Changes brought about by RA 10963 or Tax Reform for Acceleration and Inclusion (TRAIN) Act (as to Estate Tax, Donor’s Tax, Value-Added tax and Other Percentage Tax)
RA 8424, as amended Upon effectivity of TRAIN
(BEFORE TRAIN) ESTATE TAX Rate of Tax Progressive rate (5%-20%) 6% Deductions: 1. Funeral expense Deductible (actual, 5% of GE or Not deductible P200,000 whichever is the lowest) 2. Judicial expense Deductible Not deductible 3. Standard Deductible only to resident and/or Deductible to resident and/or citizen deduction citizen at P1,000,000 at P5,000,000 and to NRA at P500,000 4. Family home Deductible not to exceed P1,000,000 Deductible not to exceed P10,000,000 5. Medical expense Deductible up to P500,000 Not deductible Notice of death Required to be filed within 2 months Not required from death if gross estate exceeds P20,000 Estate tax return Required if: Required if: - There is an estate tax to be paid - There is an estate tax to be paid - Gross estate exceeds P200,000 - Gross estate consists of - Gross estate consists of registrable property, regardless registrable property, regardless of amount of amount Certification of CPA Required if gross estate exceeds Required only if gross estate P2,000,000 exceeds P5,000,000 Time for filing Within 6 months from decedent’s Within one (1) year from decedent’s death death Payment of tax Cannot be paid on installment Allowed to be paid on installment within 2 years (not subject to civil penalty and interest) if cash is insufficient to pay total estate tax due Payment of tax antecedent If a bank has knowledge of the death If a bank has knowledge of the to the transfer of shares, of a person, who maintained a bank death of a person, who maintained a bonds or rights deposit account alone, or jointly with bank deposit account alone, or another, it shall NOT allow any jointly with another, it shall allow withdrawal from said deposit account, any withdrawal from the said unless the CIR has certified that the deposit account, subject to a final taxes imposed thereon have been withholding tax of six percent (6%). paid. Provided, that the administrator of the decedent of the estate or any one (1) of the heirs of the decedent may, upon authorization by the CIR, withdraw an amount not exceeding P20,000 without the said certification. DONOR’S TAX Rate of tax Stranger – 30% 6% in excess of P250,000 whether Relative – 2% to 15% stranger or relative Transfer for less than full The insufficiency is deemed as a gift The insufficiency is deemed as a gift and adequate subject to donor’s tax, except real subject to donor’s tax, except real consideration property. property.
However, if the sale or exchange
was made in the ordinary course of Page 2 of 4
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 and money’s worth. Dowry of gift given on Exempt up to 10,000 for each No longer exempt account of marriage legitimate, recognized natural or adopted children if given before marriage or one year thereafter VALUE-ADDED TAX Zero-rated transactions: 1. Sale of gold to BSP Subject to 0% VAT Exempt 2. Sale of raw Subject to 0% VAT. materials or packaging However, it shall be subjected to materials to 12% VAT when the following nonresident buyer conditions are satisfied: for delivery to a. Successful establishment resident local and implementation o an export-oriented enhanced VAT refund enterprise to be system that grants refunds used in of creditable input tax manufacturing, within 90 days from filing of processing, VAT refund application with packaging or BIR; repacking in the b. All pending VAT refund Philippines claims as of December 31, 3. Sale of raw 2017 shall be fully paid in materials or cash by December 31, 2019. packaging materials to Provided, that the DOF shall export-oriented 0% VAT establish a VAT refund center in the enterprise whose BIR and in the BOC that will handle export sales the processing and granting of cash exceed 70% of refunds of creditable input tax. total annual production An amount equivalent to 5% of the 4. Those considered total VAT collection of the BIR and export sales under the BOC from the immediately EO 226 and other preceding year shall be special laws 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
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: 1. Importation Importation of professional Importation of professional instruments and implements, wearing instruments and implements, tools apparel, domestic animals and of trade, occupation or personal household effects (except employment, wearing apparel, any vehicle, vessel, aircraft, domestic animals and personal machinery, other goods for use in the household effects belonging to manufacture and merchandise of any persons coming to settle in the Page 3 of 4
kind in commercial quantity)Philippines or Filipinos or their
belonging to persons coming to settle families and descendants who are in the Philippines, for their own use now residents or citizens of other and nit for sake, barter or exchange, countries quantities and of class accompanying such persons , or suitable to the profession, rank or arriving within 90 days before or afterposition of the persons importing their arrival, upon the production of said items, for their own use and not evidence satisfactory to the for barter or sale, accompanying Commissioner, that such persons are such persons, or arriving within actually coming to settle in the reasonable time: Provided, that the Philippines and that the change of BOC, may, upon the production of residence is bona fide 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: Provided further, that vehicles, vessels, aircrafts, machineries, other similar goods for use in manufacture, shall not fall within this classification and shall therefore be subject to duties, taxes and other charges. 2. Sale of real Residential lot valued at P1,500,000 Residential lot valued at P1,500,000 properties not and below and house and lot valued at and below and house and lot valued primarily held for P2,500,000 are exempt at P2,500,000 are exempt. sale or lease in the ordinary PROVIDED, beginning January 1, course of 2021, exemption will apply only to business sale of house and lot and other residential dwellings with selling price of not more than P2,000,000 3. Lease of Monthly rental not exceeding P12,800 Monthly rental of not exceeding residential unit is exempt P15,000 is exempt 4. Association dues, Not exempt Exempt membership fees and other assessments and charges collected by homeowners association and condominium corporation 5. Sale of drugs and Not exempt Exempt medicines prescribed for diabetes, high cholesterol and hypertension beginning January 1, 2019 VAT threshold Gross annual sales and/or receipts of Gross annual sales and/or receipts P1,919,500 of P3,000,000 Tax credit VAT on capital goods If aggregate acquisition cost of capital If aggregate acquisition cost of goods in a calendar month exceeds capital goods in a calendar month P1,000,000 excluding VAT, the input exceeds P1,000,000 excluding VAT, tax shall be spread evenly over 60 the input tax shall be spread evenly months or useful life whichever is over 60 months or useful life Page 4 of 4
shorter whichever is shorter.
However, 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 until fully utilized Refunds or tax credits if In proper cases, CIR shall grant a In proper cases, CIR shall grant a input tax refund or issue the TCC for creditable refund for creditable input taxes input taxes within 120 days from within 90 days from date of submission of complete documents submission of the OR or invoices and other supporting documents Filing and payment Quarterly – within 25 days following Beginning January 1, 2023,filing and the close of each taxable quarter. payment shall be done within 25 days following the close of each Monthly – within 20 days from the taxable quarter end of each moth Withholding of VAT of Subject to final withholding VAT of 5% Beginning January 1, 2021, the VAT transactions with the withholding system of transaction government with the government shall shift from final to a creditable system OTHER PERCENTAGE TAXES Stock transaction tax ½ of 1% of the gross selling price 6/10 of 1% of the selling price Returns and payment As an exception, CIR may prescribe a Repealed different time for filing and the manner and time for payment