Professional Documents
Culture Documents
8
House Bill No. 4774 dated 17 January 2017
In brief
Last 17 January 2017, House Representative Dakila Carlo E. Cua introduced and filed House Bill (HB)
No. 4774, the proposed Tax Reform for Acceleration and Inclusion, which aims to create a tax system
that is simpler, fairer and more efficient, characterized by low rates and a broad base that promotes
investment, job creation and poverty reduction.
As discussed in the explanatory notes of the bill, the tax reform program consists of several packages
with each package balancing trade-offs and helping to ensure timely enactment. HB No. 4774 is the
first package which seeks to lower personal income taxes, broaden the value added tax (VAT) base,
adjust the excise taxes on petroleum and automobiles, and reduce the rates of estate and donor’s tax.
The bill also includes these tax administration measures: (a) mandatory use of fuel marking;
(b) mandatory issuance of e-receipts; (c) mandatory interconnection of large and medium firms’ point
of sales machines and accounting systems with the Bureau of Internal Revenue (BIR); (d) mandatory
use of GPS locks when transporting cargo from ports to economic zones and free ports; and (e)
relaxation of bank secrecy for fraud cases.
www.pwc.com/ph
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
2
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
Not over 0%
Not over PHP10,000 5% PHP250,000
Over 10,000 but not PHP500 + 10% of Over 250,000 but not 20% of the excess
over 30,000 the excess over over 400,000 over 250,000
10,000 Over 400,000 but not 30,000 + 25% of the
Over 30,000 but not 2,500 + 15% of the over 800,000 excess over 400,000
over 70,000 excess over 30,000 Over 800,000 but not 130,000 + 30% of
Over 70,000 but not 8,500 + 20% of the over 2,000,000 the excess over
over 140,000 excess over 70,000 800,000
Over 140,000 but not 22,500 + 25% of the Over 2,000,000 but 490,000 + 32% of
over 250,000 excess over 140,000 not over 5,000,000 the excess over
2,000,000
Over 250,000 but not 50,000 + 30% of the
over 500,000 excess over 250,000 Over 5,000,000 1,450,000 + 35%
of the excess over
Over 500,000 125,000 + 32% of 5,000,000
the excess over
500,000
Effective 1 January 2020
Not over 0%
PHP250,000
Over 250,000 but not 15% of the excess
over 400,000 over 250,000
Over 400,000 but not 22,500 + 20% of the
over 800,000 excess over 400,000
Over 800,000 but not 102,500 + 25% of
over 2,000,000 the excess over
800,000
Over 2,000,000 but 402,500 + 30% of
not over 5,000,000 the excess over
2,000,000
Over 5,000,000 1,302,500 + 35%
of the excess over
5,000,000
3
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
Basis Tax
Gross sales or gross 8% income tax on
receipts is below VAT gross sales or gross
threshold revenues (in lieu of
(i.e., PHP3,000,000) VAT and percentage
tax)
Gross sales or gross Shall be taxed in
receipts is above the same manner as
VAT threshold corporations as to
applicable tax rate,
minimum income
tax and allowable
deductions
On passive income on Sec. 24 (B) (1) Philippine Charity Removal of the tax exemption on
other winnings Sweepstakes Office (“PCSO”) and lotto winnings from PCSO and lotto
winnings are exempt from 20% final
withholding tax.
On alien individuals Sec. 25 (C) (D) and (E) A rate of 15% final Removal of fifteen percent (15%) income
and qualified Filipinos withholding tax on the gross compensation tax
employed by specific income of alien individuals and qualified
employers Filipinos employed by the following
employers:
4
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
Sec. 34 (M)
• PHP2,400 per year or PHP200 per month
worth of premium payments on health
and/or hospitalization
Adjustments in estate taxation
On estate tax rates Sec. 84 Estate tax table: • Removal of the estate tax table
• Estate tax rate fixed at six percent
Over But not over This tax Plus Of the (6%) based on net estate.
shall be Excess
Over
PHP200,000 Exempt
200,000 500,000 0 5% 200,000
500,000 2,000,000 15,000 8% 500,000
2,000,000 5,000,000 135,000 11% 2,000,000
5,000,000 10,000,000 465,000 15% 5,000,000
10,000,000 And over 1,215,000 20% 10,000,000
On estate tax Sec. 86 (A) and (B) The following are allowed The following are the retained allowable
deductions deductions for: deductions:
5
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
6
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
7
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
Manufactured Oils and Other Excise tax rates Manufactured Oils Effective
Fuels and Other Fuels
1 July 1 January 1 January
Lubricating oils and greases PHP4.50 per liter 2017 2018 2019
Processed gas 0.05 per liter Lubricating oils and PHP7.00 PHP9.00 PHP10.00
greases (per liter)
Waxes and petrolatum 3.50 per kg
Processed gas (per 3.00 5.00 6.00
Denatured alcohol 0.05 per liter
liter)
Naphtha, regular gasoline 4.35 per liter
Waxes and petrola- 7.00 9.00 10.00
and other similar products of
tum (per kg)
distillation
Denatured alcohol 3.00 5.00 6.00
Leaded premium gasoline 5.35 per liter
(per liter)
Aviation turbo jet fuel 3.67 per liter
Naphtha, regular 7.00 9.00 10.00
Kerosene 0.00 per liter gasoline and other
similar products of
Diesel fuel oil 0.00 per liter
distillation (per liter)
Liquefied Petroleum Gas 0.00 per liter
Leaded premium 7.00 9.00 10.00
Asphalt 0.56 per kg gasoline (per liter)
Bunker fuel oil 0.00 per liter Aviation turbo jet fuel 7.00 9.00 10.00
(per liter)
Kerosene (per liter) 3.00 5.00 6.00
Diesel fuel oil (per 3.00 5.00 6.00
liter)
Liquefied Petroleum 3.00 5.00 6.00
Gas (per liter)
Asphalt (per kg) 3.00 5.00 6.00
Bunker fuel oil (per 3.00 5.00 6.00
liter)
8
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
Automobiles Automobiles
Over Up to Excise tax rate Over Up to Excise tax rate
0 PHP600,000 2% 0 PHP600,000 4%
600,000 1,100,000 12,000 + 20% in 600,000 1,100,000 24,000 + 40% of
excess of 600,000 value in excess of
600,000
1,100,000 2,100,000 112,000+ 40%
in excess of 1,100,000 2,100,000 224,000 + 100% of
1,100,000 value in excess of
1,100,000
2,100,000 512,000 + 60%
in excess of 2,100,000 1,224,000 + 200%
2,100,000 of value in excess
of 2,100,000
9
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
10
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
11
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
12
Tax Alert No. 8
House Bill No. 4774 dated 17 January 2017
13
Let’s talk
For a discussion on how these proposed changes may affect you and your business, please contact:
14