Philippine’s TRAIN introduced amendments to personal income taxation, transfer taxes, taxation of sale of shares of stocks, and documentary stamp tax.
The Philippine government has commenced a massive tax reform program, consisting of several packages.
The first package of the Tax Reform for Acceleration and Inclusion (“TRAIN”), or Republic Act No. 10963, was enacted into law in December 2017 and became effective on 1 January 2018. The TRAIN introduced amendments to personal income taxation, transfer taxes, taxation of sale of shares of stocks, and documentary stamp tax, among others.
The second package of the TRAIN (“TRAIN 2”) has also been submitted to Congress. TRAIN 2 seeks the reduction of the corporate income tax. It also proposes to modify the fiscal incentives granted to certain businesses. TRAIN 2 is expected to take effect in 2019.
A tax amnesty is also being proposed and is expected to accompany the tax reform program. A tax amnesty bill has also been filed in Congress.
Personal income tax
Prior to the enactment of the TRAIN law, an individual employee or self-employed taxpayer was taxed at graduated rates ranging from 5% to 32%, depending on the taxpayer’s income bracket. Under the TRAIN, an individual with a taxable income of P250,000 or less will be exempt from income tax. Those with a taxable income above P250,000 will be subject to the graduated rates of 20% to 35% effective 2018, and 15% to 35% effective 2023. The top income tax bracket is P8,000,000.
Dennis G. Dimagiba, Partner, Head of Tax Practice Group
Kristine Anne V. Mercado-Tamayo, Associate
This article was first published on Hubbis.com