PERFORMANCE TASK:

CONTINUITY IN
TAXATION
11-St. Martin de Porres
Study Committee

Leader: Encisa, Liam Daron S.

Member 1: Cruz, John Andrei S.
Member 2: Morales, Miguel Angelo A.
Member 3: Villanueva, Sean Thadeus G.
Member 4: Almonte, Hanna Kim H.
Member 5: Garcia, Ma. Trishanna Patrique F.
Member 6: Larracas, Jana Cyrene A.
 TRAIN LAW

On December 19, 2017, Former President Rodrigo Duterte signed the Tax Reform for
Acceleration and Inclusion (TRAIN) Law, which provides income tax cuts for most Filipino taxpayers
while funding infrastructure and social programs through adjustments in VAT exemptions, excise taxes on
petroleum goods, and automobile taxes.

The TRAIN Law, enacted to simplify and streamline taxation processes, aims to facilitate
business growth, job creation, and poverty reduction. As part of the Comprehensive Tax Reform Program
(CTRP), the law focuses on reducing personal income tax (PIT), managing VAT exemptions, and
adjusting excise taxes on petroleum products and automobiles. The law corrected the inequities in the tax
system by lowering personal income taxes, allowing taxpayers to benefit from their efforts while
contributing proportionately to national development.

Tax Schedule Effectiveness in 2023

Beginning January 1, 2023, Republic Act 10963, also known as the Tax Reform for Acceleration
and Inclusion (TRAIN) law, introduces further personal income tax cuts in the Philippines. Individuals
earning below PHP250,000 annually remain exempt from personal income taxes. The revised tax
schedule reduces personal income taxes for earners below PHP8,000,000 compared to the previous rates
from January 1, 2018, to December 31, 2022. However, for individuals earning PHP8,000,000 and above
annually, the tax rate remains at 35 percent to uphold the progressivity of the tax system.
 Piecewise of TRAIN LAW
Evaluation of the TRAIN Law [2018] as of 2024
Individuals with an annual income of PHP 250,000.00 or below will be exempt from paying any income
taxes.
As for individuals with an income of more than PHP 250,000.00 to PHP 400,000.00 they will pay an
income tax of 15% of any excess value over PHP 250,000.00.
For people with an annual income of more than PHP 400,000.00 to PHP 800,000.00 they will have an
income tax of PHP 22,500.00 + 20% of any excess value over PHP 400,000.00.
And for individuals with an annual income of more than PHP 800,000.00 to PHP 2,000,000.00 they will
have to pay an income tax of PHP 102,500.00 + 25% of any excess value over PHP 800,000.00.
And individuals with an annual income of more than PHP 2,000,000.00 to PHP 8,000,000.00 they will
have to pay an income tax of PHP 402,500.00 + 30% of any excess value over PHP 2,000,000.00.
Individuals with an annual income of more than PHP 8,000,000 will have to pay an income tax of PHP
2,202,500.00 + 35% of any excess value over PHP 8,000,000.00.

Blue - Fixed tax rate

Yellow - Tax rate on excess value

Piecewise Function

Let x be the annual income

y be the annual income tax

EXAMPLES
1. A sari-sari store’s annual earnings is PHP150, 000, how much would be its annual tax?

f(x) = 0, 0 < x ≤ 250, 000

f(150, 000) = 0

Answer: The sari-sari store doesn’t incur any additional taxes based on it’s income.

2. If Mr. Vallejo’s annual income in LH Medical Hospital is PHP 398,000, how much annual income
tax he needs to pay?

f(x) = 0 + (0.15)(x-250K), 250K < x ≤ 400K

= 0 + (0.15)(398K-250K)
= 0 + (0.15)(148K)
= 0 + 22,200
= 22,200

Answer: Mr. Vallejo will be paying PHP 22,200 for the annual income tax.

3. BrewBro’s Café’s annual income is 475, 000, how much annual tax do the owner needs to pay?

f(x) = 22,500 + (0.20)(x-400K), 400K < x ≤ 800K

= 22,500 + (0.20)(475K-400K)
= 22,500 + (0.20)(75,000)
= 22,500 + 15,000
= 37,500

Answer: The annual tax of BrewBro’s Café would be PHP37,000.

4. Engr. Joey is working as an ECE at Huawei Corporation, he is earning PHP 1,250,000 yearly.
How much is his annual tax?

f(x) = 102,500 + (0.25)(x-800K), 800K < x ≤ 2M

= 102,500 + (0.25)(1,250,000-800K)
= 102,500 + (0.25)(450,000)
= 102,500 + 112,500
= 215,000

Answer: His annual tax is PHP215,000.

5. Jiam’s father has been working as an international commercial pilot and his yearly salary is PHP
4,398,400. How much will he pay for his annual income taxes?
 f(x) = 402,500 + (0.30)(x-2M), 2M < x ≤ 8M
= 402,500 + (0.30)(4,398,400-2M)
= 402,500 + (0.30)(2,398,400)
= 402,500 + 719,520
= 1,122,020

Answer: He will have to pay an annual income tax of PHP1,122,020.

6. Horizon Real Estate has an annual income of PHP9,000,000, how much is their annual tax?

F(x) = 2,202,500 + (0.35)(x-8M), x > 8,000,000

= 2,202,500 + (0.35)(9M-8M)
= 2,202,500 + (0.35)(1M)
= 2,202,500 + 350,000
= 2,552,500

Answer: Horizon Real Estate’s annual tax is PHP2,552,500.