TRAIN LAW - 3.9.18 - Laguna Chapter

REPUBLIC ACT NO.
10963
TAX REFORM FOR

ACCELERATION AND INCLUSION
(TRAIN LAW)
GERONIMA A. LAPUZ, CPA

Resource Person
FROM THE DEPARTMENT OF FINANCE:
The Tax Reform for Acceleration and

Inclusion (TRAIN) is the first package of a
broader comprehensive tax reform program
envisioned by this Administration to make the
tax system simpler, fairer, and more efficient. By
enhancing both tax policy and administration,
the reform will yield additional and reliable
source of revenues to help fund the
Administration’s 10-point Socioeconomic
Agenda.
Vision for the Philippines
By 2022 (6 years from now)
•Poverty rate reduced from 21.6 to 14% (or some
6 million Filipinos uplifted from poverty)
•Law abiding country
•Peace within the country and with our neighbors
•Achieve high-middle income status, where per
capita gross national income (GNI) increases
from USD 3,000 to USD 4,100 by 2022 in today’s
money (where Thailand and China are today)
Vision for the Philippines
By 2040 (24 years or one generation from now)
•Extreme poverty eradicated

•Inclusive economic and political institutions
where everyone has equal opportunities
•Achieve high income status, where per capita
GNI increases from USD 3,000 to USD 12,000
by 2040 in today’s money (where Malaysia and
South Korea are today)
How to raise the needed funds
•Tax policy reform to create a simpler, fairer,
and more efficient tax system characterized by
low rates and a broad base that can promote
investment, job creation, and poverty reduction
•Tax administration reforms in BIR and BOC
•Budget reforms to improve the pace,
efficiency, and transparency of spending
•All three are needed. Higher chances of tax
policy reform succeeding if done together with
other reforms.
ARTICLE VI
THE LEGISLATIVE DEPARTMENT
SECTION 24. All appropriation,

revenue or tariff bills, bills authorizing
increase of the public debt, bills of
local application, and private bills shall
originate exclusively in the House of
Representatives, but the Senate may
propose or concur with amendments.
Sources of the TRAIN LAW
House Bill No. 5636 and

Senate Bill No. 1592
ARTICLE VI
LEGISLATIVE DEPARTMENT
(2) The President shall have the power to veto any

particular item or items in an appropriation, revenue,
or tariff bill, but the veto shall not affect the item or
items to which he does not object.
Atty. Arnold A. Apdua, CPA

President Duterte has vetoed certain provisions of
the TRAIN. The vetoed five line items are the
following provisions:
1. Reduced income tax rate of employees of
Regional Headquarters (RHQs), Regional
Operating Headquarters (ROHQs), Offshore
Banking Units (OBUs), and Petroleum Service
Contractors and Subcontractors;
2. Zero-rating of sales of goods and services to
separate customs territory and tourism
enterprise zones;
3. Exemption from percentage tax of gross
sales/receipts not exceeding five hundred
thousand pesos (P500,000.00);
4. 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; and
5. Earmarking of incremental tobacco taxes.
AMENDED
PROVISIONS UNDER
THE TRAIN LAW
Section 5. Power of the Commissioner to
Obtain Information and to Summon,
Examine and Take Testimony of Persons.
-The Cooperative Development Authority shall

submit to the BIR a report on tax incentives
availed of by cooperatives and to be submitted
to the Department of Finance as database
under Tax Incentives Management and
Transparency Act.
Section 6. Power of the Commissioner to
Make Assessments and Prescribe
Additional Requirements for Tax
Administration and Enforcement:
-The power of the Commissioner or his duly

authorized representative may authorize the
examination of any taxpayer and the
assessment of the correct amount of tax,
notwithstanding requiring the prior
authorization of any government agency or
instrumentality.
Authority of the Commissioner to
prescribe real property values subject
mandatory consultation with competent
appraisers both from the private and
public sectors, and with prior notice to
affected taxpayers and subject to
automatic adjustment once every three
(3) years.
Sec 24. Income Tax Rates
A.Rates of Tax on Taxable Income of
Individuals
a) Tax Schedule Effective January 1, 2018 until
December 31, 2022:
Not over P250,000 0%
Over P250,000 but not over P400,000 20% of the excess over P250,000
Over P400,000 but not over P800,000 P30,000 + 25% of the excess over
P400,000
Over P800,000 but not over P2,000,000 P130,000 + 30% of the excess over
P800,000
Over P2,000,000 but not over P8,000,000 P490,000 + 32% of the excess over
P2,000,000
Over P8,000,000 P2,410,000 + 35% of the excess over
P8,000,000
A.Rates of Tax on Taxable Income of
Individuals
a) Tax Schedule Effective January 1, 2023 and
onwards:
Not over P250,000 0%
Over P250,000 but not over 15% of the excess over P250,000
P400,000
Over P400,000 but notover P22,500 + 20% of the excess over
P800,000 P400,000
Over P800,000 but not over P102,500 + 25% of the excess
P2,000,000 over P800,000
Over P2,000,000 but not over P402,500 + 30% of the excess
P8,000,000 over P2,000,000
Over P8,000,000 P2,202,500 + 35% of the excess
over P8,000,000
b) Rate of Tax on Income of Purely Self-
employed Individuals and/or Professionals
Whose Gross Sales or Gross Receipts and
Other Non-operating Income Does Not
Exceed the Value-added Tax (VAT) Threshold
as Provided in Section 109(BB). –
Self-employed individuals and/or professionals
shall have the option to avail of an eight
percent (8%) tax on gross sales or gross
receipts and other non-operating income in
excess of Two hundred fifty thousand pesos
(P250,000) in lieu of the graduated income tax
rates under Subsection (A)(2)(a) of this Section
and the percentage tax under Section 116 of
this Code.
(c) Rate of Tax for Mixed Income Earners. –
Taxpayers earning both compensation
income and income from business or
practice of profession shall be subject to the
following taxes:
(1) All Income from Compensation – The

rates prescribed under Subsection (A)(2)(a)
of this Section.
(2) All Income from Business or Practice of

Profession –
(a) If Total Gross Sales and/or Gross receipts
and Other Non-operating Income Do Not
Exceed the VAT Threshold as Provided in
Section 109(BB) of this Code. – The rates
prescribed under Subsection (A)(2)(a) of this
section on taxable income, or eight percent
(8%) income tax based on gross sales or
gross receipts and other non-operating
income in lieu of the graduated income tax
rates under Subsection (A)(2)(a) of this
Section and the percentage tax under
Section 116 of this Code.
(2) All Income from Business or Practice of

Profession –
(b) If Total Gross Sales and/or Gross Receipts

and Other Non-operating Income Exceeds the
VAT Threshold as Provided in Section 109(BB) of
this Code. – The rates prescribed under
Subsection (A)(2)(a) of this Section.
Sec 24 (B) Rate of Tax on Certain Passive
Income
Other winnings (except winnings amounting to

Ten Thousand pesos (P10,000) or less from
Philippine Charity Sweepstakes and Lotto which
shall be exempt) which shall be imposed a final
tax of twenty percent (20%).
Sec 24 (B) Rate of Tax on Certain Passive
Income
Interest income received by an individual

taxpayer (except a nonresident individual) from a
depository bank under the expanded foreign
currency deposit system shall be subject to a final
income tax at the rate of fifteen percent (15%) of
such interest income
Sec 24 (C) Capital Gains from Sale of Shares
of Stock not Traded in the Stock Exchange
The provisions of Section 39(B) notwithstanding,

a final tax at the rate of fifteen percent (15%) is
hereby imposed upon the net capital gains.
Sec 25. Tax on Nonresident Alien Individual
(F) The preferential tax treatment provided in
Subsections (C), (D), and (E) of this Section
shall not be applicable to regional headquarters
(RHQs), regional operating headquarters
(ROHQs), offshore banking units (OBUs) or
petroleum service contractors and
subcontractors registering with the Securities
and Exchange Commission (SEC) after January
1, 2018: 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.
Sec 27. Rates of Income tax on Domestic
Corporations
(C) Government-owned or -Controlled

Corporations, Agencies or Instrumentalities. -
Corporate income tax exemption of PCSO was
removed.
Corporations
(D) Rates of Tax on Certain Passive Incomes. -

Interest income derived by a domestic corporation
from a depository bank under the expanded
foreign currency deposit system shall be subject
to a final income tax at the rate of fifteen
percent (15%) of such interest income.
Corporations
(D) Rates of Tax on Certain Passive Incomes. -

Capital Gains from the Sale of Shares of Stock
Not Traded in the Stock Exchange. - A final tax at
the rates of fifteen percent (15%) shall be
imposed on net capital gains realized during the
taxable year from the sale
Sec 32. Gross Income
(e) 13th Month Pay and Other Benefits. – Gross

benefits received by officials and employees of
public and private entities: Provided, however,
That the total exclusion under this subparagraph
shall not exceed NINETY thousand pesos
(P90,000)
Sec 33. Special Treatment of Fringe Benefit
(A) Imposition of Tax. – Effective January 1, 2018

and onwards, a final tax of thirty-five percent
(35%), is hereby imposed on the grossed-up
monetary value of fringe benefit. The grossed-up
monetary value of the fringe benefit shall be
determined by dividing the actual monetary value
of the fringe benefit by sixty-five percent (65%)
effective January 1, 2018 and onwards
Sec 34. Deductions from Gross Income
(L) Optional Standard Deduction (OSD). – a

general professional partnership and the partners
comprising such partnership may avail of the
optional standard deduction only once, either by
the general professional partnership or the
partners comprising the partnership
Sec 34. Deductions from Gross Income
(M) Premium Payments on Health and/or

Hospitalization Insurance of an Individual
Taxpayer – REPEALED.
Sec 35. Allowance of Personal
Exemption for Individual
Taxpayer - REPEALED
Sec 51. Individual Return
(2) The following individuals shall not be

required to file an income tax return:
(a) An individual whose taxable income

does not exceed Two hundred fifty
thousand pesos (P250,000) under
Section 24(A)(2)(a)
(5) The income tax return (ITR) shall consist of a
maximum of four (4) pages in paper form or
electronic form, and shall only contain the
following information:
(A) Personal profile and information;
(B) Total gross sales, receipts or income from
compensation for services rendered, conduct
of trade or business or the exercise of
profession, except income subject to final tax
as provided under this Code;
(5) The income tax return (ITR) shall consist of a

maximum of four (4) pages in paper form or
electronic form, and shall only contain the
following information:
(C) Allowable deductions under this Code;
(D) Taxable income as defined in Section 31 of
this Code; and
(E) Income tax due and payable.
Sec 51-A. Substituted Filing of Income
Tax Returns by Employees Receiving
Purely Compensation Income
Individual taxpayers receiving purely compensation
income, regardless of amount, from only the employer
in the Philippines for the calendar year, the income tax
of which has been withheld correctly by the said
employer (tax due equals tax withheld) shall not be
required to file an annual income tax return. The
certificate of withholding filed by the respective
employers, duly stamped ‘received’ by the BIR, shall
be tantamount to the substituted filing of income tax
returns by said employees.
Sec 52. Corporate Returns
The income tax return shall consist of a maximum of
four (4) pages in paper form or electronic form. And
shall only contain the following information:
1. Corporate profile and information;
2. Gross sales, receipts or income from services
rendered, or conduct of trade or business,
except income subject to final tax as provided
under this Code;
3. Allowable deductions under this Code;
Sec 52. Corporate Returns
The income tax return shall consist of a maximum of
four (4) pages in paper form or electronic form. And
shall only contain the following information:
3. Taxable income as defined in Section 31 of this

Code; and
4. Income tax due and payable.
Provided, That the foregoing provisions shall not

affect the implementation of Republic Act No.
10708 or TIMTA.
Sec 56. Payment and
Assessment of Income Tax for
Individuals and Corporations
(2) Installment of Payment. - the second installment,

on or before October 15 following the close of the
calendar year.
Sec 57. Withholding of Tax at
Source
(B) Withholding of Creditable Tax at Source- That,

beginning January 1, 2019, the rate of withholding
shall not be less than one percent (1%) but not more
than fifteen percent (15%) of the income payment.
Sec 58. Returns and Payment of
Taxes Withheld at Source -
(A)Quarterly Returns and Payments of Taxes

Withheld. -
The return for final and creditable withholding
taxes shall be filed and the payment made not later
than the last day of the month following the close of
the quarter during which withholding was made.
Sec 62. Exemption Allowed to
Estates and Trusts. - REPEALED
Sec 74. Declaration of Income Tax
for Individuals. -
(A)In General. - Except as otherwise provided in this

Section, every individual subject to income tax under
Sections 24 and 25(A) of this Title, who is receiving
self-employment income, whether it constitutes the
sole source of his income or in combination with
salaries, wages and other fixed or determinable
income, shall make and file a declaration of his
estimated income for the current taxable year on or
before May 15 of the same taxable year
Sec 74. Declaration of Income
Tax for Individuals. -
(B) Return and Payment of Estimated Income Tax by

Individuals. - The fourth installment shall be
paid on or before May 15 of the following calendar
year when the final adjusted income tax return is due
to be filed.
Sec 84. Rates of Estate Tax. -
A tax at the rate of six percent (6%)

based on the value of such net estate.
Sec 86. Computation of Net
Estate. -
(A)Deductions Allowed to the Estate of Citizen or

a Resident. –
(1) Standard Deduction. – An amount equivalent

to Five million pesos (P5,000,000).
Sec 86. Computation of Net
Estate. -
(A)Deductions Allowed to the Estate of Citizen or

a Resident. –
(7) The Family Home - An amount equivalent to
the current fair market value of the decedent's
family home: Provided, however, That if the
said current fair market value exceeds Ten
Million pesos (P10,000,000), the excess shall
be subject to estate tax.
(B) Deductions Allowed to Non-resident
Estates
1)Standard Deduction
an amount equivalent to five
hundred thousand pesos (P500,000).
Estate Tax Returns
Requirements, Time of Filing,

and Payment
Requirements
In all cases of transfers subject to the tax

imposed herein, or regardless of the gross
value of the estate, for which a clearance from
the BIR is required as a condition precedent for
the transfer of ownership thereof in the name of
the transferee, the executor, or the
administrator, or any of the legal heirs, as the
case may be, shall file a return under oath in
duplicate
CPA Certification
Estate Tax Returns showing a gross

value exceeding P5,000,000
Time for Filing
The Estate Tax Return shall be filed

within one (1) year from the decedent’s
death
Payment by Installment
In case the available cash of the estate is

insufficient to pay the total estate tax due,
payment by installment shall be allowed within
two (2) years from the statutory date for its
payment without civil penalty and interest.
Payment of Tax Antecedent to the
Transfer of Shares, Bonds or Rights
If a bank has knowledge of the death of a

person, who maintained a bank deposit account
alone, or jointly with another, it shall allow any
withdrawal from the said deposit account,
subject to a final withholding tax of six
percent (6%).
Payment of Tax Antecedent to the
Transfer of Shares, Bonds or Rights
For this purpose, all withdrawal slips shall
contain a statement to the effect that all of the
joint depositors are still living at the time of
withdrawal by any one of the joint depositors
and such statement shall be under oath by the
said depositors.
Donor’s Tax
Tax Rate
Donor’s Tax
The tax for each calendar year shall be

six percent (6%) computed on the basis of the
total gifts in excess of two hundred fifty
thousand pesos (P250,000) exempt gift made
during the calendar year.
Transfer for Less Than Adequate
and Full Consideration
The amount by which the fair market
value of the property exceeded the value of the
consideration shall, for the purpose of the tax
imposed by this Chapter, be deemed a gift, and
shall be included in computing the amount of
gifts made during the calendar year.
Transfer for Less Than Adequate
and Full Consideration
Provided, however, that a sale, exchange,
or other transfer of property made in the
ordinary course of business (a transaction
which is a bona fide, at arm’s length, and free
from any donative intent), will be considered as
made for an adequate and full consideration in
money or money’s worth.
Value-added Tax on Sale of
Goods or Properties
Tax Rate
VAT
Twelve percent (12%) of the gross selling

price or gross value in money of the goods or
properties sold, bartered or exchanged, such
tax to be paid by the seller or transferor
VAT
Zero percent (0%) rate
a) Export Sales
2. Sale and delivery of goods to:
I. Registered enterprises within a
separate customs territory as provided
under special law
VAT
a) Export Sales
2) Sale and delivery of goods to:
II. Registered enterprises within tourism
enterprise zones as declared by the
Tourism Infrastructure and
Enterprise Zone Authority (TIEZA)
subject to the provisions under
Republic Act No. 9593 or the Tourism
Act of 2009.
VAT
a) Export Sales
6) The sale of goods, supplies, equipment
and fuel to persons engaged in
international shipping or international air
transport operations:
VAT
a) Export Sales
6) Provided, that the goods, supplies,
equipment and fuel shall be used for
international shipping or air transport
operations.
VAT
a) Export Sales
6) Provided, that subparagraphs (3), (4),
and (5) hereof shall be subject to the
twelve percent (12%) value-added tax
and no longer be considered export sales
subject to zero percent (0%) vat rate
upon satisfaction of the following
conditions:
VAT
a) Export Sales
6)
I. The successful establishment and
implementation of an enhanced vat
refund system that grants refunds of
creditable input tax within ninety (90)
days from the filing of the vat refund
application with the Bureau:
VAT
a) Export Sales
6)
I. Provided, that, to determine the
effectivity of item no. 1, all applications
filed from January 1, 2018 shall be
processed and must be decided within
ninety (90) days from the filing of the
vat refund application
VAT
a) Export Sales
6)
II. All pending vat refund claims as of
December 31, 2017 shall be fully paid
in cash by December 31, 2019.
VAT
a) Export Sales
6)
II. Provided, that the Department Of
Finance shall establish a VAT Refund
Center in the Bureau of Internal
Revenue (BIR) and in the Bureau Of
Customs (BOC) that will handle the
processing and granting of cash
refunds of creditable input tax.
VAT
a) Export Sales
6)
II. An amount equivalent to five percent
(5%) of the total value-added tax
collection of the BIR and the BOC
from the immediately preceding year
shall be automatically appropriated
annually and shall be treated as a
special account in the general fund or
VAT
a) Export Sales
6)
II. as trust receipts for the purpose of
funding claims for vat refund:
Provided, that any unused fund, at the

end of the year shall revert to the
general fund.
VAT
a) Export Sales
6)
II. Provided, further, that the BIR AND
BOC shall be required to submit to the
Congressional Oversight Committee
On The Comprehensive Tax Reform
Program (COCCTRP) a quarterly
report of all pending claims for refund
and any unused fund.
Value-added Tax on
Importation of Goods
Tax Rate
VAT
Twelve percent (12%) based on the total

value used by the Bureau of Customs in
determining tariff and customs duties, plus
customs duties, excise taxes, if any, and other
charges, such tax to be paid by the importer
prior to the release of such goods from customs
custody
Value-added Tax on Sale of
Services and Use or Lease of
Properties
Tax Rate
VAT
Twelve percent (12%) of gross receipts

derived from the sale or exchange of services,
including the use or lease of properties
VAT
…sales of electricity by generation

companies, transmission BY ANY ENTITY, and
distribution companies, INCLUDING
ELECTRIC COOPERATIVES;
VAT
4) Services rendered to persons engaged in
international shipping or international air
transport operations, including leases of
property for use thereof: Provided, that
these services shall be exclusively for
operation.
VAT
6)Transport of passengers and cargo by
DOMESTIC air or sea vessels from the
Philippines to a foreign country
VAT
8) Services Rendered to:
i. Registered enterprises within a separate
customs territory as provided under
special law
ii. Registered enterprises within tourism
enterprise zones as declared by the
TIEZA subject to the provisions under
Republic Act No. 9593 or the Tourism Act
of 2009
VAT
Provided, that subparagraphs (b)(1) and
(b)(5) hereof shall be subject to the
twelve percent (12%) value-added tax
and no longer be subject to zero percent
(0%) vat rate upon satisfaction of the
following conditions:
VAT
1. The successful establishment and
implementation of an enhanced vat
refund system that grants refunds of
creditable input tax within ninety (90)
days from the filing of the vat refund
application with the bureau
VAT
1. Provided, that, to determine the effectivity
of item no. 1, all applications filed from
January 1, 2018 shall be processed and
must be decided within ninety (90) days
from the filing of the vat refund application
VAT
2. All pending vat refund claims as of
December 31, 2017 shall be fully paid in
cash by December 31, 2019.
VAT
2. Provided, that the Department of Finance
shall establish a VAT Refund Center in
the Bureau of Internal Revenue (BIR) and
in the Bureau of Customs (BOC) that will
handle the processing and granting of
cash refunds of creditable input tax.
VAT
2. An amount equivalent to five percent
(5%) of the total VAT collection of the BIR
and the BOC from the immediately
preceding year shall be automatically
appropriated annually and shall be
treated as a special account in the
general fund or as trust receipts for the
purpose of funding claims for VAT refund
VAT
2. Provided, that any unused fund, at the
end of the year shall revert to the general
fund.
VAT
2. Provided, further, that the BIR and BOC
shall be required to submit to the
COCCTRP a quarterly report of all
pending claims for refund and any
unused fund.
Exempt Transactions
Transactions Exempt from

Value-Added Tax
Exempt Transactions
D. Importation of professional instruments and
implements, tools of trade, occupation or
employment, wearing apparel, domestic
animals, and personal and household effects
belonging to persons coming to settle in the
Philippines or Filipinos or their families and
descendants who are now residents or
citizens of other countries, such parties
hereinafter referred to as overseas Filipinos
Exempt Transactions
D. in quantities and of the class suitable to the
profession, rank or position of the persons
importing said items, for their own use and
not for barter or sale, accompanying such
persons, or arriving within a reasonable
time:
Exempt Transactions
D. Provided, that the Bureau of Customs may,

upon the production of satisfactory evidence
that such persons are actually coming to
settle in the Philippines and that the goods
are brought from their former place of
abode, exempt such goods from payment of
duties and taxes:
Exempt Transactions
D. Provided, further, that vehicles, vessels,

aircrafts, machineries and other similar
goods for use in manufacture, shall not fall
within this classification and shall therefore
be subject to duties, taxes and other
charges
Exempt Transactions
P. …Provided, that beginning January 1, 2021,
the VAT exemption shall only apply to sale of
real properties not primarily held for sale to
customers or held for lease in the ordinary
course of trade or business, sale of real
property utilized for socialized housing as
defined by Republic Act No. 7279, sale of
house and lot, and other residential
dwellings with selling price of not more than
two million pesos (P2,000,000)
Exempt Transactions
P. Provided, further, That every three (3) years

thereafter, the amount herein stated shall be
adjusted to its present value using the
Consumer Price Index, as published by the
Philippine Statistics Authority (PSA);
Exempt Transactions
Q. Lease of a residential unit with a monthly

rental not exceeding fifteen thousand
pesos (P15,000)
Exempt Transactions
U. Importation of fuel, goods and supplies by

persons engaged in international shipping or
air transport operations: Provided, that the
fuel, goods, and supplies shall be used for
operations.
Exempt Transactions
W. Sale or lease of goods and services to

senior citizens and persons with
disabilities, as provided under Republic Act
Nos. 9994 (Expanded Senior Citizens Act of
2010) and 10754 (An Act Expanding the
Benefits and Privileges of Persons with
Disability), respectively;
Exempt Transactions
X. Transfer of property pursuant to section

40(c)(2) of the NIRC, as amended
Y. Association dues, membership fees, and

other assessments and charges collected by
homeowners associations and condominium
corporations
Exempt Transactions
Z. Sale of gold to the Bangko Sentral ng

Pilipinas
AA.Sale of drugs and medicines prescribed for

diabetes, high cholesterol, and
hypertension beginning January 1, 2019
Exempt Transactions
BB.Sale or lease of goods or properties or the

performance of services other than the
transactions mentioned in the preceding
paragraphs, the gross annual sales and/or
receipts do not exceed the amount of Three
Million Pesos (P3,000,000)
Tax Credit
Creditable Input Tax

Creditable Input Tax
Provided, further, that the amortization of the

input vat shall only be allowed until December
31, 2021 after which taxpayers with unutilized
input VAT on capital goods purchased or
imported shall be allowed to apply the same as
scheduled until fully utilized:
Refunds or Tax Credits of Input Tax
Period within which Refund of Input Taxes

shall be Made
Ninety (90) days from the date of submission

of the official receipts or invoices and other
documents
Period within which Refund of Input Taxes

shall be Made
Provided, that should the Commissioner find

that the grant of refund is not proper, the
Commissioner must state in writing the legal
and factual basis for the denial.
In case of full or partial denial of the claim for

tax refund the taxpayer affected may, within
thirty (30) days from the receipt of the decision
denying the claim appeal the decision with the
Court of Tax Appeals:
Provided, however, that failure on the part of

any official, agent, or employee of the BIR to act
on the application within the ninety (90)-day
period shall be punishable under Section 269 of
this Code.
VAT Return
Payment
VAT
Provided, finally, that beginning January 1,

2023, the filing and payment required under this
subsection shall be done within twenty-five
(25) days following the close of each taxable
quarter.
Withholding of VAT
Provided, that beginning January 1, 2021, the

VAT Withholding System under this subsection
shall shift from Final to a Creditable System:
Withholding of VAT
Provided, further, that the payment for lease or

use of properties or property rights to
nonresident owners shall be subject to twelve
percent (12%) withholding tax at the time of
payment.
Tax on Persons Exempt from VAT
Provided, that, cooperatives and beginning

January 1, 2019, self-employed and
professionals with total annual gross sales
and/or gross receipts not exceeding five
hundred thousand pesos (P500,000) shall be
exempt from the three percent (3%) gross
receipts tax herein imposed
Tax on Sale, Barter or
Exchange of Shares of Stock
Listed and Traded through the
Local Stock Exchange or
through Initial Public Offering
Tax Rate
There shall be levied, assessed and collected
on every sale, barter, exchange, or other
disposition of shares of stock listed and traded
through the local stock exchange other than the
sale by a dealer in securities, a tax at the rate of
six-tenths of one percent (6/10 of 1%) of the
gross selling price or gross value in money of
the shares of stock sold, bartered, exchanged
or otherwise disposed which shall be paid by
the seller or transferor.
Excise Taxes
Certain Goods and Services

Excise Taxes
Goods and Services Subject to Excise Taxes
Excise taxes apply to goods manufactured or

produced in the Philippines for domestic sales
or consumption or for any other disposition and
to things imported as well as services
performed in the Philippines.
Excise Taxes
Goods and Services Subject to Excise Taxes
Excise taxes herein imposed and based on

weight or volume capacity or any other physical
unit of measurement shall be referred to as
'specific tax' and an excise tax herein imposed
and based on selling price or other specified
value of the good or service performed shall be
referred to as 'ad valorem tax.
Excise Taxes
Cigars and Cigarettes

RR No. 3-2018
Date of Effectivity of Tax Cigarettes packed
Rates by hand
January 1, 2018 until June Php 32.50
30, 2018
July 1, 2018 until December Php 35.00
31, 2019
January 1, 2020 until Php 37.50
December 31, 2021
December 31, 2023
RR No. 3-2018
Rates by machine
30, 2018
31, 2019
December 31, 2021
December 31, 2023
RR No. 3-2018
Date of Effectivity Cigarettes Cigarettes

of Tax Rates packed by packed by
hand machine
January 1, 2024 Effective 1/1/2024, the specific
onwards tax rate shall be increased by
4% every year thereafter
Excise Taxes
Manufactured Oils and Other

Fuels
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(a) Lubricating oils and
greases, per liter and
kilogram of volume
capacity or weight P8.00 P9.00 P10.00
(b) Processed gas, per
liter of volume capacity P8.00 P9.00 P10.00
(c)Waxes and
petrolatum, per
kilogram P8.00 P9.00 P10.00
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(d) Denatured alcohol
to be used for motive
power, per liter of
volume capacity
P8.00 P9.00 P10.00
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(e) Naphtha, regular
gasoline, PYROLYSIS
GASOLINE and other
similar products of
distillation, per liter of
volume capacity P7.00 P9.00 P10.00
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(f) Unleaded premium
gasoline, per liter of
(g) Aviation turbo jet
fuel, AVIATION GAS,
per liter of volume
capacity P4.00 P4.00 P4.00
(h)Kerosene, per liter
of volume capacity P3.00 P4.00 P5.00
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(i) Diesel fuel oil, and
on similar fuel oils
having more or less
the same generating
power, per liter of
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(j) Liquefied petroleum
gas, per KILOGRAM P1.00 P2.00 P3.00
Liquefied petroleum
gas used as raw
material in the
production of petro-
chemical products P0.00 P0.00 P0.00
(k) Asphalts, per
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(l) Bunker fuel oil, and
having more or less
the same generating
power, per liter of
Excise Taxes
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
M) Petroleum coke,
per metric ton P2.50 P4.50 P6.00
Petroleum coke, used
as feedstock to any
power generating
facility, per metric ton P0.00 P0.00 P0.00
Excise Taxes
Automobiles
Excise Taxes
Automobiles
EFFECTIVE JANUARY 1, 2018
Net manufacturer‘s price/
Importer‘s selling price Rate
Up to P600,000 4%
Over P600,000 to P1 Million Pesos 10%
Over P1 Million to P4 Million Pesos 20%
Over P4 Million Pesos 50%
Hybrid Vehicles - 50% of the applicable excise tax
rates
Purely Electric Vehicles and Pick-ups- Exempt
Excise Taxes
SEC. 149. Automobiles
As used in this Section – (a) to (f) –
(G) Hybrid Electric Vehicle shall mean a motor

vehicle powered by electric energy, with or
without provision for off-vehicle charging, in
combination with gasoline, diesel or any other
motive power: provided, that, for purposes of
this act, a hybrid electric vehicle must be able to
propel itself from a stationary condition using
solely electric motor.
Excise Taxes
SEC150-A. NON-ESSENTIAL SERVICES
There shall be levied assessed, and collected a
tax equivalent of five percent (5%) based on the
gross receipts derived from the performance of
services, net of excise tax and value-added tax ,
on invasive cosmetic procedures, surgeries,
and body enhancements directed solely
towards enhancing the patient’s appearance
and do not meaningfully promote the proper
function of the body or prevent or treat
illness or disease:
Excise Taxes
SEC150-A. NON-ESSENTIAL SERVICES
Provided, That this tax shall not apply to

procedures necessary to ameliorate a deformity
arising from, or directly related to, a congenital
or developmental defect or abnormality, a
personal injury resulting from an accident or
trauma, or disfiguring disease, tumor, virus, or
infection; Provided, further, That cases covered
by the National Health Insurance Program shall
not be subject to this tax.
Excise Taxes
Sweetened Beverages
Excise Taxes
Sweetened Beverages Rate
Using Purely Caloric Sweeteners, P6.00 Per
and Purely Non-caloric Liter of
Sweeteners, or a mix of Caloric Volume
and Non-caloric Sweeteners Capacity
Using Purely Coconut Sap Sugar
Exempt
and Purely Steviol Glycosides
Using Purely High Fructose Corn P12.00 Per
Syrup or in Combination with any Liter of
Caloric or Non-caloric Sweetener Volume
Capacity
Excise Taxes
Sweetened Beverages shall include, but not be
limited to the following:
(A). Sweetened juice drinks;
(B). Sweetened tea;
(C). All carbonated beverages;
(D). Flavored water;
(E). Energy and sports drinks;
(F). Other powdered drinks not classified as
milk, juice, tea, and coffee;
(G). Cereal and grain beverages; and
(H). Other non-alcoholic beverages that contain
added sugar.
Excise Taxes
EXCLUSIONS
1) All Milk Products
2) 100% Natural Fruit Juices
3) 100% Natural Vegetable Juices
4) Meal Replacement and Medically Indicated
Beverages
5) Ground Coffee, Instant Soluble Coffee, and
Pre -Packaged Powdered Coffee Products
DOCUMENTARY STAMP
TAX
Aty. Arnold A. Apdua, CPA
Stamp tax on Deeds of Sale,
Conveyances and Donation of
Real Property
On all conveyances, donations, deeds,
instruments, or writings, other than grants, patents
or original certificates of adjudication issued by the
Government, whereby any land, tenement, or other
realty sold shall be granted, assigned, transferred,
donated or otherwise conveyed to the purchaser, or
purchasers, or to any other person or persons
designated by such purchaser or purchasers, or to
any other person or persons designated by such
purchaser or purchasers, or donee, there shall be
collected a documentary stamp tax, at the rates
herein below prescribed, based on the consideration
contracted to be paid for such realty or on its fair
market value determined in accordance with Section
6(E) of this Code, whichever is higher: Provided,
That when one of the contracting parties is the
Government the tax herein imposed shall be based
on the actual consideration.
a)When the consideration, or value received or
contracted to be paid for such realty, after making
proper allowance of any encumbrance, does not
exceed One Thousand pesos (P1,000),
Fifteen pesos (P15.00).
b)For each additional One thousand pesos

(P1,000) or fractional part thereof in excess of
One thousand pesos (P1,000) of such
consideration or value, Fifteen pesos (P15.00).
Transfers exempt from Donor’s Tax under Section
101 (A) and (B) of this code shall be exempt from
the tax imposed under this section.
Keeping of Books of Accounts
B. 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
(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 and profit and loss statements.
Registration Requirement
A. Requirements.
 The registration shall contain the taxpayer‘s
name, style, place of residence, business and
such other information as may be required by the
Commissioner in the form prescribed therefor:
Provided, that the commissioner shall
simplify the business registration and tax
compliance requirements of self-employed
individuals and/or professionals.

G. Persons Required to Register for Value-Added
Tax.
1.a. His gross sales or receipts for the past twelve

(12) months, other than those that are exempt
under Section 109(A) to (BB), have exceeded
Three Million Pesos (P3,000,000); or
2.a. There are reasonable grounds to believe that

his gross sales or receipts for the next twelve
(12) months, other than those that are exempt
under Section 109(A) to (BB), will exceed Three
Million Pesos (P3,000,000) .

H. Optional Registration For Value-added Tax Of
Exempt Person.
1. Any person who is not required to register for
value-added tax under Subsection (G) hereof
may elect to register for value-added tax by
registering with the Revenue District Office that
has a jurisdiction over the head office of that
person, and paying the annual registration fee in
Subsection (B) hereof.
2. Any person who elects to register under this
Subsection shall not be entitled to cancel his
registration under Subsection (F) (2) for the next
three (3) years.

Provided, that any person taxed under section
24(a)(2)(b) and 24(a)(2)(c)(2)(a) of the NIRC who
elected to pay the eight percent (8%) tax on gross
sales or receipts shall not be allowed to avail of
this option.
For purposes of Title IV of this Code, any person

who has registered value-added tax as a tax type in
accordance with the provisions of Subsection (C)
hereof shall be referred to as a "VAT-registered
person" who shall be assigned only one Taxpayer
Identification Number (TIN).

Issuance of Receipts or Sales or
Commercial Invoices
B. ISSUANCE.
 All persons subject to an internal revenue tax
shall, at the point of each sale and transfer of
merchandise or for services rendered valued at
One Hundred Pesos (P100.00) or more, issue
duly registered receipts or sale or commercial
invoices, showing the date of transaction,
quantity, unit cost and description of merchandise
or nature of service.
Interest
A. In General.
 There shall be assessed and collected on any
unpaid amount of tax, interest at the rate of
double the legal interest rate for loans or
forbearance of any money in the absence of
an express stipulation as set by the Bangko
Sentral ng Pilipinas from the date prescribed
for payment until the amount is fully paid:
Provided, that in no case shall the deficiency and
the delinquency interest prescribed under
Subsection (B) and (C) hereof, be imposed
simultaneously.
B. Deficiency Interest
 Which interest shall be assessed and collected

from the date prescribed for its payment until the
full payment thereof, or upon issuance of a
notice and demand by the commissioner of
internal revenue, whichever comes earlier.

Attempt to Evade or Defeat Tax
 Any person who wilfully attempts in any manner
to evade or defeat any tax imposed under this
Code or the payment thereof shall, in addition to
other penalties provided by law, upon conviction
thereof, be punished with a fine of not less
than Five Hundred Thousand Pesos
(P500,000) but not more than Ten Million
Pesos (P10,000,000), and imprisonment of
not less than six (6) years but not more than
ten (10) years.

Revenue Regulations
No. 1-2018
Provides the revised tax rates on Mineral Products

pursuant to the provisions of RA No. 10963 (TRAIN
Law), amending for the purpose Revenue
Regulations No. 13-94

RR No. 1-2018
Sec. 3 Amending Section 5 of RR No. 13-94
A.Rate and Base of Tax
3.1 On domestic and imported coal and coke
Date of Effectivity Excise Tax per Metric Ton
January 1, 2018 Fifty pesos (P50.00)
January 1, 2018 One hundred pesos
(P100.00)
January 1, 2018 One hundred and fifty pesos
(P150.00)

RR No. 1-2018
A.Rate and Base of Tax
Coal produced under Coal Operating Contracts

entered into by the government pursuant to
Presidential Decree No. 972 as well as those
exempted from excise tax on mineral products
under other laws shall now be subject to the
applicable rates above beginning January 1,
2018.

RR No. 1-2018
3.2 All nonmetallic minerals and quarry
resources:
Excise Tax
Locally extracted or Four percent (4%) based on

produced the actual market value of the
gross output thereof at the time
of removal.

RR No. 1-2018
resources:
Excise Tax
Imported Four percent (4%) based on the value
used by the Bureau of Customs (BOC) in
determining tariff and custom duties. net
of excise tax and value-added tax.

RR No. 1-2018
resources:
Excise Tax
Locally extracted natural gas Exempt
and liquefied natural gas

RR No. 1-2018
3.3 All metallic minerals:
Excise Tax
Locally extracted or Four percent (4%) based on

produced copper. the actual market value of the
gold, chromite and gross output thereof at the time
other metallic of removal.
minerals

RR No. 1-2018
3.3 All metallic minerals:
Excise Tax
lmported copper, Four percent (4%) based on

gold, chromite and the value used by the BOC in
other metallic determining tariff and custom
minerals duties, net of excise tax and
value-added tax.

Revenue Regulations
No. 2-2018
Providing for the Revised Tax Rates and other
Implementing Guidelines on Petroleum
Products Pursuant to Republic Act. No. 10963,
otherwise known as the "Tax Reform for
Acceleration and Inclusion (TRAIN) Law"

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(a) Lubricating oils and
greases, per liter and
kilogram of volume
capacity or weight P8.00 P9.00 P10.00
(a.1) Locally produced
or imported oils
previously taxed but
subsequently
reprocessed P8.00 P9.00 P10.00

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(b) Processed gas, per
liter of volume capacity P8.00 P9.00 P10.00
(c)Waxes and
petrolatum, per
(d) Denatured alcohol
to be used for motive
power, per liter of P8.00 P9.00 P10.00
volume capacity
RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(e) Asphalts, per
(f) Naphtha, regular
gasoline, pyrolysis
gasoline and other
similar products of
distillation, per liter of

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(g) Unleaded premium
gasoline, per liter of
(h)Kerosene, per liter
of volume capacity P3.00 P4.00 P5.00
(i) Aviation turbo jet
fuel, aviation gas, per
liter of volume capacity
P4.00 P4.00 P4.00

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(j)Kerosene, when
used as aviation gas,
per liter of volume

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(k) Diesel fuel oil, and
having more or less
the same generating
power, per liter of

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(l) Liquefied petroleum
gas used for motive
power, per kilogram P2.50 P4.50 P6.00
(m) Bunker fuel oil,
and on similar fuel oils
having more or less
the same generating
power, per liter of

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
n) Petroleum coke, per
metric ton P2.50 P4.50 P6.00
(l) Liquefied petroleum
gas per kilogram P1.00 P2.00 P3.00

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(p) Naphtha and
pyrolysis gasoline,
when used as a raw
material in production,
per liter of volume

RR No. 2-2018
Jan. 1, Jan. 1, Jan. 1,
Effective on
2018 2019 2020
(q)Liquefied petroleum
gas used as raw
material in the
production of petro-
chemical products P0.00 P0.00 P0.00
(r) Petroleum coke,
used as feedstock to
any power generating
facility, per metric ton P0.00 P0.00 P0.00

Revenue Regulations
No. 3-2018
Providing for the Revised Tax Rates on Tobacco
Products Pursuant to the Provisions of Republic
Act No. 10963, otherwise known as "Tax
Reform for Acceleration and Inclusion (TRAIN)
Law”, Amending for the Purpose Revenue
Regulations No. 17-2012

RR No. 3-2018
Sec. 2 Amendatory Provisions
The provisions of section 3 Items B(4) and B(5)
of RR No. 17-2012 is hereby amended as
follows:
SEC. 3. REVISED RATES AND BASES OF

THE SPECIFIC TAX
There shall be levied, assessed and
collected an excise tax on tobacco products

RR No. 3-2018
Rates by hand
30, 2018
31, 2019
December 31, 2021
December 31, 2023

RR No. 3-2018
Rates by machine
30, 2018
31, 2019
December 31, 2021
December 31, 2023

RR No. 3-2018
Date of Effectivity Cigarettes Cigarettes

of Tax Rates packed by packed by
hand machine
January 1, 2024 Effective 1/1/2024, the specific
onwards tax rate shall be increased by
4% every year thereafter

Revenue Regulations No. 4-
2018
Rules and Regulations Implementing the

Documentary Stamp Tax Rate Adjustment Under
Republic Act No. 10963, Otherwise known as the
“Tax Reform For Acceleration and Inclusion
(TRAIN) Law”

RR No. 4-2018
• The rate of DST on the original issue of shares

has been increased from One peso (P1.00) to Two
pesos (P2.00) on each Two hundred pesos (P200),
or fractional part thereof, of the par value of such
shares of stock.

RR No. 4-2018

RR No. 4-2018

RR No. 4-2018

RR No. 5-2018
Revenue Regulations Implementing the

Adjustment of Rates on the Excise Tax on
Automobiles pursuant to the Provisions of
Republic Act No. 10963, otherwise known as
the “Tax Reform for Acceleration and
Inclusion (TRAIN) Law" Amending for the
Purpose Revenue Regulations No. 25-2003

RR No. 5-2018
“Sec. 4. – RATES AND BASES OF THE AD
VALOREM TAX ON AUTOMOBILES.
Effective January 1, 2018:
NET MANUFACTURER’S PRICE/ TAX RATE
IMPORTER’S SELLING PRICE
Up to six hundred thousand pesos 4%
(P600,000.00)
Over six hundred thousand pesos 10%
(P600,000.00) to one million pesos
(P1,000,000.00)
Over one million pesos (P1,000,000.00) 20%
to four million pesos (P4,000,000.00)
Over four million pesos 50%
(P4,000,000.00)

RR No. 5-2018
Provided, that hybrid vehicles shall be taxed at
fifty percent (50%) of the applicable excise tax
rates on automobiles subject to the conditions
in section 9(E) of this regulations: Provided,
further, that in the case of imported automobiles
not for sale, the tax imposed herein shall be
based on the total landed value, including
transaction value, customs duty and all other
charges.”

RR No. 5-2018
Hybrid Vehicles - 50%
Purely Electric Vehicles and Pick-ups-

Exempt

Revenue Regulations
No. 6-2018
Revoking Revenue Regulations (RR) No. 12-

2013 Thereby Reinstating the Provisions of
Section 2.58.5 of RR No. 14-2002, as Amended
by RR No. 17-2003

RR No. 6-2018
Sec. 2 Requirements for Deductibility of
Certain Expenses
a.) The payee reported the income and pays

the tax due thereon and the withholding agent
pays the tax including the interest incident to
the failure to withhold the tax, and surcharges, if
applicable, at the time of the audit/investigation
or reinvestigation/reconsideration.

RR No. 6-2018
Certain Expenses
b.) The recipient/payee failed to report the

income on the due date thereof, but the
withholding agent/taxpayer pays the tax,
including the interest incident to the failure to
withhold the tax, and surcharges, if applicable,
at the time of audit/investigation or
reinvestigation/reconsideration.

RR No. 6-2018
Certain Expenses
c.) The withholding agent erroneously

underwithheld the tax but pays the difference
between the correct amount and the amount of
tax withheld including the interest, incident to
such error, and surcharges, if applicable, at the
time of the audit/investigation or
reinvestigation/reconsideration.

RR No. 6-2018
Items of deduction representing return of capital

shall be allowed as deductions upon
withholding agent’s payment of the basic
withholding tax and penalties incident to non-
withholding or underwithholding.

Revenue Memorandum Order
6- 2018
Enhancement of the Frontline Services in

Compliance with the Ease of Doing Business
and Implementation of the Revised Citizen‘s
Charter

RMO 6- 2018
POLICIES AND PROCEDURES
A. The Revenue District Office (RDO) thru CSS
shall:
1. Implement a single window policy in
receiving and releasing of documentary
requirements and permits by establishing a
single counter for such purpose;
2. Assign registration officer/personnel in the
single window which shall do the following:

RMO 6- 2018
a. Receive the documentary requirements
from the new business registrants which must
comprise of the following:
i. BIR Form No. 1901/1903 with applicable
attachments under RMC No.137-2016
together with BIR Form No.1906 for Authority
to Print (ATP) and BIR Form No. 1905 for
Books of Accounts;

RMO 6- 2018
ii. Name of printer with sample invoice/receipt
and other commercial document. ln case not
available, the taxpayer can choose from the
list of accredited printers published in the
website and select sample invoice/receipt
provided under RMO.

RMO 6- 2018
b. Check the completeness of the documents
submitted for transactions other than new
business registrants following the
documentary requirements stated under RMC
No. 131-2016;
c. For ISO Certified RDOs, log the
transactions to appropriate log sheets;
d. Distribute the different applications (BIR
Form Nos. 1901/1903 and 1905) together
with the attachments to each processor;
RMO 6- 2018
e. Receive from each processor the duly,
processed applications Certificate of
Registration (COR), Authority to Print
(ATP), and stamped books of accounts;
and
f. Release in the same receiving

window/counter the COR, ATP and stamped
books of accounts to the taxpayer.

Revenue Regulations
No. 8-2018
Implementing the Income Tax
Provisions of Republic Act No. 10963,
Otherwise Known as the “Tax Reform
for Acceleration and Inclusion
(TRAIN)” Act

Definition of Terms
Sec. 2.
Gross Receipts
-refers to the total amount of money or its
equivalent representing the contract price,
compensation, service fee, rental or royalty,
including the amount charged for materials
supplied with the services, and deposits and
advance payments actually or constructively
received during the taxable period for the

Definition of Terms
Sec. 2.
Gross Receipts
services performed or to be performed for
another person, except returnable security
deposits for purposes of these regulations. In
the case of VAT taxpayer, this shall exclude the
VAT component

Definition of Terms
Sec. 2.
Gross Sales
-refers to the total sales transactions net of VAT,
if applicable, reported during the period, without
any other deduction.

Definition of Terms
Sec. 2.
Gross Sales
However, gross sales subject to the 8% income
tax rate option shall be net of the following
deductions:
1. Sales returns and allowance for which a
proper credit or refund was made during the
month or quarter to the buyer for sales
previously recorded as taxable sales; and

Definition of Terms
Sec. 2.
Gross Sales
2. Discounts determined and granted at the
time of sale, which are expressly indicated in
the invoice, the amount thereof forming part
of the gross sales duly recorded in the books
of accounts.

Definition of Terms
Sec. 2.
Gross Sales
2. Sales discount indicated in the invoice at the
time of sale, the grant of which is not
dependent upon the happening of a future
event, may be excluded from the gross sales
within the same month/quarter it was given

Definition of Terms
Sec. 2.
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.

Definition of Terms
Sec. 2.
Minimum Wage Earner (MWE)

Such statutory minimum wage rates are
exempted from income tax. Likewise, the
exemption covers the holiday pay, overtime pay,
night shift different pay, and hazard pay earned
by an MWE.

Definition of Terms
Sec. 2.
Professional
-a person formally certified by a professional
body belonging to a specific profession by virtue
of having completed a required examination or
course of studies and/or practice, whose
competence can usually be measured against
an established set of standards.

Definition of Terms
Sec. 2.
Professional
It also refers to a person who engages in some
art or sport for money, as a means of livelihood,
rather than as a hobby.

Definition of Terms
Sec. 2.
Professional
It includes but is not limited to doctors, lawyers,
engineers, architects, CPAs, professional
entertainers, artists, professional athletes,
directors, producers, insurance agents,
insurance adjusters, management and technical
consultants, bookkeeping agents, and other
recipients of professional promotional and talent
fees.
Definition of Terms
Sec. 2.
Taxable Income
-refers to the pertinent items of gross income
specified in the Code, less deductions, if any,
authorized for such types of income by the
Code or other special laws

Definition of Terms
Sec. 2.
VAT Threshold
-refers to the ceiling fixed by law to determine
VAT registrable taxpayers.

Definition of Terms
Sec. 2.
VAT Threshold
The VAT threshold is currently set at three
million pesos (P3,000,000.00) and the same
shall be used to determine the income tax
liability of self-employed individuals and/or
professional under Sections 24(A)(2)(b) and 24
(A)(2)(c)(2) of the TAX Code, as amended

Income Tax Rates
Effective January 1, 2018 until December 31, 2022
RANGE OF TAXABLE INCOME TAX DUE = a+ (b x c)

BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000.00 - -
250,000.00 400,000.00 - 20% 250,000.00
400,000.00 800,000.00 30,000.00 25% 400,000.00
800,000.00 2,000,000.00 130,000.00 30% 800,000.00
2,000,000.00 8,000,000.00 490,000.00 32% 2,000,000.00
8,000,000.00 - 2,410,000.00 35% 8,000,000.00

Income Tax Rates
Effective January 1, 2023 and onwards:
RANGE OF TAXABLE INCOME TAX DUE = a+ (b x c)

BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000.00 - -
250,000.00 400,000.00 - 15% 250,000.00
400,000.00 800,000.00 22,500.00 20% 400,000.00
800,000.00 2,000,000.00 102,500.00 25% 800,000.00
2,000,000.00 8,000,000.00 402,500.00 30% 2,000,000.00
8,000,000.00 - 2,202,500.00 35% 8,000,000.00

Individuals Earning Purely
Compensation Income
Taxable income for compensation earners is the
gross compensation income less non-taxable
income benefits such as but not limited to the
Thirteenth (13th) month pay and other benefits
(subject to limitations, see Section 6(G)(e) of
these Regulations), de minimis benefits, and
employee’s share in the SSS, GSIS, PHIC,
Pag-Ibig contributions and union dues.

Compensation Income
Husband and Wife shall compute their
individual income tax separately based on their
respective taxable income; if any income cannot
be definitely attributed to or identified as income
exclusively earned or realized by either of the
spouses, the same shall be divided equally
between the spouses for the purpose of
determining their respective taxable income.

Compensation Income
Minimum wage earners shall be exempt from
the payment of income tax based on their
statutory minimum wage rates. The holiday pay,
overtime pay, night shift differential pay and
hazard pay received by such earner are
likewise exempt.

RR No. 8-2018
Illustration 1:
Mr. CSO, a minimum wage earner, works for
G.O.D., Inc. He is not engaged in business nor
has any other source of income other than his
employment. For 2018, Mr. CSO earned a total
compensation income of P135,000.00

RR No. 8-2018
a. The taxpayer contributed to the SSS,

PhilHealth, and HDMF amounting to P5,000.00
and has received 13th month pay of
P11,000.00.

RR No. 8-2018
His income tax liability will be computed as
follows:
Total Compensation Income P 135,000.00
Less: Mandatory
contributions P 5,000.00
Non-taxable
benefits 11,000.00 16,000.00
Taxable Income P 119,000.00
*Taxpayer is exempt since he is considered a
MWE
RR No. 8-2018
b. The following year, Mr. CSO earned, aside
from his basic wage, additional pay of
P140,000.00 which consist of the overtime
pay-P80,000.00, night shift differential–
P30,000.00, hazard pay-P15,000.00, and
holiday pay-P15,000.00. He has the same
benefits and contributions as above.

RR No. 8-2018
Total Compensation Income P 135,000.00
Add: Overtime, night shift
differential, hazard,
and holiday pay 140,000.00
Total Income P 275,000.00
Less: Mandatory
contributions P 5,000.00
Non-taxable
benefits 11,000.00 16,000.00
Net Taxable Income P 259,000.00
Tax due EXEMPT

RR No. 8-2018
Taxpayer is tax exempt as an MWE. The
statutory minimum wage as well as the holiday
pay, overtime pay, night shift differential pay and
hazard pay received by such MWE are
specifically exempted from income tax under
the law.

Self-Employed Individuals
Earning Income Purely from Self-
Employment or Practice of
Profession
Individuals earning income purely from self-
employment and/or practice of profession
whose gross sales/receipts and other non-
operating income does not exceed the value-
added tax (VAT) threshold as provided under
Section 109 (BB) of the Tax Code, as amended,
shall have the option to avail of:

Profession
1. The graduated rates under Section

24(A)(2)(a) of Tax Code, as amended; OR

Profession
2. An eight percent (8%) tax on gross or
receipts and other non-operating income in
excess of two hundred fifty thousand
pesos (P250,000.00) in lieu of the
graduated income tax rates under Section
24(A) and the percentage tax under Section
116 all under the Tax Code, as amended.

RR No. 8-2018
Unless the taxpayer signifies the intention to
elect the 8% income tax rate in the 1st
Quarter Percentage and/or Income Tax
Return, or on the initial quarter return of the
taxable year after the Commencement of a new
business/practice of profession, the taxpayer
shall be considered as having availed of the
graduated rates under Section 24(A)(2)(a) of
the Tax Code, as amended. Such Election shall
be irrevocable and no amendment of option
shall be made for the said taxable year.

RR No. 8-2018
The option to be taxed at 8% income tax rate is

not available to a VAT-registered taxpayer,
regardless of the amount of gross
sales/receipts, and to a taxpayer who is subject
to Other Percentage Taxes under Title V of the
Tax Code, as amended, except those subjects
under Section 116 of the same Title.

RR No. 8-2018
Likewise, partners of a General Professional

Partnership (GPP) by virtue of their distributive
share from GPP which is already net of cost
and expenses cannot avail of the 8% income
tax rate option.

RR No. 8-2018
A taxpayer who signifies the intention to avail of

the 8% income tax rate option, and is
conclusively qualified for said option at the end
taxable year (annual) gross sales/receipts and
other non-operating income did not exceed the
VAT threshold (P3,000,000.00), shall compute
the final annual income tax due based on
the actual annual gross sales/receipts and
other non-operating income.

RR No. 8-2018
The said income tax due shall be in lieu of the

graduated rates of income tax and the
percentage tax under Sec. 116 of the Tax Code,
as amended. The financial Statements (FS) is
not required to be attached in filing the final
income tax return. However, existing rules and
regulations on bookkeeping and invoicing/
receipting shall still apply.

RR No. 8-2018
A taxpayer shall automatically be subject to the

graduated rates under Section 24(A)(2)(a) of
the Tax Code, as amended, even if the flat 8%
income tax rate option is initially selected, when
taxpayer’s gross sales/receipts and other non-
operating income exceeded the VAT threshold
during the taxable year.

RR No. 8-2018
In such case, his income tax shall be computed

under the graduated income tax rates and shall
be allowed a tax credit for the previous
quarter/s income tax payment/s under the 8%
income tax rate option.

RR No. 8-2018
In addition, a taxpayer subject to the graduated
income tax rates (either selected this as the
income tax regime, or failed to signify chosen
intention or failed to qualify to be taxed at the
8% income tax rate) is also subject to the
applicable business tax, if any. Subject to the
provisions of Section 8 of these Regulations, an
FS shall be required as an attachment to the
annual income tax return even if the gross
sales/ receipts and other non-operating income
is less than the VAT threshold.

RR No. 8-2018
However, the annual income tax return of a
taxpayer with gross sales/receipts and other
non-operating income of more than the said
VAT threshold shall be accompanied by an
audited FS.

RR No. 8-2018
Illustration 2:
Mr. EBQ operates a convenience store while
she offers bookkeeping services to her clients.
In 2018, her gross sales amounted to
P800,000.00, in addition to her receipts from
bookkeeping services of P300,000.00. She
already signified her intention to be taxed at
8% income tax rate in her 1st quarter return.

RR No. 8-2018
His income tax liability will be computed as
follows:
Gross Sales
Convenience Store P 800,000.00
Gross Receipts
Bookkeeping 300,000.00
Total Sales/Receipts P 1,100,000.00
Less: Amount allowed as deduction
under Sec. 24(A)(2)(b) 250,000.00
Tax Due (8% of P850,000.00) P 68,000.00

RR No. 8-2018
Illustration 3:
Mr. EBQ above, failed to signify her intention to
be taxed at 8% income tax rate on gross sales
in her initial Quarterly Income Tax Return, and
she incurred cost of sales and operating
expenses amounting to P600,0000.00 and
P200,000.00, respectively, or a total of
P800,000.00

RR No. 8-2018
The income tax shall be computed as follows:
Gross Sales/Receipts P 1,100,000.00
Less: Cost of Sales 600,000.00
Gross Income P 500,000.00
Less: Operating Expenses 200,000.00
Tax Due:
On excess
(P300,000-P250,000)x20% P 10,000.00

RR No. 8-2018
Illustration 4: Mr. JMLH signified his intention

to be taxed at 8% income tax rate of gross
sales in his 1st Quarter Income Tax Return. He
has no other source of income. His total sales
for the first three (3) quarters amounted to
P3,000,000.00 with 4th quarter sales of
P3,500,000.00.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
(8% Rate) (8% Rate) (8% Rate)
Total Sales P 500,000.00 P 500,000.00 P2,000,000.00 P3,500,000.00
Less: Cost of
300,000.00 300,000.00 1,200,000.00 1,200,000.00
Sales
Gross Income P 200,000.00 P 200,000.00 P 800,000.00 P2,300,000.00
Less: Operating
120,000.00 120,000.00 480,000.00 720,000.00
Expenses
Taxable
P 80,000.00 P 80,000.00 P 320,000.00 P1,580,000.00
Income

RR No. 8-2018
Total Sales P 6,500,000.00
Less: Cost of Sales 3,000,000.00
Gross Income P 3,500,000.00
Less: Operating Expenses 1,440,000.00
Taxable Income P 2,060,000.00
Income Tax Due:

Tax Due under the graduated rates P 509,200.00
Less: 8% income tax previously paid
(P3,000,000.00-P250,000.00)x8% 220,000.00
Annual Income Tax Payable P 289,200.00

RR No. 8-2018
Illustration 5:
Ms. RPSV is a prominent independent
contractor who offers architectural and
engineering service. Since her career
flourished, her total gross receipts amounted to
P4,250,000.00 for taxable year 2018. Her
recorded cost of service and operating
expenses were P2,150,000.00 and
P1,000,000.00, respectively.

RR No. 8-2018
Gross Receipts P 4,250,000.00
Less: Cost of Service 2,150,000.00
Tax Due:
On P800,000.00 P 130,000.00
On excess
(P1,100,000.00-P800,000.00)x30% 90,000.00
Income Tax Due P 220,000.00

RR No.8-2018
Illustration 6:
In 2018, Mr. GCC owns a nightclub and videoke
bar, with gross sales/receipts of P2,500,000.00.
His cost of sales and operating expenses are
P1,000,000.00 and P600,000.00, respectively,
and with non-operating income of P100,000.00.

RR No.8-2018
His tax due for 2018 shall be computed as

follows:
Taxable Income from Business;

Gross Sales P 2,500,000.00

RR No.8-2018
Gross Income P1,500,0000.00

Net Income from Operation P 900,000.00
Add: Non-operating Income 100,000.00

RR No.8-2018
Tax Due:
On P800,000.00 P 130,000.00
On excess
(P1,000,000.00 – P800,000.000)
x 30 60,000.00
Total Income Tax P 190,000.00

RR No.8-2018
•The taxpayer has no option to avail of the 8%

income tax rate on his income from business since
his business income is subject to Other Percentage
Tax under Section 125 of the Tax Code, as
amended.

RR No.8-2018
• Aside from income tax, taxpayer is liable to pay

the prescribed business tax, which in this case is
percentage tax of 18% on the gross receipts as
prescribed under Sec. 125 of the Tax Code, as
amended.

Individuals Earning Income Both
from Compensation and from
Self-employment(business or
practice of profession)
For mixed income earners, the income tax rates
applicable are:
1. The compensation income shall be subject to
the tax rates prescribed under Section
24(A)(2)(a) of the Tax Code, as amended;
AND

RR No.8-2018
2. The income from business or practice of
profession shall be subject to the following:
a) If the gross sales/receipts and other non-

operating income do not exceed the VAT
threshold, the individual has the option to
be taxed at:

RR No.8-2018
a.1 Graduated income tax rates prescribed under
Section 24(A)(2)(a) of the Tax Code, as
amended; OR
a.2 Eight percent (8%) income tax rate based on

gross sales/receipts and other non-operating
income in lieu of the graduated income tax
rates and percentage tax under Section 116
of the Tax Code as amended.

RR No.8-2018
b) If the gross sales/receipts and other non-

operating income exceeds the VAT
threshold, the individual shall be subject to
the graduated income tax rates prescribed
under Section 24 (A)(2)(a) of the Tax Code,
as amended.

RR No.8-2018
The provision under Section 4(A)(2)(b) of the

Tax Code, as amended, which allows an
option of 8% income tax rate on gross
sales/receipts and other non-operating
income in excess of P250,000.00 is available
only to purely self-employed individuals
and/or professionals

RR No.8-2018
The P250,000.00 mentioned is not

applicable to mixed income earners since it
is already incorporated in the first tier of the
graduated income tax rates applicable to
compensation income.

RR No.8-2018
Under the said graduated rates, the excess of

the P250,000.00 over the actual taxable
compensation income is not deductible against
the taxable income from business/practice of
profession under the 8% income tax rate
option.

RR No.8-2018
The total tax due shall be the sum of : (1) tax

due from compensation, computed using the
graduated income tax rates; and (2) tax due
from self-employment/practice of profession,
resulting from the multiplication f the 8% income
tax rate with the total of the gross sales/receipts
and other non-operating income.

RR No.8-2018
Mixed income earner who opted to be taxed

under the graduated income tax rate for income
business/practice of profession, shall combine
the taxation income from both compensation
and business/practice of profession in
computing for the total taxable income and
consequently, the income tax due.

RR No.8-2018
Illustration 7: Mr. MAG, a Financial Controller
of JAB Company, earned annual compensation
in 2018 of P1,500,000.00, inclusive of 13th
month and other benefits in the amount of
P120,000.00 but net of mandatory contributions
to SSS and Philhealth. Aside from employment
income, he owns a convenience store, with
gross sales of P2,400,000. His cost of sales
and operating expenses are P1,000,000.00 and
P600,000.00, respectively, and with non-
operating income of P100,000.00.

RR No.8-2018
a) His tax due for 2018 shall be computed as
follows if he opted to be taxed at eight
percent (8%) income tax rate on his gross
sales for his income from business:
Total compensation income P 1,500,000.00

Less:
Non-taxable 13th month pay and
other benefits (max) 90,000.00
Taxable Compensation Income P 1,410,000.00

RR No.8-2018
Tax due:
1. On Compensation:
On P800,000.00 P 130,000.00
On excess
(P1,410,000 – P800,000) x 30% 183,000.00
Tax due on Compensation Income P 313,000.00

RR No.8-2018
2. On Business Income:
Gross Sales P2,400,000.00
Taxable Business Income P2,500,000.00
Multiplied by income tax rate 8%
Tax Due on Business Income P 200,000.00
Total Income Tax Due

(Compensation and Business) P 513,000.00

RR No.8-2018
b) 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 and other non-
operating income:

Less: Non-taxable 13th month
pay and other benefits-max 90,000.00

RR No.8-2018
Add: Taxable Income from Business –

Net Income from Operation P 800,000.00
900,000.00
Total Taxable Income P 2,310,000.00

RR No.8-2018
Tax Due:
On P 2,000,000.00 P 490,000.00
On excess
(P2,310,000 – 2,000,000) x 32% 99,200.00
Total Income Tax P 589,200.00

RR No.8-2018
The taxable income from both compensation and
business shall be combined for purposes of
computing the income tax due if the taxpayer
chose to be subject under the graduated income
tax rates.
In addition to the income tax, Mr. MAG is

likewise liable to pay percentage tax of
P72,000.00, which is 3% of P2,400,000.00

RR No.8-2018
c) On February 2019, taxpayer tendered his
resignation to concentrate on his business.
His total compensation income amounted to
P150,000.00, inclusive of benefits of
P20,000.00.
His business operations for taxable year

2019 remains the same. He opted for the
eight percent (8%) income tax rate.

RR No.8-2018
Total compensation income P 150,000.00
Less: Non-taxable benefits 20,000.00
Taxable Compensation Income P 130,000.00
Tax due:
1. On Compensation:
On P130,000.00
(not over P250,000.00) P 0.00

RR No.8-2018
2. On Business Income:
Gross Sales P 2.400,000.00
Taxable Business Income P 2,500,000.00
Multiplied by income tax rate 8%
Tax Due on Business Income P 200,000.00
Total Income Tax Due

(Compensation and Business ) P 200,000.00

RR No.8-2018
Illustration 8:
Mr. WBV, an officer of AMBS International
Corp., earned in 2018 an annual compensation
of P1,200,000.00, inclusive of 13th month and
other benefits in the amount of P120,000.00.
Aside from employment income, he owns a
farm, with gross sales of P3,500,000.00. His
cost of sales and operating expenses are
P1,000,000.00 and P600,000.00, respectively,
and with non-operating income of P100,000.00.

RR No.8-2018
His tax due for 2018 shall be computed as
follows:
Less: Non-taxable 13th month
pay and other benefits (max) 90,000.00
Add: Taxable Income from Business

RR No.8-2018
Gross Income P2,500,000.00

Net Income from Operation P 1,900,000.00
2,000,000.00
Total Taxable Income P 3,110,000.00

RR No.8-2018
Tax Due:
On P 2,000,000.00 P 490,000.00
On excess
(P3,110,000 – 2,000,000) x 32% 355,200.00
Total income tax due P 845,200.00

Income Tax Rates on Certain
Passive Income
b) Interest income received by an individual

taxpayer (except a non-resident individual)
from a depository bank under the expanded
foreign currency deposit system – 15%;

Income Tax Rates on Certain
Passive Income
g) Winnings (except Philippine Charity
Sweepstakes and Lotto winnings amounting
to P10,000 or less) – 20%;
h) Cash and Property Dividends – 10%;
i) Capital Gains from Sale of Shares of Stock
not Traded in the Stock Exchange – 15%;
j) Capital Gains from Sale of Real Property
located in the Philippines – 6%.

Income Tax Rates on
Non-Resident Alien Individual
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.

RR No.8-2018
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
income tax rate under Sec. 24(A)(2)(a) of the
Tax Code, as amended.

RR No.8-2018
Illustration 9:
Ms. CCF, an alien employed in MCUD
Corporation that is a Petroleum Service
Contactor, received compensation income of
P5,000,000.00 for 2018, inclusive of
P400,000.00 13th month pay and other benefits.

RR No.8-2018
Computation of Taxable Income:
Compensation Income P 5,000,000.00

Less:
Non-taxable 13th Month Pay
and other benefits (max) 90,000.00

RR No.8-2018
Tax Due:
On P 2,000,000.00 P 490,000.00
On excess
(P4,910,000 – 2,000,000) x 32% 931,200.00
Total tax due P 1,421,200.00

RR No.8-2018
All employees of RHQs/ROHQs/OBUs, and
Petroleum Service Contractors and
Subcontractors shall be subject to regular tax
rate under Section
24(A)(2)(a) of the Tax Code, as amended,

without prejudice to the application of
preferential tax rates existing international tax
treaties, if warranted.

Government Owned And
Controlled Corporations (GOCCS),
Agencies Or Instrumentalities
Sec 5.
Under Section 27(C) of the Tax Code, as amended,
GOCCs, Government Agencies or Instrumentalities
shall pay such rate of tax upon their taxable income
as imposed upon corporations or associations
engaged in a similar business, industry, or activity,
except for the following:

RR No.8-2018
a) Government Service Insurance System
(GSIS);
b) Social Security System (SSS);
c) Philippine Health Insurance Corporation

(PHIC); and
d) Local Water Districts (LWD).

Exclusions from Gross Income
Sec 6.
The following items shall not be included in
gross income and shall be exempt from
income taxation:

RR No.8-2018
e) 13th Month Pay and Other Benefits. –

Gross benefits received by officials and
employees of public and private entities:
Provided, however, That the total
exclusion under this item shall not exceed
ninety thousand (P90,000.00), which shall
cover:

Special Treatment of
Fringe Benefits
SEC 7.
The tax on fringe benefits at the rate of THIRTY-
FIVE PERCENT (35%) shall be imposed on the
grossed-up monetary value of fringe benefits
furnished or granted to an employee (except
rank and file employees) by the employer,
whether an individual or a corporation (unless
the fringe benefit is required by the nature of, or
necessary to the trade, business or profession
of the employer).
RR No.8-2018
The tax herein imposed is payable by the

employer, which tax shall be paid in the same
manner as provided for under Section 57 (A) of
the Tax Code, as amended.

RR No.8-2018
The grossed-up monetary value of the fringe

benefit shall be determined by dividing the
actual monetary value of the fringe benefit by
SIXTY-FIVE PERCENT (65%), effective
January 1, 2018 and onwards:

RR No.8-2018
Provided, that the grossed-up value of the

benefit shall be determined by dividing the
actual monetary value of the fringe benefit by
the difference between one hundred percent
(100%) and the applicable tax rates under the
aforesaid subsections.

RR No.8-2018
Illustration 10:
MRU Company (a domestic
employer/company) granted Ms. MHLCO (a
Filipino branch manager employee), in addition
to her basic salaries, P5,000 cash per quarter
for her personal membership fees at Country
Golf Club. The Fringe Benefits Tax (FBT) shall
be computed as follows:

RR No.8-2018
Monetary value of fringe benefit: P 5,000.00

Percentage divisor applicable: 65%
FBT rate: 35%

RR No.8-2018
FBT= (Monetary value of fringe benefit ÷ 65%) x
35%
FBT= (P5,000.00 ÷ 65%) x 35%
FBT= P7,692.31 X 35%
FBT= P2,692.31

RR No.8-2018
Illustration 11
Same facts but the employee is a non-resident
alien individual not engaged in trade or
business within the Philippines:
Monetary value of fringe benefit: P 5,000.00

Percentage divisor applicable: 75%
FBT rate: 25%

RR No.8-2018
FBT= (Monetary value of fringe benefit ÷ 75%) x
25%
FBT= (P5,000.00 ÷ 75%) x 25%
FBT= P6,666.67 x 25%
FBT= P1,666.67

Deductions from Gross Income
SECTION 8
In general, there shall be allowed at the option
of the taxpayer, itemized deductions or an
Optional Standard Deduction (OSD) at the rate
of forty percent (40%).

RR No.8-2018
In case of individual taxpayers, OSD shall be

computed at the rate of forty percent (40%) of
gross sales/receipts, as the case may be.
Corporations may elect standard deduction in
an amount not exceeding percent (40%) of its
gross income.

RR No.8-2018
However, no deductions shall be allowed to

individual taxpayers earning compensation
income arising from personal services rendered
under an employer-employee relationship, and
those who opted to be taxed at 8% income tax
rate on their income from business/practice of
profession.

RR No. 8 - 2018
The following are the allowable itemized

deductions:
A. Expenses;
B. Interest;
C. Taxes;
D. Losses;
E. Bad Debts;

RR No. 8 - 2018
F. Depreciation;
G. Depletion of Oil and Gas Wells and Mines;
H. Charitable and Other Contributions;
I. Research and Development; and
J. Pension Trusts.

RR No. 8 - 2018
Illustration 12:
Ms. RPSV is a prominent independent
contractor who offers architectural and
engineering services. Since RPSV’s career
flourished, her total gross receipts amounted to
₱4,250,000.00 for taxable year 2018. Her
recorded coat of service and operating
expenses were ₱2,150,000.00 and
₱1,000,000.00, respectively. She opted to avail
of the 40% OSD.

RR No. 8 - 2018
OSD will be computed as follows:
Gross Receipts – Architectural and Engineering
Services ₱ 4,250,000.00
Multiply by OSD Rate 40%
Deductible OSD ₱ 1,700,000.00
Net Taxable Income will be computed as follows:

Gross Receipts – Architectural and Engineering
Services ₱ 4,250,000.00
Less: OSD 1,700,000.00
Net Taxable Income ₱ 2,550,000.00

RR No. 8 - 2018
Income tax liability will be computed as follows:
On ₱2,000,000.00 ₱ 490,000.00
On Excess
(₱2,550,000.00 - ₱2,000,000.00) x 32% 76,000.00
Income Tax Due ₱ 666,000.00

RR No. 8 - 2018
Illustration 13:
Ms. MRU operates a convenience store while
she offers bookkeeping services to her clients.
In 2018, her gross sales amounted to ₱
1,800,000.00, in addition to her gross receipts
from bookkeeping services of ₱400,000.00. Her
recorded cost of goods sold and operating
expenses were ₱ 1,325,000.00 and ₱
320,000.00, respectively.

RR No. 8 - 2018
A. Ms. MRU opted to avail of the OSD. The OSD and
taxable income shall be computed as follows:
Gross Sales – Convenience Store ₱ 1,800,000.00

Gross receipts – Bookkeeping 400,000.00
Total ₱ 2,200,000.00
Less: OSD
(₱2,200,000.00 x 40%) 880,000.00

RR No. 8 - 2018
Tax Due:
On ₱800,000.00 ₱ 130,000.00
On Excess
(₱1,320,000.00 - ₱800,000.00) x 30% 156,000.00
Total tax due ₱ 286,000.00

RR No. 8 - 2018
B. Ms. MRU’s income tax liability, if she signifies in her
1st Quarter returns her intention to be taxed at 8%
income tax rate, will be computed as follows:
Gross Sales – Convenience Store ₱ 1,800,000.00
Gross Receipts – Bookkeeping 400,000.00
Total ₱ 2,200,000.00
Less: Amt. allowed as deduction
under Sec. 24(A)(2)(b) 250,000.00
Tax Due:
8% of ₱ 1,950,000.00 ₱ 156,000.00

RR No. 8 - 2018
Illustration 14:
The gross sales of GEAL Corporation for 2018
amounted to ₱6,000,000.00, with cost of sales
amounting to ₱4,000,000.00.
It incurred operating expenses amounting to
₱1,000,000.00, and on the filing of its First
Quarter Income Tax Return, it signified its
intention to avail of the OSD.

RR No. 8 - 2018
Computation of OSD and Tax Due:
Gross Sales ₱ 6,000,000.00
Less: Cost of Sales 4 ,000,000.00
Gross Income ₱ 2,000,000.00
Less: OSD
(₱2,000,000.00 x 40%) 800,000.00
Taxable Income ₱ 1,200,000.00
Tax Due:
30% of ₱1,200,000.00 ₱ 360,000.00
• OSD for computation is based on gross income.
• Income tax rate of corporation is currently at 30%.

RR No. 8 - 2018
Determination of the Optional Standard
Deduction for General Professional
Partnerships (GPPs) and Partners of GPPs.
GPP is not subject to income tax imposed

pursuant to Sec. 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.

RR No. 8 - 2018
The GPP is not a taxable entity for income tax

purposes since it is only acting as a “pass-
through” entity where its income is ultimately
taxed to the partners comprising it. Section 26
of the Tax Code, as amended, likewise provides
that – “For purposes of computing the
distributive share of the partners, the net
income of the GPP shall be computed in the
same manner as a corporation.”

RR No. 8 - 2018
As such, a GPP may claim either the itemized

deductions allowed under Section 34 of the
Code or in lieu thereof, it can opt to avail of the
OSD allowed to corporations in claiming the
deductions in an amount not exceeding forty
percent (40%) of its gross income.

RR No. 8 - 2018
In computing taxable income defined under
Section 31 of the Tax Code, as amended, the
following may be allowed as deductions:
(a) Itemized expenses which are ordinary and

necessary, incurred or paid for the practice of
profession; OR
(b) Optional Standard Deduction (OSD).

RR No. 8 - 2018
The distributable net income of the partnership

may be determined by claiming either itemized
deductions or OSD. The share in the net
income of the partnership, actually or
constructively received, shall be reported as
taxable income of each partner.

RR No. 8 - 2018
The partners comprising the GPP can no longer

claim further deduction from their distributive
share in the net income of the GPP and are not
allowed to avail of the 8% income tax rate
option since their distributive share from the
GPP is already net of cost and expenses.

RR No. 8 - 2018
If the partner also derives other income from

trade, business or practice of profession apart
and distinct from the share in the net income of
the GPP, the deduction that can be claimed
from the other income would either be the
itemized deductions or OSD.

RR No. 8 - 2018
Illustration 15:
Mr. JMLH is a partner of AMBS & Co., a general
professional partnership, and owns 25%
interest. The gross receipts of AMBS & Co.
amounted to ₱10,000,000.00 for taxable year
2018. The recorded cost of service and
operating expenses of AMBS & Co. were
₱2,750,000.00 and ₱1,500,000.00, respectively.

RR No. 8 - 2018
If AMBS & Co. availed of the OSD, the deductions and
net income shall be computed as follows:
Gross Receipts ₱10,000,000.00

Less: Cost of Service 2,750,000.00
Less: OSD
(₱7,250,000.00 X 40%) 2,900,000.00
Net Income for distribution
to partners ₱ 4,350,000.00

RR No. 8 - 2018

Less: OSD
(₱7,250,000.00 X 40%) 2,900,000.00
to partners ₱ 4,350,000.00

RR No. 8 - 2018
The income tax liability of Mr. JMLH will be computed as
follows:
Share in Distributive Profit

(₱4,350,000.00 x 25%) ₱ 1,087,500.00
Tax Due:
On ₱ 800,000.00 ₱ 130,000.00
On Excess
(₱1,087,500.00 - ₱800,000.00)
x 30% 86,250.00

RR No. 8 - 2018
Illustration 16:
Ms. GEAL is a partner of CCF & Co., a general
professional partnership, and owns 25%
interest. The gross receipts of CCF & Co.
amounted to ₱10,000,000.00 for taxable year
2018. The recorded cost of service and
operating expenses of CCF & Co. were
₱2,750,000.00 and ₱1,500,000.00, respectively.

RR No. 8 - 2018
The Net Income of CCF & Co. will be computed
as follows:
Gross Receipts ₱ 10,000,000.00
Less: Cost of Services 2,750,000.00
to partners ₱ 5,750,000.00

RR No. 8 - 2018
The income tax liability of Ms. GEAL will be computed
as follows:
Share in Distributive Profit

( 5,750,000.00 x 25%) ₱ 1,437,500.00
Tax Due:
On 800,000 ₱ 130,000.00
On Excess
(1,437,500.00 - 800,000.00) x 30% 191,250.00

Individuals Not Required To
File Income Tax Return.
SEC 9.
The following individuals are not required to file
tax return:
A. An individual earning purely compensation

income whose taxable income does not exceed
Two Hundred Fifty Thousand pesos
(250,000.00);

RR No. 8 - 2018
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.

RR No. 8 - 2018
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;

RR No. 8 - 2018
C. An individual whose sole income has been
subjected to final withholding tax;
D. A minimum wage earner as defined in these

regulations – 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.

RR No. 8 - 2018
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.

Time Of Filing Of Individual
Income Tax Return.
SEC 10
Individuals engaged in business/practice of
profession, regardless of amount of
sales/receipts, are required to file quarterly
income tax return on or before May 15, August
15 and November 15 for the first, second and
third quarters of the current year, respectively
pursuant to Section 74(A) of the Tax Code as
amended;

RR No. 8 - 2018
and to file an annual income tax return not later

than the fifteen (15th) day of the fourth month
following the close of the calendar year or April
15 as provided under Section 51 (C)(1) of the
Tax Code as amended.

RR No. 8 - 2018
Illustration 17:
Ms. Alona Will, a popular actress, received talent fees
from EBQ-Cyril Promotions amounting to 5,000,000.00.
Her income tax shall be computed as follows:
Gross Receipts ₱ 20,000,000.00

Less: Costs and Expenses 5,000,000.00
Taxable Income ₱ 15,000,000.00

RR No. 8 - 2018
Tax Due and Payable:
On 8,000,000.00 ₱ 2,410,000.00
On Excess
( 15,000,000- 8,000,000) x 35% 2,450,000.00
Total Tax Due ₱ 4,860,000.00
Less: Creditable Taxes Withheld 1,600,000.00
Net Tax Payable ₱ 3,260,000.00

Installment Payment of
Individual Income Tax.
SECTION 11.
When the tax due is in excess of Two thousand
pesos ( 2,000.00), the individual may elect to
pay the tax in two (2) equal installments, in
which case, the first installment shall be paid at
the time the annual income tax return is filed
and the second installment paid on or before
October 15 following the close of the calendar
year.

RR No. 8 - 2018
If any installment is not paid on or before the

date fixed for its payment, the whole amount of
the unpaid tax becomes due and payable,
together with the delinquency penalties to be
reckoned on the original date when the tax is
required to be paid.

Registration Updates
SEC 12.
In relation to Sections 24(A)(2)(b) and

24(A)(2)(c)(2) of the Tax Code, as amended,
relative to the option of self-employed
individuals and/or professionals to avail of an
8% income tax rate based on gross sales/
receipts and other non-operating income,

RR No. 8 - 2018
the existing non-VAT taxpayer who is

contemplating to avail of the 8% income tax rate
at the beginning of the taxable year or before
the due date for filing and/or payment of the
percentage tax shall file an Application for
Registration Information Update (BIR Form No.
1905) to end –date the registered tax type of
percentage tax.

RR No. 8 - 2018
If the taxpayer is unable to timely update the

required registration, s/he is availing of the 8%
income tax return reflecting a zero- amount of
tax with a notation that s/he is availing of the
8% income tax rate option for the taxable year.
S/he is still required to signify the intention to
avail the option on the initial quarterly income
tax return for income tax purposes.

RR No. 8 - 2018
On the other hand, if the non- VAT taxpayer
opted to be taxed under the graduated income
tax rates s/he shall continue to pay the required
percentage tax under Sec. 116 of the Tax Code,
as amended.
As taxpayer who initially presumed that the

gross sales/ receipts and other non-operating
income for the taxable year will not exceed the
3,000,000.00 VAT threshold but has actually
exceeded the same during the taxable year,
RR No. 8 - 2018
shall immediately update his/her registration to

reflect the change in tax profile from non-VAT to
a VAT taxpayer. S/he shall be required to
update registration immediately within the
month following the month s/he exceeded the
VAT threshold. S/he shall be liable to VAT
prospectively starting on the first day of the
month following the month when the threshold
is breached.

RR No. 8 - 2018
The taxpayer shall 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
the taxpayer becomes liable for VAT, without
imposition of penalty if timely paid on the
immediately succeeding month/quarter. Thus,
there may be an instance when a taxpayer files
two (2) business tax returns in a month/quarter
–i.e., percentage and VAT returns.

RR No. 8 - 2018
A VAT taxpayer who did not exceed the VAT

threshold within the immediately preceding
three (3) year period, may opt to be a not- VAT
taxpayer and avail of the 8% income tax rate
option. S/he shall update the registration
records on or before the first quarter of a
taxable year to reflect the change in
registration.

RR No. 8 - 2018
However, s/he shall remain liable for VAT for as

long as there is no update of registration and
VAT- registered invoices/receipts are
continuously issued. Registration updates shall
be subject to existing rules and regulations on
updates, verification, inventory and
surrender/cancellation of unused VAT-
invoices/receipts.

RR No. 8 - 2018
A non-VAT taxpayer who volunteers to be a VAT
taxpayer knowing that sales/receipts and other
non-operating income will exceed the VAT
threshold within the taxable year, shall update
the registration records. Such taxpayer
becomes liable to VAT on the day when such
updating is made. In this case, the taxpayer
shall automatically be subject to the graduated
income tax rates if the 8% income tax rate
option initially selected.

RR No. 8 - 2018
Any income tax paid under the said flat 8%

income tax rate shall be deducted from the
income tax due under the graduated income tax
rates. The percentage rate due from the
beginning of the taxable year or
commencement of business/practice of
profession shall be paid on the month/quarter
immediately following such registration update.

RR No. 8 - 2018
However, if the graduated income tax rates is

chosen from the beginning, then taxpayer
ceases to be liable to percentage tax upon
registration updates and instead is now liable to
VAT.

RR No. 8 - 2018
ILLUSTRATION 18:
Ms. ENA is a newly registered non-VAT
taxpayer engaged in merchandising of car
accessories on February 1, 2018. In September
2018, her cumulative gross sales/receipts
reached Three Million Five Hundred Thousand
pesos (P3,500,000.00).

RR No. 8 - 2018
a. If the taxpayer availed he 8% income tax
rate upon her registration with the BIR on
February 1,2018 or upon filling of her first
quarterly income tax return, she is required
to update her registration and comply with
the following:
• Ms. ENA needs to visit BIR Office where
she is registered to register as VAT taxpayer
or before October 31, 2018, one month from
the time that she exceeded the 3,000,000.00
VAT threshold.

RR No. 8 - 2018
• Since she availed the option of 8% income

tax rate (not required to file he percentage tax
return), she shall file the required percentage
tax covering the sales/receipts and other non-
operating income, from February 1 to
September 30, 2018 due on or before October
20,2018, without imposition of penalty if timely
paid. She is likewise liable to VAT beginning
October 1, 2018.

RR No. 8 - 2018
• The taxpayer shall automatically be subjected
to graduated income tax rates from the time the
gross sales/receipts and other non- operating
income exceeded the VAT threshold.
• The 8% income tax paid by the taxpayer

shall be credited/deducted from her annual
income tax due using the graduated income tax
regime.

RR No. 8 - 2018
b. If the taxpayer did not avail the 8% income

tax rate upon her registration with the BIR on
February 1, 2018 or upon filing of her first
quarterly income tax return, she shall update
her registration and comply with the following:

RR No. 8 - 2018
• Since she is subject to the graduated income

tax rate, she is required to file the 1st and 2nd
quarterly percentage tax returns. The last
quarterly percentage tax return that she needs
to file should cover the period July 1, 2018 to
September 30, 2018 which is due on or before
October 20, 2018. She becomes liable to VAT
on October 1, 2018.

RR No. 8 - 2018
• The taxpayer needs to visit the BIR Office

where she is registered to update her
registration profile as VAT taxpayer on or before
October 31, 2018, one month from the time that
she exceeded the 3,000,000.00 VAT threshold.

Transitory Provisions
SEC 13.
In connection with the provision of Section

24(A)(2)(b) and Section 24 (A)(2)(c) of the Tax
Code, as amended, all existing VAT registered
taxpayers whose gross sales/receipts and other
non- operating income in the preceding year did
not exceed the VAT threshold of 3,000,000.00
shall have the option to update their registration
to non- VAT until March 31, 2018, following the
existing procedures on registration updates,
RR No. 8 - 2018
and the inventory and surrender/cancellation of
unused VAT invoices/receipts.
After the above-mentioned date, existing VAT-

registered taxpayers who have not exceeded
the threshold for the immediately preceding
three years, may opt to update their registration
to non- VAT following rules and regulations on
registration updates, verification, and the
inventory and cancellation of VAT
invoices/receipts.
Revenue Memorandum
Circular
No. 1-2018
Prescribes the Procedures on the use of
Withholding Tax Table on Compensation
Income and Advises on the Change of
Creditable Withholding Tax Rate on Certain
Income Payments to Individuals

RMC No. 1-2018
A. Change in the Creditable Withholding Tax
Rate on Income Payments to Self-
employed Individuals or Professionals
The following Income Payments to Self-
employed Individuals or Professionals shall
be subject to Eight Percent (8%):
1. Professional fees, talent fees, commissions,

etc. for services rendered by individuals;

RMC No. 1-2018
employed Individuals or Professionals shall be
subject to Eight Percent (8%):
2. Income distribution to beneficiaries of Estates

and Trusts;
3. Income Payment to certain brokers and
agents;

RMC No. 1-2018
4. Income Payments to partners of general

professional partnership;
5. Professional fees paid to medical
practitioners; and

RMC No. 1-2018
6. Commission of independent and/or exclusive

sales representatives, and marketing agents of
companies.

Revenue Memorandum
Circular 2- 2018
Transition Procedures for AII Taxpayers Filing

Tax Returns Affected by the Revised Tax Rates
Pursuant to the Provisions of Republic Act (RA)
No. 10963, Otherwise Known as the Tax Reform
for Acceleration and Inclusion (TRAIN)

RMC 2- 2018
Various BIR forms/returns being enhanced and
the Alphanumeric Tax Codes (ATCs) in line with
the implementation of the provisions of RA No.
10963 (known as TRAIN), are as follows:
BIR Changes
ATC
Form Form Name in Tax
Affected
No. Rate
1. 1602 Monthly Remittance WI 170 From 7
Return of Final lncome and WC ½% to
Taxes Withheld 170 15%

RMC 2- 2018
BIR Changes
ATC
Form Form Name in Tax
Affected
No. Rate
2. 1603 Monthly Remittance WF 320 From 15%
Return of Final lncome to 35%
Taxes Withheld
3. 2552 Percentage Tax Return PT 200 From ½ of
for Transactions Involving 1% to 6/10
Shares of Stock Listed of 1%
and Traded Through the
Local Stock Exchange or
Through lnitial and or
Secondary Public Offering
RMC 2- 2018
To cover the deficiency tax, taxpayers shall file

and pay the deficiency tax using BIR Form
No. 0605 and fill in the corresponding
information in the Tax Type and ATC fields.

RMC 2- 2018
Supposed
BIR Form Tax Type ATC
to be Used
1. 1602 WB Withholding Tax -
Banks and Other
Financial Institutions All eFPS filers
shall use
2. 1603 WR Withholding Tax -
ATC MC 031 -
Fringe Benefits
Deficiency Tax
3. 2552 ST Percentage Tax -
Stocks

REVENUE MEMORANDUM
CIRCULAR NO. 3-2018
This Circular is issued to provide transition
procedures for all taxpayers who are affected in
filing the documentary stamp tax returns (BIR Form
Nos. 2000 and 2000-OT) due to the revised tax
rates pursuant to the provisions of RA NO. 10963.
The abovementioned BIR forms are being enhanced
and the Alphanumeric Tax Codes (ATCs) affected by
the increase in tax rates are as follows:
RMC NO. 3-2018
BIR Form Form Name ATC Affected Changes in Tax
No. Rate
Documentary DS 101, 102, Increase in the

1. 2000 Stamp Tax 104 to 109, tax rate is
Declaration/Retu 112, 114 to 100% except
rn 121, 125, 126, for DS 106,
130 to 132 which is 50%
only
c
RMC NO. 3-2018
Documentary DS 102 Increase in

2. 2000-OT Stamp Tax and 125 the tax rate
Declaration/Ret is 100%
urn – One Time
Transactions
c
REVENUE MEMORANDUM CIRCULAR
NO. 4-2018
Relative to the implementation of the Revised

Tax Rates on Cigars and Cigarettes, Petroleum
Products, Automobiles, and Mineral Products
and introduction of new excise tax forms for
Non-essential Services (Invasive Cosmetics
Procedures) and Sweetened Beverages/
pursuant to the provisions of Republic Act (RA)
No. 10963, otherwise known as the Tax Reform
for Acceleration and Inclusion (TRAIN), the
following BIR forms are being enhanced:
c
RMC NO. 4-2018
1. BIR Form No. 22OO-T (Excise Tax Return for

Tobacco Products);
2. BIR. Form No, 22OO-P (Excise Tax Return for
Petroleum Products);
3. BXR Form No. 2200-AN (Excise Tax Return for
Automobiles & Non-essential Products);and
4. BIR Form No. 220O-M (Excise Tax Return for
Mineral Products).
c
RMC NO. 4-2018
The following BIR forms are being introduced, to

wit:
1. BIR Form No. 2200-5 (Excise Tax Return for
Sweetened Beverages); and
2.BIR. Form No. L620-XC (Final Withholding of
Excise Tax on Cosmetic Procedures).
c
Tax Advisory

Tax Advisory
Purely self-employed individuals and/or
professionals who are VAT-registered taxpayers
and whose gross sales/receipts and other non-
operating income do not exceed the new VAT
threshold of P3,000,000 in the preceding year,
may elect to change his/her status from VAT to
Non-VAT by filing the duly accomplished BIR
form No. 1905 “Application for Registration
Information Update” to RDO having
jurisdiction of the Head Office of the concerned
taxpayers on or before March 31, 2018.

Tax Advisory
Taxes withheld within the first two (2) months of
every taxable quarter shall be remitted thru BIR
Form 0605 on or before the 10th day following
the month of withholding.
Taxes withheld on the third (3rd) month of every
taxable quarter shall be remitted thru BIR Form
1601EQ (or the applicable quarterly withholding
tax return), not later than the last day of the
month following the close of the taxable quarter
during which the withholding tax was made.

Tax Advisory
To further clarify the advisory issued by this
Bureau last January 31, 2018 relative to the
remittances of creditable and final withholding
taxes for the first two (2) months of every
quarter, the withholding agents (WAs) are
advised to remit the withheld taxes using BIR
Form No. 0605 on or before the 10th day (for
over-the-counter filers) or 15th day (for eFPS
filers) of the following month of withholding.

Tax Advisory
It is further advised that the Alphanumeric Tax
Code to be used in the filing and remittance of
the said taxes thru BIR Form 0605 shall be "MC
200" and the tax type to be indicated shall be
"WE" for Expanded Withholding Tax or "WF" for
Final Withholding Tax, whichever is applicable.

Tax Advisory
All employees of Regional Headquarters and
Regional Operating Headquarters of
Multinational Companies, Offshore Banking
Limits: and petroleum service contractors and
subcontractors, enjoying preferential tax
treatment prior to 2018 are now subject to
regular income tax rates. Thus, withholding
taxes on compensation of these employees shall
be enforced based on withholding tax table per
Revenue Memorandum Circular No. 1 -2018.

Tax Advisory
All National Government Agencies (NGAs) shall
use BIR Form No. 0605 in the filing and
remittance of creditable and final withholding
taxes thru the Electronic Filing and Payment
System (eFPS).

Tax Advisory
The following procedures shall be adopted:
1. Accomplish/Fill-out the necessary fields in BIR
Form 0605 and indicate the following:
a. For ATC - MC200
b. For Tax Type
"'WE" for Expanded Withholding Tax or
"'W'F" for Final Withholding Tax
c. For Manner of Payment
Click on "OTHERS" box and type "eTRA"

Tax Advisory
2. Click on "Validate“
3. Submit the return and a Filing Reference
Number (FRN) will be generated
4. Click on "Proceed to Payment" and eFPS
Payment Form will be displayed
5. In eFPS Payment Form, select "TAX
REMITTANCE ADVICE"

Tax Advisory
6. Fill-out Department Code, Agency Code, Fund
Type Code
7. Click on "Submit" and a Tax Remittance Advice
will be generated
8. Print the TAX REMITTANCE ADVICE as
PROOF OF REMITTANCE

Tax Advisory
This is only a transitory procedure pending the
issuance of the enhanced withholding tax
remittance forms. With regard to the submission
of the alphabetical list of payees from whom
taxes were withheld, such shall be submitted
together with the applicable quarterly
withholding tax return not later than the last day
of the month following the close of the taxable
quarter during which the withholding tax was
made.

Tax Advisory
1. All taxpayers subject to percentage tax
pursuant to Section 116 of the Tax Code and
those who will be subject thereto due to change
of registration from VAT to Non-VAT, are required
to pay the percentage tax on a quarterly basis
using BIR Form No. 2551Q. There is no need to
file and pay monthly percentage tax on their
monthly gross receipts using BIR Form No.
2551M.

Tax Advisory
2. Taxpayers who are required to withhold Other
Percentage Taxes and Value-added Tax under
Revenue Regulations No. 2-98, as amended,
shall continue to withhold and remit taxes on a
monthly basis using BIR Form No. 1600 -
Remittance Return of VAT and Other Percentage
Taxes Withheld, considering that taxes withheld
are held in trust for the government.

Tax Advisory
2. Furthermore, BIR Form No. 1600 (Remittance
Return of VAT and Other Percentage Taxes
Withheld) shall still be used for VAT withheld on
government money payments and payments to
non-residents.

Tax Advisory
Subject What to file and pay
Percentage Quarterly Percentage Tax
Taxpayer (BIR Form 2551Q)
Withholding agents Monthly Remittance Return
(Percentage and of Value-added Tax and
VAT) Other Percentage Taxes
withheld (BlR Form 1600)

Tax Advisory
Subject What to file and pay
Withholding of VAT Monthly Remittance Return
on Government of Value-added Tax and
Money Payments Other Percentage Taxes
and Payments to Withheld (BIR Form 1600)
Non-Residents

Contact Details:
Email: arnoldapdua@gmail.com
Address: Unit 78 Zeta Building
Salcedo St., Makati City
Tel. No.: 815-6550

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TRAIN LAW - 3.9.18 - Laguna Chapter

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REPUBLIC ACT NO.

TAX REFORM FOR

GERONIMA A. LAPUZ, CPA

The Tax Reform for Acceleration and

•Extreme poverty eradicated

SECTION 24. All appropriation,

House Bill No. 5636 and

(2) The President shall have the power to veto any

Atty. Arnold A. Apdua, CPA

-The Cooperative Development Authority shall

-The power of the Commissioner or his duly

(1) All Income from Compensation – The

(2) All Income from Business or Practice of

(2) All Income from Business or Practice of

(b) If Total Gross Sales and/or Gross Receipts

Other winnings (except winnings amounting to

Interest income received by an individual

The provisions of Section 39(B) notwithstanding,

(C) Government-owned or -Controlled

(D) Rates of Tax on Certain Passive Incomes. -

(D) Rates of Tax on Certain Passive Incomes. -

(e) 13th Month Pay and Other Benefits. – Gross

(A) Imposition of Tax. – Effective January 1, 2018

(L) Optional Standard Deduction (OSD). – a

(M) Premium Payments on Health and/or

(2) The following individuals shall not be

(a) An individual whose taxable income

(5) The income tax return (ITR) shall consist of a

3. Taxable income as defined in Section 31 of this

Provided, That the foregoing provisions shall not

(2) Installment of Payment. - the second installment,

(B) Withholding of Creditable Tax at Source- That,

(A)Quarterly Returns and Payments of Taxes

(A)In General. - Except as otherwise provided in this

(B) Return and Payment of Estimated Income Tax by

A tax at the rate of six percent (6%)

(A)Deductions Allowed to the Estate of Citizen or

(1) Standard Deduction. – An amount equivalent

(A)Deductions Allowed to the Estate of Citizen or

Requirements, Time of Filing,

In all cases of transfers subject to the tax

Estate Tax Returns showing a gross

The Estate Tax Return shall be filed

In case the available cash of the estate is

If a bank has knowledge of the death of a

The tax for each calendar year shall be

Twelve percent (12%) of the gross selling

Provided, that any unused fund, at the

Twelve percent (12%) based on the total

Twelve percent (12%) of gross receipts

…sales of electricity by generation

Transactions Exempt from

D. Provided, that the Bureau of Customs may,

D. Provided, further, that vehicles, vessels,

P. Provided, further, That every three (3) years

Q. Lease of a residential unit with a monthly

U. Importation of fuel, goods and supplies by

W. Sale or lease of goods and services to

X. Transfer of property pursuant to section

Y. Association dues, membership fees, and

Z. Sale of gold to the Bangko Sentral ng

AA.Sale of drugs and medicines prescribed for

BB.Sale or lease of goods or properties or the