A.

A COMPARATIVE ANALYSIS ON THE PROVISIONS OF THE 1997 TAX CODE

& AMENDMENTS/REPEALS INTRODUCED BY TAX REFORM FOR
ACCELERATION & INCLUSION (TRAIN) LAW

We are sending below highlights of significant changes introduced by TRAIN Law based on
our comparative study conducted and pending the implementing rules and regulations to be
issued by the Bureau of Internal Revenue.

A. ADMINISTRATIVE
OLD TAX CODE AMENDMENTS INTRODUCED BY
TRAIN LAW
 No TIMTA yet at the time of the  Power of the Commissioner to obtain
enactment of 1997 Tax Code information to include data supplied by
Cooperative Development Authority in
compliance with “The Tax Incentives
Management & Transparency Act
 Presence of counterpart restrictions (TIMTA)”

 Power of the Commissioner to make

assessments notwithstanding any law
requiring prior authorization of any
 No period is provided government agency or instrumentality

 Authority of the Commissioner to

prescribe real property values subject to
automatic adjustment once every three
(3) years

B. INDIVIDUAL INCOME & RETURNS & PAYMENT

 Below Php 10,000.00 taxed at 5%
 Over Php 500,000.00 taxed at 32%
 No counter-part provision
 Personal exemption-Php 50,000.00
 Additional exemption-Php 25,000.00
per child
 No counter-part provision
 Tax exempt 13th Month Pay & Other
Benefits including Productivity
Incentives & Christmas Bonus-Php
82,000.00
 Below Php 250,000.00 no tax
 Over Php 8M taxed at 35%
 Optional for self-employed &
professionals to be taxed at 8% for
gross revenues below Php 3M or the
new VAT threshold
 No more personal and additional
exemptions
 Minimum wage earners receiving
holiday pay still exempt from income tax
 Php 90,000.00
 Employees of RHQ, ROHQ, OBU, &
Petroleum Service Contractors taxed
at 15%
 Fringe Benefit Tax-32%
 None
 Deadline for 1st Quarter & Annual
ITR-April 15
 Deadline for 2nd Installment of
Annual Income Tax Due-July 15
C. PASSIVE INCOME
 PCSO & Lotto Winnings-exempt
 Interest income on foreign currency
denominated units-7.5%
 Capital gains tax on unlisted shares-
5% for 1st Php 100,000.00 net capital
gains realized and 10% in excess of
Php 100,000.00
D. ESTATE
 Progressive at 5% to 20%
 Standard deduction at Php 1M
 Family home Php 1M
 CPA Certification needed at Php 2M
 None
 Estate tax return filing deadline-
within 6 months from the date of death
 No counterpart provisions
E. DONATION
 0%-15% & 30% on donations to
strangers
F. VAT
 VAT threshold-Php 1,919,500.00
 Sale of goods to PEZA-0%
 VAT exempt sale of residential lot-not
more than Php 1,919,200.00
 VAT exempt sale of residential house
& lot-Php 3,199,200.00
 Preferential tax treatment of 15% shall
not apply anymore to registrants after
January 1, 2018
 35%
 Returns to consist of maximum of 4
pages showing personal profile &
information, gross revenues, allowable
deductions, taxable income, income tax
due & payable
 May 15
 October 15
 Taxable above Php 10,000.00
 15% whether recipient is individual or
domestic corporation
 15%
 Flat rate of 6%
 Php 5M
 Php 10M
 Php 5M
 Final withholding tax at 6% on
withdrawals on deposits of decedent
 1 year
 Payment by installment in 2 years in
case of insufficient cash without civil
penalty & interest
 6% in excess of Php 250,000.00
 Php 3M
 Subject to 12% upon implementation
of enhanced VAT refund system
 Php 1.5M
 Php 2.5M, by 2021 Php 2M
 VAT exempt lease of residential unit-
Php 10,000.00
 Association dues, membership fees
& other assessments & charges of
homeowner’s association &
condominium corporation-vatable
 Transfer property pursuant to Section
40 (C) (2) of the Tax Code on tax-free
exchange-vatable
 Sale of medicines-12% VAT
 Amortization of input VAT on capital
goods
 120-day period within which to refund
reckoned from the complete
submission of documents
 In case of inaction, appeal to CTA
after the expiration of 120-day period
 Monthly & quarterly VAT filing
G. PERCENTAGE TAX
 Cooperatives are exempt from 3%
gross receipts tax
 Self-employed & professionals with
gross receipts of Php 1,919,500.00
and less-subject to 3%
 Stock transaction tax on listed
shares-0.50 of 1%
H. EXCISE TAX
 Php 31.20 per pack with 4% increase
annually
 Diesel-Php 0.00 per liter
 Unleaded & premium gasoline-Php
4.35 per liter
 Php 15,000.00
 VAT exempt
 VAT exempt
 VAT exempt Transfer of Sale of
drugs and medicines for diabetes, high
cholesterol & hypertension-VAT
exempt effective January 1, 2019
 Repealed by 2022
 90 days reckoned from the date of
submission of official receipts &
invoices
 BIR officer may be punished
 Effective 2023 only quarterly VAT
filing
 Beginning January 1, 2019 , annual
gross receipts not exceeding Php
500,000.0 shall be exempt from 3%
 Exempt effective January 1, 2019 if
annual gross receipts not exceeding
Php 500,000.00
 0.60 of 1%
 Php 32.50-January 2018
Php 35.00-January 2019
Php 37.50-January 2020
Php 40.00-January 2022
4% annual increase
 Php 2.50 per liter-2018
Php 4.50 per liter-2019
Php 6.00 per liter-2020
 Php 7.00 per liter-2018
Php 9.00 per liter-2019
 Php 10.00 per liter-2020
 No counterpart provisions