:
of income tax  Individual taxpayers
returns by  Receiving purely compensation
employees income, regardless of amount
receiving purely  From only one employer in the
compensation Philippines for he calendar year
income from only  The income tax of which has been
one employer in correctly withheld by the employer
the Philippines (i.e., tax due = tax withheld)
The Certificate of Withholding field by
the employers duly stamped “receive”
by the BIR shall be the substituted filing
by such employers

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 may elect to pay the tax in two following the close of the calendar
due for individuals equal installments. Payment of year.
and 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.

Section 74 Every individual subject to income The deadline for filing of declaration
Declaration of tax shall make and file a declaration estimated income for the current
Income tax for of his estimated income for the taxable year is on or before May15 of
individuals current taxable year on or before the same taxable year.
April 15 of the same taxable year.
The amount of estimated income The payment of the four installments

with respect to which a declaration shall be:
is required shall be paid in four (4)  First – May 15
installments:  Second – August 15
 First – at time of declaration  Third – November 15
 Second – August 15  Fourth – on or before May 15 of the
 Third – November 15 following calendar year when the
 Fourth – on or before April 15 of final adjusted income tax return is
the following calendar year when due to be filed.
the final adjusted income tax
return is due to be filed.
Section 34 (L) Individual taxpayers (except non- For GPPs and the partners comprising
Optional Standard resident alien) and corporations them, OSD may be availed only once,
Deduction may elect a standard deduction not i.e., either by the GPP itself or by the
exceeding 40% of gross sales/ partners comprising the GPP.
receipts or of gross income, as the
case may be, 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.

Section 27 (C) The Philippine Charity PCSO is not anymore exempt from
Exemption Sweepstakes Office (PCSO) is payment of corporate income tax.
Government-owned among the list GOCCs, agencies,
or – Controlled or instrumentalities that are
Corporations, exempt from payment of corporate
Agencies or income tax.
Instrumentalities
Section 27 (D) (1) Interest income received by a The rate of final tax on interest
Final Tax on domestic corporation from a income received by domestic
interest on foreign depository bank under the corporation under the expanded
currency deposit expanded foreign currency deposit foreign currency deposit system
(EFCD) system is subject to 7.5% increased from 7.5% to 15% final
final tax. tax.

Section 27 (D) (2) The capital gains tax on net The final tax rate for net capital gains
Capital gains tax capital gains realized from sale, tax on the sale, barter, exchange or
on sale of shares barter, or exchange or other other disposition of shares of stock in
not traded through disposition of shares of stock in a a domestic corporation not traded
the stock exchange domestic corporation nor traded through the stock exchange is
through the stock exchange is: increased from the 5/10% CGT to a
flat rate of 15% CGT.
Not over ₱100,000 – 5%
On any amount in excess of

₱100,000 – 10%

Section 52 Every corporation subject to tax, Additional provision:
Filing of corporate except foreign corporations not
income tax return engaged in trade or business in The ITR shall consist a maximum of
the Philippines, shall render in four (4) pages in paper OR electronic
duplicate, a true and accurate form.
 Quarterly income tax return;
AND It shall also only contain the
 Final or adjustment return information as required in ITRs of
individual taxpayers.
These requirements shall not affect

the implementation of TIMTA.

Final Withholding Tax and Expanded Withholding Tax Returns
Section 58 The return for FWT and the return FWT and EWT returns shall be filed
Return and for creditable withholding taxes and the payment made not later than
payments of taxes (EWT returns) shall be filed within the last day of the month following
withheld at source ten (10) days after the end of each the close of the quarter during which
month [Sec. 2.58 of RR No. 2-98] the withholding was made.
The provision that the Commissioner

may require the payment of the
taxes withheld at more frequent
intervals is removed.


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Briefing on RA 10963: Tax

Reform for Acceleration and

Over P70,000 but not P8,500 + 20% of the

TRAIN Briefing – Income Tax

Over P2Million but P490,000 + 32% of the

Section 24 For 2023 onwards:

TRAIN Briefing – Income Tax

Section 24 Refer to Revenue Memorandum Circular (RMC)

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

Not over P100,000 – 5%

On any amount in excess of

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

Section 51-A No provision Substituted filing or ITRs is available

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

The amount of estimated income The payment of the four installments

The tax withheld shall be credited

TRAIN Briefing – Income Tax

TRAIN Briefing – Income Tax

On any amount in excess of

TRAIN Briefing – Income Tax

These requirements shall not affect

TRAIN Briefing – Income Tax

The provision that the Commissioner

TRAIN Briefing – Income Tax

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