Professional Documents
Culture Documents
4 April 2018
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Fiscal Incentives
3 Redundant and not rationalized
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Property Capital
uIt is targeted to be uIt is targeted to be
filed in July 2018, to be
Tax Income Tax filed in July 2018, to
passed into law be passed into law
and effective
effective January 1, 2019.
January 1, 2019
3 4
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TRAIN
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TRAIN
Key amendments to 1997 Tax Code
Key Amendments
Income Tax
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Repealed:
PHP 25,000 exemption in computing taxable income under
RA No. 10754, An Act Expanding the Benefits and Privileges
of Persons With Disability (PWDs)
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Non-taxable
13th month pay and other benefits
PHP 90,000
PHP 82,000
Increased non-taxable
13th month pay
and other benefits
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DAILY
1 2 3 4 5 6
685 and 685 1,096 2,192 5,479 21,918
Compensation level
below
0.00 0.00 82.19 356.16 1,342.47 6,602.74
Prescribed
+20% +25% +30% over +32% +35% over
minimum
over over over
withholding tax
WEEKLY
1 2 3 4 5 6
4,808 4,808 7,692 15,385 38,462 153,846
Compensation level
and below
Prescribed 0.00 0.00 576.92 2,500.00 9,423.08 46,346.15
minimum +20% +25% +30% over +32% +35% over
withholding tax over over over
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SEMI-MONTHLY
1 2 3 4 5 6
10,417 10,417 16,667 33,333 83,333 333,333
Compensation level and below
Prescribed 0.00 0.00 +20% 1,250.00 5,416.67 20,416.67 100,416.67
minimum over +25% over +30% over +32% over +35% over
withholding tax
MONTHLY
1 2 3 4 5 6
20,833 20,833 33,333 66,667 166,667 666,667
Compensation level and below
Prescribed 0.00 0.00 +20% 2,500.00 10,333.33 40,833.33 200,833.33
minimum over +25% over +30% over +32% over +35% over
withholding tax
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Sample Computation
*Computed using the maximum availment of personal and additional exemptions (under the old
rules) and tax exempt bonuses and other benefits (under the old and new rules).
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Sample Computation
Tax Due
Taxable Old Tax Code New Tax Code
Income (2018-2022) Difference
*
Rate Due Rate Due
530,000 32% 134,600 25% 62,500 72,100
1,000,000 32% 285,000 30% 190,000 95,000
5,000,000 32% 1,565,000 32% 1,450,000 115,000
8,100,000 32% 2,557,000 35% 2,445,000 112,000
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Gross sales/
receipts ≤ PHP3M
(Optional)
3% percentage tax
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Tax Due:
Basic Amount (First P 250,000.00) P 00.00
8% in excess of P250,000.00
(P1,100,000.00 – P250,000.00) 68,000.00
Total Income Tax Due P 68,000.00
• The total of gross sales and gross receipts is below the VAT threshold of P3,000,000.00.
• Taxpayer should signify his intention to be taxed at 8% income tax in his 1st Quarter Income Tax Return.
• Income tax imposed herein is based on the total of gross sales and gross receipts.
• Income tax payment is in lieu of the graduated income tax rates under subsection (A) hereof and
percentage tax due, by express provision of law.
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Tax Due:
First P250,000 P 0.00
In excess of P250,000 (P300,000-P50,000)X 20% 10,000.00
Total Tax Due P 10,000.00
Aside from the income tax, Ms. ABS is likewise liable to pay percentage tax in the amount of thirty-
three thousand pesos (P33,000), which is three percent (3%) of P1,100,000.00.
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Tax Due:
First P800,000 P 130,000.00
Excess (P1,100,000 - P800,000) X 30% 90,000.00
Income Tax Due P 220,000.00
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Gross sales/
receipts ≤
PHP3M
Graduated income tax (Optional)
rates
(0% - 35%)
8% income tax Graduated
on gross income tax rates
sales/receipts (0% - 35%)
3% percentage
tax
*The 8% income tax rate on gross sales/gross receipts in excess of P250,000 is NOT available to mixed
income earners.
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Assume that in 2018. Mr. X, a Financial Comptroller of ABC Company, earned annual
compensation of P1,500,000.00, inclusive of 13th month and other benefits in the
amount of P120,000.00. Aside from employment income, he owns a convenience
store, with gross sales of P 2,400,000. His cost of sales and operating expenses are P
1,000,000 and P500,000, respectively.
His tax due for 2018 shall be computed as follows if he opted to be taxed at eight percent (8%) of his gross sales for
his income from business:
Tax due
First P800,000 P 130,000.00
In excess of P 800,000 (P1,410,000 – P800,000) X 30% 183,000.00
Tax due on Compensation Income P 313,000.00
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2. His tax due for 2018 shall be computed as follows if he did not opt for the eight percent (8%) income
tax based on gross sales/receipts:
Tax Due
First P2,000,000 P 490,000.00
In excess of P 2,000,000 (P2,310,000-2,000,000) X 32% 99,200.00
Total Income Tax P 582,200.00
*In addition to the income tax, Mr. X is likewise liable to pay percentage tax of P72,000,
which is 3% of P 2,400,000.00
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Gross sales/
receipts > PHP3M
Graduated income
tax rates
(0% - 35%)
12% VAT
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35%
(RA NO. 10963)
Increase in
FBT rate* 32%
(1997 Tax Code)
*FBT rate for non-resident alien not engaged in trade or business shall still be at
25% of gross.
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De minimis Benefits
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15%
ROHQ u RETAINED the provision on 15%
preferential rate
Alien Employees
preferential ADDED :
u 15% shall NOT APPLY to
and Filipino rate RHQs/ROHQ/OBUs/PSCs/SCs
Employees registering with Securities and
occupying the (on salaries, wages, Exchange Commission AFTER
same position of: annuities, 1 January 2018.*
uRegional Headquarters compensation,
(RHQs) remuneration and
u EXISTING RHQs/ROHQs/OBUs/
uRegional Operating other emoluments,
Headquarters (ROHQs) such as honoraria and PSCs/SCs for qualified employees
uOffshore Banking Units allowances) shall CONTINUE to avail of the
(OBUs) preferential tax rate for present
uPetroleum Service and future qualified employees.
Contractors and (VETOED BY THE PRESIDENT)
Subcontractors (PSCs/SCs)
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I am constrained to veto the proviso under Section 6(F) of the enrolled bill that effectively maintains the special tax rate
of 15% of gross income for the aforementioned employees, to wit:
“PROVIDED, HOWEVER, THAT EXISTING RHQS/ROHQS, OBUS, OR PETROLEUM SERVICE CONTRACTORS AND
SUBCONTRACTORS PRESENTLY AVAILING OF PREFERENTIAL TAX RATES FOR QUALIFIED EMPLOYEES SHALL
CONTINUE TO BE ENTITLED TO AVAIL OF THE PREFERENTIAL TAX RATE FOR PRESENT AND FUTURE QUALIFIED
EMPLOYEES.”
While I understand the laudable objective of the proposal, the provision is violative of the Equal Protection Clause under
Section 1, Article III of the 1987 Constitution, as well as the rule of equity and uniformity in the application of the
burden of taxation:
“Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be
denied the equal protection of the laws.”
In line with this, the overriding consideration is the promotion of fairness of the tax system for individuals performing
similar work. Given the significant reduction in the personal income tax, the employees of these firms should follow the
regular tax rates applicable to other individual taxpayers.
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REPEALED by TRAIN:
BUT existing ones enjoying the preferential income tax rate at the time of
effectivity of TRAIN shall not be affected.
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Illustration:
Income Tax on Alien Individuals
*Mr. Y can no longer avail of the 15% preferential income tax rate since ABC
Corporation was only registered with SEC after January 1, 2018.
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15%
Resident individual and
7.5% domestic corporation
final tax
Interest Income from
expanded Foreign * Rate did not change for
Currency Deposit Units
resident foreign corporation
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15%
First
PHP 100,000 5% (Resident individuals
and domestic
Capital corporations)
Gains Tax
(CGT) * No change in CGT
In excess of rate applicable to
Sale of shares
of stock not PHP 100,000
10% resident foreign
corporations &
CGT nonresident foreign
traded in the
corporation (5%/10%)
stock exchange
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Percentage Tax*
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PERIOD DEADLINE
(1997 TAX CODE)
of the same taxable year
1st Q APRIL
4th
(ANNUAL)
15 of the following taxable
year
PERIOD DEADLINE
(RA NO. 10963)
of the same taxable year
1st Q MAY
Deadline for
15
of the following taxable
individual income 4th year
tax declaration (ANNUAL)
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15 15
Deadline of 2nd following the close of the following the close of the
calendar year calendar year
installment
payment*
*When a tax due is in excess of Two thousand pesos (PHP 2,000), the taxpayer other than a
corporation (i.e., individual taxpayer), may elect to pay the tax in two (2) equal installments.
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1. Personal/Corporate profile
Not provided and information
2. Gross sales/receipts
Annual
Income Tax Return 3. Allowable deductions
(individual and 4. Taxable income
corporate)
5. Income tax due
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PCSO
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BIR Form No. 20th day following the BIR Form No. 20th day following
Distribution of BIR 2307 close of the quarter 2307 the close of the
Form Nos. 2306 and quarter
BIR Form No. On or before January 31 BIR Form No.
2307
2306 of the succeeding year 2306 (under RR 11-2018)
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“Gross Sales” for purposes of the 8% income tax, shall be net of the following:
2. Discounts determined and granted at the time of sale, expressly indicated in the
invoice, the grant of which is not dependent upon the happening of a future event.
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“Minimum Wage Earner (MWE) – refers to a worker in the private sector who
is paid with a statutory minimum wage (SMW) rates, or to an employee in the
public sector with compensation income of not more than the statutory
minimum wage rates in the non-agricultural sector where the
worker/employee is assigned.
Such statutory minimum wage rates are exempted from income tax. Likewise,
the exemption covers holiday pay, overtime pay, night shift differential pay,
and hazard pay earned by an MWE.”
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• De minimis benefits
• Employee’s share in the SSS, GSIS, PHIC, Pag-ibig contributions and union dues
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• His income tax shall be computed under the graduated income tax rates and he
shall be allowed a tax credit for the previous quarter/s income tax payment/s
under the 8% income tax rate option.
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► 8% income tax
payments will be
credited against Income
tax computed under
graduated rates.
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C. The preferential income tax rate under subsection (C), (D) and (E) of
Section 25 of the Tax Code, as amended, shall no longer be applicable without
prejudice to the application of preferential tax rates under existing
international tax treaties, if warranted. Thus, all concerned employees of the
regional or area headquarters and regional operating headquarters of
multinational companies, offshore banking units and petroleum service
contractor and subcontractors shall be subject to the regular corporate
income tax rate under Section 24 (A) (a) of the Tax Code, as amended.
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A General Professional Partnership (GPP) is not subject to income tax under Section 26 of
the Tax Code, as amended. However, the partners shall be liable to pay income tax on their
separate and individual capacities for their respective distributive share in the net income of
the GPP.
a. Itemized expenses which are ordinary and necessary, incurred or paid for the practice of
profession; OR
b. Optional Standard Deduction (OSD).
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A. An individual earning purely compensation income whose taxable income does not exceed Two Hundred Fifty Thousand
pesos (P250,000.00);
The Certificate of Withholding filed by the respective employers, duly stamped “Received” by the Bureau, shall be
tantamount to the substituted filing of income tax return by said employees.
B. An individual whose income tax has been correctly withheld by his employer, provided that such individual has only one
employer for the taxable year – the Certificate of Withholding filed by the respective employers, duly stamped “Received”
by the Bureau, shall be tantamount to the substituted filing of income tax returns by said employees;
C. An individual whose sole income has been subjected to final withholding tax;
D. A minimum wage earner as defined in these regulation – The Certificate of Withholding filed by the respective employers,
duly stamped “Received” by the Bureau shall be tantamount to the substituted filing of income tax returns by said
employees
In all cases, all individuals deriving compensation income, regardless of the amount, from two (2) or more concurrent or
successive employers at any time during the taxable year, are not qualified for substituted filing. Thus, they are still required
to file a return.
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► still required to signify the intention to avail of the 8% option on the initial quarterly income tax
return for income tax purposes
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► liable to VAT prospectively starting on the first day of the month following the month when the
threshold is breached
► pay the required percentage tax covering the sales/receipts and other non-operating income, from
the beginning of the taxable year or commencement of business/practice of profession until the
time taxpayer becomes liable for VAT, without imposition of penalty, if timely paid on the
immediately succeeding month/quarter
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VAT taxpayer did not exceed the VAT threshold within the immediately
preceding three (3) year period*
► may opt to be a non-VAT taxpayer and avail of the 8% income tax rate option
► update the registration records on or before the first quarter of a taxable year to reflect the change
in registration
• Taxpayer shall remain liable for VAT for as long as there is no update of registration and VAT-
registered invoices/receipts are continuously issued.
* This relates to Optional VAT Registration of Exempt Person [under Section 236 (H)(2), NIRC], where
the option to register for VAT cannot be cancelled for three years.
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► taxpayer shall automatically be subject to the graduated income tax rates (if the 8% income tax rate
option is initially selected)
► Any income tax paid under the 8% income tax rate shall be deducted from the income tax under the
graduated rates.
► If the graduated income tax rates is chosen from the beginning, taxpayer ceases to be liable to percentage
tax upon registration update and instead is now liable to VAT.
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Transitory Provisions
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
No 15%
Non-Resident Aliens Engaged
Final Withholding Tax on
Capital Gains from
in Trade or Business withholding
Sale of Shares of Stock
NOT Traded in the Stock Non-Resident Alien Not Old Rules provide for Final Tax
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
► Non - Individual Payees: 10% CWT if gross income shall not exceed P720,000
► Payee to submit Notarized Sworn Statement of gross receipts and copy of COR to all
income payors/withholding agents not later than January 15 of each year or prior to
initial payment
► Income Payor: required to submit its own Sworn Declaration on number of payees who
submitted Sworn Declaration with their CORs; plus list of payees
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
Additional rules:
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
Continued…
Persons
required to If individual payee’s cumulative gross receipts exceed P250,000:
deduct and • income payor shall withhold tax based on the amount in excess of P250,000
withhold despite submission of individual payee’s Sworn Declaration.
(Sec. If individual payee fails to submit Sworn Declaration to lone income payor:
2.57.3) • income shall be subject to withholding even if income payment in a taxable
year is P250,00 and below.
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
Pertinent Dates
► April 6, 2018:
► deadline of Income recipient/payee to submit “Income Payee’s Sworn Declaration of
Gross Receipts / Sales” with copy of COR to income payor/withholding agent if he/she
would like to avail of the exemption from the prescribed withholding tax under Section
2.57.2
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RR No. 11-2018
Amending certain provisions of RR No. 2-98, as amended (cont.)
► Income tax withheld by the income payor/withholding agent in excess of what is prescribed in these
regulations shall be refunded to the payee.
► The income payor/withholding agent shall reflect the amount refunded as adjustment to the remittable
withholding tax due for the first quarter withholding tax return. Adjusted amount of tax withheld shall
be reflected in the Alphalist of Payees to be attached to the said first quarter return.
► The list of payees shall be attached to first quarter return to be filed on or before April 30, 2018.
► If BIR Form 2307 (Certificate of Tax Withheld at Source) has already been given, payee shall return it to
payor upon receipt of the refund. Payor will issue a corrected BIR Form 2307, if applicable.
If no BIR Form 2307 given yet, payor to issue BIR Form 2307 to payee on or before the 20th day after
the close of the first quarter reflecting correct amount of tax withheld.
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Key Amendments
Estate Tax
Slide 84
Estate Tax
Estate Tax
Rate
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CITIZEN/RESIDENT
Deductions
Old Rule TRAIN
Medical
expenses P REMOVED
Funeral
P REMOVED
expenses [Actual funeral expense or 5% of
gross estate, whichever is lower
(up to PHP 200,000)]
Judicial REMOVED
expenses P
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CITIZEN/RESIDENT
Deductions
Old Rule TRAIN
Family
Home
P P
(up to (up to
PHP 1M) PHP 10M)
Standard
deduction
P P
(PHP 1M) (PHP 5M)
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Allowed deduction
(but return must include
gross estate outside REMOVED
Nonresident/ Non-citizen Philippines)
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Less: Deductions
Ordinary Deductions 2,000,000
Special Deductions
Family Home 10,000,000
Standard Deduction 5,000,000
Total Deductions (17,000,000)
Although the family home is valued at P30 million, the maximum allowable deduction for
the family home is P10million only.
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Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 42,000,000
Special Deductions
Family Home (10,000,000)
Standard Deduction (5,000,000)
Total Deductions (17,000,000)
Net Estate 32,000,000
Less: ½ Share of Surviving Spouse (21,000,000)
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Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 12,000,000
Special Deductions
Family Home (10,000,000)
Standard Deduction (5,000,000)
Total Deductions (17,000,000)
Net Estate 27,000,000
Less: ½ Share of Surviving Spouse (6,000,000)
Conjugal Property P14,000,000
Conjugal Deductions (2,000,000)
Net Conjugal Estate P12,000,000
(P12,000,000/2)
NET TAXABLE ESTATE P21,000,000
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Less: Deductions
Ordinary Deductions 2,000,000
Special Deductions 14,000,000
Family Home 9,000,000
Standard Deduction 5,000,000
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Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 21,000,000
Special Deductions
Family Home (4,500,000)
Standard Deduction (5,000,000)
Total Deductions (11,500,000)
Net Estate 16,500,000
Less: ½ Share of Surviving Spouse (10,500,000)
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Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 12,000,000
Special Deductions
Family Home (9,000,000)
Standard Deduction (5,000,000)
Total Deductions (16,000,000)
Net Estate 7,000,000
Less: ½ Share of Surviving Spouse (6,000,000)
Conjugal Property P14,000,000
Conjugal Deductions (2,000,000)
Net Conjugal Estate P12,000,000
(P12,000,000/2)
NET TAXABLE ESTATE P1,000,000
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Allowed within
TWO (2) YEARS
Not provided from statutory date
WITHOUT CIVIL
Payment by Installment PENALTY AND
INTEREST
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RR No. 12-2018:
Estate Tax by Installment / Partial Disposition of Estate
Options in case of Insufficiency of cash for immediate payment of total estate tax due:
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RR No. 12-2018
Withdrawal from Decedent’s Bank Deposit Account
WITHDRAWAL ► Amount withdrawn (subjected to 6% FWT) shall be excluded from the gross
estate for purposes of computing the estate tax of the decedent
► File Quarterly Return on FWT on or before last day of the month following
the close of the quarter of withholding
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Key Amendments
Donor’s Tax
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Exempt REMOVED
up to
Dowries or gifts made PHP 10,000
on account of
marriage
Slide 102
RR No. 12-2018
Consolidated Regulations on Estate & Donor’s Tax
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Key Amendments
Value-Added Tax
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Performed by subcontractors
Processing, manufacturing
and/or contractors in processing,
or repacking goods for
converting, or manufacturing
other persons doing
goods for an enterprise whose
business outside the
export sales exceed seventy
Philippines which goods
percent (70%) of total annual
are subsequently exported
production.
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TRAIN
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Goods Services
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“The above provisions go against the principle of limiting the VAT zero-rating to direct exporters. The proliferation of
separate customs territories, which include buildings, creates significant leakages in our tax system. This makes the
tax system highly inequitable and significantly reduces the revenues that could be better used for the poor. As to
tourism enterprises, the current law only allows for duty and tax free importation of capital equipment, transportation
equipment and other goods. The TIEZA Law explicitly allows only duty and tax free importation of capital equipment,
transportation equipment and other goods (in certain cases and always subject to rules provided by the DOF). Thus,
this provision actually grants a new incentive to suppliers of registered tourism enterprises. At any rate, the TIEZA law,
which is still in effect for two more years, can be used to avail of the above-mentioned incentives.”
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► The VAT zero-rating incentive being enjoyed by PEZA locators shall remain
in full force and effect (until a law or RR is passed/issued contrary to or
incompatible with the DOF pronouncement above.)
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REVISED as follows:
Transport of passengers and cargo by AIR OR
SEA VESSELS from the Philippines to a foreign
country
0% “Transport of passengers and
cargo by DOMESTIC air or
sea vessels from the
Philippines to a foreign
country”
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Sale of Electricity
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Exempt Exempt
(up to PHP 12,800) (up to PHP 15,000)
Monthly rental on
residential unit
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*Low cost housing: as set by the Housing and Urban Development Coordinating Council
**Socialized housing: ≤ 450,000
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PHP 3,000,000
PHP 1,919,500
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Within 90 days
Within 120 days From submission of the official receipts or
from submission of invoices and other documents in support
complete documents of the application
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► Source: EY Analysis
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► The 90-day period to process and decide, pending the establishment of the enhanced VAT
Refund System shall only be up to the date of the approval of the Recommendation Report
on such application for VAT Refund by the Commissioner or his duly authorized
representative
► Applies to refunds relating to Zero-rated Sales of Goods and Services which will become
subject to 12% VAT once there is an Enhanced VAT Refund System
► Applies to Claims for Refund/Credit of Excess Input Tax upon cancellation of VAT
Registration
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► RMC 17-2018 provides a table with specific no. of days for each BIR office to process:
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► Any person whose sales or receipts are exempt from the payment of VAT (with gross
sales/receipts not exceeding P3 Million) and who is not a VAT-registered person shall pay a
tax equivalent to 3% of his gross quarterly sales or receipts
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Month Amount
January P 250,000.00 For business tax purposes, he is subject to the
February 250,000.00 12% VAT starting November 2018. He is also
March 250,000.00
required to update his registration from non-
April 250,000.00
May 250,000.00
VAT to VAT on or before November 30, 2018.
June 250,000.00
July 250,000.00
August 250,000.00
September 250,000.00
October P1,000,000.00
November 1,000,000.00
December 1,000,000.00 3,000,000.00
Total P5,250,000.00
Slide 132
may apply for the issuance of a tax credit certificate for any unused input tax within 2 years
from the date of cancellation
► The date of cancellation is the date of issuance of tax clearance by the BIR
► After full settlement of all tax liabilities relative to cessation of business or change of
status
► Filing of the claim shall be made only after completion of the mandatory audit of all
internal revenue tax liabilities covering the immediately preceding year and the short
period return and the issuance of the applicable tax clearance
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► Upon such receipt, the taxpayer shall submit an inventory list of, and surrender for
cancellation, all unused stamped invoices/receipts
Slide 134
Key Amendments
Percentage Tax
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Percentage Tax
Slide 136
Continue with
Withholding Agents
BIR Form 1600
(Percentage and VAT)
(monthly)
Withholding of VAT
Continue with
on Payments to
BIR Form 1600
Government / Non-
(monthly)
Residents
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Slide 138
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Veto Message
Exemption from Percentage Tax
I am constrained to veto the provision which provides for the above under line 12 of
Sec. 38 in the enrolled bill, to wit:
The proposed exemption from percentage tax will result in unnecessary erosion of
revenues and would lead to abuse and leakages. The subject taxpayers under this
provision are already exempted from the VAT, thus the lower three percent
percentage tax on gross sales or gross receipts is considered as their fair share in
contributing to the revenue base of the country.
Slide 140
Key Amendments
Excise Tax
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*The rates of tax shall be increased by 4% every year effective on January 1, 2024,
through revenue regulations issued by the Secretary of Finance.
Slide 142
“I am constrained to veto the provision which provides for the above in lines 20 to 29 of
Sec. 82 of the enrolled bill, to wit:
The provision effectively amends the Sin Tax Law, or RA 10351, which
provides for guaranteed funds for universal health care. The provision will
effectively diminish the share of the health sector in the proposed
allocation.”
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TRAIN
PRODUCT OLD RULES
2018 2019 2020
Lubricating oils and greases PHP 4.50 PHP 8.00 PHP 9.00 PHP 10.00
Unleaded premium gasoline PHP 4.35 PHP 7.00 PHP 9.00 PHP 10.00
Amounts are per liter of volume capacity (except for greases, waxes and petrolatum, and asphalts which are per kilogram and petroleum coke which is per metric ton).
• Naptha and pyrolysis gasoline when used as a raw material in the production of petrochemical products or in refining of petroleum products, or as replacement fuel for natural-gas-
fired-combined cycle power plant when unavailable, per liter of volume capacity = ZERO
The production of petroleum products, whether or not they are classified as products of distillation and for use solely for the production of gasoline shall be exempt from excise
tax.
Slide 144
OLD TRAIN
PRODUCT
RULES 2018 2019 2020
Aviation turbo jet fuel, AVIATION GAS PHP 3.67 PHP 4.00 PHP 4.00 PHP 4.00
Diesel fuel oil and on similar fuel oils having more or less the same PHP 0.00 PHP 2.50 PHP 4.50 PHP 6.00
generating power
Liquefied petroleum gas* PHP 0.00 PHP 1.00 PHP 2.00 PHP 3.00
Bunker fuel oil and on similar fuel oils having more or less the same PHP 0.00 PHP 2.50 PHP 4.50 PHP 6.00
generating power**
PETROLEUM COKE*** N/A PHP 2.50 PHP 4.50 PHP 6.00
Amounts are per liter of volume capacity (except for greases, waxes and petrolatum, and asphalts which are per kilogram and petroleum coke which is per metric ton).
* LPG when used as raw material in the production of petrochemical products shall be taxed at P0 per kilogram.
** Provided, however, that the excise taxes paid on the purchased basestock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the
excise tax due therefrom.
*** When used as feedstock to any power generating facility, per metric ton = ZERO
For 2018 to 2020, the scheduled increase in the excise tax on fuel shall be suspended when the average Dubai crude oil price based on Mean Of Platts Singapore (MOPS) for 3 months prior
to the scheduled increase of the month reaches or exceeds USD 80 per barrel.
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D. Exemption of various petroleum products from excise tax when used as input, feedstock, or as raw material in the manufacturing of
petrochemical products, or in the refining of petroleum products, or as replacement fuel for natural gas fired combined cycle power plants
I am constrained to veto the provision which provides for the above under line 25 Sec. 43 of the enrolled bill, to wit:
“PETROLEUM PRODUCTS, INCLUDING NAPHTHA, LPG, PETROLEUM, COKE, REFINERY FUEL AND OTHER PRODUCTS OF DISTILLATION,
WHEN USED AS INPUT, FEEDSTOCK OR AS RAW MATERIAL IN THE MANUFACTURING 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, SUBJECT TO THE RULES AND REGULATIONS
TO BE PROMULGATED BY THE SECRETARY OF FINANCE, PER LITER OF VOLUME CAPACITY, ZERO (P0.00); FURTHERMORE, THAT THE
BY-PRODUCT INCLUDING FUEL OIL, DIESEL FUEL, KEROSENE, PYROLYSIS GASOLINE, LIQUEFIED PETROLEUM GASES, AND SIMILAR
OILS HAVING MORE OR LESS THE SAME GENERATING POWER, WHICH ARE PRODUCED IN THE PROCESSING OF NAPHTHA INTO
PETROCHEMICAL PRODUCTS SHALL BE SUBJECT TO THE APPLICABLE EXCISE TAX SPECIFIED IN THE SECTION, EXCEPT WHEN SUCH
BY-PRODUCTS ARE TRANSFERRED TO ANY OF THE LOCAL OIL REFINERIES THROUGH SALE, BARTER OR EXCHANGE, FOR THE PURPOSE
OF FURTHER PROCESSING OR BLENDING INTO FINISHED PRODUCTS WHICH ARE SUBJECT TO EXCISE TAX SPECIFIED IN THE SECTION,
EXCEPT WHEN SUCH BY-PRODUCTS ARE TRANSFERRED TO ANY OF THE LOCAL OIL REFINERIES THROUGH SALE, BARTER OR
EXCHANGE, FOR THE PURPOSE OF FURTHER PROCESSING OR BLENDING INTO FINISHED PRODUCTS WHICH ARE SUBJECT TO EXCISE
TAX UNDER THIS SECTION.”
The provision runs the risk of being too general, covering all types of petroleum products, which may be subject to abuse by taxpayers, and
thus lead to massive revenue erosion. At any rate, the tax code already identifies which petroleum products can be exempted.
Slide 146
OFFICIAL FUEL MARKERS OWNER / CONSIGNEE USE OF FRAUDULENT ALL COSTS PERTAINING TO
MARKER PROCUREMENT OF OFFICIAL FUEL
► Secretary of Finance to identify ► shall cause and MARKERS
a list of chemical additives and accommodate the ► shall be considered prima
corresponding quantitative marking of the petroleum facie evidence that the ► Shall be borne by the refiner,
ratio as official fuel markers. products with the official products were withdrawn or manufacturer or importer, as the
► distinct and impossible to marking agent imported without payment case may be
imitate or replicate of taxes and duties
► must be unique to the *government may subsidize cost in
Philippines the first year of implementation
INTERNAL REVENUE OR ABSENCE OF OFFICIAL OR ENGAGEMENT OF ONLY ONE
CUSTOMS OFFICERS DILUTION OF OFFICIAL FUEL MARKING PROVIDER ► The marking of petroleum products
MARKER shall be mandatory within five (5)
► shall be on site to administer ► Will provide, monitor and years from effectivity of this Act.
the declaration of the tax and ► Products shall be administer the fuel markers,
duties imposed on the presumed withdrawn with will provide equipment and
petroleum products and to intention to evade taxes devices, conduct field and
oversee application of the fuel and duties confirmatory tests
marking.
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► Periodic random inspections to establish qualitative and quantitative positive result of fuel trafficking
► To be conducted on fuels found in warehouses, storage tanks, gas stations and other retail outlets, and in other
properties or equipment of those engaged in sale, delivery, trading, transportation, distribution or importation of fuel
intended for domestic market
CONFIRMATORY TESTS
► accurate and precise analytical test of the tested unmarked, adulterated, or diluted fuel to validate and confirm the
result of the field test
Slide 148
Sale, trade, delivery, distribution or transportation of unmarked 1st Offense: PHP 2,500,000
fuel in commercial quantity
• Removal of the official fuel marking agent from marked fuel, 2nd Offense: PHP 5,000,000
• adulteration or dilution of fuel intended for sale to the domestic
market, 3rd Offense: PHP 10,000,000 and
• knowing possession, storage, transfer or offer for sale of fuel
obtained as a result of such removal, adulteration or dilution REVOCATION OF LICENSE to engage in
any trade or business
making, importing, selling, using or possessing fuel markers without Minimum:
express authority;
PHP 1,000,000
Making, importing, selling, using or possessing counterfeit fuel
markers; Maximum:
Causing another person or entity to commit any of the two preceding PHP 5,000,000
acts;
Causing the sale, distribution, supply or transport of legitimately Imprisonment of not less than 4 years but not
imported, in-transit, manufactured or procured controlled precursors more than 8 years
and essential chemicals in diluted / concentrated form
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Minimum:
Any person who willfully inserts, places, adds, or PHP 5,000,000
attaches directly or indirectly, any unmarked fuel,
Maximum:
counterfeit additive or chemical in the person, house,
effects, inventory, or in the immediate vicinity of an PHP 10,000,000
innocent individual for the purpose of implicating,
incriminating or imputing the commission of any Imprisonment of not less than 4 years
violation of this Act but not more than 8 years
“The additional penalties of revocation of the license to practice his profession in case of a practitioner, and the
closure of the fuel testing facility, may also be imposed at the instance of the court.”
Slide 150
Net Manufacturer’s/Importer’s
Tax Rate
Selling Price (in Pesos)
Tax on Tax Rate on
Lower Limit Upper Limit Lower excess over
Limit Lower Limit
0 600,000 - 2%
OLD RULES
600,000 1,100,000 12,000 20%
1,100,000 2,100,000 112,000 40%
Over 2,100,000 512,000 60%
Net Manufacturer’s/Importer’s
Selling Price (in Pesos) Tax Rate
Lower Limit Upper Limit
0 600,000 4%
600,001 1,000,000 10%
TRAIN 1,000,001 4,000,000 20%
(effective January 1, 2018) Over
50%
4,000,000
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PHP328,000 PHP328,000
(20%) (20%)
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Slide 155
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Slide 156
PHP3.74million PHP3.74million
(50%) (50%)
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Slide 158
EXCISE TAX
(NEW)
EXCISE
TAX
(OLD)
NET
MANUFACTURER’S
PRICE/IMPORTER’S
SELLING PRICE
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TYPE OF
AUTOMOBILE
OLD RULES TRAIN
Subject to 50% of
the applicable
Not provided
Hybrid excise tax rates
Vehicles on automobiles
Slide 160
TYPE OF
AUTOMOBILE
OLD RULES TRAIN
Subject to
excise tax
(Shall not be
Exempt
Pick-ups considered as trucks,
(Shall be considered as
trucks)
which are exempt from
excise tax)
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Slide 162
Slide 163
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Sweetened
Juice Drinks
Sweetened Flavored
Tea Water
Slide 164
E
X
C
All milk 100% natural 100% natural
L products fruit juices vegetable juices
U
S
I
O Meal replacement Ground coffee, instant
and medically soluble coffee & pre-
indicated packaged powdered
N beverages coffee products
S
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PARTICULARS Deadline
DATE
Filing of Return and
Payment of Excise Before removal from
Tax on Domestic and
Imported Sweetened
place of production /
Beverages from customs
custody
Slide 166
OLD
PRODUCT TRAIN
RULES
1.Coal and coke PHP 10.00 u 1 January 2018 – PHP 50.00*
(domestic or imported) per metric u 1 January 2019 – PHP 100.00*
ton u 1 January 2020 – PHP 150.00*
4. On indigenous petroleumB 3% 6%
A Locally produced: based on actual market value of the gross output
Imported: based on value used by Bureau of Customs in determining tariff and customs duties, net of excise tax and VAT
B Based on the fair international market price
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Key Amendments
Documentary Stamp Tax
Slide 168
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*Transfers exempt from donor’s tax under Section 101 (a) & (b) shall be exempt from DST.
Slide 172
First 5,000
20.00 40.00
of the amount secured
On each 5,000
Mortgages, pledges, and or fractional part thereof
10.00 20.00
deeds of trust in excess of the first
5,000
5.00 10.00
Powers of attorney
Slide 173
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Foreign Bills of
On each 200 or fractional part thereof, of the 0.30 0.60
Exchange
face value
Bank checks, drafts,
certificates of deposit not
On each instrument 1.50 3.00
bearing interest, and other
instruments
Certificates of profits or
On each PHP200 pesos, or fractional part
interest in property or 0.50 1.00
thereof, of the face value
accumulations
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On each PHP200
or fractional part thereof, of the
0.50 1.00
premium or installment payment or
contract price collected
Policies of annuities
On each PHP200
0.20 0.40
or fractional part thereof, of the
premium or contribution collected
Pre-need plans
15.00 30.00
Certificates
Slide 176
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Weight of Registered
Gross Tonnage
(Duration of the charter and
PARTICULARS OLD TRAIN
contract does not exceed six
(6) months)
Slide 178
Other Provisions
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Issuance of Receipts/Invoices
uIf purchaser is VAT-registered, invoice or receipt shall show purchaser’s Taxpayer Identification No.
uUpon establishment (within 5 years) of a system capable of storing and processing the required data, the following
shall issue electronic receipts or sales or commercial invoices (R/SCI):
uDigital records of the electronic R/SCI shall be kept by purchaser, customer/client and issuer for three years.
Slide 184
SALES REPORTING
TYPE OF TAXPAYER
METHOD
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PARTICULARS FINE/PENALTY
6 to 10 years
2 to 4 years
Imprisonment
Slide 186
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Failure to
Submit Sales
Data PERMANENT CLOSURE
of the taxpayer
Slide 188
Cumulative suppression
of
electronic sales record
Fine AND
of more than
PHP500,000 - PHP50 million is
2-4 years
PHP10 million Imprisonment
Sales ECONOMIC SABOTAGE
Suppression
Devices
to be punished
MAXIMUM PENALTY
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Hence, the workaround guidelines are provided to enhance the following forms:
BIR Form
Form Name Issuance
No.
1602 Monthly Remittance Return of Final Income Taxes Withheld RMC 2-2018
1603 Quarterly Remittance Return of Final Income Taxes Withheld
2552 Percentage Tax Return for Transactions Involving Shares of Stock Listed RR 9-2018 and
and Traded Through the Local Stock Exchange and/or Secondary Public RMC 2-2018
Offering
2000 Documentary Stamp Tax Declaration/Return
2000-OT Documentary Stamp Tax Declaration/Return – One Time Transactions RMC 3-2018
Slide 190
BIR Form
Form Name Issuance
No.
2200-T Excise Tax Return for Tobacco Products
2200-P Excise Tax Return for Petroleum Products RMC 4-2018
2200-AN Excise Tax Return for Automobile & Non-essential Products
2200-M Excise Tax Return for Mineral Products
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Package 2
Corporate Income Tax
Slide 192
Questions?
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Thank you!
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