CURRENT VS FUTURE TR

http://www.businessmirror.com.ph/house-accepts-dofs-revised-tax-reform-bill/
http://www.bworldonline.com/content.php?section=Economy&title=tax-reform-for-individuals-on-
the-horizon&id=146392
https://www.pwc.com/ph/en/tax-alerts/assets/pwcph_taxalert-08.pdf

*Now called House Bill No. 5636 (the substitute bill of House Bill No. 4774), the bill,
known as Tax Reform for Acceleration and Inclusion (TRAIN) was approved by the
House of Representatives on third and final reading on May 31

HB No. 5636 likewise provides for automatic adjustment of taxable income levels and their
corresponding base every 3 years beginning 2021 based on a 5-year cumulative Consumer
Price Index inflation rate a welcome provision not present in the 1997 Tax Code which caused
the tax brackets to remain unchanged for the past 20 years.

*The proposed adjustments in the income brackets and rates aim to a chieve
equity and progressivity, with the following in place: (1) Basic subsistence
income of P250,000 and below are considered tax-exempt; (2) There is a wider
bracket to subject low and middle-income group to lower tax rates; and (3) There
is an increased tax rate for high-income individuals specifically those who are
earning above P5,000,000.

IN WORDS
Under the bill, the PIT shall be computed in accordance with and at the rates established in the
two schedules.

For 2018 and 2019, the new tax brackets will be:

Those earning not over P250,000 will be exempted from paying tax;

Those earning over P250,000 but not over P400,000 would pay a fixed tax of 20 percent of
the income in excess of P250,000;

Those earning over P400,000 but not over P800,000 would pay a fixed tax of P30,000, with
an additional 25 percent for income above P400,000;
 Those earning over P800,000 but not over P2 million would pay an excess tax of P130,000,
with an additional 30 percent for income above P800,000;

Those earning over P2 million but not over P5 million would pay a fixed tax of P490,000, with
an additional 32 percent for income exceeding P2 million; and

Those earning over P5 million would pay a fixed tax of P1,450,500 with an additional 35
percent for the income above P5 million.

For 2020 onward, the proposed tax brackets are:

Those earning not over P250,000 will be exempted from paying tax;

Those earning over P250,000 but not over P400,000 would pay a fixed tax of 15 percent of
the income above P250,000;

Those earning over P400,000 but not over P800,000 would pay a fixed tax of P22,500 with an
additional 20 percent for the income above P400,000;

Those earning over P800,000 but not over P2 million would pay an excess tax of P102,500
with an additional 25 percent for the income above P800,000;

Those earning over P2 million but not over P5 million would pay a fixed tax of P402,500 with
an additional 30 percent for the income above P2 million; and

Those earning over P5 million would pay a fixed tax of P1,302,500, with an additional 35
percent for the income above P5 million.

The bill said after 2020, the taxable income levels in the above schedules shall be adjusted

once every five years through rules and regulations issued by the DOF.