REPUBLIC ACT

NO. 10963
Republic Act 10963 or the
TRAIN Law
 The Tax Reform for Acceleration and Inclusion
(TRAIN) is the first package of the comprehensive
tax reform program (CTRP) envisioned by
President Duterte’s administration, which seeks to
correct a number of deficiencies in the tax system
to make it simpler, fairer, and more efficient.

 Through TRAIN, every Filipino contributes in

funding more infrastructure and social services to
eradicate extreme poverty and reduce inequality
towards prosperity for all.
Republic Act 10963 or the
TRAIN Law

 TRAIN addresses several weaknesses of the current tax

system by lowering and simplifying personal income taxes,
simplifying estate and donor’s taxes, expanding the value-
added tax (VAT) base, adjusting oil and automobile excise
taxes, and introducing excise tax on sugar-sweetened
beverages.

 On Tuesday, December 19, Duterte signed into law

Republic Act No. 10963, or the Tax Reform for Acceleration
and Inclusion (TRAIN) bill, which aims to generate revenue
to fund a multi-billion dollar infrastructure program key to
the governments economic agenda.
 Tax Reform Acceleration and
Inclusion (TRAIN)

The goal of the first package of the

Comprehensive Tax Reform Program (CTRP) or
TRAIN is to create a simpler, fair, and more
efficient system, as per the constitution, where the
rich will have a bigger contribution and the poor
will benefit more from the government’s programs
and services.
C- CREATES – 8 sections
A-AMENDS- 69 sections
R-REPEALS – 3 sections
 OLD PROVISION
TRAIN LAW
Annual income: P250, 000 Annual income:
and below - 0% P10, 000 and below -
5%
Annual income: P8, 000,000 Annual income:
and above - 35% P500, 000 and above -
32%
th
13 month pay and other th
13 month pay and
bonuses: P90, 000 and other benefits: P82, 000
below - 0% and below - 0%

INCOME TAX
 Personal Income Tax

TAX SCHEDULE EFFECTIVE JANUARY 1, 2018 UNTIL DECEMBER 31, 2022

Annual Income Tax Rate
P250,000 and below 0%
Over P250, 000 – P400, 000 20% of excess over P250, 000
Over P400, 000 – P800, 000 P30,000 + 25% of excess over
P400,000
Over P800, 000 – P2,000,000 P130,000 + 30% of excess over
P800,000
Over P2,000,000 – P8,000,000 P490,000 + 32% of excess over
P2,000,000
Above P8,000,000 P2,410,000 + 35% of excess over
P8,000,000
 Personal Income Tax

TAX SCHEDULE EFFECTIVE JANUARY 1, 2023 AND ONWARDS

Annual Income Tax Rate
P250,000 and below 0%
Over P250, 000 – P400, 000 15% of excess over P250, 000
Over P400, 000 – P800, 000 P22,500 + 20% of excess over
P400,000
Over P800, 000 – P2,000,000 P102,500 + 25% of excess over
P800,000
Over P2,000,000 – P8,000,000 P402,500 + 30% of excess over
P2,000,000
Above P8,000,000 P2,202,500 + 35% of excess over
P8,000,000
Professionals and Self-employed
Annual Sales or Gross Receipts
P250,000 and below
P500,000 and below
Below P3,000,000
Above P3,000,000
Tax Rates
0%
Exempt from 3% Percentage
Tax
May choose either 8% flat tax
on gross receipts or follow
personal income tax table
Subject to personal income
tax table
 Filing of Quarterly ITR

1st Qtr. APRIL 15 MAY 15

Same
2nd Qtr. AUG. 15 AUG. 15
Same
3rd Qtr. NOV. 15 NOV. 15

ANNUAL ITR

April 15 of succeeding year Same

Below Php 10k = 5% deduction Over Php 500K = 32% deduction

Exclusions / Deductions
 Personal Exemption = Php 50,000
 Php 25,000 per dependent up to 4 children
13th Moth Pay and other bonuses Php 82,000
Employees of Regional Headquarters,ROHQ,OBU and Petroleum services Contractors 15%

Deadline of 1st
Quarter and
Annual Income
Tax Return
Deadline for 2nd
installment of
annual income
tax due
Fringe Benefits
Tax Rate
32%
 ANNUAL INCOME TAX
RETURN FOR 2018 TO BE
ANNUAL
FILED INCOME
2019 SHALL TAX
CONSIST
RETURN FOR 2018OF
OF A MAXIMUM TO4BE Additional provision:
FILED 2019 SHALL CONSIST
PAGES  Personal profile and
OF A MAXIMUM OF 4 information
PAGES  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
2nd Installment in the
payment of taxes OCTOBER 15
Deadline JULY 15

KEEPING OF BOOKS OF NO more simplified Books of

ACCOUNTS accounts
Quarterly Sales P150,000
Simplified Bookkeeping All taxpayers are required to keep
and use relevant & appropriate
set of Bookkeeping records
 Keeping of Books of Accounts

Corporations, Companies, Partnerships or Persons Required to Keep Books of

Accounts. – All corporations, companies, partnerships or persons required by law to
pay internal revenue taxes shall keep and use relevant and appropriate set of
bookkeeping records duly authorized by the Secretary of Finance wherein all
transactions and results of operations are shown and from which all taxes due the
Government may readily and accurately be ascertained and determined any time of
the year: Provided, That corporations, companies, partnerships or persons whose
gross annual sales, earnings, receipts or output exceed Three million pesos
(P3,000,000), shall have their books of accounts audited and examined yearly by
independent Certified Public Accountants and their income tax returns accompanied
with a duly accomplished Account Information form (AIF) which shall contain, among
others, information lifted from certified balance sheets, profit and loss statements,
schedules listing income-producing properties and the corresponding income
therefrom and other relevant statements.
SELF EMPLOYED INDIVIDUALS

Purely Self Employment/ Practice of Profession

Income that is below 3M

Option to avail

8% tax on gross sales or

Graduated
OR receipts in excess of
rates
P250,000 in lieu of

 Graduated Income Tax

 Percentage Tax
Below Php 250k = 0% deduction Over Php 8M = 32% - 35% deduction
Optional On gross revenues for self-employed below Php 3M
Exclusions / Deductions
 NO ADDITIONAL AND PERSONAL/ BASIC EXEMPTIONS ALREADY
13th Moth Pay and other bonuses Php 90,000
Employees of Regional Headquarters,ROHQ,OBU & Petroleum services Contractors 0%-35%
Deadline of
Annual Income
Tax Return and
1st Quarter
Deadline for 2nd
installment of
annual income
tax due
Fringe Benefit
Tax Rate
35%
 SUMMARY
PURELY COMPENSATION
INCOME EARNERS

Salary ALWAYS Graduated

Rates

8% Option

Employer Employee 250,000

Self Employed/Practice
Profession OPTION:

1. Income below 3M 8%

2. 250,000 deduction

Or
Store Doctor

3. Graduated Rates
MIXED INCOME EARNER
COMPENSATION
Compensation Always graduated Rates
Income plus Income
from Business BUSINESS INCOME TAXPAYER HAS THE OPTION TO
AVAIL THE 8%

If the taxpayer availed of the 8%

Compensation X
Business Income
Tax Due Graduated
X 8%
Rates
 If the taxpayer do not avail the 8%

Income from Compensation

+ Income from Business
Tax Due
Total
X Graduated Rates
Passive Income such as the capital gains tax on sale of unlisted shares
of stock and interest income from foreign currency bank deposits derived by
citizens, resident aliens and domestic corporations are all subject to an
increased final tax of 15%.
In addition to that, starting this year of the dog, PCSO and lotto winnings
exceeding P10,000 will be subject to 20% final tax.
Philippine Charity Exempt
Sweepstakes Office and
Lotto Winnings
Interest on Foreign 7.5%
Currency Deposit Unit *based on 1997
Tax Code* Philippine Charity Above P10K
Capital Gains Tax on 5% & 10% Sweepstakes Office and 20% FWT
unlisted shares Lotto Winnings
Interest on Foreign 15%
Stock Transaction Tax 0.50 of 1% Currency Deposit Unit *2018 TRAIN*
Capital Gains Tax on 15%
unlisted shares

Stock Transaction Tax 0.60 of 1%

 OLD PROVISION
TRAIN LAW
A flat rate of 6% Up to 20% net value
based on the net estate of the estate with a
value, standard deduction
plus the standard deduction of P1.7 million and
is increased to P5 million exemption for
and exemption for family family homes up to
homes up to P10 million P1million

ESTATE TAX
 Estate Tax

Old New
6 tiers Flat 6%
Family homes up to P1 million Family homes up to P10 million
exempt exempt
Up to P1.7 million deduction Up to P5 million deduction
Bank withdrawals on deceased’s Heirs/executors can make
accounts limited, requires many unlimited withdrawals, subject to
documents withholding tax

6 months to pay estate taxes 1 year to pay estate taxes

(installment possible)
 TRAIN LAW
OLD PROVISION

A flat rate of 6% A rate of 2%-15% on net

on net donations for gifts donations for gifts if the
exceeding donor and donee are
related, and 30%
P250,000 otherwise.
regardless of relationship
between donor and donee

DONOR’S TAX
Donor’s tax (Old Provision)

Net Gifts Bracket Tax Rate

Not over P100,000 Exempt
P100,000-P200,000 0 + 2% of excess over P100,000
P200,000-P500,000 P2,000 + 4% of excess over P200,000
P500,000-P1 million P14,000 + 6% of excess over P500,000
P1 million-P3 million P44,000 + 8% of excess over P1 million
P3 million-P5 million P204,000 + 10% of excess over P3 million
P5 million-P10 million P404,000 + 12% of excess over P5 million
Over P10 million P1,004,000 + 15% of excess over P10 million

 When the donee or beneficiary is a stranger, the tax payable by

the donor is 30% of the net gifts.
Donor’s Tax (TRAIN law)

Tax Base Tax Rate

Annual net gift of P250,000 and above 6%

 Uniform rate for donations to strangers or relatives

Sugar-sweetened beverages, once without taxes, are now
P6/liter
Meanwhile,
High fructose corn syrup beverages are at P12/liter.
A pack of cigarettes that costs P30 will now cost P32.50
this year and will increase in P2.5 increments until 2022.
So if you buy a pack of cigarettes in 2022, it will damage
your wallet to the tune of P40 and it might possibly
change your life. A 4% increase in taxes will be
implemented starting 2023.
 TRAIN LAW
Raise the excise tax on
automobiles. Those valued up to
P600,000 would be imposed a 4%
tax; 10% for P600,000 up to P1
million; 20% on over P1 million to
P4 million and 50% on over P4
million.
Cars excluded:
-Electric vehicles
-Pick-ups
Hybrid cars will be taxed at half
the rates
AUTOMOBILE
EXCISE TAX
OLD PROVISION
Vehicles: P600,000 and
below – 2%
Vehicles: P600,000 up to
P1.1 million – P12,000 + 20%
of excess over P600,000
Vehicles: above P1.1
million up to P2.1 million –
P112,000 + 40% of excess
over P2.1 million
 Automobile Excise Tax
Old Provision TRAIN Law
Net manufacturer’s Rate Net manufacturer’s Rate
Price Price
Up to P600,000 2% Up toP600,000 4%

Over P600,000- P12,000 + 20% of P600,000 to P1 million 10%

P1.1million excess over P600,000
Over P1.1million to P112,000 + 40% of P1 million to P4 million 20%
P2.1million excess over P2.1 million
Over P2.1million P512,000 + 6-% of Above P4 million 50%
excess over P2.1 million
Cars excluded:
 Electric vehicles
 Pick-ups
Hybrid cars will be taxed at half the rates
 TRAIN LAW OLD PROVISION

Impose a 5% tax on cosmetic -None-

procedures, surgeries and body
enhancements.

COSMETIC TAX
Cosmetic procedures

5% excise tax

 Invasive cosmetics procedures and surgeries directed
solely towards altering or enhancing the patient’s
appearance.

No Tax
 Procedures necessary to ameliorate a deformity arising
from, or directly related to, a congenital or
developmental defector abnormality, a personal injury
resulting from an accident or trauma, or disfiguring
disease, tumor, virus or infection.
 Where will revenue from TRAIN go?

Social mitigating
measures and
investment in
• Build, Build, Build education, health,
targeted nutrition,
Program and other
infrastructure programs
30% and anti-hunger
to address congestion programs for mothers,
through better mass infants, and young
transport and new road 70% children, social
protection,
networks
• Military infrastructure, employment, and
sports facilities for housing that prioritize
public schools and and directly benefit
potable drinking water both the poor and
supply in all public near poor households
places.
 What will tax reform fund ?

1.Education

 The tax reform will be able to

fund investments in
education, achieving a
more conducive learning
environment with the ideal
teacher-to-student ratio and
classroom-to-student ratio
 What will tax reform fund ?

2.Healthcare Services

Upgrade 704 • Upgrade and/or Hire an

 With the tax reform, local hospitals
Achieve relocate 263 rural additional
100%
we can invest more in and establish PhilHealth
and urban health 2,424 doctors,
units to disaster 29,466 nurses,
our country's 25 local coverage at resilient facilities 1,114 dentist,
healthcare by hospitals higher • Build 15,988 new 3,288
providing better quality of barangay health pharmacist,
services
services and facilities stations 2,682 medical
• Build 424 new technologist,
rural health units 911 public
and urban health health
centers associates, and
2,497 UHC
implementers
 What will tax reform fund ?
3. Infrastructure Programs
 The additional revenue raised
by the tax reform will be used to
fund the infrastructure program
of the Department of Public
Works and Highways (DPWH),
which consists of major
highways, expressways, and
flood control projects. Funding
these major infrastructure
projects is possible with tax
reform for our country to sustain
high and inclusive growth.
• Bonifacio global city –
ortigas center link road
• UP – Miriam – Ateneo
viaduct along C-
5/Katipunan
• Camarines Sur/Albay
Diversion road
• Pulillan – Baliuag Diversion
road
• Maasin City Coatal bypass
road cum sea wall
• Tacloban city by-pass road
•Panay east-west road
• Daang Maharlika
(alternate route)
•Cagayan de oro diversion
road
• Valencia city –
Pangantucan diversion road
 The proposed tax reform
program aims to provide
the needed additional
revenues that would fund
our country’s investment
needs, promoting better
lives for Filipinos.
Who will be the Winner & Losers of
this TRAIN Law?
Winners
 Minimum wage earners
 Earners with taxable income of
P250,000
 Individuals who receive bonuses
 Members of cooperatives
 Senior citizens
 Person with disabilities
 Bureau of internal revenue (BIR)
 Bureau of customs
Losers
 Consumers due to hike in excise
taxes of oil products
 Buyers of new vehicles
 Consumers of beverages
containing sugar
 House/apartments renters with
rental fees below P10,000
 Lotto winners
 Individuals who receive royalties
and interest from bank deposits